The company also announced that its board of directors declared a quarterly cash dividend of
“Our first quarter operating performance continued to reflect the success of our community banking strategy, which produced solid earnings, improved operating efficiencies and pristine credit quality,” stated
“Our performance continues to be fueled by our market footprints in
First Quarter 2024 Financial Highlights (at or for the three months ended
- Net income was
$5.1 million , or$2.51 per diluted share, compared to$4.5 million , or$2.19 per diluted share, in the first quarter of 2023. - Heartland recorded no provision for credit losses during the first quarter of 2024, compared to
$750,000 for the first quarter a year ago. - Net interest margin was 3.37%, compared to 3.49% in the preceding quarter and 3.87% in the first quarter a year ago.
- First quarter revenues (net interest income plus noninterest income) increased modestly to
$18.0 million , compared to$17.9 million in the first quarter a year ago. - Annualized return on average assets was 1.09%, compared to 1.06% in the first quarter of 2023.
- Annualized return on average tangible common equity was 13.59%, compared to 13.36% in the first quarter a year ago.
- Net loans decreased modestly during the quarter to
$1.51 billion atMarch 31, 2024 , compared to$1.53 billion three months earlier. - Total deposits decreased modestly during the quarter to
$1.63 billion atMarch 31, 2024 , compared to$1.64 billion three months earlier. - Credit quality remains pristine with nonperforming loans to gross loans of 0.13% and nonperforming assets to total assets of 0.10% at
March 31, 2024 . - Tangible book value increased 11.6% to
$74.88 per share, compared to$67.09 per share a year ago. - Declared a quarterly cash dividend of
$0.759 per share.
Balance Sheet Review
Assets
Total assets increased 6.4% to
Securities increased 39.5% to
“We’ve continued to grow the investment portfolio, increasing our asset base liquidity during the quarter to 9.10% of assets, compared to 5.85% a year earlier, which has been a strategic focus over the past year,” said
Average earning assets increased to
Loan Portfolio
“While we continued to moderate loan growth during the quarter, an increase in loan payoffs resulted in net loans decreasing 1.2% over the prior quarter end, while average loans remained nearly unchanged compared to the prior quarter,” said
Net loans were
Deposits
Total deposits were
At
Shareholders’ Equity
Shareholders’ equity increased modestly 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 8.09% at
Liquidity
Heartland had ample sources of available liquidity as of
Operating Results
In the first quarter of 2024, Heartland generated a ROAA of 1.09% and a ROATCE of 13.59%, compared to 1.13% and 15.05%, respectively, in the fourth quarter of 2023 and 1.06% and 13.36%, respectively, in the first quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income, before the provision for credit losses, decreased 3.1% to
Total revenues (net interest income, before the provision for credit losses, plus noninterest income) were
Heartland’s net interest margin was 3.37% in the first quarter of 2024, compared to 3.49% in the preceding quarter and 3.87% in the first quarter of 2023. “The largest driver in our net interest margin decline during the quarter was the shift in noninterest bearing DDA balances into higher yielding deposit accounts, which was more than anticipated. Fortunately, noninterest DDA balances still comprise a large portion of our total deposit mix, representing 25.8% of total deposits at
Heartland’s net interest margin continues to remain above the peer average posted by the Dow Jones
Provision for Credit Losses
Due to pristine credit quality, low net loan charge offs and negative loan growth, Heartland recorded no provision for credit losses in the first quarter of 2024. This compared to a
*As of
Noninterest Income
Noninterest income increased 19.9% to
“We experienced good secondary loan activity to start the year, and we were able to take
Noninterest Expense
Noninterest expenses were
“In the first quarter of 2024, we continued with our company-wide efforts to manage operating expenses,” said Almendinger. “Salary and employee benefits, the largest component of noninterest expense, were lower in part due to lower incentive compensation from muted loan growth and fewer full-time employees. This was partly offset by higher
The efficiency ratio for the first quarter of 2024 was 65.5%, compared to 62.5% for the preceding quarter and unchanged compared to the first quarter of 2023.
