Heartland Financial USA, Inc. ("HTLF") Reports Quarterly and Year to Date Results as of June 30, 2022

Company Release - 7/25/2022 4:00 PM ET

Highlights and Developments

  • Quarterly loan growth of $551.9 million or 5%, exclusive of Paycheck Protection Program ("PPP") loans
  • Quarterly net income available to common stockholders of $49.9 million
  • Efficiency ratio of 57.66%
  • Diluted earnings per common share of $1.17
  • Quarterly net charge-offs of $714,000 and 30-89 day loan delinquencies were 0.06% of total loans
  • Citywide Banks is now operating as a division of HTLF Bank, completing the first stage of charter consolidation
  Quarter Ended
June 30,
  Six Months Ended
June 30,
    2022       2021       2022       2021  
Net income available to common stockholders (in millions) $ 49.9     $ 59.6     $ 90.9     $ 110.4  
Diluted earnings per common share   1.17       1.41       2.14       2.61  
                               
Return on average assets   1.06 %     1.35 %     0.99 %     1.27 %
Return on average common equity   11.55       12.07       9.82       11.29  
Return on average tangible common equity (non-GAAP)(1)   18.35       18.05       15.08       16.99  
Net interest margin   3.18       3.37       3.13       3.40  
Net interest margin, fully tax-equivalent (non-GAAP)(1)   3.22       3.41       3.17       3.45  
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)   57.66       57.11       61.02       56.86  

(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 results were excellent and exceeded our expectations. Our tremendous loan growth, solid credit metrics and an improved efficiency ratio are attributable to the continued execution of our growth strategies and provide strong momentum going into the third quarter."
Bruce K. Lee, president and chief executive officer, HTLF

DUBUQUE, Iowa, July 25, 2022 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021:

  • Net income available to common stockholders of $49.9 million compared to $59.6 million, a decrease of $9.7 million or 16%.
  • Earnings per diluted common share of $1.17 compared to $1.41, a decrease of $0.24 or 17%.
  • Net interest income of $142.5 million compared to $141.2 million, an increase of $1.2 million or 1%.
  • Return on average common equity was 11.55% compared to 12.07%, and return on average assets was 1.06% compared to 1.35%.
  • Return on average tangible common equity (non-GAAP) was 18.35% compared to 18.05%.

"HTLF's second quarter results were excellent and exceeded our expectations. Our tremendous loan growth, solid credit metrics and an improved efficiency ratio are attributable to the continued execution of our growth strategies and provide strong momentum going into the third quarter," said Bruce K. Lee, president and chief executive officer of HTLF.

HTLF reported the following results for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

  • Net income available to common stockholders of $90.9 million compared to $110.4 million, a decrease of $19.5 million or 18%.
  • Earnings per diluted common share of $2.14 compared to $2.61, a decrease of $0.47 or 18%.
  • Net interest income of $277.1 million compared to $280.8 million, a decrease of $3.7 million or 1%.
  • Return on average common equity was 9.82% compared to 11.29%, and return on average assets was 0.99% compared to 1.27%.
  • Return on average tangible common equity (non-GAAP) was 15.08% compared to 16.99%.

Charter Consolidation Update
During the second quarter of 2022, the consolidation of HTLF’s 11 separate bank charters advanced from planning to execution. Citywide Banks is now operating as a division of HTLF Bank, completing the first stage of charter consolidation. Each of the remaining charters will be consolidated into HTLF Bank in the following 10 stages of the project, using a template that retains their current brands, local leadership and local decision making. The final stage is expected to be completed by the end of 2023. Consolidation restructuring costs are projected to be $19-20 million, with approximately $14-15 million of expenses remaining to be incurred through 2023. Charter consolidation is designed to eliminate redundancies and improve HTLF’s operating efficiency and capacity to support ongoing product and service enhancements and current and future growth. The resulting efficiencies and expansion in capacity are projected to generate financial benefits of approximately $20.0 million annually when the project is completed.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.18% (3.22% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2022 compared to 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2021.

Total interest income and average earning asset changes for the second quarter of 2022 compared to the second quarter of 2021 were:

  • Total interest income was $152.9 million compared to $148.1 million, which was an increase of $4.8 million or 3% and primarily attributable to an increase in average earning assets partially offset by lower yields and a reduction of PPP loan interest income. PPP loan interest income totaled $1.8 million compared to $11.2 million, which was a decrease of $9.4 million or 84%.
  • Total interest income on a tax-equivalent basis (non-GAAP) was $154.9 million, which was an increase of $5.0 million or 3% from $149.8 million.
  • Average earning assets increased $1.17 billion or 7% to $17.99 billion compared to $16.82 billion.
  • The average rate on earning assets decreased 12 basis points to 3.45% compared to 3.57%, which was primarily due to a shift in earning asset mix. Total average securities were 41% of total average earning assets compared to 39%.

Total interest expense and average interest bearing liability changes for the second quarter of 2022 compared to the second quarter of 2021 were:

  • Total interest expense was $10.4 million, an increase of $3.6 million or 52% from $6.9 million, based on an increase in the average interest rate paid and an increase in average interest bearing liabilities.
  • The average interest rate paid on interest bearing liabilities increased to 0.36% compared to 0.28%.
  • Average interest bearing deposits increased $1.68 billion or 18% to $11.08 billion from $9.41 billion.
  • The average interest rate paid on interest bearing deposits increased 8 basis points to 0.24% compared to 0.16%.
  • Average borrowings increased $25.2 million or 5% to $491.1 million from $465.9 million, and the average interest rate paid on borrowings was 3.18% compared to 2.65%.

