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


Highlights

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


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

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

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

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

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

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

Charter Consolidation Update

During the fourth quarter of 2022, the charters of Arizona Bank & Trust and Illinois Bank & Trust were consolidated into HTLF Bank. Citywide Banks, Premier Valley Bank, Minnesota Bank & Trust, Arizona Bank & Trust and Illinois Bank & Trust are now operating as divisions of HTLF Bank. The remaining six charters are expected to be consolidated by the end of 2023. Charter consolidation follows a template that retains the current brands, local leadership and local decision making.

Consolidation restructuring costs are projected to be $19-$20 million with approximately $10 million of expenses remaining to be incurred through 2023. Charter consolidation is designed to eliminate redundancies and improve HTLF’s operating efficiency and capacity to support ongoing product and service enhancements, as well as current and future growth. HTLF realized some operating efficiency and financial benefits in the third and fourth quarters of 2022 with the completion of five charter consolidations, and total benefits are estimated to be approximately $20.0 million annually after the project is completed.

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

Net Interest Income and Net Interest Margin

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

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

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

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

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

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

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

Noninterest Income and Noninterest Expense

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

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

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

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

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

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

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

Total Assets, Total Loans and Total Deposits

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

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

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

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

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

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

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

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

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

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

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

Provision and Allowance

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

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

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

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

  • Provision expense for the year ended December 31, 2022, totaled $4.7 million.
  • Unfunded commitments increased $899.5 million or 23% to $4.73 billion at December 31, 2022 compared to $3.83 billion at December 31, 2021.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $3.4 million for the fourth quarter of 2022 compared to provision benefit of $5.3 million for the fourth quarter of 2021. The total allowance for lending related credit losses was $129.7 million at December 31, 2022, which was 1.13% of total loans as of December 31, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets decreased $5.0 million or 7% to $66.9 million, which was 0.33% of total assets at December 31, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $58.5 million or 0.51% of total loans at December 31, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2020. At December 31, 2022, loans delinquent 30-89 days were 0.04% of total loans compared to 0.07% of total loans at December 31, 2021.

Non-GAAP Financial Measures

This earnings release contains references to financial measures which are not defined by generally accepted accounting principles ("GAAP"). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate the company's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this earnings release with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this earnings release.

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

  • Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
  • Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
  • Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
  • Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
  • Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.

Conference Call Details

HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until January 29, 2024, by logging on to www.htlf.com.

About HTLF

Heartland Financial USA, Inc., operating under the brand name HTLF, is a bank holding company with assets of $20.24 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

Safe Harbor Statement

This release (including any information incorporated herein by reference), and future oral and written statements of the company and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

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

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

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

-FINANCIAL TABLES FOLLOW-


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


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


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


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


 For the Quarter Ended
December 31,
 For the Year Ended
December 31,
  2022   2021   2022   2021 
Average Balances       
Assets$19,913,849  $19,151,691  $19,621,839  $18,508,273 
Loans, net of unearned 11,117,513   9,886,027   10,608,831   9,957,290 
Deposits 17,319,218   16,265,476   17,029,398   15,679,773 
Earning assets 18,175,838   17,681,917   18,021,134   17,025,088 
Interest bearing liabilities 11,980,032   10,207,255   11,437,921   9,969,820 
Common equity 1,548,739   2,061,973   1,738,041   2,020,200 
Total stockholders' equity 1,659,444   2,172,678   1,848,746   2,130,905 
Tangible common equity (non-GAAP)(1) 946,688   1,451,950   1,133,124   1,406,641 
        
Key Performance Ratios       
Annualized return on average assets 1.21%  1.03%  1.08%  1.19%
Annualized return on average common equity (GAAP) 15.02   9.15   11.74   10.49 
Annualized return on average tangible common equity (non-GAAP)(1) 25.19   13.47   18.56   15.59 
Annualized ratio of net charge-offs (recoveries) to average loans (0.06)  0.03   0.11   0.04 
Annualized net interest margin (GAAP) 3.61   3.08   3.32   3.29 
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 3.65   3.12   3.37   3.33 
Efficiency ratio, fully tax-equivalent(1) 54.33   63.86   57.74   59.48 
Annualized ratio of total noninterest expenses to average assets (GAAP) 2.34   2.39   2.26   2.33 
Annualized ratio of core expenses to average assets (non-GAAP)(1) 2.14   2.25   2.16   2.22 
        
