Heartland Financial USA, Inc. ("HTLF") Reports Record Quarterly and Year to Date Results as of June 30, 2021

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Highlights and Developments

  • Net income available to common stockholders of $59.6 million compared to $30.1 million for the second quarter of 2020, an increase of $29.5 million or 98%

  • Net income available to common stockholders of $110.4 million compared to $50.2 million for the six months ended June 30, 2020, an increase of $60.2 million or 120%

  • Diluted earnings per common share of $1.41 compared to $0.82 for the second quarter of the prior year, an increase of $0.59 or 72%

  • Quarterly loan growth was $287.7 million or 13% annualized, exclusive of Paycheck Protection Program ("PPP") loans

  • Non-time deposit growth of $133.3 million or 1% for the second quarter of 2021 and $780.0 million or 6% for the six months ended June 30, 2021

  • Annualized net charge off ratio of 0.12%, nonperforming assets to total assets of 0.50%, and 30-89 day loan delinquencies of 0.17%

  • Announced a 14% increase in the regular quarterly dividend to $0.25 per common share

Quarter Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income available to common stockholders (in millions)

$

59.6

$

30.1

$

110.4

$

50.2

Diluted earnings per common share

1.41

0.82

2.61

1.36

Return on average assets

1.35

%

0.84

%

1.27

%

0.73

%

Return on average common equity

12.07

7.69

11.29

6.32

Return on average tangible common equity (non-GAAP)(1)

18.05

11.97

16.99

9.95

Net interest margin

3.37

3.81

3.40

3.81

Net interest margin, fully tax-equivalent (non-GAAP)(1)

3.41

3.85

3.45

3.85

Efficiency ratio, fully-tax equivalent (non-GAAP)(1)

57.11

55.75

56.86

58.64

(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's second quarter 2021 financial performance was strong. Net income available to common stockholders totaled $59.6 million, which was a 98% increase over the same quarter last year. Loan growth, excluding PPP loans, non-time deposit growth and improved credit quality all contributed to our success this quarter."

Bruce K. Lee, president and chief executive officer, HTLF

DUBUQUE, Iowa, July 26, 2021 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020:

  • Net income available to common stockholders of $59.6 million compared to $30.1 million, an increase of $29.5 million or 98%.

  • Earnings per diluted common share of $1.41 compared to $0.82, an increase of $0.59 or 72%.

  • Net interest income of $141.2 million compared to $124.1 million, an increase of $17.1 million or 14%.

  • Return on average common equity was 12.07% and return on average assets was 1.35% compared to 7.69% and 0.84%.

  • Return on average tangible common equity (non-GAAP) was 18.05% compared to 11.97%.

HTLF report the following results for the six months ended June 30, 2021 compared to the six months ended June 30, 2020:

  • Net income available to common stockholders of $110.4 million compared to $50.2 million, an increase of $60.2 million or 120%.

  • Earnings per diluted common share of $2.61 compared to $1.36, an increase of $1.25 or 92%.

  • Net interest income of $280.8 million compared to $236.7 million, an increase of $44.2 million or 19%.

  • Return on average common equity was 11.29% and return on average assets was 1.27% compared to 6.32% and 0.73%.

  • Return on average tangible common equity (non-GAAP) was 16.99% compared to 9.95%.

"HTLF's second quarter 2021 financial performance was strong. Net income available to common stockholders totaled $59.6 million, which was a 98% increase over the same quarter last year. Loan growth, excluding PPP loans, non-time deposit growth and improved credit quality also contributed to our success this quarter," said Bruce K. Lee, president and chief executive officer of HTLF.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2021, compared to 3.44% (3.48% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2021 and 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020.

Total interest income and average earning asset changes for the second quarter of 2021 compared to the second quarter of 2020 were:

  • Total interest income was $148.1 million, which was an increase of $14.3 million or 11% from $133.8 million and primarily attributable to an increase in average earning assets partially offset by lower yields.

  • Total interest income on a tax-equivalent basis (non-GAAP) was $149.8 million, which was an increase of $14.7 million or 11% from $135.2 million.

  • Average earning assets increased $3.72 billion or 28% to $16.82 billion compared to $13.10 billion, which was primarily attributable to recent acquisitions and loan growth, including PPP loans.

  • The average rate on earning assets decreased 58 basis points to 3.57% compared to 4.15%, which was primarily due to recent decreases in market interest rates and a shift in earning asset mix. Total average securities were 39% of total earning average assets compared to 29%.

Total interest expense and average interest bearing liability changes for the second quarter of 2021 compared to the second quarter of 2020 were:

  • Total interest expense was $6.9 million, a decrease of $2.8 million or 29% from $9.6 million, based on a decrease in the average interest rate paid, which was partially offset by an increase in average interest bearing liabilities.

  • The average interest rate paid on interest bearing liabilities decreased to 0.28% compared to 0.47%, which was primarily due to recent decreases in market interest rates.

  • Average interest bearing deposits increased $1.62 billion or 21% to $9.41 billion from $7.79 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits related to government stimulus payments and other COVID-19 relief programs.

  • The average interest rate paid on interest bearing deposits decreased 16 basis points to 0.16% compared to 0.32%.

  • Average borrowings increased $97.0 million or 26% to $465.9 million from $368.9 million, which was primarily attributable to outstanding advances from the PPP lending fund used to fund PPP loans to borrowers. The average interest rate paid on borrowings was 2.65% compared to 3.80%.

Net interest income increased for the second quarter of 2021 compared to the second quarter of 2020:

  • Net interest income totaled $141.2 million compared to $124.1 million, which was an increase of $17.1 million or 14%.

  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $143.0 million compared to $125.6 million, which was an increase of $17.4 million or 14%.

Noninterest Income and Noninterest Expense

Total noninterest income was $33.2 million during the second quarter of 2021 compared to $30.6 million during the second quarter of 2020, an increase of $2.5 million or 8%. Significant changes within the noninterest income category for the second quarter of 2021 compared to the second quarter of 2020 were:

  • Service charges and fees increased $4.2 million or 38% to $15.1 million from $11.0 million. Service charges and fees on retail and small business accounts increased $2.5 million to $7.3 million from $4.9 million. During the second quarter of 2020, HTLF was waiving service charges and fees due to the COVID-19 pandemic.

  • Trust fees increased $1.1 million or 21% to $6.0 million from $5.0 million. The increase was primarily attributable to an increase in market value of trust assets under management.

  • Net gains on sales of loans held for sale totaled $4.8 million compared to $7.9 million, which was a decrease of $3.1 million or 40% and was primarily attributable to a decrease of loans sold to the secondary market.

