Heartland Financial USA, Inc. ("HTLF") Reports Annual Earnings and Fourth Quarter Results as of December 31, 2023

Company Release - 1/29/2024 4:01 PM ET

Fourth Quarter Highlights

  • Net loss available to common stockholders of ($72.4) million or ($1.69) per diluted common share.
  • Adjusted earnings available to common stockholders of $45.6 million, or $1.06 per diluted common share (non-GAAP), which excludes losses related to balance sheet repositioning, losses on sale or write-down of assets, FDIC special assessment expense, and restructuring costs.
  • Loan growth of $196.2 million or 2%.
  • Average customer deposits grew $270.7 million or 2%.
  • Common equity ratio increased to 9.27%; Tangible common equity ratio (non-GAAP) improved 80 basis points to 6.53%.
  • Net interest margin, fully tax-equivalent (non-GAAP) improved 34 basis points to 3.52%.
  • Consolidated final charter, with an expense of $1.3 million in the quarter, and initiated HTLF 3.0, the Company's new strategic plan which includes:
    • Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix.
    • Expanding Treasury Management products and capabilities.
    • Creation of consumer and small business digital platforms.
    • Footprint and facilities optimization, with a focus on efficient return on capital.
  • In the quarter we took the following actions as part of HTLF 3.0:
    • An $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss.
    • Centralized retail management span of control with restructuring costs of $944,000.
    • Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities.

  Quarter Ended
December 31,
  Year Ended December 31,
  2023   2022   2023   2022
Earnings Summary:              
Net income/(loss) available to common stockholders (in millions) $ (72.4 )   $ 58.6     $ 71.9     $ 204.1  
Diluted earnings/(loss) per common share   (1.69 )     1.37       1.68       4.79  
Return on average assets (1.42 )%     1.21 %     0.40 %     1.08 %
Return on average common equity   (16.61 )     15.02       4.19       11.74  
Return on average tangible common equity (non-GAAP)(1)   (24.88 )     25.19       6.91       18.56  
Net interest margin   3.47       3.61       3.29       3.32  
Net interest margin, fully tax-equivalent (non-GAAP)(1)   3.52       3.65       3.33       3.37  
Efficiency ratio   293.86       60.05       79.58       61.03  
Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)(1)   59.31       54.33       59.06       57.74  
               
Adjusted Earnings Summary (1):              
Adjusted earnings available to common stockholders (in millions) $ 45.6     $ 62.5     $ 193.9     $ 209.5  
Adjusted diluted earnings per common share   1.06       1.46       4.53       4.91  
Adjusted annualized return on average assets   0.96 %     1.28 %     1.01 %     1.11 %
Adjusted annualized return on average common equity   10.46       16.00       11.31       12.06  
Adjusted annualized return on average tangible common equity   16.38       26.77       17.82       19.03  
               
(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.

 

“2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.”
Bruce K. Lee, president and chief executive officer, HTLF
 

DENVER, Jan. 29, 2024 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022:

  • Net income/(loss) available to common stockholders of ($72.4) million compared to $58.6 million, a decrease of $131.0 million or 223%. Adjusted earnings available to common stockholders(1) of $45.6 million compared to $62.5 million, a decrease of $16.9 million or 27%.
  • Earnings/(loss) per diluted common share of ($1.69) compared to $1.37, a decrease of $3.06. Adjusted diluted earnings per common share(1) of $1.06 compared to $1.46, a decrease of $0.40.
  • Net interest income of $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
  • Return on average assets of (1.42%) compared to 1.21%. Adjusted annualized return on average assets(1) of 0.96% compared to 1.28%.
  • Return on average common equity of (16.61%) compared to 15.02%. Adjusted annualized return on average common equity(1) of 10.46% compared to 16.00%.
  • Return on average tangible common equity(1) of (24.88%) compared to 25.19%. Adjusted annualized return on average tangible common equity(1) of 16.38% compared to 26.77%.

HTLF reported the following results for the year ended December 31, 2023 compared to the year ended December 31, 2022:

  • Net income available to common stockholders of $71.9 million compared to $204.1 million, a decrease of $132.3 million or 65%. Adjusted earnings available to common stockholders(1) of $193.9 million compared to $209.5 million, a decrease of $15.6 million or 7%.
  • Earnings per diluted common share of $1.68 compared to $4.79, a decrease of $3.11. Adjusted diluted earnings per common share(1) of $4.53 compared to $4.91, a decrease of $0.38 or 8%.
  • Net interest income of $601.2 million compared to $598.2 million, an increase of $3.0 million or 1%.
  • Return on average assets of 0.40% compared to 1.08%. Adjusted annualized return on average assets(1) of 1.01% compared to 1.11%.
  • Return on average common equity of 4.19% compared to 11.74%. Adjusted annualized return on average common equity(1) of 11.31% compared to 12.06%.
  • Return on average tangible common equity (non-GAAP) of 6.91% compared to 18.56%. Adjusted annualized return on average tangible common equity(1) of 17.82% compared to 19.03%.

Commenting on HTLF's 2023 results, Bruce K. Lee, HTLF’s president and chief executive officer, said, “2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.”

Announced and Initiated HTLF 3.0

HTLF’s new strategic plan, HTLF 3.0, was announced and initiated in the fourth quarter of 2023. HTLF 3.0's initiatives include:

  • Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix.
  • Expanding Treasury Management products and capabilities.
  • Creation of consumer and small business digital platforms.
  • Footprint and facilities optimization, with a focus on efficient return on capital.

In the quarter we took the following actions as part of HTLF 3.0:

  • A $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss.
  • Centralized retail management span of control with restructuring costs of $944,000.
  • Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities.

Charter Consolidation Update

During the fourth quarter of 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which successfully completed the consolidation of all 11 charters. Total consolidation restructuring costs were $17 million, of which $1.3 million were incurred in the fourth quarter of 2023.

Net Interest Income and Net Interest Margin

Net interest margin was 3.47% (3.52% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2023, compared to 3.61% (3.65% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2022.

