Highlights

  • Quarterly net income available to common stockholders of $45.2 million in comparison with $27.9 million for the second quarter of the prior year, an increase of $17.3 million or 62%
  • Diluted earnings per common share of $1.26 in comparison with $0.85 for the second quarter of the prior year, an increase of $0.41 or 48%
  • Net interest margin of 4.06%, fully tax-equivalent (non-GAAP)(1) of 4.10%
  • Return on average common equity of 12.56% and return on average tangible common equity (non-GAAP)(1) of 19.52%
  • Tangible common equity ratio (non-GAAP)(1) of 8.92% in comparison to 7.46% at June 30, 2018
  • Completed the acquisition of Blue Valley Ban Corp. on May 10, 2019
  • Closed on the sale of Dubuque Bank and Trust Company's residential mortgage servicing portfolio
  • Completed the sale of two branches at Dubuque Bank and Trust Company, two branches at Illinois Bank & Trust, and one branch at Citywide Banks
 Quarter Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Net income available to common stockholders (in millions)$45.2  $27.9  $76.7  $51.1 
Diluted earnings per common share1.26  0.85  2.17  1.61 
        
Return on average assets1.55% 1.05% 1.35% 1.01%
Return on average common equity12.56  9.81  11.13  9.58 
Return on average tangible common equity (non-GAAP)(1)19.52  15.50  17.49  14.70 
Net interest margin4.06  4.23  4.09  4.21 
Net interest margin, fully tax-equivalent (non-GAAP)(1)4.10  4.30  4.14  4.28 
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)64.81  64.94  65.01  66.48 

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

"Heartland set new quarterly and year-to-date net income records for the period ended June 30, 2019. Net income of $45.2 million represents a 62 percent increase over the second quarter of 2018, while year-to-date net income of $76.7 million represents a 50 percent increase over the previous year."
Lynn B. Fuller, executive operating chairman, Heartland Financial USA, Inc.

DUBUQUE, Iowa, July 29, 2019 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $45.2 million, or $1.26 per diluted common share, for the quarter ended June 30, 2019, compared to $27.9 million, or $0.85 per diluted common share, for the second quarter of 2018. Return on average common equity was 12.56% and return on average assets was 1.55% for the second quarter of 2019, compared to 9.81% and 1.05%, respectively, for the same quarter in 2018.

Net income available to common stockholders for the six months ended June 30, 2019, was $76.7 million or $2.17 per diluted common share, compared to $51.1 million or $1.61 per diluted common share for the six months ended June 30, 2018. Return on average common equity was 11.13% and return on average assets was 1.35% for the first six months of 2019, compared to 9.58% and 1.01% for the same period in 2018.

Commenting on Heartland’s first quarter results, Lynn B. Fuller, Heartland’s executive operating chairman, said, "Heartland set new quarterly and year-to-date net income records for the period ended June 30, 2019. Net income of $45.2 million represents a 62 percent increase over the second quarter of 2018, while year-to-date net income of $76.7 million represents a 50 percent increase over the previous year."

On May 10, 2019, Heartland completed the acquisition of Blue Valley Ban Corp ("BVBC") and its wholly-owned subsidiary, Bank of Blue Valley, headquartered in Overland Park, Kansas. Based on Heartland's closing common stock price of $44.78 per share on May 10, 2019, the aggregate consideration paid to BVBC common shareholders was $92.3 million, which was paid by delivery of Heartland common stock. Immediately following the closing of the transaction, Bank of Blue Valley was merged with and into Heartland's wholly-owned Kansas subsidiary, Morrill & Janes Bank and Trust Company, and the combined entity operates under the Bank of Blue Valley brand. As of the closing date, BVBC had, at fair value, total assets of $766.2 million, total loans held to maturity of $542.0 million, and total deposits of $617.1 million. Heartland also assumed, at fair value, $16.1 million of trust preferred debt. The systems conversion for this transaction is expected to occur in the third quarter of 2019.

In keeping with its focus on core businesses and execution of strategic priorities, during the second quarter of 2019, Heartland completed the sale of two branches of Dubuque Bank and Trust Company, two branches of Illinois Bank & Trust and one branch of Citywide Banks, which resulted in a reduction of loans of $27.1 million and deposits of $107.8 million. On April 30, 2019, Dubuque Bank and Trust Company closed on the sale of substantially all its mortgage servicing rights to PNC Bank, N.A. The mortgage servicing rights had a book value of $21.0 million and an estimated fair value of $37.1 million as of March 31, 2019. In the agreement, which includes customary terms and conditions, Dubuque Bank and Trust Company is providing interim servicing of the loans until the transfer date, which is expected to be in August 2019.

Heartland is utilizing a portion of the net gains from these sales transactions, which totaled approximately $19.8 million and are recorded in the gain/loss on sales/valuations of assets, net, on the consolidated income statement, to invest in several new technology and process improvement projects. These projects include system upgrades, process automation, and expansion of online and mobile banking capabilities.

"We are excited about the technology and process improvement projects that are currently underway. We believe these projects will allow us to focus on growing our core business, improve our efficiency, and reduce our compliance and operational risks," said Bruce K. Lee, Heartland's president and chief executive officer.

Net Interest Income Increases, Net Interest Margin Decreases, from Second Quarter of 2018

Net interest margin, expressed as a percentage of average earning assets, was 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2019, compared to 4.12% (4.18% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2019 and 4.23% (4.30% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2018.

"Our fully tax-equivalent net interest margin declined eight basis points during the second quarter of 2019, compared to the first quarter, primarily due to increased deposit market rates. We will remain competitive, yet disciplined in our deposit pricing strategies as we navigate through the ever-changing interest rate environment," Lee said.

