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Heartland BancCorp Earns $3.4 Million in Fourth Quarter 2019 and Record $13.2 Million for the Year, Increases Quarterly Cash Dividend by 10% to $0.57 per Share

Friday, January 24, 2020/Categories: Press Releases

WHITEHALL, Ohio, Jan. 21, 2020 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQX: HLAN), today reported fourth quarter 2019 net income of $3.4 million, or $1.67 per diluted share. This compares to $3.6 million, or $1.77 per diluted share, in the third quarter of 2019, and $3.1 million, or $1.68 per diluted share, in the fourth quarter of 2018. For the year, net income increased 15.6% to a record $13.2 million, compared to $11.4 million in 2018.

The company also announced its board of directors increased its regular quarterly cash dividend by 10% to $0.57 per share. The dividend will be payable April 10, 2020, to shareholders of record as of March 25, 2020. Heartland has paid regular cash dividends since 1993.

“Heartland produced strong net income for the quarter, and record earnings for the year, as we continue to deliver value, grow our balance sheet and expand our market outreach,” stated G. Scott McComb, Chairman and Chief Executive Officer. “In addition to solid organic growth, we are confident that our previously announced merger with Victory Community Bank will provide tremendous opportunities for continued growth going forward.”

“Our definitive merger agreement to acquire Victory Community Bank is still on track to close near the beginning of the second quarter,” McComb continued. “We are excited about the opportunity this acquisition brings to our company, and it fits well into our strategy of expanding our presence in the attractive Northern Kentucky and Cincinnati markets. We expect the acquisition will provide substantial EPS accretion in the first full year and result in significant benefits to our expanding group of clients, communities, associates and shareholders.”

Victory Community Bank currently serves the Northern Kentucky and  Greater Cincinnati area, with three banking locations in Boone, Kenton and Campbell counties in Kentucky. At September 30, 2019, Victory Community Bank had assets of $179 million, a high-quality loan portfolio of $154 million, and an attractive deposit base of $137 million.

Fourth Quarter Financial Highlights (at or for the period ended December 31, 2019)

  • Net income increased 10.7% to $3.4 million, compared to $3.1 million in the fourth quarter a year ago.
  • Earnings per diluted share were $1.67 in the fourth quarter, compared to $1.68 in the fourth quarter a year ago, reflecting the higher number of weighted average shares outstanding during the quarter.
  • Net interest margin was 3.87%, compared to 3.90% in the preceding quarter and 4.00% in the fourth quarter a year ago.
  • Total top line revenues increased 14.6% to $15.5 million in the fourth quarter, from $13.5 million in the fourth quarter a year ago.
  • Noninterest income increased 53.6% to $2.3 million, compared to $1.5 million the fourth quarter a year ago.
  • Annualized return on average assets was 1.21%.
  • Annualized return on average equity was 10.75%.
  • Total assets increased 6.4% to $1.11 billion, compared to $1.05 billion a year earlier.
  • Net loans increased 9.1% to $890.9 million from $816.8 million a year ago.
  • Noninterest bearing demand deposits increased 10.0% to $256.0 million compared to a year ago.
  • Total deposits increased 7.2% to $944.2 million from $880.4 million a year ago.
  • Tangible book value per share increased 1.9% to $62.49 per share, compared to $61.31 three months earlier, and increased 10.9% from $56.33 per share one year earlier.
  • Declared quarterly cash dividend of $0.57 per share, which represents a 2.40% yield based on the December 31, 2019, stock price ($95.15).

Balance Sheet Review

“Net loans were up year-over-year, with good production in targeted loan types, including increases in C & I, commercial real estate and 1-4 family residential real estate loans. We continue to see significant potential for growth in our loan origination pipelines,” said Brian T. Mauntel, President and Chief Operating Officer.

Net loans increased 9.1% to $890.9 million at December 31, 2019, compared to $816.8 million at December 31, 2018, and increased 1.7% compared to $875.6 million at September 30, 2019. Owner occupied commercial real estate loans (CRE) increased 4.4% to $238.4 million at December 31, 2019, compared to a year ago and comprise 26.5% of the total loan portfolio. Non-owner occupied CRE loans increased 12.0% to $277.4 million compared to a year ago and comprise 30.8% of the total loan portfolio. 1-4 family residential real estate loans were up 11.4% from year ago levels to $232.0 million and represent 25.8% of total loans. Commercial loans were up 9.9% from year ago levels to $109.9 million, at December 31, 2019, and comprise 12.2% of the total loan portfolio. Home equity loans increased 11.2% from year ago levels to $31.0 million and represent 3.4% of total loans. Consumer loans decreased 6.6% from year ago levels to $10.9 million and represent 1.2% of the total loan portfolio.

