Heartland Financial USA, Inc. (“HTLF”) Reports Quarterly and Year to Date Results as of September 30, 2023
Highlights and Developments
- Quarterly net income available to common stockholders of $46.1 million
- Quarterly diluted earnings per common share of $1.08, which includes $.04 of acquisition, integration and restructuring costs
- Quarterly loan growth of $154.5 million or 1%
- Total customer deposit growth during the quarter of $152.3 million or 1%
- Nonperforming assets to total assets and 30-89 day loan delinquencies remained unchanged at 0.33% and 0.12%, respectively
- Nonperforming loans to total loans decreased to 0.44% from 0.54% at June 30, 2023 and 0.60% at September 30, 2022
- Completed the consolidation of two bank charters during the quarter, and the final charter was consolidated following the end of the quarter
| Quarter Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income available to common stockholders (in millions) | $ | 46.1 | $ | 54.6 | $ | 144.2 | $ | 145.5 | |||||||
| Diluted earnings per common share | 1.08 | 1.28 | 3.37 | 3.42 | |||||||||||
| Return on average assets | 0.94 | % | 1.13 | % | 1.00 | % | 1.04 | % | |||||||
| Return on average common equity | 10.47 | 12.93 | 11.28 | 10.80 | |||||||||||
| Return on average tangible common equity (non-GAAP)(1) | 16.34 | 20.76 | 17.83 | 16.79 | |||||||||||
| Net interest margin | 3.14 | 3.41 | 3.23 | 3.22 | |||||||||||
| Net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.18 | 3.45 | 3.27 | 3.27 | |||||||||||
| Efficiency ratio | 63.77 | 58.84 | 61.86 | 61.39 | |||||||||||
| Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)(1) | 59.95 | 55.26 | 58.98 | 58.99 | |||||||||||
(1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.
| “HTLF delivered another solid quarter highlighted by loan and customer deposit growth, reduced wholesale deposits and continued stable credit quality while effectively managing core expenses. We are also pleased that we successfully completed the final charter consolidation and look forward to 2024 with this significant project behind us.” |
| Bruce K. Lee, President and Chief Executive Officer, HTLF |
DENVER, Oct. 30, 2023 (GLOBE NEWSWIRE) — Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022:
- Net income available to common stockholders of $46.1 million compared to $54.6 million, a decrease of $8.5 million or 16%.
- Earnings per diluted common share of $1.08 compared to $1.28, a decrease of $0.20 or 16%.
- Earnings per diluted common share included $0.04 of acquisition, integration and restructuring costs in both quarters.
- Net interest income of $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
- Return on average assets was 0.94% compared to 1.13%.
- Return on average common equity was 10.47% compared to 12.93%.
- Return on average tangible common equity (non-GAAP) was 16.34% compared to 20.76%.
“HTLF delivered another solid quarter highlighted by loan and customer deposit growth, reduced wholesale deposits and continued stable credit quality while effectively managing core expenses. We are also pleased that we successfully completed the final charter consolidation and look forward to 2024 with this significant project behind us,” said Bruce K. Lee, president and chief executive officer of HTLF.
HTLF reported the following results for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022:
- Net income available to common stockholders of $144.2 million compared to $145.5 million, a decrease of $1.2 million or 1%.
- Earnings per diluted common share of $3.37 compared to $3.42, a decrease of $0.05 or 1%.
- Earnings per diluted common share included $0.11 of acquisition, integration and restructuring costs compared to $0.10.
- Net interest income of $445.1 million compared to $433.0 million, an increase of $12.1 million or 3%.
- Return on average assets was 1.00% compared to 1.04%.
- Return on average common equity was 11.28% compared to 10.80%.
- Return on average tangible common equity (non-GAAP) was 17.83% compared to 16.79%.
Charter Consolidation Update
During the third quarter of 2023, Rocky Mountain Bank and New Mexico Bank & Trust were consolidated into HTLF Bank. Subsequent to September 30, 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which marked the completion of charter consolidation. Total consolidation restructuring costs are projected to be $18-$19 million with approximately $2-$3 million of expenses remaining to be incurred in 2023.
Net Interest Income and Net Interest Margin
Net interest margin, expressed as a percentage of average earning assets, was 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023 compared to 3.19% (3.23% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2023, and 3.41% (3.45% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2022.
Total interest income and average earning asset changes for the third quarter of 2023 compared to the third quarter of 2022 were:
- Total interest income was $245.4 million compared to $175.8 million, an increase of $69.6 million or 40%, primarily attributable to an increase in average earning assets and higher yields.
- Total interest income on a tax-equivalent basis (non-GAAP) was $247.6 million, an increase of $69.6 million or 39% from $178.0 million.
- Average earning assets increased $281.2 million or 2% to $18.44 billion compared to $18.16 billion.
- The average rate on earning assets increased 144 basis points to 5.33% from 3.89%, primarily due to recent interest rate increases.
Total interest expense and average interest bearing liability changes for the third quarter of 2023 compared to the third quarter of 2022 were:
- Total interest expense was $99.7 million, an increase of $79.7 million from $19.9 million, due to increases in the average interest rate paid and the average balance of interest bearing liabilities.
- The average interest rate paid on interest bearing liabilities increased 234 basis points to 3.01% from 0.67%.
- Average interest bearing deposits increased $1.47 billion or 13% to $12.68 billion from $11.22 billion, primarily due to an increase of $1.36 billion in wholesale deposits.
- The average interest rate paid on interest bearing deposits increased 236 basis points to 2.90% from 0.54%.
- Average borrowings decreased $30.8 million or 6% to $475.7 million from $506.5 million, and the average interest rate paid on borrowings was 5.78% compared to 3.74%.
Net interest income changes for the third quarter of 2023 compared to the third quarter of 2022 were:
- Net interest income totaled $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
- Net interest income on a tax-equivalent basis (non-GAAP) totaled $147.9 million compared to $158.0 million, a decrease of $10.1 million or 6%.
Noninterest Income and Noninterest Expense
Total noninterest income was $28.4 million during the third quarter of 2023 compared to $29.2 million during the third quarter of 2022, a decrease of $798,000 or 3%. Significant changes within the noninterest income category for the third quarter of 2023 compared to the third quarter of 2022 were:
- Service charges and fees increased $1.3 million or 7% to $18.6 million from $17.3 million.
- Trust fees decreased $638,000 or 12% to $4.7 million from $5.4 million, primarily attributable to reduced retirement plan services income following the sale of the recordkeeping and administrative functions of HTLF Retirement Plan Services.
- Net security losses totaled $114,000 compared to net losses of $1.1 million.
- Net gains on sales of loans held for sale decreased $927,000 or 51% to $905,000 from $1.8 million, primarily attributable to a decrease in residential mortgage loans sold to the secondary market.
- Other noninterest income decreased $1.4 million or 69% to $619,000 compared to $2.0 million. During the third quarter of 2022, HTLF received a $637,000 recovery on an acquired loan that had been charged off prior to acquisition.
Total noninterest expense was $111.1 million during the third quarter of 2023 compared to $108.9 million during the third quarter of 2022, which was an increase of $2.2 million or 2%. Significant changes within the noninterest expense category for the third quarter of 2023 compared to the third quarter of 2022 were:
- Salaries and employee benefits totaled $62.3 million compared to $62.7 million, a decrease of $399,000 or 1%. The decrease was attributable to a reduction of full-time equivalent employees and lower incentive compensation expense, mostly offset by higher salary expense. Full-time equivalent employees totaled 1,965 compared to 2,020, a decrease of 55 or 3%.
- FDIC insurance assessments totaled $3.3 million compared to $2.0 million, an increase of $1.3 million due to assessment rate changes that were effective with the first quarter 2023 assessment.
- Other noninterest expenses totaled $15.3 million compared to $13.6 million, an increase of $1.7 million or 12%. Credit card processing expenses increased $1.4 million or 49% to $4.3 million from $2.9 million.
The effective tax rate was 21.89% for the third quarter of 2023 compared to 19.97% for third quarter of 2022. The following items impacted the third quarter 2023 and 2022 tax calculations:
- Various tax credits of $1.6 million compared to $1.7 million.
- Tax expense of $1.6 million compared to $258,000 resulting from the disallowed interest expense related to tax-exempt loans and securities, aligning with increases in total interest expense.
- Tax-exempt interest income as a percentage of pre-tax income of 13.14% compared to 11.45%.
Total Assets, Total Loans and Total Deposits
Total assets were $20.13 billion at September 30, 2023, a decrease of $114.4 million or 1% from $20.24 billion at year-end 2022. Securities represented 32% and 35% of total assets at September 30, 2023, and December 31, 2022, respectively.
Total loans held to maturity were $11.87 billion at September 30, 2023, compared to $11.72 billion at June 30, 2023, and $11.43 billion at December 31, 2022, representing increases of $154.5 million or 1%, and $444.1 million or 4%, respectively.
