Heartland Financial USA, Inc. ("HTLF") Reports Record Quarterly and Year to Date Results as of June 30, 2021

ソース: Nasdaq GlobeNewswire / 26 7 2021 16:00:01 America/New_York

Highlights and Developments

Net income available to common stockholders of $59.6 million compared to $30.1 million for the second quarter of 2020, an increase of $29.5 million or 98%
Net income available to common stockholders of $110.4 million compared to $50.2 million for the six months ended June 30, 2020, an increase of $60.2 million or 120%
Diluted earnings per common share of $1.41 compared to $0.82 for the second quarter of the prior year, an increase of $0.59 or 72%
Quarterly loan growth was $287.7 million or 13% annualized, exclusive of Paycheck Protection Program ("PPP") loans
Non-time deposit growth of $133.3 million or 1% for the second quarter of 2021 and $780.0 million or 6% for the six months ended June 30, 2021
Annualized net charge off ratio of 0.12%, nonperforming assets to total assets of 0.50%, and 30-89 day loan delinquencies of 0.17%
Announced a 14% increase in the regular quarterly dividend to $0.25 per common share

	Quarter Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net income available to common stockholders (in millions)	$	59.6		$	30.1		$	110.4		$	50.2
Diluted earnings per common share	1.41			0.82			2.61			1.36

Return on average assets	1.35		%	0.84		%	1.27		%	0.73		%
Return on average common equity	12.07			7.69			11.29			6.32
Return on average tangible common equity (non-GAAP)⁽¹⁾	18.05			11.97			16.99			9.95
Net interest margin	3.37			3.81			3.40			3.81
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.41			3.85			3.45			3.85
Efficiency ratio, fully-tax equivalent (non-GAAP)⁽¹⁾	57.11			55.75			56.86			58.64

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

"HTLF's second quarter 2021 financial performance was strong. Net income available to common stockholders totaled $59.6 million, which was a 98% increase over the same quarter last year. Loan growth, excluding PPP loans, non-time deposit growth and improved credit quality all contributed to our success this quarter."

Bruce K. Lee, president and chief executive officer, HTLF

DUBUQUE, Iowa, July 26, 2021 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020:

Net income available to common stockholders of $59.6 million compared to $30.1 million, an increase of $29.5 million or 98%.
Earnings per diluted common share of $1.41 compared to $0.82, an increase of $0.59 or 72%.
Net interest income of $141.2 million compared to $124.1 million, an increase of $17.1 million or 14%.
Return on average common equity was 12.07% and return on average assets was 1.35% compared to 7.69% and 0.84%.
Return on average tangible common equity (non-GAAP) was 18.05% compared to 11.97%.

HTLF report the following results for the six months ended June 30, 2021 compared to the six months ended June 30, 2020:

Net income available to common stockholders of $110.4 million compared to $50.2 million, an increase of $60.2 million or 120%.
Earnings per diluted common share of $2.61 compared to $1.36, an increase of $1.25 or 92%.
Net interest income of $280.8 million compared to $236.7 million, an increase of $44.2 million or 19%.
Return on average common equity was 11.29% and return on average assets was 1.27% compared to 6.32% and 0.73%.
Return on average tangible common equity (non-GAAP) was 16.99% compared to 9.95%.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2021, compared to 3.44% (3.48% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2021 and 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020.

Total interest income and average earning asset changes for the second quarter of 2021 compared to the second quarter of 2020 were:

Total interest income was $148.1 million, which was an increase of $14.3 million or 11% from $133.8 million and primarily attributable to an increase in average earning assets partially offset by lower yields.
Total interest income on a tax-equivalent basis (non-GAAP) was $149.8 million, which was an increase of $14.7 million or 11% from $135.2 million.
Average earning assets increased $3.72 billion or 28% to $16.82 billion compared to $13.10 billion, which was primarily attributable to recent acquisitions and loan growth, including PPP loans.
The average rate on earning assets decreased 58 basis points to 3.57% compared to 4.15%, which was primarily due to recent decreases in market interest rates and a shift in earning asset mix. Total average securities were 39% of total earning average assets compared to 29%.

Total interest expense and average interest bearing liability changes for the second quarter of 2021 compared to the second quarter of 2020 were:

Total interest expense was $6.9 million, a decrease of $2.8 million or 29% from $9.6 million, based on a decrease in the average interest rate paid, which was partially offset by an increase in average interest bearing liabilities.
The average interest rate paid on interest bearing liabilities decreased to 0.28% compared to 0.47%, which was primarily due to recent decreases in market interest rates.
Average interest bearing deposits increased $1.62 billion or 21% to $9.41 billion from $7.79 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits related to government stimulus payments and other COVID-19 relief programs.
The average interest rate paid on interest bearing deposits decreased 16 basis points to 0.16% compared to 0.32%.
Average borrowings increased $97.0 million or 26% to $465.9 million from $368.9 million, which was primarily attributable to outstanding advances from the PPP lending fund used to fund PPP loans to borrowers. The average interest rate paid on borrowings was 2.65% compared to 3.80%.

Net interest income increased for the second quarter of 2021 compared to the second quarter of 2020:

Net interest income totaled $141.2 million compared to $124.1 million, which was an increase of $17.1 million or 14%.
Net interest income on a tax-equivalent basis (non-GAAP) totaled $143.0 million compared to $125.6 million, which was an increase of $17.4 million or 14%.

Noninterest Income and Noninterest Expense

Total noninterest income was $33.2 million during the second quarter of 2021 compared to $30.6 million during the second quarter of 2020, an increase of $2.5 million or 8%. Significant changes within the noninterest income category for the second quarter of 2021 compared to the second quarter of 2020 were:

Service charges and fees increased $4.2 million or 38% to $15.1 million from $11.0 million. Service charges and fees on retail and small business accounts increased $2.5 million to $7.3 million from $4.9 million. During the second quarter of 2020, HTLF was waiving service charges and fees due to the COVID-19 pandemic.
Trust fees increased $1.1 million or 21% to $6.0 million from $5.0 million. The increase was primarily attributable to an increase in market value of trust assets under management.
Net gains on sales of loans held for sale totaled $4.8 million compared to $7.9 million, which was a decrease of $3.1 million or 40% and was primarily attributable to a decrease of loans sold to the secondary market.

