The company also announced that its board of directors declared a quarterly cash dividend of
“Heartland produced strong net income for the fourth quarter, and record earnings for the year, as we continue to selectively grow the loan portfolio while maintaining a strong deposit base,” stated
“We continue to see excellent growth in our
Fourth Quarter 2023 Financial Highlights (at or for the three months ended
- Net income was
$5.3 million , or$2.61 per diluted share, compared to$5.0 million , or$2.48 per diluted share, in the fourth quarter of 2022. - Provision for credit losses was
$550,000 , compared to$480,000 for the fourth quarter a year ago. - Net interest margin was 3.49%, compared to 3.52% in the preceding quarter and 4.13% in the fourth quarter a year ago.
- Fourth quarter revenues (net interest income plus noninterest income) increased 1.6% to
$18.6 million , compared to$18.3 million in the fourth quarter a year ago. - Annualized return on average assets was 1.13%, compared to 1.23% in the fourth quarter of 2022.
- Annualized return on average tangible common equity was 15.05%, compared to 15.63% in the fourth quarter a year ago.
- Net loans increased
$27.6 million during the quarter, or 1.8%, to$1.53 billion atDecember 31, 2023 , compared to$1.50 billion three months earlier. - Total deposits increased
$63.3 million during the quarter, or 4.0%, to$1.64 billion atDecember 31, 2023 , compared to$1.58 billion three months earlier. - Credit quality remains pristine, with nonperforming loans to gross loans of 0.13% and nonperforming assets to total assets of 0.11%, at
December 31, 2023 . - Tangible book value increased 14.0% to
$74.23 per share, compared to$65.09 per share a year ago. - Declared a quarterly cash dividend of
$0.759 per share.
2023 Full Year Financial Highlights (at or for the twelve months ended
- Net income for 2023 increased 8.0% to
$19.5 million , compared to$18.1 million in 2022. - Net interest margin was 3.62% for the year, compared to 4.03% for 2022.
- Total revenues increased 7.5% to
$73.5 million in 2023, compared to$68.4 million in 2022. - Annualized return on average assets was 1.09% for 2023, compared to 1.20% for 2022.
- Annualized return on average tangible equity was 14.15% for 2023, compared to 13.60% for 2022.
- Net loans increased
$143.4 million , or 10.3%, year-over-year to$1.53 billion . - Total deposits increased 12.8% to
$1.64 billion , compared to$1.46 billion a year ago.
Balance Sheet Review
Assets
Total assets increased 13.2% to
Securities increased 38.5% to
Average earning assets increased to
Loan Portfolio
“We continued to moderate loan growth during the quarter, resulting in net loans increasing 1.8% over the prior quarter end, with average loans increasing 1.5% compared to the prior quarter,” said
Net loans were
Deposits
Total deposits were
At
Shareholders’ Equity
Shareholders’ equity increased 8.6% to
Heartland continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with tangible equity to tangible assets of 8.00% at
Liquidity
Heartland had ample sources of available liquidity as of
Operating Results
In the fourth quarter of 2023, Heartland generated a ROAA of 1.13% and a ROATCE of 15.05%, compared to 1.07% and 14.01%, respectively, in the third quarter of 2023 and 1.23% and 15.63%, respectively, in the fourth quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income, before the provision for credit losses, decreased 2.8% to
Total revenues (net interest income, before the provision for credit losses, plus noninterest income) were
Heartland’s net interest margin was 3.49% in the fourth quarter of 2023, compared to 3.52% in the preceding quarter and 4.13% in the fourth quarter of 2022. “Our net interest margin is starting to stabilize, contracting three basis points during the fourth quarter, compared to the prior quarter. While deposit pricing pressures continue, the increase in average DDA balances helped to ease funding costs. Additionally, we continue to benefit from repricing loans at higher rates,” said
Heartland’s net interest margin continues to remain above the peer average posted by the Dow Jones
Provision for Credit Losses
Heartland recorded a
Noninterest Income
Noninterest income increased 29.4% to
“Similar to the prior quarter, we experienced strong secondary loan activity during the fourth quarter, and we were successful with executing on swaps, with
Noninterest Expense
Noninterest expenses were
“We have made a company-wide effort over the last few quarters to manage operating expenses, and we will continue this focus into 2024,” said Almendinger. “Salary and employee benefits were lower in part due to lower incentive compensation from muted loan growth. We also had a benefit of approximately
The efficiency ratio for the fourth quarter of 2023 was 62.5%, compared to 64.7% for the preceding quarter and 64.2% for the fourth quarter of 2022.
