Heartland Financial USA, Inc. ("HTLF") Reports Quarterly Results as of March 31, 2023

Company Release - 4/24/2023 4:01 PM ET

Highlights and Developments

  • Quarterly net income available to common stockholders of $50.8 million
  • Diluted earnings per common share of $1.19
  • Efficiency ratio, fully tax-equivalent (non-GAAP)(1) of 57.16%
  • Quarterly net recoveries of $1.0 million and 30-89 day loan delinquencies were 0.10% of total loans
  • Total deposits increased $168.3 million or 1%
  • Total customer deposits decreased $618.2 million or 4%
  • Uninsured deposits, excluding collateralized public deposits, were 35% of total deposits as of March 31, 2023
  • Increased borrowing capacity by $1.7 billion during the quarter to $2.8 billion
  • Common equity tier 1 ratio to risk-weighted assets of 11.28%, which is substantially above the well-capitalized regulatory requirement of 6.50%
  • Completed the consolidation of one bank charter during the quarter, and one charter consolidation completed subsequent to the end of the quarter
  Three Months Ended
March 31,
  2023   2022
Net income available to common stockholders (in millions) $ 50.8     $ 41.1  
Diluted earnings per common share   1.19       0.97  
       
Return on average assets   1.06 %     0.91 %
Return on average common equity   12.43       8.32  
Return on average tangible common equity (non-GAAP)(1)   20.05       12.41  
Net interest margin   3.36       3.08  
Net interest margin, fully tax-equivalent (non-GAAP)(1)   3.40       3.12  
Efficiency ratio   60.94       65.46  
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)   57.16       64.65  

(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.

"HTLF's strength and stability helped us navigate the first quarter of 2023. Despite some challenging headwinds, we maintained solid regulatory capital ratios, enhanced our strong liquidity position and delivered excellent credit metrics while continuing to execute our growth strategies. "
Bruce K. Lee, President and Chief Executive Officer, HTLF

DENVER, April 24, 2023 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022:

  • Net income available to common stockholders of $50.8 million compared to $41.1 million, an increase of $9.7 million or 24%.
  • Earnings per diluted common share of $1.19 compared to $0.97, an increase of $0.22 or 23%.
  • Net interest income of $152.2 million compared to $134.7 million, an increase of $17.5 million or 13%.
  • Return on average assets was 1.06% compared to 0.91%.
  • Return on average common equity was 12.43% compared to 8.32%.
  • Return on average tangible common equity (non-GAAP) was 20.05% compared to 12.41%.

"HTLF's strength and stability helped us navigate the first quarter of 2023. Despite some challenging headwinds, we maintained solid regulatory capital ratios, enhanced our strong liquidity position and delivered excellent credit metrics while continuing to execute our growth strategies," said Bruce K. Lee, president and chief executive officer of HTLF.

Strengthening HTLF in Response to Recent Banking Industry Disruptions

In the first quarter of 2023, HTLF took the following actions, primarily in response to the disruption in the banking industry in March 2023:

  • Proactively reached out to over 1,000 large depositors and helped facilitate additional FDIC insurance through Insured Cash Sweep ("ICS") products and Certificate of Deposit Registry Service ("CDARS") products,
  • Increased deposit pricing to address highly competitive deposit environment,
  • Increased access and availability to sources of liquidity by $1.7 billion,
  • Total borrowing capacity through various programs, including the Bank Term Funding Program, was $2.8 billion as of March 31, 2023, of which no balance was drawn, and
  • Retail deposit campaign resulted in over 8,000 new accounts opened.

Mr. Lee commented, "Conservative liquidity and capital management are fundamental to our strength and stability. During the quarter, we enhanced our liquidity and built our regulatory capital ratios which substantially exceed the well-capitalized thresholds. We believe our regulatory capital ratio buffers would withstand any changes in regulatory rules that require the inclusion of unrealized losses in our total investment portfolio and remain well capitalized."

Charter Consolidation Update

During the first quarter of 2023, Wisconsin Bank & Trust was consolidated into HTLF Bank. Subsequent to March 31, 2023, Bank of Blue Valley was consolidated into HTLF Bank. Citywide Banks, Premier Valley Bank, Minnesota Bank & Trust, Arizona Bank & Trust, Illinois Bank & Trust, Wisconsin Bank & Trust and Bank of Blue Valley are now operating as divisions of HTLF Bank. The remaining four 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.

Total consolidation restructuring costs are projected to be $19-$20 million with approximately $8-$9 million of expenses remaining to be incurred in 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 second half of 2022 and first quarter of 2023 with the completion of six charter consolidations, and total benefits are estimated to be approximately $20 million annually after the project is completed.

Recent Developments

As of March 29, 2023, HTLF's subsidiary, Dubuque Bank & Trust, entered into an agreement to sell and transfer the recordkeeping and administration services component of HTLF’s Retirement Plan Services business to July Business Services ("July"). Through the new partnership with July, HTLF will augment the comprehensive retirement plan solutions offered to clients with enhanced technology and an expanded suite of product offerings that clients expect from a top retirement services provider. The transaction is expected to be completed and recordkeeping and administration services transferred in the second quarter of 2023.

