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Heartland BancCorp Earnings Increase 15.7% to $1.8 Million, or $1.15 per Diluted Share, in 2Q15, Declares Quarterly Cash Dividend of $0.3724 per Share

GAHANNA, Ohio, July 21, 2015 (GLOBE NEWSWIRE) -- Heartland BancCorp ("the company," and "the bank") (OTCQB:HLAN), today reported earnings increased 15.7% to $1.8 million, or $1.15 per diluted share in the second quarter of 2015 compared to $1.6 million, or $1.01 per diluted share, in the second quarter a year ago. For the first six months of the year, Heartland's earnings increased 20.1% to $3.4 million, or $2.13 per diluted share, compared to $2.8 million, or $1.79 per diluted share, in the first six months of 2014.

The Company also announced its board of directors declared a regular quarterly cash dividend of $0.3724 per share. The dividend will be payable October 10, 2015, to shareholders of record as of September 25, 2015.

"Central Ohio's economy is growing nicely and our bank and brand are uniquely positioned to capitalize on that synergy, as demonstrated by our strong financial performance in the first half of 2015," said G. Scott McComb, Chairman, President and CEO. "We launched the Agribusiness Lending Group earlier this year, with a highly experienced team of Ag relationship managers, and we are confident this field will be very productive for us."

Second Quarter Financial Highlights (at or for the period ended June 30, 2015)

  • Net income was $1.8 million, up from $1.6 million in both the preceding quarter and second quarter a year ago.
  • Net interest margin improved 15 basis points to 4.08% compared to 3.93% in the second quarter a year ago.
  • Annualized return on average assets was 1.10%.
  • Annualized return on average equity was 11.93%.
  • Total deposits increased 12.1% to $591.3 million from a year ago.
  • Net loans increased 15.6% to $526.4 million from a year ago.
  • Non-performing assets decreased 43.9% to $3.6 million, or 0.52% of total assets, at June 30, 2015, compared to a year ago.
  • Tangible book value per share increased 7.2% to $39.60 per share compared to $36.94 per share one year earlier.
  • Declared a quarterly cash dividend of $0.3724 per share, which represents a 3.1% yield based on the June 30, 2015 stock price.

Balance Sheet Review

"Loan production was robust during the quarter, particularly in the Commercial Real Estate, C & I, and HELOC portfolios," said McComb. "As a result, net loans increased 15.6% to $526.4 million at quarter end, compared to $455.2 million a year earlier. Additionally, we continue to be blessed with opportunities to meet new business clients and have significant potential for current and future growth in relationships in our marketplace."

Total deposits increased 12.1% to $591.3 million at June 30, 2015, compared to $527.6 million a year earlier. Demand accounts represented 18.7%, while savings, NOW and money market accounts represented 36.3%, and CDs comprised 44.9% of the total deposit portfolio, at June 30, 2015.

Total assets increased 11.1% to $683.8 million at June 30, 2015, compared to $615.3 million a year earlier. Shareholders' equity increased 7.8% to $62.2 million at June 30, 2015, compared to $57.7 million one year ago. At quarter end, Heartland's tangible book value increased 7.2% to $39.60 per share compared to $36.94 per share one year earlier.

Operating Results

"Heartland's solid second quarter net interest margin was a result of our improved earning asset mix, modestly higher yields on securities and stable cost of deposits," said McComb. Heartland's net interest margin improved three basis points to 4.08% in the second quarter of 2015, compared to 4.05% in the preceding quarter and increased 15 basis points compared to 3.93% in the second quarter a year ago. In the first six months of the year, Heartland's net interest margin was 4.06%, an eight basis point improvement compared to the same period a year ago.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 11.4% to $7.1 million in the second quarter, compared to $6.4 million in the second quarter a year ago. Year-to-date, total revenues increased 11.8% to $13.9 million, compared to $12.4 million in the first six months of 2014. Net interest income before the provision for loan loss increased 16.8% to $6.4 million in the second quarter of 2015, compared to $5.5 million in the second quarter a year ago. In the first six months of 2015, net interest income before the provision for loan losses increased 15.2% to $12.5 million, compared to $10.8 million in the first six months of 2014.

Heartland's noninterest income was $732,000 in the second quarter of 2015, compared to $923,000 in the second quarter a year ago. The quarter-over-quarter decline was primarily due to a net gain on available-for-sale securities of $137,000 in the second quarter a year ago. Year-to-date, noninterest income was $1.4 million compared to $1.6 million in the same period a year ago.

