HTLF Heartland Financial USA Inc

Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022:

• Net income available to common stockholders of $46.1 million compared to $54.6 million, a decrease of $8.5 million or 16%.
• Earnings per diluted common share of $1.08 compared to $1.28, a decrease of $0.20 or 16%.
• Earnings per diluted common share included $0.04 of acquisition, integration and restructuring costs in both quarters.
• Net interest income of $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
• Return on average assets was 0.94% compared to 1.13%.
• Return on average common equity was 10.47% compared to 12.93%.
• Return on average tangible common equity (non-GAAP) was 16.34% compared to 20.76%.

"HTLF delivered another solid quarter highlighted by loan and customer deposit growth, reduced wholesale deposits and continued stable credit quality while effectively managing core expenses. We are also pleased that we successfully completed the final charter consolidation and look forward to 2024 with this significant project behind us," said Bruce K. Lee, president and chief executive officer of HTLF.

HTLF reported the following results for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022:

• Net income available to common stockholders of $144.2 million compared to $145.5 million, a decrease of $1.2 million or 1%.
• Earnings per diluted common share of $3.37 compared to $3.42, a decrease of $0.05 or 1%.
• Earnings per diluted common share included $0.11 of acquisition, integration and restructuring costs compared to $0.10.
• Net interest income of $445.1 million compared to $433.0 million, an increase of $12.1 million or 3%.
• Return on average assets was 1.00% compared to 1.04%.
• Return on average common equity was 11.28% compared to 10.80%.
• Return on average tangible common equity (non-GAAP) was 17.83% compared to 16.79%.

Charter Consolidation Update

During the third quarter of 2023, Rocky Mountain Bank and New Mexico Bank & Trust were consolidated into HTLF Bank. Subsequent to September 30, 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which marked the completion of charter consolidation. Total consolidation restructuring costs are projected to be $18-$19 million with approximately $2-$3 million of expenses remaining to be incurred in 2023.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023 compared to 3.19% (3.23% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2023, and 3.41% (3.45% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2022.

Total interest income and average earning asset changes for the third quarter of 2023 compared to the third quarter of 2022 were:

• Total interest income was $245.4 million compared to $175.8 million, an increase of $69.6 million or 40%, primarily attributable to an increase in average earning assets and higher yields.
• Total interest income on a tax-equivalent basis (non-GAAP) was $247.6 million, an increase of $69.6 million or 39% from $178.0 million.
• Average earning assets increased $281.2 million or 2% to $18.44 billion compared to $18.16 billion.
• The average rate on earning assets increased 144 basis points to 5.33% from 3.89%, primarily due to recent interest rate increases.

Total interest expense and average interest bearing liability changes for the third quarter of 2023 compared to the third quarter of 2022 were:

• Total interest expense was $99.7 million, an increase of $79.7 million from $19.9 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 234 basis points to 3.01% from 0.67%.
• Average interest bearing deposits increased $1.47 billion or 13% to $12.68 billion from $11.22 billion, primarily due to an increase of $1.36 billion in wholesale deposits.
• The average interest rate paid on interest bearing deposits increased 236 basis points to 2.90% from 0.54%.
• Average borrowings decreased $30.8 million or 6% to $475.7 million from $506.5 million, and the average interest rate paid on borrowings was 5.78% compared to 3.74%.

Net interest income changes for the third quarter of 2023 compared to the third quarter of 2022 were:

• Net interest income totaled $145.8 million compared to $155.9 million, a decrease of $10.1 million or 6%.
• Net interest income on a tax-equivalent basis (non-GAAP) totaled $147.9 million compared to $158.0 million, a decrease of $10.1 million or 6%.

Noninterest Income and Noninterest Expense

Total noninterest income was $28.4 million during the third quarter of 2023 compared to $29.2 million during the third quarter of 2022, a decrease of $798,000 or 3%. Significant changes within the noninterest income category for the third quarter of 2023 compared to the third quarter of 2022 were:

• Service charges and fees increased $1.3 million or 7% to $18.6 million from $17.3 million.
• Trust fees decreased $638,000 or 12% to $4.7 million from $5.4 million, primarily attributable to reduced retirement plan services income following the sale of the recordkeeping and administrative functions of HTLF Retirement Plan Services.
• Net security losses totaled $114,000 compared to net losses of $1.1 million.
• Net gains on sales of loans held for sale decreased $927,000 or 51% to $905,000 from $1.8 million, primarily attributable to a decrease in residential mortgage loans sold to the secondary market.
• Other noninterest income decreased $1.4 million or 69% to $619,000 compared to $2.0 million. During the third quarter of 2022, HTLF received a $637,000 recovery on an acquired loan that had been charged off prior to acquisition.

Total noninterest expense was $111.1 million during the third quarter of 2023 compared to $108.9 million during the third quarter of 2022, which was an increase of $2.2 million or 2%. Significant changes within the noninterest expense category for the third quarter of 2023 compared to the third quarter of 2022 were:

• Salaries and employee benefits totaled $62.3 million compared to $62.7 million, a decrease of $399,000 or 1%. The decrease was attributable to a reduction of full-time equivalent employees and lower incentive compensation expense, mostly offset by higher salary expense. Full-time equivalent employees totaled 1,965 compared to 2,020, a decrease of 55 or 3%.
• FDIC insurance assessments totaled $3.3 million compared to $2.0 million, an increase of $1.3 million due to assessment rate changes that were effective with the first quarter 2023 assessment.
• Other noninterest expenses totaled $15.3 million compared to $13.6 million, an increase of $1.7 million or 12%. Credit card processing expenses increased $1.4 million or 49% to $4.3 million from $2.9 million.

