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CST: 16/11/2019 22:21:18   

Heartland Financial USA, Inc. Reports Quarterly and Year to Date Results as of September 30, 2019

19 Days ago

Highlights

  • Quarterly net income available to common stockholders of $34.6 million or $0.94 per diluted common share in comparison with $33.7 million or $0.97 per diluted common share for the third quarter of the prior year
  • Net interest margin of 3.98%, fully tax-equivalent (non-GAAP)(1) of 4.02%
  • Return on average common equity of 8.91% and return on average tangible common equity (non-GAAP)(1) of 13.78%
  • Efficiency ratio (non-GAAP)(1) for the third quarter of 2019 of 61.92% compared to 62.51% for the third quarter of 2018
  • Tangible common equity ratio (non-GAAP)(1) of 8.99% in comparison to 7.70% at September 30, 2018
  • Organic loan growth of $118.6 million and organic deposit growth of $361.3 million for the third quarter of 2019
  • Entered into an agreement to acquire substantially all of the assets and deposits and certain other liabilities of Rockford Bank and Trust Company
  • Completed Bank of Blue Valley systems conversion on August 23, 2019
  Quarter Ended
September 30,
  Nine Months Ended
September 30,
  2019   2018   2019   2018
Net income available to common stockholders (in millions) $ 34.6   $ 33.7   $ 111.3   $ 84.8
Diluted earnings per common share 0.94   0.97   3.11   2.59
               
Return on average assets 1.12 %   1.18 %   1.27 %   1.07 %
Return on average common equity 8.91   10.58   10.33   9.95
Return on average tangible common equity (non-GAAP)(1) 13.78   17.31   16.13   15.64
Net interest margin 3.98   4.32   4.05   4.25
Net interest margin, fully tax-equivalent (non-GAAP)(1) 4.02   4.38   4.10   4.32
Efficiency ratio, fully-tax equivalent (non-GAAP)(1) 61.92   62.51   63.95   65.03

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

"Heartland completed another successful quarter with net income of $34.6 million for the quarter ended September 30, 2019. Our quarterly results were highlighted by a strong net interest margin and impressive organic loan and deposit growth of $118.6 million and $361.3 million, respectively."
Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc.

DUBUQUE, Iowa, Oct. 28, 2019 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $34.6 million, or $0.94 per diluted common share, for the quarter ended September 30, 2019, compared to $33.7 million, or $0.97 per diluted common share, for the third quarter of 2018. Return on average common equity was 8.91% and return on average assets was 1.12% for the third quarter of 2019, compared to 10.58% and 1.18%, respectively, for the same quarter in 2018.

Net income available to common stockholders for the nine months ended September 30, 2019, was $111.3 million or $3.11 per diluted common share, compared to $84.8 million or $2.59 per diluted common share for the nine months ended September 30, 2018. Return on average common equity was 10.33% and return on average assets was 1.27% for the first nine months of 2019, compared to 9.95% and 1.07% for the same period in 2018.

Commenting on Heartland’s third quarter results, Bruce K. Lee, Heartland’s president and chief executive officer, said, "Heartland completed another successful quarter with net income of $34.6 million for the quarter ended September 30, 2019. Our quarterly results were highlighted by a strong net interest margin and impressive organic loan and deposit growth of $118.6 million and $361.3 million, respectively."

Recent Developments

  • On May 10, 2019, Heartland completed the acquisition of Blue Valley Ban Corp. ("BVBC") and its wholly-owned subsidiary, Bank of Blue Valley, headquartered in Overland Park, Kansas. Based on Heartland's closing common stock price of $44.78 per share on May 10, 2019, the aggregate consideration paid to BVBC common shareholders was $92.3 million, which was paid by delivery of Heartland common stock. Immediately following the closing of the transaction, Bank of Blue Valley was merged with and into Heartland's wholly-owned Kansas subsidiary, Morrill & Janes Bank and Trust Company, and the combined entity operates under the Bank of Blue Valley brand. As of the closing date, BVBC had, at fair value, total assets of $766.2 million, total loans held to maturity of $542.0 million, and total deposits of $617.1 million. Heartland also assumed, at fair value, $16.1 million of trust preferred debt. The systems conversion for this transaction was completed on August 23, 2019.
  • In keeping with its focus on core businesses and execution of strategic priorities, during the second quarter of 2019, Heartland completed the sale of two branches of Dubuque Bank and Trust Company, two branches of Illinois Bank & Trust and one branch of Citywide Banks, which resulted in a reduction of loans of $27.1 million and deposits of $107.8 million. On April 30, 2019, Dubuque Bank and Trust Company closed on the sale of substantially all its mortgage servicing rights to PNC Bank, N.A. Heartland is utilizing a portion of the net gains from these sales transactions, which totaled approximately $19.8 million and were recorded in the second quarter of 2019, to invest in several new technology and process improvement projects. These projects include system upgrades, process automation, and expansion of online and mobile banking capabilities.
  • On August 13, 2019, Heartland's Illinois Bank & Trust subsidiary entered into a purchase and assumption agreement to acquire substantially all of the assets and substantially all of the deposits and certain other liabilities of Rockford Bank and Trust Company ("RB&T"), headquartered in Rockford, Illinois. RB&T is a wholly-owned subsidiary of Moline, Illinois-based QCR Holdings, Inc. As of September 30, 2019, RB&T had total assets of $519.5 million, which included $417.3 million of gross loans held to maturity, and $451.5 million of deposits. RB&T serves the Rockford market from two full-service banking locations. The all-cash transaction is subject to approval by federal and state bank regulators and to customary closing conditions and is expected to close in the fourth quarter of 2019. The systems conversion is expected to occur in the first quarter of 2020.

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

Net interest margin, expressed as a percentage of average earning assets, was 3.98% (4.02% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2019, compared to 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2019 and 4.32% (4.38% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2018.

Total interest income for the third quarter of 2019 was $133.4 million compared to $124.9 million recorded in the third quarter of 2018, an increase of $8.5 million or 7%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.1 million for the third quarter of 2019 and $1.5 million for the third quarter of 2018. With these adjustments, total interest income on a tax-equivalent basis was $134.5 million for the third quarter of 2019, an increase of $8.1 million or 6%, compared to total interest income on a tax-equivalent basis of $126.4 million for the third quarter of 2018. Average earning assets of $11.10 billion increased $948.0 million or 9% from the third quarter of 2018, which was primarily attributable to recent acquisitions. The average rate on earning assets decreased 13 basis points to 4.81% for the third quarter of 2019 compared to 4.94% for the same quarter in 2018. In the first quarter of 2019, Heartland sold its higher yielding consumer loan portfolios, which decreased the average rate on earning assets by approximately 13 basis points for the third quarter of 2019 compared to the same quarter in 2018. 