Total deposits increased 7.2% to $944.2 million at December 31, 2019, compared to $880.4 million a year earlier and decreased 3.2% compared to $975.4 million three months earlier. Noninterest bearing demand deposit accounts increased 10.0% compared to a year ago and represented 27.1% of total deposits, Savings, NOW and money market accounts increased 10.9% compared to a year ago and represented 37.8% of total deposits and CDs increased 1.7% when compared to a year ago and comprised 35.1% of the total deposit portfolio, at December 31, 2019.

Total assets increased 6.4% to $1.11 billion at December 31, 2019, compared to $1.05 billion a year earlier. Shareholders’ equity increased 11.6% to $128.4 million at December 31, 2019, compared to $115.0 million a year earlier. At December 31, 2019, Heartland’s tangible book value increased 10.9% to $62.49 per share compared to $56.33 per share one year earlier.

Operating Results

“The three interest rate reductions during the second half of the year put temporary pressure on our net interest margin due to a lag in the maturity and downward repricing of some higher cost deposits,” said Carrie Almendinger, EVP and Chief Financial Officer. Heartland’s net interest margin was 3.87% in the fourth quarter of 2019, compared to 3.90% in the preceding quarter and 4.00% in the fourth quarter of 2018. For the year, Heartland’s net interest margin improved four basis points to 3.94% compared to 3.90% in 2018.

Net interest income before the provision for loan loss increased 5.1% to $10.3 million in the fourth quarter of 2019, compared to $9.8 million in the fourth quarter a year ago, and remained unchanged compared to the preceding quarter. For the year, net interest income before the provision for loan losses increased 12.4% to $40.4 million, compared to $36.0 million in 2018.

Total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 11.5% to $12.6 million in the fourth quarter, compared to $11.3 million in the fourth quarter a year ago, and increased 1.7% from $12.4 million in the preceding quarter. For the year, revenues increased 17.0% to $48.2 million, compared to $41.2 million in 2018.

Heartland’s noninterest income increased 53.6% to $2.3 million in the fourth quarter, compared to $1.5 million in the fourth quarter a year ago, and increased 13.3% compared to $2.0 million in the preceding quarter. The TransCounty Title Agency acquisition contributed $499,000 to noninterest income during the fourth quarter of 2019, compared to $317,000 in the fourth quarter a year ago. For the year, noninterest income increased 48.9% to $7.8 million, compared to $5.3 million in 2018, with the TransCounty Title Agency acquisition contributing $2.1 million to noninterest income in 2019, compared to $455,000 in 2018.

Fourth quarter noninterest expenses were $8.0 million, compared to $7.6 million in the preceding quarter and $7.1 million in the fourth quarter a year ago. The year-over-year increase was due to costs associated with the company’s branch expansion, including its new Upper Arlington branch, as well as costs associated with the subsidiary TransCounty Title Agency. For the year, noninterest expenses totaled $30.6 million, compared to $25.8 million in 2018, resulting in an efficiency ratio of 63.48% for 2019 compared to 62.44% in 2018. The efficiency ratio for the fourth quarter of 2019 was 63.60%, compared to 61.39% for the preceding quarter and 62.75% for the fourth quarter of 2018.  

Credit Quality

Asset quality remains excellent, reflecting the strong performance of the loan portfolio. Nonaccrual loans totaled $1.9 million at December 31, 2019, compared to $2.3 million three months earlier and $1.8 million at December 31, 2018. There was $491,000 in loans past due 90 days and still accruing at December 31, 2019, compared to $997,000 at September 30, 2019, and $97,000 a year ago.

Performing restructured loans that were not included in nonaccrual loans at December 31, 2019, were $341,000, compared to $342,000 at the preceding quarter end. 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. 

Heartland had no other real estate owned (OREO) and other non-performing assets on the books at December 31, 2019, September 30, 2019 or a year ago. Non-performing assets (NPAs), consisting of non-performing loans, and loans delinquent 90 days or more, were $2.3 million, or 0.21% of assets, at December 31, 2019, compared to $3.3 million, or 0.29% of total assets, three months earlier, and $1.9 million, or 0.18% of assets a year ago.

