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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d)
of the Securities Exchange Act of 1934
January 29, 2024
Date of Report (Date of earliest event reported)
Heartland Financial USA, Inc.
(Exact name of Registrant as specified in its charter)
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Delaware | 001-15393 | 42-1405748 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
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1800 Larimer Street | Suite 1800 | Denver, | Colorado | 80202 |
(Address of principal executive offices) | (Zip code) |
(303) 285-9200
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Exchange Act: | | | | | | | | |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, par value $1.00 per share | HTLF | Nasdaq Stock Market |
Depositary Shares (each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E) | HTLFP | Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On January 29, 2024, Heartland Financial USA, Inc. ("HTLF") issued a news release announcing its earnings for the quarter ended December 31, 2023. A copy of the news release is attached as Exhibit 99.1 and is incorporated by reference in this Item 2.02. The information furnished in Item 2.02 and in Exhibit 99.1 shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 7.01 Regulation FD Disclosure.
For the benefit of its investors, HTLF is also furnishing an Investor Presentation attached as Exhibit 99.2 and incorporated herein by reference in this Item 7.01. The information furnished in this Item 7.01 and Exhibit 99.2 shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: January 29, 2024 | | HEARTLAND FINANCIAL USA, INC. |
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| | By: | /s/ Kevin L. Thompson |
| | | Kevin L. Thompson |
| | | Executive Vice President |
| | | Chief Financial Officer |
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| January 29, 2024 |
FOR IMMEDIATE RELEASE |
HEARTLAND FINANCIAL USA, INC. ("HTLF") REPORTS ANNUAL EARNINGS AND FOURTH QUARTER RESULTS AS OF DECEMBER 31, 2023
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Fourth Quarter Highlights |
§ | Net loss available to common stockholders of ($72.4) million or ($1.69) per diluted common share. |
§ | Adjusted earnings available to common stockholders of $45.6 million, or $1.06 per diluted common share (non-GAAP), which excludes losses related to balance sheet repositioning, losses on sale or write-down of assets, FDIC special assessment expense, and restructuring costs. |
§ | Loan growth of $196.2 million or 2%. |
§ | Average customer deposits grew $270.7 million or 2%. |
§ | Common equity ratio increased to 9.27%; Tangible common equity ratio (non-GAAP) improved 80 basis points to 6.53%. |
§ | Net interest margin, fully tax-equivalent (non-GAAP) improved 34 basis points to 3.52%. |
§ | Consolidated final charter, with an expense of $1.3 million in the quarter, and initiated HTLF 3.0, the Company's new strategic plan which includes: |
| ▪Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix. |
| ▪Expanding Treasury Management products and capabilities. |
| ▪Creation of consumer and small business digital platforms. |
| ▪Footprint and facilities optimization, with a focus on efficient return on capital. |
§ | In the quarter we took the following actions as part of HTLF 3.0: |
| •An $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss. |
| •Centralized retail management span of control with restructuring costs of $944,000. |
| •Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities. |
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| Quarter Ended December 31, | | Year Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
Earnings Summary: | | | | | | | |
Net income/(loss) available to common stockholders (in millions) | $ | (72.4) | | | $ | 58.6 | | | $ | 71.9 | | | $ | 204.1 | |
Diluted earnings/(loss) per common share | (1.69) | | | 1.37 | | | 1.68 | | | 4.79 | |
Return on average assets | (1.42) | % | | 1.21 | % | | 0.40 | % | | 1.08 | % |
Return on average common equity | (16.61) | | | 15.02 | | | 4.19 | | | 11.74 | |
Return on average tangible common equity (non-GAAP)(1) | (24.88) | | | 25.19 | | | 6.91 | | | 18.56 | |
Net interest margin | 3.47 | | | 3.61 | | | 3.29 | | | 3.32 | |
Net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.52 | | | 3.65 | | | 3.33 | | | 3.37 | |
Efficiency ratio | 293.86 | | | 60.05 | | | 79.58 | | | 61.03 | |
Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)(1) | 59.31 | | | 54.33 | | | 59.06 | | | 57.74 | |
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Adjusted Earnings Summary (1): | | | | | | | |
Adjusted earnings available to common stockholders (in millions) | $ | 45.6 | | | $ | 62.5 | | | $ | 193.9 | | | $ | 209.5 | |
Adjusted diluted earnings per common share | 1.06 | | | 1.46 | | | 4.53 | | | 4.91 | |
Adjusted annualized return on average assets | 0.96 | % | | 1.28 | % | | 1.01 | % | | 1.11 | % |
Adjusted annualized return on average common equity | 10.46 | | | 16.00 | | | 11.31 | | | 12.06 | |
Adjusted annualized return on average tangible common equity | 16.38 | | | 26.77 | | | 17.82 | | | 19.03 | |
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(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. |
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“2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.” |
Bruce K. Lee, president and chief executive officer, HTLF |
Denver, Monday, January 29, 2024-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022:
•Net income/(loss) available to common stockholders of ($72.4) million compared to $58.6 million, a decrease of $131.0 million or 223%. Adjusted earnings available to common stockholders(1) of $45.6 million compared to $62.5 million, a decrease of $16.9 million or 27%.
•Earnings/(loss) per diluted common share of ($1.69) compared to $1.37, a decrease of $3.06. Adjusted diluted earnings per common share(1) of $1.06 compared to $1.46, a decrease of $0.40.
•Net interest income of $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
•Return on average assets of (1.42%) compared to 1.21%. Adjusted annualized return on average assets(1) of 0.96% compared to 1.28%.
•Return on average common equity of (16.61%) compared to 15.02%. Adjusted annualized return on average common equity(1) of 10.46% compared to 16.00%.
•Return on average tangible common equity(1) of (24.88%) compared to 25.19%. Adjusted annualized return on average tangible common equity(1) of 16.38% compared to 26.77%.
HTLF reported the following results for the year ended December 31, 2023 compared to the year ended December 31, 2022:
•Net income available to common stockholders of $71.9 million compared to $204.1 million, a decrease of $132.3 million or 65%. Adjusted earnings available to common stockholders(1) of $193.9 million compared to $209.5 million, a decrease of $15.6 million or 7%.
•Earnings per diluted common share of $1.68 compared to $4.79, a decrease of $3.11. Adjusted diluted earnings per common share(1) of $4.53 compared to $4.91, a decrease of $0.38 or 8%.
•Net interest income of $601.2 million compared to $598.2 million, an increase of $3.0 million or 1%.
•Return on average assets of 0.40% compared to 1.08%. Adjusted annualized return on average assets(1) of 1.01% compared to 1.11%.
•Return on average common equity of 4.19% compared to 11.74%. Adjusted annualized return on average common equity(1) of 11.31% compared to 12.06%.
•Return on average tangible common equity (non-GAAP) of 6.91% compared to 18.56%. Adjusted annualized return on average tangible common equity(1) of 17.82% compared to 19.03%.
Commenting on HTLF's 2023 results, Bruce K. Lee, HTLF’s president and chief executive officer, said, “2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.”
Announced and Initiated HTLF 3.0
HTLF’s new strategic plan, HTLF 3.0, was announced and initiated in the fourth quarter of 2023. HTLF 3.0's initiatives include:
•Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix.
•Expanding Treasury Management products and capabilities.
•Creation of consumer and small business digital platforms.
•Footprint and facilities optimization, with a focus on efficient return on capital.
In the quarter we took the following actions as part of HTLF 3.0:
•A $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss.
•Centralized retail management span of control with restructuring costs of $944,000.
•Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities.
Charter Consolidation Update
During the fourth quarter of 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which successfully completed the consolidation of all 11 charters. Total consolidation restructuring costs were $17 million, of which $1.3 million were incurred in the fourth quarter of 2023.
Net Interest Income and Net Interest Margin
Net interest margin was 3.47% (3.52% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2023, compared to 3.61% (3.65% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2022.
Total interest income and average earning asset changes for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:
•Total interest income was $255.9 million compared to $204.7 million, an increase of $51.2 million or 25%, primarily attributable to higher yields and an increase in average loans.
•Total interest income on a tax-equivalent basis was $257.9 million, an increase of $51.1 million or 25%, from $206.9 million.
•Average earning assets decreased $321.9 million or 2% to $17.85 billion compared to $18.17 billion, which was primarily attributable to the balance sheet repositioning completed in the fourth quarter of 2023.
•The average rate on earning assets increased 121 basis points to 5.73% from 4.52%, primarily due to recent interest rate increases.
Total interest expense and average interest-bearing liability changes for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:
•Total interest expense was $99.7 million, an increase of $60.3 million from $39.5 million, due to increases in the average interest rate paid and the average balance of interest-bearing liabilities.
•The average interest rate paid on interest-bearing liabilities increased 180 basis points to 3.11% from 1.31%.
•Average interest-bearing deposits increased $638.2 million or 6% to $11.95 billion from $11.31 billion, primarily due to growth in time deposits. Total average interest-bearing deposits were 72% of total average deposits compared to 65%.
•The average interest rate paid on HTLF's interest-bearing deposits increased 179 basis points to 2.92% from 1.13%.
•Average borrowings increased $103.4 million or 15% to $773.7 million from $670.2 million, and the average interest rate paid on borrowings was 5.99% compared to 4.30%.
Net interest income changes for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:
•Net interest income totaled $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
•Net interest income on a tax-equivalent basis (non-GAAP) totaled $158.2 million compared to $167.4 million, a decrease of $9.2 million or 5%.
Noninterest Income and Noninterest Expense
Total noninterest income was ($111.8) million during the fourth quarter of 2023 compared to $30.0 million during the fourth quarter of 2022, a decrease of $141.8 million. Significant changes by noninterest income category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:
•Service charges and fees increased $1.3 million or 7% to $18.7 million from $17.4 million, which was primarily attributable to an increase in debit interchange volume.
•Net securities losses totaled $140.0 million compared to net securities losses of $153,000, which was an increase of $139.9 million attributable to the balance sheet repositioning strategy executed in the quarter.
•Net gains of sales of loans held for sale decreased $794,000 to $94,000 compared to $888,000, primarily due to a decrease of loans sold to the secondary market as HTLF exits mortgage loan originations through PrimeWest.
Total noninterest expense for the fourth quarter of 2023 was $130.3 million compared to $117.2 million for the same quarter of 2022, which was an increase of $13.1 million or 11%. Significant changes within the noninterest expense category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:
•Salaries and employee benefits totaled $64.8 million compared to $61.6 million, which was an increase of $3.2 million or 5%. The fourth quarter of 2023 included $813,000 higher severance related expenses and the fourth quarter of 2022 included a $1.5 million benefit associated with the employer tax credit. Increases in other components of salary expenses during the fourth quarter of 2023 were largely offset by lower incentive compensation expense.
•FDIC insurance assessment of $10.3 million, which included a one-time special assessment of $8.1 million in the fourth quarter of 2023 compared to $1.9 million in the fourth quarter of 2022, which was an increase of $8.4 million.
•Acquisition, integration and restructuring costs totaled $4.4 million compared to $2.4 million, an increase of $1.9 million or 79% due to the addition of HTLF 3.0 initiatives and the completion of the charter consolidation project.
•Partnership investment in tax credit projects increased $326,000 or 10% to $3.6 million compared to $3.2 million. The expense is dependent upon the number and timing of tax credit projects placed into service.
HTLF's effective tax rate was 27.97% for the fourth quarter of 2023 compared to 18.67% for the fourth quarter of 2022. The following items impacted HTLF's fourth quarter 2023 and 2022 tax calculations:
•Various tax credits of $3.8 million compared to $3.6 million.
•Tax expense of $1.3 million compared to $561,000 resulting from disallowed interest expense related to tax-exempt loans and securities, aligning with the increases in total interest expense.
•Tax-exempt interest income as a percentage of pre-tax income of (7.93%) compared to 10.85%.
For the years ended December 31, 2023 and 2022, HTLF's effective tax rate was 17.42% and 20.76%, respectively.
Total Assets, Total Loans and Total Deposits
Total assets were $19.41 billion at December 31, 2023, a decrease of $832.5 million or 4% from $20.24 billion at year-end 2022. Securities represented 29% and 35% of total assets at December 31, 2023, and December 31, 2022, respectively, primarily due to the balance sheet repositioning.
Total loans held to maturity were $12.07 billion at December 31, 2023, compared to $11.87 billion at September 30, 2023 and $11.43 billion at December 31, 2022. Loans increased $196.2 million or 2% during the fourth quarter of 2023 and $640.3 million or 6% since year-end 2022.
Significant changes by loan category at December 31, 2023 compared to September 30, 2023 included:
•Commercial and business lending, which includes commercial and industrial, PPP, and owner occupied commercial real estate loans, increased $267.8 million or 4% to $6.29 billion at December 31, 2023, compared to $6.03 billion at September 30, 2023.
•Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, decreased $120.5 million or 3% to $3.57 billion from $3.69 billion.
•Agricultural and agricultural real estate loans totaled $919.2 million compared to $842.1 million, an increase of $77.1 million or 9%.
•Residential loans totaled $797.8 million compared to $813.8 million, a decrease of $16.0 million or 2%.
•Consumer loans decreased $12.2 million or 2% to $493.2 million from $505.4 million.
Significant changes by loan category at December 31, 2023 compared to December 31, 2022 included:
•Commercial and business lending, which includes commercial and industrial, PPP, and owner occupied commercial real estate loans, increased $552.3 million or 10% to $6.29 billion at December 31, 2023, compared to $5.74 billion at December 31, 2022.
•Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $158.4 million or 5% to $3.57 billion from $3.41 billion.
•Agricultural and agricultural real estate loans totaled $919.2 million, a decrease of $1.3 million or less than 1% from $920.5 million.
•Residential loans totaled $797.8 million compared to $853.4 million, a decrease of $55.5 million or 7%.
•Consumer loans decreased $13.5 million or 3% to $493.2 million from $506.7 million.
Total deposits were $16.20 billion as of December 31, 2023, compared to $17.10 billion at September 30, 2023, which was a decrease of $899.3 million or 5%. Total deposits were $16.2 billion as of December 31, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $1.31 billion or 7%.
Total customer deposits were $14.86 billion as of December 31, 2023, compared to $14.80 billion at September 30, 2023, which was an increase of $58.8 million or less than 1%. Significant customer deposit changes by category at December 31, 2023, compared to September 30, 2023, included:
•Customer demand deposits decreased $292.5 million or 6% to $4.50 billion compared to $4.79 billion.
•Customer savings deposits increased $220.8 million or 3% to $8.41 billion compared to $8.19 billion.
•Customer time deposits increased $130.5 million or 7% to $1.94 billion compared to $1.81 billion.
Total customer deposits were $14.86 billion at December 31, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $367.3 million or 2%. Significant customer deposit changes by category at December 31, 2023 compared to December 31, 2022, included:
•Customer demand deposits decreased $1.20 billion or 21% to $4.50 billion compared to $5.70 billion.