Total interest expense for the third quarter of 2019 was $22.1 million, an increase of $7.9 million or 55% from $14.2 million in the third quarter of 2018. The average interest rate paid on Heartland's interest bearing liabilities increased to 1.22% for the third quarter of 2019 compared to 0.86% for the third quarter of 2018, which was primarily due to recent increases in market interest rates. Average interest bearing deposits increased $666.8 million or 11% to $6.79 billion for the quarter ended September 30, 2019, from $6.13 billion in the same quarter in 2018, which was primarily attributable to recent acquisitions. The average interest rate paid on Heartland's interest bearing deposits increased 40 basis points to 1.05% for the third quarter of 2019 compared to 0.65% for the same quarter in 2018. Average borrowings decreased $36.8 million or 9% to $382.2 million during the third quarter of 2019 from $419.0 million during the same quarter in 2018. The average interest rate paid on Heartland's borrowings was 4.26% for the third quarter of 2019 compared to 3.91% in the third quarter of 2018.

Net interest income was $111.3 million during the third quarter of 2019 compared to $110.7 million during the third quarter of 2018, an increase of $643,000 or 1%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $112.5 million during the third quarter of 2019 compared to net interest income on a tax-equivalent basis of $112.2 million during the third quarter of 2018, an increase of $239,000 or less than 1%.

"Our fully tax-equivalent net interest margin remains strong at 4.02% for the third quarter of 2019, which was a decline of eight basis points from the second quarter of 2019. In response to the recent decline in interest rates, we have taken steps to help maintain our yield on loans and lower our funding costs," Lee said.

Noninterest Income and Noninterest Expense Remain Flat from Third Quarter of 2018

Total noninterest income was $29.4 million during the third quarter of 2019 compared to $29.8 million during the third quarter of 2018, a decrease of $365,000 or 1%. Significant changes by noninterest income category were:

  • Loan servicing income totaled $821,000 for the third quarter of 2019 compared to $1.7 million for the third quarter of 2018, which was a decrease of $849,000 or 51%. The decrease was primarily due to the sale of the mortgage servicing rights of Dubuque Bank and Trust Company in the second quarter of 2019.
  • Securities gains, net, totaled $2.0 million for the third quarter of 2019 compared to net securities losses of $145,000 in the third quarter of 2018.
  • Net gains on sale of loans held for sale totaled $4.7 million during the third quarter of 2019 compared to $7.4 million during the same quarter in 2018, which was a decrease of $2.7 million or 37%, primarily due to the outsourcing of Heartland's legacy mortgage lending operations in the fourth quarter of 2018.
  • Other noninterest income totaled $3.2 million for the third quarter of 2019 compared to $1.1 million for the third quarter of 2018, which was an increase of $2.1 million or 179%. Commercial swap fee income increased $1.3 million to $1.6 million for the third quarter of 2019 compared to $374,000 for the same quarter of 2018. Also included in other noninterest income for the third quarter of 2019 was a gain on the extinguishment of debt of $375,000.

For the third quarter of 2019, total noninterest expense was $93.0 million compared to $92.5 million during the third quarter of 2018, an increase of $428,000 or less than 1%. The most significant change by noninterest expense category was in other noninterest expenses, which was $15.5 million for the third quarter of 2019 compared to $12.9 million for the third quarter of 2018, which was an increase of $2.5 million or 20%. Included in this increase was a write-down of $3.1 million on a partnership investment that qualifies for solar energy tax credits.

"Our strategic initiatives and process improvement projects are positively impacting our  total noninterest expense as we expected. Since the end of the third quarter of 2018, our assets increased $1.23 billion while our expenses have remained flat," said Lee.

Heartland's effective tax rate was 18.66% for the third quarter of 2019 compared to 20.99% for the third quarter of 2018. Included in Heartland's third quarter 2019 and 2018 tax calculations were solar energy tax credits of $2.0 million and $223,000, respectively. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $281,000 for the third quarter of 2019 compared to $307,000 for the third quarter of 2018. Tax-exempt interest income as a percentage of pre-tax income declined to 10.08% during the third quarter of 2019 from 13.62% during the third quarter of 2018.

Loans and Deposits Increase Since December 31, 2018

Total assets were $12.57 billion at September 30, 2019, an increase of $1.16 billion or 10% from $11.41 billion at year-end 2018. Excluding $766.2 million of assets acquired at fair value in the BVBC transaction, total assets increased $395.0 million or 3% since year-end 2018. Securities represented 25% and 24% of total assets at September 30, 2019, and December 31, 2018, respectively.

Total loans held to maturity were $7.97 billion at September 30, 2019, compared to $7.41 billion at year-end 2018, an increase of $563.9 million or 8%. This change includes $542.0 million of total loans held to maturity acquired at fair value in the BVBC transaction. During the first quarter of 2019, Heartland classified $32.1 million of loans as held for sale in conjunction with the branch sales. Excluding the reclassification of loans to held for sale and the BVBC transaction, total loans held to maturity increased $54.0 million or 1% since December 31, 2018. Loan changes by category were:

  • Commercial and commercial real estate loans totaled $6.39 billion at September 30, 2019, compared to $5.73 billion at December 31, 2018, which was an increase of $661.9 million or 12%. Excluding $14.9 million of commercial and commercial real estate loans classified as held for sale during the first quarter of 2019 and $480.1 million of loans acquired in the BVBC transaction, commercial and commercial real estate loans increased $196.6 million or 3% since year-end.
  • Agricultural and agricultural real estate loans totaled $545.0 million at September 30, 2019, compared to $565.4 million at December 31, 2018, which was a decrease of $20.4 million or 4%. Excluding $6.6 million of agricultural and agricultural real estate loans classified as held for sale during the first quarter of 2019 and $1.8 million of loans acquired in the BVBC transaction, agricultural and agricultural real estate loans decreased $15.6 million or 3% since year-end.
  • Residential mortgage loans decreased $83.8 million or 12% to $589.8 million at September 30, 2019, from $673.6 million at December 31, 2018. Excluding $2.0 million of residential mortgage loans classified as held for sale during the first quarter of 2019 and $17.2 million of loans acquired in the BVBC transaction, residential mortgage loans decreased $99.0 million or 15% since year-end.
  • Consumer loans increased $7.6 million or 2% to $447.7 million at September 30, 2019, compared to $440.2 million at December 31, 2018. Excluding $8.6 million of loans classified as held for sale during the first quarter of 2019 and $42.9 million of loans acquired in the BVBC transaction, consumer loans decreased $26.7 million or 6% since year-end.

