JONESBORO, Ga., July 27, 2022 (GLOBE NEWSWIRE) -- Heritage Southeast Bancorporation, Inc. (“Company”) (OTCQX: HSBI) today announced second quarter 2022 earnings of $3.3 million, or $0.46 per diluted share compared to $3.8 million, or $0.53 per diluted share in the prior quarter ended March 31, 2022. Second quarter earnings reflected higher operating expenses related to employee separation costs partly offset by higher net interest income.
Highlights of the Company’s results for the quarter ended June 30, 2022 include the following:
- On June 15, 2022, HSBI, Heritage Southeast Bank and VyStar Credit Union mutually agreed to terminate the proposed purchase agreement and HSBI engaged Piper Sandler to review strategic alternatives to enhance shareholder value.
- Earnings per share excluding employee separation and VyStar transaction costs was $0.61 per diluted share for the second quarter ended June 30, 2022 compared to $0.59 per share for the prior quarter and $0.57 one year earlier (see GAAP to non-GAAP reconciliation).
- The net interest margin, exclusive of PPP loans, increased to 3.31% for the quarter ended June 30, 2022 compared to 3.20% for the prior quarter and 3.26% one year earlier.
- Total loans, excluding PPP loans, increased $32.3 million during the second quarter, or 3.0%. Relative to one year earlier, total loans, excluding PPP loans, increased $112.0 million, or 11.2%.
- Return on tangible equity excluding employee separation and VyStar transaction costs was 15.56% for the second quarter ended June 30, 2022 compared to 14.76% the previous quarter.
“We continue to see a strong loan pipeline in our Georgia and North Florida markets. As we redeploy our elevated level of liquid investments into higher yielding loans, we expect our net interest margin will continue to increase in the current interest rate environment,” said Leonard Moreland, Chief Executive Officer. “The economic environment surrounding the markets we serve remains strong and we expect new and existing banking opportunities to remain robust throughout the remainder of 2022,” Moreland added.
Net Interest Income
The Company’s net interest income increased to $13.2 million during the second quarter of 2022 from $12.3 million in the first quarter ended March 31, 2022. The higher net interest income was a direct result of continued loan growth and the increase in interest rates. The Company’s reported net interest margin increased 9 basis points to 3.34% for the second quarter of 2022 from 3.25% for the preceding quarter. Net interest income and net interest margin was less impacted by revenue on the PPP portfolio and more influenced by higher yields on other earning asset categories.
Loan Loss Provision
The Company did not recognize any loan loss provision for the second quarter. Management believes the improved economic and pandemic climate has provided better clarity on the ability for borrowers to meet their loan obligations. Additionally, non-performing assets continued to remain low. As such, the current level of reserves is believed to be sufficient as of June 30, 2022.
Non-interest Income
Second quarter non-interest income increased to $4.3 million from $4.1 million for the first quarter of 2022. Interchange and ATM fees increased slightly as well as gains on the sale of SBA loans relative to the previous quarter. As indicated during the previous earnings release, gains on the sale of SBA loans have returned to more traditional levels.
Non-interest Expense
Non-interest expense increased $1.4 million to $13.2 million for the second quarter of 2022 from $11.7 million the prior quarter. The current quarter reflected $1.2 million in employee separation costs as well as $315,000 in transaction related expenses. The efficiency ratio exclusive of transaction and employee separation costs improved to 65.3% for the quarter ended June 30, 2022 from 66.3% in the previous quarter and 67.2% one year earlier.
Balance Sheet
Total assets increased slightly to $1.71 billion at June 30, 2022, relative to $1.70 billion at the previous quarter end. Liquidity levels continued to remain elevated and will be used to fund future loan originations. At June 30, 2022, cash and cash equivalents totaled $298.4 million relative to $313.0 million three months earlier. Securities available for sale increased by $4.0 million to $193.0 million at June 30, 2022 from $189.0 million three months earlier. Loans, excluding PPP loans, increased 3.0% to $1.11 billion at June 30, 2022 from $1.08 billion at March 31, 2022. Meanwhile, PPP loans decreased to one loan totaling $180,000 at June 30, 2022.
Total deposits increased to $1.49 billion at June 30, 2022 from $1.47 billion three months earlier. Non-interest-bearing deposits remain the largest component of the deposit portfolio, representing 35.5% of total deposits, followed by money market and savings deposits at 31.3%, interest-bearing demand deposits at 18.9% and time deposits at 14.3%.
