Heartland Financial USA, Inc. Reports 2017 Second Quarter Results

Dubuque, Iowa, UNITED STATES


Highlights

  • Quarterly net income available to common stockholders of $21.9 million in comparison with $20.9 million for the second quarter of the prior year
  • Diluted earnings per common share of $0.81 in comparison with $0.84 for the second quarter of the prior year
  • Net interest margin of 3.94%, fully tax-equivalent (non-GAAP)(1) of 4.14%
  • Return on average common equity of 11.13% and return on average tangible common equity (non-GAAP)(2) of 14.07%
  • Tangible common equity ratio (non-GAAP)(3) of 7.97%
  • Efficiency ratio, fully tax-equivalent (non-GAAP)(4) of 65.61% compared to 67.95% for the second quarter of 2016
  • Demand deposits increased $36.2 million during the quarter and represent 34% of total deposits
  • Completed acquisition of Citywide Banks of Colorado, Inc. on July 7, 2017

 Quarter Ended
June 30,
 Six Months Ended
June 30,
 2017 2016 2017 2016
Net income (in millions)$22.0  $21.0  $40.0  $41.0 
Net income available to common stockholders (in millions)                                    21.9  20.9  39.9  40.8 
Diluted earnings per common share0.81  0.84  1.49  1.66 
        
Return on average assets1.06% 1.03% 0.97% 1.01%
Return on average common equity11.13  12.58  10.44  12.63 
Return on average tangible common equity (non-GAAP)(2)14.07  16.32  13.18  16.38 
Net interest margin3.94  3.95  3.95  3.98 
Net interest margin, fully tax-equivalent (non-GAAP)(1)4.14  4.12  4.15  4.15 


"Heartland’s second quarter 2017 financial performance was excellent. Net income available to common stockholders of nearly $22.0 million exceeded the same quarter last year by 5 percent. Results were fueled in part by a solid net interest margin of 4.14 percent on a fully tax-equivalent basis and improvement in our efficiency ratio."
Lynn B. Fuller, chairman and chief executive officer, Heartland Financial USA, Inc.

(1) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table included in this earnings release.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table included in this earnings release.
(3) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table included in this earnings release.
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table include in this earnings release.

DUBUQUE, Iowa, July 31, 2017 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ:HTLF) today reported net income available to common stockholders of $21.9 million, or $0.81 per diluted common share, for the quarter ended June 30, 2017, compared to $20.9 million, or $0.84 per diluted common share, for the second quarter of 2016. Return on average common equity was 11.13% and return on average assets was 1.06% for the second quarter of 2017, compared to 12.58% and 1.03%, respectively, for the same quarter in 2016.

Net income available to common stockholders for the six months ended June 30, 2017, was $39.9 million or $1.49 per diluted common share, compared to $40.8 million or $1.66 per diluted common share for the six months ended June 30, 2016. Return on average common equity was 10.44%, and return on average assets was 0.97% for the first six months of 2017, compared to 12.63% and 1.01%, respectively, for the same period in 2016.

Commenting on Heartland’s second quarter results, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, "Heartland’s second quarter 2017 financial performance was excellent. Net income available to common stockholders of nearly $22.0 million exceeded the same quarter last year by 5 percent. Results were fueled in part by a solid net interest margin of 4.14 percent on a fully tax-equivalent basis and improvement in our efficiency ratio."

On February 28, 2017, Heartland completed the acquisition of Founders Bancorp, parent company of Founders Community Bank, based in San Luis Obispo, California. Based on Heartland's closing common stock price of $49.55 per share as of February 28, 2017, the aggregate consideration was $31.0 million, with 30% of the consideration paid in cash and 70% by delivery of Heartland common stock. Simultaneous with the closing of the transaction, Founders Community Bank merged into Heartland's Premier Valley Bank subsidiary. As of the close date, Founders Community Bank had, at fair value, total assets of $213.3 million, total loans of $96.4 million and total deposits of $181.5 million. The systems conversion for this transaction occurred two weeks after the closing.

On July 7, 2017, Heartland completed the acquisition of Citywide Banks of Colorado, Inc., parent company of Citywide Banks, headquartered in Aurora, Colorado. Simultaneous with the close, Citywide Banks merged into Heartland's Centennial Bank and Trust subsidiary. The aggregate consideration was approximately $211.2 million, of which $58.6 million was cash, and the remainder was settled by delivery of 3,216,161 shares of Heartland common stock. The combined entity operates as Citywide Banks. As of June 30, 2017, Citywide Banks had total assets of $1.38 billion, including $1.00 billion in net loans outstanding, and $1.20 billion of deposits. The systems conversion for this transaction is scheduled to be completed in the fourth quarter of 2017.

Commenting on merger and acquisition activity, Fuller stated, "Earlier this month, we announced the completion of our acquisition of Citywide Banks of Colorado with $1.4 billion in assets. This transaction represents the largest acquisition in our history and adds sizable market share in Denver, one of America's best growth markets."

Fully Tax-Equivalent Net Interest Margin Remains Above 4.00%

Net interest margin, expressed as a percentage of average earning assets, was 3.94% (4.14% on a fully tax-equivalent basis) during the second quarter of 2017, compared to 3.95% (4.16% on a fully tax-equivalent basis) during the first quarter of 2017 and 3.95% (4.12% on a fully tax-equivalent basis) during the second quarter of 2016.

Fuller said, "We are very pleased to see net interest margin remained strong at 4.14 percent on a fully tax-equivalent basis reflecting reductions in funding costs and improved yields in the securities portfolio."