In the second quarter of 2015, noninterest expenses were $4.3 million, which were unchanged compared to the preceding quarter, and up from $3.9 million a year ago. In the first six months of the year, noninterest expenses were $8.7 million compared to $7.8 million in the first six months of 2014. The year-over-year increase is primarily attributable to costs associated with the new branch in Pickerington, Ohio, as well as higher employee and incentive costs due to higher loan production.

Credit Quality

"Credit quality has improved dramatically compared to a year ago. Nonaccrual loans, however, were up slightly in the current quarter primarily due to one commercial real estate lending relationship," said McComb. Heartland's nonaccrual loans were $2.6 million at June 30, 2015, which was a slight increase compared to $2.4 million three months earlier, and a decrease of 53.2% compared to $5.5 million a year earlier. Other real estate owned (OREO) and other non-performing assets were almost unchanged at $127,000 at June 30, 2015, compared to $117,000 three months earlier and decreased 83.6% compared to $772,000 a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $3.6 million at June 30, 2015, compared to $3.0 million three months earlier, and decreased 43.9% when compared to $6.4 million a year ago.

Heartland's second quarter provision for loan losses was $240,000, the same as in the preceding quarter. This compares to $350,000 in the second quarter a year ago. Year-to-date, the provision for loan losses totaled $480,000 compared to $755,000 in the first six months of 2014. As of June 30, 2015, the allowance for loan losses represented 214.1% of nonaccrual loans compared to 221.2% three months earlier, and 94.3% one year earlier.

Net charge-offs were $13,000 in the second quarter compared to $319,000 in the preceding quarter, and $280,000 in the second quarter a year ago. The allowance for loan losses was $5.5 million, or 1.02% of total loans at June 30, 2015, compared to $5.3 million, or 1.01% of total loans at March 31, 2015, and $5.2 million, or 1.12% of total loans a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates twelve 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 OTC Markets (OTCQB) under the symbol HLAN. Learn more about Heartland Bank at HeartlandBank.com.

In May 2015, Heartland was ranked #77 on the American Banker magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity ("ROE") as of 12/31/14.