•Customer savings deposits decreased $259.7 million or 3% to $8.41 billion compared to $8.67 billion.
•Customer time deposits increased $1.09 billion to $1.94 billion compared to $851.5 million.
Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $958.1 million or 42% from $2.30 billion at September 30, 2023. Significant wholesale and institutional deposit changes by category at December 31, 2023, compared to September 30, 2023, included:
•Wholesale and institutional savings deposits decreased $170.1 million or 30% to $394.4 million compared to $564.5 million.
•Wholesale time deposits decreased $788.0 million or 45% to $950.9 million compared to $1.74 billion.
Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $943.9 million or 41% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at December 31, 2023 compared to December 31, 2022 included:
•Wholesale and institutional savings deposits decreased $929.1 million or 70% to $394.4 million compared to $1.32 billion.
•Wholesale time deposits decreased $14.8 million or 2% to $950.9 million compared to $965.7 million.
Provision and Allowance
Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the fourth quarter of 2023 was $12.8 million, which was an increase of $10.7 million from $2.1 million of provision benefit recorded in the fourth quarter of 2022. The provision expense for the fourth quarter of 2023 was primarily impacted by a customer that moved to non accrual due to its abrupt decision to discontinue business operations.
HTLF's allowance for credit losses for loans totaled $122.6 million at December 31, 2023, compared to $109.5 million at December 31, 2022, respectively. The following items impacted HTLF's allowance for credit losses for loans for the year ended December 31, 2023:
•Provision expense for the year ended December 31, 2023, totaled $25.4 million.
•Net charge-offs of $12.4 million were recorded for the year or 0.11% of average loans. Net charge-offs of $392,000 were recorded in the fourth quarter of 2022 or 0.01% of average loans.
Provision and Allowance for Credit Losses for Unfunded Commitments
HTLF's allowance for unfunded commitments totaled $16.5 million and $20.2 million at December 31, 2023 and December 31, 2022, respectively. The following impacted HTLF's allowance for credit losses for unfunded commitments during 2023:
•Provision benefit for the year ended December 31, 2023, totaled $3.7 million.
•Unfunded commitments decreased $103.9 million or 2% to $4.63 billion at December 31, 2023 compared to $4.73 billion at December 31, 2022.
Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $11.7 million for the fourth quarter of 2023 compared to $3.4 million for the fourth quarter of 2022. The total allowance for lending related credit losses was $139.0 million at December 31, 2023, which was 1.15% of total loans as of December 31, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.
Nonperforming Assets
Nonperforming assets increased $43.6 million or 65% to $110.5 million, which was 0.57% of total assets at December 31, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. The increase was primarily driven by a well-collateralized long-term manufacturing customer who is experiencing cash flow challenges due to a recent acquisition. Nonperforming loans were $97.9 million or 0.81% of total loans at December 31, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At December 31, 2023, loans delinquent 30-89 days were 0.09% of total loans compared to 0.04% of total loans at December 31, 2022.
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:
•Adjusted earnings available to common stockholders, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability net income available to common stockholders as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
•Adjusted annualized return on average assets, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
•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.
•Adjusted 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. Net interest margin, fully tax equivalent, is net interest income adjusted for the tax-favored status of certain loans and securities divided by average earning assets.
•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.
•Adjusted annualized return on average common equity, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
•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 annualized return on average tangible common equity, adjusts net income available to common stockholders for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
•Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.
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 via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until January 28, 2025, by logging on to www.htlf.com.
About HTLF
Heartland Financial USA, Inc., operating under the brand name HTLF, is a bank holding company with assets of $19.41 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, wealth management, investments and residential mortgage. 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, 2022, include, among others:
•Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, supply chain issues, labor shortages, 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 due to 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, rising interest rates 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 economic, political, and competitive forces impacting our business;
•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 HTLF's business, financial condition and results of operations. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF 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 HTLF's financial results, is included in HTLF’s filings with the SEC.
-FINANCIAL TABLES FOLLOW-
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CONTACT: | |
Kevin L. Thompson | |
Executive Vice President | |
Chief Financial Officer | |
(563) 589-1994 | |
kthompson@htlf.com | |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended December 31, | | For the Year Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
Interest Income | | | | | | | |
Interest and fees on loans | $ | 192,861 | | | $ | 143,970 | | | $ | 697,997 | | | $ | 477,970 | |
Interest on securities: | | | | | | | |
Taxable | 54,573 | | | 53,178 | | | 223,521 | | | 169,544 | |
Nontaxable | 6,278 | | | 6,132 | | | 25,268 | | | 24,006 | |
Interest on federal funds sold | — | | | 11 | | | 3 | | | 11 | |
Interest on deposits with other banks and short-term investments | 2,174 | | | 1,410 | | | 7,007 | | | 3,125 | |
Total Interest Income | 255,886 | | | 204,701 | | | 953,796 | | | 674,656 | |
Interest Expense | | | | | | | |
Interest on deposits | 88,071 | | | 32,215 | | | 319,688 | | | 56,880 | |
Interest on borrowings | 5,874 | | | 2,223 | | | 10,311 | | | 2,717 | |
Interest on term debt | 5,804 | | | 5,043 | | | 22,560 | | | 16,823 | |
Total Interest Expense | 99,749 | | | 39,481 | | | 352,559 | | | 76,420 | |
Net Interest Income | 156,137 | | | 165,220 | | | 601,237 | | | 598,236 | |
Provision for credit losses | 11,738 | | | 3,387 | | | 21,707 | | | 15,370 | |
Net Interest Income After Provision for Credit Losses | 144,399 | | | 161,833 | | | 579,530 | | | 582,866 | |
Noninterest Income | | | | | | | |
Service charges and fees | 18,708 | | | 17,432 | | | 74,024 | | | 68,031 | |
Loan servicing income | 158 | | | 790 | | | 1,561 | | | 2,741 | |
Trust fees | 4,905 | | | 5,440 | | | 20,715 | | | 22,570 | |
Brokerage and insurance commissions | 729 | | | 629 | | | 2,794 | | | 2,986 | |
Capital market fees | 1,676 | | | 1,824 | | | 10,007 | | | 11,543 | |
Securities gains (losses), net | (140,007) | | | (153) | | | (141,539) | | | (425) | |
Unrealized gain (loss) on equity securities, net | 75 | | | (7) | | | 240 | | | (622) | |
| | | | | | | |
Net gains on sale of loans held for sale | 94 | | | 888 | | | 3,880 | | | 9,032 | |
Valuation adjustment on servicing rights | — | | | — | | | — | | | 1,658 | |
Income on bank owned life insurance | 729 | | | 600 | | | 3,771 | | | 2,341 | |
Other noninterest income | 1,132 | | | 2,532 | | | 3,621 | | | 8,409 | |
Total Noninterest Income | (111,801) | | | 29,975 | | | (20,926) | | | 128,264 | |
Noninterest Expense | | | | | | | |
Salaries and employee benefits | 64,766 | | | 61,611 | | | 251,276 | | | 254,478 | |
Occupancy | 6,509 | | | 6,905 | | | 26,847 | | | 28,155 | |
Furniture and equipment | 2,901 | | | 3,019 | | | 11,599 | | | 12,499 | |
Professional fees | 17,060 | | | 16,320 | | | 58,667 | | | 58,606 | |
FDIC insurance assessments | 10,313 | | | 1,866 | | | 19,940 | | | 7,000 | |
Advertising | 1,677 | | | 1,829 | | | 8,347 | | | 6,221 | |
Core deposit and customer relationship intangibles amortization | 1,611 | | | 1,841 | | | 6,739 | | | 7,834 | |
Other real estate and loan collection expenses, net | 505 | | | 373 | | | 1,489 | | | 950 | |
(Gain) loss on sales/valuations of assets, net | 2,072 | | | 2,388 | | | (77) | | | (1,047) | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,442 | | | 10,359 | | | 7,586 | |
Partnership investment in tax credit projects | 3,573 | | | 3,247 | | | 5,401 | | | 5,040 | |
Other noninterest expenses | 14,933 | | | 15,377 | | | 61,240 | | | 56,055 | |
Total Noninterest Expense | 130,285 | | | 117,218 | | | 461,827 | | | 443,377 | |
Income Before Income Taxes | (97,687) | | | 74,590 | | | 96,777 | | | 267,753 | |
Income taxes | (27,324) | | | 13,936 | | | 16,857 | | | 55,573 | |
Net Income/(Loss) | (70,363) | | | 60,654 | | | 79,920 | | | 212,180 | |
| | | | | | | |
| | | | | | | |
Preferred dividends | (2,012) | | | (2,012) | | | (8,050) | | | (8,050) | |
| | | | | | | |
Net Income/(Loss) Available to Common Stockholders | $ | (72,375) | | | $ | 58,642 | | | $ | 71,870 | | | $ | 204,130 | |
Earnings/(loss) per common share-diluted | $ | (1.69) | | | $ | 1.37 | | | $ | 1.68 | | | $ | 4.79 | |
Weighted average shares outstanding-diluted | 42,838,405 | | | 42,699,752 | | | 42,791,795 | | | 42,630,703 | |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Interest Income | | | | | | | | | |
Interest and fees on loans | $ | 192,861 | | | $ | 182,394 | | | $ | 168,899 | | | $ | 153,843 | | | $ | 143,970 | |
Interest on securities: | | | | | | | | | |
Taxable | 54,573 | | | 54,800 | | | 58,172 | | | 55,976 | | | 53,178 | |
Nontaxable | 6,278 | | | 6,584 | | | 6,378 | | | 6,028 | | | 6,132 | |
Interest on federal funds sold | — | | | 3 | | | — | | | — | | | 11 | |
Interest on deposits with other banks and short-term investments | 2,174 | | | 1,651 | | | 2,051 | | | 1,131 | | | 1,410 | |
Total Interest Income | 255,886 | | | 245,432 | | | 235,500 | | | 216,978 | | | 204,701 | |
Interest Expense | | | | | | | | | |
Interest on deposits | 88,071 | | | 92,744 | | | 81,975 | | | 56,898 | | | 32,215 | |
Interest on borrowings | 5,874 | | | 1,167 | | | 848 | | | 2,422 | | | 2,223 | |
Interest on term debt | 5,804 | | | 5,765 | | | 5,545 | | | 5,446 | | | 5,043 | |
Total Interest Expense | 99,749 | | | 99,676 | | | 88,368 | | | 64,766 | | | 39,481 | |
Net Interest Income | 156,137 | | | 145,756 | | | 147,132 | | | 152,212 | | | 165,220 | |
Provision for credit losses | 11,738 | | | 1,516 | | | 5,379 | | | 3,074 | | | 3,387 | |
Net Interest Income After Provision for Credit Losses | 144,399 | | | 144,240 | | | 141,753 | | | 149,138 | | | 161,833 | |
Noninterest Income | | | | | | | | | |
Service charges and fees | 18,708 | | | 18,553 | | | 19,627 | | | 17,136 | | | 17,432 | |
Loan servicing income | 158 | | | 278 | | | 411 | | | 714 | | | 790 | |
Trust fees | 4,905 | | | 4,734 | | | 5,419 | | | 5,657 | | | 5,440 | |
Brokerage and insurance commissions | 729 | | | 692 | | | 677 | | | 696 | | | 629 | |
Capital markets fees | 1,676 | | | 1,845 | | | 4,037 | | | 2,449 | | | 1,824 | |
Securities gains (losses), net | (140,007) | | | (114) | | | (314) | | | (1,104) | | | (153) | |
Unrealized gain (loss) on equity securities, net | 75 | | | 13 | | | (41) | | | 193 | | | (7) | |
| | | | | | | | | |
Net gains on sale of loans held for sale | 94 | | | 905 | | | 1,050 | | | 1,831 | | | 888 | |
Valuation adjustment on servicing rights | — | | | — | | | — | | | — | | | — | |
Income on bank owned life insurance | 729 | | | 858 | | | 1,220 | | | 964 | | | 600 | |
Other noninterest income | 1,132 | | | 619 | | | 407 | | | 1,463 | | | 2,532 | |
Total Noninterest Income | (111,801) | | | 28,383 | | | 32,493 | | | 29,999 | | | 29,975 | |
Noninterest Expense | | | | | | | | | |
Salaries and employee benefits | 64,766 | | | 62,262 | | | 62,099 | | | 62,149 | | | 61,611 | |
Occupancy | 6,509 | | | 6,438 | | | 6,691 | | | 7,209 | | | 6,905 | |
Furniture and equipment | 2,901 | | | 2,720 | | | 3,063 | | | 2,915 | | | 3,019 | |