Income Tax Provision
In the first quarter of 2024, Heartland recorded
________________________
*As of
Credit Quality
“Our overall credit quality metrics continue to remain strong. We continue to see minimal signs of stress in the loan portfolio, and we hold strong collateral positions with all our loans,” said McComb.
At
Nonaccrual loans were
There were no other real estate owned and other nonperforming assets on the books at
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
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 | $ | 25,626 | $ | 25,195 | $ | 24,194 | $ | 22,476 | $ | 20,521 | ||||||
Interest expense | 10,764 | 9,807 | 8,928 | 7,437 | 5,180 | |||||||||||
Net interest income | 14,862 | 15,388 | 15,266 | 15,039 | 15,341 | |||||||||||
Provision for credit losses | - | 550 | 500 | 800 | 750 | |||||||||||
Noninterest income | 3,119 | 3,217 | 3,232 | 3,390 | 2,601 | |||||||||||
Noninterest expense | 11,775 | 11,632 | 11,975 | 11,695 | 11,750 | |||||||||||
Provision for income taxes | 1,124 | 1,135 | 1,091 | 1,088 | 992 | |||||||||||
Net income | 5,082 | 5,288 | 4,932 | 4,846 | 4,450 | |||||||||||
Share data: | ||||||||||||||||
Basic earnings per share | $ | 2.52 | $ | 2.62 | $ | 2.45 | $ | 2.41 | $ | 2.21 | ||||||
Diluted earnings per share | 2.51 | 2.61 | 2.43 | 2.39 | 2.19 | |||||||||||
Dividends declared per share | 0.76 | 0.76 | 0.76 | 0.76 | 0.76 | |||||||||||
Book value per share | 81.28 | 80.66 | 74.24 | 75.02 | 73.60 | |||||||||||
Tangible book value per share | 74.88 | 74.23 | 67.78 | 68.54 | 67.09 | |||||||||||
Common shares outstanding, 20,000,000 authorized | 2,105,737 | 2,105,737 | 2,105,737 | 2,105,237 | 2,103,537 | |||||||||||
(90,612 | ) | (90,612 | ) | (90,612 | ) | (90,612 | ) | (90,612 | ) | |||||||
Common shares, net | 2,015,125 | 2,015,125 | 2,015,125 | 2,014,625 | 2,012,925 | |||||||||||
Average common shares outstanding, net | 2,015,125 | 2,015,125 | 2,014,936 | 2,013,607 | 2,009,782 | |||||||||||
Balance sheet - average balances: | ||||||||||||||||
Loans receivable, net | $ | 1,519,946 | $ | 1,520,331 | $ | 1,498,257 | $ | 1,465,920 | $ | 1,415,215 | ||||||
Earning assets | 1,776,073 | 1,749,160 | 1,718,549 | 1,672,994 | 1,606,350 | |||||||||||
12,934 | 12,982 | 13,031 | 13,077 | 13,132 | ||||||||||||
Total assets | 1,878,171 | 1,854,191 | 1,822,084 | 1,772,998 | 1,705,675 | |||||||||||
Demand deposits | 453,581 | 476,992 | 473,373 | 467,301 | 495,443 | |||||||||||
Deposits | 1,639,911 | 1,622,335 | 1,598,495 | 1,553,882 | 1,488,181 | |||||||||||
Borrowings | 58,938 | 60,857 | 51,856 | 49,965 | 54,257 | |||||||||||
Shareholders' equity | 163,283 | 152,393 | 152,720 | 150,017 | 148,195 | |||||||||||
Ratios: | ||||||||||||||||
Return on average assets | 1.09 | % | 1.13 | % | 1.07 | % | 1.10 | % | 1.06 | % | ||||||
Return on average equity | 12.52 | % | 13.77 | % | 12.81 | % | 12.96 | % | 12.18 | % | ||||||
Return on average tangible common equity | 13.59 | % | 15.05 | % | 14.01 | % | 14.19 | % | 13.36 | % | ||||||
