Highlights
- Quarterly net income available to common stockholders of $27.9 million in comparison with $21.9 million for the second quarter of the prior year
- Diluted earnings per common share of $0.85 in comparison with $0.81 for the second quarter of the prior year
- Net interest margin of 4.23%, fully tax-equivalent (non-GAAP)(1) of 4.30%
- Organic loan growth of $50.6 million or 3% annualized and organic demand deposit growth of $111.6 million or 14% annualized
- Return on average common equity of 9.81% and return on average tangible common equity (non-GAAP)(2) of 14.56%
- Tangible common equity ratio (non-GAAP)(3) of 7.46%
- Completed the acquisition of First Bank Lubbock Bancshares, Inc. on May 18, 2018
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income (in millions) | $ | 27.9 | $ | 22.0 | $ | 51.1 | $ | 40.0 | |||||||
| Net income available to common stockholders (in millions) | 27.9 | 21.9 | 51.1 | 39.9 | |||||||||||
| Diluted earnings per common share | 0.85 | 0.81 | 1.61 | 1.49 | |||||||||||
| Return on average assets | 1.05 | % | 1.06 | % | 1.01 | % | 0.97 | % | |||||||
| Return on average common equity | 9.81 | 11.13 | 9.58 | 10.44 | |||||||||||
| Return on average tangible common equity (non-GAAP)(2) | 14.56 | 14.07 | 13.82 | 13.18 | |||||||||||
| Net interest margin | 4.23 | 3.94 | 4.21 | 3.95 | |||||||||||
| Net interest margin, fully tax-equivalent (non-GAAP)(1) | 4.30 | 4.14 | 4.28 | 4.15 | |||||||||||
| "Heartland's strong financial performance continued during the second quarter of 2018. Net income available to common stockholders was $27.9 million, which was a 27% increase over the same quarter a year ago." |
| Lynn B. Fuller, executive operating chairman, Heartland Financial USA, Inc. |
(1) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table included in this earnings release.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table included in this earnings release.
(3) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table included in this earnings release.
DUBUQUE, Iowa, July 23, 2018 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ:HTLF) today reported net income available to common stockholders of $27.9 million, or $0.85 per diluted common share, for the quarter ended June 30, 2018, compared to $21.9 million, or $0.81 per diluted common share, for the second quarter of 2017. Return on average common equity was 9.81% and return on average assets was 1.05% for the second quarter of 2018, compared to 11.13% and 1.06%, respectively, for the same quarter in 2017.
Net income available to common stockholders for the six months ended June 30, 2018, was $51.1 million or $1.61 per diluted common share, compared to $39.9 million or $1.49 per diluted common share for the six months ended June 30, 2017. Return on average common equity was 9.58% and return on average assets was 1.01% for the first six months of 2018, compared to 10.44% and 0.97% for the same period in 2017.
Commenting on Heartland’s second quarter results, Lynn B. Fuller, Heartland’s executive operating chairman, said, "Heartland's strong financial performance continued during the second quarter of 2018. Net income available to common stockholders was $27.9 million, which was a 27% increase over the same quarter a year ago."
On February 23, 2018, Heartland completed the acquisition of Signature Bancshares, Inc., parent company of Signature Bank, based in Minnetonka, Minnesota. Based on Heartland's closing common stock price of $53.55 per share as of February 23, 2018, the aggregate consideration was $61.4 million, with approximately 10% of the consideration paid in cash and 90% paid by delivery of Heartland common stock. Simultaneous with the closing of the transaction, Signature Bank merged into Heartland's Minnesota Bank & Trust subsidiary. As of the closing date, Signature Bancshares, Inc. had, at fair value, total assets of $427.1 million, total loans held to maturity of $324.5 million and total deposits of $357.3 million. The systems conversion for this transaction occurred on April 20, 2018.
On May 18, 2018, Heartland completed the acquisition of Lubbock, Texas based First Bank Lubbock Bancshares, Inc. ("FBLB"), parent company of First Bank & Trust, and PrimeWest Mortgage Corporation, which is a wholly-owned subsidiary of First Bank & Trust. Based on Heartland's closing common stock price of $55.05 per share on May 18, 2018, the aggregate consideration paid to FBLB common shareholders was $189.9 million, with approximately 3% of the consideration paid in cash and 97% paid by delivery of Heartland common stock. As a result of the transaction, First Bank & Trust became a wholly-owned subsidiary of Heartland and its 11th state-chartered bank. First Bank & Trust and PrimeWest Mortgage Corporation continue to operate under their present brands and management teams. As of the closing date, FBLB had, at fair value, total assets of $1.12 billion, total loans held to maturity of $681.1 million and total deposits of $893.8 million. Heartland also assumed, at fair value, $8.2 million of trust preferred debt. The systems conversion for this transaction is expected to occur in the third quarter of 2018.
In the first quarter of 2018, Heartland recorded $2.6 million of restructuring expenses related to its legacy mortgage lending operation. The restructuring projects are primarily related to outsourcing the loan application processing, underwriting and loan closing functions and include a workforce reduction of approximately 100 employees and the discontinuation of several current systems.
Bruce K. Lee, Heartland's president and chief executive officer, stated, "Our mortgage restructuring projects are nearing completion. When completed, we look forward to providing an enhanced customer experience and streamlined operations that will reduce the volatility and cost of originating mortgage loans."
Fully Tax-Equivalent Net Interest Margin Increases from Second Quarter of 2017
Net interest margin, expressed as a percentage of average earning assets, was 4.23% (4.30% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2018, compared to 4.19% (4.26% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2018 and 3.94% (4.14% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2017.
"On a fully tax equivalent basis, net interest margin for the second quarter of 2018 increased 16 basis points to 4.30 percent from 4.14 percent for the second quarter of 2017. The strong margin was driven by an improved earning asset mix and strong demand deposit growth," Lee said.
Total interest income for the second quarter of 2018 was $113.4 million compared to $82.1 million recorded in the second quarter of 2017. The taxable equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.6 million for the second quarter of 2018 and $3.8 million for the second quarter of 2017. With these adjustments, total interest income on a tax-equivalent basis was $115.0 million for the second quarter of 2018, an increase of $29.1 million or 34%, compared to total interest income of $85.9 million for the second quarter of 2017. Average earning assets increased $2.03 billion or 27% from the second quarter of 2017, which was primarily attributable to the acquisitions completed in the third quarter of 2017 and the first half of 2018. The average rate on earning assets increased 26 basis points to 4.80% for the second quarter of 2018 compared to 4.54% for the same quarter in 2017. The increase in interest income on a tax-equivalent basis was primarily due to recent increases in market interest rates and the increase in average earning assets.
Interest expense on deposits and borrowings for the second quarter of 2018 was $12.0 million, an increase of $4.5 million or 60% from $7.5 million in the second quarter of 2017. Average interest bearing deposits increased $1.08 billion or 23% to $5.79 billion for the quarter ended June 30, 2018, from $4.71 billion in the same quarter in 2017, which was primarily attributable to recent acquisitions. The average interest rate paid on Heartland's interest bearing deposits increased 20 basis points to 0.55% for the second quarter of 2018 compared to 0.35% for the same quarter in 2017. Average borrowings declined $19.8 million or 5% to $415.3 million during the second quarter of 2018 from $435.1 million during the same quarter in 2017. The average interest rate paid on Heartland's borrowings was 3.88% for the second quarter of 2018 compared to 3.06% in the second quarter of 2017. The increase in the average interest rate paid on Heartland's interest bearing liabilities was primarily due to recent increases in market interest rates.
Net interest income was $101.4 million during the second quarter of 2018 compared to $74.6 million during the second quarter of 2017, an increase of $26.8 million or 36%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $103.0 million during the second quarter of 2018 compared to net interest income on a tax-equivalent basis of $78.4 million during the second quarter of 2017, an increase of $24.6 million or 31%.