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

  • Total interest income was $255.9 million compared to $204.7 million, an increase of $51.2 million or 25%, primarily attributable to higher yields and an increase in average loans.
  • Total interest income on a tax-equivalent basis was $257.9 million, an increase of $51.1 million or 25%, from $206.9 million.
  • Average earning assets decreased $321.9 million or 2% to $17.85 billion compared to $18.17 billion, which was primarily attributable to the balance sheet repositioning completed in the fourth quarter of 2023.
  • The average rate on earning assets increased 121 basis points to 5.73% from 4.52%, primarily due to recent interest rate increases.

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

  • Total interest expense was $99.7 million, an increase of $60.3 million from $39.5 million, due to increases in the average interest rate paid and the average balance of interest-bearing liabilities.
  • The average interest rate paid on interest-bearing liabilities increased 180 basis points to 3.11% from 1.31%.
  • Average interest-bearing deposits increased $638.2 million or 6% to $11.95 billion from $11.31 billion, primarily due to growth in time deposits. Total average interest-bearing deposits were 72% of total average deposits compared to 65%.
  • The average interest rate paid on HTLF's interest-bearing deposits increased 179 basis points to 2.92% from 1.13%.
  • Average borrowings increased $103.4 million or 15% to $773.7 million from $670.2 million, and the average interest rate paid on borrowings was 5.99% compared to 4.30%.

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

  • Net interest income totaled $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $158.2 million compared to $167.4 million, a decrease of $9.2 million or 5%.

Noninterest Income and Noninterest Expense

Total noninterest income was ($111.8) million during the fourth quarter of 2023 compared to $30.0 million during the fourth quarter of 2022, a decrease of $141.8 million. Significant changes by noninterest income category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:

  • Service charges and fees increased $1.3 million or 7% to $18.7 million from $17.4 million, which was primarily attributable to an increase in debit interchange volume.
  • Net securities losses totaled $140.0 million compared to net securities losses of $153,000, which was an increase of $139.9 million attributable to the balance sheet repositioning strategy executed in the quarter.
  • Net gains of sales of loans held for sale decreased $794,000 to $94,000 compared to $888,000, primarily due to a decrease of loans sold to the secondary market as HTLF exits mortgage loan originations through PrimeWest.

Total noninterest expense for the fourth quarter of 2023 was $130.3 million compared to $117.2 million for the same quarter of 2022, which was an increase of $13.1 million or 11%. Significant changes within the noninterest expense category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:

  • Salaries and employee benefits totaled $64.8 million compared to $61.6 million, which was an increase of $3.2 million or 5%. The fourth quarter of 2023 included $813,000 higher severance related expenses and the fourth quarter of 2022 included a $1.5 million benefit associated with the employer tax credit. Increases in other components of salary expenses during the fourth quarter of 2023 were largely offset by lower incentive compensation expense.
  • FDIC insurance assessment of $10.3 million, which included a one-time special assessment of $8.1 million in the fourth quarter of 2023 compared to $1.9 million in the fourth quarter of 2022, which was an increase of $8.4 million.
  • Acquisition, integration and restructuring costs totaled $4.4 million compared to $2.4 million, an increase of $1.9 million or 79% due to the addition of HTLF 3.0 initiatives and the completion of the charter consolidation project.
  • Partnership investment in tax credit projects increased $326,000 or 10% to $3.6 million compared to $3.2 million. The expense is dependent upon the number and timing of tax credit projects placed into service.

HTLF's effective tax rate was 27.97% for the fourth quarter of 2023 compared to 18.67% for the fourth quarter of 2022. The following items impacted HTLF's fourth quarter 2023 and 2022 tax calculations:

  • Various tax credits of $3.8 million compared to $3.6 million.
  • Tax expense of $1.3 million compared to $561,000 resulting from disallowed interest expense related to tax-exempt loans and securities, aligning with the increases in total interest expense.
  • Tax-exempt interest income as a percentage of pre-tax income of (7.93%) compared to 10.85%.

For the years ended December 31, 2023 and 2022, HTLF's effective tax rate was 17.42% and 20.76%, respectively.

Total Assets, Total Loans and Total Deposits

Total assets were $19.41 billion at December 31, 2023, a decrease of $832.5 million or 4% from $20.24 billion at year-end 2022. Securities represented 29% and 35% of total assets at December 31, 2023, and December 31, 2022, respectively, primarily due to the balance sheet repositioning.

Total loans held to maturity were $12.07 billion at December 31, 2023, compared to $11.87 billion at September 30, 2023 and $11.43 billion at December 31, 2022. Loans increased $196.2 million or 2% during the fourth quarter of 2023 and $640.3 million or 6% since year-end 2022.

Significant changes by loan category at December 31, 2023 compared to September 30, 2023 included:

  • Commercial and business lending, which includes commercial and industrial, PPP, and owner occupied commercial real estate loans, increased $267.8 million or 4% to $6.29 billion at December 31, 2023, compared to $6.03 billion at September 30, 2023.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, decreased $120.5 million or 3% to $3.57 billion from $3.69 billion.
  • Agricultural and agricultural real estate loans totaled $919.2 million compared to $842.1 million, an increase of $77.1 million or 9%.
  • Residential loans totaled $797.8 million compared to $813.8 million, a decrease of $16.0 million or 2%.
  • Consumer loans decreased $12.2 million or 2% to $493.2 million from $505.4 million.

Significant changes by loan category at December 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 $552.3 million or 10% to $6.29 billion at December 31, 2023, compared to $5.74 billion at December 31, 2022.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $158.4 million or 5% to $3.57 billion from $3.41 billion.
  • Agricultural and agricultural real estate loans totaled $919.2 million, a decrease of $1.3 million or less than 1% from $920.5 million.
  • Residential loans totaled $797.8 million compared to $853.4 million, a decrease of $55.5 million or 7%.
  • Consumer loans decreased $13.5 million or 3% to $493.2 million from $506.7 million.

Total deposits were $16.20 billion as of December 31, 2023, compared to $17.10 billion at September 30, 2023, which was a decrease of $899.3 million or 5%. Total deposits were $16.2 billion as of December 31, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $1.31 billion or 7%.