Yield on earning assets | 5.80 | % | 5.71 | % | 5.59 | % | 5.39 | % | 5.18 | % | ||||||
Cost of deposits | 2.45 | % | 2.21 | % | 2.05 | % | 1.76 | % | 1.24 | % | ||||||
Cost of funds | 2.55 | % | 2.31 | % | 2.15 | % | 1.86 | % | 1.36 | % | ||||||
Net interest margin | 3.37 | % | 3.49 | % | 3.52 | % | 3.61 | % | 3.87 | % | ||||||
Efficiency ratio | 65.49 | % | 62.52 | % | 64.74 | % | 63.46 | % | 65.48 | % | ||||||
Asset quality: | ||||||||||||||||
Net loan charge-offs to average loans | 0.01 | % | 0.08 | % | 0.01 | % | 0.01 | % | 0.01 | % | ||||||
Nonperforming loans to gross loans | 0.13 | % | 0.13 | % | 0.14 | % | 0.14 | % | 0.09 | % | ||||||
Nonperforming assets to total assets | 0.10 | % | 0.11 | % | 0.11 | % | 0.12 | % | 0.07 | % | ||||||
Allowance for credit losses to gross loans | 1.17 | % | 1.16 | % | 1.13 | % | 1.13 | % | 1.13 | % | ||||||
ACL + UCL to gross loans | 1.27 | % | 1.25 | % | 1.26 | % | 1.24 | % | 1.22 | % | ||||||
Consolidated Balance Sheets | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from | $ | 18,314 | $ | 16,750 | $ | 20,993 | $ | 16,304 | $ | 14,121 | ||||||||||
Interest bearing deposits | 15,717 | 19,932 | 24,222 | 20,017 | 37,297 | |||||||||||||||
Interest bearing time deposits | - | - | - | - | - | |||||||||||||||
Available-for-sale securities | 222,609 | 211,130 | 179,817 | 178,031 | 159,622 | |||||||||||||||
Held-to-maturity securities | 0 | 0 | 5 | 5 | 5 | |||||||||||||||
Loans held for sale | 2,210 | 1,145 | 1,706 | 2,748 | 1,200 | |||||||||||||||
Commercial | 166,413 | 172,658 | 169,405 | 176,972 | 165,736 | |||||||||||||||
CRE (Owner occupied) | 293,542 | 295,996 | 277,092 | 273,526 | 285,575 | |||||||||||||||
CRE (Non Owner occupied) | 489,709 | 501,056 | 502,012 | 490,900 | 468,163 | |||||||||||||||
1-4 Family | 507,374 | 508,826 | 499,953 | 495,578 | 486,077 | |||||||||||||||
Home Equity | 54,178 | 51,697 | 52,466 | 48,542 | 44,749 | |||||||||||||||
Consumer | 18,859 | 18,974 | 19,857 | 19,848 | 18,502 | |||||||||||||||
Allowance for credit losses | (17,897 | ) | (17,928 | ) | (17,143 | ) | (17,063 | ) | (16,644 | ) | ||||||||||
Net Loans | 1,512,178 | 1,531,279 | 1,503,642 | 1,488,303 | 1,452,158 | |||||||||||||||
Premises and equipment | 33,298 | 33,649 | 33,586 | 31,919 | 30,926 | |||||||||||||||
Nonmarketable equity securities | 6,941 | 6,866 | 6,863 | 6,635 | 6,631 | |||||||||||||||
Mortgage servicing rights, net | 3,384 | 3,373 | 3,346 | 3,208 | 3,119 | |||||||||||||||
Foreclosed assets held for sale | 0 | 10 | 0 | 5 | 5 | |||||||||||||||
12,388 | 12,388 | 12,388 | 12,388 | 12,388 | ||||||||||||||||
Intangible Assets | 517 | 565 | 613 | 661 | 710 | |||||||||||||||
Deferred income taxes | 6,662 | 7,087 | 8,323 | 6,702 | 6,157 | |||||||||||||||
Life insurance assets | 20,545 | 20,315 | 20,140 | 20,020 | 19,903 | |||||||||||||||
Accrued interest receivable and other assets | 22,429 | 18,661 | 19,148 | 18,744 | 20,848 | |||||||||||||||