Income Tax Provision
In the fourth quarter of 2023, Heartland recorded
Credit Quality
“Our overall credit quality metrics continue to remain stable. We are seeing minimal signs of stress in the loan portfolio, and we hold strong collateral positions with all our loans,” said McComb.
Beginning
___________________________
*As of
At
Nonaccrual loans were
There was
About
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
During the first quarter of 2023, Heartland was ranked 36th 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) Heartland’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; and (ii) 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; and (6) 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.
Quarterly Financial Summary | ||||||||||||||||
Three Months Ended | ||||||||||||||||
Earnings and dividends: | ||||||||||||||||
Interest income | $ | 25,195 | $ | 24,194 | $ | 22,476 | $ | 20,521 | $ | 18,841 | ||||||
Interest expense | 9,807 | 8,928 | 7,437 | 5,180 | 3,011 | |||||||||||
Net interest income | 15,388 | 15,266 | 15,039 | 15,341 | 15,830 | |||||||||||
Provision for credit losses | 550 | 500 | 800 | 750 | 480 | |||||||||||
Noninterest income | 3,217 | 3,232 | 3,390 | 2,601 | 2,487 | |||||||||||
Noninterest expense | 11,632 | 11,975 | 11,695 | 11,750 | 11,761 | |||||||||||
Provision for income taxes | 1,135 | 1,091 | 1,088 | 992 | 1,048 | |||||||||||
Net income | 5,288 | 4,932 | 4,846 | 4,450 | 5,028 | |||||||||||
Share data: | ||||||||||||||||
Basic earnings per share | $ | 2.62 | $ | 2.45 | $ | 2.41 | $ | 2.21 | $ | 2.50 | ||||||
Diluted earnings per share | 2.61 | 2.43 | 2.39 | 2.19 | 2.48 | |||||||||||
Dividends declared per share | 0.76 | 0.76 | 0.76 | 0.76 | 0.69 | |||||||||||
Book value per share | 80.66 | 74.24 | 75.02 | 73.60 | 71.63 | |||||||||||
Tangible book value per share | 74.23 | 67.78 | 68.54 | 67.09 | 65.09 | |||||||||||
Common shares outstanding, 20,000,000 authorized | 2,105,737 | 2,105,737 | 2,105,237 | 2,103,537 | 2,099,587 | |||||||||||
(90,612 | ) | (90,612 | ) | (90,612 | ) | (90,612 | ) | (90,612 | ) | |||||||
Common shares, net | 2,015,125 | 2,015,125 | 2,014,625 | 2,012,925 | 2,008,975 | |||||||||||
Average common shares outstanding, net | 2,015,125 | 2,014,936 | 2,013,607 | 2,009,782 | 2,008,839 | |||||||||||
Balance sheet - average balances: | ||||||||||||||||
Loans receivable, net | $ | 1,520,331 | $ | 1,498,257 | $ | 1,465,920 | $ | 1,415,215 | $ | 1,356,369 | ||||||
Earning assets | 1,749,160 | 1,718,549 | 1,672,994 | 1,606,350 | 1,520,860 | |||||||||||
12,982 | 13,031 | 13,077 | 13,132 | 13,186 | ||||||||||||
Total assets | 1,854,191 | 1,822,084 | 1,772,998 | 1,705,675 | 1,620,580 | |||||||||||
Demand deposits | 476,992 | 473,373 | 467,301 | 495,443 | 500,624 | |||||||||||
Deposits | 1,622,335 | 1,598,495 | 1,553,882 | 1,488,181 | 1,413,150 | |||||||||||
Borrowings | 60,857 | 51,856 | 49,965 | 54,257 | 52,162 | |||||||||||
Shareholders' equity | 152,393 | 152,720 | 150,017 | 148,195 | 140,800 | |||||||||||
Ratios: | ||||||||||||||||
Return on average assets | 1.13 | % | 1.07 | % | 1.10 | % | 1.06 | % | 1.23 | % | ||||||
Return on average equity | 13.77 | % | 12.81 | % | 12.96 | % | 12.18 | % | 14.16 | % | ||||||
Return on average tangible common equity | 15.05 | % | 14.01 | % | 14.19 | % | 13.36 | % | 15.63 | % | ||||||
