GAHANNA, Ohio, July 19, 2016 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported that second quarter net income increased 10.1% to $2.0 million, or $1.26 per diluted share, compared to $1.8 million, or $1.15 per diluted share, in the second quarter of 2015. In the first six months of 2016, Heartland’s net income increased 12.2% to $3.8 million, or $2.37 per diluted share, compared to $3.4 million, or $2.13 per diluted share, in the first six months of 2015.
The company also announced its board of directors declared its regular quarterly cash dividend of $0.3910 per share. The dividend will be payable October 10, 2016, to shareholders of record as of September 25, 2016, providing a 2.84% current yield at recent market prices.
“We continue to build earnings momentum with solid loan growth and strong profitability metrics both in our commercial and retail segments, generating double digit growth in both the second quarter and first half of 2016,” said G. Scott McComb, Chairman, President and CEO. “Our return on average assets was well above average at 1.07% and return on average equity was 11.7% in the second quarter. Our associates continue to tell their ‘Heartland Story’ as we are sharpening our prospecting and sales skills company wide. The greater Columbus market remains one of the healthiest economies in the country further enhancing our messaging as Central Ohio's Community Bank.”
Second Quarter Financial Highlights (at or for the period ended June 30, 2016)
- Net income was $2.0 million, up from $1.83 million in the second quarter a year ago.
- Net interest margin remained strong at 3.92% compared to 4.03% in the preceding quarter and 4.08% in the second quarter a year ago.
- Annualized return on average assets was 1.07%, compared to the average of 0.77% for the 60 banks in the SNL Bank Index $500M to $1B.
- Annualized return on average equity was 11.77%, compared to the average of 7.18% for the SNL Bank Index $500M to $1B.
- Total deposits increased 8.7% to $642.7 million from a year ago.
- Net loans increased 9.7% to $557.4 million from a year ago.
- Non-performing assets were $5.7 million, or 0.75% of total assets, at June 30, 2016, compared to $6.1 million, or 0.81%, three months earlier and $3.6 million, or 0.52%, one year earlier.
- Tangible book value per share increased 12.5% to $44.55 per share compared to $39.60 per share one year earlier.
- Declared quarterly cash dividend of $0.3910 per share, which represents a 2.84% yield based on the June 30, 2016 stock price ($55.00).
In November 2015, Heartland completed a $5.4 million private placement of subordinated notes to accredited investors with fixed and variable rates producing a weighted interest rate of 4.986%. The proceeds give Heartland the opportunity to build out its business plan and meet the growing demand from clients and the marketplace.
Balance Sheet Review
“Our loan pipeline continues to grow at a robust pace, due to the hard work of lenders in all 13 of our local markets. As a result, net loans were up $20.4 million, or 3.7% during the quarter. The agricultural and commercial and industrial (C&I) portfolios continue to show strong growth, increasing 76% and 16%, respectively compared to a year ago, In addition, residential loan growth gained momentum, increasing 17.9% which was precipitated by changes to our business model,” said McComb. Net loans increased 3.7% to $577.4 million at June 30, 2016, compared to $557.0 million at March 31, 2016 and increased 9.7% compared to $526.4 million at June 30, 2015.
Heartland’s total deposits increased 8.7% to $642.7 million at quarter end, compared to $591.3 million a year earlier and were down modestly compared to $645.6 million three months earlier. Demand deposit accounts represented 20.6%, savings, NOW and money market accounts represented 35.9%, and CDs comprised 43.5% of the total deposit portfolio, at June 30, 2016.
Total assets increased 11.6% to $763.3 million at June 30, 2016, compared to $683.8 million a year earlier and increased modestly compared to $760.8 million three months earlier. Shareholders’ equity increased 3.4% to $70.5 million at June 30, 2016, compared to $68.2 million at March 31, 2016 and increased 13.3% compared to $62.2 million one year ago. At quarter end, Heartland’s tangible book value increased 2.9% to $44.81 per share compared to $43.56 per share three months earlier and increased 12.4% from $39.87 per share one year earlier.
Total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 8.0% to $7.7 million in the second quarter, compared to $7.1 million in the second quarter a year ago, and were up modestly compared to $7.5 million in the preceding quarter. Year-to-date, total revenues increased 9.8% to $15.2 million, compared to $13.9 million in the same period one year ago. Net interest income before the provision for loan loss increased 5.7% to $6.8 million in the second quarter of 2016, compared to $6.4 million in the second quarter a year ago, and increased slightly compared to $6.7 million in the preceding quarter. In the first six months of the year, net interest income increased 8.0% to $13.5 million, compared to $12.5 million in the first six months of 2015.
