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| EX-99.2 - EX-99.2 - HEARTLAND FINANCIAL USA INC | investor_presentation-7x.htm |
| 8-K - 8-K - HEARTLAND FINANCIAL USA INC | htlf-20200727.htm |
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| CONTACT: | FOR IMMEDIATE RELEASE | ||||
| Bryan R. McKeag | July 27, 2020 | ||||
| Executive Vice President | |||||
| Chief Financial Officer | |||||
| (563) 589-1994 | |||||
| bmckeag@htlf.com | |||||
HEARTLAND FINANCIAL USA, INC. REPORTS QUARTERLY AND YEAR TO DATE RESULTS AS OF JUNE 30, 2020
Highlights and Developments
| § | Quarterly net income of $30.1 million or $0.82 per diluted common share in comparison with $45.2 million or $1.26 per diluted common share for the second quarter of the prior year | |||||||
| § | Net interest margin of 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP)(1) during the second quarter of 2020, compared to 3.81% (3.84% on a fully tax-equivalent basis, non-GAAP)(1) during the first quarter of 2020 and 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP)(1) during the second quarter of 2019 | |||||||
| § | Efficiency ratio (non-GAAP)1 of 55.75% compared to 64.13% for the second quarter of 2019 | |||||||
| § | Funded approximately 4,800 Paycheck Protection Program ("PPP") loans totaling $1.20 billion | |||||||
| § | Arizona Bank & Trust subsidiary entered into a purchase and assumption agreement with Johnson Bank for four banking centers located in Phoenix and Scottsdale, Arizona | |||||||
| § | Completed the issuance of $115.0 million of preferred equity | |||||||
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net income available to common stockholders (in millions) | $ | 30.1 | $ | 45.2 | $ | 50.2 | $ | 76.7 | |||||||||||||||
| Diluted earnings per common share | 0.82 | 1.26 | 1.36 | 2.17 | |||||||||||||||||||
| Return on average assets | 0.84 | % | 1.55 | % | 0.73 | % | 1.35 | % | |||||||||||||||
| Return on average common equity | 7.69 | 12.56 | 6.32 | 11.13 | |||||||||||||||||||
Return on average tangible common equity (non-GAAP)(1) | 11.97 | 19.52 | 9.95 | 17.49 | |||||||||||||||||||
| Net interest margin | 3.81 | 4.06 | 3.81 | 4.09 | |||||||||||||||||||
Net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.85 | 4.10 | 3.85 | 4.14 | |||||||||||||||||||
Efficiency ratio, fully-tax equivalent (non-GAAP)(1) | 55.75 | 64.13 | 58.64 | 64.52 | |||||||||||||||||||
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.
| "Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded $1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued $115 million of preferred stock during the quarter." | ||
| Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc. | ||
Dubuque, Iowa, Monday, July 27, 2020-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following quarterly results:
•net income available to common stockholders of $30.1 million, or $0.82 per diluted common share, for the quarter ended June 30, 2020, compared to $45.2 million, or $1.26 per diluted common share, for the second quarter of 2019.
•excluding tax-effected provision for credit losses of $21.2 million and tax-effected acquisition, integration and restructuring costs of $532,000, adjusted net income available to common stockholders (non-GAAP) was $51.8 million, or $1.40 of adjusted earnings per diluted common share (non-GAAP) for the second quarter of 2020, compared to $49.8 million (non-GAAP), or $1.39 of adjusted earnings per diluted common share (non-GAAP), for the second quarter of 2019, which excluded tax-effected provision for credit losses of $3.9 million and tax-effected acquisition, integration and restructuring costs of $734,000.
•return on average common equity was 7.69% and return on average assets was 0.84% for the second quarter of 2020, compared to 12.56% and 1.55%, respectively, for the same quarter in 2019.
•return on average tangible common equity (non-GAAP) of 11.97% and adjusted return on average tangible common equity (non-GAAP) of 20.02% for the second quarter of 2020 compared to 19.52% and 21.41%, respectively, for the second quarter of 2019.
Heartland reported the following results for the six months ended June 30, 2020:
•net income available to common stockholders of $50.2 million or $1.36 per diluted common share, for the six months ended June 30, 2020, compared to $76.7 million or $2.17 per diluted common share for the six months ended June 30, 2019.
•excluding tax-effected provision for credit losses of $38.2 million and tax-effected acquisition, integration and restructuring costs of $1.6 million, adjusted net income available to common stockholders (non-GAAP) was $90.0 million, or $2.44 of adjusted earnings per diluted common share (non-GAAP), for the six months ended June 30, 2020, compared to $85.4 million (non-GAAP), or $2.42 of adjusted earnings per diluted common share (non-GAAP), for the six months ended June 30, 2019, which excluded tax-effected provision for credit losses of $5.2 million and tax-effected acquisition, integration and restructuring costs of $3.6 million.
•return on average common equity was 6.32% and return on average assets was 0.73% for the first six months of 2020, compared to 11.13% and 1.35%, respectively, for the same period in 2019.
•return on average tangible common equity (non-GAAP) of 9.95% and adjusted return on average tangible common equity (non-GAAP) of 17.19% for the six months ended June 30, 2020, compared to 17.49% and 19.37%, respectively, for the six months ended June 30, 2019.
"Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded $1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued $115 million of preferred stock during the quarter," said Bruce K. Lee, Heartland's president and chief executive officer.
Responses to COVID-19
In the first quarter of 2020, Heartland implemented and continues to operate under its pandemic management plan to assure workplace and employee safety and business resiliency while providing relief and support to customers and communities facing challenges from the impacts of COVID-19, which included the following measures:
•employees who can work from home continue to do so, while those who come into bank locations are on rotating teams to limit potential exposure;
•all in-person events and large meetings are canceled and have transitioned to virtual meetings;
•expanded time off program and enhanced health care coverage for COVID-19 related testing and treatments, and
•implemented and extended a 20% wage premium for certain customer-facing and call center employees.
"The health and safety of our employees continues to be our top priority. We are monitoring our markets closely and updating our responses accordingly," Lee said.
The continued economic disruption resulting from the COVID-19 pandemic will make it difficult for some customers to repay the principal and interest on their loans, and Heartland's subsidiary banks have been working with customers to modify the terms of certain existing loans.
The following table shows the total loan exposure as of June 30, 2020, and March 31, 2020, to customer segment profiles that Heartland believes will be more heavily impacted by COVID-19, dollars in thousands:
| As of June 30, 2020 | As of March 31, 2020 | ||||||||||||||||||||||
| Industry | Total Exposure(1) | % of Gross Exposure(1) | Total Exposure(1) | % of Gross Exposure(1) | |||||||||||||||||||
| Lodging | $ | 490,475 | 4.38 | % | $ | 498,596 | 4.47 | % | |||||||||||||||
| Multi-family properties | 474,610 | 4.24 | 436,931 | 3.92 | |||||||||||||||||||
| Retail trade | 407,030 | 3.64 | 367,727 | 3.30 | |||||||||||||||||||
| Retail properties | 369,782 | 3.31 | 408,506 | 3.66 | |||||||||||||||||||
| Restaurants and bars | 255,701 | 2.29 | 247,239 | 2.22 | |||||||||||||||||||
| Nursing homes/assisted living | 130,103 | 1.16 | 126,267 | 1.13 | |||||||||||||||||||
| Oil and gas | 63,973 | 0.57 | 56,302 | 0.50 | |||||||||||||||||||
| Childcare facilities | 44,968 | 0.40 | 48,455 | 0.43 | |||||||||||||||||||
| Gaming | 34,618 | 0.31 | 34,790 | 0.31 | |||||||||||||||||||
| Total | $ | 2,271,260 | 20.30 | % | $ | 2,224,813 | 19.94 | % | |||||||||||||||
| (1) Total loans outstanding, excluding PPP loans, and unfunded commitments | |||||||||||||||||||||||
As of June 30, 2020, loan modifications have been made on approximately $1.10 billion of loans in Heartland's portfolio. Approximately 58% of these modifications are interest only for 90 days, and the remainder are primarily principal and interest deferments for 90 days. The original loan modifications will be expiring throughout the third quarter, and Heartland expects that the majority will be returning to full payment status. However, it is likely that some of the modifications will be extended for an additional 90 days in order to provide the necessary support for certain COVID-19 impacted customers.
Through June 30, 2020, Heartland's subsidiary banks funded approximately 4,800 PPP loans, totaling $1.20 billion. As of June 30, 2020, deferred fees totaling $35.3 million were recorded associated with the PPP loans, of which $3.7 million was recognized in income during the quarter.
The ultimate impact of the COVID-19 pandemic on Heartland's financial condition and results of operations will depend on risks and uncertainties, such as the severity and duration of the pandemic, related restrictions on business and consumer activity, and the availability of government programs to alleviate the economic stress of the pandemic. See Heartland's "Safe Harbor Statement" below.
2020 Developments
Adoption of ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)"
On January 1, 2020, Heartland adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)," commonly referred to as "CECL." The impact of Heartland's adoption of CECL ("Day 1") resulted in the following:
•an increase of $12.1 million to the allowance for credit losses related to loans, which included a reclassification of $6.0 million of purchased credit impaired loan discount on previously acquired loans, and a cumulative-effect adjustment to retained earnings totaling $4.6 million, net of taxes of $1.5 million;
•an increase of $13.6 million to the allowance for unfunded commitments and a cumulative-effect adjustment to retained earnings totaling $10.2 million, net of taxes of $3.4 million, and
•established an allowance for credit losses for Heartland's held to maturity debt securities of $158,000 and a cumulative-effect adjustment to retained earnings totaling $118,000, net of taxes of $40,000.
Entered into a Definitive Merger Agreement with AIM Bancshares, Inc.
On February 11, 2020, Heartland entered into a definitive merger agreement to acquire AIM Bancshares, Inc. and its wholly-owned subsidiary, AimBank, headquartered in Levelland, Texas. In the transaction, all issued and outstanding shares of AIM Bancshares stock will be exchanged for shares of Heartland common stock and cash. Shareholders of AIM Bancshares will receive 207.0 shares of Heartland common stock and $685.00 of cash for
each share of AIM Bancshares. The transaction value will change due to fluctuations in the price of Heartland common stock and is subject to certain potential adjustments as set forth in the merger agreement. Simultaneous with the closing of the transaction, AimBank will merge with and into Heartland's Lubbock, Texas-based subsidiary, First Bank and Trust. Heartland and AIM Bancshares are currently reviewing the corporate structure and terms of the transaction. As of June 30, 2020, AimBank had total assets of approximately $1.95 billion, which included $1.19 billion of gross loans outstanding, and approximately $1.69 billion of deposits.
