Heartland BancCorp Earns $4.8 Million, or $2.39 Per Diluted Share, in the Second Quarter of 2023; Declares Quarterly Cash Dividend of $0.759 per Share

Heartland BancCorp

WHITEHALL, Ohio, July 24, 2023 (GLOBE NEWSWIRE) -- Heartland BancCorp (“Heartland” and “the Company”) (OTCQX: HLAN), parent company of Heartland Bank (“Bank”), today reported net income increased 23.1% to $4.8 million, or $2.39 per diluted share, in the second quarter of 2023, compared to $3.9 million, or $1.94 per diluted share, in the second quarter of 2022, and increased 8.9% compared to $4.5 million, or $2.19 per diluted share, in the preceding quarter. In the first six months of 2023, net income increased 16.6% to $9.3 million, or $4.58 per diluted share, compared to $8.0 million, or $3.93 per diluted share, in the first six months of 2022.

The company also announced that its board of directors declared a quarterly cash dividend of $0.759 per share. The dividend will be payable October 10, 2023, to shareholders of record as of September 25, 2023. Heartland has paid regular quarterly cash dividends since 1993.

“Our second quarter and year to date operating results were solid, highlighted by higher operating income, stable balance sheet growth and pristine credit quality,” stated G. Scott McComb, Chairman, President and Chief Executive Officer. “Due to the current rate environment, we made changes at the beginning of the second quarter to pull back the growth rate of loans to an annualized target range between 8-12%. While implementing this strategy, we remained selective on the loans we added during the quarter, as well as adhering to disciplined loan pricing. The result was more muted loan growth during the quarter of 2.5%, or 10% annualized, and new loans had an average rate of 7.59%, up approximately 70 basis points from the prior quarter. Additionally, we continue to focus on building out the Cincinnati market that we entered just a year ago. Our brand of community banking is gaining momentum in Cincinnati, just as it’s been in all the markets that we serve. We will continue to look for ways to come out ahead as we navigate through this challenging operating environment.”

Second Quarter 2023 Financial Highlights (at or for the three months ended June 30, 2023)

• Net income was $4.8 million, or $2.39 per diluted share, compared to $3.9 million, or $1.94 per diluted share, in the second quarter of 2022.

• Provision for credit losses was $800,000, compared to $480,000 for the second quarter a year ago.

• Net interest margin was 3.61%, compared to 3.87% in the preceding quarter and 3.92% in the second quarter a year ago.

• Second quarter revenues (net interest income plus noninterest income) increased 13.9% to $18.4 million, compared to $16.2 million in the second quarter a year ago.

• Annualized return on average assets was 1.10%, unchanged compared to the second quarter of 2022.

• Annualized return on average tangible common equity was 14.19%, compared to 11.97% in the second quarter a year ago.

• Net loans increased $36.1 million during the quarter, or 2.5%, to $1.49 billion at June 30, 2023, compared to $1.45 billion three months earlier.

• Total deposits decreased $9.9 million during the quarter, or less than 1%, to $1.56 billion at June 30, 2023, compared to $1.57 billion three months earlier.

• Credit quality remains pristine, with nonperforming loans to gross loans of 0.14% and nonperforming assets to total assets of 0.12%, at June 30, 2023.

• Tangible book value was $68.54 per share, compared to $64.06 per share a year ago.

• Declared a quarterly cash dividend of $0.759 per share.
  

Liquidity

Heartland had ample sources of available liquidity as of June 30, 2023, including a $220 million line of credit at the FHLB, as well as additional credit lines of $85 million. Nearly 68% of Heartland’s client deposit balances were FDIC insured or collateralized as of June 30, 2023.

Balance Sheet Review

Assets

Total assets increased 20.7% to $1.81 billion at June 30, 2023, compared to $1.50 billion a year earlier, and increased 2.3% compared to $1.77 billion three months earlier. Heartland’s loan-to-deposit ratio was 95.5% at June 30, 2023, compared to 92.6% at March 31, 2023, and 91.8% at June 30, 2022.

