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Heartland BancCorp Earns $2.2 Million in 4Q16 and $8.0 Million in 2016; Increases Quarterly Cash Dividend by 10% to $0.4301 per Share

GAHANNA, Ohio, Jan. 17, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported fourth quarter net income increased 6% to $2.2 million, or $1.33 per diluted share, compared to $2.0 million, or $1.26 per diluted share, in the preceding quarter. In the fourth quarter a year ago, following a $879,000 life insurance benefit, Heartland earned $2.8 million. Excluding the life insurance benefit, Heartland’s 4Q15 core earnings were $1.9 million, or $1.21 per diluted share.

For the year, Heartland’s core earnings increased 11% to $8.0 million, or $4.97 per diluted share, compared to $7.2 million, or $4.57 per diluted share in 2015, excluding the life insurance benefit. Including the life insurance benefit, earnings in 2015 were $8.1 million, or $5.13 per diluted share.

The company also announced its board of directors increased its regular quarterly cash dividend by 10% to $0.4301 per share. The dividend will be payable April 10, 2017, to shareholders of record as of March 25, 2017, providing a 2.36% current yield at recent market prices. This is the fifth consecutive year Heartland has increased its quarterly cash dividend.

“Solid profitability, record revenue generation, robust loan and deposit growth and building out our support infrastructure were the highlights of our 2016 financial results,” said G. Scott McComb, Chairman, President and CEO. “The strength of our team and the strategy to seek those that appreciate value is working very nicely. Our focus in the coming year remains on expanding market share in Central Ohio, while continuing to look for growth opportunities in other Ohio markets.”

Fourth Quarter Financial Highlights (at or for the period ended December 31, 2016)

  • Net income was $2.2 million, up from core net income of $1.9 million in the fourth quarter a year ago.
  • Net interest margin remained strong at 3.99% compared to 3.90% in the preceding quarter and 3.99% in the fourth quarter a year ago.
  • Annualized return on average assets was 1.12% for the fourth quarter of 2016, compared to the average of 0.79% generated by the 536 banks in the SNL MicroCap U.S. Bank Index in the third quarter of 2016.
  • Annualized return on average equity was 12.24%, compared to the average of 7.88% generated by the SNL MicroCap U.S. Bank Index.
  • Total deposits increased 6.7% to $664.7 million from a year ago.
  • Net loans increased 14.2% to $617.9 million from a year ago.
  • Non-performing assets improved to $4.6 million, or 0.59% of total assets, at December 31, 2016, compared to $5.2 million, or 0.66%, three months earlier and $5.2 million, or 0.72%, one year earlier.
  • Tangible book value per share increased 5.7% to $44.83 per share compared to $42.40 per share one year earlier.
  • Declared quarterly cash dividend of $0.4301 per share, which represents a 2.69% yield based on the December 31, 2016 stock price ($64.01).

Balance Sheet Review

“Our loan production remains solid, again boosted by the growth in agricultural, commercial and industrial (C&I) and residential mortgage loans,” said McComb. Net loans increased 2.7% to $617.9 million at December 31, 2016, compared to $601.4 million at September 30, 2016 and increased 14.2% compared to $541.0 million at December 31, 2015.

Heartland’s total deposits increased 6.7% to $664.7 million at year end, compared to $623.0 million a year earlier and declined slightly compared to $667.9 million three months earlier. Demand deposit accounts represented 24.5%, savings, NOW and money market accounts represented 33.7%, and CDs comprised 41.9% of the total deposit portfolio, at December 31, 2016.

Total assets increased 7.1% to $781.3 million at December 31, 2016, compared to $729.5 million a year earlier and shareholders’ equity increased 7.1% to $71.4 million at December 31, 2016, compared to $66.7 million one year ago. At year end, Heartland’s book value increased 5.8% to $45.10 per share compared to $42.61 per share one year earlier.

Operating Results

Net interest income before the provision for loan loss increased 10.5% to $7.3 million in the fourth quarter of 2016, compared to $6.58 million in the fourth quarter a year ago, and increased 3.9% compared to $7.0 million in the preceding quarter. For the year, net interest income increased 9.1% to $27.8 million, compared to $25.5 million in 2015.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) were $8.2 million in the fourth quarter, compared to $8.3 million in the fourth quarter a year ago, and increased 3.0% compared to $7.9 million in the preceding quarter. For the year, total revenues increased 6.5% to a record $31.3 million, compared to $29.4 million in 2015. Excluding the 4Q15 life insurance benefit of $879,000, total revenues were $7.4 million in the fourth quarter of 2015 and $28.5 million for the year.

“The net interest margin expanded nine basis points compared to the preceding quarter, and level with fourth quarter a year ago,” McComb said. Heartland’s net interest margin was 3.99% in the fourth quarter of 2016, compared to 3.90% in the preceding quarter and 3.99% in the fourth quarter a year ago. For the year, Heartland’s net interest margin was 3.94% compared to 4.02% in 2015. “Our net interest margin for the year was impacted by higher levels of long-term borrowing which are augmenting deposit growth to fund strong loan growth.”