Total assets | $ | 1,877,192 | $ | 1,883,150 | $ | 1,834,792 | $ | 1,805,690 | $ | 1,765,090 | ||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Demand | $ | 419,864 | $ | 487,631 | $ | 454,764 | $ | 462,232 | $ | 487,238 | ||||||||||
Saving, NOW and money market | 705,942 | 711,198 | 695,106 | 677,833 | 685,233 | |||||||||||||||
Time | 502,848 | 443,772 | 429,480 | 418,046 | 395,525 | |||||||||||||||
Total deposits | 1,628,654 | 1,642,601 | 1,579,350 | 1,558,111 | 1,567,996 | |||||||||||||||
Repurchase agreements | 4,472 | 4,583 | 4,446 | 4,594 | 5,095 | |||||||||||||||
FHLB Advances | 38,000 | 31,000 | 56,000 | 50,000 | 0 | |||||||||||||||
Subordinated debt | 24,044 | 24,034 | 24,024 | 24,213 | 24,703 | |||||||||||||||
Interest payable and other liabilities | 18,228 | 18,400 | 21,377 | 17,635 | 19,153 | |||||||||||||||
Total liabilities | 1,713,398 | 1,720,618 | 1,685,197 | 1,654,553 | 1,616,947 | |||||||||||||||
Shareholders' Equity | ||||||||||||||||||||
Common stock, without par value | 62,797 | 62,725 | 62,615 | 62,473 | 62,173 | |||||||||||||||
Retained earnings | 123,617 | 120,064 | 116,306 | 112,904 | 108,962 | |||||||||||||||
Accumulated other comprehensive income (expense) | (17,626 | ) | (15,263 | ) | (24,332 | ) | (19,246 | ) | (17,998 | ) | ||||||||||
(4,994 | ) | (4,994 | ) | (4,994 | ) | (4,994 | ) | (4,994 | ) | |||||||||||
Total shareholders' equity | 163,794 | 162,532 | 149,595 | 151,137 | 148,143 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 1,877,192 | $ | 1,883,150 | $ | 1,834,792 | $ | 1,805,690 | $ | 1,765,090 | ||||||||||
Consolidated Statements of Income | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Interest Income | ||||||||||||||||||||
Loans | $ | 23,015 | $ | 22,850 | $ | 22,080 | $ | 20,609 | $ | 18,885 | ||||||||||
Securities | ||||||||||||||||||||
Taxable | 1,637 | 1,374 | 1,173 | 928 | 845 | |||||||||||||||
Tax-exempt | 657 | 629 | 619 | 596 | 598 | |||||||||||||||
Other | 317 | 342 | 322 | 343 | 193 | |||||||||||||||
Total interest income | 25,626 | 25,195 | 24,194 | 22,476 | 20,521 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Deposits | 10,006 | 9,017 | 8,272 | 6,837 | 4,564 | |||||||||||||||
Borrowings | 758 | 790 | 656 | 600 | 616 | |||||||||||||||
Total interest expense | 10,764 | 9,807 | 8,928 | 7,437 | 5,180 | |||||||||||||||
Net Interest Income | 14,862 | 15,388 | 15,266 | 15,039 | 15,341 | |||||||||||||||
Provision for Credit Losses | - | 550 | 500 | 800 | 750 | |||||||||||||||
Net Interest Income After Provision for Credit Losses | 14,862 | 14,838 | 14,766 | 14,239 | 14,591 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Service charges | 952 | 1,002 | 1,020 | 1,015 | 975 | |||||||||||||||
Gains on sale of loans and originated MSR | 518 | 734 | 708 | 704 | 226 | |||||||||||||||
Loan servicing fees, net | 494 | 354 | 408 | 337 | 431 | |||||||||||||||
Title insurance income | 210 | 214 | 196 | 311 | 171 | |||||||||||||||
