JONESBORO, Ga.--(BUSINESS WIRE)--
Heritage Southeast Bancorporation, Inc. (OTCQX: HSBI) (“HSBI”) today reported net income of $2.7 million or $0.37 per diluted share for the fourth quarter of 2019. In September 2019, HSBI completed the previously announced merger with two other Georgia based financial institutions (Heritage Bancorporation, Inc., Hinesville and Providence Bank, Alpharetta). The financial information only includes the results from these acquired entities from the acquisition date. For the year ended December 31, 2019, net income was $989,000, which was negatively impacted by merger related costs primarily recognized in the third quarter.
Commenting on the announcement, Leonard Moreland, Chief Executive Officer of HSBI, said, “We are pleased with our first full quarter results under the newly formed entity. The team performed well in the period and we believe there is significant opportunity for organic growth within our footprint. The company is positioned to take advantage of these opportunities with the goal of continuing to increase market share and strengthen the communities we serve. We now look forward to 2020, the consolidation of our core systems, recognizing additional backroom efficiencies and enhancing the customer experience.”
About Heritage Southeast Bancorporation, Inc. and Heritage Southeast Bank:
Heritage Southeast Bancorporation, Inc. (OTCQX: HSBI) serves as the holding company for Heritage Southeast Bank, which is headquartered in Jonesboro, GA and operates under the names “Heritage Bank,” “The Heritage Bank,” and “Providence Bank” in its various markets. With approximately $1.3 billion in assets, the bank provides a well-rounded offering of commercial and consumer products through its 24 locations. For additional information, visit the HSBI website.
While the branches of each of the three combined legacy institutions operate under their respective legacy names, all such branches are branches of the same single insured depository institution, Heritage Southeast Bank, and a customer’s deposits in branches operating under different trade names will be commonly insured and subject to the same FDIC insurance limits.
Cautionary Note Regarding Forward-Looking Statements
Statements included in this press release, which are not historical in nature, are intended to be, and hereby are identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will,” “may,” “anticipate,” “create,” “plan,” “expect,” “should,” and “could” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following:
• the possibility that the anticipated benefits of the transaction, including anticipated improved product and service offerings, efficiencies and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the three companies or as a result of the strength of the economy, competitive factors in the areas where the combined company does business, or as a result of other unexpected factors or events;
• the impact of purchase accounting with respect to the transaction, or any change in the assumptions used regarding the assets purchased and liabilities assumed to determine their fair value;
• the integration of the businesses and operations of the three companies, which may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to the combined company’s business; and
• other factors that may affect future results of the combined company, including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; actions of the Federal Reserve Board; and other legislative and regulatory actions and reforms.
