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Heartland BancCorp Earns $1.6 Million, or $1.02 per Diluted Share in Third Quarter of 2014; Fueled by 4.04% Net Interest Margin and 14% Loan Growth, Declares Regular Quarterly Cash Dividend of $0.3547 Per Share

2014-10-22 17:22 ET - News Release

GAHANNA, Ohio, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Heartland BancCorp, (OTCQB:HLAN) today reported earnings increased 12.1% to $1.6 million, or $1.02 per diluted share, in the third quarter of 2014 compared to $1.4 million, or $0.92 per diluted share, in the third quarter a year ago. In the first nine months of the year, Heartland's earnings increased 16.1% to $4.4 million, or $2.82 per diluted share, compared to $3.8 million, or $2.44 per diluted share, in the first nine months of 2013.

The Company also announced its board of directors declared a regular quarterly cash dividend of $0.3547 per share. The dividend will be payable January 10, 2015 to shareholders of record December 25, 2014.

"Heartland's third quarter success was fueled by solid loan and deposit growth and ongoing improvements in credit quality," stated G. Scott McComb, Chairman, President and CEO. "We have seen improvements across all areas of our operations this year and continue to generate a healthy net interest margin. The steady economic recovery in Ohio, particularly in the Columbus MSA, has contributed to strong core deposit growth and robust lending activity.  We look forward to the future with confidence as we continue to create value for our shareholders by developing strong relationships with our customers, communities and employees." 

Third Quarter Highlights (at or for the period ended September 30, 2014)

  • Net income was $1.6 million, or $1.02 per diluted share, compared to $1.4 million, or $0.92 per diluted share in the third quarter of 2013.
  • Annualized return on average assets was 1.05%.
  • Annualized return on average equity was 11.21%.
  • Net interest margin improved 11 basis points to 4.04%, compared to 3.93% in the third quarter a year ago.
  • Core deposits increased 9.4% and represent 56.7% of total deposits.
  • Total net loans increased 14% to $490.3 million compared to a year ago.
  • Non-performing assets decreased 8.2% compared to three months earlier to $5.8 million, or 0.92% of total assets, at September 30, 2014.
  • Book value per share increased 9.6% to $38.07 per share, compared to $34.73 per share one year earlier.
  • Declared a quarterly cash dividend of $0.3547 per share, which represents a 3.4% yield based on the recent stock price.

Balance Sheet Review

"We are continuing to build our loan pipeline and new applications were particularly robust during the current quarter," said McComb. "As a result, total net loans increased 13.9% to $479.3 million at quarter end compared to $420.9 million a year earlier, with a majority of the growth coming from an increase in both commercial real estate loans and new C&I loans."

Heartland's total deposits increased 8.7% to $543.0 million at September 30, 2014, compared to $499.6 million a year earlier. "A majority of the deposit increase came from a combination of new demand deposits, as well as higher balances in checking accounts," said McComb. Demand accounts represent 19%, savings, NOW and money market accounts represent 38%, and CDs comprise 43% of the total deposit portfolio at September 30, 2014. 

Total assets increased 9.0% to $636.0 million at September 30, 2014, compared to $583.7 million a year earlier and shareholders' equity increased 9.8% to $59.1 million at September 30, 2014, compared to $53.8 million one year ago. At quarter-end, Heartland's tangible book value increased 9.6% to $38.07 per share, compared to $34.73 per share one year earlier.

Credit Quality

"Heartland's credit quality metrics remained strong in the current quarter and reflect our focus on maintaining a moderate risk profile. Non-performing loan balances, real estate owned and other repossessed assets all declined compared to the prior quarter and are below year ago levels," said McComb.

The third quarter provision for loan losses was $275,000, compared to $350,000 in the preceding quarter and $455,000 in the third quarter a year ago. As of September 30, 2014, the allowance for loan losses represented 103.3% of nonperforming loans compared to 94.3% three months earlier and 69.1% a year earlier.

Net charge-offs were $82,000 in the third quarter compared to $280,000 in the preceding quarter and $838,000 in the third quarter a year ago. The allowance for loan losses was $5.4 million, or 1.11% of total loans at September 30, 2014, compared to $5.2 million, or 1.12% of total loans at June 30, 2014, and $5.4 million, or 1.26% of total loans a year ago.

Nonaccrual loans decreased 5.3% to $5.2 million at September 30, 2014, compared to $5.5 million three months earlier, and decreased 33.1% compared to $7.8 million a year earlier. Other real estate owned (OREO) and other non-performing assets declined 33.0% to $517,000 at September 30, 2014 compared to $772,000 three months earlier and decreased 83.3% compared to $3.1 million a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, decreased 8.2% to $5.8 million at September 30, 2014, compared to $6.4 million three months earlier, and decreased 46% when compared to $10.9 million a year ago. 

