Heartland Financial USA, Inc. (HTLF) Reports Annual Earnings and Fourth Quarter Results as of December 31, 2022

Company Release - 1/30/2023 4:01 PM ET

Highlights

  • Quarterly net income available to common stockholders of $58.6 million or $1.37 per diluted common share
  • Annual net income available to common stockholders of $204.1 million or $4.79 per diluted common share
  • Quarterly loan growth of $504.8 million or 5%
  • Annual loan growth of $1.47 billion or 15%. Excluding decreases in Paycheck Protection Program ("PPP") loans, annual loan growth was $1.66 billion or 17%.
  • Total revenue growth during the quarter of $10.1 million or 5% and $37.0 million or 5% during the year
  • Nonperforming assets to total assets declined to 0.33% and 30-89 day loan delinquencies fell to 0.04% of total loans
  • Net loan recoveries for the quarter of $1.7 million
  • Completed the consolidation of two bank charters during the fourth quarter for a total five charter consolidations completed in 2022
  Quarter Ended
December 31,
  Year Ended
December 31,
    2022       2021       2022       2021  
Net income available to common stockholders (in millions) $ 58.6     $ 47.6     $ 204.1     $ 211.9  
Diluted earnings per common share   1.37       1.12       4.79       5.00  
               
Return on average assets   1.21 %     1.03 %     1.08 %     1.19 %
Return on average common equity   15.02       9.15       11.74       10.49  
Return on average tangible common equity (non-GAAP)(1)   25.19       13.47       18.56       15.59  
Net interest margin   3.61       3.08       3.32       3.29  
Net interest margin, fully tax-equivalent (non-GAAP)(1)   3.65       3.12       3.37       3.33  
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)   54.33       63.86       57.74       59.48  
               
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.

 

"HTLF delivered strong fourth quarter and full year results while executing our strategic plans for driving organic growth, improving customer experience and consolidating charters. We continue to demonstrate strong momentum, passing $20 billion in total assets and delivering a record $726.5 million in total revenue for 2022."
Bruce K. Lee, president and chief executive officer, HTLF

DENVER, Jan. 30, 2023 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021:

  • Net income available to common stockholders of $58.6 million compared to $47.6 million, an increase of $11.1 million or 23%.
  • Earnings per diluted common share of $1.37 compared to $1.12, an increase of $0.25 or 22%.
  • Net interest income of $165.2 million compared to $137.2 million, an increase of $28.0 million or 20%.
  • Return on average assets of 1.21% compared to 1.03%.
  • Return on average common equity of 15.02% compared to 9.15%.
  • Return on average tangible common equity (non-GAAP) of 25.19% compared to 13.47%.

HTLF reported the following results for the year ended December 31, 2022 compared to the year ended December 31, 2021:

  • Net income available to common stockholders of $204.1 million compared to $211.9 million, a decrease of $7.7 million or 4%.
  • Earnings per diluted common share of $4.79 compared to $5.00, a decrease of $0.21 or 4%.
  • Net interest income of $598.2 million compared to $560.6 million, an increase of $37.7 million or 7%.
  • Return on average assets of 1.08% compared to 1.19%.
  • Return on average common equity of 11.74% compared to 10.49%.
  • Return on average tangible common equity (non-GAAP) of 18.56% compared to 15.59%.

Commenting on HTLF's 2022 results, Bruce K. Lee, HTLF’s president and chief executive officer, said, "HTLF delivered strong fourth quarter and full year results while executing our strategic plans for driving organic growth, improving customer experience and consolidating charters. We continue to demonstrate strong momentum, passing $20 billion in total assets and delivering a record $726.5 million in total revenue for 2022."

Charter Consolidation Update

During the fourth quarter of 2022, the charters of Arizona Bank & Trust and Illinois Bank & Trust were consolidated into HTLF Bank. Citywide Banks, Premier Valley Bank, Minnesota Bank & Trust, Arizona Bank & Trust and Illinois Bank & Trust are now operating as divisions of HTLF Bank. 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 $10 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 and fourth quarters of 2022 with the completion of five charter consolidations, and total benefits are estimated to be approximately $20.0 million annually after the project is completed.

Effective December 31, 2022, the address of HTLF's headquarters was changed to Denver, Colorado, which is where HTLF Bank is headquartered.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.61% (3.65% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2022, compared to 3.08% (3.12% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2021.

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

  • Total interest income was $204.7 million, which was an increase of $60.7 million or 42% from $144.0 million and primarily attributable to higher yields and an increase in average earning assets.
  • Total interest income on a tax-equivalent basis was $206.9 million, which was an increase of $60.8 million or 42% from $146.0 million.
  • Average earning assets increased $493.9 million or 3% to $18.18 billion compared to $17.68 billion, which was primarily attributable to loan growth.
  • The average rate on earning assets increased 124 basis points to 4.52% compared to 3.28%, which was primarily due to recent increases in market interest rates and a shift in earning asset mix. Total average securities were 39% of total average earning assets compared to 44%.

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

  • Total interest expense was $39.5 million, an increase of $32.6 million from $6.8 million, which was attributable to an increase in the average interest rate paid and an increase in average interest bearing liabilities.
  • The average interest rate paid on HTLF's interest bearing liabilities increased to 1.31% compared to 0.27%, which was primarily due to recent increases in market interest rates.
  • Average interest bearing deposits increased $1.65 billion or 17% to $11.31 billion from $9.66 billion which was primarily attributable to deposit growth. Total average interest bearing deposits were 65% of total average deposits compared to 59%.
  • The average interest rate paid on HTLF's interest bearing deposits increased 100 basis points to 1.13% compared to 0.13%.
  • Average borrowings increased $121.4 million to $670.2 million from $548.9 million. The average interest rate paid on HTLF's borrowings was 4.30% compared to 2.66%.