Asset Quality
Classified assets, which include nonperforming assets and accruing classified loans, increased slightly to $3.2 million at June 30, 2022, compared with $3.1 million at March 31, 2022. The increase during the second quarter reflected an increase of $181,000 in nonperforming loans offset by a decrease in accruing classified loans of $43,000. Nonperforming assets, which exclude accruing classified loans, totaled $2.9 million at June 30, 2022, or 0.17% of total assets.
The allowance for loan losses decreased slightly to $15.3 million, or 1.38% of total loans at June 30, 2022 from $15.4 million, or 1.42% of total loans at March 31, 2022. The decrease was due to net loan charge-offs totaling $100,000 during the period as no loan loss provision was required.
Capital
Total shareholder equity was $150.0 million at June 30, 2022. Tangible shareholder equity relative to total assets was 6.85% at June 30, 2022 (down from 6.95% at March 31, 2022). Tangible book value per share was $15.93 at June 30, 2022 as compared to $16.02 at the end of the first quarter and $16.40 at year end 2021. The decrease in the period was the result of continued declines in accumulated other comprehensive income related to the impact of rising interest rates on our investment portfolio. At June 30, 2022, the Bank’s Leverage Ratio was 9.89%, its Common Equity Tier I and Tier 1 Capital ratios were 12.58%, and its Total Risk-Based Capital ratio was 13.73%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
About Heritage Southeast Bancorporation, Inc.
Heritage Southeast Bancorporation, Inc. 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 $1.7 billion in assets, the Bank provides a well-rounded offering of commercial and consumer products through its 23 locations. For additional information, visit the HSBI website at www.myhsbi.com.
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.
HSBI disclaims any obligation to update or revise any forward-looking statements contained in this communication (which statements speak only as of the date hereof), or in any other written or oral communication that relates to the proposed combination or to matters that may affect such proposed combination, whether as a result of new inform
ation, future events or otherwise.
| CONTACT |
|
|
| Leonard A. Moreland |
|
Philip F. Resch |
| Chief Executive Officer |
|
Chief Financial Officer |
| |
|
|
| Heritage Southeast Bancorporation, Inc. |
|
|
| 101 North Main Street |
|
|
| P.O. Box 935 |
|
|
| Jonesboro, GA 30236 |
|
|
| (770) 824-9934 |
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
Financial Highlights
|
|
|
|
|
|
|
(Unaudited) (in thousands, except per share data)
|
|
|
|
|
| |
|
|
|
|
|
| |
Three Months Ended |
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
Earnings:
|
|
|
|
|
|
| Net Interest Income |
$ |
13,205 |
|
$ |
12,325 |
|
$ |
12,633 |
|
$ |
13,152 |
|
$ |
12,727 |
|
| Net Income |
|
3,329 |
|
|
3,840 |
|
|
3,108 |
|
|
3,503 |
|
|
2,869 |
|