Net interest income changes for the second quarter of 2022 compared to the second quarter of 2021 were:

  • Net interest income totaled $142.5 million compared to $141.2 million, which was an increase of $1.2 million or 1%. PPP loan interest income totaled $1.8 million compared to $11.2 million, which was a decrease of $9.4 million or 84%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $144.4 million compared to $143.0 million, which was an increase of $1.5 million or 1%.

Noninterest Income and Noninterest Expense

Total noninterest income was $34.5 million during the second quarter of 2022 compared to $33.2 million during the second quarter of 2021, an increase of $1.4 million or 4%. Significant changes within the noninterest income category for the second quarter of 2022 compared to the second quarter of 2021 were:

  • Service charges and fees increased $2.9 million or 19% to $18.1 million from $15.1 million. Credit card revenue was $5.8 million compared to $4.3 million, which was an increase of $1.5 million or 35%.
  • Net security losses totaled $2.1 million compared to net gains of $2.8 million.
  • Net gains on sales of loans held for sale totaled $2.9 million compared to $4.8 million, which was a decrease of $1.9 million or 39% and was primarily attributable to a decrease of loans sold to the secondary market.
  • Other noninterest income totaled $7.9 million compared to $2.2 million, which was an increase of $5.7 million. The following items impacted other noninterest income for the second quarter of 2022 compared to the second quarter of 2021:
    • Commercial swap fees and syndication income totaled $4.9 million compared to $193,000.
    • Gains on the sale of VISA B shares totaled $1.9 million compared to $0.  

Total noninterest expense was $106.5 million during the second quarter of 2022 compared to $103.4 million during the second quarter of 2021, which was an increase of $3.1 million or 3%. Significant changes within the noninterest expense category for the second quarter of 2022 compared to the second quarter of 2021 were:

  • Salaries and employee benefits totaled $64.0 million compared to $57.3 million, which was an increase of $6.7 million or 12%. The increase was primarily attributable to higher salary expenses due to inflationary wage pressures and increased health care expenses due to normalized health care usage.
  • Net gains on sales/valuations of assets totaled $3.2 million compared to net losses of $183,000, and the change was primarily attributable to a gain of $3.0 million associated with the sale of two branches in Illinois and a gain of $413,000 associated with the sale of an insurance subsidiary.
  • Acquisition, integration and restructuring costs totaled $2.4 million compared to $210,000, an increase of $2.2 million due to the progression of the charter consolidation project.

The effective tax rate was 22.89% for the second quarter of 2022 compared to 21.11% for the second quarter of 2021. The following items impacted the second quarter 2022 and 2021 tax calculations:

  • Solar energy tax credits of $702,000 compared to $1.3 million.
  • Federal low-income housing tax credits of $135,000 in each quarterly calculation.
  • New markets tax credits of $75,000 in each quarterly calculation.
  • Historic rehabilitation tax credits of $63,000 compared to $123,000.
  • Tax-exempt interest income as a percentage of pre-tax income of 11.05% compared to 8.49%.
  • Tax expense of $43,000 compared to a tax benefit of $150,000 resulting from the vesting of restricted stock units.

Total Assets, Total Loans and Total Deposits

Total assets were $19.66 billion at June 30, 2022, an increase of $383.9 million or 2% from $19.27 billion at year-end 2021. Securities represented 37% and 40% of total assets at June 30, 2022, and December 31, 2021, respectively.

Total loans held to maturity were $10.68 billion at June 30, 2022, compared to $9.95 billion at December 31, 2021, which was an increase of $723.6 million or 7%. Excluding total PPP loans, loans increased $551.9 million or 5% since March 31, 2022 and $900.5 million or 9% since December 31, 2021.

Significant changes by loan category at June 30, 2022 compared to March 31, 2022 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $210.7 million or 4% to $5.37 billion compared to $5.15 billion.
    • PPP loans originated in 2020 ("PPP I") decreased $2.9 million or 51%. PPP loans originated in 2021 ("PPP II") decreased $48.1 million or 70%.
    • Excluding total PPP loans, commercial and business lending increased $261.8 million or 5% to $5.34 billion from $5.08 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $162.5 million or 5% to $3.17 billion compared to $3.00 billion.
  • Agricultural and agricultural real estate loans increased $70.3 million or 9% to $836.7 million compared to $766.4 million.
  • Consumer loans increased $37.3 million or 9% to $464.1 million from $426.8 million.

Significant changes by loan category at June 30, 2022 compared to December 31, 2021 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $280.1 million or 6% to $5.37 billion compared to $5.09 billion.
    • PPP I loans decreased $24.3 million or 90%. PPP II loans decreased $152.5 million or 88%.
    • Excluding total PPP loans, commercial and business lending increased $456.9 million or 9% to $5.34 billion from $4.89 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $300.1 million or 10% to $3.17 billion compared to $2.87 billion.
  • Agricultural and agricultural real estate loans increased $83.0 million or 11% to $836.7 million compared to $753.8 million.
  • Consumer loans increased $44.6 million or 11% to $464.1 million from $419.5 million.

Total deposits were $17.23 billion as of June 30, 2022, compared to $16.42 billion at December 31, 2021. Significant deposit changes by category at June 30, 2022 compared to December 31, 2021 included:

  • Demand deposits decreased $408.0 million or 6% to $6.09 billion compared to $6.50 billion.
  • Savings deposits increased $1.16 billion or 13% to $10.06 billion from $8.90 billion.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the second quarter of 2022 was $1.5 million, which was an increase of $8.0 million from a provision benefit of $6.5 million recorded in the second quarter of 2021. The provision expense for the second quarter of 2022 compared to the second quarter of 2021 was impacted by several factors, including:

  • loan growth exclusive of PPP loans totaling $551.9 million compared to $287.7 million,
  • decrease in nonperforming loans of $22.4 million to $63.0 million or 0.59% of total loans compared to $85.4 million or 0.85% of total loans at June 30, 2021,
  • nonpass loans declined to 5.8% of total loans compared to 10.4% of total loans at June 30, 2021, and
  • loans delinquent 30-89 days as a percent of total loans fell to 0.06% compared to 0.17% at June 30, 2021.

