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Heartland BancCorp Earns $1.8 Million in 1Q17; Declares Quarterly Cash Dividend of $0.4301 per Share; Total Assets Surpass $800 Million

GAHANNA, Ohio, April 18, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported first quarter net income was $1.8 million, or $1.13 per diluted share, compared to $2.2 million, or $1.33 per diluted share, in the preceding quarter and $1.8 million, or $1.12 per diluted share in the first quarter a year ago.

The company also announced its board of directors declared a regular quarterly cash dividend of $0.4301 per share. The dividend will be payable July 10, 2017, to shareholders of record as of June 25, 2017, providing a 2.21% current yield at recent market prices.

“Our year-over-year results reflect our investment in talent acquisition and branch expansion to support continued, consistent growth and financial performance,” stated G. Scott McComb, Chairman, President and CEO. “During 2016, we made strategic investments in our personnel, expanding our banking team to prepare for future growth and to strengthen expertise in areas such as financial planning. In addition, we have added fixed costs to expand our branch network into the Hilliard and Clintonville markets, and to begin the construction of our new corporate center in Whitehall. We made these additional investments in our future, while returning a year-over-year increase in earnings of 3%.”

First Quarter Financial Highlights (at or for the period ended March 31, 2017)

  • Net income was $1.8 million, or $1.13 per diluted share, in 1Q17.
  • Net interest margin remained strong at 3.94% compared to 3.99% in the preceding quarter and 3.98% in the first quarter a year ago.
  • Annualized return on average assets was 0.93% for the first quarter of 2017, compared to the average of 0.79% generated by the 564 banks in the SNL MicroCap U.S. Bank Index in 2016.
  • Annualized return on average equity was 10.34%, compared to the average of 7.96% generated by the SNL MicroCap U.S. Bank Index.
  • Total assets increased 7.6% to $818.4 million, compared to $760.8 million a year earlier.
  • Total deposits increased 9.1% to $704.2 million from a year ago.
  • Net loans increased 14.1% to $635.7 million from a year ago.
  • Non-performing assets improved to $4.3 million, or 0.53% of total assets, at March 31, 2017, compared to $4.6 million, or 0.59%, three months earlier and $6.1 million, or 0.81%, one year earlier.
  • Tangible book value per share increased 5.1% to $45.50 per share compared to $43.30 per share one year earlier.
  • Declared quarterly cash dividend of $0.4301 per share, which represents a 2.231% yield based on the March 31, 2017 stock price ($77.00).

Balance Sheet Review

“Strong economic growth in our primary market area continues to fuel solid demand for loans, primarily in the agricultural, commercial and industrial (C&I) and residential mortgage loan sectors,” said McComb. Net loans increased 14.1% to $635.7 million at March 31, 2017, compared to $557.0 million at March 31, 2016 and increased 2.9% compared to $617.9 million at December 31, 2016.

Heartland’s total deposits increased 9.1% to $704.2 million at March 31, 2017, compared to $645.6 million a year earlier and increased 5.9% compared to $664.7 million three months earlier. Demand deposit accounts represented 22.4%, savings, NOW and money market accounts represented 37.4%, and CDs comprised 40.3% of the total deposit portfolio, at March 31, 2017.

Total assets increased 7.6% to $818.4 million at March 31, 2017, compared to $760.8 million a year earlier and shareholders’ equity increased 6.6% to $72.6 million at March 31, 2017, compared to $68.2 million one year ago. At quarter end, Heartland’s tangible book value increased 5.1% to $45.50 per share compared to $43.30 per share one year earlier.

Operating Results

Heartland’s net interest income before the provision for loan loss increased 5.6% to $7.1 million in the first quarter of 2017, compared to $6.7 million in the first quarter a year ago, and decreased 2.5% compared to $7.3 million in the preceding quarter.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 6.4% to $8.0 million in the first quarter, compared to $7.5 million in the first quarter a year ago, and decreased compared to $8.2 million in the preceding quarter.

Heartland’s net interest margin was 3.94% in the first quarter of 2017, compared to 3.99% in the preceding quarter and 3.98% in the first quarter a year ago. The slight contraction in the net interest margin for the quarter was impacted by higher levels of liquidity, with an average of $23 million in overnight investments compared to $18 million in the preceding quarter, in addition to long-term borrowing to position the bank for future increases in market interest rates and augment deposits to fund strong loan growth.