Professional fees | 17,060 | | | 13,616 | | | 15,194 | | | 12,797 | | | 16,320 | |
FDIC insurance assessments | 10,313 | | | 3,313 | | | 3,035 | | | 3,279 | | | 1,866 | |
Advertising | 1,677 | | | 1,633 | | | 3,052 | | | 1,985 | | | 1,829 | |
Core deposit and customer relationship intangibles amortization | 1,611 | | | 1,625 | | | 1,715 | | | 1,788 | | | 1,841 | |
Other real estate and loan collection expenses, net | 505 | | | 481 | | | 348 | | | 155 | | | 373 | |
(Gain) loss on sales/valuations of assets, net | 2,072 | | | 108 | | | (3,372) | | | 1,115 | | | 2,388 | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,429 | | | 1,892 | | | 1,673 | | | 2,442 | |
Partnership investment in tax credit projects | 3,573 | | | 1,136 | | | 154 | | | 538 | | | 3,247 | |
Other noninterest expenses | 14,933 | | | 15,292 | | | 15,575 | | | 15,440 | | | 15,377 | |
Total Noninterest Expense | 130,285 | | | 111,053 | | | 109,446 | | | 111,043 | | | 117,218 | |
Income Before Income Taxes | (97,687) | | | 61,570 | | | 64,800 | | | 68,094 | | | 74,590 | |
Income taxes | (27,324) | | | 13,479 | | | 15,384 | | | 15,318 | | | 13,936 | |
Net Income/(Loss) | (70,363) | | | 48,091 | | | 49,416 | | | 52,776 | | | 60,654 | |
| | | | | | | | | |
| | | | | | | | | |
Preferred dividends | (2,012) | | | (2,013) | | | (2,012) | | | (2,013) | | | (2,012) | |
| | | | | | | | | |
Net Income/(Loss) Available to Common Stockholders | $ | (72,375) | | | $ | 46,078 | | | $ | 47,404 | | | $ | 50,763 | | | $ | 58,642 | |
Earnings/(loss) per common share-diluted | $ | (1.69) | | | $ | 1.08 | | | $ | 1.11 | | | $ | 1.19 | | | $ | 1.37 | |
Weighted average shares outstanding-diluted | 42,838,405 | | | 42,812,563 | | | 42,757,603 | | | 42,742,878 | | | 42,699,752 | |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| As of |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Assets | | | | | | | | | |
Cash and due from banks | $ | 275,554 | | | $ | 248,756 | | | $ | 317,303 | | | $ | 274,354 | | | $ | 309,045 | |
Interest-bearing deposits with other banks and other short-term investments | 47,459 | | | 99,239 | | | 82,884 | | | 87,757 | | | 54,042 | |
Cash and cash equivalents | 323,013 | | | 347,995 | | | 400,187 | | | 362,111 | | | 363,087 | |
Time deposits in other financial institutions | 1,240 | | | 1,490 | | | 1,490 | | | 1,740 | | | 1,740 | |
Securities: | | | | | | | | | |
| | | | | | | | | |
Carried at fair value | 4,646,891 | | | 5,482,687 | | | 5,798,041 | | | 6,096,657 | | | 6,147,144 | |
Held to maturity, at cost | 838,241 | | | 835,468 | | | 834,673 | | | 832,098 | | | 829,403 | |
Other investments, at cost | 91,277 | | | 90,001 | | | 72,291 | | | 72,364 | | | 74,567 | |
Loans held for sale | 5,071 | | | 6,262 | | | 14,353 | | | 10,425 | | | 5,277 | |
| | | | | | | | | |
Loans: | | | | | | | | | |
Held to maturity | 12,068,645 | | | 11,872,436 | | | 11,717,974 | | | 11,495,353 | | | 11,428,352 | |
| | | | | | | | | |
Allowance for credit losses | (122,566) | | | (110,208) | | | (111,198) | | | (112,707) | | | (109,483) | |
Loans, net | 11,946,079 | | | 11,762,228 | | | 11,606,776 | | | 11,382,646 | | | 11,318,869 | |
Premises, furniture and equipment, net | 181,070 | | | 187,436 | | | 190,420 | | | 191,267 | | | 197,330 | |
Goodwill | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | |
Core deposit and customer relationship intangibles, net | 18,415 | | | 20,026 | | | 21,651 | | | 23,366 | | | 25,154 | |
Servicing rights, net | — | | | — | | | — | | | — | | | 7,840 | |
Cash surrender value on life insurance | 197,085 | | | 196,694 | | | 195,793 | | | 194,419 | | | 193,403 | |
Other real estate, net | 12,548 | | | 14,362 | | | 2,677 | | | 7,438 | | | 8,401 | |
| | | | | | | | | |
Other assets | 574,772 | | | 609,139 | | | 510,359 | | | 432,008 | | | 496,008 | |
Total Assets | $ | 19,411,707 | | | $ | 20,129,793 | | | $ | 20,224,716 | | | $ | 20,182,544 | | | $ | 20,244,228 | |
Liabilities and Equity | | | | | | | | | |
Liabilities | | | | | | | | | |
| | | | | | | | | |
Deposits: | | | | | | | | | |
Demand | $ | 4,500,304 | | | $ | 4,792,813 | | | $ | 4,897,858 | | | $ | 5,119,554 | | | $ | 5,701,340 | |
Savings | 8,805,597 | | | 8,754,911 | | | 8,772,596 | | | 9,256,609 | | | 9,994,391 | |
Time | 2,895,813 | | | 3,553,269 | | | 3,993,089 | | | 3,305,183 | | | 1,817,278 | |
Total deposits | 16,201,714 | | | 17,100,993 | | | 17,663,543 | | | 17,681,346 | | | 17,513,009 | |
| | | | | | | | | |
Borrowings | 622,255 | | | 392,634 | | | 44,364 | | | 92,337 | | | 376,117 | |
Term debt | 372,396 | | | 372,059 | | | 372,403 | | | 372,097 | | | 371,753 | |
Accrued expenses and other liabilities | 282,225 | | | 438,577 | | | 285,416 | | | 207,359 | | | 248,294 | |
Total Liabilities | 17,478,590 | | | 18,304,263 | | | 18,365,726 | | | 18,353,139 | | | 18,509,173 | |
Stockholders' Equity | | | | | | | | | |
Preferred equity | 110,705 | | | 110,705 | | | 110,705 | | | 110,705 | | | 110,705 | |
Common stock | 42,688 | | | 42,656 | | | 42,645 | | | 42,559 | | | 42,467 | |
Capital surplus | 1,090,740 | | | 1,088,267 | | | 1,087,358 | | | 1,084,112 | | | 1,080,964 | |
Retained earnings | 1,141,501 | | | 1,226,740 | | | 1,193,522 | | | 1,158,948 | | | 1,120,925 | |
Accumulated other comprehensive income/(loss) | (452,517) | | | (642,838) | | | (575,240) | | | (566,919) | | | (620,006) | |
| | | | | | | | | |
Total Equity | 1,933,117 | | | 1,825,530 | | | 1,858,990 | | | 1,829,405 | | | 1,735,055 | |
| | | | | | | | | |
| | | | | | | | | |
Total Liabilities and Equity | $ | 19,411,707 | | | $ | 20,129,793 | | | $ | 20,224,716 | | | $ | 20,182,544 | | | $ | 20,244,228 | |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Average Balances | | | | | | | | | |
Assets | $ | 19,667,825 | | | $ | 20,207,920 | | | $ | 20,221,511 | | | $ | 20,118,005 | | | $ | 19,913,849 | |
Loans, net of unearned | 11,938,272 | | 11,800,064 | | 11,625,442 | | 11,378,078 | | 11,117,513 |
Total deposits | 16,709,394 | | 17,507,813 | | 17,689,138 | | 17,505,867 | | 17,319,218 |
Customer deposits | 14,969,948 | | 14,699,235 | | 14,655,535 | | 15,123,181 | | 15,739,698 |
Earning assets | 17,853,957 | | 18,439,010 | | 18,523,552 | | 18,392,649 | | 18,175,838 |
Interest-bearing liabilities | 12,721,680 | | 13,158,631 | | 13,209,794 | | 12,582,234 | | 11,980,032 |
Common equity | 1,729,086 | | 1,746,818 | | 1,727,013 | | 1,655,860 | | 1,548,739 |
Total stockholders' equity | 1,839,791 | | 1,857,523 | | 1,837,718 | | 1,766,565 | | 1,659,444 |
Tangible common equity (non-GAAP)(1) | 1,133,888 | | 1,149,992 | | 1,128,527 | | 1,055,617 | | 946,688 |
| | | | | | | | | |
Key Performance Ratios | | | | | | | | | |
Annualized return on average assets | (1.42) | % | | 0.94 | % | | 0.98 | % | | 1.06 | % | | 1.21 | % |
Adjusted annualized return on average assets (non-GAAP)(1) | 0.96 | | | 0.98 | | | 0.96 | | | 1.12 | | | 1.28 | |
Annualized return on average common equity (GAAP) | (16.61) | | | 10.47 | | | 11.01 | | | 12.43 | | | 15.02 | |
Adjusted annualized return on average common equity (non-GAAP)(1) | 10.46 | | | 10.92 | | | 10.80 | | | 13.16 | | | 16.00 | |
Annualized return on average tangible common equity (non-GAAP)(1) | (24.89) | | | 16.32 | | | 17.31 | | | 20.03 | | | 25.17 | |
Adjusted annualized return on average tangible common equity (non-GAAP)(1) | 16.38 | | | 17.02 | | | 17.00 | | | 21.17 | | | 26.77 | |
Annualized ratio of net charge-offs (recoveries) to average loans | 0.01 | | | 0.12 | | | 0.32 | | | (0.04) | | | (0.06) | |
Annualized net interest margin (GAAP) | 3.47 | | | 3.14 | | | 3.19 | | | 3.36 | | | 3.61 | |
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.52 | | | 3.18 | | | 3.23 | | | 3.40 | | | 3.65 | |
Efficiency ratio (GAAP) | 293.86 | | | 63.77 | | | 60.93 | | | 60.94 | | | 60.05 | |
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 59.31 | | | 59.95 | | | 59.88 | | | 57.16 | | | 54.33 | |
Annualized ratio of total noninterest expenses to average assets (GAAP) | 2.63 | | | 2.18 | | | 2.17 | | | 2.24 | | | 2.34 | |
Annualized ratio of core expenses to average assets (non-GAAP)(1) | 2.23 | | | 2.08 | | | 2.16 | | | 2.14 | | | 2.14 | |
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(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. |
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|
|
|
| For the Quarter Ended December 31, | | For the Year Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
Average Balances | | | | | | | |
Assets | $ | 19,667,825 | | | $ | 19,913,849 | | | $ | 20,053,004 | | | $ | 19,621,839 | |
Loans, net of unearned | 11,938,272 | | | 11,117,513 | | | 11,687,313 | | | 10,608,831 | |
Deposits | 16,709,394 | | | 17,319,218 | | | 17,351,294 | | | 17,029,398 | |
Earning assets | 17,853,957 | | | 18,175,838 | | | 18,301,190 | | | 18,021,134 | |
Interest-bearing liabilities | 12,721,680 | | | 11,980,032 | | | 12,919,125 | | | 11,437,921 | |
Common equity | 1,729,086 | | | 1,548,739 | | | 1,714,983 | | | 1,738,041 | |
Total stockholders' equity | 1,839,791 | | | 1,659,444 | | | 1,825,688 | | | 1,848,746 | |
Tangible common equity (non-GAAP)(1) | 1,133,888 | | | 946,688 | | | 1,117,311 | | | 1,133,124 | |
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Key Performance Ratios | | | | | | | |
Annualized return on average assets | (1.42) | % | | 1.21 | % | | 0.40 | % | | 1.08 | % |
Adjusted annualized return on average assets (non-GAAP)(1) | 0.96 | | | 1.28 | | | 1.01 | | | 1.11 | |
Annualized return on average common equity (GAAP) | (16.61) | | | 15.02 | | | 4.19 | | | 11.74 | |
Adjusted annualized return on average common equity (non-GAAP)(1) | 10.46 | | | 16.00 | | | 11.31 | | | 12.06 | |
Annualized return on average tangible common equity (non-GAAP)(1) | (24.89) | | | 25.17 | | | 6.89 | | | 18.55 | |
Adjusted annualized return on average tangible common equity (non-GAAP)(1) | 16.38 | | | 26.77 | | | 17.82 | | | 19.03 | |
Annualized ratio of net charge-offs (recoveries) to average loans | 0.01 | | | (0.06) | | | 0.11 | | | 0.11 | |
Annualized net interest margin (GAAP) | 3.47 | | | 3.61 | | | 3.29 | | | 3.32 | |
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.52 | | | 3.65 | | | 3.33 | | | 3.37 | |
Efficiency ratio (GAAP) | 293.86 | | | 60.05 | | | 79.58 | | | 61.03 | |
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 59.31 | | | 54.33 | | | 59.06 | | | 57.74 | |
Annualized ratio of total noninterest expenses to average assets (GAAP) | 2.63 | | | 2.34 | | | 2.30 | | | 2.26 | |
Annualized ratio of core expenses to average assets (non-GAAP)(1) | 2.23 | | | 2.14 | | | 2.15 | | | 2.16 | |
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(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. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA |
| As of and for the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Common Share Data | | | | | | | | | |
Book value per common share | $ | 42.69 | | | $ | 40.20 | | | $ | 41.00 | | | $ | 40.38 | | | $ | 38.25 | |
Tangible book value per common share (non-GAAP)(1) | 28.77 | | | 26.23 | | | 26.98 | | | 26.30 | | | 24.09 | |
ASC 320 effect on book value per common share | (11.00) | | | (16.27) | | | (14.04) | | | (13.35) | | | (14.58) | |
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Common shares outstanding, net of treasury stock | 42,688,008 | | | 42,656,303 | | | 42,644,544 | | | 42,558,726 | | | 42,467,394 | |
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Capital Ratios | | | | | | | | | |
Common equity ratio | 9.27 | % | | 8.49 | % | | 8.65 | % | | 8.54 | % | | 8.16 | % |
Tangible common equity ratio (non-GAAP)(1) | 6.53 | | | 5.73 | | | 5.86 | | | 5.72 | | | 5.21 | |
Tier 1 leverage ratio | 9.44 | | | 9.59 | | | 9.40 | | | 9.25 | | | 9.13 | |
Common equity tier 1 ratio(2) | 10.97 | | | 11.37 | | | 11.33 | | | 11.28 | | | 11.07 | |
Total risk based capital ratio(2) | 14.53 | | | 14.90 | | | 14.93 | | | 14.98 | | | 14.76 | |
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Other Selected Trend Information | | | | | | | | | |
Effective tax rate | 27.97 | % | | 21.89 | % | | 23.74 | % | | 22.50 | % | | 18.68 | % |
Full time equivalent employees | 1,970 | | | 1,965 | | | 1,966 | | | 1,991 | | | 2,002 | |
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Loans Held to Maturity | | | | | | | | | |
Commercial and industrial | $ | 3,652,047 | | | $ | 3,591,809 | | | $ | 3,590,680 | | | $ | 3,498,345 | | | $ | 3,464,414 | |
Paycheck Protection Program ("PPP") | 2,777 | | | 3,750 | | | 4,139 | | | 8,258 | | | 11,025 | |
Owner occupied commercial real estate | 2,638,175 | | | 2,429,659 | | | 2,398,698 | | | 2,312,538 | | | 2,265,307 | |
Commercial and business lending | 6,292,999 | | | 6,025,218 | | | 5,993,517 | | | 5,819,141 | | | 5,740,746 | |