Significant changes by loan category at September 30, 2023 compared to June 30, 2023 included:
- Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $31.7 million or 1% to $6.03 billion compared to $5.99 billion.
- Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $142.0 million or 4% to $3.69 billion compared to $3.54 billion.
- Residential mortgage loans decreased $14.6 million or 2% to $813.8 million from $828.4 million.
Significant changes by loan category at September 30, 2023 compared to December 31, 2022 included:
- Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $284.5 million or 5% to $6.03 billion compared to $5.74 billion.
- Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $278.9 million or 8% to $3.69 billion compared to $3.41 billion.
- Agricultural and agricultural real estate loans decreased $78.4 million or 9% to $842.1 million compared to $920.5 million.
- Residential mortgage loans decreased $39.6 million or 5% to $813.8 million compared to $853.4 million.
Total deposits were $17.10 billion as of September 30, 2023, compared to $17.66 billion at June 30, 2023, which was a decrease of $562.6 million or 3%. Total deposits were $17.10 billion as of September 30, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $412.0 million or 2%.
Total customer deposits were $14.80 billion as of September 30, 2023 compared to $14.65 billion at June 30, 2023, which was an increase of $152.3 million or 1%. Significant customer deposit changes by category at September 30, 2023, compared to June 30, 2023, included:
- Customer demand deposits decreased $105.0 million or 2% to $4.79 billion compared to $4.90 billion.
- Customer savings deposits increased $40.8 million or 1% to $8.19 billion compared to $8.15 billion.
- Customer time deposits increased $216.5 million or 14% to $1.81 billion compared to $1.60 billion.
Total customer deposits were $14.80 billion at September 30, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $426.2 million or 3%. Significant customer deposit changes by category at September 30, 2023 compared to December 31, 2022, included:
- Customer demand deposits decreased $908.5 million or 16% to $4.79 billion compared to $5.70 billion.
- Customer savings deposits decreased $480.5 million or 6% to $8.19 billion compared to $8.67 billion.
- Customer time deposits increased $962.8 million to $1.81 billion compared to $851.5 million.
Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was a decrease of $714.8 million or 24% from $3.02 billion at June 30, 2023. Significant wholesale and institutional deposit changes by category at September 30, 2023, compared to June 30, 2023, included:
- Wholesale and institutional savings deposits decreased $58.5 million or 9% to $564.5 million compared to $623.0 million.
- Wholesale time deposits decreased $656.3 million or 27% to $1.74 billion compared to $2.40 billion.
Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was an increase of $14.2 million or 1% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at September 30, 2023 compared to December 31, 2022 included:
- Wholesale and institutional savings deposits decreased $759.0 million or 57% to $564.5 million compared to $1.32 billion.
- Wholesale time deposits increased $773.2 million or 80% to $1.74 billion compared to $965.7 million.
Provision and Allowance
Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the third quarter of 2023 was $2.7 million, which was a decrease of $1.7 million from $4.4 million recorded in the third quarter of 2022.
The allowance for credit losses for loans totaled $110.2 million at September 30, 2023 and $109.5 million at December 31, 2022. The following items impacted the allowance for credit losses for loans at September 30, 2023:
- Provision expense for the nine months ended September 30, 2023, totaled $12.7 million.
- Net charge-offs of $12.0 million were recorded for the first nine months of 2023.
Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments decreased $2.7 million or 13% to $17.5 million at September 30, 2023, from $20.2 million at December 31, 2022, primarily due to a reduction of $85.6 million in unfunded commitments for construction loans, which carry the highest loss rate. Total unfunded commitments increased $84.1 million or 2% to $4.81 billion at September 30, 2023 compared to $4.73 billion at December 31, 2022.
Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $1.5 million for the third quarter of 2023 compared to $5.5 million for the third quarter of 2022. The total allowance for lending related credit losses was $127.7 million or 1.08% of total loans at September 30, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.
Nonperforming Assets
Nonperforming assets decreased $753,000 or 1% to $66.2 million or 0.33% of total assets at September 30, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. Nonperforming loans were $51.8 million or 0.44% of total loans at September 30, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At September 30, 2023, loans delinquent 30-89 days were 0.12% of total loans compared to 0.04% of total loans at December 31, 2022. Other real estate owned, net, increased $6.0 million or 71% to $14.4 million at September 30, 2023 from $8.4 million at December 31, 2022. HTLF added one property with a book value of $11.3 million to other real estate during the third quarter of 2023.
Non-GAAP Financial Measures
This earnings release contains references to financial measures which are not defined by generally accepted accounting principles (“GAAP”). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate the company’s financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this earnings release with other companies’ non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this earnings release.
Below are the non-GAAP measures included in this earnings release, management’s reason for including each measure and the method of calculating each measure:
- Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
- Adjusted efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
- Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
- Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
- Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
- Adjusted tangible common equity ratio is total common equity less goodwill, core deposit and customer relationship intangibles, net, and accumulated other comprehensive loss divided by total assets less goodwill and core deposit and customer relationship intangibles, net, and the fair value adjustment on securities and derivatives, net of deferred taxes. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength, composition and trends on a comparable basis by excluding the variability of the fair value of securities and derivatives, net of deferred taxes.
- Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
- Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.
Conference Call Details
HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until October 29, 2024, by logging on to www.htlf.com.
About HTLF
Heartland Financial USA, Inc., is a Denver, Colorado-based bank holding company operating under the brand name HTLF, with assets of $20.13 billion as of September 30, 2023. HTLF’s banks serve communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.
Safe Harbor Statement
This release (including any information incorporated herein by reference) and future oral and written statements of HTLF and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.
Any statements about HTLF’s expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of HTLF’s operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF’s management. These forward-looking statements are generally identified by the use of the words such as “believe”, “expect”, “anticipate”, “plan”, “intend”, “estimate”, “project”, “may”, “will”, “would”, “could”, “should”, “view”, “opportunity”, “potential”, or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of HTLF and its management. Although HTLF may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which HTLF currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF’s reports filed with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section under Item 1A of Part I of HTLF’s Annual Report on Form 10-K for the year ended December 31, 2022, include, among others:
- Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics, such as the COVID-19 pandemic or future pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, recession, supply chain issues, labor shortages, terrorist threats or acts of war;
- Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF’s borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;
- Liquidity and Interest Rate Risks, including the impact of capital market conditions, rising interest rates and changes in monetary policy on our borrowings and net interest income;
- Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
- Strategic and External Risks, including economic, political and competitive forces impacting our business;
- Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
- Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.
There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF’s business, financial condition and results of operations. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in HTLF’s filings with the SEC.