| Net Income excluding transaction and employee separation costs |
|
4,443 |
|
|
4,288 |
|
|
4,809 |
|
|
4,368 |
|
|
4,146 |
|
| |
|
|
|
|
|
|
Per Share Data:
|
|
|
|
|
|
| Earnings per share: |
|
|
|
|
|
| Basic |
$ |
0.47 |
|
$ |
0.55 |
|
$ |
0.45 |
|
$ |
0.50 |
|
$ |
0.41 |
|
| Diluted |
$ |
0.46 |
|
$ |
0.53 |
|
$ |
0.43 |
|
$ |
0.49 |
|
$ |
0.40 |
|
| Diluted excluding transaction and employee separation costs |
$ |
0.61 |
|
$ |
0.59 |
|
$ |
0.67 |
|
$ |
0.60 |
|
$ |
0.57 |
|
| Weighted average number of shares: |
|
|
|
|
|
| Basic |
|
7,012 |
|
|
7,008 |
|
|
6,979 |
|
|
6,976 |
|
|
6,967 |
|
| Diluted |
|
7,225 |
|
|
7,225 |
|
|
7,218 |
|
|
7,222 |
|
|
7,212 |
|
| Period-end number of shares (1) |
|
7,215 |
|
|
7,212 |
|
|
7,220 |
|
|
7,220 |
|
|
7,220 |
|
| Book value per share (period-end) |
$ |
20.79 |
|
$ |
20.92 |
|
$ |
21.32 |
|
$ |
21.09 |
|
$ |
20.65 |
|
| Tangible book value per share (period-end) |
$ |
15.93 |
|
$ |
16.02 |
|
$ |
16.40 |
|
$ |
16.13 |
|
$ |
15.65 |
|
| |
|
|
|
|
|
|
Key Ratios (percent):
|
|
|
|
|
|
| Return on average assets |
|
0.78 |
% |
|
0.93 |
% |
|
0.75 |
% |
|
0.84 |
% |
|
0.69 |
% |
| Return on average assets excluding transaction and employee separation costs |
|
1.04 |
% |
|
1.04 |
% |
|
1.16 |
% |
|
1.05 |
% |
|
1.00 |
% |
| Return on average tangible equity |
|
11.66 |
% |
|
13.21 |
% |
|
10.61 |
% |
|
12.15 |
% |
|
10.34 |
% |
| Return on average tangible equity excluding transaction and employee separation costs |
|
15.56 |
% |
|
14.76 |
% |
|
16.41 |
% |
|
15.15 |
% |
|
14.95 |
% |
| Yield on interest earning assets |
|
3.62 |
% |
|
3.52 |
% |
|
3.60 |
% |
|
3.78 |
% |
|
3.72 |
% |
| Cost of funds |
|
0.28 |
% |
|
0.27 |
% |
|
0.29 |
% |
|
0.33 |
% |
|
0.36 |
% |
| Net interest margin |
|
3.34 |
% |
|
3.25 |
% |
|
3.31 |
% |
|
3.45 |
% |
|
3.36 |
% |
| Net interest margin, excluding PPP loans |
|
3.31 |
% |
|
3.20 |
% |
|
3.23 |
% |
|
3.28 |
% |
|
3.26 |
% |
| Non-interest income as a percent of total revenue |
|
24.7 |
% |
|
25.1 |
% |
|
29.9 |
% |
|
25.4 |
% |
|
26.6 |
% |
| Efficiency ratio |
|
73.8 |
% |
|
69.9 |
% |
|
77.4 |
% |
|
72.0 |
% |
|
76.5 |
% |
| Efficiency ratio excluding transaction and employee separation costs |
|
65.3 |
% |
|
66.3 |
% |
|
63.7 |
% |
|
65.9 |
% |
|
67.2 |
% |
| Tangible common equity to tangible assets |
|
6.85 |
% |
|
6.95 |
% |
|
7.31 |
% |
|
7.26 |
% |
|
6.99 |
% |
| |
|
|
|
|
|
|
Asset Quality (period-end):
|
|
|
|
|
|
| Allowance for loan losses to total loans |
|
1.38 |
% |
|
1.42 |
% |
|
1.44 |
% |
|
1.39 |
% |
|
1.43 |
% |
| Allowance for loan losses to loans, excluding PPP loans |
|
1.38 |
% |
|
1.43 |
% |
|
1.46 |
% |
|
1.42 |
% |
|
1.52 |
% |
| Allowance for loan losses to total nonperforming loans |
|
736.1 |
% |
|
811.6 |
% |
|
877.7 |
% |
|
692.3 |
% |
|
1113.0 |
% |
| Nonperforming assets to total assets |
|
0.17 |
% |
|
0.16 |
% |
|
0.16 |
% |
|
0.20 |
% |
|
0.18 |
% |
| Net charge-offs (annualized) to average loans |
|
0.04 |
% |
|
-0.06 |
% |
|
-0.15 |
% |
|