Noninterest Income and Noninterest Expenses Increase from Second Quarter of 2017
Noninterest income totaled $27.6 million during the second quarter of 2018 compared to $25.6 million during the second quarter of 2017, an increase of $2.0 million or 8%. Service charges and fees increased $2.4 million or 25% to $12.1 million for the second quarter of 2018 compared to $9.7 million for the same quarter of 2017. Service charges related to credit card income increased $806,000 or 37% to $3.0 million for the second quarter of 2018 from $2.2 million for the same quarter of 2017. The remainder of the increase in service charges was primarily attributable to Heartland's larger customer base as a result of recent acquisitions. Securities losses, net, totaled $259,000 for the second quarter of 2018 compared to net securities gains of $1.4 million for the second quarter of 2017. Other noninterest income increased $429,000 or 58% to $1.2 million for the second quarter of 2018 compared to $738,000 for the second quarter of 2017. Included in this increase was $174,000 of reimbursements from customers for loan workout expenses that had been incurred and paid in prior years.
For the second quarter of 2018, noninterest expenses totaled $88.9 million compared to $69.3 million during the second quarter of 2017, an increase of $19.6 million or 28%. Salaries and employee benefits increased $9.6 million or 23% to $50.8 million for the second quarter of 2018 compared to $41.1 million for the same quarter in 2017, which was primarily due to the increase in full time equivalent employees from recent acquisitions. Heartland had 2,216 full time equivalent employees at June 30, 2018, compared to 1,862 full time equivalent employees at June 30, 2017. Advertising expenses increased $786,000 or 58% to $2.1 million for the second quarter of 2018 compared to $1.4 million for the second quarter of 2017, primarily related to increased marketing efforts to support Heartland's expanding footprint. For the second quarter of 2018, losses of $1.5 million were recorded on sales/valuations of assets compared to a net gain of $112,000 for the same quarter of 2017. This increase of $1.6 million was primarily due to write-downs and losses on repossessed assets of $993,000 during the second quarter of 2018.
Heartland's effective tax rate was 21.09% for the second quarter of 2018 compared to 26.85% for the second quarter of 2017. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $307,000 during the second quarter of 2018 compared to $310,000 for the second quarter of 2017. Heartland's effective tax rate was also affected by the passage of the Tax Cuts and Jobs Act in December 2017, which reduced the federal income tax rate from a maximum of 35% to 21% beginning January 1, 2018. The level of tax-exempt interest income as a percentage of pre-tax income was 16.77% during the second quarter of 2018 compared to 23.49% during the second quarter of 2017.
Loans and Deposits Increase Since December 31, 2017
Total assets were $11.30 billion at June 30, 2018, an increase of $1.49 billion or 15% from $9.81 billion at year-end 2017. Excluding $427.1 million of assets acquired at fair value in the Signature Bancshares Inc. transaction and $1.12 billion of assets acquired at fair value in the FBLB transaction, total assets decreased $53.1 million or 1% since December 31, 2017. The decrease in assets was primarily due to a reduction in the securities portfolio, which represented 22% and 25% of total assets at June 30, 2018, and December 31, 2017, respectively.
Total loans held to maturity were $7.48 billion at June 30, 2018, compared to $6.39 billion at year-end 2017, an increase of $1.09 billion or 17%. This change includes $324.5 million of total loans held to maturity acquired at fair value in the Signature Bancshares, Inc. transaction and $681.1 million of total loans held to maturity acquired at fair value in the FBLB transaction. Exclusive of these transactions, total loans held to maturity increased $50.6 million or 3% annualized during the second quarter of 2018 and $80.7 million or 3% annualized for the first six months of 2018.
Total deposits were $9.49 billion as of June 30, 2018, compared to $8.15 billion at year-end 2017, an increase of $1.34 billion or 16%. This increase included $357.3 million of deposits, at fair value, acquired in the Signature Bancshares, Inc. transaction and $893.8 million of deposits, at fair value, acquired in the FBLB transaction. Exclusive of these transactions, total deposits increased $91.1 million or 1% since December 31, 2017. Demand deposits increased $416.5 million or 14% to $3.40 billion at June 30, 2018 compared to $2.98 billion at December 31, 2017. Excluding $299.0 million of demand deposits attributable to the Signature Bancshares, Inc. and FBLB transactions, demand deposits increased $117.5 million or 4% since year-end 2017. Excluding demand deposits acquired in the second quarter of 2018, demand deposits increased $111.6 million or 4% since March 31, 2018. Savings deposits increased $624.4 million or 15% to $4.86 billion at June 30, 2018, from $4.24 billion at December 31, 2017. Excluding savings deposits of $619.0 million acquired in the Signature Bancshares, Inc. and FBLB transactions, savings deposits increased $5.4 million or less than 1% since year-end 2017. Excluding savings deposits acquired in the second quarter of 2018, savings deposits decreased $95.2 million or 2% since March 31, 2018.
"We were encouraged by both organic loan growth of $50.6 million and organic demand deposit growth of $111.6 million in the second quarter. Quality loan and demand deposit growth remain among our top priorities," Lee stated.
Nonperforming Assets Increase Since December 31, 2017
Nonperforming assets were $81.0 million or 0.72% of total assets at June 30, 2018, compared to $74.6 million or 0.76% of total assets at December 31, 2017. Excluding $10.4 million of nonperforming assets acquired in the Signature Bancshares, Inc. and FBLB transactions, nonperforming assets decreased $4.0 million or 5% since year-end 2017. Nonperforming loans were $69.4 million or 0.93% of total loans at June 30, 2018, compared to $63.4 million or 0.99% of total loans at December 31, 2017.
The allowance for loan losses at June 30, 2018, was 0.82% of loans and 88.32% of nonperforming loans, compared to 0.87% of loans and 87.82% of nonperforming loans at December 31, 2017. The provision for loan losses increased $3.9 million to $4.8 million for the second quarter of 2018 compared to $889,000 for the same quarter in 2017. Included in the provision expense for the second quarter of 2018 was $2.1 million of specific reserves related to updated collateral values on two agricultural relationships and two commercial relationships. The remaining increase is attributable to a combination of several factors, including higher loan growth, acquired loans moving out of the purchased accounting pools and general changes in credit quality.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until July 22, 2019, 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 $11.3 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 125 banking locations serving 93 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war; (iii) changes in state and federal laws, regulations and governmental policies as they impact the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions and Heartland's ability to successfully integrate acquired banks; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||
| For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||
| Interest and fees on loans | $ | 96,787 | $ | 68,094 | $ | 182,438 | $ | 134,992 | |||||||||||||||