-FINANCIAL TABLES FOLLOW-
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
| For the Quarter Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Interest Income | |||||||||||||||
| Interest and fees on loans | $ | 182,394 | $ | 122,913 | $ | 505,136 | $ | 334,000 | |||||||
| Interest on securities: | |||||||||||||||
| Taxable | 54,800 | 45,648 | 168,948 | 116,366 | |||||||||||
| Nontaxable | 6,584 | 6,164 | 18,990 | 17,874 | |||||||||||
| Interest on federal funds sold | 3 | — | 3 | — | |||||||||||
| Interest on deposits with other banks and short-term investments | 1,651 | 1,081 | 4,833 | 1,715 | |||||||||||
| Total Interest Income | 245,432 | 175,806 | 697,910 | 469,955 | |||||||||||
| Interest Expense | |||||||||||||||
| Interest on deposits | 92,744 | 15,158 | 231,617 | 24,665 | |||||||||||
| Interest on short-term borrowings | 1,167 | 360 | 4,437 | 494 | |||||||||||
| Interest on other borrowings | 5,765 | 4,412 | 16,756 | 11,780 | |||||||||||
| Total Interest Expense | 99,676 | 19,930 | 252,810 | 36,939 | |||||||||||
| Net Interest Income | 145,756 | 155,876 | 445,100 | 433,016 | |||||||||||
| Provision for credit losses | 1,516 | 5,492 | 9,969 | 11,983 | |||||||||||
| Net Interest Income After Provision for Credit Losses | 144,240 | 150,384 | 435,131 | 421,033 | |||||||||||
| Noninterest Income | |||||||||||||||
| Service charges and fees | 18,553 | 17,282 | 55,316 | 50,599 | |||||||||||
| Loan servicing income | 278 | 831 | 1,403 | 1,951 | |||||||||||
| Trust fees | 4,734 | 5,372 | 15,810 | 17,130 | |||||||||||
| Brokerage and insurance commissions | 692 | 649 | 2,065 | 2,357 | |||||||||||
| Capital markets fees | 1,845 | 1,809 | 8,331 | 9,719 | |||||||||||
| Securities losses, net | (114 | ) | (1,055 | ) | (1,532 | ) | (272 | ) | |||||||
| Unrealized gain/(loss) on equity securities, net | 13 | (211 | ) | 165 | (615 | ) | |||||||||
| Net gains on sale of loans held for sale | 905 | 1,832 | 3,786 | 8,144 | |||||||||||
| Valuation adjustment on servicing rights | — | — | — | 1,658 | |||||||||||
| Income on bank owned life insurance | 858 | 694 | 3,042 | 1,741 | |||||||||||
| Other noninterest income | 619 | 1,978 | 2,489 | 5,877 | |||||||||||
| Total Noninterest Income | 28,383 | 29,181 | 90,875 | 98,289 | |||||||||||
| Noninterest Expense | |||||||||||||||
| Salaries and employee benefits | 62,262 | 62,661 | 186,510 | 192,867 | |||||||||||
| Occupancy | 6,438 | 6,794 | 20,338 | 21,250 | |||||||||||
| Furniture and equipment | 2,720 | 2,928 | 8,698 | 9,480 | |||||||||||
| Professional fees | 13,616 | 14,289 | 41,607 | 42,286 | |||||||||||
| FDIC insurance assessments | 3,313 | 1,988 | 9,627 | 5,134 | |||||||||||
| Advertising | 1,633 | 1,554 | 6,670 | 4,392 | |||||||||||
| Core deposit and customer relationship intangibles amortization | 1,625 | 1,856 | 5,128 | 5,993 | |||||||||||
| Other real estate and loan collection expenses, net | 481 | 304 | 984 | 577 | |||||||||||
| (Gain)/loss on sales/valuations of assets, net | 108 | (251 | ) | (2,149 | ) | (3,435 | ) | ||||||||
| Acquisition, integration and restructuring costs | 2,429 | 2,156 | 5,994 | 5,144 | |||||||||||
| Partnership investment in tax credit projects | 1,136 | 979 | 1,828 | 1,793 | |||||||||||
| Other noninterest expenses | 15,292 | 13,625 | 46,307 | 40,678 | |||||||||||
| Total Noninterest Expense | 111,053 | 108,883 | 331,542 | 326,159 | |||||||||||
| Income Before Income Taxes | 61,570 | 70,682 | 194,464 | 193,163 | |||||||||||
| Income taxes | 13,479 | 14,118 | 44,181 | 41,637 | |||||||||||
| Net Income | 48,091 | 56,564 | 150,283 | 151,526 | |||||||||||
| Preferred dividends | (2,013 | ) | (2,013 | ) | (6,038 | ) | (6,038 | ) | |||||||
| Net Income Available to Common Stockholders | $ | 46,078 | $ | 54,551 | $ | 144,245 | $ | 145,488 | |||||||
| Earnings per common share-diluted | $ | 1.08 | $ | 1.28 | $ | 3.37 | $ | 3.42 | |||||||
| Weighted average shares outstanding-diluted | 42,812,563 | 42,643,940 | 42,769,872 | 42,596,301 | |||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Interest Income | |||||||||||||||||||
| Interest and fees on loans | $ | 182,394 | $ | 168,899 | $ | 153,843 | $ | 143,970 | $ | 122,913 | |||||||||
| Interest on securities: | |||||||||||||||||||
| Taxable | 54,800 | 58,172 | 55,976 | 53,178 | 45,648 | ||||||||||||||
| Nontaxable | 6,584 | 6,378 | 6,028 | 6,132 | 6,164 | ||||||||||||||
| Interest on federal funds sold | 3 | — | — | 11 | — | ||||||||||||||
| Interest on deposits with other banks and short-term investments | 1,651 | 2,051 | 1,131 | 1,410 | 1,081 | ||||||||||||||
| Total Interest Income | 245,432 | 235,500 | 216,978 | 204,701 | 175,806 | ||||||||||||||
| Interest Expense | |||||||||||||||||||
| Interest on deposits | 92,744 | 81,975 | 56,898 | 32,215 | 15,158 | ||||||||||||||
| Interest on short-term borrowings | 1,167 | 848 | 2,422 | 2,223 | 360 | ||||||||||||||
| Interest on other borrowings | 5,765 | 5,545 | 5,446 | 5,043 | 4,412 | ||||||||||||||
| Total Interest Expense | 99,676 | 88,368 | 64,766 | 39,481 | 19,930 | ||||||||||||||
| Net Interest Income | 145,756 | 147,132 | 152,212 | 165,220 | 155,876 | ||||||||||||||
| Provision for credit losses | 1,516 | 5,379 | 3,074 | 3,387 | 5,492 | ||||||||||||||
| Net Interest Income After Provision for Credit Losses | 144,240 | 141,753 | 149,138 | 161,833 | 150,384 | ||||||||||||||
| Noninterest Income | |||||||||||||||||||
| Service charges and fees | 18,553 | 19,627 | 17,136 | 17,432 | 17,282 | ||||||||||||||
| Loan servicing income | 278 | 411 | 714 | 790 | 831 | ||||||||||||||
| Trust fees | 4,734 | 5,419 | 5,657 | 5,440 | 5,372 | ||||||||||||||
| Brokerage and insurance commissions | 692 | 677 | 696 | 629 | 649 | ||||||||||||||
| Capital markets fees | 1,845 | 4,037 | 2,449 | 1,824 | 1,809 | ||||||||||||||
| Securities losses, net | (114 | ) | (314 | ) | (1,104 | ) | (153 | ) | (1,055 | ) | |||||||||
| Unrealized gain/(loss) on equity securities, net | 13 | (41 | ) | 193 | (7 | ) | (211 | ) | |||||||||||
| Net gains on sale of loans held for sale | 905 | 1,050 | 1,831 | 888 | 1,832 | ||||||||||||||
| Valuation adjustment on servicing rights | — | — | — | — | — | ||||||||||||||
| Income on bank owned life insurance | 858 | 1,220 | 964 | 600 | 694 | ||||||||||||||
| Other noninterest income | 619 | 407 | 1,463 | 2,532 | 1,978 | ||||||||||||||
| Total Noninterest Income | 28,383 | 32,493 | 29,999 | 29,975 | 29,181 | ||||||||||||||
| Noninterest Expense | |||||||||||||||||||
| Salaries and employee benefits | 62,262 | 62,099 | 62,149 | 61,611 | 62,661 | ||||||||||||||
| Occupancy | 6,438 | 6,691 | 7,209 | 6,905 | 6,794 | ||||||||||||||
| Furniture and equipment | 2,720 | 3,063 | 2,915 | 3,019 | 2,928 | ||||||||||||||
| Professional fees | 13,616 | 15,194 | 12,797 | 16,320 | 14,289 | ||||||||||||||
| FDIC insurance assessments | 3,313 | 3,035 | 3,279 | 1,866 | 1,988 | ||||||||||||||
| Advertising | 1,633 | 3,052 | 1,985 | 1,829 | 1,554 | ||||||||||||||
| Core deposit and customer relationship intangibles amortization | 1,625 | 1,715 | 1,788 | 1,841 | 1,856 | ||||||||||||||
| Other real estate and loan collection expenses, net | 481 | 348 | 155 | 373 | 304 | ||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 108 | (3,372 | ) | 1,115 | 2,388 | (251 | ) | ||||||||||||
| Acquisition, integration and restructuring costs | 2,429 | 1,892 | 1,673 | 2,442 | 2,156 | ||||||||||||||