The effective tax rate was 21.89% for the third quarter of 2023 compared to 19.97% for third quarter of 2022. The following items impacted the third quarter 2023 and 2022 tax calculations:

• Various tax credits of $1.6 million compared to $1.7 million.
• Tax expense of $1.6 million compared to $258,000 resulting from the disallowed interest expense related to tax-exempt loans and securities, aligning with increases in total interest expense.
• Tax-exempt interest income as a percentage of pre-tax income of 13.14% compared to 11.45%.

Total Assets, Total Loans and Total Deposits

Total assets were $20.13 billion at September 30, 2023, a decrease of $114.4 million or 1% from $20.24 billion at year-end 2022. Securities represented 32% and 35% of total assets at September 30, 2023, and December 31, 2022, respectively.

Total loans held to maturity were $11.87 billion at September 30, 2023, compared to $11.72 billion at June 30, 2023, and $11.43 billion at December 31, 2022, representing increases of $154.5 million or 1%, and $444.1 million or 4%, respectively.

Significant changes by loan category at September 30, 2023 compared to June 30, 2023 included:

• Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $31.7 million or 1% to $6.03 billion compared to $5.99 billion.
• Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $142.0 million or 4% to $3.69 billion compared to $3.54 billion.
• Residential mortgage loans decreased $14.6 million or 2% to $813.8 million from $828.4 million.

Significant changes by loan category at September 30, 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 $284.5 million or 5% to $6.03 billion compared to $5.74 billion.
• Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $278.9 million or 8% to $3.69 billion compared to $3.41 billion.
• Agricultural and agricultural real estate loans decreased $78.4 million or 9% to $842.1 million compared to $920.5 million.
• Residential mortgage loans decreased $39.6 million or 5% to $813.8 million compared to $853.4 million.

Total deposits were $17.10 billion as of September 30, 2023, compared to $17.66 billion at June 30, 2023, which was a decrease of $562.6 million or 3%. Total deposits were $17.10 billion as of September 30, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $412.0 million or 2%.

Total customer deposits were $14.80 billion as of September 30, 2023 compared to $14.65 billion at June 30, 2023, which was an increase of $152.3 million or 1%. Significant customer deposit changes by category at September 30, 2023, compared to June 30, 2023, included:

• Customer demand deposits decreased $105.0 million or 2% to $4.79 billion compared to $4.90 billion.
• Customer savings deposits increased $40.8 million or 1% to $8.19 billion compared to $8.15 billion.
• Customer time deposits increased $216.5 million or 14% to $1.81 billion compared to $1.60 billion.

Total customer deposits were $14.80 billion at September 30, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $426.2 million or 3%. Significant customer deposit changes by category at September 30, 2023 compared to December 31, 2022, included:

• Customer demand deposits decreased $908.5 million or 16% to $4.79 billion compared to $5.70 billion.
• Customer savings deposits decreased $480.5 million or 6% to $8.19 billion compared to $8.67 billion.
• Customer time deposits increased $962.8 million to $1.81 billion compared to $851.5 million.

Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was a decrease of $714.8 million or 24% from $3.02 billion at June 30, 2023. Significant wholesale and institutional deposit changes by category at September 30, 2023, compared to June 30, 2023, included:

• Wholesale and institutional savings deposits decreased $58.5 million or 9% to $564.5 million compared to $623.0 million.
• Wholesale time deposits decreased $656.3 million or 27% to $1.74 billion compared to $2.40 billion.

Total wholesale and institutional deposits were $2.30 billion as of September 30, 2023, which was an increase of $14.2 million or 1% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at September 30, 2023 compared to December 31, 2022 included:

• Wholesale and institutional savings deposits decreased $759.0 million or 57% to $564.5 million compared to $1.32 billion.
• Wholesale time deposits increased $773.2 million or 80% to $1.74 billion compared to $965.7 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans Provision for credit losses for loans for the third quarter of 2023 was $2.7 million, which was a decrease of $1.7 million from $4.4 million recorded in the third quarter of 2022.

The allowance for credit losses for loans totaled $110.2 million at September 30, 2023 and $109.5 million at December 31, 2022. The following items impacted the allowance for credit losses for loans at September 30, 2023:

• Provision expense for the nine months ended September 30, 2023, totaled $12.7 million.
• Net charge-offs of $12.0 million were recorded for the first nine months of 2023.

Provision and Allowance for Credit Losses for Unfunded Commitments The allowance for unfunded commitments decreased $2.7 million or 13% to $17.5 million at September 30, 2023, from $20.2 million at December 31, 2022, primarily due to a reduction of $85.6 million in unfunded commitments for construction loans, which carry the highest loss rate. Total unfunded commitments increased $84.1 million or 2% to $4.81 billion at September 30, 2023 compared to $4.73 billion at December 31, 2022.

Total Provision and Allowance for Lending Related Credit LossesThe total provision expense for lending related credit losses was $1.5 million for the third quarter of 2023 compared to $5.5 million for the third quarter of 2022. The total allowance for lending related credit losses was $127.7 million or 1.08% of total loans at September 30, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.

Nonperforming Assets

Nonperforming assets decreased $753,000 or 1% to $66.2 million or 0.33% of total assets at September 30, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. Nonperforming loans were $51.8 million or 0.44% of total loans at September 30, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At September 30, 2023, loans delinquent 30-89 days were 0.12% of total loans compared to 0.04% of total loans at December 31, 2022. Other real estate owned, net, increased $6.0 million or 71% to $14.4 million at September 30, 2023 from $8.4 million at December 31, 2022. HTLF added one property with a book value of $11.3 million to other real estate during the third quarter of 2023.

Non-GAAP Financial MeasuresThis 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. Because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this earnings release with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this earnings release.