| Interest on securities: | |||||||||||||||||||||||
| Taxable | 12,270 | 8,599 | 23,847 | 16,852 | |||||||||||||||||||
| Nontaxable | 3,584 | 5,020 | 7,163 | 10,211 | |||||||||||||||||||
| Interest on federal funds sold | — | 3 | — | 3 | |||||||||||||||||||
| Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 768 | 345 | 1,175 | 554 | |||||||||||||||||||
| Total Interest Income | 113,409 | 82,061 | 214,623 | 162,612 | |||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||
| Interest on deposits | 7,983 | 4,163 | 13,749 | 7,893 | |||||||||||||||||||
| Interest on short-term borrowings | 547 | 90 | 815 | 227 | |||||||||||||||||||
| Interest on other borrowings | 3,470 | 3,228 | 7,066 | 6,884 | |||||||||||||||||||
| Total Interest Expense | 12,000 | 7,481 | 21,630 | 15,004 | |||||||||||||||||||
| Net Interest Income | 101,409 | 74,580 | 192,993 | 147,608 | |||||||||||||||||||
| Provision for loan losses | 4,831 | 889 | 9,094 | 4,530 | |||||||||||||||||||
| Net Interest Income After Provision for Loan Losses | 96,578 | 73,691 | 183,899 | 143,078 | |||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||
| Service charges and fees | 12,072 | 9,696 | 22,151 | 19,153 | |||||||||||||||||||
| Loan servicing income | 1,807 | 1,351 | 3,561 | 3,075 | |||||||||||||||||||
| Trust fees | 4,615 | 3,979 | 9,295 | 7,610 | |||||||||||||||||||
| Brokerage and insurance commissions | 877 | 976 | 1,784 | 2,012 | |||||||||||||||||||
| Securities gains/(losses), net | (259 | ) | 1,392 | 1,182 | 3,874 | ||||||||||||||||||
| Unrealized gain/(loss) on equity securities, net | 71 | — | 43 | — | |||||||||||||||||||
| Net gains on sale of loans held for sale | 6,800 | 6,817 | 10,851 | 12,964 | |||||||||||||||||||
| Valuation adjustment on servicing rights | (216 | ) | 19 | (218 | ) | 24 | |||||||||||||||||
| Income on bank owned life insurance | 700 | 656 | 1,314 | 1,273 | |||||||||||||||||||
| Other noninterest income | 1,167 | 738 | 2,387 | 1,532 | |||||||||||||||||||
| Total Noninterest Income | 27,634 | 25,624 | 52,350 | 51,517 | |||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||
| Salaries and employee benefits | 50,758 | 41,126 | 99,468 | 82,893 | |||||||||||||||||||
| Occupancy | 6,315 | 5,056 | 12,358 | 10,129 | |||||||||||||||||||
| Furniture and equipment | 3,184 | 2,586 | 5,933 | 5,087 | |||||||||||||||||||
| Professional fees | 9,948 | 7,583 | 18,407 | 15,892 | |||||||||||||||||||
| FDIC insurance assessments | 684 | 909 | 1,673 | 1,716 | |||||||||||||||||||
| Advertising | 2,145 | 1,359 | 4,085 | 3,783 | |||||||||||||||||||
| Core deposit intangibles and customer relationship intangibles amortization | 2,274 | 1,218 | 4,137 | 2,389 | |||||||||||||||||||
| Other real estate and loan collection expenses | 948 | 365 | 1,680 | 1,193 | |||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 1,528 | (112 | ) | 1,331 | 300 | ||||||||||||||||||
| Restructuring expenses | — | — | 2,564 | — | |||||||||||||||||||
| Other noninterest expenses | 11,098 | 9,208 | 20,892 | 17,656 | |||||||||||||||||||
| Total Noninterest Expense | 88,882 | 69,298 | 172,528 | 141,038 | |||||||||||||||||||
| Income Before Income Taxes | 35,330 | 30,017 | 63,721 | 53,557 | |||||||||||||||||||
| Income taxes | 7,451 | 8,059 | 12,574 | 13,589 | |||||||||||||||||||
| Net Income | 27,879 | 21,958 | 51,147 | 39,968 | |||||||||||||||||||
| Preferred dividends | (13 | ) | (13 | ) | (26 | ) | (32 | ) | |||||||||||||||
| Interest expense on convertible preferred debt | — | 4 | — | 9 | |||||||||||||||||||
| Net Income Available to Common Stockholders | $ | 27,866 | $ | 21,949 | $ | 51,121 | $ | 39,945 | |||||||||||||||
| Earnings per common share-diluted | $ | 0.85 | $ | 0.81 | $ | 1.61 | $ | 1.49 | |||||||||||||||
| Weighted average shares outstanding-diluted | 32,830,751 | 26,972,580 | 31,746,126 | 26,798,134 | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | |||||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 96,787 | $ | 85,651 | $ | 86,108 | $ | 82,906 | $ | 68,094 | |||||||||||||||||||
| Interest on securities: | |||||||||||||||||||||||||||||
| Taxable | 12,270 | 11,577 | 11,119 | 10,394 | 8,599 | ||||||||||||||||||||||||
| Nontaxable | 3,584 | 3,579 | 4,401 | 5,086 | 5,020 | ||||||||||||||||||||||||
| Interest on federal funds sold | — | — | 5 | 34 | 3 | ||||||||||||||||||||||||
| Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 768 | 407 | 435 | 558 | 345 | ||||||||||||||||||||||||
| Total Interest Income | 113,409 | 101,214 | 102,068 | 98,978 | 82,061 | ||||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||
| Interest on deposits | 7,983 | 5,766 | 5,313 | 5,073 | 4,163 | ||||||||||||||||||||||||
| Interest on short-term borrowings | 547 | 268 | 180 | 271 | 90 | ||||||||||||||||||||||||
| Interest on other borrowings | 3,470 | 3,596 | 3,719 | 3,790 | 3,228 | ||||||||||||||||||||||||
| Total Interest Expense | 12,000 | 9,630 | 9,212 | 9,134 | 7,481 | ||||||||||||||||||||||||
| Net Interest Income | 101,409 | 91,584 | 92,856 | 89,844 | 74,580 | ||||||||||||||||||||||||
| Provision for loan losses | 4,831 | 4,263 | 5,328 | 5,705 | 889 | ||||||||||||||||||||||||
| Net Interest Income After Provision for Loan Losses | 96,578 | 87,321 | 87,528 | 84,139 | 73,691 | ||||||||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||||||||
| Service charges and fees | 12,072 | 10,079 | 9,892 | 10,138 | 9,696 | ||||||||||||||||||||||||
| Loan servicing income | 1,807 | 1,754 | 1,400 | 1,161 | 1,351 | ||||||||||||||||||||||||
| Trust fees | 4,615 | 4,680 | 4,336 | 3,872 | 3,979 | ||||||||||||||||||||||||
| Brokerage and insurance commissions | 877 | 907 | 1,071 | 950 | 976 | ||||||||||||||||||||||||
| Securities gains/(losses), net | (259 | ) | 1,441 | 1,420 | 1,679 | 1,392 | |||||||||||||||||||||||
| Unrealized gain/(loss) on equity securities, net | 71 | (28 | ) | — | — | — | |||||||||||||||||||||||
| Net gains on sale of loans held for sale | 6,800 | 4,051 | 4,290 | 4,997 | 6,817 | ||||||||||||||||||||||||
| Valuation adjustment on servicing rights | (216 | ) | (2 | ) | (8 | ) | 5 | 19 | |||||||||||||||||||||
| Income on bank owned life insurance | 700 | 614 | 733 | 766 | 656 | ||||||||||||||||||||||||
| Other noninterest income | 1,167 | 1,220 | 2,394 | 1,409 | 738 | ||||||||||||||||||||||||
| Total Noninterest Income | 27,634 | 24,716 | 25,528 | 24,977 | 25,624 | ||||||||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 50,758 | 48,710 | 43,289 | 45,225 | 41,126 | ||||||||||||||||||||||||
| Occupancy | 6,315 | 6,043 | 5,892 | 6,223 | 5,056 | ||||||||||||||||||||||||
| Furniture and equipment | 3,184 | 2,749 | 3,148 | 2,826 | 2,586 | ||||||||||||||||||||||||
| Professional fees | 9,948 | 8,459 | 8,537 | 8,450 | 7,583 | ||||||||||||||||||||||||
| FDIC insurance assessments | 684 | 989 | 985 | 894 | 909 | ||||||||||||||||||||||||
| Advertising | 2,145 | 1,940 | 2,088 | 1,358 | 1,359 | ||||||||||||||||||||||||
| Core deposit intangibles and customer relationship intangibles amortization | 2,274 | 1,863 | 1,825 | 1,863 | 1,218 | ||||||||||||||||||||||||
| Other real estate and loan collection expenses | 948 | 732 | 687 | 581 | 365 | ||||||||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 1,528 | (197 | ) | 833 | 1,342 | (112 | ) | ||||||||||||||||||||||
| Restructuring expenses | — | 2,564 | — | — | — | ||||||||||||||||||||||||
| Other noninterest expenses | 11,098 | 9,794 | 10,594 | 9,997 | 9,208 | ||||||||||||||||||||||||
| Total Noninterest Expense | 88,882 | 83,646 | 77,878 | 78,759 | 69,298 | ||||||||||||||||||||||||
| Income Before Income Taxes | 35,330 | 28,391 | 35,178 | 30,357 | 30,017 | ||||||||||||||||||||||||
| Income taxes | 7,451 | 5,123 | 21,506 | 8,725 | 8,059 | ||||||||||||||||||||||||