Interest bearing deposits in other banks was $20.0 million at June 30, 2023, compared to $35.6 million a year earlier and $37.3 million three months earlier.

Average earning assets increased to $1.67 billion in the second quarter of 2023, compared to $1.61 billion in the first quarter of 2023, and $1.35 billion in the second quarter a year ago. The average yield on interest-earning assets was 5.39% in the second quarter of 2023, up 21 basis points from 5.18% in the preceding quarter, and up 122 basis points from 4.17% in the second quarter a year ago.

Loan Portfolio

“Loan growth was strong during the quarter, increasing 2.5%, over the prior quarter end, or 10% annualized, with good activity in most loan segments,” said Ben Babcanec, EVP and Chief Operating Officer. “We continue to moderate the growth rate of loans through remaining very disciplined with loan pricing.”

Net loans were $1.49 billion at June 30, 2023, which was a 2.5% increase compared to $1.45 billion at March 31, 2023, and a 24.5% increase compared to $1.20 billion at June 30, 2022. Commercial loans increased 32.0% from year ago levels to $177.0 million, and comprise 11.8% of the total loan portfolio at June 30, 2023. Owner occupied commercial real estate loans (CRE) decreased 10.8% to $273.5 million at June 30, 2023, compared to a year ago, and comprise 18.2% of the total loan portfolio. Non-owner occupied CRE loans increased 41.5% to $490.9 million, compared to a year ago, and comprise 32.6% of the total loan portfolio at June 30, 2023. 1-4 family residential real estate loans increased 33.8% from year ago levels to $495.6 million and represent 32.9% of total loans. Home equity loans increased 28.6% from year ago levels to $48.5 million and represent 3.2% of total loans, while consumer loans increased 29.4% from year ago levels to $19.8 million and represent 1.3% of the total loan portfolio at June 30, 2023.

Deposits

Total deposits were $1.56 billion at June 30, 2023, a modest decrease compared to $1.57 billion at March 31, 2023, and a $255.8 million, or 19.6% increase, compared to $1.30 billion at June 30, 2022. “Total deposit balances contracted modestly during the second quarter due to a surge of deposit gathering near the end of the first quarter of 2023. However, average deposits increased $65.7 million to $1.55 billion in the second quarter of 2023 compared to the preceding quarter, with the growth primarily in money market and CD accounts,” said Babcanec. “While we are able to maintain strong deposit balances, some of the DDA runoff during the quarter was due to more insurance-sensitive clients reallocating some DDA balances to insured deposit products as well as rate sensitive clients reallocating to interest bearing accounts.” At June 30, 2023, noninterest bearing demand deposit accounts decreased 5.5% compared to a year ago and represented 29.7% of total deposits; savings, NOW and money market accounts increased 11.8% compared to a year ago and represented 43.5% of total deposits, and CDs increased 102.3% compared to a year ago and comprised 26.8% of total deposits. The average cost of deposits was 1.76% in the second quarter of 2023, compared to 1.24% in the first quarter of 2023, and 0.16% in the second quarter of 2022.

Shareholders’ Equity

Shareholders’ equity increased to $151.1 million at June 30, 2023, compared to $148.1 million three months earlier and $141.9 million a year earlier. At June 30, 2023, Heartland’s tangible book value increased to $68.54 per share, compared to $67.09 at March 31, 2023, and $64.06 at June 30, 2022.

Heartland continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with tangible equity to tangible assets of 7.70% at June 30, 2023, compared to 7.71% at March 31, 2023, and 8.68% at June 30, 2022.

Operating Results

In the second quarter of 2023, Heartland generated a ROAA of 1.10% and a ROATCE of 14.19%, compared to 1.06% and 13.36%, respectively, in the first quarter of 2023 and 1.10% and 11.97%, respectively, in the second quarter a year ago.

