HEARTLAND BANCCORP COLUMBUS, OHIO - Q1 2021 FINANCIAL UPDATE
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Heartland BancCorp
Columbus, Ohio
Q1 2021 Financial Update
As of April 19, 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.
32021 First Quarter Financial Highlights
Revenue Net Income TBVPS
$15.8 million $4.6 million $64.56
↑ 23% y/y ↑ 58% y/y ↑ 3.6% y/y
ROAA ROATCE EPS
1.20% 14.66% $2.29
↑ 18 bps y/y ↑ 533 bps y/y ↑ 60% y/y
➢ Net loans increased 1% q/q to $1.13 billion
➢ Total deposits increased 3% q/q to $1.36 billion
➢ Noninterest DDA increased 5% q/q to $448 million
➢ Net interest margin (NIM) of 3.36% (including PPP effects), down 14 bps from the prior quarter
➢ Efficiency ratio of 61.81%, down 643 bps from the prior year
➢ TBVPS increased 1% q/q to $64.56
➢ Credit quality and capital remain strong
4PPP Update
1,223 loans
283 loans remaining for
forgiven for $120.5 million
$40.8 million
in Q1 172 loans
have applied
for
forgiveness
919 loans
remaining for
$101.3 million
587 loans
originated for
$60.0 million
Notes: Graph in 000s, PPP data as of March 31st, 2021
5Deferments Update
Business Detail Consumer Detail
➢ 13 loans on deferment with a balance of $37.5 ➢ 4 loans on deferment with a balance of $0.7
million million
➢ All on interest only payments ➢ $0.7 million on full deferment
➢ Q2 - $8.9 million ➢ All set to resume regular payments in
➢ Q3 - $28.6 million Q2 2021
➢ Deferments by sector:
➢ Accommodation & Food - $35.9 million
(all hotels)
➢ Represents 35% of total hotel
exposure, remaining 65% are on
regular payments
➢ 7 total hotel operators
➢ 70% weighted LTV
Note: Deferment data as of March 31st, 2021
6Credit Risk Management
ALLL as % of Total Loans
1.43%
1.36%
1.31%
1.28%
1.04% 1.24%
1.17%
0.97%
0.93%
Q1 20 Q2 20 Q3 20 Q4 20 Q1 21
Past Due Loans (30+) to Total Loans Nonaccrual Loans to Total Loans
0.65%
0.44%
0.40%
0.35%
0.59% 0.29%
0.40% 0.39% 0.39%
0.37% 0.36%
0.31%
0.35% 0.36% 0.35% 0.25% 0.26%
0.33%
Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21
Note: Dashed line metrics excludes PPP loans
7Balance Sheet
Loans
➢ Net loans up $191.0m, or 20% y/y $1,121.9 $1,133.5
$942.5
➢ 1-4 family up $76.4m, or 32% y/y
➢ Includes $120.2 million in acquired loans
➢ C&I up $101.5m, or 75% y/y
➢ Includes $120.0m in PPP loans
➢ ALLL/Total loans now 1.28%, up from 1.24% in 4Q 2020
➢ ALLL/Total loans is 1.43% excluding PPP loans 1Q 2020 4Q 2020 1Q 2021
Deposits
$1,357.4
$1,312.8 ➢ Total deposits up $372.5m, or 38% y/y
$984.8 ➢ Includes $149.9 million in acquired deposits
➢ DDA up $192.0m, or 75% y/y
➢ Savings, NOW and MMDA up $223.0m, or 59% y/y
➢ CDs down $42.5m, or 12% y/y
➢ $229 million in CDs set to reprice in next 12 months, with
1Q 2020 4Q 2020 1Q 2021
an average current rate of 1.02%
Note: Data as of March 31, 2021 unless otherwise noted. Graphs in millions. VCB acquired loans net of
loans held for sale.
8Diversified Loan Portfolio
Total Loan Portfolio (Q1 2020) Total Loan Portfolio (Q1 2021)
HELOCs Consumer HELOCs Consumer
3% 1% Commercial 4% 1%
Commercial
14% 11%
CRE (Non CRE (Non
Owner Owner
Occ.) Occ.)
30% 29%
$283m Total CRE $301m Total CRE
56% 53%
$534m 1-4 Family $546m
1-4 Family 31%
CRE (Owner CRE (Owner
26% $318m
Occ.) Occ.)