Net interest income increased for the fourth quarter of 2022 compared to the fourth quarter of 2021:

  • Net interest income totaled $165.2 million compared to $137.2 million, which was an increase of $28.0 million or 20%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $167.4 million compared to $139.2 million, which was an increase of $28.2 million or 20%.

Noninterest Income and Noninterest Expense

Total noninterest income was $30.0 million during the fourth quarter of 2022 compared to $32.7 million during the fourth quarter of 2021, a decrease of $2.8 million or 8%. Significant changes by noninterest income category for the fourth quarter of 2022 compared to the fourth quarter of 2021 were:

  • Service charges and fees increased $2.1 million or 14% to $17.4 million from $15.3 million, which was primarily attributable to an increase in credit card revenue. Credit card revenue increased $1.3 million or 24% to $6.5 million compared to $5.2 million.
  • Net securities losses totaled $153,000 compared to net securities gains of $1.6 million, which was a decrease of $1.7 million.
  • Net gains of sales of loans held for sale decreased $3.3 million to $888,000 compared to $4.2 million, primarily due to a decrease of loans sold to the secondary market.

Total noninterest expense for the fourth quarter of 2022 was $117.2 million compared to $115.4 million for the same quarter of 2021, which was an increase of $1.8 million or 2%. Significant changes within the noninterest expense category for the fourth quarter of 2022 compared to the fourth quarter of 2021 were:

  • Salaries and employee benefits totaled $61.6 million compared to $63.0 million, which was a decrease of $1.4 million or 2% and included lower salary expense due to a reduction of full-time equivalent employees which was partially offset by higher incentive compensation expense.
  • Net losses on sales/valuation of assets totaled $2.4 million compared to $214,000, which was an increase of $2.2 million. HTLF recorded losses primarily associated with franchise optimization activities in the fourth quarter of 2022.
  • Acquisition, integration and restructuring costs totaled $2.4 million compared to $2.0 million, an increase of $453,000 or 23% due to the progression of the charter consolidation project.
  • Partnership investment in tax credit projects increased $698,000 or 27% to $3.2 million compared to $2.5 million. The expense is dependent upon the number and timing of tax credit projects placed into service.
  • Occupancy expense decreased $377,000 or 5% to $6.9 million compared to $7.3 million, and furniture and equipment decreased $345,000 or 10% to $3.0 million from $3.4 million. These decreases are primarily attributable to the reduction in branch locations. Branch locations totaled 119 at December 31, 2022 compared to 130 at December 31, 2021.
  • Other noninterest expenses totaled $15.4 million compared to $14.6 million, which was an increase of $801,000 or 5%. Credit card processing expense, which is driven by volume, totaled $4.1 million compared to $3.3 million, an increase of $794,000 or 24%.

HTLF's effective tax rate was 18.68% for the fourth quarter of 2022 compared to 17.16% for the fourth quarter of 2021. The following items impacted HTLF's fourth quarter 2022 and 2021 tax calculations:

  • Solar energy tax credits of $2.5 million in each quarterly calculation.
  • Federal low-income housing tax credits of $263,000 and $135,000.
  • New markets tax credits of $75,000 in each quarterly calculation.
  • Historic rehabilitation tax credits of $842,000 and $272,000.
  • Tax-exempt interest income as a percentage of pre-tax income of 11.80% compared to 9.86%.
  • Tax benefits of $165,000 and $491,000 related to the release of valuation allowances on deferred tax assets.

For the years ended December 31, 2022 and 2021, HTLF's effective tax rate was 20.76% and 20.10%, respectively.

Total Assets, Total Loans and Total Deposits

Total assets were $20.24 billion at December 31, 2022, an increase of $969.7 million or 5% from $19.27 billion at year-end 2021. Securities represented 35% and 40% of total assets at December 31, 2022, and December 31, 2021, respectively.

Total loans held to maturity were $11.43 billion at December 31, 2022, compared to $10.92 billion at September 30, 2022 and $9.95 billion at December 31, 2021. Excluding total PPP loans, loans increased $507.3 million or 5% during the fourth quarter of 2022 and $1.66 billion or 17% since year-end 2021.

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

  • Commercial and business lending, which includes commercial and industrial PPP, and owner occupied commercial real estate loans, increased $162.6 million or 3% to $5.74 billion at December 31, 2022, compared to $5.58 billion at September 30, 2022.
    • PPP loans originated in 2020 ("PPP I") loans decreased $423,000 or 23%. PPP loans originated in 2021 ("PPP II") decreased $2.1 million or 18%.
    • Excluding total PPP loans, commercial and business lending increased $165.0 million or 3% to $5.73 billion from $5.56 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $191.5 million or 6% to $3.41 billion from $3.22 billion.
  • Agricultural and agricultural real estate loans totaled $920.5 million compared to $781.4 million, an increase of $139.2 million or 18%.
  • Consumer loans increased $11.2 million or 2% to $506.7 million from $495.5 million.

Significant changes by loan category at December 31, 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 $655.4 million or 13% to $5.74 billion at December 31, 2022, compared to $5.09 billion at December 31, 2021.
    • PPP I loans decreased $25.7 million or 95%. PPP II loans decreased $163.2 million or 94%.
    • Excluding total PPP loans, commercial and business lending increased $844.3 million or 17% to $5.73 billion from $4.89 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $540.3 million or 19% to $3.41 billion from $2.87 billion.
  • Agricultural and agricultural real estate loans totaled $920.5 million, an increase of $166.8 million or 22% from $753.8 million.
  • Consumer loans increased $87.2 million or 21% to $506.7 million from $419.5 million.  

Total deposits were $17.51 billion as of December 31, 2022, $17.27 billion as of September 30, 2022 and $16.42 billion at December 31, 2021. Significant deposit changes by category at December 31, 2022 compared to September 30, 2022 included:

  • Demand deposits decreased $382.2 million or 6% to $5.70 billion compared to $6.08 billion.
  • Savings deposits decreased $66.1 million or 1% to $9.99 billion from $10.06 billion.
  • Time deposits increased $694.2 million or 62% to $1.82 billion from $1.12 billion.