Growth in total interest income on a tax-equivalent basis was primarily due to recent increases in market interest rates and the increase in average earning assets. Total interest income for the second quarter of 2019 was $127.0 million compared to $113.4 million recorded in the second quarter of 2018, an increase of $13.6 million or 12%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.3 million for the second quarter of 2019 and $1.6 million for the second quarter of 2018. With these adjustments, total interest income on a tax-equivalent basis was $128.3 million for the second quarter of 2019, an increase of $13.3 million or 12%, compared to total interest income on a tax-equivalent basis of $115.0 million for the second quarter of 2018. Average earning assets of $10.55 billion increased $937.4 million or 10% from the second quarter of 2018, which was primarily attributable to recent acquisitions. The average rate on earning assets increased 8 basis points to 4.88% for the second quarter of 2019 compared to 4.80% for the same quarter in 2018.

Increases in total interest expense were primarily due to recent increases in market interest rates and deposit growth from recent acquisitions. Total interest expense for the second quarter of 2019 was $20.3 million, an increase of $8.3 million or 69% from $12.0 million in the second quarter of 2018. The average interest rate paid on Heartland's interest bearing liabilities increased to 1.18% for the second quarter of 2019 compared to 0.78% for the second quarter of 2018, which was primarily due to recent increases in market interest rates. Average interest bearing deposits increased $713.3 million or 12% to $6.50 billion for the quarter ended June 30, 2019, from $5.79 billion in the same quarter in 2018, which was primarily attributable to recent acquisitions. The average interest rate paid on Heartland's interest bearing deposits increased 44 basis points to 0.99% for the second quarter of 2019 compared to 0.55% for the same quarter in 2018. Average borrowings decreased $46.0 million or 11% to $369.3 million during the second quarter of 2019 from $415.3 million during the same quarter in 2018. The average interest rate paid on Heartland's borrowings was 4.52% for the second quarter of 2019 compared to 3.88% in the second quarter of 2018.

Net interest income was $106.7 million during the second quarter of 2019 compared to $101.4 million during the second quarter of 2018, an increase of $5.3 million or 5%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $108.0 million during the second quarter of 2019 compared to net interest income on a tax-equivalent basis of $103.0 million during the second quarter of 2018, an increase of $5.0 million or 5%.

Noninterest Income Increases and Noninterest Expense Decreases from Second Quarter of 2018

Total noninterest income was $32.1 million during the second quarter of 2019 compared to $27.6 million during the second quarter of 2018, an increase of $4.4 million or 16%. Significant changes by noninterest income category were:

  • Service charges and fees increased $2.6 million or 21% to $14.6 million for the second quarter of 2019 compared to $12.1 million for the same quarter of 2018. Service charges related to credit card income increased $1.2 million or 37% to $4.3 million for the second quarter of 2019 from $3.0 million for the same quarter of 2018. The remainder of the increase in service charges was primarily attributable to Heartland's larger customer base as a result of recent acquisitions.
  • Securities gains, net, totaled $3.6 million for the second quarter of 2019 compared to net securities losses of $259,000 in the second quarter of 2018.
  • Net gains on sale of loans held for sale totaled $4.3 million during the second quarter of 2019 compared to $6.8 million during the same quarter in 2018, which was a decrease of $2.5 million or 36%, primarily due to the outsourcing of Heartland's legacy mortgage lending operations in the fourth quarter of 2018.
  • Other noninterest income totaled $1.7 million for the second quarter of 2019 compared to $1.2 million for the second quarter of 2018, which was an increase of $515,000 or 44%. Included in noninterest income for the second quarter of 2019 was a recovery of $266,000 on an acquired loan that was charged off prior to acquisition.

For the second quarter of 2019, total noninterest expense was $75.1 million compared to $88.9 million during the second quarter of 2018, a decrease of $13.8 million or 16%. Significant changes by noninterest expense category were:

  • Professional fees increased $4.3 million or 41% to $15.0 million for the second quarter of 2019 compared to $10.6 million for the same period in 2018. Included in this increase for the second quarter of 2019 was $2.9 million of expenses related to Heartland's technology and process improvement projects.
  • Core deposit and customer relationship intangibles amortization increased $1.0 million to $3.3 million for the second quarter of 2019 compared to $2.3 million for the second quarter of 2018, which was primarily due to recent acquisitions.
  • Net gains on sales/valuations of assets totaled $18.3 million for the second quarter of 2019 compared to net losses on sales/valuations of assets of $1.5 million for the second quarter of 2018. Net gains from the branch sales totaled $6.5 million, and the gain on the sale of the mortgage servicing rights totaled $13.3 million. Excluding these gains, net losses on sales/valuations of assets totaled $1.5 million for the second quarter of 2019.
  • Other noninterest expenses were $12.6 million for the second quarter of 2019 compared to $11.1 million for the second quarter of 2018, which was an increase of $1.5 million or 14%. Included in this increase was a write-down of $1.5 million on a partnership investment that qualifies for solar energy tax credits.

Heartland's effective tax rate was 23.12% for the second quarter of 2019 compared to 21.09% for the second quarter of 2018. Included in Heartland's second quarter 2019 tax calculation were solar energy tax credits of $911,000. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $281,000 for the second quarter of 2019 compared to $307,000 for the second quarter of 2018. Tax-exempt interest income as a percentage of pre-tax income declined to 8.09% during the second quarter of 2019 from 16.77% during the second quarter of 2018.

Loans and Deposits Decrease Since December 31, 2018

Total assets were $12.16 billion at June 30, 2019, an increase of $752.3 million or 7% from $11.41 billion at year-end 2018. Excluding $766.2 million of assets acquired at fair value in the BVBC transaction, total assets decreased $13.9 million or less than 1% since year-end 2018. Securities represented 22% and 24% of total assets at June 30, 2019, and December 31, 2018, respectively.