Entered into a Purchase and Assumption Agreement with Johnson Financial Group, Inc.
On June 9, 2020, Arizona Bank & Trust (“AB&T”), a wholly-owned subsidiary of Heartland headquartered in Phoenix, Arizona, entered into a purchase and assumption agreement, pursuant to which AB&T will acquire certain assets and will assume substantially all of the deposits and certain other liabilities of Johnson Bank’s Arizona operations, which includes four banking centers. Johnson Bank is a wholly-owned subsidiary of Johnson Financial Group, Inc. headquartered in Racine, Wisconsin. Johnson Insurance Services is not a part of this transaction.
Under the terms of the purchase and assumption agreement, AB&T will acquire Johnson Bank's Arizona banking centers, which had deposits of approximately $415.3 million and loans of approximately $168.1 million as of June 30. The actual amount of deposits assumed and loans acquired will be determined at closing, which is expected to be in the fourth quarter of 2020.
"We are excited to expand Arizona Bank & Trust's presence in the Phoenix and Scottsdale areas," commented Lynn B. Fuller, Heartland's executive operating chairman.
Issued $115.0 Million of Preferred Equity
On June 26, 2020, Heartland issued and sold 4.6 million depositary shares, each representing a 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E. The depositary shares are listed on The Nasdaq Global Select Market under the symbol "HTLFP." The net proceeds of $110.7 million are expected to be used for general corporate purposes, which may include organic and acquired growth, financing investments, capital expenditures, investments in wholly-owned subsidiaries as regulatory capital and repayment of debt.
Net Interest Income Increases and Net Interest Margin Decreases from Second Quarter of 2019
Net interest margin, expressed as a percentage of average earning assets, was 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020, compared to 3.81% (3.84% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2020 and 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2019.
Total interest income for the second quarter of 2020 was $133.8 million compared to $127.0 million recorded in the second quarter of 2019, an increase of $6.8 million or 5%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.4 million for the second quarter of 2020 and $1.3 million for the second quarter of 2019. With these adjustments, total interest income on a tax-equivalent basis was $135.2 million for the second quarter of 2020, an increase of $6.9 million or 5%, compared to total interest income on a tax-equivalent basis of $128.3 million for the second quarter of 2019.
Average earning assets of $13.10 billion increased $2.55 billion or 24% from the second quarter of 2019, which was primarily attributable to recent acquisitions and loan growth, including PPP loans. The average rate on earning assets decreased 73 basis points to 4.15% for the second quarter of 2020 compared to 4.88% for the same quarter in 2019, which was primarily due to recent decreases in market interest rates and the lower yield on PPP loans, which was 2.64% for the second quarter of 2020.
Total interest expense for the second quarter of 2020 was $9.6 million, a decrease of $10.7 million or 53% from $20.3 million in the second quarter of 2019. The average interest rate paid on Heartland's interest bearing liabilities decreased to 0.47% for the second quarter of 2020 compared to 1.18% for the second quarter of 2019, which was primarily due to recent decreases in market interest rates.
Average interest bearing deposits increased $1.28 billion or 20% to $7.79 billion for the quarter ended June 30, 2020, from $6.50 billion in the same quarter in 2019, which was primarily attributable to recent acquisitions and deposit growth. The average interest rate paid on Heartland's interest bearing deposits decreased 67 basis points to 0.32% for the second quarter of 2020 compared to 0.99% for the same quarter in 2019.
Average borrowings decreased $389,000 or less than 1% to $368.9 million during the first quarter of 2020 from $369.3 million during the same quarter in 2019. The average interest rate paid on Heartland's borrowings was 3.80% for the second quarter of 2020 compared to 4.52% in the second quarter of 2019.
Net interest income was $124.1 million during the second quarter of 2020 compared to $106.7 million during the second quarter of 2019, an increase of $17.4 million or 16%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $125.6 million during the second quarter of 2020 compared to net interest income on a tax-equivalent basis of $108.0 million during the second quarter of 2019, an increase of $17.6 million or 16%.
Noninterest Income Decreases and Noninterest Expense Increases from Second Quarter of 2019
Total noninterest income was $30.6 million during the second quarter of 2020 compared to $32.1 million during the second quarter of 2019, a decrease of $1.4 million or 4%. Significant changes by noninterest income category were:
•Service charges and fees decreased $3.7 million or 25% to $11.0 million for the second quarter of 2020 compared to $14.6 million for the second quarter of 2019. Overdraft fees and ATM fees for the second quarter of 2020 totaled $3.4 million compared to $7.1 million for the same quarter of 2019. The decrease was primarily attributable to decreased volume due to the COVID-19 pandemic and the impact of the Durbin Amendment, which was effective for Heartland on July 1, 2019.
•Loan servicing income totaled $379,000 for the second quarter of 2020 compared to $1.3 million for the second quarter of 2019, which was a decrease of $959,000 or 72%. The decrease was attributable to the sale of the mortgage servicing rights of Dubuque Bank and Trust Company in the second quarter of 2019.
•Net gains on sale of loans held for sale totaled $7.9 million during the second quarter of 2020 compared to $4.3 million during the same quarter in 2019, which was an increase of $3.5 million or 81%, primarily due to an increase in residential mortgage loan activity in response to the recent declines in mortgage interest rates.
For the second quarter of 2020, total noninterest expense was $90.4 million compared to $75.1 million during the second quarter of 2019, an increase of $15.3 million or 20%. Significant changes by noninterest expense category were:
•Net loss on sales/valuations of assets increased $19.0 million as losses totaled $701,000 in the second quarter of 2020 compared to gains of $18.3 million in the second quarter of 2019. The gains recorded in 2019 were related to branch sales and the sale of the mortgage servicing rights of Dubuque Bank and Trust Company.
Heartland's effective tax rate was 19.75% for the second quarter of 2020 compared to 23.12% for the second quarter of 2019. The following items impacted Heartland's second quarter 2020 and 2019 tax calculations:
•Solar energy tax credits of $798,000 and $911,000 for the second quarter of 2020 and 2019, respectively.
•Federal low-income housing tax credits of $195,000 and $281,000 for the second quarter of 2020 and 2019, respectively.
•New markets tax credits of $75,000 during the second quarter of 2020 compared to $0 in the second quarter of 2019.
•Tax-exempt interest income as a percentage of pre-tax income increased to 14.19% during the second quarter of 2020 compared to 8.09% for the second quarter of 2019.
•Tax expense of $66,000 in the second quarter of 2020 compared to $64,000 in the second quarter of 2019 resulting from the vesting of restricted stock unit awards.
Total Assets Increase, Total Loans Increase and Deposits Increase Since December 31, 2019
Total assets were $15.0 billion at June 30, 2020, an increase of $1.82 billion or 14% from $13.21 billion at year-end 2019. Securities represented 28% and 26% of total assets at June 30, 2020, and December 31, 2019, respectively.
Total loans held to maturity were $9.25 billion at June 30, 2020, and $8.37 billion at December 31, 2019, which was an increase of $878.9 million or 11%. Loan changes by category were:
•Commercial and business lending, which includes commercial and industrial, Paycheck Protection Program ("PPP"), and owner occupied commercial real estate loans, increased $918.6 million or 23% to $4.92 billion at June 30, 2020, compared to $4.00 billion at December 31, 2019. Excluding $1.12 billion of PPP loans, commercial and business lending decreased $205.8 million or 5% since year-end 2019.
•Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $136.5 million or 5% to $2.66 billion at June 30, 2020 from $2.52 billion at year-end 2019.
•Agricultural and agricultural real estate loans totaled $520.8 million at June 30, 2020, compared to $565.8 million at December 31, 2019, which was a decrease of $45.1 million or 8%.
•Residential mortgage loans decreased $96.5 million or 12% to $735.8 million at June 30, 2020, from $832.3 million at December 31, 2019.
•Consumer loans decreased $34.6 million or 8% to $408.7 million at June 30, 2020, compared to $443.3 million at December 31, 2019.
Total deposits were $12.71 billion as of June 30, 2020, compared to $11.04 billion at year-end 2019, an increase of $1.66 billion or 15%. Deposit changes by category were:
•Demand deposits increased $1.29 billion or 36% to $4.83 billion at June 30, 2020, compared to $3.54 billion at December 31, 2019.
•Savings deposits increased $502.9 million or 8% to $6.81 billion at June 30, 2020, from $6.31 billion at December 31, 2019.
•Time deposits decreased $125.8 million or 11% to $1.07 billion at June 30, 2020 from $1.19 billion at December 31, 2019.
Growth in non-time deposits was positively impacted by federal government stimulus payments and other COVID-19 relief programs.
Provision and Allowance for Credit Losses for Loans Increase Since December 31, 2019
Heartland's allowance for credit losses for loans totaled $119.9 million and $70.4 million at June 30, 2020, and December 31, 2019, respectively. The allowance for credit losses for loans totaled $82.5 million after the adoption of CECL on January 1, 2020, which was an increase of $12.1 million since year-end 2019. Provision expense for the second quarter of 2020 totaled $25.0 million compared to $19.9 million for the first quarter of 2020 and $4.9 million in the second quarter of 2019. Heartland recorded $11.6 million of provision expense for one fracking sand company relationship that was individually assessed for allowance for credit losses in the second quarter.
The allowance for credit losses for loans at June 30, 2020, was 1.30% of loans compared to 0.84% of loans at December 31, 2019. Net charge offs for the second quarter of 2020 totaled $2.4 million compared to $3.7 million for the second quarter of 2019, which was a decrease of $1.3 million or 35%. Heartland expects that net charge offs will increase in the second half of 2020 as customers’ ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.
Heartland's allowance for unfunded commitments totaled $13.9 million after the adoption of CECL on January 1, 2020. Heartland recorded $1.9 million of provision for credit losses related to unfunded loan commitments in the second quarter of 2020. At June 30, 2020, the allowance for unfunded commitments was $17.4 million, and unfunded loan commitments totaled $3.06 billion.
The total allowance for credit related lending losses was $137.3 million at June 30, 2020, which was 1.49% of loans as of June 30, 2020.