Total customer deposits were $14.86 billion as of December 31, 2023, compared to $14.80 billion at September 30, 2023, which was an increase of $58.8 million or less than 1%. Significant customer deposit changes by category at December 31, 2023, compared to September 30, 2023, included:

  • Customer demand deposits decreased $292.5 million or 6% to $4.50 billion compared to $4.79 billion.
  • Customer savings deposits increased $220.8 million or 3% to $8.41 billion compared to $8.19 billion.
  • Customer time deposits increased $130.5 million or 7% to $1.94 billion compared to $1.81 billion.

Total customer deposits were $14.86 billion at December 31, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $367.3 million or 2%. Significant customer deposit changes by category at December 31, 2023 compared to December 31, 2022, included:

  • Customer demand deposits decreased $1.20 billion or 21% to $4.50 billion compared to $5.70 billion.
  • Customer savings deposits decreased $259.7 million or 3% to $8.41 billion compared to $8.67 billion.
  • Customer time deposits increased $1.09 billion to $1.94 billion compared to $851.5 million.

Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $958.1 million or 42% from $2.30 billion at September 30, 2023. Significant wholesale and institutional deposit changes by category at December 31, 2023, compared to September 30, 2023, included:

  • Wholesale and institutional savings deposits decreased $170.1 million or 30% to $394.4 million compared to $564.5 million.
  • Wholesale time deposits decreased $788.0 million or 45% to $950.9 million compared to $1.74 billion.

Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $943.9 million or 41% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at December 31, 2023 compared to December 31, 2022 included:

  • Wholesale and institutional savings deposits decreased $929.1 million or 70% to $394.4 million compared to $1.32 billion.
  • Wholesale time deposits decreased $14.8 million or 2% to $950.9 million compared to $965.7 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the fourth quarter of 2023 was $12.8 million, which was an increase of $10.7 million from $2.1 million of provision benefit recorded in the fourth quarter of 2022. The provision expense for the fourth quarter of 2023 was primarily impacted by a customer that moved to non accrual due to its abrupt decision to discontinue business operations.

HTLF's allowance for credit losses for loans totaled $122.6 million at December 31, 2023, compared to $109.5 million at December 31, 2022, respectively. The following items impacted HTLF's allowance for credit losses for loans for the year ended December 31, 2023:

  • Provision expense for the year ended December 31, 2023, totaled $25.4 million.
  • Net charge-offs of $12.4 million were recorded for the year or 0.11% of average loans. Net charge-offs of $392,000 were recorded in the fourth quarter of 2022 or 0.01% of average loans.

Provision and Allowance for Credit Losses for Unfunded Commitments
HTLF's allowance for unfunded commitments totaled $16.5 million and $20.2 million at December 31, 2023 and December 31, 2022, respectively. The following impacted HTLF's allowance for credit losses for unfunded commitments during 2023:

  • Provision benefit for the year ended December 31, 2023, totaled $3.7 million.
  • Unfunded commitments decreased $103.9 million or 2% to $4.63 billion at December 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 $11.7 million for the fourth quarter of 2023 compared to $3.4 million for the fourth quarter of 2022. The total allowance for lending related credit losses was $139.0 million at December 31, 2023, which was 1.15% of total loans as of December 31, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.

Nonperforming Assets

Nonperforming assets increased $43.6 million or 65% to $110.5 million, which was 0.57% of total assets at December 31, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. The increase was primarily driven by a well-collateralized long-term manufacturing customer who is experiencing cash flow challenges due to a recent acquisition. Nonperforming loans were $97.9 million or 0.81% of total loans at December 31, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At December 31, 2023, loans delinquent 30-89 days were 0.09% 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. 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:

  • Adjusted earnings available to common stockholders, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability net income available to common stockholders as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
  • Adjusted annualized return on average assets, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
  • 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.
  • Adjusted 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. Net interest margin, fully tax equivalent, is net interest income adjusted for the tax-favored status of certain loans and securities divided by average earning assets.
  • 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 annualized return on average common equity, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
  • 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.
  • Adjusted annualized return on average tangible common equity, adjusts net income available to common stockholders for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
  • 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 28, 2025, 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 $19.41 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, 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 and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, 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 due to 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 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 HTLF's financial results, is included in HTLF’s filings with the SEC.

-FINANCIAL TABLES FOLLOW-

CONTACT:
Kevin L. Thompson
Executive Vice President
Chief Financial Officer
(563) 589-1994
kthompson@htlf.com 

 
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,
  2023   2022   2023   2022
Interest Income              
Interest and fees on loans $ 192,861     $ 143,970     $ 697,997     $ 477,970  
Interest on securities:              
Taxable   54,573       53,178       223,521       169,544  
Nontaxable   6,278       6,132       25,268       24,006  
Interest on federal funds sold         11       3       11  
Interest on deposits with other banks and short-term investments   2,174       1,410       7,007       3,125  
Total Interest Income   255,886       204,701       953,796       674,656  
Interest Expense              
Interest on deposits   88,071       32,215       319,688       56,880  
Interest on borrowings   5,874       2,223       10,311       2,717  
Interest on term debt   5,804       5,043       22,560       16,823  
Total Interest Expense   99,749       39,481       352,559       76,420  
Net Interest Income   156,137       165,220       601,237       598,236  
Provision for credit losses   11,738       3,387       21,707       15,370  
Net Interest Income After Provision for Credit Losses   144,399       161,833       579,530       582,866  
Noninterest Income              
Service charges and fees   18,708       17,432       74,024       68,031  
Loan servicing income   158       790       1,561       2,741  
Trust fees   4,905       5,440       20,715       22,570  
Brokerage and insurance commissions   729       629       2,794       2,986  
Capital market fees   1,676       1,824       10,007       11,543  
Securities gains (losses), net   (140,007 )     (153 )     (141,539 )     (425 )
Unrealized gain (loss) on equity securities, net   75       (7 )     240       (622 )
Net gains on sale of loans held for sale   94       888       3,880       9,032  
Valuation adjustment on servicing rights                     1,658  
Income on bank owned life insurance   729       600       3,771       2,341  
Other noninterest income   1,132       2,532       3,621       8,409  
Total Noninterest Income   (111,801 )     29,975       (20,926 )     128,264  
Noninterest Expense              
Salaries and employee benefits   64,766       61,611       251,276       254,478  
Occupancy   6,509       6,905       26,847       28,155  
Furniture and equipment   2,901       3,019       11,599       12,499  
Professional fees   17,060       16,320       58,667       58,606  
FDIC insurance assessments   10,313       1,866       19,940       7,000  
Advertising   1,677       1,829       8,347       6,221  
Core deposit and customer relationship intangibles amortization   1,611       1,841       6,739       7,834  
Other real estate and loan collection expenses, net   505       373       1,489       950  
(Gain) loss on sales/valuations of assets, net   2,072       2,388       (77 )     (1,047 )
Acquisition, integration and restructuring costs   4,365       2,442       10,359       7,586  
Partnership investment in tax credit projects   3,573       3,247       5,401       5,040  
Other noninterest expenses   14,933       15,377       61,240       56,055  
Total Noninterest Expense   130,285       117,218       461,827       443,377  
Income Before Income Taxes   (97,687 )     74,590       96,777       267,753  
Income taxes   (27,324 )     13,936       16,857       55,573  
Net Income/(Loss)   (70,363 )     60,654       79,920       212,180  
Preferred dividends   (2,012 )     (2,012 )     (8,050 )     (8,050 )
Net Income/(Loss) Available to Common Stockholders $ (72,375 )   $ 58,642     $ 71,870     $ 204,130  
Earnings/(loss) per common share-diluted $ (1.69 )   $ 1.37     $ 1.68     $ 4.79  
Weighted average shares outstanding-diluted   42,838,405       42,699,752       42,791,795       42,630,703  
                               