The allowance for credit losses for loans totaled $101.4 million and $110.1 million at June 30, 2022, and December 31, 2021, respectively. The following items impacted the allowance for credit losses for loans for the six months ended June 30, 2022:

  • Provision expense for the six months ended June 30, 2022, totaled $4.2 million.
  • Net charge offs of $12.9 million were recorded for the first six months of 2022.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $17.8 million at June 30, 2022, which was an increase of $2.3 million from $15.5 million at December 31, 2021. Unfunded commitments increased $628.7 million to $4.46 billion at June 30, 2022 compared to $3.83 billion at December 31, 2021.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $3.2 million for the second quarter of 2022 compared to provision benefit of $7.1 million for the second quarter of 2021. The total allowance for lending related credit losses was $119.1 million or 1.12% of total loans at June 30, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets decreased $4.4 million or 6% to $67.5 million or 0.34% of total assets at June 30, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $63.0 million or 0.59% of total loans at June 30, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2021. At June 30, 2022, loans delinquent 30-89 days were 0.06% of total loans compared to 0.07% of total loans at December 31, 2021.

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 via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until July 23, 2023, 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 $19.66 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, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

Safe Harbor Statement
This release (including any information incorporated herein by reference) contains, and future oral and written statements of HTLF and its management may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

Any statements about HTLF's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "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 HTLF and its management. Although HTLF may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which HTLF currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of HTLF’s Annual Report on Form 10-K for the year ended December 31, 2021, include, among others:

  • Coronavirus Disease 2019 ("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 economic, political and competitive forces impacting our business;
  • Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
  • Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF's business, financial condition and results of operations. 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 HTLF’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. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in HTLF's filings with the SEC.

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
June 30,
  For the Six Months Ended
June 30,
    2022       2021       2022       2021  
Interest Income              
Interest and fees on loans $ 108,718     $ 111,915     $ 211,087     $ 224,354  
Interest on securities:              
Taxable   38,098       31,546       70,718       61,989  
Nontaxable   5,508       4,561       11,710       9,064  
Interest on federal funds sold                     1  
Interest on deposits with other banks and short-term investments   563       60       634       126  
Total Interest Income   152,887       148,082       294,149       295,534  
Interest Expense              
Interest on deposits   6,530       3,790       9,507       8,185  
Interest on short-term borrowings   88       98       134       250  
Interest on other borrowings   3,808       2,976       7,368       6,276  
Total Interest Expense   10,426       6,864       17,009       14,711  
Net Interest Income   142,461       141,218       277,140       280,823  
Provision (benefit) for credit losses   3,246       (7,080 )     6,491       (7,728 )
Net Interest Income After Provision (Benefit) for Credit Losses   139,215       148,298       270,649       288,551  
Noninterest Income              
Service charges and fees   18,066       15,132       33,317       28,803  
Loan servicing income   834       873       1,120       1,711  
Trust fees   5,679       6,039       11,758       11,816  
Brokerage and insurance commissions   839       865       1,708       1,718  
Securities gains/(losses), net   (2,089 )     2,842       783       2,812  
Unrealized gain/ (loss) on equity securities, net   (121 )     83       (404 )     (27 )
Net gains on sale of loans held for sale   2,901       4,753       6,312       11,173  
Valuation adjustment on servicing rights         (526 )     1,658       391  
Income on bank owned life insurance   523       937       1,047       1,766  
Other noninterest income   7,907       2,166       11,809       3,318  
Total Noninterest Income   34,539       33,164       69,108       63,481  
Noninterest Expense              
Salaries and employee benefits   64,032       57,332       130,206       116,394  
Occupancy   7,094       7,399       14,456       15,317  
Furniture and equipment   3,033       3,501       6,552       6,594  
Professional fees   15,987       16,237       31,143       29,727  
Advertising   1,283       1,649       2,838       3,118  
Core deposit and customer relationship intangibles amortization   2,083       2,415       4,137       4,931  
Other real estate and loan collection expenses, net   78       414       273       549  
(Gain)/loss on sales/valuations of assets, net   (3,230 )     183       (3,184 )     377  
Acquisition, integration and restructuring costs   2,412       210       2,988       3,138  
Partnership investment in tax credit projects   737       1,345       814       1,380  
Other noninterest expenses   12,970       12,691       27,053       24,274  
Total Noninterest Expense   106,479       103,376       217,276       205,799  
Income Before Income Taxes   67,275       78,086       122,481       146,233  
Income taxes   15,402       16,481       27,519       31,814  
Net Income   51,873       61,605       94,962       114,419  
Preferred dividends   (2,012 )     (2,012 )     (4,025 )     (4,025 )
Net Income Available to Common Stockholders $ 49,861     $ 59,593     $ 90,937     $ 110,394  
Earnings per common share-diluted $ 1.17     $ 1.41     $ 2.14     $ 2.61  
Weighted average shares outstanding-diluted   42,565,391       42,359,873       42,562,639       42,357,133  