Nonperforming Assets Increase Since December 31, 2019
Nonperforming assets increased $11.0 million or 13% to $98.5 million or 0.66% of total assets at June 30, 2020, compared to $87.6 million or 0.66% of total assets at December 31, 2019. Nonperforming loans were $93.0 million or 1.01% of total loans at June 30, 2020, compared to $80.7 million or 0.96% of total loans at December 31, 2019. Included in new nonperforming loans at June 30, 2020 was one fracking sand company relationship with an unpaid principal balance of $14.6 million. At June 30, 2020, loans delinquent 30-89 days were 0.22% of total loans compared to 0.33% of total loans at December 31, 2019. Heartland expects that nonperforming assets and delinquent loans will increase through 2020 as customers’ ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.
Non-GAAP Financial Measures
This press release contains references to financial measures which are not defined by generally accepted accounting principles ("GAAP"). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate Heartland's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this press release with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this press release.
Below are the non-GAAP measures included in this press release, management's reason for including each measure and the method of calculating each measure:
•Annualized return on average tangible common equity is net income available to common stockholders plus core deposit and customer relationship intangibles amortization, net of tax, divided by average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
•Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
•Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this press release.
•Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
•Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
•Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
•Adjusted net income, adjusted return on average tangible common equity and adjusted diluted earnings per share exclude tax-effected provision for credit losses and acquisition, integration and restructuring costs. Management believes the presentation of these non-GAAP measures are useful to compare net income,
return on average tangible common equity and earnings per share results excluding the variability of credit loss provisions and acquisition, integration and restructuring costs.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 866-928-9948 at least five minutes before the 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 26, 2021, 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 $15.03 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 114 banking locations serving 83 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed below and in the risk factors in Heartland's reports filed with the Securities and Exchange Commission, contained, among others: the impact of the COVID-19 pandemic on Heartland and U.S. and global financial markets; containment measures enacted by the U.S. federal and state governments and by private businesses in response to the COVID-19 pandemic; the deterioration of the U.S. economy in general and in the local economies in which Heartland conducts its operations; increasing credit losses due to deterioration in the financial condition of its borrowers, based on declining oil prices and asset and collateral values, which may continue to increase Heartland’s provision for credit losses and net charge-offs; civil unrest in the communities that Heartland serves; levels of unemployment in the subsidiary banks’ lending areas; real estate market values in the subsidiary banks’ lending areas; future natural disasters and increases to flood insurance premiums; the effects of past and any future terrorist threats and attacks, acts of war or threats thereof; the level of prepayments on loans and mortgage-backed securities; legislative/regulatory changes affecting banking, taxes, securities, insurance and monetary and financial matters; monetary and fiscal policies of the U.S. Government including policies of the United States Department of the Treasury and the Federal Reserve; the quality or composition of Heartland’s loan or investment portfolios; demand for loan products and financial services, deposit flows and competition in Heartland’s market areas; changes in accounting principles and guidelines; the timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet; Heartland’s ability to implement technological changes as anticipated and to develop and maintain secure and reliable electronic delivery systems; Heartland’s ability to retain key executives and employees and the ability of Heartland and its subsidiaries to successfully consummate acquisitions and integrate acquired operations.
The COVID-19 pandemic is adversely affecting Heartland and its customers, counterparties, employees and third-party service providers. The pandemic’s severity, its duration and the extent of its impact on Heartland’s business, financial condition, results of operations, liquidity and prospects remain uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Heartland’s net income and the value of its assets and liabilities, reduce the availability of funding to Heartland, lead to a tightening of credit and increase stock price volatility. Some economists and investment banks also predict that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.
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-
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| 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, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||
| Interest and fees on loans | $ | 107,005 | $ | 106,027 | $ | 213,419 | $ | 206,483 | |||||||||||||||
| Interest on securities: | |||||||||||||||||||||||
| Taxable | 23,362 | 16,123 | 45,093 | 31,999 | |||||||||||||||||||
| Nontaxable | 3,344 | 2,554 | 5,527 | 5,647 | |||||||||||||||||||
| Interest on federal funds sold | — | — | — | 4 | |||||||||||||||||||
| Interest on deposits with other banks and short-term investments | 54 | 2,299 | 775 | 3,591 | |||||||||||||||||||
| Total Interest Income | 133,765 | 127,003 | 264,814 | 247,724 | |||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||
| Interest on deposits | 6,134 | 16,138 | 20,716 | 29,351 | |||||||||||||||||||
| Interest on short-term borrowings | 61 | 338 | 357 | 1,227 | |||||||||||||||||||
| Interest on other borrowings | 3,424 | 3,819 | 7,084 | 7,483 | |||||||||||||||||||
| Total Interest Expense | 9,619 | 20,295 | 28,157 | 38,061 | |||||||||||||||||||
| Net Interest Income | 124,146 | 106,708 | 236,657 | 209,663 | |||||||||||||||||||
| Provision for credit losses | 26,796 | 4,918 | 48,316 | 6,553 | |||||||||||||||||||
| Net Interest Income After Provision for Credit Losses | 97,350 | 101,790 | 188,341 | 203,110 | |||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||
| Service charges and fees | 10,972 | 14,629 | 22,993 | 27,423 | |||||||||||||||||||
| Loan servicing income | 379 | 1,338 | 1,342 | 3,067 | |||||||||||||||||||
| Trust fees | 4,977 | 4,825 | 9,999 | 9,299 | |||||||||||||||||||
| Brokerage and insurance commissions | 595 | 1,028 | 1,328 | 1,762 | |||||||||||||||||||
| Securities gains, net | 2,006 | 3,580 | 3,664 | 5,155 | |||||||||||||||||||
| Unrealized gain/ (loss) on equity securities, net | 680 | 112 | 449 | 370 | |||||||||||||||||||
| Net gains on sale of loans held for sale | 7,857 | 4,343 | 12,517 | 7,519 | |||||||||||||||||||
| Valuation adjustment on servicing rights | 9 | (364) | (1,556) | (953) | |||||||||||||||||||
| Income on bank owned life insurance | 1,167 | 888 | 1,665 | 1,787 | |||||||||||||||||||
| Other noninterest income | 1,995 | 1,682 | 4,053 | 3,349 | |||||||||||||||||||
| Total Noninterest Income | 30,637 | 32,061 | 56,454 | 58,778 | |||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||
| Salaries and employee benefits | 50,118 | 49,895 | 100,075 | 100,180 | |||||||||||||||||||
| Occupancy | 6,502 | 6,426 | 12,973 | 13,033 | |||||||||||||||||||
| Furniture and equipment | 2,993 | 3,136 | 6,101 | 5,828 | |||||||||||||||||||
| Professional fees | 13,676 | 14,344 | 26,149 | 25,366 | |||||||||||||||||||
| Advertising | 995 | 2,609 | 3,200 | 4,929 | |||||||||||||||||||
| Core deposit and customer relationship intangibles amortization | 2,696 | 3,313 | 5,677 | 6,155 | |||||||||||||||||||
| Other real estate and loan collection expenses, net | 203 | 162 | 537 | 863 | |||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 701 | (18,286) | 717 | (21,290) | |||||||||||||||||||
| Acquisition, integration and restructuring costs | 673 | 929 | 2,049 | 4,543 | |||||||||||||||||||
| Partnership investment in tax credit projects | 791 | 1,465 | 975 | 1,940 | |||||||||||||||||||
| Other noninterest expenses | 11,091 | 11,105 | 22,845 | 21,781 | |||||||||||||||||||
| Total Noninterest Expense | 90,439 | 75,098 | 181,298 | 163,328 | |||||||||||||||||||
| Income Before Income Taxes | 37,548 | 58,753 | 63,497 | 98,560 | |||||||||||||||||||
| Income taxes | 7,417 | 13,584 | 13,326 | 21,894 | |||||||||||||||||||
| Net Income | $ | 30,131 | $ | 45,169 | $ | 50,171 | $ | 76,666 | |||||||||||||||
| Earnings per common share-diluted | $ | 0.82 | $ | 1.26 | $ | 1.36 | $ | 2.17 | |||||||||||||||