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Interest Income                  
Interest and fees on loans $ 192,861     $ 182,394     $ 168,899     $ 153,843     $ 143,970  
Interest on securities:                  
Taxable   54,573       54,800       58,172       55,976       53,178  
Nontaxable   6,278       6,584       6,378       6,028       6,132  
Interest on federal funds sold         3                   11  
Interest on deposits with other banks and short-term investments   2,174       1,651       2,051       1,131       1,410  
Total Interest Income   255,886       245,432       235,500       216,978       204,701  
Interest Expense                  
Interest on deposits   88,071       92,744       81,975       56,898       32,215  
Interest on borrowings   5,874       1,167       848       2,422       2,223  
Interest on term debt   5,804       5,765       5,545       5,446       5,043  
Total Interest Expense   99,749       99,676       88,368       64,766       39,481  
Net Interest Income   156,137       145,756       147,132       152,212       165,220  
Provision for credit losses   11,738       1,516       5,379       3,074       3,387  
Net Interest Income After Provision for Credit Losses   144,399       144,240       141,753       149,138       161,833  
Noninterest Income                  
Service charges and fees   18,708       18,553       19,627       17,136       17,432  
Loan servicing income   158       278       411       714       790  
Trust fees   4,905       4,734       5,419       5,657       5,440  
Brokerage and insurance commissions   729       692       677       696       629  
Capital markets fees   1,676       1,845       4,037       2,449       1,824  
Securities gains (losses), net   (140,007 )     (114 )     (314 )     (1,104 )     (153 )
Unrealized gain (loss) on equity securities, net   75       13       (41 )     193       (7 )
Net gains on sale of loans held for sale   94       905       1,050       1,831       888  
Valuation adjustment on servicing rights                            
Income on bank owned life insurance   729       858       1,220       964       600  
Other noninterest income   1,132       619       407       1,463       2,532  
Total Noninterest Income   (111,801 )     28,383       32,493       29,999       29,975  
Noninterest Expense                  
Salaries and employee benefits   64,766       62,262       62,099       62,149       61,611  
Occupancy   6,509       6,438       6,691       7,209       6,905  
Furniture and equipment   2,901       2,720       3,063       2,915       3,019  
Professional fees   17,060       13,616       15,194       12,797       16,320  
FDIC insurance assessments   10,313       3,313       3,035       3,279       1,866  
Advertising   1,677       1,633       3,052       1,985       1,829  
Core deposit and customer relationship intangibles amortization   1,611       1,625       1,715       1,788       1,841  
Other real estate and loan collection expenses, net   505       481       348       155       373  
(Gain) loss on sales/valuations of assets, net   2,072       108       (3,372 )     1,115       2,388  
Acquisition, integration and restructuring costs   4,365       2,429       1,892       1,673       2,442  
Partnership investment in tax credit projects   3,573       1,136       154       538       3,247  
Other noninterest expenses   14,933       15,292       15,575       15,440       15,377  
Total Noninterest Expense   130,285       111,053       109,446       111,043       117,218  
Income Before Income Taxes   (97,687 )     61,570       64,800       68,094       74,590  
Income taxes   (27,324 )     13,479       15,384       15,318       13,936  
Net Income/(Loss)   (70,363 )     48,091       49,416       52,776       60,654  
Preferred dividends   (2,012 )     (2,013 )     (2,012 )     (2,013 )     (2,012 )
Net Income/(Loss) Available to Common Stockholders $ (72,375 )   $ 46,078     $ 47,404     $ 50,763     $ 58,642  
Earnings/(loss) per common share-diluted $ (1.69 )   $ 1.08     $ 1.11     $ 1.19     $ 1.37  
Weighted average shares outstanding-diluted   42,838,405       42,812,563       42,757,603       42,742,878       42,699,752  
                                       

