HEARTLAND FINANCIAL USA INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - HEARTLAND FINANCIAL USA INC	form8kq42015coverpage.htm



CONTACT:	FOR IMMEDIATE RELEASE
Bryan R. McKeag	January 25, 2016
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS 2015 FOURTH QUARTER AND ANNUAL RESULTS

Highlights



§	Record annual net income of $60.0 million, a 43% increase from the prior year
§	Diluted earnings per common share of $0.67 for the quarter and $2.83 for the year
§	Return on average tangible common equity of 12.78% for the quarter and 13.90% for the year
§	Net interest margin of 3.99% for the quarter and 3.97% for the year
§	Deposits, exclusive of acquisitions, increased $367.8 million or 8% for the year
§	Loans held to maturity, exclusive of acquisitions, increased $185.7 million or 5% for the year
§	Completed acquisition of Premier Valley Bank in Fresno, California during the quarter
§	Completed systems conversion of Community Bank in Santa Fe, New Mexico during the quarter



	Quarter Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
Net income (in millions)	$	14.6		$	12.3		$	60.0		$	41.9
Net income available to common stockholders (in millions)	14.4			12.1			59.2			41.1
Diluted earnings per common share	0.67			0.64			2.83			2.19

Return on average assets	0.79		%	0.80		%	0.88		%	0.70		%
Return on average common equity	10.69			11.77			11.92			10.62
Return on average tangible common equity	12.78			13.22			13.90			12.04
Net interest margin	3.99			3.94			3.97			3.96



“The year 2015 was Heartland’s best year on record with net income of $60 million. Net income increased by 43 percent over 2014, with earnings per share growing by 29 percent.” Lynn B. Fuller, chairman and chief executive officer, Heartland Financial USA, Inc.

Dubuque, Iowa, Monday, January 25, 2016-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $14.4 million, or $0.67 per diluted common share, for the quarter ended December 31, 2015, compared to $12.1 million, or $0.64 per diluted common share, for the fourth quarter of 2014. Return on average common equity was 10.69% and return on average assets was 0.79% for the fourth quarter of 2015, compared to 11.77% and 0.80%, respectively, for the same quarter in 2014.

Commenting on Heartland’s results for 2015, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, “The year 2015 was Heartland’s best year on record with net income of $60 million. Net income increased by 43 percent over 2014, with earnings per share growing by 29 percent.”

Net income available to common stockholders for the year 2015 was $59.2 million, or $2.83 per diluted common share, compared to $41.1 million, or $2.19 per diluted common share, recorded during the year 2014. Return on average common equity was 11.92% and return on average assets was 0.88% for the year 2015, compared to 10.62% and 0.70%, respectively, for the same period in 2014.

On January 16, 2015, Heartland completed the acquisition of Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin, in an all stock transaction valued at approximately $53.1 million. Simultaneous with the closing, Community Bank & Trust was merged into Heartland's Wisconsin Bank & Trust subsidiary. As of the close date, the transaction included, at fair value, total assets of $525.3 million, total loans of $395.0 million and total deposits of $434.0 million. The systems conversion for this transaction was completed on May 15, 2015.

On August 21, 2015, Heartland completed the acquisition of Community Bancorporation of New Mexico, Inc., parent company of Community Bank in Santa Fe, New Mexico, in an all cash transaction valued at approximately $11.1 million. Simultaneous with closing of the transaction, Community Bank merged into Heartland’s New Mexico Bank & Trust subsidiary. As of the close date, the transaction included, at fair value, total assets of $166.5 million, total loans of $99.5 million and total deposits of $147.4 million. The systems conversion for this transaction was completed on November 6, 2015.

On September 11, 2015, Heartland completed the acquisition of First Scottsdale Bank, N.A. in Scottsdale, Arizona, in an all cash transaction valued at approximately $17.7 million. Simultaneous with the close, First Scottsdale Bank was merged into Heartland’s Arizona Bank & Trust subsidiary. As of the close date, the transaction included, at fair value, total assets of $83.7 million, total loans of $54.7 million and total deposits of $65.9 million. The systems conversion for this transaction was completed simultaneous with the closing.

On November 30, 2015, Heartland completed the acquisition of Premier Valley Bank, a community bank based in Fresno, California. Simultaneous with the close, Premier Valley became a wholly-owned subsidiary of Heartland. Premier Valley shareholders received $95.0 million or $7.73 per share of Premier Valley common stock in the merger, and elected to receive this payment in shares of Heartland common stock or in cash, subject to proration so that 70% of the total payment was in Heartland common stock and 30% in cash. As of the close date, the transaction included, at fair value, total assets of $733.7 million, total loans of $389.8 million and total deposits of $622.7 million. The systems conversion for this transaction is expected to occur during the first quarter of 2016.

On October 22, 2015, Heartland entered into a merger agreement with CIC Bancshares, Inc., parent company of Centennial Bank, headquartered in Denver, Colorado. Under the agreement, Heartland will acquire CIC Bancshares, Inc. in a transaction valued at approximately $83.5 million, of which approximately 20 percent would be payable in cash and approximately 80 percent would be payable by issuance of Heartland common stock. Simultaneous with closing of the transaction, Centennial Bank will be merged into Heartland’s Summit Bank & Trust subsidiary, with the resulting institution operating under the name, Centennial Bank and Trust. Centennial Bank had total assets of approximately $730.0 million as of September 30, 2015. The transaction has received regulatory approval, but is subject to approval by shareholders of CIC Bancshares, Inc., and is expected to close during the first quarter of 2016.