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
 As of and for the Quarter Ended
 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Common Share Data         
Book value per common share$38.25  $36.41  $39.19  $42.98  $49.00 
Tangible book value per common share (non-GAAP)(1)$24.09  $22.20  $24.94  $28.66  $34.59 
ASC 320 effect on book value per common share$(14.58) $(15.31) $(11.43) $(6.74) $(0.10)
Common shares outstanding, net of treasury stock 42,467,394   42,444,106   42,439,439   42,369,908   42,275,264 
Tangible common equity ratio (non-GAAP)(1) 5.21%  4.94%  5.56%  6.52%  7.84%
          
Other Selected Trend Information          
Effective tax rate 18.68%  19.97%  22.89%  21.95%  17.16%
Full time equivalent employees 2,002   2,020   2,087   2,208   2,249 
          
Loans Held to Maturity         
Commercial and industrial$3,464,414  $3,278,703  $3,059,519  $2,814,513  $2,645,085 
Paycheck Protection Program ("PPP") 11,025   13,506   23,031   74,065   199,883 
Owner occupied commercial real estate 2,265,307   2,285,973   2,282,833   2,266,076   2,240,334 
Commercial and business lending 5,740,746   5,578,182   5,365,383   5,154,654   5,085,302 
Non-owner occupied commercial real estate 2,330,940   2,219,542   2,321,718   2,161,761   2,010,591 
Real estate construction 1,076,082   996,017   845,045   842,483   856,119 
Commercial real estate lending 3,407,022   3,215,559   3,166,763   3,004,244   2,866,710 
Total commercial lending 9,147,768   8,793,741   8,532,146   8,158,898   7,952,012 
Agricultural and agricultural real estate 920,510   781,354   836,703   766,443   753,753 
Residential mortgage 853,361   852,928   845,270   825,242   829,283 
Consumer 506,713   495,509   464,099   426,802   419,524 
Total loans held to maturity$11,428,352  $10,923,532  $10,678,218  $10,177,385  $9,954,572 
          
Total unfunded loan commitments$4,729,677  $4,664,379  $4,458,874  $4,130,316  $3,830,219 
          
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


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


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Quarter Ended
 December 31, 2022 September 30, 2022 December 31, 2021
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets                 
Securities:                 
Taxable$6,122,313  $53,178 3.45% $6,303,278  $45,648 2.87% $6,730,511  $30,637 1.81%
Nontaxable(1) 890,368   7,762 3.46   951,232   7,802 3.25   964,712   7,082 2.91 
Total securities 7,012,681   60,940 3.45   7,254,510   53,450 2.92   7,695,223   37,719 1.94 
Interest on deposits with other banks and other short-term investments 151,405   1,410 3.69   222,170   1,081 1.93   218,809   86 0.16 
Federal funds sold 739   11 5.91   11            
Loans:(2)                 
Commercial and industrial(1) 3,346,843   45,290 5.37   3,182,134   37,526 4.68   2,614,685   26,465 4.02 
PPP loans 12,252   397 12.86   17,859   363 8.06   302,829   8,106 10.62 
Owner occupied commercial real estate 2,277,055   26,194 4.56   2,272,666   23,601 4.12   2,166,768   22,007 4.03 
Non-owner occupied commercial real estate 2,286,298   29,273 5.08   2,258,424   25,895 4.55   1,996,186   21,744 4.32 
Real estate construction 1,050,802   16,585 6.26   914,520   12,382 5.37   837,716   9,390 4.45 
Agricultural and agricultural real estate 785,647   10,159 5.13   799,823   8,966 4.45   697,521   7,089 4.03 
Residential mortgage 858,767   9,168 4.24   858,119   8,665 4.01   853,208   8,615 4.01 
Consumer 499,849   7,426 5.89   479,590   6,028 4.99   417,114   4,793 4.56 
Less: allowance for credit losses-loans (106,500)      (102,031)      (118,142)    
Net loans 11,011,013   144,492 5.21   10,681,104   123,426 4.58   9,767,885   108,209 4.40 
Total earning assets 18,175,838   206,853 4.52%  18,157,795   177,957 3.89%  17,681,917   146,014 3.28%
Nonearning Assets 1,738,011       1,617,546       1,469,774     
Total Assets$19,913,849      $19,775,341      $19,151,691     
Interest Bearing Liabilities                 
Savings$9,987,692  $25,950 1.03% $10,059,652  $12,907 0.51% $8,609,596  $2,160 0.10%
Time deposits 1,322,094   6,265 1.88   1,156,908   2,251 0.77   1,048,785   1,008 0.38 
Short-term borrowings 298,804   2,223 2.95   134,974   360 1.06   176,956   123 0.28 
Other borrowings 371,442   5,043 5.39   371,492   4,412 4.71   371,918   3,554 3.79 
Total interest bearing liabilities 11,980,032   39,481 1.31%  11,723,026   19,930 0.67%  10,207,255   6,845 0.27%
Noninterest Bearing Liabilities                 
Noninterest bearing deposits 6,009,432       6,065,729       6,607,095     
Accrued interest and other liabilities 264,941       201,575       164,663     
Total noninterest bearing liabilities 6,274,373       6,267,304       6,771,758     
Equity 1,659,444       1,785,011       2,172,678     
Total Liabilities and Equity$19,913,849      $19,775,341      $19,151,691     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $167,372     $158,027     $139,169  
Net interest spread(1)    3.21%     3.22%     3.01%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)    3.65%     3.45%     3.12%
Interest bearing liabilities to earning assets 65.91%      64.56%      57.73%    
 