Significant deposit changes by category at December 31, 2022 compared to December 31, 2021 included:

  • Demand deposits decreased $794.0 million or 12% to $5.70 billion compared to $6.50 billion.
  • Savings deposits increased $1.10 billion or 12% to $9.99 billion from $8.90 billion. The increase was primarily attributable in an increase of $855.6 million in wholesale funding deposits, which totaled $1.09 billion at December 31, 2022 compared to $235.0 million at December 31, 2021.
  • Time deposits increased $793.3 million or 77% to $1.82 billion from $1.02 billion.

The increase in time deposits for both the fourth quarter of 2022 and for the year ended December 31, 2022, was primarily attributable to an increase in wholesale funding time deposits, which totaled $965.7 million at December 31, 2022, compared to $150.0 million at September 30, 2022, and $0 at December 31, 2021.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the fourth quarter of 2022 was $2.1 million, which was an increase of $8.9 million from $6.8 million of provision benefit recorded in the fourth quarter of 2021. The provision expense for the fourth quarter of 2022 was impacted by strong quarterly loan growth, net recoveries of $1.7 million, and healthy current credit performance. Management utilized a macroeconomic outlook in the estimation of the allowance for credit losses that anticipates a moderate recession developing within the next twelve months. The provision benefit recorded in the fourth quarter of 2021 reflected an improving credit environment and macroeconomic outlook.

HTLF's allowance for credit losses for loans totaled $109.5 million at December 31, 2022, compared to $110.1 million at December 31, 2021. The following items have impacted HTLF's allowance for credit losses for loans for the year ended December 31, 2022:

  • Provision expense for the year ended December 31, 2022, totaled $10.6 million.
  • Net charge offs of $11.2 million were recorded for the year or 0.11% of average loans.

Provision and Allowance for Credit Losses for Unfunded Commitments
HTLF's allowance for unfunded commitments totaled $20.2 million and $15.5 million at December 31, 2022 and December 31, 2021. The following impacted HTLF's allowance for credit losses for unfunded commitments during 2022:

  • Provision expense for the year ended December 31, 2022, totaled $4.7 million.
  • Unfunded commitments increased $899.5 million or 23% to $4.73 billion at December 31, 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 $3.4 million for the fourth quarter of 2022 compared to provision benefit of $5.3 million for the fourth quarter of 2021. The total allowance for lending related credit losses was $129.7 million at December 31, 2022, which was 1.13% of total loans as of December 31, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets decreased $5.0 million or 7% to $66.9 million, which was 0.33% of total assets at December 31, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $58.5 million or 0.51% of total loans at December 31, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2020. At December 31, 2022, loans delinquent 30-89 days were 0.04% 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 January 29, 2024, by logging on to www.htlf.com.

About HTLF

Heartland Financial USA, Inc., operating under the brand name HTLF, is a bank holding company with assets of $20.24 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 the company and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

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

  • COVID-19 Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;
  • Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics, persistent inflation, supply chain issues, labor shortages, terrorist threats or acts of war;
  • Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;
  • Liquidity and Interest Rate Risks, including the impact of capital market conditions, rising interest rates and changes in monetary policy on our borrowings and net interest income;
  • Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
  • Strategic and External Risks, including competitive forces impacting our business and strategic acquisition risks;
  • Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
  • Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect the company’s business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic and the impact of varying governmental responses that affect the company’s customers and the economies where they operate. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. The company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to or correct or update any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect the company’s financial results, is included in the company’s filings with the SEC.