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Interest Income                  
Interest and fees on loans $ 108,718     $ 102,369     $ 107,721     $ 112,062     $ 111,915  
Interest on securities:                  
Taxable   38,098       32,620       30,637       32,384       31,546  
Nontaxable   5,508       6,202       5,595       4,609       4,561  
Interest on federal funds sold                            
Interest on deposits with other banks and short-term investments   563       71       86       132       60  
Total Interest Income   152,887       141,262       144,039       149,187       148,082  
Interest Expense                  
Interest on deposits   6,530       2,977       3,168       3,444       3,790  
Interest on short-term borrowings   88       46       123       98       98  
Interest on other borrowings   3,808       3,560       3,554       3,102       2,976  
Total Interest Expense   10,426       6,583       6,845       6,644       6,864  
Net Interest Income   142,461       134,679       137,194       142,543       141,218  
Provision (benefit) for credit losses   3,246       3,245       (5,313 )     (4,534 )     (7,080 )
Net Interest Income After Provision (Benefit) for Credit Losses   139,215       131,434       142,507       147,077       148,298  
Noninterest Income                  
Service charges and fees   18,066       15,251       15,349       15,551       15,132  
Loan servicing income   834       286       781       784       873  
Trust fees   5,679       6,079       6,380       6,221       6,039  
Brokerage and insurance commissions   839       869       962       866       865  
Securities gains/(losses), net   (2,089 )     2,872       1,563       1,535       2,842  
Unrealized gain/ (loss) on equity securities, net   (121 )     (283 )     (27 )     112       83  
Net gains on sale of loans held for sale   2,901       3,411       4,151       5,281       4,753  
Valuation adjustment on servicing rights         1,658       502       195       (526 )
Income on bank owned life insurance   523       524       1,056       940       937  
Other noninterest income   7,907       3,902       2,013       1,239       2,166  
Total Noninterest Income   34,539       34,569       32,730       32,724       33,164  
Noninterest Expense                  
Salaries and employee benefits   64,032       66,174       63,031       60,689       57,332  
Occupancy   7,094       7,362       7,282       7,366       7,399  
Furniture and equipment   3,033       3,519       3,364       3,365       3,501  
Professional fees   15,987       15,156       17,631       17,242       16,237  
Advertising   1,283       1,555       2,218       1,921       1,649  
Core deposit and customer relationship intangibles amortization   2,083       2,054       2,169       2,295       2,415  
Other real estate and loan collection expenses, net   78       195       363       78       414  
(Gain)/loss on sales/valuations of assets, net   (3,230 )     46       214       (3 )     183  
Acquisition, integration and restructuring costs   2,412       576       1,989       204       210  
Partnership investment in tax credit projects   737       77       2,549       2,374       1,345  
Other noninterest expenses   12,970       14,083       14,576       15,096       12,691  
Total Noninterest Expense   106,479       110,797       115,386       110,627       103,376  
Income Before Income Taxes   67,275       55,206       59,851       69,174       78,086  
Income taxes   15,402       12,117       10,271       13,250       16,481  
Net Income   51,873       43,089       49,580       55,924       61,605  
Preferred dividends   (2,012 )     (2,013 )     (2,012 )     (2,013 )     (2,012 )
Net Income Available to Common Stockholders $ 49,861     $ 41,076     $ 47,568     $ 53,911     $ 59,593  
Earnings per common share-diluted $ 1.17     $ 0.97     $ 1.12     $ 1.27     $ 1.41  
Weighted average shares outstanding-diluted   42,565,391       42,540,953       42,479,442       42,415,993       42,359,873  

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Assets                  
Cash and due from banks $ 221,077     $ 198,559     $ 163,895     $ 192,247     $ 208,702  
Interest bearing deposits with other banks and short-term investments   163,717       406,343       271,704       135,158       240,426  
Cash and cash equivalents   384,794       604,902       435,599       327,405       449,128  
Time deposits in other financial institutions   1,855       2,894       2,894       3,138       3,138  
Securities:                  
Carried at fair value   7,106,218       7,025,243       7,530,374       7,449,936       6,543,978  
Held to maturity, at cost, less allowance for credit losses   81,939       81,785       84,709       85,354       85,439  
Other investments, at cost   85,899       82,751       82,567       83,332       76,809  
Loans held for sale   18,803       22,685       21,640       37,078       33,248  
Loans:                  
Held to maturity   10,678,218       10,177,385       9,954,572       9,854,907       10,012,014  
Allowance for credit losses   (101,353 )     (100,522 )     (110,088 )     (117,533 )     (120,726 )
Loans, net   10,576,865       10,076,863       9,844,484       9,737,374       9,891,288  
Premises, furniture and equipment, net   206,818       213,752       215,827       221,996       226,358  
Goodwill   576,005       576,005       576,005       576,005       576,005  
Core deposit and customer relationship intangibles, net   28,851       30,934       32,988       35,157       37,452  
Servicing rights, net   8,288       8,102       6,890       6,351       6,201  
Cash surrender value on life insurance   192,474       192,267       191,722       190,576       189,619  
Other real estate, net   4,528       1,422       1,927       4,744       6,314  
Other assets   385,062       311,274       246,923       237,779       246,029  
Total Assets $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225     $ 18,371,006  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
Demand $ 6,087,304     $ 6,376,249     $ 6,495,326     $ 6,537,722     $ 6,299,289  
Savings   10,059,678       9,236,427       8,897,909       8,416,204       8,189,223  
Time   1,078,568       1,054,008       1,024,020       1,068,317       1,126,606  
Total deposits   17,225,550       16,666,684       16,417,255       16,022,243       15,615,118  
Short-term borrowings   97,749       107,372       131,597       265,620       152,563  
Other borrowings   372,538       372,290       372,072       371,765       271,244  
Accrued expenses and other liabilities   188,494       152,676       171,447       164,345       172,295  
Total Liabilities   17,884,331       17,299,022       17,092,371       16,823,973       16,211,220  
Stockholders' Equity                  
Preferred equity   110,705       110,705       110,705       110,705       110,705  
Common stock   42,439       42,370       42,275       42,250       42,245  
Capital surplus   1,076,766       1,073,048       1,071,956       1,068,913       1,066,765  
Retained earnings   1,031,076       992,655       962,994       926,834       883,484  
Accumulated other comprehensive income (loss)   (486,918 )     (286,921 )     (5,752 )     23,550       56,587  
Total Equity   1,774,068       1,931,857       2,182,178       2,172,252       2,159,786  
Total Liabilities and Equity $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225     $ 18,371,006  