| Partnership investment in tax credit projects | 1,136 | 154 | 538 | 3,247 | 979 | ||||||||||||||
| Other noninterest expenses | 15,292 | 15,575 | 15,440 | 15,377 | 13,625 | ||||||||||||||
| Total Noninterest Expense | 111,053 | 109,446 | 111,043 | 117,218 | 108,883 | ||||||||||||||
| Income Before Income Taxes | 61,570 | 64,800 | 68,094 | 74,590 | 70,682 | ||||||||||||||
| Income taxes | 13,479 | 15,384 | 15,318 | 13,936 | 14,118 | ||||||||||||||
| Net Income | 48,091 | 49,416 | 52,776 | 60,654 | 56,564 | ||||||||||||||
| Preferred dividends | (2,013 | ) | (2,012 | ) | (2,013 | ) | (2,012 | ) | (2,013 | ) | |||||||||
| Net Income Available to Common Stockholders | $ | 46,078 | $ | 47,404 | $ | 50,763 | $ | 58,642 | $ | 54,551 | |||||||||
| Earnings per common share-diluted | $ | 1.08 | $ | 1.11 | $ | 1.19 | $ | 1.37 | $ | 1.28 | |||||||||
| Weighted average shares outstanding-diluted | 42,812,563 | 42,757,603 | 42,742,878 | 42,699,752 | 42,643,940 | ||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| As of | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Assets | |||||||||||||||||||
| Cash and due from banks | $ | 248,756 | $ | 317,303 | $ | 274,354 | $ | 309,045 | $ | 250,394 | |||||||||
| Interest bearing deposits with other banks and short-term investments | 99,239 | 82,884 | 87,757 | 54,042 | 149,466 | ||||||||||||||
| Cash and cash equivalents | 347,995 | 400,187 | 362,111 | 363,087 | 399,860 | ||||||||||||||
| Time deposits in other financial institutions | 1,490 | 1,490 | 1,740 | 1,740 | 1,740 | ||||||||||||||
| Securities: | |||||||||||||||||||
| Carried at fair value | 5,482,687 | 5,798,041 | 6,096,657 | 6,147,144 | 6,060,331 | ||||||||||||||
| Held to maturity, at cost, less allowance for credit losses | 835,468 | 834,673 | 832,098 | 829,403 | 830,247 | ||||||||||||||
| Other investments, at cost | 90,001 | 72,291 | 72,364 | 74,567 | 80,286 | ||||||||||||||
| Loans held for sale | 6,262 | 14,353 | 10,425 | 5,277 | 9,570 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Held to maturity | 11,872,436 | 11,717,974 | 11,495,353 | 11,428,352 | 10,923,532 | ||||||||||||||
| Allowance for credit losses | (110,208 | ) | (111,198 | ) | (112,707 | ) | (109,483 | ) | (105,715 | ) | |||||||||
| Loans, net | 11,762,228 | 11,606,776 | 11,382,646 | 11,318,869 | 10,817,817 | ||||||||||||||
| Premises, furniture and equipment, net | 187,436 | 190,420 | 191,267 | 197,330 | 203,585 | ||||||||||||||
| Goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | ||||||||||||||
| Core deposit and customer relationship intangibles, net | 20,026 | 21,651 | 23,366 | 25,154 | 26,995 | ||||||||||||||
| Servicing rights, net | — | — | — | 7,840 | 8,379 | ||||||||||||||
| Cash surrender value on life insurance | 196,694 | 195,793 | 194,419 | 193,403 | 193,184 | ||||||||||||||
| Other real estate, net | 14,362 | 2,677 | 7,438 | 8,401 | 8,030 | ||||||||||||||
| Other assets | 609,139 | 510,359 | 432,008 | 496,008 | 466,921 | ||||||||||||||
| Total Assets | $ | 20,129,793 | $ | 20,224,716 | $ | 20,182,544 | $ | 20,244,228 | $ | 19,682,950 | |||||||||
| Liabilities and Equity | |||||||||||||||||||
| Liabilities | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand | $ | 4,792,813 | $ | 4,897,858 | $ | 5,119,554 | $ | 5,701,340 | $ | 6,083,563 | |||||||||
| Savings | 8,754,911 | 8,772,596 | 9,256,609 | 9,994,391 | 10,060,523 | ||||||||||||||
| Time | 3,553,269 | 3,993,089 | 3,305,183 | 1,817,278 | 1,123,035 | ||||||||||||||
| Total deposits | 17,100,993 | 17,663,543 | 17,681,346 | 17,513,009 | 17,267,121 | ||||||||||||||
| Short-term borrowings | 392,634 | 44,364 | 92,337 | 376,117 | 147,000 | ||||||||||||||
| Other borrowings | 372,059 | 372,403 | 372,097 | 371,753 | 371,446 | ||||||||||||||
| Accrued expenses and other liabilities | 438,577 | 285,416 | 207,359 | 248,294 | 241,425 | ||||||||||||||
| Total Liabilities | 18,304,263 | 18,365,726 | 18,353,139 | 18,509,173 | 18,026,992 | ||||||||||||||
| Stockholders’ Equity | |||||||||||||||||||
| Preferred equity | 110,705 | 110,705 | 110,705 | 110,705 | 110,705 | ||||||||||||||
| Common stock | 42,656 | 42,645 | 42,559 | 42,467 | 42,444 | ||||||||||||||
| Capital surplus | 1,088,267 | 1,087,358 | 1,084,112 | 1,080,964 | 1,079,277 | ||||||||||||||
| Retained earnings | 1,226,740 | 1,193,522 | 1,158,948 | 1,120,925 | 1,074,168 | ||||||||||||||
| Accumulated other comprehensive loss | (642,838 | ) | (575,240 | ) | (566,919 | ) | (620,006 | ) | (650,636 | ) | |||||||||
| Total Equity | 1,825,530 | 1,858,990 | 1,829,405 | 1,735,055 | 1,655,958 | ||||||||||||||
| Total Liabilities and Equity | $ | 20,129,793 | $ | 20,224,716 | $ | 20,182,544 | $ | 20,244,228 | $ | 19,682,950 | |||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Average Balances | |||||||||||||||||||
| Assets | $ | 20,207,920 | $ | 20,221,511 | $ | 20,118,005 | $ | 19,913,849 | $ | 19,775,341 | |||||||||
| Loans, net of unearned | 11,800,064 | 11,625,442 | 11,378,078 | 11,117,513 | 10,783,135 | ||||||||||||||
| Deposits | 17,507,813 | 17,689,138 | 17,505,867 | 17,319,218 | 17,282,289 | ||||||||||||||
| Earning assets | 18,439,010 | 18,523,552 | 18,392,649 | 18,175,838 | 18,157,795 | ||||||||||||||
| Interest bearing liabilities | 13,158,631 | 13,209,794 | 12,582,234 | 11,980,032 | 11,723,026 | ||||||||||||||
| Common equity | 1,746,818 | 1,727,013 | 1,655,860 | 1,548,739 | 1,674,306 | ||||||||||||||
| Total stockholders’ equity | 1,857,523 | 1,837,718 | 1,766,565 | 1,659,444 | 1,785,011 | ||||||||||||||
| Tangible common equity (non-GAAP)(1) | 1,149,992 | 1,128,527 | 1,055,617 | 946,688 | 1,070,399 | ||||||||||||||
| Key Performance Ratios | |||||||||||||||||||
| Annualized return on average assets | 0.94 | % | 0.98 | % | 1.06 | % | 1.21 | % | 1.13 | % | |||||||||
| Annualized return on average common equity (GAAP) | 10.47 | 11.01 | 12.43 | 15.02 | 12.93 | ||||||||||||||
| Annualized return on average tangible common equity (non-GAAP)(1) | 16.34 | 17.33 | 20.05 | 25.19 | 20.76 | ||||||||||||||
| Annualized ratio of net charge-offs/(recoveries) to average loans | 0.12 | 0.32 | (0.04 | ) | (0.06 | ) | 0.00 | ||||||||||||
| Annualized net interest margin (GAAP) | 3.14 | 3.19 | 3.36 | 3.61 | 3.41 | ||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.18 | 3.23 | 3.40 | 3.65 | 3.45 | ||||||||||||||
| Efficiency ratio (GAAP) | 63.77 | 60.93 | 60.94 | 60.05 | 58.84 | ||||||||||||||
| Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 59.95 | 59.88 | 57.16 | 54.33 | 55.26 | ||||||||||||||
| Annualized ratio of total noninterest expenses to average assets (GAAP) | 2.18 | 2.17 | 2.24 | 2.34 | 2.18 | ||||||||||||||
| Annualized ratio of core expenses to average assets (non-GAAP)(1) | 2.08 | 2.16 | 2.14 | 2.14 | 2.09 | ||||||||||||||
| (1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||
| For the Quarter Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Average Balances | |||||||||||||||
| Assets | $ | 20,207,920 | $ | 19,775,341 | $ | 20,182,808 | $ | 19,523,433 | |||||||
| Loans, net of unearned | 11,800,064 | 10,783,135 | 11,602,741 | 10,437,409 | |||||||||||
| Deposits | 17,507,813 | 17,282,289 | 17,567,614 | 16,931,730 | |||||||||||
| Earning assets | 18,439,010 | 18,157,795 | 18,451,907 | 17,969,001 | |||||||||||