Non-owner occupied commercial real estate | 2,553,711 | | | 2,656,358 | | | 2,530,736 | | | 2,421,341 | | | 2,330,940 | |
Real estate construction | 1,011,716 | | | 1,029,554 | | | 1,013,134 | | | 1,102,186 | | | 1,076,082 | |
Commercial real estate lending | 3,565,427 | | | 3,685,912 | | | 3,543,870 | | | 3,523,527 | | | 3,407,022 | |
Total commercial lending | 9,858,426 | | | 9,711,130 | | | 9,537,387 | | | 9,342,668 | | | 9,147,768 | |
Agricultural and agricultural real estate | 919,184 | | | 842,116 | | | 839,817 | | | 810,183 | | | 920,510 | |
Residential mortgage | 797,829 | | | 813,803 | | | 828,437 | | | 841,084 | | | 853,361 | |
Consumer | 493,206 | | | 505,387 | | | 512,333 | | | 501,418 | | | 506,713 | |
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Total loans held to maturity | $ | 12,068,645 | | | $ | 11,872,436 | | | $ | 11,717,974 | | | $ | 11,495,353 | | | $ | 11,428,352 | |
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Total unfunded loan commitments | $ | 4,625,768 | | | $ | 4,813,798 | | | $ | 4,905,147 | | | $ | 4,867,925 | | | $ | 4,729,677 | |
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Deposits | | | | | | | | | |
Demand-customer | $ | 4,500,304 | | | $ | 4,792,813 | | | $ | 4,897,858 | | | $ | 5,119,554 | | | $ | 5,701,340 | |
Savings-customer | 8,411,240 | | | 8,190,430 | | | 8,149,596 | | | 8,501,337 | | | 8,670,898 | |
Savings-wholesale and institutional | 394,357 | | | 564,481 | | | 623,000 | | | 755,272 | | | 1,323,493 | |
Total savings | 8,805,597 | | | 8,754,911 | | | 8,772,596 | | | 9,256,609 | | | 9,994,391 | |
Time-customer | 1,944,884 | | | 1,814,335 | | | 1,597,849 | | | 1,071,476 | | | 851,539 | |
Time-wholesale | 950,929 | | | 1,738,934 | | | 2,395,240 | | | 2,233,707 | | | 965,739 | |
Total time | 2,895,813 | | | 3,553,269 | | | 3,993,089 | | | 3,305,183 | | | 1,817,278 | |
Total deposits | $ | 16,201,714 | | | $ | 17,100,993 | | | $ | 17,663,543 | | | $ | 17,681,346 | | | $ | 17,513,009 | |
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Total customer deposits | $ | 14,856,428 | | | $ | 14,797,578 | | | $ | 14,645,303 | | | $ | 14,692,367 | | | $ | 15,223,777 | |
Total wholesale and institutional deposits | 1,345,286 | | | 2,303,415 | | | 3,018,240 | | | 2,988,979 | | | 2,289,232 | |
Total deposits | $ | 16,201,714 | | | $ | 17,100,993 | | | $ | 17,663,543 | | | $ | 17,681,346 | | | $ | 17,513,009 | |
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(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) December 31, 2023 calculation is preliminary. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| As of and for the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Allowance for Credit Losses-Loans | | | | | | | | | |
Balance, beginning of period | $ | 110,208 | | | $ | 111,198 | | | $ | 112,707 | | | $ | 109,483 | | | $ | 105,715 | |
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Provision (benefit) for credit losses | 12,750 | | | 2,672 | | | 7,829 | | | 2,184 | | | 2,075 | |
Charge-offs | (3,886) | | | (3,964) | | | (9,613) | | | (2,151) | | | (2,668) | |
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Recoveries | 3,494 | | | 302 | | | 275 | | | 3,191 | | | 4,361 | |
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Balance, end of period | $ | 122,566 | | | $ | 110,208 | | | $ | 111,198 | | | $ | 112,707 | | | $ | 109,483 | |
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Allowance for Unfunded Commitments | | | | | | | | | |
Balance, beginning of period | $ | 17,480 | | | $ | 18,636 | | | $ | 21,086 | | | $ | 20,196 | | | $ | 18,884 | |
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Provision for credit losses | (1,012) | | | (1,156) | | | (2,450) | | | 890 | | | 1,312 | |
Balance, end of period | $ | 16,468 | | | $ | 17,480 | | | $ | 18,636 | | | $ | 21,086 | | | $ | 20,196 | |
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Allowance for lending related credit losses | $ | 139,034 | | | $ | 127,688 | | | $ | 129,834 | | | $ | 133,793 | | | $ | 129,679 | |
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Provision for Credit Losses | | | | | | | | | |
Provision (benefit) for credit losses-loans | $ | 12,750 | | | $ | 2,672 | | | $ | 7,829 | | | $ | 2,184 | | | $ | 2,075 | |
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Provision for credit losses-unfunded commitments | (1,012) | | | (1,156) | | | (2,450) | | | 890 | | | 1,312 | |
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Total provision (benefit) for credit losses | $ | 11,738 | | | $ | 1,516 | | | $ | 5,379 | | | $ | 3,074 | | | $ | 3,387 | |
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Asset Quality | | | | | | | | | |
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Nonaccrual loans | $ | 95,426 | | | $ | 51,304 | | | $ | 61,956 | | | $ | 58,066 | | | $ | 58,231 | |
Loans past due ninety days or more | 2,507 | | | 511 | | | 1,459 | | | 174 | | | 273 | |
Other real estate owned | 12,548 | | | 14,362 | | | 2,677 | | | 7,438 | | | 8,401 | |
Other repossessed assets | — | | | 1 | | | 5 | | | 24 | | | 26 | |
Total nonperforming assets | $ | 110,481 | | | $ | 66,178 | | | $ | 66,097 | | | $ | 65,702 | | | $ | 66,931 | |
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Nonperforming Assets Activity | | | | | | | | | |
Balance, beginning of period | $ | 66,178 | | | $ | 66,097 | | | $ | 65,702 | | | $ | 66,931 | | | $ | 73,268 | |
Net loan (charge offs) recoveries | (392) | | | (3,662) | | | (9,338) | | | 1,040 | | | 1,693 | |
New nonperforming loans | 61,193 | | | 19,295 | | | 19,805 | | | 4,626 | | | 1,439 | |
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Reduction of nonperforming loans(1) | (14,278) | | | (14,691) | | | (5,253) | | | (5,711) | | | (8,875) | |
OREO/Repossessed assets sales proceeds | (2,220) | | | (861) | | | (4,819) | | | (1,184) | | | (594) | |
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Balance, end of period | $ | 110,481 | | | $ | 66,178 | | | $ | 66,097 | | | $ | 65,702 | | | $ | 66,931 | |
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Asset Quality Ratios | | | | | | | | | |
Ratio of nonperforming loans to total loans | 0.81 | % | | 0.44 | % | | 0.54 | % | | 0.51 | % | | 0.51 | % |
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Ratio of nonperforming assets to total assets | 0.57 | | | 0.33 | | | 0.33 | | | 0.33 | | | 0.33 | |
Annualized ratio of net loan charge-offs (recoveries) to average loans | 0.01 | | | 0.12 | | | 0.32 | | | (0.04) | | | (0.06) | |
Allowance for loan credit losses as a percent of loans | 1.02 | | | 0.93 | | | 0.95 | | | 0.98 | | | 0.96 | |
Allowance for lending related credit losses as a percent of loans | 1.15 | | | 1.08 | | | 1.11 | | | 1.16 | | | 1.13 | |
Allowance for loan credit losses as a percent of nonperforming loans | 125.15 | | | 212.70 | | | 175.35 | | | 193.52 | | | 187.14 | |
Loans delinquent 30-89 days as a percent of total loans | 0.09 | | | 0.12 | | | 0.12 | | | 0.10 | | | 0.04 | |
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(1) Includes principal reductions, transfers to performing status and transfers to OREO. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS |
| For the Quarter Ended |
| December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
| Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | |
Taxable | $ | 5,119,970 | | | $ | 54,573 | | | 4.23 | % | | $ | 5,726,057 | | | $ | 54,800 | | | 3.80 | % | | $ | 6,122,313 | | | $ | 53,178 | | | 3.45 | % |
Nontaxable(1) | 759,464 | | | 7,681 | | | 4.01 | | | 881,162 | | | 8,085 | | | 3.64 | | | 890,368 | | | 7,762 | | | 3.46 | |
Total securities | 5,879,434 | | | 62,254 | | | 4.20 | | | 6,607,219 | | | 62,885 | | | 3.78 | | | 7,012,681 | | | 60,940 | | | 3.45 | |
Interest on deposits with other banks and other short-term investments | 146,027 | | | 2,174 | | | 5.91 | | | 142,301 | | | 1,651 | | | 4.60 | | | 151,405 | | | 1,410 | | | 3.69 | |
Federal funds sold | — | | | — | | | — | | | 152 | | | 3 | | | 7.83 | | | 739 | | | 11 | | | 5.91 | |
Loans:(2) | | | | | | | | | | | | | | | | | |
Commercial and industrial(1) | 3,624,034 | | | 66,980 | | | 7.33 | | | 3,610,677 | | | 63,001 | | | 6.92 | | | 3,346,843 | | | 45,290 | | | 5.37 | |
PPP loans | 3,064 | | | 8 | | | 1.04 | | | 3,948 | | | 11 | | | 1.11 | | | 12,252 | | | 397 | | | 12.86 | |
Owner occupied commercial real estate | 2,436,234 | | | 31,714 | | | 5.16 | | | 2,412,501 | | | 30,127 | | | 4.95 | | | 2,277,055 | | | 26,194 | | | 4.56 | |
Non-owner occupied commercial real estate | 2,688,805 | | | 42,417 | | | 6.26 | | | 2,586,011 | | | 38,779 | | | 5.95 | | | 2,286,298 | | | 29,273 | | | 5.08 | |
Real estate construction | 1,035,010 | | | 20,200 | | | 7.74 | | | 1,027,544 | | | 19,448 | | | 7.51 | | | 1,050,802 | | | 16,585 | | | 6.26 | |
Agricultural and agricultural real estate | 844,353 | | | 13,069 | | | 6.14 | | | 822,957 | | | 12,582 | | | 6.07 | | | 785,647 | | | 10,159 | | | 5.13 | |
Residential mortgage | 810,069 | | | 9,531 | | | 4.67 | | | 827,402 | | | 9,482 | | | 4.55 | | | 858,767 | | | 9,168 | | | 4.24 | |
Consumer | 496,703 | | | 9,597 | | | 7.67 | | | 509,024 | | | 9,615 | | | 7.49 | | | 499,849 | | | 7,426 | | | 5.89 | |
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Less: allowance for credit losses-loans | (109,776) | | | — | | | — | | | (110,726) | | | — | | | — | | | (106,500) | | | — | | | — | |
Net loans | 11,828,496 | | | 193,516 | | | 6.49 | | | 11,689,338 | | | 183,045 | | | 6.21 | | | 11,011,013 | | | 144,492 | | | 5.21 | |
Total earning assets | 17,853,957 | | | 257,944 | | | 5.73 | % | | 18,439,010 | | | 247,584 | | | 5.33 | % | | 18,175,838 | | | 206,853 | | | 4.52 | % |
Nonearning Assets | 1,813,868 | | | | | | | 1,768,910 | | | | | | | 1,738,011 | | | | | |
Total Assets | $ | 19,667,825 | | | | | | | $ | 20,207,920 | | | | | | | $ | 19,913,849 | | | | | |
Interest-bearing Liabilities | | | | | | | | | | | | | | | | | |
Savings | $ | 8,782,197 | | | $ | 53,807 | | | 2.43 | % | | $ | 8,737,581 | | | $ | 49,195 | | | 2.23 | % | | $ | 9,987,692 | | | $ | 25,950 | | | 1.03 | % |
Time deposits | 3,165,788 | | | 34,264 | | | 4.29 | | | 3,945,371 | | | 43,549 | | | 4.38 | | | 1,322,094 | | | 6,265 | | | 1.88 | |
Borrowings | 401,463 | | | 5,874 | | | 5.80 | | | 103,567 | | | 1,167 | | | 4.47 | | | 298,804 | | | 2,223 | | | 2.95 | |
Term debt | 372,232 | | | 5,804 | | | 6.19 | | | 372,112 | | | 5,765 | | | 6.15 | | | 371,442 | | | 5,043 | | | 5.39 | |
Total interest-bearing liabilities | 12,721,680 | | | 99,749 | | | 3.11 | % | | 13,158,631 | | | 99,676 | | | 3.01 | % | | 11,980,032 | | | 39,481 | | | 1.31 | % |
Noninterest-bearing Liabilities | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | 4,761,409 | | | | | | | 4,824,861 | | | | | | | 6,009,432 | | | | | |
Accrued interest and other liabilities | 344,945 | | | | | | | 366,905 | | | | | | | 264,941 | | | | | |
Total noninterest-bearing liabilities | 5,106,354 | | | | | | | 5,191,766 | | | | | | | 6,274,373 | | | | | |
Equity | 1,839,791 | | | | | | | 1,857,523 | | | | | | | 1,659,444 | | | | | |
Total Liabilities and Equity | $ | 19,667,825 | | | | | | | $ | 20,207,920 | | | | | | | $ | 19,913,849 | | | | | |
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | | | $ | 158,195 | | | | | | | $ | 147,908 | | | | | | | $ | 167,372 | | | |
Net interest spread(1) | | | | | 2.62 | % | | | | | | 2.32 | % | | | | | | 3.21 | % |
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3) | | | | | 3.52 | % | | | | | | 3.18 | % | | | | | | 3.65 | % |
Interest-bearing liabilities to earning assets | 71.25 | % | | | | | | 71.36 | % | | | | | | 65.91 | % | | | | |
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(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. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS |
| For the Year Ended |
| December 31, 2023 | | December 31, 2022 |
| Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | |
Securities: | | | | | | | | | | | |
Taxable | $ | 5,723,603 | | | $ | 223,521 | | | 3.91 | % | | $ | 6,335,586 | | | $ | 169,544 | | | 2.68 | % |
Nontaxable(1) | 864,288 | | | 31,292 | | | 3.62 | | | 965,474 | | | 30,387 | | | 3.15 | |
Total securities | 6,587,891 | | | 254,813 | | | 3.87 | | | 7,301,060 | | | 199,931 | | | 2.74 | |
Interest-bearing deposits with other banks and other short-term investments | 136,964 | | | 7,007 | | | 5.12 | | | 216,786 | | | 3,125 | | | 1.44 | |
Federal funds sold | 38 | | | 3 | | | 7.89 | | | 192 | | | 11 | | | 5.73 | |
Loans:(2) | | | | | | | | | | | |
Commercial and industrial(1) | 3,566,610 | | | 236,532 | | | 6.63 | | | 3,070,890 | | | 140,310 | | | 4.57 | |
PPP loans | 5,797 | | | 69 | | | 1.19 | | | 50,464 | | | 6,884 | | | 13.64 | |
Owner occupied commercial real estate | 2,375,883 | | | 116,641 | | | 4.91 | | | 2,272,088 | | | 93,936 | | | 4.13 | |