-FINANCIAL TABLES FOLLOW-


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
December 31,
  For the Year Ended
December 31,
    2022       2021       2022       2021  
Interest Income              
Interest and fees on loans $ 143,970     $ 107,721     $ 477,970     $ 444,137  
Interest on securities:              
Taxable   53,178       30,637       169,544       125,010  
Nontaxable   6,132       5,595       24,006       19,268  
Interest on federal funds sold   11             11       1  
Interest on deposits with other banks and short-term investments   1,410       86       3,125       344  
Total Interest Income   204,701       144,039       674,656       588,760  
Interest Expense              
Interest on deposits   32,215       3,168       56,880       14,797  
Interest on short-term borrowings   2,223       123       2,717       471  
Interest on other borrowings   5,043       3,554       16,823       12,932  
Total Interest Expense   39,481       6,845       76,420       28,200  
Net Interest Income   165,220       137,194       598,236       560,560  
Provision (benefit) for credit losses   3,387       (5,313 )     15,370       (17,575 )
Net Interest Income After Provision for Credit Losses   161,833       142,507       582,866       578,135  
Noninterest Income              
Service charges and fees   17,432       15,349       68,031       59,703  
Loan servicing income   790       781       2,741       3,276  
Trust fees   5,440       6,380       22,570       24,417  
Brokerage and insurance commissions   629       962       2,986       3,546  
Securities gains (losses), net   (153 )     1,563       (425 )     5,910  
Unrealized gain (loss) on equity securities, net   (7 )     (27 )     (622 )     58  
Net gains on sale of loans held for sale   888       4,151       9,032       20,605  
Valuation adjustment on servicing rights         502       1,658       1,088  
Income on bank owned life insurance   600       1,056       2,341       3,762  
Other noninterest income   4,356       2,013       19,952       6,570  
Total Noninterest Income   29,975       32,730       128,264       128,935  
Noninterest Expense              
Salaries and employee benefits   61,611       63,031       254,478       240,114  
Occupancy   6,905       7,282       28,155       29,965  
Furniture and equipment   3,019       3,364       12,499       13,323  
Professional fees   18,186       17,631       65,606       64,600  
Advertising   1,829       2,218       6,221       7,257  
Core deposit and customer relationship intangibles amortization   1,841       2,169       7,834       9,395  
Other real estate and loan collection expenses, net   373       363       950       990  
(Gain) loss on sales/valuations of assets, net   2,388       214       (1,047 )     588  
Acquisition, integration and restructuring costs   2,442       1,989       7,586       5,331  
Partnership investment in tax credit projects   3,247       2,549       5,040       6,303  
Other noninterest expenses   15,377       14,576       56,055       53,946  
Total Noninterest Expense   117,218       115,386       443,377       431,812  
Income Before Income Taxes   74,590       59,851       267,753       275,258  
Income taxes   13,936       10,271       55,573       55,335  
Net Income   60,654       49,580       212,180       219,923  
Preferred dividends   (2,012 )     (2,012 )     (8,050 )     (8,050 )
Net Income Available to Common Stockholders $ 58,642     $ 47,568     $ 204,130     $ 211,873  
Earnings per common share-diluted $ 1.37     $ 1.12     $ 4.79     $ 5.00  
Weighted average shares outstanding-diluted   42,699,752       42,479,442       42,630,703       42,410,611  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Interest Income                  
Interest and fees on loans $ 143,970     $ 122,913     $ 108,718     $ 102,369     $ 107,721  
Interest on securities:                  
Taxable   53,178       45,648       38,098       32,620       30,637  
Nontaxable   6,132       6,164       5,508       6,202       5,595  
Interest on federal funds sold   11                          
Interest on deposits with other banks and short-term investments   1,410       1,081       563       71       86  
Total Interest Income   204,701       175,806       152,887       141,262       144,039  
Interest Expense                  
Interest on deposits   32,215       15,158       6,530       2,977       3,168  
Interest on short-term borrowings   2,223       360       88       46       123  
Interest on other borrowings   5,043       4,412       3,808       3,560       3,554  
Total Interest Expense   39,481       19,930       10,426       6,583       6,845  
Net Interest Income   165,220       155,876       142,461       134,679       137,194  
Provision (benefit) for credit losses   3,387       5,492       3,246       3,245       (5,313 )
Net Interest Income After Provision for Credit Losses   161,833       150,384       139,215       131,434       142,507  
Noninterest Income                  
Service charges and fees   17,432       17,282       18,066       15,251       15,349  
Loan servicing income   790       831       834       286       781  
Trust fees   5,440       5,372       5,679       6,079       6,380  
Brokerage and insurance commissions   629       649       839       869       962  
Securities gains (losses), net   (153 )     (1,055 )     (2,089 )     2,872       1,563  
Unrealized gain (loss) on equity securities, net   (7 )     (211 )     (121 )     (283 )     (27 )
Net gains on sale of loans held for sale   888       1,832       2,901       3,411       4,151  
Valuation adjustment on servicing rights                     1,658       502  
Income on bank owned life insurance   600       694       523       524       1,056  
Other noninterest income   4,356       3,787       7,907       3,902       2,013  
Total Noninterest Income   29,975       29,181       34,539       34,569       32,730  
Noninterest Expense                  
Salaries and employee benefits   61,611       62,661       64,032       66,174       63,031  
Occupancy   6,905       6,794       7,094       7,362       7,282  
Furniture and equipment   3,019       2,928       3,033       3,519       3,364  
Professional fees   18,186       16,277       15,987       15,156       17,631  
Advertising   1,829       1,554       1,283       1,555       2,218  
Core deposit and customer relationship intangibles amortization   1,841       1,856       2,083       2,054       2,169  
Other real estate and loan collection expenses, net   373       304       78       195       363  
(Gain) loss on sales/valuations of assets, net   2,388       (251 )     (3,230 )     46       214  
Acquisition, integration and restructuring costs   2,442       2,156       2,412       576       1,989  
Partnership investment in tax credit projects   3,247       979       737       77       2,549  
Other noninterest expenses   15,377       13,625       12,970       14,083       14,576  
Total Noninterest Expense   117,218       108,883       106,479       110,797       115,386  
Income Before Income Taxes   74,590       70,682       67,275       55,206       59,851  
Income taxes   13,936       14,118       15,402       12,117       10,271  
Net Income   60,654       56,564       51,873       43,089       49,580  
Preferred dividends   (2,012 )     (2,013 )     (2,012 )     (2,013 )     (2,012 )
Net Income Available to Common Stockholders $ 58,642     $ 54,551     $ 49,861     $ 41,076     $ 47,568  
Earnings per common share-diluted $ 1.37     $ 1.28     $ 1.17     $ 0.97     $ 1.12  
Weighted average shares outstanding-diluted   42,699,752       42,643,940       42,565,391       42,540,953       42,479,442  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Assets                  
Cash and due from banks $ 309,045     $ 250,394     $ 221,077     $ 198,559     $ 163,895  
Interest bearing deposits with other banks and other short-term investments   54,042       149,466       163,717       406,343       271,704  
Cash and cash equivalents   363,087       399,860       384,794       604,902       435,599  
Time deposits in other financial institutions   1,740       1,740       1,855       2,894       2,894  
Securities:                  
Carried at fair value   6,147,144       6,060,331       7,106,218       7,025,243       7,530,374  
Held to maturity, at cost   829,403       830,247       81,939       81,785       84,709  
Other investments, at cost   74,567       80,286       85,899       82,751       82,567  
Loans held for sale   5,277       9,570       18,803       22,685       21,640  
Loans:                  
Held to maturity   11,428,352       10,923,532       10,678,218       10,177,385       9,954,572  
Allowance for credit losses   (109,483 )     (105,715 )     (101,353 )     (100,522 )     (110,088 )
Loans, net   11,318,869       10,817,817       10,576,865       10,076,863       9,844,484  
Premises, furniture and equipment, net   197,330       203,585       206,818       213,752       215,827  
Goodwill   576,005       576,005       576,005       576,005       576,005  
Core deposit and customer relationship intangibles, net   25,154       26,995       28,851       30,934       32,988  
Servicing rights, net   7,840       8,379       8,288       8,102       6,890  
Cash surrender value on life insurance   193,403       193,184       192,474       192,267       191,722  
Other real estate, net   8,401       8,030       4,528       1,422       1,927  
Other assets   496,008       466,921       385,062       311,274       246,923  
Total Assets $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
Demand $ 5,701,340     $ 6,083,563     $ 6,087,304     $ 6,376,249     $ 6,495,326  
Savings   9,994,391       10,060,523       10,059,678       9,236,427       8,897,909  
Time   1,817,278       1,123,035       1,078,568       1,054,008       1,024,020  
Total deposits   17,513,009       17,267,121       17,225,550       16,666,684       16,417,255  
Short-term borrowings   376,117       147,000       97,749       107,372       131,597  
Other borrowings   371,753       371,446       372,538       372,290       372,072  
Accrued expenses and other liabilities   248,294       241,425       188,494       152,676       171,447  
Total Liabilities   18,509,173       18,026,992       17,884,331       17,299,022       17,092,371  
Stockholders' Equity                  
Preferred equity   110,705       110,705       110,705       110,705       110,705  
Common stock   42,467       42,444       42,439       42,370       42,275  
Capital surplus   1,080,964       1,079,277       1,076,766       1,073,048       1,071,956  
Retained earnings   1,120,925       1,074,168       1,031,076       992,655       962,994  
Accumulated other comprehensive income/(loss)   (620,006 )     (650,636 )     (486,918 )     (286,921 )     (5,752 )
Total Equity   1,735,055       1,655,958       1,774,068       1,931,857       2,182,178  
Total Liabilities and Equity $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Average Balances                  
Assets $ 19,913,849     $ 19,775,341     $ 19,559,091     $ 19,229,872     $ 19,151,691  
Loans, net of unearned   11,117,513       10,783,135       10,477,368       10,043,594       9,886,027  
Deposits   17,319,218       17,282,289       17,044,479       16,459,378       16,265,476  
Earning assets   18,175,838       18,157,795       17,987,734       17,757,067       17,681,917  
Interest bearing liabilities   11,980,032       11,723,026       11,575,319       10,453,400       10,207,255  
Common equity   1,548,739       1,674,306       1,731,393       2,003,424       2,061,973  
Total stockholders' equity   1,659,444       1,785,011       1,842,098       2,114,129       2,172,678  
Tangible common equity (non-GAAP)(1)   946,688       1,070,399       1,125,543       1,395,488       1,451,950  
                   