Net Interest Margin As a Percentage of Average Earning Assets and In Dollars Increases

Net interest margin, expressed as a percentage of average earning assets, was 3.99% during the fourth quarter of 2015, compared to 4.01% during the third quarter of 2015 and 3.94% during the fourth quarter of 2014.

Fuller said, “Throughout the year, we were pleased to see net interest margin hold steady in the 4 percent range. Despite continued pressure from a very low interest rate environment, we continue to find opportunities to maintain asset yields while managing down our funding costs.”

Interest income for the fourth quarter of 2015 was $70.2 million, an increase of $9.8 million or 16%, compared to the $60.4 million recorded in the fourth quarter of 2014. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $2.8 million for the fourth quarter of 2015 and $2.6 million for the fourth quarter of 2014. With these adjustments, interest income on a tax-equivalent basis was $73.0 million for the fourth quarter of 2015, an increase of $10.1 million or 16%, compared to $62.9 million for the fourth quarter of 2014. The increase in interest income in the fourth quarter of 2015, as compared to the fourth quarter of 2014, was primarily due to an increase in average earning assets, which increased $1.00 billion or 18% during the fourth quarter of 2015 compared to the fourth quarter of 2014, with approximately $626.3 million attributable to the acquisitions completed during 2015 and the remainder attributable primarily to loan growth experienced during the last half of 2014 and first half of 2015. Also contributing to the increase in interest income during the fourth quarter of 2015 compared to the fourth quarter of 2014 was a change in the composition of average earning assets from lower-yielding investments to higher-yielding loans. The percentage of average net loans and leases to total earning assets was 73% during the fourth quarter of 2015 compared to 70% during the fourth quarter of 2014.

Interest expense for the fourth quarter of 2015 was $7.5 million, a decrease of $763,000 or 9% from $8.2 million in the fourth quarter of 2014. Average interest bearing liabilities increased $658.3 million or 16% for the quarter ended December 31, 2015, as compared to the same quarter in 2014, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 17 basis points from 0.79% in the fourth quarter of 2014 to 0.62% in the fourth quarter of 2015. The average interest rate paid on savings deposits was 0.20% during the fourth quarter of 2015 compared to 0.28% during the fourth quarter of 2014 and the average interest rate paid on time deposits was 0.82% during the fourth quarter of 2015 compared to 1.09% during the fourth quarter of 2014.

Net interest income increased $10.5 million or 20% to $62.7 million in the fourth quarter of 2015 from the $52.2 million recorded in the fourth quarter of 2014. Net interest income on a tax-equivalent basis totaled $65.5 million during the fourth quarter of 2015, an increase of $10.8 million or 20% from the $54.7 million recorded during the fourth quarter of 2014.

Noninterest Income and Noninterest Expenses Increase

Noninterest income totaled $24.4 million during the fourth quarter of 2015 compared to $21.2 million during the fourth quarter of 2014, an increase of $3.1 million or 15%. Service charges and fees totaled $6.7 million during the fourth quarter of 2015 compared to $5.1 million during the fourth quarter of 2014, an increase of $1.6 million or 31%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which is attributable to the acquisitions. Net securities gains totaled $3.9 million during the fourth quarter of 2015 compared to $1.2 million during the fourth quarter of 2014, an increase of $2.7 million or 224%.

For the fourth quarter of 2015, noninterest expenses totaled $66.0 million compared to $53.9 million during the fourth quarter of 2014, an increase of $12.0 million or 22%. Salaries and employee benefits increased $2.2 million or 7%, primarily attributable to acquisitions. Losses on sales/valuations of assets, net, totaled $4.2 million during the fourth quarter of 2015 compared to $116,000 during the fourth quarter of 2014, an increase of $4.1 million, primarily attributable to the writedown on one property. Other noninterest expenses increased $2.9 million or 36%, primarily as a result of one-time costs associated with the acquisitions and additional investments in technology.

Heartland's effective tax rate was 23.03% for the fourth quarter of 2015 compared to 26.08% for the fourth quarter of 2014. Included in the determination of Heartland's income taxes for the fourth quarters of both 2015 and 2014 were federal historic rehabilitation tax credits associated with Heartland's ownership interest in qualifying real estate projects totaling $1.4 million in 2015 and $1.3 million in 2014. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $145,000 during the fourth quarter of 2015 compared to $189,000 during the fourth quarter of 2014. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 27.70% during the fourth quarter of 2015 compared to 28.54% during the fourth quarter of 2014.

Loans and Deposits Increase

Total assets were $7.70 billion at December 31, 2015, an increase of $1.65 billion or 27% since year-end 2014. Total assets of the entities acquired during 2015 were $1.51 billion at acquisition date. Securities represented 24% of total assets at December 31, 2015, compared to 28% at year-end 2014.

Total loans and leases held to maturity were $5.00 billion at December 31, 2015, compared to $3.88 billion at year-end 2014, an increase of $1.12 billion or 29%. This increase includes $939.0 million of total loans and leases held to maturity acquired in the 2015 acquisitions. Exclusive of these acquisitions, total loans and leases held to maturity increased $185.7 million or 5% since year-end 2014.