Net Interest Income/Net Interest Margin

Net interest income, before the provision for credit losses, increased 14.3% to $15.0 million in the second quarter of 2023, compared to $13.2 million in the second quarter a year ago, and decreased 2.0% compared to $15.3 million in the preceding quarter. In the first six months of 2023, net interest income increased 17.1% to $30.4 million, compared to $26.0 million in the first six months of 2022.

Total revenues (net interest income, before the provision for credit losses, plus noninterest income) was $18.4 million in the second quarter of 2023, a 13.9% increase compared to $16.2 million in the second quarter a year ago, and a 2.7% increase compared to $17.9 million in the preceding quarter. Year-to-date, total revenues increased 12.8% to $36.4 million, compared to $32.2 million in the same period a year earlier.

Heartland’s net interest margin was 3.61% in the second quarter of 2023, compared to 3.87% in the preceding quarter and 3.92% in the second quarter of 2022. “The unprecedented rise in funding costs that is affecting the entire banking industry impacted our net interest margin during the quarter. While we anticipate deposit pricing pressures and stiff competition in our markets to continue in the near term, we continue to benefit from repricing loans at higher rates,” said Carrie Almendinger, EVP and Chief Financial Officer.

Heartland’s net interest margin continues to remain above the peer average posted by the Dow Jones U.S. MicroCap Bank Index with total market capitalization under $250 million as of March 31, 2023.^*

*As of March 31, 2023, the Dow Jones U.S. MicroCap Bank Index tracked 157 banks with total common market capitalization under $250 million for the following ratios: NIM* of 3.48%.

Provision for Credit Losses

Heartland recorded an $800,000 provision for credit losses in the second quarter of 2023, compared to a $750,000 provision for credit losses in the first quarter of 2023, and a $480,000 provision for credit losses in the second quarter of 2022. “We continue to make additions to the allowance for credit losses to reflect the steady level of new loan growth,” said McComb. “Overall credit quality remains very stable, and we are seeing minimal signs of stress in the loan portfolio.”

Noninterest Income

Noninterest income increased 12.5% to $3.4 million in the second quarter of 2023, compared to $3.0 million in the second quarter a year ago, and increased 30.3% compared to $2.6 million in the preceding quarter. Gains on sale of loans and originated mortgage servicing rights increased 63.3% to $704,000 in the second quarter of 2023, compared to $431,000 in the second quarter a year ago, and increased 211.5% compared to $226,000 in the preceding quarter. In the first six months of 2023, noninterest income decreased 4.6% to $6.0 million, compared to $6.3 million in the first six months of 2022.

“We saw increased secondary loan activity during the quarter, and we have been more successful with executing on swaps, with just over $300,000 in swap referral fee income during the second quarter. Also impacting noninterest income was an increase in title insurance income during the quarter,” said Almendinger.

Noninterest Expense

Noninterest expenses were $11.7 million during the second quarter of 2023, a slight decrease compared to $11.8 million in the preceding quarter, and an 8.0% increase compared to $10.8 million in the second quarter a year ago. Salary and employee benefit expenses, the largest component of noninterest expense, were $7.3 million in the second quarter of 2023, compared to $7.5 million in the first quarter of 2023, and $6.8 million in the second quarter of 2022. Occupancy expense increased 9.9% compared to the year ago quarter due to the expansion into the permanent office space in Cincinnati. Year-to-date, noninterest expense totaled $23.4 million, compared to $21.4 million in the first six months of 2022.

“We are making a concerted effort to keep operating expenses in check, and as a result, salary and employee benefit expense decreased compared to the preceding quarter, partly due to lower incentive compensation. As we look to grow the team, our focus remains selective, as we are primarily looking to add new associates in revenue producing roles,” said Almendinger.

The efficiency ratio for the second quarter of 2023 was 63.5%, compared to 65.5% for the preceding quarter and 66.9% for the second quarter of 2022.