Total noninterest expense was $103.4 million during the second quarter of 2021 compared to $90.4 million during the second quarter of 2020, which was an increase of $12.9 million or 14%. Significant changes within the noninterest expense category for the second quarter of 2021 compared to the second quarter of 2020 were:

  • Salaries and employee benefits totaled $57.3 million compared to $50.1 million, which was an increase of $7.2 million or 14%. Full-time equivalent employees increased 270 to 2,091 compared to 1,821 which was primarily attributable to the acquisitions completed in the fourth quarter of 2020.

  • Professional fees increased $2.6 million or 19% to $16.2 million compared to $13.7 million, which was primarily attributable to utilization of specialized resources to support automation and technology projects, including the customer service call center.

  • Other noninterest expenses increased $1.6 million or 14% to $12.7 million compared to $11.1 million. The increase was primarily attributable to the acquisitions completed in the fourth quarter of 2020.

The effective tax rate was 21.11% for the second quarter of 2021 compared to 19.75% for the second quarter of 2020. The following items impacted the second quarter 2021 and 2020 tax calculations:

  • Solar energy tax credits of $1.3 million compared to $798,000.

  • Federal low-income housing tax credits of $135,000 compared to $195,000.

  • New markets tax credits of $75,000 in each quarterly calculation.

  • Historic rehabilitation tax credits of $123,000 compared to $0.

  • Tax-exempt interest income as a percentage of pre-tax income of 8.49% compared to 14.19%.

  • Tax benefit of $150,000 compared to tax expense of $66,000 resulting from the vesting of restricted stock unit awards.

Total Assets, Total Loans and Total Deposits

Total assets were $18.37 billion at June 30, 2021, an increase of $462.7 million or 3% from $17.91 billion at year-end 2020. Securities represented 37% and 35% of total assets at June 30, 2021, and December 31, 2020, respectively.

Total loans held to maturity were $10.01 billion at June 30, 2021, $10.05 billion at March 31, 2021, and $10.02 billion at December 31, 2020. Excluding total PPP loans, loans increased $287.7 million or 13% annualized during the second quarter of 2021 and $117.6 million or 2.6% annualized since year-end 2020.

Significant changes by loan category at June 30, 2021 compared to March 31, 2021 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $125.9 million or 2% to $5.29 billion compared to $5.41 billion.

    • PPP loans originated in 2020 ("PPP I") decreased $365.4 million or 49%. PPP loans originated in 2021 ("PPP II") increased $39.2 million or 9%.

    • Excluding total PPP loans, commercial and business lending increased $200.2 million or 5% to $4.46 billion from $4.29 billion.

  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $78.5 million or 3% to $2.84 billion compared to $2.76 billion.

Significant changes by loan category at June 30, 2021 compared to December 31, 2020, included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $19.2 million or less than 1%, to $5.29 billion compared to $5.27 billion.

    • PPP I loans decreased $583.6 million or 61%. PPP II loans totaled $455.0 million.

    • Excluding total PPP loans, commercial and business lending increased $147.8 million or 3% to $4.46 billion from $4.31 billion.

  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $57.0 million or 2% to $2.84 billion compared to $2.78 billion.

  • Residential mortgage loans decreased $39.5 million or 5% to $800.9 million compared to $840.4 million.

  • Agriculture and agricultural real estate loans decreased $34.9 million or 5% to $679.6 million compared to $714.5 million.

Total deposits were $15.62 billion as of June 30, 2021, $15.56 billion as of March 31, 2021 and $14.98 billion at year-end 2020. Significant deposit changes by category at June 30, 2021 compared to March 31, 2021 included:

  • Demand deposits increased $123.3 million or 2% to $6.30 billion compared to $6.18 billion.

  • Time deposits decreased $77.2 million or 6% to $1.13 billion from $1.20 billion.

Significant deposit changes by category at June 30, 2021 compared to December 31, 2020 included:

  • Demand deposits increased $610.5 million or 11% to $6.30 billion compared to $5.69 billion.

  • Time deposits decreased $144.8 million or 11% to $1.13 billion from $1.27 billion.

Growth in demand deposits during the second quarter and first six months of 2021 was positively impacted by payments related to federal government stimulus programs and other COVID-19 relief programs.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision benefit for credit losses for loans for the second quarter of 2021 was $6.5 million, which was a decrease of $31.5 million from provision expense of $25.0 million recorded in the second quarter of 2020. The provision benefit for the second quarter of 2021 was impacted by several factors, including:

  • increases in balances of loans held to maturity of $287.7 million during the second quarter, excluding total PPP loans;

  • modest improvements in credit quality marked by a decrease in nonperforming loans of $6.5 million to $85.4 million and nonpass loans of 10.37% of total loans for the second quarter compared to nonperforming loans of $91.9 million and nonpass loans of 11.47% of total loans at March 31, 2021, and

  • improved macroeconomic factors compared to previous quarters.

The allowance for credit losses for loans totaled $120.7 million and $131.6 million at June 30, 2021, and December 31, 2020, respectively. The following items have impacted the allowance for credit losses for loans for the six months ended June 30, 2021:

  • Provision benefit for the six months ended June 30, 2021, totaled $6.5 million.

  • Net charge offs of $4.4 million were recorded for the first six months of 2021.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $14.0 million at June 30, 2021, which was a decrease of $1.3 million from $15.3 million at December 31, 2020. Unfunded commitments increased $186.1 million to $3.43 billion at June 30, 2021 compared to $3.25 billion at December 31, 2020.

Total Provision and Allowance for Lending Related Credit Losses
The total provision benefit for lending related credit losses was $7.1 million for the second quarter of 2021 compared to provision expense of $26.9 million for the second quarter of 2020. The total allowance for lending related credit losses was $134.7 million at June 30, 2021, which was 1.35% of total loans as of June 30, 2021, compared to $146.9 million or 1.47% of total loans as of December 31, 2020. Excluding PPP loans, the allowance for lending related credit losses as a percentage of total loans was 1.47% and 1.62% as of June 30, 2021, and December 31, 2020, respectively.

Nonperforming Assets

Nonperforming assets decreased $3.2 million or 3% to $91.7 million or 0.50% of total assets at June 30, 2021, compared to $95.0 million or 0.53% of total assets at December 31, 2020. Nonperforming loans were $85.4 million or 0.85% of total loans at June 30, 2021, compared to $88.1 million or 0.88% of total loans at December 31, 2020. At June 30, 2021, loans delinquent 30-89 days were 0.17% of total loans compared to 0.23% of total loans at December 31, 2020.

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. Additionally, 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.

  • 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.

  • 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.