Key Performance Ratios                  
Annualized return on average assets   1.21 %     1.13 %     1.06 %     0.91 %     1.03 %
Annualized return on average common equity (GAAP)   15.02       12.93       11.55       8.32       9.15  
Annualized return on average tangible common equity (non-GAAP)(1)   25.19       20.76       18.35       12.41       13.47  
Annualized ratio of net charge-offs (recoveries) to average loans   (0.06 )     0.00       0.03       0.49       0.03  
Annualized net interest margin (GAAP)   3.61       3.41       3.18       3.08       3.08  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.65       3.45       3.22       3.12       3.12  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   54.33       55.26       57.66       64.65       63.86  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.34       2.18       2.18       2.34       2.39  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.14       2.09       2.14       2.28       2.25  

 

  For the Quarter Ended
December 31,
  For the Year Ended
December 31,
    2022       2021       2022       2021  
Average Balances              
Assets $ 19,913,849     $ 19,151,691     $ 19,621,839     $ 18,508,273  
Loans, net of unearned   11,117,513       9,886,027       10,608,831       9,957,290  
Deposits   17,319,218       16,265,476       17,029,398       15,679,773  
Earning assets   18,175,838       17,681,917       18,021,134       17,025,088  
Interest bearing liabilities   11,980,032       10,207,255       11,437,921       9,969,820  
Common equity   1,548,739       2,061,973       1,738,041       2,020,200  
Total stockholders' equity   1,659,444       2,172,678       1,848,746       2,130,905  
Tangible common equity (non-GAAP)(1)   946,688       1,451,950       1,133,124       1,406,641  
               
Key Performance Ratios              
Annualized return on average assets   1.21 %     1.03 %     1.08 %     1.19 %
Annualized return on average common equity (GAAP)   15.02       9.15       11.74       10.49  
Annualized return on average tangible common equity (non-GAAP)(1)   25.19       13.47       18.56       15.59  
Annualized ratio of net charge-offs (recoveries) to average loans   (0.06 )     0.03       0.11       0.04  
Annualized net interest margin (GAAP)   3.61       3.08       3.32       3.29  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.65       3.12       3.37       3.33  
Efficiency ratio, fully tax-equivalent(1)   54.33       63.86       57.74       59.48  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.34       2.39       2.26       2.33  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.14       2.25       2.16       2.22  
               
(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
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Common Share Data                  
Book value per common share $ 38.25     $ 36.41     $ 39.19     $ 42.98     $ 49.00  
Tangible book value per common share (non-GAAP)(1) $ 24.09     $ 22.20     $ 24.94     $ 28.66     $ 34.59  
ASC 320 effect on book value per common share $ (14.58 )   $ (15.31 )   $ (11.43 )   $ (6.74 )   $ (0.10 )
Common shares outstanding, net of treasury stock   42,467,394       42,444,106       42,439,439       42,369,908       42,275,264  
Tangible common equity ratio (non-GAAP)(1)   5.21 %     4.94 %     5.56 %     6.52 %     7.84 %
                   
Other Selected Trend Information                  
Effective tax rate   18.68 %     19.97 %     22.89 %     21.95 %     17.16 %
Full time equivalent employees   2,002       2,020       2,087       2,208       2,249  
                   