Interest income for the second quarter of 2017 was $82.1 million compared to $81.3 million recorded in the second quarter of 2016. The taxable equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $3.8 million for the second quarter of 2017 and $3.1 million for the second quarter of 2016. With these adjustments, interest income on a tax-equivalent basis was $85.9 million for the second quarter of 2017, an increase of $1.4 million or 2%, compared to $84.5 million for the second quarter of 2016. The increase in interest income on a fully tax-equivalent basis in the second quarter of 2017, as compared to the second quarter of 2016, was primarily due to an increase in average earning assets, which totaled $7.59 billion during the second quarter of 2017 compared to $7.45 billion during the second quarter of 2016, a $139.4 million or 2% increase.  This growth is attributable to the Founders Bancorp acquisition completed on February 28, 2017, and an increase in the average balance of the securities portfolio.

Interest expense for the second quarter of 2017 was $7.5 million, a decrease of $732,000 or 9% from $8.2 million in the second quarter of 2016. Average interest bearing liabilities decreased $217.2 million or 4% to $5.15 billion for the quarter ended June 30, 2017, from $5.36 billion in the same quarter in 2016, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 4 basis points from 0.62% in the second quarter of 2016 to 0.58% in the second quarter of 2017.

Net interest income was $74.6 million during the second quarter of 2017 compared to $73.1 million during the second quarter of 2016, an increase of $1.5 million or 2%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $78.4 million during the second quarter of 2017 compared to $76.3 million during the second quarter of 2016, an increase of $2.1 million or 3%.

Noninterest Income and Noninterest Expenses Decrease From Second Quarter 2016

Noninterest income totaled $25.6 million during the second quarter of 2017 compared to $31.0 million during the second quarter of 2016, a decrease of $5.4 million or 17%. Service charges and fees totaled $9.7 million during the second quarter of 2017 compared to $8.0 million during the second quarter of 2016, an increase of $1.7 million or 21%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which was the result of the CIC Bancshares, Inc. acquisition completed during the first quarter of 2016 and the Founders Bancorp acquisition completed in the first quarter of 2017, and increased interchange revenue from commercial card activity. Securities gains, net, were $1.4 million during the second quarter of 2017 compared to $4.6 million recorded during the same quarter in 2016, a decrease of $3.2 million or 70%. Net gains on sale of loans held for sale totaled $6.8 million during the second quarter of 2017 compared to $11.3 million during the second quarter of 2016, a decrease of $4.5 million or 40%, due to lower mortgage loan activity.

For the second quarter of 2017, noninterest expenses totaled $69.3 million compared to $71.0 million during the second quarter of 2016, a decrease of $1.7 million or 2%. The category with the most significant decrease was salaries and employee benefits, which decreased $859,000 or 2%. At June 30, 2017, Heartland had 1,862 full time equivalent employees compared to 1,888 full time equivalent employees at June 30, 2016.

"Heartland continues to carefully manage noninterest expenses, and we are pleased to see positive results as reflected in our efficiency ratio, which dropped into the 65% range for the quarter," added Fuller.

Heartland's effective tax rate was 26.85% for the second quarter of 2017 compared to 32.37% for the second quarter of 2016. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $310,000 during the second quarter of 2017 compared to $304,000 for the second quarter of 2016. Also included in the second quarter of 2017 tax computation was a state tax credit of $830,000 related to a partnership investment in tax credit projects. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 23.49% during the second quarter of 2017 compared to 18.86% during the second quarter of 2016.

Loans Decrease and Deposits Increase Since December 31, 2016

Total assets were $8.20 billion at June 30, 2017, a decrease of $42.4 million or 1% from $8.25 billion at year-end 2016. Exclusive of the $213.9 million of assets acquired at fair value in the Founders Bancorp transaction, total assets decreased $256.3 million or 3% since December 31, 2016. Securities represented 25% and 26% of total assets at June 30, 2017, and December 31, 2016, respectively.

Total loans held to maturity were $5.33 billion at June 30, 2017, compared to $5.35 billion at year-end 2016, a decrease of $26.6 million or less than 1%. This change includes $96.4 million of total loans held to maturity acquired at fair value in the Founders Bancorp transaction. Exclusive of this transaction, total loans held to maturity decreased $123.1 million or 2% since December 31, 2016.

Total deposits were $6.93 billion as of June 30, 2017, compared to $6.85 billion at year-end 2016, an increase of $82.8 million or 1%. This increase included $181.5 million of deposits, at fair value, acquired in the Founders Bancorp transaction. Exclusive of this transaction, total deposits decreased $98.7 million since December 31, 2016. Demand deposits totaled $2.36 billion at June 30, 2017, which increased $153.4 million or 7% since year-end 2016, with $94.4 million of the increase attributable to the Founders Bancorp transaction. Savings deposits decreased $83.5 million or 2% to $3.70 billion at June 30, 2017 from $3.79 billion at December 31, 2016. Excluding savings deposits of $63.3 million acquired in the Founders Bancorp transaction, savings deposits decreased $146.8 million since year-end 2016.

Fuller said, "Total deposits eased a bit in the second quarter, though the key category, demand deposits, increased and now represents 34% of total deposits."

Nonperforming Assets Increase Since December 31, 2016

Nonperforming assets were $76.0 million or 0.93% of total assets at June 30, 2017, compared to $74.8 million or 0.91% of total assets at December 31, 2016. Nonperforming loans were $66.1 million or 1.24% of total loans at June 30, 2017, compared to $64.4 million or 1.20% of total loans at December 31, 2016.

