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

Company Release - 10/31/2022 4:01 PM ET
Highlights and Developments
Quarterly loan growth of $254.8 million or 2%, exclusive of Paycheck Protection Program ("PPP") loans
Total revenue growth of $8.1 million or 5% during the quarter to $185.1 million
Quarterly net income available to common stockholders of $54.6 million
Efficiency ratio of 55.26%
Diluted earnings per common share of $1.28
Quarterly net charge-offs of $26,000 and 30-89 day loan delinquencies were 0.10% of total loans
Completed the consolidation of two bank charters during the quarter, and one charter consolidation completed subsequent to the end of the quarter

 

  Quarter Ended
September 30,
  Nine Months Ended
September 30,
    2022       2021       2022       2021  
Net income available to common stockholders (in millions) $ 54.6     $ 53.9     $ 145.5     $ 164.3  
Diluted earnings per common share   1.28       1.27       3.42       3.88  
               
Return on average assets   1.13 %     1.19 %     1.04 %     1.25 %
Return on average common equity   12.93       10.32       10.80       10.95  
Return on average tangible common equity (non-GAAP)(1)   20.76       15.14       16.79       16.34  
Net interest margin   3.41       3.30       3.22       3.37  
Net interest margin, fully tax-equivalent (non-GAAP)(1)   3.45       3.34       3.27       3.41  
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)   55.26       60.38       58.99       58.05  
(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 completed another successful quarter as we continue to execute on our growth and efficiency strategies. Our third quarter results were highlighted by an improved efficiency ratio, solid loan growth and clean credit metrics."
Bruce K. Lee, president and chief executive officer, HTLF

DUBUQUE, Iowa, Oct. 31, 2022 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021:

  • Net income available to common stockholders of $54.6 million compared to $53.9 million, an increase of $640,000 or 1%.
  • Earnings per diluted common share of $1.28 compared to $1.27, an increase of $0.01 or 1%.
  • Net interest income of $155.9 million compared to $142.6 million, an increase of $13.3 million or 9%.
  • Return on average assets was 1.13% compared to 1.19%.
  • Return on average common equity was 12.93% compared to 10.32%.
  • Return on average tangible common equity (non-GAAP) was 20.76% compared to 15.14%.

"HTLF completed another successful quarter as we continue to execute on our growth and efficiency strategies. Our third quarter results were highlighted by an improved efficiency ratio, solid loan growth and clean credit metrics," said Bruce K. Lee, president and chief executive officer of HTLF.

HTLF reported the following results for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:

  • Net income available to common stockholders of $145.5 million compared to $164.3 million, a decrease of $18.8 million or 11%.
  • Earnings per diluted common share of $3.42 compared to $3.88, a decrease of $0.46 or 12%.
  • Net interest income of $433.0 million compared to $423.4 million, an increase of $9.7 million or 2%.
  • Return on average assets was 1.04% compared to 1.25%.
  • Return on average common equity was 10.80% compared to 10.95%.
  • Return on average tangible common equity (non-GAAP) was 16.79% compared to 16.34%.

Charter Consolidation Update

During the third quarter of 2022, the charters of Premier Valley Bank and Minnesota Bank & Trust were consolidated into HTLF Bank. Subsequent to September 30, 2022, the Arizona Bank & Trust charter was consolidated into HTLF Bank. Citywide Banks, Premier Valley Bank, Minnesota Bank & Trust and Arizona Bank & Trust are now operating as divisions of HTLF Bank. During the fourth quarter of 2022, one additional charter consolidation is expected to be completed, and the remaining six charters are expected to be consolidated by the end of 2023. Charter consolidation follows a template that retains the current brands, local leadership and local decision making.

Consolidation restructuring costs are projected to be $19-$20 million with approximately $12-$13 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, as well as current and future growth. HTLF realized some operating efficiency and financial benefits in the third quarter of 2022 with the completion of two charter consolidations, and total benefits are estimated to be approximately $20.0 million annually after the project is completed.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.41% (3.45% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2022 compared to 3.30% (3.34% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2021.

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

  • Total interest income was $175.8 million compared to $149.2 million, which was an increase of $26.6 million or 18% and primarily attributable to an increase in average earning assets and higher yields partially offset by a reduction of PPP loan interest income. PPP loan interest income totaled $363,000 compared to $11.2 million, which was a decrease of $10.8 million or 97%.
  • Total interest income on a tax-equivalent basis (non-GAAP) was $178.0 million, which was an increase of $27.1 million or 18% from $150.9 million.
  • Average earning assets increased $1.03 billion or 6% to $18.16 billion compared to $17.12 billion.
  • The average rate on earning assets increased 39 basis points to 3.89% compared to 3.50%, which was primarily due to recent interest rate increases.

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

  • Total interest expense was $19.9 million, an increase of $13.3 million from $6.6 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 0.67% compared to 0.27%.
  • Average interest bearing deposits increased $1.76 billion or 19% to $11.22 billion from $9.46 billion.
  • The average interest rate paid on interest bearing deposits increased 40 basis points to 0.54% compared to 0.14%.
  • Average borrowings increased $86.6 million or 21% to $506.5 million from $419.9 million, and the average interest rate paid on borrowings was 3.74% compared to 3.02%.

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

  • Net interest income totaled $155.9 million compared to $142.5 million, which was an increase of $13.3 million or 9%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $158.0 million compared to $144.3 million, which was an increase of $13.8 million or 10%.