The fourth quarter provision for loan losses was $375,000, the same as in both the preceding quarter and the fourth quarter a year ago. The allowance for loan losses was $8.8 million, or 0.97% of total loans at December 31, 2019, compared to $8.5 million, or 0.97% of total loans at September 30, 2019, and $7.5 million, or 0.92% of total loans a year ago. As of December 31, 2019, the allowance for loan losses represented 471.9% of nonaccrual loans compared to 376.3% three months earlier, and 420.0% one year earlier. Heartland recorded net loan charge-offs of $142,000 in the fourth quarter. This compares to net loan recoveries of $166,000 in the third quarter of 2019 and net loan charge-offs of $99,000 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 16 full-service banking offices and TransCounty Title Agency, LLC. Heartland Bank, founded in 1911, provides full-service commercial, small business, and consumer banking services; professional financial planning 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 (OTCQX) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.

In May of 2019, Heartland was ranked #44 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 12/31/18. In September of 2019, Heartland stock uplisted to the OTCQX® Best Market after previously trading on the OTCQB® Venture Market.

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, 2019   Sep. 30, 2019   Dec. 31, 2018    
  Cash and cash equivalents $ 19,475     $ 57,356     $ 29,922      
  Available-for-sale securities   139,218       140,156       140,556      
  Held-to-maturity securities, fair values of, $760,122, $906,529 and $1,568,346 respectively   758       918       1,565      
                       
  Commercial   109,941       105,564       100,028      
  CRE (Owner occupied)   238,429       241,618       228,461      
  CRE (Non Owner occupied)   277,425       273,065       247,780      
  1-4 Family   231,989       221,649       208,335      
  Home Equity   30,997       30,936       27,869      
  Consumer   10,886       11,307       11,660      
  Net deferred loan costs, premiums and discounts   (45 )     6       197      
  Allowance for loan losses   (8,767 )     (8,534 )     (7,547 )    
    Net Loans   890,855       875,611       816,783      
                       
  Premises and equipment   30,186       29,822       28,504      
  Nonmarketable equity securities   4,440       4,431       3,527      
  Interest receivable   4,835       5,266       4,169      
  Goodwill   1,206       1,206       1,069      
  Intangible Assets   935       964       446      
  Deferred income taxes   1,433       1,433       1,433      
  Life insurance assets   17,057       16,880       16,555      
  Lease - Right of Use Asset   2,569       2,619       -      
  Other   1,628       1,675       2,550      
    Total assets $ 1,114,595     $ 1,138,337     $ 1,047,079      
                       
Liabilities and Shareholders' Equity                    
  Liabilities                    
  Deposits                    
  Demand $ 255,971     $ 263,604     $ 232,682      
  Saving, NOW and money market   356,484       351,820       321,498      
  Time   331,768       359,949       326,261      
    Total deposits   944,223       975,373       880,441      
  Short-term borrowings   16,344       10,111       34,768      
  Long-term debt   15,460       15,460       10,460      
  Lease Liability   2,569       2,619       -      
  Interest payable and other liabilities   7,609       8,788       6,382      
    Total liabilities   986,205       1,012,351       932,051      
                       
  Shareholders' Equity                    
  Common stock, without par value; authorized 5,000,000 shares; 2,020,273, 2,019,463 and 2,015,276 shares issued, respectively   56,091       55,775       55,080      
  Retained earnings   70,853       68,456       61,855      
  Accumulated other comprehensive income (expense)   1,446       1,755       (1,907 )    
    Total shareholders' equity   128,390       125,986       115,028      
    Total liabilities and shareholders' equity $ 1,114,595     $ 1,138,337     $ 1,047,079      
    Book value per share $ 63.55     $ 62.39     $ 57.08      
                       

 