Total loans held to maturity were $7.85 billion at June 30, 2019, compared to $7.41 billion at year-end 2018, an increase of $445.4 million or 6%. This change includes $542.0 million of total loans held to maturity acquired at fair value in the BVBC transaction. During the first quarter of 2019, Heartland classified $32.1 million of loans as held for sale in conjunction with the branch sales. Excluding the reclassification of loans to held for sale and the BVBC transaction, total loans held to maturity decreased $64.6 million or 1% since December 31, 2018. Loan changes by category were:

  • Commercial and commercial real estate loans totaled $6.23 billion at June 30, 2019, compared to $5.73 billion at December 31, 2018, which was an increase of $498.7 million or 9%. Excluding $14.9 million of commercial and commercial real estate loans classified as held for sale during the first quarter and $480.1 million of loans acquired in the BVBC transaction, commercial and commercial real estate loans increased $33.4 million or 1% since year-end.
  • Agricultural and agricultural real estate loans totaled $549.4 million at June 30, 2019, compared to $565.4 million at December 31, 2018, which was a decrease of $16.0 million or 3%. Excluding $6.6 million of agricultural and agricultural real estate loans classified as held for sale during the first quarter of 2019 and $1.8 million of loans acquired in the BVBC transaction, agricultural and agricultural real estate loans decreased $11.2 million or 2% since December 31, 2018.
  • Residential mortgage loans decreased $59.9 million or 9% to $613.7million at June 30, 2019, from $673.6 million at December 31, 2018. Excluding $2.0 million of residential mortgage loans classified as held for sale during the first quarter of 2019 and $17.2 million of loans acquired in the BVBC transaction, residential mortgage loans decreased $75.1 million or 11% since year-end.
  • Consumer loans increased $21.6 million or 5% to $461.8 million at June 30, 2019, compared to $440.2 million at December 31, 2018. Excluding $8.6 million of loans classified as held for sale during the first quarter of 2019 and $42.9 million of loans acquired in the BVBC transaction, consumer loans decreased $12.6 million or 3% since year-end.

"We were pleased to see growth again in our commercial and commercial real estate loan portfolios. The declines in the residential mortgage and consumer loans continued to be primarily the result of customers refinancing loans due to recent mortgage interest rate decreases," said Lee.

Total deposits were $10.11 billion as of June 30, 2019, compared to $9.40 billion at year-end 2018, an increase of $712.1 million or 8%. This increase includes $617.1 million of deposits acquired at fair value in the BVBC transaction. During the first quarter of 2019, Heartland classified $77.0 million of deposits as held for sale in conjunction with the branch sales. Exclusive of the reclassification of deposits to held for sale and the deposits acquired at fair value in the BVBC transaction, total deposits increased $172.0 million or 2% since December 31, 2018. Deposit changes by category were:

  • Demand deposits increased $162.0 million or 5% to $3.43 billion at June 30, 2019, compared to $3.26 billion at December 31, 2018. Excluding $164.9 million of demand deposits acquired in the BVBC transaction and $17.3 million of demand deposits classified as held for sale in the first quarter of 2019, demand deposits increased $14.4 million or less than 1% since year-end 2018.
  • Savings deposits increased $425.5 million or 8% to $5.53 billion at June 30, 2019, from $5.11 billion at December 31, 2018. Excluding savings deposits of $346.2 million acquired in the BVBC transaction and $47.8 million of savings deposits classified as held for sale in the first quarter of 2019, savings deposits increased $127.2 million or 2% since year-end 2018.
  • Time deposits increased $124.6 million or 12% to $1.15 billion at June 30, 2019 from $1.02 billion at December 31, 2018. Excluding time deposits of $106.0 million acquired in the BVBC transaction and $11.9 million of time deposits classified as held for sale in the first quarter of 2019, time deposits increased $30.4 million or 3% since year-end 2018. The increase in time deposits was primarily due to an increase in brokered time deposits of $30.9 million.

"Organic non-time deposit growth was $141.6 million for the first six months of 2019, which represents a 2 percent increase since year-end 2018. Non-time deposits represented 89 percent of total deposits at June 30, 2019," Lee stated.

Nonperforming Assets Increase Since December 31, 2018

Nonperforming assets increased $7.3 million or 9% to $86.6 million or 0.71% of total assets at June 30, 2019, compared to $79.3 million or 0.69% of total assets at December 31, 2018. Nonperforming loans were $79.9 million or 1.02% of total loans at June 30, 2019, compared to $72.7 million or 0.98% of total loans at December 31, 2018. The increase is primarily related to two agribusiness relationships that were originated in Heartland's Midwestern markets and one commercial relationship that was originated in one of Heartland's Western markets. At June 30, 2019, loans delinquent 30-89 days were 0.31% of total loans compared to 0.21% of total loans at December 31, 2018.

The allowance for loan losses at June 30, 2019, was 0.81% of loans and 79.91% of nonperforming loans, compared to 0.84% of loans and 85.27% of nonperforming loans at December 31, 2018.

Non-GAAP Financial Measures

This press 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 Heartland'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 press 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 press release.

Below are the non-GAAP measures included in this press release, management's reason for including each measure and the method of calculating each measure:

  • Annualized return on average tangible common equity is net income available to common stockholders plus  core deposit and customer relationship intangibles amortization, net of tax, divided by average common stockholders' 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 financial condition and capital strength.
  • Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this press release.
  • Tangible book value per common share is total common stockholders' 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 stockholders' 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 use of equity, financial condition and capital strength.

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 28, 2020, 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 $12.16 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 116 banking locations serving 84 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 in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, 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 as they impact 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 and Heartland's ability to successfully integrate acquired banks; (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,
 2019 2018 2019 2018
Interest Income       
Interest and fees on loans$106,027  $96,787  $206,483  $182,438 
Interest on securities:       
Taxable16,123  12,270  31,999  23,847 
Nontaxable2,554  3,584  5,647  7,163 
Interest on federal funds sold    4   
Interest on deposits with other banks and other short-term investments

