Heartland Financial USA, Inc. Reports Record Annual Earnings and Strong Fourth Quarter Results as of December 31, 2019

Company Release - 1/27/2020 4:00 PM ET

Highlights

  • Record annual net income available to common stockholders of $149.1 million, an increase of $32.2 million or 28% from $117.0 million for 2018
  • Quarterly net income available to common stockholders of $37.9 million or $1.03 per diluted common share in comparison with $32.1 million or $0.93 per diluted common share for the fourth quarter of the prior year
  • Net interest margin of 3.86%, fully tax-equivalent (non-GAAP)(1) of 3.90% for the fourth quarter of 2019
  • Return on average common equity of 9.56% and return on average tangible common equity (non-GAAP)(1) of 14.65% for the fourth quarter of 2019
  • Efficiency ratio (non-GAAP)(1) for the fourth quarter of 2019 of 60.69%
  • Tangible common equity ratio (non-GAAP)(1) of 8.52% at December 31, 2019
  • Organic commercial and commercial real estate loan growth of $96.8 million and organic non-time deposit growth of $225.0 million for the fourth quarter of 2019
  • Completed the acquisition of substantially all of the assets and deposits and certain other liabilities of Rockford Bank and Trust Company
    
 Quarter Ended
December 31,
 Year Ended
December 31,
 2019 2018 2019 2018
Net income available to common stockholders (in millions)$37.9  $32.1  $149.1  $117.0 
Diluted earnings per common share1.03  0.93  4.14  3.52 
        
Return on average assets1.17% 1.12% 1.24% 1.09%
Return on average common equity9.56  9.88  10.12  9.93 
Return on average tangible common equity (non-GAAP)(1)14.65  15.96  15.73  15.72 
Net interest margin3.86  4.28  4.00  4.26 
Net interest margin, fully tax-equivalent (non-GAAP)(1)3.90  4.34  4.04  4.32 
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)60.69  59.35  63.11  63.54 
            

(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.

"Heartland completed a record year with net income available to common stockholders of $149.1 million, which was an increase of $32.2 million or 28 percent over the prior year. Diluted earnings per share for 2019 increased $0.62 or 18 percent to $4.14 from $3.52 for 2018."
Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc.
 

DUBUQUE, Iowa, Jan. 27, 2020 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $37.9 million, or $1.03 per diluted common share, for the quarter ended December 31, 2019, compared to $32.1 million, or $0.93 per diluted common share, for the fourth quarter of 2018. Return on average common equity was 9.56% and return on average assets was 1.17% for the fourth quarter of 2019, compared to 9.88% and 1.12%, respectively, for the same quarter in 2018.

Net income available to common stockholders for the year ended December 31, 2019, was $149.1 million or $4.14 per diluted common share, compared to $117.0 million or $3.52 per diluted common share for the year ended December 31, 2018. Return on average common equity was 10.12% and return on average assets was 1.24% for the year 2019, compared to 9.93% and 1.09% for the same period in 2018.

Commenting on Heartland’s 2019 results, Bruce K. Lee, Heartland’s president and chief executive officer, said, "Heartland completed a record year with net income available to common stockholders of $149.1 million, which was an increase of $32.2 million or 28 percent over the prior year. Diluted earnings per share for 2019 increased $0.62 or 18 percent to $4.14 from $3.52 for 2018."

Strategic Developments in 2019

In keeping with its focus on core businesses and execution of strategic priorities, Heartland completed the following transactions:

  • In the first quarter of 2019, two branch locations of Wisconsin Bank & Trust and the consumer finance loan portfolios totaling approximately $67 million of Citizens’ Finance Company were sold. During the second quarter of 2019, Heartland completed the sale of two branches of Dubuque Bank and Trust Company, two branches of Illinois Bank & Trust and one branch of Citywide Banks. On April 30, 2019, Dubuque Bank and Trust Company closed on the sale of substantially all its mortgage servicing rights to PNC Bank, N.A. Heartland is utilizing a portion of the net gains from these sales transactions, which totaled approximately $24.5 million, to invest in several new technology and process improvement projects. These projects include system upgrades, process automation, and expansion of online and mobile banking capabilities.
  • On May 10, 2019, Heartland completed the acquisition of Blue Valley Ban Corp. ("BVBC") and its wholly-owned subsidiary, Bank of Blue Valley, headquartered in Overland Park, Kansas. Based on Heartland's closing common stock price of $44.78 per share on May 10, 2019, the aggregate consideration paid to BVBC common shareholders was $92.3 million, which was paid by delivery of Heartland common stock. Immediately following the closing of the transaction, Bank of Blue Valley was merged with and into Heartland's wholly-owned Kansas subsidiary, Morrill & Janes Bank and Trust Company, and the combined entity operates under the Bank of Blue Valley brand. As of the closing date, BVBC had, at fair value, total assets of $766.2 million, total loans held to maturity of $542.0 million, and total deposits of $617.1 million. Heartland also assumed, at fair value, $16.1 million of trust preferred debt. The systems conversion for this transaction was completed on August 23, 2019.
  • On November 30, 2019, Heartland's Illinois Bank & Trust subsidiary completed its acquisition of substantially all of the assets and substantially all of the deposits and certain other liabilities of Rockford Bank and Trust Company ("RB&T"), headquartered in Rockford, Illinois. RB&T is a wholly-owned subsidiary of Moline, Illinois-based QCR Holdings, Inc. As of the closing date, RB&T had, at fair value, total assets of $495.7 million, which included $354.0 million of gross loans held to maturity, and $430.3 million of deposits. RB&T serves the Rockford market from two full-service banking locations. The systems conversion is expected to occur in the first quarter of 2020.

“We are pleased that we have advanced our goal to have two additional charters over $1 billion dollars in assets with the acquisitions in 2019 of Bank of Blue Valley and Rockford Bank & Trust," commented Lynn B. Fuller, Heartland's executive operating chairman.

Net Interest Income Increases, Net Interest Margin Decreases, from Fourth Quarter of 2018

Net interest margin, expressed as a percentage of average earning assets, was 3.86% (3.90% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2019, compared to 3.98% (4.02% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2019 and 4.28% (4.34% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2018.

Total interest income for the fourth quarter of 2019 was $133.2 million compared to $126.3 million recorded in the fourth quarter of 2018, an increase of $6.9 million or 5%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.1 million for the fourth quarter of 2019 and $1.6 million for the fourth quarter of 2018. With these adjustments, total interest income on a tax-equivalent basis was $134.3 million for the fourth quarter of 2019, an increase of $6.4 million or 5%, compared to total interest income on a tax-equivalent basis of $127.9 million for the fourth quarter of 2018.