The allowance for loan losses at June 30, 2017, was 1.02% of loans and 81.78% of nonperforming loans, compared to 1.02% of loans and 84.37% of nonperforming loans at December 31, 2016. The provision for loan losses was $889,000 for the second quarter of 2017 compared to $2.1 million for the second quarter of 2016. For the six months ended June 30, 2017, provision expense was $4.5 million compared to $4.2 million recorded for the six months ended June 30, 2016.

Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until July 30, 2018, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company with assets of approximately $9.6 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 121 banking locations serving 88 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, 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 are detailed in the risk factors included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war; (iii) changes in state and federal laws, regulations and governmental policies concerning the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.

-FINANCIAL TABLES FOLLOW-


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
June 30,
 For the Six Months Ended
June 30,
 2017 2016 2017 2016
Interest Income       
Interest and fees on loans$68,094  $69,809  $134,992  $138,234 
Interest on securities:       
Taxable8,599  7,903  16,852  16,547 
Nontaxable5,020  3,566  10,211  7,076 
Interest on federal funds sold3  1  3  11 
Interest bearing deposits with the Federal Reserve Bank and other
banks and other short-term investments      
345  52  554  147 
Total Interest Income82,061  81,331  162,612  162,015 
Interest Expense       
Interest on deposits4,163  4,021  7,893  8,194 
Interest on short-term borrowings90  519  227  848 
Interest on other borrowings3,228  3,673  6,884  7,148 
Total Interest Expense7,481  8,213  15,004  16,190 
Net Interest Income74,580  73,118  147,608  145,825 
Provision for loan losses889  2,118  4,530  4,185 
Net Interest Income After Provision for Loan Losses73,691  71,000  143,078  141,640 
Noninterest Income       
Service charges and fees9,696  8,022  19,153  15,184 
Loan servicing income1,351  1,292  3,075  2,560 
Trust fees3,979  3,625  7,610  7,438 
Brokerage and insurance commissions976  886  2,012  1,908 
Securities gains, net1,392  4,622  3,874  8,148 
Net gains on sale of loans held for sale6,817  11,270  12,964  22,335 
Valuation adjustment on commercial servicing rights19  (46) 24  (46)
Income on bank owned life insurance656  591  1,273  1,113 
Other noninterest income738  764  1,532  1,964 
Total Noninterest Income25,624  31,026  51,517  60,604 
Noninterest Expense       
Salaries and employee benefits41,126  41,985  82,893  83,699 
Occupancy5,056  5,220  10,129  10,223 
Furniture and equipment2,586  2,442  5,087  4,555 
Professional fees7,583  7,486  15,892  14,496 
FDIC insurance assessments909  1,120  1,716  2,288 
Advertising1,359  1,551  3,783  2,835 
Core deposit intangibles and customer relationship intangibles amortization                        1,218  1,297  2,389  3,192 
Other real estate and loan collection expenses365  659  1,193  1,231 
(Gain)/loss on sales/valuations of assets, net(112) (43) 300  270 
Other noninterest expenses9,208  9,303  17,656  18,540 
Total Noninterest Expense69,298  71,020  141,038  141,329 
Income Before Income Taxes30,017  31,006  53,557  60,915 
Income taxes8,059  10,036  13,589  19,936 
Net Income21,958  20,970  39,968  40,979 
Preferred dividends(13) (52) (32) (220)
Interest expense on convertible preferred debt4  31  9  31 
Net Income Available to Common Stockholders$21,949  $20,949  $39,945  $40,790 
Earnings per common share-diluted$0.81  $0.84  $1.49  $1.66 
Weighted average shares outstanding-diluted26,972,580  24,974,995  26,798,134  24,541,356 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Interest Income         
Interest and fees on loans$68,094  $66,898  $69,848  $70,046  $69,809 
Interest on securities:         
Taxable8,599  8,253  8,480  7,831  7,903 
Nontaxable5,020  5,191  4,292  3,717  3,566 
Interest on federal funds sold3      1  1 
Interest bearing deposits with the Federal Reserve Bank and other
banks and other short-term investments  
345  209  157  92  52 
Total Interest Income82,061  80,551  82,777  81,687  81,331 
Interest Expense         
Interest on deposits4,163  3,730  3,744  4,001  4,021 
Interest on short-term borrowings90  137  119  235  519 
Interest on other borrowings3,228  3,656  3,754  3,770  3,673 
Total Interest Expense7,481  7,523  7,617  8,006  8,213 
Net Interest Income74,580  73,028  75,160  73,681  73,118 
Provision for loan losses889  3,641  2,181  5,328  2,118 
Net Interest Income After Provision for Loan Losses73,691  69,387  72,979  68,353  71,000 
Noninterest Income         
Service charges and fees9,696  9,457  8,128  8,278  8,022 
Loan servicing income1,351  1,724  1,068  873  1,292 
Trust fees3,979  3,631  3,718  3,689  3,625 
Brokerage and insurance commissions976  1,036  955  1,006  886 
Securities gains, net1,392  2,482  1,608  1,584  4,622 
Net gains on sale of loans held for sale6,817  6,147  5,840  11,459  11,270 
Valuation adjustment on commercial servicing rights19  5  8  5  (46)
Income on bank owned life insurance656  617  542  620  591 
Other noninterest income738  794  2,588  1,028  764 
Total Noninterest Income25,624  25,893  24,455  28,542  31,026 
Noninterest Expense         
Salaries and employee benefits41,126  41,767  39,115  40,733  41,985 
Occupancy5,056  5,073  5,076  5,099  5,220 
Furniture and equipment2,586  2,501  2,944  2,746  2,442 
Professional fees7,583  8,309  7,195  5,985  7,486 
FDIC insurance assessments909  807  717  1,180  1,120 
Advertising1,359  2,424  2,274  1,339  1,551 
Core deposit intangibles and customer relationship intangibles amortization  1,218  1,171  1,147  1,291  1,297 
Other real estate and loan collection expenses365  828  572  640  659 
(Gain)/loss on sales/valuations of assets, net(112) 412  414  794  (43)
Other noninterest expenses9,208  8,448  10,458  8,620  9,303 
Total Noninterest Expense69,298  71,740  69,912  68,427  71,020 
Income Before Income Taxes30,017  23,540  27,522  28,468  31,006 
Income taxes8,059  5,530  8,360  8,260  10,036 
Net Income21,958  18,010  19,162  20,208  20,970 
Preferred dividends(13) (19) (19) (53) (52)
Interest expense on convertible preferred debt4  5  3  17  31 
Net Income Available to Common Stockholders$21,949  $17,996  $19,146  $20,172  $20,949 
Earnings per common share-diluted$0.81  $0.68  $0.74  $0.81  $0.84 
Weighted average shares outstanding-diluted26,972,580  26,627,830  25,800,472  24,922,946  24,974,995 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As Of
 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Assets         
Cash and due from banks$141,100  $129,386  $151,290  $196,234  $222,718 
Interest bearing deposits with the Federal Reserve Bank and other          
banks and other short-term investments
40,676  43,765  7,434  5,855  7,232 
Cash and cash equivalents181,776  173,151  158,724  202,089  229,950 
Time deposits in other financial institutions30,241  41,539  2,105  2,105  2,105 
Securities:         
Available for sale, at fair value1,789,441  1,893,528  1,845,864  1,655,696  1,566,592 
Held to maturity, at cost259,586  260,616  263,662  265,302  270,423 
Other investments, at cost21,094  21,557  21,560  22,082  22,680 
Loans held for sale48,848  49,009  61,261  78,317  82,538 
Loans:         
Held to maturity5,325,082  5,361,604  5,351,719  5,438,715  5,482,258 
Allowance for loan losses(54,051) (54,999) (54,324) (54,653) (51,756)
Loans, net5,271,031  5,306,605  5,297,395  5,384,062  5,430,502 
Premises, furniture and equipment, net163,003  165,425  164,028  165,841  168,701 
Goodwill141,461  141,461  127,699  127,699  127,699 
Core deposit intangibles and customer relationship intangibles, net22,850  24,068  22,775  23,922  25,213 
Servicing rights, net34,736  35,441  35,778  35,906  35,654 
Cash surrender value on life insurance120,281  117,613  112,615  112,060  111,425 
Other real estate, net9,269  11,188  9,744  10,740  11,003 
Other assets111,104  120,644  123,869  116,394  119,916 
Total Assets$8,204,721  $8,361,845  $8,247,079  $8,202,215  $8,204,401 
Liabilities and Equity         
Liabilities         
Deposits:         
 Demand$2,355,410  $2,319,256  $2,202,036  $2,238,736  $2,149,911 
 Savings3,704,579  3,940,146  3,788,089  3,753,300  3,691,791 
 Time870,180  830,459  857,286  920,657  995,870 
Total deposits6,930,169  7,089,861  6,847,411  6,912,693  6,837,572 
Short-term borrowings139,130  155,025  306,459  214,105  303,707 
Other borrowings281,096  282,051  288,534  294,493  296,895 
Accrued expenses and other liabilities48,356  53,596  63,759  76,536  78,264 
Total Liabilities7,398,751  7,580,533  7,506,163  7,497,827  7,516,438 
Stockholders' Equity         
Preferred equity938  938  1,357  1,357  3,777 
Common stock26,701  26,674  26,120  24,683  24,544 
Capital surplus352,500  351,423  328,376  279,316  274,682 
Retained earnings450,228  431,219  416,109  402,179  384,479 
Accumulated other comprehensive income (loss)(24,397) (28,942) (31,046) (3,079) 513 
Treasury stock at cost      (68) (32)
Total Equity805,970  781,312  740,916  704,388  687,963 
Total Liabilities and Equity$8,204,721  $8,361,845  $8,247,079  $8,202,215  $8,204,401 