Total noninterest expense was $103.4 million during the second quarter of 2021 compared to $90.4 million during the second quarter of 2020, which was an increase of $12.9 million or 14%. Significant changes within the noninterest expense category for the second quarter of 2021 compared to the second quarter of 2020 were:

Salaries and employee benefits totaled $57.3 million compared to $50.1 million, which was an increase of $7.2 million or 14%. Full-time equivalent employees increased 270 to 2,091 compared to 1,821 which was primarily attributable to the acquisitions completed in the fourth quarter of 2020.
Professional fees increased $2.6 million or 19% to $16.2 million compared to $13.7 million, which was primarily attributable to utilization of specialized resources to support automation and technology projects, including the customer service call center.
Other noninterest expenses increased $1.6 million or 14% to $12.7 million compared to $11.1 million. The increase was primarily attributable to the acquisitions completed in the fourth quarter of 2020.

The effective tax rate was 21.11% for the second quarter of 2021 compared to 19.75% for the second quarter of 2020. The following items impacted the second quarter 2021 and 2020 tax calculations:

Solar energy tax credits of $1.3 million compared to $798,000.
Federal low-income housing tax credits of $135,000 compared to $195,000.
New markets tax credits of $75,000 in each quarterly calculation.
Historic rehabilitation tax credits of $123,000 compared to $0.
Tax-exempt interest income as a percentage of pre-tax income of 8.49% compared to 14.19%.
Tax benefit of $150,000 compared to tax expense of $66,000 resulting from the vesting of restricted stock unit awards.

Total Assets, Total Loans and Total Deposits

Total assets were $18.37 billion at June 30, 2021, an increase of $462.7 million or 3% from $17.91 billion at year-end 2020. Securities represented 37% and 35% of total assets at June 30, 2021, and December 31, 2020, respectively.

Total loans held to maturity were $10.01 billion at June 30, 2021, $10.05 billion at March 31, 2021, and $10.02 billion at December 31, 2020. Excluding total PPP loans, loans increased $287.7 million or 13% annualized during the second quarter of 2021 and $117.6 million or 2.6% annualized since year-end 2020.

Significant changes by loan category at June 30, 2021 compared to March 31, 2021 included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $125.9 million or 2% to $5.29 billion compared to $5.41 billion.
- PPP loans originated in 2020 ("PPP I") decreased $365.4 million or 49%. PPP loans originated in 2021 ("PPP II") increased $39.2 million or 9%.
- Excluding total PPP loans, commercial and business lending increased $200.2 million or 5% to $4.46 billion from $4.29 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $78.5 million or 3% to $2.84 billion compared to $2.76 billion.

Significant changes by loan category at June 30, 2021 compared to December 31, 2020, included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $19.2 million or less than 1%, to $5.29 billion compared to $5.27 billion.
- PPP I loans decreased $583.6 million or 61%. PPP II loans totaled $455.0 million.
- Excluding total PPP loans, commercial and business lending increased $147.8 million or 3% to $4.46 billion from $4.31 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $57.0 million or 2% to $2.84 billion compared to $2.78 billion.
Residential mortgage loans decreased $39.5 million or 5% to $800.9 million compared to $840.4 million.
Agriculture and agricultural real estate loans decreased $34.9 million or 5% to $679.6 million compared to $714.5 million.

Total deposits were $15.62 billion as of June 30, 2021, $15.56 billion as of March 31, 2021 and $14.98 billion at year-end 2020. Significant deposit changes by category at June 30, 2021 compared to March 31, 2021 included:

Demand deposits increased $123.3 million or 2% to $6.30 billion compared to $6.18 billion.
Time deposits decreased $77.2 million or 6% to $1.13 billion from $1.20 billion.

Significant deposit changes by category at June 30, 2021 compared to December 31, 2020 included:

Demand deposits increased $610.5 million or 11% to $6.30 billion compared to $5.69 billion.
Time deposits decreased $144.8 million or 11% to $1.13 billion from $1.27 billion.

Growth in demand deposits during the second quarter and first six months of 2021 was positively impacted by payments related to federal government stimulus programs and other COVID-19 relief programs.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision benefit for credit losses for loans for the second quarter of 2021 was $6.5 million, which was a decrease of $31.5 million from provision expense of $25.0 million recorded in the second quarter of 2020. The provision benefit for the second quarter of 2021 was impacted by several factors, including:

increases in balances of loans held to maturity of $287.7 million during the second quarter, excluding total PPP loans;
modest improvements in credit quality marked by a decrease in nonperforming loans of $6.5 million to $85.4 million and nonpass loans of 10.37% of total loans for the second quarter compared to nonperforming loans of $91.9 million and nonpass loans of 11.47% of total loans at March 31, 2021, and
improved macroeconomic factors compared to previous quarters.

The allowance for credit losses for loans totaled $120.7 million and $131.6 million at June 30, 2021, and December 31, 2020, respectively. The following items have impacted the allowance for credit losses for loans for the six months ended June 30, 2021:

Provision benefit for the six months ended June 30, 2021, totaled $6.5 million.
Net charge offs of $4.4 million were recorded for the first six months of 2021.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $14.0 million at June 30, 2021, which was a decrease of $1.3 million from $15.3 million at December 31, 2020. Unfunded commitments increased $186.1 million to $3.43 billion at June 30, 2021 compared to $3.25 billion at December 31, 2020.

Total Provision and Allowance for Lending Related Credit Losses
The total provision benefit for lending related credit losses was $7.1 million for the second quarter of 2021 compared to provision expense of $26.9 million for the second quarter of 2020. The total allowance for lending related credit losses was $134.7 million at June 30, 2021, which was 1.35% of total loans as of June 30, 2021, compared to $146.9 million or 1.47% of total loans as of December 31, 2020. Excluding PPP loans, the allowance for lending related credit losses as a percentage of total loans was 1.47% and 1.62% as of June 30, 2021, and December 31, 2020, respectively.

Nonperforming Assets

Nonperforming assets decreased $3.2 million or 3% to $91.7 million or 0.50% of total assets at June 30, 2021, compared to $95.0 million or 0.53% of total assets at December 31, 2020. Nonperforming loans were $85.4 million or 0.85% of total loans at June 30, 2021, compared to $88.1 million or 0.88% of total loans at December 31, 2020. At June 30, 2021, loans delinquent 30-89 days were 0.17% of total loans compared to 0.23% of total loans at December 31, 2020.