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Year Ended
 December 31, 2022 December 31, 2021
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$6,335,586  $169,544 2.68% $6,135,732  $125,010 2.04%
Nontaxable(1) 965,474   30,387 3.15   799,283   24,390 3.05 
Total securities 7,301,060   199,931 2.74   6,935,015   149,400 2.15 
Interest bearing deposits with other banks and other short-term investments 216,786   3,125 1.44   254,630   344 0.14 
Federal funds sold 192   11 5.73   3,457   1 0.03 
Loans:(2)           
Commercial and industrial(1) 3,070,890   140,310 4.57   2,543,514   111,473 4.38 
PPP loans 50,464   6,884 13.64   734,139   40,627 5.53 
Owner occupied commercial real estate 2,272,088   93,936 4.13   1,950,014   81,717 4.19 
Non-owner occupied commercial real estate 2,196,922   99,202 4.52   1,969,910   87,728 4.45 
Real estate construction 923,316   48,258 5.23   824,055   37,891 4.60 
Agricultural and agricultural real estate 778,526   34,064 4.38   681,493   29,822 4.38 
Residential mortgage 852,541   34,276 4.02   846,573   36,768 4.34 
Consumer 464,084   23,058 4.97   407,592   20,201 4.96 
Less: allowance for credit losses-loans (105,735)      (125,304)    
Net loans 10,503,096   479,988 4.57   9,831,986   446,227 4.54 
Total earning assets 18,021,134   683,055 3.79%  17,025,088   595,972 3.50%
Nonearning Assets 1,600,705       1,483,185     
Total Assets$19,621,839      $18,508,273     
Interest Bearing Liabilities           
Savings$9,737,100  $46,623 0.48% $8,311,825  $9,063 0.11%
Time deposits 1,160,538   10,257 0.88   1,137,097   5,734 0.50 
Short-term borrowings 168,404   2,717 1.61   181,165   471 0.26 
Other borrowings 371,879   16,823 4.52   339,733   12,932 3.81 
Total interest bearing liabilities 11,437,921   76,420 0.67%  9,969,820   28,200 0.28%
Noninterest Bearing Liabilities           
Noninterest bearing deposits 6,131,760       6,230,851     
Accrued interest and other liabilities 203,412       176,697     
Total noninterest bearing liabilities 6,335,172       6,407,548     
Equity 1,848,746       2,130,905     
Total Liabilities and Equity$19,621,839      $18,508,273     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $606,635     $567,772  
Net interest spread(1)    3.12%     3.22%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)    3.37%     3.33%
Interest bearing liabilities to earning assets 63.47%      58.56%    
            
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)         
Net income available to common stockholders (GAAP)$58,642  $54,551  $49,861  $41,076  $47,568 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,455   1,466   1,645   1,623   1,713 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$60,097  $56,017  $51,506  $42,699  $49,281 
          