“After a very strong second quarter, loan demand moderated during the second half of the year. That said, organic loan growth of $186 million represents an increase of 5 percent which is respectable. And for 2016, we remain cautiously optimistic as quality loan growth is our second highest priority," added Fuller.

Total deposits were $6.41 billion as of December 31, 2015, compared to $4.77 billion at year-end 2014, an increase of $1.64 billion or 34%. Of this increase, $1.27 billion was attributable to the acquisitions completed during 2015. Exclusive of these acquisitions, total deposits increased $367.8 million or 8% since year-end 2014. Demand deposits totaled $1.91 billion at December 31, 2015, an increase of $618.9 million or 48% since year-end 2014, with $414.5 million of the increase attributable to the acquisitions. Included in the deposit growth during 2015 was a $89.3 million increase in brokered time deposits, the majority of which were issued to replace higher cost long-term FHLB advances and wholesale repurchase agreements that matured during the year.

Fuller said, “We were very pleased to see excellent deposit growth in 2015, especially in the fourth quarter. Excluding acquisitions, deposits increased by $368 million, or 8 percent over year-end 2014. We have experienced a very favorable shift in our deposit mix through the growth of demand deposits, which now represent 30 percent of total deposits.”

Nonperforming Assets Increase; Provision for Loan Losses Decrease

Nonperforming assets were $51.7 million or 0.67% of total assets at December 31, 2015, compared to $44.5 million or 0.73% of total assets at December 31, 2014. Exclusive of $16.4 million of nonperforming assets acquired in the acquisitions, nonperforming assets decreased $9.5 million or 21% since year-end 2014. Nonperforming loans, excluding those covered under loss sharing agreements, were $39.7 million or 0.79% of total loans and leases at December 31, 2015, compared to $25.1 million or 0.63% of total loans and leases at December 31, 2014.

The allowance for loan and lease losses at December 31, 2015, was 0.97% of loans and leases and 122.77% of nonperforming loans compared to 1.07% of loans and leases and 165.33% of nonperforming loans at December 31, 2014. The provision for loan losses was $2.2 million for the fourth quarter of 2015 compared to $2.9 million for the fourth quarter of 2014.

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 January 24, 2017, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a $7.7 billion diversified financial services company providing banking, mortgage, wealth management, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 94 banking locations serving 71 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California, with mortgage loan production offices in California, Nevada and Idaho. 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 included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, 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 concerning 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, (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 December 31,						For the Year Ended December 31,
	2015			2014			2015			2014
Interest Income
Interest and fees on loans and leases	$	59,905		$	50,226		$	227,106		$	194,022
Interest on securities:
Taxable	6,917			6,972			26,646			29,727
Nontaxable	3,311			3,190			12,178			13,269
Interest on federal funds sold	21			—			24			1
Interest on deposits in other financial institutions	3			3			14			23
Total Interest Income	70,157			60,391			265,968			237,042
Interest Expense
Interest on deposits	3,772			4,144			15,530			18,154
Interest on short-term borrowings	200			222			838			877
Interest on other borrowings	3,485			3,854			15,602			14,938
Total Interest Expense	7,457			8,220			31,970			33,969
Net Interest Income	62,700			52,171			233,998			203,073
Provision for loan and lease losses	2,171			2,866			12,697			14,501
Net Interest Income After Provision for Loan and Lease Losses	60,529			49,305			221,301			188,572
Noninterest Income
Service charges and fees	6,654			5,078			24,308			20,085
Loan servicing income	1,704			1,360			5,276			5,583
Trust fees	3,230			3,350			14,281			13,097
Brokerage and insurance commissions	917			1,115			3,789			4,440
Securities gains, net	3,913			1,208			13,143			3,668
Loss on trading account securities	—			—			—			(38		)
Impairment loss on securities	(769		)	—			(769		)	—
Gains on sale of loans held for sale	7,085			7,778			45,249			31,337
Income on bank owned life insurance	644			399			1,999			1,472
Other noninterest income	1,003			945			3,409			2,580
Total Noninterest Income	24,381			21,233			110,685			82,224
Noninterest Expense
Salaries and employee benefits	33,583			31,415			144,105			129,843
Occupancy	4,334			3,905			16,928			15,746
Furniture and equipment	2,344			2,097			8,747			8,105
Professional fees	6,503			5,072			23,047			18,241
FDIC insurance assessments	886			960			3,759			3,808
Advertising	1,624			1,442			5,465			5,524
Intangible assets amortization	898			487			2,978			2,223
Other real estate and loan collection expenses	723			524			2,437			2,309
Loss on sales/valuations of assets, net	4,238			116			6,821			2,105
Other noninterest expenses	10,821			7,930			36,759			27,896
Total Noninterest Expense	65,954			53,948			251,046			215,800
Income Before Income Taxes	18,956			16,590			80,940			54,996
Income taxes	4,365			4,327			20,898			13,096
Net Income	14,591			12,263			60,042			41,900
Preferred dividends and discount	(204		)	(204		)	(817		)	(817		)
Net Income Available to Common Stockholders	$	14,387		$	12,059		$	59,225		$	41,083
Earnings per common share-diluted	$	0.67		$	0.64		$	2.83		$	2.19
Weighted average shares outstanding-diluted	21,491,699			18,762,272			20,929,385			18,741,921