Noninterest Income and Noninterest Expense

Total noninterest income was $29.2 million during the third quarter of 2022 compared to $32.7 million during the third quarter of 2021, a decrease of $3.5 million or 11%. Significant changes within the noninterest income category for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Service charges and fees increased $1.7 million or 11% to $17.3 million from $15.1 million, which was primarily attributable to an increase of $1.2 million or 25% in credit card revenue to $6.2 million compared to $5.0 million.
  • Net security losses totaled $1.1 million compared to net gains of $1.5 million.
  • Net gains on sales of loans held for sale totaled $1.8 million compared to $5.3 million, which was a decrease of $3.4 million or 65% and was primarily attributable to a decrease of loans sold to the secondary market.
  • Other noninterest income totaled $3.8 million compared to $1.2 million, which was an increase of $2.5 million and was primarily attributable to an increase in commercial swap fees and syndication income to $1.8 million from $131,000.  

Total noninterest expense was $108.9 million during the third quarter of 2022 compared to $110.6 million during the third quarter of 2021, which was a decrease of $1.7 million or 2%. Significant changes within the noninterest expense category for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Salaries and employee benefits totaled $62.7 million compared to $60.7 million, which was an increase of $2.0 million or 3%. The increase was primarily attributable to higher incentive compensation expenses.
  • Acquisition, integration and restructuring costs totaled $2.2 million compared to $204,000, an increase of $2.0 million due to the progression of the charter consolidation project.
  • Partnership investment in tax credit projects decreased $1.4 million or 59% to $979,000 from $2.4 million.
  • Occupancy expense decreased $572,000 or 8% to $6.8 million from $7.4 million, and furniture and equipment expense decreased $437,000 or 13% to $2.9 million from $3.4 million. These decreases are primarily attributable to the reduction in branch locations. Branch locations totaled 121 at September 30, 2022, compared to 131 at September 30, 2021.

The effective tax rate was 19.97% for the third quarter of 2022 compared to 19.15% for the third quarter of 2021. The following items impacted the third quarter 2022 and 2021 tax calculations:

  • Solar energy tax credits of $1.1 million compared to $2.1 million.
  • Federal low-income housing tax credits of $519,000 compared to $135,000.
  • New markets tax credits of $75,000 in each quarterly calculation.
  • Historic rehabilitation tax credits of $63,000 compared to $327,000.
  • Tax-exempt interest income as a percentage of pre-tax income of 11.45% compared to 9.32%.

Total Assets, Total Loans and Total Deposits

Total assets were $19.68 billion at September 30, 2022, an increase of $408.4 million or 2% from $19.27 billion at year-end 2021. Securities represented 35% and 40% of total assets at September 30, 2022, and December 31, 2021, respectively.

During the third quarter of 2022, HTLF transferred taxable municipal bonds with a book value of $934.5 million and a fair value of $748.3 million from the available for sale portfolio to the held to maturity portfolio.

Total loans held to maturity were $10.92 billion at September 30, 2022, compared to $9.95 billion at December 31, 2021, which was an increase of $969.0 million or 10%. Excluding total PPP loans, loans increased $254.8 million or 2% since June 30, 2022 and $1.16 billion or 12% since December 31, 2021.

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

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $212.8 million or 4% to $5.58 billion compared to $5.37 billion.
    • PPP loans originated in 2020 ("PPP I") decreased $883,000 or 32%. PPP loans originated in 2021 ("PPP II") decreased $8.6 million or 43%.
    • Excluding total PPP loans, commercial and business lending increased $222.3 million or 4% to $5.56 billion from $5.34 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $48.8 million or 2% to $3.22 billion compared to $3.17 billion.
  • Agricultural and agricultural real estate loans decreased $55.3 million or 7% to $781.4 million compared to $836.7 million.
  • Consumer loans increased $31.4 million or 7% to $495.5 million from $464.1 million.

Significant changes by loan category at September 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 $492.9 million or 10% to $5.58 billion compared to $5.09 billion.
    • PPP I loans decreased $25.2 million or 93%. PPP II loans decreased $161.1 million or 93%.
    • Excluding total PPP loans, commercial and business lending increased $679.3 million or 14% to $5.56 billion from $4.89 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $348.8 million or 12% to $3.22 billion compared to $2.87 billion.
  • Agricultural and agricultural real estate loans increased $27.6 million or 4% to $781.4 million compared to $753.8 million.
  • Consumer loans increased $76.0 million or 18% to $495.5 million from $419.5 million.

Total deposits were $17.27 billion as of September 30, 2022, compared to $16.42 billion at December 31, 2021. Significant deposit changes by category at September 30, 2022 compared to December 31, 2021 included:

  • Demand deposits decreased $411.8 million or 6% to $6.08 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 third quarter of 2022 was $4.4 million, which was an increase of $8.8 million from a provision benefit of $4.4 million recorded in the third quarter of 2021. The provision expense for the third quarter of 2022 reflects a stable credit environment with a deteriorating economic outlook due to the long-term impact of rising interest rates and record high inflation. The provision benefit recorded in the third quarter of 2021 reflected an improving credit environment coming off elevated COVID reserving levels with an improving economic outlook due to waning COVID concerns.