| Interest bearing liabilities | 13,158,631 | 11,723,026 | 12,985,665 | 11,255,232 | |||||||||||
| Common equity | 1,746,818 | 1,674,306 | 1,710,230 | 1,801,835 | |||||||||||
| Total stockholders’ equity | 1,857,523 | 1,785,011 | 1,820,935 | 1,912,540 | |||||||||||
| Tangible common stockholders’ equity | 1,149,992 | 1,070,399 | 1,111,724 | 1,195,952 | |||||||||||
| Key Performance Ratios | |||||||||||||||
| Annualized return on average assets | 0.94 | % | 1.13 | % | 1.00 | % | 1.04 | % | |||||||
| Annualized return on average common equity (GAAP) | 10.47 | 12.93 | 11.28 | 10.80 | |||||||||||
| Annualized return on average tangible common equity (non-GAAP)(1) | 16.34 | 20.76 | 17.83 | 16.79 | |||||||||||
| Annualized ratio of net charge-offs/(recoveries) to average loans | 0.12 | 0.00 | 0.14 | 0.17 | |||||||||||
| Annualized net interest margin (GAAP) | 3.14 | 3.41 | 3.23 | 3.22 | |||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.18 | 3.45 | 3.27 | 3.27 | |||||||||||
| Efficiency ratio (GAAP) | 63.77 | 58.84 | 61.86 | 61.39 | |||||||||||
| Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 59.95 | 55.26 | 58.98 | 58.99 | |||||||||||
| Total noninterest expenses to average assets (GAAP) | 2.18 | 2.18 | 2.20 | 2.23 | |||||||||||
| Core expenses to average assets (non-GAAP)(1) | 2.08 | 2.09 | 2.12 | 2.17 | |||||||||||
| (1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Common Share Data | |||||||||||||||||||
| Book value per common share | $ | 40.20 | $ | 41.00 | $ | 40.38 | $ | 38.25 | $ | 36.41 | |||||||||
| Tangible book value per common share (non-GAAP)(1) | 26.23 | 26.98 | 26.30 | 24.09 | 22.20 | ||||||||||||||
| ASC 320 effect on book value per common share | (16.27 | ) | (14.04 | ) | (13.35 | ) | (14.58 | ) | (15.31 | ) | |||||||||
| Common shares outstanding, net of treasury stock | 42,656,303 | 42,644,544 | 42,558,726 | 42,467,394 | 42,444,106 | ||||||||||||||
| Tangible common equity ratio (non-GAAP)(1) | 5.73 | % | 5.86 | % | 5.72 | % | 5.21 | % | 4.94 | % | |||||||||
| Adjusted tangible common equity ratio (non-GAAP)(1) | 8.73 | % | 8.54 | % | 8.37 | % | 8.11 | % | 8.07 | % | |||||||||
| Other Selected Trend Information | |||||||||||||||||||
| Effective tax rate | 21.89 | % | 23.74 | % | 22.50 | % | 18.68 | % | 19.97 | % | |||||||||
| Full time equivalent employees | 1,965 | 1,966 | 1,991 | 2,002 | 2,020 | ||||||||||||||
| Loans Held to Maturity | |||||||||||||||||||
| Commercial and industrial | $ | 3,591,809 | $ | 3,590,680 | $ | 3,498,345 | $ | 3,464,414 | $ | 3,278,703 | |||||||||
| Paycheck Protection Program (“PPP”) | 3,750 | 4,139 | 8,258 | 11,025 | 13,506 | ||||||||||||||
| Owner occupied commercial real estate | 2,429,659 | 2,398,698 | 2,312,538 | 2,265,307 | 2,285,973 | ||||||||||||||
| Commercial and business lending | 6,025,218 | 5,993,517 | 5,819,141 | 5,740,746 | 5,578,182 | ||||||||||||||
| Non-owner occupied commercial real estate | 2,656,358 | 2,530,736 | 2,421,341 | 2,330,940 | 2,219,542 | ||||||||||||||
| Real estate construction | 1,029,554 | 1,013,134 | 1,102,186 | 1,076,082 | 996,017 | ||||||||||||||
| Commercial real estate lending | 3,685,912 | 3,543,870 | 3,523,527 | 3,407,022 | 3,215,559 | ||||||||||||||
| Total commercial lending | 9,711,130 | 9,537,387 | 9,342,668 | 9,147,768 | 8,793,741 | ||||||||||||||
| Agricultural and agricultural real estate | 842,116 | 839,817 | 810,183 | 920,510 | 781,354 | ||||||||||||||
| Residential mortgage | 813,803 | 828,437 | 841,084 | 853,361 | 852,928 | ||||||||||||||
| Consumer | 505,387 | 512,333 | 501,418 | 506,713 | 495,509 | ||||||||||||||
| Total loans held to maturity | $ | 11,872,436 | $ | 11,717,974 | $ | 11,495,353 | $ | 11,428,352 | $ | 10,923,532 | |||||||||
| Total unfunded loan commitments | $ | 4,813,798 | $ | 4,905,147 | $ | 4,867,925 | $ | 4,729,677 | $ | 4,664,379 | |||||||||
| Deposits | |||||||||||||||||||
| Demand-customer | $ | 4,792,813 | $ | 4,897,858 | $ | 5,119,554 | $ | 5,701,340 | $ | 6,083,563 | |||||||||
| Savings-customer | 8,190,430 | 8,149,596 | 8,501,337 | 8,670,898 | 8,691,545 | ||||||||||||||
| Savings-wholesale and institutional | 564,481 | 623,000 | 755,272 | 1,323,493 | 1,368,978 | ||||||||||||||
| Total savings | 8,754,911 | 8,772,596 | 9,256,609 | 9,994,391 | 10,060,523 | ||||||||||||||
| Time-customer | 1,814,335 | 1,597,849 | 1,071,476 | 851,539 | 973,035 | ||||||||||||||
| Time-wholesale | 1,738,934 | 2,395,240 | 2,233,707 | 965,739 | 150,000 | ||||||||||||||
| Total time | 3,553,269 | 3,993,089 | 3,305,183 | 1,817,278 | 1,123,035 | ||||||||||||||
| Total deposits | $ | 17,100,993 | $ | 17,663,543 | $ | 17,681,346 | $ | 17,513,009 | $ | 17,267,121 | |||||||||
| Total customer deposits | $ | 14,797,578 | $ | 14,645,303 | $ | 14,692,367 | $ | 15,223,777 | $ | 15,748,143 | |||||||||
| Total wholesale and institutional deposits | 2,303,415 | 3,018,240 | 2,988,979 | 2,289,232 | 1,518,978 | ||||||||||||||
| Total deposits | $ | 17,100,993 | $ | 17,663,543 | $ | 17,681,346 | $ | 17,513,009 | $ | 17,267,121 | |||||||||
| (1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Allowance for Credit Losses-Loans | |||||||||||||||||||
| Balance, beginning of period | $ | 111,198 | $ | 112,707 | $ | 109,483 | $ | 105,715 | $ | 101,353 | |||||||||
| Provision for credit losses | 2,672 | 7,829 | 2,184 | 2,075 | 4,388 | ||||||||||||||
| Charge-offs | (3,964 | ) | (9,613 | ) | (2,151 | ) | (2,668 | ) | (938 | ) | |||||||||
| Recoveries | 302 | 275 | 3,191 | 4,361 | 912 | ||||||||||||||
| Balance, end of period | $ | 110,208 | $ | 111,198 | $ | 112,707 | $ | 109,483 | $ | 105,715 | |||||||||
| Allowance for Unfunded Commitments | |||||||||||||||||||
| Balance, beginning of period | $ | 18,636 | $ | 21,086 | $ | 20,196 | $ | 18,884 | $ | 17,780 | |||||||||
| Provision for credit losses | (1,156 | ) | (2,450 | ) | 890 | 1,312 | 1,104 | ||||||||||||
| Balance, end of period | $ | 17,480 | $ | 18,636 | $ | 21,086 | $ | 20,196 | $ | 18,884 | |||||||||
| Allowance for lending related credit losses | $ | 127,688 | $ | 129,834 | $ | 133,793 | $ | 129,679 | $ | 124,599 | |||||||||
| Provision for Credit Losses | |||||||||||||||||||
| Provision for credit losses-loans | $ | 2,672 | $ | 7,829 | $ | 2,184 | $ | 2,075 | $ | 4,388 | |||||||||
| Provision (benefit) for credit losses-unfunded commitments | (1,156 | ) | (2,450 | ) | 890 | 1,312 | 1,104 | ||||||||||||
| Total provision for credit losses | $ | 1,516 | $ | 5,379 | $ | 3,074 | $ | 3,387 | $ | 5,492 | |||||||||
| Asset Quality | |||||||||||||||||||
| Nonaccrual loans | $ | 51,304 | $ | 61,956 | $ | 58,066 | $ | 58,231 | $ | 64,560 | |||||||||
| Loans past due ninety days or more | 511 | 1,459 | 174 | 273 | 678 | ||||||||||||||
| Other real estate owned | 14,362 | 2,677 | 7,438 | 8,401 | 8,030 | ||||||||||||||
| Other repossessed assets | 1 | 5 | 24 | 26 | — | ||||||||||||||
| Total nonperforming assets | $ | 66,178 | $ | 66,097 | $ | 65,702 | $ | 66,931 | $ | 73,268 | |||||||||
| Nonperforming Assets Activity | |||||||||||||||||||
| Balance, beginning of period | $ | 66,097 | $ | 65,702 | $ | 66,931 | $ | 73,268 | $ | 67,532 | |||||||||
| Net loan (charge-offs)/recoveries | (3,662 | ) | (9,338 | ) | 1,040 | 1,693 | (26 | ) | |||||||||||
| New nonperforming loans | 19,295 | 19,805 | 4,626 | 1,439 | 8,388 | ||||||||||||||
| Reduction of nonperforming loans(1) | (14,691 | ) | (5,253 | ) | (5,711 | ) | (8,875 | ) | (2,015 | ) | |||||||||