Non-owner occupied commercial real estate | 2,517,645 | | | 147,528 | | | 5.86 | | | 2,196,922 | | | 99,202 | | | 4.52 | |
Real estate construction | 1,047,192 | | | 76,307 | | | 7.29 | | | 923,316 | | | 48,258 | | | 5.23 | |
Agricultural and agricultural real estate | 837,861 | | | 49,260 | | | 5.88 | | | 778,526 | | | 34,064 | | | 4.38 | |
Residential mortgage | 832,562 | | | 37,669 | | | 4.52 | | | 852,541 | | | 34,276 | | | 4.02 | |
Consumer | 503,763 | | | 36,522 | | | 7.25 | | | 464,084 | | | 23,058 | | | 4.97 | |
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Less: allowance for credit losses-loans | (111,016) | | | — | | | — | | | (105,735) | | | — | | | — | |
Net loans | 11,576,297 | | | 700,528 | | | 6.05 | | | 10,503,096 | | | 479,988 | | | 4.57 | |
Total earning assets | 18,301,190 | | | 962,351 | | | 5.26 | % | | 18,021,134 | | | 683,055 | | | 3.79 | % |
Nonearning Assets | 1,751,814 | | | | | | | 1,600,705 | | | | | |
Total Assets | $ | 20,053,004 | | | | | | | $ | 19,621,839 | | | | | |
Interest-bearing Liabilities | | | | | | | | | | | |
Savings | $ | 9,043,067 | | | $ | 182,179 | | | 2.01 | % | | $ | 9,737,100 | | | $ | 46,623 | | | 0.48 | % |
Time deposits | 3,299,405 | | | 137,509 | | | 4.17 | | | 1,160,538 | | | 10,257 | | | 0.88 | |
Borrowings | 204,524 | | | 10,311 | | | 5.04 | | | 168,404 | | | 2,717 | | | 1.61 | |
Term debt | 372,129 | | | 22,560 | | | 6.06 | | | 371,879 | | | 16,823 | | | 4.52 | |
Total interest-bearing liabilities | 12,919,125 | | | 352,559 | | | 2.73 | % | | 11,437,921 | | | 76,420 | | | 0.67 | % |
Noninterest-bearing Liabilities | | | | | | | | | | | |
Noninterest-bearing deposits | 5,008,822 | | | | | | | 6,131,760 | | | | | |
Accrued interest and other liabilities | 299,369 | | | | | | | 203,412 | | | | | |
Total noninterest-bearing liabilities | 5,308,191 | | | | | | | 6,335,172 | | | | | |
Equity | 1,825,688 | | | | | | | 1,848,746 | | | | | |
Total Liabilities and Equity | $ | 20,053,004 | | | | | | | $ | 19,621,839 | | | | | |
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | | | $ | 609,792 | | | | | | | $ | 606,635 | | | |
Net interest spread(1) | | | | | 2.53 | % | | | | | | 3.12 | % |
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3) | | | | | 3.33 | % | | | | | | 3.37 | % |
Interest-bearing liabilities to earning assets | 70.59 | % | | | | | | 63.47 | % | | | | |
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(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. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | | | | | | | | | |
Earnings available to common stockholders (GAAP) | $ | (72,375) | | | $ | 46,078 | | | $ | 47,404 | | | $ | 50,763 | | | $ | 58,642 | |
Plus core deposit and customer relationship intangibles amortization, net of tax(2) | 1,229 | | | 1,240 | | | 1,309 | | | 1,364 | | | 1,410 | |
Earnings available to common stockholders excluding intangible amortization (non-GAAP) | $ | (71,146) | | | $ | 47,318 | | | $ | 48,713 | | | $ | 52,127 | | | $ | 60,052 | |
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Average common equity (GAAP) | $ | 1,729,086 | | | $ | 1,746,818 | | | $ | 1,727,013 | | | $ | 1,655,860 | | | $ | 1,548,739 | |
Less average goodwill | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | |
Less average core deposit and customer relationship intangibles, net | 19,193 | | | 20,821 | | | 22,481 | | | 24,238 | | | 26,046 | |
Average tangible common equity (non-GAAP) | $ | 1,133,888 | | | $ | 1,149,992 | | | $ | 1,128,527 | | | $ | 1,055,617 | | | $ | 946,688 | |
Annualized return on average common equity (GAAP) | (16.61) | % | | 10.47 | % | | 11.01 | % | | 12.43 | % | | 15.02 | % |
Annualized return on average tangible common equity (non-GAAP) | (24.89) | % | | 16.32 | % | | 17.31 | % | | 20.03 | % | | 25.17 | % |
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Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | | | | | | | | | |
Net Interest Income (GAAP) | $ | 156,137 | | | $ | 145,756 | | | $ | 147,132 | | | $ | 152,212 | | | $ | 165,220 | |
Plus tax-equivalent adjustment(1) | 2,058 | | | 2,152 | | | 2,136 | | | 2,209 | | | 2,152 | |
Net interest income, fully tax-equivalent (non-GAAP) | $ | 158,195 | | | $ | 147,908 | | | $ | 149,268 | | | $ | 154,421 | | | $ | 167,372 | |
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Average earning assets | $ | 17,853,957 | | | $ | 18,439,010 | | | $ | 18,523,552 | | | $ | 18,392,649 | | | $ | 18,175,838 | |
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Annualized net interest margin (GAAP) | 3.47 | % | | 3.14 | % | | 3.19 | % | | 3.36 | % | | 3.61 | % |
Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.52 | | | 3.18 | | | 3.23 | | | 3.40 | | | 3.65 | |
Net purchase accounting discount amortization on loans included in annualized net interest margin | 0.02 | | | 0.01 | | | 0.03 | | | 0.02 | | | 0.03 | |
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Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | | | | | | | | | |
Common equity (GAAP) | $ | 1,822,412 | | | $ | 1,714,825 | | | $ | 1,748,285 | | | $ | 1,718,700 | | | $ | 1,624,350 | |
Less goodwill | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | |
Less core deposit and customer relationship intangibles, net | 18,415 | | | 20,026 | | | 21,651 | | | 23,366 | | | 25,154 | |
Tangible common equity (non-GAAP) | $ | 1,227,992 | | | $ | 1,118,794 | | | $ | 1,150,629 | | | $ | 1,119,329 | | | $ | 1,023,191 | |
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Common shares outstanding, net of treasury stock | 42,688,008 | | | 42,656,303 | | | 42,644,544 | | | 42,558,726 | | | 42,467,394 | |
Common equity (book value) per share (GAAP) | $ | 42.69 | | | $ | 40.20 | | | $ | 41.00 | | | $ | 40.38 | | | $ | 38.25 | |
Tangible book value per common share (non-GAAP) | $ | 28.77 | | | $ | 26.23 | | | $ | 26.98 | | | $ | 26.30 | | | $ | 24.09 | |
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Reconciliation of Tangible Common Equity Ratio (non-GAAP) | | | | | | | | | |
Tangible common equity (non-GAAP) | $ | 1,227,992 | | | $ | 1,118,794 | | | $ | 1,150,629 | | | $ | 1,119,329 | | | $ | 1,023,191 | |
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Total assets (GAAP) | $ | 19,411,707 | | | $ | 20,129,793 | | | $ | 20,224,716 | | | $ | 20,182,544 | | | $ | 20,244,228 | |
Less goodwill | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | |
Less core deposit and customer relationship intangibles, net | 18,415 | | | 20,026 | | | 21,651 | | | 23,366 | | | 25,154 | |
Total tangible assets (non-GAAP) | $ | 18,817,287 | | | $ | 19,533,762 | | | $ | 19,627,060 | | | $ | 19,583,173 | | | $ | 19,643,069 | |
Tangible common equity ratio (non-GAAP) | 6.53 | % | | 5.73 | % | | 5.86 | % | | 5.72 | % | | 5.21 | % |
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(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended |
12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
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Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP) | |
Net interest income (GAAP) | $ | 156,137 | | | $ | 145,756 | | | $ | 147,132 | | | $ | 152,212 | | | $ | 165,220 | |
Tax-equivalent adjustment(1) | 2,058 | | | 2,152 | | | 2,136 | | | 2,209 | | | 2,152 | |
Fully tax-equivalent net interest income | 158,195 | | | 147,908 | | | 149,268 | | | 154,421 | | | 167,372 | |
Noninterest income | (111,801) | | | 28,383 | | | 32,493 | | | 29,999 | | | 29,975 | |
Securities (gains)/losses, net | 140,007 | | | 114 | | | 314 | | | 1,104 | | | 153 | |
Unrealized (gain) loss on equity securities, net | (75) | | | (13) | | | 41 | | | (193) | | | 7 | |
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Valuation adjustment on servicing rights | — | | | — | | | — | | | — | | | — | |
Adjusted revenue (non-GAAP) | $ | 186,326 | | | $ | 176,392 | | | $ | 182,116 | | | $ | 185,331 | | | $ | 197,507 | |
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Total noninterest expenses (GAAP) | $ | 130,285 | | | $ | 111,053 | | | $ | 109,446 | | | $ | 111,043 | | | $ | 117,218 | |
Less: | | | | | | | | | |
Core deposit and customer relationship intangibles amortization | 1,611 | | | 1,625 | | | 1,715 | | | 1,788 | | | 1,841 | |
Partnership investment in tax credit projects | 3,573 | | | 1,136 | | | 154 | | | 538 | | | 3,247 | |
(Gain) loss on sales/valuation of assets, net | 2,072 | | | 108 | | | (3,372) | | | 1,115 | | | 2,388 | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,429 | | | 1,892 | | | 1,673 | | | 2,442 | |
FDIC special assessment | 8,145 | | | — | | | — | | | — | | | — | |
Core expenses (non-GAAP) | $ | 110,519 | | | $ | 105,755 | | | $ | 109,057 | | | $ | 105,929 | | | $ | 107,300 | |
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Efficiency ratio (GAAP) | 293.86 | % | | 63.77 | % | | 60.93 | % | | 60.94 | % | | 60.05 | % |
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) | 59.31 | % | | 59.95 | % | | 59.88 | % | | 57.16 | % | | 54.33 | % |
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Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP) | | | | | | | | | |
Total noninterest expenses (GAAP) | $ | 130,285 | | | $ | 111,053 | | | $ | 109,446 | | | $ | 111,043 | | | $ | 117,218 | |
Core expenses (non-GAAP) | 110,519 | | | 105,755 | | | 109,057 | | | 105,929 | | | 107,300 | |
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Average assets | $ | 19,667,825 | | | $ | 20,207,920 | | | $ | 20,221,511 | | | $ | 20,118,005 | | | $ | 19,913,849 | |
Total noninterest expenses to average assets (GAAP) | 2.63 | % | | 2.18 | % | | 2.17 | % | | 2.24 | % | | 2.34 | % |
Core expenses to average assets (non-GAAP) | 2.23 | % | | 2.08 | % | | 2.16 | % | | 2.14 | % | | 2.14 | % |
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Acquisition, integration and restructuring costs | | | | | | | | | |
Salaries and employee benefits | $ | 1,425 | | | $ | 94 | | | $ | 93 | | | $ | 74 | | | $ | 424 | |
Occupancy | 1,092 | | | — | | | — | | | — | | | — | |
Furniture and equipment | 19 | | | — | | | — | | | — | | | — | |
Professional fees | 793 | | | 1,617 | | | 1,068 | | | 934 | | | 1,587 | |
Advertising | 28 | | | 178 | | | 222 | | | 122 | | | 95 | |
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Other noninterest expenses | 1,008 | | | 540 | | | 509 | | | 543 | | | 336 | |
Total acquisition, integration and restructuring costs | $ | 4,365 | | | $ | 2,429 | | | $ | 1,892 | | | $ | 1,673 | | | $ | 2,442 | |
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(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended |
| 12/31/2023 | | 9/30/2023 | | 6/30/2023 | | 3/31/2023 | | 12/31/2022 |
Reconciliation of Adjusted Earnings | | | | | | | | | |
Net income/(loss) | $ | (70,363) | | | $ | 48,091 | | | $ | 49,416 | | | $ | 52,776 | | | $ | 60,654 | |
Loss from sale of securities | 140,007 | | | 114 | | | 314 | | | 1,104 | | | 153 | |
(Gain) loss on sales/valuation of assets, net | 2,072 | | | 108 | | | (3,372) | | | 1,115 | | | 2,388 | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,429 | | | 1,892 | | | 1,673 | | | 2,442 | |
FDIC special assessment | 8,145 | | | — | | | — | | | — | | | — | |
Total adjustments | 154,589 | | | 2,651 | | | (1,166) | | | 3,892 | | | 4,983 | |
Tax effect of adjustments(2) | (36,638) | | | (628) | | | 276 | | | (922) | | | (1,166) | |
Adjusted earnings | $ | 47,588 | | | $ | 50,114 | | | $ | 48,526 | | | $ | 55,746 | | | $ | 64,471 | |
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Preferred dividends | (2,012) | | | (2,013) | | | (2,012) | | | (2,013) | | | (2,012) | |
Adjusted earnings available to common stockholders | $ | 45,576 | | | $ | 48,101 | | | $ | 46,514 | | | $ | 53,733 | | | $ | 62,459 | |
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Plus core deposit and customer relationship intangibles amortization, net of tax(2) | 1,229 | | | 1,240 | | | 1,309 | | | 1,364 | | | 1,410 | |
Earnings available to common stockholders excluding intangible amortization (non-GAAP) | $ | 46,805 | | | $ | 49,341 | | | $ | 47,823 | | | $ | 55,097 | | | $ | 63,869 | |
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Reconciliation of Adjusted Annualized Return on Average Assets | |
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Average assets | $ | 19,667,825 | | | $ | 20,207,920 | | | $ | 20,221,511 | | | $ | 20,118,005 | | | $ | 19,913,849 | |
Adjusted annualized return on average assets (non-GAAP) | 0.96 | % | | 0.98 | % | | 0.96 | % | | 1.12 | % | | 1.28 | % |
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Reconciliation of Adjusted Annualized Return on Average Common Equity | | | | | | | | | |