2,299  768  3,591  1,175 
Total Interest Income127,003  113,409  247,724  214,623 
Interest Expense       
Interest on deposits16,138  7,983  29,351  13,749 
Interest on short-term borrowings338  547  1,227  815 
Interest on other borrowings3,819  3,470  7,483  7,066 
Total Interest Expense20,295  12,000  38,061  21,630 
Net Interest Income106,708  101,409  209,663  192,993 
Provision for loan losses4,918  4,831  6,553  9,094 
Net Interest Income After Provision for Loan Losses101,790  96,578  203,110  183,899 
Noninterest Income       
Service charges and fees14,629  12,072  27,423  22,151 
Loan servicing income1,338  1,807  3,067  3,561 
Trust fees4,825  4,615  9,299  9,295 
Brokerage and insurance commissions1,028  877  1,762  1,784 
Securities gains/(losses), net3,580  (259) 5,155  1,182 
Unrealized gain on equity securities, net112  71  370  43 
Net gains on sale of loans held for sale4,343  6,800  7,519  10,851 
Valuation adjustment on servicing rights(364) (216) (953) (218)
Income on bank owned life insurance888  700  1,787  1,314 
Other noninterest income1,682  1,167  3,349  2,387 
Total Noninterest Income32,061  27,634  58,778  52,350 
Noninterest Expense       
Salaries and employee benefits49,995  50,758  100,280  99,468 
Occupancy6,436  6,315  13,043  12,358 
Furniture and equipment3,220  3,184  5,912  5,933 
Professional fees14,968  10,632  26,347  20,080 
Advertising2,661  2,145  4,986  4,085 
Core deposit and customer relationship intangibles amortization3,313  2,274  6,155  4,137 
Other real estate and loan collection expenses162  948  863  1,680 
(Gain)/loss on sales/valuations of assets, net(18,286) 1,528  (21,290) 1,331 
Restructuring expenses    3,227  2,564 
Other noninterest expenses12,629  11,098  23,805  20,892 
Total Noninterest Expense75,098  88,882  163,328  172,528 
Income Before Income Taxes58,753  35,330  98,560  63,721 
Income taxes13,584  7,451  21,894  12,574 
Net Income45,169  27,879  76,666  51,147 
Preferred dividends  (13)   (26)
Net Income Available to Common Stockholders$45,169  $27,866  $76,666  $51,121 
Earnings per common share-diluted$1.26  $0.85  $2.17  $1.61 
Weighted average shares outstanding-diluted35,879,259  32,830,751  35,295,407  31,746,126 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Interest Income         
Interest and fees on loans$106,027  $100,456  $105,700  $105,733  $96,787 
Interest on securities:         
Taxable16,123  15,876  15,851  14,433  12,270 
Nontaxable2,554  3,093  3,467  3,490  3,584 
Interest on federal funds sold  4       
Interest on deposits with other banks and other short-term investments

2,299  1,292  1,285  1,238  768 
Total Interest Income127,003  120,721  126,303  124,894  113,409 
Interest Expense         
Interest on deposits16,138  13,213  11,826  10,092  7,983 
Interest on short-term borrowings338  889  417  464  547 
Interest on other borrowings3,819  3,664  3,777  3,660  3,470 
Total Interest Expense20,295  17,766  16,020  14,216  12,000 
Net Interest Income106,708  102,955  110,283  110,678  101,409 
Provision for loan losses4,918  1,635  9,681  5,238  4,831 
Net Interest Income After Provision for Loan Losses101,790  101,320  100,602  105,440  96,578 
Noninterest Income         
Service charges and fees14,629  12,794  13,660  12,895  12,072 
Loan servicing income1,338  1,729  2,061  1,670  1,807 
Trust fees4,825  4,474  4,599  4,499  4,615 
Brokerage and insurance commissions1,028  734  1,618  1,111  877 
Securities gains/(losses), net3,580  1,575  48  (145) (259)
Unrealized gain on equity securities, net112  258  115  54  71 
Net gains on sale of loans held for sale4,343  3,176  3,189  7,410  6,800 
Valuation adjustment on servicing rights(364) (589) (58) 230  (216)
Income on bank owned life insurance888  899  587  892  700 
Other noninterest income1,682  1,667  1,226  1,149  1,167 
Total Noninterest Income32,061  26,717  27,045  29,765  27,634 
Noninterest Expense         
Salaries and employee benefits49,995  50,285  46,729  49,921  50,758 
Occupancy6,436  6,607  6,622  6,348  6,315 
Furniture and equipment3,220  2,692  3,126  3,470  3,184 
Professional fees14,968  11,379  10,630  12,800  10,632 
Advertising2,661  2,325  2,726  2,754  2,145 
Core deposit and customer relationship intangibles amortization3,313  2,842  2,592  2,626  2,274 
Other real estate and loan collection expenses162  701  574  784  948 
(Gain)/loss on sales/valuations of assets, net(18,286) (3,004) (35) 912  1,528 
Restructuring expenses  3,227       
Other noninterest expenses12,629  11,176  15,857  12,924  11,098 
Total Noninterest Expense75,098  88,230  88,821  92,539  88,882 
Income Before Income Taxes58,753  39,807  38,826  42,666  35,330 
Income taxes13,584  8,310  6,685  8,956  7,451 
Net Income45,169  31,497  32,141  33,710  27,879 
Preferred dividends      (13) (13)
Net Income Available to Common Stockholders$45,169  $31,497  $32,141  $33,697  $27,866 
Earnings per common share-diluted$1.26  $0.91  $0.93  $0.97  $0.85 
Weighted average shares outstanding-diluted35,879,259  34,699,839  34,670,180  34,644,187  32,830,751 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Assets         
Cash and due from banks$198,664  $174,198  $223,135  $196,847  $193,069 
Interest bearing deposits with other banks and other short-term investments443,475  318,303  50,495  240,528  194,937 
Cash and cash equivalents642,139  492,501  273,630  437,375  388,006 
Time deposits in other financial institutions4,430  4,675  4,672  5,836  6,803 
Securities:         
Carried at fair value2,561,887  2,400,460  2,450,709  2,274,215  2,197,117 
Held to maturity, at cost88,166  88,089  236,283  239,908  244,271 
Other investments, at cost31,366  27,506  28,396  26,656  26,725 
Loans held for sale34,575  69,716  119,801  77,727  55,684 
Loans:         
Held to maturity7,853,051  7,331,544  7,407,697  7,365,493  7,477,697 
 Allowance for loan losses(63,850) (62,639) (61,963) (61,221) (61,324)
Loans, net7,789,201  7,268,905  7,345,734  7,304,272  7,416,373 
Premises, furniture and equipment, net198,329  190,215  194,676  198,224  199,959 
Goodwill427,097  391,668  391,668  391,668  391,668 
Core deposit and customer relationship intangibles, net52,718  44,637  47,479  50,071  52,698 
Servicing rights, net7,180  28,968  31,072  32,039  31,996 
Cash surrender value on life insurance170,421  163,764  162,892  162,216  159,302 
Other real estate, net6,646  5,391  6,153  11,908  11,074 
Other assets146,135  136,000  114,841  123,017  120,244 
Total Assets$12,160,290  $11,312,495  $11,408,006  $11,335,132  $11,301,920 
Liabilities and Equity         
Liabilities         
Deposits:         
 Demand$3,426,758  $3,118,909  $3,264,737  $3,427,819  $3,399,598 
 Savings5,533,503  5,145,929  5,107,962  4,958,430  4,864,773 
 Time1,148,296  1,088,104  1,023,730  1,125,914  1,224,773 
Total deposits10,108,557  9,352,942  9,396,429  9,512,163  9,489,144 
Deposits held for sale  118,564  106,409  50,312   
Short-term borrowings107,260  104,314  227,010  131,139  229,890 
Other borrowings282,863  268,312  274,905  277,563  258,708 
Accrued expenses and other liabilities139,823  96,261  78,078  83,562  68,431 
Total Liabilities10,638,503  9,940,393  10,082,831  10,054,739  10,046,173 
Stockholders' Equity         
Preferred equity        938 
Common stock36,690  34,604  34,477  34,473  34,438 
Capital surplus837,150  745,596  743,095  742,080  740,128 
Retained earnings642,808  603,506  579,252  553,662  524,786 
Accumulated other comprehensive income/(loss)5,139  (11,604) (31,649) (49,822) (44,543)
Total Equity1,521,787  1,372,102  1,325,175  1,280,393  1,255,747 
Total Liabilities and Equity$12,160,290  $11,312,495  $11,408,006  $11,335,132  $11,301,920 