Yield on earning assets | 5.71 | % | 5.59 | % | 5.39 | % | 5.18 | % | 4.91 | % | ||||||
Cost of deposits | 2.21 | % | 2.05 | % | 1.76 | % | 1.24 | % | 0.70 | % | ||||||
Cost of funds | 2.31 | % | 2.15 | % | 1.86 | % | 1.36 | % | 0.82 | % | ||||||
Net interest margin | 3.49 | % | 3.52 | % | 3.61 | % | 3.87 | % | 4.13 | % | ||||||
Efficiency ratio | 62.52 | % | 64.74 | % | 63.46 | % | 65.48 | % | 64.21 | % | ||||||
Asset quality: | ||||||||||||||||
Net loan charge-offs to average loans | 0.08 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.03 | % | ||||||
Nonperforming loans to gross loans | 0.13 | % | 0.14 | % | 0.14 | % | 0.09 | % | 0.07 | % | ||||||
Nonperforming assets to total assets | 0.11 | % | 0.11 | % | 0.12 | % | 0.07 | % | 0.06 | % | ||||||
Allowance for loan losses to gross loans | 1.16 | % | 1.13 | % | 1.13 | % | 1.13 | % | 1.18 | % | ||||||
ACL + UCL to gross loans | 1.25 | % | 1.26 | % | 1.24 | % | 1.22 | % | 1.18 | % |
Consolidated Balance Sheets | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from | $ | 16,750 | $ | 20,993 | $ | 16,304 | $ | 14,121 | $ | 17,543 | ||||||||||
Interest bearing deposits | 19,932 | 24,222 | 20,017 | 37,297 | 5,340 | |||||||||||||||
Interest bearing time deposits | - | - | - | - | - | |||||||||||||||
Available-for-sale securities | 211,130 | 179,817 | 178,031 | 159,622 | 152,492 | |||||||||||||||
Held-to-maturity securities | 0 | 5 | 5 | 5 | 5 | |||||||||||||||
Loans held for sale | 1,145 | 1,706 | 2,748 | 1,200 | 1,345 | |||||||||||||||
Commercial | 172,658 | 169,405 | 176,972 | 165,736 | 162,720 | |||||||||||||||
CRE (Owner occupied) | 295,996 | 277,092 | 273,526 | 285,575 | 325,820 | |||||||||||||||
CRE (Nonowner occupied) | 501,056 | 502,012 | 490,900 | 468,163 | 391,461 | |||||||||||||||
1-4 Family | 508,826 | 499,953 | 495,578 | 486,077 | 461,661 | |||||||||||||||
Home Equity | 51,697 | 52,466 | 48,542 | 44,749 | 44,526 | |||||||||||||||
Consumer | 18,974 | 19,857 | 19,848 | 18,502 | 18,245 | |||||||||||||||
Allowance for credit losses | (17,928 | ) | (17,143 | ) | (17,063 | ) | (16,644 | ) | (16,591 | ) | ||||||||||
Net Loans | 1,531,279 | 1,503,642 | 1,488,303 | 1,452,158 | 1,387,842 | |||||||||||||||
Premises and equipment | 33,649 | 33,586 | 31,919 | 30,926 | 30,476 | |||||||||||||||
Nonmarketable equity securities | 6,866 | 6,863 | 6,635 | 6,631 | 6,627 | |||||||||||||||
Mortgage servicing rights, net | 3,373 | 3,346 | 3,208 | 3,119 | 3,173 | |||||||||||||||
Foreclosed assets held for sale | 10 | 0 | 5 | 5 | 5 | |||||||||||||||
12,388 | 12,388 | 12,388 | 12,388 | 12,388 | ||||||||||||||||
Intangible Assets | 565 | 613 | 661 | 710 | 765 | |||||||||||||||
Deferred income taxes | 7,087 | 8,323 | 6,702 | 6,157 | 7,504 | |||||||||||||||
Life insurance assets | 20,315 | 20,140 | 20,020 | 19,903 | 19,790 | |||||||||||||||
Accrued interest receivable and other assets | 18,661 | 19,148 | 18,744 | 20,848 | 17,831 | |||||||||||||||
Total assets | $ | 1,883,150 | $ | 1,834,792 | $ | 1,805,690 | $ | 1,765,090 | $ | 1,663,126 | ||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Demand | $ | 487,631 | $ | 454,764 | $ | 462,232 | $ | 487,238 | $ | 523,036 | ||||||||||
Saving, NOW and money market | 711,198 | 695,106 | 677,833 | 685,233 | 609,676 | |||||||||||||||
Time | 443,772 | 429,480 | 418,046 | 395,525 | 323,858 | |||||||||||||||
Total deposits | 1,642,601 | 1,579,350 | 1,558,111 | 1,567,996 | 1,456,570 | |||||||||||||||