Loans Held to Maturity                  
Commercial and industrial $ 3,464,414     $ 3,278,703     $ 3,059,519     $ 2,814,513     $ 2,645,085  
Paycheck Protection Program ("PPP")   11,025       13,506       23,031       74,065       199,883  
Owner occupied commercial real estate   2,265,307       2,285,973       2,282,833       2,266,076       2,240,334  
Commercial and business lending   5,740,746       5,578,182       5,365,383       5,154,654       5,085,302  
Non-owner occupied commercial real estate   2,330,940       2,219,542       2,321,718       2,161,761       2,010,591  
Real estate construction   1,076,082       996,017       845,045       842,483       856,119  
Commercial real estate lending   3,407,022       3,215,559       3,166,763       3,004,244       2,866,710  
Total commercial lending   9,147,768       8,793,741       8,532,146       8,158,898       7,952,012  
Agricultural and agricultural real estate   920,510       781,354       836,703       766,443       753,753  
Residential mortgage   853,361       852,928       845,270       825,242       829,283  
Consumer   506,713       495,509       464,099       426,802       419,524  
Total loans held to maturity $ 11,428,352     $ 10,923,532     $ 10,678,218     $ 10,177,385     $ 9,954,572  
                   
Total unfunded loan commitments $ 4,729,677     $ 4,664,379     $ 4,458,874     $ 4,130,316     $ 3,830,219  
                   
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of and for the Quarter Ended
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Allowance for Credit Losses-Loans                  
Balance, beginning of period $ 105,715     $ 101,353     $ 100,522     $ 110,088     $ 117,533  
Provision (benefit) for credit losses   2,075       4,388       1,545       2,628       (6,808 )
Charge-offs   (2,668 )     (938 )     (1,473 )     (13,217 )     (1,953 )
Recoveries   4,361       912       759       1,023       1,316  
Balance, end of period $ 109,483     $ 105,715     $ 101,353     $ 100,522     $ 110,088  
                   
Allowance for Unfunded Commitments                  
Balance, beginning of period $ 18,884     $ 17,780     $ 16,079     $ 15,462     $ 13,967  
Provision for credit losses   1,312       1,104       1,701       617       1,495  
Balance, end of period $ 20,196     $ 18,884     $ 17,780     $ 16,079     $ 15,462  
                   
Allowance for lending related credit losses $ 129,679     $ 124,599     $ 119,133     $ 116,601     $ 125,550  
                   
Provision for Credit Losses                  
Provision (benefit) for credit losses-loans $ 2,075     $ 4,388     $ 1,545     $ 2,628     $ (6,808 )
Provision for credit losses-unfunded commitments   1,312       1,104       1,701       617       1,495  
Total provision (benefit) for credit losses $ 3,387     $ 5,492     $ 3,246     $ 3,245     $ (5,313 )
                   
Asset Quality                  
Nonaccrual loans $ 58,231     $ 64,560     $ 62,909     $ 64,174     $ 69,369  
Loans past due ninety days or more   273       678       95       246       550  
Other real estate owned   8,401       8,030       4,528       1,422       1,927  
Other repossessed assets   26                   34       43  
Total nonperforming assets $ 66,931     $ 73,268     $ 67,532     $ 65,876     $ 71,889  
                   
Performing troubled debt restructured loans $ 8,279     $ 8,047     $ 1,350     $ 882     $ 817  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 73,268     $ 67,532     $ 65,876     $ 71,889     $ 88,146  
Net loan (charge offs) recoveries   1,693       (26 )     (714 )     (12,194 )     (637 )
New nonperforming loans   1,439       8,388       8,590       15,832       5,886  
Reduction of nonperforming loans(1)   (8,875 )     (2,015 )     (5,244 )     (8,448 )     (18,429 )
OREO/Repossessed assets sales proceeds   (594 )     (611 )     (976 )     (1,203 )     (3,077 )
Balance, end of period $ 66,931     $ 73,268     $ 67,532     $ 65,876     $ 71,889  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans   0.51 %     0.60 %     0.59 %     0.63 %     0.70 %
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans   0.58       0.67       0.60       0.64       0.71  
Ratio of nonperforming assets to total assets   0.33       0.37       0.34       0.34       0.37  
Annualized ratio of net loan charge-offs (recoveries) to average loans   (0.06 )     0.00       0.03       0.49       0.03  
Allowance for loan credit losses as a percent of loans   0.96       0.97       0.95       0.99       1.11  
Allowance for lending related credit losses as a percent of loans   1.13       1.14       1.12       1.15       1.26  
Allowance for loan credit losses as a percent of nonperforming loans   187.14       162.05       160.87       156.04       157.45  
Loans delinquent 30-89 days as a percent of total loans   0.04       0.10       0.06       0.10       0.07  
                   