The allowance for credit losses for loans totaled $105.7 million and $110.1 million at September 30, 2022, and December 31, 2021, respectively. The following items impacted the allowance for credit losses for loans at September 30, 2022:

  • Provision expense for the nine months ended September 30, 2022, totaled $8.6 million.
  • Net charge offs of $12.9 million were recorded for the first nine months of 2022.
  • Nonpass loans declined to 5.3% of total loans compared to 7.4% of total loans at December 31, 2021.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $18.9 million at September 30, 2022, which was an increase of $3.4 million from $15.5 million at December 31, 2021. Unfunded commitments increased $834.2 million to $4.66 billion at September 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 $5.5 million for the third quarter of 2022 compared to provision benefit of $4.5 million for the third quarter of 2021. The total allowance for lending related credit losses was $124.6 million or 1.14% of total loans at September 30, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets increased $1.4 million or 2% to $73.3 million or 0.37% of total assets at September 30, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $65.2 million or 0.60% of total loans at September 30, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2021. At September 30, 2022, loans delinquent 30-89 days were 0.10% 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.
  • Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.

Conference Call Details
HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until October 30, 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 $19.68 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) 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
September 30,
  For the Nine Months Ended
September 30,
    2022       2021       2022       2021  
Interest Income              
Interest and fees on loans $ 122,913     $ 112,062     $ 334,000     $ 336,416  
Interest on securities:              
Taxable   45,648       32,384       116,366       94,373  
Nontaxable   6,164       4,609       17,874       13,673  
Interest on federal funds sold                     1  
Interest on deposits with other banks and short-term investments   1,081       132       1,715       258  
Total Interest Income   175,806       149,187       469,955       444,721  
Interest Expense              
Interest on deposits   15,158       3,444       24,665       11,629  
Interest on short-term borrowings   360       98       494       348  
Interest on other borrowings   4,412       3,102       11,780       9,378  
Total Interest Expense   19,930       6,644       36,939       21,355  
Net Interest Income   155,876       142,543       433,016       423,366  
Provision (benefit) for credit losses   5,492       (4,534 )     11,983       (12,262 )
Net Interest Income After Provision (Benefit) for Credit Losses   150,384       147,077       421,033       435,628  
Noninterest Income              
Service charges and fees   17,282       15,551       50,599       44,354  
Loan servicing income   831       784       1,951       2,495  
Trust fees   5,372       6,221       17,130       18,037  
Brokerage and insurance commissions   649       866       2,357       2,584  
Securities gains/(losses), net   (1,055 )     1,535       (272 )     4,347  
Unrealized gain/ (loss) on equity securities, net   (211 )     112       (615 )     85  
Net gains on sale of loans held for sale   1,832       5,281       8,144       16,454  
Valuation adjustment on servicing rights         195       1,658       586  
Income on bank owned life insurance   694       940       1,741       2,706  
Other noninterest income   3,787       1,239       15,596       4,557  
Total Noninterest Income   29,181       32,724       98,289       96,205  
Noninterest Expense              
Salaries and employee benefits   62,661       60,689       192,867       177,083  
Occupancy   6,794       7,366       21,250       22,683  
Furniture and equipment   2,928       3,365       9,480       9,959  
Professional fees   16,277       17,242       47,420       46,969  
Advertising   1,554       1,921       4,392       5,039  
Core deposit and customer relationship intangibles amortization   1,856       2,295       5,993       7,226  
Other real estate and loan collection expenses, net   304       78       577       627  
(Gain)/loss on sales/valuations of assets, net   (251 )     (3 )     (3,435 )     374  
Acquisition, integration and restructuring costs   2,156       204       5,144       3,342  
Partnership investment in tax credit projects   979       2,374       1,793       3,754  
Other noninterest expenses   13,625       15,096       40,678       39,370  
Total Noninterest Expense   108,883       110,627       326,159       316,426  
Income Before Income Taxes   70,682       69,174       193,163       215,407  
Income taxes   14,118       13,250       41,637       45,064  
Net Income   56,564       55,924       151,526       170,343  
Preferred dividends   (2,013 )     (2,013 )     (6,038 )     (6,038 )
Net Income Available to Common Stockholders $ 54,551     $ 53,911     $ 145,488     $ 164,305  
Earnings per common share-diluted $ 1.28     $ 1.27     $ 3.42     $ 3.88  
Weighted average shares outstanding-diluted   42,643,940       42,415,993       42,596,301       42,381,313  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Interest Income                  
Interest and fees on loans $ 122,913     $ 108,718     $ 102,369     $ 107,721     $ 112,062  
Interest on securities:                  
Taxable   45,648       38,098       32,620       30,637       32,384  
Nontaxable   6,164       5,508       6,202       5,595       4,609  
Interest on federal funds sold                            
Interest on deposits with other banks and short-term investments   1,081       563       71       86       132  
Total Interest Income   175,806       152,887       141,262       144,039       149,187  
Interest Expense                  
Interest on deposits   15,158       6,530       2,977       3,168       3,444  
Interest on short-term borrowings   360       88       46       123       98  
Interest on other borrowings   4,412       3,808       3,560       3,554       3,102  
Total Interest Expense   19,930       10,426       6,583       6,845       6,644  
Net Interest Income   155,876       142,461       134,679       137,194       142,543  
Provision (benefit) for credit losses   5,492       3,246       3,245       (5,313 )     (4,534 )
Net Interest Income After Provision (Benefit) for Credit Losses   150,384       139,215       131,434       142,507       147,077  
Noninterest Income                  
Service charges and fees   17,282       18,066       15,251       15,349       15,551  
Loan servicing income   831       834       286       781       784  