0.12 |
% |
|
0.04 |
% |
| |
|
|
|
|
|
|
Capital (period-end):
|
|
|
|
|
|
| Heritage Southeast Bank (HSB) risk based capital ratios: |
|
|
|
|
| CET1 |
|
12.58 |
% |
|
12.50 |
% |
|
12.67 |
% |
|
12.29 |
% |
|
12.32 |
% |
| Tier 1 |
|
12.58 |
% |
|
12.50 |
% |
|
12.67 |
% |
|
12.29 |
% |
|
12.32 |
% |
| Total |
|
13.73 |
% |
|
13.69 |
% |
|
13.90 |
% |
|
13.50 |
% |
|
13.57 |
% |
| Leverage |
|
9.89 |
% |
|
9.89 |
% |
|
9.81 |
% |
|
9.40 |
% |
|
9.01 |
% |
| |
|
|
|
|
|
|
Other (period-end):
|
|
|
|
|
|
| Branches |
|
23 |
|
|
23 |
|
|
23 |
|
|
23 |
|
|
22 |
|
| FTE |
|
270 |
|
|
275 |
|
|
280 |
|
|
278 |
|
|
276 |
|
| |
|
|
|
|
|
|
(1) Includes restricted stock and shares yet to be issued under a supplemental executive retirement plan. |
|
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
Consolidated Statements of Income
|
|
|
|
|
|
|
(Unaudited) (in thousands, except per share data)
|
|
|
|
|
| |
|
|
|
|
|
| |
Three Months Ended |
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
2022 |
2022 |
2021 |
2021 |
2021 |
| Interest and dividend revenue: |
|
|
|
|
|
| Loans, including fees |
$ |
12,939 |
$ |
12,247 |
$ |
12,666 |
$ |
12,705 |
$ |
12,592 |
| PPP loans, including fees |
|
114 |
|
235 |
|
428 |
|
1,014 |
|
1,024 |
| Investment securities |
|
654 |
|
756 |
|
518 |
|
564 |
|
376 |
| Fed funds sold, deposits in banks and other |
|
593 |
|
113 |
|
113 |
|
107 |
|
79 |
| Total interest and dividend revenue |
|
14,300 |
|
13,351 |
|
13,725 |
|
14,390 |
|
14,071 |
| |
|
|
|
|
|
| Interest expense: |
|
|
|
|
|
| Deposits |
|
665 |
|
656 |
|
703 |
|
760 |
|
843 |
| Repurchase agreements |
|
9 |
|
14 |
|
8 |
|
8 |
|
6 |
| Line of credit |
|
318 |
|
271 |
|
253 |
|
192 |
|
124 |
| Subordinated notes |
|
- |
|
- |
|
47 |
|
198 |
|
290 |
| Junior subordinated debentures |
|
103 |
|
85 |
|
81 |
|
80 |
|
81 |
| Total interest expense |
|
1,095 |
|
1,026 |
|
1,092 |
|
1,238 |
|
1,344 |
| |
|
|
|
|
|
| Net interest income |
|
13,205 |
|
12,325 |
|
12,633 |
|
13,152 |
|
12,727 |
| Provision for loan losses |
|
- |
|
- |
|
- |
|
- |
|
- |
| Net interest revenue after provision for loan losses |
|
13,205 |
|
12,325 |
|
12,633 |
|
13,152 |
|
12,727 |
| |
|
|
|
|
|
| Noninterest revenue: |
|
|
|
|
|
| Service charges and fees |
|
1,482 |
|
1,476 |
|
1,608 |
|
1,571 |
|
1,291 |
| Interchange and ATM fees |
|
1,548 |
|
1,453 |
|
1,506 |
|
1,517 |
|
1,665 |
| Gain on sale of SBA loans |
|
430 |
|
419 |
|
1,521 |
|
652 |
|
738 |
| Other |
|
865 |
|
779 |
|
759 |
|
741 |
|
913 |
| Total noninterest revenue |
|
4,325 |
|
4,127 |
|
5,394 |
|
4,481 |
|
4,607 |
| |
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
| Salaries and employee benefits |
|
7,977 |
|
6,341 |
|
6,692 |
|
6,760 |
|
6,551 |
| Occupancy and equipment |
|
1,425 |
|
1,350 |
|
1,394 |
|
1,434 |
|
1,443 |
| Other real estate expenses, including losses |
|
|
|
|
|
| on sales and impairments, net |
|
6 |
|
7 |
|
93 |
|
27 |
|
165 |
| Transaction costs |
|
315 |
|
604 |
|
2,480 |
|
1,069 |