Income Tax Provision

In the second quarter of 2023, Heartland recorded $1.1 million in state and federal income tax expense for an effective tax rate of 18.3%, compared to $992,000, or 18.2%, in the first quarter of 2023 and $933,000, or 19.2%, in the second quarter a year ago.

Credit Quality

Beginning January 1, 2023, Heartland began accounting for credit losses under CECL which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model.

At June 30, 2023, the allowance for credit losses plus unfunded commitment liability (ACL + UCL) was $18.7 million, or 1.24% of total loans, compared to $18.0 million, or 1.22% of total loans, at March 31, 2023, and $15.9 million, or 1.32% of total loans, a year ago. As of June 30, 2023, the ACL represented 789% of nonaccrual loans, compared to 1,460% three months earlier and 1,678% one year earlier.

Nonaccrual loans were $2.2 million at June 30, 2023, compared to $1.1 million at March 31, 2023, and $949,000 at June 30, 2022. At June 30, 2023, nonaccrual loans totaled 13 loans with an average balance of approximately $166,000. There were zero loans past due 90 days and still accruing at June 30, 2023, compared to $111,000 at March 31, 2023, and $245,000 at June 30, 2022. Net loan charge-offs totaled $43,000 at June 30, 2023, compared to $19,000 in net loan charge-offs at March 31, 2023, and $5,000 in net loan charge-offs at June 30, 2022.

Heartland had zero performing restructured loans that were not included in nonaccrual loans at June 30, 2023, and at March 31, 2023. This compared to $4.5 million in performing restructured loans at June 30, 2022. Borrowers who are in financial difficulty and who have been granted concessions including interest rate reductions, term extensions or payment alterations, are categorized as restructured loans.

There was $5,000 in other real estate owned and other non-performing assets on the books at June 30, 2023, unchanged from three months earlier and one year earlier. Non-performing assets (NPAs), consisting of non-performing loans and loans past due 90 days or more, were $2.2 million, or 0.12% of total assets, at June 30, 2023, compared to $1.3 million, or 0.07% of total assets, at March 31, 2023, and $1.5 million, or 0.10% of total assets a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 19 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 June of 2023, Heartland was ranked #119 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity as of December 31, 2022.

During the first quarter of 2023, Heartland was ranked 36^th on the OTCQX’s Best 50 list for 2023. The OTCQX Best 50 is an annual ranking of the top 50 U.S. and international companies traded on the OTCQX Best Market, based on an equal weighting of one-year total return and average daily dollar volume growth. Companies in the 2023 OTCQX Best 50 were ranked based on their performance during the 2022 calendar year.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about (i) the benefits of a merger between Heartland Bank and Victory Community Bank, including future financial and operating results, cost savings enhancements to revenue and accretion to reported earnings that may be realized from the merger; (ii) Heartland’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; and (iii) other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” or words of similar meaning generally intended to identify forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of Heartland’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Heartland. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements because of the following factors, among others: (1) the assumptions and estimates used by Heartland’s management include both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments, and thus, may not be realized; (2) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which Heartland is engaged; (3) changes in the interest rate environment may adversely affect net interest income; (4) results may be adversely affected by continued diversification of assets and adverse changes to credit quality; (5) competition from other financial services companies in Heartland’s markets could adversely affect operations; (6) the impact of the coronavirus (COVID-19) pandemic on the employees and clients of Heartland, as well as the resulting effect on the business, financial condition and results of operations on Heartland; and (7) the current economic slowdown could adversely affect credit quality and loan originations.