Trust fees   5,372       5,679       6,079       6,380       6,221  
Brokerage and insurance commissions   649       839       869       962       866  
Securities gains/(losses), net   (1,055 )     (2,089 )     2,872       1,563       1,535  
Unrealized gain/ (loss) on equity securities, net   (211 )     (121 )     (283 )     (27 )     112  
Net gains on sale of loans held for sale   1,832       2,901       3,411       4,151       5,281  
Valuation adjustment on servicing rights               1,658       502       195  
Income on bank owned life insurance   694       523       524       1,056       940  
Other noninterest income   3,787       7,907       3,902       2,013       1,239  
Total Noninterest Income   29,181       34,539       34,569       32,730       32,724  
Noninterest Expense                  
Salaries and employee benefits   62,661       64,032       66,174       63,031       60,689  
Occupancy   6,794       7,094       7,362       7,282       7,366  
Furniture and equipment   2,928       3,033       3,519       3,364       3,365  
Professional fees   16,277       15,987       15,156       17,631       17,242  
Advertising   1,554       1,283       1,555       2,218       1,921  
Core deposit and customer relationship intangibles amortization   1,856       2,083       2,054       2,169       2,295  
Other real estate and loan collection expenses, net   304       78       195       363       78  
(Gain)/loss on sales/valuations of assets, net   (251 )     (3,230 )     46       214       (3 )
Acquisition, integration and restructuring costs   2,156       2,412       576       1,989       204  
Partnership investment in tax credit projects   979       737       77       2,549       2,374  
Other noninterest expenses   13,625       12,970       14,083       14,576       15,096  
Total Noninterest Expense   108,883       106,479       110,797       115,386       110,627  
Income Before Income Taxes   70,682       67,275       55,206       59,851       69,174  
Income taxes   14,118       15,402       12,117       10,271       13,250  
Net Income   56,564       51,873       43,089       49,580       55,924  
Preferred dividends   (2,013 )     (2,012 )     (2,013 )     (2,012 )     (2,013 )
Net Income Available to Common Stockholders $ 54,551     $ 49,861     $ 41,076     $ 47,568     $ 53,911  
Earnings per common share-diluted $ 1.28     $ 1.17     $ 0.97     $ 1.12     $ 1.27  
Weighted average shares outstanding-diluted   42,643,940       42,565,391       42,540,953       42,479,442       42,415,993  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Assets                  
Cash and due from banks $ 250,394     $ 221,077     $ 198,559     $ 163,895     $ 192,247  
Interest bearing deposits with other banks and short-term investments   149,466       163,717       406,343       271,704       135,158  
Cash and cash equivalents   399,860       384,794       604,902       435,599       327,405  
Time deposits in other financial institutions   1,740       1,855       2,894       2,894       3,138  
Securities:                  
Carried at fair value   6,060,331       7,106,218       7,025,243       7,530,374       7,449,936  
Held to maturity, at cost, less allowance for credit losses   830,247       81,939       81,785       84,709       85,354  
Other investments, at cost   80,286       85,899       82,751       82,567       83,332  
Loans held for sale   9,570       18,803       22,685       21,640       37,078  
Loans:                  
Held to maturity   10,923,532       10,678,218       10,177,385       9,954,572       9,854,907  
Allowance for credit losses   (105,715 )     (101,353 )     (100,522 )     (110,088 )     (117,533 )
Loans, net   10,817,817       10,576,865       10,076,863       9,844,484       9,737,374  
Premises, furniture and equipment, net   203,585       206,818       213,752       215,827       221,996  
Goodwill   576,005       576,005       576,005       576,005       576,005  
Core deposit and customer relationship intangibles, net   26,995       28,851       30,934       32,988       35,157  
Servicing rights, net   8,379       8,288       8,102       6,890       6,351  
Cash surrender value on life insurance   193,184       192,474       192,267       191,722       190,576  
Other real estate, net   8,030       4,528       1,422       1,927       4,744  
Other assets   466,921       385,062       311,274       246,923       237,779  
Total Assets $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
Demand $ 6,083,563     $ 6,087,304     $ 6,376,249     $ 6,495,326     $ 6,537,722  
Savings   10,060,523       10,059,678       9,236,427       8,897,909       8,416,204  
Time   1,123,035       1,078,568       1,054,008       1,024,020       1,068,317  
Total deposits   17,267,121       17,225,550       16,666,684       16,417,255       16,022,243  
Short-term borrowings   147,000       97,749       107,372       131,597       265,620  
Other borrowings   371,446       372,538       372,290       372,072       371,765  
Accrued expenses and other liabilities   241,425       188,494       152,676       171,447       164,345  
Total Liabilities   18,026,992       17,884,331       17,299,022       17,092,371       16,823,973  
Stockholders' Equity                  
Preferred equity   110,705       110,705       110,705       110,705       110,705  
Common stock   42,444       42,439       42,370       42,275       42,250  
Capital surplus   1,079,277       1,076,766       1,073,048       1,071,956       1,068,913  
Retained earnings   1,074,168       1,031,076       992,655       962,994       926,834  
Accumulated other comprehensive income (loss)   (650,636 )     (486,918 )     (286,921 )     (5,752 )     23,550  
Total Equity   1,655,958       1,774,068       1,931,857       2,182,178       2,172,252  
Total Liabilities and Equity $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
  For the Quarter Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Average Balances                  
Assets $ 19,775,341     $ 19,559,091     $ 19,229,872     $ 19,151,691     $ 18,608,775  
Loans, net of unearned   10,783,135       10,477,368       10,043,594       9,886,027       9,920,047  
Deposits   17,282,289       17,044,479       16,459,378       16,265,476       15,817,778  
Earning assets   18,157,795       17,987,734       17,757,067       17,681,917       17,123,824  
Interest bearing liabilities   11,723,026       11,575,319       10,453,400       10,207,255       9,881,350  
Common equity   1,674,306       1,731,393       2,003,424       2,061,973       2,072,593  
Total stockholders' equity   1,785,011       1,842,098       2,114,129       2,172,678       2,183,298  
Tangible common equity (non-GAAP)(1)   1,070,399       1,125,543       1,395,488       1,451,950       1,460,309  
                   