|
1,612 |
| Other |
|
3,459 |
|
3,441 |
|
3,538 |
|
3,634 |
|
3,720 |
| Total other operating expenses |
|
13,182 |
|
11,743 |
|
14,197 |
|
12,924 |
|
13,491 |
| Income before income tax expense |
|
4,348 |
|
4,709 |
|
3,830 |
|
4,709 |
|
3,843 |
| Income tax expense |
|
1,019 |
|
869 |
|
722 |
|
1,206 |
|
974 |
| Net income |
$ |
3,329 |
$ |
3,840 |
$ |
3,108 |
$ |
3,503 |
$ |
2,869 |
| |
|
|
|
|
|
| Weighted-average number of shares outstanding: |
|
|
|
|
|
| Basic |
|
7,012 |
|
7,008 |
|
6,979 |
|
6,976 |
|
6,967 |
| Diluted |
|
7,225 |
|
7,225 |
|
7,218 |
|
7,222 |
|
7,212 |
| |
|
|
|
|
|
| Earnings per share: |
|
|
|
|
|
| Basic |
$ |
0.47 |
$ |
0.55 |
$ |
0.45 |
$ |
0.50 |
$ |
0.41 |
| Diluted |
$ |
0.46 |
$ |
0.53 |
$ |
0.43 |
$ |
0.49 |
$ |
0.40 |
| |
|
|
|
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
Consolidated Statements of Income
|
|
|
|
(Unaudited) (in thousands, except per share data)
|
|
| |
|
|
| |
|
|
| |
Six Months Ended |
| |
June 30, |
June 30, |
| |
2022 |
2021 |
| Interest and dividend revenue: |
|
|
| Loans, including fees |
$ |
25,186 |
$ |
25,217 |
| PPP loans, including fees |
|
350 |
|
2,095 |
| Investment securities |
|
1,410 |
|
892 |
| Fed funds sold, deposits in banks and other |
|
705 |
|
134 |
| Total interest and dividend revenue |
|
27,651 |
|
28,338 |
| |
|
|
| Interest expense: |
|
|
| Deposits |
|
1,320 |
|
1,829 |
| Repurchase agreements |
|
24 |
|
16 |
| Line of credit |
|
589 |
|
234 |
| Subordinated debt |
|
- |
|
600 |
| Junior subordinated debentures |
|
188 |
|
163 |
| Total interest expense |
|
2,121 |
|
2,842 |
| |
|
|
| Net interest income |
|
25,530 |
|
25,496 |
| Provision for loan losses |
|
- |
|
- |
| Net interest revenue after provision for loan losses |
|
25,530 |
|
25,496 |
| |
|
|
| Noninterest revenue: |
|
|
| Service charges and fees |
|
2,959 |
|
2,574 |
| Interchange and ATM fees |
|
3,001 |
|
3,201 |
| Gain on sale of SBA loans |
|
849 |
|
1,644 |
| Other |
|
1,643 |
|
1,684 |
| Total noninterest revenue |
|
8,452 |
|
9,103 |
| |
|
|
| Operating expenses: |
|
|
| Salaries and employee benefits |
|
14,318 |
|
13,079 |
| Occupancy and equipment |
|
2,775 |
|
2,845 |
| Other real estate expenses, including losses |
|
|
| on sales and impairments, net |
|
13 |
|
172 |
| Transaction costs |
|
919 |
|
1,612 |
| Other |
|
6,900 |
|
7,628 |
| Total other operating expenses |
|
24,925 |
|
25,336 |
| Income before income tax expense |
|
9,057 |
|
9,263 |
| Income tax expense |
|
1,888 |
|
2,061 |
| Net income |
$ |
7,169 |
$ |
7,202 |
| |
|
|
| Weighted-average number of shares outstanding: |
|
|
| Basic |
|
7,010 |
|
6,964 |
| Diluted |
|
7,223 |
|
7,209 |
| |
|
|
| Earnings per share: |
|
|
| Basic |
$ |
1.02 |
$ |
1.03 |
| Diluted |
$ |
0.99 |
$ |
1.00 |
| |
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
| |
|
|
|
|
|
| |
(Unaudited) |
(Unaudited) |
(Audited) |
(Unaudited) |
(Unaudited) |
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
| Assets |
|
|
|
|
|
| Cash and due from banks |