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Assets                  
Cash and due from banks $ 275,554     $ 248,756     $ 317,303     $ 274,354     $ 309,045  
Interest-bearing deposits with other banks and other short-term investments   47,459       99,239       82,884       87,757       54,042  
Cash and cash equivalents   323,013       347,995       400,187       362,111       363,087  
Time deposits in other financial institutions   1,240       1,490       1,490       1,740       1,740  
Securities:                  
Carried at fair value   4,646,891       5,482,687       5,798,041       6,096,657       6,147,144  
Held to maturity, at cost   838,241       835,468       834,673       832,098       829,403  
Other investments, at cost   91,277       90,001       72,291       72,364       74,567  
Loans held for sale   5,071       6,262       14,353       10,425       5,277  
Loans:                  
Held to maturity   12,068,645       11,872,436       11,717,974       11,495,353       11,428,352  
Allowance for credit losses   (122,566 )     (110,208 )     (111,198 )     (112,707 )     (109,483 )
Loans, net   11,946,079       11,762,228       11,606,776       11,382,646       11,318,869  
Premises, furniture and equipment, net   181,070       187,436       190,420       191,267       197,330  
Goodwill   576,005       576,005       576,005       576,005       576,005  
Core deposit and customer relationship intangibles, net   18,415       20,026       21,651       23,366       25,154  
Servicing rights, net                           7,840  
Cash surrender value on life insurance   197,085       196,694       195,793       194,419       193,403  
Other real estate, net   12,548       14,362       2,677       7,438       8,401  
Other assets   574,772       609,139       510,359       432,008       496,008  
Total Assets $ 19,411,707     $ 20,129,793     $ 20,224,716     $ 20,182,544     $ 20,244,228  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
Demand $ 4,500,304     $ 4,792,813     $ 4,897,858     $ 5,119,554     $ 5,701,340  
Savings   8,805,597       8,754,911       8,772,596       9,256,609       9,994,391  
Time   2,895,813       3,553,269       3,993,089       3,305,183       1,817,278  
Total deposits   16,201,714       17,100,993       17,663,543       17,681,346       17,513,009  
Borrowings   622,255       392,634       44,364       92,337       376,117  
Term debt   372,396       372,059       372,403       372,097       371,753  
Accrued expenses and other liabilities   282,225       438,577       285,416       207,359       248,294  
Total Liabilities   17,478,590       18,304,263       18,365,726       18,353,139       18,509,173  
Stockholders' Equity                  
Preferred equity   110,705       110,705       110,705       110,705       110,705  
Common stock   42,688       42,656       42,645       42,559       42,467  
Capital surplus   1,090,740       1,088,267       1,087,358       1,084,112       1,080,964  
Retained earnings   1,141,501       1,226,740       1,193,522       1,158,948       1,120,925  
Accumulated other comprehensive income/(loss)   (452,517 )     (642,838 )     (575,240 )     (566,919 )     (620,006 )
Total Equity   1,933,117       1,825,530       1,858,990       1,829,405       1,735,055  
Total Liabilities and Equity $ 19,411,707     $ 20,129,793     $ 20,224,716     $ 20,182,544     $ 20,244,228  
                                       

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Average Balances                  
Assets $ 19,667,825     $ 20,207,920     $ 20,221,511     $ 20,118,005     $ 19,913,849  
Loans, net of unearned   11,938,272       11,800,064       11,625,442       11,378,078       11,117,513  
Total deposits   16,709,394       17,507,813       17,689,138       17,505,867       17,319,218  
Customer deposits   14,969,948       14,699,235       14,655,535       15,123,181       15,739,698  
Earning assets   17,853,957       18,439,010       18,523,552       18,392,649       18,175,838  
Interest-bearing liabilities   12,721,680       13,158,631       13,209,794       12,582,234       11,980,032  
Common equity   1,729,086       1,746,818       1,727,013       1,655,860       1,548,739  
Total stockholders' equity   1,839,791       1,857,523       1,837,718       1,766,565       1,659,444  
Tangible common equity (non-GAAP)(1)   1,133,888       1,149,992       1,128,527       1,055,617       946,688  
                   
Key Performance Ratios                  
Annualized return on average assets (1.42 )%     0.94 %     0.98 %     1.06 %     1.21 %
Adjusted annualized return on average assets (non-GAAP)(1)   0.96       0.98       0.96       1.12       1.28  
Annualized return on average common equity (GAAP)   (16.61 )     10.47       11.01       12.43       15.02  
Adjusted annualized return on average common equity (non-GAAP)(1)   10.46       10.92       10.80       13.16       16.00  
Annualized return on average tangible common equity (non-GAAP)(1)   (24.89 )     16.32       17.31       20.03       25.17  
Adjusted annualized return on average tangible common equity (non-GAAP)(1)   16.38       17.02       17.00       21.17       26.77  
Annualized ratio of net charge-offs (recoveries) to average loans   0.01       0.12       0.32       (0.04 )     (0.06 )
Annualized net interest margin (GAAP)   3.47       3.14       3.19       3.36       3.61  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.52       3.18       3.23       3.40       3.65  
Efficiency ratio (GAAP)   293.86       63.77       60.93       60.94       60.05  
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)   59.31       59.95       59.88       57.16       54.33  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.63       2.18       2.17       2.24       2.34  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.23       2.08       2.16       2.14       2.14  
                   
(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.
 

 

       
  For the Quarter Ended
December 31,
  For the Year Ended
December 31,
  2023   2022   2023   2022
Average Balances              
Assets $ 19,667,825     $ 19,913,849     $ 20,053,004     $ 19,621,839  
Loans, net of unearned   11,938,272       11,117,513       11,687,313       10,608,831  
Deposits   16,709,394       17,319,218       17,351,294       17,029,398  
Earning assets   17,853,957       18,175,838       18,301,190       18,021,134  
Interest-bearing liabilities   12,721,680       11,980,032       12,919,125       11,437,921  
Common equity   1,729,086       1,548,739       1,714,983       1,738,041  
Total stockholders' equity   1,839,791       1,659,444       1,825,688       1,848,746  
Tangible common equity (non-GAAP)(1)   1,133,888       946,688       1,117,311       1,133,124  
               