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, please register in advance of the conference using the link provided below. Upon registering, participant dial-in numbers, Direct Event passcode and unique registrant ID will be provided. Direct Event online registration can be found at: http://www.directeventreg.com/registration/event/3970348. In the 10 minutes prior to the call start time, participants need to use the conference access information provided in the email received at the point of registering. A replay will be available until July 25, 2022, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., operating under the brand name HTLF, is a financial services company with assets of $18.37 billion. HTLF has banks serving 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, residential mortgage, wealth management, investment and insurance. 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 the company 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 the company'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 the company's operations or performance. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "intent", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "may", "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 the company and its management. Although the company may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of the company 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 the company 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 the company’s Annual Report on Form 10-K for the year ended December 31, 2020, include, among others:

  • COVID-19 Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;

  • Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, 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 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 competitive forces impacting our business and strategic acquisition risks;

  • 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 the company’s business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic and the impact of varying governmental responses that affect the company’s customers and the economies where they operate. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. The company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to or correct or update 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 the company’s financial results, is included in the company’s filings with the SEC.

CONTACT:

Bryan R. McKeag

Executive Vice President

Chief Financial Officer

(563) 589-1994

BMcKeag@htlf.com


HEARTLAND FINANCIAL USA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

For the Quarter Ended
June 30,

For the Six Months Ended
June 30,

2021

2020

2021

2020

Interest Income

Interest and fees on loans

$

111,915

$

107,005

$

224,354

$

213,419

Interest on securities:

Taxable

31,546

23,362

61,989

45,093

Nontaxable

4,561

3,344

9,064

5,527

Interest on federal funds sold

1

Interest on deposits with other banks and short-term investments

60

54

126

775

Total Interest Income

148,082

133,765

295,534

264,814

Interest Expense

Interest on deposits

3,790

6,134

8,185

20,716

Interest on short-term borrowings

98

61

250

357

Interest on other borrowings

2,976

3,424

6,276

7,084

Total Interest Expense

6,864

9,619

14,711

28,157

Net Interest Income

141,218

124,146

280,823

236,657

Provision (benefit) for credit losses

(7,080

)

26,796

(7,728

)

48,316

Net Interest Income After Provision for Credit Losses

148,298

97,350

288,551

188,341

Noninterest Income

Service charges and fees

15,132

10,972

28,803

22,993

Loan servicing income

873

379

1,711

1,342

Trust fees

6,039

4,977

11,816

9,999

Brokerage and insurance commissions

865

595

1,718

1,328

Securities gains/(losses), net

2,842

2,006

2,812

3,664

Unrealized gain/ (loss) on equity securities, net

83

680

(27

)

449

Net gains on sale of loans held for sale

4,753

7,857

11,173

12,517

Valuation adjustment on servicing rights

(526

)

9

391

(1,556

)

Income on bank owned life insurance

937

1,167

1,766

1,665

Other noninterest income

2,166

1,995

3,318

4,053

Total Noninterest Income

33,164

30,637

63,481

56,454

Noninterest Expense

Salaries and employee benefits

57,332

50,118

116,394

100,075

Occupancy

7,399

6,502

15,317

12,973

Furniture and equipment

3,501

2,993

6,594

6,101

Professional fees

16,237

13,676

29,727

26,149

Advertising

1,649

995

3,118

3,200

Core deposit and customer relationship intangibles amortization

2,415

2,696

4,931

5,677

Other real estate and loan collection expenses, net

414

203

549

537

Loss on sales/valuations of assets, net

183

701

377

717

Acquisition, integration and restructuring costs

210

673

3,138

2,049

Partnership investment in tax credit projects

1,345

791

1,380

975

Other noninterest expenses

12,691

11,091

24,274

22,845

Total Noninterest Expense

103,376

90,439

205,799

181,298

Income Before Income Taxes

78,086

37,548

146,233

63,497

Income taxes

16,481

7,417

31,814

13,326

Net Income

61,605

30,131

114,419

50,171

Preferred dividends

(2,012

)

(4,025

)

Net Income Available to Common Stockholders

$

59,593

$

30,131

$

110,394

$

50,171

Earnings per common share-diluted

$

1.41

$

0.82

$

2.61

$

1.36

Weighted average shares outstanding-diluted

42,359,873

36,915,630

42,357,133

36,919,555


HEARTLAND FINANCIAL USA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

For the Quarter Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Interest Income

Interest and fees on loans

$

111,915

$

112,439

$

108,865

$

102,657

$

107,005

Interest on securities:

Taxable

31,546

30,443

28,154

25,016

23,362

Nontaxable

4,561

4,503

3,735

3,222

3,344

Interest on federal funds sold

1

Interest on deposits with other banks and short-term investments

60

66

77

72

54

Total Interest Income

148,082

147,452

140,831

130,967

133,765

Interest Expense

Interest on deposits

3,790

4,395

4,609

4,962

6,134

Interest on short-term borrowings

98

152

175

78

61

Interest on other borrowings

2,976

3,300

3,472

3,430

3,424

Total Interest Expense

6,864

7,847

8,256

8,470

9,619

Net Interest Income

141,218

139,605

132,575

122,497

124,146

Provision (benefit) for credit losses

(7,080

)

(648

)

17,072

1,678

26,796

Net Interest Income After Provision for Credit Losses

148,298

140,253

115,503

120,819

97,350

Noninterest Income

Service charges and fees

15,132

13,671

12,725

11,749

10,972

Loan servicing income

873

838

997

638

379

Trust fees

6,039

5,777

5,506

5,357

4,977

Brokerage and insurance commissions

865

853

779

649

595

Securities gains/(losses), net

2,842

(30

)

2,829

1,300

2,006

Unrealized gain/ (loss) on equity securities, net

83

(110

)

36

155

680

Net gains on sale of loans held for sale

4,753

6,420

7,104

8,894

7,857

Valuation adjustment on servicing rights

(526

)

917

(102

)

(120

)

9

Income on bank owned life insurance

937

829

1,021

868

1,167

Other noninterest income

2,166

1,152

1,726

1,726

1,995

Total Noninterest Income

33,164

30,317

32,621

31,216

30,637

Noninterest Expense

Salaries and employee benefits

57,332

59,062

51,615

50,978

50,118

Occupancy

7,399

7,918

6,849

6,732

6,502

Furniture and equipment

3,501

3,093

3,913

2,500

2,993

Professional fees

16,237

13,490

15,117

12,802

13,676

Advertising

1,649

1,469

1,107

928

995

Core deposit and customer relationship intangibles amortization

2,415

2,516

2,501

2,492

2,696

Other real estate and loan collection expenses, net

414

135

468

335

203

Loss on sales/valuations of assets, net

183

194

2,621

1,763

701

Acquisition, integration and restructuring costs

210

2,928

2,186

1,146

673

Partnership investment in tax credit projects

1,345

35

1,899

927

791

Other noninterest expenses

12,691

11,583

10,993

9,793

11,091

Total Noninterest Expense

103,376

102,423

99,269

90,396

90,439

Income Before Income Taxes

78,086

68,147

48,855

61,639

37,548

Income taxes

16,481

15,333

9,046

13,681

7,417

Net Income

61,605

52,814

39,809

47,958

30,131

Preferred dividends

(2,012

)