HEARTLAND FINANCIAL USA, INC.       
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)       
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA       
 For the Quarter Ended
June 30,
 For the Six Months Ended
June 30,
 2017 2016 2017 2016
Average Balances       
Assets$8,333,301  $8,211,326  $8,283,681  $8,118,198 
Loans, net of unearned5,376,826  5,582,878  5,371,271  5,470,490 
Deposits7,050,126  6,806,259  6,973,897  6,742,635 
Earning assets7,586,256  7,446,849  7,544,609  7,361,775 
Interest bearing liabilities5,146,243  5,363,477  5,168,475  5,318,320 
Common stockholders' equity791,039  669,930  771,464  649,612 
Total stockholders' equity791,977  673,707  772,575  684,739 
Tangible common stockholders' equity(1)625,929  516,347  611,050  500,726 
        
Key Performance Ratios       
Annualized return on average assets1.06% 1.03% 0.97% 1.01%
Annualized return on average common equity (GAAP)11.13% 12.58% 10.44% 12.63%
Annualized return on average tangible common equity (non-GAAP)(2)14.07% 16.32% 13.18% 16.38%
Annualized ratio of net charge-offs to average loans0.14% 0.01% 0.18% 0.04%
Annualized net interest margin (GAAP)3.94% 3.95% 3.95% 3.98%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(3)4.14% 4.12% 4.15% 4.15%
Efficiency ratio, fully tax-equivalent(4)65.61% 67.95% 67.75% 67.43%
        