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

• Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
• 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.
• 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 tangible common equity ratio is total common equity less goodwill, core deposit and customer relationship intangibles, net, and accumulated other comprehensive loss divided by total assets less goodwill and core deposit and customer relationship intangibles, net, and the fair value adjustment on securities and derivatives, net of deferred taxes. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength, composition and trends on a comparable basis by excluding the variability of the fair value of securities and derivatives, net of deferred taxes.
• 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.
• 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 DetailsHTLF 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 October 29, 2024, by logging on to www.htlf.com.

About HTLFHeartland Financial USA, Inc., is a Denver, Colorado-based bank holding company operating under the brand name HTLF, with assets of $20.13 billion as of September 30, 2023. HTLF's banks serve 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 StatementThis release (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 release, 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 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 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-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter EndedSeptember 30,								For the Nine Months EndedSeptember 30,
		2023				2022				2023				2022
Interest Income
Interest and fees on loans	$	182,394			$	122,913			$	505,136			$	334,000
Interest on securities:
Taxable		54,800				45,648				168,948				116,366
Nontaxable		6,584				6,164				18,990				17,874
Interest on federal funds sold		3				—				3				—
Interest on deposits with other banks and short-term investments		1,651				1,081				4,833				1,715
Total Interest Income		245,432				175,806				697,910				469,955
Interest Expense
Interest on deposits		92,744				15,158				231,617				24,665
Interest on short-term borrowings		1,167				360				4,437				494
Interest on other borrowings		5,765				4,412				16,756				11,780
Total Interest Expense		99,676				19,930				252,810				36,939
Net Interest Income		145,756				155,876				445,100				433,016
Provision for credit losses		1,516				5,492				9,969				11,983
Net Interest Income After Provision for Credit Losses		144,240				150,384				435,131				421,033
Noninterest Income
Service charges and fees		18,553				17,282				55,316				50,599
Loan servicing income		278				831				1,403				1,951
Trust fees		4,734				5,372				15,810				17,130
Brokerage and insurance commissions		692				649				2,065				2,357
Capital markets fees		1,845				1,809				8,331				9,719
Securities losses, net		(114	)			(1,055	)			(1,532	)			(272	)
Unrealized gain/(loss) on equity securities, net		13				(211	)			165				(615	)
Net gains on sale of loans held for sale		905				1,832				3,786				8,144
Valuation adjustment on servicing rights		—				—				—				1,658
Income on bank owned life insurance		858				694				3,042				1,741
Other noninterest income		619				1,978				2,489				5,877
Total Noninterest Income		28,383				29,181				90,875				98,289
Noninterest Expense
Salaries and employee benefits		62,262				62,661				186,510				192,867
Occupancy		6,438				6,794				20,338				21,250
Furniture and equipment		2,720				2,928				8,698				9,480
Professional fees		13,616				14,289				41,607				42,286
FDIC insurance assessments		3,313				1,988				9,627				5,134
Advertising		1,633				1,554				6,670				4,392
Core deposit and customer relationship intangibles amortization		1,625				1,856				5,128				5,993
Other real estate and loan collection expenses, net		481				304				984				577
(Gain)/loss on sales/valuations of assets, net		108				(251	)			(2,149	)			(3,435	)
Acquisition, integration and restructuring costs		2,429				2,156				5,994				5,144
Partnership investment in tax credit projects		1,136				979				1,828				1,793
Other noninterest expenses		15,292				13,625				46,307				40,678
Total Noninterest Expense		111,053				108,883				331,542				326,159
Income Before Income Taxes		61,570				70,682				194,464				193,163
Income taxes		13,479				14,118				44,181				41,637
Net Income		48,091				56,564				150,283				151,526
Preferred dividends		(2,013	)			(2,013	)			(6,038	)			(6,038	)
Net Income Available to Common Stockholders	$	46,078			$	54,551			$	144,245			$	145,488
Earnings per common share-diluted	$	1.08			$	1.28			$	3.37			$	3.42
Weighted average shares outstanding-diluted		42,812,563				42,643,940				42,769,872				42,596,301