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Average common stockholders' equity (GAAP) | $ | 1,729,086 | | | $ | 1,746,818 | | | $ | 1,727,013 | | | $ | 1,655,860 | | | $ | 1,548,739 | |
Adjusted annualized average common equity (non-GAAP) | 10.46 | % | | 10.92 | % | | 10.80 | % | | 13.16 | % | | 16.00 | % |
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Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity | | | | | | | | | |
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Average tangible common equity (non-GAAP) | $ | 1,133,888 | | | $ | 1,149,992 | | | $ | 1,128,527 | | | $ | 1,055,617 | | | $ | 946,688 | |
Adjusted annualized average tangible common equity (non-GAAP) | 16.38 | % | | 17.02 | % | | 17.00 | % | | 21.17 | % | | 26.77 | % |
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Reconciliation of Adjusted Diluted Earnings Per Common Share | | | | | | | | | |
Weighted average shares outstanding-diluted | 42,838,405 | | 42,812,563 | | 42,757,603 | | 42,742,878 | | 42,699,752 |
Adjusted diluted earnings per common share | $ | 1.06 | | | $ | 1.12 | | | $ | 1.09 | | | $ | 1.26 | | | $ | 1.46 | |
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(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items. |
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HEARTLAND FINANCIAL USA, INC. |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| For the Quarter Ended December 31, | | For the Year Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | | | | | | | |
Earnings available to common stockholders (GAAP) | $ | (72,375) | | | $ | 58,642 | | | $ | 71,870 | | | $ | 204,130 | |
Plus core deposit and customer relationship intangibles amortization, net of tax(2) | 1,229 | | | 1,410 | | | 5,142 | | | 6,071 | |
Earnings available to common stockholders excluding intangible amortization (non-GAAP) | $ | (71,146) | | | $ | 60,052 | | | $ | 77,012 | | | $ | 210,201 | |
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Average common equity (GAAP) | $ | 1,729,086 | | | $ | 1,548,739 | | | $ | 1,714,983 | | | $ | 1,738,041 | |
Less average goodwill | 576,005 | | | 576,005 | | | 576,005 | | | 576,005 | |
Less average core deposit and customer relationship intangibles, net | 19,193 | | | 26,046 | | | 21,667 | | | 28,912 | |
Average tangible common equity (non-GAAP) | $ | 1,133,888 | | | $ | 946,688 | | | $ | 1,117,311 | | | $ | 1,133,124 | |
Annualized return on average common equity (GAAP) | (16.61) | % | | 15.02 | % | | 4.19 | % | | 11.74 | % |
Annualized return on average tangible common equity (non-GAAP) | (24.89) | % | | 25.17 | % | | 6.89 | % | | 18.55 | % |
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Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | | | | | | | |
Net Interest Income (GAAP) | $ | 156,137 | | | $ | 165,220 | | | $ | 601,237 | | | $ | 598,236 | |
Plus tax-equivalent adjustment(1) | 2,058 | | | 2,152 | | | 8,555 | | | 8,399 | |
Net interest income, fully tax-equivalent (non-GAAP) | $ | 158,195 | | | $ | 167,372 | | | $ | 609,792 | | | $ | 606,635 | |
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Average earning assets | $ | 17,853,957 | | | $ | 18,175,838 | | | $ | 18,301,190 | | | $ | 18,021,134 | |
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Annualized net interest margin (GAAP) | 3.47 | % | | 3.61 | % | | 3.29 | % | | 3.32 | % |
Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.52 | | | 3.65 | | | 3.33 | | | 3.37 | |
Net purchase accounting discount amortization on loans included in annualized net interest margin | 0.02 | | | 0.03 | | | 0.02 | | | 0.04 | |
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(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items. |
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HEARTLAND FINANCIAL USA, INC. | | |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | | |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | | |
| For the Quarter Ended December 31, | | For the Year Ended December 31, | | |
| 2023 | | 2022 | | 2023 | | 2022 | | |
Reconciliation of Efficiency Ratio (non-GAAP) | | | | | | | | | |
Net interest income (GAAP) | $ | 156,137 | | | $ | 165,220 | | | $ | 601,237 | | | $ | 598,236 | | | |
Tax-equivalent adjustment(1) | 2,058 | | | 2,152 | | | 8,555 | | | 8,399 | | | |
Fully tax-equivalent net interest income | 158,195 | | | 167,372 | | | 609,792 | | | 606,635 | | | |
Noninterest income | (111,801) | | | 29,975 | | | (20,926) | | | 128,264 | | | |
Securities (gains)/losses, net | 140,007 | | | 153 | | | 141,539 | | | 425 | | | |
Unrealized (gain) loss on equity securities, net | (75) | | | 7 | | | (240) | | | 622 | | | |
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Valuation adjustment on servicing rights | — | | | — | | | — | | | (1,658) | | | |
Adjusted revenue (non-GAAP) | $ | 186,326 | | | $ | 197,507 | | | $ | 730,165 | | | $ | 734,288 | | | |
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Total noninterest expenses (GAAP) | $ | 130,285 | | | $ | 117,218 | | | $ | 461,827 | | | $ | 443,377 | | | |
Less: | | | | | | | | | |
Core deposit and customer relationship intangibles amortization | 1,611 | | | 1,841 | | | 6,739 | | | 7,834 | | | |
Partnership investment in tax credit projects | 3,573 | | | 3,247 | | | 5,401 | | | 5,040 | | | |
(Gain) loss on sales/valuations of assets, net | 2,072 | | | 2,388 | | | (77) | | | (1,047) | | | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,442 | | | 10,359 | | | 7,586 | | | |
FDIC special assessment | 8,145 | | | — | | | 8,145 | | | — | | | |
Core expenses (non-GAAP) | $ | 110,519 | | | $ | 107,300 | | | $ | 431,260 | | | $ | 423,964 | | | |
Efficiency ratio (GAAP) | 293.86 | % | | 60.05 | % | | 79.58 | % | | 61.03 | % | | |
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) | 59.31 | % | | 54.33 | % | | 59.06 | % | | 57.74 | % | | |
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Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP) | | | | | | | | | |
Total noninterest expenses (GAAP) | $ | 130,285 | | | $ | 117,218 | | | $ | 461,827 | | | $ | 443,377 | | | |
Core expenses (non-GAAP) | 110,519 | | | 107,300 | | | 431,260 | | | 423,964 | | | |
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Average assets | $ | 19,667,825 | | | $ | 19,913,849 | | | $ | 20,053,004 | | | $ | 19,621,839 | | | |
Total noninterest expenses to average assets (GAAP) | 2.63 | % | | 2.34 | % | | 2.30 | % | | 2.26 | % | | |
Core expenses to average assets (non-GAAP) | 2.23 | % | | 2.14 | % | | 2.15 | % | | 2.16 | % | | |
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Acquisition, integration and restructuring costs | | | | | | | | | |
Salaries and employee benefits | $ | 1,425 | | | $ | 424 | | | $ | 1,686 | | | $ | 1,404 | | | |
Occupancy | 1,092 | | | — | | | 1,092 | | | — | | | |
Furniture and equipment | 19 | | | — | | | 19 | | | — | | | |
Professional fees | 793 | | | 1,587 | | | 4,412 | | | 5,082 | | | |
Advertising | 28 | | | 95 | | | 550 | | | 382 | | | |
| | | | | | | | | |
Other noninterest expenses | 1,008 | | | 336 | | | 2,600 | | | 718 | | | |
Total acquisition, integration and restructuring costs | $ | 4,365 | | | $ | 2,442 | | | $ | 10,359 | | | $ | 7,586 | | | |
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(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | | |
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HEARTLAND FINANCIAL USA, INC. | | |
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | | |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | | |
| For the Quarter Ended December 31, | | For the Year Ended December 31, | | |
| 2023 | | 2022 | | 2023 | | 2022 | | |
Reconciliation of Adjusted Earnings (non-GAAP) | | | | | | | | | |
Net income/(loss) | $ | (70,363) | | | $ | 60,654 | | | $ | 79,920 | | | $ | 212,180 | | | |
Loss from sale of securities | 140,007 | | | 153 | | | 141,539 | | | 425 | | | |
(Gain) loss on sales/valuation of assets, net | 2,072 | | | 2,388 | | | (77) | | | (1,047) | | | |
Acquisition, integration and restructuring costs | 4,365 | | | 2,442 | | | 10,359 | | | 7,586 | | | |
FDIC special assessment | 8,145 | | | — | | | 8,145 | | | — | | | |
Total adjustments | 154,589 | | | 4,983 | | | 159,966 | | | 6,964 | | | |
Tax effect of adjustments(2) | (36,638) | | | (1,166) | | | (37,912) | | | (1,567) | | | |
Adjusted earnings | $ | 47,588 | | | $ | 64,471 | | | $ | 201,974 | | | $ | 217,577 | | | |
| | | | | | | | | |
Preferred dividends | (2,012) | | | (2,012) | | | (8,050) | | | (8,050) | | | |
Adjusted earnings available to common stockholders | $ | 45,576 | | | $ | 62,459 | | | $ | 193,924 | | | $ | 209,527 | | | |
| | | | | | | | | |
Plus core deposit and customer relationship intangibles amortization, net of tax(2) | 1,229 | | | 1,410 | | | 5,142 | | | 6,071 | | | |
Earnings available to common stockholders excluding intangible amortization (non-GAAP) | $ | 46,805 | | | $ | 63,869 | | | $ | 199,066 | | | $ | 215,598 | | | |
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Reconciliation of Adjusted Annualized Return on Average Assets | | | | | | | | | |
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Average assets | $ | 19,667,825 | | | $ | 19,913,849 | | | $ | 20,053,004 | | | $ | 19,621,839 | | | |
Adjusted annualized return on average assets (non-GAAP) | 0.96 | % | | 1.28 | % | | 1.01 | % | | 1.11 | % | | |
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Reconciliation of Adjusted Annualized Return on Average Common Equity | | | | | | | | | |
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Average common stockholders' equity (GAAP) | $ | 1,729,086 | | | $ | 1,548,739 | | | $ | 1,714,983 | | | $ | 1,738,041 | | | |
Adjusted annualized average common equity (non-GAAP) | 10.46 | % | | 16.00 | % | | 11.31 | % | | 12.06 | % | | |
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Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity | | | | | | | | | |
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Average tangible common equity (non-GAAP) | $ | 1,133,888 | | | $ | 946,688 | | | $ | 1,117,311 | | | $ | 1,133,124 | | | |
Adjusted annualized average tangible common equity (non-GAAP) | 16.38 | % | | 26.77 | % | | 17.82 | % | | 19.03 | % | | |
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Reconciliation of Adjusted Diluted Earnings Per Common Share | | | | | | | | | |
Weighted average shares outstanding-diluted | 42,838,405 | | 42,699,752 | | 42,791,795 | | 42,630,703 | | |
Adjusted diluted earnings per common share | $ | 1.06 | | | $ | 1.46 | | | $ | 4.53 | | | $ | 4.91 | | | |
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(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items. | | |
4th Quarter 2023 Financial Data
2 Safe Harbor Within the charts and tables presented, certain segments, columns and rows may not sum to totals shown due to rounding. This investor presentation (including any information incorporated herein by reference) and future oral and written statements of HTLF 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 HTLF'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 HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this investor presentation, , and future oral and written statements of HTLF and its management. Although HTLF may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF 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 HTLF 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 HTLF’s Annual Report on Form 10-K for the year ended December 31, 2022, include, among others: • Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics, such as the COVID-19 pandemic or future pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, recession, supply chain issues, labor shortages, 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, rising interest rates 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 economic, political and competitive forces impacting our business; • 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 HTLF's business, financial condition and results of operations. Additionally, all statements in this investor presentation, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to 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 HTLF’s financial results, is included in HTLF's filings with the SEC.
3 HTLF Vision Statement: We help our customers achieve their goals by delivering financial expertise and insights with best-in-class experiences, while actively contributing to the vitality of the communities where we live and work Values and Guiding Principles Integrity Always do the right thing. Be honest and open. Accountability Keep your promises, follow through and follow up. Community Engage your community and your team. Unlock the potential around you. Excellence Exceed expectations - every customer, every time Together, we are HTLF.