Average earning assets of $11.58 billion increased $1.35 billion or 13% from the fourth quarter of 2018, which was primarily attributable to recent acquisitions. The average rate on earning assets decreased 36 basis points to 4.60% for the fourth quarter of 2019 compared to 4.96% for the same quarter in 2018. In the first quarter of 2019, Heartland sold its higher yielding consumer loan portfolios, which accounted for 10 basis points of margin in the fourth quarter of 2018.

Total interest expense for the fourth quarter of 2019 was $20.5 million, an increase of $4.4 million or 28% from $16.0 million in the fourth quarter of 2018. The average interest rate paid on Heartland's interest bearing liabilities increased to 1.08% for the fourth quarter of 2019 compared to 0.97% for the fourth quarter of 2018.

Average interest bearing deposits increased $961.3 million or 16% to $7.12 billion for the quarter ended December 31, 2019, from $6.16 billion in the same quarter in 2018, which was primarily attributable to recent acquisitions. The average interest rate paid on Heartland's interest bearing deposits increased 15 basis points to 0.91% for the fourth quarter of 2019 compared to 0.76% for the same quarter in 2018.

Average borrowings decreased $4.8 million or 1% to $392.7 million during the fourth quarter of 2019 from $397.5 million during the same quarter in 2018. The average interest rate paid on Heartland's borrowings was 4.10% for the fourth quarter of 2019 compared to 4.19% in the fourth quarter of 2018.

Net interest income was $112.7 million during the fourth quarter of 2019 compared to $110.3 million during the fourth quarter of 2018, an increase of $2.5 million or 2%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $113.9 million during the fourth quarter of 2019 compared to net interest income on a tax-equivalent basis of $111.8 million during the fourth quarter of 2018, an increase of $2.0 million or 2%.

"While our net interest margin declined during the fourth quarter of 2019, we were able to lower our non-time deposit costs by 16 basis points. The current interest rate environment is very competitive, however, we are actively working to maintain our yield on loans while lowering our funding costs," Lee said.

Noninterest Income and Noninterest Expense Increase from Fourth Quarter of 2018

Total noninterest income was $28.0 million during the fourth quarter of 2019 compared to $27.0 million during the fourth quarter of 2018, an increase of $985,000 or 4%. Significant changes by noninterest income category were:

  • Service charges and fees decreased $1.3 million or 9% to $12.4 million for the fourth quarter of 2019 compared to $13.7 million for the fourth quarter of 2018. Debit card income for the fourth quarter of 2019 totaled $1.6 million compared to $3.7 million for the same quarter in 2018, which was a decrease of $2.2 million or 58%, primarily due to the impact of the Durbin Amendment, which was effective for Heartland on July 1, 2019.
  • Loan servicing income totaled $955,000 for the fourth quarter of 2019 compared to $2.1 million for the fourth quarter of 2018, which was a decrease of $1.1 million or 54%. The decrease was primarily due to the sale of the mortgage servicing rights of Dubuque Bank and Trust Company in the second quarter of 2019.
  • Other noninterest income totaled $2.9 million for the fourth quarter of 2019 compared to $1.2 million for the fourth quarter of 2018, which was an increase of $1.6 million or 133%. Included in other noninterest income for the fourth quarter of 2019 was $891,000 related to proceeds on life insurance policies.

Total noninterest expense for the fourth quarter of 2019 was $92.9 million compared to $88.8 million for the same quarter of 2018, which was an increase of $4.0 million or 5%. Significant changes by noninterest expense category were:

  • Salaries and employee benefits totaled $50.2 million for the fourth quarter of 2019 compared to $46.7 million for the same quarter of 2018, which is an increase of $3.5 million or 8%, which was primarily attributable to higher incentive compensation costs.
  • Professional fees increased $914,000 or 9% to $11.5 million for the fourth quarter of 2019 compared to $10.6 million for the fourth quarter of 2018. This increase was primarily attributable to higher consulting fees related to process improvement and model validations. Consulting fees increased $759,000 or 150% to $1.3 million in the fourth quarter of 2019 from $507,000 in the same quarter of 2018.
  • Net losses on assets totaled $1.5 million for the fourth quarter of 2019 compared to net gains of $35,000 for the fourth quarter of 2018, which was an increase of $1.5 million. Write-downs on fixed assets and buildings held for sale totaling $2.4 million were recorded in the fourth quarter of 2019. An additional gain of $1.2 million was recorded associated with the mortgage servicing rights sale due to the re-evaluation of any remaining contingencies. 

Heartland's effective tax rate was 11.99% for the fourth quarter of 2019 compared to 17.22% for the fourth quarter of 2018. The following items impacted Heartland's fourth quarter 2019 and 2018 tax calculations:

  • Solar energy tax credits of $764,000 and $2.6 million for the fourth quarter of 2019 and 2018, respectively.
  • Federal low-income housing tax credits of $281,000 and $307,000 for the fourth quarter of 2019 and 2018, respectively.
  • Tax-exempt interest income as a percentage of pre-tax income declined to 9.79% during the fourth quarter of 2019 from 15.16% during the fourth quarter of 2018.
  • Historic rehabilitation tax credits totaled $1.8 million for the fourth quarter of 2019 compared to $0 for the same quarter of 2018.
  • Included in the fourth quarter 2019 tax calculation were $1.9 million of tax benefits related to the release of valuation allowances on deferred tax assets.

For the years ended December 31, 2019 and 2018, Heartland's effective tax rate was 19.00% and 19.43%, respectively.

Loans and Deposits Increase Since December 31, 2018

Total assets were $13.21 billion at December 31, 2019, an increase of $1.80 billion or 16% from $11.41 billion at year-end 2018. Excluding $766.2 million of assets acquired at fair value in the BVBC transaction and $495.7 million of assets acquired at fair value in the RB&T transaction, total assets increased $539.7 million or 5% since year-end 2018. Securities represented 26% and 24% of total assets at December 31, 2019, and December 31, 2018, respectively.

