HEARTLAND BANCCORP COLUMBUS, OHIO - Q4 2020 FINANCIAL UPDATE
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Heartland BancCorp
Columbus, Ohio
Q4 2020 Financial Update
As of January 15, 2020
(OTCQX: HLAN)
Safe Harbor Statement
This presentation 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 presentation 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 are susceptible to multiple interpretations and
periodic revisions based on actual experience and business developments, and thus, may not be realized; (2) the businesses of
Heartland Bank and Victory Community Bank may not be combined successfully, or such combination may take longer, be more
difficult, time-consuming or costly to accomplish than expected, and the expected growth opportunities or cost savings from the
merger may not be fully realized or may take longer to realize than expected; (3) legislative or regulatory changes, including changes
in accounting standards, may adversely affect the businesses in which Heartland is engaged; (4) changes in the interest rate
environment may adversely affect net interest income; (5) results may be adversely affected by continued diversification of assets and
adverse changes to credit quality; (6) competition from other financial services companies in Heartland’s markets could adversely
affect operations; (7) the impact of the coronavirus (COVID-19) pandemic on the employees and customers of Heartland, as well as the
resulting effect on the business, financial condition and results of operations on Heartland; and (8) 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. You are cautioned not to place any undue reliance on forward-
looking statements. 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.
2
Heartland BancCorp
(OTCQX: HLAN)
It is Heartland Bank’s mission to provide the best-personalized financial
services at competitive prices for the economic growth and well-being of
individuals and businesses within our communities. This goal shall be
accomplished through well-trained, caring employees, with unquestionable
integrity, who practice sound and innovative banking principles, which will
maximize bank profits and growth.
32020 Full-Year Financial Highlights
Fourth consecutive year of record net income
Revenue Net Income TBVPS
$60.5 million $14.8 million $63.87
↑ 25% y/y ↑ 12% y/y ↑ 2.2% y/y
ROAA ROATCE EPS
1.08% 12.00% $7.33
↓ 13 bps y/y ↑ 118 bps y/y ↑ 14% y/y
➢ Net loans increased 26% y/y to $1.13 billion
➢ Total deposits increased 39% y/y to $1.31 billion
➢ Noninterest DDA increased 67% y/y to $427 million
➢ Net interest margin (NIM) of 3.63% (including PPP effects), down 31 bps from the prior year
➢ Efficiency ratio of 59.92%, down 356 bps from the prior year
➢ TBVPS increased by 2% y/y, or $1.38 to $63.87
➢ Credit quality and capital remain strong
42020 Fourth Quarter Financial Highlights
Revenue Net Income TBVPS
$17.2 million $5.8 million $63.87
↑ 37% y/y ↑ 67% y/y ↑ 2.2% y/y
ROAA ROATCE EPS
1.50% 18.39% $2.87
↑ 29 bps y/y ↑ 745 bps y/y ↑ 71% y/y
➢ Net loans decreased 4% q/q to $1.13 billion
➢ Total deposits increased 2% q/q to $1.31 billion
➢ Noninterest DDA increased 10% q/q to $427 million
➢ Net interest margin (NIM) of 3.50% (including PPP effects), up 12 bps from the prior quarter
➢ Efficiency ratio of 55.07%, down 521 bps from the prior year
➢ TBVPS increased 4% q/q to $63.87
➢ Credit quality and capital remain strong
5PPP Update
919 loans
remaining for
$101.3 million
157 loans 507 loans
forgiven for have applied
$28.0 million for
in Q4 forgiveness