Heartland’s noninterest income was $876,000 in the fourth quarter, compared to $1.7 million in the fourth quarter a year ago, and $914,000 in the preceding quarter. Fourth quarter 2015 noninterest income included a $879,000 benefit in excess of life insurance cash value from a policy payout. For the year, noninterest income was $3.6 million, compared to $4.0 million in 2015. Excluding the life insurance benefit, Heartland’s noninterest income increased 12% from $780,000 in the fourth quarter of 2015, and 16% from $3.1 million for the year.

Fourth quarter noninterest expenses were $5.0 million, compared to $4.5 million in the fourth quarter a year ago and $5.0 million in the preceding quarter. For the year, noninterest expense increased 11.3% to $19.5 million, compared to $17.6 million in 2015. “In 2016 we have added the necessary personnel in the back office to manage the risk, transactions and support of a Billion Dollar plus bank,” McComb said. The efficiency ratio for the fourth quarter of 2016 was 61.27%, compared to 55.08% for the fourth quarter of 2015. Excluding the life insurance benefit, the efficiency ratio for 4Q15 was 61.69%. “We continue efforts to increase our investment in personnel across business lines with a view to increasing revenues and reducing our efficiency ratio as the bank executes on its growth initiatives,” added McComb.

Credit Quality

Nonaccrual loans decreased 2.4% to $4.2 million at December 31, 2016, compared to $4.3 million three months earlier but increased compared to $3.3 million a year earlier. There were no loans past due 90 days and still accruing at December 31, 2016, compared to $461,000 at the end of the third quarter and $1.9 million a year ago. There were $1.2 million in restructured loans included in nonaccrual loans at December 31, 2016, as compared to $815,000 three months earlier.

Performing restructured loans that were not included in nonaccrual loans at the end of the fourth quarter of 2016 were $1.9 million, compared to $3.2 million in the preceding quarter. 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.

There was $400,000 in other real estate owned (OREO) and other non-performing assets on the books at December 31, 2016, the same as in the preceding quarter end. There was no OREO and other non-performing assets at December 31, 2015.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.6 million, or 0.59% of assets, at December 31, 2016, compared to $5.2 million, or 0.66% of assets, three months earlier, and $5.2 million, or 0.72% of assets a year ago.

Heartland’s fourth quarter provision for loan losses was $135,000, the same as in the preceding quarter. The provision for loan losses was $120,000 in the fourth quarter a year ago. As of December 31, 2016, the allowance for loan losses represented 135.2% of nonaccrual loans compared to 135.8% three months earlier, and 172.2% one year earlier.

The allowance for loan losses was $5.7 million, or 0.91% of total loans at December 31, 2016, compared to $5.9 million, or 1.03% of total loans at September 30, 2016, and $5.7 million, or 1.04% of total loans a year ago. Net charge-offs were $304,000 in the fourth quarter compared to $251,000 in the preceding quarter, and $54,000 in the fourth quarter 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.

Heartland BancCorp
Consolidated Balance Sheets
Assets Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015
Cash and cash equivalents 21,360,328 40,463,763 36,994,171
Available-for-sale securities 103,040,574 110,158,614 114,492,664
Held-to-maturity securities, fair value $5,771,601 and $6,407,215 at
December 31, 2016 and 2015, respectively and $6,289,982 at September
30, 2016
5,570,879 5,972,843 6,044,094
Loans, net of allowance for loan losses of $5,698,631 and $5,715,827 at
December 31, 2016 and 2015, respectively and $5,867,741 at September
30, 2016
617,861,089 601,400,849 540,958,372
Premises and equipment 14,055,450 13,921,042 13,506,350
Nonmarketable equity securities 2,825,439 2,825,439 2,658,239
Interest receivable 2,240,709 2,614,368 1,958,082
Goodwill 417,353 417,353 417,353
Deferred income taxes 1,765,794 1,765,794 1,722,934
Life insurance assets 9,531,991 9,446,365 9,327,518
Other 2,632,748 1,639,342 1,416,804
Total assets$ 781,302,354 $ 790,625,772 $ 729,496,581
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand$ 162,690,185 $ 150,913,820 $ 139,226,242
Saving, NOW and money market 223,817,354 241,181,130 219,076,813
Time 278,166,617 275,809,945 264,651,203
Total deposits 664,674,156 667,904,895 622,954,258
Short-term borrowings 24,456,241 27,465,075 29,150,118
Long-term debt 15,460,000 15,460,000 5,460,000
Interest payable and other liabilities 5,311,787 7,931,744 5,270,849
Total liabilities 709,902,184 718,761,714 662,835,225
Shareholders' Equity
Common stock, without par value; authorized 5,000,000 shares; issued
2016 - 1,583,228 shares 2015 - 1,564,581 shares and September 2016 -
1,580,228 shares
24,595,195 24,428,011 23,872,599
Retained earnings 47,545,465 46,002,554 41,991,488
Accumulated other comprehensive income (expense) (740,492) 1,433,493 797,269
Total shareholders' equity 71,400,168 71,864,058 66,661,356
Total liabilities and shareholders' equity$ 781,302,352 $ 790,625,772 $ 729,496,581
Book value per share$45.10 $45.48$42.61


