Highlands Bancorp, Inc. Reports Results for the Quarter and Year Ended December 31, 2017

Highlands Bancorp, Inc. Reports Results for the Quarter and Year Ended December 31, 2017

Highlands Bancorp, Inc. (OTCPink:HSBK), parent company of Highlands State Bank, reported a fourth quarter net loss of $19,000 in 2017 compared to net income of $501,000 for the same period of 2016. The net loss for the fourth quarter of 2017 includes a one-time, non-cash charge of $658,000 reflected in the tax expense line, associated with the enactment of Tax Cuts and Jobs Act (Tax Reform), and is related to the re-measurement of the Company’s deferred tax asset (DTA) arising from a reduction in the federal corporate tax rate to 21%. Fourth quarter net loss available to common stockholders was $21,000 or $.01 per diluted share in 2017 compared to net income available to common stockholders of $499,000 or $.26 per diluted share for the same period in 2016. Net income available to common stockholders for the year ended December 31, 2017 increased $313,000 to $1,957,000 or $.71 per diluted share, when compared to $1,644,000 or $.88 per diluted share for the year of 2016. Without the impact of Tax Reform, net income available to common stockholders increased $138,000 or 27.7% to $637,000 or $.23 per diluted share for the fourth quarter of 2017 when compared to the fourth quarter of 2016, and increased $971,000 or 59.1% to $2,615,000 or $.94 per diluted share for the twelve months ended December 31, 2017, when compared to the twelve months ended December 31, 2016.

Net interest income increased by $547,000 to $3,517,000 for the fourth quarter of 2017 compared to net interest income of $2,970,000 for the fourth quarter of 2016. For the year ended December 31, 2017, net interest income increased $1,686,000 to $13,223,000 from $11,537,000 for 2016 primarily as a result of loan portfolio growth. The provision for loan losses was $217,000 for the fourth quarter of 2017 and $764,000 for the year ended December 31, 2017. In 2016, the Company’s provision totaled $87,000 and $522,000 for the fourth quarter and year respectively. The provision for loan losses reflects management’s continued assessment of the reserves maintained on non-performing loans. Charge-offs for the year ended December 31, 2017 were $57,000 compared to charge-offs of $397,000 in 2016. Recoveries of previously charged off loans totaled $2,000 in 2017, and $86,000 in 2016. The ratio of non-performing loans and performing TDRs to total loans was .96% at year-end 2017, compared to .86% at year-end 2016.

Non-interest income was $861,000 for the fourth quarter of 2017, compared to $1,177,000 for the fourth quarter of 2016. For the year ended December 31, 2017, non-interest income was $3,188,000 decreasing $902,000 from $4,090,000 for the year ended December 31, 2016. These decreases for 2017 were the result of lower gains on sales of mortgage loans, which were down $276,000 for the quarter and $742,000 for the year, and reduced loan fees which reflected declines of $14,000 for the quarter and $157,000 for the year. In addition, the Company had losses on the sale of securities during 2017 of $39,000 for the quarter and $11,000 for the year. Non-interest expenses for the fourth quarter of 2017 declined $140,000 to $3,138,000, compared to $3,278,000 for the fourth quarter of 2016, and decreased $776,000 to $11,507,000 for the year ended December 31, 2017, compared to $12,283,000 for the year ended December 31, 2016 as a result of decreased expenses for compensation and benefits, rent, and professional fees. These declines were partially offset by the write-off in the fourth quarter of a $175,000 mortgage license intangible asset which arose from the purchase of Secure Lending Solutions, Inc. in 2014.

Total assets were $449.0 million on December 31, 2017, an increase of $54.0 million or 13.7% from $395.0 million on December 31, 2016. Deposits increased $46.3 million or 13.5% from $342.8 million on December 31, 2016 to $389.1 million on December 31, 2017. Net loans outstanding, including loans held for sale, increased $65.2 million or 19.4% to $401.8 million as of December 31, 2017 from $336.6 million the previous year end. Total equity was $28.5 million on December 31, 2017, increasing $1.8 million or 6.7% from $26.7 million on December 31, 2016.

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.
Steven C. Ackmann, 973-764-3200

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