| Weighted average shares outstanding-diluted | 36,915,630 | 35,879,259 | 36,919,555 | 35,295,407 | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 107,005 | $ | 106,414 | $ | 107,566 | $ | 110,566 | $ | 106,027 | |||||||||||||||||||
| Interest on securities: | |||||||||||||||||||||||||||||
| Taxable | 23,362 | 21,731 | 22,581 | 18,567 | 16,123 | ||||||||||||||||||||||||
| Nontaxable | 3,344 | 2,183 | 2,102 | 2,119 | 2,554 | ||||||||||||||||||||||||
| Interest on federal funds sold | — | — | — | — | — | ||||||||||||||||||||||||
| Interest on deposits with other banks and short-term investments | 54 | 721 | 953 | 2,151 | 2,299 | ||||||||||||||||||||||||
| Total Interest Income | 133,765 | 131,049 | 133,202 | 133,403 | 127,003 | ||||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||
| Interest on deposits | 6,134 | 14,582 | 16,401 | 17,982 | 16,138 | ||||||||||||||||||||||||
| Interest on short-term borrowings | 61 | 296 | 271 | 250 | 338 | ||||||||||||||||||||||||
| Interest on other borrowings | 3,424 | 3,660 | 3,785 | 3,850 | 3,819 | ||||||||||||||||||||||||
| Total Interest Expense | 9,619 | 18,538 | 20,457 | 22,082 | 20,295 | ||||||||||||||||||||||||
| Net Interest Income | 124,146 | 112,511 | 112,745 | 111,321 | 106,708 | ||||||||||||||||||||||||
| Provision for credit losses | 26,796 | 21,520 | 4,903 | 5,201 | 4,918 | ||||||||||||||||||||||||
| Net Interest Income After Provision for Credit Losses | 97,350 | 90,991 | 107,842 | 106,120 | 101,790 | ||||||||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||||||||
| Service charges and fees | 10,972 | 12,021 | 12,368 | 12,366 | 14,629 | ||||||||||||||||||||||||
| Loan servicing income | 379 | 963 | 955 | 821 | 1,338 | ||||||||||||||||||||||||
| Trust fees | 4,977 | 5,022 | 5,141 | 4,959 | 4,825 | ||||||||||||||||||||||||
| Brokerage and insurance commissions | 595 | 733 | 1,062 | 962 | 1,028 | ||||||||||||||||||||||||
| Securities gains, net | 2,006 | 1,658 | 491 | 2,013 | 3,580 | ||||||||||||||||||||||||
| Unrealized gain/ (loss) on equity securities, net | 680 | (231) | 11 | 144 | 112 | ||||||||||||||||||||||||
| Net gains on sale of loans held for sale | 7,857 | 4,660 | 3,363 | 4,673 | 4,343 | ||||||||||||||||||||||||
| Valuation adjustment on servicing rights | 9 | (1,565) | 668 | (626) | (364) | ||||||||||||||||||||||||
| Income on bank owned life insurance | 1,167 | 498 | 1,117 | 881 | 888 | ||||||||||||||||||||||||
| Other noninterest income | 1,995 | 2,058 | 2,854 | 3,207 | 1,682 | ||||||||||||||||||||||||
| Total Noninterest Income | 30,637 | 25,817 | 28,030 | 29,400 | 32,061 | ||||||||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 50,118 | 49,957 | 50,234 | 49,927 | 49,895 | ||||||||||||||||||||||||
| Occupancy | 6,502 | 6,471 | 5,802 | 6,594 | 6,426 | ||||||||||||||||||||||||
| Furniture and equipment | 2,993 | 3,108 | 3,323 | 2,862 | 3,136 | ||||||||||||||||||||||||
| Professional fees | 13,676 | 12,473 | 11,082 | 11,276 | 14,344 | ||||||||||||||||||||||||
| Advertising | 995 | 2,205 | 2,274 | 2,622 | 2,609 | ||||||||||||||||||||||||
| Core deposit and customer relationship intangibles amortization | 2,696 | 2,981 | 2,918 | 2,899 | 3,313 | ||||||||||||||||||||||||
| Other real estate and loan collection expenses, net | 203 | 334 | 261 | (89) | 162 | ||||||||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | 701 | 16 | 1,512 | 356 | (18,286) | ||||||||||||||||||||||||
| Acquisition, integration and restructuring costs | 673 | 1,376 | 537 | 1,500 | 929 | ||||||||||||||||||||||||
| Partnership investment in tax credit projects | 791 | 184 | 3,038 | 3,052 | 1,465 | ||||||||||||||||||||||||
| Other noninterest expenses | 11,091 | 11,754 | 11,885 | 11,968 | 11,105 | ||||||||||||||||||||||||
| Total Noninterest Expense | 90,439 | 90,859 | 92,866 | 92,967 | 75,098 | ||||||||||||||||||||||||
| Income Before Income Taxes | 37,548 | 25,949 | 43,006 | 42,553 | 58,753 | ||||||||||||||||||||||||
| Income taxes | 7,417 | 5,909 | 5,155 | 7,941 | 13,584 | ||||||||||||||||||||||||
| Net Income | $ | 30,131 | $ | 20,040 | $ | 37,851 | $ | 34,612 | $ | 45,169 | |||||||||||||||||||
| Earnings per common share-diluted | $ | 0.82 | $ | 0.54 | $ | 1.03 | $ | 0.94 | $ | 1.26 | |||||||||||||||||||
| Weighted average shares outstanding-diluted | 36,915,630 | 36,895,591 | 36,840,519 | 36,835,191 | 35,879,259 | ||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 211,429 | $ | 175,587 | $ | 206,607 | $ | 243,395 | $ | 198,664 | |||||||||||||||||||
| Interest bearing deposits with other banks and short-term investments | 242,149 | 64,156 | 172,127 | 204,372 | 443,475 | ||||||||||||||||||||||||
| Cash and cash equivalents | 453,578 | 239,743 | 378,734 | 447,767 | 642,139 | ||||||||||||||||||||||||
| Time deposits in other financial institutions | 3,128 | 3,568 | 3,564 | 3,711 | 4,430 | ||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||
| Carried at fair value | 4,126,351 | 3,488,621 | 3,312,796 | 3,020,568 | 2,561,887 | ||||||||||||||||||||||||
| Held to maturity, at cost, less allowance for credit losses | 90,579 | 91,875 | 91,324 | 87,965 | 88,166 | ||||||||||||||||||||||||
| Other investments, at cost | 35,902 | 35,370 | 31,321 | 29,042 | 31,366 | ||||||||||||||||||||||||
| Loans held for sale | 54,382 | 22,957 | 26,748 | 35,427 | 34,575 | ||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||
| Held to maturity | 9,246,830 | 8,374,236 | 8,367,917 | 7,971,608 | 7,853,051 | ||||||||||||||||||||||||
| Allowance for credit losses | (119,937) | (97,350) | (70,395) | (66,222) | (63,850) | ||||||||||||||||||||||||
| Loans, net | 9,126,893 | 8,276,886 | 8,297,522 | 7,905,386 | 7,789,201 | ||||||||||||||||||||||||
| Premises, furniture and equipment, net | 198,481 | 200,960 | 200,525 | 199,235 | 198,329 | ||||||||||||||||||||||||
| Goodwill | 446,345 | 446,345 | 446,345 | 427,097 | 427,097 | ||||||||||||||||||||||||
| Core deposit and customer relationship intangibles, net | 43,011 | 45,707 | 48,688 | 49,819 | 52,718 | ||||||||||||||||||||||||
| Servicing rights, net | 5,469 | 5,220 | 6,736 | 6,271 | 7,180 | ||||||||||||||||||||||||
| Cash surrender value on life insurance | 172,813 | 172,140 | 171,625 | 171,471 | 170,421 | ||||||||||||||||||||||||
| Other real estate, net | 5,539 | 6,074 | 6,914 | 6,425 | 6,646 | ||||||||||||||||||||||||
| Other assets | 263,682 | 259,043 | 186,755 | 179,078 | 146,135 | ||||||||||||||||||||||||
| Total Assets | $ | 15,026,153 | $ | 13,294,509 | $ | 13,209,597 | $ | 12,569,262 | $ | 12,160,290 | |||||||||||||||||||
| Liabilities and Equity | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand | $ | 4,831,151 | $ | 3,696,974 | $ | 3,543,863 | $ | 3,581,127 | $ | 3,426,758 | |||||||||||||||||||
| Savings | 6,810,296 | 6,366,610 | 6,307,425 | 5,770,754 | 5,533,503 | ||||||||||||||||||||||||
| Time | 1,067,252 | 1,110,441 | 1,193,043 | 1,117,975 | 1,148,296 | ||||||||||||||||||||||||
| Total deposits | 12,708,699 | 11,174,025 | 11,044,331 | 10,469,856 | 10,108,557 | ||||||||||||||||||||||||
| Short-term borrowings | 88,631 | 121,442 | 182,626 | 107,853 | 107,260 | ||||||||||||||||||||||||
| Other borrowings | 306,459 | 276,150 | 275,773 | 278,417 | 282,863 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 174,987 | 169,178 | 128,730 | 149,293 | 139,823 | ||||||||||||||||||||||||
| Total Liabilities | 13,278,776 | 11,740,795 | 11,631,460 | 11,005,419 | 10,638,503 | ||||||||||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||||||||||||
| Preferred equity | 110,705 | — | — | — | — | ||||||||||||||||||||||||
| Common stock | 36,845 | 36,807 | 36,704 | 36,696 | 36,690 | ||||||||||||||||||||||||
| Capital surplus | 844,202 | 842,780 | 839,857 | 838,543 | 837,150 | ||||||||||||||||||||||||
| Retained earnings | 723,067 | 700,298 | 702,502 | 670,816 | 642,808 | ||||||||||||||||||||||||
| Accumulated other comprehensive income/(loss) | 32,558 | (26,171) | (926) | 17,788 | 5,139 | ||||||||||||||||||||||||
| Total Equity | 1,747,377 | 1,553,714 | 1,578,137 | 1,563,843 | 1,521,787 | ||||||||||||||||||||||||
| Total Liabilities and Equity | $ | 15,026,153 | $ | 13,294,509 | $ | 13,209,597 | $ | 12,569,262 | $ | 12,160,290 | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Average Balances | |||||||||||||||||||||||||||||
| Assets | $ | 14,391,856 | $ | 13,148,173 | $ | 12,798,770 | $ | 12,293,332 | $ | 11,708,538 | |||||||||||||||||||
| Loans, net of unearned | 9,186,913 | 8,364,220 | 8,090,476 | 7,883,678 | 7,648,562 | ||||||||||||||||||||||||
| Deposits | 12,288,378 | 10,971,193 | 10,704,643 | 10,253,643 | 9,790,756 | ||||||||||||||||||||||||
| Earning assets | 13,103,159 | 11,891,455 | 11,580,295 | 11,102,581 | 10,552,166 | ||||||||||||||||||||||||
| Interest bearing liabilities | 8,155,753 | 7,841,941 | 7,513,701 | 7,174,944 | 6,872,449 | ||||||||||||||||||||||||
| Common equity | 1,574,902 | 1,619,682 | 1,570,258 | 1,541,369 | 1,442,388 | ||||||||||||||||||||||||
| Total stockholders' equity | 1,580,997 | 1,619,682 | 1,570,258 | 1,541,369 | 1,442,388 | ||||||||||||||||||||||||
Tangible common equity (non-GAAP)(1) | 1,083,834 | 1,125,705 | 1,087,495 | 1,062,568 | 981,878 | ||||||||||||||||||||||||
| Key Performance Ratios | |||||||||||||||||||||||||||||
| Annualized return on average assets | 0.84 | % | 0.61 | % | 1.17 | % | 1.12 | % | 1.55 | % | |||||||||||||||||||