Key Performance Ratios              
Annualized return on average assets (1.42 )%     1.21 %     0.40 %     1.08 %
Adjusted annualized return on average assets (non-GAAP)(1)   0.96       1.28       1.01       1.11  
Annualized return on average common equity (GAAP)   (16.61 )     15.02       4.19       11.74  
Adjusted annualized return on average common equity (non-GAAP)(1)   10.46       16.00       11.31       12.06  
Annualized return on average tangible common equity (non-GAAP)(1)   (24.89 )     25.17       6.89       18.55  
Adjusted annualized return on average tangible common equity (non-GAAP)(1)   16.38       26.77       17.82       19.03  
Annualized ratio of net charge-offs (recoveries) to average loans   0.01       (0.06 )     0.11       0.11  
Annualized net interest margin (GAAP)   3.47       3.61       3.29       3.32  
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   3.52       3.65       3.33       3.37  
Efficiency ratio (GAAP)   293.86       60.05       79.58       61.03  
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)   59.31       54.33       59.06       57.74  
Annualized ratio of total noninterest expenses to average assets (GAAP)   2.63       2.34       2.30       2.26  
Annualized ratio of core expenses to average assets (non-GAAP)(1)   2.23       2.14       2.15       2.16  
               
(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
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Common Share Data                  
Book value per common share $ 42.69     $ 40.20     $ 41.00     $ 40.38     $ 38.25  
Tangible book value per common share (non-GAAP)(1)   28.77       26.23       26.98       26.30       24.09  
ASC 320 effect on book value per common share   (11.00 )     (16.27 )     (14.04 )     (13.35 )     (14.58 )
                   
Common shares outstanding, net of treasury stock   42,688,008       42,656,303       42,644,544       42,558,726       42,467,394  
                   
Capital Ratios                  
Common equity ratio   9.27 %     8.49 %     8.65 %     8.54 %     8.16 %
Tangible common equity ratio (non-GAAP)(1)   6.53       5.73       5.86       5.72       5.21  
Tier 1 leverage ratio   9.44       9.59       9.40       9.25       9.13  
Common equity tier 1 ratio(2)   10.97       11.37       11.33       11.28       11.07  
Total risk based capital ratio(2)   14.53       14.90       14.93       14.98       14.76  
                   
Other Selected Trend Information                  
Effective tax rate   27.97 %     21.89 %     23.74 %     22.50 %     18.68 %
Full time equivalent employees   1,970       1,965       1,966       1,991       2,002  
                   
Loans Held to Maturity                  
Commercial and industrial $ 3,652,047     $ 3,591,809     $ 3,590,680     $ 3,498,345     $ 3,464,414  
Paycheck Protection Program ("PPP")   2,777       3,750       4,139       8,258       11,025  
Owner occupied commercial real estate   2,638,175       2,429,659       2,398,698       2,312,538       2,265,307  
Commercial and business lending   6,292,999       6,025,218       5,993,517       5,819,141       5,740,746  
Non-owner occupied commercial real estate   2,553,711       2,656,358       2,530,736       2,421,341       2,330,940  
Real estate construction   1,011,716       1,029,554       1,013,134       1,102,186       1,076,082  
Commercial real estate lending   3,565,427       3,685,912       3,543,870       3,523,527       3,407,022  
Total commercial lending   9,858,426       9,711,130       9,537,387       9,342,668       9,147,768  
Agricultural and agricultural real estate   919,184       842,116       839,817       810,183       920,510  
Residential mortgage   797,829       813,803       828,437       841,084       853,361  
Consumer   493,206       505,387       512,333       501,418       506,713  
Total loans held to maturity $ 12,068,645     $ 11,872,436     $ 11,717,974     $ 11,495,353     $ 11,428,352  
                   
Total unfunded loan commitments $ 4,625,768     $ 4,813,798     $ 4,905,147     $ 4,867,925     $ 4,729,677  
                   
Deposits                  
Demand-customer $ 4,500,304     $ 4,792,813     $ 4,897,858     $ 5,119,554     $ 5,701,340  
Savings-customer   8,411,240       8,190,430       8,149,596       8,501,337       8,670,898  
Savings-wholesale and institutional   394,357       564,481       623,000       755,272       1,323,493  
Total savings   8,805,597       8,754,911       8,772,596       9,256,609       9,994,391  
Time-customer   1,944,884       1,814,335       1,597,849       1,071,476       851,539  
Time-wholesale   950,929       1,738,934       2,395,240       2,233,707       965,739  
Total time   2,895,813       3,553,269       3,993,089       3,305,183       1,817,278  
Total deposits $ 16,201,714     $ 17,100,993     $ 17,663,543     $ 17,681,346     $ 17,513,009  
                   
Total customer deposits $ 14,856,428     $ 14,797,578     $ 14,645,303     $ 14,692,367     $ 15,223,777  
Total wholesale and institutional deposits   1,345,286       2,303,415       3,018,240       2,988,979       2,289,232  
Total deposits $ 16,201,714     $ 17,100,993     $ 17,663,543     $ 17,681,346     $ 17,513,009  
                   
(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.
(2) December 31, 2023 calculation is preliminary.
 

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of and for the Quarter Ended
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Allowance for Credit Losses-Loans                  
Balance, beginning of period $ 110,208     $ 111,198     $ 112,707     $ 109,483     $ 105,715  
Provision (benefit) for credit losses   12,750       2,672       7,829       2,184       2,075  
Charge-offs   (3,886 )     (3,964 )     (9,613 )     (2,151 )     (2,668 )
Recoveries   3,494       302       275       3,191       4,361  
Balance, end of period $ 122,566     $ 110,208     $ 111,198     $ 112,707     $ 109,483  
                   
Allowance for Unfunded Commitments                  
Balance, beginning of period $ 17,480     $ 18,636     $ 21,086     $ 20,196     $ 18,884  
Provision for credit losses   (1,012 )     (1,156 )     (2,450 )     890       1,312  
Balance, end of period $ 16,468     $ 17,480     $ 18,636     $ 21,086     $ 20,196  
                   
Allowance for lending related credit losses $ 139,034     $ 127,688     $ 129,834     $ 133,793     $ 129,679  
                   
Provision for Credit Losses                  
Provision (benefit) for credit losses-loans $ 12,750     $ 2,672     $ 7,829     $ 2,184     $ 2,075  
Provision for credit losses-unfunded commitments   (1,012 )     (1,156 )     (2,450 )     890       1,312  
Total provision (benefit) for credit losses $ 11,738     $ 1,516     $ 5,379     $ 3,074     $ 3,387  
                   