Total loans held to maturity were $8.37 billion at December 31, 2019, compared to $7.41 billion at year-end 2018, an increase of $960.2 million or 13%. This change includes $896.0 million of total loans held to maturity acquired at fair value in the BVBC and RB&T transactions. During the first quarter of 2019, Heartland classified $32.1 million of loans as held for sale in conjunction with the branch sales. Excluding the reclassification of loans to held for sale and the BVBC and RB&T transactions, total loans held to maturity organically grew $96.3 million or 1% since December 31, 2018. Loan changes by category were:

  • Commercial and commercial real estate loans totaled $6.79 billion at December 31, 2019, compared to $5.73 billion at December 31, 2018, which was an increase of $1.06 billion or 18%. Excluding $14.9 million of commercial and commercial real estate loans classified as held for sale during the first quarter of 2019 and $780.3 million of loans acquired in the BVBC and RB&T transactions, commercial and commercial real estate loans organically grew $293.4 million or 5% December 31, 2018.
  • Agricultural and agricultural real estate loans totaled $533.1 million at December 31, 2019, compared to $565.4 million at December 31, 2018, which was a decrease of $32.3 million or 6%. Excluding $6.6 million of agricultural and agricultural real estate loans classified as held for sale during the first quarter of 2019 and $1.8 million of loans acquired in the BVBC transaction, agricultural and agricultural real estate loans organically decreased $27.5 million or 5% since December 31, 2018.
  • Residential mortgage loans decreased $75.9 million or 11% to $597.7 million at December 31, 2019, from $673.6 million at December 31, 2018. Excluding $2.0 million of residential mortgage loans classified as held for sale during the first quarter of 2019 and $59.3 million of loans acquired in the BVBC and RB&T transactions, residential mortgage loans organically decreased $133.2 million or 20% since December 31, 2018.
  • Consumer loans increased $12.1 million or 3% to $452.2 million at December 31, 2019, compared to $440.2 million at December 31, 2018. Excluding $8.6 million of loans classified as held for sale during the first quarter of 2019 and $54.7 million of loans acquired in the BVBC and RB&T transactions, consumer loans organically decreased $33.9 million or 8% since December 31, 2018.

"We had outstanding organic commercial and commercial real estate loan growth in the fourth quarter of 2019 of $96.8 million and $293.4 million for the year, and we expect this growth to continue in 2020," said Lee. 

Total deposits were $11.04 billion as of December 31, 2019, compared to $9.40 billion at year-end, which was an increase of $1.65 billion or 18%. This increase includes $1.05 billion of deposits acquired at fair value in the BVBC and RB&T transactions. During the first quarter of 2019, Heartland classified $77.0 million of deposits as held for sale in conjunction with the branch sales. Exclusive of the reclassification of deposits to held for sale and the deposits acquired at fair value in the BVBC and RB&T transactions, total deposits organically increased $677.5 million or 7% since December 31, 2018. Deposit changes by category were:

  • Demand deposits increased $279.1 million or 9% to $3.54 billion at December 31, 2019, compared to $3.26 billion at December 31, 2018. Excluding $235.5 million of demand deposits acquired in the BVBC and RB&T transactions and $17.3 million of demand deposits classified as held for sale in the first quarter of 2019, demand deposits organically increased $60.9 million or 2% since year-end 2018.
  • Savings deposits increased $1.20 billion or 23% to $6.31 billion at December 31, 2019, from $5.11 billion at December 31, 2018. Excluding savings deposits of $550.0 million acquired in the BVBC and RB&T transactions and $47.8 million of savings deposits classified as held for sale in the first quarter of 2019, savings deposits organically increased $697.3 million or 14% since year-end 2018.
  • Time deposits increased $169.3 million or 17% to $1.19 billion at December 31, 2019 from $1.02 billion at December 31, 2018. Excluding time deposits of $261.9 million acquired in the BVBC and RB&T transactions and $11.9 million of time deposits classified as held for sale in the first quarter of 2019, time deposits organically decreased $80.8 million or 8% since year-end 2018.

"We had impressive organic non-time deposit growth of $225.0 million for the fourth quarter of 2019 and $758.2 million for the year. Non-time deposits represented 89 percent of total deposits at December 31, 2019," Lee stated.

Nonperforming Assets Increase Since December 31, 2018

Nonperforming assets increased $8.3 million or 10% to $87.6 million or 0.66% of total assets at December 31, 2019, compared to $79.3 million or 0.69% of total assets at December 31, 2018. Excluding $3.5 million of nonperforming assets acquired in the BVBC and RB&T transactions, nonperforming assets increased $4.8 million or 6%. Nonperforming loans were $80.7 million or 0.96% of total loans at December 31, 2019, compared to $72.7 million or 0.98% of total loans at December 31, 2018. Nonperforming loans past due 90 days or more increased $3.4 million to $4.1 million at December 31, 2019 compared to $726,000 at December 31, 2018, which was primarily attributable to one $2.7 million commercial relationship that has been paid off since December 31, 2019. At December 31, 2019, loans delinquent 30-89 days were 0.33% of total loans compared to 0.21% of total loans at December 31, 2018.

The allowance for loan losses at December 31, 2019, was 0.84% of loans at December 31, 2019, and December 31, 2018. The allowance for loan losses as a percentage of nonperforming loans was 87.28% and 85.27% at December 31, 2019 and December 31, 2018, respectively. Provision expense for the fourth quarter of 2019 was $4.9 million compared to $9.7 million for the fourth quarter of 2018, which was a decrease of $4.8 million or 49%. Provision expense in the fourth quarter of 2018 included $4.0 million of provision expense due to two impaired commercial loans from acquired portfolios.

Non-GAAP Financial Measures

This press 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 Heartland'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 press 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 press release, except that organic loan and deposit growth are reconciled to total loan and deposit growth in the preceding narrative discussion.

Below are the non-GAAP measures included in this press release, management's reason for including each measure and the method of calculating each measure:

  • Annualized return on average tangible common equity is net income available to common stockholders plus core deposit and customer relationship intangibles amortization, net of tax, divided by average common stockholders' 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 financial condition and capital strength.
  • 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 press release.
  • Organic deposit growth is exclusive of deposits obtained through acquisitions and the reclassification of deposits that are held for sale. Management believes that this measure provides a more complete understanding of underlying trends in deposit growth notwithstanding dispositions and acquisitions.
  • Organic loan growth is exclusive of loans obtained through acquisitions and the reclassification of loans that are held for sale. Management believes that this measure provides a more complete understanding of underlying trends in loan growth notwithstanding dispositions and acquisitions.
  • Tangible book value per common share is total common stockholders' 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 stockholders' 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 use of equity, financial condition and capital strength.

Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 866-928-9948 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until January 26, 2021, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company with assets of $13.21 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 115 banking locations serving 83 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, 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 are detailed in the risk factors in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war; (iii) changes in state and federal laws, regulations and governmental policies as they impact the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions and Heartland's ability to successfully integrate acquired banks; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.


 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
December 31,
 For the Year Ended
December 31,
 2019 2018 2019 2018
Interest Income       
Interest and fees on loans$107,566  $105,700  $424,615  $393,871 
Interest on securities:       
Taxable22,581  15,851  73,147  54,131 
Nontaxable2,102  3,467  9,868  14,120 
Interest on federal funds sold    4   
Interest on deposits with other banks and other short-term investments953  1,285  6,695  3,698 
Total Interest Income133,202  126,303  514,329  465,820 
Interest Expense       
Interest on deposits16,401  11,826  63,734  35,667 
Interest on short-term borrowings271  417  1,748  1,696 
Interest on other borrowings3,785  3,777  15,118  14,503 
Total Interest Expense20,457  16,020  80,600  51,866 
Net Interest Income112,745  110,283  433,729  413,954 
Provision for loan losses4,903  9,681  16,657  24,013 
Net Interest Income After Provision for Loan Losses107,842  100,602  417,072  389,941 
Noninterest Income       
Service charges and fees12,368  13,660  52,157  48,706 
Loan servicing income955  2,061  4,843  7,292 
Trust fees5,141  4,599  19,399  18,393 
Brokerage and insurance commissions1,062  1,618  3,786  4,513 
Securities gains, net491  48  7,659  1,085 
Unrealized gain on equity securities, net11  115  525  212 
Net gains on sale of loans held for sale3,363  3,189  15,555  21,450 
Valuation adjustment on servicing rights668  (58) (911) (46)
Income on bank owned life insurance1,117  587  3,785  2,793 
Other noninterest income2,854  1,226  9,410  4,762 
Total Noninterest Income28,030  27,045  116,208  109,160 
Noninterest Expense       
Salaries and employee benefits50,234  46,729  200,541  196,118 
Occupancy5,813  6,622  25,450  25,328 
Furniture and equipment3,330  3,126  12,100  12,529 
Professional fees11,544  10,630  50,022  43,510 
Advertising2,305  2,726  10,028  9,565 
Core deposit and customer relationship intangibles amortization2,918  2,592  11,972  9,355 
Other real estate and loan collection expenses, net261  574  1,035  3,038 
(Gain)/loss on sales/valuations of assets, net1,512  (35) (19,422) 2,208 
Restructuring expenses    3,227  2,564 
Other noninterest expenses14,949  15,857  54,208  49,673 
Total Noninterest Expense92,866  88,821  349,161  353,888 
Income Before Income Taxes43,006  38,826  184,119  145,213 
Income taxes5,155  6,685  34,990  28,215 
Net Income37,851  32,141  149,129  116,998 
Preferred dividends      (39)
Net Income Available to Common Stockholders$37,851  $32,141  $149,129  $116,959 
Earnings per common share-diluted$1.03  $0.93  $4.14  $3.52 
Weighted average shares outstanding-diluted36,840,519  34,670,180  36,061,908  33,213,148 
            


 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Interest Income         
Interest and fees on loans$107,566  $110,566  $106,027  $100,456   $105,700 
Interest on securities:         
Taxable22,581  18,567  16,123  15,876   15,851 
Nontaxable2,102  2,119  2,554  3,093   3,467 
Interest on federal funds sold      4    
Interest on deposits with other banks and other short-term investments953  2,151  2,299  1,292   1,285 
Total Interest Income133,202  133,403  127,003  120,721   126,303 
Interest Expense         
Interest on deposits16,401  17,982  16,138  13,213   11,826 
Interest on short-term borrowings271  250  338  889   417 
Interest on other borrowings3,785  3,850  3,819  3,664   3,777 
Total Interest Expense20,457  22,082  20,295  17,766   16,020 
Net Interest Income112,745  111,321  106,708  102,955   110,283 
Provision for loan losses4,903  5,201  4,918  1,635   9,681 
Net Interest Income After Provision for Loan Losses107,842  106,120  101,790  101,320   100,602 
Noninterest Income         
Service charges and fees12,368  12,366  14,629  12,794   13,660 
Loan servicing income955  821  1,338  1,729   2,061 
Trust fees5,141  4,959  4,825  4,474   4,599 
Brokerage and insurance commissions1,062  962  1,028  734   1,618 
Securities gains, net491  2,013  3,580  1,575   48 
Unrealized gain on equity securities, net11  144  112  258   115 
Net gains on sale of loans held for sale3,363  4,673  4,343  3,176   3,189 
Valuation adjustment on servicing rights668  (626) (364) (589)  (58)
Income on bank owned life insurance1,117  881  888  899   587 
Other noninterest income2,854  3,207  1,682  1,667   1,226 
Total Noninterest Income28,030  29,400  32,061  26,717   27,045 
Noninterest Expense         
Salaries and employee benefits50,234  50,027  49,995  50,285   46,729 
Occupancy5,813  6,594  6,436  6,607   6,622 
Furniture and equipment3,330  2,858  3,220  2,692   3,126 
Professional fees11,544  12,131  14,968  11,379   10,630 
Advertising2,305  2,737  2,661  2,325   2,726 
Core deposit and customer relationship intangibles amortization2,918  2,899  3,313  2,842   2,592 
Other real estate and loan collection expenses, net261  (89) 162  701   574 
(Gain)/loss on sales/valuations of assets, net1,512  356  (18,286) (3,004)  (35)
Restructuring expenses      3,227    
Other noninterest expenses14,949  15,454  12,629  11,176   15,857 
Total Noninterest Expense92,866  92,967  75,098  88,230   88,821 
Income Before Income Taxes43,006  42,553  58,753  39,807   38,826 
Income taxes5,155  7,941  13,584  8,310   6,685 
Net Income37,851  34,612  45,169  31,497   32,141 
Preferred dividends          
Net Income Available to Common Stockholders$37,851  $34,612  $45,169  $31,497   $32,141 
Earnings per common share-diluted$1.03  $0.94  $1.26  $0.91   $0.93 
Weighted average shares outstanding-diluted36,840,519  36,835,191  35,879,259  34,699,839   34,670,180 
                