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Interest Income
Interest and fees on loans	$	182,394			$	168,899			$	153,843			$	143,970			$	122,913
Interest on securities:
Taxable		54,800				58,172				55,976				53,178				45,648
Nontaxable		6,584				6,378				6,028				6,132				6,164
Interest on federal funds sold		3				—				—				11				—
Interest on deposits with other banks and short-term investments		1,651				2,051				1,131				1,410				1,081
Total Interest Income		245,432				235,500				216,978				204,701				175,806
Interest Expense
Interest on deposits		92,744				81,975				56,898				32,215				15,158
Interest on short-term borrowings		1,167				848				2,422				2,223				360
Interest on other borrowings		5,765				5,545				5,446				5,043				4,412
Total Interest Expense		99,676				88,368				64,766				39,481				19,930
Net Interest Income		145,756				147,132				152,212				165,220				155,876
Provision for credit losses		1,516				5,379				3,074				3,387				5,492
Net Interest Income After Provision for Credit Losses		144,240				141,753				149,138				161,833				150,384
Noninterest Income
Service charges and fees		18,553				19,627				17,136				17,432				17,282
Loan servicing income		278				411				714				790				831
Trust fees		4,734				5,419				5,657				5,440				5,372
Brokerage and insurance commissions		692				677				696				629				649
Capital markets fees		1,845				4,037				2,449				1,824				1,809
Securities losses, net		(114	)			(314	)			(1,104	)			(153	)			(1,055	)
Unrealized gain/(loss) on equity securities, net		13				(41	)			193				(7	)			(211	)
Net gains on sale of loans held for sale		905				1,050				1,831				888				1,832
Valuation adjustment on servicing rights		—				—				—				—				—
Income on bank owned life insurance		858				1,220				964				600				694
Other noninterest income		619				407				1,463				2,532				1,978
Total Noninterest Income		28,383				32,493				29,999				29,975				29,181
Noninterest Expense
Salaries and employee benefits		62,262				62,099				62,149				61,611				62,661
Occupancy		6,438				6,691				7,209				6,905				6,794
Furniture and equipment		2,720				3,063				2,915				3,019				2,928
Professional fees		13,616				15,194				12,797				16,320				14,289
FDIC insurance assessments		3,313				3,035				3,279				1,866				1,988
Advertising		1,633				3,052				1,985				1,829				1,554
Core deposit and customer relationship intangibles amortization		1,625				1,715				1,788				1,841				1,856
Other real estate and loan collection expenses, net		481				348				155				373				304
(Gain)/loss on sales/valuations of assets, net		108				(3,372	)			1,115				2,388				(251	)
Acquisition, integration and restructuring costs		2,429				1,892				1,673				2,442				2,156
Partnership investment in tax credit projects		1,136				154				538				3,247				979
Other noninterest expenses		15,292				15,575				15,440				15,377				13,625
Total Noninterest Expense		111,053				109,446				111,043				117,218				108,883
Income Before Income Taxes		61,570				64,800				68,094				74,590				70,682
Income taxes		13,479				15,384				15,318				13,936				14,118
Net Income		48,091				49,416				52,776				60,654				56,564
Preferred dividends		(2,013	)			(2,012	)			(2,013	)			(2,012	)			(2,013	)
Net Income Available to Common Stockholders	$	46,078			$	47,404			$	50,763			$	58,642			$	54,551
Earnings per common share-diluted	$	1.08			$	1.11			$	1.19			$	1.37			$	1.28
Weighted average shares outstanding-diluted		42,812,563				42,757,603				42,742,878				42,699,752				42,643,940

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Assets
Cash and due from banks	$	248,756			$	317,303			$	274,354			$	309,045			$	250,394
Interest bearing deposits with other banks and short-term investments		99,239				82,884				87,757				54,042				149,466
Cash and cash equivalents		347,995				400,187				362,111				363,087				399,860
Time deposits in other financial institutions		1,490				1,490				1,740				1,740				1,740
Securities:
Carried at fair value		5,482,687				5,798,041				6,096,657				6,147,144				6,060,331
Held to maturity, at cost, less allowance for credit losses		835,468				834,673				832,098				829,403				830,247
Other investments, at cost		90,001				72,291				72,364				74,567				80,286
Loans held for sale		6,262				14,353				10,425				5,277				9,570
Loans:
Held to maturity		11,872,436				11,717,974				11,495,353				11,428,352				10,923,532
Allowance for credit losses		(110,208	)			(111,198	)			(112,707	)			(109,483	)			(105,715	)
Loans, net		11,762,228				11,606,776				11,382,646				11,318,869				10,817,817
Premises, furniture and equipment, net		187,436				190,420				191,267				197,330				203,585
Goodwill		576,005				576,005				576,005				576,005				576,005
Core deposit and customer relationship intangibles, net		20,026				21,651				23,366				25,154				26,995
Servicing rights, net		—				—				—				7,840				8,379
Cash surrender value on life insurance		196,694				195,793				194,419				193,403				193,184
Other real estate, net		14,362				2,677				7,438				8,401				8,030
Other assets		609,139				510,359				432,008				496,008				466,921
Total Assets	$	20,129,793			$	20,224,716			$	20,182,544			$	20,244,228			$	19,682,950
Liabilities and Equity
Liabilities
Deposits:
Demand	$	4,792,813			$	4,897,858			$	5,119,554			$	5,701,340			$	6,083,563
Savings		8,754,911				8,772,596				9,256,609				9,994,391				10,060,523
Time		3,553,269				3,993,089				3,305,183				1,817,278				1,123,035
Total deposits		17,100,993				17,663,543				17,681,346				17,513,009				17,267,121
Short-term borrowings		392,634				44,364				92,337				376,117				147,000
Other borrowings		372,059				372,403				372,097				371,753				371,446
Accrued expenses and other liabilities		438,577				285,416				207,359				248,294				241,425
Total Liabilities		18,304,263				18,365,726				18,353,139				18,509,173				18,026,992
Stockholders' Equity
Preferred equity		110,705				110,705				110,705				110,705				110,705
Common stock		42,656				42,645				42,559				42,467				42,444
Capital surplus		1,088,267				1,087,358				1,084,112				1,080,964				1,079,277
Retained earnings		1,226,740				1,193,522				1,158,948				1,120,925				1,074,168
Accumulated other comprehensive loss		(642,838	)			(575,240	)			(566,919	)			(620,006	)			(650,636	)
Total Equity		1,825,530				1,858,990				1,829,405				1,735,055				1,655,958
Total Liabilities and Equity	$	20,129,793			$	20,224,716			$	20,182,544			$	20,244,228			$	19,682,950