"An important contributor to our third quarter success was organic growth in our commercial loan portfolio of $163.2 million and $196.6 million year to date. We continued to see contraction in the residential mortgage and consumer loan portfolios due to declines in mortgage interest rates. Quality loan growth remains a top priority, and our pipelines indicate continued growth," said Lee. 

Total deposits were $10.47 billion as of September 30, 2019, compared to $9.40 billion at year-end 2018, an increase of $1.07 billion or 11%. This increase includes $617.1 million of deposits acquired at fair value in the BVBC transaction. During the first quarter of 2019, Heartland classified $77.0 million of deposits as held for sale in conjunction with the branch sales. Exclusive of the reclassification of deposits to held for sale and the deposits acquired at fair value in the BVBC transaction, total deposits increased $533.3 million or 6% since December 31, 2018. Deposit changes by category were:

  • Demand deposits increased $316.4 million or 10% to $3.58 billion at September 30, 2019, compared to $3.26 billion at December 31, 2018. Excluding $164.9 million of demand deposits acquired in the BVBC transaction and $17.3 million of demand deposits classified as held for sale in the first quarter of 2019, demand deposits increased $168.8 million or 5% since year-end 2018.
  • Savings deposits increased $662.8 million or 13% to $5.77 billion at September 30, 2019, from $5.11 billion at December 31, 2018. Excluding savings deposits of $346.2 million acquired in the BVBC transaction and $47.8 million of savings deposits classified as held for sale in the first quarter of 2019, savings deposits increased $364.4 million or 7% since year-end 2018.
  • Time deposits increased $94.2 million or 9% to $1.12 billion at September 30, 2019 from $1.02 billion at December 31, 2018. Excluding time deposits of $106.0 million acquired in the BVBC transaction and $11.9 million of time deposits classified as held for sale in the first quarter of 2019, time deposits increased $100,000 or less than 1% since year-end 2018.

"We had outstanding organic non-time deposit growth of $391.6 million for the third quarter of 2019 and $533.3 million for the first nine months of 2019. Non-time deposits represented 89 percent of total deposits at September 30, 2019," Lee stated.

Nonperforming Assets Decrease Since December 31, 2018

Nonperforming assets decreased $595,000 or 1% to $78.7 million or 0.63% of total assets at September 30, 2019, compared to $79.3 million or 0.69% of total assets at December 31, 2018. Nonperforming loans were $72.2 million or 0.91% of total loans at September 30, 2019, compared to $72.7 million or 0.98% of total loans at December 31, 2018. At September 30, 2019, loans delinquent 30-89 days were 0.28% of total loans compared to 0.21% of total loans at December 31, 2018.

The allowance for loan losses at September 30, 2019, was 0.83% of loans and 91.66% of nonperforming loans, compared to 0.84% of loans and 85.27% of nonperforming loans at December 31, 2018.

Non-GAAP Financial Measures

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

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

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

Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until October 27, 2020, by logging on to www.htlf.com.   

About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company with assets of $12.57 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 114 banking locations serving 83 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com

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

-FINANCIAL TABLES FOLLOW- 

 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
September 30,
  For the Nine Months Ended
September 30,
  2019     2018     2019     2018  
Interest Income              
Interest and fees on loans $ 110,566     $ 105,733     $ 317,049     $ 288,171  
Interest on securities:              
Taxable 18,567     14,433     50,566     38,280  
Nontaxable 2,119     3,490     7,766     10,653  
Interest on federal funds sold         4      
Interest on deposits with other banks and other short-term investments 2,151     1,238     5,742     2,413  
Total Interest Income 133,403     124,894     381,127     339,517  
Interest Expense              
Interest on deposits 17,982     10,092     47,333     23,841  
Interest on short-term borrowings 250     464     1,477     1,279  
Interest on other borrowings 3,850     3,660     11,333     10,726  
Total Interest Expense 22,082     14,216     60,143     35,846  
Net Interest Income 111,321     110,678     320,984     303,671  
Provision for loan losses 5,201     5,238     11,754     14,332  
Net Interest Income After Provision for Loan Losses 106,120     105,440     309,230     289,339  
Noninterest Income              
Service charges and fees 12,366     12,895     39,789     35,046  
Loan servicing income 821     1,670     3,888     5,231  
Trust fees 4,959     4,499     14,258     13,794  
Brokerage and insurance commissions 962     1,111     2,724     2,895  
Securities gains/(losses), net 2,013     (145 )   7,168     1,037  
Unrealized gain on equity securities, net 144     54     514     97  
Net gains on sale of loans held for sale 4,673     7,410     12,192     18,261  
Valuation adjustment on servicing rights (626 )   230     (1,579 )   12  
Income on bank owned life insurance 881     892     2,668     2,206  
Other noninterest income 3,207     1,149     6,556     3,536  
Total Noninterest Income 29,400     29,765     88,178     82,115  
Noninterest Expense              
Salaries and employee benefits 50,027     49,921     150,307     149,389  
Occupancy 6,594     6,348     19,637     18,706  
Furniture and equipment 2,858     3,470     8,770     9,403  
Professional fees 12,131     12,800     38,478     32,880  
Advertising 2,737     2,754     7,723     6,839  
Core deposit and customer relationship intangibles amortization 2,899     2,626     9,054     6,763  
Other real estate and loan collection expenses, net (89 )   784     774     2,464  
(Gain)/loss on sales/valuations of assets, net 356     912     (20,934 )   2,243  
Restructuring expenses         3,227     2,564  
Other noninterest expenses 15,454     12,924     39,259     33,816  
Total Noninterest Expense 92,967     92,539     256,295     265,067  
Income Before Income Taxes 42,553     42,666     141,113     106,387  
Income taxes 7,941     8,956     29,835     21,530  
Net Income 34,612     33,710     111,278     84,857  
Preferred dividends     (13 )       (39 )
Net Income Available to Common Stockholders $ 34,612     $ 33,697     $ 111,278     $ 84,818  
Earnings per common share-diluted $ 0.94     $ 0.97     $ 3.11     $ 2.59  
Weighted average shares outstanding-diluted 36,835,191     34,644,187     35,817,899     32,707,481  
                       