 

 
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
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Average Balances                  
Assets $ 19,559,091     $ 19,229,872     $ 19,151,691     $ 18,608,775     $ 18,293,756  
Loans, net of unearned   10,477,368       10,043,594       9,886,027       9,920,047       10,072,071  
Deposits   17,044,479       16,459,378       16,265,476       15,817,778       15,576,345  
Earning assets   17,987,734       17,757,067       17,681,917       17,123,824       16,819,978  
Interest bearing liabilities   11,575,319       10,453,400       10,207,255       9,881,350       9,871,302  
Common equity   1,731,393       2,003,424       2,061,973       2,072,593       1,980,904  
Total stockholders' equity   1,842,098       2,114,129       2,172,678       2,183,298       2,091,609  
Tangible common equity (non-GAAP)(1)   1,125,543       1,395,488       1,451,950       1,460,309       1,366,285  
                   
Key Performance Ratios                  
Annualized return on average assets   1.06 %     0.91 %     1.03 %     1.19 %     1.35 %
Annualized return on average common equity (GAAP)   11.55       8.32       9.15       10.32       12.07  
Annualized return on average tangible common equity (non-GAAP)(1)   18.35       12.41       13.47       15.14       18.05  
Annualized ratio of net charge-offs/(recoveries) to average loans   0.03       0.49       0.03       (0.05 )     0.12  
Annualized net interest margin (GAAP)   3.18       3.08       3.08       3.30       3.37  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.22       3.12       3.12       3.34       3.41  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   57.66       64.65       63.86       60.38       57.11  

 

  For the Quarter Ended
June 30,
  For the Six Months Ended
June 30,
    2022       2021       2022       2021  
Average Balances              
Assets $ 19,559,091     $ 18,293,756     $ 19,395,391     $ 18,130,148  
Loans, net of unearned   10,477,368       10,072,071       10,261,679       10,012,443  
Deposits   17,044,479       15,576,345       16,753,544       15,311,921  
Earning assets   17,987,734       16,819,978       17,873,037       16,641,045  
Interest bearing liabilities   11,575,319       9,871,302       11,017,459       9,894,103  
Common equity   1,731,393       1,980,904       1,866,657       1,972,337  
Total stockholders' equity   1,842,098       2,091,609       1,977,362       2,083,042  
Tangible common stockholders' equity   1,125,543       1,366,285       1,259,769       1,356,333  
               
Key Performance Ratios              
Annualized return on average assets   1.06 %     1.35 %     0.99 %     1.27 %
Annualized return on average common equity (GAAP)   11.55       12.07       9.82       11.29  
Annualized return on average tangible common equity (non-GAAP)(1)   18.35       18.05       15.08       16.99  
Annualized ratio of net charge-offs/(recoveries) to average loans   0.03       0.12       0.25       0.09  
Annualized net interest margin (GAAP)   3.18       3.37       3.13       3.40  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.22       3.41       3.17       3.45  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   57.66       57.11       61.02       56.86  
               
(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
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Common Share Data                  
Book value per common share $ 39.19     $ 42.98     $ 49.00     $ 48.79     $ 48.50  
Tangible book value per common share (non-GAAP)(1) $ 24.94     $ 28.66     $ 34.59     $ 34.33     $ 33.98  
Common shares outstanding, net of treasury stock   42,439,439       42,369,908       42,275,264       42,250,092       42,245,452  
Tangible common equity ratio (non-GAAP)(1)   5.56 %     6.52 %     7.84 %     7.89 %     8.08 %
                   
Other Selected Trend Information                  
Effective tax rate   22.89 %     21.95 %     17.16 %     19.15 %     21.11 %
Full time equivalent employees   2,087       2,208       2,249       2,163       2,091  
                   
Loans Held to Maturity                  
Commercial and industrial $ 3,059,519     $ 2,814,513     $ 2,645,085     $ 2,538,369     $ 2,518,908  
Paycheck Protection Program ("PPP")   23,031       74,065       199,883       409,247       829,175  
Owner occupied commercial real estate   2,282,833       2,266,076       2,240,334       2,135,227       1,940,134  
Commercial and business lending   5,365,383       5,154,654       5,085,302       5,082,843       5,288,217  
Non-owner occupied commercial real estate   2,321,718       2,161,761       2,010,591       2,020,487       1,987,369  
Real estate construction   845,045       842,483       856,119       814,001       854,295  
Commercial real estate lending   3,166,763       3,004,244       2,866,710       2,834,488       2,841,664  
Total commercial lending   8,532,146       8,158,898       7,952,012       7,917,331       8,129,881  
Agricultural and agricultural real estate   836,703       766,443       753,753       684,670       679,608  
Residential mortgage   845,270       825,242       829,283       840,356       800,884  
Consumer   464,099       426,802       419,524       412,550       401,641  
Total loans held to maturity $ 10,678,218     $ 10,177,385     $ 9,954,572     $ 9,854,907     $ 10,012,014  
                   
Total unfunded loan commitments $ 4,458,874     $ 4,130,316     $ 3,830,219     $ 3,583,417     $ 3,433,062  
                   