Average common equity (GAAP)$1,548,739  $1,674,306  $1,731,393  $2,003,424  $2,061,973 
Less average goodwill 576,005   576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 26,046   27,902   29,845   31,931   34,018 
Average tangible common equity (non-GAAP)$946,688  $1,070,399  $1,125,543  $1,395,488  $1,451,950 
Annualized return on average common equity (GAAP) 15.02%  12.93%  11.55%  8.32%  9.15%
Annualized return on average tangible common equity (non-GAAP) 25.19%  20.76%  18.35%  12.41%  13.47%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)         
Net Interest Income (GAAP)$165,220  $155,876  $142,461  $134,679  $137,194 
Plus tax-equivalent adjustment(1) 2,152   2,151   1,977   2,119   1,975 
Net interest income, fully tax-equivalent (non-GAAP)$167,372  $158,027  $144,438  $136,798  $139,169 
          
Average earning assets$18,175,838  $18,157,795  $17,987,734  $17,757,067  $17,681,917 
          
Annualized net interest margin (GAAP) 3.61%  3.41%  3.18%  3.08%  3.08%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.65   3.45   3.22   3.12   3.12 
Net purchase accounting discount amortization on loans included in annualized net interest margin 0.03   0.03   0.07   0.05   0.05 
          
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)         
Common equity (GAAP)$1,624,350  $1,545,253  $1,663,363  $1,821,152  $2,071,473 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 25,154   26,995   28,851   30,934   32,988 
Tangible common equity (non-GAAP)$1,023,191  $942,253  $1,058,507  $1,214,213  $1,462,480 
          
Common shares outstanding, net of treasury stock 42,467,394   42,444,106   42,439,439   42,369,908   42,275,264 
Common equity (book value) per share (GAAP)$38.25  $36.41  $39.19  $42.98  $49.00 
Tangible book value per common share (non-GAAP)$24.09  $22.20  $24.94  $28.66  $34.59 
          
Reconciliation of Tangible Common Equity Ratio (non-GAAP)         
Tangible common equity (non-GAAP)$1,023,191  $942,253  $1,058,507  $1,214,213  $1,462,480 
          
Total assets (GAAP)$20,244,228  $19,682,950  $19,658,399  $19,230,879  $19,274,549 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 25,154   26,995   28,851   30,934   32,988 
Total tangible assets (non-GAAP)$19,643,069  $19,079,950  $19,053,543  $18,623,940  $18,665,556 
Tangible common equity ratio (non-GAAP) 5.21%  4.94%  5.56%  6.52%  7.84%
          
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)

For the Quarter Ended
12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Net interest income (GAAP)$165,220  $155,876  $142,461  $134,679  $137,194 
Tax-equivalent adjustment(1) 2,152   2,151   1,977   2,119   1,975 
Fully tax-equivalent net interest income 167,372   158,027   144,438   136,798   139,169 
Noninterest income 29,975   29,181   34,539   34,569   32,730 
Securities (gains)/losses, net 153   1,055   2,089   (2,872)  (1,563)
Unrealized (gain) loss on equity securities, net 7   211   121   283   27 
Valuation adjustment on servicing rights          (1,658)  (502)
Adjusted revenue (non-GAAP)$197,507  $188,474  $181,187  $167,120  $169,861 
          
Total noninterest expenses (GAAP)$117,218  $108,883  $106,479  $110,797  $115,386 
Less:         
Core deposit and customer relationship intangibles amortization 1,841   1,856   2,083   2,054   2,169 
Partnership investment in tax credit projects 3,247   979   737   77   2,549 
(Gain) loss on sales/valuation of assets, net 2,388   (251)  (3,230)  46   214 
Acquisition, integration and restructuring costs 2,442   2,156   2,412   576   1,989 
Core expenses (non-GAAP)$107,300  $104,143  $104,477  $108,044  $108,465 
Efficiency ratio, fully tax-equivalent (non-GAAP) 54.33%  55.26%  57.66%  64.65%  63.86%
          
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)         
Total noninterest expenses (GAAP)$117,218  $108,883  $106,479  $110,797  $115,386 
Core expenses (non-GAAP) 107,300   104,143   104,477   108,044   108,465 
          
Average assets$19,913,849  $19,775,341  $19,559,091  $19,229,872  $19,151,691 
Total noninterest expenses to average assets (GAAP) 2.34%  2.18%  2.18%  2.34%  2.39%
Core expenses to average assets (non-GAAP) 2.14%  2.09%  2.14%  2.28%  2.25%
          