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

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

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

Conference Call Details
HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join, please register in advance of the conference using the link provided below. Upon registering, participant dial-in numbers, Direct Event passcode and unique registrant ID will be provided. Direct Event online registration can be found at: http://www.directeventreg.com/registration/event/3970348. In the 10 minutes prior to the call start time, participants need to use the conference access information provided in the email received at the point of registering. A replay will be available until July 25, 2022, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., operating under the brand name HTLF, is a financial services company with assets of $18.37 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, residential mortgage, wealth management, investment and insurance. Additional information is available at www.htlf.com.

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

Any statements about the company's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of the company's operations or performance. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "intent", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "may", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of the company and its management. Although the company may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of the company to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which the company currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of the company’s Annual Report on Form 10-K for the year ended December 31, 2020, include, among others:

COVID-19 Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;
Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, terrorist threats or acts of war;
Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;
Liquidity and Interest Rate Risks, including the impact of capital market conditions and changes in monetary policy on our borrowings and net interest income;
Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
Strategic and External Risks, including competitive forces impacting our business and strategic acquisition risks;
Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect the company’s business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic and the impact of varying governmental responses that affect the company’s customers and the economies where they operate. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. The company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to or correct or update any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect the company’s financial results, is included in the company’s filings with the SEC.

CONTACT:

Bryan R. McKeag

Executive Vice President

Chief Financial Officer

(563) 589-1994

BMcKeag@htlf.com

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,
	2021			2020		2021			2020
Interest Income
Interest and fees on loans	$	111,915		$	107,005	$	224,354		$	213,419
Interest on securities:
Taxable	31,546			23,362		61,989			45,093
Nontaxable	4,561			3,344		9,064			5,527
Interest on federal funds sold	—			—		1			—
Interest on deposits with other banks and short-term investments	60			54		126			775
Total Interest Income	148,082			133,765		295,534			264,814
Interest Expense
Interest on deposits	3,790			6,134		8,185			20,716
Interest on short-term borrowings	98			61		250			357
Interest on other borrowings	2,976			3,424		6,276			7,084
Total Interest Expense	6,864			9,619		14,711			28,157
Net Interest Income	141,218			124,146		280,823			236,657
Provision (benefit) for credit losses	(7,080		)	26,796		(7,728		)	48,316
Net Interest Income After Provision for Credit Losses	148,298			97,350		288,551			188,341
Noninterest Income
Service charges and fees	15,132			10,972		28,803			22,993
Loan servicing income	873			379		1,711			1,342
Trust fees	6,039			4,977		11,816			9,999
Brokerage and insurance commissions	865			595		1,718			1,328
Securities gains/(losses), net	2,842			2,006		2,812			3,664
Unrealized gain/ (loss) on equity securities, net	83			680		(27		)	449
Net gains on sale of loans held for sale	4,753			7,857		11,173			12,517
Valuation adjustment on servicing rights	(526		)	9		391			(1,556		)
Income on bank owned life insurance	937			1,167		1,766			1,665
Other noninterest income	2,166			1,995		3,318			4,053
Total Noninterest Income	33,164			30,637		63,481			56,454
Noninterest Expense
Salaries and employee benefits	57,332			50,118		116,394			100,075
Occupancy	7,399			6,502		15,317			12,973
Furniture and equipment	3,501			2,993		6,594			6,101
Professional fees	16,237			13,676		29,727			26,149
Advertising	1,649			995		3,118			3,200
Core deposit and customer relationship intangibles amortization	2,415			2,696		4,931			5,677
Other real estate and loan collection expenses, net	414			203		549			537
Loss on sales/valuations of assets, net	183			701		377			717
Acquisition, integration and restructuring costs	210			673		3,138			2,049
Partnership investment in tax credit projects	1,345			791		1,380			975
Other noninterest expenses	12,691			11,091		24,274			22,845
Total Noninterest Expense	103,376			90,439		205,799			181,298
Income Before Income Taxes	78,086			37,548		146,233			63,497
Income taxes	16,481			7,417		31,814			13,326
Net Income	61,605			30,131		114,419			50,171
Preferred dividends	(2,012		)	—		(4,025		)	—
Net Income Available to Common Stockholders	$	59,593		$	30,131	$	110,394		$	50,171
Earnings per common share-diluted	$	1.41		$	0.82	$	2.61		$	1.36
Weighted average shares outstanding-diluted	42,359,873			36,915,630		42,357,133			36,919,555

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Interest Income
Interest and fees on loans	$	111,915		$	112,439		$	108,865		$	102,657		$	107,005
Interest on securities:
Taxable	31,546			30,443			28,154			25,016			23,362
Nontaxable	4,561			4,503			3,735			3,222			3,344
Interest on federal funds sold	—			1			—			—			—
Interest on deposits with other banks and short-term investments	60			66			77			72			54
Total Interest Income	148,082			147,452			140,831			130,967			133,765
Interest Expense
Interest on deposits	3,790			4,395			4,609			4,962			6,134
Interest on short-term borrowings	98			152			175			78			61
Interest on other borrowings	2,976			3,300			3,472			3,430			3,424
Total Interest Expense	6,864			7,847			8,256			8,470			9,619
Net Interest Income	141,218			139,605			132,575			122,497			124,146
Provision (benefit) for credit losses	(7,080		)	(648		)	17,072			1,678			26,796
Net Interest Income After Provision for Credit Losses	148,298			140,253			115,503			120,819			97,350
Noninterest Income
Service charges and fees	15,132			13,671			12,725			11,749			10,972
Loan servicing income	873			838			997			638			379
Trust fees	6,039			5,777			5,506			5,357			4,977
Brokerage and insurance commissions	865			853			779			649			595
Securities gains/(losses), net	2,842			(30		)	2,829			1,300			2,006
Unrealized gain/ (loss) on equity securities, net	83			(110		)	36			155			680
Net gains on sale of loans held for sale	4,753			6,420			7,104			8,894			7,857
Valuation adjustment on servicing rights	(526		)	917			(102		)	(120		)	9
Income on bank owned life insurance	937			829			1,021			868			1,167
Other noninterest income	2,166			1,152			1,726			1,726			1,995
Total Noninterest Income	33,164			30,317			32,621			31,216			30,637
Noninterest Expense
Salaries and employee benefits	57,332			59,062			51,615			50,978			50,118
Occupancy	7,399			7,918			6,849			6,732			6,502
Furniture and equipment	3,501			3,093			3,913			2,500			2,993
Professional fees	16,237			13,490			15,117			12,802			13,676
Advertising	1,649			1,469			1,107			928			995
Core deposit and customer relationship intangibles amortization	2,415			2,516			2,501			2,492			2,696
Other real estate and loan collection expenses, net	414			135			468			335			203
Loss on sales/valuations of assets, net	183			194			2,621			1,763			701
Acquisition, integration and restructuring costs	210			2,928			2,186			1,146			673
Partnership investment in tax credit projects	1,345			35			1,899			927			791
Other noninterest expenses	12,691			11,583			10,993			9,793			11,091
Total Noninterest Expense	103,376			102,423			99,269			90,396			90,439
Income Before Income Taxes	78,086			68,147			48,855			61,639			37,548
Income taxes	16,481			15,333			9,046			13,681			7,417
Net Income	61,605			52,814			39,809			47,958			30,131
Preferred dividends	(2,012		)	(2,013		)	(2,014		)	(2,437		)	—
Net Income Available to Common Stockholders	$	59,593		$	50,801		$	37,795		$	45,521		$	30,131
Earnings per common share-diluted	$	1.41		$	1.20		$	0.98		$	1.23		$	0.82
Weighted average shares outstanding-diluted	42,359,873			42,335,747			38,534,082			36,995,572			36,915,630