(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
  6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Allowance for Credit Losses-Loans                  
Balance, beginning of period $ 100,522     $ 110,088     $ 117,533     $ 120,726     $ 130,172  
Provision (benefit) for credit losses   1,545       2,628       (6,808 )     (4,448 )     (6,466 )
Charge-offs   (1,473 )     (13,217 )     (1,953 )     (1,167 )     (3,497 )
Recoveries   759       1,023       1,316       2,422       517  
Balance, end of period $ 101,353     $ 100,522     $ 110,088     $ 117,533     $ 120,726  
                   
Allowance for Unfunded Commitments                  
Balance, beginning of period $ 16,079     $ 15,462     $ 13,967     $ 14,002     $ 14,619  
Provision (benefit) for credit losses   1,701       617       1,495       (35 )     (617 )
Balance, end of period $ 17,780     $ 16,079     $ 15,462     $ 13,967     $ 14,002  
                   
Allowance for lending related credit losses $ 119,133     $ 116,601     $ 125,550     $ 131,500     $ 134,728  
                   
Provision for Credit Losses                  
Provision (benefit) for credit losses-loans $ 1,545     $ 2,628     $ (6,808 )   $ (4,448 )   $ (6,466 )
Provision (benefit) for credit losses-unfunded commitments   1,701       617       1,495       (35 )     (617 )
Provision (benefit) for credit losses-held to maturity securities                     (51 )     3  
Total provision (benefit) for credit losses $ 3,246     $ 3,245     $ (5,313 )   $ (4,534 )   $ (7,080 )
                   
Asset Quality                  
Nonaccrual loans $ 62,909     $ 64,174     $ 69,369     $ 82,375     $ 85,268  
Loans past due ninety days or more   95       246       550       861       97  
Other real estate owned   4,528       1,422       1,927       4,744       6,314  
Other repossessed assets         34       43       166       50  
Total nonperforming assets $ 67,532     $ 65,876     $ 71,889     $ 88,146     $ 91,729  
                   
Performing troubled debt restructured loans $ 1,350     $ 882     $ 817     $ 1,817     $ 2,122  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 65,876     $ 71,889     $ 88,146     $ 91,729     $ 98,364  
Net loan (charge offs)/recoveries   (714 )     (12,194 )     (637 )     1,255       (2,980 )
New nonperforming loans   8,590       15,832       5,886       6,908       7,989  
Reduction of nonperforming loans(1)   (5,244 )     (8,448 )     (18,429 )     (8,581 )     (10,948 )
Net OREO/repossessed assets sales proceeds and losses   (976 )     (1,203 )     (3,077 )     (3,165 )     (696 )
Balance, end of period $ 67,532     $ 65,876     $ 71,889     $ 88,146     $ 91,729  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans   0.59 %     0.63 %     0.70 %     0.84 %     0.85 %
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans   0.60       0.64       0.71       0.86       0.87  
Ratio of nonperforming assets to total assets   0.34       0.34       0.37       0.46       0.50  
Annualized ratio of net loan charge-offs/(recoveries) to average loans   0.03       0.49       0.03       (0.05 )     0.12  
Allowance for loan credit losses as a percent of loans   0.95       0.99       1.11       1.19       1.21  
Allowance for lending related credit losses as a percent of loans   1.12       1.15       1.26       1.33       1.35  
Allowance for loan credit losses as a percent of nonperforming loans   160.87       156.04       157.45       141.20       141.42  
Loans delinquent 30-89 days as a percent of total loans   0.06       0.10       0.07       0.12       0.17  
                   
(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, 2022   March 31, 2022   June 30, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 6,419,615     $ 38,098   2.38 %   $ 6,501,664     $ 32,620   2.03 %   $ 5,862,683     $ 31,546   2.16 %
Nontaxable(1)   915,880       6,972   3.05       1,106,951       7,851   2.88       740,601       5,773   3.13  
Total securities   7,335,495       45,070   2.46       7,608,615       40,471   2.16       6,603,284       37,319   2.27  
Interest on deposits with other banks and short-term investments   277,773       563   0.81       216,451       71   0.13       271,891       60   0.09  
Federal funds sold                 11                        
Loans:(2)                                  
Commercial and industrial(1)   3,002,822       30,441   4.07       2,744,336       27,053   4.00       2,469,742       28,562   4.64  
PPP loans   41,370       1,801   17.46       132,050       4,323   13.28       1,047,559       11,186   4.28  
Owner occupied commercial real estate   2,294,524       22,863   4.00       2,243,522       21,278   3.85       1,858,891       20,097   4.34  
Non-owner occupied commercial real estate   2,179,048       22,871   4.21       2,060,548       21,163   4.17       1,980,374       21,734   4.40  
Real estate construction   878,555       10,015   4.57       847,250       9,276   4.44       815,738       9,212   4.53  
Agricultural and agricultural real estate   782,610       7,933   4.07       745,348       7,006   3.81       672,560       7,267   4.33  
Residential mortgage   849,174       8,358   3.95       843,881       8,085   3.89       827,291       9,255   4.49  
Consumer   449,265       4,949   4.42       426,659       4,655   4.42       399,916       5,152   5.17  
Less: allowance for credit losses-loans   (102,902 )             (111,604 )             (127,268 )        
Net loans   10,374,466       109,231   4.22       9,931,990       102,839   4.20       9,944,803       112,465   4.54  
Total earning assets   17,987,734       154,864   3.45 %     17,757,067       143,381   3.27 %     16,819,978       149,844   3.57 %
Nonearning Assets   1,571,357               1,472,805               1,473,778          
Total Assets $ 19,559,091             $ 19,229,872             $ 18,293,756          
Interest Bearing Liabilities                                  
Savings $ 9,995,497     $ 5,372   0.22 %   $ 8,889,950     $ 2,394   0.11 %   $ 8,234,151     $ 2,233   0.11 %
Time deposits   1,088,765       1,158   0.43       1,071,675       583   0.22       1,171,266       1,557   0.53  
Short-term borrowings   118,646       88   0.30       119,588       46   0.16       169,822       98   0.23  
Other borrowings   372,411       3,808   4.10       372,187       3,560   3.88       296,063       2,976   4.03  
Total interest bearing liabilities   11,575,319       10,426   0.36 %     10,453,400       6,583   0.26 %     9,871,302       6,864   0.28 %
Noninterest Bearing Liabilities                                  
Noninterest bearing deposits   5,960,217               6,497,753               6,170,928          
Accrued interest and other liabilities   181,457               164,590               159,917          
Total noninterest bearing liabilities   6,141,674               6,662,343               6,330,845          
Equity   1,842,098               2,114,129               2,091,609          
Total Liabilities and Equity $ 19,559,091             $ 19,229,872             $ 18,293,756          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 144,438           $ 136,798           $ 142,980    
Net interest spread (1)         3.09 %           3.01 %           3.29 %
Net interest income, fully tax-equivalent (non-GAAP )(1)(3) to total earning assets         3.22 %           3.12 %           3.41 %
Interest bearing liabilities to earning assets   64.35 %             58.87 %             58.69 %        
                                   