(2,013

)

(2,014

)

(2,437

)

Net Income Available to Common Stockholders

$

59,593

$

50,801

$

37,795

$

45,521

$

30,131

Earnings per common share-diluted

$

1.41

$

1.20

$

0.98

$

1.23

$

0.82

Weighted average shares outstanding-diluted

42,359,873

42,335,747

38,534,082

36,995,572

36,915,630


HEARTLAND FINANCIAL USA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

As of

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Assets

Cash and due from banks

$

208,702

$

198,177

$

219,243

$

175,284

$

211,429

Interest bearing deposits with other banks and short-term investments

240,426

269,685

118,660

156,371

242,149

Cash and cash equivalents

449,128

467,862

337,903

331,655

453,578

Time deposits in other financial institutions

3,138

3,138

3,129

3,129

3,128

Securities:

Carried at fair value

6,543,978

6,370,495

6,127,975

4,950,698

4,126,351

Held to maturity, at cost, less allowance for credit losses

85,439

85,293

88,839

88,700

90,579

Other investments, at cost

76,809

74,935

75,253

35,940

35,902

Loans held for sale

33,248

43,037

57,949

65,969

54,382

Loans:

Held to maturity

10,012,014

10,050,456

10,023,051

9,099,646

9,246,830

Allowance for credit losses

(120,726

)

(130,172

)

(131,606

)

(103,377

)

(119,937

)

Loans, net

9,891,288

9,920,284

9,891,445

8,996,269

9,126,893

Premises, furniture and equipment, net

226,358

225,047

226,094

200,028

198,481

Goodwill

576,005

576,005

576,005

446,345

446,345

Core deposit and customer relationship intangibles, net

37,452

39,867

42,383

40,520

43,011

Servicing rights, net

6,201

6,953

6,052

5,752

5,469

Cash surrender value on life insurance

189,619

188,521

187,664

173,111

172,813

Other real estate, net

6,314

6,236

6,624

5,050

5,539

Other assets

246,029

236,754

281,024

269,498

263,682

Total Assets

$

18,371,006

$

18,244,427

$

17,908,339

$

15,612,664

$

15,026,153

Liabilities and Equity

Liabilities

Deposits:

Demand

$

6,299,289

$

6,175,946

$

5,688,810

$

5,022,567

$

4,831,151

Savings

8,189,223

8,179,251

8,019,704

6,742,151

6,810,296

Time

1,126,606

1,203,854

1,271,391

1,002,392

1,067,252

Total deposits

15,615,118

15,559,051

14,979,905

12,767,110

12,708,699

Short-term borrowings

152,563

140,597

167,872

306,706

88,631

Other borrowings

271,244

349,514

457,042

524,045

306,459

Accrued expenses and other liabilities

172,295

139,058

224,289

203,199

174,987

Total Liabilities

16,211,220

16,188,220

15,829,108

13,801,060

13,278,776

Stockholders' Equity

Preferred equity

110,705

110,705

110,705

110,705

110,705

Common stock

42,245

42,174

42,094

36,885

36,845

Capital surplus

1,066,765

1,063,497

1,062,083

847,377

844,202

Retained earnings

883,484

833,171

791,630

761,211

723,067

Accumulated other comprehensive income

56,587

6,660

72,719

55,426

32,558

Total Equity

2,159,786

2,056,207

2,079,231

1,811,604

1,747,377

Total Liabilities and Equity

$

18,371,006

$

18,244,427

$

17,908,339

$

15,612,664

$

15,026,153


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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Average Balances

Assets

$

18,293,756

$

17,964,723

$

16,401,152

$

15,167,225

$

14,391,856

Loans, net of unearned

10,072,071

9,952,152

9,366,430

9,220,666

9,186,913

Deposits

15,576,345

15,044,561

13,518,020

12,650,822

12,288,378

Earning assets

16,819,978

16,460,124

15,042,079

13,868,360

13,103,159

Interest bearing liabilities

9,871,302

9,917,159

9,053,855

8,320,123

8,155,753

Common equity

1,980,904

1,963,674

1,769,575

1,661,381

1,574,902

Total stockholders' equity

2,091,609

2,074,379

1,880,280

1,772,086

1,580,997

Tangible common equity (non-GAAP)(1)

1,366,285

1,346,270

1,238,691

1,172,891

1,083,834

Key Performance Ratios

Annualized return on average assets

1.35

%

1.19

%

0.97

%

1.26

%

0.84

%

Annualized return on average common equity (GAAP)

12.07

10.49

8.50

10.90

7.69

Annualized return on average tangible common equity (non-GAAP)(1)

18.05

15.90

12.77

16.11

11.97

Annualized ratio of net charge-offs to average loans

0.12

0.06

0.01

0.92

0.11

Annualized net interest margin (GAAP)

3.37

3.44

3.51

3.51

3.81

Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)

3.41

3.48

3.55

3.55

3.85

Efficiency ratio, fully tax-equivalent (non-GAAP)(1)

57.11

56.61

54.93

54.67

55.75


For the Quarter Ended
June 30,

For the Six Months Ended
June 30,

2021

2020

2021

2020

Average Balances

Assets

$

18,293,756

$

14,391,856

$

18,130,148

$

13,770,015

Loans, net of unearned

10,072,071

9,186,913

10,012,443

8,775,566

Deposits

15,576,345

12,288,378

15,311,921

11,629,785

Earning assets

16,819,978

13,103,159

16,641,045

12,497,307

Interest bearing liabilities

9,871,302

8,155,753

9,894,103

7,998,847

Common equity

1,980,904

1,574,902

1,972,337

1,597,292

Total stockholders' equity

2,091,609

1,580,997

2,083,042

1,600,340

Tangible common stockholders' equity

1,366,285

1,083,834

1,356,333

1,104,770

Key Performance Ratios

Annualized return on average assets

1.35

%

0.84

%

1.27

%

0.73

%

Annualized return on average common equity (GAAP)

12.07

7.69

11.29

6.32

Annualized return on average tangible common equity (non-GAAP)(1)

18.05

11.97

16.99

9.95

Annualized ratio of net charge-offs to average loans

0.12

0.11

0.09

0.17

Annualized net interest margin (GAAP)