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)(5)       
Net income available to common shareholders (GAAP)$21,949  $20,949  $39,945  $40,790 
        
Average common stockholders' equity (GAAP)$791,039  $669,930  $771,464  $649,612 
Less average goodwill141,461  127,700  136,976  123,727 
  Less average core deposit intangibles and customer relationship
  intangibles,  net
23,649  25,883  23,438  25,159 
Average tangible common equity (non-GAAP)$625,929  $516,347  $611,050  $500,726 
Annualized return on average common equity (GAAP)11.13% 12.58% 10.44% 12.63%
Annualized return on average tangible common equity (non-GAAP)14.07% 16.32% 13.18% 16.38%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)(6)       
Net Interest Income (GAAP)$74,580  $73,118  $147,608  $145,825 
Plus tax-equivalent adjustment(7)3,796  3,146  7,656  6,187 
Net interest income, tax-equivalent (non-GAAP)
$78,376  $76,264  $155,264  $152,012 
        
Average earning assets$7,586,256  $7,446,849  $7,544,609  $7,361,775 
        
Annualized net interest margin (GAAP)3.94% 3.95% 3.95% 3.98%
Annualized net interest margin, fully tax-equivalent (non-GAAP)
4.14% 4.12% 4.15% 4.15%
        
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table.
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure.
(5) Return on average tangible common equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles and customer deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(6) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(7) Computed on a tax-equivalent basis using an effective tax rate of 35%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Average Balances         
Assets$8,333,301  $8,233,510  $8,280,042  $8,172,683  $8,211,326 
Loans, net of unearned5,376,826  5,365,654  5,473,001  5,538,088  5,582,878 
Deposits7,050,126  6,896,821  6,928,978  6,839,334  6,806,259 
Earning assets7,586,256  7,502,496  7,551,997  7,382,860  7,446,849 
Interest bearing liabilities5,146,243  5,190,955  5,206,393  5,224,172  5,363,477 
Common stockholders' equity791,039  751,671  726,455  689,637  669,930 
Total stockholders' equity791,977  752,958  727,812  692,404  673,707 
Tangible common stockholders' equity(1)625,929  596,006  575,412  537,375  516,347 
          
Key Performance Ratios         
Annualized return on average assets1.06% 0.89% 0.92% 0.98% 1.03%
Annualized return on average common equity (GAAP)11.13% 9.71% 10.48% 11.64% 12.58%
Annualized return on average tangible common equity (non-GAAP)(2)14.07% 12.25% 13.24% 14.93% 16.32%
Annualized ratio of net charge-offs to average loans0.14% 0.22% 0.18% 0.17% 0.01%
Annualized net interest margin (GAAP)3.94% 3.95% 3.96% 3.97% 3.95%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(3)4.14% 4.16% 4.14% 4.14% 4.12%
Efficiency ratio, fully tax-equivalent(4)65.61% 69.95% 66.29% 63.88% 67.95%
          
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)(5)         
Net income available to common shareholders (GAAP)$21,949  $17,996  $19,146  $20,172  $20,949 
          
Average common stockholders' equity (GAAP)$791,039  $751,671  $726,455  $689,637  $669,930 
   Less average goodwill141,461  132,440  127,699  127,699  127,699 
Less average core deposit intangibles and customer relationship intangibles, net23,649  23,225  23,344  24,563  25,884 
Average tangible common equity (non-GAAP)$625,929  $596,006  $575,412  $537,375  $516,347 
Annualized return on average common equity (GAAP)11.13% 9.71% 10.48% 11.64% 12.58%
Annualized return on average tangible common equity (non-GAAP)14.07% 12.25% 13.24% 14.93% 16.32%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)(6)         
Net Interest Income (GAAP)$74,580  $73,028  $75,160  $73,681  $73,118 
   Plus tax-equivalent adjustment(7)3,796  3,860  3,511  3,221  3,146 
Net interest income, fully tax-equivalent (non-GAAP)$78,376  $76,888  $78,671  $76,902  $76,264 
          
Average earning assets$7,586,256  $7,502,496  $7,551,997  $7,382,860  $7,446,849 
          
Annualized net interest margin (GAAP)3.94% 3.95% 3.96% 3.97% 3.95%
Annualized net interest margin, fully tax-equivalent (non-GAAP)4.14% 4.16% 4.14% 4.14% 4.12%
 
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table.
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure.
(5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(6) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(7) Computed on a tax-equivalent basis using an effective tax rate of 35%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
June 30,
 For the Six Months Ended
June 30,
Reconciliation of Non-GAAP Measure-Efficiency Ratio(1)2017 2016 2017 2016
Net interest income$74,580  $73,118  $147,608  $145,825 
Tax-equivalent adjustment(2)3,796  3,146  7,656  6,187 
Fully tax-equivalent net interest income78,376  76,264  155,264  152,012 
Noninterest income25,624  31,026  51,517  60,604 
Securities gains, net(1,392) (4,622) (3,874) (8,148)
Adjusted income$102,608  $102,668  $202,907  $204,468 
        
Total noninterest expenses$69,298  $71,020  $141,038  $141,329 
Less:       
Core deposit intangibles and customer relationship intangibles amortization1,218  1,297  2,389  3,192 
Partnership investment in tax credit projects876    876   
(Gain)/loss on sales/valuations of assets, net(112) (43) 300  270 
Adjusted noninterest expenses$67,316  $69,766  $137,473  $137,867 
        