| Net Income | 27,879 | 23,268 | 13,672 | 21,632 | 21,958 | ||||||||||||||||||||||||
| Preferred dividends | (13 | ) | (13 | ) | (13 | ) | (13 | ) | (13 | ) | |||||||||||||||||||
| Interest expense on convertible preferred debt | — | — | — | 3 | 4 | ||||||||||||||||||||||||
| Net Income Available to Common Stockholders | $ | 27,866 | $ | 23,255 | $ | 13,659 | $ | 21,622 | $ | 21,949 | |||||||||||||||||||
| Earnings per common share-diluted | $ | 0.85 | $ | 0.76 | $ | 0.45 | $ | 0.72 | $ | 0.81 | |||||||||||||||||||
| Weighted average shares outstanding-diluted | 32,830,751 | 30,645,212 | 30,209,043 | 29,910,437 | 26,972,580 | ||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 193,069 | $ | 143,071 | $ | 168,723 | $ | 180,751 | $ | 141,100 | |||||||||||||||||||
| Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 194,937 | 123,275 | 27,280 | 70,985 | 40,676 | ||||||||||||||||||||||||
| Cash and cash equivalents | 388,006 | 266,346 | 196,003 | 251,736 | 181,776 | ||||||||||||||||||||||||
| Time deposits in other financial institutions | 6,803 | 6,297 | 9,820 | 19,793 | 30,241 | ||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||
| Carried at fair value | 2,197,117 | 2,027,665 | 2,216,753 | 2,093,385 | 1,789,441 | ||||||||||||||||||||||||
| Held to maturity, at cost | 244,271 | 249,766 | 253,550 | 256,355 | 259,586 | ||||||||||||||||||||||||
| Other investments, at cost | 26,725 | 22,982 | 22,563 | 23,176 | 21,094 | ||||||||||||||||||||||||
| Loans held for sale | 55,684 | 24,376 | 44,560 | 35,795 | 48,848 | ||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||
| Held to maturity | 7,477,697 | 6,746,015 | 6,391,464 | 6,373,415 | 5,325,082 | ||||||||||||||||||||||||
| Allowance for loan losses | (61,324 | ) | (58,656 | ) | (55,686 | ) | (54,885 | ) | (54,051 | ) | |||||||||||||||||||
| Loans, net | 7,416,373 | 6,687,359 | 6,335,778 | 6,318,530 | 5,271,031 | ||||||||||||||||||||||||
| Premises, furniture and equipment, net | 199,959 | 172,862 | 174,301 | 178,961 | 163,003 | ||||||||||||||||||||||||
| Goodwill | 391,668 | 270,305 | 236,615 | 236,615 | 141,461 | ||||||||||||||||||||||||
| Core deposit intangibles and customer relationship intangibles, net | 52,698 | 41,063 | 35,203 | 37,028 | 22,850 | ||||||||||||||||||||||||
| Servicing rights, net | 31,996 | 25,471 | 25,857 | 26,599 | 34,736 | ||||||||||||||||||||||||
| Cash surrender value on life insurance | 159,302 | 143,444 | 142,818 | 142,073 | 120,281 | ||||||||||||||||||||||||
| Other real estate, net | 11,074 | 11,801 | 10,777 | 13,226 | 9,269 | ||||||||||||||||||||||||
| Other assets | 120,244 | 106,126 | 106,141 | 122,355 | 111,104 | ||||||||||||||||||||||||
| Total Assets | $ | 11,301,920 | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | |||||||||||||||||||
| Liabilities and Equity | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand | $ | 3,399,598 | $ | 3,094,457 | $ | 2,983,128 | $ | 3,009,940 | $ | 2,355,410 | |||||||||||||||||||
| Savings | 4,864,773 | 4,536,106 | 4,240,328 | 4,227,340 | 3,704,579 | ||||||||||||||||||||||||
| Time | 1,224,773 | 910,977 | 923,453 | 994,604 | 870,180 | ||||||||||||||||||||||||
| Total deposits | 9,489,144 | 8,541,540 | 8,146,909 | 8,231,884 | 6,930,169 | ||||||||||||||||||||||||
| Short-term borrowings | 229,890 | 131,240 | 324,691 | 171,871 | 139,130 | ||||||||||||||||||||||||
| Other borrowings | 258,708 | 276,118 | 285,011 | 301,473 | 281,096 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 68,431 | 55,460 | 62,671 | 68,715 | 48,356 | ||||||||||||||||||||||||
| Total Liabilities | 10,046,173 | 9,004,358 | 8,819,282 | 8,773,943 | 7,398,751 | ||||||||||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||||||||||||
| Preferred equity | 938 | 938 | 938 | 938 | 938 | ||||||||||||||||||||||||
| Common stock | 34,438 | 31,068 | 29,953 | 29,946 | 26,701 | ||||||||||||||||||||||||
| Capital surplus | 740,128 | 557,990 | 503,709 | 503,262 | 352,500 | ||||||||||||||||||||||||
| Retained earnings | 524,786 | 500,959 | 481,331 | 468,556 | 450,228 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | (44,543 | ) | (39,450 | ) | (24,474 | ) | (21,018 | ) | (24,397 | ) | |||||||||||||||||||
| Total Equity | 1,255,747 | 1,051,505 | 991,457 | 981,684 | 805,970 | ||||||||||||||||||||||||
| Total Liabilities and Equity | $ | 11,301,920 | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Average Balances | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | $ | 10,643,306 | $ | 8,333,301 | $ | 10,204,061 | $ | 8,283,681 | |||||||||||||||||||||||||||||||||||||||
| Loans, net of unearned | 7,123,182 | 5,376,826 | 6,826,018 | 5,371,271 | |||||||||||||||||||||||||||||||||||||||||||
| Deposits | 9,018,945 | 7,050,126 | 8,637,165 | 6,973,897 | |||||||||||||||||||||||||||||||||||||||||||
| Earning assets | 9,614,800 | 7,586,256 | 9,238,391 | 7,544,609 | |||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | 6,205,187 | 5,146,243 | 5,951,175 | 5,168,475 | |||||||||||||||||||||||||||||||||||||||||||
| Common stockholders' equity | 1,139,876 | 791,039 | 1,076,083 | 771,464 | |||||||||||||||||||||||||||||||||||||||||||
| Total stockholders' equity | 1,140,814 | 791,977 | 1,077,021 | 772,575 | |||||||||||||||||||||||||||||||||||||||||||
| Tangible common stockholders' equity(1) | 767,732 | 625,929 | 745,937 | 611,050 | |||||||||||||||||||||||||||||||||||||||||||
| Key Performance Ratios | |||||||||||||||||||||||||||||||||||||||||||||||
| Annualized return on average assets | 1.05 | % | 1.06 | % | 1.01 | % | 0.97 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized return on average common equity (GAAP) | 9.81 | % | 11.13 | % | 9.58 | % | 10.44 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized return on average tangible common equity (non-GAAP)(2) | 14.56 | % | 14.07 | % | 13.82 | % | 13.18 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized ratio of net charge-offs to average loans | 0.12 | % | 0.14 | % | 0.11 | % | 0.18 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.23 | % | 3.94 | % | 4.21 | % | 3.95 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | 4.30 | % | 4.14 | % | 4.28 | % | 4.15 | % | |||||||||||||||||||||||||||||||||||||||
| Efficiency ratio, fully tax-equivalent(4) | 65.04 | % | 65.61 | % | 66.53 | % | 67.75 | % | |||||||||||||||||||||||||||||||||||||||
| Reconciliation of Return on Average Tangible Common Equity (non-GAAP)(5) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders (GAAP) | $ | 27,866 | $ | 21,949 | $ | 51,121 | $ | 39,945 | |||||||||||||||||||||||||||||||||||||||
| Average common stockholders' equity (GAAP) | $ | 1,139,876 | $ | 791,039 | $ | 1,076,083 | $ | 771,464 | |||||||||||||||||||||||||||||||||||||||
| Less average goodwill | 325,781 | 141,461 | 288,185 | 136,976 | |||||||||||||||||||||||||||||||||||||||||||
| Less average core deposit intangibles and customer relationship intangibles, net | 46,363 | 23,649 | 41,961 | 23,438 | |||||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 767,732 | $ | 625,929 | $ | 745,937 | $ | 611,050 | |||||||||||||||||||||||||||||||||||||||
| Annualized return on average common equity (GAAP) | 9.81 | % | 11.13 | % | 9.58 | % | 10.44 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized return on average tangible common equity (non-GAAP) | 14.56 | % | 14.07 | % | 13.82 | % | 13.18 | % | |||||||||||||||||||||||||||||||||||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)(6) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Interest Income (GAAP) | $ | 101,409 | $ | 74,580 | $ | 192,993 | $ | 147,608 | |||||||||||||||||||||||||||||||||||||||