(1) Includes principal reductions, transfers to performing status and transfers to OREO.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Quarter Ended
  December 31, 2022   September 30, 2022   December 31, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 6,122,313     $ 53,178   3.45 %   $ 6,303,278     $ 45,648   2.87 %   $ 6,730,511     $ 30,637   1.81 %
Nontaxable(1)   890,368       7,762   3.46       951,232       7,802   3.25       964,712       7,082   2.91  
Total securities   7,012,681       60,940   3.45       7,254,510       53,450   2.92       7,695,223       37,719   1.94  
Interest on deposits with other banks and other short-term investments   151,405       1,410   3.69       222,170       1,081   1.93       218,809       86   0.16  
Federal funds sold   739       11   5.91       11                        
Loans:(2)                                  
Commercial and industrial(1)   3,346,843       45,290   5.37       3,182,134       37,526   4.68       2,614,685       26,465   4.02  
PPP loans   12,252       397   12.86       17,859       363   8.06       302,829       8,106   10.62  
Owner occupied commercial real estate   2,277,055       26,194   4.56       2,272,666       23,601   4.12       2,166,768       22,007   4.03  
Non-owner occupied commercial real estate   2,286,298       29,273   5.08       2,258,424       25,895   4.55       1,996,186       21,744   4.32  
Real estate construction   1,050,802       16,585   6.26       914,520       12,382   5.37       837,716       9,390   4.45  
Agricultural and agricultural real estate   785,647       10,159   5.13       799,823       8,966   4.45       697,521       7,089   4.03  
Residential mortgage   858,767       9,168   4.24       858,119       8,665   4.01       853,208       8,615   4.01  
Consumer   499,849       7,426   5.89       479,590       6,028   4.99       417,114       4,793   4.56  
Less: allowance for credit losses-loans   (106,500 )             (102,031 )             (118,142 )        
Net loans   11,011,013       144,492   5.21       10,681,104       123,426   4.58       9,767,885       108,209   4.40  
Total earning assets   18,175,838       206,853   4.52 %     18,157,795       177,957   3.89 %     17,681,917       146,014   3.28 %
Nonearning Assets   1,738,011               1,617,546               1,469,774          
Total Assets $ 19,913,849             $ 19,775,341             $ 19,151,691          
Interest Bearing Liabilities                                  
Savings $ 9,987,692     $ 25,950   1.03 %   $ 10,059,652     $ 12,907   0.51 %   $ 8,609,596     $ 2,160   0.10 %
Time deposits   1,322,094       6,265   1.88       1,156,908       2,251   0.77       1,048,785       1,008   0.38  
Short-term borrowings   298,804       2,223   2.95       134,974       360   1.06       176,956       123   0.28  
Other borrowings   371,442       5,043   5.39       371,492       4,412   4.71       371,918       3,554   3.79  
Total interest bearing liabilities   11,980,032       39,481   1.31 %     11,723,026       19,930   0.67 %     10,207,255       6,845   0.27 %
Noninterest Bearing Liabilities                                  
Noninterest bearing deposits   6,009,432               6,065,729               6,607,095          
Accrued interest and other liabilities   264,941               201,575               164,663          
Total noninterest bearing liabilities   6,274,373               6,267,304               6,771,758          
Equity   1,659,444               1,785,011               2,172,678          
Total Liabilities and Equity $ 19,913,849             $ 19,775,341             $ 19,151,691          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 167,372           $ 158,027           $ 139,169    
Net interest spread (1)         3.21 %           3.22 %           3.01 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets (1)(3)         3.65 %           3.45 %           3.12 %
Interest bearing liabilities to earning assets   65.91 %             64.56 %             57.73 %        
 
(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 Year Ended
  December 31, 2022   December 31, 2021
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 6,335,586     $ 169,544   2.68 %   $ 6,135,732     $ 125,010   2.04 %
Nontaxable(1)   965,474       30,387   3.15       799,283       24,390   3.05  
Total securities   7,301,060       199,931   2.74       6,935,015       149,400   2.15  
Interest bearing deposits with other banks and other short-term investments   216,786       3,125   1.44       254,630       344   0.14  
Federal funds sold   192       11   5.73       3,457       1   0.03  
Loans:(2)                      
Commercial and industrial(1)   3,070,890       140,310   4.57       2,543,514       111,473   4.38  
PPP loans   50,464       6,884   13.64       734,139       40,627   5.53  
Owner occupied commercial real estate   2,272,088       93,936   4.13       1,950,014       81,717   4.19  
Non-owner occupied commercial real estate   2,196,922       99,202   4.52       1,969,910       87,728   4.45  
Real estate construction   923,316       48,258   5.23       824,055       37,891   4.60  
Agricultural and agricultural real estate   778,526       34,064   4.38       681,493       29,822   4.38  
Residential mortgage   852,541       34,276   4.02       846,573       36,768   4.34  
Consumer   464,084       23,058   4.97       407,592       20,201   4.96  
Less: allowance for credit losses-loans   (105,735 )             (125,304 )        
Net loans   10,503,096       479,988   4.57       9,831,986       446,227   4.54  
Total earning assets   18,021,134       683,055   3.79 %     17,025,088       595,972   3.50 %
Nonearning Assets   1,600,705               1,483,185          
Total Assets $ 19,621,839             $ 18,508,273          
Interest Bearing Liabilities                      
Savings $ 9,737,100     $ 46,623   0.48 %   $ 8,311,825     $ 9,063   0.11 %
Time deposits   1,160,538       10,257   0.88       1,137,097       5,734   0.50  
Short-term borrowings   168,404       2,717   1.61       181,165       471   0.26  
Other borrowings   371,879       16,823   4.52       339,733       12,932   3.81  
Total interest bearing liabilities   11,437,921       76,420   0.67 %     9,969,820       28,200   0.28 %
Noninterest Bearing Liabilities                      
Noninterest bearing deposits   6,131,760               6,230,851          
Accrued interest and other liabilities   203,412               176,697          
Total noninterest bearing liabilities   6,335,172               6,407,548          
Equity   1,848,746               2,130,905          
Total Liabilities and Equity $ 19,621,839             $ 18,508,273          
Net interest income, fully tax-equivalent (non-GAAP )(1)(3)     $ 606,635           $ 567,772    
Net interest spread (1)         3.12 %           3.22 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets (1)(3)         3.37 %           3.33 %
Interest bearing liabilities to earning assets   63.47 %             58.56 %        
                       
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                  
Net income available to common stockholders (GAAP) $ 58,642     $ 54,551     $ 49,861     $ 41,076     $ 47,568  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,455       1,466       1,645       1,623       1,713  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $ 60,097     $ 56,017     $ 51,506     $ 42,699     $ 49,281  
                   
Average common equity (GAAP) $ 1,548,739     $ 1,674,306     $ 1,731,393     $ 2,003,424     $ 2,061,973  
Less average goodwill   576,005       576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   26,046       27,902       29,845       31,931       34,018  
Average tangible common equity (non-GAAP) $ 946,688     $ 1,070,399     $ 1,125,543     $ 1,395,488     $ 1,451,950  
Annualized return on average common equity (GAAP)   15.02 %     12.93 %     11.55 %     8.32 %     9.15 %
Annualized return on average tangible common equity (non-GAAP)   25.19 %     20.76 %     18.35 %     12.41 %     13.47 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                  
Net Interest Income (GAAP) $ 165,220     $ 155,876     $ 142,461     $ 134,679     $ 137,194  
Plus tax-equivalent adjustment(1)   2,152       2,151       1,977       2,119       1,975  
Net interest income, fully tax-equivalent (non-GAAP) $ 167,372     $ 158,027     $ 144,438     $ 136,798     $ 139,169  
                   