Efficiency ratio, fully tax-equivalent (non-GAAP)65.61% 67.95% 67.75% 67.43%


HEARTLAND FINANCIAL USA, INC. 
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) 
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 
 For the Quarter Ended
Reconciliation of Non-GAAP Measure-Efficiency Ratio(1)6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Net interest income$74,580  $73,028  $75,160  $73,681  $73,118 
Tax-equivalent adjustment(2)3,796  3,860  3,511  3,221  3,146 
Fully tax-equivalent net interest income78,376  76,888  78,671  76,902  76,264 
Noninterest income25,624  25,893  24,455  28,542  31,026 
Securities gains, net(1,392) (2,482) (1,608) (1,584) (4,622)
Adjusted income$102,608  $100,299  $101,518  $103,860  $102,668 
          
Total noninterest expenses$69,298  $71,740  $69,912  $68,427  $71,020 
Less:         
Core deposit intangibles and customer relationship intangibles amortization1,218  1,171  1,147  1,291  1,297 
Partnership investment in tax credit projects876    1,051     
(Gain)/loss on sales/valuation of assets, net(112) 412  414  794  (43)
Adjusted noninterest expenses$67,316  $70,157  $67,300  $66,342  $69,766 
          
Efficiency ratio, fully tax-equivalent (non-GAAP)65.61% 69.95% 66.29% 63.88% 67.95%
          
(1) 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 the table. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(2) Computed on a tax-equivalent basis using an effective tax rate of 35%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
 As of and for the Quarter Ended
 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Common Share Data         
Book value per common share$30.15  $29.26  $28.31  $28.48  $27.88 
Tangible book value per common share (non-GAAP)(1)$24.00  $23.05  $22.55  $22.34  $21.65 
ASC 320 effect on book value per common share$(0.87) $(1.06) $(1.15) $0.03  $0.21 
Common shares outstanding, net of treasury stock26,701,226  26,674,121  26,119,929  24,681,380  24,543,376 
Tangible common equity ratio (non-GAAP)(2)7.97% 7.50% 7.28% 6.85% 6.60%
          
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(3)         
Common stockholders' equity (GAAP)$805,032  $780,374  $739,559  $703,031  $684,186 
Less goodwill141,461  141,461  127,699  127,699  127,699 
Less core deposit intangibles and customer relationship intangibles, net22,850  24,068  22,775  23,922  25,213 
Tangible common stockholders' equity (non-GAAP)$640,721  $614,845  $589,085  $551,410  $531,274 
          
Common shares outstanding, net of treasury stock26,701,226  26,674,121  26,119,929  24,681,380  24,543,376 
Common stockholders' equity (book value) per share (GAAP)$30.15  $29.26  $28.31  $28.48  $27.88 
Tangible book value per common share (non-GAAP)$24.00  $23.05  $22.55  $22.34  $21.65 
          
Reconciliation of Tangible Common Equity Ratio(non-GAAP)(4)         
Total assets (GAAP)$8,204,721  $8,361,845  $8,247,079  $8,202,215  $8,204,401 
Less goodwill141,461  141,461  127,699  127,699  127,699 
Less core deposit intangibles and customer relationship intangibles, net22,850  24,068  22,775  23,922  25,213 
Total tangible assets (non-GAAP)$8,040,410  $8,196,316  $8,096,605  $8,050,594  $8,051,489 
Tangible common equity ratio (non-GAAP)7.97% 7.50% 7.28% 6.85% 6.60%
          
Loan Data         
Loans held to maturity:         
Commercial and commercial real estate$3,803,011  $3,849,748  $3,825,847  $3,900,612  $3,930,879 
Residential mortgage596,385  604,902  617,924  625,965  644,267 
Agricultural and agricultural real estate495,243  481,125  489,318  489,387  480,883 
Consumer431,052  427,962  420,613  425,582  428,730 
Unearned discount and deferred loan fees(609) (2,133) (1,983) (2,831) (2,501)
Total loans held to maturity$5,325,082  $5,361,604  $5,351,719  $5,438,715  $5,482,258 
          
Other Selected Trend Information         
Effective tax rate26.85% 23.49% 30.38% 29.02% 32.37%
Full time equivalent employees1,862  1,896  1,864  1,846  1,888 
Total residential mortgage loan applications$308,113  $248,614  $304,018  $445,107  $440,907 
Residential mortgage loans originated$216,637  $161,851  $278,065  $324,337  $324,633 
Residential mortgage loans sold$180,296  $172,521  $269,333  $315,917  $302,448 
Residential mortgage loan servicing portfolio$4,340,243  $4,338,311  $4,308,580  $4,259,459  $4,203,429 
          
(1) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table.
(2) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table.
(3) Tangible book value per common share is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(4) The tangible common equity ratio is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by total assets less goodwill and core deposit intangibles and customer relationship intangibles, net. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of and for the Quarter Ended
 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Allowance for Loan Losses         
Balance, beginning of period$54,999  $54,324  $54,653  $51,756  $49,738 
Provision for loan losses889  3,641  2,181  5,328  2,118 
Charge-offs(2,766) (3,718) (3,555) (3,283) (2,951)
Recoveries929  752  1,045  852  2,851 
Balance, end of period$54,051  $54,999  $54,324  $54,653  $51,756 
          
Asset Quality         
Nonaccrual loans$65,393  $62,868  $64,299  $57,799  $57,053 
Loans past due ninety days or more as to interest or principal payments698  872  86  105   
Other real estate owned9,269  11,188  9,744  10,740  11,003 
Other repossessed assets675  739  663  821  564 
Total nonperforming assets$76,035  $75,667  $74,792  $69,465  $68,620 
          