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Average Balances
Assets	$	20,207,920			$	20,221,511			$	20,118,005			$	19,913,849			$	19,775,341
Loans, net of unearned		11,800,064				11,625,442				11,378,078				11,117,513				10,783,135
Deposits		17,507,813				17,689,138				17,505,867				17,319,218				17,282,289
Earning assets		18,439,010				18,523,552				18,392,649				18,175,838				18,157,795
Interest bearing liabilities		13,158,631				13,209,794				12,582,234				11,980,032				11,723,026
Common equity		1,746,818				1,727,013				1,655,860				1,548,739				1,674,306
Total stockholders' equity		1,857,523				1,837,718				1,766,565				1,659,444				1,785,011
Tangible common equity (non-GAAP)(1)		1,149,992				1,128,527				1,055,617				946,688				1,070,399
Key Performance Ratios
Annualized return on average assets		0.94	%			0.98	%			1.06	%			1.21	%			1.13	%
Annualized return on average common equity (GAAP)		10.47				11.01				12.43				15.02				12.93
Annualized return on average tangible common equity (non-GAAP)(1)		16.34				17.33				20.05				25.19				20.76
Annualized ratio of net charge-offs/(recoveries) to average loans		0.12				0.32				(0.04	)			(0.06	)			0.00
Annualized net interest margin (GAAP)		3.14				3.19				3.36				3.61				3.41
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)		3.18				3.23				3.40				3.65				3.45
Efficiency ratio (GAAP)		63.77				60.93				60.94				60.05				58.84
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)		59.95				59.88				57.16				54.33				55.26
Annualized ratio of total noninterest expenses to average assets (GAAP)		2.18				2.17				2.24				2.34				2.18
Annualized ratio of core expenses to average assets (non-GAAP)(1)		2.08				2.16				2.14				2.14				2.09
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