Increase in cash value of life insurance | 230 | 175 | 120 | 117 | 114 | |||||||||||||||
Other | 715 | 738 | 780 | 906 | 684 | |||||||||||||||
Total noninterest income | 3,119 | 3,217 | 3,232 | 3,390 | 2,601 | |||||||||||||||
Noninterest Expense | ||||||||||||||||||||
Salaries and employee benefits | 7,300 | 7,430 | 7,393 | 7,252 | 7,483 | |||||||||||||||
Net occupancy and equipment expense | 1,106 | 1,052 | 1,057 | 1,055 | 1,067 | |||||||||||||||
Software and data processing fees | 1,156 | 1,163 | 1,205 | 1,069 | 1,025 | |||||||||||||||
Professional fees | 233 | 242 | 225 | 288 | 266 | |||||||||||||||
Marketing expense | 310 | 320 | 271 | 309 | 299 | |||||||||||||||
State financial institution tax | 292 | 260 | 259 | 259 | 261 | |||||||||||||||
284 | 299 | 341 | 298 | 228 | ||||||||||||||||
Other | 1,094 | 866 | 1,224 | 1,165 | 1,121 | |||||||||||||||
Total noninterest expense | 11,775 | 11,632 | 11,975 | 11,695 | 11,750 | |||||||||||||||
Income before Income Tax | 6,206 | 6,423 | 6,023 | 5,934 | 5,442 | |||||||||||||||
Provision for Income Taxes | 1,124 | 1,135 | 1,091 | 1,088 | 992 | |||||||||||||||
Net Income | $ | 5,082 | $ | 5,288 | $ | 4,932 | $ | 4,846 | $ | 4,450 | ||||||||||
Basic Earnings Per Share | $ | 2.52 | $ | 2.62 | $ | 2.45 | $ | 2.41 | $ | 2.21 | ||||||||||
Diluted Earnings Per Share | $ | 2.51 | $ | 2.61 | $ | 2.43 | $ | 2.39 | $ | 2.19 | ||||||||||
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||||
(Dollars in thousands except per share amounts)(Unaudited) | ||||||||||||||||||||
Asset Quality Ratios and Data: | ||||||||||||||||||||
Nonaccrual loans (excluding restructured loans) | $ | 1,817 | $ | 1,621 | $ | 1,942 | $ | 2,163 | $ | 1,140 | ||||||||||
Nonaccrual restructured loans | - | - | - | - | - | |||||||||||||||
Loans past due 90 days and still accruing | 149 | 468 | 146 | - | 111 | |||||||||||||||
Total non-performing loans | 1,966 | 2,089 | 2,088 | 2,163 | 1,251 | |||||||||||||||
OREO and other non-performing assets | - | 10 | - | 5 | 5 | |||||||||||||||
Total non-performing assets | $ | 1,966 | $ | 2,099 | $ | 2,088 | $ | 2,168 | $ | 1,256 | ||||||||||
Nonperforming loans to gross loans | 0.13 | % | 0.13 | % | 0.14 | % | 0.14 | % | 0.09 | % | ||||||||||
Nonperforming assets to total assets | 0.10 | % | 0.11 | % | 0.11 | % | 0.12 | % | 0.07 | % | ||||||||||
Allowance for credit losses to gross loans | 1.17 | % | 1.16 | % | 1.13 | % | 1.13 | % | 1.13 | % | ||||||||||
Unfunded commitment liability to gross loans | 0.10 | % | 0.09 | % | 0.13 | % | 0.11 | % | 0.09 | % | ||||||||||
ACL + UCL to gross loans | 1.27 | % | 1.25 | % | 1.26 | % | 1.24 | % | 1.22 | % | ||||||||||
Performing restructured loans (RC-C) | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Net charge-offs quarter ending | $ | 30 | $ | 318 | $ | 47 | $ | 43 | $ | 19 | ||||||||||
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Source:
2024 GlobeNewswire, Inc., source