3.37

3.81

3.40

3.81

Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)

3.41

3.85

3.45

3.85

Efficiency ratio, fully tax-equivalent (non-GAAP)(1)

57.11

55.75

56.86

58.64

(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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Common Share Data

Book value per common share

$

48.50

$

46.13

$

46.77

$

46.11

$

44.42

Tangible book value per common share (non-GAAP)(1)

$

33.98

$

31.53

$

32.07

$

32.91

$

31.14

Common shares outstanding, net of treasury stock

42,245,452

42,173,675

42,093,862

36,885,390

36,844,744

Tangible common equity ratio (non-GAAP)(1)

8.08

%

7.54

%

7.81

%

8.03

%

7.89

%

Other Selected Trend Information

Effective tax rate

21.11

%

22.50

%

18.52

%

22.20

%

19.75

%

Full time equivalent employees

2,091

2,131

2,013

1,827

1,821

Loans Held to Maturity

Commercial and industrial

$

2,518,908

$

2,421,260

$

2,534,799

$

2,303,646

$

2,364,400

Paycheck Protection Program ("PPP")

829,175

1,155,328

957,785

1,128,035

1,124,430

Owner occupied commercial real estate

1,940,134

1,837,559

1,776,406

1,494,902

1,433,271

Commercial and business lending

5,288,217

5,414,147

5,268,990

4,926,583

4,922,101

Non-owner occupied commercial real estate

1,987,369

1,967,183

1,921,481

1,659,683

1,543,623

Real estate construction

854,295

796,027

863,220

917,765

1,115,843

Commercial real estate lending

2,841,664

2,763,210

2,784,701

2,577,448

2,659,466

Total commercial lending

8,129,881

8,177,357

8,053,691

7,504,031

7,581,567

Agricultural and agricultural real estate

679,608

683,969

714,526

508,058

520,773

Residential mortgage

800,884

786,994

840,442

701,899

735,762

Consumer

401,641

402,136

414,392

385,658

408,728

Total loans held to maturity

$

10,012,014

$

10,050,456

$

10,023,051

$

9,099,646

$

9,246,830

Total unfunded loan commitments

$

3,433,062

$

3,306,042

$

3,246,953

$

2,980,484

$

3,065,283

(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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Allowance for Credit Losses-Loans

Balance, beginning of period

$

130,172

$

131,606

$

103,377

$

119,937

$

97,350

Allowance for acquired purchased credit deteriorated loans

12,313

Provision (benefit) for credit losses

(6,466

)

16

16,132

4,741

25,007

Charge-offs

(3,497

)

(2,126

)

(1,104

)

(21,753

)

(3,564

)

Recoveries

517

676

888

452

1,144

Balance, end of period

$

120,726

$

130,172

$

131,606

$

103,377

$

119,937

Allowance for Unfunded Commitments

Balance, beginning of period

$

14,619

$

15,280

$

14,330

$

17,392

$

15,468

Provision (benefit) for credit losses

(617

)

(661

)

950

(3,062

)

1,924

Balance, end of period

$

14,002

$

14,619

$

15,280

$

14,330

$

17,392

Allowance for lending related credit losses

$

134,728

$

144,791

$

146,886

$

117,707

$

137,329

Provision for Credit Losses

Provision (benefit) for credit losses-loans

$

(6,466

)

$

16

$

6,572

$

4,741

$

25,007

Provision for credit losses-acquired loans

9,560

Provision (benefit) for credit losses-unfunded commitments

(617

)

(661

)

(1,372

)

(3,062

)

1,924

Provision for credit losses-acquired unfunded commitments

2,322

Provision (benefit) for credit losses-held to maturity securities

3

(3

)

(10

)

(1

)

(135

)

Total provision (benefit) for credit losses

$

(7,080

)

$

(648

)

$

17,072

$

1,678

$

26,796


HEARTLAND FINANCIAL USA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

As of and for the Quarter Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Asset Quality

Nonaccrual loans

$

85,268

$

91,718

$

87,386

$

79,040

$

91,609

Loans past due ninety days or more

97

171

720

1,681

1,360

Other real estate owned

6,314

6,236

6,624

5,050

5,539

Other repossessed assets

50

239

240

130

29

Total nonperforming assets

$

91,729

$

98,364

$

94,970

$

85,901

$

98,537

Performing troubled debt restructured loans

$

2,122

$

2,394

$

2,370

$

11,818

$

2,636

Nonperforming Assets Activity

Balance, beginning of period

$

98,364

$

94,970

$

85,901

$

98,537

$

85,371

Net loan charge offs

(2,980

)

(1,450

)

(216

)

(21,301

)

(2,420

)

New nonperforming loans

7,989

14,936

8,664

11,834

26,857

Acquired nonperforming assets

12,781

Reduction of nonperforming loans(1)

(10,948

)

(8,884

)

(10,811

)

(1,994

)

(9,911

)

Net OREO/repossessed assets sales proceeds and losses

(696

)

(1,208

)

(1,349

)

(1,175

)

(1,360

)

Balance, end of period

$

91,729

$

98,364

$

94,970

$

85,901

$

98,537

Asset Quality Ratios

Ratio of nonperforming loans to total loans

0.85

%

0.91

%

0.88

%

0.89

%

1.01

%

Ratio of nonperforming loans and performing trouble debt restructured loans to total loans

0.87

0.94

0.90

1.02

1.03

Ratio of nonperforming assets to total assets

0.50

0.54

0.53

0.55

0.66

Annualized ratio of net loan charge-offs to average loans

0.12

0.06

0.01

0.92

0.11

Allowance for loan credit losses as a percent of loans

1.21

1.30

1.14

1.30

Allowance for lending related credit losses as a percent of loans

1.35

1.44

1.47

1.29

1.49

Allowance for loan credit losses as a percent of nonperforming loans

141.42

141.66

149.37

128.07

129.01

Loans delinquent 30-89 days as a percent of total loans

0.17

0.16

0.23

0.17

0.22

(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

June 30, 2021

March 31, 2021

June 30, 2020

Average
Balance

Interest

Rate

Average
Balance

Interest

Rate

Average
Balance

Interest

Rate

Earning Assets

Securities:

Taxable

$

5,862,683

$

31,546

2.16

%

$

5,693,097

$

30,443

2.17

%

$

3,375,245

$

23,362

2.78

%

Nontaxable(1)

740,601

5,773

3.13

730,565

5,700

3.16

433,329

4,233

3.93

Total securities

6,603,284

37,319

2.27

6,423,662

36,143

2.28

3,808,574

27,595

2.91

Interest on deposits with other banks and short-term investments

271,891

60

0.09

204,488

66

0.13

210,347

54

0.10

Federal funds sold

14,020

1

0.03

Loans:(2)