Repurchase agreements | 4,583 | 4,446 | 4,594 | 5,095 | 15,213 | |||||||||||||||
FHLB Advances | 31,000 | 56,000 | 50,000 | 0 | 6,000 | |||||||||||||||
Subordinated debt | 24,034 | 24,024 | 24,213 | 24,703 | 24,693 | |||||||||||||||
Interest payable and other liabilities | 18,400 | 21,377 | 17,635 | 19,153 | 16,741 | |||||||||||||||
Total liabilities | 1,720,618 | 1,685,197 | 1,654,553 | 1,616,947 | 1,519,217 | |||||||||||||||
Shareholders' Equity | ||||||||||||||||||||
Common stock, without par value | 62,725 | 62,615 | 62,473 | 62,173 | 61,998 | |||||||||||||||
Retained earnings | 120,064 | 116,306 | 112,904 | 108,962 | 107,166 | |||||||||||||||
Accumulated other comprehensive income (expense) | (15,263 | ) | (24,332 | ) | (19,246 | ) | (17,998 | ) | (20,261 | ) | ||||||||||
(4,994 | ) | (4,994 | ) | (4,994 | ) | (4,994 | ) | (4,994 | ) | |||||||||||
Total shareholders' equity | 162,532 | 149,595 | 151,137 | 148,143 | 143,909 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 1,883,150 | $ | 1,834,792 | $ | 1,805,690 | $ | 1,765,090 | $ | 1,663,126 |
Consolidated Statements of Income | ||||||||||||||
Three Months Ended | ||||||||||||||
Interest Income | ||||||||||||||
Loans | $ | 22,850 | $ | 22,080 | $ | 20,609 | $ | 18,885 | $ | 17,312 | ||||
Securities | ||||||||||||||
Taxable | 1,374 | 1,173 | 928 | 845 | 757 | |||||||||
Tax-exempt | 629 | 619 | 596 | 598 | 604 | |||||||||
Other | 342 | 322 | 343 | 193 | 168 | |||||||||
Total interest income | 25,195 | 24,194 | 22,476 | 20,521 | 18,841 | |||||||||
Interest Expense | ||||||||||||||
Deposits | 9,017 | 8,272 | 6,837 | 4,564 | 2,497 | |||||||||
Borrowings | 790 | 656 | 600 | 616 | 514 | |||||||||
Total interest expense | 9,807 | 8,928 | 7,437 | 5,180 | 3,011 | |||||||||
Net Interest Income | 15,388 | 15,266 | 15,039 | 15,341 | 15,830 | |||||||||
Provision for Credit Losses | 550 | 500 | 800 | 750 | 480 | |||||||||
Net Interest Income After Provision for Credit Losses | 14,838 | 14,766 | 14,239 | 14,591 | 15,350 | |||||||||
Noninterest income | ||||||||||||||
Service charges | 1,002 | 1,020 | 1,015 | 975 | 930 | |||||||||
Gains on sale of loans and originated MSR | 734 | 708 | 704 | 226 | 218 | |||||||||
Loan servicing fees, net | 354 | 408 | 337 | 431 | 317 | |||||||||
Title insurance income | 214 | 196 | 311 | 171 | 237 | |||||||||
Increase in cash value of life insurance | 175 | 120 | 117 | 114 | 110 | |||||||||
Other | 738 | 780 | 906 | 684 | 675 | |||||||||
Total noninterest income | 3,217 | 3,232 | 3,390 | 2,601 | 2,487 | |||||||||
Noninterest Expense | ||||||||||||||
Salaries and employee benefits | 7,430 | 7,393 | 7,252 | 7,483 | 7,474 | |||||||||
Net occupancy and equipment expense | 1,052 | 1,057 | 1,055 | 1,067 | 1,004 | |||||||||
Software and data processing fees | 1,163 | 1,205 | 1,069 | 1,025 | 939 | |||||||||
Professional fees | 242 | 225 | 288 | 266 | 383 | |||||||||
Marketing expense | 320 | 271 | 309 | 299 | 250 | |||||||||
State financial institution tax | 260 | 259 | 259 | 261 | 339 | |||||||||
299 | 341 | 298 | 228 | 104 | ||||||||||
Other | 866 | 1,224 | 1,165 | 1,121 | 1,268 | |||||||||
Total noninterest expense | 11,632 | 11,975 | 11,695 | 11,750 | 11,761 | |||||||||
Income before Income Tax | 6,423 | 6,023 | 5,934 | 5,442 | 6,076 | |||||||||
Provision for Income Taxes | 1,135 | 1,091 | 1,088 | 992 | 1,048 | |||||||||