Heritage Southeast Bancorporation, Inc. and its subsidiary disclaim any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
| | |
| | Heritage Southeast Bancorporation, Inc. |
| | Consolidated Balance Sheets |
| | (in thousands) |
| | | | | |
| | | | | |
| | | 12/31/19 | 9/30/19 (1) | 12/31/18 |
| | | (Unaudited) | (Unaudited) | |
| | Assets | | | |
| | Cash and due from banks |
$
|
30,458
|
|
$
|
26,633
|
|
$
|
4,668
|
|
| | Interest-earning deposits with banks |
|
142,552
|
|
|
113,293
|
|
|
22,166
|
|
| | Investment securities |
|
125,479
|
|
|
104,265
|
|
|
47,917
|
|
| | Other investments |
|
1,632
|
|
|
1,632
|
|
|
1,370
|
|
| | Loans, net of unearned income: | | | |
| | Originated |
|
508,281
|
|
|
469,700
|
|
|
408,294
|
|
| | Acquired |
|
406,171
|
|
|
444,370
|
|
|
-
|
|
| | Less reserve for loan losses |
|
5,946
|
|
|
5,523
|
|
|
5,136
|
|
| | Loans, net |
|
908,506
|
|
|
908,547
|
|
|
403,158
|
|
| | | | | |
| | Premises and equipment, net |
|
34,160
|
|
|
34,005
|
|
|
13,982
|
|
| | Other real estate owned |
|
9,293
|
|
|
11,838
|
|
|
2,923
|
|
| | Goodwill and other intangibles |
|
35,613
|
|
|
35,930
|
|
|
-
|
|
| | Other assets |
|
48,447
|
|
|
50,013
|
|
|
15,799
|
|
| | |
$
|
1,336,140
|
|
$
|
1,286,156
|
|
$
|
511,983
|
|
| | | | | |
| | Liabilities and Shareholders' Equity | | | |
| | Deposits: | | | |
| | Non-interest bearing |
$
|
296,850
|
|
$
|
304,342
|
|
$
|
111,609
|
|
| | NOW |
|
234,334
|
|
|
189,500
|
|
|
67,878
|
|
| | Money market and savings |
|
291,778
|
|
|
284,047
|
|
|
119,140
|
|
| | Time |
|
331,516
|
|
|
328,830
|
|
|
127,752
|
|
| | Total deposits |
|
1,154,478
|
|
|
1,106,719
|
|
|
426,379
|
|
| | | | | |
| | FHLB borrowings |
|
5,167
|
|
|
5,667
|
|
|
22,167
|
|
| | Repurchase agreements |
|
12,295
|
|
|
11,418
|
|
|
12,815
|
|
| | Junior subordinated debentures |
|
9,096
|
|
|
9,045
|
|
|
-
|
|
| | Other borrowings |
|
9,088
|
|
|
9,088
|
|
|
3,446
|
|
| | Other liabilities |
|
9,992
|
|
|
10,746
|
|
|
3,785
|
|
| | Total liabilities |
|
1,200,116
|
|
|
1,152,683
|
|
|
468,592
|
|
| | | | | |
| | Shareholders' Equity: | | | |
| | Common stock |
|
703
|
|
|
702
|
|
|
216
|
|
| | Additional paid-in capital |
|
116,210
|
|
|
116,089
|
|
|
24,912
|
|
| | Retained earnings |
|
19,654
|
|
|
16,914
|
|
|
18,666
|
|
| | Other comprehensive loss |
|
(543
|
)
|
|
(232
|
)
|
|
(403
|
)
|
| | Total shareholders' equity |
|
136,024
|
|
|
133,473
|
|
|
43,391
|
|
| | |
$
|
1,336,140
|
|
$
|
1,286,156
|
|
$
|
511,983
|
|
| | | | | |
(1) | Acquired loans, goodwill and other assets changed from previously reported due to adjustments of fair value estimates related to the Heritage Bancorporation, Inc. acquisition. |
|
| Heritage Southeast Bancorporation, Inc. |
| Consolidated Income Statements |
| (in thousands) |
|
| | | | | |
| For three months ended | | Years ended |
| 12/31/19 | 12/31/18 | | 12/31/19 | 12/31/18 |
| (Unaudited) | (Unaudited) | | (Unaudited) | |
| Interest income: | | | | | |
| Loans, including fees |
$
|
13,903
|
$
|
5,957
| |
$
|
35,697
|
|
$
|
21,644
|
| Deposits with other banks |
|
380
|
|
168
| |
|
969
|
|
|
537
|
| Other |
|
26
|
|
12
| |
|
76
|
|
|
48
|
| Investment securities |
|
606
|
|
202
| |
|
1,468
|
|
|
745
|
| Total interest income |
|
14,915
|
|
6,339
| |
|
38,210
|
|
|
22,974
|
| | | | | |
| Interest expense: | | | | | |
| Deposits |
|
2,116
|
|
641
| |
|
5,348
|
|
|
2,007
|
| Junior subordinated debentures |
|
143
|
|
-
| |
|
175
|
|
|
-
|