$2.0 million in $120k in
Recognition salaries salaries
Breakdown by
Line Item $306k in $346k in $764k in
interest income interest income interest income
Notes: Graph in 000s, PPP data as of December 31st, 2020
6Deferments Update
Business Detail Business Detail
➢ 22 loans still on deferment with a balance of ➢ Deferments by Quarter to resume regular
$51.2 million payment:
➢ 1st Time – 9 loans, $23.2 million ➢ Q1 2021 - $43.9 million
➢ All hotels, all on interest only ➢ 1st Time - $23.2 million
➢ Most expected to request 2nd ➢ 2nd Time - $20.7 million
deferment ➢ Q2 2021 - $0
➢ 2nd Time – 13 loans, $28.0 million ➢ Q3 2021 - $7.3 million
➢ $4.7 million on full deferment Consumer Detail
➢ $23.3 million on interest only
➢ 7 loans still on deferment with a balance of
➢ Deferments by sector:
$0.7 million
➢ Accommodation & Food - $44.5 million
➢ $0.7 million on full deferment
➢ RE Rental & Leasing - $3.8 million
➢ All set to resume regular payments in
➢ Manufacturing - $2.7 million
Q1 2021
➢ Retail Trade - $0.2 million
➢ 22 FHLB loans with a balance of $5.2 million in
forbearance process
Notes: Deferment data as of December 31st, 2020
7Credit Risk Management
ALLL as % of Total Loans
1.36%
1.31%
1.24%
1.04% 1.17%
0.97% 0.97%
0.93%
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Past Due Loans (30+) to Total Loans Nonaccrual Loans to Total Loans
0.65%
0.40%
0.35%
0.59% 0.29%
0.40%
0.37% 0.36%
0.49%
0.31%
0.35% 0.36% 0.25% 0.26%
0.33%
0.21%
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Note: Dashed line metrics excludes PPP loans
8Balance Sheet Concentrations
Industry Outstanding
Further Breakout
(based on 2-digit NAICS) Balance
▪ Hotels - $95 million $105 million
Accommodation and Food Services
▪ Restaurants - $8 million (10.0% of total loans)
▪ Religious Organizations - $55 million $73 million
Other Services
▪ Personal Service - $5 million (7.0% of total loans)
▪ Assisted Living Facilities - $20 million
$42 million
Healthcare and Social Assistance ▪ Skilled Nursing Facilities - $7 million
(4.0% of total loans)
▪ Continuing Care - $4 million
▪ Breweries - $15 million $36 million
Manufacturing
▪ Sign Manufacturing - $3 million (3.5% of total loans)
▪ Supermarket & Other Grocery - $8 million
$21 million
Retail Trade ▪ Gas Stations with Convenience - $4 million
(2.0% of total loans)
▪ Used Car Dealers - $3 million
Note: Data as of December 31, 2020, Excludes PPP loans
9Balance Sheet
Loans
➢ Net loans up $235.5m, or 26% y/y
$1,168.9 $1,126.3
➢ 1-4 family up $95.6m, or 41% y/y
$890.9
➢ Includes $120.2 million in acquired loans
➢ C&I up $106.3m, or 97% y/y
➢ Includes $101.3m in PPP loans
➢ ALLL/Total loans now 1.24%, up from 1.17% in 3Q 2020
➢ ALLL/Total loans is 1.36% excluding PPP loans 4Q 2019 3Q 2020 4Q 2020
Deposits
$1,287.4 $1,312.8
➢ Total deposits up $368.6m, or 39% y/y
$944.2
➢ Includes $149.9 million in acquired deposits
➢ DDA up $170.8m, or 67% y/y
➢ Savings, NOW and MMDA up $172.4m, or 48% y/y
➢ CDs up $25.4m, or 8% y/y
➢ $265 million in CDs set to reprice in next 12 months, with
4Q 2019 3Q 2020 4Q 2020
an average current rate of 1.17%
Note: Data as of December 31, 2020 unless otherwise noted. Graphs in millions. VCB acquired loans net
of loans held for sale.
10Diversified Loan Portfolio
Total Loan Portfolio (Q4 2019) Total Loan Portfolio (Q4 2020)
HELOCs Consumer HELOCs Consumer
4% 1% Commercial 4% 1%
Commercial
12% 11%
CRE (Non CRE (Non
Owner Owner
Occ.) Occ.)
31% 30%
$277m Total CRE Total CRE
$307m
57% 53%
1-4 Family 1-4 Family
$516m $547m
26% 31% CRE (Owner
CRE (Owner
$232m $359m Occ.)
Occ.)