                       


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Interest Income                  
Interest and fees on loans $ 110,566     $ 106,027     $ 100,456     $ 105,700     $ 105,733  
Interest on securities:                  
Taxable 18,567     16,123     15,876     15,851     14,433  
Nontaxable 2,119     2,554     3,093     3,467     3,490  
Interest on federal funds sold         4          
Interest on deposits with other banks and other short-term investments 2,151     2,299     1,292     1,285     1,238  
Total Interest Income 133,403     127,003     120,721     126,303     124,894  
Interest Expense                  
Interest on deposits 17,982     16,138     13,213     11,826     10,092  
Interest on short-term borrowings 250     338     889     417     464  
Interest on other borrowings 3,850     3,819     3,664     3,777     3,660  
Total Interest Expense 22,082     20,295     17,766     16,020     14,216  
Net Interest Income 111,321     106,708     102,955     110,283     110,678  
Provision for loan losses 5,201     4,918     1,635     9,681     5,238  
Net Interest Income After Provision for Loan Losses 106,120     101,790     101,320     100,602     105,440  
Noninterest Income                  
Service charges and fees 12,366     14,629     12,794     13,660     12,895  
Loan servicing income 821     1,338     1,729     2,061     1,670  
Trust fees 4,959     4,825     4,474     4,599     4,499  
Brokerage and insurance commissions 962     1,028     734     1,618     1,111  
Securities gains/(losses), net 2,013     3,580     1,575     48     (145 )
Unrealized gain on equity securities, net 144     112     258     115     54  
Net gains on sale of loans held for sale 4,673     4,343     3,176     3,189     7,410  
Valuation adjustment on servicing rights (626 )   (364 )   (589 )   (58 )   230  
Income on bank owned life insurance 881     888     899     587     892  
Other noninterest income 3,207     1,682     1,667     1,226     1,149  
Total Noninterest Income 29,400     32,061     26,717     27,045     29,765  
Noninterest Expense                  
Salaries and employee benefits 50,027     49,995     50,285     46,729     49,921  
Occupancy 6,594     6,436     6,607     6,622     6,348  
Furniture and equipment 2,858     3,220     2,692     3,126     3,470  
Professional fees 12,131     14,968     11,379     10,630     12,800  
Advertising 2,737     2,661     2,325     2,726     2,754  
Core deposit and customer relationship intangibles amortization 2,899     3,313     2,842     2,592     2,626  
Other real estate and loan collection expenses, net (89 )   162     701     574     784  
(Gain)/loss on sales/valuations of assets, net 356     (18,286 )   (3,004 )   (35 )   912  
Restructuring expenses         3,227          
Other noninterest expenses 15,454     12,629     11,176     15,857     12,924  
Total Noninterest Expense 92,967     75,098     88,230     88,821     92,539  
Income Before Income Taxes 42,553     58,753     39,807     38,826     42,666  
Income taxes 7,941     13,584     8,310     6,685     8,956  
Net Income 34,612     45,169     31,497     32,141     33,710  
Preferred dividends                 (13 )
Net Income Available to Common Stockholders $ 34,612     $ 45,169     $ 31,497     $ 32,141     $ 33,697  
Earnings per common share-diluted $ 0.94     $ 1.26     $ 0.91     $ 0.93     $ 0.97  
Weighted average shares outstanding-diluted 36,835,191     35,879,259     34,699,839     34,670,180     34,644,187  
                             
                             


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of
  9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Assets                  
Cash and due from banks $ 243,395     $ 198,664     $ 174,198     $ 223,135     $ 196,847  
Interest bearing deposits with other banks and other short-term investments 204,372     443,475     318,303     50,495     240,528  
Cash and cash equivalents 447,767     642,139     492,501     273,630     437,375  
Time deposits in other financial institutions 3,711     4,430     4,675     4,672     5,836  
Securities:                  
Carried at fair value 3,020,568     2,561,887     2,400,460     2,450,709     2,274,215  
Held to maturity, at cost 87,965     88,166     88,089     236,283     239,908  
Other investments, at cost 29,042     31,366     27,506     28,396     26,656  
Loans held for sale 35,427     34,575     69,716     119,801     77,727  
Loans:                  
Held to maturity 7,971,608     7,853,051     7,331,544     7,407,697     7,365,493  
Allowance for loan losses (66,222 )   (63,850 )   (62,639 )   (61,963 )   (61,221 )
Loans, net 7,905,386     7,789,201     7,268,905     7,345,734     7,304,272  
Premises, furniture and equipment, net 199,235     198,329     190,215     194,676     198,224  
Goodwill 427,097     427,097     391,668     391,668     391,668  
Core deposit and customer relationship intangibles, net 49,819     52,718     44,637     47,479     50,071  
Servicing rights, net 6,271     7,180     28,968     31,072     32,039  
Cash surrender value on life insurance 171,471     170,421     163,764     162,892     162,216  
Other real estate, net 6,425     6,646     5,391     6,153     11,908  
Other assets 179,078     146,135     136,000     114,841     123,017  
Total Assets $ 12,569,262     $ 12,160,290     $ 11,312,495     $ 11,408,006     $ 11,335,132  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
 Demand $ 3,581,127     $ 3,426,758     $ 3,118,909     $ 3,264,737     $ 3,427,819  
 Savings 5,770,754     5,533,503     5,145,929     5,107,962     4,958,430  
 Time 1,117,975     1,148,296     1,088,104     1,023,730     1,125,914  
Total deposits 10,469,856     10,108,557     9,352,942     9,396,429     9,512,163  
Deposits held for sale         118,564     106,409     50,312  
Short-term borrowings 107,853     107,260     104,314     227,010     131,139  
Other borrowings 278,417     282,863     268,312     274,905     277,563  
Accrued expenses and other liabilities 149,293     139,823     96,261     78,078     83,562  
Total Liabilities 11,005,419     10,638,503     9,940,393     10,082,831     10,054,739  
Stockholders' Equity                  
Common stock 36,696     36,690     34,604     34,477     34,473  
Capital surplus 838,543     837,150     745,596     743,095     742,080  
Retained earnings 670,816     642,808     603,506     579,252     553,662  
Accumulated other comprehensive income/(loss) 17,788     5,139     (11,604 )   (31,649 )   (49,822 )
Total Equity 1,563,843     1,521,787     1,372,102     1,325,175     1,280,393  
Total Liabilities and Equity $ 12,569,262     $ 12,160,290     $ 11,312,495     $ 11,408,006     $ 11,335,132  
                                       