| Annualized return on average common equity (GAAP) | 7.69 | 4.98 | 9.56 | 8.91 | 12.56 | ||||||||||||||||||||||||
Annualized return on average tangible common equity (non-GAAP)(1) | 11.97 | 8.00 | 14.65 | 13.78 | 19.52 | ||||||||||||||||||||||||
Annualized adjusted return on average tangible common equity (non-GAAP)(1) | 20.02 | 14.46 | 16.22 | 15.76 | 21.41 | ||||||||||||||||||||||||
| Annualized ratio of net charge-offs to average loans | 0.11 | 0.24 | 0.04 | 0.14 | 0.19 | ||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 3.81 | 3.81 | 3.86 | 3.98 | 4.06 | ||||||||||||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.85 | 3.84 | 3.90 | 4.02 | 4.10 | ||||||||||||||||||||||||
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 55.75 | 61.82 | 60.31 | 60.85 | 64.13 | ||||||||||||||||||||||||
| (1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||||||||
| For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Average Balances | |||||||||||||||||||||||
| Assets | $ | 14,391,856 | $ | 11,708,538 | $ | 13,770,015 | $ | 11,489,095 | |||||||||||||||
| Loans, net of unearned | 9,186,913 | 7,648,562 | 8,775,566 | 7,531,360 | |||||||||||||||||||
| Deposits | 12,288,378 | 9,790,756 | 11,629,785 | 9,574,680 | |||||||||||||||||||
| Earning assets | 13,103,159 | 10,552,166 | 12,497,307 | 10,342,229 | |||||||||||||||||||
| Interest bearing liabilities | 8,155,753 | 6,872,449 | 7,998,847 | 6,747,990 | |||||||||||||||||||
| Common equity | 1,574,902 | 1,442,388 | 1,597,292 | 1,389,612 | |||||||||||||||||||
| Total stockholders' equity | 1,580,997 | 1,442,388 | 1,600,340 | 1,389,612 | |||||||||||||||||||
| Tangible common stockholders' equity | 1,083,834 | 981,878 | 1,104,770 | 940,217 | |||||||||||||||||||
| Key Performance Ratios | |||||||||||||||||||||||
| Annualized return on average assets | 0.84 | % | 1.55 | % | 0.73 | % | 1.35 | % | |||||||||||||||
| Annualized return on average common equity (GAAP) | 7.69 | 12.56 | 6.32 | 11.13 | |||||||||||||||||||
Annualized return on average tangible common equity (non-GAAP)(1) | 11.97 | 19.52 | 9.95 | 17.49 | |||||||||||||||||||
Annualized adjusted return on average tangible common equity (non-GAAP)(1) | 20.02 | 21.41 | 17.19 | 19.37 | |||||||||||||||||||
| Annualized ratio of net charge-offs to average loans | 0.11 | 0.19 | 0.17 | 0.12 | |||||||||||||||||||
| Annualized net interest margin (GAAP) | 3.81 | 4.06 | 3.81 | 4.09 | |||||||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.85 | 4.10 | 3.85 | 4.14 | |||||||||||||||||||
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 55.75 | 64.13 | 58.64 | 64.52 | |||||||||||||||||||
| (1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Common Share Data | |||||||||||||||||||||||||||||
| Book value per common share | $ | 44.42 | $ | 42.21 | $ | 43.00 | $ | 42.62 | $ | 41.48 | |||||||||||||||||||
Tangible book value per common share (non-GAAP)(1) | $ | 31.14 | $ | 28.84 | $ | 29.51 | $ | 29.62 | $ | 28.40 | |||||||||||||||||||
| Common shares outstanding, net of treasury stock | 36,844,744 | 36,807,217 | 36,704,278 | 36,696,190 | 36,690,061 | ||||||||||||||||||||||||
Tangible common equity ratio (non-GAAP)(1) | 7.89 | % | 8.29 | % | 8.52 | % | 8.99 | % | 8.92 | % | |||||||||||||||||||
| Other Selected Trend Information | |||||||||||||||||||||||||||||
| Effective tax rate | 19.75 | % | 22.77 | % | 11.99 | % | 18.66 | % | 23.12 | % | |||||||||||||||||||
| Full time equivalent employees | 1,821 | 1,817 | 1,908 | 1,962 | 2,040 | ||||||||||||||||||||||||
Loans Held to Maturity(2) | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 2,364,400 | $ | 2,550,490 | $ | 2,530,809 | $ | 2,388,861 | $ | 2,325,025 | |||||||||||||||||||
| Paycheck Protection Program ("PPP") | 1,124,430 | — | — | — | — | ||||||||||||||||||||||||
| Owner occupied commercial real estate | 1,433,271 | 1,431,038 | 1,472,704 | 1,392,415 | 1,354,996 | ||||||||||||||||||||||||
| Commercial and business lending | 4,922,101 | 3,981,528 | 4,003,513 | 3,781,276 | 3,680,021 | ||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 1,543,623 | 1,551,787 | 1,495,877 | 1,378,020 | 1,372,343 | ||||||||||||||||||||||||
| Real estate construction | 1,115,843 | 1,069,700 | 1,027,081 | 980,298 | 943,109 | ||||||||||||||||||||||||
| Commercial real estate lending | 2,659,466 | 2,621,487 | 2,522,958 | 2,358,318 | 2,315,452 | ||||||||||||||||||||||||
| Total commercial lending | 7,581,567 | 6,603,015 | 6,526,471 | 6,139,594 | 5,995,473 | ||||||||||||||||||||||||
| Agricultural and agricultural real estate | 520,773 | 550,107 | 565,837 | 571,596 | 559,054 | ||||||||||||||||||||||||
| Residential mortgage | 735,762 | 792,540 | 832,277 | 823,056 | 849,576 | ||||||||||||||||||||||||
| Consumer | 408,728 | 428,574 | 443,332 | 437,362 | 448,948 | ||||||||||||||||||||||||
| Total loans held to maturity | $ | 9,246,830 | $ | 8,374,236 | $ | 8,367,917 | $ | 7,971,608 | $ | 7,853,051 | |||||||||||||||||||
| Total unfunded loan commitments | $ | 3,065,283 | $ | 2,782,679 | $ | 2,973,732 | $ | 2,659,729 | $ | 2,530,946 | |||||||||||||||||||
| (1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||||||||
| (2) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Allowance for Credit Losses-Loans | |||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 97,350 | $ | 70,395 | $ | 66,222 | $ | 63,850 | $ | 62,639 | |||||||||||||||||||
| Impact of ASU 2016-13 adoption | — | 12,071 | — | — | — | ||||||||||||||||||||||||
| Provision for credit losses | 25,007 | 19,865 | 4,903 | 5,201 | 4,918 | ||||||||||||||||||||||||
| Charge-offs | (3,564) | (6,301) | (2,018) | (4,842) | (4,780) | ||||||||||||||||||||||||
| Recoveries | 1,144 | 1,320 | 1,288 | 2,013 | 1,073 | ||||||||||||||||||||||||
| Balance, end of period | $ | 119,937 | $ | 97,350 | $ | 70,395 | $ | 66,222 | $ | 63,850 | |||||||||||||||||||
Allowance for Unfunded Commitments(1) | |||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 15,468 | $ | 248 | $ | — | $ | — | $ | — | |||||||||||||||||||
| Impact of ASU 2016-13 adoption | — | 13,604 | — | — | — | ||||||||||||||||||||||||
| Provision for credit losses | 1,924 | 1,616 | — | — | — | ||||||||||||||||||||||||
| Balance, end of period | $ | 17,392 | $ | 15,468 | $ | — | $ | — | $ | — | |||||||||||||||||||
| Allowance for lending related credit losses | $ | 137,329 | $ | 112,818 | $ | 70,395 | $ | 66,222 | $ | 63,850 | |||||||||||||||||||
| Provision for Credit Losses | |||||||||||||||||||||||||||||
| Provision for credit losses-loans | $ | 25,007 | $ | 19,865 | $ | 4,903 | $ | 5,201 | $ | 4,918 | |||||||||||||||||||
| Provision for credit losses-unfunded commitments | 1,924 | 1,616 | — | — | — | ||||||||||||||||||||||||
Provision for credit losses-held to maturity securities(2) | (135) | 39 | — | — | — | ||||||||||||||||||||||||
| Total provision for credit losses | $ | 26,796 | $ | 21,520 | $ | 4,903 | $ | 5,201 | $ | 4,918 | |||||||||||||||||||
| (1) Prior to the adoption of ASU 2016-13, the allowance for unfunded commitments was immaterial and therefore prior periods have not been shown in this table. | |||||||||||||||||||||||||||||
| (2) Prior to ASU 2016-13, there was no requirement to record provision for credit losses for held to maturity securities. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Asset Quality | |||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 91,609 | $ | 79,280 | $ | 76,548 | $ | 72,208 | $ | 79,619 | |||||||||||||||||||
| Loans past due ninety days or more | 1,360 | — | 4,105 | 40 | 285 | ||||||||||||||||||||||||
| Other real estate owned | 5,539 | 6,074 | 6,914 | 6,425 | 6,646 | ||||||||||||||||||||||||
| Other repossessed assets | 29 | 17 | 11 | 13 | 39 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 98,537 | $ | 85,371 | $ | 87,578 | $ | 78,686 | $ | 86,589 | |||||||||||||||||||
| Performing troubled debt restructured loans | $ | 2,636 | $ | 2,858 | $ | 3,794 | $ | 3,199 | $ | 3,539 | |||||||||||||||||||
| Nonperforming Assets Activity | |||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 85,371 | $ | 87,578 | $ | 78,686 | $ | 86,589 | $ | 84,399 | |||||||||||||||||||
| Net loan charge offs | (2,420) | (4,981) | (730) | (2,829) | (3,707) | ||||||||||||||||||||||||
| New nonperforming loans | 26,857 | 15,796 | 13,751 | 6,818 | 13,688 | ||||||||||||||||||||||||
| Acquired nonperforming assets | — | — | 3,262 | — | 230 | ||||||||||||||||||||||||
Reduction of nonperforming loans(1) | (9,911) | (11,937) | (5,859) | (8,861) | (6,246) | ||||||||||||||||||||||||
| Net OREO/repossessed assets sales proceeds and losses | (1,360) | (1,085) | (1,532) | (3,031) | (1,775) | ||||||||||||||||||||||||
| Balance, end of period | $ | 98,537 | $ | 85,371 | $ | 87,578 | $ | 78,686 | $ | 86,589 | |||||||||||||||||||
| Asset Quality Ratios | |||||||||||||||||||||||||||||
| Ratio of nonperforming loans to total loans | 1.01 | % | 0.95 | % | 0.96 | % | 0.91 | % | 1.02 | % | |||||||||||||||||||
| Ratio of nonperforming loans and performing trouble debt restructured loans to total loans | 1.03 | 0.98 | 1.01 | 0.95 | 1.06 | ||||||||||||||||||||||||
| Ratio of nonperforming assets to total assets | 0.66 | 0.64 | 0.66 | 0.63 | 0.71 | ||||||||||||||||||||||||
| Annualized ratio of net loan charge-offs to average loans | 0.11 | 0.24 | 0.04 | 0.14 | 0.19 | ||||||||||||||||||||||||
