Heartland Financial USA, Inc. ("HTLF") Reports Quarterly and Year to Date Results as of September 30, 2023


Highlights and Developments

  • Quarterly net income available to common stockholders of $46.1 million
  • Quarterly diluted earnings per common share of $1.08, which includes $.04 of acquisition, integration and restructuring costs
  • Quarterly loan growth of $154.5 million or 1%
  • Total customer deposit growth during the quarter of $152.3 million or 1%
  • Nonperforming assets to total assets and 30-89 day loan delinquencies remained unchanged at 0.33% and 0.12%, respectively
  • Nonperforming loans to total loans decreased to 0.44% from 0.54% at June 30, 2023 and 0.60% at September 30, 2022
  • Completed the consolidation of two bank charters during the quarter, and the final charter was consolidated following the end of the quarter
 Quarter Ended
September 30,
 Nine Months Ended September 30,
  2023   2022   2023   2022 
Net income available to common stockholders (in millions)$46.1  $54.6  $144.2  $145.5 
Diluted earnings per common share 1.08   1.28   3.37   3.42 
        
Return on average assets 0.94%  1.13%  1.00%  1.04%
Return on average common equity 10.47   12.93   11.28   10.80 
Return on average tangible common equity (non-GAAP)(1) 16.34   20.76   17.83   16.79 
Net interest margin 3.14   3.41   3.23   3.22 
Net interest margin, fully tax-equivalent (non-GAAP)(1) 3.18   3.45   3.27   3.27 
Efficiency ratio 63.77   58.84   61.86   61.39 
Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)(1) 59.95   55.26   58.98   58.99 

(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 another solid quarter highlighted by loan and customer deposit growth, reduced wholesale deposits and continued stable credit quality while effectively managing core expenses. We are also pleased that we successfully completed the final charter consolidation and look forward to 2024 with this significant project behind us."
Bruce K. Lee, President and Chief Executive Officer, HTLF

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

  • Net income available to common stockholders of $46.1 million compared to $54.6 million, a decrease of $8.5 million or 16%.
  • Earnings per diluted common share of $1.08 compared to $1.28, a decrease of $0.20 or 16%.
  • Earnings per diluted common share included $0.04 of acquisition, integration and restructuring costs in both quarters.
  • Net interest income of $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
  • Return on average assets was 0.94% compared to 1.13%.
  • Return on average common equity was 10.47% compared to 12.93%.
  • Return on average tangible common equity (non-GAAP) was 16.34% compared to 20.76%.

"HTLF delivered another solid quarter highlighted by loan and customer deposit growth, reduced wholesale deposits and continued stable credit quality while effectively managing core expenses. We are also pleased that we successfully completed the final charter consolidation and look forward to 2024 with this significant project behind us," said Bruce K. Lee, president and chief executive officer of HTLF.

HTLF reported the following results for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022:

  • Net income available to common stockholders of $144.2 million compared to $145.5 million, a decrease of $1.2 million or 1%.
  • Earnings per diluted common share of $3.37 compared to $3.42, a decrease of $0.05 or 1%.
  • Earnings per diluted common share included $0.11 of acquisition, integration and restructuring costs compared to $0.10.
  • Net interest income of $445.1 million compared to $433.0 million, an increase of $12.1 million or 3%.
  • Return on average assets was 1.00% compared to 1.04%.
  • Return on average common equity was 11.28% compared to 10.80%.
  • Return on average tangible common equity (non-GAAP) was 17.83% compared to 16.79%.

Charter Consolidation Update

During the third quarter of 2023, Rocky Mountain Bank and New Mexico Bank & Trust were consolidated into HTLF Bank. Subsequent to September 30, 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which marked the completion of charter consolidation. Total consolidation restructuring costs are projected to be $18-$19 million with approximately $2-$3 million of expenses remaining to be incurred in 2023.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023 compared to 3.19% (3.23% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2023, and 3.41% (3.45% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2022.

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

  • Total interest income was $245.4 million compared to $175.8 million, an increase of $69.6 million or 40%, primarily attributable to an increase in average earning assets and higher yields.
  • Total interest income on a tax-equivalent basis (non-GAAP) was $247.6 million, an increase of $69.6 million or 39% from $178.0 million.
  • Average earning assets increased $281.2 million or 2% to $18.44 billion compared to $18.16 billion.
  • The average rate on earning assets increased 144 basis points to 5.33% from 3.89%, primarily due to recent interest rate increases.

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

  • Total interest expense was $99.7 million, an increase of $79.7 million from $19.9 million, due to increases in the average interest rate paid and the average balance of interest bearing liabilities.
  • The average interest rate paid on interest bearing liabilities increased 234 basis points to 3.01% from 0.67%.
  • Average interest bearing deposits increased $1.47 billion or 13% to $12.68 billion from $11.22 billion, primarily due to an increase of $1.36 billion in wholesale deposits.
  • The average interest rate paid on interest bearing deposits increased 236 basis points to 2.90% from 0.54%.
  • Average borrowings decreased $30.8 million or 6% to $475.7 million from $506.5 million, and the average interest rate paid on borrowings was 5.78% compared to 3.74%.

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

  • Net interest income totaled $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $147.9 million compared to $158.0 million, a decrease of $10.1 million or 6%.

Noninterest Income and Noninterest Expense

Total noninterest income was $28.4 million during the third quarter of 2023 compared to $29.2 million during the third quarter of 2022, a decrease of $798,000 or 3%. Significant changes within the noninterest income category for the third quarter of 2023 compared to the third quarter of 2022 were:

  • Service charges and fees increased $1.3 million or 7% to $18.6 million from $17.3 million.
  • Trust fees decreased $638,000 or 12% to $4.7 million from $5.4 million, primarily attributable to reduced retirement plan services income following the sale of the recordkeeping and administrative functions of HTLF Retirement Plan Services.
  • Net security losses totaled $114,000 compared to net losses of $1.1 million.
  • Net gains on sales of loans held for sale decreased $927,000 or 51% to $905,000 from $1.8 million, primarily attributable to a decrease in residential mortgage loans sold to the secondary market.
  • Other noninterest income decreased $1.4 million or 69% to $619,000 compared to $2.0 million. During the third quarter of 2022, HTLF received a $637,000 recovery on an acquired loan that had been charged off prior to acquisition.