$ |
32,404 |
|
$ |
30,191 |
|
$ |
29,689 |
|
$ |
28,201 |
|
$ |
27,722 |
|
| Interest-bearing deposits with banks |
|
266,020 |
|
|
282,852 |
|
|
261,513 |
|
|
259,342 |
|
|
278,360 |
|
| Cash and cash equivalents |
|
298,424 |
|
|
313,043 |
|
|
291,202 |
|
|
287,543 |
|
|
306,082 |
|
| Securities available for sale, at fair value |
|
192,982 |
|
|
188,954 |
|
|
197,309 |
|
|
171,804 |
|
|
173,606 |
|
| Other investments |
|
827 |
|
|
827 |
|
|
786 |
|
|
786 |
|
|
786 |
|
| Loans: |
|
|
|
|
|
| Loans, excluding PPP loans |
|
1,111,079 |
|
|
1,078,736 |
|
|
1,044,413 |
|
|
1,044,938 |
|
|
999,127 |
|
| PPP loans |
|
180 |
|
|
4,171 |
|
|
10,912 |
|
|
23,051 |
|
|
59,233 |
|
| Allowance for loan losses |
|
(15,296 |
) |
|
(15,396 |
) |
|
(15,228 |
) |
|
(14,837 |
) |
|
(15,159 |
) |
| Loans, net |
|
1,095,963 |
|
|
1,067,511 |
|
|
1,040,097 |
|
|
1,053,152 |
|
|
1,043,201 |
|
| |
|
|
|
|
|
| Premises and equipment, net |
|
33,812 |
|
|
34,400 |
|
|
35,136 |
|
|
35,770 |
|
|
36,114 |
|
| Bank owned life insurance |
|
35,104 |
|
|
34,871 |
|
|
34,634 |
|
|
34,404 |
|
|
34,174 |
|
| Other real estate owned |
|
857 |
|
|
857 |
|
|
857 |
|
|
1,128 |
|
|
1,533 |
|
| Goodwill |
|
28,275 |
|
|
28,275 |
|
|
28,275 |
|
|
28,275 |
|
|
28,275 |
|
| Core deposit intangible, net |
|
6,809 |
|
|
7,046 |
|
|
7,283 |
|
|
7,521 |
|
|
7,758 |
|
| Deferred tax asset, net |
|
13,975 |
|
|
13,622 |
|
|
12,093 |
|
|
12,261 |
|
|
13,313 |
|
| Other assets |
|
6,004 |
|
|
7,280 |
|
|
6,893 |
|
|
7,366 |
|
|
7,423 |
|
| Total Assets |
$ |
1,713,032 |
|
$ |
1,696,686 |
|
$ |
1,654,565 |
|
$ |
1,640,010 |
|
$ |
1,652,265 |
|
| |
|
|
|
|
|
| Liabilities |
|
|
|
|
|
| Deposits: |
|
|
|
|
|
| Noninterest-bearing |
$ |
527,023 |
|
$ |
519,305 |
|
$ |
485,754 |
|
$ |
490,341 |
|
$ |
488,877 |
|
| Interest-bearing demand |
|
280,387 |
|
|
271,545 |
|
|
275,115 |
|
|
259,811 |
|
|
270,380 |
|
| Money market and savings |
|
465,783 |
|
|
457,768 |
|
|
439,965 |
|
|
427,272 |
|
|
425,371 |
|
| Time |
|
213,255 |
|
|
220,349 |
|
|
226,604 |
|
|
237,292 |
|
|
250,839 |
|
| Total deposits |
|
1,486,448 |
|
|
1,468,967 |
|
|
1,427,438 |
|
|
1,414,716 |
|
|
1,435,467 |
|
| |
|
|
|
|
|
| Securities sold under agreements to repurchase |
|
22,266 |
|
|
27,373 |
|
|
23,988 |
|
|
23,424 |
|
|
15,241 |
|
| Line of credit |
|
34,688 |
|
|
34,688 |
|
|
34,188 |
|
|
23,688 |
|
|
22,688 |
|
| Subordinated notes |
|
- |
|
|
- |
|
|
- |
|
|
8,674 |
|
|
13,165 |
|
| Junior subordinated debentures |
|
9,480 |
|
|
9,442 |
|
|
9,403 |
|
|
9,365 |
|
|
9,327 |
|
| Accrued expenses and other liabilities |
|
10,163 |
|
|
5,377 |
|
|
5,588 |
|
|
7,862 |
|
|
7,312 |
|
| Total liabilities |
|
1,563,045 |
|
|
1,545,847 |
|
|
1,500,605 |
|
|
1,487,729 |
|
|
1,503,200 |
|
| |
|
|
|
|
|
| Shareholders' Equity |
|
|
|
|
|
| Common stock |
|
702 |
|
|
702 |
|
|
703 |
|
|
702 |
|
|
702 |
|
| Additional paid in capital |
|
117,328 |
|
|
117,307 |
|
|
117,443 |
|
|
117,298 |
|
|
117,151 |
|
| Retained earnings |