Net Income | $ | 5,288 | $ | 4,932 | $ | 4,846 | $ | 4,450 | $ | 5,028 | ||||
Basic Earnings Per Share | $ | 2.62 | $ | 2.45 | $ | 2.41 | $ | 2.21 | $ | 2.50 | ||||
Diluted Earnings Per Share | $ | 2.61 | $ | 2.43 | $ | 2.39 | $ | 2.19 | $ | 2.48 |
Consolidated Statements of Income | ||||||
Twelve Months Ended | ||||||
Interest Income | ||||||
Loans | $ | 84,424 | $ | 57,919 | ||
Securities | ||||||
Taxable | 4,320 | 2,498 | ||||
Tax-exempt | 2,442 | 2,346 | ||||
Other | 1,200 | 334 | ||||
Total interest income | 92,386 | 63,097 | ||||
Interest Expense | ||||||
Deposits | 28,690 | 4,447 | ||||
Borrowings | 2,662 | 1,659 | ||||
Total interest expense | 31,352 | 6,106 | ||||
Net Interest Income | 61,034 | 56,991 | ||||
Provision for Credit Losses | 2,600 | 1,920 | ||||
Net Interest Income After Provision for Credit Losses | 58,434 | 55,071 | ||||
Noninterest income | ||||||
Service charges | 4,012 | 3,632 | ||||
Gains on sale of loans and originated MSR | 2,372 | 1,519 | ||||
Loan servicing fees, net | 1,530 | 1,504 | ||||
Title insurance income | 892 | 1,177 | ||||
Increase in cash value of life insurance | 526 | 408 | ||||
Other | 3,108 | 3,141 | ||||
Total noninterest income | 12,440 | 11,381 | ||||
Noninterest Expense | ||||||
Salaries and employee benefits | 29,558 | 28,344 | ||||
Net occupancy and equipment expense | 4,231 | 3,920 | ||||
Software and data processing fees | 4,462 | 3,663 | ||||
Professional fees | 1,021 | 1,044 | ||||
Marketing expense | 1,199 | 1,012 | ||||
State financial institution tax | 1,039 | 1,130 | ||||
1,166 | 371 | |||||
Other | 4,376 | 4,741 | ||||
Total noninterest expense | 47,052 | 44,225 | ||||
Income before Income Tax | 23,822 | 22,227 | ||||
Provision for Income Taxes | 4,306 | 4,156 | ||||
Net Income | $ | 19,516 | $ | 18,071 | ||
Basic Earnings Per Share | $ | 9.69 | $ | 9.00 | ||
Diluted Earnings Per Share | $ | 9.62 | $ | 8.90 |
ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||||||
(Dollars in thousands except per share amounts)(Unaudited) | |||||||||||||||||||
Asset Quality Ratios and Data: | |||||||||||||||||||
Nonaccrual loans (excluding restructured loans) | $ | 1,621 | $ | 1,942 | $ | 2,163 | $ | 1,140 | $ | 700 | |||||||||
Nonaccrual restructured loans | - | - | - | - | - | ||||||||||||||
Loans past due 90 days and still accruing | 468 | 146 | - | 111 | 309 | ||||||||||||||
Total nonperforming loans | 2,089 | 2,088 | 2,163 | 1,251 | 1,009 | ||||||||||||||
OREO and other non-performing assets | 10 | - | 5 | 5 | 5 | ||||||||||||||
Total non-performing assets | $ | 2,099 | $ | 2,088 | $ | 2,168 | $ | 1,256 | $ | 1,014 | |||||||||
Nonperforming loans to gross loans | 0.13 | % | 0.14 | % | 0.14 | % | 0.09 | % | 0.07 | % | |||||||||
Nonperforming assets to total assets | 0.11 | % | 0.11 | % | 0.12 | % | 0.07 | % | 0.06 | % | |||||||||
Allowance for credit losses to gross loans | 1.16 | % | 1.13 | % | 1.13 | % | 1.13 | % | 1.18 | % | |||||||||
Unfunded commitment liability to gross loans | 0.09 | % | 0.13 | % | 0.11 | % | 0.09 | % | - | ||||||||||
ACL + UCL to gross loans | 1.25 | % | 1.26 | % | 1.24 | % | 1.22 | % | 1.18 | % | |||||||||
Performing restructured loans (RC-C) | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
Net charge-offs quarter ending | $ | 318 | $ | 47 | $ | 43 | $ | 19 | $ | 118 |
Contact: | |
Source:
2024 GlobeNewswire, Inc., source