Le Lézard
Classified in: Business
Subject: EARNINGS

Heritage Southeast Bancorporation, Inc. Reports Fourth Quarter Results


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 acquisition date (09/01/19) as well as merger related costs recognized during the first nine months of the year.

 (2)

Ratios for Heritage Southeast Bank.  

 


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