Key Performance Ratios                  
Annualized return on average assets   1.13 %     1.06 %     0.91 %     1.03 %     1.19 %
Annualized return on average common equity (GAAP)   12.93       11.55       8.32       9.15       10.32  
Annualized return on average tangible common equity (non-GAAP)(1)   20.76       18.35       12.41       13.47       15.14  
Annualized ratio of net charge-offs/(recoveries) to average loans   0.00       0.03       0.49       0.03       (0.05 )
Annualized net interest margin (GAAP)   3.41       3.18       3.08       3.08       3.30  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.45       3.22       3.12       3.12       3.34  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   55.26       57.66       64.65       63.86       60.38  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.18       2.18       2.34       2.39       2.36  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.09       2.14       2.28       2.25       2.25  

 

  For the Quarter Ended
September 30,
  For the Nine Months Ended
September 30,
    2022       2021       2022       2021  
Average Balances              
Assets $ 19,775,341     $ 18,608,775     $ 19,523,433     $ 18,291,444  
Loans, net of unearned   10,783,135       9,920,047       10,437,409       9,981,306  
Deposits   17,282,289       15,817,778       16,931,730       15,482,394  
Earning assets   18,157,795       17,123,824       17,969,001       16,803,740  
Interest bearing liabilities   11,723,026       9,881,350       11,255,232       9,889,806  
Common equity   1,674,306       2,072,593       1,801,835       2,006,123  
Total stockholders' equity   1,785,011       2,183,298       1,912,540       2,116,828  
Tangible common stockholders' equity   1,070,399       1,460,309       1,195,952       1,391,373  
               
Key Performance Ratios              
Annualized return on average assets   1.13 %     1.19 %     1.04 %     1.25 %
Annualized return on average common equity (GAAP)   12.93       10.32       10.80       10.95  
Annualized return on average tangible common equity (non-GAAP)(1)   20.76       15.14       16.79       16.34  
Annualized ratio of net charge-offs/(recoveries) to average loans   0.00       (0.05 )     0.17       0.04  
Annualized net interest margin (GAAP)   3.41       3.30       3.22       3.37  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.45       3.34       3.27       3.41  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   55.26       60.38       58.99       58.05  
Total noninterest expenses to average assets (GAAP)   2.18       2.36       2.23       2.31  
Core expenses to average assets (non-GAAP)(1)   2.09       2.25       2.17       2.21  
               
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
  As of and for the Quarter Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Common Share Data                  
Book value per common share $ 36.41     $ 39.19     $ 42.98     $ 49.00     $ 48.79  
Tangible book value per common share (non-GAAP)(1) $ 22.20     $ 24.94     $ 28.66     $ 34.59     $ 34.33  
Common shares outstanding, net of treasury stock   42,444,106       42,439,439       42,369,908       42,275,264       42,250,092  
Tangible common equity ratio (non-GAAP)(1)   4.94 %     5.56 %     6.52 %     7.84 %     7.89 %
                   
Other Selected Trend Information                  
Effective tax rate   19.97 %     22.89 %     21.95 %     17.16 %     19.15 %
Full time equivalent employees   2,020       2,087       2,208       2,249       2,163  
                   
Loans Held to Maturity                  
Commercial and industrial $ 3,278,703     $ 3,059,519     $ 2,814,513     $ 2,645,085     $ 2,538,369  
Paycheck Protection Program ("PPP")   13,506       23,031       74,065       199,883       409,247  
Owner occupied commercial real estate   2,285,973       2,282,833       2,266,076       2,240,334       2,135,227  
Commercial and business lending   5,578,182       5,365,383       5,154,654       5,085,302       5,082,843  
Non-owner occupied commercial real estate   2,219,542       2,321,718       2,161,761       2,010,591       2,020,487  
Real estate construction   996,017       845,045       842,483       856,119       814,001  
Commercial real estate lending   3,215,559       3,166,763       3,004,244       2,866,710       2,834,488  
Total commercial lending   8,793,741       8,532,146       8,158,898       7,952,012       7,917,331  
Agricultural and agricultural real estate   781,354       836,703       766,443       753,753       684,670  
Residential mortgage   852,928       845,270       825,242       829,283       840,356  
Consumer   495,509       464,099       426,802       419,524       412,550  
Total loans held to maturity $ 10,923,532     $ 10,678,218     $ 10,177,385     $ 9,954,572     $ 9,854,907  
                   
Total unfunded loan commitments $ 4,664,379     $ 4,458,874     $ 4,130,316     $ 3,830,219     $ 3,583,417  
                   