| Allowance for loan credit losses as a percent of loans | 1.30 | 1.16 | 0.84 | 0.83 | 0.81 | ||||||||||||||||||||||||
Allowance for lending related credit losses as a percent of loans(2) | 1.49 | 1.35 | 0.84 | 0.83 | 0.81 | ||||||||||||||||||||||||
| Allowance for loan credit losses as a percent of nonperforming loans | 129.01 | 122.79 | 87.28 | 91.66 | 79.91 | ||||||||||||||||||||||||
| Loans delinquent 30-89 days as a percent of total loans | 0.22 | 0.38 | 0.33 | 0.28 | 0.31 | ||||||||||||||||||||||||
| (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, 2020 | March 31, 2020 | June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Rate | Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||||||||||||||||||||||||||||
| Earning Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | $ | 3,375,245 | $ | 23,362 | 2.78 | % | $ | 3,132,103 | $ | 21,731 | 2.79 | % | $ | 2,217,863 | $ | 16,123 | 2.92 | % | |||||||||||||||||||||||||||||||||||
Nontaxable(1) | 433,329 | 4,233 | 3.93 | 288,535 | 2,763 | 3.85 | 324,164 | 3,233 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||
| Total securities | 3,808,574 | 27,595 | 2.91 | 3,420,638 | 24,494 | 2.88 | 2,542,027 | 19,356 | 3.05 | ||||||||||||||||||||||||||||||||||||||||||||
| Interest on deposits with other banks and short-term investments | 210,347 | 54 | 0.10 | 181,320 | 721 | 1.60 | 424,262 | 2,299 | 2.17 | ||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Loans:(2)(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial(1) | 2,453,066 | 30,759 | 5.04 | 2,607,513 | 32,454 | 5.01 | 2,436,443 | 31,991 | 5.27 | ||||||||||||||||||||||||||||||||||||||||||||
| PPP loans | 916,405 | 6,017 | 2.64 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | 1,426,019 | 17,670 | 4.98 | 1,433,160 | 18,581 | 5.21 | 1,312,149 | 18,659 | 5.70 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 1,540,958 | 19,055 | 4.97 | 1,472,268 | 19,530 | 5.34 | 1,134,298 | 17,683 | 6.25 | ||||||||||||||||||||||||||||||||||||||||||||
| Real estate construction | 1,100,514 | 12,589 | 4.60 | 1,045,836 | 12,845 | 4.94 | 900,733 | 13,195 | 5.88 | ||||||||||||||||||||||||||||||||||||||||||||
| Agricultural and agricultural real estate | 532,668 | 6,171 | 4.66 | 552,968 | 7,039 | 5.12 | 566,315 | 7,465 | 5.29 | ||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 795,149 | 9,586 | 4.85 | 819,730 | 10,421 | 5.11 | 872,633 | 11,129 | 5.12 | ||||||||||||||||||||||||||||||||||||||||||||
| Consumer | 422,134 | 5,685 | 5.42 | 432,745 | 6,095 | 5.66 | 425,991 | 6,494 | 6.11 | ||||||||||||||||||||||||||||||||||||||||||||
| Less: allowance for loan losses | (102,675) | — | — | (74,723) | — | — | (62,685) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net loans | 9,084,238 | 107,532 | 4.76 | 8,289,497 | 106,965 | 5.19 | 7,585,877 | 106,616 | 5.64 | ||||||||||||||||||||||||||||||||||||||||||||
| Total earning assets | 13,103,159 | 135,181 | 4.15 | % | 11,891,455 | 132,180 | 4.47 | % | 10,552,166 | 128,271 | 4.88 | % | |||||||||||||||||||||||||||||||||||||||||
| Nonearning Assets | 1,288,697 | 1,256,718 | 1,156,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 14,391,856 | $ | 13,148,173 | $ | 11,708,538 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | $ | 6,690,504 | $ | 2,372 | 0.14 | % | $ | 6,277,528 | $ | 10,082 | 0.65 | % | $ | 5,360,355 | $ | 11,895 | 0.89 | % | |||||||||||||||||||||||||||||||||||
| Time deposits | 1,096,386 | 3,762 | 1.38 | 1,146,619 | 4,500 | 1.58 | 1,142,842 | 4,243 | 1.49 | ||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 82,200 | 61 | 0.30 | 141,807 | 296 | 0.84 | 92,977 | 338 | 1.46 | ||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 286,663 | 3,424 | 4.80 | 275,987 | 3,660 | 5.33 | 276,275 | 3,819 | 5.54 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 8,155,753 | 9,619 | 0.47 | % | 7,841,941 | 18,538 | 0.95 | % | 6,872,449 | 20,295 | 1.18 | ||||||||||||||||||||||||||||||||||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 4,501,488 | 3,547,046 | 3,287,559 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest and other liabilities | 153,618 | 139,504 | 106,142 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest bearing liabilities | 4,655,106 | 3,686,550 | 3,393,701 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | 1,580,997 | 1,619,682 | 1,442,388 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Equity | $ | 14,391,856 | $ | 13,148,173 | $ | 11,708,538 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(4) | $ | 125,562 | $ | 113,642 | $ | 107,976 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(1) | 3.68 | % | 3.52 | % | 3.70 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(4) to total earning assets | 3.85 | % | 3.84 | % | 4.10 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities to earning assets | 62.24 | % | 65.95 | % | 65.13 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||||||||||||||||||
| For the Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||||||||||||||||
| Earning Assets | |||||||||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||||||||
| Taxable | $ | 3,253,675 | $ | 45,093 | 2.79 | % | $ | 2,193,576 | $ | 31,999 | 2.94 | % | |||||||||||||||||||||||
Nontaxable(1) | 360,932 | 6,996 | 3.90 | 357,757 | 7,148 | 4.03 | |||||||||||||||||||||||||||||
| Total securities | 3,614,607 | 52,089 | 2.90 | 2,551,333 | 39,147 | 3.09 | |||||||||||||||||||||||||||||
| Interest bearing deposits with other banks and other short-term investments | 195,833 | 775 | 0.80 | 321,922 | 3,591 | 2.25 | |||||||||||||||||||||||||||||
| Federal funds sold | — | — | — | 278 | 4 | 2.90 | |||||||||||||||||||||||||||||
Loans:(2)(3) | |||||||||||||||||||||||||||||||||||
Commercial and industrial(1) | 2,530,349 | 63,213 | 5.02 | 2,381,953 | 62,380 | 5.28 | |||||||||||||||||||||||||||||
| PPP loans | 458,202 | 6,017 | 2.64 | — | — | — | |||||||||||||||||||||||||||||
| Owner occupied commercial real estate | 1,429,560 | 36,251 | 5.10 | 1,285,930 | 36,190 | 5.68 | |||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 1,506,583 | 38,585 | 5.15 | 1,130,756 | 35,106 | 6.26 | |||||||||||||||||||||||||||||
| Real estate construction | 1,073,175 | 25,434 | 4.77 | 866,548 | 25,066 | 5.83 | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | 542,818 | 13,210 | 4.89 | 567,330 | 14,668 | 5.21 | |||||||||||||||||||||||||||||
| Residential mortgage | 807,440 | 20,007 | 4.98 | 878,691 | 21,415 | 4.91 | |||||||||||||||||||||||||||||
| Consumer | 427,439 | 11,780 | 5.54 | 420,152 | 12,837 | 6.16 | |||||||||||||||||||||||||||||
| Less: allowance for loan losses | (88,699) | — | — | (62,664) | — | — | |||||||||||||||||||||||||||||
| Net loans | 8,686,867 | 214,497 | 4.97 | 7,468,696 | 207,662 | 5.61 | |||||||||||||||||||||||||||||
| Total earning assets | 12,497,307 | 267,361 | 4.30 | % | 10,342,229 | 250,404 | 4.88 | % | |||||||||||||||||||||||||||
| Nonearning Assets | 1,272,708 | 1,146,866 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 13,770,015 | $ | 11,489,095 | |||||||||||||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||||||||||||
| Savings | $ | 6,484,016 | $ | 12,454 | 0.39 | % | $ | 5,241,428 | $ | 21,978 | 0.85 | % | |||||||||||||||||||||||
| Time deposits | 1,121,502 | 8,262 | 1.48 | 1,089,091 | 7,373 | 1.37 | |||||||||||||||||||||||||||||
| Short-term borrowings | 112,004 | 357 | 0.64 | 143,901 | 1,227 | 1.72 | |||||||||||||||||||||||||||||
| Other borrowings | 281,325 | 7,084 | 5.06 | 273,570 | 7,483 | 5.52 | |||||||||||||||||||||||||||||
| Total interest bearing liabilities | 7,998,847 | 28,157 | 0.71 | % | 6,747,990 | 38,061 | 1.14 | % | |||||||||||||||||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 4,024,267 | 3,244,161 | |||||||||||||||||||||||||||||||||
| Accrued interest and other liabilities | 146,561 | 107,332 | |||||||||||||||||||||||||||||||||
| Total noninterest bearing liabilities | 4,170,828 | 3,351,493 | |||||||||||||||||||||||||||||||||
| Stockholders' Equity | 1,600,340 | 1,389,612 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 13,770,015 | $ | 11,489,095 | |||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(4) | $ | 239,204 | $ | 212,343 | |||||||||||||||||||||||||||||||
Net interest spread(1) | 3.59 | % | 3.74 | % | |||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(4) to total earning assets | 3.85 | % | 4.14 | % | |||||||||||||||||||||||||||||||
| Interest bearing liabilities to earning assets | 64.00 | % | 65.25 | % | |||||||||||||||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||||||||
| (2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||||||||||||||||||
| (3) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted. | |||||||||||||||||||||||||||||||||||
| (4) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. | |||||||||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||
| SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | |||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||
| As of and For the Quarter Ended | |||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||
| Total Assets | |||||||||||||||||
| Citywide Banks | $ | 2,546,942 | $ | 2,271,889 | $ | 2,294,512 | $ | 2,335,811 | $ | 2,261,591 | |||||||
| New Mexico Bank & Trust | 1,899,194 | 1,670,097 | 1,763,037 | 1,607,498 | 1,534,236 | ||||||||||||