$242m
26% 24%
$251m $245m
1-4 Family Serviced Loans: 1-4 Family Serviced Loans:
$33 million $370 million
Due to acquisition of VCB
Note: Balances excludes PPP loans
9Diversified Deposit Portfolio
Total Deposit Portfolio (Q1 2020) Total Deposit Portfolio (Q1 2021)
Demand Time
26% 23% Demand
Time
$256 m 33%
36%
$448 m
Saving,
NOW, Saving,
MMDA NOW,
38% MMDA
44%
Cost of Deposits: 1.02% Cost of Deposits: 0.34%
Down from 0.45% q/q
10NIM Walk forward
283 loans
forgiven for Negative
$40.8 million impacts of Reduced
excess liquidity benefit of
earning 0.10% net free
at FRB funds
Full Q impact
of 43bps
compared to
27bps in Q4
11Noninterest Income
Year over Year Change
➢ Noninterest income up $1.1m, or 42%
➢ Growth drivers
➢ Gains on sale of loans and OMSR up $669k, or 76%
$4,790,000
➢ Heartland Planning Associates income up $78k, or
34%
$3,700,000 ➢ Total TCTA contribution of $619k during 1Q21, up
from $475k in 1Q20
$2,606,000
Linked Quarter Change
➢ Noninterest income down $1.1m, or 23%
➢ Gains on sale of loans and OMSR down $1.5m, or
49%
1Q 2020 4Q 2020 1Q 2021
➢ Loan service fees up $414k
➢ Negative income in 4Q20 related to MSR
amortization related to payoffs
12Noninterest Income Detail
Gains on sale of loans, OMSR & net loan servicing fees 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
$1,755
➢ Agribusiness driven by recurring servicing income from
$301
Farmer Mac I and II and gain on sale of loans
$1,188
$2,460
$664 ➢ Commercial driven by SWAP referral fees and recurring
$1,418
servicing income (SBA, Participations)
$373
➢ No SWAP referral fees in 1Q 2021, $626k in SWAP
$152
referral fees in 1Q 2020
1Q 2020 4Q 2020 1Q 2021
Mortgage Agribusiness Commercial
Note: Graph in thousands
13Noninterest Expense
Year over Year Change
➢ Noninterest expense up $885k, or 10%
➢ Growth drivers
$9,614,000 ➢ Other expense up $499k, or 53%
$9,371,000
➢ Includes $414k in FHLB prepayment penalty
$8,729,000 ➢ Salaries and employee benefits down $243k, or 4%
➢ Includes $1.2 million in deferred PPP cost
benefit
Linked Quarter Change
➢ Noninterest expense up $243k, or 3%
➢ Growth drivers
➢ Ex. PPP, salary reduction from deferred origination
costs down $300k q/q
1Q 2020 4Q 2020 1Q 2021
➢ Benefit accrual adjustments q/q
➢ Advertising expense increased $100k q/q due to
expense reductions in Q4 2020
14Heartland BancCorp Total Return
Value of $100 invested at January 1, 2016
$260
$240 $242.11
$220
$200
$180 $177.00
$176.06
$160
$140
$120
$100
1/1/2016 2016 2017 2018 2019 2020 4/19/2021
HLAN Total Return SNL U.S. Bank $1B-$5B SNL Midwest U.S. Bank
Note: Uses 4/19/2021 stock price of $95.01. 15Heartland BancCorp (OTCQX: HLAN)
Investment Metrics Investment Value
Stock Price $95.01 Sustained track record of strong earnings performance –
strong NIM, healthy NII, attractive dividend yield
Shares Outstanding 1.99 M
Diversified revenue streams
Market Cap $189.4 M
P/E Ratio (LTM) 11.6x Strong senior leadership team
TBV per Share (MRQ) $64.56
Infrastructure in place for future expansion
Price/TBV 147%
ROAA (MRQ) 1.20% Solid credit quality & CRE risk management culture
ROATCE (MRQ) 14.66%
Focus on growing core deposit franchise
Efficiency Ratio (MRQ) 61.81%
Dividend Yield 2.64% Strong Northern Kentucky Regional team poised for growth
Notes: Metrics use 4/19/2021 stock price of $95.01. Shares outstanding is net of Treasury Shares. 16Contact 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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