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Interest Income
Interest and fees on loans and leases	$	59,905		$	58,328		$	55,824		$	53,049		$	50,226
Interest on securities:
Taxable	6,917			5,858			6,739			7,132			6,972
Nontaxable	3,311			3,077			2,874			2,916			3,190
Interest on federal funds sold	21			1			1			1			—
Interest on deposits in other financial institutions	3			4			3			4			3
Total Interest Income	70,157			67,268			65,441			63,102			60,391
Interest Expense
Interest on deposits	3,772			3,767			3,819			4,172			4,144
Interest on short-term borrowings	200			228			212			198			222
Interest on other borrowings	3,485			3,549			3,766			4,802			3,854
Total Interest Expense	7,457			7,544			7,797			9,172			8,220
Net Interest Income	62,700			59,724			57,644			53,930			52,171
Provision for loan and lease losses	2,171			3,181			5,674			1,671			2,866
Net Interest Income After Provision for Loan and Lease Losses	60,529			56,543			51,970			52,259			49,305
Noninterest Income
Service charges and fees	6,654			6,350			5,900			5,404			5,078
Loan servicing income	1,704			1,368			1,163			1,041			1,360
Trust fees	3,230			3,507			3,913			3,631			3,350
Brokerage and insurance commissions	917			869			916			1,087			1,115
Securities gains, net	3,913			1,767			3,110			4,353			1,208
Loss on trading account securities	—			—			—			—			—
Impairment loss on securities	(769		)	—			—			—			—
Gains on sale of loans held for sale	7,085			9,823			14,599			13,742			7,778
Income on bank owned life insurance	644			372			459			524			399
Other noninterest income	1,003			924			601			881			945
Total Noninterest Income	24,381			24,980			30,661			30,663			21,233
Noninterest Expense
Salaries and employee benefits	33,583			37,033			36,851			36,638			31,415
Occupancy	4,334			4,307			4,028			4,259			3,905
Furniture and equipment	2,344			2,121			2,176			2,106			2,097
Professional fees	6,503			5,251			5,249			6,044			5,072
FDIC insurance assessments	886			1,018			899			956			960
Advertising	1,624			1,327			1,333			1,181			1,442
Intangible assets amortization	898			734			715			631			487
Other real estate and loan collection expenses	723			496			753			465			524
Loss on sales/valuations of assets, net	4,238			721			1,509			353			116
Other noninterest expenses	10,821			8,988			9,969			6,981			7,930
Total Noninterest Expense	65,954			61,996			63,482			59,614			53,948
Income Before Income Taxes	18,956			19,527			19,149			23,308			16,590
Income taxes	4,365			4,945			3,989			7,599			4,327
Net Income	14,591			14,582			15,160			15,709			12,263
Preferred dividends and discount	(204		)	(205		)	(204		)	(204		)	(204		)
Net Income Available to Common Stockholders	$	14,387		$	14,377		$	14,956		$	15,505		$	12,059
Earnings per common share-diluted	$	0.67		$	0.69		$	0.72		$	0.76		$	0.64
Weighted average shares outstanding-diluted	21,419,699			20,893,312			20,877,236			20,493,266			18,762,272



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Assets
Cash and due from banks	$	237,841		$	76,954		$	111,909		$	104,475		$	64,150
Federal funds sold and other short-term investments	20,958			14,151			7,813			7,257			9,721
Cash and cash equivalents	258,799			91,105			119,722			111,732			73,871
Time deposits in other financial institutions	2,355			2,355			2,355			2,605			2,605
Securities:
Available for sale, at fair value	1,578,434			1,261,687			1,315,699			1,353,537			1,401,868
Held to maturity, at cost	279,117			282,200			283,258			284,030			284,587
Other investments, at cost	21,443			19,292			20,455			18,297			20,498
Loans held for sale	74,783			102,569			105,898			105,670			70,514
Loans and leases:
Held to maturity	5,001,486			4,642,523			4,449,823			4,243,689			3,876,745
Loans covered by loss share agreements	—			—			—			—			1,258
Allowance for loan and lease losses	(48,685		)	(47,105		)	(45,614		)	(41,854		)	(41,449		)
Loans and leases, net	4,952,801			4,595,418			4,404,209			4,201,835			3,836,554
Premises, furniture and equipment, net	150,678			147,486			143,423			145,132			130,713
Other real estate, net	11,524			17,041			16,983			19,097			19,016
Goodwill	97,277			56,828			54,162			51,073			35,583
Other intangible assets, net	56,945			48,695			45,226			44,024			33,932
Cash surrender value on life insurance	110,297			99,564			96,693			95,118			82,638
Other assets	100,301			81,644			108,924			74,126			59,433
Total Assets	$	7,694,754		$	6,805,884		$	6,717,007		$	6,506,276		$	6,051,812
Liabilities and Equity
Liabilities
Deposits:
Demand	$	1,914,141		$	1,632,005		$	1,536,355		$	1,515,004		$	1,295,193
Savings	3,367,479			2,936,611			2,816,666			2,863,744			2,687,493
Time	1,124,203			938,621			964,248			887,650			785,336
Total deposits	6,405,823			5,507,237			5,317,269			5,266,398			4,768,022
Short-term borrowings	293,898			335,845			477,918			259,335			330,264
Other borrowings	263,214			302,086			296,594			361,300			395,705
Accrued expenses and other liabilities	68,646			69,707			46,020			51,896			61,504
Total Liabilities	7,031,581			6,214,875			6,137,801			5,938,929			5,555,495
Stockholders' Equity
Preferred equity	81,698			81,698			81,698			81,698			81,698
Common stock	22,436			20,640			20,616			20,586			18,511
Capital surplus	216,436			149,613			148,789			147,642			95,816
Retained earnings	348,630			337,421			325,106			312,212			298,764
Accumulated other comprehensive income (loss)	(6,027		)	1,731			3,059			5,255			1,528
Treasury stock at cost	—			(94		)	(62		)	(46		)	—
Total Equity	663,173			591,009			579,206			567,347			496,317
Total Liabilities and Equity	$	7,694,754		$	6,805,884		$	6,717,007		$	6,506,276		$	6,051,812



