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Heartland BancCorp Earns $1.6 Million, or $1.02 per Diluted Share in Third Quarter of 2014; Fueled by 4.04% Net Interest Margin and 14% Loan Growth, Declares Regular Quarterly Cash Dividend of $0.3547 Per Share

GAHANNA, Ohio, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Heartland BancCorp, (OTCQB:HLAN) today reported earnings increased 12.1% to $1.6 million, or $1.02 per diluted share, in the third quarter of 2014 compared to $1.4 million, or $0.92 per diluted share, in the third quarter a year ago. In the first nine months of the year, Heartland's earnings increased 16.1% to $4.4 million, or $2.82 per diluted share, compared to $3.8 million, or $2.44 per diluted share, in the first nine months of 2013.

The Company also announced its board of directors declared a regular quarterly cash dividend of $0.3547 per share. The dividend will be payable January 10, 2015 to shareholders of record December 25, 2014.

"Heartland's third quarter success was fueled by solid loan and deposit growth and ongoing improvements in credit quality," stated G. Scott McComb, Chairman, President and CEO. "We have seen improvements across all areas of our operations this year and continue to generate a healthy net interest margin. The steady economic recovery in Ohio, particularly in the Columbus MSA, has contributed to strong core deposit growth and robust lending activity. We look forward to the future with confidence as we continue to create value for our shareholders by developing strong relationships with our customers, communities and employees."

Third Quarter Highlights (at or for the period ended September 30, 2014)

  • Net income was $1.6 million, or $1.02 per diluted share, compared to $1.4 million, or $0.92 per diluted share in the third quarter of 2013.
  • Annualized return on average assets was 1.05%.
  • Annualized return on average equity was 11.21%.
  • Net interest margin improved 11 basis points to 4.04%, compared to 3.93% in the third quarter a year ago.
  • Core deposits increased 9.4% and represent 56.7% of total deposits.
  • Total net loans increased 14% to $490.3 million compared to a year ago.
  • Non-performing assets decreased 8.2% compared to three months earlier to $5.8 million, or 0.92% of total assets, at September 30, 2014.
  • Book value per share increased 9.6% to $38.07 per share, compared to $34.73 per share one year earlier.
  • Declared a quarterly cash dividend of $0.3547 per share, which represents a 3.4% yield based on the recent stock price.

Balance Sheet Review

"We are continuing to build our loan pipeline and new applications were particularly robust during the current quarter," said McComb. "As a result, total net loans increased 13.9% to $479.3 million at quarter end compared to $420.9 million a year earlier, with a majority of the growth coming from an increase in both commercial real estate loans and new C&I loans."

Heartland's total deposits increased 8.7% to $543.0 million at September 30, 2014, compared to $499.6 million a year earlier. "A majority of the deposit increase came from a combination of new demand deposits, as well as higher balances in checking accounts," said McComb. Demand accounts represent 19%, savings, NOW and money market accounts represent 38%, and CDs comprise 43% of the total deposit portfolio at September 30, 2014.

Total assets increased 9.0% to $636.0 million at September 30, 2014, compared to $583.7 million a year earlier and shareholders' equity increased 9.8% to $59.1 million at September 30, 2014, compared to $53.8 million one year ago. At quarter-end, Heartland's tangible book value increased 9.6% to $38.07 per share, compared to $34.73 per share one year earlier.

Credit Quality

"Heartland's credit quality metrics remained strong in the current quarter and reflect our focus on maintaining a moderate risk profile. Non-performing loan balances, real estate owned and other repossessed assets all declined compared to the prior quarter and are below year ago levels," said McComb.

The third quarter provision for loan losses was $275,000, compared to $350,000 in the preceding quarter and $455,000 in the third quarter a year ago. As of September 30, 2014, the allowance for loan losses represented 103.3% of nonperforming loans compared to 94.3% three months earlier and 69.1% a year earlier.

Net charge-offs were $82,000 in the third quarter compared to $280,000 in the preceding quarter and $838,000 in the third quarter a year ago. The allowance for loan losses was $5.4 million, or 1.11% of total loans at September 30, 2014, compared to $5.2 million, or 1.12% of total loans at June 30, 2014, and $5.4 million, or 1.26% of total loans a year ago.

Nonaccrual loans decreased 5.3% to $5.2 million at September 30, 2014, compared to $5.5 million three months earlier, and decreased 33.1% compared to $7.8 million a year earlier. Other real estate owned (OREO) and other non-performing assets declined 33.0% to $517,000 at September 30, 2014 compared to $772,000 three months earlier and decreased 83.3% compared to $3.1 million a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, decreased 8.2% to $5.8 million at September 30, 2014, compared to $6.4 million three months earlier, and decreased 46% when compared to $10.9 million a year ago.

