HGH - Heartland Group Holdings

[noodles]

Thanks. Can anybody quantify this from a profit perspective? i've seen no comment on this in recent annual reports etc.

Something from the 1h13...

"Rural The low seasonal demand in livestock trading reflectedminimal growth in the rural receivables book – an increaseof $2m. NOI was $11.5m, an increase of $3.6m from thePrevious Corresponding Reporting Period due to a full sixmonths’ earnings from the PWF book.
On an average balance comparison, the rural receivablesbook grew for the Current Reporting Period compared tothe year ended June 2012. "

But looking at last year:
1H13 Rural interest income =23545
FY13 Rural interest income =45762

So no real seasonality there. Maybe I just don't know how to interpret the results?

[Snow Leopard]

I'm not sure if the last 2 years can be relied on. There have been significant costs being taken out of the business including the banking licence effect. Obviously i need to dig into this a bit more.

EDIT: Ok digging more
Here are the last 2 year "Profit before impaired asset expense and income tax"

1h12	9400
2h12	19937
1h13	20200
2h13	16340

Definitely seasonality in FY12, but the opposite seasonality on FY13. It's all over the place.

Now if you were Snoopy I would invoke Note 36(e) [2013FY Financials] on you . This adds back in another $6M1 to your 2h13 figure.
But you are not so I will not .


I understand that Snoopy is busy staring at the 'Significant Reduction in Non‐Core Property' slide of the Acquisition Presentation and trying to find an interpretation that fits his belief.

Best Wishes
Paper Tiger

[noodles]

Now if you were Snoopy I would invoke Note 36(e) [2013FY Financials] on you . This adds back in another $6M1 to your 2h13 figure.

Thanks PT,
I did find the 6.1mill eventually. See my recent edits to the post.
I'm glad the volcano has not affected your insightful posts.
Cheers,
Noodles

[percy]

Has there been a half year result ??

Half year result will be announced on Tuesday 25th February,so not far away.

[winner69]

So 'many' of our depositors are old, the ageing demographics are a compelling case to enter the HER market (and most of our shareholders are ageing)

Is HNZ moving to position themselves as the old folks Bank?

[Xerof]

HeartstarterBank?



This seems like a good bolt on product. But with market dominance already established, where will growth come from. I didn't see any mention of it in the ann

[noodles]

So 'many' of our depositors are old, the ageing demographics are a compelling case to enter the HER market (and most of our shareholders are ageing)

Is HNZ moving to position themselves as the old folks Bank?

Absolutely, Heartland sponsors the National Bowls Championships

[percy]

So 'many' of our depositors are old, the ageing demographics are a compelling case to enter the HER market (and most of our shareholders are ageing)

Is HNZ moving to position themselves as the old folks Bank?

HNZ are going to where the money is [and big profits].!!
Watch for a change on name in your bank, as they follow suite "Geriatric Co-Op Pensioner's Bank." !!

[Jay]

I did see adverts (on TV) on the field side hoardings at eden park NRL 9's in the weekend - not so many "oldies" there I would have thought
Good to get their name out there

[Captain Dan]

An article on Interest.co.nz this morning below for those who can't log-in to view it. Seemingly good news regarding the legacy property portfolio, but looking forward to confirmation that the contracts are unconditional.

• Heartland boss Jeff Greenslade confident victory over dud legacy property portfolio is near Gareth Vaughan, 0 comments

By Gareth Vaughan
Heartland Bank CEO Jeff Greenslade appears confident victory has been won over the bank's dud legacy property portfolio.
Geeenslade told interest.co.nz that, if conditional contracts come to fruition, Heartland will only have to use $5 million of a $15 million provision for the loans by June 30. Heartland had been able to shift the assets "quite effectively," he said.
"You may recall we set up a provision of just under $15 million to assist in this process. If all those conditional contracts come to fruition by the end of June, we will have only tapped into $5 million out of that $15 million. That’s ahead of expectations," Greenslade said.

"Pleasingly for us the impairment line is no longer the one to watch out for."
The non-core property portfolio comprises loans and investment properties inherited from Marac Finance when the previously Pyne Gould Corporation (PGC) owned finance company merged with building societies CBS Canterbury and Southern Cross Building Society to create Heartland in January 2011. The portfolio was valued at $107.4 million at June 30 last year.

Last June Heartland revealed a $24 million hit because of the property portfolio. This stemmed from a one-off non-cash asset write-down of $18 million before tax, plus a pre-tax hit of $6 million from writing off the balance of an $11 million fee being paid to a unit of the George Kerr controlled PGC as management of the portfolio was brought in-house.
'Even the ugly stuff is shifting'
At that time Heartland said the loan portfolio had been split into three categories labelled "performing", "accelerating" and "extend". Performing loans or assets would be held unless an attractive offer was received, the stuff classed as "acceleration" would be exited within 18 months, and loans in the "extend" portfolio would be converted over time to real estate to be better positioned for sale and held for up to five years.
"Even the rump, which is the bad stuff which was $11 million when we started, we’ve got that down to $7 million" Greenslade said. "We thought that was the bit we were going to be left with. So even the ugly stuff is actually shifting."
Charts provided by Heartland in its reverse equity mortgage deal presentation (see below) detail progress with the portfolio. As of June 30 last year the portfolio was valued at $122.3 million, excluding general provisions of $14.9 million. Based on conditional contracts, the portfolio is forecast to be valued at $67.9 million at June 30 this year. The drop in value sees its "rump" decline from $11.1 million to $7 million, the "performing loans" rise slightly in value to $28.9 million from $28.6 million, and the "for sale" portion fall to $32 million from $82.5 million.
High capital requirements 'something to think about'
Meanwhile, Greenslade said Heartland was "comfortable" with its Reserve Bank capital requirements being higher than those for other banks, but this would be something "we will be thinking about in the future."
Heartland's conditions of bank registration set out that it must have a minimum total capital ratio equivalent to 12% of total risk-weighted exposures, minimum tier one capital ratio of 12%, and common equity tier one capital ratio of 10%. Other banks have a minimum total capital ratio of 8%, minimum tier one capital ratio of 6%, and minimum common equity tier one capital ratio of 4.5%.
"We’re comfortable where we are, it hasn’t caused us any problems," Greenslade said. "And I think generally speaking all banks are going to be carrying more capital going forward, so we don’t feel alone in that regard."
"That is something between us and the Reserve Bank but that’s not an issue right now."

Since January 1 this year banks also require a buffer ratio for common equity tier one capital of at least 2.5%. This buffer ratio is described by the Reserve Bank as a counter-cyclical capital buffer that can be applied in times of excessive credit growth. It's part of the Reserve Bank's version of the global Basel III bank capital adequacy standards, which have been endorsed by the G20. Heartland isn't required to maintain this buffer.
Heartland provided the following chart (from here) on the reduction of its non-core property holdings
[IMG]file:///C:\Users\dah\AppData\Local\Temp\msohtmlclip1\01\cl ip_image001.gif[/IMG]
Heartland says both the June 30, 2014 forecast and the value of its total property book at December 31, 2013 are based on conditional contracts.
The value of its total property book given above excludes general provisions of $14.9 million at June 30, 2013), $12.1 million at December 31, 2013, and about $10 million at June 30, 2014.