HEARTLAND FINANCIAL USA, INC
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
				For the Quarter Ended December 31,						For the Year Ended December 31,
				2015			2014			2015			2014
Average Balances
Assets				$	7,241,104		$	5,974,188		$	6,763,901		$	5,857,488
Loans and leases, net of unearned				4,827,844			3,899,465			4,551,008			3,744,830
Deposits				5,938,905			4,784,592			5,458,623			4,698,936
Earning assets				6,512,565			5,508,287			6,152,090			5,384,275
Interest bearing liabilities				4,781,797			4,123,478			4,531,510			4,101,071
Common stockholders' equity				533,845			406,664			496,877			386,844
Total stockholders' equity				615,543			488,362			578,575			468,542
Tangible common stockholders' equity				446,564			361,916			425,992			341,134

Key Performance Ratios
Annualized return on average assets				0.79		%	0.80		%	0.88		%	0.70		%
Annualized return on average common equity				10.69		%	11.77		%	11.92		%	10.62		%
Annualized return on average common tangible equity				12.78		%	13.22		%	13.90		%	12.04		%
Annualized ratio of net charge-offs to average loans and leases				0.05		%	0.32		%	0.12		%	0.39		%
Annualized net interest margin⁽¹⁾				3.99		%	3.94		%	3.97		%	3.96		%
Efficiency ratio, fully taxable equivalent⁽²⁾				68.53		%	69.99		%	69.16		%	71.61		%

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Average Balances
Assets	$	7,241,104		$	6,726,196		$	6,625,797		$	6,454,271		$	5,974,188
Loans and leases, net of unearned	4,827,844			4,654,179			4,447,124			4,267,593			3,899,465
Deposits	5,938,905			5,423,418			5,302,235			5,161,782			4,784,592
Earning assets	6,512,565			6,161,495			6,069,844			5,857,204			5,508,287
Interest bearing liabilities	4,781,797			4,491,089			4,451,200			4,398,184			4,123,478
Common stockholders' equity	533,845			500,399			489,394			463,048			406,664
Total stockholders' equity	615,543			582,097			571,092			544,746			488,362
Tangible common stockholders' equity	446,564			431,304			424,245			401,294			361,916

Key Performance Ratios
Annualized return on average assets	0.79		%	0.85		%	0.91		%	0.97		%	0.80		%
Annualized return on average common equity	10.69		%	11.40		%	12.26		%	13.58		%	11.77		%
Annualized return on average common tangible equity	12.78		%	13.22		%	14.14		%	15.67		%	13.22		%
Annualized ratio of net charge-offs to average loans and leases	0.05		%	0.14		%	0.17		%	0.12		%	0.32		%
Annualized net interest margin⁽¹⁾	3.99		%	4.01		%	3.97		%	3.90		%	3.94		%
Efficiency ratio, fully taxable equivalent⁽²⁾	68.53		%	69.85		%	67.43		%	70.95		%	69.99		%

(1) Computed on a tax equivalent basis using an effective tax rate of 35%.
(2) Refer to the "Non-GAAP Reconciliation-Efficiency Ratio" table that follows for details of this non-GAAP measure.



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
				For the Quarter Ended December 31,						For the Year Ended December 31,
Reconciliation of Non-GAAP Measure-Efficiency Ratio				2015			2014			2015			2014
Net interest income				$	62,700		$	52,171		$	233,998		$	203,073
Taxable equivalent adjustment⁽¹⁾				2,827			2,550			10,216			10,298
Fully taxable equivalent net interest income				65,527			54,721			244,214			213,371
Noninterest income				24,381			21,233			110,685			82,224
Securities gains, net				(3,913		)	(1,208		)	(13,143		)	(3,668		)
Impairment loss on securities				769			—			769			—
Adjusted income				$	86,764		$	74,746		$	342,525		$	291,927

Total noninterest expenses				$	65,954		$	53,948		$	251,046		$	215,800
Less:
Intangible assets amortization				898			487			2,978			2,223
Partnership investment in historic rehabilitation tax credits				1,362			1,028			4,357			2,436
Loss on sales/valuations of assets, net				4,238			116			6,821			2,105
Adjusted noninterest expenses				$	59,456		$	52,317		$	236,890		$	209,036

Efficiency ratio, fully taxable equivalent⁽²⁾				68.53		%	69.99		%	69.16		%	71.61		%