|
44,966 |
|
|
41,637 |
|
|
37,798 |
|
|
34,689 |
|
|
31,186 |
|
| Other comprehensive income (loss) |
|
(13,009 |
) |
|
(8,807 |
) |
|
(1,984 |
) |
|
(408 |
) |
|
26 |
|
| Total Shareholders' Equity |
|
149,987 |
|
|
150,839 |
|
|
153,960 |
|
|
152,281 |
|
|
149,065 |
|
| Total Liabilities and Shareholders' Equity |
$ |
1,713,032 |
|
$ |
1,696,686 |
|
$ |
1,654,565 |
|
$ |
1,640,010 |
|
$ |
1,652,265 |
|
| |
|
|
|
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
GAAP to Non-GAAP Reconciliation
|
|
|
|
|
|
|
(Unaudited) (in thousands, except per share data)
|
|
|
|
|
| |
|
|
|
|
|
| |
Three Months Ended |
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
| Net income (GAAP) |
$ |
3,329 |
|
$ |
3,840 |
|
$ |
3,108 |
|
$ |
3,503 |
|
$ |
2,869 |
|
| Transaction costs (TC) |
|
315 |
|
|
604 |
|
|
2,480 |
|
|
1,069 |
|
|
1,612 |
|
| Employee separation costs (SC) |
|
1,180 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
| Income tax benefit related to TC and SC |
|
(381 |
) |
|
(156 |
) |
|
(779 |
) |
|
(204 |
) |
|
(335 |
) |
| Net income excluding TC and SC |
$ |
4,443 |
|
$ |
4,288 |
|
$ |
4,809 |
|
$ |
4,368 |
|
$ |
4,146 |
|
| |
|
|
|
|
|
| Diluted earnings per share: |
|
|
|
|
|
| GAAP |
$ |
0.46 |
|
$ |
0.53 |
|
$ |
0.43 |
|
$ |
0.49 |
|
$ |
0.40 |
|
| Excluding TC and SC |
$ |
0.61 |
|
$ |
0.59 |
|
$ |
0.67 |
|
$ |
0.60 |
|
$ |
0.57 |
|
| |
|
|
|
|
|
| Weighted average number of shares - diluted |
|
7,225 |
|
|
7,225 |
|
|
7,218 |
|
|
7,222 |
|
|
7,212 |
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
Loan Portfolio
|
|
|
|
|
|
|
(Unaudited) (in thousands)
|
|
|
|
|
|
| |
|
|
|
|
|
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
| Real estate loans: |
|
|
|
|
|
| Construction and land development |
$ |
182,601 |
|
$ |
173,066 |
|
$ |
159,630 |
|
$ |
154,487 |
|
$ |
144,263 |
|
| Single-family residential |
|
160,335 |
|
|
151,033 |
|
|
158,667 |
|
|
163,412 |
|
|
162,996 |
|
| Commercial - owner occupied |
|
274,555 |
|
|
267,815 |
|
|
265,900 |
|
|
275,220 |
|
|
260,186 |
|
| Commercial - other |
|
254,082 |
|
|
258,112 |
|
|
239,994 |
|
|
228,229 |
|
|
214,995 |
|
| Multifamily |
|
3,955 |
|
|
6,487 |
|
|
6,592 |
|
|
13,826 |
|
|
14,017 |
|
| Total real estate loans |
|
875,528 |
|
|
856,513 |
|
|
830,783 |
|
|
835,174 |
|
|
796,457 |
|
| Commercial loans (not secured by real estate) |
|
226,639 |
|
|
212,109 |
|
|
202,966 |
|
|
197,084 |
|
|
190,095 |
|
| Consumer loans (not secured by real estate) |
|
10,614 |
|
|
11,596 |
|
|
12,081 |
|
|
14,015 |
|
|
13,874 |
|
| Gross loans |
|
1,112,781 |
|
|
1,080,218 |
|
|
1,045,830 |
|
|
1,046,273 |
|
|
1,000,426 |
|
| Unearned income |
|
(1,702 |
) |
|
(1,482 |
) |
|
(1,417 |
) |
|
(1,335 |
) |
|
(1,299 |
) |
| Loans, net of unearned income |
$ |
1,111,079 |
|
$ |
1,078,736 |
|
$ |
1,044,413 |
|
$ |
1,044,938 |
|
$ |
999,127 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
| PPP loans: |
|
|
|
|
|
| Up to $50,000 |
$ |
- |
|
$ |
209 |
|
$ |
644 |
|
$ |
2,344 |
|