| Other borrowings |
|
179
|
|
205
| |
|
706
|
|
|
631
|
| Total interest expense |
|
2,438
|
|
846
| |
|
6,229
|
|
|
2,638
|
| | | | | |
| Net interest income |
|
12,477
|
|
5,493
| |
|
31,981
|
|
|
20,336
|
| | | | | |
| Provision for loan losses |
|
560
|
|
50
| |
|
1,245
|
|
|
605
|
| | | | | |
| Net interest income after provision for loan losses | | | | | |
|
11,917
|
|
5,443
| |
|
30,736
|
|
|
19,731
|
| | | | | |
| Noninterest income: | | | | | |
| Service charges on deposits |
|
1,727
|
|
320
| |
|
3,207
|
|
|
1,150
|
| (Loss) gain on sale of investment securities |
|
-
|
|
-
| |
|
(229
|
)
|
|
187
|
| Gain on sale of loans |
|
184
|
|
78
| |
|
407
|
|
|
333
|
| Interchange and ATM fees |
|
1,315
|
|
256
| |
|
2,205
|
|
|
703
|
| Other |
|
628
|
|
128
| |
|
1,195
|
|
|
779
|
| Total noninterest income |
|
3,854
|
|
782
| |
|
6,785
|
|
|
3,152
|
| | | | | |
| Noninterest expense: | | | | | |
| Salaries & employee benefits |
|
6,125
|
|
2,635
| |
|
15,970
|
|
|
9,892
|
| Occupancy & equipment |
|
1,376
|
|
582
| |
|
3,167
|
|
|
1,946
|
| Merger costs |
|
-
|
|
106
| |
|
7,265
|
|
|
318
|
| Other real estate owned |
|
44
|
|
91
| |
|
646
|
|
|
314
|
| Other |
|
4,324
|
|
1,263
| |
|
8,721
|
|
|
4,829
|
| Total noninterest expense |
|
11,869
|
|
4,677
| |
|
35,769
|
|
|
17,299
|
| | | | | |
| Income before taxes |
|
3,902
|
|
1,548
| |
|
1,752
|
|
|
5,584
|
| | | | | |
| Income tax provision |
|
1,162
|
|
249
| |
|
763
|
|
|
1,165
|
| | | | | |
| Net income |
$
|
2,740
|
$
|
1,299
| |
$
|
989
|
|
$
|
4,419
|
| | | | | |
| | Heritage Southeast Bancorporation, Inc. |
| | Other Highlights |
| | (in thousands, except for share and per share data) |
| | | | | | |
| | | | | | |
| | | | | | |
| | | 4Q2019 | | For years ended |
| | | (Unaudited) | | 12/31/19 | 12/31/18 |
| | Profitability (1) | | | (Unaudited) | |
| | Net income |
$
|
2,740
|
| |
$
|
989
|
|
$
|
4,419
|
|
| | Net interest margin |
|
4.29
|
%
| |
|
4.40
|
%
|
|
4.39
|
%
|
| | Cost of funds |
|
0.84
|
%
| |
|
0.87
|
%
|
|
0.59
|
%
|
| | Return on average assets |
|
0.83
|
%
| |
|
0.12
|
%
|
|
0.90
|
%
|
| | Return on average equity |
|
8.06
|
%
| |
|
1.31
|
%
|
|
10.79
|
%
|
| | | | | | |
| | | | | Balance as of |
| | | | | 12/31/19 | 12/31/18 |
| | Asset Quality | | | | |
| | Classified assets | | |
$
|
23,913
|
|
$
|
5,374
|
|
| | Nonperforming assets (NPAs) | | |
|
21,281
|
|
|
4,651
|
|
| | NPAs to total assets | | |
|
1.59
|
%
|
|
0.91
|
%
|
| | Net charge-offs to average loans | | |
|
0.07
|
%
|
|
0.00
|
%
|
| | | | | | |
| | Capital (2) | | | | |
| | Leverage ratio | | |
|
8.68
|
%
|
|
9.14
|
%
|
| | Common equity tier 1 risk based ratio | | |
|
10.43
|
%
|
|
10.46
|
%
|
| | Total risk based ratio | | |
|
11.00
|
%
|
|
11.61
|
%
|
| | | | | | |
| | | | | | |
| | Tangible book value per common share | | |
$
|
13.86
|
|
$
|
14.75
|
|
| | Shares outstanding | | |
|
7,029,281
|
|
|
2,160,102
|
|
| | | | | | |
| | | | | | |
| | | | | | |
(1) | Full year 2019 net income includes the operations of the acquired institutions since acquisitiondate (09/01/19) as well as merger related costs recognized during the first nine months of the year. |
(2) | Ratios for Heritage Southeast Bank. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200123005169/en/
Leonard A. Moreland
Chief Executive Officer
or
Philip F. Resch
Chief Financial Officer
Heritage Southeast Bancorporation, Inc.
101 North Main Street
P.O. Box 935
Jonesboro, GA 30236
(770) 824-9934
Source: Heritage Southeast Bancorporation, Inc.