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Reconciliation of Non-GAAP Measure-Efficiency Ratio
Net interest income	$	62,700		$	59,724		$	57,644		$	53,930		$	52,171
Taxable equivalent adjustment⁽¹⁾	2,827			2,588			2,408			2,393			2,550
Fully taxable equivalent net interest income	65,527			62,312			60,052			56,323			54,721
Noninterest income	24,381			24,980			30,661			30,663			21,233
Securities gains, net	(3,913		)	(1,767		)	(3,110		)	(4,353		)	(1,208		)
Impairment loss on securities	769			—			—			—			—
Adjusted income	$	86,764		$	85,525		$	87,603		$	82,633		$	74,746

Total noninterest expenses	$	65,954		$	61,996		$	63,482		$	59,614		$	53,948
Less:
Intangible assets amortization	898			734			715			631			487
Partnership investment in historic rehabilitation tax credits	1,362			805			2,190			—			1,028
Loss on sales/valuation of assets, net	4,238			721			1,509			353			116
Adjusted noninterest expenses	$	59,456		$	59,736		$	59,068		$	58,630		$	52,317

Efficiency ratio, fully taxable equivalent⁽²⁾	68.53		%	69.85		%	67.43		%	70.95		%	69.99		%

(1) Computed on a tax equivalent basis using an effective tax rate of 35%.
(2) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable 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 historic rehabilitation tax credits. 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, such as securities gains, net and losses on sales/valuations of assets, net. 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 AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Common Share Data
Book value per common share	$	25.92		$	24.68		$	24.13		$	23.59		$	22.40
Tangible book value per common share⁽¹⁾	$	20.60		$	21.20		$	20.84		$	20.41		$	19.99
ASC 320 effect on book value per common share	$	(0.18	)	$	0.22		$	0.21		$	0.38		$	0.19
Common shares outstanding, net of treasury stock	22,435,693			20,637,321			20,614,325			20,585,072			18,511,125
Tangible capital ratio⁽²⁾	6.10		%	6.50		%	6.46		%	6.52		%	6.16		%

Loan and Lease Data
Loans held to maturity:
Commercial and commercial real estate	$	3,605,574		$	3,303,098		$	3,199,717		$	3,067,315		$	2,743,140
Residential mortgage	539,555			491,667			443,026			413,938			380,341
Agricultural and agricultural real estate	471,870			469,381			444,110			411,732			423,827
Consumer	386,867			379,903			364,441			351,981			330,555
Unearned discount and deferred loan fees	(2,380		)	(1,526		)	(1,471		)	(1,277		)	(1,118		)
Total loans and leases held to maturity	$	5,001,486		$	4,642,523		$	4,449,823		$	4,243,689		$	3,876,745

Loans covered under loss share agreements:
Commercial and commercial real estate	$	—		$	—		$	—		$	—		$	54
Residential mortgage	—			—			—			—			1,204
Agricultural and agricultural real estate	—			—			—			—			—
Consumer	—			—			—			—			—
Total loans and leases covered under loss share agreements	$	—		$	—		$	—		$	—		$	1,258

Other Selected Trend Information
Effective tax rate	23.03		%	25.32		%	20.83		%	32.60		%	26.08		%
Full time equivalent employees	1,799			1,736			1,788			1,776			1,631
Total Residential Mortgage Loan Applications	$	307,163		$	443,294		$	615,463		$	647,487		$	383,845
Residential Mortgage Loans Originated	$	258,939		$	370,956		$	421,798		$	319,581		$	293,268
Residential Mortgage Loans Sold	$	260,189		$	360,172		$	402,151		$	268,786		$	281,250
Residential Mortgage Loan Servicing Portfolio	$	4,057,861		$	3,963,677		$	3,785,794		$	3,578,409		$	3,498,724

(1) Total common stockholders' equity less goodwill and intangible assets (excluding servicing rights) 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.
(2) Total common stockholders' equity less goodwill and intangible assets (excluding servicing rights) divided by total assets less intangible assets (excluding mortgage servicing rights). 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.



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Allowance for Loan and Lease Losses
Balance, beginning of period	$	47,105		$	45,614		$	41,854		$	41,449		$	41,698
Provision for loan and lease losses	2,171			3,181			5,674			1,671			2,866
Charge-offs on loans not covered by loss share agreements	(1,837		)	(2,439		)	(2,734		)	(2,004		)	(4,020		)
Charge-offs on loans covered by loss share agreements	—			—			—			—			—
Recoveries	1,246			749			820			738			905
Recoveries on loans covered by loss share agreements	—			—			—			—			—
Balance, end of period	$	48,685		$	47,105		$	45,614		$	41,854		$	41,449

Asset Quality
Not covered under loss share agreements:
Nonaccrual loans	$	39,655		$	32,577		$	26,710		$	27,023		$	25,070
Loans and leases past due ninety days or more as to interest or principal payments	—			1,181			—			9			—
Other real estate owned	11,524			17,041			16,983			19,097			19,016
Other repossessed assets	485			626			544			404			445
Total nonperforming assets not covered under loss share agreements	$	51,664		$	51,425		$	44,237		$	46,533		$	44,531

Covered under loss share agreements:
Nonaccrual loans	$	—		$	—		$	—		$	—		$	278
Other real estate owned	—			—			—			—			—
Total nonperforming assets covered under loss share agreements	$	—		$	—		$	—		$	—		$	278

Performing troubled debt restructured loans	$	10,968		$	10,154		$	10,903		$	10,904		$	12,133