Operating Results

Heartland's revenues (net interest income before the provision for loan losses, plus non-interest income) increased 10.2% to $6.6 million in the third quarter, compared to $6.0 million in the third quarter a year ago. In the first nine months of the year, Heartland's revenues increased 5.6% to $19.0 million compared to $18.0 million in the first nine months of 2013. Net interest income before the provision for loan loss increased 14.1% to $5.9 million in the third quarter of 2014, compared to $5.2 million in the third quarter a year ago. In the first nine months of the year, net interest income increased 10.2% to $16.7 million compared to $15.2 million the first nine months a year ago.

"Despite continued pressure on loan yields, our net interest margin remains healthy and well above peer levels due to higher than industry average yields on our loan mix," said McComb. Heartland's net interest margin remained steady at 4.04% in the third quarter of 2014, compared to 3.99% in the preceding quarter and 3.93% in the third quarter a year ago. The average net interest margin was 2.81% for the 324 banks that make up the SNL U.S. Bank Index as of June 30, 2014. In the first nine months of 2014, Heartland's net interest margin improved 11 basis points to 4.00% compared to 3.89% in the first nine months of 2013.

Noninterest income decreased to $734,000 in the third quarter of 2014, compared to $851,000 in the third quarter a year ago. Year-to-date, noninterest income was $2.3 million compared to $2.9 million in the first nine months of 2013. The year-to-date decrease in noninterest income was primarily attributed to substantially lower net realized gains on available-for-sale securities, which totaled $137,000 in the first nine months of 2014, compared to $691,000 in the first nine months of 2013.

In the third quarter of 2014, noninterest expenses increased 13.7% to $4.1 million, compared to $3.6 million in the third quarter a year ago. Year-to-date, noninterest expense increased 4.6% to $11.9 million compared to $11.4 million in the same period a year earlier. "The increase in noninterest expense for both the quarter and the year-to-date periods is primarily related to the increase in commercial lenders we have brought on during the year, who are helping to produce our double-digit year-over-year loan growth," said McComb.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates eleven full-service banking offices. Heartland Bank, founded in 1911, provides full service commercial, small business, and consumer banking services; alternative investment services; insurance services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC and an Equal Housing Lender. Heartland BancCorp is currently quoted on the over-the-counter (OTC) Bulletin Board Service under the symbol HLAN. Learn more about Heartland Bank at HeartlandBank.com.

Safe Harbor Statement

This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.