“The flattening yield curve has put pressure on the net interest margin for all banks this year, and we are not immune to the effects of the low interest rate environment and the tightening spread between long and short yields. Nevertheless, our net interest margin remains healthy,” McComb noted. Consequently, net interest margin fell 9 basis points to 3.92% in the second quarter and was down 16 basis points from the year ago quarter.” Heartland’s net interest margin was 3.92% in the second quarter of 2016, compared to 4.03% in the preceding quarter and 4.08% in the second quarter a year ago. In the first six months of the year, Heartland’s net interest margin was 3.97% compared to 4.06% in the first six months of 2015.
Heartland’s noninterest income increased 28.5% to $940,000 in the second quarter, compared to $732,000 in the second quarter a year ago, and increased 13.3% compared to $830,000 in the preceding quarter. The year-over-year increase was largely as a result of the net gains and commissions on loan sales and servicing revenue. In the first six months of 2016, noninterest income increased 25.5% to $1.8 million, compared to $1.4 million in the first six months of 2015.
Second quarter noninterest expenses were $4.8 million, which were unchanged from the preceding quarter and an increase of 10.3% compared to $4.3 million in the second quarter a year ago. The year-over-year increase is primarily attributable to an increase in loan production, along with a management realignment to prepare the company for continued growth.
"Nonaccrual loans and past due loans still accruing improved moderately during the quarter, as we work with the few individuals that were past due," said McComb. “Nonaccrual loans increased during the quarter as the single large relationship that had been accruing moved into the nonaccrual category. With minimal 90-day past due loans and no foreclosed assets on the books at quarter end, our ratio of nonperforming assets to total assets is 0.75%, compared to 0.81% in the preceding quarter and .52% a year ago.”
Nonaccrual loans were $5.2 million at June 30, 2016, compared to $3.6 million three months earlier and $2.6 million a year earlier. Loans past due 90 days and still accruing decreased substantially to $479,000 from $2.6 million at the end of the first quarter and $872,000 a year ago. There were $795 in restructured loans included in nonaccrual loans at the end of the second quarter of 2016, as compared to $603,000 at June 30, 2015.
Performing restructured loans that were not included in nonaccrual loans at the end of the second quarter of 2016 were $3.8 million, compared to $4.3 million in the preceding quarter and a decrease compared to $5.2 million a year ago. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations are categorized as restructured loans. “We present restructured loans that are performing separately from those that are classified as nonaccrual to provide more information on this category of loans and to differentiate between accruing performing and nonperforming restructured loans,” added McComb.
There was no other real estate owned (OREO) and other non-performing assets on the books at June 30, 2016, the same as at the preceding quarter end. OREO was $127,000 at June 30, 2015.
Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $5.7 million, or 0.75% of assets, at June 30, 2016, compared to $6.1 million, or 0.81% of assets, three months earlier, and $3.6 million, or 0.52% of assets a year ago.
Heartland’s second quarter provision for loan losses was $135,000, compared to $240,000 in both the preceding quarter and in the second quarter a year ago. As of June 30, 2016, the allowance for loan losses represented 114.1% of nonaccrual loans compared to 165.7% three months earlier, and 214.1% one year earlier.
Net charge-offs were $56,000 in the second quarter compared to $51,000 in the preceding quarter, and $332,000 in the second quarter a year ago. The allowance for loan losses was $6.0 million, or 1.03% of total loans at June 30, 2016, compared to $5.9 million, or 1.05% of total loans at March 31, 2016, and $5.5 million, or 1.02% 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 thirteen 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 2016, 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 12/31/15.
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.