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of and for the Quarter Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Allowance for Credit Losses-Loans                  
Balance, beginning of period $ 101,353     $ 100,522     $ 110,088     $ 117,533     $ 120,726  
Provision (benefit) for credit losses   4,388       1,545       2,628       (6,808 )     (4,448 )
Charge-offs   (938 )     (1,473 )     (13,217 )     (1,953 )     (1,167 )
Recoveries   912       759       1,023       1,316       2,422  
Balance, end of period $ 105,715     $ 101,353     $ 100,522     $ 110,088     $ 117,533  
                   
Allowance for Unfunded Commitments                  
Balance, beginning of period $ 17,780     $ 16,079     $ 15,462     $ 13,967     $ 14,002  
Provision (benefit) for credit losses   1,104       1,701       617       1,495       (35 )
Balance, end of period $ 18,884     $ 17,780     $ 16,079     $ 15,462     $ 13,967  
                   
Allowance for lending related credit losses $ 124,599     $ 119,133     $ 116,601     $ 125,550     $ 131,500  
                   
Provision for Credit Losses                  
Provision (benefit) for credit losses-loans $ 4,388     $ 1,545     $ 2,628     $ (6,808 )   $ (4,448 )
Provision (benefit) for credit losses-unfunded commitments   1,104       1,701       617       1,495       (35 )
Provision (benefit) for credit losses-held to maturity securities                           (51 )
Total provision (benefit) for credit losses $ 5,492     $ 3,246     $ 3,245     $ (5,313 )   $ (4,534 )
                   
Asset Quality                  
Nonaccrual loans $ 64,560     $ 62,909     $ 64,174     $ 69,369     $ 82,375  
Loans past due ninety days or more   678       95       246       550       861  
Other real estate owned   8,030       4,528       1,422       1,927       4,744  
Other repossessed assets               34       43       166  
Total nonperforming assets $ 73,268     $ 67,532     $ 65,876     $ 71,889     $ 88,146  
                   
Performing troubled debt restructured loans $ 8,047     $ 1,350     $ 882     $ 817     $ 1,817  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 67,532     $ 65,876     $ 71,889     $ 88,146     $ 91,729  
Net loan (charge offs)/recoveries   (26 )     (714 )     (12,194 )     (637 )     1,255  
New nonperforming loans   8,388       8,590       15,832       5,886       6,908  
Reduction of nonperforming loans(1)   (2,015 )     (5,244 )     (8,448 )     (18,429 )     (8,581 )
Net OREO/repossessed assets sales proceeds and losses   (611 )     (976 )     (1,203 )     (3,077 )     (3,165 )
Balance, end of period $ 73,268     $ 67,532     $ 65,876     $ 71,889     $ 88,146  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans   0.60 %     0.59 %     0.63 %     0.70 %     0.84 %
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans   0.67       0.60       0.64       0.71       0.86  
Ratio of nonperforming assets to total assets   0.37       0.34       0.34       0.37       0.46  
Annualized ratio of net loan charge-offs/(recoveries) to average loans         0.03       0.49       0.03       (0.05 )
Allowance for loan credit losses as a percent of loans   0.97       0.95       0.99       1.11       1.19  
Allowance for lending related credit losses as a percent of loans   1.14       1.12       1.15       1.26       1.33  
Allowance for loan credit losses as a percent of nonperforming loans   162.05       160.87       156.04       157.45       141.20  
Loans delinquent 30-89 days as a percent of total loans   0.10       0.06       0.10       0.07       0.12  
                   
(1) Includes principal reductions, transfers to performing status and transfers to OREO.

 