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Assets
Cash and due from banks	$	208,702		$	198,177		$	219,243		$	175,284		$	211,429
Interest bearing deposits with other banks and short-term investments	240,426			269,685			118,660			156,371			242,149
Cash and cash equivalents	449,128			467,862			337,903			331,655			453,578
Time deposits in other financial institutions	3,138			3,138			3,129			3,129			3,128
Securities:
Carried at fair value	6,543,978			6,370,495			6,127,975			4,950,698			4,126,351
Held to maturity, at cost, less allowance for credit losses	85,439			85,293			88,839			88,700			90,579
Other investments, at cost	76,809			74,935			75,253			35,940			35,902
Loans held for sale	33,248			43,037			57,949			65,969			54,382
Loans:
Held to maturity	10,012,014			10,050,456			10,023,051			9,099,646			9,246,830
Allowance for credit losses	(120,726		)	(130,172		)	(131,606		)	(103,377		)	(119,937		)
Loans, net	9,891,288			9,920,284			9,891,445			8,996,269			9,126,893
Premises, furniture and equipment, net	226,358			225,047			226,094			200,028			198,481
Goodwill	576,005			576,005			576,005			446,345			446,345
Core deposit and customer relationship intangibles, net	37,452			39,867			42,383			40,520			43,011
Servicing rights, net	6,201			6,953			6,052			5,752			5,469
Cash surrender value on life insurance	189,619			188,521			187,664			173,111			172,813
Other real estate, net	6,314			6,236			6,624			5,050			5,539
Other assets	246,029			236,754			281,024			269,498			263,682
Total Assets	$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664		$	15,026,153
Liabilities and Equity
Liabilities
Deposits:
Demand	$	6,299,289		$	6,175,946		$	5,688,810		$	5,022,567		$	4,831,151
Savings	8,189,223			8,179,251			8,019,704			6,742,151			6,810,296
Time	1,126,606			1,203,854			1,271,391			1,002,392			1,067,252
Total deposits	15,615,118			15,559,051			14,979,905			12,767,110			12,708,699
Short-term borrowings	152,563			140,597			167,872			306,706			88,631
Other borrowings	271,244			349,514			457,042			524,045			306,459
Accrued expenses and other liabilities	172,295			139,058			224,289			203,199			174,987
Total Liabilities	16,211,220			16,188,220			15,829,108			13,801,060			13,278,776
Stockholders' Equity
Preferred equity	110,705			110,705			110,705			110,705			110,705
Common stock	42,245			42,174			42,094			36,885			36,845
Capital surplus	1,066,765			1,063,497			1,062,083			847,377			844,202
Retained earnings	883,484			833,171			791,630			761,211			723,067
Accumulated other comprehensive income	56,587			6,660			72,719			55,426			32,558
Total Equity	2,159,786			2,056,207			2,079,231			1,811,604			1,747,377
Total Liabilities and Equity	$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664		$	15,026,153

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
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Average Balances
Assets	$	18,293,756		$	17,964,723		$	16,401,152		$	15,167,225		$	14,391,856
Loans, net of unearned	10,072,071			9,952,152			9,366,430			9,220,666			9,186,913
Deposits	15,576,345			15,044,561			13,518,020			12,650,822			12,288,378
Earning assets	16,819,978			16,460,124			15,042,079			13,868,360			13,103,159
Interest bearing liabilities	9,871,302			9,917,159			9,053,855			8,320,123			8,155,753
Common equity	1,980,904			1,963,674			1,769,575			1,661,381			1,574,902
Total stockholders' equity	2,091,609			2,074,379			1,880,280			1,772,086			1,580,997
Tangible common equity (non-GAAP)⁽¹⁾	1,366,285			1,346,270			1,238,691			1,172,891			1,083,834

Key Performance Ratios
Annualized return on average assets	1.35		%	1.19		%	0.97		%	1.26		%	0.84		%
Annualized return on average common equity (GAAP)	12.07			10.49			8.50			10.90			7.69
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾	18.05			15.90			12.77			16.11			11.97
Annualized ratio of net charge-offs to average loans	0.12			0.06			0.01			0.92			0.11
Annualized net interest margin (GAAP)	3.37			3.44			3.51			3.51			3.81
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.41			3.48			3.55			3.55			3.85
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾	57.11			56.61			54.93			54.67			55.75

	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Average Balances
Assets	$	18,293,756		$	14,391,856		$	18,130,148		$	13,770,015
Loans, net of unearned	10,072,071			9,186,913			10,012,443			8,775,566
Deposits	15,576,345			12,288,378			15,311,921			11,629,785
Earning assets	16,819,978			13,103,159			16,641,045			12,497,307
Interest bearing liabilities	9,871,302			8,155,753			9,894,103			7,998,847
Common equity	1,980,904			1,574,902			1,972,337			1,597,292
Total stockholders' equity	2,091,609			1,580,997			2,083,042			1,600,340
Tangible common stockholders' equity	1,366,285			1,083,834			1,356,333			1,104,770