| Plus tax-equivalent adjustment(7) | 1,575 | 3,796 | 3,119 | 7,656 | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income, tax-equivalent (non-GAAP) | $ | 102,984 | $ | 78,376 | $ | 196,112 | $ | 155,264 | |||||||||||||||||||||||||||||||||||||||
| Average earning assets | $ | 9,614,800 | $ | 7,586,256 | $ | 9,238,391 | $ | 7,544,609 | |||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.23 | % | 3.94 | % | 4.21 | % | 3.95 | % | |||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.30 | % | 4.14 | % | 4.28 | % | 4.15 | % | |||||||||||||||||||||||||||||||||||||||
| (1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net. | |||||||||||||||||||||||||||||||||||||||||||||||
| (2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table. | |||||||||||||||||||||||||||||||||||||||||||||||
| (3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table. | |||||||||||||||||||||||||||||||||||||||||||||||
| (4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure. | |||||||||||||||||||||||||||||||||||||||||||||||
| (5) Return on average tangible common equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles and customer deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||||||||||||||||||||||||||||||
| (6) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||||||||||||||||||||||||||||||
| (7) Computed on a tax-equivalent basis using an effective tax rate of 21% beginning January 1, 2018, and 35% for all prior periods. | |||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Average Balances | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | $ | 10,643,306 | $ | 9,759,936 | $ | 9,807,621 | $ | 9,639,844 | $ | 8,333,301 | ||||||||||||||||||||||||||||||||||||||
| Loans, net of unearned | 7,123,182 | 6,525,553 | 6,343,923 | 6,286,264 | 5,376,826 | |||||||||||||||||||||||||||||||||||||||||||
| Deposits | 9,018,945 | 8,251,140 | 8,293,006 | 8,100,028 | 7,050,126 | |||||||||||||||||||||||||||||||||||||||||||
| Earning assets | 9,614,800 | 8,857,801 | 8,891,432 | 8,726,228 | 7,586,256 | |||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | 6,205,187 | 5,694,337 | 5,663,816 | 5,697,713 | 5,146,243 | |||||||||||||||||||||||||||||||||||||||||||
| Common stockholders' equity | 1,139,876 | 1,011,580 | 986,026 | 954,511 | 791,039 | |||||||||||||||||||||||||||||||||||||||||||
| Total stockholders' equity | 1,140,814 | 1,012,518 | 986,964 | 955,449 | 791,977 | |||||||||||||||||||||||||||||||||||||||||||
| Tangible common stockholders' equity(1) | 767,732 | 723,898 | 713,018 | 691,464 | 625,929 | |||||||||||||||||||||||||||||||||||||||||||
| Key Performance Ratios | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annualized return on average assets | 1.05 | % | 0.97 | % | 0.55 | % | 0.89 | % | 1.06 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized return on average common equity (GAAP) | 9.81 | % | 9.32 | % | 5.50 | % | 8.99 | % | 11.13 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized return on average tangible common equity (non-GAAP)(2) | 14.56 | % | 13.03 | % | 7.60 | % | 12.41 | % | 14.07 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized ratio of net charge-offs to average loans | 0.12 | % | 0.08 | % | 0.28 | % | 0.31 | % | 0.14 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.23 | % | 4.19 | % | 4.14 | % | 4.08 | % | 3.94 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | 4.30 | % | 4.26 | % | 4.30 | % | 4.26 | % | 4.14 | % | ||||||||||||||||||||||||||||||||||||||
| Efficiency ratio, fully tax-equivalent(4) | 65.04 | % | 68.21 | % | 62.26 | % | 64.54 | % | 65.61 | % | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Return on Average Tangible Common Equity (non-GAAP)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders (GAAP) | $ | 27,866 | $ | 23,255 | $ | 13,659 | $ | 21,622 | $ | 21,949 | ||||||||||||||||||||||||||||||||||||||
| Average common stockholders' equity (GAAP) | $ | 1,139,876 | $ | 1,011,580 | $ | 986,026 | $ | 954,511 | $ | 791,039 | ||||||||||||||||||||||||||||||||||||||
| Less average goodwill | 325,781 | 250,172 | 236,615 | 226,097 | 141,461 | |||||||||||||||||||||||||||||||||||||||||||
| Less average core deposit intangibles and customer relationship intangibles, net | 46,363 | 37,510 | 36,393 | 36,950 | 23,649 | |||||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 767,732 | $ | 723,898 | $ | 713,018 | $ | 691,464 | $ | 625,929 | ||||||||||||||||||||||||||||||||||||||
| Annualized return on average common equity (GAAP) | 9.81 | % | 9.32 | % | 5.50 | % | 8.99 | % | 11.13 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized return on average tangible common equity (non-GAAP) | 14.56 | % | 13.03 | % | 7.60 | % | 12.41 | % | 14.07 | % | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)(6) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net Interest Income (GAAP) | $ | 101,409 | $ | 91,584 | $ | 92,856 | $ | 89,844 | $ | 74,580 | ||||||||||||||||||||||||||||||||||||||
| Plus tax-equivalent adjustment(7) | 1,575 | 1,544 | 3,558 | 3,925 | 3,796 | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 102,984 | $ | 93,128 | $ | 96,414 | $ | 93,769 | $ | 78,376 | ||||||||||||||||||||||||||||||||||||||
| Average earning assets | $ | 9,614,800 | $ | 8,857,801 | $ | 8,891,432 | $ | 8,726,228 | $ | 7,586,256 | ||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.23 | % | 4.19 | % | 4.14 | % | 4.08 | % | 3.94 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.30 | % | 4.26 | % | 4.30 | % | 4.26 | % | 4.14 | % | ||||||||||||||||||||||||||||||||||||||
| (1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (6) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (7) Computed on a tax-equivalent basis using an effective tax rate of 21% beginning January 1, 2018, and 35% for all prior periods. | ||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measure-Efficiency Ratio(1) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 101,409 | $ | 74,580 | $ | 192,993 | $ | 147,608 | |||||||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment(2) | 1,575 | 3,796 | 3,119 | 7,656 | |||||||||||||||||||||||||||||||||||||||||||
| Fully tax-equivalent net interest income | 102,984 | 78,376 | 196,112 | 155,264 | |||||||||||||||||||||||||||||||||||||||||||
| Noninterest income | 27,634 | 25,624 | 52,350 | 51,517 | |||||||||||||||||||||||||||||||||||||||||||
| Securities (gains)/losses, net | 259 | (1,392 | ) | (1,182 | ) | (3,874 | ) | ||||||||||||||||||||||||||||||||||||||||
| Unrealized (gain)/loss on equity securities, net | (71 | ) | — | (43 | ) | — | |||||||||||||||||||||||||||||||||||||||||
| Adjusted income | $ | 130,806 | $ | 102,608 | $ | 247,237 | $ | 202,907 | |||||||||||||||||||||||||||||||||||||||
| Total noninterest expenses | $ | 88,882 | $ | 69,298 | $ | 172,528 | $ | 141,038 | |||||||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Core deposit intangibles and customer relationship intangibles amortization | 2,274 | 1,218 | 4,137 | 2,389 | |||||||||||||||||||||||||||||||||||||||||||
| Partnership investment in tax credit projects | — | 876 | — | 876 | |||||||||||||||||||||||||||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 1,528 | (112 | ) | 1,331 | 300 | ||||||||||||||||||||||||||||||||||||||||||
| Restructuring expenses | — | — | 2,564 | — | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest expenses | $ | 85,080 | $ | 67,316 | $ | 164,496 | $ | 137,473 | |||||||||||||||||||||||||||||||||||||||
| Efficiency ratio, fully tax-equivalent (non-GAAP) | 65.04 | % | 65.61 | % | 66.53 | % | 67.75 | % | |||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measure-Efficiency Ratio(1) | 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | ||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 101,409 | $ | 91,584 | $ | 92,856 | $ | 89,844 | $ | 74,580 | |||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment(2) | 1,575 | 1,544 | 3,558 | 3,925 | 3,796 | ||||||||||||||||||||||||||||||||||||||||