Heartland BancCorp  
Consolidated Statements of Income  
                                 
    Three Months Ended   Twelve Months Ended  
Interest Income Dec. 31, 2019   Sep. 30, 2019   Dec. 31, 2018   Dec. 31, 2019   Dec. 31, 2018  
  Loans $ 12,071   $ 11,989   $ 10,838   $ 46,270   $ 39,211    
  Securities         -                    
  Taxable   513     723     666     2,722     2,219    
  Tax-exempt   490     465     404     1,828     1,642    
  Other   164     242     148     605     459    
    Total interest income   13,238     13,419     12,056     51,425     43,531    
Interest Expense                              
  Deposits   2,779     2,900     2,009     10,251     6,662    
  Borrowings   160     167     252     778     914    
    Total interest expense   2,939     3,067     2,261     11,029     7,576    
Net Interest Income   10,299     10,352     9,795     40,396     35,955    
Provision for Loan Losses   375     375     375     1,500     1,500    
Net Interest Income After Provision for Loan Losses 9,924     9,977     9,420     38,896     34,455    
Noninterest income                              
  Service charges   533     560     544     2,151     2,143    
  Net gains and commissions on loan sales and servicing   766     536     204     2,083     1,387    
  Title insurance income   292     331     195     1,109     281    
  Net realized gains on sales of available-for-sale securities   -     -     -     -     (64 )  
  Net realized gain/(loss) on sales of foreclosed assets   -     -     -     -     10    
  Increase in cash value of life insurance   177     108     116     502     435    
  Other   504     470     420     1,991     1,072    
    Total noninterest income   2,272     2,005     1,479     7,836     5,264    
Noninterest Expense                              
  Salaries and employee benefits   4,816     4,665     4,256     18,485     14,887    
  Net occupancy and equipment expense   1,088     908     870     3,939     3,393    
  Data processing fees   361     395     340     1,509     1,392    
  Professional fees   213     209     177     956     782    
  Marketing expense   224     247     228     951     866    
  Printing and office supplies   86     72     83     311     300    
  State financial institution tax   269     226     152     905     621    
  FDIC insurance premiums   4     2     102     106     467    
  Other   934     862     866     3,458     3,067    
    Total noninterest expense   7,995     7,586     7,074     30,620     25,775    
Income before Income Tax   4,201     4,396     3,825     16,112     13,944    
Provision for Income Taxes   754     775     711     2,916     2,529    
Net Income $ 3,447   $ 3,621   $ 3,114   $ 13,196   $ 11,415    
Basic Earnings Per Share $ 1.71   $ 1.79   $ 1.71   $ 6.54   $ 6.81    
Diluted Earnings Per Share $ 1.67   $ 1.77   $ 1.68   $ 6.45   $ 6.68    
                                 

 

ADDITIONAL FINANCIAL INFORMATION                      
(Dollars in thousands except per share amounts)(Unaudited)   Three Months Ended   Twelve Months Ended  
    Dec. 31, 2019   Sep. 30, 2019   Dec. 31, 2018   Dec. 31, 2019   Dec. 31, 2018  
Performance Ratios:                      
Return on average assets   1.21%   1.28%   1.19%   1.21%   1.16%  
Return on average equity   10.75%   11.56%   12.56%   10.81%   13.15%  
Return on average tangible common equity   10.94%   11.73%   12.76%   10.82%   13.28%  
Net interest margin   3.87%   3.90%   4.00%   3.94%   3.90%  
Efficiency ratio   63.60%   61.39%   62.75%   63.48%   62.44%  
                       
Asset Quality Ratios and Data:   As of or for the Three Months Ended          
    Dec. 31, 2019   Sep. 30, 2019   Dec. 31, 2018          
Nonaccrual loans   $ 1,858   $ 2,268   $ 1,797          
Loans past due 90 days and still accruing   491   997   97          
Non-performing investment securities   -   -   -          
OREO and other non-performing assets   -   -   -          
Total non-performing assets   $ 2,349   $ 3,265   $ 1,894          
                       
Non-performing assets to total assets   0.21%   0.29%   0.18%          
Net charge-offs quarter ending   $ 142   $ (166)   $ 99          
                       
Allowance for loan loss   $ 8,767   $ 8,534   $ 7,547          
Nonaccrual loans   $ 1,858   $ 2,268   $ 1,797          
Allowance for loan loss to non accrual loans   471.85%   376.28%   419.98%          
Allowance for loan losses to loans outstanding   0.97%   0.97%   0.92%          
                       
Restructured loans included in non-accrual   $ 289   $ 289   $ 324          
Performing restructured loans (RC-C)   $ 341   $ 342   $ 293          
                       
Book Values:                      
Total shareholders' equity   $ 128,390   $ 125,986   $ 115,028          
Less: goodwill and intangible assets   2,141   2,170   1,515          
Shareholders' equity less goodwill and intangible assets   $ 126,249   $ 123,816   $ 113,513          
Common shares outstanding   2,020,273   2,019,463   2,015,276          
Less: treasury shares   -   -   -          
Common shares as adjusted   2,020,273   2,019,463   2,015,276          
Book value per common share   $ 63.55   $ 62.39   $ 57.08          
                       
Tangible book value per common share   $ 62.49   $ 61.31   $ 56.33          
                       

 

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

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