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 June 30, 2015 March 31, 2015 June 30, 2014
Cash and due from banks $ 18,276,394 $ 31,078,674 $ 25,046,465
Federal funds sold -- -- 99,000
Cash and cash equivalents 18,276,394 31,078,674 25,145,465
Available-for-sale securities 102,750,431 100,811,843 107,813,882
Held-to-maturity securities, fair value $6,912,734 and $7,222,168 at June 30, 2015 and 2014, respectively and $6,922,387 at March 31, 2015 6,512,404 6,453,351 6,598,997
Loans, net of allowance for loan losses of $5,498,142 and $5,169,910 at June 30, 2015 and 2014, respectively and $5,271,174 at March 31, 2015 526,378,261 515,645,398 455,166,994
Premises and equipment 13,052,320 12,880,648 12,234,256
Nonmarketable equity securities 2,658,239 2,655,439 1,941,839
Foreclosed assets held for sale 127,457 117,457 772,398
Interest receivable 1,835,510 2,359,955 1,656,804
Goodwill 417,353 417,353 417,353
Deferred income taxes 1,881,258 1,881,258 1,731,311
Life insurance assets 9,270,862 1,215,898 1,140,898
Other 686,528 92,304 725,442
Total assets $ 683,847,017 $ 675,609,578 $ 615,345,639
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand $ 110,780,365 $ 109,641,986 $ 93,737,565
Saving, NOW and money market 214,830,174 220,201,722 200,406,842
Time 265,725,425 256,227,173 233,445,342
Total deposits 591,335,964 586,070,881 527,589,749
Short-term borrowings 26,121,461 22,882,863 25,285,661
Interest payable and other liabilities 4,184,678 4,769,023 4,783,030
Total liabilities 621,642,103 613,722,767 557,658,440
Shareholders' Equity
Common stock, without par value; authorized 5,000,000 shares; issued 2015 -- 1,560,121, 2014 -- 1,551,922 shares and March 2015 - 1,554,921 shares 23,646,662 23,577,337 23,460,714
Retained earnings 38,403,912 37,159,060 33,998,681
Accumulated other comprehensive income (expense) 154,340 1,150,414 291,074
Treasury stock at Cost, Common; 2014- 1,665 shares -- -- (63,270)
Total shareholders' equity 62,204,914 61,886,811 57,687,199
Total liabilities and shareholders' equity $ 683,847,017 $ 675,609,578 $ 615,345,639
Book value per share $ 39.87 $ 39.80 $ 37.21
Heartland BancCorp
Consolidated Statements of Income
Three Months Ended Six Months Ended
Interest Income June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014
Loans $ 6,492,460 $ 6,140,166 $ 5,432,679 $ 12,632,626 $ 10,685,588
Securities
Taxable 313,128 303,519 309,243 616,647 648,974
Tax-exempt 386,843 385,458 405,647 772,301 836,194
Other 11,301 8,293 13,105 19,594 22,228
Total interest income 7,203,732 6,837,436 6,160,674 14,041,168 12,192,984
Interest Expense
Deposits 805,249 753,517 683,201 1,558,766 1,357,718
Borrowings 3,050 3,677 3,340 6,727 8,118
Total interest expense 808,299 757,194 686,541 1,565,493 1,365,836
Net Interest Income 6,395,433 6,080,242 5,474,133 12,475,675 10,827,148
Provision for Loan Losses 240,000 240,000 350,000 480,000 755,000
Net Interest Income After Provision for Loan Losses 6,155,433 5,840,242 5,124,133 11,995,675 10,072,148
Noninterest income
Service charges 479,553 467,519 517,989 947,072 999,212
Net Gains and commissions on loan sales 43,802 39,526 36,562 83,328 52,906
Net realized gains on available-for-sale securities 8,500 8,434 136,701 16,934 136,701
Net realized gain/(loss) on sales of foreclosed assets -- 58 77,031 58 102,800
Other 199,914 163,196 155,034 363,110 300,768
Total noninterest income 731,769 678,733 923,317 1,410,502 1,592,387
Noninterest Expense
Salaries and employee benefits 2,542,268 2,487,769 2,139,971 5,030,037 4,371,295
Net occupancy and equipment expense 466,576 441,724 422,785 908,300 869,244
Data processing fees 274,407 272,083 272,884 546,490 514,740
Professional fees 122,229 170,499 228,123 292,728 382,519
Marketing expense 135,000 141,000 131,250 276,000 267,500
Printing and office supplies 44,183 49,103 34,679 93,286 84,658
State franchise taxes 105,981 105,982 90,097 211,963 193,030
FDIC Insurance premiums 96,000 111,000 79,836 207,000 158,417
Other 534,157 568,371 458,158 1,102,528 977,745
Total noninterest expense 4,320,801 4,347,531 3,857,783 8,668,332 7,819,148
Income before Income Tax 2,566,401 2,171,444 2,189,667 4,737,845 3,845,387
Provision for Income Taxes 740,559 621,419 611,867 1,361,978 1,033,610
Net Income $ 1,825,842 $ 1,550,025 $ 1,577,800 $ 3,375,867 $ 2,811,777
Basic Earnings Per Share $ 1.17 $ 1.00 $ 1.02 $ 2.17 $ 1.81
Diluted Earnings Per Share $ 1.15 $ 0.98 $ 1.01 $ 2.13 $ 1.79
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Six Months Ended
June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014
Performance Ratios:
Return on average assets 1.10% 0.95% 1.05% 1.01% 0.94%
Return on average equity 11.93% 10.26% 11.25% 10.96% 10.04%
Net interest margin 4.13% 4.05% 3.99% 4.06% 3.98%
Efficiency ratio 60.70% 64.40% 61.62% 62.50% 63.66%
Asset Quality Ratios and Data: As of or for the Three Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
Non accrual loans $ 2,567 $ 2,383 $ 5,485
Loans past due 90 days and still accruing 872 454 100
Non-performing investment securities -- -- --
OREO and other non-performing assets 127 117 772
Total non-performing assets $ 3,566 $ 2,954 $ 6,357
Non-performing assets to total assets 0.52% 0.44% 1.03%
Net charge-offs quarter ending $ 13 $ 319 $ 280
Allowance for loan loss $ 5,498 $ 5,271 $ 5,170
Non accrual loans $ 2,568 $ 2,383 $ 5,485
Allowance for loan loss to non accrual loans 214.10% 221.19% 94.26%
Allowance for loan losses to loans outstanding 1.02% 1.01% 1.12%
Book Values:
Total shareholders' equity $ 62,205 $ 61,887 $ 57,687
Less, goodwill 417 417 417
Shareholders' equity less goodwill $ 61,788 $ 61,469 $ 57,270
Common shares outstanding 1,560,121 1,554,921 1,551,922
Less treasury shares -- -- 1,665
Common shares as adjusted 1,560,121 1,554,921 1,550,257
Book value per common share $ 39.87 $ 39.80 $ 37.21
Tangible book value per common share $ 39.60 $ 39.53 $ 36.94

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

Source:Heartland BancCorp