 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of
 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Assets         
Cash and due from banks$206,607  $243,395  $198,664  $174,198  $223,135 
Interest bearing deposits with other banks and other short-term investments172,127  204,372  443,475  318,303  50,495 
Cash and cash equivalents378,734  447,767  642,139  492,501  273,630 
Time deposits in other financial institutions3,564  3,711  4,430  4,675  4,672 
Securities:         
Carried at fair value3,312,796  3,020,568  2,561,887  2,400,460  2,450,709 
Held to maturity, at cost91,324  87,965  88,166  88,089  236,283 
Other investments, at cost31,321  29,042  31,366  27,506  28,396 
Loans held for sale26,748  35,427  34,575  69,716  119,801 
Loans:         
Held to maturity8,367,917  7,971,608  7,853,051  7,331,544  7,407,697 
Allowance for loan losses(70,395) (66,222) (63,850) (62,639) (61,963)
Loans, net8,297,522  7,905,386  7,789,201  7,268,905  7,345,734 
Premises, furniture and equipment, net200,525  199,235  198,329  190,215  194,676 
Goodwill446,345  427,097  427,097  391,668  391,668 
Core deposit and customer relationship intangibles, net48,688  49,819  52,718  44,637  47,479 
Servicing rights, net6,736  6,271  7,180  28,968  31,072 
Cash surrender value on life insurance171,625  171,471  170,421  163,764  162,892 
Other real estate, net6,914  6,425  6,646  5,391  6,153 
Other assets186,755  179,078  146,135  136,000  114,841 
Total Assets$13,209,597  $12,569,262  $12,160,290  $11,312,495  $11,408,006 
Liabilities and Equity         
Liabilities         
Deposits:         
Demand$3,543,863  $3,581,127  $3,426,758  $3,118,909  $3,264,737 
Savings6,307,425  5,770,754  5,533,503  5,145,929  5,107,962 
Time1,193,043  1,117,975  1,148,296  1,088,104  1,023,730 
Total deposits11,044,331  10,469,856  10,108,557  9,352,942  9,396,429 
Deposits held for sale      118,564  106,409 
Short-term borrowings182,626  107,853  107,260  104,314  227,010 
Other borrowings275,773  278,417  282,863  268,312  274,905 
Accrued expenses and other liabilities128,730  149,293  139,823  96,261  78,078 
Total Liabilities11,631,460  11,005,419  10,638,503  9,940,393  10,082,831 
Stockholders' Equity         
Common stock36,704  36,696  36,690  34,604  34,477 
Capital surplus839,857  838,543  837,150  745,596  743,095 
Retained earnings702,502  670,816  642,808  603,506  579,252 
Accumulated other comprehensive income/(loss)(926) 17,788  5,139  (11,604) (31,649)
Total Equity1,578,137  1,563,843  1,521,787  1,372,102  1,325,175 
Total Liabilities and Equity$13,209,597  $12,569,262  $12,160,290  $11,312,495  $11,408,006 
                    


 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
December 31,
 For the Year Ended
December 31,
 2019 2018 2019 2018
Average Balances       
Assets$12,798,770  $11,371,247  $12,021,917  $10,772,297 
Loans, net of unearned8,090,476  7,436,497  7,761,091  7,140,239 
Deposits10,704,643  9,596,807  10,030,629  9,104,278 
Earning assets11,580,295  10,225,409  10,845,940  9,718,106 
Interest bearing liabilities7,513,701  6,557,185  7,048,607  6,253,586 
Common stockholders' equity1,570,258  1,290,691  1,473,396  1,177,346 
Total stockholders' equity1,570,258  1,290,691  1,473,396  1,177,955 
Tangible common stockholders' equity (non-GAAP)1,087,495  849,851  1,008,178  790,788 
        
Key Performance Ratios       
Annualized return on average assets1.17% 1.12% 1.24% 1.09%
Annualized return on average common equity (GAAP)9.56% 9.88% 10.12% 9.93%
Annualized return on average tangible common equity (non-GAAP)(1)14.65% 15.96% 15.73% 15.72%
Annualized ratio of net charge-offs to average loans0.04% 0.48% 0.11% 0.25%
Annualized net interest margin (GAAP)3.86% 4.28% 4.00% 4.26%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)3.90% 4.34% 4.04% 4.32%
Efficiency ratio, fully tax-equivalent(1)60.69% 59.35% 63.11% 63.54%
        
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)       
Net income available to common stockholders (GAAP)$37,851  $32,141  $149,129  $116,959 
Plus core deposit and customer relationship intangibles amortization, net of tax(2)2,305  2,048  9,458  7,391 
Adjusted net income available to common stockholders (non-GAAP)$40,156  $34,189  $158,587  $124,350 
        
Average common stockholders' equity (GAAP)$1,570,258  $1,290,691  $1,473,396  $1,177,346 
Less average goodwill433,374  391,668  415,841  340,352 
Less average core deposit and customer relationship intangibles, net49,389  49,172  49,377  46,206 
Average tangible common equity (non-GAAP)$1,087,495  $849,851  $1,008,178  $790,788 
Annualized return on average common equity (GAAP)9.56% 9.88% 10.12% 9.93%
Annualized return on average tangible common equity (non-GAAP)14.65% 15.96% 15.73% 15.72%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)       
Net Interest Income (GAAP)$112,745  $110,283  $433,729  $413,954 
Plus tax-equivalent adjustment(2)1,109  1,565  4,929  6,228 
Net interest income, tax-equivalent (non-GAAP)$113,854  $111,848  $438,658  $420,182 
        
Average earning assets$11,580,295  $10,225,409  $10,845,940  $9,718,106 
        
Annualized net interest margin (GAAP)3.86% 4.28% 4.00% 4.26%
Annualized net interest margin, fully tax-equivalent (non-GAAP)3.90% 4.34% 4.04% 4.32%
        
(1) Refer to the "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.
(2) 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
 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Average Balances         
Assets$12,798,770  $12,293,332  $11,708,538  $11,267,214  $11,371,247 
Loans, net of unearned8,090,476  7,883,678  7,648,562  7,412,855  7,436,497 
Deposits10,704,643  10,253,643  9,790,756  9,356,204  9,596,807 
Earning assets11,580,295  11,102,581  10,552,166  10,129,957  10,225,409 
Interest bearing liabilities7,513,701  7,174,944  6,872,449  6,622,149  6,557,185 
Common stockholders' equity1,570,258  1,541,369  1,442,388  1,336,250  1,290,691 
Total stockholders' equity1,570,258  1,541,369  1,442,388  1,336,250  1,290,691 
Tangible common stockholders' equity (non-GAAP)1,087,495  1,062,568  981,878  898,092  849,851 
          
