Heartland BancCorp Earnings Increase 20.4% to $1.9 Million, or $1.22 per Diluted Share, in 3Q15, Declares Quarterly Cash Dividend of $0.3724 per Share

GAHANNA, Ohio, Oct. 20, 2015 (GLOBE NEWSWIRE) — Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported earnings increased 20.4% to $1.9 million, or $1.22 per diluted share in the third quarter of 2015 compared to $1.6 million, or $1.02 per diluted share, in the third quarter a year ago. In the preceding quarter, earnings were $1.8 million, or $1.15 per diluted share. For the first nine months of the year, Heartland’s earnings increased 20.2% to $5.3 million, or $3.36 per diluted share, compared to $4.4 million, or $2.82 per diluted share, in the first nine months of 2014.

The Company also announced its board of directors declared a regular quarterly cash dividend of $0.3724 per share. The dividend will be payable January 10, 2016, to shareholders of record as of December 25, 2015.

“With above average wage growth and below average unemployment, the greater Columbus market continues to be one of the healthiest economies, not only in the region, but in the country.* We have been strategically positioned to leverage that growth,” said G. Scott McComb, Chairman, President and CEO.

Third Quarter Financial Highlights (at or for the period ended September 30, 2015)

  • Net income was $1.9 million, up from $1.8 million in the preceding quarter and $1.6 million in the third quarter a year ago.
  • Net interest margin remained strong at 3.96% compared to 4.08% in the preceding quarter and 4.04% in the third quarter a year ago.
  • Annualized return on average assets was 1.14%.
  • Annualized return on average equity was 12.47%.
  • Total deposits increased 12.0% to $608.0 million from a year ago.
  • Net loans increased 10.5% to $529.7 million from a year ago.
  • Non-performing assets decreased 29.8% to $4.1 million, or 0.59% of total assets, at September 30, 2015, compared to a year ago, and increased from $3.6 million in the preceding quarter.
  • Tangible book value per share increased 8.0% to $40.84 per share compared to $37.80 per share one year earlier.
  • Declared a quarterly cash dividend of $0.3724 per share, which represents a 3.0% yield based on the September 30, 2015 stock price. ($48.97)

*http://money.cnn.com/2015/08/10/news/economy/cities-fastest-wage-growth/

Balance Sheet Review

“Our strong loan growth during the quarter, particularly in the agricultural and commercial and industrial (C&I) portfolios, contributed to double digit year-over-year loan growth again this quarter,” said McComb. “We have taken advantage of the thirst for local community banking, and continue to develop relationships with new clients as they seek what we deliver.” Net loans increased 0.6% to $529.7 million at quarter end, compared to $526.4 million three months earlier and increased 10.5% compared to $479.3 million a year earlier.

Total deposits increased 2.8% to $608.0 million at September 30, 2015, compared to $591.3 million at June 30, 2015 and increased 12.0% compared to $543.0 million at September 30, 2014. Demand accounts represented 19.6%, savings, NOW and money market accounts represented 35.7%, and CDs comprised 44.6% of the total deposit portfolio, at September 30, 2015.

Total assets increased 2.4 % to $700.5 million at September 30, 2015, compared to $683.8 million three months earlier and increased 10.1 % compared to $636.0 million a year earlier. Shareholders’ equity increased 3.2% to $64.2 million at September 30, 2015, compared to $62.2 million at June 30, 2015 and increased 8.7% compared to $59.1 million one year ago. At quarter end, Heartland’s tangible book value increased 3.1% to $40.84 per share compared to $39.60 per share three months earlier and increased 8.0% from $37.80 per share one year earlier.

Operating Results

“Our net interest margin contracted during the quarter, reflecting the continued margin compression that the industry is experiencing,” said McComb. Heartland’s net interest margin was 3.96% in the third quarter of 2015, compared to 4.08% in the preceding quarter and 4.04% in the third quarter a year ago. In the first nine months of the year, Heartland’s net interest margin was 4.03%, a three basis point improvement compared to the same period a year ago.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 9.5% to $7.3 million in the third quarter, compared to $6.6 million in the third quarter a year ago.  Year-to-date, total revenues increased 11.0% to $21.1 million, compared to $19.04 million in the first nine months of 2014. Net interest income before the provision for loan loss increased 8.3% to $6.4 million in the third quarter of 2015, compared to $5.9 million in the third quarter a year ago.  In the first nine months of 2015, net interest income before the provision for loan losses increased 12.8% to $18.9 million, compared to $16.7 million in the first nine months of 2014.

Heartland’s noninterest income was $874,000 in the third quarter of 2015, compared to $732,000 in the second quarter and $734,000 a year ago. The increase in noninterest income reflects a $124,000 net gain on sale of loans, which is more than triple the gains booked the prior periods.  Year-to-date, noninterest income was $2.28 million compared to $2.33 million in the same period a year ago. In 2014, Heartland had substantial gains from sales of securities and foreclosed assets. 