Key Performance Ratios
Annualized return on average assets	1.35		%	0.84		%	1.27		%	0.73		%
Annualized return on average common equity (GAAP)	12.07			7.69			11.29			6.32
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾	18.05			11.97			16.99			9.95
Annualized ratio of net charge-offs to average loans	0.12			0.11			0.09			0.17
Annualized net interest margin (GAAP)	3.37			3.81			3.40			3.81
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.41			3.85			3.45			3.85
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾	57.11			55.75			56.86			58.64

(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
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Common Share Data
Book value per common share	$	48.50		$	46.13		$	46.77		$	46.11		$	44.42
Tangible book value per common share (non-GAAP)⁽¹⁾	$	33.98		$	31.53		$	32.07		$	32.91		$	31.14
Common shares outstanding, net of treasury stock	42,245,452			42,173,675			42,093,862			36,885,390			36,844,744
Tangible common equity ratio (non-GAAP)⁽¹⁾	8.08		%	7.54		%	7.81		%	8.03		%	7.89		%

Other Selected Trend Information
Effective tax rate	21.11		%	22.50		%	18.52		%	22.20		%	19.75		%
Full time equivalent employees	2,091			2,131			2,013			1,827			1,821

Loans Held to Maturity
Commercial and industrial	$	2,518,908		$	2,421,260		$	2,534,799		$	2,303,646		$	2,364,400
Paycheck Protection Program ("PPP")	829,175			1,155,328			957,785			1,128,035			1,124,430
Owner occupied commercial real estate	1,940,134			1,837,559			1,776,406			1,494,902			1,433,271
Commercial and business lending	5,288,217			5,414,147			5,268,990			4,926,583			4,922,101
Non-owner occupied commercial real estate	1,987,369			1,967,183			1,921,481			1,659,683			1,543,623
Real estate construction	854,295			796,027			863,220			917,765			1,115,843
Commercial real estate lending	2,841,664			2,763,210			2,784,701			2,577,448			2,659,466
Total commercial lending	8,129,881			8,177,357			8,053,691			7,504,031			7,581,567
Agricultural and agricultural real estate	679,608			683,969			714,526			508,058			520,773
Residential mortgage	800,884			786,994			840,442			701,899			735,762
Consumer	401,641			402,136			414,392			385,658			408,728
Total loans held to maturity	$	10,012,014		$	10,050,456		$	10,023,051		$	9,099,646		$	9,246,830

Total unfunded loan commitments	$	3,433,062		$	3,306,042		$	3,246,953		$	2,980,484		$	3,065,283

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

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Allowance for Credit Losses-Loans
Balance, beginning of period	$	130,172		$	131,606		$	103,377		$	119,937		$	97,350
Allowance for acquired purchased credit deteriorated loans	—			—			12,313			—			—
Provision (benefit) for credit losses	(6,466		)	16			16,132			4,741			25,007
Charge-offs	(3,497		)	(2,126		)	(1,104		)	(21,753		)	(3,564		)
Recoveries	517			676			888			452			1,144
Balance, end of period	$	120,726		$	130,172		$	131,606		$	103,377		$	119,937

Allowance for Unfunded Commitments
Balance, beginning of period	$	14,619		$	15,280		$	14,330		$	17,392		$	15,468
Provision (benefit) for credit losses	(617		)	(661		)	950			(3,062		)	1,924
Balance, end of period	$	14,002		$	14,619		$	15,280		$	14,330		$	17,392

Allowance for lending related credit losses	$	134,728		$	144,791		$	146,886		$	117,707		$	137,329

Provision for Credit Losses
Provision (benefit) for credit losses-loans	$	(6,466	)	$	16		$	6,572		$	4,741		$	25,007
Provision for credit losses-acquired loans	—			—			9,560			—			—
Provision (benefit) for credit losses-unfunded commitments	(617		)	(661		)	(1,372		)	(3,062		)	1,924
Provision for credit losses-acquired unfunded commitments	—			—			2,322			—			—
Provision (benefit) for credit losses-held to maturity securities	3			(3		)	(10		)	(1		)	(135		)
Total provision (benefit) for credit losses	$	(7,080	)	$	(648	)	$	17,072		$	1,678		$	26,796

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Asset Quality
Nonaccrual loans	$	85,268		$	91,718		$	87,386		$	79,040		$	91,609
Loans past due ninety days or more	97			171			720			1,681			1,360
Other real estate owned	6,314			6,236			6,624			5,050			5,539
Other repossessed assets	50			239			240			130			29
Total nonperforming assets	$	91,729		$	98,364		$	94,970		$	85,901		$	98,537

Performing troubled debt restructured loans	$	2,122		$	2,394		$	2,370		$	11,818		$	2,636

Nonperforming Assets Activity
Balance, beginning of period	$	98,364		$	94,970		$	85,901		$	98,537		$	85,371
Net loan charge offs	(2,980		)	(1,450		)	(216		)	(21,301		)	(2,420		)
New nonperforming loans	7,989			14,936			8,664			11,834			26,857
Acquired nonperforming assets	—			—			12,781			—			—
Reduction of nonperforming loans⁽¹⁾	(10,948		)	(8,884		)	(10,811		)	(1,994		)	(9,911		)
Net OREO/repossessed assets sales proceeds and losses	(696		)	(1,208		)	(1,349		)	(1,175		)	(1,360		)
Balance, end of period	$	91,729		$	98,364		$	94,970		$	85,901		$	98,537

Asset Quality Ratios
Ratio of nonperforming loans to total loans	0.85		%	0.91		%	0.88		%	0.89		%	1.01		%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.87			0.94			0.90			1.02			1.03
Ratio of nonperforming assets to total assets	0.50			0.54			0.53			0.55			0.66
Annualized ratio of net loan charge-offs to average loans	0.12			0.06			0.01			0.92			0.11
Allowance for loan credit losses as a percent of loans	1.21			1.30			1.31			1.14			1.30
Allowance for lending related credit losses as a percent of loans	1.35			1.44			1.47			1.29			1.49
Allowance for loan credit losses as a percent of nonperforming loans	141.42			141.66			149.37			128.07			129.01
Loans delinquent 30-89 days as a percent of total loans	0.17			0.16			0.23			0.17			0.22