Asset Quality                  
Nonaccrual loans $ 95,426     $ 51,304     $ 61,956     $ 58,066     $ 58,231  
Loans past due ninety days or more   2,507       511       1,459       174       273  
Other real estate owned   12,548       14,362       2,677       7,438       8,401  
Other repossessed assets         1       5       24       26  
Total nonperforming assets $ 110,481     $ 66,178     $ 66,097     $ 65,702     $ 66,931  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 66,178     $ 66,097     $ 65,702     $ 66,931     $ 73,268  
Net loan (charge offs) recoveries   (392 )     (3,662 )     (9,338 )     1,040       1,693  
New nonperforming loans   61,193       19,295       19,805       4,626       1,439  
Reduction of nonperforming loans(1)   (14,278 )     (14,691 )     (5,253 )     (5,711 )     (8,875 )
OREO/Repossessed assets sales proceeds   (2,220 )     (861 )     (4,819 )     (1,184 )     (594 )
Balance, end of period $ 110,481     $ 66,178     $ 66,097     $ 65,702     $ 66,931  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans   0.81 %     0.44 %     0.54 %     0.51 %     0.51 %
Ratio of nonperforming assets to total assets   0.57       0.33       0.33       0.33       0.33  
Annualized ratio of net loan charge-offs (recoveries) to average loans   0.01       0.12       0.32       (0.04 )     (0.06 )
Allowance for loan credit losses as a percent of loans   1.02       0.93       0.95       0.98       0.96  
Allowance for lending related credit losses as a percent of loans   1.15       1.08       1.11       1.16       1.13  
Allowance for loan credit losses as a percent of nonperforming loans   125.15       212.70       175.35       193.52       187.14  
Loans delinquent 30-89 days as a percent of total loans   0.09       0.12       0.12       0.10       0.04  
                   
(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, 2023   September 30, 2023   December 31, 2022
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 5,119,970     $ 54,573   4.23 %   $ 5,726,057     $ 54,800   3.80 %   $ 6,122,313     $ 53,178   3.45 %
Nontaxable(1)   759,464       7,681   4.01       881,162       8,085   3.64       890,368       7,762   3.46  
Total securities   5,879,434       62,254   4.20       6,607,219       62,885   3.78       7,012,681       60,940   3.45  
Interest on deposits with other banks and other short-term investments   146,027       2,174   5.91       142,301       1,651   4.60       151,405       1,410   3.69  
Federal funds sold                 152       3   7.83       739       11   5.91  
Loans:(2)                                  
Commercial and industrial(1)   3,624,034       66,980   7.33       3,610,677       63,001   6.92       3,346,843       45,290   5.37  
PPP loans   3,064       8   1.04       3,948       11   1.11       12,252       397   12.86  
Owner occupied commercial real estate   2,436,234       31,714   5.16       2,412,501       30,127   4.95       2,277,055       26,194   4.56  
Non-owner occupied commercial real estate   2,688,805       42,417   6.26       2,586,011       38,779   5.95       2,286,298       29,273   5.08  
Real estate construction   1,035,010       20,200   7.74       1,027,544       19,448   7.51       1,050,802       16,585   6.26  
Agricultural and agricultural real estate   844,353       13,069   6.14       822,957       12,582   6.07       785,647       10,159   5.13  
Residential mortgage   810,069       9,531   4.67       827,402       9,482   4.55       858,767       9,168   4.24  
Consumer   496,703       9,597   7.67       509,024       9,615   7.49       499,849       7,426   5.89  
Less: allowance for credit losses-loans   (109,776 )             (110,726 )             (106,500 )        
Net loans   11,828,496       193,516   6.49       11,689,338       183,045   6.21       11,011,013       144,492   5.21  
Total earning assets   17,853,957       257,944   5.73 %     18,439,010       247,584   5.33 %     18,175,838       206,853   4.52 %
Nonearning Assets   1,813,868               1,768,910               1,738,011          
Total Assets $ 19,667,825             $ 20,207,920             $ 19,913,849          
Interest-bearing Liabilities                                  
Savings $ 8,782,197     $ 53,807   2.43 %   $ 8,737,581     $ 49,195   2.23 %   $ 9,987,692     $ 25,950   1.03 %
Time deposits   3,165,788       34,264   4.29       3,945,371       43,549   4.38       1,322,094       6,265   1.88  
Borrowings   401,463       5,874   5.80       103,567       1,167   4.47       298,804       2,223   2.95  
Term debt   372,232       5,804   6.19       372,112       5,765   6.15       371,442       5,043   5.39  
Total interest-bearing liabilities   12,721,680       99,749   3.11 %     13,158,631       99,676   3.01 %     11,980,032       39,481   1.31 %
Noninterest-bearing Liabilities                                  
Noninterest-bearing deposits   4,761,409               4,824,861               6,009,432          
Accrued interest and other liabilities   344,945               366,905               264,941          
Total noninterest-bearing liabilities   5,106,354               5,191,766               6,274,373          
Equity   1,839,791               1,857,523               1,659,444          
Total Liabilities and Equity $ 19,667,825             $ 20,207,920             $ 19,913,849          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 158,195           $ 147,908           $ 167,372    
Net interest spread (1)         2.62 %           2.32 %           3.21 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets (1)(3)         3.52 %           3.18 %           3.65 %
Interest-bearing liabilities to earning assets   71.25 %             71.36 %             65.91 %        
 