Operating Results

Heartland's revenues (net interest income before the provision for loan losses, plus non-interest income) increased 10.2% to $6.6 million in the third quarter, compared to $6.0 million in the third quarter a year ago. In the first nine months of the year, Heartland's revenues increased 5.6% to $19.0 million compared to $18.0 million in the first nine months of 2013. Net interest income before the provision for loan loss increased 14.1% to $5.9 million in the third quarter of 2014, compared to $5.2 million in the third quarter a year ago. In the first nine months of the year, net interest income increased 10.2% to $16.7 million compared to $15.2 million the first nine months a year ago.

"Despite continued pressure on loan yields, our net interest margin remains healthy and well above peer levels due to higher than industry average yields on our loan mix," said McComb. Heartland's net interest margin remained steady at 4.04% in the third quarter of 2014, compared to 3.99% in the preceding quarter and 3.93% in the third quarter a year ago. The average net interest margin was 2.81% for the 324 banks that make up the SNL U.S. Bank Index as of June 30, 2014. In the first nine months of 2014, Heartland's net interest margin improved 11 basis points to 4.00% compared to 3.89% in the first nine months of 2013.

Noninterest income decreased to $734,000 in the third quarter of 2014, compared to $851,000 in the third quarter a year ago. Year-to-date, noninterest income was $2.3 million compared to $2.9 million in the first nine months of 2013. The year-to-date decrease in noninterest income was primarily attributed to substantially lower net realized gains on available-for-sale securities, which totaled $137,000 in the first nine months of 2014, compared to $691,000 in the first nine months of 2013.  

In the third quarter of 2014, noninterest expenses increased 13.7% to $4.1 million, compared to $3.6 million in the third quarter a year ago. Year-to-date, noninterest expense increased 4.6% to $11.9 million compared to $11.4 million in the same period a year earlier. "The increase in noninterest expense for both the quarter and the year-to-date periods is primarily related to the increase in commercial lenders we have brought on during the year, who are helping to produce our double-digit year-over-year loan growth," said McComb.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates eleven 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 over-the-counter (OTC) Bulletin Board Service under the symbol HLAN. Learn more about Heartland Bank at HeartlandBank.com.

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 Sept. 30, 2014 June 30, 2014 Sept. 30, 2013
Cash and due from banks  $ 25,105,558  $ 25,046,465  $ 20,679,384
Federal funds sold  --   99,000  -- 
Cash and due from banks  25,105,558  25,145,465  20,679,384
Available-for-sale securities  104,317,349  107,813,882  111,220,096
Held-to-maturity securities, fair value $7,097,981 and $7,198,014 at September 30, 2014 and 2013, respectively and $7,801,919 at June 30, 2014  6,627,470  6,598,997  6,959,072
Loans, net of allowance for loan losses of $5,363,148 and $5,357,008 at September 30, 2014 and 2013, respectively and $5,169,910 at June 30, 2014  479,316,638  455,166,994  420,919,004
Premises and equipment  12,252,675  12,234,256  11,943,694
Federal Reserve and Federal Home Loan Bank stock  1,941,839  1,941,839  1,889,950
Foreclosed assets held for sale  516,911  772,398  3,089,100
Interest receivable  2,185,004  1,656,804  1,994,068
Receivables due from loan sales      
Goodwill  417,353  417,353  417,353
Deferred income taxes  1,597,220  1,731,311  3,036,817
Other  1,748,676  1,866,340  1,560,619
Total assets  $ 636,026,693  $ 615,345,639  $ 583,709,157
       
Liabilities and Shareholders' Equity      
Liabilities      
Deposits      
Demand  $ 103,352,665  $ 93,737,565  $ 89,651,217
Saving, NOW and money market  204,394,936  200,406,842  191,625,207
Time  235,257,990  233,445,342  218,292,225
Total deposits  543,005,591  527,589,749  499,568,649
Short-term borrowings  28,740,469  25,285,661  26,448,018
Interest payable and other liabilities  5,229,770  4,783,030  3,929,336
Total liabilities  576,975,830  557,658,440  529,946,003
       
Shareholders' Equity      
Common stock, without par value; authorized 5,000,000 shares; issued 2014 - 1,552,922, 2013 - 1,547,922 shares and June 2014 - 1,551,922 shares  23,500,371  23,460,714  23,275,659
Retained earnings  35,062,394  33,998,681  31,407,292
Accumulated other comprehensive income (expense)  551,368  291,074  (919,797)
Treasury stock at Cost, Common; 2014- 1,665 shares  (63,270)  (63,270)  -- 
Total shareholders' equity  59,050,863  57,687,199  53,763,154
Total liabilities and shareholders' equity  $ 636,026,693  $ 615,345,639  $ 583,709,157
Book value per share  $ 38.07  $ 37.21  $ 34.73
 