Performing troubled debt restructured loans$11,157  $11,010  $10,380  $10,281  $9,923 
          
Nonperforming Assets Activity         
Balance, beginning of period$75,667  $74,792  $69,465  $68,620  $60,153 
Net loan charge offs(1,837) (2,966) (2,510) (2,431) (100)
New nonperforming loans13,700  14,819  23,035  10,884  19,994 
Reduction of nonperforming loans(1)(7,443) (10,037) (13,707) (6,983) (10,313)
OREO/Repossessed assets sales proceeds(3,734) (715) (1,037) (343) (918)
OREO/Repossessed assets writedowns, net(259) (279) (274) (521) (337)
Net activity at Citizens Finance Co.(59) 53  (180) 239  141 
Balance, end of period$76,035  $75,667  $74,792  $69,465  $68,620 
 
Asset Quality Ratios         
Ratio of nonperforming loans to total loans1.24% 1.19% 1.20% 1.06% 1.04%
Ratio of nonperforming assets to total assets0.93% 0.90% 0.91% 0.85% 0.84%
Annualized ratio of net loan charge-offs to average loans0.14% 0.22% 0.18% 0.17% 0.01%
Allowance for loan losses as a percent of loans1.02% 1.03% 1.02% 1.00% 0.94%
Allowance for loan losses as a percent of nonperforming loans81.78% 86.29% 84.37% 94.39% 90.72%
Loans delinquent 30-89 days as a percent of total loans0.38% 0.44% 0.37% 0.40% 0.73%
          
(1) Includes principal reductions, transfers to performing status and transfers to OREO.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Quarter Ended
 June 30, 2017 June 30, 2016
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$1,516,745  $8,599  2.27% $1,468,896  $7,903  2.16%
Nontaxable(1)624,915  7,723  4.96  430,086  5,486  5.13 
Total securities2,141,660  16,322  3.06  1,898,982  13,389  2.84 
Interest bearing deposits with the Federal Reserve Bank and other
banks and other short-term investments
121,778  345  1.14  10,727  52  1.95 
Federal funds sold1,262  3  0.95  5,114  1  0.08 
Loans:(2)           
Commercial and commercial real estate(1)3,824,061  46,912  4.92  3,866,861  46,889  4.88 
Residential mortgage633,344  6,509  4.12  803,952  8,286  4.15 
Agricultural and agricultural real estate(1)488,222  5,807  4.77  481,625  5,504  4.60 
Consumer431,199  8,289  7.71  430,440  8,273  7.73 
Fees on loans  1,670      2,083   
Less: allowance for loan losses(55,270)     (50,852)    
Net loans5,321,556  69,187  5.21  5,532,026  71,035  5.16 
Total earning assets7,586,256  85,857  4.54% 7,446,849  84,477  4.56%
Nonearning Assets747,045      764,477     
Total Assets$8,333,301      $8,211,326     
Interest Bearing Liabilities           
Savings$3,881,219  $2,505  0.26% $3,699,971  $2,028  0.22%
Time, $100,000 and over350,786  727  0.83  421,151  733  0.70 
Other time deposits479,164  931  0.78  586,810  1,260  0.86 
Short-term borrowings153,565  90  0.24  373,768  519  0.56 
Other borrowings281,509  3,228  4.60  281,777  3,673  5.24 
Total interest bearing liabilities5,146,243  7,481  0.58% 5,363,477  8,213  0.62%
Noninterest Bearing Liabilities           
Noninterest bearing deposits2,338,957      2,098,327     
Accrued interest and other liabilities56,124      75,815     
Total noninterest bearing liabilities2,395,081      2,174,142     
Stockholders' Equity791,977      673,707     
Total Liabilities and Stockholders' Equity$8,333,301      $8,211,326     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $78,376      $76,264   
Net interest spread(1)    3.96%     3.94%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(3)    4.14%     4.12%
Interest bearing liabilities to earning assets67.84%     72.02%    
            
Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)(3)           
Net interest income, fully tax-equivalent (non-GAAP)  $78,376      $76,264   
Adjustments for tax-equivalent interest(1)  (3,796)     (3,146)  
Net interest income (GAAP)  $74,580      $73,118   
            
Average earning assets$7,586,256      $7,446,849     
Annualized net interest margin (GAAP)  3.94%     3.95%  
Annualized net interest margin, fully tax-equivalent (non-GAAP)  4.14%     4.12%  
            