| Net OREO/repossessed assets sales proceeds and losses | (861 | ) | (4,819 | ) | (1,184 | ) | (594 | ) | (611 | ) | |||||||||
| Balance, end of period | $ | 66,178 | $ | 66,097 | $ | 65,702 | $ | 66,931 | $ | 73,268 | |||||||||
| Asset Quality Ratios | |||||||||||||||||||
| Ratio of nonperforming loans to total loans | 0.44 | % | 0.54 | % | 0.51 | % | 0.51 | % | 0.60 | % | |||||||||
| Ratio of nonperforming assets to total assets | 0.33 | 0.33 | 0.33 | 0.33 | 0.37 | ||||||||||||||
| Annualized ratio of net loan charge-offs/(recoveries) to average loans | 0.12 | 0.32 | (0.04 | ) | (0.06 | ) | 0.00 | ||||||||||||
| Allowance for loan credit losses as a percent of loans | 0.93 | 0.95 | 0.98 | 0.96 | 0.97 | ||||||||||||||
| Allowance for lending related credit losses as a percent of loans | 1.08 | 1.11 | 1.16 | 1.13 | 1.14 | ||||||||||||||
| Allowance for loan credit losses as a percent of nonperforming loans | 212.70 | 175.35 | 193.52 | 187.14 | 162.05 | ||||||||||||||
| Loans delinquent 30-89 days as a percent of total loans | 0.12 | 0.12 | 0.10 | 0.04 | 0.10 | ||||||||||||||
| (1) Includes principal reductions, transfers to performing status and transfers to OREO. | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||||
| Average Balance |
Interest | Rate | Average Balance |
Interest | Rate | Average Balance |
Interest | Rate | |||||||||||||||||||||
| Earning Assets | |||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||
| Taxable | $ | 5,726,057 | $ | 54,800 | 3.80 | % | $ | 5,962,207 | $ | 58,172 | 3.91 | % | $ | 6,303,278 | $ | 45,648 | 2.87 | % | |||||||||||
| Nontaxable(1) | 881,162 | 8,085 | 3.64 | 895,458 | 7,896 | 3.54 | 951,232 | 7,802 | 3.25 | ||||||||||||||||||||
| Total securities | 6,607,219 | 62,885 | 3.78 | 6,857,665 | 66,068 | 3.86 | 7,254,510 | 53,450 | 2.92 | ||||||||||||||||||||
| Interest on deposits with other banks and short-term investments | 142,301 | 1,651 | 4.60 | 153,622 | 2,051 | 5.36 | 222,170 | 1,081 | 1.93 | ||||||||||||||||||||
| Federal funds sold | 152 | 3 | 7.83 | — | — | — | 11 | — | — | ||||||||||||||||||||
| Loans:(2) | |||||||||||||||||||||||||||||
| Commercial and industrial(1) | 3,610,677 | 63,001 | 6.92 | 3,565,449 | 56,644 | 6.37 | 3,182,134 | 37,526 | 4.68 | ||||||||||||||||||||
| PPP loans | 3,948 | 11 | 1.11 | 6,302 | 24 | 1.53 | 17,859 | 363 | 8.06 | ||||||||||||||||||||
| Owner occupied commercial real estate | 2,412,501 | 30,127 | 4.95 | 2,366,107 | 28,031 | 4.75 | 2,272,666 | 23,601 | 4.12 | ||||||||||||||||||||
| Non-owner occupied commercial real estate | 2,586,011 | 38,779 | 5.95 | 2,462,098 | 35,583 | 5.80 | 2,258,424 | 25,895 | 4.55 | ||||||||||||||||||||
| Real estate construction | 1,027,544 | 19,448 | 7.51 | 1,028,109 | 18,528 | 7.23 | 914,520 | 12,382 | 5.37 | ||||||||||||||||||||
| Agricultural and agricultural real estate | 822,957 | 12,582 | 6.07 | 848,554 | 12,256 | 5.79 | 799,823 | 8,966 | 4.45 | ||||||||||||||||||||
| Residential mortgage | 827,402 | 9,482 | 4.55 | 840,741 | 9,383 | 4.48 | 858,119 | 8,665 | 4.01 | ||||||||||||||||||||
| Consumer | 509,024 | 9,615 | 7.49 | 508,082 | 9,068 | 7.16 | 479,590 | 6,028 | 4.99 | ||||||||||||||||||||
| Less: allowance for credit losses-loans | (110,726 | ) | — | — | (113,177 | ) | — | — | (102,031 | ) | — | — | |||||||||||||||||
| Net loans | 11,689,338 | 183,045 | 6.21 | 11,512,265 | 169,517 | 5.91 | 10,681,104 | 123,426 | 4.58 | ||||||||||||||||||||
| Total earning assets | 18,439,010 | 247,584 | 5.33 | % | 18,523,552 | 237,636 | 5.15 | % | 18,157,795 | 177,957 | 3.89 | % | |||||||||||||||||
| Nonearning Assets | 1,768,910 | 1,697,959 | 1,617,546 | ||||||||||||||||||||||||||
| Total Assets | $ | 20,207,920 | $ | 20,221,511 | $ | 19,775,341 | |||||||||||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||||||||||||
| Savings | $ | 8,737,581 | $ | 49,195 | 2.23 | % | $ | 8,935,775 | $ | 41,284 | 1.85 | % | $ | 10,059,652 | $ | 12,907 | 0.51 | % | |||||||||||
| Time deposits | 3,945,371 | 43,549 | 4.38 | 3,812,330 | 40,691 | 4.28 | 1,156,908 | 2,251 | 0.77 | ||||||||||||||||||||
| Short-term borrowings | 103,567 | 1,167 | 4.47 | 89,441 | 848 | 3.80 | 134,974 | 360 | 1.06 | ||||||||||||||||||||
| Other borrowings | 372,112 | 5,765 | 6.15 | 372,248 | 5,545 | 5.97 | 371,492 | 4,412 | 4.71 | ||||||||||||||||||||
| Total interest bearing liabilities | 13,158,631 | 99,676 | 3.01 | % | 13,209,794 | 88,368 | 2.68 | % | 11,723,026 | 19,930 | 0.67 | % | |||||||||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||
| Noninterest bearing deposits | 4,824,861 | 4,941,033 | 6,065,729 | ||||||||||||||||||||||||||
| Accrued interest and other liabilities | 366,905 | 232,966 | 201,575 | ||||||||||||||||||||||||||
| Total noninterest bearing liabilities | 5,191,766 | 5,173,999 | 6,267,304 | ||||||||||||||||||||||||||
| Equity | 1,857,523 | 1,837,718 | 1,785,011 | ||||||||||||||||||||||||||
| Total Liabilities and Equity | $ | 20,207,920 | $ | 20,221,511 | $ | 19,775,341 | |||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | $ | 147,908 | $ | 149,268 | $ | 158,027 | |||||||||||||||||||||||
| Net interest spread(1) | 2.32 | % | 2.47 | % | 3.22 | % | |||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets | 3.18 | % | 3.23 | % | 3.45 | % | |||||||||||||||||||||||
| Interest bearing liabilities to earning assets | 71.36 | % | 71.31 | % | 64.56 | % | |||||||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||
| (2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||||||||||||
| (3) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||
| For the Nine Months Ended | |||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||
| Average Balance |
Interest | Rate | Average Balance |
Interest | Rate | ||||||||||||||
| Earning Assets | |||||||||||||||||||
| Securities: | |||||||||||||||||||
| Taxable | $ | 5,927,026 | $ | 168,948 | 3.81 | % | $ | 6,407,459 | $ | 116,366 | 2.43 | % | |||||||
| Nontaxable(1) | 899,613 | 23,611 | 3.51 | 990,784 | 22,625 | 3.05 | |||||||||||||
| Total securities | 6,826,639 | 192,559 | 3.77 | 7,398,243 | 138,991 | 2.51 | % | ||||||||||||
| Interest bearing deposits with other banks and other short-term investments | 133,910 | 4,833 | 4.83 | 238,819 | 1,715 | 0.96 | |||||||||||||
| Federal funds sold | 51 | 3 | 7.86 | 7 | — | — | |||||||||||||
| Loans:(2) | |||||||||||||||||||
| Commercial and industrial(1) | 3,547,256 | 169,552 | 6.39 | % | 2,977,751 | 95,020 | 4.27 | ||||||||||||
| PPP loans | 6,718 | 61 | 1.21 | 63,342 | 6,487 | 13.69 | |||||||||||||
| Owner occupied commercial real estate | 2,355,545 | 84,927 | 4.82 | 2,270,486 | 67,742 | 3.99 | |||||||||||||
| Non-owner occupied commercial real estate | 2,459,965 | 105,111 | 5.71 | 2,166,873 | 69,929 | 4.31 | |||||||||||||
| Real estate construction | 1,051,298 | 56,107 | 7.14 | 880,354 | 31,673 | 4.81 | |||||||||||||
| Agricultural and agricultural real estate | 835,673 | 36,191 | 5.79 | 776,127 | 23,905 | 4.12 | |||||||||||||
| Residential mortgage | 840,143 | 28,138 | 4.48 | 850,444 | 25,108 | 3.95 | |||||||||||||
| Consumer | 506,143 | 26,925 | 7.11 | 452,032 | 15,632 | 4.62 | |||||||||||||
| Less: allowance for credit losses-loans | (111,434 | ) | — | — | (105,477 | ) | — | — | |||||||||||
| Net loans | 11,491,307 | 507,012 | 5.90 | 10,331,932 | 335,496 | 4.34 | |||||||||||||