26% 23%
$238m $240m
1-4 Family Serviced Loans: 1-4 Family Serviced Loans:
$25 million $366 million, ↑ 8% q/q
Due to acquisition of VCB
Note: Balances excludes PPP loans
11Diversified Deposit Portfolio
Total Deposit Portfolio (Q4 2019) Total Deposit Portfolio (Q4 2020)
Time
Demand 27%
27% Demand
Time
$256 m 33%
35%
$427 m
Saving,
NOW, Saving,
MMDA NOW,
38% MMDA
40%
Cost of Deposits: 1.15% Cost of Deposits: 0.45%
Down from 0.56% q/q
12NIM Walk forward
Positive
157 loans impacts of
forgiven for repricing
Negative
$28.0 million liabilities Reduced
impacts of
downward benefit of
excess
quicker than net free
liquidity at
assets in Q4 funds
the FRB
earning
0.10%
13Noninterest Income
Year over Year Change
➢ Noninterest income up $2.5m, or 111%
➢ Growth drivers
➢ Net gains and commissions on loan sales and
$4,790,000
servicing up $2.0m, or 266%
➢ Heartland Planning Associates income up $106k, or
$3,755,000 53%
➢ Total TCTA contribution of $649k during 4Q20, up
from $499k in 4Q19
$2,272,000
Linked Quarter Change
➢ Noninterest income up $1.0m, or 28%
➢ Growth drivers
4Q 2019 3Q 2020 4Q 2020
➢ Net gains and commissions on loan sales and
servicing up $778k, or 38%
➢ Primarily driven by mortgage segment
14Noninterest Income Detail
Net Gains and Commissions on Loan Sales and Servicing Breakout
Segment Detail
$2,807
➢ Mortgage driven by gain on loan sales to Freddie Mac &
$197
$150 FHLB, gain on mortgage servicing asset, LRA fee income and
recurring servicing fee income
$2,029
$106 ➢ $366 million in off b/s serviced loans
$300
➢ Agribusiness driven by recurring servicing income from
$2,460
Farmer Mac I and II and gain on sale of loans
$766
$1,622 ➢ $80 million in off b/s serviced loans
$246
$240
➢ Commercial driven by SWAP referral fees and recurring
$280
servicing income (SBA, Participations)
4Q 2019 3Q 2020 4Q 2020
Mortgage Agribusiness Commercial
➢ $105 million in off b/s serviced loans
Note: Graph in thousands
15Noninterest Expense
Year over Year Change
➢ Noninterest expense up $1.4m, or 17%
➢ Growth drivers
➢ Salaries and employee benefits up $832k, or 17%
$9,421,000 $9,371,000
➢ 36 new associates YoY to support strong
balance sheet and income growth
➢ Elevated expenses related to production-based
$7,995,000
compensation in Mortgage division
➢ Occupancy and equipment expense up $181k, or 17%
➢ Continued investment in infrastructure and
digital platform
Linked Quarter Change
➢ Noninterest expense down $50k, or 1%
4Q 2019 3Q 2020 4Q 2020
➢ Cost saves from VCB acquisition fully realized in the 4th
Quarter
16Heartland BancCorp Total Return
Value of $100 invested at January 1, 2016
$240
$220 $221.49
$200
$180
$160
$152.30
$150.10
$140
$120
$100
1/1/2016 2016 2017 2018 2019 2020 1/15/2021
HLAN Total Return SNL U.S. Bank $1B-$5B SNL Midwest U.S. Bank
Note: Uses 1/15/2021 stock price of $87.50 17Heartland BancCorp (OTCQX: HLAN)
Investment Metrics Investment Value
Stock Price $87.50 Sustained track record of strong earnings performance –
strong NIM, healthy NII, attractive dividend yield
Shares Outstanding 1.99 M
Diversified revenue streams
Market Cap $174.4 M
P/E Ratio (ttm) 12.0x Strong senior leadership team
TBV per Share (MRQ) $63.87
Infrastructure in place for future expansion
17.2% CAGR asset growth since 2015 ($684m -> $1.5b)
Price/TBV 137%
ROAA (MRQ) 1.50% Solid credit quality & CRE risk management culture
ROATCE (MRQ) 18.39%
Focus on growing core deposit franchise
Efficiency Ratio (MRQ) 55.07%
Dividend Yield 2.61% Strong Northern Kentucky Regional team poised for growth
Notes: Metrics use 1/15/2021 stock price of $87.50. Shares outstanding is net of Treasury Shares. 18Contact Information G. Scott McComb Chairman, President & Chief Executive Officer 614-337-4600 Scott.McComb@heartland.bank Carrie Almendinger EVP & Chief Financial Officer 614-337-4600 Carrie.Almendinger@heartland.bank Benjamin Babcanec SVP & Chief Operating Officer 614-337-4600 Benjamin.Babcanec@heartland.bank Jennifer Eckert SVP & Head of Investor Relations 614-337-4600 Jennifer.Eckert@heartland.bank
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