Nonperforming Assets Activity
Balance, beginning of period	$	51,425		$	44,237		$	46,533		$	44,809		$	51,408
Net loan charge offs	(591		)	(1,690		)	(1,914		)	(1,266		)	(3,115		)
New nonperforming loans	9,686			7,996			4,676			4,059			5,226
Acquired nonperforming assets	4,956			5,328			—			6,101			—
Reduction of nonperforming loans⁽¹⁾	(6,768		)	(2,758		)	(1,409		)	(4,493		)	(6,446		)
OREO/Repossessed assets sales proceeds	(2,980		)	(1,074		)	(3,202		)	(2,312		)	(1,252		)
OREO/Repossessed assets writedowns, net	(3,909		)	(756		)	(565		)	(319		)	(918		)
Net activity at Citizens Finance Co.	(155		)	142			118			(46		)	(94		)
Balance, end of period	$	51,664		$	51,425		$	44,237		$	46,533		$	44,809

Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements
Ratio of nonperforming loans and leases to total loans and leases	0.79		%	0.73		%	0.60		%	0.64		%	0.63		%
Ratio of nonperforming assets to total assets	0.67		%	0.76		%	0.66		%	0.72		%	0.73		%
Annualized ratio of net loan charge-offs to average loans and leases	0.05		%	0.14		%	0.17		%	0.12		%	0.32		%
Allowance for loan and lease losses as a percent of loans and leases	0.97		%	1.01		%	1.03		%	0.99		%	1.07		%
Allowance for loan and lease losses as a percent of nonperforming loans and leases	122.77		%	139.54		%	170.78		%	154.83		%	165.33		%
Loans delinquent 30-89 days as a percent of total loans	0.31		%	0.40		%	0.31		%	0.42		%	0.21		%

(1) Includes principal reductions and transfers to performing status



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	December 31, 2015							December 31, 2014
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	1,290,462		$	6,917	2.13	%	$	1,278,709		$	6,972	2.16	%
Nontaxable⁽¹⁾	387,015			5,094		5.22		362,832			4,908		5.37
Total securities	1,677,477			12,011		2.84		1,641,541			11,880		2.87
Interest bearing deposits	12,350			3		0.10		8,928			3		0.13
Federal funds sold	42,614			21		0.20		683			—		—
Loans and leases:⁽²⁾
Commercial and commercial real estate⁽¹⁾	3,395,242			40,588		4.74		2,701,006			32,613		4.79
Residential mortgage	580,797			5,836		3.99		458,781			4,803		4.15
Agricultural and agricultural real estate⁽¹⁾	470,797			5,663		4.77		411,431			5,050		4.87
Consumer	381,008			7,460		7.77		328,247			6,664		8.05
Fees on loans	—			1,402		—		—			1,928		—
Less: allowance for loan and lease losses	(47,720		)	—		—		(42,330		)	—		—
Net loans and leases	4,780,124			60,949		5.06		3,857,135			51,058		5.25
Total earning assets	6,512,565			72,984		4.45	%	5,508,287			62,941		4.53	%
Nonearning Assets	728,539							465,901
Total Assets	$	7,241,104						$	5,974,188
Interest Bearing Liabilities
Savings	$	3,118,115		$	1,611	0.20	%	$	2,640,560		$	1,858	0.28	%
Time, $100,000 and over	334,254			779		0.92		331,770			833		1.00
Other time deposits	711,622			1,382		0.77		497,832			1,453		1.16
Short-term borrowings	325,613			200		0.24		311,738			222		0.28
Other borrowings	292,193			3,485		4.73		341,578			3,854		4.48
Total interest bearing liabilities	4,781,797			7,457		0.62	%	4,123,478			8,220		0.79	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	1,774,914							1,314,430
Accrued interest and other liabilities	68,850							47,918
Total noninterest bearing liabilities	1,843,764							1,362,348
Stockholders' Equity	615,543							488,362
Total Liabilities and Stockholders' Equity	$	7,241,104						$	5,974,188
Net interest income⁽¹⁾				$	65,527						$	54,721
Net interest spread⁽¹⁾						3.83	%						3.74	%
Net interest income to total earning assets⁽¹⁾						3.99	%						3.94	%
Interest bearing liabilities to earning assets	73.42		%					74.86		%

(1) Computed on a tax equivalent basis using an effective tax rate of 35%
(2) Nonaccrual loans are included in average loans outstanding.