Commercial and industrial(1)

2,469,742

28,562

4.64

2,500,250

28,222

4.58

2,453,066

30,759

5.04

PPP loans

1,047,559

11,186

4.28

992,517

10,149

4.15

916,405

6,017

2.64

Owner occupied commercial real estate

1,858,891

20,097

4.34

1,778,829

19,565

4.46

1,426,019

17,670

4.98

Non-owner occupied commercial real estate

1,980,374

21,734

4.40

1,937,564

22,121

4.63

1,540,958

19,055

4.97

Real estate construction

815,738

9,212

4.53

806,315

9,698

4.88

1,100,514

12,589

4.60

Agricultural and agricultural real estate

672,560

7,267

4.33

681,279

8,051

4.79

532,668

6,171

4.66

Residential mortgage

827,291

9,255

4.49

849,923

9,830

4.69

795,149

9,586

4.85

Consumer

399,916

5,152

5.17

405,475

5,367

5.37

422,134

5,685

5.42

Less: allowance for credit losses-loans

(127,268

)

(134,198

)

(102,675

)

Net loans

9,944,803

112,465

4.54

9,817,954

113,003

4.67

9,084,238

107,532

4.76

Total earning assets

16,819,978

149,844

3.57

%

16,460,124

149,213

3.68

%

13,103,159

135,181

4.15

%

Nonearning Assets

1,473,778

1,504,599

1,288,697

Total Assets

$

18,293,756

$

17,964,723

$

14,391,856

Interest Bearing Liabilities

Savings

$

8,234,151

$

2,233

0.11

%

$

8,032,308

$

2,430

0.12

%

$

6,690,504

$

2,372

0.14

%

Time deposits

1,171,266

1,557

0.53

1,233,682

1,965

0.65

1,096,386

3,762

1.38

Short-term borrowings

169,822

98

0.23

240,037

152

0.26

82,200

61

0.30

Other borrowings

296,063

2,976

4.03

411,132

3,300

3.26

286,663

3,424

4.80

Total interest bearing liabilities

9,871,302

6,864

0.28

%

9,917,159

7,847

0.32

%

8,155,753

9,619

0.47

%

Noninterest Bearing Liabilities

Noninterest bearing deposits

6,170,928

5,778,571

4,501,488

Accrued interest and other liabilities

159,917

194,614

153,618

Total noninterest bearing liabilities

6,330,845

5,973,185

4,655,106

Equity

2,091,609

2,074,379

1,580,997

Total Liabilities and Equity

$

18,293,756

$

17,964,723

$

14,391,856

Net interest income, fully tax-equivalent (non-GAAP)(1)(3)

$

142,980

$

141,366

$

125,562

Net interest spread(1)

3.29

%

3.36

%

3.68

%

Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets

3.41

%

3.48

%

3.85

%

Interest bearing liabilities to earning assets

58.69

%

60.25

%

62.24

%

(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 Six Months Ended

June 30, 2021

June 30, 2020

Average
Balance

Interest

Rate

Average
Balance

Interest

Rate

Earning Assets

Securities:

Taxable

$

5,778,333

$

61,989

2.16

%

$

3,253,675

$

45,093

2.79

%

Nontaxable(1)

735,636

11,473

3.15

360,932

6,996

3.90

%

Total securities

6,513,969

73,462

2.27

3,614,607

52,089

2.90

Interest bearing deposits with other banks and other short-term investments

238,376

126

0.11

195,833

775

0.80

Federal funds sold

6,971

1

0.03

Loans:(2)

Commercial and industrial(1)

2,485,210

56,784

4.61

2,530,349

63,213

5.02

%

PPP loans

1,020,190

21,335

4.22

458,202

6,017

2.64

%

Owner occupied commercial real estate

1,818,932

39,662

4.40

1,429,560

36,251

5.10

%

Non-owner occupied commercial real estate

1,958,938

43,855

4.51

1,506,583

38,585

5.15

%

Real estate construction

811,053

18,910

4.70

1,073,175

25,434

4.77

%

Agricultural and agricultural real estate

676,895

15,318

4.56

542,818

13,210

4.89

%

Residential mortgage

838,545

19,085

4.59

807,440

20,007

4.98

%

Consumer

402,680

10,519

5.27

427,439

11,780

5.54

%

Less: allowance for credit losses-loans

(130,714

)

(88,699

)

Net loans

9,881,729

225,468

4.60

8,686,867

214,497

4.97

Total earning assets

16,641,045

299,057

3.62

%

12,497,307

267,361

4.30

%

Nonearning Assets

1,489,103

1,272,708

Total Assets

$

18,130,148

$

13,770,015

Interest Bearing Liabilities

Savings

$

8,133,787

$

4,663

0.12

%

$

6,484,016

$

12,454

0.39

%

Time deposits

1,202,301

3,522

0.59

%

1,121,502

8,262

1.48

Short-term borrowings

204,735

250

0.25

%

112,004

357

0.64

Other borrowings

353,280

6,276

3.58

%

281,325

7,084

5.06

Total interest bearing liabilities

9,894,103

14,711

0.30

%

7,998,847

28,157

0.71

%

Noninterest Bearing Liabilities

Noninterest bearing deposits

5,975,833

4,024,267

Accrued interest and other liabilities

177,170

146,561

Total noninterest bearing liabilities

6,153,003

4,170,828

Stockholders' Equity

2,083,042

1,600,340

Total Liabilities and Stockholders' Equity

$

18,130,148

$

13,770,015

Net interest income, fully tax-equivalent (non-GAAP)(1)(3)

$

284,346

$

239,204

Net interest spread(1)

3.32

%

3.59

%

Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets

3.45

%

3.85

%

Interest bearing liabilities to earning assets

59.46

%

64.00

%

(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.

SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)

DOLLARS IN THOUSANDS

As of and For the Quarter Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Total Assets

First Bank & Trust

$

2,882,969

$

2,991,053

$

3,171,961

$

1,289,187

$

1,256,710

Citywide Banks

2,611,842

2,632,199

2,628,963

2,639,516

2,546,942

New Mexico Bank & Trust

2,494,257

2,356,918

2,032,637

2,002,663

1,899,194

Dubuque Bank and Trust Company

1,990,040

1,932,234

1,853,078

1,838,260

1,849,035

Illinois Bank & Trust

1,671,240

1,584,561

1,525,503

1,500,012

1,470,000

Arizona Bank & Trust

1,645,816

1,614,740

1,529,800

1,039,253

970,775

Bank of Blue Valley

1,419,003

1,425,434

1,376,080

1,424,261

1,380,159

Wisconsin Bank & Trust

1,252,096

1,264,009

1,267,488

1,262,069

1,203,108

Premier Valley Bank

1,126,807

1,062,607

1,076,615

1,042,437

1,031,899

Minnesota Bank & Trust

955,638

995,692

1,000,168

1,007,548

951,236

Rocky Mountain Bank

646,821

620,800

616,157

617,169

590,764

Total Deposits

First Bank & Trust

$

2,361,391

$

2,427,920

$

2,622,716

$

936,366

$

959,886

Citywide Banks

2,174,237

2,231,320

2,181,511

2,163,051

2,147,642

New Mexico Bank & Trust

2,195,838

2,077,304

1,749,963

1,747,527

1,698,584

Dubuque Bank and Trust Company

1,471,564

1,565,782

1,456,908

1,591,561

1,496,559

Illinois Bank & Trust

1,512,106

1,426,426

1,338,677

1,307,513

1,318,866

Arizona Bank & Trust

1,450,248

1,453,888

1,357,158

886,174

865,430

Bank of Blue Valley

1,168,617

1,178,114

1,138,264

1,142,910

1,138,818

Wisconsin Bank & Trust

1,093,119

1,067,735

1,057,369

1,011,843

1,050,766

Premier Valley Bank

963,459

896,715

836,984

855,913

869,165

Minnesota Bank & Trust

762,549

813,693

789,555

804,045

820,199

Rocky Mountain Bank

568,961

549,894

538,012

533,429

519,029


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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)

Net income available to common stockholders (GAAP)

$

59,593

$

50,801

$

37,795

$

45,521

$

30,131

Plus core deposit and customer relationship intangibles amortization, net of tax(1)

1,907

1,988

1,975

1,969

2,130

Net income available to common stockholders excluding intangible amortization (non-GAAP)

$

61,500

$

52,789

$

39,770

$

47,490

$

32,261

Average common equity (GAAP)

$

1,980,904

$

1,963,674

$

1,769,575

$

1,661,381

$

1,574,902

Less average goodwill

576,005

576,005

488,151

446,345

446,345

Less average core deposit and customer relationship intangibles, net

38,614

41,399

42,733

42,145

44,723

Average tangible common equity (non-GAAP)

$

1,366,285

$

1,346,270

$

1,238,691

$

1,172,891

$

1,083,834

Annualized return on average common equity (GAAP)

12.07

%

10.49

%

8.50

%

10.90

%

7.69

%

Annualized return on average tangible common equity (non-GAAP)

18.05

%

15.90

%

12.77

%

16.11

%

11.97

%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)

Net Interest Income (GAAP)

$

141,218

$

139,605

$

132,575

$

122,497

$

124,146

Plus tax-equivalent adjustment(1)

1,762

1,761

1,529

1,390

1,416

Net interest income, fully tax-equivalent (non-GAAP)

$

142,980

$

141,366

$

134,104

$

123,887

$

125,562

Average earning assets

$

16,819,978

$

16,460,124

$

15,042,079

$

13,868,360

$

13,103,159

Annualized net interest margin (GAAP)

3.37

%

3.44

%

3.51

%

3.51

%

3.81

%

Annualized net interest margin, fully tax-equivalent (non-GAAP)

3.41

3.48

3.55

3.55

3.85

Net purchase accounting discount amortization on loans included in annualized net interest margin

0.09

0.12

0.10

0.10

0.16


Reconciliation of Tangible Book Value Per Common Share (non-GAAP)

Common equity (GAAP)

$

2,049,081

$

1,945,502

$

1,968,526

$

1,700,899

$

1,636,672

Less goodwill

576,005

576,005

576,005

446,345

446,345

Less core deposit and customer relationship intangibles, net

37,452

39,867

42,383

40,520

43,011

Tangible common equity (non-GAAP)

$

1,435,624

$

1,329,630

$

1,350,138

$

1,214,034

$

1,147,316

Common shares outstanding, net of treasury stock

42,245,452

42,173,675

42,093,862

36,885,390

36,844,744

Common equity (book value) per share (GAAP)

$

48.50

$

46.13

$

46.77

$

46.11

$

44.42

Tangible book value per common share (non-GAAP)

$

33.98

$

31.53

$

32.07

$

32.91

$

31.14

Reconciliation of Tangible Common Equity Ratio (non-GAAP)

Tangible common equity (non-GAAP)

$

1,435,624

$

1,329,630

$

1,350,138

$

1,214,034

$

1,147,316

Total assets (GAAP)

$

18,371,006

$

18,244,427

$

17,908,339

$

15,612,664

$

15,026,153

Less goodwill

576,005

576,005

576,005

446,345

446,345

Less core deposit and customer relationship intangibles, net

37,452

39,867

42,383

40,520

43,011

Total tangible assets (non-GAAP)

$

17,757,549

$

17,628,555

$

17,289,951

$

15,125,799

$

14,536,797

Tangible common equity ratio (non-GAAP)

8.08

%

7.54

%

7.81

%

8.03

%

7.89

%

(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 Efficiency Ratio (non-GAAP)

For the Quarter Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Net interest income (GAAP)

$

141,218

$

139,605

$

132,575

$

122,497

$

124,146

Tax-equivalent adjustment(1)

1,762

1,761

1,529

1,390

1,416

Fully tax-equivalent net interest income

142,980

141,366

134,104

123,887

125,562

Noninterest income

33,164

30,317

32,621

31,216

30,637

Securities (gains)/losses, net

(2,842

)

30

(2,829

)

(1,300

)

(2,006

)

Unrealized (gain)/loss on equity securities, net

(83

)

110

(36

)

(155

)

(680

)

Valuation adjustment on servicing rights

526

(917

)

102

120

(9

)

Adjusted revenue (non-GAAP)

$

173,745

$

170,906

$

163,962

$

153,768

$

153,504

Total noninterest expenses (GAAP)

$

103,376

$

102,423

$

99,269

$

90,396

$

90,439

Less:

Core deposit and customer relationship intangibles amortization

2,415

2,516

2,501

2,492

2,696

Partnership investment in tax credit projects

1,345

35

1,899

927

791

Loss on sales/valuation of assets, net

183

194

2,621

1,763

701

Acquisition, integration and restructuring costs

210

2,928

2,186

1,146

673

Adjusted noninterest expenses (non-GAAP)

$

99,223

$

96,750

$

90,062

$

84,068

$

85,578

Efficiency ratio, fully tax-equivalent (non-GAAP)