In the third quarter of 2015, noninterest expenses were $4.3 million, which were unchanged compared to the preceding quarter, and up from $4.1 million a year ago.  In the first nine months of the year, noninterest expenses were $13.0 million compared to $11.9 million in the first nine months of 2014. The year-over-year increase is primarily attributable to costs associated with the new branch in Pickerington, Ohio, as well as higher employee and incentive costs due to higher loan production.

Credit Quality

“Credit quality continues to improve compared to a year ago, and all of our foreclosed assets have been cleared as of the end of the quarter. Nonaccrual loans and past due loans still accruing, however, were up in the current quarter for a few relationships that have been slow in making their payments,” said McComb. 

Heartland’s nonaccrual loans were $3.0 million at September 30, 2015, which was a slight increase compared to $2.6 million three months earlier, and a decrease of 42.4% from $5.2 million a year earlier. Loans past due 90 days and still accruing also increased to $1.1 million from $872,000 at the end of the second quarter and $157,000 a year ago. Other real estate owned (OREO) and other non-performing assets were zero compared to $127,000 at June 30, 2015, and $517,000 a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.1 million at September 30, 2015, compared to $3.6 million three months earlier, and decreased 29.8% when compared to $5.9 million a year ago. 

Heartland’s third quarter provision for loan losses was $160,000, down from $240,000 in the preceding quarter. This compares to $275,000 in the third quarter a year ago. Year-to-date, the provision for loan losses totaled $640,000 compared to $1.03 million in the first nine months of 2014. As of September 30, 2015, the allowance for loan losses represented 190.8% of nonaccrual loans compared to 214.2% three months earlier, and 103.3% one year earlier.

Net charge-offs were $8,000 in the third quarter compared to $13,000 in the preceding quarter, and $81,000 in the third quarter a year ago. The allowance for loan losses was $5.6 million, or 1.06% of total loans at September 30, 2015, compared to $5.5 million, or 1.03% of total loans at Jun 30, 2015, and $5.4 million, or 1.11% of total loans a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates twelve 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 2015, 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 12/31/14.

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, 2015 June 30, 2015 Sept. 30, 2014
Cash and due from banks  $ 29,736,396  $ 18,276,394  $ 25,105,558
Federal funds sold  —   —   — 
Cash and cash equivalents  29,736,396  18,276,394  25,105,558
Available-for-sale securities  104,061,671  102,750,431  104,317,349
Held-to-maturity securities, fair value $6,845,100 and $7,097,981 at September 30, 2015 and 2014, respectively and $6,912,734 at June 30, 2015  6,498,787  6,512,404  6,627,470
Loans, net of allowance for loan losses of $5,649,773 and $5,363,148 at September 30, 2015 and 2014, respectively and $5,498,142 at June 30, 2015  529,733,539  526,378,261  479,316,638
Premises and equipment  13,458,703  13,052,320  12,252,675
Nonmarketable equity securities  2,658,239  2,658,239  1,941,839
Foreclosed assets held for sale  —   127,457  516,911
Interest receivable  2,374,220  1,835,510  2,185,004
Goodwill  417,353  417,353  417,353
Deferred income taxes  1,881,258  1,881,258  1,597,220
Life insurance assets  9,337,159  9,270,862  1,140,898
Other   322,333  686,528  607,778
 Total assets  $ 700,479,658  $ 683,847,017  $ 636,026,693
       
Liabilities and Shareholders’ Equity      
 Liabilities      
Deposits      
Demand  $ 119,445,210  $ 110,780,365  $ 103,352,665
Saving, NOW and money market  217,336,061  214,830,174  204,394,936
Time  271,254,619  265,725,425  235,257,990
 Total deposits  608,035,890  591,335,964  543,005,591
Short-term borrowings  23,620,874  26,121,461  28,740,469
Interest payable and other liabilities  4,617,893  4,184,678  5,229,770
 Total liabilities  636,274,657  621,642,103  576,975,830
       