                                       


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,
    2019   2018   2019   2018
Average Balances                
Assets   $ 12,293,332   $ 11,291,289   $ 11,760,120   $ 10,570,453
Loans, net of unearned   7,883,678   7,462,176   7,650,090   7,040,401
Deposits   10,253,643   9,530,743   9,803,488   8,938,297
Earning assets   11,102,581   10,154,591   10,598,465   9,547,147
Interest bearing liabilities   7,174,944   6,544,949   6,891,871   6,151,275
Common stockholders' equity   1,541,369   1,263,226   1,440,754   1,139,149
Total stockholders' equity   1,541,369   1,263,795   1,440,754   1,139,963
Tangible common stockholders' equity   1,062,568   819,966   981,449   770,884
                 
Key Performance Ratios                
Annualized return on average assets   1.12 %   1.18 %   1.27 %   1.07 %
Annualized return on average common equity (GAAP)   8.91 %   10.58 %   10.33 %   9.95 %
Annualized return on average tangible common equity (non-GAAP)(1)   13.78 %   17.31 %   16.13 %   15.64 %
Annualized ratio of net charge-offs to average loans   0.14 %   0.28 %   0.13 %   0.17 %
Annualized net interest margin (GAAP)   3.98 %   4.32 %   4.05 %   4.25 %
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)   4.02 %   4.38 %   4.10 %   4.32 %
Efficiency ratio, fully tax-equivalent(1)   61.92 %   62.51 %   63.95 %   65.03 %
                 
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                
Net income available to common stockholders (GAAP)   $ 34,612   $ 33,697   $ 111,278   $ 84,818
Plus core deposit and customer relationship intangibles amortization, net of tax(2)   2,291   2,075   7,153   5,343
Adjusted net income available to common stockholders (non-GAAP)   $ 36,903   $ 35,772   $ 118,431   $ 90,161
                 
Average common stockholders' equity (GAAP)   $ 1,541,369   $ 1,263,226   $ 1,440,754   $ 1,139,149
Less average goodwill   427,097   391,668   409,932   323,058
Less average core deposit and customer relationship intangibles, net   51,704   51,592   49,373   45,207
Average tangible common equity (non-GAAP)   $ 1,062,568   819,966   981,449   770,884
Annualized return on average common equity (GAAP)   8.91 %    10.58 %    10.33 %    9.95 % 
Annualized return on average tangible common equity (non-GAAP)   13.78 %    17.31 %    16.13 %    15.64 % 
                 
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                
Net Interest Income (GAAP)   $ 111,321   $ 110,678   $ 320,984   $ 303,671
Plus tax-equivalent adjustment(2)   1,140   1,544   3,820   4,663
Net interest income, tax-equivalent (non-GAAP)   $ 112,461   $ 112,222   $ 324,804   $ 308,334
                 
Average earning assets   $ 11,102,581   $ 10,154,591   $ 10,598,465   $ 9,547,147
                 
Annualized net interest margin (GAAP)   3.98 %    4.32 %    4.05 %    4.25 % 
Annualized net interest margin, fully tax-equivalent (non-GAAP)   4.02 %    4.38 %    4.10 %    4.32 % 
                 
(1) Refer to the "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.
(2) Computed on a tax-equivalent basis using an effective tax rate of 21%.
 
 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Average Balances                  
Assets $ 12,293,332   $ 11,708,538   $ 11,267,214   $ 11,371,247   $ 11,291,289
Loans, net of unearned 7,883,678   7,648,562   7,412,855   7,436,497   7,462,176
Deposits 10,253,643   9,790,756   9,356,204   9,596,807   9,530,743
Earning assets 11,102,581   10,552,166   10,129,957   10,225,409   10,154,591
Interest bearing liabilities 7,174,944   6,872,449   6,622,149   6,557,185   6,544,949
Common stockholders' equity 1,541,369   1,442,388   1,336,250   1,290,691   1,263,226
Total stockholders' equity 1,541,369   1,442,388   1,336,250   1,290,691   1,263,795
Tangible common stockholders' equity (non-GAAP) 1,062,568   981,878   898,092   849,851   819,966
                   
Key Performance Ratios                  
Annualized return on average assets 1.12 %   1.55 %   1.13 %   1.12 %   1.18 %
Annualized return on average common equity (GAAP) 8.91 %   12.56 %   9.56 %   9.88 %   10.58 %
Annualized return on average tangible common equity (non-GAAP)(1) 13.78 %   19.52 %   15.24 %   15.96 %   17.31 %
Annualized ratio of net charge-offs to average loans 0.14 %   0.19 %   0.05 %   0.48 %   0.28 %
Annualized net interest margin (GAAP) 3.98 %   4.06 %   4.12 %   4.28 %   4.32%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 4.02 %   4.10 %   4.18 %   4.34 %   4.38 %
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) 61.92 %   64.81 %   65.23 %   59.35 %   62.51 %
                   
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)                  
Net income available to common stockholders (GAAP) $ 34,612   $ 45,169   $ 31,497   $ 32,141   $ 33,697
Plus core deposit and customer relationship intangibles amortization, net of tax(2) 2,291   2,617   2,245   2,048   2,075
Adjusted net income available to common stockholders (non-GAAP) $ 36,903   $ 47,786   $ 33,742   $ 34,189   $ 35,772
                   
Average common stockholders' equity (GAAP) $ 1,541,369   $ 1,442,388   $ 1,336,250   $ 1,290,691   $ 1,263,226
Less average goodwill 427,097   410,642   391,668   391,668   391,668
Less average core deposit and customer relationship intangibles, net 51,704   49,868   46,490   49,172   51,592
Average tangible common stockholders' equity (non-GAAP) $ 1,062,568   $ 981,878   $ 898,092   $ 849,851   $ 819,966
Annualized return on average common equity (GAAP) 8.91 %   12.56 %   9.56 %   9.88 %   10.58 %
Annualized return on average tangible common equity (non-GAAP) 13.78 %   19.52 %   15.24 %   15.96 %   17.31 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)                  
Net Interest Income (GAAP) $ 111,321   $ 106,708   $ 102,955   $ 110,283   $ 110,678
Plus tax-equivalent adjustment(2) 1,140   1,268   1,412   1,565   1,544
Net interest income, fully tax-equivalent (non-GAAP) $ 112,461   $ 107,976   $ 104,367   $ 111,848   $ 112,222
                   
Average earning assets $ 11,102,581   $ 10,552,166   $ 10,129,957   $ 10,225,409   $ 10,154,591
                   
Annualized net interest margin (GAAP) 3.98 %   4.06 %   4.12 %   4.28 %   4.32 %
Annualized net interest margin, fully tax-equivalent (non-GAAP) 4.02 %   4.10 %   4.18 %   4.34 %   4.38 %
 
(1) Refer to the "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.
(2) Computed on a tax-equivalent basis using an effective tax rate of 21%.
 