| Dubuque Bank and Trust Company | 1,849,035 | 1,591,312 | 1,646,105 | 1,547,014 | 1,680,539 | ||||||||||||
| Illinois Bank & Trust | 1,470,000 | 1,295,984 | 1,301,172 | 839,721 | 852,830 | ||||||||||||
| Bank of Blue Valley | 1,380,159 | 1,222,358 | 1,307,688 | 1,346,342 | 1,319,226 | ||||||||||||
| First Bank & Trust | 1,256,710 | 1,163,181 | 1,137,714 | 1,158,320 | 1,088,796 | ||||||||||||
| Wisconsin Bank & Trust | 1,203,108 | 1,079,582 | 1,090,412 | 1,032,016 | 1,042,463 | ||||||||||||
| Premier Valley Bank | 1,031,899 | 889,280 | 903,220 | 888,401 | 847,076 | ||||||||||||
| Arizona Bank & Trust | 970,775 | 866,107 | 784,240 | 695,236 | 732,783 | ||||||||||||
| Minnesota Bank & Trust | 951,236 | 778,724 | 718,724 | 718,035 | 631,339 | ||||||||||||
| Rocky Mountain Bank | 590,764 | 576,245 | 532,191 | 528,094 | 503,126 | ||||||||||||
| Total Deposits | |||||||||||||||||
| Citywide Banks | $ | 2,147,642 | $ | 1,868,404 | $ | 1,829,217 | $ | 1,895,894 | $ | 1,833,259 | |||||||
| New Mexico Bank & Trust | 1,698,584 | 1,451,041 | 1,565,070 | 1,413,170 | 1,346,304 | ||||||||||||
| Dubuque Bank and Trust Company | 1,496,559 | 1,363,164 | 1,290,756 | 1,275,131 | 1,157,881 | ||||||||||||
| Illinois Bank & Trust | 1,318,866 | 1,139,945 | 1,167,905 | 768,267 | 769,577 | ||||||||||||
| Bank of Blue Valley | 1,138,818 | 1,008,362 | 1,016,743 | 1,091,243 | 1,077,183 | ||||||||||||
| First Bank & Trust | 959,886 | 900,399 | 893,419 | 903,410 | 844,793 | ||||||||||||
| Wisconsin Bank & Trust | 1,050,766 | 920,168 | 941,109 | 880,217 | 892,020 | ||||||||||||
| Premier Valley Bank | 869,165 | 706,479 | 707,814 | 719,141 | 689,384 | ||||||||||||
| Arizona Bank & Trust | 865,430 | 754,464 | 693,975 | 578,694 | 646,728 | ||||||||||||
| Minnesota Bank & Trust | 820,199 | 648,560 | 574,369 | 600,175 | 515,310 | ||||||||||||
| Rocky Mountain Bank | 519,029 | 496,465 | 468,314 | 462,825 | 438,349 | ||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 30,131 | $ | 20,040 | $ | 37,851 | $ | 34,612 | $ | 45,169 | |||||||||||||||||||
Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 2,130 | 2,355 | 2,305 | 2,291 | 2,617 | ||||||||||||||||||||||||
| Net income excluding intangible amortization (non-GAAP) | $ | 32,261 | $ | 22,395 | $ | 40,156 | $ | 36,903 | $ | 47,786 | |||||||||||||||||||
| Average common equity (GAAP) | $ | 1,574,902 | $ | 1,619,682 | $ | 1,570,258 | $ | 1,541,369 | $ | 1,442,388 | |||||||||||||||||||
| Less average goodwill | 446,345 | 446,345 | 433,374 | 427,097 | 410,642 | ||||||||||||||||||||||||
| Less average core deposit and customer relationship intangibles, net | 44,723 | 47,632 | 49,389 | 51,704 | 49,868 | ||||||||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,083,834 | $ | 1,125,705 | $ | 1,087,495 | $ | 1,062,568 | $ | 981,878 | |||||||||||||||||||
| Annualized return on average common equity (GAAP) | 7.69 | % | 4.98 | % | 9.56 | % | 8.91 | % | 12.56 | % | |||||||||||||||||||
| Annualized return on average tangible common equity (non-GAAP) | 11.97 | % | 8.00 | % | 14.65 | % | 13.78 | % | 19.52 | % | |||||||||||||||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||||||||||||||||
| Net Interest Income (GAAP) | $ | 124,146 | $ | 112,511 | $ | 112,745 | $ | 111,321 | $ | 106,708 | |||||||||||||||||||
Plus tax-equivalent adjustment(1) | 1,416 | 1,131 | 1,109 | 1,140 | 1,268 | ||||||||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 125,562 | $ | 113,642 | $ | 113,854 | $ | 112,461 | $ | 107,976 | |||||||||||||||||||
| Average earning assets | $ | 13,103,159 | $ | 11,891,455 | $ | 11,580,295 | $ | 11,102,581 | $ | 10,552,166 | |||||||||||||||||||
| Annualized net interest margin (GAAP) | 3.81 | % | 3.81 | % | 3.86 | % | 3.98 | % | 4.06 | % | |||||||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.85 | 3.84 | 3.90 | 4.02 | 4.10 | ||||||||||||||||||||||||
| Purchase accounting discount amortization on loans included in annualized net interest margin | 0.16 | 0.09 | 0.17 | 0.23 | 0.18 | ||||||||||||||||||||||||
| Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | |||||||||||||||||||||||||||||
| Common equity (GAAP) | $ | 1,636,672 | $ | 1,553,714 | $ | 1,578,137 | $ | 1,563,843 | $ | 1,521,787 | |||||||||||||||||||
| Less goodwill | 446,345 | 446,345 | 446,345 | 427,097 | 427,097 | ||||||||||||||||||||||||
| Less core deposit and customer relationship intangibles, net | 43,011 | 45,707 | 48,688 | 49,819 | 52,718 | ||||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 1,147,316 | $ | 1,061,662 | $ | 1,083,104 | $ | 1,086,927 | $ | 1,041,972 | |||||||||||||||||||
| Common shares outstanding, net of treasury stock | 36,844,744 | 36,807,217 | 36,704,278 | 36,696,190 | 36,690,061 | ||||||||||||||||||||||||
| Common equity (book value) per share (GAAP) | $ | 44.42 | $ | 42.21 | $ | 43.00 | $ | 42.62 | $ | 41.48 | |||||||||||||||||||
| Tangible book value per common share (non-GAAP) | $ | 31.14 | $ | 28.84 | $ | 29.51 | $ | 29.62 | $ | 28.40 | |||||||||||||||||||
| Reconciliation of Tangible Common Equity Ratio (non-GAAP) | |||||||||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 1,147,316 | $ | 1,061,662 | $ | 1,083,104 | $ | 1,086,927 | $ | 1,041,972 | |||||||||||||||||||
| Total assets (GAAP) | $ | 15,026,153 | $ | 13,294,509 | $ | 13,209,597 | $ | 12,569,262 | $ | 12,160,290 | |||||||||||||||||||
| Less goodwill | 446,345 | 446,345 | 446,345 | 427,097 | 427,097 | ||||||||||||||||||||||||
| Less core deposit and customer relationship intangibles, net | 43,011 | 45,707 | 48,688 | 49,819 | 52,718 | ||||||||||||||||||||||||
| Total tangible assets (non-GAAP) | $ | 14,536,797 | $ | 12,802,457 | $ | 12,714,564 | $ | 12,092,346 | $ | 11,680,475 | |||||||||||||||||||
| Tangible common equity ratio (non-GAAP) | 7.89 | % | 8.29 | % | 8.52 | % | 8.99 | % | 8.92 | % | |||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||||||||
| Reconciliation of Efficiency Ratio (non-GAAP) | For the Quarter Ended | ||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 124,146 | $ | 112,511 | $ | 112,745 | $ | 111,321 | $ | 106,708 | |||||||||||||||||||
Tax-equivalent adjustment(1) | 1,416 | 1,131 | 1,109 | 1,140 | 1,268 | ||||||||||||||||||||||||
| Fully tax-equivalent net interest income | 125,562 | 113,642 | 113,854 | 112,461 | 107,976 | ||||||||||||||||||||||||
| Noninterest income | 30,637 | 25,817 | 28,030 | 29,400 | 32,061 | ||||||||||||||||||||||||
| Securities gains, net | (2,006) | (1,658) | (491) | (2,013) | (3,580) | ||||||||||||||||||||||||
| Unrealized (gain)/loss on equity securities, net | (680) | 231 | (11) | (144) | (112) | ||||||||||||||||||||||||
| Gain on extinguishment of debt | — | — | — | (375) | — | ||||||||||||||||||||||||
| Valuation adjustment on servicing rights | (9) | 1,565 | (668) | 626 | 364 | ||||||||||||||||||||||||
| Adjusted revenue (non-GAAP) | $ | 153,504 | $ | 139,597 | $ | 140,714 | $ | 139,955 | $ | 136,709 | |||||||||||||||||||
| Total noninterest expenses (GAAP) | $ | 90,439 | $ | 90,859 | $ | 92,866 | $ | 92,967 | $ | 75,098 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Core deposit and customer relationship intangibles amortization | 2,696 | 2,981 | 2,918 | 2,899 | 3,313 | ||||||||||||||||||||||||
| Partnership investment in tax credit projects | 791 | 184 | 3,038 | 3,052 | 1,465 | ||||||||||||||||||||||||
| (Gain)/loss on sales/valuation of assets, net | 701 | 16 | 1,512 | 356 | (18,286) | ||||||||||||||||||||||||
| Acquisition, integration and restructuring costs | 673 | 1,376 | 537 | 1,500 | 929 | ||||||||||||||||||||||||
| Adjusted noninterest expenses (non-GAAP) | $ | 85,578 | $ | 86,302 | $ | 84,861 | $ | 85,160 | $ | 87,677 | |||||||||||||||||||
| Efficiency ratio, fully tax-equivalent (non-GAAP) | 55.75 | % | 61.82 | % | 60.31 | % | 60.85 | % | 64.13 | % | |||||||||||||||||||
| Acquisition, integration and restructuring costs | |||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 122 | $ | 44 | $ | — | $ | 100 | $ | 100 | |||||||||||||||||||
| Occupancy | — | — | 11 | — | 10 | ||||||||||||||||||||||||
| Furniture and equipment | 15 | 24 | 7 | (4) | 84 | ||||||||||||||||||||||||
| Professional fees | 505 | 996 | 462 | 855 | 624 | ||||||||||||||||||||||||
| Advertising | 4 | 89 | 31 | 115 | 52 | ||||||||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | — | — | — | — | — | ||||||||||||||||||||||||
| Other noninterest expenses | 27 | 223 | 26 | 434 | 59 | ||||||||||||||||||||||||
| Total acquisition, integration and restructuring costs | $ | 673 | $ | 1,376 | $ | 537 | $ | 1,500 | $ | 929 | |||||||||||||||||||
After tax impact on diluted earnings per share(1) | $ | 0.01 | $ | 0.03 | $ | 0.01 | $ | 0.03 | $ | 0.02 | |||||||||||||||||||
| Reconciliation of Adjusted Net Income and Adjusted Diluted EPS (non-GAAP) | |||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 30,131 | $ | 20,040 | $ | 37,851 | $ | 34,612 | $ | 45,169 | |||||||||||||||||||
Provision for credit losses(1) | 21,169 | 17,001 | 3,873 | 4,109 | 3,885 | ||||||||||||||||||||||||
Acquisition, integration and restructuring costs(1) | 532 | 1,087 | 424 | 1,185 | 734 | ||||||||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 51,832 | $ | 38,128 | $ | 42,148 | $ | 39,906 | $ | 49,788 | |||||||||||||||||||
| Diluted earnings per share (GAAP) | $ | 0.82 | $ | 0.54 | $ | 1.03 | $ | 0.94 | $ | 1.26 | |||||||||||||||||||