Key Performance Ratios         
Annualized return on average assets1.17% 1.12% 1.55% 1.13% 1.12%
Annualized return on average common equity (GAAP)9.56% 8.91% 12.56% 9.56% 9.88%
Annualized return on average tangible common equity (non-GAAP)(1)14.65% 13.78% 19.52% 15.24% 15.96%
Annualized ratio of net charge-offs to average loans0.04% 0.14% 0.19% 0.05% 0.48%
Annualized net interest margin (GAAP)3.86% 3.98% 4.06% 4.12% 4.28%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)3.90% 4.02% 4.10% 4.18% 4.34%
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)60.69% 61.92% 64.81% 65.23% 59.35%
          
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)         
Net income available to common stockholders (GAAP)$37,851  $34,612  $45,169  $31,497  $32,141 
Plus core deposit and customer relationship intangibles amortization, net of tax(2)2,305  2,291  2,617  2,245  2,048 
Adjusted net income available to common stockholders (non-GAAP)$40,156  $36,903  $47,786  $33,742  $34,189 
          
Average common stockholders' equity (GAAP)$1,570,258  $1,541,369  $1,442,388  $1,336,250  $1,290,691 
Less average goodwill433,374  427,097  410,642  391,668  391,668 
Less average core deposit and customer relationship intangibles, net49,389  51,704  49,868  46,490  49,172 
Average tangible common stockholders' equity (non-GAAP)$1,087,495  $1,062,568  $981,878  $898,092  $849,851 
Annualized return on average common equity (GAAP)9.56% 8.91% 12.56% 9.56% 9.88%
Annualized return on average tangible common equity (non-GAAP)14.65% 13.78% 19.52% 15.24% 15.96%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)         
Net Interest Income (GAAP)$112,745  $111,321  $106,708  $102,955  $110,283 
Plus tax-equivalent adjustment(2)1,109  1,140  1,268  1,412  1,565 
Net interest income, fully tax-equivalent (non-GAAP)$113,854  $112,461  $107,976  $104,367  $111,848 
          
Average earning assets$11,580,295  $11,102,581  $10,552,166  $10,129,957  $10,225,409 
          
Annualized net interest margin (GAAP)3.86% 3.98% 4.06% 4.12% 4.28%
Annualized net interest margin, fully tax-equivalent (non-GAAP)3.90% 4.02% 4.10% 4.18% 4.34%
 
(1) Refer to the "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.
(2) 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
December 31,
 For the Year Ended
December 31,
Reconciliation of Efficiency Ratio (non-GAAP)2019 2018 2019 2018
Net interest income (GAAP)$112,745  $110,283  $433,729  $413,954 
Tax-equivalent adjustment(1)1,109  1,565  4,929  6,228 
Fully tax-equivalent net interest income113,854  111,848  438,658  420,182 
Noninterest income28,030  27,045  116,208  109,160 
Securities gains, net(491) (48) (7,659) (1,085)
Unrealized gain on equity securities, net(11) (115) (525) (212)
Gain on extinguishment of debt    (375)  
Valuation adjustment on servicing rights(668) 58  911  46 
Adjusted income (non-GAAP)$140,714  $138,788  $547,218  $528,091 
        
Total noninterest expenses (GAAP)$92,866  $88,821  $349,161  $353,888 
Less:       
Core deposit and customer relationship intangibles amortization2,918  2,592  11,972  9,355 
Partnership investment in tax credit projects3,038  3,895  8,030  4,233 
(Gain)/loss on sales/valuations of assets, net1,512  (35) (19,422) 2,208 
Restructuring expenses    3,227  2,564 
Adjusted noninterest expenses (non-GAAP)$85,398  $82,369  $345,354  $335,528 
        
Efficiency ratio, fully tax-equivalent (non-GAAP)60.69% 59.35% 63.11% 63.54%
            


Reconciliation of Efficiency Ratio (non-GAAP)For the Quarter Ended
12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Net interest income (GAAP)$112,745  $111,321  $106,708  $102,955  $110,283 
Tax-equivalent adjustment(1)1,109  1,140  1,268  1,412  1,565 
Fully tax-equivalent net interest income113,854  112,461  107,976  104,367  111,848 
Noninterest income28,030  29,400  32,061  26,717  27,045 
Securities gains, net(491) (2,013) (3,580) (1,575) (48)
Unrealized gain on equity securities, net(11) (144) (112) (258) (115)
Gain on extinguishment of debt  (375)      
Valuation adjustment on servicing rights(668) 626  364  589  58 
Adjusted income (non-GAAP)$140,714  $139,955  $136,709  $129,840  $138,788 
          
Total noninterest expenses (GAAP)$92,866  $92,967  $75,098  $88,230  $88,821 
Less:         
Core deposit and customer relationship intangibles amortization2,918  2,899  3,313  2,842  2,592 
Partnership investment in tax credit projects3,038  3,052  1,465  475  3,895 
(Gain)/loss on sales/valuation of assets, net1,512  356  (18,286) (3,004) (35)
Restructuring expenses      3,227   
Adjusted noninterest expenses (non-GAAP)$85,398  $86,660  $88,606  $84,690  $82,369 
          
Efficiency ratio, fully tax-equivalent (non-GAAP)60.69% 61.92% 64.81% 65.23% 59.35%
          
(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 AND FULL TIME EQUIVALENT EMPLOYEE DATA
 As of and for the Quarter Ended
 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Common Share Data         
Book value per common share$43.00  $42.62  $41.48  $39.65  $38.44 
Tangible book value per common share (non-GAAP)(1)$29.51  $29.62  $28.40  $27.04  $25.70 
Common shares outstanding, net of treasury stock36,704,278  36,696,190  36,690,061  34,603,611  34,477,499 
Tangible common equity ratio (non-GAAP)(1)8.52% 8.99% 8.92% 8.60% 8.08%
          
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)         
Common stockholders' equity (GAAP)$1,578,137  $1,563,843  $1,521,787  $1,372,102  $1,325,175 
Less goodwill446,345  427,097  427,097  391,668  391,668 
Less core deposit and customer relationship intangibles, net48,688  49,819  52,718  44,637  47,479 
Tangible common stockholders' equity (non-GAAP)$1,083,104  $1,086,927  $1,041,972  $935,797  $886,028 
          