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,
 2019 2018 2019 2018
Average Balances       
Assets$11,708,538  $10,643,306  $11,489,095  $10,204,061 
Loans, net of unearned7,648,562  7,123,182  7,531,360  6,826,018 
Deposits9,790,756  9,018,945  9,574,680  8,637,165 
Earning assets10,552,166  9,614,800  10,342,229  9,238,391 
Interest bearing liabilities6,872,449  6,205,187  6,747,990  5,951,175 
Common stockholders' equity1,442,388  1,139,876  1,389,612  1,076,083 
Total stockholders' equity1,442,388  1,140,814  1,389,612  1,077,021 
Tangible common stockholders' equity981,878  767,732  940,217  745,937 
        
Key Performance Ratios       
Annualized return on average assets1.55% 1.05% 1.35% 1.01%
Annualized return on average common equity (GAAP)12.56% 9.81% 11.13% 9.58%
Annualized return on average tangible common equity (non-GAAP)(1)19.52% 15.50% 17.49% 14.70%
Annualized ratio of net charge-offs to average loans0.19% 0.12% 0.12% 0.10%
Annualized net interest margin (GAAP)4.06% 4.23% 4.09% 4.21%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)4.10% 4.30% 4.14% 4.28%
Efficiency ratio, fully tax-equivalent(1)64.81% 64.94% 65.01% 66.48%
        
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)       
Net income available to common stockholders (GAAP)$45,169  $27,866  $76,666  $51,121 
Plus core deposit and customer relationship intangibles amortization, net of tax(2)2,617  1,796  4,862  3,268 
Adjusted net income available to common stockholders (non-GAAP)$47,786  $29,662  $81,528  $54,389 
        
Average common stockholders' equity (GAAP)$1,442,388  $1,139,876  $1,389,612  $1,076,083 
Less average goodwill410,642  325,781  401,207  288,185 
Less average core deposit and customer relationship intangibles, net49,868  46,363  48,188  41,961 
Average tangible common equity (non-GAAP)$981,878  767,732  940,217  745,937 
Annualized return on average common equity (GAAP)12.56% 9.81% 11.13% 9.58%
Annualized return on average tangible common equity (non-GAAP)19.52% 15.50% 17.49% 14.70%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)       
Net Interest Income (GAAP)$106,708  $101,409  $209,663  $192,993 
Plus tax-equivalent adjustment(2)1,268  1,575  2,680  3,119 
Net interest income, tax-equivalent (non-GAAP)

$107,976  $102,984  $212,343  $196,112 
        
Average earning assets$10,552,166  $9,614,800  $10,342,229  $9,238,391 
        
Annualized net interest margin (GAAP)4.06% 4.23% 4.09% 4.21%
Annualized net interest margin, fully tax-equivalent (non-GAAP)

4.10% 4.30% 4.14% 4.28%
        
(1) Refer to the "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) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Average Balances         
Assets$11,708,538  $11,267,214  $11,371,247  $11,291,289  $10,643,306 
Loans, net of unearned7,648,562  7,412,855  7,436,497  7,462,176  7,123,182 
Deposits9,790,756  9,356,204  9,596,807  9,530,743  9,018,945 
Earning assets10,552,166  10,129,957  10,225,409  10,154,591  9,614,800 
Interest bearing liabilities6,872,449  6,622,149  6,557,185  6,544,949  6,205,187 
Common stockholders' equity1,442,388  1,336,250  1,290,691  1,263,226  1,139,876 
Total stockholders' equity1,442,388  1,336,250  1,290,691  1,263,795  1,140,814 
Tangible common stockholders' equity (non-GAAP)981,878  898,092  849,851  819,966  767,732 
          
Key Performance Ratios         
Annualized return on average assets1.55% 1.13% 1.12% 1.18% 1.05%
Annualized return on average common equity (GAAP)12.56% 9.56% 9.88% 10.58% 9.81%
Annualized return on average tangible common
equity (non-GAAP)(1)
19.52% 15.24% 15.96% 17.31% 15.50%
Annualized ratio of net charge-offs to average loans0.19% 0.05% 0.48% 0.28% 0.12%
Annualized net interest margin (GAAP)4.06% 4.12% 4.28% 4.32% 4.23%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)4.10% 4.18% 4.34% 4.38% 4.30%
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)64.81% 65.23% 59.35% 62.51% 64.94%
          