(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, 2021							March 31, 2021							June 30, 2020
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	5,862,683		$	31,546	2.16	%	$	5,693,097		$	30,443	2.17	%	$	3,375,245		$	23,362	2.78	%
Nontaxable⁽¹⁾	740,601			5,773		3.13		730,565			5,700		3.16		433,329			4,233		3.93
Total securities	6,603,284			37,319		2.27		6,423,662			36,143		2.28		3,808,574			27,595		2.91
Interest on deposits with other banks and short-term investments	271,891			60		0.09		204,488			66		0.13		210,347			54		0.10
Federal funds sold	—			—		—		14,020			1		0.03		—			—		—
Loans:⁽²⁾
Commercial and industrial⁽¹⁾	2,469,742			28,562		4.64		2,500,250			28,222		4.58		2,453,066			30,759		5.04
PPP loans	1,047,559			11,186		4.28		992,517			10,149		4.15		916,405			6,017		2.64
Owner occupied commercial real estate	1,858,891			20,097		4.34		1,778,829			19,565		4.46		1,426,019			17,670		4.98
Non-owner occupied commercial real estate	1,980,374			21,734		4.40		1,937,564			22,121		4.63		1,540,958			19,055		4.97
Real estate construction	815,738			9,212		4.53		806,315			9,698		4.88		1,100,514			12,589		4.60
Agricultural and agricultural real estate	672,560			7,267		4.33		681,279			8,051		4.79		532,668			6,171		4.66
Residential mortgage	827,291			9,255		4.49		849,923			9,830		4.69		795,149			9,586		4.85
Consumer	399,916			5,152		5.17		405,475			5,367		5.37		422,134			5,685		5.42
Less: allowance for credit losses-loans	(127,268		)	—		—		(134,198		)	—		—		(102,675		)	—		—
Net loans	9,944,803			112,465		4.54		9,817,954			113,003		4.67		9,084,238			107,532		4.76
Total earning assets	16,819,978			149,844		3.57	%	16,460,124			149,213		3.68	%	13,103,159			135,181		4.15	%
Nonearning Assets	1,473,778							1,504,599							1,288,697
Total Assets	$	18,293,756						$	17,964,723						$	14,391,856
Interest Bearing Liabilities
Savings	$	8,234,151		$	2,233	0.11	%	$	8,032,308		$	2,430	0.12	%	$	6,690,504		$	2,372	0.14	%
Time deposits	1,171,266			1,557		0.53		1,233,682			1,965		0.65		1,096,386			3,762		1.38
Short-term borrowings	169,822			98		0.23		240,037			152		0.26		82,200			61		0.30
Other borrowings	296,063			2,976		4.03		411,132			3,300		3.26		286,663			3,424		4.80
Total interest bearing liabilities	9,871,302			6,864		0.28	%	9,917,159			7,847		0.32	%	8,155,753			9,619		0.47	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	6,170,928							5,778,571							4,501,488
Accrued interest and other liabilities	159,917							194,614							153,618
Total noninterest bearing liabilities	6,330,845							5,973,185							4,655,106
Equity	2,091,609							2,074,379							1,580,997
Total Liabilities and Equity	$	18,293,756						$	17,964,723						$	14,391,856
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾				$	142,980						$	141,366						$	125,562
Net interest spread⁽¹⁾						3.29	%						3.36	%						3.68	%
Net interest income, fully tax-equivalent (non-GAAP^)(1)(3) to total earning assets						3.41	%						3.48	%						3.85	%
Interest bearing liabilities to earning assets	58.69		%					60.25		%					62.24		%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Six Months Ended
	June 30, 2021							June 30, 2020
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	5,778,333		$	61,989	2.16	%	$	3,253,675		$	45,093	2.79	%
Nontaxable⁽¹⁾	735,636			11,473		3.15		360,932			6,996		3.90	%
Total securities	6,513,969			73,462		2.27		3,614,607			52,089		2.90
Interest bearing deposits with other banks and other short-term investments	238,376			126		0.11		195,833			775		0.80
Federal funds sold	6,971			1		0.03		—			—		—
Loans:⁽²⁾
Commercial and industrial⁽¹⁾	2,485,210			56,784		4.61		2,530,349			63,213		5.02	%
PPP loans	1,020,190			21,335		4.22		458,202			6,017		2.64	%
Owner occupied commercial real estate	1,818,932			39,662		4.40		1,429,560			36,251		5.10	%
Non-owner occupied commercial real estate	1,958,938			43,855		4.51		1,506,583			38,585		5.15	%
Real estate construction	811,053			18,910		4.70		1,073,175			25,434		4.77	%
Agricultural and agricultural real estate	676,895			15,318		4.56		542,818			13,210		4.89	%
Residential mortgage	838,545			19,085		4.59		807,440			20,007		4.98	%
Consumer	402,680			10,519		5.27		427,439			11,780		5.54	%
Less: allowance for credit losses-loans	(130,714		)	—		—		(88,699		)	—		—
Net loans	9,881,729			225,468		4.60		8,686,867			214,497		4.97
Total earning assets	16,641,045			299,057		3.62	%	12,497,307			267,361		4.30	%
Nonearning Assets	1,489,103							1,272,708
Total Assets	$	18,130,148						$	13,770,015
Interest Bearing Liabilities
Savings	$	8,133,787		$	4,663	0.12	%	$	6,484,016		$	12,454	0.39	%
Time deposits	1,202,301			3,522		0.59	%	1,121,502			8,262		1.48
Short-term borrowings	204,735			250		0.25	%	112,004			357		0.64
Other borrowings	353,280			6,276		3.58	%	281,325			7,084		5.06
Total interest bearing liabilities	9,894,103			14,711		0.30	%	7,998,847			28,157		0.71	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	5,975,833							4,024,267
Accrued interest and other liabilities	177,170							146,561
Total noninterest bearing liabilities	6,153,003							4,170,828
Stockholders' Equity	2,083,042							1,600,340
Total Liabilities and Stockholders' Equity	$	18,130,148						$	13,770,015
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾				$	284,346						$	239,204
Net interest spread⁽¹⁾						3.32	%						3.59	%
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾ to total earning assets						3.45	%						3.85	%
Interest bearing liabilities to earning assets	59.46		%					64.00		%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
	As of and For the Quarter Ended
	6/30/2021		3/31/2021		12/31/2020		9/30/2020		6/30/2020
Total Assets
First Bank & Trust	$	2,882,969	$	2,991,053	$	3,171,961	$	1,289,187	$	1,256,710
Citywide Banks	2,611,842		2,632,199		2,628,963		2,639,516		2,546,942
New Mexico Bank & Trust	2,494,257		2,356,918		2,032,637		2,002,663		1,899,194
Dubuque Bank and Trust Company	1,990,040		1,932,234		1,853,078		1,838,260		1,849,035
Illinois Bank & Trust	1,671,240		1,584,561		1,525,503		1,500,012		1,470,000
Arizona Bank & Trust	1,645,816		1,614,740		1,529,800		1,039,253		970,775
Bank of Blue Valley	1,419,003		1,425,434		1,376,080		1,424,261		1,380,159
Wisconsin Bank & Trust	1,252,096		1,264,009		1,267,488		1,262,069		1,203,108
Premier Valley Bank	1,126,807		1,062,607		1,076,615		1,042,437		1,031,899
Minnesota Bank & Trust	955,638		995,692		1,000,168		1,007,548		951,236
Rocky Mountain Bank	646,821		620,800		616,157		617,169		590,764
Total Deposits
First Bank & Trust	$	2,361,391	$	2,427,920	$	2,622,716	$	936,366	$	959,886
Citywide Banks	2,174,237		2,231,320		2,181,511		2,163,051		2,147,642
New Mexico Bank & Trust	2,195,838		2,077,304		1,749,963		1,747,527		1,698,584
Dubuque Bank and Trust Company	1,471,564		1,565,782		1,456,908		1,591,561		1,496,559
Illinois Bank & Trust	1,512,106		1,426,426		1,338,677		1,307,513		1,318,866
Arizona Bank & Trust	1,450,248		1,453,888		1,357,158		886,174		865,430
Bank of Blue Valley	1,168,617		1,178,114		1,138,264		1,142,910		1,138,818
Wisconsin Bank & Trust	1,093,119		1,067,735		1,057,369		1,011,843		1,050,766
Premier Valley Bank	963,459		896,715		836,984		855,913		869,165
Minnesota Bank & Trust	762,549		813,693		789,555		804,045		820,199
Rocky Mountain Bank	568,961		549,894		538,012		533,429		519,029