4 HTLF Highlights 1. See appendix for reconciliation of non-GAAP financial measures 4Q 2023 Highlights FY 2023 Highlights Ø Loan growth of $640 million or 5.6% during the year Ø Commercial business loans increased 9.6% Ø 41% decrease in Wholesale and Institutional deposits Ø 19% increase in Tangible Book Value per Share1 Ø Tangible Common Equity Ratio1 improved 132 bps Ø Dividend per share increased to $1.20 from $1.09, or 10% Ø Net Interest Income of $156 million improved 7% Ø $196 million loan growth Ø $271 million of average customer deposit growth Ø 3.52% NIM1, 34 bps increase Ø Loan yield increased 28 bps Ø Tangible Common Equity Ratio1 improved 80 bps Ø Announced and initiated HTLF 3.0, the company's new strategic plan
5 HTLF 3.0 - The Journey ▪ Consortium of 11 community banks ▪ Separate bank charters and boards ▪ Growth through acquisition ▪ Asset growth focus ▪ Inconsistent legacy products and services ▪ High efficiency ratio ▪ Focus investments in Commercial business ▪ Differentiate through quality of talent, and products and services ▪ Innovate and add talent to grow and better serve customers ▪ Upgrade and add Treasury Management and Digital Capabilities ▪ Reduce expenses through improved organizational design and increasing span of control ▪ Deploy capital more efficiently, to drive improved Earnings Per Share (EPS), Revenue and Tangible Common Equity (TCE) ▪ Review and optimize footprint ▪ $20 billion asset regional bank ▪ Rebranded to HTLF ▪ Launched Heartland Specialty Industries, Food & Ag, Capital Markets ▪ Emphasis on fee revenue drivers ▪ Organic growth and expense focus ▪ Relocated headquarters to Denver ▪ Consolidated bank charters and IT systems ▪ Improved board diversity HTLF 1.0 HTLF 3.0 HTLF 2.0
6 HTLF 3.0: 3-Year Strategic Plan
7 HTLF 3.0 - Building Blocks Reduce complexity and focus on core business √ Charter Consolidation complete √ Sale of MSR portfolio √ Exited remaining mortgage origination business √ Sold/closed 19 branches since January 2022 √ Partnered with 3rd party for retirement plan recordkeeping √ Sold consumer credit card portfolio √ Sold insurance business Investment in quality revenue growth Enhancing Efficiency Return on Assets / Capital Allocation
Focused Business Investments Commercial Consumer Invest Enhance Efficiency 8 HTLF 3.0 - Strategic Transformation √ Retail ▪ Target - Mass Affluent ▪ Target - Business owners, Executives, and Employees √ Private Banking √ Wealth √ Middle Market ▪ Investments in six growth markets √ Specialized Industries ▪ Food and Agriculture ▪ Healthcare √ Small Business √ Treasury Management & Card Talent √ Fee Income Quality earnings growth to drive higher returns
9 HTLF 3.0 - Initiatives Commercial Corporate / Other Consumer q Talent Adds & Lift Outs q Build out Treasury Management Product Suite q Acquire or Build New Fee Income Business q Launch Small Business Digital Bank q Balance Sheet Repositioning q Review Footprint to Maximize Return on Capital q Accelerate Digital and Process Modernization q Invest in Growth Markets q Increase Management Span of Control q Reduce Retail Expenses Through Branch Rationalization q Launch Consumer Digital Bank q Standardize Customer Experience q Modernize Branch Delivery Initiatives
10 HTLF 3.0 Actions in Motion Commercial Talent Acquisition & Uptiering √ Head of Division Commercial & Middle Market √ Treasury & Payments Solutions - National Sales Leader ▪ Invest in and top-grade in-market Middle Market Bankers ▪ Enhance Division Commercial Banker talent ▪ Invest in and top-grade Commercial Card and Treasury Management professionals ▪ Expand Food and Agribusiness, Healthcare Talent across footprint Product Enhancements ▪ Build out Treasury Management product suite & Card capabilities ▪ Build or acquire new fee income business Digital Delivery ▪ Small Business digital bank (1Q 2025) Invest Enhance Talent Client Acquisition Double Digit Revenue Growth Enhance Efficiency Enhance Talent Branch Reductions Reduce Retail Expenses Invest/Modernize Geographic Rationalization Improve Efficiency Digital Innovation √ Completed Consumer Talent Uptiering √ Centralize retail sales and management √ Increase span of control √ Head of Private Banking (PB) ▪ PB talent upgrades Modernize Delivery √ Wealth customer portal - InvestCloud ▪ Reduce branch number / size ▪ Client alignment / segmentation Digital Delivery ▪ Consumer Digital Bank (3Q 2024) ▪ Digital Account Opening Corporate / Other Financial √ Balance sheet repositioning Geographic Optimization ▪ Current footprint under review to maximize Return on Capital ▪ Align branch footprint to commercial / small business focus Digital ▪ Improve Digital capabilities ▪ Expand utilization of existing technology stack
11 HTLF 3.0 is Well Underway Balance Sheet Repositioning (Completed) • Sold $865M securities • Repaid higher cost wholesale deposits • Pre-tax loss of $140M Strategic Benefits: ØTCE Ratio ØNet Interest Margin ØFuture earnings Retail Optimization (In Process) • Centralized and increased span of control • Eliminate redundancies • FTE reduction Strategic Benefits: ØEnhanced Talent Ø Improved Efficiency ØFuture earnings Expand Digital Capabilities (In Process) • Launch Consumer Digital Bank - 3Q 2024 • Launch Small Business Digital Bank - 1Q 2025 • Digital Account Opening Strategic Benefits: ØDeposit acquisition ØNew client acquisition Ø Improved Efficiency ØDigital innovation platform Invest + Modernize Enhance Invest Talent Acquisition (In Process) Strategic Hires: • Middle Market (6) • Food & Agribusiness (4) • Head of Division Commercial & Middle Market • Head of Private Banking • TPS - National Sales Leader Executive Team adds: ØChief Strategy Officer ØChief Innovation/Digital Officer Enhance + Invest
12 HTLF 3.0: Strategic Targets 2026 Adjusted 20231 HTLF 3.0 3 Year Targets EPS Growth (5)% 6 - 8% Return on Average Assets 1.01% 1.40 - 1.50% Fee Income to Revenue 16.7% 22 - 25% Efficiency Ratio 59% 50 - 52% Tangible Common Equity to Assets 6.5% 9.5 - 10.0% 1. See appendix for reconciliation of non-GAAP financial measures Earnings Impact from HTLF 3.0 2024 2025 2026
13 Adjusted Earnings Detail 1. NIM calculated as fully taxable equivalent - See appendix for reconciliation of non-GAAP financial measures 4Q 2023 FY 2023 Earnings per share - reported $(1.69) $1.68 Net income / (loss) (70,363) 79,920 Adjustments Loss from sale of securities 140,007 141,539 (Gain) loss on sales/valuation of assets, net 2,072 (77) Acquisition, integration and restructuring 4,365 10,359 FDIC special assessment 8,145 8,145 Total adjustments 154,589 159,966 Tax effect of adjustments (36,638) (37,912) Adjusted earnings 47,588 201,974 Adjusted earnings available to common stockholders 45,576 193,924 Earnings per share - adjusted $1.06 $4.53 4Q 2023 Actions Ø Balance sheet repositioning ▪ Sold $865.4M of securities for a $140M pre-tax loss ▪ Repaid wholesale funding ▪ Improves future profitability Ø Footprint and facilities optimization ▪ $1.1M in restructuring costs ▪ $2.1M in facilities losses and write downs Ø Completed charter consolidation ▪ 4Q23 restructuring expense of $1.3M Ø Centralized retail management and span of control ▪ Improves efficiency
$0.59 $0.68 $0.80 $0.96 $1.09 $1.20 17% 16% 22% 19% 23% 26% Dividends Payout Ratio Adjusted Payout Ratio 2018 2019 2020 2021 2022 2023 $3.52 $4.14 $3.57 $5.00 $4.79 $4.53 $3.52 $4.14 $3.57 $5.00 $4.79 $1.68 Diluted EPS Adjusted EPS 2018 2019 2020 2021 2022 2023 14 HTLF Diluted EPS and Common Dividends Increasing Dividends to Shareholders 1 Diluted EPS Common Dividends For more than 40 years, HTLF has increased or maintained our quarterly common dividend. 1 1. See appendix for reconciliation of non-GAAP Adjusted EPS, which also is the basis for the Adjusted Payout Ratio
Return on Average Assets (%) Return on Average Tangible Common Equity (%)1 Pre-Provision Net Revenue ($M)2 Revenue / FTE ($000) 1.21 1.06 0.98 0.94 (1.42) 1.08 0.40 0.96 1.01 ROAA Adjusted ROAA 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 97.5 91.5 91.4 88.6 22.5 349.4 294.193.5 365.7 Revenues/FTE Adjusted Revenues/FTE 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 78.0 71.2 70.2 63.1 (85.9) 283.1 118.5 73.7 290.4 PPNR Adjusted PPNR 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 15 1. See appendix for reconciliation of non-GAAP financial measures 2. Pre-Provision Net Revenue is defined as Net Interest Income + Non-interest Income - Non Interest Expense 3. Adjusted PPNR uses both Adjusted Noninterest Income and Adjusted Noninterest Expense 4. Adjusted Revenue uses Adjusted NonInterest Income 25.17 20.03 17.31 16.32 (24.89) 18.55 6.89 16.38 17.82 ROATCE Adjusted ROATCE 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 Profitability Summary 4 1 3
3.65% 3.40% 3.23% 3.18% 3.52% 3.37% 3.33% 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 16 Net Interest Margin Breakdown NIM FTE1 Trends Annualized NIM FTE1 3.65% 3.40% 3.24% 3.18% 3.52% 5.21% 5.56% 5.91% 6.21% 6.49% 3.45% 3.67% 3.86% 3.78% 4.20% 0.74% 1.32% 1.86% 2.10% 2.09% NIM FTE Yield on Loans Yield on Securities Cost of Deposits 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 4Q 2023 Highlights Note: Cycle beta starting point 1Q2022 Note: Beta is defined as the change in deposit cost of funds rate divided by the change in Fed Funds rate - over the same time period 1. On a fully tax equivalent basis; See appendix for reconciliation of non-GAAP financial measures ▪ From the prior quarter, which includes benefits from the Balance Sheet repositioning ▪ Net Interest Margin, FTE1 improved 34 bps ▪ Yield on Loans increased 28 bps ▪ Cost of Deposits flat ▪ Customer Deposits up 22 bps ▪ Offset by lower Wholesale costs due to Balance Sheet repositioning
4Q2023 Cost of Funds & Betas 17 Deposit Funding Attractive Customer Deposit Costs Portfolio ($M) Average Cost of Funds Beta Deposit Type 3Q 2023 4Q 2023 3Q 2023 4Q 2023 DEC Cycle to date Non Interest Bearing $4,793 $4,500 0.00 % 0.00 % 0.00 % Interest Bearing $8,190 $8,412 2.01 % 2.27 % 2.31 % 40 % Customer Non-Time $12,983 $12,912 1.26 % 1.44 % 1.49 % 25 % Customer Time $1,814 $1,945 3.47 % 3.80 % 3.88 % 66 % Customer Deposits $14,797 $14,857 1.52 % 1.74 % 1.79 % 31 % Non Customer Deposits1 $2,303 $1,345 5.14 % 5.12 % 5.06 % 92 % Total Deposits $17,100 $16,202 2.10 % 2.09 % 2.08 % 37 % Cost of Deposits and Cycle Beta Trends Note: Cycle beta starting point 1Q2022 Note: Beta is defined as the change in deposit cost of funds rate divided by the change in Fed Funds rate - over the same time period 1. Non Customer Deposits include Wholesale deposits, Institutional deposits, and Brokered CDs 9% 16% 22% 27% 31% 18% 27% 35% 38% 37%3.80% 4.68% 5.16% 5.43% 5.50% 1.74% 2.09% Customer Deposit Beta - Cycle to Date Total Deposit Beta - Cycle to Date Fed Funds Customer Deposit Costs Total Deposit Costs 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023
Commercial Revenue 48% Consumer Revenue 44% Other 8% 18 Noninterest Income Diversified Revenue Mix $13.6 $14.4 $16.5 $13.8 $13.6 $6.5 $6.3 $6.5 $6.7 $6.5 $4.0 $4.2 $4.5 $4.6 $4.6 $1.3 $1.5 $1.5 $0.7 $0.8 $1.8 $2.4 $4.0 $1.8 $1.7 Card Solutions Service Charges Retirement Plan Services Capital Markets 4Q22 1Q23 2Q23 3Q23 4Q23 Commercial Revenues ($M) Consumer Revenues ($M) $11.7 $11.5 $13.2 $12.0 $12.5 $5.1 $4.9 $6.7 $5.4 $5.0 $1.9 $1.8 $1.9 $1.9 $2.6 $4.7 $4.8 $4.6 $4.7 $4.9 Service Charges Debit Interchange Private Client 4Q22 1Q23 2Q23 3Q23 4Q23 Note: Noninterest Income excludes security gains/losses A) Includes change in NSF/OD fee and product structure in Dec 2023, $600K negative impact in 4Q23 and estimated full year 2024 impact at $7.2M 1. Private Client includes: Wealth Management, Brokerage, & Insurance Fees 1 4Q 2023 Noninterest Income Breakdown 15% of Total Revenues A
2.34% 2.24% 2.17% 2.18% 2.63% 2.26% 2.30% 2.14% 2.14% 2.16% 2.08% 2.23% 2.16% 2.15% Core Expenses Non-Core Expenses 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 54.33% 57.16% 59.88% 59.95% 59.31% 57.74% 59.06% 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 1. Non-Core Expenses include: restructuring costs, tax credits, CDI Amortization, gains/losses on sale of assets, and the FDIC special assessment 2. See appendix for reconciliation of non-GAAP financial measures Adjusted Efficiency Ratio2 Trend Core Expenses as a % of Average Assets 19 Operating Efficiency Improving Core Costs 2 1,2
• Collateralized borrowing capacity of $2.6 billion • Principal cash flow from portfolio of ~$751 million over the next 12 months, as of 12/31/23. • Total unencumbered AFS securities as of 12/31 is $1.9 billion to allow for flexibility in balance sheet management 20 12/31 Sources of Liquidity ($M) Highly Liquid Balance Sheet Strong Liquidity Sources with Access to Significant Funding Type Outstandings Available FRB Window $ — $ 1,378.9 Fed BTFP — 545.5 FHLB Advances 521.2 629.9 Total Securitized 521.2 2,554.3 Federal Funds Purchased — 265.0 Wholesale / Brokered CDs1 1,162.6 2,697.9 Total Unsecured 1,162.6 2,962.9 Total $ 1,683.8 $ 5,517.2 On-Balance Sheet Cash & Equivalents $ 323.0 AFS securities, unencumbered 1,892.2 Total On-Balance Sheet $ 2,215.2 Liquidity Metrics 9/30/2023 12/31/2023 Cash + AFS / Assets 29.0% 25.6% Loans / Deposits 69.4% 74.5% Loans / Customer Deposits 80.2% 81.2% Investments / Assets 31.8% 28.7% Total Borrowings / Assets 3.8% 5.1% 1. Brokered availability based on internal limit
US Treas/Agy 1.0% Muni 16.0% MBS - Agy 30.0% MBS - Non-Agy 32.9% CMBS - Agy 1.4% CMBS - Non-Agy 11.1% ABS 4.7% Other 2.9% 21 Investment Portfolio AFS Portfolio Detail as of 12/31/23 $4.6B Yield: 4.20% <1 Year 15.0% 1-3 Years 29.7% 3-5 Years 18.8% >5 Years 36.5% AFS Portfolio Duration as of 12/31/23 Mod. Dur.1 4.90 AFS 84.7% HTM 15.3% Hold Mix AFS Cost Basis Trend ($M) $6,789 $6,671 $6,416 $6,229 $5,100 $6,147 $6,097 $5,798 $5,483 $4,647 $642 $574 $618 $747 $453 Fair Value Unreal. Loss 12/31/22 03/31/23 06/30/23 09/30/23 12/31/23 1. Modified Duration calculation includes our hedge on AFS securities, without the hedge Modified Duration would be 5.55
Loan Composition by Product Type Geographic Diversification (by Bank Division) Loans Held to Maturity ($M)Operating Line Utilization Rates C&I 30% CRE-OO 22% CRE-NOO 21% RESI 7% AG 8% CONS 4% CONST 8% Yield: 6.49%1 CO 16% TX 13% NM 8% IA 8% IL 9% AZ 13% WI 10% KS/MO 5% CA 8% MN 6% MT 4% 35% 33% 33% 33% 32% 46% 39% 40% 34% 45% C&I Loans Ag 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 $11,428 $11,495 $11,718 $11,872 $12,069 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 221. Based on average loans QTD as of December 31, 2023 and includes AFS loans and nonaccrual loans; includes purchase accounting of 0.02% Diversified Loan Portfolio Across both Product and Footprint
$16.2 $6.2 39% Total Deposits Brokered ICS Collateralized Insured Uninsured/ Non- Collateralized $17.5 $17.7 $17.6 $17.0 $16.2 $9.5 $9.2 $9.2 $9.3 $9.2 $5.7 $5.5 $5.4 $5.4 $5.6 $2.3 $3.0 $3.0 $2.3 $1.4 Commercial Consumer Non Customer 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 Deposit Flows ($B) 23 Deposit Summary Diversified and Stable Deposit Base Uninsured Deposits ($B) $1.4 61% $2.0 $1.1 $5.5 • Customer deposits increased $60 million from prior quarter ◦ Average Customer deposit balance grew $271 million over prior quarter • Diversified deposit base ◦ Across footprint with no market > 14% ◦ No industry > 10% • Attractive Customer deposit book ◦ 30% Non Interest Bearing ◦ 1.74% Customer deposit costs ◦ 31% cycle to date beta • 61% of deposits insured/collateralized Average Deposit Account Balance 4Q 2023 +/- from 3Q Consumer $21,387 $941 Commercial $129,048 $(485) Public Funds $1,939,326 $173,462 1. Non Customer Deposits include Wholesale deposits, Institutional deposits, and Brokered CDs 1
Non Interest Bearing 28% Interest Bearing Checking 29% Savings 7% Money Market 16% Time 12% Total Wholesale/ Institutional Deposits 8% Geographic Diversification (by Bank Division) Commercial Customer Diversification 24 Healthy Deposit Mix Total Deposit Composition Public Admin 10% Health Care 9% Construction 10% Real Estate Rental 7% Non-Profit 8% Finance 6% Education 7% Professional Services 6% Manufacturing 7% Retail Trade 3% Wholesale Trade 4% Other 23% 1. Other Deposits included Brokered and Trust MMDA not allocated to a division. TX 11% CO 11% NM 14% IA 7% IL 10% AZ 9% WI 8% KS/MO 6% CA 6% MN 3% MT 4% Other 11% Non Interest Bearing 30% Interest Bearing Checking 32% Savings 8% Money Market 17% Time 13% Customer Deposit Composition $16.2B $14.9B 1
11.07 11.28 11.33 11.37 10.97 4Q22 1Q23 2Q23 3Q23 4Q23 6.50 TCE/TA (%) 1 Tier 1 Leverage Ratio (%) CET1 Ratio (%)2 Total Risk Based Capital Ratio (%)2 5.21 5.72 5.86 5.73 6.53 4Q22 1Q23 2Q23 3Q23 4Q23 11.81 12.02 12.05 9.59 9.44 5.00 5.00 4Q22 1Q23 2Q23 3Q23 4Q23 14.76 14.98 14.93 14.90 14.53 4Q22 1Q23 2Q23 3Q23 4Q23 25 1. See appendix for reconciliation of non-GAAP financial measures 2. 4Q 2023 calculation is preliminary Note: Lines depicts well capitalized bank levels Consolidated Capital Ratios Exceeding Well Capitalized Levels 10.00 5.00
$4,766 $11,684 $13,662 $13,816 $10,970 0.04% 0.10% 0.12% 0.12% 0.09% Delinquencies ($000) Delinquencies / Total Loans (%) 4Q22 1Q23 2Q23 3Q23 4Q23 Non-Performing Assets Non-Performing Loans Net Charge-offs Loan Delinquencies 30-89 days $66,931 $65,702 $66,097 $66,178 $110,481 0.33% 0.33% 0.33% 0.33% 0.57% NPAs ($000) NPAs / Assets (%) 4Q22 1Q23 2Q23 3Q23 4Q23 $58,504 $58,240 $63,415 $51,815 $97,933 0.51% 0.51% 0.54% 0.44% 0.81% NPLs ($000) NPLs / Gross Loans (%) 4Q22 1Q23 2Q23 3Q23 4Q23 -$1,693 -$1,040 $9,338 $3,662 $392 (0.06)% (0.04)% 0.32% 0.12% 0.01% NCOs ($000) NCOs / Avg Loans (%) 4Q22 1Q23 2Q23 3Q23 4Q23 26 Summary Asset Quality Note: The 4Q 2023 increase in non-performers was primarily driven by a well-collateralized long-term manufacturing customer who is experiencing cash flow challenges due to a recent acquisition.