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)         
Net income available to common stockholders (GAAP)$45,169  $31,497  $32,141  $33,697  $27,866 
Plus core deposit and customer relationship intangibles amortization, net of tax(2)2,617  2,245  2,048  2,075  1,796 
Adjusted net income available to common stockholders (non-GAAP)$47,786  $33,742  $34,189  $35,772  $29,662 
          
Average common stockholders' equity (GAAP)$1,442,388  $1,336,250  $1,290,691  $1,263,226  $1,139,876 
  Less average goodwill410,642  391,668  391,668  391,668  325,781 
Less average core deposit and customer relationship intangibles, net49,868  46,490  49,172  51,592  46,363 
Average tangible common stockholders' equity (non-GAAP)$981,878  $898,092  $849,851  $819,966  $767,732 
Annualized return on average common equity (GAAP)12.56% 9.56% 9.88% 10.58% 9.81%
Annualized return on average tangible common equity (non-GAAP)19.52% 15.24% 15.96% 17.31% 15.50%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)         
Net Interest Income (GAAP)$106,708  $102,955  $110,283  $110,678  $101,409 
  Plus tax-equivalent adjustment(2)1,268  1,412  1,565  1,544  1,575 
Net interest income, fully tax-equivalent (non-GAAP)$107,976  $104,367  $111,848  $112,222  $102,984 
          
Average earning assets$10,552,166  $10,129,957  $10,225,409  $10,154,591  $9,614,800 
          
Annualized net interest margin (GAAP)4.06% 4.12% 4.28% 4.32% 4.23%
Annualized net interest margin, fully tax-equivalent (non-GAAP)4.10% 4.18% 4.34% 4.38% 4.30%
 
(1) Refer to the "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) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
June 30,
 For the Six Months Ended
June 30,
Reconciliation of Efficiency Ratio (non-GAAP)2019 2018 2019 2018
Net interest income (GAAP)$106,708  $101,409  $209,663  $192,993 
Tax-equivalent adjustment(1)1,268  1,575  2,680  3,119 
Fully tax-equivalent net interest income107,976  102,984  212,343  196,112 
Noninterest income32,061  27,634  58,778  52,350 
Securities (gains)/losses, net(3,580) 259  (5,155) (1,182)
Unrealized gain on equity securities, net(112) (71) (370) (43)
Valuation adjustment on servicing rights364  216  953  218 
Adjusted income (non-GAAP)$136,709  $131,022  $266,549  $247,455 
        
Total noninterest expenses (GAAP)$75,098  $88,882  $163,328  $172,528 
Less:       
Core deposit and customer relationship intangibles amortization3,313  2,274  6,155  4,137 
Partnership investment in tax credit projects1,465    1,940   
(Gain)/loss on sales/valuations of assets, net(18,286) 1,528  (21,290) 1,331 
  Restructuring expenses    3,227  2,564 
Adjusted noninterest expenses (non-GAAP)$88,606  $85,080  $173,296  $164,496 
        
Efficiency ratio, fully tax-equivalent (non-GAAP)64.81% 64.94% 65.01% 66.48%


Reconciliation of Efficiency Ratio (non-GAAP)For the Quarter Ended
6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Net interest income (GAAP)$106,708  $102,955  $110,283  $110,678  $101,409 
Tax-equivalent adjustment(1)1,268  1,412  1,565  1,544  1,575 
Fully tax-equivalent net interest income107,976  104,367  111,848  112,222  102,984 
Noninterest income32,061  26,717  27,045  29,765  27,634 
Securities (gains)/losses, net(3,580) (1,575) (48) 145  259 
Unrealized gain on equity securities, net(112) (258) (115) (54) (71)
Valuation adjustment on servicing rights364  589  58  (230) 216 
Adjusted income (non-GAAP)$136,709  $129,840  $138,788  $141,848  $131,022 
          
Total noninterest expenses (GAAP)$75,098  $88,230  $88,821  $92,539  $88,882 
Less:         
Core deposit and customer relationship intangibles amortization3,313  2,842  2,592  2,626  2,274 
Partnership investment in tax credit projects1,465  475  3,895  338   
(Gain)/loss on sales/valuation of assets, net(18,286) (3,004) (35) 912  1,528 
Restructuring expenses  3,227       
Adjusted noninterest expenses (non-GAAP)$88,606  $84,690  $82,369  $88,663  $85,080 
          
Efficiency ratio, fully tax-equivalent (non-GAAP)64.81% 65.23% 59.35% 62.51% 64.94%
          
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
 As of and for the Quarter Ended
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Common Share Data         
Book value per common share$41.48  $39.65  $38.44  $37.14  $36.44 
Tangible book value per common share (non-GAAP)(1)$28.40  $27.04  $25.70  $24.33  $23.53 
Common shares outstanding, net of treasury stock36,690,061  34,603,611  34,477,499  34,473,029  34,438,445 
Tangible common equity ratio (non-GAAP)(1)8.92% 8.60% 8.08% 7.70% 7.46%
          
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)         
Common stockholders' equity (GAAP)$1,521,787  $1,372,102  $1,325,175  $1,280,393  $1,254,809 
Less goodwill427,097  391,668  391,668  391,668  391,668 
Less core deposit and customer relationship intangibles, net52,718  44,637  47,479  50,071  52,698 
Tangible common stockholders' equity (non-GAAP)$1,041,972  $935,797  $886,028  $838,654  $810,443 
          
Common shares outstanding, net of treasury stock36,690,061  34,603,611  34,477,499  34,473,029  34,438,445 
Common stockholders' equity (book value) per share (GAAP)$41.48  $39.65  $38.44  $37.14  $36.44 
Tangible book value per common share (non-GAAP)$28.40  $27.04  $25.70  $24.33  $23.53 
          
Reconciliation of Tangible Common Equity Ratio (non-GAAP)         
Tangible common stockholders' equity (non-GAAP)$1,041,972  $935,797  $886,028  $838,654  $810,443 
          