Total noninterest expense was $111.1 million during the third quarter of 2023 compared to $108.9 million during the third quarter of 2022, which was an increase of $2.2 million or 2%. Significant changes within the noninterest expense category for the third quarter of 2023 compared to the third quarter of 2022 were:

  • Salaries and employee benefits totaled $62.3 million compared to $62.7 million, a decrease of $399,000 or 1%. The decrease was attributable to a reduction of full-time equivalent employees and lower incentive compensation expense, mostly offset by higher salary expense. Full-time equivalent employees totaled 1,965 compared to 2,020, a decrease of 55 or 3%.
  • FDIC insurance assessments totaled $3.3 million compared to $2.0 million, an increase of $1.3 million due to assessment rate changes that were effective with the first quarter 2023 assessment.
  • Other noninterest expenses totaled $15.3 million compared to $13.6 million, an increase of $1.7 million or 12%. Credit card processing expenses increased $1.4 million or 49% to $4.3 million from $2.9 million.

The effective tax rate was 21.89% for the third quarter of 2023 compared to 19.97% for third quarter of 2022. The following items impacted the third quarter 2023 and 2022 tax calculations:

  • Various tax credits of $1.6 million compared to $1.7 million.
  • Tax expense of $1.6 million compared to $258,000 resulting from the disallowed interest expense related to tax-exempt loans and securities, aligning with increases in total interest expense.
  • Tax-exempt interest income as a percentage of pre-tax income of 13.14% compared to 11.45%.

Total Assets, Total Loans and Total Deposits

Total assets were $20.13 billion at September 30, 2023, a decrease of $114.4 million or 1% from $20.24 billion at year-end 2022. Securities represented 32% and 35% of total assets at September 30, 2023, and December 31, 2022, respectively.

Total loans held to maturity were $11.87 billion at September 30, 2023, compared to $11.72 billion at June 30, 2023, and $11.43 billion at December 31, 2022, representing increases of $154.5 million or 1%, and $444.1 million or 4%, respectively.

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

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $31.7 million or 1% to $6.03 billion compared to $5.99 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $142.0 million or 4% to $3.69 billion compared to $3.54 billion.
  • Residential mortgage loans decreased $14.6 million or 2% to $813.8 million from $828.4 million.

Significant changes by loan category at September 30, 2023 compared to December 31, 2022 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $284.5 million or 5% to $6.03 billion compared to $5.74 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $278.9 million or 8% to $3.69 billion compared to $3.41 billion.
  • Agricultural and agricultural real estate loans decreased $78.4 million or 9% to $842.1 million compared to $920.5 million.
  • Residential mortgage loans decreased $39.6 million or 5% to $813.8 million compared to $853.4 million.

Total deposits were $17.10 billion as of September 30, 2023, compared to $17.66 billion at June 30, 2023, which was a decrease of $562.6 million or 3%. Total deposits were $17.10 billion as of September 30, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $412.0 million or 2%.

Total customer deposits were $14.80 billion as of September 30, 2023 compared to $14.65 billion at June 30, 2023, which was an increase of $152.3 million or 1%. Significant customer deposit changes by category at September 30, 2023, compared to June 30, 2023, included:

  • Customer demand deposits decreased $105.0 million or 2% to $4.79 billion compared to $4.90 billion.
  • Customer savings deposits increased $40.8 million or 1% to $8.19 billion compared to $8.15 billion.
  • Customer time deposits increased $216.5 million or 14% to $1.81 billion compared to $1.60 billion.

Total customer deposits were $14.80 billion at September 30, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $426.2 million or 3%. Significant customer deposit changes by category at September 30, 2023 compared to December 31, 2022, included:

  • Customer demand deposits decreased $908.5 million or 16% to $4.79 billion compared to $5.70 billion.
  • Customer savings deposits decreased $480.5 million or 6% to $8.19 billion compared to $8.67 billion.
  • Customer time deposits increased $962.8 million to $1.81 billion compared to $851.5 million.

Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was a decrease of $714.8 million or 24% from $3.02 billion at June 30, 2023. Significant wholesale and institutional deposit changes by category at September 30, 2023, compared to June 30, 2023, included:

  • Wholesale and institutional savings deposits decreased $58.5 million or 9% to $564.5 million compared to $623.0 million.
  • Wholesale time deposits decreased $656.3 million or 27% to $1.74 billion compared to $2.40 billion.

Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was an increase of $14.2 million or 1% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at September 30, 2023 compared to December 31, 2022 included:

  • Wholesale and institutional savings deposits decreased $759.0 million or 57% to $564.5 million compared to $1.32 billion.
  • Wholesale time deposits increased $773.2 million or 80% to $1.74 billion compared to $965.7 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the third quarter of 2023 was $2.7 million, which was a decrease of $1.7 million from $4.4 million recorded in the third quarter of 2022.

The allowance for credit losses for loans totaled $110.2 million at September 30, 2023 and $109.5 million at December 31, 2022. The following items impacted the allowance for credit losses for loans at September 30, 2023:

  • Provision expense for the nine months ended September 30, 2023, totaled $12.7 million.
  • Net charge-offs of $12.0 million were recorded for the first nine months of 2023.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments decreased $2.7 million or 13% to $17.5 million at September 30, 2023, from $20.2 million at December 31, 2022, primarily due to a reduction of $85.6 million in unfunded commitments for construction loans, which carry the highest loss rate. Total unfunded commitments increased $84.1 million or 2% to $4.81 billion at September 30, 2023 compared to $4.73 billion at December 31, 2022.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $1.5 million for the third quarter of 2023 compared to $5.5 million for the third quarter of 2022. The total allowance for lending related credit losses was $127.7 million or 1.08% of total loans at September 30, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.

Nonperforming Assets

Nonperforming assets decreased $753,000 or 1% to $66.2 million or 0.33% of total assets at September 30, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. Nonperforming loans were $51.8 million or 0.44% of total loans at September 30, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At September 30, 2023, loans delinquent 30-89 days were 0.12% of total loans compared to 0.04% of total loans at December 31, 2022. Other real estate owned, net, increased $6.0 million or 71% to $14.4 million at September 30, 2023 from $8.4 million at December 31, 2022. HTLF added one property with a book value of $11.3 million to other real estate during the third quarter of 2023.