| Total earning assets | 18,451,907 | 704,407 | 5.10 | % | 17,969,001 | 476,202 | 3.54 | % | |||||||||||
| Nonearning Assets | 1,730,901 | 1,554,432 | |||||||||||||||||
| Total Assets | $ | 20,182,808 | $ | 19,523,433 | |||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||
| Savings | $ | 9,130,980 | $ | 128,372 | 1.88 | % | $ | 9,652,651 | $ | 20,673 | 0.29 | % | |||||||
| Time deposits | 3,344,434 | 103,245 | 4.13 | 1,106,095 | 3,992 | 0.48 | |||||||||||||
| Short-term borrowings | 138,157 | 4,437 | 4.29 | 124,459 | 494 | 0.53 | |||||||||||||
| Other borrowings | 372,094 | 16,756 | 6.02 | 372,027 | 11,780 | 4.23 | |||||||||||||
| Total interest bearing liabilities | 12,985,665 | 252,810 | 2.60 | % | 11,255,232 | 36,939 | 0.44 | % | |||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||
| Noninterest bearing deposits | 5,092,200 | 6,172,984 | |||||||||||||||||
| Accrued interest and other liabilities | 284,008 | 182,677 | |||||||||||||||||
| Total noninterest bearing liabilities | 5,376,208 | 6,355,661 | |||||||||||||||||
| Stockholders’ Equity | 1,820,935 | 1,912,540 | |||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 20,182,808 | $ | 19,523,433 | |||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | $ | 451,597 | $ | 439,263 | |||||||||||||||
| Net interest spread(1) | 2.50 | % | 3.10 | % | |||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets | 3.27 | % | 3.27 | % | |||||||||||||||
| Interest bearing liabilities to earning assets | 70.38 | % | 62.64 | % | |||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||
| (2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||
| (3) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||||||
| Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||
| Net income available to common stockholders (GAAP) | $ | 46,078 | $ | 47,404 | $ | 50,763 | $ | 58,642 | $ | 54,551 | |||||||||
| Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 1,284 | 1,354 | 1,413 | 1,455 | 1,466 | ||||||||||||||
| Net income available to common stockholders excluding intangible amortization (non-GAAP) | $ | 47,362 | $ | 48,758 | $ | 52,176 | $ | 60,097 | $ | 56,017 | |||||||||
| Average common equity (GAAP) | $ | 1,746,818 | $ | 1,727,013 | $ | 1,655,860 | $ | 1,548,739 | $ | 1,674,306 | |||||||||
| Less average goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | ||||||||||||||
| Less average core deposit and customer relationship intangibles, net | 20,821 | 22,481 | 24,238 | 26,046 | 27,902 | ||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,149,992 | $ | 1,128,527 | $ | 1,055,617 | $ | 946,688 | $ | 1,070,399 | |||||||||
| Annualized return on average common equity (GAAP) | 10.47 | % | 11.01 | % | 12.43 | % | 15.02 | % | 12.93 | % | |||||||||
| Annualized return on average tangible common equity (non-GAAP) | 16.34 | % | 17.33 | % | 20.05 | % | 25.19 | % | 20.76 | % | |||||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||||||
| Net Interest Income (GAAP) | $ | 145,756 | $ | 147,132 | $ | 152,212 | $ | 165,220 | $ | 155,876 | |||||||||
| Plus tax-equivalent adjustment(1) | 2,152 | 2,136 | 2,209 | 2,152 | 2,151 | ||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 147,908 | $ | 149,268 | $ | 154,421 | $ | 167,372 | $ | 158,027 | |||||||||
| Average earning assets | $ | 18,439,010 | $ | 18,523,552 | $ | 18,392,649 | $ | 18,175,838 | $ | 18,157,795 | |||||||||
| Annualized net interest margin (GAAP) | 3.14 | % | 3.19 | % | 3.36 | % | 3.61 | % | 3.41 | % | |||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.18 | 3.23 | 3.40 | 3.65 | 3.45 | ||||||||||||||
| Net purchase accounting discount amortization on loans included in annualized net interest margin | 0.01 | 0.03 | 0.02 | 0.03 | 0.03 | ||||||||||||||
| Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | ||||||||||||||||||||
| Common equity (GAAP) | $ | 1,714,825 | $ | 1,748,285 | $ | 1,718,700 | $ | 1,624,350 | $ | 1,545,253 | ||||||||||
| Less goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | |||||||||||||||
| Less core deposit and customer relationship intangibles, net | 20,026 | 21,651 | 23,366 | 25,154 | 26,995 | |||||||||||||||
| Tangible common equity (non-GAAP) | $ | 1,118,794 | $ | 1,150,629 | $ | 1,119,329 | $ | 1,023,191 | $ | 942,253 | ||||||||||
| Common shares outstanding, net of treasury stock | 42,656,303 | 42,644,544 | 42,558,726 | 42,467,394 | 42,444,106 | |||||||||||||||
| Common equity (book value) per share (GAAP) | $ | 40.20 | $ | 41.00 | $ | 40.38 | $ | 38.25 | $ | 36.41 | ||||||||||
| Tangible book value per common share (non-GAAP) | $ | 26.23 | $ | 26.98 | $ | 26.30 | $ | 24.09 | $ | 22.20 | ||||||||||
| Reconciliation of Tangible Common Equity Ratio (non-GAAP) | ||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 1,118,794 | $ | 1,150,629 | $ | 1,119,329 | $ | 1,023,191 | $ | 942,253 | ||||||||||
| Total assets (GAAP) | $ | 20,129,793 | $ | 20,224,716 | $ | 20,182,544 | $ | 20,244,228 | $ | 19,682,950 | ||||||||||
| Less goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | |||||||||||||||
| Less core deposit and customer relationship intangibles, net | 20,026 | 21,651 | 23,366 | 25,154 | 26,995 | |||||||||||||||
| Total tangible assets (non-GAAP) | $ | 19,533,762 | $ | 19,627,060 | $ | 19,583,173 | $ | 19,643,069 | $ | 19,079,950 | ||||||||||
| Tangible common equity ratio (non-GAAP) | 5.73 | % | 5.86 | % | 5.72 | % | 5.21 | % | 4.94 | % | ||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | ||||||||||||||||
| Reconciliation of Adjusted Tangible Common Equity Ratio (non-GAAP) | ||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 1,118,794 | $ | 1,150,629 | $ | 1,119,329 | $ | 1,023,191 | $ | 942,253 | ||||||||||
| Accumulated other comprehensive loss | 642,838 | 575,240 | 566,919 | 620,006 | 650,636 | |||||||||||||||
| Adjusted tangible common equity (non-GAAP) | $ | 1,761,632 | $ | 1,725,869 | $ | — | $ | 1,686,248 | $ | 1,643,197 | $ | 1,592,889 | ||||||||
| Total tangible assets (non-GAAP) | $ | 19,533,762 | $ | 19,627,060 | $ | 19,583,173 | $ | 19,643,069 | $ | 19,079,950 | ||||||||||
| Fair value adjustment for securities and derivatives, net of deferred taxes | 642,838 | 575,240 | 566,919 | 620,006 | 650,636 | |||||||||||||||
| Total adjusted tangible assets (non-GAAP) | $ | 20,176,600 | $ | 20,202,300 | $ | 20,150,092 | $ | 20,263,075 | $ | 19,730,586 | ||||||||||
| Adjusted tangible common equity ratio (non-GAAP) | 8.73 | % | 8.54 | % | 8.37 | % | 8.11 | % | 8.07 | % | ||||||||||
| Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP) | |||||||||||||||||||
| Net interest income (GAAP) | $ | 145,756 | $ | 147,132 | $ | 152,212 | $ | 165,220 | $ | 155,876 | |||||||||
| Tax-equivalent adjustment(1) | 2,152 | 2,136 | 2,209 | 2,152 | 2,151 | ||||||||||||||
| Fully tax-equivalent net interest income | 147,908 | 149,268 | 154,421 | 167,372 | 158,027 | ||||||||||||||
| Noninterest income (GAAP) | 28,383 | 32,493 | 29,999 | 29,975 | 29,181 | ||||||||||||||
| Securities losses, net | 114 | 314 | 1,104 | 153 | 1,055 | ||||||||||||||
| Unrealized (gain)/loss on equity securities, net | (13 | ) | 41 | (193 | ) | 7 | 211 | ||||||||||||
| Gain on extinguishment of debt | — | — | — | — | — | ||||||||||||||
| Valuation adjustment on servicing rights | — | — | — | — | — | ||||||||||||||
