WHITEHALL, Ohio, Jan. 21, 2020 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (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.
“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.
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 $99,000 in the fourth quarter a year ago.
About Heartland BancCorp
Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 16 full-service banking offices and TransCounty Title Agency, LLC. Heartland Bank, founded in 1911, provides full-service commercial, small business, and consumer banking services; professional financial planning services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC, and an Equal Housing Lender. Heartland BancCorp is currently quoted on the OTC Markets (OTCQX) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.
In May of 2019, Heartland was ranked #44 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity (“ROE”) as of 12/31/18. In September of 2019, Heartland stock uplisted to the OTCQX® Best Market after previously trading on the OTCQB® Venture Market.
Safe Harbor Statement
This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.
|Consolidated Balance Sheets|
|Assets||Dec. 31, 2019||Sep. 30, 2019||Dec. 31, 2018|
|Cash and cash equivalents||$||19,475||$||57,356||$||29,922|
|Held-to-maturity securities, fair values of, $760,122, $906,529 and $1,568,346 respectively||758||918||1,565|
|CRE (Owner occupied)||238,429||241,618||228,461|
|CRE (Non Owner occupied)||277,425||273,065||247,780|
|Net deferred loan costs, premiums and discounts||(45||)||6||197|
|Allowance for loan losses||(8,767||)||(8,534||)||(7,547||)|
|Premises and equipment||30,186||29,822||28,504|
|Nonmarketable equity securities||4,440||4,431||3,527|
|Deferred income taxes||1,433||1,433||1,433|
|Life insurance assets||17,057||16,880||16,555|
|Lease - Right of Use Asset||2,569||2,619||-|
|Liabilities and Shareholders' Equity|
|Saving, NOW and money market||356,484||351,820||321,498|
|Interest payable and other liabilities||7,609||8,788||6,382|
|Common stock, without par value; authorized 5,000,000 shares; 2,020,273, 2,019,463 and 2,015,276 shares issued, respectively||56,091||55,775||55,080|
|Accumulated other comprehensive income (expense)||1,446||1,755||(1,907||)|
|Total shareholders' equity||128,390||125,986||115,028|
|Total liabilities and shareholders' equity||$||1,114,595||$||1,138,337||$||1,047,079|
|Book value per share||$||63.55||$||62.39||$||57.08|
|Consolidated Statements of Income|
|Three Months Ended||Twelve Months Ended|
|Interest Income||Dec. 31, 2019||Sep. 30, 2019||Dec. 31, 2018||Dec. 31, 2019||Dec. 31, 2018|
|Total interest income||13,238||13,419||12,056||51,425||43,531|
|Total interest expense||2,939||3,067||2,261||11,029||7,576|
|Net Interest Income||10,299||10,352||9,795||40,396||35,955|
|Provision for Loan Losses||375||375||375||1,500||1,500|
|Net Interest Income After Provision for Loan Losses||9,924||9,977||9,420||38,896||34,455|
|Net gains and commissions on loan sales and servicing||766||536||204||2,083||1,387|
|Title insurance income||292||331||195||1,109||281|
|Net realized gains on sales of available-for-sale securities||-||-||-||-||(64||)|
|Net realized gain/(loss) on sales of foreclosed assets||-||-||-||-||10|
|Increase in cash value of life insurance||177||108||116||502||435|
|Total noninterest income||2,272||2,005||1,479||7,836||5,264|
|Salaries and employee benefits||4,816||4,665||4,256||18,485||14,887|
|Net occupancy and equipment expense||1,088||908||870||3,939||3,393|
|Data processing fees||361||395||340||1,509||1,392|
|Printing and office supplies||86||72||83||311||300|
|State financial institution tax||269||226||152||905||621|
|FDIC insurance premiums||4||2||102||106||467|
|Total noninterest expense||7,995||7,586||7,074||30,620||25,775|
|Income before Income Tax||4,201||4,396||3,825||16,112||13,944|
|Provision for Income Taxes||754||775||711||2,916||2,529|
|Basic Earnings Per Share||$||1.71||$||1.79||$||1.71||$||6.54||$||6.81|
|Diluted Earnings Per Share||$||1.67||$||1.77||$||1.68||$||6.45||$||6.68|
|ADDITIONAL FINANCIAL INFORMATION|
|(Dollars in thousands except per share amounts)(Unaudited)||Three Months Ended||Twelve Months Ended|
|Dec. 31, 2019||Sep. 30, 2019||Dec. 31, 2018||Dec. 31, 2019||Dec. 31, 2018|
|Return on average assets||1.21%||1.28%||1.19%||1.21%||1.16%|
|Return on average equity||10.75%||11.56%||12.56%||10.81%||13.15%|
|Return on average tangible common equity||10.94%||11.73%||12.76%||10.82%||13.28%|
|Net interest margin||3.87%||3.90%||4.00%||3.94%||3.90%|
|Asset Quality Ratios and Data:||As of or for the Three Months Ended|
|Dec. 31, 2019||Sep. 30, 2019||Dec. 31, 2018|
|Nonaccrual loans||$ 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|
|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|