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

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

  • Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Adjusted efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
  • Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
  • Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
  • Adjusted tangible common equity ratio is total common equity less goodwill, core deposit and customer relationship intangibles, net, and accumulated other comprehensive loss divided by total assets less goodwill and core deposit and customer relationship intangibles, net, and the fair value adjustment on securities and derivatives, net of deferred taxes. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength, composition and trends on a comparable basis by excluding the variability of the fair value of securities and derivatives, net of deferred taxes.
  • 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 October 29, 2024, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., is a Denver, Colorado-based bank holding company operating under the brand name HTLF, with assets of $20.13 billion as of September 30, 2023. HTLF's banks serve communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

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

Any statements about HTLF's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of HTLF and its management. Although HTLF may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which HTLF currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of HTLF’s Annual Report on Form 10-K for the year ended December 31, 2022, include, among others:

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

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF's business, financial condition and results of operations. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in HTLF's filings with the SEC.

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
  2023   2022   2023   2022 
Interest Income       
Interest and fees on loans$182,394  $122,913  $505,136  $334,000 
Interest on securities:       
Taxable 54,800   45,648   168,948   116,366 
Nontaxable 6,584   6,164   18,990   17,874 
Interest on federal funds sold 3      3    
Interest on deposits with other banks and short-term investments 1,651   1,081   4,833   1,715 
Total Interest Income 245,432   175,806   697,910   469,955 
Interest Expense       
Interest on deposits 92,744   15,158   231,617   24,665 
Interest on short-term borrowings 1,167   360   4,437   494 
Interest on other borrowings 5,765   4,412   16,756   11,780 
Total Interest Expense 99,676   19,930   252,810   36,939 
Net Interest Income 145,756   155,876   445,100   433,016 
Provision for credit losses 1,516   5,492   9,969   11,983 
Net Interest Income After Provision for Credit Losses 144,240   150,384   435,131   421,033 
Noninterest Income       
Service charges and fees 18,553   17,282   55,316   50,599 
Loan servicing income 278   831   1,403   1,951 
Trust fees 4,734   5,372   15,810   17,130 
Brokerage and insurance commissions 692   649   2,065   2,357 
Capital markets fees 1,845   1,809   8,331   9,719 
Securities losses, net (114)  (1,055)  (1,532)  (272)
Unrealized gain/(loss) on equity securities, net 13   (211)  165   (615)
Net gains on sale of loans held for sale 905   1,832   3,786   8,144 
Valuation adjustment on servicing rights          1,658 
Income on bank owned life insurance 858   694   3,042   1,741 
Other noninterest income 619   1,978   2,489   5,877 
Total Noninterest Income 28,383   29,181   90,875   98,289 
Noninterest Expense       
Salaries and employee benefits 62,262   62,661   186,510   192,867 
Occupancy 6,438   6,794   20,338   21,250 
Furniture and equipment 2,720   2,928   8,698   9,480 
Professional fees 13,616   14,289   41,607   42,286 
FDIC insurance assessments 3,313   1,988   9,627   5,134 
Advertising 1,633   1,554   6,670   4,392 
Core deposit and customer relationship intangibles amortization 1,625   1,856   5,128   5,993 
Other real estate and loan collection expenses, net 481   304   984   577 
(Gain)/loss on sales/valuations of assets, net 108   (251)  (2,149)  (3,435)
Acquisition, integration and restructuring costs 2,429   2,156   5,994   5,144 
Partnership investment in tax credit projects 1,136   979   1,828   1,793 
Other noninterest expenses 15,292   13,625   46,307   40,678 
Total Noninterest Expense 111,053   108,883   331,542   326,159 
Income Before Income Taxes 61,570   70,682   194,464   193,163 
Income taxes 13,479   14,118   44,181   41,637 
Net Income 48,091   56,564   150,283   151,526 
Preferred dividends (2,013)  (2,013)  (6,038)  (6,038)
Net Income Available to Common Stockholders$46,078  $54,551  $144,245  $145,488 
Earnings per common share-diluted$1.08  $1.28  $3.37  $3.42 
Weighted average shares outstanding-diluted 42,812,563   42,643,940   42,769,872   42,596,301 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Interest Income         
Interest and fees on loans$182,394  $168,899  $153,843  $143,970  $122,913 
Interest on securities:         
Taxable 54,800   58,172   55,976   53,178   45,648 
Nontaxable 6,584   6,378   6,028   6,132   6,164 
Interest on federal funds sold 3         11    
Interest on deposits with other banks and short-term investments 1,651   2,051   1,131   1,410   1,081 
Total Interest Income 245,432   235,500   216,978   204,701   175,806 
Interest Expense         
Interest on deposits 92,744   81,975   56,898   32,215   15,158 
Interest on short-term borrowings 1,167   848   2,422   2,223   360 
Interest on other borrowings 5,765   5,545   5,446   5,043   4,412 
Total Interest Expense 99,676   88,368   64,766   39,481   19,930 
Net Interest Income 145,756   147,132   152,212   165,220   155,876 
Provision for credit losses 1,516   5,379   3,074   3,387   5,492 
Net Interest Income After Provision for Credit Losses 144,240   141,753   149,138   161,833   150,384 
Noninterest Income         
Service charges and fees 18,553   19,627   17,136   17,432   17,282 
Loan servicing income 278   411   714   790   831 
Trust fees 4,734   5,419   5,657   5,440   5,372 
Brokerage and insurance commissions 692   677   696   629   649 
Capital markets fees 1,845   4,037   2,449   1,824   1,809 
Securities losses, net (114)  (314)  (1,104)  (153)  (1,055)
Unrealized gain/(loss) on equity securities, net 13   (41)  193   (7)  (211)