Noninterest income was $935,000 in the first quarter, compared to $830,000 in the first quarter a year ago, and $876,000 in the preceding quarter.

First quarter noninterest expenses were $5.2 million, compared to $4.8 million in the first quarter a year ago and $5.0 million in the preceding quarter. The efficiency ratio for the first quarter of 2017 was 64.64%, compared to 64.48% for the first quarter of 2016. “We have continued our investment in new personnel across all business lines with a view of increasing revenues and reducing our efficiency ratio as the bank executes on its growth initiatives,” said McComb.

Credit Quality

Nonaccrual loans decreased 13.8% to $3.6 million at March 31, 2017, compared to $4.2 million three months earlier and remained relatively unchanged compared to a year earlier. There were $266,000 in loans past due 90 days and still accruing at March 31, 2017, compared to none at the end of the preceding quarter and $2.6 million a year ago. There were $740,000 in restructured loans included in nonaccrual loans at March 31, 2017, as compared to $1.2 million three months earlier.

Performing restructured loans that were not included in nonaccrual loans at the end of the first quarter of 2017 were $2.3 million, compared to $1.9 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 March 31, 2017, the same as in the preceding quarter end. There was no OREO and other non-performing assets at March 31, 2016.

Heartland’s nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.3 million, or 0.53% of assets, at March 31, 2017, compared to $4.6 million, or 0.59% of assets, three months earlier, and $6.1 million, or 0.81% of assets a year ago.

The first quarter provision for loan losses was $330,000, compared to $135,000 in the preceding quarter and $240,000 in the first quarter a year ago. As of March 31, 2017, the allowance for loan losses represented 165.3% of nonaccrual loans compared to 135.2% three months earlier, and 165.7% one year earlier.

The allowance for loan losses was $6.0 million, or 0.94% of total loans at March 31, 2017, compared to $5.7 million, or 0.91% of total loans at December 31, 2016, and $5.9 million, or 1.05% of total loans a year ago. Net charge-offs were $20,000 in the first quarter compared to $304,000 in the preceding quarter, and $51,000 in the first 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 March 31, 2017 Dec. 31, 2016 March 31, 2016
Cash and cash equivalents 35,295,248 21,360,328 50,409,176
Available-for-sale securities 103,322,669 103,040,574 116,371,892
Held-to-maturity securities, fair value $5,722,494 and $6,368,233 at
March 31, 2017 and 2016, respectively and $5,771,601 at December
31, 2016
5,552,890 5,570,879 5,988,749
Loans, net of allowance for loan losses of $6,008,531 and $5,904,718
at March 31, 2017 and 2016, respectively and $5,698,631 at December
31, 2016
635,681,470 617,861,089 556,966,762
Premises and equipment 14,910,491 14,055,450 13,614,047
Nonmarketable equity securities 2,830,339 2,825,439 2,658,239
Foreclosed assets held for sale 400,000 400,000 -
Interest receivable 2,679,291 2,240,709 2,537,113
Goodwill 417,353 417,353 417,353
Deferred income taxes 2,374,481 2,557,509 1,765,794
Life insurance assets 12,824,596 9,531,991 9,392,956
Other 2,131,784 1,441,033 647,980
Total assets $ 818,420,612 $ 781,302,354 $ 760,770,061
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand $ 157,531,055 $ 162,690,185 $ 127,783,871
Saving, NOW and money market 263,127,467 223,817,354 240,534,031
Time 283,518,058 278,166,617 277,293,146
Total deposits 704,176,580 664,674,156 645,611,048
Short-term borrowings 20,422,504 24,456,241 30,657,576
Long-term debt 15,460,000 15,460,000 5,460,000
Interest payable and other liabilities 5,727,564 5,311,789 10,883,276
Total liabilities 745,786,648 709,902,186 692,611,900
Shareholders' Equity
Common stock, without par value; authorized 5,000,000 shares; issued
2017 - 1,587,228 shares 2016 - 1,564,581 shares and December 2016
- 1,583,228 shares
24,033,757 24,595,195 23,913,514
Retained earnings 49,408,956 47,545,465 43,187,045
Accumulated other comprehensive income (expense) (808,749) (740,492) 1,057,602
Total shareholders' equity 72,633,964 71,400,168 68,158,161
Total liabilities and shareholders' equity $ 818,420,612 $ 781,302,354 $ 760,770,061
Book value per share $45.76 $45.10 $43.56