Heartland cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements are expressly qualified in their entirety by the cautionary statements above. Heartland does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

Heartland BancCorp
Quarterly Financial Summary
		Three Months Ended
Earnings and dividends:		Jun. 30, 2023				Mar. 31, 2023				Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022
Interest income		$	22,476			$	20,521			$	18,841			$	16,652			$	13,993
Interest expense		7,437				5,180				3,011				1,444				832
Net interest income		15,039				15,341				15,830				15,208				13,161
Provision for credit losses		800				750				480				480				480
Noninterest income		3,390				2,601				2,487				2,614				3,012
Noninterest expense		11,695				11,750				11,761				11,051				10,824
Provision for income taxes		1,088				992				1,048				1,223				933
Net income		4,846				4,450				5,028				5,068				3,936
Share data:
Basic earnings per share		$	2.41			$	2.21			$	2.50			$	2.53			$	1.96
Diluted earnings per share		2.39				2.19				2.48				2.50				1.94
Dividends declared per share		0.76				0.76				0.69				0.69				0.69
Book value per share		75.02				73.60				71.63				69.48				70.66
Tangible book value per share		68.54				67.09				65.09				62.90				64.06
Common shares outstanding, 20,000,000 authorized		2,105,237				2,103,537				2,099,587				2,098,962				2,098,962
Treasury shares		(90,612		)		(90,612		)		(90,612		)		(90,612		)		(90,612		)
Common shares, net		2,014,625				2,012,925				2,008,975				2,008,350				2,008,350
Average common shares outstanding, net		2,013,607				2,009,782				2,008,839				2,008,350				2,008,154
Balance sheet – average balances:
Loans receivable, net		$	1,465,920			$	1,415,215			$	1,356,369			$	1,261,695			$	1,164,191
Earning assets		1,672,994				1,606,350				1,520,860				1,437,508				1,345,041
Goodwill & intangible assets		13,077				13,132				13,186				13,241				13,295
Total assets		1,772,998				1,705,675				1,620,580				1,530,675				1,437,003
Demand deposits		467,301				495,443				500,624				491,782				472,426
Deposits		1,553,882				1,488,181				1,413,150				1,323,645				1,237,620
Borrowings		49,965				54,257				52,162				49,409				42,459
Shareholders' equity		150,017				148,195				140,800				144,873				145,218
Ratios:
Return on average assets		1.10		%		1.06		%		1.23		%		1.31		%		1.10		%
Return on average equity		12.96		%		12.18		%		14.16		%		13.88		%		10.87		%
Return on average tangible common equity		14.19		%		13.36		%		15.63		%		15.27		%		11.97		%
Yield on earning assets		5.39		%		5.18		%		4.91		%		4.60		%		4.17		%
Cost of deposits		1.76		%		1.24		%		0.70		%		0.30		%		0.16		%
Cost of funds		1.86		%		1.36		%		0.82		%		0.42		%		0.26		%
Net interest margin		3.61		%		3.87		%		4.13		%		4.20		%		3.92		%
Efficiency ratio		63.46		%		65.48		%		64.21		%		62.02		%		66.94		%
Asset quality:
Net loan charge-offs to average loans		0.01		%		0.01		%		0.03		%		0.06		%		0.00		%
Nonperforming loans to gross loans		0.14		%		0.09		%		0.07		%		0.08		%		0.12		%
Nonperforming assets to total assets		0.12		%		0.07		%		0.06		%		0.07		%		0.10		%
Allowance for loan losses to gross loans		1.13		%		1.13		%		1.18		%		1.23		%		1.32		%
ACL + UCL to gross loans		1.24		%		1.22		%		1.18		%		1.23		%		1.32		%