Net gains on sale of loans held for sale 905   1,050   1,831   888   1,832 
Valuation adjustment on servicing rights              
Income on bank owned life insurance 858   1,220   964   600   694 
Other noninterest income 619   407   1,463   2,532   1,978 
Total Noninterest Income 28,383   32,493   29,999   29,975   29,181 
Noninterest Expense         
Salaries and employee benefits 62,262   62,099   62,149   61,611   62,661 
Occupancy 6,438   6,691   7,209   6,905   6,794 
Furniture and equipment 2,720   3,063   2,915   3,019   2,928 
Professional fees 13,616   15,194   12,797   16,320   14,289 
FDIC insurance assessments 3,313   3,035   3,279   1,866   1,988 
Advertising 1,633   3,052   1,985   1,829   1,554 
Core deposit and customer relationship intangibles amortization 1,625   1,715   1,788   1,841   1,856 
Other real estate and loan collection expenses, net 481   348   155   373   304 
(Gain)/loss on sales/valuations of assets, net 108   (3,372)  1,115   2,388   (251)
Acquisition, integration and restructuring costs 2,429   1,892   1,673   2,442   2,156 
Partnership investment in tax credit projects 1,136   154   538   3,247   979 
Other noninterest expenses 15,292   15,575   15,440   15,377   13,625 
Total Noninterest Expense 111,053   109,446   111,043   117,218   108,883 
Income Before Income Taxes 61,570   64,800   68,094   74,590   70,682 
Income taxes 13,479   15,384   15,318   13,936   14,118 
Net Income 48,091   49,416   52,776   60,654   56,564 
Preferred dividends (2,013)  (2,012)  (2,013)  (2,012)  (2,013)
Net Income Available to Common Stockholders$46,078  $47,404  $50,763  $58,642  $54,551 
Earnings per common share-diluted$1.08  $1.11  $1.19  $1.37  $1.28 
Weighted average shares outstanding-diluted 42,812,563   42,757,603   42,742,878   42,699,752   42,643,940 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of
 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Assets         
Cash and due from banks$248,756  $317,303  $274,354  $309,045  $250,394 
Interest bearing deposits with other banks and short-term investments 99,239   82,884   87,757   54,042   149,466 
Cash and cash equivalents 347,995   400,187   362,111   363,087   399,860 
Time deposits in other financial institutions 1,490   1,490   1,740   1,740   1,740 
Securities:         
Carried at fair value 5,482,687   5,798,041   6,096,657   6,147,144   6,060,331 
Held to maturity, at cost, less allowance for credit losses 835,468   834,673   832,098   829,403   830,247 
Other investments, at cost 90,001   72,291   72,364   74,567   80,286 
Loans held for sale 6,262   14,353   10,425   5,277   9,570 
Loans:         
Held to maturity 11,872,436   11,717,974   11,495,353   11,428,352   10,923,532 
Allowance for credit losses (110,208)  (111,198)  (112,707)  (109,483)  (105,715)
Loans, net 11,762,228   11,606,776   11,382,646   11,318,869   10,817,817 
Premises, furniture and equipment, net 187,436   190,420   191,267   197,330   203,585 
Goodwill 576,005   576,005   576,005   576,005   576,005 
Core deposit and customer relationship intangibles, net 20,026   21,651   23,366   25,154   26,995 
Servicing rights, net          7,840   8,379 
Cash surrender value on life insurance 196,694   195,793   194,419   193,403   193,184 
Other real estate, net 14,362   2,677   7,438   8,401   8,030 
Other assets 609,139   510,359   432,008   496,008   466,921 
Total Assets$20,129,793  $20,224,716  $20,182,544  $20,244,228  $19,682,950 
Liabilities and Equity         
Liabilities         
Deposits:         
Demand$4,792,813  $4,897,858  $5,119,554  $5,701,340  $6,083,563 
Savings 8,754,911   8,772,596   9,256,609   9,994,391   10,060,523 
Time 3,553,269   3,993,089   3,305,183   1,817,278   1,123,035 
Total deposits 17,100,993   17,663,543   17,681,346   17,513,009   17,267,121 
Short-term borrowings 392,634   44,364   92,337   376,117   147,000 
Other borrowings 372,059   372,403   372,097   371,753   371,446 
Accrued expenses and other liabilities 438,577   285,416   207,359   248,294   241,425 
Total Liabilities 18,304,263   18,365,726   18,353,139   18,509,173   18,026,992 
Stockholders' Equity         
Preferred equity 110,705   110,705   110,705   110,705   110,705 
Common stock 42,656   42,645   42,559   42,467   42,444 
Capital surplus 1,088,267   1,087,358   1,084,112   1,080,964   1,079,277 
Retained earnings 1,226,740   1,193,522   1,158,948   1,120,925   1,074,168 
Accumulated other comprehensive loss (642,838)  (575,240)  (566,919)  (620,006)  (650,636)
Total Equity 1,825,530   1,858,990   1,829,405   1,735,055   1,655,958 
Total Liabilities and Equity$20,129,793  $20,224,716  $20,182,544  $20,244,228  $19,682,950 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
 For the Quarter Ended
  9/30/2023   6/30/2023   3/31/2023   12/31/2022   9/30/2022 
Average Balances         
Assets$20,207,920  $20,221,511  $20,118,005  $19,913,849  $19,775,341 
Loans, net of unearned 11,800,064   11,625,442   11,378,078   11,117,513   10,783,135 
Deposits 17,507,813   17,689,138   17,505,867   17,319,218   17,282,289 
Earning assets 18,439,010   18,523,552   18,392,649   18,175,838   18,157,795 
Interest bearing liabilities 13,158,631   13,209,794   12,582,234   11,980,032   11,723,026 
Common equity 1,746,818   1,727,013   1,655,860   1,548,739   1,674,306 
Total stockholders' equity 1,857,523   1,837,718   1,766,565   1,659,444   1,785,011 
Tangible common equity (non-GAAP)(1) 1,149,992   1,128,527   1,055,617   946,688   1,070,399 
          
Key Performance Ratios         
Annualized return on average assets 0.94%  0.98%  1.06%  1.21%  1.13%
Annualized return on average common equity (GAAP) 10.47   11.01   12.43   15.02   12.93 
Annualized return on average tangible common equity (non-GAAP)(1) 16.34   17.33   20.05   25.19   20.76 
Annualized ratio of net charge-offs/(recoveries) to average loans 0.12   0.32   (0.04)  (0.06)  0.00 
Annualized net interest margin (GAAP) 3.14   3.19   3.36   3.61   3.41 
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 3.18   3.23   3.40   3.65   3.45 
Efficiency ratio (GAAP) 63.77   60.93   60.94   60.05   58.84 
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) 59.95   59.88   57.16   54.33   55.26 
Annualized ratio of total noninterest expenses to average assets (GAAP) 2.18   2.17   2.24   2.34   2.18 
Annualized ratio of core expenses to average assets (non-GAAP)(1) 2.08   2.16   2.14   2.14   2.09 
          