 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
September 30,
  For the Nine Months Ended
September 30,
Reconciliation of Efficiency Ratio (non-GAAP) 2019
  2018
  2019   2018
Net interest income (GAAP) $ 111,321     $ 110,678     $ 320,984     $ 303,671  
Tax-equivalent adjustment(1) 1,140     1,544     3,820     4,663  
Fully tax-equivalent net interest income 112,461     112,222     324,804     308,334  
Noninterest income 29,400     29,765     88,178     82,115  
Securities (gains)/losses, net (2,013 )   145     (7,168 )   (1,037 )
Unrealized gain on equity securities, net (144 )   (54 )   (514 )   (97 )
Gain on extinguishment of debt (375 )       (375 )    
Valuation adjustment on servicing rights 626     (230 )   1,579     (12 )
Adjusted income (non-GAAP) $ 139,955     $ 141,848     $ 406,504     $ 389,303  
               
Total noninterest expenses (GAAP) $ 92,967     $ 92,539     $ 256,295     $ 265,067  
Less:              
Core deposit and customer relationship intangibles amortization 2,899     2,626     9,054     6,763  
Partnership investment in tax credit projects 3,052     338     4,992     338  
(Gain)/loss on sales/valuations of assets, net 356     912     (20,934 )   2,243  
Restructuring expenses         3,227     2,564  
Adjusted noninterest expenses (non-GAAP) $ 86,660     $ 88,663     $ 259,956     $ 253,159  
               
Efficiency ratio, fully tax-equivalent (non-GAAP) 61.92 %   62.51 %   63.95 %   65.03 %
                       
                       


Reconciliation of Efficiency Ratio (non-GAAP) For the Quarter Ended
9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Net interest income (GAAP) $ 111,321     $ 106,708     $ 102,955     $ 110,283     $ 110,678  
Tax-equivalent adjustment(1) 1,140     1,268     1,412     1,565     1,544  
Fully tax-equivalent net interest income 112,461     107,976     104,367     111,848     112,222  
Noninterest income 29,400     32,061     26,717     27,045     29,765  
Securities (gains)/losses, net (2,013 )   (3,580 )   (1,575 )   (48 )   145  
Unrealized gain on equity securities, net (144 )   (112 )   (258 )   (115 )   (54 )
Gain on extinguishment of debt (375 )                
Valuation adjustment on servicing rights 626     364     589     58     (230 )
Adjusted income (non-GAAP) $ 139,955     $ 136,709     $ 129,840     $ 138,788     $ 141,848  
                   
Total noninterest expenses (GAAP) $ 92,967     $ 75,098     $ 88,230     $ 88,821     $ 92,539  
Less:                  
Core deposit and customer relationship intangibles amortization 2,899     3,313     2,842     2,592     2,626  
Partnership investment in tax credit projects 3,052     1,465     475     3,895     338  
(Gain)/loss on sales/valuation of assets, net 356     (18,286 )   (3,004 )   (35 )   912  
Restructuring expenses         3,227          
Adjusted noninterest expenses (non-GAAP) $ 86,660     $ 88,606     $ 84,690     $ 82,369     $ 88,663  
                   
Efficiency ratio, fully tax-equivalent (non-GAAP) 61.92
%   64.81
%   65.23
%   59.35
%   62.51
%
                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
 
 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
  As of and for the Quarter Ended
  9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Common Share Data                  
Book value per common share $ 42.62     $ 41.48     $ 39.65     $ 38.44     $ 37.14  
Tangible book value per common share (non-GAAP)(1) $ 29.62     $ 28.40     $ 27.04     $ 25.70     $ 24.33  
Common shares outstanding, net of treasury stock 36,696,190     36,690,061     34,603,611     34,477,499     34,473,029  
Tangible common equity ratio (non-GAAP)(1) 8.99 %     8.92 %     8.60 %     8.08 %     7.70 %  
                                                 
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)                                                
Common stockholders' equity (GAAP) $ 1,563,843     $ 1,521,787     $ 1,372,102     $ 1,325,175     $ 1,280,393  
Less goodwill 427,097     427,097     391,668     391,668     391,668  
Less core deposit and customer relationship intangibles, net 49,819     52,718     44,637     47,479     50,071  
Tangible common stockholders' equity (non-GAAP) $ 1,086,927     $ 1,041,972     $ 935,797     $ 886,028     $ 838,654  
                   
Common shares outstanding, net of treasury stock 36,696,190     36,690,061     34,603,611     34,477,499     34,473,029  
Common stockholders' equity (book value) per share (GAAP) $ 42.62     $ 41.48     $ 39.65     $ 38.44     $ 37.14  
Tangible book value per common share (non-GAAP) $ 29.62     $ 28.40     $ 27.04     $ 25.70     $ 24.33  
                   
Reconciliation of Tangible Common Equity Ratio (non-GAAP)                  
Tangible common stockholders' equity (non-GAAP) $ 1,086,927     $ 1,041,972     $ 935,797     $ 886,028     $ 838,654  
                   
Total assets (GAAP) $ 12,569,262     $ 12,160,290     $ 11,312,495     $ 11,408,006     $ 11,335,132  
Less goodwill 427,097     427,097     391,668     391,668     391,668  
Less core deposit and customer relationship intangibles, net 49,819     52,718     44,637     47,479     50,071  
Total tangible assets (non-GAAP) $ 12,092,346     $ 11,680,475     $ 10,876,190     $ 10,968,859     $ 10,893,393  
Tangible common equity ratio (non-GAAP) 8.99 %     8.92 %     8.60 %     8.08 %     7.70 %  
                   