$ |
7,033 |
|
| $50,001 - $150,000 |
|
- |
|
|
318 |
|
|
804 |
|
|
3,936 |
|
|
15,438 |
|
| $150,001 - $2 million |
|
180 |
|
|
3,754 |
|
|
9,788 |
|
|
15,328 |
|
|
26,384 |
|
| Greater than $2 million |
|
- |
|
|
- |
|
|
- |
|
|
2,155 |
|
|
11,963 |
|
| Total PPP loans |
|
180 |
|
|
4,281 |
|
|
11,236 |
|
|
23,763 |
|
|
60,818 |
|
| Unearned income |
|
- |
|
|
(110 |
) |
|
(324 |
) |
|
(712 |
) |
|
(1,585 |
) |
| PPP loans, net of unearned income |
$ |
180 |
|
$ |
4,171 |
|
$ |
10,912 |
|
$ |
23,051 |
|
$ |
59,233 |
|
| |
|
|
|
|
|
|
HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY
|
|
|
|
|
Asset Quality Information
|
|
|
|
|
|
|
(Unaudited) (in thousands)
|
|
|
|
|
|
| |
|
|
|
|
|
| |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
| |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
| Classified assets: |
|
|
|
|
|
| Nonperforming loans |
$ |
2,078 |
|
$ |
1,897 |
|
$ |
1,735 |
|
$ |
2,143 |
|
$ |
1,362 |
|
| Other real estate owned |
|
857 |
|
|
857 |
|
|
857 |
|
|
1,128 |
|
|
1,533 |
|
| Total nonperforming assets |
|
2,935 |
|
|
2,754 |
|
|
2,592 |
|
|
3,271 |
|
|
2,895 |
|
| Accruing classified loans |
|
284 |
|
|
327 |
|
|
676 |
|
|
804 |
|
|
811 |
|
| Total classified assets |
$ |
3,219 |
|
$ |
3,081 |
|
$ |
3,268 |
|
$ |
4,075 |
|
$ |
3,706 |
|
| |
|
|
|
|
|
| Classified assets to HSB Tier 1 capital plus ALL |
|
1.8 |
% |
|
1.7 |
% |
|
1.9 |
% |
|
2.5 |
% |
|
2.3 |
% |
| Nonperforming assets to total assets |
|
0.17 |
% |
|
0.16 |
% |
|
0.16 |
% |
|
0.20 |
% |
|
0.18 |
% |
| |
|
|
|
|
|
| Allowance for loan losses: |
|
|
|
|
|
| Balance at beginning of period |
$ |
15,396 |
|
$ |
15,228 |
|
$ |
14,837 |
|
$ |
15,159 |
|
$ |
15,256 |
|
| Provision for loan losses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
| Charge-offs |
|
(651 |
) |
|
(99 |
) |
|
(295 |
) |
|
(403 |
) |
|
(195 |
) |
| Recoveries |
|
551 |
|
|
267 |
|
|
686 |
|
|
81 |
|
|
98 |
|
| Balance at end of period |
$ |
15,296 |
|
$ |
15,396 |
|
$ |
15,228 |
|
$ |
14,837 |
|
$ |
15,159 |
|
| |
|
|
|
|
|
| Loans, excluding PPP loans |
$ |
1,111,079 |
|
$ |
1,078,736 |
|
$ |
1,044,413 |
|
$ |
1,044,938 |
|
$ |
999,127 |
|
| PPP loans |
|
180 |
|
|
4,171 |
|
|
10,912 |
|
|
23,051 |
|
|
59,233 |
|
| Performing past due loans |
|
995 |
|
|
1,638 |
|
|
1,277 |
|
|
3,541 |
|
|
1,464 |
|
| Allowance as % of loans |
|
1.38 |
% |
|
1.42 |
% |
|
1.44 |
% |
|
1.39 |
% |
|
1.43 |
% |
| Allowance as % of loans, excluding PPP loans |
|
1.38 |
% |
|
1.43 |
% |
|
1.46 |
% |
|
1.42 |
% |
|
1.52 |
% |
| Allowance as a % of nonperforming loans |
|
736.1 |
% |
|
811.6 |
% |
|
877.7 |
% |
|
692.3 |
% |
|
1113.0 |
% |
| Average loans, excluding PPP loans |
|
1,092,048 |
|
|
1,056,269 |
|
|
1,044,492 |
|
|
1,017,213 |
|
|
993,346 |
|
| Average PPP loans |
|
1,520 |
|
|
8,075 |
|
|
15,164 |
|
|
40,910 |
|
|
77,325 |
|
| Net charge-offs (annualized) to average loans |
|
0.04 |
% |
|
-0.06 |
% |
|
-0.15 |
% |
|
0.12 |
% |
|
0.04 |
% |
Source: Heritage Southeast Bancorporation, Inc.