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


 For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
  2023   2022   2023   2022 
Average Balances       
Assets$20,207,920  $19,775,341  $20,182,808  $19,523,433 
Loans, net of unearned 11,800,064   10,783,135   11,602,741   10,437,409 
Deposits 17,507,813   17,282,289   17,567,614   16,931,730 
Earning assets 18,439,010   18,157,795   18,451,907   17,969,001 
Interest bearing liabilities 13,158,631   11,723,026   12,985,665   11,255,232 
Common equity 1,746,818   1,674,306   1,710,230   1,801,835 
Total stockholders' equity 1,857,523   1,785,011   1,820,935   1,912,540 
Tangible common stockholders' equity 1,149,992   1,070,399   1,111,724   1,195,952 
        
Key Performance Ratios       
Annualized return on average assets 0.94%  1.13%  1.00%  1.04%
Annualized return on average common equity (GAAP) 10.47   12.93   11.28   10.80 
Annualized return on average tangible common equity (non-GAAP)(1) 16.34   20.76   17.83   16.79 
Annualized ratio of net charge-offs/(recoveries) to average loans 0.12   0.00   0.14   0.17 
Annualized net interest margin (GAAP) 3.14   3.41   3.23   3.22 
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 3.18   3.45   3.27   3.27 
Efficiency ratio (GAAP) 63.77   58.84   61.86   61.39 
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) 59.95   55.26   58.98   58.99 
Total noninterest expenses to average assets (GAAP) 2.18   2.18   2.20   2.23 
Core expenses to average assets (non-GAAP)(1) 2.08   2.09   2.12   2.17 
        
(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
 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Common Share Data         
Book value per common share$40.20  $41.00  $40.38  $38.25  $36.41 
Tangible book value per common share (non-GAAP)(1) 26.23   26.98   26.30   24.09   22.20 
ASC 320 effect on book value per common share (16.27)  (14.04)  (13.35)  (14.58)  (15.31)
          
Common shares outstanding, net of treasury stock 42,656,303   42,644,544   42,558,726   42,467,394   42,444,106 
Tangible common equity ratio (non-GAAP)(1) 5.73%  5.86%  5.72%  5.21%  4.94%
Adjusted tangible common equity ratio (non-GAAP)(1) 8.73%  8.54%  8.37%  8.11%  8.07%
          
Other Selected Trend Information          
Effective tax rate 21.89%  23.74%  22.50%  18.68%  19.97%
Full time equivalent employees 1,965   1,966   1,991   2,002   2,020 
          
Loans Held to Maturity         
Commercial and industrial$3,591,809  $3,590,680  $3,498,345  $3,464,414  $3,278,703 
Paycheck Protection Program ("PPP") 3,750   4,139   8,258   11,025   13,506 
Owner occupied commercial real estate 2,429,659   2,398,698   2,312,538   2,265,307   2,285,973 
Commercial and business lending 6,025,218   5,993,517   5,819,141   5,740,746   5,578,182 
Non-owner occupied commercial real estate 2,656,358   2,530,736   2,421,341   2,330,940   2,219,542 
Real estate construction 1,029,554   1,013,134   1,102,186   1,076,082   996,017 
Commercial real estate lending 3,685,912   3,543,870   3,523,527   3,407,022   3,215,559 
Total commercial lending 9,711,130   9,537,387   9,342,668   9,147,768   8,793,741 
Agricultural and agricultural real estate 842,116   839,817   810,183   920,510   781,354 
Residential mortgage 813,803   828,437   841,084   853,361   852,928 
Consumer 505,387   512,333   501,418   506,713   495,509 
Total loans held to maturity$11,872,436  $11,717,974  $11,495,353  $11,428,352  $10,923,532 
          
Total unfunded loan commitments$4,813,798  $4,905,147  $4,867,925  $4,729,677  $4,664,379 
          
Deposits          
Demand-customer$4,792,813  $4,897,858  $5,119,554  $5,701,340  $6,083,563 
Savings-customer 8,190,430   8,149,596   8,501,337   8,670,898   8,691,545 
Savings-wholesale and institutional 564,481   623,000   755,272   1,323,493   1,368,978 
Total savings 8,754,911   8,772,596   9,256,609   9,994,391   10,060,523 
Time-customer 1,814,335   1,597,849   1,071,476   851,539   973,035 
Time-wholesale 1,738,934   2,395,240   2,233,707   965,739   150,000 
Total time 3,553,269   3,993,089   3,305,183   1,817,278   1,123,035 
Total deposits $17,100,993  $17,663,543  $17,681,346  $17,513,009  $17,267,121 
          
Total customer deposits$14,797,578  $14,645,303  $14,692,367  $15,223,777  $15,748,143 
Total wholesale and institutional deposits 2,303,415   3,018,240   2,988,979   2,289,232   1,518,978 
Total deposits$17,100,993  $17,663,543  $17,681,346  $17,513,009  $17,267,121 
          
(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
  9/30/2023   6/30/2023   3/31/2023   12/31/2022   9/30/2022 
Allowance for Credit Losses-Loans         
Balance, beginning of period$111,198  $112,707  $109,483  $105,715  $101,353 
Provision for credit losses 2,672   7,829   2,184   2,075   4,388 
Charge-offs (3,964)  (9,613)  (2,151)  (2,668)  (938)
Recoveries 302   275   3,191   4,361   912 
Balance, end of period$110,208  $111,198  $112,707  $109,483  $105,715 
          
Allowance for Unfunded Commitments         
Balance, beginning of period$18,636  $21,086  $20,196  $18,884  $17,780 
Provision for credit losses (1,156)  (2,450)  890   1,312   1,104 
Balance, end of period$17,480  $18,636  $21,086  $20,196  $18,884 
          
Allowance for lending related credit losses$127,688  $129,834  $133,793  $129,679  $124,599 
          