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Year Ended
	December 31, 2015							December 31, 2014
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	1,272,573		$	26,646	2.09	%	$	1,296,991		$	29,727	2.29	%
Nontaxable⁽¹⁾	348,189			18,735		5.38		375,788			20,414		5.43
Total securities	1,620,762			45,381		2.80		1,672,779			50,141		3.00
Interest bearing deposits	10,997			14		0.13		7,678			23		0.30
Federal funds sold	14,153			24		0.17		509			1		0.20
Loans and leases:⁽²⁾
Commercial and commercial real estate⁽¹⁾	3,199,493			152,931		4.78		2,611,150			126,592		4.85
Residential mortgage	542,364			21,982		4.05		430,950			18,359		4.26
Agricultural and agricultural real estate⁽¹⁾	444,808			21,498		4.83		388,974			19,558		5.03
Consumer	364,343			28,936		7.94		313,756			26,034		8.30
Fees on loans				5,418		—		—			6,632		—
Less: allowance for loan and lease losses	(44,830		)	—		—		(41,521		)	—		—
Net loans and leases	4,506,178			230,765		5.12		3,703,309			197,175		5.32
Total earning assets	6,152,090			276,184		4.49	%	5,384,275			247,340		4.59	%
Nonearning Assets	611,811							473,213
Total Assets	$	6,763,901						$	5,857,488
Interest Bearing Liabilities
Savings	$	2,918,706		$	6,613	0.23	%	$	2,589,649		$	8,042	0.31	%
Time, $100,000 and over	341,071			3,152		0.92		330,428			3,474		1.05
Other time deposits	606,030			5,765		0.95		535,483			6,638		1.24
Short-term borrowings	339,019			838		0.25		308,942			877		0.28
Other borrowings	326,684			15,602		4.78		336,569			14,938		4.44
Total interest bearing liabilities	4,531,510			31,970		0.71	%	4,101,071			33,969		0.83	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	1,592,816							1,243,376
Accrued interest and other liabilities	61,000							44,499
Total noninterest bearing liabilities	1,653,816							1,287,875
Stockholders' Equity	578,575							468,542
Total Liabilities and Stockholders' Equity	$	6,763,901						$	5,857,488
Net interest income⁽¹⁾				$	244,214						$	213,371
Net interest spread⁽¹⁾						3.78	%						3.76	%
Net interest income to total earning assets⁽¹⁾						3.97	%						3.96	%
Interest bearing liabilities to earning assets	73.66		%					76.17		%

(1) Computed on a tax equivalent basis using an effective tax rate of 35%
(2) Nonaccrual loans are included in the average loans outstanding.



HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
	As of and For the Quarter Ended
	12/31/2015		9/30/2015			6/30/2015			3/31/2015		12/31/2014
Total Assets
Dubuque Bank and Trust Company	$	1,617,322	$	1,431,767		$	1,541,610		$	1,413,772	$	1,508,573
New Mexico Bank & Trust	1,336,004		1,282,784			1,141,575			1,113,031		1,142,580
Wisconsin Bank & Trust	1,139,337		1,098,405			1,150,867			1,128,104		650,658
Morrill & Janes Bank and Trust Company	902,918		845,067			860,781			888,321		898,161
Premier Valley Bank	765,451		—			—			—		—
Illinois Bank & Trust⁽¹⁾	757,478		769,170			784,162			748,937		778,542
Arizona Bank & Trust	591,066		599,119			510,838			487,059		470,997
Rocky Mountain Bank	491,522		501,093			508,262			477,799		468,671
Minnesota Bank & Trust	214,303		188,633			195,201			169,254		167,808
Summit Bank & Trust	161,806		155,114			152,672			140,868		134,145
Total Portfolio Loans
Dubuque Bank and Trust Company	$	956,517	$	953,273		$	945,574		$	907,956	$	952,114
New Mexico Bank & Trust	794,744		777,433			658,543			635,843		635,402
Wisconsin Bank & Trust	793,508		844,557			876,321			865,323		502,310
Morrill & Janes Bank and Trust Company	539,198		527,217			520,978			475,295		440,899
Premier Valley Bank	383,929		—			—			—		—
Illinois Bank & Trust⁽¹⁾	465,937		473,859			455,247			439,757		429,772
Arizona Bank & Trust	444,501		444,916			383,588			355,986		342,731
Rocky Mountain Bank	370,440		380,304			375,860			343,008		254,455
Minnesota Bank & Trust	134,137		128,700			127,172			114,477		110,920
Summit Bank & Trust	101,449		94,127			95,275			87,913		90,515
Total Deposits
Dubuque Bank and Trust Company	$	1,209,074	$	1,120,999		$	1,144,932		$	1,166,070	$	1,211,896
New Mexico Bank & Trust	1,085,052		1,047,358			891,003			880,422		860,465
Wisconsin Bank & Trust	974,001		904,803			985,804			939,157		554,722
Morrill & Janes Bank and Trust Company	713,589		650,123			662,524			696,606		703,016
Premier Valley Bank	647,022		—			—			—		—
Illinois Bank & Trust⁽¹⁾	631,010		641,024			645,354			625,885		600,357
Arizona Bank & Trust	500,490		491,254			405,680			378,422		351,635
Rocky Mountain Bank	417,426		428,234			417,647			407,958		395,609
Minnesota Bank & Trust	194,373		163,291			172,547			148,773		150,146
Summit Bank & Trust	128,759		139,826			122,928			124,113		111,859
Net Income (Loss)
Dubuque Bank and Trust Company	$	3,587	$	4,477		$	7,416		$	6,016	$	5,184
New Mexico Bank & Trust	2,576		3,220			3,658			4,164		2,015
Wisconsin Bank & Trust	2,443		3,886			2,950			2,181		1,737
Morrill & Janes Bank and Trust Company	1,096		2,024			1,566			1,656		2,157
Premier Valley Bank	1,008		—			—			—		—
Illinois Bank & Trust⁽¹⁾	574		1,877			1,309			2,482		1,721
Arizona Bank & Trust	968		1,254			998			677		1,159
Rocky Mountain Bank	1,506		1,471			1,196			1,156		1,684
Minnesota Bank & Trust	166		411			223			162		395
Summit Bank & Trust	62		(6		)	(81		)	305		(491		)

(1) Includes Galena State Bank & Trust Co. for the quarter ended December 31, 2014.

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