On March 31, 2023, HTLF's subsidiary, First Bank & Trust, closed on the sale of its mortgage servicing rights portfolio, which consisted of approximately 4,500 loans serviced for others with an unpaid principal balance of approximately $700 million. In the agreement, which includes customary terms and conditions, First Bank & Trust is providing interim servicing of the loans until the expected transfer date in May 2023.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.36% (3.40% on a fully tax-equivalent basis, non-GAAP) for the first quarter of 2023 compared to 3.61% (3.65% on a fully tax-equivalent basis, non-GAAP) for the fourth quarter of 2022, and 3.08% (3.12% on a fully tax-equivalent basis, non-GAAP) for the first quarter of 2022.

Total interest income and average earning asset changes for the first quarter of 2023 compared to the first quarter of 2022 were:

  • Total interest income was $217.0 million compared to $141.3 million, which was an increase of $75.7 million or 54% and primarily attributable to an increase in average earning assets and higher yields.
  • Total interest income on a tax-equivalent basis (non-GAAP) was $219.2 million, which was an increase of $75.8 million or 53% from $143.4 million.
  • Average earning assets increased $635.6 million or 4% to $18.39 billion compared to $17.76 billion.
  • The average rate on earning assets increased 156 basis points to 4.83% compared to 3.27%, which was primarily due to recent interest rate increases.

Total interest expense and average interest bearing liability changes for the first quarter of 2023 compared to the first quarter of 2022 were:

  • Total interest expense was $64.8 million, an increase of $58.2 million from $6.6 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 interest bearing liabilities increased 183 basis points to 2.09% compared to 0.26%.
  • Average interest bearing deposits increased $2.03 billion or 20% to $11.99 billion from $9.96 billion, primarily attributable to an increase of $1.04 billion in wholesale deposits.
  • The average interest rate paid on interest bearing deposits increased 180 basis points to 1.92% compared to 0.12%.
  • Average borrowings increased $102.9 million or 21% to $594.7 million from $491.8 million, and the average interest rate paid on borrowings was 5.37% compared to 2.97%.

Net interest income changes for the first quarter of 2023 compared to the first quarter of 2022 were:

  • Net interest income totaled $152.2 million compared to $134.7 million, which was an increase of $17.5 million or 13%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $154.4 million compared to $136.8 million, which was an increase of $17.6 million or 13%.

Noninterest Income and Noninterest Expense

Total noninterest income was $30.0 million during the first quarter of 2023 compared to $34.6 million during the first quarter of 2022, a decrease of $4.6 million or 13%. Significant changes within the noninterest income category for the first quarter of 2023 compared to the first quarter of 2022 were:

  • Service charges and fees increased $1.9 million or 12% to $17.1 million from $15.3 million, which was primarily attributable to an increase of $1.3 million or 26% in credit card revenue to $6.3 million compared to $5.0 million.
  • Net security losses totaled $1.1 million compared to net gains of $2.9 million.
  • Net gains on sales of loans held for sale totaled $1.8 million compared to $3.4 million, which was a decrease of $1.6 million or 46% and was primarily attributable to a decrease of loans sold to the secondary market.
  • Valuation adjustment benefit on servicing rights was $0 compared to $1.7 million.

Total noninterest expense was $111.0 million during the first quarter of 2023 compared to $110.8 million during the first quarter of 2022, which was an increase of $246,000 or less than 1%. Significant changes within the noninterest expense category for the first quarter of 2023 compared to the first quarter of 2022 were:

  • Salaries and employee benefits totaled $62.1 million compared to $66.2 million, which was a decrease of $4.0 million or 6%. The decrease was primarily attributable to a reduction of full-time equivalent employees and lower incentive compensation expense. Full-time equivalent employees totaled 1,991 compared to 2,208, which was a decrease of 217 or 10%.
  • Acquisition, integration and restructuring costs totaled $1.7 million compared to $576,000, an increase of $1.1 million due to the progression of the charter consolidation project.
  • Professional fees totaled $16.1 million compared to $15.2 million, which was an increase of $920,000 or 6%. FDIC insurance assessments totaled $3.3 million compared to $1.6 million, an increase of $1.7 million due to assessment rate changes that were effective with the first quarter 2023 assessment.
  • Loss on sales/valuations of assets, net totaled $1.1 million compared to $46,000, which was an increase of $1.1 million. HTLF recorded $813,000 of losses on fixed assets associated with branch optimization activities and a loss of $193,000 associated with the sale of the mortgage servicing rights portfolio.

The effective tax rate was 22.50% for the first quarter of 2023 compared to 21.95% for the first quarter of 2022. The following items impacted the first quarter 2023 and 2022 tax calculations:

  • Various tax credits of $969,000 compared to $273,000.
  • Tax expense of $929,000 compared to $58,000 resulting from the disallowed interest expense related to tax-exempt loans and securities, aligning with increases in total interest expense.
  • Tax-exempt interest income as a percentage of pre-tax income of 12.20% compared to 14.44%.

Total Assets, Total Loans and Total Deposits

Total assets were $20.18 billion at March 31, 2023, a decrease of $61.7 million or less than 1% from $20.24 billion at year-end 2022. Securities represented 35% of total assets at both March 31, 2023 and December 31, 2022.

Total loans held to maturity were $11.50 billion at March 31, 2023, compared to $11.43 billion at December 31, 2022, which was an increase of $67.0 million or 1%.