Provision for Credit Losses         
Provision for credit losses-loans$2,672  $7,829  $2,184  $2,075  $4,388 
Provision (benefit) for credit losses-unfunded commitments (1,156)  (2,450)  890   1,312   1,104 
Total provision for credit losses$1,516  $5,379  $3,074  $3,387  $5,492 
          
Asset Quality         
Nonaccrual loans$51,304  $61,956  $58,066  $58,231  $64,560 
Loans past due ninety days or more 511   1,459   174   273   678 
Other real estate owned 14,362   2,677   7,438   8,401   8,030 
Other repossessed assets 1   5   24   26    
Total nonperforming assets$66,178  $66,097  $65,702  $66,931  $73,268 
          
Nonperforming Assets Activity          
Balance, beginning of period$66,097  $65,702  $66,931  $73,268  $67,532 
Net loan (charge-offs)/recoveries (3,662)  (9,338)  1,040   1,693   (26)
New nonperforming loans 19,295   19,805   4,626   1,439   8,388 
Reduction of nonperforming loans(1) (14,691)  (5,253)  (5,711)  (8,875)  (2,015)
Net OREO/repossessed assets sales proceeds and losses (861)  (4,819)  (1,184)  (594)  (611)
Balance, end of period$66,178  $66,097  $65,702  $66,931  $73,268 
          
Asset Quality Ratios         
Ratio of nonperforming loans to total loans 0.44%  0.54%  0.51%  0.51%  0.60%
Ratio of nonperforming assets to total assets 0.33   0.33   0.33   0.33   0.37 
Annualized ratio of net loan charge-offs/(recoveries) to average loans 0.12   0.32   (0.04)  (0.06)  0.00 
Allowance for loan credit losses as a percent of loans 0.93   0.95   0.98   0.96   0.97 
Allowance for lending related credit losses as a percent of loans 1.08   1.11   1.16   1.13   1.14 
Allowance for loan credit losses as a percent of nonperforming loans 212.70   175.35   193.52   187.14   162.05 
Loans delinquent 30-89 days as a percent of total loans 0.12   0.12   0.10   0.04   0.10 
          
(1) Includes principal reductions, transfers to performing status and transfers to OREO.


HEARTLAND FINANCIAL USA, INC.  
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Quarter Ended
 September 30, 2023 June 30, 2023 September 30, 2022
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets                 
Securities:                 
Taxable$5,726,057  $54,800 3.80% $5,962,207  $58,172 3.91% $6,303,278  $45,648 2.87%
Nontaxable(1) 881,162   8,085 3.64   895,458   7,896 3.54   951,232   7,802 3.25 
Total securities 6,607,219   62,885 3.78   6,857,665   66,068 3.86   7,254,510   53,450 2.92 
Interest on deposits with other banks and short-term investments 142,301   1,651 4.60   153,622   2,051 5.36   222,170   1,081 1.93 
Federal funds sold 152   3 7.83          11     
Loans:(2)                 
Commercial and industrial(1) 3,610,677   63,001 6.92   3,565,449   56,644 6.37   3,182,134   37,526 4.68 
PPP loans 3,948   11 1.11   6,302   24 1.53   17,859   363 8.06 
Owner occupied commercial real estate 2,412,501   30,127 4.95   2,366,107   28,031 4.75   2,272,666   23,601 4.12 
Non-owner occupied commercial real estate 2,586,011   38,779 5.95   2,462,098   35,583 5.80   2,258,424   25,895 4.55 
Real estate construction 1,027,544   19,448 7.51   1,028,109   18,528 7.23   914,520   12,382 5.37 
Agricultural and agricultural real estate 822,957   12,582 6.07   848,554   12,256 5.79   799,823   8,966 4.45 
Residential mortgage 827,402   9,482 4.55   840,741   9,383 4.48   858,119   8,665 4.01 
Consumer 509,024   9,615 7.49   508,082   9,068 7.16   479,590   6,028 4.99 
Less: allowance for credit losses-loans (110,726)      (113,177)      (102,031)    
Net loans 11,689,338   183,045 6.21   11,512,265   169,517 5.91   10,681,104   123,426 4.58 
Total earning assets 18,439,010   247,584 5.33%  18,523,552   237,636 5.15%  18,157,795   177,957 3.89%
Nonearning Assets 1,768,910       1,697,959       1,617,546     
Total Assets$20,207,920      $20,221,511      $19,775,341     
Interest Bearing Liabilities                 
Savings$8,737,581  $49,195 2.23% $8,935,775  $41,284 1.85% $10,059,652  $12,907 0.51%
Time deposits 3,945,371   43,549 4.38   3,812,330   40,691 4.28   1,156,908   2,251 0.77 
Short-term borrowings 103,567   1,167 4.47   89,441   848 3.80   134,974   360 1.06 
Other borrowings 372,112   5,765 6.15   372,248   5,545 5.97   371,492   4,412 4.71 
Total interest bearing liabilities 13,158,631   99,676 3.01%  13,209,794   88,368 2.68%  11,723,026   19,930 0.67%
Noninterest Bearing Liabilities                 
Noninterest bearing deposits 4,824,861       4,941,033       6,065,729     
Accrued interest and other liabilities 366,905       232,966       201,575     
Total noninterest bearing liabilities 5,191,766       5,173,999       6,267,304     
Equity 1,857,523       1,837,718       1,785,011     
Total Liabilities and Equity$20,207,920      $20,221,511      $19,775,341     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $147,908     $149,268     $158,027  
Net interest spread(1)    2.32%     2.47%     3.22%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets    3.18%     3.23%     3.45%
Interest bearing liabilities to earning assets         71.36%      71.31%      64.56%    
                  