Common shares outstanding, net of treasury stock36,704,278  36,696,190  36,690,061  34,603,611  34,477,499 
Common stockholders' equity (book value) per share (GAAP)$43.00  $42.62  $41.48  $39.65  $38.44 
Tangible book value per common share (non-GAAP)$29.51  $29.62  $28.40  $27.04  $25.70 
          
Reconciliation of Tangible Common Equity Ratio (non-GAAP)         
Tangible common stockholders' equity (non-GAAP)$1,083,104  $1,086,927  $1,041,972  $935,797  $886,028 
          
Total assets (GAAP)$13,209,597  $12,569,262  $12,160,290  $11,312,495  $11,408,006 
Less goodwill446,345  427,097  427,097  391,668  391,668 
Less core deposit and customer relationship intangibles, net48,688  49,819  52,718  44,637  47,479 
Total tangible assets (non-GAAP)$12,714,564  $12,092,346  $11,680,475  $10,876,190  $10,968,859 
Tangible common equity ratio (non-GAAP)8.52% 8.99% 8.92% 8.60% 8.08%
          
Loan Data          
Loans held to maturity:         
Commercial and commercial real estate$6,790,458  $6,393,596  $6,230,372  $5,745,051  $5,731,712 
Residential mortgage597,742  589,793  613,707  630,433  673,603 
Agricultural and agricultural real estate533,064  545,006  549,404  544,805  565,408 
Consumer452,233  447,718  461,802  412,573  440,158 
Unearned discount and deferred loan fees(5,580) (4,505) (2,234) (1,318) (3,184)
Total loans held to maturity$8,367,917  $7,971,608  $7,853,051  $7,331,544  $7,407,697 
          
Other Selected Trend Information          
Effective tax rate11.99% 18.66% 23.12% 20.88% 17.22%
Full time equivalent employees1,908  1,962  2,040  1,976  2,045 
          
(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
 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018
Allowance for Loan Losses         
Balance, beginning of period$66,222  $63,850  $62,639  $61,963  $61,221 
Provision for loan losses4,903  5,201  4,918  1,635  9,681 
Charge-offs(2,018) (4,842) (4,780) (1,950) (9,777)
Recoveries1,288  2,013  1,073  991  838 
Balance, end of period$70,395  $66,222  $63,850  $62,639  $61,963 
          
Asset Quality         
Nonaccrual loans$76,548  $72,208  $79,619  $77,294  $71,943 
Loans past due ninety days or more4,105  40  285  1,706  726 
Other real estate owned6,914  6,425  6,646  5,391  6,153 
Other repossessed assets11  13  39  8  459 
Total nonperforming assets$87,578  $78,686  $86,589  $84,399  $79,281 
          
Performing troubled debt restructured loans$3,794  $3,199  $3,539  $3,460  $4,026 
          
Nonperforming Assets Activity          
Balance, beginning of period$78,686  $86,589  $84,399  $79,281  $85,617 
Net loan charge offs(730) (2,829) (3,707) (959) (8,939)
New nonperforming loans13,751  6,818  13,688  15,314  17,332 
Acquired nonperforming assets3,262    230     
Reduction of nonperforming loans(1)(5,859) (8,861) (6,246) (6,238) (6,065)
OREO/Repossessed assets sales proceeds(1,399) (3,067) (1,288) (2,092) (8,390)
OREO/Repossessed assets gain/(loss and writedowns), net(133) 36  (487) (462) (230)
Net activity at Citizens Finance Co.      (445) (44)
Balance, end of period$87,578  $78,686  $86,589  $84,399  $79,281 
          
Asset Quality Ratios         
Ratio of nonperforming loans to total loans0.96% 0.91% 1.02% 1.08% 0.98%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans1.01% 0.95% 1.06% 1.12% 1.04%
Ratio of nonperforming assets to total assets0.66% 0.63% 0.71% 0.75% 0.69%
Annualized ratio of net loan charge-offs to average loans0.04% 0.14% 0.19% 0.05% 0.48%
Allowance for loan losses as a percent of loans0.84% 0.83% 0.81% 0.85% 0.84%
Allowance for loan losses as a percent of nonperforming loans87.28% 91.66% 79.91% 79.29% 85.27%
Loans delinquent 30-89 days as a percent of total loans0.33% 0.28% 0.31% 0.47% 0.21%
          
(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
 December 31, 2019 September 30, 2019 December 31, 2018
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets                 
Securities:                 
Taxable$3,033,480  $22,581  2.95% $2,658,107  $18,567 2.77% $2,184,096  $15,851 2.88%
Nontaxable(1)271,792  2,661  3.88  266,933  2,682 3.99  427,332  4,388 4.07 
Total securities3,305,272  25,242  3.03  2,925,040  21,249 2.88  2,611,428  20,239 3.07 
Interest on deposits with other banks and other short-term investments251,599  953  1.50  358,327  2,151 2.38  238,087  1,285 2.14 
Federal funds sold           309    
Loans:(2)                 
Commercial and commercial real estate(1)6,484,485  85,591  5.24  6,216,133  86,864 5.54  5,644,475  77,822 5.47 
Residential mortgage614,735  7,156  4.62  662,663  7,979 4.78  704,012  8,682 4.89 
Agricultural and agricultural real estate(1)538,029  7,005  5.17  550,441  7,551 5.44  568,904  7,752 5.41 
Consumer453,227  6,109  5.35  454,441  6,697 5.85  519,106  9,355 7.15 
Fees on loans  2,255      2,052    2,733  
Less: allowance for loan losses(67,052)     (64,464)    (60,912)   
Net loans8,023,424  108,116  5.35  7,819,214  111,143 5.64  7,375,585  106,344 5.72 
Total earning assets11,580,295  134,311  4.60% 11,102,581  134,543 4.81% 10,225,409  127,868 4.96%
Nonearning Assets1,218,475      1,190,751      1,145,838     
Total Assets$12,798,770      $12,293,332      $11,371,247     
Interest Bearing Liabilities(3)                 
Savings$5,986,007  $11,790  0.78% $5,643,722  $13,301 0.94% $5,071,573  $8,817 0.69%
Time deposits1,135,025  4,611  1.61  1,149,064  4,681 1.62  1,088,122  3,009 1.10 
Short-term borrowings115,680  271  0.93  102,440  250 0.97  121,053  417 1.37 
Other borrowings276,989  3,785  5.42  279,718  3,850 5.46  276,437  3,777 5.42 
Total interest bearing liabilities7,513,701  20,457  1.08% 7,174,944  22,082 1.22% 6,557,185  16,020 0.97%
Noninterest Bearing Liabilities(3)                 
Noninterest bearing deposits3,583,611      3,460,857      3,437,112     
Accrued interest and other liabilities131,200      116,162      86,259     
Total noninterest bearing liabilities3,714,811      3,577,019      3,523,371     
Stockholders' Equity1,570,258      1,541,369      1,290,691     
Total Liabilities and Stockholders' Equity$12,798,770      $12,293,332      $11,371,247     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $113,854      $112,461     $111,848  
Net interest spread(1)    3.52%     3.59%     3.99%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets    3.90%     4.02%     4.34%
                  
(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) Includes deposits held for sale.
 