Significant changes by loan category at March 31, 2023 compared to December 31, 2022 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $78.4 million or 1% to $5.82 billion compared to $5.74 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $116.5 million or 3% to $3.52 billion compared to $3.41 billion.
  • Agricultural and agricultural real estate loans decreased $110.3 million or 12% to $810.2 million compared to $920.5 million.

Total deposits were $17.68 billion as of March 31, 2023, compared to $17.51 billion at December 31, 2022, which was an increase of $168.3 million or 1%. Total customer deposits were $14.84 billion as of March 31, 2023 compared to $15.46 billion at December 31, 2022, which was a decrease of $618.2 million or 4%. Total wholesale deposits were $2.84 billion, which was an increase of $786.5 million or 38% from $2.06 billion at December 31, 2022.

Significant deposit changes by category at March 31, 2023 compared to December 31, 2022 included:

  • Customer demand deposits decreased $581.8 million or 10% to $5.12 billion compared to $5.70 billion.
  • Total savings deposits decreased $737.8 million or 7% to $9.26 billion from $9.99 billion. Total customer savings deposits decreased $256.4 million or 3% to $8.64 billion from $8.90 billion. Wholesale savings deposits decreased $481.4 million or 44% to $609.2 million from $1.09 billion.
  • Total time deposits increased $1.49 billion or 82% to $3.31 billion from $1.82 billion. Customer time deposits increased $219.9 million or 26% to $1.07 billion from $851.5 million. Wholesale time deposits increased $1.27 billion to $2.23 billion from $965.7 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the first quarter of 2023 was $2.2 million, which was a decrease of $444,000 or 17% from $2.6 million recorded in the first quarter of 2022. The provision expense for the first quarter of 2023 reflects net recoveries of $1.0 million and healthy current credit metrics. Management continued to utilize a macroeconomic outlook which anticipated a moderate recession developing within the next twelve months.

The allowance for credit losses for loans totaled $112.7 million and $109.5 million at March 31, 2023, and December 31, 2022, respectively. The following items impacted the allowance for credit losses for loans at March 31, 2023:

  • Provision expense for the three months ended March 31, 2023, totaled $2.2 million.
  • Net recoveries of $1.0 million were recorded for the first three months of 2023.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $21.1 million at March 31, 2023, which was an increase of $890,000 from $20.2 million at December 31, 2022. Unfunded commitments increased $138.2 million to $4.87 billion at March 31, 2023 compared to $4.73 billion at December 31, 2022.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $3.1 million for the first quarter of 2023 compared to $3.2 million for the first quarter of 2022. The total allowance for lending related credit losses was $133.8 million or 1.16% of total loans at March 31, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.

Nonperforming Assets

Nonperforming assets decreased $1.2 million or 2% to $65.7 million or 0.33% of total assets at March 31, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. Nonperforming loans were $58.2 million or 0.51% of total loans at March 31, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At March 31, 2023, loans delinquent 30-89 days were 0.10% of total loans compared to 0.04% of total loans at December 31, 2022.

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. 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.
  • Adjusted tangible common equity ratio is total common equity less goodwill, core deposit and customer relationship intangibles, net, and accumulated other comprehensive loss 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 excluding the variability of accumulated other comprehensive income (loss).
  • 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 April 23, 2024, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., is a Denver, Colorado-based bank holding company operating under the brand name HTLF, with assets of $20.18 billion as of March 31, 2023. HTLF's banks serves 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, 2022, include, among others:

  • Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics, such as the COVID-19 pandemic or future pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, recession, 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 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. 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 Securities and Exchange Commission (the "SEC").