 Shareholders’ Equity      
Common stock, without par value; authorized 5,000,000 shares; issued 2015 — 1,561,781 shares 2014 — 1,552,922 shares and June 2015 – 1,560,121 shares  23,725,023  23,646,662  23,500,371
Retained earnings  39,765,320  38,403,912  35,062,394
Accumulated other comprehensive income (expense)  714,658  154,340  551,368
Treasury stock at Cost, Common; 2014- 1,665 shares  —   —   (63,270)
 Total shareholders’ equity  64,205,001  62,204,914  59,050,863
 Total liabilities and shareholders’ equity  $ 700,479,658  $ 683,847,017  $ 636,026,693
 Book value per share  $ 41.11  $ 39.87  $ 38.07
Heartland BancCorp
Consolidated Statements of Income
  Three Months Ended  Nine Months Ended      
Interest Income Sept. 30, 2015 June 30, 2015 Sept. 30, 2014 Sept. 30, 2015 Sept. 30, 2014
Loans  $ 6,497,915  $ 6,492,460  $ 5,919,484  $ 19,130,541  $ 16,605,072
Securities          
Taxable   335,461  313,128  282,906  952,108  931,880
Tax-exempt  383,968  386,843  402,987  1,156,269  1,239,181
Other  15,443  11,301  8,056  35,037  30,284
 Total interest income  7,232,787  7,203,732  6,613,433  21,273,955  18,806,417
Interest Expense          
Deposits  846,062  805,249  715,202  2,404,828  2,072,920
Borrowings  3,291  3,050  4,513  10,018  12,631
 Total interest expense  849,353  808,299  719,715  2,414,846  2,085,551
Net Interest Income  6,383,434  6,395,433  5,893,718  18,859,109  16,720,866
Provision for Loan Losses  160,000  240,000  275,000  640,000  1,030,000
Net Interest Income After Provision for Loan Losses  6,223,434  6,155,433  5,618,718  18,219,109  15,690,866
Noninterest income          
Service charges  500,789  479,553  505,932  1,447,861  1,505,144
Net Gains and commissions on loan sales   123,793  43,802  36,098  207,121  89,004
Net realized gains on available-for-sale securities  —  8,500  —  16,934  136,701
Net realized gain/(loss) on sales of foreclosed assets  5,250  —  51,273  5,308  154,073
Other  244,580  199,914  140,263  607,690  441,031
 Total noninterest income  874,412  731,769  733,566  2,284,914  2,325,953
Noninterest Expense          
Salaries and employee benefits  2,501,325  2,542,268  2,346,693  7,531,362  6,717,988
Net occupancy and equipment expense  478,053  466,576  422,382  1,386,353  1,291,626
Data processing fees  270,360  274,407  184,541  816,850  699,281
Professional fees  140,972  122,229  203,598  433,700  586,117
Marketing expense  135,000  135,000  131,250  411,000  398,750
Printing and office supplies  33,805  44,183  38,063  127,091  122,721
State franchise taxes  105,982  105,981  90,097  317,945  283,127
FDIC Insurance premiums  111,000  96,000  91,836  318,000  250,253
Other  564,992  534,157  595,943  1,667,520  1,573,688
 Total noninterest expense  4,341,489  4,320,801  4,104,403  13,009,821  11,923,551
Income before Income Tax  2,756,357  2,566,401  2,247,881  7,494,202  6,093,268
Provision for Income Taxes  813,343  740,559  634,529  2,175,321  1,668,139
Net Income  $ 1,943,014  $ 1,825,842  $ 1,613,352  $ 5,318,881  $ 4,425,129
Basic Earnings Per Share  $ 1.25  $ 1.17  $ 1.04  $ 3.42  $ 2.85
Diluted Earnings Per Share  $ 1.22  $ 1.15  $ 1.02  $ 3.36  $ 2.82
           
ADDITIONAL FINANCIAL INFORMATION          
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Nine Months Ended
  Sept. 30, 2015 June 30, 2015 Sept. 30, 2014 Sept. 30, 2015 Sept. 30, 2014
Performance Ratios:          
Return on average assets 1.14% 1.10% 1.05% 1.01% 0.97%
Return on average equity  12.47% 11.93% 11.21% 10.96% 10.40%
Net interest margin 3.96% 4.13% 4.04% 4.03% 4.00%
Efficiency ratio 59.82% 60.70% 61.93% 61.58% 63.05%
           
Asset Quality Ratios and Data: As of or for the Three Months Ended    
  Sept. 30, 2015 June 30, 2015 Sept. 30, 2014    
Non accrual loans  $ 2,991  $ 2,567  $ 5,192    
Loans past due 90 days and still accruing  1,126  872  157    
Non-performing investment securities  —   —   —    
OREO and other non-performing assets  —   127  517    
Total non-performing assets  $ 4,117  $ 3,566  $ 5,866    
           
Non-performing assets to total assets 0.59% 0.52% 0.92%    
Net charge-offs quarter ending   $ 8  $ 13  $ 81    
           
Allowance for loan loss  $ 5,650  $ 5,498  $ 5,363    
Non accrual loans  $ 2,962  $ 2,567  $ 5,192    
Allowance for loan loss to non accrual loans 190.75% 214.18% 103.29%    
Allowance for loan losses to loans outstanding 1.06% 1.03% 1.11%    
           
Book Values:          
Total shareholders’ equity  $ 64,205  $ 62,205  $ 59,051    
Less, goodwill  417  417  417    
Shareholders’ equity less goodwill  $ 63,788  $ 61,788  $ 58,634    
Common shares outstanding  1,561,781  1,560,121  1,552,922    
Less treasury shares  —   —   1,665    
Common shares as adjusted  1,561,781  1,560,121  1,551,257    
Book value per common share  $ 41.11  $ 39.87  $ 38.07    
           
Tangible book value per common share  $ 40.84  $ 39.60  $ 37.80    
CONTACT: G. Scott McComb, Chairman, President & CEO
         Heartland BancCorp  614-337-4600