Average earning assets $ 18,175,838     $ 18,157,795     $ 17,987,734     $ 17,757,067     $ 17,681,917  
                   
Annualized net interest margin (GAAP)   3.61 %     3.41 %     3.18 %     3.08 %     3.08 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)   3.65       3.45       3.22       3.12       3.12  
Net purchase accounting discount amortization on loans included in annualized net interest margin   0.03       0.03       0.07       0.05       0.05  
                   
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                  
Common equity (GAAP) $ 1,624,350     $ 1,545,253     $ 1,663,363     $ 1,821,152     $ 2,071,473  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   25,154       26,995       28,851       30,934       32,988  
Tangible common equity (non-GAAP) $ 1,023,191     $ 942,253     $ 1,058,507     $ 1,214,213     $ 1,462,480  
                   
Common shares outstanding, net of treasury stock   42,467,394       42,444,106       42,439,439       42,369,908       42,275,264  
Common equity (book value) per share (GAAP) $ 38.25     $ 36.41     $ 39.19     $ 42.98     $ 49.00  
Tangible book value per common share (non-GAAP) $ 24.09     $ 22.20     $ 24.94     $ 28.66     $ 34.59  
                   
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                  
Tangible common equity (non-GAAP) $ 1,023,191     $ 942,253     $ 1,058,507     $ 1,214,213     $ 1,462,480  
                   
Total assets (GAAP) $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879     $ 19,274,549  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   25,154       26,995       28,851       30,934       32,988  
Total tangible assets (non-GAAP) $ 19,643,069     $ 19,079,950     $ 19,053,543     $ 18,623,940     $ 18,665,556  
Tangible common equity ratio (non-GAAP)   5.21 %     4.94 %     5.56 %     6.52 %     7.84 %
                   
(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
12/31/2022   9/30/2022   6/30/2022   3/31/2022   12/31/2021
Net interest income (GAAP) $ 165,220     $ 155,876     $ 142,461     $ 134,679     $ 137,194  
Tax-equivalent adjustment(1)   2,152       2,151       1,977       2,119       1,975  
Fully tax-equivalent net interest income   167,372       158,027       144,438       136,798       139,169  
Noninterest income   29,975       29,181       34,539       34,569       32,730  
Securities (gains)/losses, net   153       1,055       2,089       (2,872 )     (1,563 )
Unrealized (gain) loss on equity securities, net   7       211       121       283       27  
Valuation adjustment on servicing rights                     (1,658 )     (502 )
Adjusted revenue (non-GAAP) $ 197,507     $ 188,474     $ 181,187     $ 167,120     $ 169,861  
                   
Total noninterest expenses (GAAP) $ 117,218     $ 108,883     $ 106,479     $ 110,797     $ 115,386  
Less:                  
Core deposit and customer relationship intangibles amortization   1,841       1,856       2,083       2,054       2,169  
Partnership investment in tax credit projects   3,247       979       737       77       2,549  
(Gain) loss on sales/valuation of assets, net   2,388       (251 )     (3,230 )     46       214  
Acquisition, integration and restructuring costs   2,442       2,156       2,412       576       1,989  
Core expenses (non-GAAP) $ 107,300     $ 104,143     $ 104,477     $ 108,044     $ 108,465  
Efficiency ratio, fully tax-equivalent (non-GAAP)   54.33 %     55.26 %     57.66 %     64.65 %     63.86 %
                   
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)                  
Total noninterest expenses (GAAP) $ 117,218     $ 108,883     $ 106,479     $ 110,797     $ 115,386  
Core expenses (non-GAAP)   107,300       104,143       104,477       108,044       108,465  
                   
Average assets $ 19,913,849     $ 19,775,341     $ 19,559,091     $ 19,229,872     $ 19,151,691  
Total noninterest expenses to average assets (GAAP)   2.34 %     2.18 %     2.18 %     2.34 %     2.39 %
Core expenses to average assets (non-GAAP)   2.14 %     2.09 %     2.14 %     2.28 %     2.25 %
                   
Acquisition, integration and restructuring costs                  
Salaries and employee benefits $ 424     $ 365     $ 275     $ 340     $  
Occupancy                            
Furniture and equipment                            
Professional fees   1,587       1,480       1,779       236       1,989  
Advertising   95       131       156              
(Gain) loss on sales/valuations of assets, net                            
Other noninterest expenses   336       180       202              
Total acquisition, integration and restructuring costs $ 2,442     $ 2,156     $ 2,412     $ 576     $ 1,989  
After tax impact on diluted earnings per share(1) $ 0.05     $ 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
December 31,
  For the Year Ended
December 31,
    2022       2021       2022       2021  
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)              
Net income available to common stockholders (GAAP) $ 58,642     $ 47,568     $ 204,130     $ 211,873  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,455       1,713       6,189       7,422  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $ 60,097     $ 49,281     $ 210,319     $ 219,295  
               
Average common equity (GAAP) $ 1,548,739     $ 2,061,973     $ 1,738,041     $ 2,020,200  
Less average goodwill   576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   26,046       34,018       28,912       37,554  
Average tangible common equity (non-GAAP) $ 946,688     $ 1,451,950     $ 1,133,124     $ 1,406,641  
Annualized return on average common equity (GAAP)   15.02 %     9.15 %     11.74 %     10.49 %
Annualized return on average tangible common equity (non-GAAP)   25.19 %     13.47 %     18.56 %     15.59 %