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Three Months Ended 
March 31,
  2023
  2022
Interest Income      
Interest and fees on loans $ 153,843     $ 102,369  
Interest on securities:      
Taxable   55,976       32,620  
Nontaxable   6,028       6,202  
Interest on federal funds sold          
Interest on deposits with other banks and short-term investments   1,131       71  
Total Interest Income   216,978       141,262  
Interest Expense      
Interest on deposits   56,898       2,977  
Interest on short-term borrowings   2,422       46  
Interest on other borrowings   5,446       3,560  
Total Interest Expense   64,766       6,583  
Net Interest Income   152,212       134,679  
Provision for credit losses   3,074       3,245  
Net Interest Income After Provision for Credit Losses   149,138       131,434  
Noninterest Income      
Service charges and fees   17,136       15,251  
Loan servicing income   714       286  
Trust fees   5,657       6,079  
Brokerage and insurance commissions   696       869  
Capital markets fees   2,449       3,039  
Securities gains/(losses), net   (1,104 )     2,872  
Unrealized gain/(loss) on equity securities, net   193       (283 )
Net gains on sale of loans held for sale   1,831       3,411  
Valuation adjustment on servicing rights         1,658  
Income on bank owned life insurance   964       524  
Other noninterest income   1,463       863  
Total Noninterest Income   29,999       34,569  
Noninterest Expense      
Salaries and employee benefits   62,149       66,174  
Occupancy   7,209       7,362  
Furniture and equipment   2,915       3,519  
Professional fees   16,076       15,156  
Advertising   1,985       1,555  
Core deposit and customer relationship intangibles amortization   1,788       2,054  
Other real estate and loan collection expenses, net   155       195  
(Gain)/loss on sales/valuations of assets, net   1,115       46  
Acquisition, integration and restructuring costs   1,673       576  
Partnership investment in tax credit projects   538       77  
Other noninterest expenses   15,440       14,083  
Total Noninterest Expense   111,043       110,797  
Income Before Income Taxes   68,094       55,206  
Income taxes   15,318       12,117  
Net Income   52,776       43,089  
Preferred dividends   (2,013 )     (2,013 )
Net Income Available to Common Stockholders $ 50,763     $ 41,076  
Earnings per common share-diluted $ 1.19     $ 0.97  
Weighted average shares outstanding-diluted   42,742,878       42,540,953  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Interest Income                  
Interest and fees on loans $ 153,843     $ 143,970     $ 122,913     $ 108,718     $ 102,369  
Interest on securities:                  
Taxable   55,976       53,178       45,648       38,098       32,620  
Nontaxable   6,028       6,132       6,164       5,508       6,202  
Interest on federal funds sold         11                    
Interest on deposits with other banks and short-term investments   1,131       1,410       1,081       563       71  
Total Interest Income   216,978       204,701       175,806       152,887       141,262  
Interest Expense                  
Interest on deposits   56,898       32,215       15,158       6,530       2,977  
Interest on short-term borrowings   2,422       2,223       360       88       46  
Interest on other borrowings   5,446       5,043       4,412       3,808       3,560  
Total Interest Expense   64,766       39,481       19,930       10,426       6,583  
Net Interest Income   152,212       165,220       155,876       142,461       134,679  
Provision for credit losses   3,074       3,387       5,492       3,246       3,245  
Net Interest Income After Provision for Credit Losses   149,138       161,833       150,384       139,215       131,434  
Noninterest Income                  
Service charges and fees   17,136       17,432       17,282       18,066       15,251  
Loan servicing income   714       790       831       834       286  
Trust fees   5,657       5,440       5,372       5,679       6,079  
Brokerage and insurance commissions   696       629       649       839       869  
Capital markets fees   2,449       1,824       1,809       4,871       3,039  
Securities gains/(losses), net   (1,104 )     (153 )     (1,055 )     (2,089 )     2,872  
Unrealized gain/(loss) on equity securities, net   193       (7 )     (211 )     (121 )     (283 )
Net gains on sale of loans held for sale   1,831       888       1,832       2,901       3,411  
Valuation adjustment on servicing rights                           1,658  
Income on bank owned life insurance   964       600       694       523       524  
Other noninterest income   1,463       2,532       1,978       3,036       863  
Total Noninterest Income   29,999       29,975       29,181       34,539       34,569  
Noninterest Expense                  
Salaries and employee benefits   62,149       61,611       62,661       64,032       66,174  
Occupancy   7,209       6,905       6,794       7,094       7,362  
Furniture and equipment   2,915       3,019       2,928       3,033       3,519  
Professional fees   16,076       18,186       16,277       15,987       15,156  
Advertising   1,985       1,829       1,554       1,283       1,555  
Core deposit and customer relationship intangibles amortization   1,788       1,841       1,856       2,083       2,054  
Other real estate and loan collection expenses, net   155       373       304       78       195  
(Gain)/loss on sales/valuations of assets, net   1,115       2,388       (251 )     (3,230 )     46  
Acquisition, integration and restructuring costs   1,673       2,442       2,156       2,412       576  
Partnership investment in tax credit projects   538       3,247       979       737       77  
Other noninterest expenses   15,440       15,377       13,625       12,970       14,083  
Total Noninterest Expense   111,043       117,218       108,883       106,479       110,797  
Income Before Income Taxes   68,094       74,590       70,682       67,275       55,206  
Income taxes   15,318       13,936       14,118       15,402       12,117  
Net Income   52,776       60,654       56,564       51,873       43,089  
Preferred dividends   (2,013 )     (2,012 )     (2,013 )     (2,012 )     (2,013 )
Net Income Available to Common Stockholders $ 50,763     $ 58,642     $ 54,551     $ 49,861     $ 41,076  
Earnings per common share-diluted $ 1.19     $ 1.37     $ 1.28     $ 1.17     $ 0.97  
Weighted average shares outstanding-diluted   42,742,878       42,699,752       42,643,940       42,565,391       42,540,953  