Total assets (GAAP)$12,160,290  $11,312,495  $11,408,006  $11,335,132  $11,301,920 
  Less goodwill427,097  391,668  391,668  391,668  391,668 
 Less core deposit and customer relationship intangibles, net52,718  44,637  47,479  50,071  52,698 
Total tangible assets (non-GAAP)$11,680,475  $10,876,190  $10,968,859  $10,893,393  $10,857,554 
Tangible common equity ratio (non-GAAP)8.92% 8.60% 8.08% 7.70% 7.46%
          
Loan Data         
Loans held to maturity:         
Commercial and commercial real estate$6,230,372  $5,745,051  $5,731,712  $5,610,953  $5,721,138 
Residential mortgage613,707  630,433  673,603  676,941  683,051 
Agricultural and agricultural real estate549,404  544,805  565,408  574,048  562,353 
Consumer461,802  412,573  440,158  506,181  512,899 
Unearned discount and deferred loan fees(2,234) (1,318) (3,184) (2,630) (1,744)
Total loans held to maturity$7,853,051  $7,331,544  $7,407,697  $7,365,493  $7,477,697 
          
Other Selected Trend Information         
Effective tax rate23.12% 20.88% 17.22% 20.99% 21.09%
Full time equivalent employees2,040  1,976  2,045  2,124  2,216 
          
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of and for the Quarter Ended
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Allowance for Loan Losses         
Balance, beginning of period$62,639  $61,963  $61,221  $61,324  $58,656 
Provision for loan losses4,918  1,635  9,681  5,238  4,831 
Charge-offs(4,780) (1,950) (9,777) (6,120) (3,164)
Recoveries1,073  991  838  779  1,001 
Balance, end of period$63,850  $62,639  $61,963  $61,221  $61,324 
          
Asset Quality         
Nonaccrual loans$79,619  $77,294  $71,943  $73,060  $69,376 
Loans past due ninety days or more285  1,706  726  154  54 
Other real estate owned6,646  5,391  6,153  11,908  11,074 
Other repossessed assets39  8  459  495  499 
Total nonperforming assets$86,589  $84,399  $79,281  $85,617  $81,003 
          
Performing troubled debt restructured loans$3,539  $3,460  $4,026  $4,180  $4,012 
          
Nonperforming Assets Activity         
Balance, beginning of period$84,399  $79,281  $85,617  $81,003  $77,052 
Net loan charge offs(3,707) (959) (8,939) (5,341) (2,163)
New nonperforming loans13,688  15,314  17,332  16,965  16,254 
Acquired nonperforming assets230        7,973 
Reduction of nonperforming loans(1)(6,246) (6,238) (6,065) (5,085) (15,696)
OREO/Repossessed assets sales proceeds(1,288) (2,092) (8,390) (1,064) (1,541)
OREO/Repossessed assets writedowns, net(487) (462) (230) (886) (993)
Net activity at Citizens Finance Co.  (445) (44) 25  117 
Balance, end of period$86,589  $84,399  $79,281  $85,617  $81,003 
 
Asset Quality Ratios         
Ratio of nonperforming loans to total loans1.02% 1.08% 0.98% 0.99% 0.93%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans1.06% 1.12% 1.04% 1.05% 0.98%
Ratio of nonperforming assets to total assets0.71% 0.75% 0.69% 0.76% 0.72%
Annualized ratio of net loan charge-offs to average loans0.19% 0.05% 0.48% 0.28% 0.12%
Allowance for loan losses as a percent of loans0.81% 0.85% 0.84% 0.83% 0.82%
Allowance for loan losses as a percent of nonperforming loans79.91% 79.29% 85.27% 83.62% 88.32%
Loans delinquent 30-89 days as a percent of total loans0.31% 0.47% 0.21% 0.62% 0.30%
          
(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, 2019 March 31, 2019 June 30, 2018
 Average
Balance
 Interest Rate Average Balance Interest Rate Average
Balance
 Interest Rate
Earning Assets                 
Securities:                 
Taxable$2,217,863  $16,123  2.92% $2,169,016  $15,876  2.97% $1,890,468  $12,270  2.60%
Nontaxable(1)324,164  3,233  4.00  391,724  3,915  4.05  448,844  4,537  4.05 
Total securities2,542,027  19,356  3.05  2,560,740  19,791  3.13  2,339,312  16,807  2.88 
Interest on deposits with other banks and other short-term investments424,262  2,299  2.17  218,445  1,292  2.40  211,414  768  1.46 
Federal funds sold      560  4  2.90       
Loans:(2)                 
Commercial and commercial real estate(1)5,968,424  82,328  5.53  5,745,180  78,083  5.51  5,403,447  71,301  5.29 
Residential mortgage676,465  8,238  4.88  673,682  7,179  4.32  685,005  7,562  4.43 
Agricultural and agricultural real estate(1)558,128  7,581  5.45  554,506  7,301  5.34  542,249  6,850  5.07 
Consumer445,545  6,517  5.87  439,487  6,479  5.98  492,481  9,192  7.49 
Fees on loans  1,952      2,004      2,504   
Less: allowance for loan losses(62,685)     (62,643)     (59,108)    
Net loans7,585,877  106,616  5.64  7,350,212  101,046  5.58  7,064,074  97,409  5.53 
Total earning assets10,552,166  128,271  4.88% 10,129,957  122,133  4.89% 9,614,800  114,984  4.80%
Nonearning Assets1,156,372      1,137,257      1,028,506     
Total Assets$11,708,538      $11,267,214      $10,643,306     
Interest Bearing Liabilities(3)                 
Savings$5,360,355  $11,895  0.89% $5,121,179  $10,083  0.80% $4,748,306  $5,535  0.47%
Time deposits1,142,842  4,243  1.49  1,034,744  3,130  1.23  1,041,590  2,448  0.94 
Short-term borrowings92,977  338  1.46  195,390  889  1.85  152,576  547  1.44 
Other borrowings276,275  3,819  5.54  270,836  3,664  5.49  262,715  3,470  5.30 
Total interest bearing liabilities6,872,449  20,295  1.18% 6,622,149  17,766  1.09% 6,205,187  12,000  0.78%
Noninterest Bearing Liabilities(3)                 
Noninterest bearing deposits3,287,559      3,200,281      3,229,049     
Accrued interest and other liabilities106,142      108,534      68,256     
Total noninterest bearing liabilities3,393,701      3,308,815      3,297,305     
Stockholders' Equity1,442,388      1,336,250      1,140,814     
Total Liabilities and Stockholders' Equity$11,708,538      $11,267,214      $10,643,306     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $107,976      $104,367      $102,984   
Net interest spread(1)    3.70%     3.80%     4.02%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets    4.10%     4.18%     4.30%
                  