	For the Quarter EndedSeptember 30,								For the Nine Months EndedSeptember 30,
		2023				2022				2023				2022
Average Balances
Assets	$	20,207,920			$	19,775,341			$	20,182,808			$	19,523,433
Loans, net of unearned		11,800,064				10,783,135				11,602,741				10,437,409
Deposits		17,507,813				17,282,289				17,567,614				16,931,730
Earning assets		18,439,010				18,157,795				18,451,907				17,969,001
Interest bearing liabilities		13,158,631				11,723,026				12,985,665				11,255,232
Common equity		1,746,818				1,674,306				1,710,230				1,801,835
Total stockholders' equity		1,857,523				1,785,011				1,820,935				1,912,540
Tangible common stockholders' equity		1,149,992				1,070,399				1,111,724				1,195,952
Key Performance Ratios
Annualized return on average assets		0.94	%			1.13	%			1.00	%			1.04	%
Annualized return on average common equity (GAAP)		10.47				12.93				11.28				10.80
Annualized return on average tangible common equity (non-GAAP)(1)		16.34				20.76				17.83				16.79
Annualized ratio of net charge-offs/(recoveries) to average loans		0.12				0.00				0.14				0.17
Annualized net interest margin (GAAP)		3.14				3.41				3.23				3.22
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)		3.18				3.45				3.27				3.27
Efficiency ratio (GAAP)		63.77				58.84				61.86				61.39
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)		59.95				55.26				58.98				58.99
Total noninterest expenses to average assets (GAAP)		2.18				2.18				2.20				2.23
Core expenses to average assets (non-GAAP)(1)		2.08				2.09				2.12				2.17
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Common Share Data
Book value per common share	$	40.20			$	41.00			$	40.38			$	38.25			$	36.41
Tangible book value per common share (non-GAAP)(1)		26.23				26.98				26.30				24.09				22.20
ASC 320 effect on book value per common share		(16.27	)			(14.04	)			(13.35	)			(14.58	)			(15.31	)
Common shares outstanding, net of treasury stock		42,656,303				42,644,544				42,558,726				42,467,394				42,444,106
Tangible common equity ratio (non-GAAP)(1)		5.73	%			5.86	%			5.72	%			5.21	%			4.94	%
Adjusted tangible common equity ratio (non-GAAP)(1)		8.73	%			8.54	%			8.37	%			8.11	%			8.07	%
Other Selected Trend Information
Effective tax rate		21.89	%			23.74	%			22.50	%			18.68	%			19.97	%
Full time equivalent employees		1,965				1,966				1,991				2,002				2,020
Loans Held to Maturity
Commercial and industrial	$	3,591,809			$	3,590,680			$	3,498,345			$	3,464,414			$	3,278,703
Paycheck Protection Program ("PPP")		3,750				4,139				8,258				11,025				13,506
Owner occupied commercial real estate		2,429,659				2,398,698				2,312,538				2,265,307				2,285,973
Commercial and business lending		6,025,218				5,993,517				5,819,141				5,740,746				5,578,182
Non-owner occupied commercial real estate		2,656,358				2,530,736				2,421,341				2,330,940				2,219,542
Real estate construction		1,029,554				1,013,134				1,102,186				1,076,082				996,017
Commercial real estate lending		3,685,912				3,543,870				3,523,527				3,407,022				3,215,559
Total commercial lending		9,711,130				9,537,387				9,342,668				9,147,768				8,793,741
Agricultural and agricultural real estate		842,116				839,817				810,183				920,510				781,354
Residential mortgage		813,803				828,437				841,084				853,361				852,928
Consumer		505,387				512,333				501,418				506,713				495,509
Total loans held to maturity	$	11,872,436			$	11,717,974			$	11,495,353			$	11,428,352			$	10,923,532
Total unfunded loan commitments	$	4,813,798			$	4,905,147			$	4,867,925			$	4,729,677			$	4,664,379
Deposits
Demand-customer	$	4,792,813			$	4,897,858			$	5,119,554			$	5,701,340			$	6,083,563
Savings-customer		8,190,430				8,149,596				8,501,337				8,670,898				8,691,545
Savings-wholesale and institutional		564,481				623,000				755,272				1,323,493				1,368,978
Total savings		8,754,911				8,772,596				9,256,609				9,994,391				10,060,523
Time-customer		1,814,335				1,597,849				1,071,476				851,539				973,035
Time-wholesale		1,738,934				2,395,240				2,233,707				965,739				150,000
Total time		3,553,269				3,993,089				3,305,183				1,817,278				1,123,035
Total deposits	$	17,100,993			$	17,663,543			$	17,681,346			$	17,513,009			$	17,267,121
Total customer deposits	$	14,797,578			$	14,645,303			$	14,692,367			$	15,223,777			$	15,748,143
Total wholesale and institutional deposits		2,303,415				3,018,240				2,988,979				2,289,232				1,518,978
Total deposits	$	17,100,993			$	17,663,543			$	17,681,346			$	17,513,009			$	17,267,121
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Allowance for Credit Losses-Loans
Balance, beginning of period	$	111,198			$	112,707			$	109,483			$	105,715			$	101,353
Provision for credit losses		2,672				7,829				2,184				2,075				4,388
Charge-offs		(3,964	)			(9,613	)			(2,151	)			(2,668	)			(938	)
Recoveries		302				275				3,191				4,361				912
Balance, end of period	$	110,208			$	111,198			$	112,707			$	109,483			$	105,715
Allowance for Unfunded Commitments
Balance, beginning of period	$	18,636			$	21,086			$	20,196			$	18,884			$	17,780
Provision for credit losses		(1,156	)			(2,450	)			890				1,312				1,104
Balance, end of period	$	17,480			$	18,636			$	21,086			$	20,196			$	18,884
Allowance for lending related credit losses	$	127,688			$	129,834			$	133,793			$	129,679			$	124,599
Provision for Credit Losses
Provision for credit losses-loans	$	2,672			$	7,829			$	2,184			$	2,075			$	4,388
Provision (benefit) for credit losses-unfunded commitments		(1,156	)			(2,450	)			890				1,312				1,104
Total provision for credit losses	$	1,516			$	5,379			$	3,074			$	3,387			$	5,492
Asset Quality
Nonaccrual loans	$	51,304			$	61,956			$	58,066			$	58,231			$	64,560
Loans past due ninety days or more		511				1,459				174				273				678
Other real estate owned		14,362				2,677				7,438				8,401				8,030
Other repossessed assets		1				5				24				26				—
Total nonperforming assets	$	66,178			$	66,097			$	65,702			$	66,931			$	73,268
Nonperforming Assets Activity
Balance, beginning of period	$	66,097			$	65,702			$	66,931			$	73,268			$	67,532
Net loan (charge-offs)/recoveries		(3,662	)			(9,338	)			1,040				1,693				(26	)
New nonperforming loans		19,295				19,805				4,626				1,439				8,388
Reduction of nonperforming loans(1)		(14,691	)			(5,253	)			(5,711	)			(8,875	)			(2,015	)
Net OREO/repossessed assets sales proceeds and losses		(861	)			(4,819	)			(1,184	)			(594	)			(611	)
Balance, end of period	$	66,178			$	66,097			$	65,702			$	66,931			$	73,268
Asset Quality Ratios
Ratio of nonperforming loans to total loans		0.44	%			0.54	%			0.51	%			0.51	%			0.60	%
Ratio of nonperforming assets to total assets		0.33				0.33				0.33				0.33				0.37
Annualized ratio of net loan charge-offs/(recoveries) to average loans		0.12				0.32				(0.04	)			(0.06	)			0.00
Allowance for loan credit losses as a percent of loans		0.93				0.95				0.98				0.96				0.97
Allowance for lending related credit losses as a percent of loans		1.08				1.11				1.16				1.13				1.14
Allowance for loan credit losses as a percent of nonperforming loans		212.70				175.35				193.52				187.14				162.05
Loans delinquent 30-89 days as a percent of total loans		0.12				0.12				0.10				0.04				0.10
(1) Includes principal reductions, transfers to performing status and transfers to OREO.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	September 30, 2023										June 30, 2023										September 30, 2022
	AverageBalance				Interest			Rate			AverageBalance				Interest			Rate			AverageBalance				Interest			Rate
Earning Assets
Securities:
Taxable	$	5,726,057			$	54,800		3.80	%		$	5,962,207			$	58,172		3.91	%		$	6,303,278			$	45,648		2.87	%
Nontaxable(1)		881,162				8,085		3.64				895,458				7,896		3.54				951,232				7,802		3.25
Total securities		6,607,219				62,885		3.78				6,857,665				66,068		3.86				7,254,510				53,450		2.92
Interest on deposits with other banks and short-term investments		142,301				1,651		4.60				153,622				2,051		5.36				222,170				1,081		1.93
Federal funds sold		152				3		7.83				—				—		—				11				—		—
Loans:(2)
Commercial and industrial(1)		3,610,677				63,001		6.92				3,565,449				56,644		6.37				3,182,134				37,526		4.68
PPP loans		3,948				11		1.11				6,302				24		1.53				17,859				363		8.06
Owner occupied commercial real estate		2,412,501				30,127		4.95				2,366,107				28,031		4.75				2,272,666				23,601		4.12
Non-owner occupied commercial real estate		2,586,011				38,779		5.95				2,462,098				35,583		5.80				2,258,424				25,895		4.55
Real estate construction		1,027,544				19,448		7.51				1,028,109				18,528		7.23				914,520				12,382		5.37
Agricultural and agricultural real estate		822,957				12,582		6.07				848,554				12,256		5.79				799,823				8,966		4.45
Residential mortgage		827,402				9,482		4.55				840,741				9,383		4.48				858,119				8,665		4.01
Consumer		509,024				9,615		7.49				508,082				9,068		7.16				479,590				6,028		4.99
Less: allowance for credit losses-loans		(110,726	)			—		—				(113,177	)			—		—				(102,031	)			—		—
Net loans		11,689,338				183,045		6.21				11,512,265				169,517		5.91				10,681,104				123,426		4.58
Total earning assets		18,439,010				247,584		5.33	%			18,523,552				237,636		5.15	%			18,157,795				177,957		3.89	%
Nonearning Assets		1,768,910										1,697,959										1,617,546
Total Assets	$	20,207,920									$	20,221,511									$	19,775,341
Interest Bearing Liabilities
Savings	$	8,737,581			$	49,195		2.23	%		$	8,935,775			$	41,284		1.85	%		$	10,059,652			$	12,907		0.51	%
Time deposits		3,945,371				43,549		4.38				3,812,330				40,691		4.28				1,156,908				2,251		0.77
Short-term borrowings		103,567				1,167		4.47				89,441				848		3.80				134,974				360		1.06
Other borrowings		372,112				5,765		6.15				372,248				5,545		5.97				371,492				4,412		4.71
Total interest bearing liabilities		13,158,631				99,676		3.01	%			13,209,794				88,368		2.68	%			11,723,026				19,930		0.67	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		4,824,861										4,941,033										6,065,729
Accrued interest and other liabilities		366,905										232,966										201,575
Total noninterest bearing liabilities		5,191,766										5,173,999										6,267,304
Equity		1,857,523										1,837,718										1,785,011
Total Liabilities and Equity	$	20,207,920									$	20,221,511									$	19,775,341
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)					$	147,908									$	149,268									$	158,027
Net interest spread(1)								2.32	%									2.47	%									3.22	%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets								3.18	%									3.23	%									3.45	%
Interest bearing liabilities to earning assets		71.36	%									71.31	%									64.56	%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Nine Months Ended
	September 30, 2023										September 30, 2022
	AverageBalance				Interest			Rate			AverageBalance				Interest			Rate
Earning Assets
Securities:
Taxable	$	5,927,026			$	168,948		3.81	%		$	6,407,459			$	116,366		2.43	%
Nontaxable(1)		899,613				23,611		3.51				990,784				22,625		3.05
Total securities		6,826,639				192,559		3.77				7,398,243				138,991		2.51	%
Interest bearing deposits with other banks and other short-term investments		133,910				4,833		4.83				238,819				1,715		0.96
Federal funds sold		51				3		7.86				7				—		—
Loans:(2)
Commercial and industrial(1)		3,547,256				169,552		6.39	%			2,977,751				95,020		4.27
PPP loans		6,718				61		1.21				63,342				6,487		13.69
Owner occupied commercial real estate		2,355,545				84,927		4.82				2,270,486				67,742		3.99
Non-owner occupied commercial real estate		2,459,965				105,111		5.71				2,166,873				69,929		4.31
Real estate construction		1,051,298				56,107		7.14				880,354				31,673		4.81
Agricultural and agricultural real estate		835,673				36,191		5.79				776,127				23,905		4.12
Residential mortgage		840,143				28,138		4.48				850,444				25,108		3.95
Consumer		506,143				26,925		7.11				452,032				15,632		4.62
Less: allowance for credit losses-loans		(111,434	)			—		—				(105,477	)			—		—
Net loans		11,491,307				507,012		5.90				10,331,932				335,496		4.34
Total earning assets		18,451,907				704,407		5.10	%			17,969,001				476,202		3.54	%
Nonearning Assets		1,730,901										1,554,432
Total Assets	$	20,182,808									$	19,523,433
Interest Bearing Liabilities
Savings	$	9,130,980			$	128,372		1.88	%		$	9,652,651			$	20,673		0.29	%
Time deposits		3,344,434				103,245		4.13				1,106,095				3,992		0.48
Short-term borrowings		138,157				4,437		4.29				124,459				494		0.53
Other borrowings		372,094				16,756		6.02				372,027				11,780		4.23
Total interest bearing liabilities		12,985,665				252,810		2.60	%			11,255,232				36,939		0.44	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		5,092,200										6,172,984
Accrued interest and other liabilities		284,008										182,677
Total noninterest bearing liabilities		5,376,208										6,355,661
Stockholders' Equity		1,820,935										1,912,540
Total Liabilities and Stockholders' Equity	$	20,182,808									$	19,523,433
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)					$	451,597									$	439,263
Net interest spread(1)								2.50	%									3.10	%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets								3.27	%									3.27	%
Interest bearing liabilities to earning assets		70.38	%									62.64	%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	46,078			$	47,404			$	50,763			$	58,642			$	54,551
Plus core deposit and customer relationship intangibles amortization, net of tax(1)		1,284				1,354				1,413				1,455				1,466
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	47,362			$	48,758			$	52,176			$	60,097			$	56,017
Average common equity (GAAP)	$	1,746,818			$	1,727,013			$	1,655,860			$	1,548,739			$	1,674,306
Less average goodwill		576,005				576,005				576,005				576,005				576,005
Less average core deposit and customer relationship intangibles, net		20,821				22,481				24,238				26,046				27,902
Average tangible common equity (non-GAAP)	$	1,149,992			$	1,128,527			$	1,055,617			$	946,688			$	1,070,399
Annualized return on average common equity (GAAP)		10.47	%			11.01	%			12.43	%			15.02	%			12.93	%
Annualized return on average tangible common equity (non-GAAP)		16.34	%			17.33	%			20.05	%			25.19	%			20.76	%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	145,756			$	147,132			$	152,212			$	165,220			$	155,876
Plus tax-equivalent adjustment(1)		2,152				2,136				2,209				2,152				2,151
Net interest income, fully tax-equivalent (non-GAAP)	$	147,908			$	149,268			$	154,421			$	167,372			$	158,027
Average earning assets	$	18,439,010			$	18,523,552			$	18,392,649			$	18,175,838			$	18,157,795
Annualized net interest margin (GAAP)		3.14	%			3.19	%			3.36	%			3.61	%			3.41	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.18				3.23				3.40				3.65				3.45
Net purchase accounting discount amortization on loans included in annualized net interest margin		0.01				0.03				0.02				0.03				0.03