 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Assets                  
Cash and due from banks $ 274,354     $ 309,045     $ 250,394     $ 221,077     $ 198,559  
Interest bearing deposits with other banks and short-term investments   87,757       54,042       149,466       163,717       406,343  
Cash and cash equivalents   362,111       363,087       399,860       384,794       604,902  
Time deposits in other financial institutions   1,740       1,740       1,740       1,855       2,894  
Securities:                  
Carried at fair value   6,096,657       6,147,144       6,060,331       7,106,218       7,025,243  
Held to maturity, at cost, less allowance for credit losses   832,098       829,403       830,247       81,939       81,785  
Other investments, at cost   72,364       74,567       80,286       85,899       82,751  
Loans held for sale   10,425       5,277       9,570       18,803       22,685  
Loans:                  
Held to maturity   11,495,353       11,428,352       10,923,532       10,678,218       10,177,385  
Allowance for credit losses   (112,707 )     (109,483 )     (105,715 )     (101,353 )     (100,522 )
Loans, net   11,382,646       11,318,869       10,817,817       10,576,865       10,076,863  
Premises, furniture and equipment, net   191,267       197,330       203,585       206,818       213,752  
Goodwill   576,005       576,005       576,005       576,005       576,005  
Core deposit and customer relationship intangibles, net   23,366       25,154       26,995       28,851       30,934  
Servicing rights, net         7,840       8,379       8,288       8,102  
Cash surrender value on life insurance   194,419       193,403       193,184       192,474       192,267  
Other real estate, net   7,438       8,401       8,030       4,528       1,422  
Other assets   432,008       496,008       466,921       385,062       311,274  
Total Assets $ 20,182,544     $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
Demand $ 5,119,554     $ 5,701,340     $ 6,083,563     $ 6,087,304     $ 6,376,249  
Savings   9,256,609       9,994,391       10,060,523       10,059,678       9,236,427  
Time   3,305,183       1,817,278       1,123,035       1,078,568       1,054,008  
Total deposits   17,681,346       17,513,009       17,267,121       17,225,550       16,666,684  
Short-term borrowings   92,337       376,117       147,000       97,749       107,372  
Other borrowings   372,097       371,753       371,446       372,538       372,290  
Accrued expenses and other liabilities   207,359       248,294       241,425       188,494       152,676  
Total Liabilities   18,353,139       18,509,173       18,026,992       17,884,331       17,299,022  
Stockholders' Equity                  
Preferred equity   110,705       110,705       110,705       110,705       110,705  
Common stock   42,559       42,467       42,444       42,439       42,370  
Capital surplus   1,084,112       1,080,964       1,079,277       1,076,766       1,073,048  
Retained earnings   1,158,948       1,120,925       1,074,168       1,031,076       992,655  
Accumulated other comprehensive loss   (566,919 )     (620,006 )     (650,636 )     (486,918 )     (286,921 )
Total Equity   1,829,405       1,735,055       1,655,958       1,774,068       1,931,857  
Total Liabilities and Equity $ 20,182,544     $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879  

 

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
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Average Balances                  
Assets $ 20,118,005     $ 19,913,849     $ 19,775,341     $ 19,559,091     $ 19,229,872  
Loans, net of unearned   11,378,078       11,117,513       10,783,135       10,477,368       10,043,594  
Deposits   17,505,867       17,319,218       17,282,289       17,044,479       16,459,378  
Earning assets   18,392,649       18,175,838       18,157,795       17,987,734       17,757,067  
Interest bearing liabilities   12,582,234       11,980,032       11,723,026       11,575,319       10,453,400  
Common equity   1,655,860       1,548,739       1,674,306       1,731,393       2,003,424  
Total stockholders' equity   1,766,565       1,659,444       1,785,011       1,842,098       2,114,129  
Tangible common equity (non-GAAP)(1)   1,055,617       946,688       1,070,399       1,125,543       1,395,488  
                   
Key Performance Ratios                  
Annualized return on average assets   1.06 %     1.21 %     1.13 %     1.06 %     0.91 %
Annualized return on average common equity (GAAP)   12.43       15.02       12.93       11.55       8.32  
Annualized return on average tangible common equity (non-GAAP)(1)   20.05       25.19       20.76       18.35       12.41  
Annualized ratio of net charge-offs/(recoveries) to average loans   (0.04 )     (0.06 )     0.00       0.03       0.49  
Annualized net interest margin (GAAP)   3.36       3.61       3.41       3.18       3.08  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.40       3.65       3.45       3.22       3.12  
Efficiency ratio (GAAP)   60.94       60.05       58.84       60.16       65.46  
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)   57.16       54.33       55.26       57.66       64.65  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.24       2.34       2.18       2.18       2.34  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.14       2.14       2.09       2.14       2.28  
                   
(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
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Common Share Data                  
Book value per common share $ 40.38     $ 38.25     $ 36.41     $ 39.19     $ 42.98  
Tangible book value per common share (non-GAAP)(1) $ 26.30     $ 24.09     $ 22.20     $ 24.94     $ 28.66  
ASC 320 effect on book value per common share $ (13.35 )   $ (14.58 )   $ (15.31 )   $ (11.43 )   $ (6.74 )
Common shares outstanding, net of treasury stock   42,558,726       42,467,394       42,444,106       42,439,439       42,369,908  
Tangible common equity ratio (non-GAAP)(1)   5.72 %     5.21 %     4.94 %     5.56 %     6.52 %
Adjusted tangible common equity ratio (non-GAAP)(1)   8.61 %     8.37 %     8.35 %     8.11 %     8.06 %
                   
Other Selected Trend Information                  
Effective tax rate   22.50 %     18.68 %     19.97 %     22.89 %     21.95 %
Full time equivalent employees   1,991       2,002       2,020       2,087       2,208  
                   