|Consolidated Balance Sheets|
|Assets||June 30, 2016||March 31, 2016||June 30, 2015|
|Cash and cash equivalents||33,727,073||50,409,176||18,276,394|
|Held-to-maturity securities, fair value $6,362,826 and $6,912,732 at June 30, 2016 and 2015, respectively and $6,368,233 at March 31, 2016||5,987,094||5,988,749||6,512,404|
|Loans, net of allowance for loan losses of $5,983,550 and $5,498,142 at June 30, 2016 and 2015, respectively and $5,904,718 at March 31, 2016||577,357,438||556,966,762||526,378,261|
|Premises and equipment||13,930,605||13,614,047||13,052,320|
|Nonmarketable equity securities||2,825,439||2,658,239||2,658,239|
|Foreclosed assets held for sale||-||-||127,457|
|Deferred income taxes||1,765,794||1,765,794||1,881,258|
|Life insurance assets||9,453,665||9,392,956||9,270,862|
|Liabilities and Shareholders' Equity|
|Saving, NOW and money market||230,829,215||240,534,031||214,830,174|
|Interest payable and other liabilities||10,464,687||10,883,276||4,184,678|
|Common stock, without par value; authorized 5,000,000 shares; issued 2016 - 1,572,178 shares 2015 - 1,560,121 shares and March 2016 - 1,564,581 shares||24,115,306||23,913,514||23,646,662|
|Accumulated other comprehensive income (expense)||1,753,528||1,057,602||154,340|
|Treasury stock at Cost, Common;||-||-||-|
|Total shareholders' equity||70,451,791||68,158,161||62,204,914|
|Total liabilities and shareholders' equity||$||763,345,828||$||760,770,061||$||683,847,017|
|Book value per share||$||44.81||$||43.56||$||39.87|
|Consolidated Statements of Income|
|Three Months Ended||Six Months Ended|
|Interest Income||June 30, 2016||March 31, 2016||June 30, 2015||June 30, 2016||June 30, 2015|
|Total interest income||7,766,886||7,684,286||7,203,732||15,451,172||14,041,168|
|Total interest expense||1,008,339||966,146||808,299||1,974,485||1,565,493|
|Net Interest Income||6,758,547||6,718,140||6,395,433||13,476,687||12,475,675|
|Provision for Loan Losses||135,000||240,000||240,000||375,000||480,000|
|Net Interest Income After Provision for Loan Losses||6,623,547||6,478,140||6,155,433||13,101,687||11,995,675|
|Net Gains and commissions on loan sales||123,727||122,725||43,802||246,452||83,328|
|Net realized gains on available-for-sale securities||133,425||64,286||8,500||197,711||16,934|
|Net realized gain/(loss) on sales of foreclosed assets||-||-||-||-||58|
|Total noninterest income||939,993||829,756||731,769||1,769,749||1,410,502|
|Salaries and employee benefits||2,792,939||2,934,564||2,542,268||5,727,503||5,030,037|
|Net occupancy and equipment expense||533,519||473,973||466,576||1,007,492||908,300|
|Data processing fees||287,053||265,536||274,407||552,589||546,490|
|Printing and office supplies||51,960||44,197||44,183||96,157||93,286|
|State franchise taxes||139,500||139,500||105,981||279,000||211,963|
|FDIC Insurance premiums||98,000||98,000||96,000||196,000||207,000|
|Total noninterest expense||4,765,587||4,825,271||4,320,801||9,590,858||8,668,332|
|Income before Income Tax||2,797,953||2,482,625||2,566,401||5,280,578||4,737,845|
|Provision for Income Taxes||787,318||704,420||740,559||1,491,738||1,361,978|
|Basic Earnings Per Share||$||1.28||$||1.14||$||1.17||$||2.42||$||2.17|
|Diluted Earnings Per Share||$||1.26||$||1.12||$||1.15||$||2.37||$||2.13|
|ADDITIONAL FINANCIAL INFORMATION|
|(Dollars in thousands except per share amounts)(Unaudited)||Three Months Ended||Six Months Ended|
|June 30, 2016||March 31, 2016||June 30, 2015||June 30, 2016||June 30, 2015|
|Return on average assets||1.07||%||0.97||%||1.10||%||1.01||%||1.01||%|
|Return on average equity||11.77||%||10.76||%||11.93||%||11.12||%||10.96||%|
|Net interest margin||3.92||%||4.03||%||4.08||%||3.97||%||4.06||%|
|Asset Quality Ratios and Data:||As of or for the Three Months Ended|
|June 30, 2016||March 31, 2015||June 30, 2015|
|Non accrual loans||$||5,246||$||3,563||$||2,567|
|Loans past due 90 days and still accruing||479||2,564||872|
|Non-performing investment securities||-||-||-|
|OREO and other non-performing assets||-||-||127|
|Total non-performing assets||$||5,725||$||6,127||$||3,566|
|Non-performing assets to total assets||0.75||%||0.81||%||0.52||%|
|Net charge-offs quarter ending||$||56||$||51||$||332|
|Allowance for loan loss||$||5,984||$||5,905||$||5,498|
|Non accrual loans||$||5,246||$||3,563||$||2,568|
|Allowance for loan loss to non accrual loans||114.07||%||165.73||%||214.10||%|
|Allowance for loan losses to loans outstanding||1.03||%||1.05||%||1.02||%|
|Total shareholders' equity||$||70,452||$||68,158||$||62,205|
|Shareholders' equity less goodwill||$||70,035||$||67,741||$||61,788|
|Common shares outstanding||1,572,178||1,564,581||1,560,121|
|Less treasury shares||-||-||-|
|Common shares as adjusted||1,572,178||1,564,581||1,560,121|
|Book value per common share||$||44.81||$||43.56||$||39.87|
|Tangible book value per common share||$||44.55||$||43.30||$||39.60|
Contacts: G. Scott McComb, Chairman, President & CEO Heartland BancCorp 614-337-4600