(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, 2022   June 30, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 6,460,412     $ 70,718   2.21 %   $ 5,778,333     $ 61,989   2.16 %
Nontaxable(1)   1,010,888       14,823   2.96       735,636       11,473   3.15  
Total securities   7,471,300       85,541   2.31 %     6,513,969       73,462   2.27 %
Interest bearing deposits with other banks and other short-term investments   247,281       634   0.52       238,376       126   0.11  
Federal funds sold   6               6,971       1   0.03  
Loans:(2)                      
Commercial and industrial(1)   2,874,694       57,494   4.03 %     2,485,210       56,784   4.61 %
PPP loans   86,460       6,124   14.28       1,020,190       21,335   4.22  
Owner occupied commercial real estate   2,268,963       44,141   3.92       1,818,932       39,662   4.40  
Non-owner occupied commercial real estate   2,119,925       44,034   4.19       1,958,938       43,855   4.51  
Real estate construction   862,989       19,291   4.51       811,053       18,910   4.70  
Agricultural and agricultural real estate   764,082       14,939   3.94       676,895       15,318   4.56  
Residential mortgage   846,542       16,443   3.92       838,545       19,085   4.59  
Consumer   438,024       9,604   4.42       402,680       10,519   5.27  
Less: allowance for credit losses-loans   (107,229 )             (130,714 )        
Net loans   10,154,450       212,070   4.21       9,881,729       225,468   4.60  
Total earning assets   17,873,037       298,245   3.37 %     16,641,045       299,057   3.62 %
Nonearning Assets   1,522,354               1,489,103          
Total Assets $ 19,395,391             $ 18,130,148          
Interest Bearing Liabilities                      
Savings $ 9,445,778     $ 7,766   0.17 %   $ 8,133,787     $ 4,663   0.12 %
Time deposits   1,080,267       1,741   0.32       1,202,301       3,522   0.59  
Short-term borrowings   119,115       134   0.23       204,735       250   0.25  
Other borrowings   372,299       7,368   3.99       353,280       6,276   3.58  
Total interest bearing liabilities   11,017,459       17,009   0.31 %     9,894,103       14,711   0.30 %
Noninterest Bearing Liabilities                      
Noninterest bearing deposits   6,227,499               5,975,833          
Accrued interest and other liabilities   173,071               177,170          
Total noninterest bearing liabilities   6,400,570               6,153,003          
Stockholders' Equity   1,977,362               2,083,042          
Total Liabilities and Stockholders' Equity $ 19,395,391             $ 18,130,148          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 281,236           $ 284,346    
Net interest spread (1)         3.06 %           3.32 %
Net interest income, fully tax-equivalent (non-GAAP) (1)(3) to total earning assets         3.17 %           3.45 %
Interest bearing liabilities to earning assets   61.64 %             59.46 %        
                       
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.    
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
  For the Quarter Ended
  6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                            
Net income available to common stockholders (GAAP) $      49,861     $      41,076     $      47,568     $      53,911     $      59,593  
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,645     1,623     1,713     1,814     1,907  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $      51,506     $      42,699     $      49,281     $      55,725     $      61,500  
                             
Average common equity (GAAP) $ 1,731,393     $ 2,003,424     $ 2,061,973     $ 2,072,593     $ 1,980,904  
Less average goodwill 576,005     576,005     576,005     576,005     576,005  
Less average core deposit and customer relationship intangibles, net 29,845     31,931     34,018     36,279     38,614  
Average tangible common equity (non-GAAP) $ 1,125,543     $ 1,395,488     $ 1,451,950     $ 1,460,309     $ 1,366,285  
Annualized return on average common equity (GAAP) 11.55 %   8.32 %   9.15 %   10.32 %   12.07 %
Annualized return on average tangible common equity (non-GAAP) 18.35 %   12.41 %   13.47 %   15.14 %   18.05 %
                             
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                            
Net Interest Income (GAAP) $    142,461     $    134,679     $    137,194     $    142,543     $    141,218  
Plus tax-equivalent adjustment(1) 1,977     2,119     1,975     1,714     1,762  
Net interest income, fully tax-equivalent (non-GAAP) $    144,438     $    136,798     $    139,169     $    144,257     $    142,980  
                             
Average earning assets $ 17,987,734     $ 17,757,067     $ 17,681,917     $ 17,123,824     $ 16,819,978  
                             