| Fully tax-equivalent net interest income | 102,984 | 93,128 | 96,414 | 93,769 | 78,376 | ||||||||||||||||||||||||||||||||||||||||
| Noninterest income | 27,634 | 24,716 | 25,528 | 24,977 | 25,624 | ||||||||||||||||||||||||||||||||||||||||
| Securities (gains)/losses, net | 259 | (1,441 | ) | (1,420 | ) | (1,679 | ) | (1,392 | ) | ||||||||||||||||||||||||||||||||||||
| Unrealized (gain)/loss on equity securities, net | (71 | ) | 28 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | — | — | (1,280 | ) | — | — | |||||||||||||||||||||||||||||||||||||||
| Adjusted income | $ | 130,806 | $ | 116,431 | $ | 119,242 | $ | 117,067 | $ | 102,608 | |||||||||||||||||||||||||||||||||||
| Total noninterest expenses | $ | 88,882 | $ | 83,646 | $ | 77,878 | $ | 78,759 | $ | 69,298 | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||
| Core deposit intangibles and customer relationship intangibles amortization | 2,274 | 1,863 | 1,825 | 1,863 | 1,218 | ||||||||||||||||||||||||||||||||||||||||
| Partnership investment in tax credit projects | — | — | 984 | — | 876 | ||||||||||||||||||||||||||||||||||||||||
| (Gain)/loss on sales/valuation of assets, net | 1,528 | (197 | ) | 833 | 1,342 | (112 | ) | ||||||||||||||||||||||||||||||||||||||
| Restructuring expenses | — | 2,564 | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest expenses | $ | 85,080 | $ | 79,416 | $ | 74,236 | $ | 75,554 | $ | 67,316 | |||||||||||||||||||||||||||||||||||
| Efficiency ratio, fully tax-equivalent (non-GAAP) | 65.04 | % | 68.21 | % | 62.26 | % | 64.54 | % | 65.61 | % | |||||||||||||||||||||||||||||||||||
| (1) Efficiency ratio, fully tax-equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis, which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items, as noted in the table. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||||||||||||||||||||||||||||
| (2) Computed on a tax-equivalent basis using an effective tax rate of 21% beginning January 1, 2018, and 35% for all prior periods. | |||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Common Share Data | ||||||||||||||||||||||||||||||||||||||||||||||||
| Book value per common share | $ | 36.44 | $ | 33.81 | $ | 33.07 | $ | 32.75 | $ | 30.15 | ||||||||||||||||||||||||||||||||||||||
| Tangible book value per common share (non-GAAP)(1) | $ | 23.53 | $ | 23.79 | $ | 23.99 | $ | 23.61 | $ | 24.00 | ||||||||||||||||||||||||||||||||||||||
| Common shares outstanding, net of treasury stock | 34,438,445 | 31,068,239 | 29,953,356 | 29,946,069 | 26,701,226 | |||||||||||||||||||||||||||||||||||||||||||
| Tangible common equity ratio (non-GAAP)(2) | 7.46 | % | 7.59 | % | 7.53 | % | 7.46 | % | 7.97 | % | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stockholders' equity (GAAP) | $ | 1,254,809 | $ | 1,050,567 | $ | 990,518 | $ | 980,746 | $ | 805,032 | ||||||||||||||||||||||||||||||||||||||
| Less goodwill | 391,668 | 270,305 | 236,615 | 236,615 | 141,461 | |||||||||||||||||||||||||||||||||||||||||||
| Less core deposit intangibles and customer relationship intangibles, net | 52,698 | 41,063 | 35,203 | 37,028 | 22,850 | |||||||||||||||||||||||||||||||||||||||||||
| Tangible common stockholders' equity (non-GAAP) | $ | 810,443 | $ | 739,199 | $ | 718,700 | $ | 707,103 | $ | 640,721 | ||||||||||||||||||||||||||||||||||||||
| Common shares outstanding, net of treasury stock | 34,438,445 | 31,068,239 | 29,953,356 | 29,946,069 | 26,701,226 | |||||||||||||||||||||||||||||||||||||||||||
| Common stockholders' equity (book value) per share (GAAP) | $ | 36.44 | $ | 33.81 | $ | 33.07 | $ | 32.75 | $ | 30.15 | ||||||||||||||||||||||||||||||||||||||
| Tangible book value per common share (non-GAAP) | $ | 23.53 | $ | 23.79 | $ | 23.99 | $ | 23.61 | $ | 24.00 | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Tangible Common Equity Ratio (non-GAAP)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets (GAAP) | $ | 11,301,920 | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | ||||||||||||||||||||||||||||||||||||||
| Less goodwill | 391,668 | 270,305 | 236,615 | 236,615 | 141,461 | |||||||||||||||||||||||||||||||||||||||||||
| Less core deposit intangibles and customer relationship intangibles, net | 52,698 | 41,063 | 35,203 | 37,028 | 22,850 | |||||||||||||||||||||||||||||||||||||||||||
| Total tangible assets (non-GAAP) | $ | 10,857,554 | $ | 9,744,495 | $ | 9,538,921 | $ | 9,481,984 | $ | 8,040,410 | ||||||||||||||||||||||||||||||||||||||
| Tangible common equity ratio (non-GAAP) | 7.46 | % | 7.59 | % | 7.53 | % | 7.46 | % | 7.97 | % | ||||||||||||||||||||||||||||||||||||||
| Loan Data | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held to maturity: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and commercial real estate | $ | 5,721,138 | $ | 5,129,777 | $ | 4,809,875 | $ | 4,777,856 | $ | 3,803,011 | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 683,051 | 624,725 | 624,279 | 635,611 | 596,385 | |||||||||||||||||||||||||||||||||||||||||||
| Agricultural and agricultural real estate | 562,353 | 518,386 | 511,588 | 511,764 | 495,243 | |||||||||||||||||||||||||||||||||||||||||||
| Consumer | 512,899 | 474,929 | 447,484 | 450,088 | 431,052 | |||||||||||||||||||||||||||||||||||||||||||
| Unearned discount and deferred loan fees | (1,744 | ) | (1,802 | ) | (1,762 | ) | (1,904 | ) | (609 | ) | ||||||||||||||||||||||||||||||||||||||
| Total loans held to maturity | $ | 7,477,697 | $ | 6,746,015 | $ | 6,391,464 | $ | 6,373,415 | $ | 5,325,082 | ||||||||||||||||||||||||||||||||||||||
| Other Selected Trend Information | ||||||||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 21.09 | % | 18.04 | % | 61.13 | % | 28.74 | % | 26.85 | % | ||||||||||||||||||||||||||||||||||||||
| Full time equivalent employees | 2,216 | 2,022 | 2,008 | 2,024 | 1,862 | |||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage loan applications | $ | 341,978 | $ | 234,825 | $ | 232,946 | $ | 271,476 | $ | 308,113 | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans originated | $ | 225,563 | $ | 149,768 | $ | 185,580 | $ | 198,911 | $ | 216,637 | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans sold | $ | 201,808 | $ | 127,963 | $ | 168,527 | $ | 188,501 | $ | 180,296 | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage loan servicing portfolio | $ | 4,158,107 | $ | 3,535,988 | $ | 3,558,090 | $ | 3,557,866 | $ | 4,340,243 | ||||||||||||||||||||||||||||||||||||||
| (1) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Tangible book value per common share is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (4) The tangible common equity ratio is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by total assets less goodwill and core deposit intangibles and customer relationship intangibles, net. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Allowance for Loan Losses | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 58,656 | $ | 55,686 | $ | 54,885 | $ | 54,051 | $ | 54,999 | ||||||||||||||||||||||||||||||||||||||
| Provision for loan losses | 4,831 | 4,263 | 5,328 | 5,705 | 889 | |||||||||||||||||||||||||||||||||||||||||||
| Charge-offs | (3,164 | ) | (2,224 | ) | (5,628 | ) | (5,759 | ) | (2,766 | ) | ||||||||||||||||||||||||||||||||||||||
| Recoveries | 1,001 | 931 | 1,101 | 888 | 929 | |||||||||||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | 61,324 | $ | 58,656 | $ | 55,686 | $ | 54,885 | $ | 54,051 | ||||||||||||||||||||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 69,376 | $ | 64,806 | $ | 62,581 | $ | 63,456 | $ | 65,393 | ||||||||||||||||||||||||||||||||||||||