Heartland BancCorp
Consolidated Balance Sheets
Assets Sept. 30, 2014 June 30, 2014 Sept. 30, 2013
Cash and due from banks $ 25,105,558 $ 25,046,465 $ 20,679,384
Federal funds sold -- 99,000 --
Cash and due from banks 25,105,558 25,145,465 20,679,384
Available-for-sale securities 104,317,349 107,813,882 111,220,096
Held-to-maturity securities, fair value $7,097,981 and $7,198,014 at September 30, 2014 and 2013, respectively and $7,801,919 at June 30, 2014 6,627,470 6,598,997 6,959,072
Loans, net of allowance for loan losses of $5,363,148 and $5,357,008 at September 30, 2014 and 2013, respectively and $5,169,910 at June 30, 2014 479,316,638 455,166,994 420,919,004
Premises and equipment 12,252,675 12,234,256 11,943,694
Federal Reserve and Federal Home Loan Bank stock 1,941,839 1,941,839 1,889,950
Foreclosed assets held for sale 516,911 772,398 3,089,100
Interest receivable 2,185,004 1,656,804 1,994,068
Receivables due from loan sales
Goodwill 417,353 417,353 417,353
Deferred income taxes 1,597,220 1,731,311 3,036,817
Other 1,748,676 1,866,340 1,560,619
Total assets $ 636,026,693 $ 615,345,639 $ 583,709,157
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand $ 103,352,665 $ 93,737,565 $ 89,651,217
Saving, NOW and money market 204,394,936 200,406,842 191,625,207
Time 235,257,990 233,445,342 218,292,225
Total deposits 543,005,591 527,589,749 499,568,649
Short-term borrowings 28,740,469 25,285,661 26,448,018
Interest payable and other liabilities 5,229,770 4,783,030 3,929,336
Total liabilities 576,975,830 557,658,440 529,946,003
Shareholders' Equity
Common stock, without par value; authorized 5,000,000 shares; issued 2014 - 1,552,922, 2013 - 1,547,922 shares and June 2014 - 1,551,922 shares 23,500,371 23,460,714 23,275,659
Retained earnings 35,062,394 33,998,681 31,407,292
Accumulated other comprehensive income (expense) 551,368 291,074 (919,797)
Treasury stock at Cost, Common; 2014- 1,665 shares (63,270) (63,270) --
Total shareholders' equity 59,050,863 57,687,199 53,763,154
Total liabilities and shareholders' equity $ 636,026,693 $ 615,345,639 $ 583,709,157
Book value per share $ 38.07 $ 37.21 $ 34.73
Heartland BancCorp
Consolidated Statements of Income
Three Months Ended Nine Months Ended
Interest Income Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013
Loans $ 5,919,484 $ 5,432,679 $ 5,138,858 $ 16,605,072 $ 15,195,263
Securities
Taxable 282,906 309,243 316,211 931,880 1,100,522
Tax-exempt 402,987 405,647 438,345 1,239,181 1,354,521
Other 8,056 13,105 12,763 30,284 35,562
Total interest income 6,613,433 6,160,674 5,906,177 18,806,417 17,685,868
Interest Expense
Deposits 715,202 683,201 738,555 2,072,920 2,289,212
Borrowings 4,513 3,340 2,973 12,631 227,888
Total interest expense 719,715 686,541 741,528 2,085,551 2,517,100
Net Interest Income 5,893,718 5,474,133 5,164,649 16,720,866 15,168,768
Provision for Loan Losses 275,000 350,000 455,000 1,030,000 1,565,000
Net Interest Income After Provision for Loan Losses 5,618,718 5,124,133 4,709,649 15,690,866 13,603,768
Noninterest income
Service charges 505,932 517,989 511,623 1,505,144 1,455,105
Net Gains and commissions on loan sales 36,098 36,562 18,388 89,004 52,342
Net realized gains on available-for-sale securities -- 136,701 6,692 136,701 690,795
Net realized gain/(loss) on sales of foreclosed assets 51,273 77,031 20,188 154,073 (20,731)
Other 140,263 155,034 294,459 441,031 686,103
Total noninterest income 733,566 923,317 851,350 2,325,953 2,863,614
Noninterest Expense
Salaries and employee benefits 2,346,693 2,139,971 1,926,343 6,717,988 6,037,299
Net occupancy and equipment expense 422,382 422,785 432,284 1,291,626 1,358,327
Data processing fees 184,541 272,884 221,496 699,281 667,019
Professional fees 203,598 228,123 167,147 586,117 616,122
Marketing expense 131,250 131,250 99,999 398,750 299,997
Printing and office supplies 38,063 34,679 38,194 122,721 119,562
State franchise taxes 90,097 90,097 153,726 283,127 465,841
FDIC Insurance premiums 91,836 79,836 120,491 250,253 357,497
Other 595,943 458,158 450,224 1,573,688 1,482,762
Total noninterest expense 4,104,403 3,857,783 3,609,904 11,923,551 11,404,426
Income before Income Tax 2,247,881 2,189,667 1,951,095 6,093,268 5,062,956
Provision for Income Taxes 634,529 611,867 511,252 1,668,139 1,250,905
Net Income $ 1,613,352 $ 1,577,800 $ 1,439,843 $ 4,425,129 $ 3,812,051
Basic Earnings Per Share $ 1.04 $ 1.02 $ 0.93 $ 2.85 $ 2.47
Diluted Earnings Per Share $ 1.02 $ 1.01 $ 0.92 $ 2.82 $ 2.44
Three Months Ended Nine Months Ended
Sept. 30,
2014
June 30,
2014
Sept. 30,
2013
Sept. 30,
2014
Sept. 30,
2013
Performance Ratios:
Return on average assets 1.05% 1.05% 1.02% 0.97% 0.88%
Return on average equity 11.21% 11.25% 10.86% 10.40% 9.28%
Net Interest margin 4.04% 3.99% 3.93% 4.00% 3.89%
Efficiency Ratio 61.93% 61.62% 60.07% 63.05% 65.76%
Asset Quality Ratios and Data: As of or for the Three Months Ended
Sept. 30,
2014
June 30,
2014
Sept. 30,
2013
Non Accrual Loans 5,193 5,485 7,763
Loans Past Due 90 days and Still accruing 126 100 50
Non Performing Investment investment securities -- -- --
OREO and other non-performing Assets 517 772 3,090
Total non-performing assets 5,836 6,357 10,903
Non performing assets to total assets 0.92% 1.03% 1.87%
Non-performing assets to total assets
Total Assets as of 636,027 615,346 583,709
Net Charge-offs Quarter ending 82 280 838
Allowance for loan loss 5,363,148 5,169,910 5,357,008
Loans Receivable 484,679,786 460,336,904 426,276,012
Allowance to loans outstanding 1.11% 1.12% 1.26%
Allowance for Loan Loss 5,363 5,170 5,357
Non accrual Loans 5,193 5,485 7,763
Allowance for loan loss to non accrual loans 103.27% 94.26% 69.01%
Total Shareholders' Equity 59,050,863 57,687,199 53,753,748
Less, Goodwill 417,353 417,353 417,353
Shareholders' equity less Goodwill 58,633,510 57,269,846 53,336,395
Common Shares outstanding 1,552,922 1,551,922 1,544,922
Less treasury Shares 1,665 1,665 --
Common Shares as adjusted 1,551,257 1,550,257 1,544,922
Book Value per common share $ 38.07 $ 37.21 $ 34.79
Tangible Book Value per common shares $ 37.80 $ 36.94 $ 34.52

CONTACT: G. Scott McComb, President, Chairman & CEO Heartland BancCorp 614-337-4600Source:Heartland BancCorp