Loans Held to Maturity                  
Commercial and industrial $ 3,498,345     $ 3,464,414     $ 3,278,703     $ 3,059,519     $ 2,814,513  
Paycheck Protection Program ("PPP")   8,258       11,025       13,506       23,031       74,065  
Owner occupied commercial real estate   2,312,538       2,265,307       2,285,973       2,282,833       2,266,076  
Commercial and business lending   5,819,141       5,740,746       5,578,182       5,365,383       5,154,654  
Non-owner occupied commercial real estate   2,421,341       2,330,940       2,219,542       2,321,718       2,161,761  
Real estate construction   1,102,186       1,076,082       996,017       845,045       842,483  
Commercial real estate lending   3,523,527       3,407,022       3,215,559       3,166,763       3,004,244  
Total commercial lending   9,342,668       9,147,768       8,793,741       8,532,146       8,158,898  
Agricultural and agricultural real estate   810,183       920,510       781,354       836,703       766,443  
Residential mortgage   841,084       853,361       852,928       845,270       825,242  
Consumer   501,418       506,713       495,509       464,099       426,802  
Total loans held to maturity $ 11,495,353     $ 11,428,352     $ 10,923,532     $ 10,678,218     $ 10,177,385  
                   
Total unfunded loan commitments $ 4,867,925     $ 4,729,677     $ 4,664,379     $ 4,458,874     $ 4,130,316  
                   
Deposits                  
Demand-customer $ 5,119,554     $ 5,701,340     $ 6,083,563     $ 6,087,304     $ 6,376,249  
Savings-customer   8,647,396       8,903,747       8,927,535       9,050,011       8,661,306  
Savings-wholesale   609,213       1,090,644       1,132,988       1,009,667       575,121  
Total savings   9,256,609       9,994,391       10,060,523       10,059,678       9,236,427  
Time-customer   1,071,476       851,539       973,035       1,003,568       979,008  
Time-wholesale   2,233,707       965,739       150,000       75,000       75,000  
Total time   3,305,183       1,817,278       1,123,035       1,078,568       1,054,008  
Total deposits $ 17,681,346     $ 17,513,009     $ 17,267,121     $ 17,225,550     $ 16,666,684  
                   
Total customer deposits $ 14,838,426     $ 15,456,626     $ 15,984,133     $ 16,140,883     $ 16,016,563  
Total wholesale deposits   2,842,920       2,056,383       1,282,988       1,084,667       650,121  
  $ 17,681,346     $ 17,513,009     $ 17,267,121     $ 17,225,550     $ 16,666,684  
                   
(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
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Allowance for Credit Losses-Loans                  
Balance, beginning of period $ 109,483     $ 105,715     $ 101,353     $ 100,522     $ 110,088  
Provision for credit losses   2,184       2,075       4,388       1,545       2,628  
Charge-offs   (2,151 )     (2,668 )     (938 )     (1,473 )     (13,217 )
Recoveries   3,191       4,361       912       759       1,023  
Balance, end of period $ 112,707     $ 109,483     $ 105,715     $ 101,353     $ 100,522  
                   
Allowance for Unfunded Commitments                  
Balance, beginning of period $ 20,196     $ 18,884     $ 17,780     $ 16,079     $ 15,462  
Provision for credit losses   890       1,312       1,104       1,701       617  
Balance, end of period $ 21,086     $ 20,196     $ 18,884     $ 17,780     $ 16,079  
                   
Allowance for lending related credit losses $ 133,793     $ 129,679     $ 124,599     $ 119,133     $ 116,601  
                   
Provision for Credit Losses                  
Provision for credit losses-loans $ 2,184     $ 2,075     $ 4,388     $ 1,545     $ 2,628  
Provision for credit losses-unfunded commitments   890       1,312       1,104       1,701       617  
Total provision for credit losses $ 3,074     $ 3,387     $ 5,492     $ 3,246     $ 3,245  
                   
Asset Quality                  
Nonaccrual loans $ 58,066     $ 58,231     $ 64,560     $ 62,909     $ 64,174  
Loans past due ninety days or more   174       273       678       95       246  
Other real estate owned   7,438       8,401       8,030       4,528       1,422  
Other repossessed assets   24       26                   34  
Total nonperforming assets $ 65,702     $ 66,931     $ 73,268     $ 67,532     $ 65,876  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 66,931     $ 73,268     $ 67,532     $ 65,876     $ 71,889  
Net loan (charge-offs)/recoveries   1,040       1,693       (26 )     (714 )     (12,194 )
New nonperforming loans   4,626       1,439       8,388       8,590       15,832  
Reduction of nonperforming loans(1)   (5,711 )     (8,875 )     (2,015 )     (5,244 )     (8,448 )
Net OREO/repossessed assets sales proceeds and losses   (1,184 )     (594 )     (611 )     (976 )     (1,203 )
Balance, end of period $ 65,702     $ 66,931     $ 73,268     $ 67,532     $ 65,876  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans   0.51 %     0.51 %     0.60 %     0.59 %     0.63 %
Ratio of nonperforming assets to total assets   0.33       0.33       0.37       0.34       0.34  
Annualized ratio of net loan charge-offs/(recoveries) to average loans   (0.04 )     (0.06 )     0.00       0.03       0.49  
Allowance for loan credit losses as a percent of loans   0.98       0.96       0.97       0.95       0.99  
Allowance for lending related credit losses as a percent of loans   1.16       1.13       1.14       1.12       1.15  
Allowance for loan credit losses as a percent of nonperforming loans   193.52       187.14       162.05       160.87       156.04  
Loans delinquent 30-89 days as a percent of total loans   0.10       0.04       0.10       0.06       0.10  
                   