Heartland BancCorp
Consolidated Balance Sheets
Assets		Jun. 30, 2023				Mar. 31, 2023				Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022
Cash and due from		$	16,304			$	14,121			$	17,543			$	21,705			$	18,139
Interest bearing deposits			20,017				37,297				5,340				5,263				35,583
Interest bearing time deposits			-				-				-				-				-
Available-for-sale securities			178,031				159,622				152,492				149,458				154,505
Held-to-maturity securities			5				5				5				49				49
Loans held for sale			2,748				1,200				1,345				717				655
Commercial			176,972				165,736				162,720				151,154				134,033
CRE (Owner occupied)			273,526				285,575				325,820				323,390				306,507
CRE (Non Owner occupied)			490,900				468,163				391,461				373,491				346,905
1-4 Family			495,578				486,077				461,661				412,690				370,444
Home Equity			48,542				44,749				44,526				40,253				37,740
Consumer			19,848				18,502				18,245				16,337				15,343
Allowance for credit losses			(17,063	)			(16,644	)			(16,591	)			(16,229	)			(15,925	)
Net Loans			1,488,303				1,452,158				1,387,842				1,301,086				1,195,047
Premises and equipment			31,919				30,926				30,476				30,496				30,516
Nonmarketable equity securities			6,635				6,631				6,627				6,623				6,032
Mortgage serving rights, net			3,208				3,119				3,173				3,228				3,268
Foreclosed assets held for sale			5				5				5				5				5
Goodwill			12,388				12,388				12,388				12,388				12,388
Intangible Assets			661				710				765				819				874
Deferred income taxes			6,702				6,157				7,504				7,587				6,134
Life insurance assets			20,020				19,903				19,790				19,680				18,314
Accrued interest receivable and other assets			18,744				20,846				17,831				16,038				14,353
Total assets		$	1,805,690			$	1,765,090			$	1,663,126			$	1,575,142			$	1,495,862
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand		$	462,232			$	487,238			$	523,036			$	476,379			$	489,172
Saving, NOW and money market			677,833				685,233				609,676				639,161				606,534
Time			418,046				395,525				323,858				234,046				206,632
Total deposits			1,558,111				1,567,996				1,456,570				1,349,586				1,302,338
Repurchase agreements			4,594				5,095				15,213				7,830				7,525
FHLB Advances			50,000				0				6,000				39,000				7,000
Subordinated debt			24,213				24,703				24,693				24,682				24,672
Interest payable and other liabilities			17,635				19,153				16,741				14,506				12,413
Total liabilities			1,654,553				1,616,947				1,519,217				1,435,604				1,353,948
Shareholders' Equity
Common stock, without par value			62,473				62,173				61,998				61,769				61,641
Retained earnings			112,904				108,962				107,166				103,524				99,841
Accumulated other comprehensive income (expense)			(19,246	)			(17,998	)			(20,261	)			(20,761	)			(14,574	)
Treasury stock at Cost, Common			(4,994	)			(4,994	)			(4,994	)			(4,994	)			(4,994	)
Total shareholders' equity			151,137				148,143				143,909				139,538				141,914
Total liabilities and shareholders' equity		$	1,805,690			$	1,765,090			$	1,663,126			$	1,575,142			$	1,495,862

Heartland BancCorp
Consolidated Statements of Income
		Three Months Ended
Interest Income		Jun. 30, 2023				Mar. 31, 2023				Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022
Loans		$	20,609			$	18,885			$	17,312			$	15,285			$	12,778
Securities
Taxable			928				845				757				684				586
Tax-exempt			596				598				604				590				578
Other			343				193				168				93				51
Total interest income			22,476				20,521				18,841				16,652				13,993
Interest Expense
Deposits			6,837				4,564				2,497				1,012				484
Borrowings			600				616				514				432				348
Total interest expense			7,437				5,180				3,011				1,444				832
Net Interest Income			15,039				15,341				15,830				15,208				13,161
Provision for Credit Losses			800				750				480				480				480
Net Interest Income After Provision for Credit Losses			14,239				14,591				15,350				14,728				12,681
Noninterest income
Service charges			1,015				975				930				925				916
Gains on sale of loans and originated MSR			704				226				218				187				431
Loan servicing fees, net			337				431				317				367				311
Title insurance income			311				171				237				304				346
Net realized gains on sales of available-for-sale securities			-				-				-				-				-
Increase in cash value of life insurance			117				114				110				104				96
Other			906				684				675				727				912
Total noninterest income			3,390				2,601				2,487				2,614				3,012
Noninterest Expense
Salaries and employee benefits			7,252				7,483				7,474				7,146				6,819
Net occupancy and equipment expense			1,055				1,067				1,004				962				960
Software and data processing fees			1,069				1,025				939				984				907
Professional fees			288				266				383				181				247
Marketing expense			309				299				250				256				247
State financial institution tax			259				261				339				257				257
FDIC insurance premiums			298				228				104				104				94
Other			1,165				1,121				1,268				1,161				1,293
Total noninterest expense			11,695				11,750				11,761				11,051				10,824
Income before Income Tax			5,934				5,442				6,076				6,291				4,869
Provision for Income Taxes			1,088				992				1,048				1,223				933
Net Income		$	4,846			$	4,450			$	5,028			$	5,068			$	3,936
Basic Earnings Per Share		$	2.41			$	2.21			$	2.50			$	2.53			$	1.96
Diluted Earnings Per Share		$	2.39			$	2.19			$	2.48			$	2.50			$	1.94