(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, 2023   December 31, 2022
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 5,723,603     $ 223,521   3.91 %   $ 6,335,586     $ 169,544   2.68 %
Nontaxable(1)   864,288       31,292   3.62       965,474       30,387   3.15  
Total securities   6,587,891       254,813   3.87       7,301,060       199,931   2.74  
Interest-bearing deposits with other banks and other short-term investments   136,964       7,007   5.12       216,786       3,125   1.44  
Federal funds sold   38       3   7.89       192       11   5.73  
Loans:(2)                      
Commercial and industrial(1)   3,566,610       236,532   6.63       3,070,890       140,310   4.57  
PPP loans   5,797       69   1.19       50,464       6,884   13.64  
Owner occupied commercial real estate   2,375,883       116,641   4.91       2,272,088       93,936   4.13  
Non-owner occupied commercial real estate   2,517,645       147,528   5.86       2,196,922       99,202   4.52  
Real estate construction   1,047,192       76,307   7.29       923,316       48,258   5.23  
Agricultural and agricultural real estate   837,861       49,260   5.88       778,526       34,064   4.38  
Residential mortgage   832,562       37,669   4.52       852,541       34,276   4.02  
Consumer   503,763       36,522   7.25       464,084       23,058   4.97  
Less: allowance for credit losses-loans   (111,016 )             (105,735 )        
Net loans   11,576,297       700,528   6.05       10,503,096       479,988   4.57  
Total earning assets   18,301,190       962,351   5.26 %     18,021,134       683,055   3.79 %
Nonearning Assets   1,751,814               1,600,705          
Total Assets $ 20,053,004             $ 19,621,839          
Interest-bearing Liabilities                      
Savings $ 9,043,067     $ 182,179   2.01 %   $ 9,737,100     $ 46,623   0.48 %
Time deposits   3,299,405       137,509   4.17       1,160,538       10,257   0.88  
Borrowings   204,524       10,311   5.04       168,404       2,717   1.61  
Term debt   372,129       22,560   6.06       371,879       16,823   4.52  
Total interest-bearing liabilities   12,919,125       352,559   2.73 %     11,437,921       76,420   0.67 %
Noninterest-bearing Liabilities                      
Noninterest-bearing deposits   5,008,822               6,131,760          
Accrued interest and other liabilities   299,369               203,412          
Total noninterest-bearing liabilities   5,308,191               6,335,172          
Equity   1,825,688               1,848,746          
Total Liabilities and Equity $ 20,053,004             $ 19,621,839          
Net interest income, fully tax-equivalent (non-GAAP) (1)(3)     $ 609,792           $ 606,635    
Net interest spread (1)         2.53 %           3.12 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets (1)(3)         3.33 %           3.37 %
Interest-bearing liabilities to earning assets   70.59 %             63.47 %        
                       
(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
  12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                  
Earnings available to common stockholders (GAAP) $ (72,375 )   $ 46,078     $ 47,404     $ 50,763     $ 58,642  
Plus core deposit and customer relationship intangibles amortization, net of tax(2)   1,229       1,240       1,309       1,364       1,410  
Earnings available to common stockholders excluding intangible amortization (non-GAAP) $ (71,146 )   $ 47,318     $ 48,713     $ 52,127     $ 60,052  
                   
Average common equity (GAAP) $ 1,729,086     $ 1,746,818     $ 1,727,013     $ 1,655,860     $ 1,548,739  
Less average goodwill   576,005       576,005       576,005       576,005       576,005  
Less average core deposit and customer relationship intangibles, net   19,193       20,821       22,481       24,238       26,046  
Average tangible common equity (non-GAAP) $ 1,133,888     $ 1,149,992     $ 1,128,527     $ 1,055,617     $ 946,688  
Annualized return on average common equity (GAAP) (16.61 )%     10.47 %     11.01 %     12.43 %     15.02 %
Annualized return on average tangible common equity (non-GAAP) (24.89 )%     16.32 %     17.31 %     20.03 %     25.17 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                  
Net Interest Income (GAAP) $ 156,137     $ 145,756     $ 147,132     $ 152,212     $ 165,220  
Plus tax-equivalent adjustment(1)   2,058       2,152       2,136       2,209       2,152  
Net interest income, fully tax-equivalent (non-GAAP) $ 158,195     $ 147,908     $ 149,268     $ 154,421     $ 167,372  
                   
Average earning assets $ 17,853,957     $ 18,439,010     $ 18,523,552     $ 18,392,649     $ 18,175,838  
                   
Annualized net interest margin (GAAP)   3.47 %     3.14 %     3.19 %     3.36 %     3.61 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)   3.52       3.18       3.23       3.40       3.65  
Net purchase accounting discount amortization on loans included in annualized net interest margin   0.02       0.01       0.03       0.02       0.03  
                   
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                  
Common equity (GAAP) $ 1,822,412     $ 1,714,825     $ 1,748,285     $ 1,718,700     $ 1,624,350  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   18,415       20,026       21,651       23,366       25,154  
Tangible common equity (non-GAAP) $ 1,227,992     $ 1,118,794     $ 1,150,629     $ 1,119,329     $ 1,023,191  
                   
Common shares outstanding, net of treasury stock   42,688,008       42,656,303       42,644,544       42,558,726       42,467,394  
Common equity (book value) per share (GAAP) $ 42.69     $ 40.20     $ 41.00     $ 40.38     $ 38.25  
Tangible book value per common share (non-GAAP) $ 28.77     $ 26.23     $ 26.98     $ 26.30     $ 24.09  
                   
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                  
Tangible common equity (non-GAAP) $ 1,227,992     $ 1,118,794     $ 1,150,629     $ 1,119,329     $ 1,023,191  
                   
Total assets (GAAP) $ 19,411,707     $ 20,129,793     $ 20,224,716     $ 20,182,544     $ 20,244,228  
Less goodwill   576,005       576,005       576,005       576,005       576,005  
Less core deposit and customer relationship intangibles, net   18,415       20,026       21,651       23,366       25,154  
Total tangible assets (non-GAAP) $ 18,817,287     $ 19,533,762     $ 19,627,060     $ 19,583,173     $ 19,643,069  
Tangible common equity ratio (non-GAAP)   6.53 %     5.73 %     5.86 %     5.72 %     5.21 %
                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.
 

 

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)  
Net interest income (GAAP) $ 156,137     $ 145,756     $ 147,132     $ 152,212     $ 165,220  
Tax-equivalent adjustment(1)   2,058       2,152       2,136       2,209       2,152  
Fully tax-equivalent net interest income   158,195       147,908       149,268       154,421       167,372  
Noninterest income   (111,801 )     28,383       32,493       29,999       29,975  
Securities (gains)/losses, net   140,007       114       314       1,104       153  
Unrealized (gain) loss on equity securities, net   (75 )     (13 )     41       (193 )     7  
Valuation adjustment on servicing rights