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July 29, 2019
J. Lance Carter
Executive Vice President and Chief Operating Officer
Heartland Bancorp, Inc.
401 North Hershey Road
Bloomington, IL 61704
Re: Heartland Bancorp, Inc.
Draft Registration Statement on Form S-1
Submitted July 2, 2019
CIK No. 0000775215
Dear Mr. Carter:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1 Submitted on July 2, 2019
General
1. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Basis of Presentation, page ii
2. We note your disclosure here and on page 15 that you intend to conduct a
stock split prior
to the completion of this offering but that this is not reflected in all
of your per-share
information in this prospectus. Please confirm that you will revise your
prospectus to
J. Lance Carter
FirstNameBancorp, Inc.Lance Carter
Heartland LastNameJ.
Comapany NameHeartland Bancorp, Inc.
July 29, 2019
July 29, 2019 Page 2
Page 2
FirstName LastName
disclose all per-share information to reflect your proposed stock
split in a pre-effective
amendment, or explain why you do not believe this is material
information for investors in
this offering. We may have additional comments after reviewing your
response.
Prospectus Summary
Company Overview, page 1
3. Please revise to clarify, if true, that you have a "leading deposit
share" in Central Illinois
and/or specific MSAs or Micropolitan Statistical Areas therin (e.g.
Bloomington-Normal,
Ottawa-Peru, etc.). In this regard we note you do not appear to have a
leading deposit
share in Northeastern Illinois or the Chicago MSA based on your
disclosure of branch
locations on page 4 and deposit market share by county on page 7.
4. Please revise to specify the time period over which you have acquired
"more than a dozen
community bank acquisitions."
Our Market Area, page 3
5. We note your disclosure that the Chicago MSA contributes 34% of your
deposits and 44%
of your loan portfolio. Please tell us your next largest market(s) by
these metrics and, if
material, disclose this information and outline the economies of the
"mid-sized markets"
in which you operate.
Summary Historical Consolidated Financial and Other Data
GAAP reconciliation and management explanation of non-GAAP financial measures
Net interest income excluding accretable yield and net interest margin
excluding accretable
yield, page 19
6. We note that you disclose, here and elsewhere in the filing, multiple
non-GAAP metrics
that exclude accretable yield, such as net interest margin excluding
accretable yield, net
interest income excluding accretable yield, yield on loans excluding
accretable yield, loan
interest income excluding accretable yield, and yield on loans
excluding accretable yield.
The exclusion of accretion income represents a tailored accounting
principle prohibited by
Regulation G, as it appears to exclude the effects of purchase
accounting rather than
presenting true organic growth. Please revise your filing to remove
these items. Refer to
Question 100.04 of the Compliance and Disclosure Interpretations for
guidance.
Core net income, core return on average assets and core return on average
stockholders' equity ,
page 23
7. We note that your core net income is adjusted for gains or losses on
sales of securities and
bank premises and equipment, which you consider non-recurring.
However, we note that
these items appear to have occurred as adjustments in multiple
periods. Please tell us how
you concluded that these adjustments are consistent with guidance in
Item 10(e) of
Regulation S-K and see Question 102.03 of the Compliance and
Disclosure
J. Lance Carter
Heartland Bancorp, Inc.
July 29, 2019
Page 3
Interpretations on Non-GAAP Financial Measures (April 4, 2018). In
addition, revise
your disclosures to provide enough detail for readers to understand
why you consider
these adjustments to be non-recurring.
Comprehensive Credit-Related Coverage, page 26
8. We note that you present "total allowance for loan losses and credit
loss related loan
discounts," which appears to include credit-related loan discounts
resulting from business
combination accounting. We also note that you calculate "comprehensive
credit-related
coverage" based upon this total allowance. The addition of acquisition
accounting
adjustments (credit-related loan discounts) to the allowance for loan
losses to derive a
total allowance represents a tailored accounting principle prohibited
under Regulation G.
In addition, this adjustment implies that the acquisition
accounting-related adjustment is
available to the entire loan population (i.e., acquired and originated
loans), but it is only
available for the acquired loans. Please revise future filings to
remove these measures.
Refer to Question 100.04 of the Non-GAAP Compliance and Disclosure
Interpretations.
Use of Proceeds, page 60
9. We note that you may use proceeds from this offering for opportunistic
or selective
acquisitions, as well as disclosure on page 125 that pursuing
strategic acquisitions in
Illinois is part of your business strategy. Please revise to disclose,
if true, that you have no
current plans, understandings, or agreements to make any material
acquisitions.
Alternatively, revise your prospectus to disclose the material terms
of such plans.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Overview of Recent Financial Results
Comparison of Year Ended December 31, 2018 to Year Ended December 31, 2017,
page 72
10. Please revise your disclosures to discuss the nature of the employee
benefits policy change
that resulted in the $1.3 million expense in the year ended December
31, 2017.
Critical Accounting Policies and Estimates , page 111
11. Please add disclosure in your Critical Accounting Policies similar to
what you note on
FirstName LastNameJ.that, as Carter of your election to use the extended
transition under the
page 54 stating Lance a result
Comapany NameHeartland Bancorp, Inc. may not be comparable to companies that
comply
JOBS Act, your financial statements
July 29, 2019 Pagecompany effective dates.
with public 3
FirstName LastName
J. Lance Carter
FirstNameBancorp, Inc.Lance Carter
Heartland LastNameJ.
Comapany NameHeartland Bancorp, Inc.
July 29, 2019
Page 4
July 29, 2019 Page 4
FirstName LastName
Index to Consolidated Financial Statements
Unaudited Consolidated Financial Statements as of March 31, 2019 and for the
Three Months
ended March 31, 2019 and 2018
Consolidated Statements of Income for the Three Months ended March 31, 2019 and
2018, page
F-3
12. Revise your historical financial statements to include a separate
column for pro forma tax
and related EPS data. Refer to section 3410.1 of the Division of
Corporation Finance
Financial Reporting Manual.
Exhibit Index, page II-4
13. We note your disclosure on page 150 that you have entered into
employment agreements
with each of your Named Executive Officers. Please revise to include
these employment
agreements in your Exhibit Index. Refer to Item 601(b)(10)(iii)(A) of
Regulation S-K for
guidance.
You may contact Michael Henderson, Staff Accountant, at (202) 551-3364
or Cara Lubit,
Staff Accountant, at (202) 551-5909 if you have questions regarding comments on
the financial
statements and related matters. Please contact Christopher Dunham, Staff
Attorney, at (202)
551-3783 or Michael Clampitt, Senior Counsel, at (202) 551-3434 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Financial Services
cc: Elisabeth M. Martin