Acquisition, integration and restructuring costs         
Salaries and employee benefits$424  $365  $275  $340  $ 
Occupancy              
Furniture and equipment              
Professional fees 1,587   1,480   1,779   236   1,989 
Advertising 95   131   156       
(Gain) loss on sales/valuations of assets, net              
Other noninterest expenses 336   180   202       
Total acquisition, integration and restructuring costs$2,442  $2,156  $2,412  $576  $1,989 
After tax impact on diluted earnings per share(1)$0.05  $0.04  $0.04  $0.01  $0.05 
          
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
December 31,
 For the Year Ended
December 31,
  2022   2021   2022   2021 
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)       
Net income available to common stockholders (GAAP)$58,642  $47,568  $204,130  $211,873 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,455   1,713   6,189   7,422 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$60,097  $49,281  $210,319  $219,295 
        
Average common equity (GAAP)$1,548,739  $2,061,973  $1,738,041  $2,020,200 
Less average goodwill 576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 26,046   34,018   28,912   37,554 
Average tangible common equity (non-GAAP)$946,688  $1,451,950  $1,133,124  $1,406,641 
Annualized return on average common equity (GAAP) 15.02%  9.15%  11.74%  10.49%
Annualized return on average tangible common equity (non-GAAP) 25.19%  13.47%  18.56%  15.59%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)       
Net Interest Income (GAAP)$165,220  $137,194  $598,236  $560,560 
Plus tax-equivalent adjustment(1) 2,152   1,975   8,399   7,212 
Net interest income, fully tax-equivalent (non-GAAP)$167,372  $139,169  $606,635  $567,772 
        
Average earning assets$18,175,838  $17,681,917  $18,021,134  $17,025,088 
        
Annualized net interest margin (GAAP) 3.61%  3.08%  3.32%  3.29%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.65   3.12   3.37   3.33 
Net purchase accounting discount amortization on loans included in annualized net interest margin 0.03   0.05   0.04   0.09 
        
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
December 31,
 For the Year Ended
December 31,
Reconciliation of Efficiency Ratio (non-GAAP) 2022   2021   2022   2021 
Net interest income (GAAP)$165,220  $137,194  $598,236  $560,560 
Tax-equivalent adjustment(1) 2,152   1,975   8,399   7,212 
Fully tax-equivalent net interest income 167,372   139,169   606,635   567,772 
Noninterest income 29,975   32,730   128,264   128,935 
Securities (gains)/losses, net 153   (1,563)  425   (5,910)
Unrealized (gain) loss on equity securities, net 7   27   622   (58)
Valuation adjustment on servicing rights    (502)  (1,658)  (1,088)
Adjusted revenue (non-GAAP)$197,507  $169,861  $734,288  $689,651 
        
Total noninterest expenses (GAAP)$117,218  $115,386  $443,377  $431,812 
Less:       
Core deposit and customer relationship intangibles amortization 1,841   2,169   7,834   9,395 
Partnership investment in tax credit projects 3,247   2,549   5,040   6,303 
(Gain) loss on sales/valuations of assets, net 2,388   214   (1,047)  588 
Acquisition, integration and restructuring costs 2,442   1,989   7,586   5,331 
Core expenses (non-GAAP)$107,300  $108,465  $423,964  $410,195 
Efficiency ratio, fully tax-equivalent (non-GAAP) 54.33%  63.86%  57.74%  59.48%
        
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)       
Total noninterest expenses (GAAP)$117,218  $115,386  $443,377  $431,812 
Core expenses (non-GAAP) 107,300   108,465   423,964   410,195 
        
Average assets$19,913,849  $19,151,691  $19,621,839  $18,508,273 
Total noninterest expenses to average assets (GAAP) 2.34%  2.39%  2.26%  2.33%
Core expenses to average assets (non-GAAP) 2.14%  2.25%  2.16%  2.22%
        
Acquisition, integration and restructuring costs       
Salaries and employee benefits$424  $  $1,404  $578 
Occupancy          10 
Furniture and equipment          655 
Professional fees 1,587   1,989   5,082   2,867 
Advertising 95      382   173 
(Gain)/loss on sales/valuations of assets, net          39 
Other noninterest expenses 336      718   1,009 
Total acquisition, integration and restructuring costs$2,442  $1,989  $7,586  $5,331 
After tax impact on diluted earnings per share(1)$0.05  $0.05  $0.14  $0.13 
        
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


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