Annualized net interest margin (GAAP) 3.18 %   3.08 %   3.08 %   3.30 %   3.37 %
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.22     3.12     3.12     3.34     3.41  
Net purchase accounting discount amortization on loans included in annualized net interest margin 0.07     0.05     0.05     0.08     0.09  
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                            
Common equity (GAAP) $ 1,663,363     $ 1,821,152     $ 2,071,473     $ 2,061,547     $ 2,049,081  
Less goodwill 576,005     576,005     576,005     576,005     576,005  
Less core deposit and customer relationship intangibles, net 28,851     30,934     32,988     35,157     37,452  
Tangible common equity (non-GAAP) $ 1,058,507     $ 1,214,213     $ 1,462,480     $ 1,450,385     $ 1,435,624  
                             
Common shares outstanding, net of treasury stock 42,439,439     42,369,908     42,275,264     42,250,092     42,245,452  
Common equity (book value) per share (GAAP) $        39.19     $        42.98     $        49.00     $        48.79     $        48.50  
Tangible book value per common share (non-GAAP) $        24.94     $        28.66     $        34.59     $        34.33     $        33.98  
                             
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                            
Tangible common equity (non-GAAP) $ 1,058,507     $ 1,214,213     $ 1,462,480     $ 1,450,385     $ 1,435,624  
                             
Total assets (GAAP) $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225     $ 18,371,006  
Less goodwill 576,005     576,005     576,005     576,005     576,005  
Less core deposit and customer relationship intangibles, net 28,851     30,934     32,988     35,157     37,452  
Total tangible assets (non-GAAP) $ 19,053,543     $ 18,623,940     $ 18,665,556     $ 18,385,063     $ 17,757,549  
Tangible common equity ratio (non-GAAP) 5.56 %   6.52 %   7.84 %   7.89 %   8.08 %
                             
 (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
6/30/2022   3/31/2022   12/31/2021   9/30/2021   6/30/2021
Net interest income (GAAP) $ 142,461     $ 134,679     $ 137,194     $ 142,543     $ 141,218  
Tax-equivalent adjustment(1)   1,977       2,119       1,975       1,714       1,762  
Fully tax-equivalent net interest income   144,438       136,798       139,169       144,257       142,980  
Noninterest income   34,539       34,569       32,730       32,724       33,164  
Securities (gains)/losses, net   2,089       (2,872 )     (1,563 )     (1,535 )     (2,842 )
Unrealized (gain)/loss on equity securities, net   121       283       27       (112 )     (83 )
Valuation adjustment on servicing rights         (1,658 )     (502 )     (195 )     526  
Adjusted revenue (non-GAAP) $ 181,187     $ 167,120     $ 169,861     $ 175,139     $ 173,745  
                   
Total noninterest expenses (GAAP) $ 106,479     $ 110,797     $ 115,386     $ 110,627     $ 103,376  
Less:                  
Core deposit and customer relationship intangibles amortization   2,083       2,054       2,169       2,295       2,415  
Partnership investment in tax credit projects   737       77       2,549       2,374       1,345  
(Gain)/loss on sales/valuation of assets, net   (3,230 )     46       214       (3 )     183  
Acquisition, integration and restructuring costs   2,412       576       1,989       204       210  
Adjusted noninterest expenses (non-GAAP) $ 104,477     $ 108,044     $ 108,465     $ 105,757     $ 99,223  
Efficiency ratio, fully tax-equivalent (non-GAAP)   57.66 %     64.65 %     63.86 %     60.38 %     57.11 %
                   
Acquisition, integration and restructuring costs                  
Salaries and employee benefits $ 275     $ 340     $     $     $ 44  
Occupancy                           1  
Furniture and equipment                     7       41  
Professional fees   1,779       236       1,989       145       63  
Advertising   156                   11       6  
(Gain)/loss on sales/valuations of assets, net                     39        
Other noninterest expenses   202                   2       55  
Total acquisition, integration and restructuring costs $ 2,412     $ 576     $ 1,989     $ 204     $ 210  
After tax impact on diluted earnings per common share(1) $ 0.04     $ 0.01     $ 0.05     $     $  
                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
June 30,
  For the Six Months Ended
June 30,
    2022       2021       2022       2021  
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)              
Net income available to common stockholders (GAAP) $ 49,861     $ 59,593     $ 90,937     $ 110,394  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,645       1,907       3,268       3,895  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $ 51,506     $ 61,500     $ 94,205     $ 114,289  
               
Average common equity (GAAP) $ 1,731,393     $ 1,980,904     $ 1,866,657     $ 1,972,337  
Less average goodwill   576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   29,845       38,614       30,883       39,999  
Average tangible common equity (non-GAAP) $ 1,125,543     $ 1,366,285     $ 1,259,769     $ 1,356,333  
Annualized return on average common equity (GAAP)   11.55 %     12.07 %     9.82 %     11.29 %
Annualized return on average tangible common equity (non-GAAP)   18.35 %     18.05 %     15.08 %     16.99 %
               
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)              
Net Interest Income (GAAP) $ 142,461     $ 141,218     $ 277,140     $ 280,823  
Plus tax-equivalent adjustment(1)   1,977       1,762       4,096       3,523  
Net interest income, fully tax-equivalent (non-GAAP) $ 144,438     $ 142,980     $ 281,236     $ 284,346  
               
Average earning assets $ 17,987,734     $ 16,819,978     $ 17,873,037     $ 16,641,045  
               
Annualized net interest margin (GAAP)   3.18 %     3.37 %     3.13 %     3.40 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)   3.22       3.41       3.17       3.45  
Purchase accounting discount amortization on loans included in annualized net interest margin   0.07       0.09       0.06       0.11  
               
(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,
  2022       2021       2022