(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
  March 31, 2023   December 31, 2022   March 31, 2022
  Average 
Balance
  Interest   Rate   Average 
Balance
  Interest   Rate   Average 
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 6,096,888     $ 55,976   3.72 %   $ 6,122,313     $ 53,178   3.45 %   $ 6,501,664     $ 32,620   2.03 %
Nontaxable(1)   922,676       7,630   3.35       890,368       7,762   3.46       1,106,951       7,851   2.88  
Total securities   7,019,564       63,606   3.67       7,012,681       60,940   3.45       7,608,615       40,471   2.16  
Interest on deposits with other banks and short-term investments   105,400       1,131   4.35       151,405       1,410   3.69       216,451       71   0.13  
Federal funds sold                 739       11   5.91       11          
Loans:(2)                                  
Commercial and industrial(1)   3,459,317       49,907   5.85       3,346,843       45,290   5.37       2,744,336       27,053   4.00  
PPP loans   9,970       26   1.06       12,252       397   12.86       132,050       4,323   13.28  
Owner occupied commercial real estate   2,289,002       26,769   4.74       2,277,055       26,194   4.56       2,243,522       21,278   3.85  
Non-owner occupied commercial real estate   2,331,318       30,749   5.35       2,286,298       29,273   5.08       2,060,548       21,163   4.17  
Real estate construction   1,099,026       18,131   6.69       1,050,802       16,585   6.26       847,250       9,276   4.44  
Agricultural and agricultural real estate   835,648       11,353   5.51       785,647       10,159   5.13       745,348       7,006   3.81  
Residential mortgage   852,561       9,273   4.41       858,767       9,168   4.24       843,881       8,085   3.89  
Consumer   501,236       8,242   6.67       499,849       7,426   5.89       426,659       4,655   4.42  
Less: allowance for credit losses-loans   (110,393 )             (106,500 )             (111,604 )        
Net loans   11,267,685       154,450   5.56       11,011,013       144,492   5.21       9,931,990       102,839   4.20  
Total earning assets   18,392,649       219,187   4.83 %     18,175,838       206,853   4.52 %     17,757,067       143,381   3.27 %
Nonearning Assets   1,725,356               1,738,011               1,472,805          
Total Assets $ 20,118,005             $ 19,913,849             $ 19,229,872          
Interest Bearing Liabilities                                  
Savings $ 9,730,494     $ 37,893   1.58 %   $ 9,987,692     $ 25,950   1.03 %   $ 8,889,950     $ 2,394   0.11 %
Time deposits   2,257,047       19,005   3.41       1,322,094       6,265   1.88       1,071,675       583   0.22  
Short-term borrowings   222,772       2,422   4.41       298,804       2,223   2.95       119,588       46   0.16  
Other borrowings   371,921       5,446   5.94       371,442       5,043   5.39       372,187       3,560   3.88  
Total interest bearing liabilities   12,582,234       64,766   2.09 %     11,980,032       39,481   1.31 %     10,453,400       6,583   0.26 %
Noninterest Bearing Liabilities                                  
Noninterest bearing deposits   5,518,326               6,009,432               6,497,753          
Accrued interest and other liabilities   250,880               264,941               164,590          
Total noninterest bearing liabilities   5,769,206               6,274,373               6,662,343          
Equity   1,766,565               1,659,444               2,114,129          
Total Liabilities and Equity $ 20,118,005             $ 19,913,849             $ 19,229,872          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 154,421           $ 167,372           $ 136,798    
Net interest spread (1)         2.74 %           3.21 %           3.01 %
Net interest income, fully tax-equivalent (non-GAAP )(1)(3)  to total earning assets         3.40 %           3.65 %           3.12 %
Interest bearing liabilities to earning assets   68.41 %             65.91 %             58.87 %        
                                   
(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
  3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                  
Net income available to common stockholders (GAAP) $ 50,763     $ 58,642     $ 54,551     $ 49,861     $ 41,076  
Plus core deposit and customer relationship intangibles amortization, net of tax(1)   1,413       1,455       1,466       1,645       1,623  
Net income available to common stockholders excluding intangible amortization (non-GAAP) $ 52,176     $ 60,097     $ 56,017     $ 51,506     $ 42,699  
                   
Average common equity (GAAP) $ 1,655,860     $ 1,548,739     $ 1,674,306     $ 1,731,393     $ 2,003,424  
Less average goodwill   576,005       576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   24,238       26,046       27,902       29,845       31,931  
Average tangible common equity (non-GAAP) $ 1,055,617     $ 946,688     $ 1,070,399     $ 1,125,543     $ 1,395,488  
Annualized return on average common equity (GAAP)   12.43 %     15.02 %     12.93 %     11.55 %     8.32 %
Annualized return on average tangible common equity (non-GAAP)   20.05 %     25.19 %     20.76 %     18.35 %     12.41 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                  
Net Interest Income (GAAP) $ 152,212     $ 165,220     $ 155,876     $ 142,461     $ 134,679  
Plus tax-equivalent adjustment(1)   2,209       2,152       2,151       1,977       2,119  
Net interest income, fully tax-equivalent (non-GAAP) $ 154,421     $ 167,372     $ 158,027     $ 144,438     $ 136,798  
Average earning assets $ 18,392,649     $ 18,175,838     $ 18,157,795     $ 17,987,734     $ 17,757,067  
                   
Annualized net interest margin (GAAP)   3.36 %     3.61 %     3.41 %     3.18 %     3.08 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)   3.40       3.65       3.45       3.22       3.12  
Net purchase accounting discount amortization on loans included in annualized net interest margin   0.02       0.03       0.03       0.07       0.05  