(1) Computed on a tax-equivalent basis using an effective tax rate of 35%
(2) Nonaccrual loans are included in the average loans outstanding.
(3) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Six Months Ended
 June 30, 2017 June 30, 2016
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$1,483,087  $16,852  2.29% $1,488,664  $16,547  2.24%
Nontaxable(1)635,168  15,709  4.99  423,655  10,886  5.17 
Total securities2,118,255  32,561  3.10  1,912,319  27,433  2.88 
Interest bearing deposits with the Federal Reserve Bank and other
banks and other short-term investments
109,095  554  1.02  11,180  147  2.64 
Federal funds sold791  3  0.76  18,120  11  0.12 
Loans:(2)           
Commercial and commercial real estate(1)3,818,689  92,825  4.90  3,805,401  93,643  4.95 
Residential mortgage639,902  13,192  4.16  769,043  15,885  4.15 
Agricultural and agricultural real estate(1)485,665  11,361  4.72  474,801  11,233  4.76 
Consumer427,015  16,342  7.72  421,245  16,196  7.73 
Fees on loans  3,430      3,654   
Less: allowance for loan losses(54,803)     (50,334)    
Net loans5,316,468  137,150  5.20  5,420,156  140,611  5.22 
Total earning assets7,544,609  170,268  4.55% 7,361,775  168,202  4.59%
Nonearning Assets739,072      756,423     
Total Assets$8,283,681      $8,118,198     
Interest Bearing Liabilities           
Savings$3,859,730  $4,610  0.24% $3,628,089  $3,922  0.22%
Time, $100,000 and over349,789  1,452  0.84  459,885  1,604  0.70 
Other time deposits481,736  1,831  0.77  614,556  2,668  0.87 
Short-term borrowings194,272  227  0.24  342,464  848  0.50 
Other borrowings282,948  6,884  4.91  273,326  7,148  5.26 
Total interest bearing liabilities5,168,475  15,004  0.59% 5,318,320  16,190  0.61%
Noninterest Bearing Liabilities           
Noninterest bearing deposits2,282,642      2,040,105     
Accrued interest and other liabilities59,989      75,034     
Total noninterest bearing liabilities2,342,631      2,115,139     
Stockholders' Equity772,575      684,739     
Total Liabilities and Stockholders' Equity$8,283,681      $8,118,198     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $155,264      $152,012   
Net interest spread(1)    3.96%     3.98%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(3)    4.15%     4.15%
Interest bearing liabilities to earning assets68.51%     72.24%    
            
Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)(3)           
Net interest income, fully tax-equivalent (non-GAAP)  $155,264      $152,012   
Adjustments for tax-equivalent interest(1)  (7,656)     (6,187)  
Net interest income (GAAP)  $147,608      $145,825   
            
Average earning assets$7,544,609      $7,361,775     
Annualized net interest margin (GAAP)  3.95%     3.98%  
Annualized net interest margin, fully tax-equivalent (non-GAAP)  4.15%     4.15%  
            
(1) Computed on a tax-equivalent basis using an effective tax rate of 35%.
(2) Nonaccrual loans are included in the average loans outstanding.
(3) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP.


HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
 As of and For the Quarter Ended
 6/30/20173/31/201712/31/20169/30/20166/30/2016
Total Assets     
Dubuque Bank and Trust Company$1,441,655 $1,436,038 $1,497,775 $1,448,796 $1,473,461 
New Mexico Bank & Trust1,407,991 1,382,480 1,374,647 1,318,203 1,321,113 
Wisconsin Bank & Trust1,035,628 1,033,633 1,065,715 1,068,288 1,080,224 
Premier Valley Bank850,956 854,838 640,684 635,620 629,423 
Centennial Bank and Trust817,859 839,505 901,782 892,723 909,697 
Morrill & Janes Bank and Trust Company748,286 871,819 863,544 862,767 843,069 
Illinois Bank & Trust740,153 746,669 742,173 748,801 742,697 
Arizona Bank & Trust566,339 578,597 582,266 574,561 577,002 
Rocky Mountain Bank476,829 479,121 477,063 481,346 473,583 
Minnesota Bank & Trust216,957 213,789 229,114 238,745 230,004 
Total Portfolio Loans     
Dubuque Bank and Trust Company$884,640 $903,617 $905,242 $906,347 $928,869 
New Mexico Bank & Trust934,734 906,477 924,249 917,679 870,109 
Wisconsin Bank & Trust662,502 644,380 650,254 711,714 732,503 
Premier Valley Bank447,148 440,406 348,879 354,610 376,275 
Centennial Bank and Trust558,573 572,254 609,760 638,006 668,547 
Morrill & Janes Bank and Trust Company                          515,896 546,123 548,544 538,666 522,518 
Illinois Bank & Trust447,887 469,105 473,008 469,236 466,983 
Arizona Bank & Trust377,358 384,028 384,706 385,926 390,078 
Rocky Mountain Bank335,173 330,921 347,839 357,346 362,475 
Minnesota Bank & Trust144,112 142,736 144,098 139,581 144,009 
Total Deposits     
Dubuque Bank and Trust Company$1,178,368 $1,212,899 $1,231,016 $1,182,947 $1,159,942 
New Mexico Bank & Trust1,190,758 1,184,675 1,091,436 1,101,550 1,062,410 
Wisconsin Bank & Trust874,845 868,033 899,676 889,957 911,915 
Premier Valley Bank681,298 708,226 510,142 520,814 514,522 
Centennial Bank and Trust682,872 712,377 733,449 767,128 775,417 
Morrill & Janes Bank and Trust Company627,857 721,075 738,036 676,176 696,073 
Illinois Bank & Trust669,532 641,750 636,419 671,104 653,582 
Arizona Bank & Trust493,419 501,111 477,213 493,331 497,599 
Rocky Mountain Bank416,436 420,067 414,344 420,581 405,888 
Minnesota Bank & Trust193,365 189,324 194,368 214,651 207,228 
Net Income     
Dubuque Bank and Trust Company$3,477 $2,056 $806 $5,112 $4,475 
New Mexico Bank & Trust5,855 4,419 4,061 3,824 5,642 
Wisconsin Bank & Trust3,448 1,968 2,970 3,368 3,399 
Premier Valley Bank2,573 1,306 2,969 1,804 1,695 
Centennial Bank and Trust746 1,366 1,572 925 256 
Morrill & Janes Bank and Trust Company2,210 2,227 2,519 1,707 2,133 
Illinois Bank & Trust1,984 1,991 1,917 2,179 2,397 
Arizona Bank & Trust1,073 1,486 1,305 2,034 2,121 
Rocky Mountain Bank1,732 1,521 1,229 1,456 1,484 
Minnesota Bank & Trust563 591 888 675 559 
      

        

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