1.13% 1.16% 1.11% 1.08% 1.15% 0.96% 0.98% 0.95% 0.93% 1.02% 0.17% 0.18% 0.16% 0.15% 0.14% Allowance for Credit Allowance for Unfunded 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 $20,196 $16,468 Balance: 12/31/2022 Balance: 12/31/2023 Allowance as a % of Loans Allowance for Credit Losses ($000) Allowance for Unfunded Commits ($000) $109,483 $25,435 $(19,614) $7,262 $122,566 Balance: 12/31/2022 Provision for credit losses Charge-offs Recoveries Balance: 12/31/2023 27 Allowance for Credit Related Losses
28 Management Outlook Assumes no change in economic environment FY 2024 vs FY 2023 Loan Growth Deposit Growth ▪ 6-8% growth, principally in the commercial portfolio ▪ 5-7% growth, to fund loan growth, with strong commercial and some consumer ▪ Securities amortization (cashflow) to pay down wholesale deposits Net Interest Margin Credit Quality ▪ Stable at ~3.50%, assuming stable interest rate environment ▪ Full year provision for credit losses expected to increase modestly Noninterest Income1 Noninterest Expense ▪ Core income flat with growth in Treasury Management and card fees, offset by both lower consumer and small business NSF/OD fees and exit of mortgage banking business ▪ Core expenses down ~2% with lower occupancy, marketing, legal, and operational expenses, offset by performance comp and technology investments Tax Capital ▪ Effective tax rate of ~24%, excluding discrete items (i.e. new tax credits) ▪ Earnings accretion and securities amortization expected to increase all capital ratios, with CET1 approaching 11.5-12% by year end 1. Noninterest Income excludes security gains/losses
29 Contact Information
31 Non-GAAP Reconciliations
YTD 4Q23 3Q23 2Q23 1Q23 4Q22 2023 2022 Reconciliation of Tangible Book Value Per Common Share (non-GAAP) Common stockholders' equity (GAAP) $ 1,822,412 $ 1,714,825 $ 1,748,285 $ 1,718,700 $ 1,624,350 $ 1,822,412 $ 1,624,350 Less goodwill 576,005 576,005 576,005 576,005 576,005 576,005 576,005 Less core deposit and customer relationship intangibles, net 18,415 20,026 21,651 23,366 25,154 18,415 25,154 Tangible common stockholders' equity (non-GAAP) $ 1,227,992 $ 1,118,794 $ 1,150,629 $ 1,119,329 $ 1,023,191 $ 1,227,992 $ 1,023,191 Common shares outstanding, net of treasury stock 42,688,008 42,656,303 42,644,544 42,558,726 42,467,394 42,688,008 42,467,394 Common stockholders' equity (book value) per share (GAAP) $ 42.69 $ 40.20 $ 41.00 $ 40.38 $ 38.25 $ 42.69 $ 38.25 Tangible book value per common share (non-GAAP) $ 28.77 $ 26.23 $ 26.98 $ 26.30 $ 24.09 $ 28.77 $ 24.09 Reconciliation of Tangible Common Equity Ratio (non-GAAP) Total assets (GAAP) $ 19,411,707 $ 20,129,793 $ 20,224,716 $ 20,182,544 $ 20,244,228 $ 19,411,707 $ 20,244,228 Less goodwill 576,005 576,005 576,005 576,005 576,005 576,005 576,005 Less core deposit and customer relationship intangibles, net 18,415 20,026 21,651 23,366 25,154 18,415 25,154 Total tangible assets (non-GAAP) $ 18,817,287 $ 19,533,762 $ 19,627,060 $ 19,583,173 $ 19,643,069 $ 18,817,287 $ 19,643,069 Tangible common equity ratio (non-GAAP) 6.53 % 5.73 % 5.86 % 5.72 % 5.21 % 6.53 % 5.21 % Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) Net Interest Income (GAAP) $ 156,137 $ 145,756 $ 147,132 $ 152,212 $ 165,220 $ 601,237 $ 598,236 Plus tax-equivalent adjustment1 2,058 2,152 2,136 2,209 2,152 8,555 8,399 Net interest income, fully tax-equivalent (non-GAAP) $ 158,195 $ 147,908 $ 149,268 $ 154,421 $ 167,372 $ 609,792 $ 606,635 Average earning assets $ 17,853,957 $ 18,439,010 $ 18,523,552 $ 18,392,649 $ 18,175,838 $ 18,301,190 $ 18,021,134 Annualized net interest margin (GAAP) 3.47 % 3.14 % 3.19 % 3.36 % 3.61 % 3.29 % 3.32 % Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.52 % 3.18 % 3.23 % 3.40 % 3.65 % 3.33 % 3.37 % Purchase accounting discount amortization on loans included in annualized net interest margin 0.02 % 0.01 % 0.03 % 0.02 % 0.03 % 0.02 % 0.04 % Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) Net income/(loss) available to common stockholders (GAAP) $ (72,375) $ 46,078 $ 47,404 $ 50,763 $ 58,642 $ 71,870 $ 204,130 Plus core deposit and customer relationship intangibles amortization, net of tax2 1,229 1,240 1,309 1,364 1,410 5,142 6,071 Net income available to common stockholders excluding intangible amortization (non-GAAP) $ (71,146) $ 47,318 $ 48,713 $ 52,127 $ 60,052 $ 77,012 $ 210,201 Average common stockholders' equity (GAAP) $ 1,729,086 $ 1,746,818 $ 1,727,013 $ 1,655,860 $ 1,548,739 $ 1,714,983 $ 1,738,041 Less average goodwill 576,005 576,005 576,005 576,005 576,005 576,005 576,005 Less average core deposit and customer relationship intangibles, net 19,193 20,821 22,481 24,238 26,046 21,667 28,912 Average tangible common stockholders' equity (non-GAAP) $ 1,133,888 $ 1,149,992 $ 1,128,527 $ 1,055,617 $ 946,688 $ 1,117,311 $ 1,133,124 Annualized return on average tangible common equity (non-GAAP) (24.89) % 16.32 % 17.31 % 20.03 % 25.17 % 6.89 % 18.55 % 32 Non-GAAP Reconciliations (Dollars in thousands except per share data) 1. Computed on a tax-equivalent basis using an effective tax rate of 21%. 2. Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.
YTD 4Q23 3Q23 2Q23 1Q23 4Q22 2023 2022 Reconciliation of Non-GAAP Measure-Efficiency Ratio Net interest income (GAAP) $ 156,137 $ 145,756 $ 147,132 $ 152,212 $ 165,220 $ 601,237 $ 598,236 Tax-equivalent adjustment1 2,058 2,152 2,136 2,209 2,152 8,555 8,399 Fully tax-equivalent net interest income 158,195 147,908 149,268 154,421 167,372 609,792 606,635 Noninterest income (111,801) 28,383 32,493 29,999 29,975 (20,926) 128,264 Plus: Securities (gains)/losses, net 140,007 114 314 1,104 153 141,539 425 Unrealized (gain) loss on equity securities, net (75) (13) 41 (193) 7 (240) 622 Gain on extinguishment of debt — — — — — — — Valuation adjustment on servicing rights — — — — — — (1,658) Adjusted noninterest income 28,131 28,484 32,848 30,910 30,135 120,373 127,653 Adjusted revenue (non-GAAP) $ 186,326 $ 176,392 $ 182,116 $ 185,331 $ 197,507 $ 730,165 $ 734,288 Total noninterest expenses (GAAP) 130,285 111,053 109,446 111,043 117,218 461,827 443,377 Less: Core deposit and customer relationship intangibles amortization 1,611 1,625 1,715 1,788 1,841 6,739 7,834 Partnership investment in tax credit projects 3,573 1,136 154 538 3,247 5,401 5,040 (Gain) loss on sales/valuations of assets, net 2,072 108 (3,372) 1,115 2,388 (77) (1,047) Restructuring expenses 4,365 2,429 1,892 1,673 2,442 10,359 7,586 FDIC special assessment 8,145 — — — — 8,145 — Core (adjusted) expenses (non-GAAP) $ 110,519 $ 105,755 $ 109,057 $ 105,929 $ 107,300 $ 431,260 $ 423,964 Efficiency ratio (GAAP) 293.86 % 63.77 % 60.93 % 60.94 % 60.05 % 79.58 % 61.03 % Adjusted efficiency ratio, fully tax-equivalent (non-GAAP) 59.31 % 59.95 % 59.88 % 57.16 % 54.33 % 59.06 % 57.74 % 33 Non-GAAP Reconciliations (cont.) (Dollars in thousands) 1. Computed on a tax-equivalent basis using an effective tax rate of 21%.
YTD 4Q23 3Q23 2Q23 1Q23 4Q22 2023 2022 Reconciliation of Adjusted Earnings Net Income/(loss) $ (70,363) $ 48,091 $ 49,416 $ 52,776 $ 60,654 $ 79,920 $ 212,180 Loss from sale of securities 140,007 114 314 1,104 153 141,539 425 (Gain) loss on sales/valuation of assets, net 2,072 108 (3,372) 1,115 2,388 (77) (1,047) Acquisition, integration and restructuring costs 4,365 2,429 1,892 1,673 2,442 10,359 7,586 FDIC special assessment 8,145 — — — — 8,145 — Total adjustments 154,589 2,651 (1,166) 3,892 4,983 159,966 6,964 Tax effect of adjustments1 (36,638) (628) 276 (922) (1,166) (37,912) (1,567) Adjusted earnings $ 47,588 $ 50,114 $ 48,526 $ 55,746 $ 64,471 $ 201,974 $ 217,577 Preferred dividends (2,012) (2,013) (2,012) (2,013) (2,012) (8,050) (8,050) Adjusted earnings available to common stockholders $ 45,576 $ 48,101 $ 46,514 $ 53,733 $ 62,459 $ 193,924 $ 209,527 Core deposit and customer relationship intangibles amortization, net of tax1 1,229 1,240 1,309 1,364 1,410 5,142 6,071 Earnings available to common stockholders excluding intangible amortization 46,805 49,341 47,823 55,097 63,869 199,066 215,598 Reconciliation of Adjusted Diluted EPS Adjusted earnings available to common stockholders $ 45,576 $ 48,101 $ 46,514 $ 53,733 $ 62,459 $ 193,924 $ 209,527 Common shares outstanding, net of treasury stock 42,838,405 42,812,563 42,757,603 42,742,878 42,699,752 42,791,795 42,630,703 Adjusted EPS (Non-GAAP) $ 1.06 $ 1.12 $ 1.09 $ 1.26 $ 1.46 $ 4.53 $ 4.91 Reconciliation of Adjusted Return on Average Assets Adjusted earnings $ 47,588 $ 50,114 $ 48,526 $ 55,746 $ 64,471 $ 201,974 $ 217,577 Average assets 19,667,825 20,207,920 20,221,511 20,118,005 19,913,849 20,053,004 19,621,839 Annualized adjusted return on average assets (non-GAAP) 0.96 % 0.98 % 0.96 % 1.12 % 1.28 % 1.01 % 1.11 % Reconciliation of Adjusted Return on Average Tangible Common Equity Earnings available to common stockholders excluding intangible amortization $ 46,805 $ 49,341 $ 47,823 $ 55,097 $ 63,869 $ 199,066 $ 215,598 Average tangible common stockholders' equity (non-GAAP) 1,133,888 1,149,992 1,128,527 1,055,617 946,688 1,117,311 1,133,124 Annualized adjusted return on average assets (non-GAAP) 16.38 % 17.02 % 17.00 % 21.17 % 26.77 % 17.82 % 19.03 % 34 Non-GAAP Reconciliations (cont.) (Dollars in thousands except per share data) 1. Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.
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Cover
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Jan. 29, 2024 |
Entity Information [Line Items] |
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Jan. 29, 2024
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Heartland Financial USA, Inc.
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001-15393
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DE
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Entity Tax Identification Number |
42-1405748
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CO
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80202
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City Area Code |
(303)
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Local Phone Number |
285-9200
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Suite 1800
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Denver,
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1800 Larimer Street
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Common Stock, par value $1.00 per share |
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Common Stock, par value $1.00 per share
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Trading Symbol |
HTLF
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Security Exchange Name |
NASDAQ
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Depositary Shares (each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E) |
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Entity Information [Line Items] |
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Title of 12(b) Security |
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Heartland Financial USA (NASDAQ:HTLFP)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Heartland Financial USA (NASDAQ:HTLFP)
Gráfica de Acción Histórica
De May 2023 a May 2024