 

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                  
Common equity (GAAP) $ 1,718,700     $ 1,624,350     $ 1,545,253     $ 1,663,363     $ 1,821,152  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   23,366       25,154       26,995       28,851       30,934  
Tangible common equity (non-GAAP) $ 1,119,329     $ 1,023,191     $ 942,253     $ 1,058,507     $ 1,214,213  
                   
Common shares outstanding, net of treasury stock   42,558,726       42,467,394       42,444,106       42,439,439       42,369,908  
Common equity (book value) per share (GAAP) $ 40.38     $ 38.25     $ 36.41     $ 39.19     $ 42.98  
Tangible book value per common share (non-GAAP) $ 26.30     $ 24.09     $ 22.20     $ 24.94     $ 28.66  
                   
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                  
Tangible common equity (non-GAAP) $ 1,119,329     $ 1,023,191     $ 942,253     $ 1,058,507     $ 1,214,213  
                   
Total assets (GAAP) $ 20,182,544     $ 20,244,228     $ 19,682,950     $ 19,658,399     $ 19,230,879  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   23,366       25,154       26,995       28,851       30,934  
Total tangible assets (non-GAAP) $ 19,583,173     $ 19,643,069     $ 19,079,950     $ 19,053,543     $ 18,623,940  
Tangible common equity ratio (non-GAAP)   5.72 %     5.21 %     4.94 %     5.56 %     6.52 %
                   
Reconciliation of Adjusted Tangible Common Equity Ratio (non-GAAP)                  
Tangible common equity (non-GAAP) $ 1,119,329     $ 1,023,191     $ 942,253     $ 1,058,507     $ 1,214,213  
Accumulated other comprehensive loss   566,919       620,006       650,636       486,918       286,921  
Adjusted tangible common equity (non-GAAP) $ 1,686,248     $ 1,643,197     $ 1,592,889     $ 1,545,425     $ 1,501,134  
Total tangible assets (non-GAAP) $ 19,583,173     $ 19,643,069     $ 19,079,950     $ 19,053,543     $ 18,623,940  
Adjusted tangible common equity ratio (non-GAAP)   8.61 %     8.37 %     8.35 %     8.11 %     8.06 %
                   
(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
3/31/2023   12/31/2022   9/30/2022   6/30/2022   3/31/2022
Net interest income (GAAP) $ 152,212     $ 165,220     $ 155,876     $ 142,461     $ 134,679  
Tax-equivalent adjustment(1)   2,209       2,152       2,151       1,977       2,119  
Fully tax-equivalent net interest income   154,421       167,372       158,027       144,438       136,798  
Noninterest income (GAAP)   29,999       29,975       29,181       34,539       34,569  
Securities (gains)/losses, net   1,104       153       1,055       2,089       (2,872 )
Unrealized (gain)/loss on equity securities, net   (193 )     7       211       121       283  
Valuation adjustment on servicing rights                           (1,658 )
Adjusted revenue (non-GAAP) $ 185,331     $ 197,507     $ 188,474     $ 181,187     $ 167,120  
                   
Total noninterest expenses (GAAP) $ 111,043     $ 117,218     $ 108,883     $ 106,479     $ 110,797  
Less:                  
Core deposit and customer relationship intangibles amortization   1,788       1,841       1,856       2,083       2,054  
Partnership investment in tax credit projects   538       3,247       979       737       77  
(Gain)/loss on sales/valuation of assets, net   1,115       2,388       (251 )     (3,230 )     46  
Acquisition, integration and restructuring costs   1,673       2,442       2,156       2,412       576  
Core expenses (non-GAAP) $ 105,929     $ 107,300     $ 104,143     $ 104,477     $ 108,044  
                   
Efficiency ratio (GAAP)   60.94 %     60.05 %     58.84 %     60.16 %     65.46 %
Efficiency ratio, fully tax-equivalent (non-GAAP)   57.16 %     54.33 %     55.26 %     57.66 %     64.65 %
                   
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)                  
Total noninterest expenses (GAAP) $ 111,043     $ 117,218     $ 108,883     $ 106,479     $ 110,797  
Core expenses (non-GAAP)   105,929       107,300       104,143       104,477       108,044  
                   
Average assets $ 20,118,005     $ 19,913,849     $ 19,775,341     $ 19,559,091     $ 19,229,872  
Total noninterest expenses to average assets (GAAP)   2.24 %     2.34 %     2.18 %     2.18 %     2.34 %
Core expenses to average assets (non-GAAP)   2.14 %     2.14 %     2.09 %     2.14 %     2.28 %
                   
Acquisition, integration and restructuring costs                  
Salaries and employee benefits $ 74     $ 424     $ 365     $ 275     $ 340  
Professional fees   934       1,587       1,480       1,779       236  
Advertising   122       95       131       156        
Other noninterest expenses   543       336       180       202        
Total acquisition, integration and restructuring costs $ 1,673     $ 2,442     $ 2,156     $ 2,412     $ 576  
After tax impact on diluted earnings per common share(1) $ 0.03     $ 0.05     $ 0.04     $ 0.04     $ 0.01  
                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

 

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

 


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Source: Heartland Financial USA, Inc.