Heartland BancCorp
Consolidated Statements of Income
		Six Months Ended
Interest Income		Jun. 30, 2023				Jun. 30, 2022
Loans		$	39,494			$	25,322
Securities
Taxable			1,773				1,057
Tax-exempt			1,194				1,152
Other			536				73
Total interest income			42,997				27,604
Interest Expense
Deposits			11,401				938
Borrowings			1,216				713
Total interest expense			12,617				1,651
Net Interest Income			30,380				25,953
Provision for Credit Losses			1,550				960
Net Interest Income After Provision for Credit Losses			28,830				24,993
Noninterest income
Service charges			1,990				1,777
Gains on sale of loans and originated MSR			930				1,115
Loan servicing fees, net			768				820
Title insurance income			482				636
Net realized gains on sales of available-for-sale securities			-				-
Increase in cash value of life insurance			231				195
Other			1,590				1,737
Total noninterest income			5,991				6,280
Noninterest Expense
Salaries and employee benefits			14,735				13,724
Net occupancy and equipment expense			2,122				1,953
Software and data processing fees			2,094				1,739
Professional fees			554				480
Marketing expense			608				506
State financial institution tax			520				533
FDIC insurance premiums			526				162
Other			2,286				2,316
Total noninterest expense			23,445				21,413
Income before Income Tax			11,376				9,860
Provision for Income Taxes			2,080				1,885
Net Income		$	9,296			$	7,975
Basic Earnings Per Share		$	4.62			$	3.97
Diluted Earnings Per Share		$	4.58			$	3.93

Heartland BancCorp
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)
Asset Quality Ratios and Data:
		Jun. 30, 2023				Mar. 31, 2023				Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022
Nonaccrual loans (excluding restructured loans)		$	2,163			$	1,140			$	700			$	699			$	949
Nonaccrual restructured loans			-				-				-				-				261
Loans past due 90 days and still accruing			-				111				309				404				245
Total non-performing loans			2,163				1,251				1,009				1,103				1,455
OREO and other non-performing assets			5				5				5				5				5
Total non-performing assets		$	2,168			$	1,256			$	1,014			$	1,108			$	1,460
Nonperforming loans to gross loans			0.14	%			0.09	%			0.07	%			0.08	%			0.12	%
Nonperforming assets to total assets			0.12	%			0.07	%			0.06	%			0.07	%			0.10	%
Allowance for credit losses to gross loans			1.13	%			1.13	%			1.18	%			1.23	%			1.32	%
Unfunded commitment liability to gross loans			0.11	%			0.09	%			-				-				-
ACL + UCL to gross loans			1.24	%			1.22	%			1.18	%			1.23	%			1.32	%
Performing restructured loans (RC-C)		$	-			$	-			$	-			$	3,148			$	4,519
Net charge-offs quarter ending		$	43			$	19			$	118			$	176			$	5

Contact:

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