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
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Net income available to common stockholders (GAAP)	$	59,593		$	50,801		$	37,795		$	45,521		$	30,131
Plus core deposit and customer relationship intangibles amortization, net of tax⁽¹⁾	1,907			1,988			1,975			1,969			2,130
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	61,500		$	52,789		$	39,770		$	47,490		$	32,261

Average common equity (GAAP)	$	1,980,904		$	1,963,674		$	1,769,575		$	1,661,381		$	1,574,902
Less average goodwill	576,005			576,005			488,151			446,345			446,345
Less average core deposit and customer relationship intangibles, net	38,614			41,399			42,733			42,145			44,723
Average tangible common equity (non-GAAP)	$	1,366,285		$	1,346,270		$	1,238,691		$	1,172,891		$	1,083,834
Annualized return on average common equity (GAAP)	12.07		%	10.49		%	8.50		%	10.90		%	7.69		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%	15.90		%	12.77		%	16.11		%	11.97		%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	141,218		$	139,605		$	132,575		$	122,497		$	124,146
Plus tax-equivalent adjustment⁽¹⁾	1,762			1,761			1,529			1,390			1,416
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980		$	141,366		$	134,104		$	123,887		$	125,562

Average earning assets	$	16,819,978		$	16,460,124		$	15,042,079		$	13,868,360		$	13,103,159

Annualized net interest margin (GAAP)	3.37		%	3.44		%	3.51		%	3.51		%	3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41			3.48			3.55			3.55			3.85
Net purchase accounting discount amortization on loans included in annualized net interest margin	0.09			0.12			0.10			0.10			0.16

*Reconciliation of Tangible Book Value Per Common Share (non-GAAP)*
Common equity (GAAP)	$	2,049,081		$	1,945,502		$	1,968,526		$	1,700,899		$	1,636,672
Less goodwill	576,005			576,005			576,005			446,345			446,345
Less core deposit and customer relationship intangibles, net	37,452			39,867			42,383			40,520			43,011
Tangible common equity (non-GAAP)	$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034		$	1,147,316

Common shares outstanding, net of treasury stock	42,245,452			42,173,675			42,093,862			36,885,390			36,844,744
Common equity (book value) per share (GAAP)	$	48.50		$	46.13		$	46.77		$	46.11		$	44.42
Tangible book value per common share (non-GAAP)	$	33.98		$	31.53		$	32.07		$	32.91		$	31.14

*Reconciliation of Tangible Common Equity Ratio (non-GAAP)*
Tangible common equity (non-GAAP)	$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034		$	1,147,316

Total assets (GAAP)	$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664		$	15,026,153
Less goodwill	576,005			576,005			576,005			446,345			446,345
Less core deposit and customer relationship intangibles, net	37,452			39,867			42,383			40,520			43,011
Total tangible assets (non-GAAP)	$	17,757,549		$	17,628,555		$	17,289,951		$	15,125,799		$	14,536,797
Tangible common equity ratio (non-GAAP)	8.08		%	7.54		%	7.81		%	8.03		%	7.89		%

(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
*Reconciliation of Efficiency Ratio (non-GAAP)*	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Net interest income (GAAP)	$	141,218		$	139,605		$	132,575		$	122,497		$	124,146
Tax-equivalent adjustment⁽¹⁾	1,762			1,761			1,529			1,390			1,416
Fully tax-equivalent net interest income	142,980			141,366			134,104			123,887			125,562
Noninterest income	33,164			30,317			32,621			31,216			30,637
Securities (gains)/losses, net	(2,842		)	30			(2,829		)	(1,300		)	(2,006		)
Unrealized (gain)/loss on equity securities, net	(83		)	110			(36		)	(155		)	(680		)
Valuation adjustment on servicing rights	526			(917		)	102			120			(9		)
Adjusted revenue (non-GAAP)	$	173,745		$	170,906		$	163,962		$	153,768		$	153,504