| Adjusted revenue (non-GAAP) | $ | 176,392 | $ | 182,116 | $ | 185,331 | $ | 197,507 | $ | 188,474 | |||||||||
| Total noninterest expenses (GAAP) | $ | 111,053 | $ | 109,446 | $ | 111,043 | $ | 117,218 | $ | 108,883 | |||||||||
| Less: | |||||||||||||||||||
| Core deposit and customer relationship intangibles amortization | 1,625 | 1,715 | 1,788 | 1,841 | 1,856 | ||||||||||||||
| Partnership investment in tax credit projects | 1,136 | 154 | 538 | 3,247 | 979 | ||||||||||||||
| (Gain)/loss on sales/valuation of assets, net | 108 | (3,372 | ) | 1,115 | 2,388 | (251 | ) | ||||||||||||
| Acquisition, integration and restructuring costs | 2,429 | 1,892 | 1,673 | 2,442 | 2,156 | ||||||||||||||
| Core expenses (non-GAAP) | $ | 105,755 | $ | 109,057 | $ | 105,929 | $ | 107,300 | $ | 104,143 | |||||||||
| Efficiency ratio (GAAP) | 63.77 | % | 60.93 | % | 60.94 | % | 60.05 | % | 58.84 | % | |||||||||
| Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) | 59.95 | % | 59.88 | % | 57.16 | % | 54.33 | % | 55.26 | % | |||||||||
| Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP) | |||||||||||||||||||
| Total noninterest expenses (GAAP) | $ | 111,053 | $ | 109,446 | $ | 111,043 | $ | 117,218 | $ | 108,883 | |||||||||
| Core expenses (non-GAAP) | 105,755 | 109,057 | 105,929 | 107,300 | 104,143 | ||||||||||||||
| Average assets | $ | 20,207,920 | $ | 20,221,511 | $ | 20,118,005 | $ | 19,913,849 | $ | 19,775,341 | |||||||||
| Total noninterest expenses to average assets (GAAP) | 2.18 | % | 2.17 | % | 2.24 | % | 2.34 | % | 2.18 | % | |||||||||
| Core expenses to average assets (non-GAAP) | 2.08 | % | 2.16 | % | 2.14 | % | 2.14 | % | 2.09 | % | |||||||||
| Acquisition, integration and restructuring costs | |||||||||||||||||||
| Salaries and employee benefits | $ | 94 | $ | 93 | $ | 74 | $ | 424 | $ | 365 | |||||||||
| Occupancy | — | — | — | — | — | ||||||||||||||
| Furniture and equipment | — | — | — | — | — | ||||||||||||||
| Professional fees | 1,617 | 1,068 | 934 | 1,587 | 1,480 | ||||||||||||||
| Advertising | 178 | 222 | 122 | 95 | 131 | ||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | — | — | — | — | — | ||||||||||||||
| Other noninterest expenses | 540 | 509 | 543 | 336 | 180 | ||||||||||||||
| Total acquisition, integration and restructuring costs | $ | 2,429 | $ | 1,892 | $ | 1,673 | $ | 2,442 | $ | 2,156 | |||||||||
| After tax impact on diluted earnings per common share(1) | $ | 0.04 | $ | 0.03 | $ | 0.03 | $ | 0.05 | $ | 0.04 | |||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
| For the Quarter Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||
| Net income available to common stockholders (GAAP) | $ | 46,078 | $ | 54,551 | $ | 144,245 | $ | 145,488 | |||||||
| Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 1,284 | 1,466 | 4,051 | 4,734 | |||||||||||
| Net income available to common stockholders excluding intangible amortization (non-GAAP) | $ | 47,362 | $ | 56,017 | $ | 148,296 | $ | 150,222 | |||||||
| Average common equity (GAAP) | $ | 1,746,818 | $ | 1,674,306 | $ | 1,710,230 | $ | 1,801,835 | |||||||
| Less average goodwill | 576,005 | 576,005 | 576,005 | 576,005 | |||||||||||
| Less average core deposit and customer relationship intangibles, net | 20,821 | 27,902 | 22,501 | 29,878 | |||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,149,992 | $ | 1,070,399 | $ | 1,111,724 | $ | 1,195,952 | |||||||
| Annualized return on average common equity (GAAP) | 10.47 | % | 12.93 | % | 11.28 | % | 10.80 | % | |||||||
| Annualized return on average tangible common equity (non-GAAP) | 16.34 | % | 20.76 | % | 17.83 | % | 16.79 | % | |||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||
| Net Interest Income (GAAP) | $ | 145,756 | $ | 155,876 | $ | 445,100 | $ | 433,016 | |||||||
| Plus tax-equivalent adjustment(1) | 2,152 | 2,151 | 6,497 | 6,247 | |||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 147,908 | $ | 158,027 | $ | 451,597 | $ | 439,263 | |||||||
| Average earning assets | $ | 18,439,010 | $ | 18,157,795 | $ | 18,451,907 | $ | 17,969,001 | |||||||
| Annualized net interest margin (GAAP) | 3.14 | % | 3.41 | % | 3.23 | % | 3.22 | % | |||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.18 | 3.45 | 3.27 | 3.27 | |||||||||||
| Purchase accounting discount amortization on loans included in annualized net interest margin | 0.01 | 0.03 | 0.02 | 0.05 | |||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
| Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP) | For the Quarter Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net interest income (GAAP) | $ | 145,756 | $ | 155,876 | $ | 445,100 | $ | 433,016 | |||||||
| Tax-equivalent adjustment(1) | 2,152 | 2,151 | 6,497 | 6,247 | |||||||||||
| Fully tax-equivalent net interest income | 147,908 | 158,027 | 451,597 | 439,263 | |||||||||||
| Noninterest income (GAAP) | 28,383 | 29,181 | 90,875 | 98,289 | |||||||||||
| Securities (gains)/losses, net | 114 | 1,055 | 1,532 | 272 | |||||||||||
| Unrealized (gain)/loss on equity securities, net | (13 | ) | 211 | (165 | ) | 615 | |||||||||
| Valuation adjustment on servicing rights | — | — | — | (1,658 | ) | ||||||||||
| Adjusted revenue (non-GAAP) | $ | 176,392 | $ | 188,474 | $ | 543,839 | $ | 536,781 | |||||||
| Total noninterest expenses (GAAP) | $ | 111,053 | $ | 108,883 | $ | 331,542 | $ | 326,159 | |||||||
| Less: | |||||||||||||||
| Core deposit and customer relationship intangibles amortization | 1,625 | 1,856 | 5,128 | 5,993 | |||||||||||
| Partnership investment in tax credit projects | 1,136 | 979 | 1,828 | 1,793 | |||||||||||
| (Gain)/loss on sales/valuation of assets, net | 108 | (251 | ) | (2,149 | ) | (3,435 | ) | ||||||||
| Acquisition, integration and restructuring costs | 2,429 | 2,156 | 5,994 | 5,144 | |||||||||||
| Core expenses (non-GAAP) | $ | 105,755 | $ | 104,143 | $ | 320,741 | $ | 316,664 | |||||||
| Efficiency ratio (GAAP) | 63.77 | % | 58.84 | % | 61.86 | % | 61.39 | % | |||||||
| Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) | 59.95 | % | 55.26 | % | 58.98 | % | 58.99 | % | |||||||
| Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP) | |||||||||||||||
| Total noninterest expenses (GAAP) | $ | 111,053 | $ | 108,883 | $ | 331,542 | $ | 326,159 | |||||||
| Core expenses (non-GAAP) | 105,755 | 104,143 | 320,741 | 316,664 | |||||||||||
| Average assets | $ | 20,207,920 | $ | 19,775,341 | $ | 20,182,808 | $ | 19,523,433 | |||||||
| Total noninterest expenses to average assets (GAAP) | 2.18 | % | 2.18 | % | 2.20 | % | 2.23 | % | |||||||
| Core expenses to average assets (non-GAAP) | 2.08 | % | 2.09 | % | 2.12 | % | 2.17 | % | |||||||
| Acquisition, integration and restructuring costs | |||||||||||||||
| Salaries and employee benefits | $ | 94 | $ | 365 | $ | 261 | $ | 980 | |||||||
| Professional fees | 1,617 | 1,480 | 3,619 | 3,495 | |||||||||||
| Advertising | 178 | 131 | 522 | 287 | |||||||||||
| Other noninterest expenses | 540 | 180 | 1,592 | 382 | |||||||||||
| Total acquisition, integration and restructuring costs | $ | 2,429 | $ | 2,156 | $ | 5,994 | $ | 5,144 | |||||||
| After tax impact on diluted earnings per common share(1) | $ | 0.04 | $ | 0.04 | $ | 0.11 | $ | 0.10 | |||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||
| CONTACT: |
| Bryan R. McKeag |
| Executive Vice President |
| Chief Financial Officer |
| (563) 589-1994 |
| BMcKeag@htlf.com |