HEARTLAND FINANCIAL USA, INC.    
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Quarter Ended
  September 30, 2022   June 30, 2022   September 30, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 6,303,278     $ 45,648   2.87 %   $ 6,419,615     $ 38,098   2.38 %   $ 6,244,097     $ 32,384   2.06 %
Nontaxable(1)   951,232       7,802   3.25       915,880       6,972   3.05       759,073       5,835   3.05  
Total securities   7,254,510       53,450   2.92       7,335,495       45,070   2.46       7,003,170       38,219   2.17  
Interest on deposits with other banks and short-term investments   222,170       1,081   1.93       277,773       563   0.81       322,430       132   0.16  
Federal funds sold   11                                      
Loans:(2)                                  
Commercial and industrial(1)   3,182,134       37,526   4.68       3,002,822       30,441   4.07       2,588,270       28,224   4.33  
PPP loans   17,859       363   8.06       41,370       1,801   17.46       602,675       11,186   7.36  
Owner occupied commercial real estate   2,272,666       23,601   4.12       2,294,524       22,863   4.00       1,990,538       20,048   4.00  
Non-owner occupied commercial real estate   2,258,424       25,895   4.55       2,179,048       22,871   4.21       1,964,609       22,129   4.47  
Real estate construction   914,520       12,382   5.37       878,555       10,015   4.57       835,976       9,591   4.55  
Agricultural and agricultural real estate   799,823       8,966   4.45       782,610       7,933   4.07       674,510       7,415   4.36  
Residential mortgage   858,119       8,665   4.01       849,174       8,358   3.95       855,734       9,068   4.20  
Consumer   479,590       6,028   4.99       449,265       4,949   4.42       407,735       4,889   4.76  
Less: allowance for credit losses-loans   (102,031 )             (102,902 )             (121,823 )        
Net loans   10,681,104       123,426   4.58       10,374,466       109,231   4.22       9,798,224       112,550   4.56  
Total earning assets   18,157,795       177,957   3.89 %     17,987,734       154,864   3.45 %     17,123,824       150,901   3.50 %
Nonearning Assets   1,617,546               1,571,357               1,484,951          
Total Assets $ 19,775,341             $ 19,559,091             $ 18,608,775          
Interest Bearing Liabilities                                  
Savings $ 10,059,652     $ 12,907   0.51 %   $ 9,995,497     $ 5,372   0.22 %   $ 8,364,326     $ 2,240   0.11 %
Time deposits   1,156,908       2,251   0.77       1,088,765       1,158   0.43       1,097,126       1,204   0.44  
Short-term borrowings   134,974       360   1.06       118,646       88   0.30       139,001       98   0.28  
Other borrowings   371,492       4,412   4.71       372,411       3,808   4.10       280,897       3,102   4.38  
Total interest bearing liabilities   11,723,026       19,930   0.67 %     11,575,319       10,426   0.36 %     9,881,350       6,644   0.27 %
Noninterest Bearing Liabilities                                  
Noninterest bearing deposits   6,065,729               5,960,217               6,356,326          
Accrued interest and other liabilities   201,575               181,457               187,801          
Total noninterest bearing liabilities   6,267,304               6,141,674               6,544,127          
Equity   1,785,011               1,842,098               2,183,298          
Total Liabilities and Equity $ 19,775,341             $ 19,559,091             $ 18,608,775          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 158,027           $ 144,438           $ 144,257    
Net interest spread (1)         3.22 %           3.09 %           3.23 %
Net interest income, fully tax-equivalent (non-GAAP )(1)(3) to total earning assets         3.45 %           3.22 %           3.34 %
Interest bearing liabilities to earning assets   64.56 %             64.35 %             57.71 %        
                                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.    
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Nine Months Ended
  September 30, 2022   September 30, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 6,407,459     $ 116,366   2.43 %   $ 5,935,295     $ 94,373   2.13 %
Nontaxable(1)   990,784       22,625   3.05       743,534       17,308   3.11  
Total securities   7,398,243       138,991   2.51       6,678,829       111,681   2.24 %
Interest bearing deposits with other banks and other short-term investments   238,819       1,715   0.96       266,701       258   0.13  
Federal funds sold   7               4,622       1   0.03  
Loans:(2)                      
Commercial and industrial(1)   2,977,751       95,020   4.27       2,519,608       85,008   4.51  
PPP loans   63,342       6,487   13.69       879,489       32,521   4.94  
Owner occupied commercial real estate   2,270,486       67,742   3.99       1,876,929       59,710   4.25  
Non-owner occupied commercial real estate   2,166,873       69,929   4.31       1,961,016       65,984   4.50  
Real estate construction   880,354       31,673   4.81       819,452       28,501   4.65  
Agricultural and agricultural real estate   776,127       23,905   4.12       676,091       22,733   4.50  
Residential mortgage   850,444       25,108   3.95       844,337       28,153   4.46  
Consumer   452,032       15,632   4.62       404,384       15,408   5.09  
Less: allowance for credit losses-loans   (105,477 )             (127,718 )        
Net loans   10,331,932       335,496   4.34       9,853,588       338,018   4.59  
Total earning assets   17,969,001       476,202   3.54 %     16,803,740       449,958   3.58 %
Nonearning Assets   1,554,432               1,487,704          
Total Assets $ 19,523,433             $ 18,291,444          
Interest Bearing Liabilities                      
Savings $ 9,652,651     $ 20,673   0.29 %   $ 8,211,478     $ 6,903   0.11 %
Time deposits   1,106,095       3,992   0.48       1,166,858       4,726   0.54  
Short-term borrowings   124,459       494   0.53       182,583       348   0.25  
Other borrowings   372,027       11,780   4.23       328,887       9,378   3.81  
Total interest bearing liabilities   11,255,232       36,939   0.44 %     9,889,806       21,355   0.29 %
Noninterest Bearing Liabilities                      
Noninterest bearing deposits   6,172,984               6,104,058          
Accrued interest and other liabilities   182,677               180,752          
Total noninterest bearing liabilities   6,355,661               6,284,810          
Stockholders' Equity   1,912,540               2,116,828          
Total Liabilities and Stockholders' Equity $ 19,523,433             $ 18,291,444          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 439,263           $ 428,603    
Net interest spread (1)         3.10 %           3.29 %
Net interest income, fully tax-equivalent (non-GAAP) (1)(3) to total earning assets         3.27 %           3.41 %
Interest bearing liabilities to earning assets   62.64 %             58.85 %        
                       
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.    
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
  For the Quarter Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                  
Net income available to common stockholders (GAAP) $ 54,551     $ 49,861     $ 41,076     $ 47,568     $ 53,911  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,466       1,645       1,623       1,713       1,814  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $ 56,017     $ 51,506     $ 42,699     $ 49,281     $ 55,725  
                   