 
Heartland BancCorp
Consolidated Statements of Income
           
  Three Months Ended Nine Months Ended
Interest IncomeSept. 30, 2014June 30, 2014Sept. 30, 2013Sept. 30, 2014Sept. 30, 2013
Loans  $ 5,919,484  $ 5,432,679  $ 5,138,858  $ 16,605,072  $ 15,195,263
Securities          
Taxable  282,906  309,243  316,211  931,880  1,100,522
Tax-exempt  402,987  405,647  438,345  1,239,181  1,354,521
Other  8,056  13,105  12,763  30,284  35,562
Total interest income  6,613,433  6,160,674  5,906,177  18,806,417  17,685,868
Interest Expense          
Deposits  715,202  683,201  738,555  2,072,920  2,289,212
Borrowings  4,513  3,340  2,973  12,631  227,888
Total interest expense  719,715  686,541  741,528  2,085,551  2,517,100
Net Interest Income  5,893,718  5,474,133  5,164,649  16,720,866  15,168,768
Provision for Loan Losses  275,000  350,000  455,000  1,030,000  1,565,000
Net Interest Income After Provision for Loan Losses  5,618,718  5,124,133  4,709,649  15,690,866  13,603,768
Noninterest income          
Service charges  505,932  517,989  511,623  1,505,144  1,455,105
Net Gains and commissions on loan sales  36,098  36,562  18,388  89,004  52,342
Net realized gains on available-for-sale securities  --  136,701  6,692  136,701  690,795
Net realized gain/(loss) on sales of foreclosed assets  51,273  77,031  20,188  154,073  (20,731)
Other  140,263  155,034  294,459  441,031  686,103
Total noninterest income  733,566  923,317  851,350  2,325,953  2,863,614
Noninterest Expense          
Salaries and employee benefits  2,346,693  2,139,971  1,926,343  6,717,988  6,037,299
Net occupancy and equipment expense  422,382  422,785  432,284  1,291,626  1,358,327
Data processing fees  184,541  272,884  221,496  699,281  667,019
Professional fees  203,598  228,123  167,147  586,117  616,122
Marketing expense  131,250  131,250  99,999  398,750  299,997
Printing and office supplies  38,063  34,679  38,194  122,721  119,562
State franchise taxes  90,097  90,097  153,726  283,127  465,841
FDIC Insurance premiums  91,836  79,836  120,491  250,253  357,497
Other  595,943  458,158  450,224  1,573,688  1,482,762
Total noninterest expense  4,104,403  3,857,783  3,609,904  11,923,551  11,404,426
Income before Income Tax  2,247,881  2,189,667  1,951,095  6,093,268  5,062,956
Provision for Income Taxes  634,529  611,867  511,252  1,668,139  1,250,905
Net Income  $ 1,613,352  $ 1,577,800  $ 1,439,843  $ 4,425,129  $ 3,812,051
Basic Earnings Per Share  $ 1.04  $ 1.02  $ 0.93  $ 2.85  $ 2.47
Diluted Earnings Per Share  $ 1.02  $ 1.01  $ 0.92  $ 2.82  $ 2.44
     
     
  Three Months Ended Nine Months Ended
  Sept. 30,
2014
June 30,
2014
Sept. 30,
2013
Sept. 30,
2014
Sept. 30,
2013
           
Performance Ratios:          
Return on average assets 1.05% 1.05% 1.02% 0.97% 0.88%
Return on average equity  11.21% 11.25% 10.86% 10.40% 9.28%
Net Interest margin 4.04% 3.99% 3.93% 4.00% 3.89%
Efficiency Ratio 61.93% 61.62% 60.07% 63.05% 65.76%
           
Asset Quality Ratios and Data: As of or for the Three Months Ended    
  Sept. 30,
2014
June 30,
2014
Sept. 30,
2013
   
           
Non Accrual Loans  5,193  5,485  7,763    
Loans Past Due 90 days and Still accruing  126  100  50    
Non Performing Investment investment securities  --   --  --    
OREO and other non-performing Assets  517  772  3,090    
Total non-performing assets  5,836  6,357  10,903    
           
Non performing assets to total assets 0.92% 1.03% 1.87%    
           
Non-performing assets to total assets          
Total Assets as of  636,027  615,346  583,709    
           
Net Charge-offs Quarter ending   82  280  838    
           
           
Allowance for loan loss   5,363,148  5,169,910  5,357,008    
Loans Receivable  484,679,786  460,336,904  426,276,012    
Allowance to loans outstanding 1.11% 1.12% 1.26%    
           
           
Allowance for Loan Loss  5,363  5,170  5,357    
Non accrual Loans  5,193  5,485  7,763    
Allowance for loan loss to non accrual loans 103.27% 94.26% 69.01%    
           
Total Shareholders' Equity  59,050,863  57,687,199  53,753,748    
Less, Goodwill  417,353  417,353  417,353    
Shareholders' equity less Goodwill  58,633,510  57,269,846  53,336,395    
Common Shares outstanding  1,552,922  1,551,922  1,544,922    
Less treasury Shares  1,665  1,665  --     
Common Shares as adjusted  1,551,257  1,550,257  1,544,922    
Book Value per common share $ 38.07  $ 37.21  $ 34.79    
           
Tangible Book Value per common shares $ 37.80  $ 36.94  $ 34.52    
CONTACT: G. Scott McComb, President, Chairman & CEO
         Heartland BancCorp 614-337-4600

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