Loan Data                  
Loans held to maturity:                  
Commercial and commercial real estate $ 6,393,596     $ 6,230,372     $ 5,745,051     $ 5,731,712     $ 5,610,953  
Residential mortgage 589,793     613,707     630,433     673,603     676,941  
Agricultural and agricultural real estate 545,006     549,404     544,805     565,408     574,048  
Consumer 447,718     461,802     412,573     440,158     506,181  
Unearned discount and deferred loan fees (4,505 )   (2,234 )   (1,318 )   (3,184 )   (2,630 )
Total loans held to maturity $ 7,971,608     $ 7,853,051     $ 7,331,544     $ 7,407,697     $ 7,365,493  
                   
Other Selected Trend Information                  
Effective tax rate 18.66 %     23.12 %     20.88 %     17.22 %     20.99 %  
Full time equivalent employees 1,962     2,040     1,976     2,045     2,124  
                   
(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
  9/30/2019   6/30/2019   3/31/2019   12/31/2018   9/30/2018
Allowance for Loan Losses                  
Balance, beginning of period $ 63,850     $ 62,639     $ 61,963     $ 61,221     $ 61,324  
Provision for loan losses 5,201     4,918     1,635     9,681     5,238  
Charge-offs (4,842 )   (4,780 )   (1,950 )   (9,777 )   (6,120 )
Recoveries 2,013     1,073     991     838     779  
Balance, end of period $ 66,222     $ 63,850     $ 62,639     $ 61,963     $ 61,221  
                   
Asset Quality                  
Nonaccrual loans $ 72,208     $ 79,619     $ 77,294     $ 71,943     $ 73,060  
Loans past due ninety days or more 40     285     1,706     726     154  
Other real estate owned 6,425     6,646     5,391     6,153     11,908  
Other repossessed assets 13     39     8     459     495  
Total nonperforming assets $ 78,686     $ 86,589     $ 84,399     $ 79,281     $ 85,617  
                   
Performing troubled debt restructured loans $ 3,199     $ 3,539     $ 3,460     $ 4,026     $ 4,180  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 86,589     $ 84,399     $ 79,281     $ 85,617     $ 81,003  
Net loan charge offs (2,829 )   (3,707 )   (959 )   (8,939 )   (5,341 )
New nonperforming loans 6,818     13,688     15,314     17,332     16,965  
Acquired nonperforming assets     230              
Reduction of nonperforming loans(1) (8,861 )   (6,246 )   (6,238 )   (6,065 )   (5,085 )
OREO/Repossessed assets sales proceeds (3,067 )   (1,288 )   (2,092 )   (8,390 )   (1,064 )
OREO/Repossessed assets gain/(loss and writedowns), net 36     (487 )   (462 )   (230 )   (886 )
Net activity at Citizens Finance Co.         (445 )   (44 )   25  
Balance, end of period $ 78,686     $ 86,589     $ 84,399     $ 79,281     $ 85,617  
                   
Asset Quality Ratios                  
Ratio of nonperforming loans to total loans 0.91 %   1.02 %   1.08 %   0.98 %   0.99 %
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans 0.95 %   1.06 %   1.12 %   1.04 %   1.05 %
Ratio of nonperforming assets to total assets 0.63 %   0.71 %   0.75 %   0.69 %   0.76 %
Annualized ratio of net loan charge-offs to average loans 0.14 %   0.19 %   0.05 %   0.48 %   0.28 %
Allowance for loan losses as a percent of loans 0.83 %   0.81 %   0.85 %   0.84 %   0.83 %
Allowance for loan losses as a percent of nonperforming loans 91.66 %   79.91 %   79.29 %   85.27 %   83.62 %
Loans delinquent 30-89 days as a percent of total loans 0.28 %   0.31 %   0.47 %   0.21 %   0.62 %
                   
(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, 2019   June 30, 2019   September 30, 2018
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                                  
Securities:                                  
Taxable $ 2,658,107     $ 18,567   2.77 %   $ 2,217,863     $ 16,123   2.92 %   $ 2,066,071     $ 14,433   2.77 %
Nontaxable(1) 266,933     2,682   3.99     324,164     3,233   4.00     435,045     4,418   4.03  
Total securities 2,925,040     21,249   2.88     2,542,027     19,356   3.05     2,501,116     18,851   2.99  
Interest on deposits with other banks and other short-term investments 358,327     2,151   2.38     424,262     2,299   2.17     252,535     1,238   1.94  
Federal funds sold                            
Loans:(2)                                  
Commercial and commercial real estate(1) 6,216,133     86,864   5.54     5,968,424     82,328   5.53     5,637,360     77,443   5.45  
Residential mortgage 662,663     7,979   4.78     676,465     8,238   4.88     736,875     8,952   4.82  
Agricultural and agricultural real estate(1) 550,441     7,551   5.44     558,128     7,581   5.45     571,599     7,725   5.36  
Consumer 454,441     6,697   5.85     445,545     6,517   5.87     516,342     10,043   7.72  
Fees on loans     2,052           1,952           2,186    
Less: allowance for loan losses (64,464 )         (62,685 )         (61,236 )      
Net loans 7,819,214     111,143   5.64     7,585,877     106,616   5.64     7,400,940     106,349   5.70  
Total earning assets 11,102,581     134,543   4.81 %   10,552,166     128,271   4.88 %   10,154,591     126,438   4.94 %
Nonearning Assets 1,190,751             1,156,372             1,136,698          
Total Assets $ 12,293,332             $ 11,708,538             $ 11,291,289          
Interest Bearing Liabilities(3)                                  
Savings $ 5,643,722     $ 13,301   0.94 %   $ 5,360,355     $ 11,895   0.89 %   $ 4,932,013     $ 6,980   0.56 %
Time deposits 1,149,064     4,681   1.62     1,142,842     4,243   1.49     1,193,971     3,112   1.03  
Short-term borrowings 102,440     250   0.97     92,977     338   1.46     148,041     464   1.24  
Other borrowings 279,718     3,850   5.46     276,275     3,819   5.54     270,924     3,660   5.36  
Total interest bearing liabilities 7,174,944     22,082   1.22 %   6,872,449     20,295   1.18 %   6,544,949     14,216   0.86 %
Noninterest Bearing Liabilities(3)                                  
Noninterest bearing deposits 3,460,857             3,287,559             3,404,759          
Accrued interest and other liabilities 116,162             106,142             77,786          
Total noninterest bearing liabilities 3,577,019             3,393,701             3,482,545          
Stockholders' Equity 1,541,369             1,442,388             1,263,795          
Total Liabilities and Stockholders' Equity $ 12,293,332             $ 11,708,538             $ 11,291,289          
Net interest income, fully tax-equivalent (non-GAAP)(1)     $ 112,461           $ 107,976           $ 112,222    
Net interest spread(1)         3.59 %           3.70 %           4.08 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets         4.02 %           4.10 %           4.38 %
                                   
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Includes deposits held for sale.
 