(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
 For the Nine Months Ended
 September 30, 2023 September 30, 2022
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$5,927,026  $168,948 3.81% $6,407,459  $116,366 2.43%
Nontaxable(1) 899,613   23,611 3.51   990,784   22,625 3.05 
Total securities 6,826,639   192,559 3.77   7,398,243   138,991 2.51%
Interest bearing deposits with other banks and other short-term investments 133,910   4,833 4.83   238,819   1,715 0.96 
Federal funds sold 51   3 7.86   7     
Loans:(2)           
Commercial and industrial(1) 3,547,256   169,552 6.39%  2,977,751   95,020 4.27 
PPP loans 6,718   61 1.21   63,342   6,487 13.69 
Owner occupied commercial real estate 2,355,545   84,927 4.82   2,270,486   67,742 3.99 
Non-owner occupied commercial real estate 2,459,965   105,111 5.71   2,166,873   69,929 4.31 
Real estate construction 1,051,298   56,107 7.14   880,354   31,673 4.81 
Agricultural and agricultural real estate 835,673   36,191 5.79   776,127   23,905 4.12 
Residential mortgage 840,143   28,138 4.48   850,444   25,108 3.95 
Consumer 506,143   26,925 7.11   452,032   15,632 4.62 
Less: allowance for credit losses-loans (111,434)      (105,477)    
Net loans 11,491,307   507,012 5.90   10,331,932   335,496 4.34 
Total earning assets 18,451,907   704,407 5.10%  17,969,001   476,202 3.54%
Nonearning Assets 1,730,901       1,554,432     
Total Assets$20,182,808      $19,523,433     
Interest Bearing Liabilities           
Savings$9,130,980  $128,372 1.88% $9,652,651  $20,673 0.29%
Time deposits 3,344,434   103,245 4.13   1,106,095   3,992 0.48 
Short-term borrowings 138,157   4,437 4.29   124,459   494 0.53 
Other borrowings 372,094   16,756 6.02   372,027   11,780 4.23 
Total interest bearing liabilities 12,985,665   252,810 2.60%  11,255,232   36,939 0.44%
Noninterest Bearing Liabilities           
Noninterest bearing deposits 5,092,200       6,172,984     
Accrued interest and other liabilities 284,008       182,677     
Total noninterest bearing liabilities 5,376,208       6,355,661     
Stockholders' Equity 1,820,935       1,912,540     
Total Liabilities and Stockholders' Equity$20,182,808      $19,523,433     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $451,597     $439,263  
Net interest spread(1)    2.50%     3.10%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets    3.27%     3.27%
Interest bearing liabilities to earning assets 70.38%      62.64%    
            
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.  
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
 For the Quarter Ended
  9/30/2023   6/30/2023   3/31/2023   12/31/2022   9/30/2022 
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)         
Net income available to common stockholders (GAAP)$46,078  $47,404  $50,763  $58,642  $54,551 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,284   1,354   1,413   1,455   1,466 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$47,362  $48,758  $52,176  $60,097  $56,017 
          
Average common equity (GAAP)$1,746,818  $1,727,013  $1,655,860  $1,548,739  $1,674,306 
Less average goodwill 576,005   576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 20,821   22,481   24,238   26,046   27,902 
Average tangible common equity (non-GAAP)$1,149,992  $1,128,527  $1,055,617  $946,688  $1,070,399 
Annualized return on average common equity (GAAP) 10.47%  11.01%  12.43%  15.02%  12.93%
Annualized return on average tangible common equity (non-GAAP) 16.34%  17.33%  20.05%  25.19%  20.76%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)         
Net Interest Income (GAAP)$145,756  $147,132  $152,212  $165,220  $155,876 
Plus tax-equivalent adjustment(1) 2,152   2,136   2,209   2,152   2,151 
Net interest income, fully tax-equivalent (non-GAAP)$147,908  $149,268  $154,421  $167,372  $158,027 
Average earning assets$18,439,010  $18,523,552  $18,392,649  $18,175,838  $18,157,795 
          
Annualized net interest margin (GAAP) 3.14%  3.19%  3.36%  3.61%  3.41%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.18   3.23   3.40   3.65   3.45 
Net purchase accounting discount amortization on loans included in annualized net interest margin 0.01   0.03   0.02   0.03   0.03 


Reconciliation of Tangible Book Value Per Common Share (non-GAAP)         
Common equity (GAAP)$1,714,825  $1,748,285  $1,718,700  $1,624,350  $1,545,253 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 20,026   21,651   23,366   25,154   26,995 
Tangible common equity (non-GAAP)$1,118,794  $1,150,629  $1,119,329  $1,023,191  $942,253 
          
Common shares outstanding, net of treasury stock 42,656,303   42,644,544   42,558,726   42,467,394   42,444,106 
Common equity (book value) per share (GAAP)$40.20  $41.00  $40.38  $38.25  $36.41 
Tangible book value per common share (non-GAAP)$26.23  $26.98  $26.30  $24.09  $22.20 
          
Reconciliation of Tangible Common Equity Ratio (non-GAAP)         
Tangible common equity (non-GAAP)$1,118,794  $1,150,629  $1,119,329  $ 1,023,191  $942,253 
          
Total assets (GAAP)$20,129,793  $20,224,716  $20,182,544  $20,244,228  $19,682,950 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 20,026   21,651   23,366   25,154   26,995 
Total tangible assets (non-GAAP)$19,533,762  $19,627,060  $19,583,173  $19,643,069  $19,079,950 
Tangible common equity ratio (non-GAAP) 5.73%  5.86%  5.72%  5.21%  4.94%
          
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
  9/30/2023   6/30/2023    3/31/2023   12/31/2022   9/30/2022 
Reconciliation of Adjusted Tangible Common Equity Ratio (non-GAAP)         
Tangible common equity (non-GAAP)$1,118,794  $1,150,629  $1,119,329  $1,023,191  $942,253 
Accumulated other comprehensive loss 642,838   575,240   566,919   620,006   650,636 
Adjusted tangible common equity (non-GAAP)$1,761,632  $1,725,869 $                $1,686,248  $1,643,197  $1,592,889 
          
Total tangible assets (non-GAAP)$19,533,762  $19,627,060  $19,583,173  $19,643,069  $19,079,950 
Fair value adjustment for securities and derivatives, net of deferred taxes 642,838   575,240   566,919   620,006   650,636 
Total adjusted tangible assets (non-GAAP)$20,176,600  $20,202,300  $20,150,092  $20,263,075  $19,730,586 
Adjusted tangible common equity ratio (non-GAAP) 8.73%  8.54%  8.37%  8.11%  8.07%


Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP) 
Net interest income (GAAP)$145,756  $        147,132  $152,212  $165,220   $155,876 
Tax-equivalent adjustment(1) 2,152           2,136   2,209   2,152   2,151 
Fully tax-equivalent net interest income 147,908   149,268   154,421   167,372   158,027 
Noninterest income (GAAP) 28,383   32,493   29,999   29,975   29,181 
Securities losses, net 114   314   1,104   153   1,055 
Unrealized (gain)/loss on equity securities, net (13)  41   (193)  7   211 
Gain on extinguishment of debt              
Valuation adjustment on servicing rights              
Adjusted revenue (non-GAAP)$176,392  $182,116  $185,331  $197,507  $        188,474 
          
Total noninterest expenses (GAAP)$111,053  $109,446  $111,043  $117,218  $108,883 
Less:         
Core deposit and customer relationship intangibles amortization 1,625   1,715   1,788   1,841   1,856 
Partnership investment in tax credit projects 1,136   154   538   3,247   979 
(Gain)/loss on sales/valuation of assets, net 108   (3,372)  1,115   2,388   (251)
Acquisition, integration and restructuring costs 2,429   1,892   1,673   2,442   2,156 
Core expenses (non-GAAP)$105,755  $109,057  $105,929  $107,300  $104,143 
          
Efficiency ratio (GAAP) 63.77%          60.93        %  60.94%  60.05%  58.84%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) 59.95%          59.88        %  57.16%  54.33%  55.26%
          
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)         
Total noninterest expenses (GAAP)$111,053  $        109,446          $111,043  $117,218  $108,883 
Core expenses (non-GAAP) 105,755           109,057           105,929   107,300   104,143 
          
Average assets$20,207,920  $        20,221,511          $20,118,005  $19,913,849  $19,775,341 
Total noninterest expenses to average assets (GAAP) 2.18%          2.17        %  2.24%  2.34%  2.18%
Core expenses to average assets (non-GAAP) 2.08%          2.16        %  2.14%  2.14%  2.09%
          
Acquisition, integration and restructuring costs         
Salaries and employee benefits$94  $        93          $74  $424  $365 
Occupancy            —                  
Furniture and equipment            —                  
Professional fees 1,617           1,068           934   1,587   1,480 
Advertising 178           222           122   95   131 
(Gain)/loss on sales/valuations of assets, net            —                  
Other noninterest expenses 540           509           543   336   180 
Total acquisition, integration and restructuring costs$2,429  $        1,892          $1,673  $2,442  $2,156 
After tax impact on diluted earnings per common share(1)$0.04  $        0.03          $0.03  $0.05  $0.04 
          
(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
September 30,
 For the Nine Months Ended
September 30,
  2023   2022   2023   2022 
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)       
Net income available to common stockholders (GAAP)$46,078  $        54,551          $        144,245  $145,488 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,284           1,466           4,051   4,734 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$47,362  $        56,017          $148,296  $150,222 
        
Average common equity (GAAP)$1,746,818  $1,674,306  $1,710,230  $1,801,835 
Less average goodwill 576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 20,821   27,902   22,501   29,878 
Average tangible common equity (non-GAAP)$1,149,992  $1,070,399  $1,111,724  $1,195,952 
Annualized return on average common equity (GAAP) 10.47%  12.93%  11.28%  10.80%
Annualized return on average tangible common equity (non-GAAP) 16.34%  20.76%  17.83%  16.79%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)       
Net Interest Income (GAAP)$145,756  $155,876  $445,100  $433,016 
Plus tax-equivalent adjustment(1) 2,152   2,151   6,497   6,247 
Net interest income, fully tax-equivalent (non-GAAP)$147,908  $158,027  $451,597  $439,263 
        
Average earning assets$18,439,010  $18,157,795  $18,451,907  $17,969,001 
        
Annualized net interest margin (GAAP) 3.14%  3.41%  3.23%  3.22%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.18   3.45   3.27   3.27 
Purchase accounting discount amortization on loans included in annualized net interest margin 0.01   0.03   0.02     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
Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)

For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
 2023   2022   2023   2022 
Net interest income (GAAP)$145,756  $        155,876  $        445,100  $433,016 
Tax-equivalent adjustment(1) 2,152   2,151           6,497   6,247 
Fully tax-equivalent net interest income 147,908   158,027   451,597   439,263 
Noninterest income (GAAP) 28,383   29,181   90,875           98,289 
Securities (gains)/losses, net 114   1,055   1,532   272 
Unrealized (gain)/loss on equity securities, net         (13)  211   (165)  615 
Valuation adjustment on servicing rights          (1,658)
Adjusted revenue (non-GAAP)$176,392  $188,474  $       543,839  $536,781 
        
Total noninterest expenses (GAAP)$111,053  $108,883  $331,542  $326,159 
Less:       
Core deposit and customer relationship intangibles amortization 1,625   1,856   5,128   5,993 
Partnership investment in tax credit projects 1,136   979   1,828   1,793 
(Gain)/loss on sales/valuation of assets, net 108   (251)  (2,149)  (3,435)
Acquisition, integration and restructuring costs 2,429   2,156   5,994   5,144 
Core expenses (non-GAAP)$105,755  $104,143  $320,741  $316,664 
Efficiency ratio (GAAP) 63.77%  58.84%  61.86%  61.39%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) 59.95%  55.26%  58.98%  58.99%
        
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)       
Total noninterest expenses (GAAP)$111,053  $108,883  $331,542  $326,159 
Core expenses (non-GAAP) 105,755   104,143   320,741   316,664 
        
Average assets$        20,207,920  $19,775,341  $20,182,808  $19,523,433 
Total noninterest expenses to average assets (GAAP) 2.18%  2.18%  2.20%  2.23%
Core expenses to average assets (non-GAAP) 2.08%  2.09%  2.12%  2.17%
        
Acquisition, integration and restructuring costs       
Salaries and employee benefits$94  $365  $261  $980 
Professional fees 1,617   1,480   3,619   3,495 
Advertising 178   131   522   287 
Other noninterest expenses 540   180   1,592   382 
Total acquisition, integration and restructuring costs$2,429  $2,156  $5,994  $5,144 
After tax impact on diluted earnings per common share(1)$0.04  $0.04  $0.11  $0.10 
 
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

 

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

 



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