Heartland BancCorp
Consolidated Statements of Income
Three Months Ended, Twelve Months Ended
Interest Income Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015
Loans$ 7,569,129 $ 7,198,912 $ 6,645,404 $ 28,478,204 $ 25,775,945
Securities
Taxable 350,014 417,825 424,204 1,604,436 1,376,312
Tax-exempt 397,670 404,060 395,358 1,635,314 1,551,627
Other 23,351 43,559 15,888 137,738 50,925
Total interest income 8,340,164 8,064,356 7,480,854 31,855,692 28,754,809
Interest Expense
Deposits 948,685 952,850 851,796 3,702,300 3,256,624
Borrowings 112,343 108,922 39,234 394,985 49,252
Total interest expense 1,061,028 1,061,772 891,030 4,097,285 3,305,876
Net Interest Income 7,279,136 7,002,584 6,589,824 27,758,407 25,448,933
Provision for Loan Losses 135,000 135,000 120,000 645,000 760,000
Net Interest Income After Provision for Loan Losses 7,144,136 6,867,584 6,469,824 27,113,407 24,688,933
Noninterest income
Service charges 497,286 502,355 477,606 1,944,229 1,925,467
Net Gains and commissions on loan sales 198,565 158,832 34,621 603,849 241,742
Net realized gains on available-for-sale securities - - 1,357 197,711 18,291
Net realized gain/(loss) on sales of foreclosed assets- - - - 5,308
Benefit in excess of life insurance cash value - - 879,488 - 879,488
Other 180,594 252,411 272,255 814,003 879,945
Total noninterest income 876,445 913,598 1,665,326 3,559,792 3,950,240
Noninterest Expense
Salaries and employee benefits 2,894,910 2,790,860 2,800,345 11,413,273 10,331,707
Net occupancy and equipment expense 563,235 554,864 456,349 2,125,591 1,842,702
Data processing fees 303,607 264,328 265,293 1,120,524 1,082,143
Professional fees 193,836 246,129 64,706 681,553 498,406
Marketing expense 115,334 149,349 134,990 563,381 545,990
Printing and office supplies 101,279 57,885 31,786 255,321 158,877
State franchise taxes 123,301 128,701 105,981 531,002 423,926
FDIC Insurance premiums 72,000 100,000 93,000 368,000 411,000
Other 629,669 658,006 593,635 2,479,506 2,261,155
Total noninterest expense 4,997,171 4,950,122 4,546,085 19,538,151 17,555,906
Income before Income Tax 3,023,410 2,831,060 3,589,065 11,135,048 11,083,267
Provision for Income Taxes 861,458 793,593 780,246 3,146,789 2,955,567
Net Income$ 2,161,952 $ 2,037,467 $ 2,808,819 $ 7,988,259 $ 8,127,700
Basic Earnings Per Share$ 1.37 $ 1.29 $ 1.80 $5.08 $5.21
Diluted Earnings Per Share$ 1.33 $ 1.26 $ 1.77 $4.97 $5.13


ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Twelve Months Ended
Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015
Performance Ratios:
Return on average assets 1.12% 1.06% 1.59% 1.05% 1.18%
Return on average equity 12.24% 11.61% 17.51% 11.49% 12.91%
Net interest margin 3.99% 3.90% 3.99% 3.94% 4.02%
Efficiency ratio 61.27% 62.53% 55.08% 62.78% 59.75%
Asset Quality Ratios and Data: As of or for the Three Months Ended
Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015
Non accrual loans $ 4,216 $ 4,321 $ 3,320
Loans past due 90 days and still accruing - 461 1,919
Non-performing investment securities - - -
OREO and other non-performing assets 400 400 -
Total non-performing assets $ 4,616 $ 5,182 $ 5,239
Non-performing assets to total assets 0.59% 0.66% 0.72%
Net charge-offs quarter ending $ 304 $ 251 $ 54
Allowance for loan loss $ 5,698 $ 5,868 $ 5,716
Non accrual loans $ 4,216 $ 4,321 $ 3,320
Allowance for loan loss to non accrual loans 135.15% 135.80% 172.17%
Allowance for loan losses to loans outstanding 0.91% 1.03% 1.04%
Book Values:
Total shareholders' equity $ 71,400 $ 71,864 $ 66,758
Less, goodwill 417 417 417
Shareholders' equity less goodwill $ 70,983 $ 71,447 $ 66,341
Common shares outstanding 1,583,228 1,580,228 1,564,581
Less treasury shares - - -
Common shares as adjusted 1,583,228 1,580,228 1,564,581
Book value per common share $ 45.10 $ 45.48 $ 42.67
Tangible book value per common share $ 44.83 $ 45.21 $ 42.40



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

Source:Heartland BancCorp