 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Nine Months Ended
  September 30, 2019   September 30, 2018
  Average
Balance
  Interest   Rate   Average
Balance
  Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 2,350,120     $ 50,566   2.88 %   $ 1,937,053     $ 38,280   2.64 %
Nontaxable(1) 327,150     9,830   4.02     444,127     13,485   4.06  
Total securities 2,677,270     60,396   3.02     2,381,180     51,765   2.91  
Interest bearing deposits with other banks and other short-term investments 334,191     5,742   2.30     183,905     2,413   1.75  
Federal funds sold 185     4   2.89     471        
Loans:(2)                      
Commercial and commercial real estate(1) 5,978,304     247,275   5.53     5,319,862     211,557   5.32  
Residential mortgage 670,896     23,396   4.66     688,367     23,365   4.54  
Agricultural and agricultural real estate(1) 554,344     22,433   5.41     542,755     20,579   5.07  
Consumer 446,546     19,693   5.90     489,417     27,895   7.62  
Fees on loans     6,008           6,606    
Less: allowance for loan losses (63,271 )         (58,810 )      
Net loans 7,586,819     318,805   5.62     6,981,591     290,002   5.55  
Total earning assets 10,598,465     384,947   4.86 %   9,547,147     344,180   4.82 %
Nonearning Assets 1,161,655             1,023,306          
Total Assets $ 11,760,120             $ 10,570,453          
Interest Bearing Liabilities(3)                      
Savings $ 5,376,999     $ 35,279   0.88 %   $ 4,681,710     $ 16,306   0.47 %
Time deposits 1,109,302     12,054   1.45     1,048,878     7,535   0.96  
Short-term borrowings 129,928     1,477   1.52     149,453     1,279   1.14  
Other borrowings 275,642     11,333   5.50     271,234     10,726   5.29  
Total interest bearing liabilities 6,891,871     60,143   1.17 %   6,151,275     35,846   0.78 %
Noninterest Bearing Liabilities(3)                      
Noninterest bearing deposits 3,317,187             3,207,709          
Accrued interest and other liabilities 110,308             71,506          
Total noninterest bearing liabilities 3,427,495             3,279,215          
Stockholders' Equity 1,440,754             1,139,963          
Total Liabilities and Stockholders' Equity $ 11,760,120             $ 10,570,453          
Net interest income, fully tax-equivalent (non-GAAP)(1)     $ 324,804           $ 308,334    
Net interest spread(1)         3.69 %           4.04 %
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets         4.10 %           4.32 %
                       
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Includes deposits held for sale.


HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
  As of and For the Quarter Ended
  9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
Total Assets          
Citywide Banks $ 2,335,811 $ 2,261,591 $ 2,214,105 $ 2,307,284 $ 2,300,018
New Mexico Bank & Trust 1,607,498 1,534,236 1,500,024 1,492,555 1,465,020
Dubuque Bank and Trust Company 1,547,014 1,680,539 1,550,487 1,480,914 1,523,447
Bank of Blue Valley(1) 1,346,342 1,319,226 564,833 571,012 592,786
First Bank & Trust 1,158,320 1,088,796 1,099,759 1,109,929 1,112,464
Wisconsin Bank & Trust 1,032,016 1,042,463 1,031,305 1,114,352 1,051,160
Premier Valley Bank 888,401 847,076 855,473 849,696 851,358
Illinois Bank & Trust 839,721 852,830 810,357 804,907 795,132
Minnesota Bank & Trust 718,035 631,339 657,187 666,564 649,179
Arizona Bank & Trust 695,236 732,783 669,806 658,714 650,032
Rocky Mountain Bank 528,094 503,126 489,135 490,453 492,063
Total Deposits(2)          
Citywide Banks $ 1,895,894 $ 1,833,259 $ 1,802,701 $ 1,848,373 $ 1,905,830
New Mexico Bank & Trust 1,413,170 1,346,304 1,313,708 1,307,464 1,267,844
Dubuque Bank and Trust Company 1,275,131 1,157,881 1,245,553 1,214,541 1,217,976
Bank of Blue Valley(1) 1,091,243 1,077,183 473,712 489,471 511,154
First Bank & Trust 903,410 844,793 857,313 861,629 875,170
Wisconsin Bank & Trust 880,217 892,020 872,090 927,821 891,167
Premier Valley Bank 719,141 689,384 676,849 639,194 706,125
Illinois Bank & Trust 768,267 769,577 735,101 715,482 726,790
Minnesota Bank & Trust 600,175 515,310 546,706 560,399 544,513
Arizona Bank & Trust 578,694 646,728 593,089 574,762 550,530
Rocky Mountain Bank 462,825 438,349 426,503 424,700 429,167
Net Income          
Citywide Banks $ 6,030 $ 8,120 $ 7,283 $ 7,005 $ 7,762
New Mexico Bank & Trust 6,404 7,634 7,847 6,007 7,104
Dubuque Bank and Trust Company 5,445 17,353 5,011 6,002 4,458
Bank of Blue Valley(1) 3,550 3,505 1,172 324 165
First Bank & Trust ,927 3,099 2,792 3,334 3,932
Wisconsin Bank & Trust 3,195 2,516 4,707 3,229 3,735
Premier Valley Bank 3,301 2,763 2,411 2,930 3,006
Illinois Bank & Trust 2,223 1,751 2,632 2,180 2,419
Minnesota Bank & Trust 3,250 1,980 1,454 1,038 2,167
Arizona Bank & Trust 3,222 3,110 2,780 1,951 2,660
Rocky Mountain Bank 720 779 1,358 1,230 1,210
 
(1) Formerly known as Morrill & Janes Bank and Trust Company.
(2) Includes deposits held for sale.          

 

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

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