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Highlands Bancorp, Inc. Reports Increase in Net Income for the Six Months Ended June 30, 2018

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Highlands Bancorp, Inc. (OTC:HSBK) parent company of Highlands State
Bank, reported second quarter 2018 net income of $912,000 compared to
net income of $717,000 for the second quarter of 2017, increasing
$195,000 or 27.2%. Second quarter 2018 net income available to common
stockholders totaled $911,000 or $.34 per basic and $.32 per diluted
common share, an increase of 27.2% compared to $716,000 or $.26 per
basic and diluted common share for the same period in 2017. For the six
months ended June 30, 2018 net income increased $524,000 or 43.1% to
$1,741,000 compared to net income of $1,217,000 for the same period in
2017. Net income available to common stockholders for the six months of
2018 totaled $1,740,000 or $.64 per basic common share and $.62 per
diluted common share compared to $1,216,000 or $.45 per basic and $.44
per diluted common share for 2017.

Net interest income increased by $409,000 to $3,669,000 for the second
quarter of 2018 when compared to net interest income of $3,260,000 for
the second quarter of 2017 due to growth in the loan and investment
portfolios during the period. For the first six months of 2018, net
interest income was $7,189,000 compared to $6,356,000 for the same
period of 2017, reflecting an increase of $833,000 or 13.1%. The
provision for loan losses for the second quarter of 2018 of $221,000
increased by $10,000 when compared to $211,000 for the second quarter of
2017, and decreased $171,000 to $319,000 for the first six months of
2018 when compared to $490,000 for the same period in 2017. The lower
provision for loan losses in 2018 is a result of management's continued
assessment of the reserves maintained on non-performing loans. There
were no loan charge-offs for the second quarter of 2018 or 2017, and no
charge-offs for the six months ended June 30, 2018, compared to loan
charge-offs of $10,000 for the same period in 2017. There were no
recoveries of previously charged off loans during the second quarters of
2018 or 2017. Recoveries for the first six months of 2018 and 2017
totaled $0 and $1,000 respectively.

Non-interest income for the second quarter of 2018 increased $14,000
when compared to the same period in 2017 due to higher loan and late
fees, and increased debit card interchange income. Non-interest income
for the first six months of 2018 increased $86,000 when compared to the
same period in 2017 due to higher loan fees and insufficient fund
charges. Non-interest expenses increased by $354,000 to $3,082,000 for
the second quarter of 2018, and by $731,000 to $6,279,000 for the six
months ended June 30, 2018 when compared to similar periods of 2017 due
to the additional costs associated with the Company's growth and
increased earnings, including higher salary and benefit costs from
additions made to staff, and increased data processing, deposit
insurance, foreclosed asset, advertising, legal, and professional costs.

The Company's total assets were $487.9 million on June 30, 2018,
increasing $38.9 million or 8.7% when compared to total assets of $449.0
million at December 31, 2017. Deposits increased $12.8 million or 3.3%
from $389.1 million on December 31, 2017 to $401.9 million on June 30,
2018. Borrowings increased $23.3 million or 82.3% to $51.6 million from
$28.3 million on December 31, 2017 to fund loan growth and provide
additional liquidity. Net loans outstanding on June 30, 2018 were $422.7
million compared to $396.6 million on December 31, 2017, reflecting an
increase of $26.1 million or 6.6%. Non-accrual loans decreased $414
thousand to $2.7 million at June 30, 2018 compared to $3.1 million at
December 31, 2017, and non-performing loans and performing troubled debt
restructurings as a percentage of total loans declined to .79% at June
30, 2018 from .96% at December 31, 2017.

The Company serves as the holding company for Highlands State Bank.
Highlands State Bank is a full service community bank headquartered in
Vernon, New Jersey with branch offices in Sparta, Totowa, and Denville
New Jersey. Highlands State Bank provides deposit and loan banking
services to consumers and businesses in northern New Jersey.

Forward-Looking Statements

This news release contains certain forward-looking statements, either
expressed or implied, which are provided to assist the reader in
understanding anticipated future financial performance.
These
statements involve certain risks, uncertainties, estimates and
assumptions made by management, which are subject to factors beyond the
company's control and could impede its ability to achieve these goals.

These factors include general economic conditions, trends in interest
rates, the ability of our borrowers to repay their loans, and results of
regulatory exams, among other factors
.

 
Highlands Bancorp, Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share data)
           
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
INCOME STATEMENT
Net interest income $ 3,669 $ 3,260 $ 7,189 $ 6,356
Provision for loan losses 221 211 319 490
Non-interest income 825 811 1,689 1,603
Non-interest expense   3,082     2,728     6,279     5,548  
Net income before income tax 1,191 1,132 2,280 1,921
Income tax expense   (279 )   (415 )   (539 )   (704 )
Net income 912 717 1,741 1,217
Net income attributable to
non-controlling interest   1     1     1     1  
Net income available to
common stockholders $ 911   $ 716   $ 1,740   $ 1,216  
 
EARNINGS PER COMMON SHARE:
Net income available to
common stockholders:
Basic $ 0.34   $ 0.26   $ 0.64   $ 0.45  
Diluted $ 0.32   $ 0.26   $ 0.62   $ 0.44  
 
Weighted average common shares
Basic   2,716,257     2,702,067     2,709,660     2,702,067  
Diluted   2,809,870     2,768,435     2,804,481     2,767,921  
 
SELECTED BALANCE SHEET DATA
AT END OF PERIOD   6/30/2018     12/31/2017  
Total loans $ 427,330 $ 400,855
Allowance for loan losses 4,596 4,276
Loans held for sale 6,273 5,194
Investment securities 12,172 10,439
Total Assets 487,870 449,016
Total Deposits 401,878 389,120
Borrowings 51,630 28,318
Stockholders' Equity 30,276 28,510
Goodwill 1,151 1,151
 
Book value per common share $ 11.15 $ 10.55
Tangible book value per common share $ 10.72 $ 10.13
 
ASSET QUALITY
Non-accrual loans $ 2,671 $ 3,085
Loans past due 90 days and
still accruing - -
Troubled debt restructurings (TDRs)
currently in compliance with new terms 691 749
OREO property 233 282
Allowance for loan losses to total loans 1.08 % 1.07 %
Non-performing loans and performing TDRs
to total loans 0.79 % 0.96 %

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