(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) Includes deposits held for sale.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Six Months Ended
 June 30, 2019 June 30, 2018
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$2,193,576  $31,999  2.94% $1,847,858  $23,847  2.60%
Nontaxable(1)357,757  7,148  4.03  448,743  9,067  4.07 
Total securities2,551,333  39,147  3.09  2,296,601  32,914  2.89 
Interest bearing deposits with other banks and other short-term investments321,922  3,591  2.25  173,349  1,175  1.37 
Federal funds sold278  4  2.90       
Loans:(2)           
Commercial and commercial real estate(1)5,857,419  160,411  5.52  5,158,483  134,114  5.24 
Residential mortgage675,081  15,417  4.61  663,711  14,413  4.38 
Agricultural and agricultural real estate(1)556,327  14,882  5.39  528,093  12,854  4.91 
Consumer442,533  12,996  5.92  475,731  17,852  7.57 
Fees on loans  3,956      4,420   
Less: allowance for loan losses(62,664)     (57,577)    
Net loans7,468,696  207,662  5.61  6,768,441  183,653  5.47 
Total earning assets10,342,229  250,404  4.88  9,238,391  217,742  4.75 
Nonearning Assets1,146,866      965,670     
Total Assets$11,489,095      $10,204,061     
Interest Bearing Liabilities(3)           
Savings$5,241,428  $21,978  0.85% $4,554,484  $9,326  0.41%
Time deposits1,089,091  7,373  1.37  975,129  4,423  0.91 
Short-term borrowings143,901  1,227  1.72  150,171  815  1.09 
Other borrowings273,570  7,483  5.52  271,391  7,066  5.25 
Total interest bearing liabilities6,747,990  38,061  1.14  5,951,175  21,630  0.73 
Noninterest Bearing Liabilities(3)           
Noninterest bearing deposits3,244,161      3,107,552     
Accrued interest and other liabilities107,332      68,313     
Total noninterest bearing liabilities3,351,493      3,175,865     
Stockholders' Equity1,389,612      1,077,021     
Total Liabilities and Stockholders' Equity$11,489,095      $10,204,061     
Net interest income, fully tax-equivalent (non-GAAP)(1)  $212,343      $196,112   
Net interest spread(1)    3.74%     4.02%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets    4.14%     4.28%
            
(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) Includes deposits held for sale.


HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
 As of and For the Quarter Ended
 6/30/20193/31/201912/31/20189/30/20186/30/2018
Total Assets     
Citywide Banks$2,261,591 $2,214,105 $2,307,284 $2,300,018 $2,295,261 
Dubuque Bank and Trust Company1,680,539 1,550,487 1,480,914 1,523,447 1,500,108 
New Mexico Bank & Trust1,534,236 1,500,024 1,492,555 1,465,020 1,466,311 
Bank of Blue Valley(2)1,319,226 564,833 571,012 592,786 602,630 
First Bank & Trust1,088,796 1,099,759 1,109,929 1,112,464 1,123,559 
Wisconsin Bank & Trust1,042,463 1,031,305 1,114,352 1,051,160 1,034,075 
Illinois Bank & Trust852,830 810,357 804,907 795,132 815,905 
Premier Valley Bank847,076 855,473 849,696 851,358 846,215 
Arizona Bank & Trust732,783 669,806 658,714 650,032 653,596 
Minnesota Bank & Trust631,339 657,187 666,564 649,179 660,469 
Rocky Mountain Bank503,126 489,135 490,453 492,063 504,243 
Total Deposits(1)     
Citywide Banks$1,833,259 $1,802,701 $1,848,373 $1,905,830 $1,867,626 
Dubuque Bank and Trust Company1,157,881 1,245,553 1,214,541 1,217,976 1,136,431 
New Mexico Bank & Trust1,346,304 1,313,708 1,307,464 1,267,844 1,242,673 
Bank of Blue Valley(2)1,077,183 473,712 489,471 511,154 498,798 
First Bank & Trust844,793 857,313 861,629 875,170 887,181 
Wisconsin Bank & Trust892,020 872,090 927,821 891,167 874,035 
Illinois Bank & Trust769,577 735,101 715,482 726,790 753,022 
Premier Valley Bank689,384 676,849 639,194 706,125 696,460 
Arizona Bank & Trust646,728 593,089 574,762 550,530 558,895 
Minnesota Bank & Trust515,310 546,706 560,399 544,513 561,257 
Rocky Mountain Bank438,349 426,503 424,700 429,167 443,359 
Net Income     
Citywide Banks$8,120 $7,283 $7,005 $7,762 $7,018 
Dubuque Bank and Trust Company17,353 5,011 6,002 4,458 4,426 
New Mexico Bank & Trust7,634 7,847 6,007 7,104 7,043 
Bank of Blue Valley(2)3,505 1,172 324 165 961 
First Bank & Trust3,099 2,792 3,334 3,932 1,925 
Wisconsin Bank & Trust2,516 4,707 3,229 3,735 2,470 
Illinois Bank & Trust1,751 2,632 2,180 2,419 2,421 
Premier Valley Bank2,763 2,411 2,930 3,006 2,664 
Arizona Bank & Trust3,110 2,780 1,951 2,660 3,623 
Minnesota Bank & Trust1,980 1,454 1,038 2,167 581 
Rocky Mountain Bank779 1,358 1,230 1,210 1,185 
 
(1) Includes deposits held for sale.
(2) Formerly known as Morrill & Janes Bank and Trust Company.

 

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