| Loans past due ninety days or more as to interest or principal payments | 54 | 22 | 830 | 2,348 | 698 | |||||||||||||||||||||||||||||||||||||||||||
| Other real estate owned | 11,074 | 11,801 | 10,777 | 13,226 | 9,269 | |||||||||||||||||||||||||||||||||||||||||||
| Other repossessed assets | 499 | 423 | 411 | 773 | 675 | |||||||||||||||||||||||||||||||||||||||||||
| Total nonperforming assets | $ | 81,003 | $ | 77,052 | $ | 74,599 | $ | 79,803 | $ | 76,035 | ||||||||||||||||||||||||||||||||||||||
| Performing troubled debt restructured loans | $ | 4,012 | $ | 3,206 | $ | 6,617 | $ | 10,040 | $ | 11,157 | ||||||||||||||||||||||||||||||||||||||
| Nonperforming Assets Activity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 77,052 | $ | 74,599 | $ | 79,803 | $ | 76,035 | $ | 75,667 | ||||||||||||||||||||||||||||||||||||||
| Net loan charge offs | (2,163 | ) | (1,293 | ) | (4,527 | ) | (4,871 | ) | (1,837 | ) | ||||||||||||||||||||||||||||||||||||||
| New nonperforming loans | 16,254 | 8,546 | 9,911 | 9,117 | 13,700 | |||||||||||||||||||||||||||||||||||||||||||
| Acquired nonperforming assets | 7,973 | 2,459 | — | 7,991 | — | |||||||||||||||||||||||||||||||||||||||||||
| Reduction of nonperforming loans(1) | (15,696 | ) | (6,549 | ) | (7,177 | ) | (5,183 | ) | (7,443 | ) | ||||||||||||||||||||||||||||||||||||||
| OREO/Repossessed assets sales proceeds | (1,541 | ) | (657 | ) | (2,917 | ) | (3,328 | ) | (3,734 | ) | ||||||||||||||||||||||||||||||||||||||
| OREO/Repossessed assets writedowns, net | (993 | ) | (16 | ) | (146 | ) | (56 | ) | (259 | ) | ||||||||||||||||||||||||||||||||||||||
| Net activity at Citizens Finance Co. | 117 | (37 | ) | (348 | ) | 98 | (59 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | 81,003 | $ | 77,052 | $ | 74,599 | $ | 79,803 | $ | 76,035 | ||||||||||||||||||||||||||||||||||||||
| Asset Quality Ratios | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ratio of nonperforming loans to total loans | 0.93 | % | 0.96 | % | 0.99 | % | 1.03 | % | 1.24 | % | ||||||||||||||||||||||||||||||||||||||
| Ratio of nonperforming assets to total assets | 0.72 | % | 0.77 | % | 0.76 | % | 0.82 | % | 0.93 | % | ||||||||||||||||||||||||||||||||||||||
| Annualized ratio of net loan charge-offs to average loans | 0.12 | % | 0.08 | % | 0.28 | % | 0.31 | % | 0.14 | % | ||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses as a percent of loans | 0.82 | % | 0.87 | % | 0.87 | % | 0.86 | % | 1.02 | % | ||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses as a percent of nonperforming loans | 88.32 | % | 90.48 | % | 87.82 | % | 83.41 | % | 81.78 | % | ||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-89 days as a percent of total loans | 0.30 | % | 0.21 | % | 0.27 | % | 0.33 | % | 0.38 | % | ||||||||||||||||||||||||||||||||||||||
| (1) Includes principal reductions, transfers to performing status and transfers to OREO. | ||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2018 | June 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||||||||||||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | $ | 1,890,468 | $ | 12,270 | 2.60 | % | $ | 1,516,745 | $ | 8,599 | 2.27 | % | ||||||||||||||||||||||||||||||||||||||||
| Nontaxable(1) | 448,844 | 4,537 | 4.05 | 624,915 | 7,723 | 4.96 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total securities | 2,339,312 | 16,807 | 2.88 | 2,141,660 | 16,322 | 3.06 | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 211,414 | 768 | 1.46 | 121,778 | 345 | 1.14 | ||||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | — | — | — | 1,262 | 3 | 0.95 | ||||||||||||||||||||||||||||||||||||||||||||||
| Loans:(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and commercial real estate(1) | 5,403,447 | 71,301 | 5.29 | 3,824,061 | 46,912 | 4.92 | ||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 685,005 | 7,562 | 4.43 | 633,344 | 6,509 | 4.12 | ||||||||||||||||||||||||||||||||||||||||||||||
| Agricultural and agricultural real estate(1) | 542,249 | 6,850 | 5.07 | 488,222 | 5,807 | 4.77 | ||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | 492,481 | 9,192 | 7.49 | 431,199 | 8,289 | 7.71 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fees on loans | 2,504 | — | 1,670 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Less: allowance for loan losses | (59,108 | ) | — | — | (55,270 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net loans | 7,064,074 | 97,409 | 5.53 | 5,321,556 | 69,187 | 5.21 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total earning assets | 9,614,800 | 114,984 | 4.80 | % | 7,586,256 | 85,857 | 4.54 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Nonearning Assets | 1,028,506 | 747,045 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 10,643,306 | $ | 8,333,301 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | $ | 4,748,306 | $ | 5,535 | 0.47 | % | $ | 3,881,219 | $ | 2,505 | 0.26 | % | ||||||||||||||||||||||||||||||||||||||||
| Time, $100,000 and over | 482,593 | 1,066 | 0.89 | 350,786 | 727 | 0.83 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other time deposits | 558,997 | 1,382 | 0.99 | 479,164 | 931 | 0.78 | ||||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 152,576 | 547 | 1.44 | 153,565 | 90 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 262,715 | 3,470 | 5.30 | 281,509 | 3,228 | 4.60 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 6,205,187 | 12,000 | 0.78 | % | 5,146,243 | 7,481 | 0.58 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 3,229,049 | 2,338,957 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest and other liabilities | 68,256 | 56,124 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest bearing liabilities | 3,297,305 | 2,395,081 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | 1,140,814 | 791,977 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 10,643,306 | $ | 8,333,301 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1) | $ | 102,984 | $ | 78,376 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread(1) | 4.02 | % | 3.96 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(3) | 4.30 | % | 4.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities to earning assets | 64.54 | % | 67.84 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 102,984 | $ | 78,376 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for tax-equivalent interest(1) | (1,575 | ) | (3,796 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 101,409 | $ | 74,580 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average earning assets | $ | 9,614,800 | $ | 7,586,256 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.23 | % | 3.94 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.30 | % | 4.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21% beginning January 1, 2018, and 35% for all prior periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Nonaccrual loans are included in the average loans outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2018 | June 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||||||||||||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | $ | 1,847,858 | $ | 23,847 | 2.60 | % | $ | 1,483,087 | $ | 16,852 | 2.29 | % | ||||||||||||||||||||||||||||||||||||||||
| Nontaxable(1) | 448,743 | 9,067 | 4.07 | 635,168 | 15,709 | 4.99 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total securities | 2,296,601 | 32,914 | 2.89 | 2,118,255 | 32,561 | 3.10 | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 173,349 | 1,175 | 1.37 | 109,095 | 554 | 1.02 | ||||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | — | — | — | 791 | 3 | 0.76 | ||||||||||||||||||||||||||||||||||||||||||||||