Heartland BancCorp
Consolidated Statements of Income
Three Months Ended,
Interest Income March 31, 2017 Dec. 31, 2016 March 31, 2016
Loans $ 7,371,268 $ 7,569,129 $ 6,801,720
Securities
Taxable 364,164 350,014 435,385
Tax-exempt 393,430 397,670 410,970
Other 48,165 23,351 36,211
Total interest income 8,177,027 8,340,164 7,684,286
Interest Expense
Deposits 962,964 948,685 891,924
Borrowings 116,704 112,343 74,222
Total interest expense 1,079,668 1,061,028 966,146
Net Interest Income 7,097,359 7,279,136 6,718,140
Provision for Loan Losses 330,000 135,000 240,000
Net Interest Income After Provision for Loan Losses 6,767,359 7,144,136 6,478,140
Noninterest income
Service charges 480,842 497,286 454,649
Net Gains and commissions on loan sales 160,778 198,565 122,725
Net realized gains on available-for-sale securities 6,128 - 64,286
Increase in cash value of life insurance 92,605 60,626 65,438
Other 194,846 119,968 122,658
Total noninterest income 935,199 876,445 829,756
Noninterest Expense
Salaries and employee benefits 3,166,256 2,894,910 2,934,564
Net occupancy and equipment expense 558,715 563,235 473,973
Data processing fees 303,774 303,607 265,536
Professional fees 124,880 193,836 112,039
Marketing expense 141,000 115,334 149,349
Printing and office supplies 64,994 101,279 44,197
State franchise taxes 141,825 123,301 139,500
FDIC Insurance premiums 79,500 72,000 98,000
Other 607,687 629,669 608,113
Total noninterest expense 5,188,631 4,997,171 4,825,271
Income before Income Tax 2,513,927 3,023,410 2,482,625
Provision for Income Taxes 677,365 861,458 704,420
Net Income $ 1,836,562 $ 2,161,952 $ 1,778,205
Basic Earnings Per Share $ 1.16 $ 1.37 $ 1.14
Diluted Earnings Per Share $ 1.13 $ 1.33 $ 1.12

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended
March 31, 2017 Dec. 31, 2016 March 31, 2016
Performance Ratios:
Return on average assets 0.93% 1.12% 0.97%
Return on average equity 10.34% 12.24% 10.76%
Net interest margin 3.94% 3.99% 3.98%
Efficiency ratio 64.64% 61.27% 64.48%
Asset Quality Ratios and Data: As of or for the Three Months Ended
March 31, 2017 Dec. 31, 2016 March 31, 2016
Non accrual loans $ 3,635 $ 4,216 $ 3,563
Loans past due 90 days and still accruing 271 - 2,564
Non-performing investment securities - - -
OREO and other non-performing assets 400 400 -
Total non-performing assets $ 4,306 $ 4,616 $ 6,127
Non-performing assets to total assets 0.53% 0.59% 0.81%
Net charge-offs quarter ending $ 20 $ 304 $ 51
Allowance for loan loss $ 6,008 $ 5,698 $ 5,905
Non accrual loans $ 3,635 $ 4,216 $ 3,563
Allowance for loan loss to non accrual loans 165.28% 135.15% 165.73%
Allowance for loan losses to loans outstanding 0.94% 0.91% 1.05%
Book Values:
Total shareholders' equity $ 72,634 $ 71,400 $ 68,158
Less, goodwill 417 417 417
Shareholders' equity less goodwill $ 72,217 $ 70,983 $ 67,741
Common shares outstanding 1,587,228 1,583,228 1,564,581
Less treasury shares - - -
Common shares as adjusted 1,587,228 1,583,228 1,564,581
Book value per common share $ 45.76 $ 45.10 $ 43.56
Tangible book value per common share $ 45.50 $ 44.83 $ 43.30



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

Source:Heartland BancCorp