 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Year Ended
 December 31, 2019 December 31, 2018
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$2,522,365  $73,147 2.90% $1,999,321  $54,131 2.71%
Nontaxable(1)313,197  12,491 3.99  439,894  17,873 4.06 
Total securities2,835,562  85,638 3.02  2,439,215  72,004 2.95 
Interest bearing deposits with other banks and other short-term investments313,373  6,695 2.14  197,562  3,698 1.87 
Federal funds sold138  4 2.90  430    
Loans:(2)           
Commercial and commercial real estate(1)6,105,889  332,866 5.45  5,401,683  289,379 5.36 
Residential mortgage656,741  30,552 4.65  692,310  32,047 4.63 
Agricultural and agricultural real estate(1)550,231  29,438 5.35  549,346  28,331 5.16 
Consumer448,230  25,802 5.76  496,900  37,250 7.50 
Fees on loans  8,263     9,339  
Less: allowance for loan losses(64,224)    (59,340)   
Net loans7,696,867  426,921 5.55  7,080,899  396,346 5.60 
Total earning assets10,845,940  519,258 4.79% 9,718,106  472,048 4.86%
Nonearning Assets1,175,977      1,054,191     
Total Assets$12,021,917      $10,772,297     
Interest Bearing Liabilities(3)           
Savings$5,530,503  $47,069 0.85% $4,779,977  $25,123 0.53%
Time deposits1,115,785  16,665 1.49  1,058,769  10,544 1.00 
Short-term borrowings126,337  1,748 1.38  142,295  1,696 1.19 
Other borrowings275,982  15,118 5.48  272,545  14,503 5.32 
Total interest bearing liabilities7,048,607  80,600 1.14% 6,253,586  51,866 0.83%
Noninterest Bearing Liabilities(3)           
Noninterest bearing deposits3,384,341      3,265,532     
Accrued interest and other liabilities115,573      75,224     
Total noninterest bearing liabilities3,499,914      3,340,756     
Stockholders' Equity1,473,396      1,177,955     
Total Liabilities and Stockholders' Equity$12,021,917      $10,772,297     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $438,658     $420,182  
Net interest spread(1)    3.65%     4.03%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets    4.04%     4.32%
            
(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) Includes deposits held for sale.
 


 
HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
 As of and For the Quarter Ended
 12/31/20199/30/20196/30/20193/31/201912/31/2018
Total Assets     
Citywide Banks$2,294,512 $2,335,811 $2,261,591 $2,214,105 $2,307,284 
New Mexico Bank & Trust1,763,037 1,607,498 1,534,236 1,500,024 1,492,555 
Dubuque Bank and Trust Company1,646,105 1,547,014 1,680,539 1,550,487 1,480,914 
Bank of Blue Valley(1)1,307,688 1,346,342 1,319,226 564,833 571,012 
Illinois Bank & Trust1,301,172 839,721 852,830 810,357 804,907 
First Bank & Trust1,137,714 1,158,320 1,088,796 1,099,759 1,109,929 
Wisconsin Bank & Trust1,090,412 1,032,016 1,042,463 1,031,305 1,114,352 
Premier Valley Bank903,220 888,401 847,076 855,473 849,696 
Arizona Bank & Trust784,240 695,236 732,783 669,806 658,714 
Minnesota Bank & Trust718,724 718,035 631,339 657,187 666,564 
Rocky Mountain Bank532,191 528,094 503,126 489,135 490,453 
Total Deposits(2)     
Citywide Banks$1,829,217 $1,895,894 $1,833,259 $1,802,701 $1,848,373 
New Mexico Bank & Trust1,565,070 1,413,170 1,346,304 1,313,708 1,307,464 
Dubuque Bank and Trust Company1,290,756 1,275,131 1,157,881 1,245,553 1,214,541 
Bank of Blue Valley(1)1,016,743 1,091,243 1,077,183 473,712 489,471 
Illinois Bank & Trust1,167,905 768,267 769,577 735,101 715,482 
First Bank & Trust893,419 903,410 844,793 857,313 861,629 
Wisconsin Bank & Trust941,109 880,217 892,020 872,090 927,821 
Premier Valley Bank707,814 719,141 689,384 676,849 639,194 
Arizona Bank & Trust693,975 578,694 646,728 593,089 574,762 
Minnesota Bank & Trust574,369 600,175 515,310 546,706 560,399 
Rocky Mountain Bank468,314 462,825 438,349 426,503 424,700 
Net Income      
Citywide Banks$6,963 $6,030 $8,120 $7,283 $7,005 
New Mexico Bank & Trust6,288 6,404 7,634 7,847 6,007 
Dubuque Bank and Trust Company8,357 5,445 17,353 5,011 6,002 
Bank of Blue Valley(1)3,556 3,550 3,505 1,172 324 
Illinois Bank & Trust1,741 2,223 1,751 2,632 2,180 
First Bank & Trust4,366 2,927 3,099 2,792 3,334 
Wisconsin Bank & Trust3,103 3,195 2,516 4,707 3,229 
Premier Valley Bank3,299 3,301 2,763 2,411 2,930 
Arizona Bank & Trust993 3,222 3,110 2,780 1,951 
Minnesota Bank & Trust2,094 3,250 1,980 1,454 1,038 
Rocky Mountain Bank952 720 779 1,358 1,230 
 
(1) Formerly known as Morrill & Janes Bank and Trust Company.
(2) Includes deposits held for sale.
 


CONTACT:
Bryan R. McKeag
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com  

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Source: Heartland Financial USA, Inc.