Average common equity (GAAP) $ 1,674,306     $ 1,731,393     $ 2,003,424     $ 2,061,973     $ 2,072,593  
Less average goodwill   576,005       576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   27,902       29,845       31,931       34,018       36,279  
Average tangible common equity (non-GAAP) $ 1,070,399     $ 1,125,543     $ 1,395,488     $ 1,451,950     $ 1,460,309  
Annualized return on average common equity (GAAP)   12.93 %     11.55 %     8.32 %     9.15 %     10.32 %
Annualized return on average tangible common equity (non-GAAP)   20.76 %     18.35 %     12.41 %     13.47 %     15.14 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                  
Net Interest Income (GAAP) $ 155,876     $ 142,461     $ 134,679     $ 137,194     $ 142,543  
Plus tax-equivalent adjustment(1)   2,151       1,977       2,119       1,975       1,714  
Net interest income, fully tax-equivalent (non-GAAP) $ 158,027     $ 144,438     $ 136,798     $ 139,169     $ 144,257  
                   
Average earning assets $ 18,157,795     $ 17,987,734     $ 17,757,067     $ 17,681,917     $ 17,123,824  
                   
Annualized net interest margin (GAAP)   3.41 %     3.18 %     3.08 %     3.08 %     3.30 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)   3.45       3.22       3.12       3.12       3.34  
Net purchase accounting discount amortization on loans included in annualized net interest margin   0.03       0.07       0.05       0.05       0.08  

 

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                  
Common equity (GAAP) $ 1,545,253     $ 1,663,363     $ 1,821,152     $ 2,071,473     $ 2,061,547  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   26,995       28,851       30,934       32,988       35,157  
Tangible common equity (non-GAAP) $ 942,253     $ 1,058,507     $ 1,214,213     $ 1,462,480     $ 1,450,385  
                   
Common shares outstanding, net of treasury stock   42,444,106       42,439,439       42,369,908       42,275,264       42,250,092  
Common equity (book value) per share (GAAP) $ 36.41     $ 39.19     $ 42.98     $ 49.00     $ 48.79  
Tangible book value per common share (non-GAAP) $ 22.20     $ 24.94     $ 28.66     $ 34.59     $ 34.33  
                   
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                  
Tangible common equity (non-GAAP) $ 942,253     $ 1,058,507     $ 1,214,213     $ 1,462,480     $ 1,450,385  
                   
Total assets (GAAP) $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549     $ 18,996,225  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   26,995       28,851       30,934       32,988       35,157  
Total tangible assets (non-GAAP) $ 19,079,950     $ 19,053,543     $ 18,623,940     $ 18,665,556     $ 18,385,063  
Tangible common equity ratio (non-GAAP)   4.94 %     5.56 %     6.52 %     7.84 %     7.89 %
                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)
For the Quarter Ended
9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Net interest income (GAAP) $ 155,876     $ 142,461     $ 134,679     $ 137,194     $ 142,543  
Tax-equivalent adjustment(1)   2,151       1,977       2,119       1,975       1,714  
Fully tax-equivalent net interest income   158,027       144,438       136,798       139,169       144,257  
Noninterest income   29,181       34,539       34,569       32,730       32,724  
Securities (gains)/losses, net   1,055       2,089       (2,872 )     (1,563 )     (1,535 )
Unrealized (gain)/loss on equity securities, net   211       121       283       27       (112 )
Valuation adjustment on servicing rights               (1,658 )     (502 )     (195 )
Adjusted revenue (non-GAAP) $ 188,474     $ 181,187     $ 167,120     $ 169,861     $ 175,139  
                   
Total noninterest expenses (GAAP) $ 108,883     $ 106,479     $ 110,797     $ 115,386     $ 110,627  
Less:                  
Core deposit and customer relationship intangibles amortization   1,856       2,083       2,054       2,169       2,295  
Partnership investment in tax credit projects   979       737       77       2,549       2,374  
(Gain)/loss on sales/valuation of assets, net   (251 )     (3,230 )     46       214       (3 )
Acquisition, integration and restructuring costs   2,156       2,412       576       1,989       204  
Core expenses (non-GAAP) $ 104,143     $ 104,477     $ 108,044     $ 108,465     $ 105,757  
Efficiency ratio, fully tax-equivalent (non-GAAP)   55.26 %     57.66 %     64.65 %     63.86 %     60.38 %
                   
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)                  
Total noninterest expenses (GAAP) $ 108,883     $ 106,479     $ 110,797     $ 115,386     $ 110,627  
Core expenses (non-GAAP)   104,143       104,477       108,044       108,465       105,757  
                   
Average assets $ 19,775,341     $ 19,559,091     $ 19,229,872     $ 19,151,691     $ 18,608,775  
Total noninterest expenses to average assets (GAAP)   2.18 %     2.18 %     2.34 %     2.39 %     2.36 %
Core expenses to average assets (non-GAAP)   2.09 %     2.14 %     2.28 %     2.25 %     2.25 %
                   
Acquisition, integration and restructuring costs                  
Salaries and employee benefits $ 365     $ 275     $ 340     $     $  
Occupancy                            
Furniture and equipment                           7  
Professional fees   1,480       1,779       236       1,989       145  
Advertising   131       156                   11  
(Gain)/loss on sales/valuations of assets, net                           39  
Other noninterest expenses   180       202                   2  
Total acquisition, integration and restructuring costs $ 2,156     $ 2,412     $ 576     $ 1,989     $ 204  
After tax impact on diluted earnings per common share(1) $ 0.04     $ 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
September 30,
  For the Nine Months Ended
September 30,
    2022       2021       2022       2021  
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)              
Net income available to common stockholders (GAAP) $ 54,551     $ 53,911     $ 145,488     $ 164,305  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,466