Highlands Bancorp, Inc. (OTC BB: HSBK.OB) parent company of Highlands State Bank, reported fourth quarter net income of $563,000 in 2013 compared to net income of $1,012,000 for the same period of 2012. Fourth quarter net income available to common stockholders was $545,000 or $.30 per diluted share in 2013 compared to $995,000 or $.56 per diluted share for the same period in 2012. Net income for the full year 2013 was $2,270,000 compared to $1,548,000 for the full year 2012. Net income available to common stockholders for the full year 2013 was $2,201,000 or $1.23 per diluted share compared to $1,484,000 or $.83 per diluted share for the year of 2012. The quarterly and annual results for both 2013 and 2012 were positively impacted by partial reversals of the Company's valuation allowance on deferred tax assets which resulted in tax benefits of $333,000 or $.19 per share for the fourth quarter of 2013 and $640,000 or $.36 per share for the fourth quarter of 2012, and $1,310,000 or $.73 per share and $640,000 or $.36 per share for the years of 2013 and 2012, respectively.

Net interest income increased by $134,000 to $2,123,000 for the fourth quarter of 2013 compared to net interest income of $1,989,000 for the fourth quarter of 2012. For the year ended December 31, 2013, net interest income increased to $8,036,000 from $7,237,000 for 2012 as a result of loan portfolio growth and lower cost of funds. The provision for loan losses was $339,000 for the quarter and $727,000 for the year ended December 31, 2013. In 2012, the Company's provision totaled $373,000 and $1,077,000 for the fourth quarter and year respectively. The decrease in the provision for loan losses reflects improvement in non-performing loans and management's continued assessment of the reserves maintained on non-performing loans. Loans increased $28.8 million in 2013 compared to $29.8 million in 2012. Charge-offs for the year ended December 31, 2013 were $762,000 compared to charge-offs of $564,000 in 2012. Recoveries of previously charged off loans totaled $2,000 in 2013, compared to $34,000 in 2012. The ratio of non-performing loans and performing TDRs to total loans declined to 2.69% at year end 2013 from 4.18% at year end 2012.

Non-interest income was $139,000 for the fourth quarter of 2013, remaining flat with the fourth quarter of 2012. For the year ended December 31, 2013, non-interest income was $180,000 declining $332,000 from $512,000 for the year ended December 31, 2012. This decline for 2013 was primarily the result of $282,000 in increased losses on the sales and writedowns of foreclosed property, and a $76,000 loss on fixed assets relating to the sublease of excess space in one of the Company's branch locations. Non-interest expenses increased $311,000 for the fourth quarter of 2013 compared to the same period in 2012, and $765,000 for the year ended December 31, 2013 compared to 2012 primarily due to higher employee salary and benefit costs resulting from additions made to staff and stock-based compensation charges, and from increases in professional fees, data processing, deposit insurance, loan, and advertising costs.

Total assets were $223.4 million on December 31, 2013, an increase of $30.3 million or 15.7% from $193.1 million on December 31, 2012. Deposits increased $29.2 million or 17.5% from $166.9 on December 31, 2012 to $196.1 million on December 31, 2013. Net loans outstanding increased $28.8 million or 17.9% to $189.3 million as of December 31, 2013 from $160.5 million the previous year end.

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 Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
INCOME STATEMENT
Net interest income $ 2,123 $ 1,989 $ 8,036 $ 7,237
Provision for loan losses 339 373 727 1,077
Non-interest income 139 138 180 512
Non-interest expense   1,693     1,382     6,529     5,764  
Net income before income taxes 230 372 960 908
Income tax benefit   333     640     1,310     640  
Net income 563 1,012 2,270 1,548
Preferred stock dividends and accretion   (18 )   (17 )   (69 )   (64 )

Net income available to common stockholders

$ 545   $ 995   $ 2,201   $ 1,484  
 
EARNINGS PER COMMON SHARE:

Net income available to common stockholders:

Basic and diluted $ 0.30   $ 0.56   $ 1.23   $ 0.83  
 
Weighted average common shares
Basic and diluted   1,788,262     1,788,262     1,788,262     1,788,262  
 
 
SELECTED BALANCE SHEET DATA
AT END OF PERIOD 12/31/2013   12/31/2012  
Total loans $ 191,943 $ 163,165
Allowance for loan losses 2,597 2,630
Investment securities 14,658 11,903

 

Total Assets 223,449 193,109
Total Deposits 196,114 166,882
Stockholders' Equity 21,927 19,982
 
Book value per common share $ 8.43 $ 7.34
Tangible book value per common share $ 7.98 $ 6.89
 
ASSET QUALITY
Non-accrual loans $ 4,409 $ 4,920

Loans past due 90 days and still accruing

- -

Troubled debt restructurings (TDRs) currently in compliance with new terms

752 1,893
OREO property 609 3,143
Allowance for loan losses to total loans 1.35 % 1.61 %

Non-performing loans and performing TDRs to total loans

2.69 % 4.18 %

Highlands Bancorp, Inc.
George E. Irwin, 973-764-3200