Total noninterest expenses (GAAP)	$	103,376		$	102,423		$	99,269		$	90,396		$	90,439
Less:
Core deposit and customer relationship intangibles amortization	2,415			2,516			2,501			2,492			2,696
Partnership investment in tax credit projects	1,345			35			1,899			927			791
Loss on sales/valuation of assets, net	183			194			2,621			1,763			701
Acquisition, integration and restructuring costs	210			2,928			2,186			1,146			673
Adjusted noninterest expenses (non-GAAP)	$	99,223		$	96,750		$	90,062		$	84,068		$	85,578
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%	56.61		%	54.93		%	54.67		%	55.75		%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44		$	534		$	232		$	—		$	122
Occupancy	1			9			—			—			—
Furniture and equipment	41			607			423			496			15
Professional fees	63			670			1,422			476			505
Advertising	6			156			42			8			4
Other noninterest expenses	55			952			67			166			27
Total acquisition, integration and restructuring costs	$	210		$	2,928		$	2,186		$	1,146		$	673
After tax impact on diluted earnings per common share⁽¹⁾	$	—		$	0.05		$	0.04		$	0.02		$	0.01

(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,
	2021			2020			2021			2020
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Net income available to common stockholders (GAAP)	$	59,593		$	30,131		$	110,394		$	50,171
Plus core deposit and customer relationship intangibles amortization, net of tax⁽¹⁾	1,907			2,130			3,895			4,485
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	61,500		$	32,261		$	114,289		$	54,656

Average common equity (GAAP)	$	1,980,904		$	1,574,902		$	1,972,337		$	1,597,292
Less average goodwill	576,005			446,345			576,005			446,345
Less average core deposit and customer relationship intangibles, net	38,614			44,723			39,999			46,177
Average tangible common equity (non-GAAP)	$	1,366,285		$	1,083,834		$	1,356,333		$	1,104,770
Annualized return on average common equity (GAAP)	12.07		%	7.69		%	11.29		%	6.32		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%	11.97		%	16.99		%	9.95		%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	141,218		$	124,146		$	280,823		$	236,657
Plus tax-equivalent adjustment⁽¹⁾	1,762			1,416			3,523			2,547
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980		$	125,562		$	284,346		$	239,204

Average earning assets	$	16,819,978		$	13,103,159		$	16,641,045		$	12,497,307

Annualized net interest margin (GAAP)	3.37		%	3.81		%	3.40		%	3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41			3.85			3.45			3.85
Purchase accounting discount amortization on loans included in annualized net interest margin	0.09			0.16			0.11			0.10

(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,
*Reconciliation of Efficiency Ratio (non-GAAP)*	2021			2020			2021			2020
Net interest income (GAAP)	$	141,218		$	124,146		$	280,823		$	236,657
Tax-equivalent adjustment⁽¹⁾	1,762			1,416			3,523			2,547
Fully tax-equivalent net interest income	142,980			125,562			284,346			239,204
Noninterest income	33,164			30,637			63,481			56,454
Securities gains, net	(2,842		)	(2,006		)	(2,812		)	(3,664		)
Unrealized (gain)/loss on equity securities, net	(83		)	(680		)	27			(449		)
Valuation adjustment on servicing rights	526			(9		)	(391		)	1,556
Adjusted revenue (non-GAAP)	$	173,745		$	153,504		$	344,651		$	293,101

Total noninterest expenses (GAAP)	$	103,376		$	90,439		$	205,799		$	181,298
Less:
Core deposit and customer relationship intangibles amortization	2,415			2,696			4,931			5,677
Partnership investment in tax credit projects	1,345			791			1,380			975
Loss on sales/valuation of assets, net	183			701			377			717
Acquisition, integration and restructuring costs	210			673			3,138			2,049
Adjusted noninterest expenses (non-GAAP)	$	99,223		$	85,578		$	195,973		$	171,880
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%	55.75		%	56.86		%	58.64		%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44		$	122		$	578		$	166
Occupancy	1			—			10			—
Furniture and equipment	41			15			648			39
Professional fees	63			505			733			1,501
Advertising	6			4			162			93
Other noninterest expenses	55			27			1,007			250
Total acquisition, integration and restructuring costs	$	210		$	673		$	3,138		$	2,049
After tax impact on diluted earnings per common share⁽¹⁾	$	—		$	0.01		$	0.06		$	0.04

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and For the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
PPP I loan balances	$	374,174		$	739,562		$	957,785		$	1,128,035		$	1,124,430
Average PPP I loan balances	597,703			841,262			1,064,863			1,128,488			916,405

PPP I fee income	$	7,313		$	7,464		$	9,109		$	4,542		$	3,655
PPP I interest income	1,445			2,087			2,697			2,920			2,362
Total PPP I interest income	$	8,758		$	9,551		$	11,806		$	7,462		$	6,017

PPP II loan balances	$	455,001		$	415,766		$	—		$	—		$	—
Average PPP II loan balances	449,856			151,255			—			—			—

PPP II fee income	$	1,263		$	223		$	—		$	—		$	—
PPP II interest income	1,165			375			—			—			—
Total PPP II interest income	$	2,428		$	598		$	—		$	—		$	—

Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.31		%	3.39		%	3.44		%	3.59		%	3.90		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.35			3.44			3.48			3.64			3.95
Ratio of nonperforming loans to total loans	0.93			1.03			0.97			1.01			1.14
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.95			1.06			1.00			1.16			1.18
Ratio of nonperforming assets to total assets	0.52			0.58			0.56			0.59			0.71
Annualized ratio of net loan charge-offs to average loans	0.13			0.07			0.01			1.05			0.12
Allowance for loan credit losses as a percent of loans	1.31			1.46			1.45			1.30			1.48
Allowance for lending related credit losses as a percent of loans	1.47			1.63			1.62			1.48			1.69
Loans delinquent 30-89 days as a percent of total loans	0.18			0.18			0.25			0.19			0.26
After tax impact of total PPP interest income on diluted earnings per common share⁽¹⁾	$	0.21		$	0.19		$	0.24		$	0.16		$	0.13

	As of and For the Six Months Ended
	June 30, 2021			June 30, 2020
Average PPP I loan balances	$	718,810		$	458,202
Average PPP II loan balances	301,380			—

PPP I and II fee income	$	16,263		$	3,655
PPP I and II interest income	5,072			2,362
Total PPP I and II interest income	$	21,335		$	6,017

Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.35		%	3.85		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.40			3.90
Annualized ratio of net loan charge-offs to average loans	0.10			0.18

After tax impact of total PPP interest income on diluted earnings per common share⁽¹⁾	$	0.40		$	0.13

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

Heartland Financial USA, Inc. ("HTLF") Reports Record Quarterly and Year to Date Results as of June 30, 2021

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