| Loans:(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and commercial real estate(1) | 5,158,483 | 134,114 | 5.24 | 3,818,689 | 92,825 | 4.90 | ||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 663,711 | 14,413 | 4.38 | 639,902 | 13,192 | 4.16 | ||||||||||||||||||||||||||||||||||||||||||||||
| Agricultural and agricultural real estate(1) | 528,093 | 12,854 | 4.91 | 485,665 | 11,361 | 4.72 | ||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | 475,731 | 17,852 | 7.57 | 427,015 | 16,342 | 7.72 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fees on loans | 4,420 | — | 3,430 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Less: allowance for loan losses | (57,577 | ) | — | — | (54,803 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net loans | 6,768,441 | 183,653 | 5.47 | 5,316,468 | 137,150 | 5.20 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total earning assets | 9,238,391 | 217,742 | 4.75 | % | 7,544,609 | 170,268 | 4.55 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Nonearning Assets | 965,670 | 739,072 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 10,204,061 | $ | 8,283,681 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | $ | 4,554,484 | $ | 9,326 | 0.41 | % | $ | 3,859,730 | $ | 4,610 | 0.24 | % | ||||||||||||||||||||||||||||||||||||||||
| Time, $100,000 and over | 430,309 | 1,842 | 0.86 | 349,789 | 1,452 | 0.84 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other time deposits | 544,820 | 2,581 | 0.96 | 481,736 | 1,831 | 0.77 | ||||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 150,171 | 815 | 1.09 | 194,272 | 227 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 271,391 | 7,066 | 5.25 | 282,948 | 6,884 | 4.91 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 5,951,175 | 21,630 | 0.73 | % | 5,168,475 | 15,004 | 0.59 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest Bearing Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 3,107,552 | 2,282,642 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest and other liabilities | 68,313 | 59,989 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest bearing liabilities | 3,175,865 | 2,342,631 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | 1,077,021 | 772,575 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 10,204,061 | $ | 8,283,681 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP)(1) | $ | 196,112 | $ | 155,264 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread(1) | 4.02 | % | 3.96 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(3) | 4.28 | % | 4.15 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities to earning assets | 64.42 | % | 68.51 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 196,112 | $ | 155,264 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for tax-equivalent interest(1) | (3,119 | ) | (7,656 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 192,993 | $ | 147,608 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average earning assets | $ | 9,238,391 | $ | 7,544,609 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 4.21 | % | 3.95 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.28 | % | 4.15 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21% beginning January 1, 2018, and 35% for all prior periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Nonaccrual loans are included in the average loans outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Annualized net interest margin, fully tax-equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of and For the Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30/2018 | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Citywide Banks(1) | $2,295,261 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Dubuque Bank and Trust Company | 1,500,108 | 1,490,100 | 1,443,419 | 1,479,647 | 1,441,655 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico Bank & Trust | 1,466,311 | 1,416,788 | 1,453,534 | 1,425,185 | 1,407,991 | |||||||||||||||||||||||||||||||||||||||||||||||
| First Bank & Trust | 1,123,559 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Wisconsin Bank & Trust | 1,034,075 | 1,017,053 | 1,079,222 | 1,030,192 | 1,035,628 | |||||||||||||||||||||||||||||||||||||||||||||||
| Premier Valley Bank | 846,215 | 805,014 | 925,078 | 886,495 | 850,956 | |||||||||||||||||||||||||||||||||||||||||||||||
| Illinois Bank & Trust | 815,905 | 751,371 | 783,127 | 761,285 | 740,153 | |||||||||||||||||||||||||||||||||||||||||||||||
| Minnesota Bank & Trust | 660,469 | 631,852 | 210,157 | 217,246 | 216,957 | |||||||||||||||||||||||||||||||||||||||||||||||
| Arizona Bank & Trust | 653,596 | 633,474 | 602,182 | 566,951 | 566,339 | |||||||||||||||||||||||||||||||||||||||||||||||
| Morrill & Janes Bank and Trust Company | 602,630 | 648,568 | 654,871 | 719,246 | 748,286 | |||||||||||||||||||||||||||||||||||||||||||||||
| Rocky Mountain Bank | 504,243 | 490,917 | 487,136 | 486,790 | 476,829 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Citywide Banks(1) | $ | 1,867,626 | $ | 1,914,726 | $ | 1,895,540 | $ | 1,924,605 | $ | 682,872 | ||||||||||||||||||||||||||||||||||||||||||
| Dubuque Bank and Trust Company | 1,136,431 | 1,193,271 | 1,084,415 | 1,139,512 | 1,178,368 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico Bank & Trust | 1,242,673 | 1,202,051 | 1,229,324 | 1,221,134 | 1,190,758 | |||||||||||||||||||||||||||||||||||||||||||||||
| First Bank & Trust | 887,181 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Wisconsin Bank & Trust | 874,035 | 835,919 | 890,835 | 852,489 | 874,845 | |||||||||||||||||||||||||||||||||||||||||||||||
| Premier Valley Bank | 696,460 | 660,070 | 705,142 | 714,605 | 681,298 | |||||||||||||||||||||||||||||||||||||||||||||||
| Illinois Bank & Trust | 753,022 | 674,391 | 692,227 | 691,680 | 669,532 | |||||||||||||||||||||||||||||||||||||||||||||||
| Minnesota Bank & Trust | 561,257 | 533,893 | 178,036 | 189,749 | 193,365 | |||||||||||||||||||||||||||||||||||||||||||||||
| Arizona Bank & Trust | 558,895 | 567,515 | 522,490 | 500,270 | 493,419 | |||||||||||||||||||||||||||||||||||||||||||||||
| Morrill & Janes Bank and Trust Company | 498,798 | 558,174 | 563,638 | 605,390 | 627,857 | |||||||||||||||||||||||||||||||||||||||||||||||
| Rocky Mountain Bank | 443,359 | 429,000 | 424,487 | 426,405 | 416,436 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Citywide Banks(1) | $ | 7,018 | $ | 5,463 | $ | 1,069 | $ | 4,541 | $ | 746 | ||||||||||||||||||||||||||||||||||||||||||
| Dubuque Bank and Trust Company | 4,426 | 3,214 | 9,027 | 703 | 3,477 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico Bank & Trust | 7,043 | 6,444 | 2,954 | 4,972 | 5,855 | |||||||||||||||||||||||||||||||||||||||||||||||
| First Bank & Trust | 1,925 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Wisconsin Bank & Trust | 2,470 | 2,617 | 2,210 | 3,368 | 3,448 | |||||||||||||||||||||||||||||||||||||||||||||||
| Premier Valley Bank | 2,664 | 2,373 | 1,508 | 2,907 | 2,573 | |||||||||||||||||||||||||||||||||||||||||||||||
| Illinois Bank & Trust | 2,421 | 2,712 | 794 | 2,286 | 1,984 | |||||||||||||||||||||||||||||||||||||||||||||||
| Minnesota Bank & Trust | 581 | 762 | 106 | 791 | 563 | |||||||||||||||||||||||||||||||||||||||||||||||
| Arizona Bank & Trust | 3,623 | 2,104 | (103 | ) | 1,451 | 1,073 | ||||||||||||||||||||||||||||||||||||||||||||||
| Morrill & Janes Bank and Trust Company | 961 | 1,186 | 650 | 1,760 | 2,210 | |||||||||||||||||||||||||||||||||||||||||||||||
| Rocky Mountain Bank | 1,185 | 1,172 | 1,769 | 1,631 | 1,732 | |||||||||||||||||||||||||||||||||||||||||||||||
| (1) Formerly known as Centennial Bank and Trust. | ||||||||||||||||||||||||||||||||||||||||||||||||||||