57.11

%

56.61

%

54.93

%

54.67

%

55.75

%

Acquisition, integration and restructuring costs

Salaries and employee benefits

$

44

$

534

$

232

$

$

122

Occupancy

1

9

Furniture and equipment

41

607

423

496

15

Professional fees

63

670

1,422

476

505

Advertising

6

156

42

8

4

Other noninterest expenses

55

952

67

166

27

Total acquisition, integration and restructuring costs

$

210

$

2,928

$

2,186

$

1,146

$

673

After tax impact on diluted earnings per common share(1)

$

$

0.05

$

0.04

$

0.02

$

0.01

(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
June 30,

For the Six Months Ended
June 30,

2021

2020

2021

2020

Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)

Net income available to common stockholders (GAAP)

$

59,593

$

30,131

$

110,394

$

50,171

Plus core deposit and customer relationship intangibles amortization, net of tax(1)

1,907

2,130

3,895

4,485

Net income available to common stockholders excluding intangible amortization (non-GAAP)

$

61,500

$

32,261

$

114,289

$

54,656

Average common equity (GAAP)

$

1,980,904

$

1,574,902

$

1,972,337

$

1,597,292

Less average goodwill

576,005

446,345

576,005

446,345

Less average core deposit and customer relationship intangibles, net

38,614

44,723

39,999

46,177

Average tangible common equity (non-GAAP)

$

1,366,285

$

1,083,834

$

1,356,333

$

1,104,770

Annualized return on average common equity (GAAP)

12.07

%

7.69

%

11.29

%

6.32

%

Annualized return on average tangible common equity (non-GAAP)

18.05

%

11.97

%

16.99

%

9.95

%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)

Net Interest Income (GAAP)

$

141,218

$

124,146

$

280,823

$

236,657

Plus tax-equivalent adjustment(1)

1,762

1,416

3,523

2,547

Net interest income, fully tax-equivalent (non-GAAP)

$

142,980

$

125,562

$

284,346

$

239,204

Average earning assets

$

16,819,978

$

13,103,159

$

16,641,045

$

12,497,307

Annualized net interest margin (GAAP)

3.37

%

3.81

%

3.40

%

3.81

%

Annualized net interest margin, fully tax-equivalent (non-GAAP)

3.41

3.85

3.45

3.85

Purchase accounting discount amortization on loans included in annualized net interest margin

0.09

0.16

0.11

0.10

(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 Efficiency Ratio (non-GAAP)

For the Quarter Ended
June 30,

For the Six Months Ended
June 30,

2021

2020

2021

2020

Net interest income (GAAP)

$

141,218

$

124,146

$

280,823

$

236,657

Tax-equivalent adjustment(1)

1,762

1,416

3,523

2,547

Fully tax-equivalent net interest income

142,980

125,562

284,346

239,204

Noninterest income

33,164

30,637

63,481

56,454

Securities gains, net

(2,842

)

(2,006

)

(2,812

)

(3,664

)

Unrealized (gain)/loss on equity securities, net

(83

)

(680

)

27

(449

)

Valuation adjustment on servicing rights

526

(9

)

(391

)

1,556

Adjusted revenue (non-GAAP)

$

173,745

$

153,504

$

344,651

$

293,101

Total noninterest expenses (GAAP)

$

103,376

$

90,439

$

205,799

$

181,298

Less:

Core deposit and customer relationship intangibles amortization

2,415

2,696

4,931

5,677

Partnership investment in tax credit projects

1,345

791

1,380

975

Loss on sales/valuation of assets, net

183

701

377

717

Acquisition, integration and restructuring costs

210

673

3,138

2,049

Adjusted noninterest expenses (non-GAAP)

$

99,223

$

85,578

$

195,973

$

171,880

Efficiency ratio, fully tax-equivalent (non-GAAP)

57.11

%

55.75

%

56.86

%

58.64

%

Acquisition, integration and restructuring costs

Salaries and employee benefits

$

44

$

122

$

578

$

166

Occupancy

1

10

Furniture and equipment

41

15

648

39

Professional fees

63

505

733

1,501

Advertising

6

4

162

93

Other noninterest expenses

55

27

1,007

250

Total acquisition, integration and restructuring costs

$

210

$

673

$

3,138

$

2,049

After tax impact on diluted earnings per common share(1)

$

$

0.01

$

0.06

$

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 AND FULL TIME EQUIVALENT EMPLOYEE DATA

As of and For the Quarter Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

PPP I loan balances

$

374,174

$

739,562

$

957,785

$

1,128,035

$

1,124,430

Average PPP I loan balances

597,703

841,262

1,064,863

1,128,488

916,405

PPP I fee income

$

7,313

$

7,464

$

9,109

$

4,542

$

3,655

PPP I interest income

1,445

2,087

2,697

2,920

2,362

Total PPP I interest income

$

8,758

$

9,551

$

11,806

$

7,462

$

6,017

PPP II loan balances

$

455,001

$

415,766

$

$

$

Average PPP II loan balances

449,856

151,255

PPP II fee income

$

1,263

$

223

$

$

$

PPP II interest income

1,165

375

Total PPP II interest income

$

2,428

$

598

$

$

$

Selected ratios excluding total PPP loans and total PPP interest income

Annualized net interest margin (GAAP)

3.31

%

3.39

%

3.44

%

3.59

%

3.90

%

Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)

3.35

3.44

3.48

3.64

3.95

Ratio of nonperforming loans to total loans

0.93

1.03

0.97

1.01

1.14

Ratio of nonperforming loans and performing trouble debt restructured loans to total loans

0.95

1.06

1.00

1.16

1.18

Ratio of nonperforming assets to total assets

0.52

0.58

0.56

0.59

0.71

Annualized ratio of net loan charge-offs to average loans

0.13

0.07

0.01

1.05

0.12

Allowance for loan credit losses as a percent of loans

1.31

1.46

1.45

1.30

1.48

Allowance for lending related credit losses as a percent of loans

1.47

1.63

1.62

1.48

1.69

Loans delinquent 30-89 days as a percent of total loans

0.18

0.18

0.25

0.19

0.26

After tax impact of total PPP interest income on diluted earnings per common share(1)

$

0.21

$

0.19

$

0.24

$

0.16

$

0.13


As of and For the Six Months Ended

June 30, 2021

June 30, 2020

Average PPP I loan balances

$

718,810

$

458,202

Average PPP II loan balances

301,380

PPP I and II fee income

$

16,263

$

3,655

PPP I and II interest income

5,072

2,362

Total PPP I and II interest income

$

21,335

$

6,017

Selected ratios excluding total PPP loans and total PPP interest income

Annualized net interest margin (GAAP)

3.35

%

3.85

%

Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)

3.40

3.90

Annualized ratio of net loan charge-offs to average loans

0.10

0.18

After tax impact of total PPP interest income on diluted earnings per common share(1)

$

0.40

$

0.13

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.