| Adjusted diluted earnings per share (non-GAAP) | $ | 1.40 | $ | 1.03 | $ | 1.14 | $ | 1.08 | $ | 1.39 | |||||||||||||||||||
| Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 51,832 | $ | 38,128 | $ | 42,148 | $ | 39,906 | $ | 49,788 | |||||||||||||||||||
Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 2,130 | 2,355 | 2,305 | 2,291 | 2,617 | ||||||||||||||||||||||||
| Adjusted net income excluding intangible amortization (non-GAAP) | $ | 53,962 | $ | 40,483 | $ | 44,453 | $ | 42,197 | $ | 52,405 | |||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,083,834 | $ | 1,125,705 | $ | 1,087,495 | $ | 1,062,568 | $ | 981,878 | |||||||||||||||||||
| Annualized adjusted return on average tangible common equity (non-GAAP) | 20.02 | % | 14.46 | % | 16.22 | % | 15.76 | % | 21.41 | % | |||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||
| For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||||||
| Net income (GAAP) | $ | 30,131 | $ | 45,169 | $ | 50,171 | $ | 76,666 | |||||||||||||||
Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 2,130 | 2,617 | 4,485 | 4,862 | |||||||||||||||||||
| Net income excluding intangible amortization (non-GAAP) | $ | 32,261 | $ | 47,786 | $ | 54,656 | $ | 81,528 | |||||||||||||||
| Average common equity (GAAP) | $ | 1,574,902 | $ | 1,442,388 | $ | 1,597,292 | $ | 1,389,612 | |||||||||||||||
| Less average goodwill | 446,345 | 410,642 | 446,345 | 401,207 | |||||||||||||||||||
| Less average core deposit and customer relationship intangibles, net | 44,723 | 49,868 | 46,177 | 48,188 | |||||||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,083,834 | $ | 981,878 | $ | 1,104,770 | $ | 940,217 | |||||||||||||||
| Annualized return on average common equity (GAAP) | 7.69 | % | 12.56 | % | 6.32 | % | 11.13 | % | |||||||||||||||
| Annualized return on average tangible common equity (non-GAAP) | 11.97 | % | 19.52 | % | 9.95 | % | 17.49 | % | |||||||||||||||
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||||||||||
| Net Interest Income (GAAP) | $ | 124,146 | $ | 106,708 | $ | 236,657 | $ | 209,663 | |||||||||||||||
Plus tax-equivalent adjustment(1) | 1,416 | 1,268 | 2,547 | 2,680 | |||||||||||||||||||
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 125,562 | $ | 107,976 | $ | 239,204 | $ | 212,343 | |||||||||||||||
| Average earning assets | $ | 13,103,159 | $ | 10,552,166 | $ | 12,497,307 | $ | 10,342,229 | |||||||||||||||
| Annualized net interest margin (GAAP) | 3.81 | % | 4.06 | % | 3.81 | % | 4.09 | % | |||||||||||||||
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.85 | 4.10 | 3.85 | 4.14 | |||||||||||||||||||
| Purchase accounting discount amortization on loans included in annualized net interest margin | 0.16 | 0.18 | 0.10 | 0.17 | |||||||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||||||
| Reconciliation of Efficiency Ratio (non-GAAP) | For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net interest income (GAAP) | $ | 124,146 | $ | 106,708 | $ | 236,657 | $ | 209,663 | |||||||||||||||
Tax-equivalent adjustment(1) | 1,416 | 1,268 | 2,547 | 2,680 | |||||||||||||||||||
| Fully tax-equivalent net interest income | 125,562 | 107,976 | 239,204 | 212,343 | |||||||||||||||||||
| Noninterest income | 30,637 | 32,061 | 56,454 | 58,778 | |||||||||||||||||||
| Securities gains, net | (2,006) | (3,580) | (3,664) | (5,155) | |||||||||||||||||||
| Unrealized (gain)/loss on equity securities, net | (680) | (112) | (449) | (370) | |||||||||||||||||||
| Gain on extinguishment of debt | — | — | — | — | |||||||||||||||||||
| Valuation adjustment on servicing rights | (9) | 364 | 1,556 | 953 | |||||||||||||||||||
| Adjusted revenue (non-GAAP) | $ | 153,504 | $ | 136,709 | $ | 293,101 | $ | 266,549 | |||||||||||||||
| Total noninterest expenses (GAAP) | $ | 90,439 | $ | 75,098 | $ | 181,298 | $ | 163,328 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Core deposit and customer relationship intangibles amortization | 2,696 | 3,313 | 5,677 | 6,155 | |||||||||||||||||||
| Partnership investment in tax credit projects | 791 | 1,465 | 975 | 1,940 | |||||||||||||||||||
| (Gain)/loss on sales/valuation of assets, net | 701 | (18,286) | 717 | (21,290) | |||||||||||||||||||
| Acquisition, integration and restructuring costs | 673 | 929 | 2,049 | 4,543 | |||||||||||||||||||
| Adjusted noninterest expenses (non-GAAP) | $ | 85,578 | $ | 87,677 | $ | 171,880 | $ | 171,980 | |||||||||||||||
| Efficiency ratio, fully tax-equivalent (non-GAAP) | 55.75 | % | 64.13 | % | 58.64 | % | 64.52 | % | |||||||||||||||
| Acquisition, integration and restructuring costs | |||||||||||||||||||||||
| Salaries and employee benefits | $ | 122 | $ | 100 | $ | 166 | $ | 716 | |||||||||||||||
| Occupancy | — | 10 | — | 1,204 | |||||||||||||||||||
| Furniture and equipment | 15 | 84 | 39 | 84 | |||||||||||||||||||
| Professional fees | 505 | 624 | 1,501 | 1,048 | |||||||||||||||||||
| Advertising | 4 | 52 | 93 | 57 | |||||||||||||||||||
| (Gain)/loss on sales/valuations of assets, net | — | — | — | 1,003 | |||||||||||||||||||
| Other noninterest expenses | 27 | 59 | 250 | 431 | |||||||||||||||||||
| Total acquisition, integration and restructuring costs | $ | 673 | $ | 929 | $ | 2,049 | $ | 4,543 | |||||||||||||||
After tax impact on diluted earnings per share(1) | $ | 0.01 | $ | 0.02 | $ | 0.04 | $ | 0.10 | |||||||||||||||
| Reconciliation of Adjusted Net Income and Adjusted Diluted EPS (non-GAAP) | |||||||||||||||||||||||
| Net income (GAAP) | $ | 30,131 | $ | 45,169 | $ | 50,171 | $ | 76,666 | |||||||||||||||
Provision for credit losses(1) | 21,169 | 3,885 | 38,170 | 5,177 | |||||||||||||||||||
Acquisition, integration and restructuring costs(1) | 532 | 734 | 1,619 | 3,589 | |||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 51,832 | $ | 49,788 | $ | 89,960 | $ | 85,432 | |||||||||||||||
| Diluted earnings per share (GAAP) | $ | 0.82 | $ | 1.26 | $ | 1.36 | $ | 2.17 | |||||||||||||||
| Adjusted diluted earnings per share (non-GAAP) | $ | 1.40 | $ | 1.39 | $ | 2.44 | $ | 2.42 | |||||||||||||||
| Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 51,832 | $ | 49,788 | $ | 89,960 | $ | 85,432 | |||||||||||||||
Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 2,130 | 2,617 | 4,485 | 4,862 | |||||||||||||||||||
| Adjusted net income excluding intangible amortization (non-GAAP) | $ | 53,962 | $ | 52,405 | $ | 94,445 | $ | 90,294 | |||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,083,834 | $ | 981,878 | $ | 1,104,770 | $ | 940,217 | |||||||||||||||
| Annualized adjusted return on average tangible common equity (non-GAAP) | 20.02 | % | 21.41 | % | 17.19 | % | 19.37 | % | |||||||||||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||||||||||||
| As of and For the Quarter Ended | |||||||||||||||||||||||||||||
| 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | |||||||||||||||||||||||||
| PPP loan balances | $ | 1,124,430 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Average PPP loan balances | 916,405 | ||||||||||||||||||||||||||||
| PPP fee income | $ | 3,655 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| PPP interest income | 2,362 | — | — | — | — | ||||||||||||||||||||||||
| Total PPP interest income | $ | 6,017 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Selected ratios excluding PPP loans and interest income | |||||||||||||||||||||||||||||
| Annualized net interest margin (GAAP) | 3.90 | % | — | % | — | % | — | % | — | % | |||||||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.95 | — | — | — | — | ||||||||||||||||||||||||
| Ratio of nonperforming loans to total loans | 1.14 | — | — | — | — | ||||||||||||||||||||||||
| Ratio of nonperforming loans and performing trouble debt restructured loans to total loans | 1.18 | — | — | — | — | ||||||||||||||||||||||||
| Ratio of nonperforming assets to total assets | 0.71 | — | — | — | — | ||||||||||||||||||||||||
| Annualized ratio of net loan charge-offs to average loans | 0.12 | — | — | — | — | ||||||||||||||||||||||||
| Allowance for loan credit losses as a percent of loans | 1.48 | — | — | — | — | ||||||||||||||||||||||||
| Allowance for lending related credit losses as a percent of loans | 1.69 | — | — | — | — | ||||||||||||||||||||||||
| Loans delinquent 30-89 days as a percent of total loans | 0.26 | — | — | — | — | ||||||||||||||||||||||||
After tax impact of PPP interest income on diluted earnings per share(1) | $ | 0.13 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| As of and For the Six Months Ended | |||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||
| PPP loan balances | $ | 1,124,430 | $ | — | |||||||
| PPP average loan balances | 458,202 | — | |||||||||
| PPP fee income | $ | 3,655 | $ | — | |||||||
| PPP interest income | 2,362 | — | |||||||||
| Total PPP interest income | $ | 6,017 | $ | — | |||||||
| Selected ratios excluding PPP loans and interest income | |||||||||||
| Annualized net interest margin (GAAP) | 3.85 | % | — | % | |||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.90 | — | |||||||||
| Annualized ratio of net loan charge-offs to average loans | 0.18 | — | |||||||||
After tax impact of PPP interest income on diluted earnings per share(1) | $ | 0.13 | $ | — | |||||||
| (1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||