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	1,714,825			$	1,748,285				$	1,718,700			$	1,624,350			$	1,545,253
Less goodwill		576,005				576,005					576,005				576,005				576,005
Less core deposit and customer relationship intangibles, net		20,026				21,651					23,366				25,154				26,995
Tangible common equity (non-GAAP)	$	1,118,794			$	1,150,629				$	1,119,329			$	1,023,191			$	942,253
Common shares outstanding, net of treasury stock		42,656,303				42,644,544					42,558,726				42,467,394				42,444,106
Common equity (book value) per share (GAAP)	$	40.20			$	41.00				$	40.38			$	38.25			$	36.41
Tangible book value per common share (non-GAAP)	$	26.23			$	26.98				$	26.30			$	24.09			$	22.20
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,118,794			$	1,150,629				$	1,119,329			$	1,023,191			$	942,253
Total assets (GAAP)	$	20,129,793			$	20,224,716				$	20,182,544			$	20,244,228			$	19,682,950
Less goodwill		576,005				576,005					576,005				576,005				576,005
Less core deposit and customer relationship intangibles, net		20,026				21,651					23,366				25,154				26,995
Total tangible assets (non-GAAP)	$	19,533,762			$	19,627,060				$	19,583,173			$	19,643,069			$	19,079,950
Tangible common equity ratio (non-GAAP)		5.73	%			5.86	%				5.72	%			5.21	%			4.94	%
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
		9/30/2023				6/30/2023					3/31/2023				12/31/2022				9/30/2022
Reconciliation of Adjusted Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,118,794			$	1,150,629				$	1,119,329			$	1,023,191			$	942,253
Accumulated other comprehensive loss		642,838				575,240					566,919				620,006				650,636
Adjusted tangible common equity (non-GAAP)	$	1,761,632			$	1,725,869		$	—	$	1,686,248			$	1,643,197			$	1,592,889
Total tangible assets (non-GAAP)	$	19,533,762			$	19,627,060				$	19,583,173			$	19,643,069			$	19,079,950
Fair value adjustment for securities and derivatives, net of deferred taxes		642,838				575,240					566,919				620,006				650,636
Total adjusted tangible assets (non-GAAP)	$	20,176,600			$	20,202,300				$	20,150,092			$	20,263,075			$	19,730,586
Adjusted tangible common equity ratio (non-GAAP)		8.73	%			8.54	%				8.37	%			8.11	%			8.07	%

Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)
Net interest income (GAAP)	$	145,756			$	147,132			$	152,212			$	165,220			$	155,876
Tax-equivalent adjustment(1)		2,152				2,136				2,209				2,152				2,151
Fully tax-equivalent net interest income		147,908				149,268				154,421				167,372				158,027
Noninterest income (GAAP)		28,383				32,493				29,999				29,975				29,181
Securities losses, net		114				314				1,104				153				1,055
Unrealized (gain)/loss on equity securities, net		(13	)			41				(193	)			7				211
Gain on extinguishment of debt		—				—				—				—				—
Valuation adjustment on servicing rights		—				—				—				—				—
Adjusted revenue (non-GAAP)	$	176,392			$	182,116			$	185,331			$	197,507			$	188,474
Total noninterest expenses (GAAP)	$	111,053			$	109,446			$	111,043			$	117,218			$	108,883
Less:
Core deposit and customer relationship intangibles amortization		1,625				1,715				1,788				1,841				1,856
Partnership investment in tax credit projects		1,136				154				538				3,247				979
(Gain)/loss on sales/valuation of assets, net		108				(3,372	)			1,115				2,388				(251	)
Acquisition, integration and restructuring costs		2,429				1,892				1,673				2,442				2,156
Core expenses (non-GAAP)	$	105,755			$	109,057			$	105,929			$	107,300			$	104,143
Efficiency ratio (GAAP)		63.77	%			60.93	%			60.94	%			60.05	%			58.84	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		59.95	%			59.88	%			57.16	%			54.33	%			55.26	%
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)
Total noninterest expenses (GAAP)	$	111,053			$	109,446			$	111,043			$	117,218			$	108,883
Core expenses (non-GAAP)		105,755				109,057				105,929				107,300				104,143
Average assets	$	20,207,920			$	20,221,511			$	20,118,005			$	19,913,849			$	19,775,341
Total noninterest expenses to average assets (GAAP)		2.18	%			2.17	%			2.24	%			2.34	%			2.18	%
Core expenses to average assets (non-GAAP)		2.08	%			2.16	%			2.14	%			2.14	%			2.09	%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	94			$	93			$	74			$	424			$	365
Occupancy		—				—				—				—				—
Furniture and equipment		—				—				—				—				—
Professional fees		1,617				1,068				934				1,587				1,480
Advertising		178				222				122				95				131
(Gain)/loss on sales/valuations of assets, net		—				—				—				—				—
Other noninterest expenses		540				509				543				336				180
Total acquisition, integration and restructuring costs	$	2,429			$	1,892			$	1,673			$	2,442			$	2,156
After tax impact on diluted earnings per common share(1)	$	0.04			$	0.03			$	0.03			$	0.05			$	0.04
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter EndedSeptember 30,								For the Nine Months EndedSeptember 30,
		2023				2022				2023				2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	46,078			$	54,551			$	144,245			$	145,488
Plus core deposit and customer relationship intangibles amortization, net of tax(1)		1,284				1,466				4,051				4,734
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	47,362			$	56,017			$	148,296			$	150,222
Average common equity (GAAP)	$	1,746,818			$	1,674,306			$	1,710,230			$	1,801,835
Less average goodwill		576,005				576,005				576,005				576,005
Less average core deposit and customer relationship intangibles, net		20,821				27,902				22,501				29,878
Average tangible common equity (non-GAAP)	$	1,149,992			$	1,070,399			$	1,111,724			$	1,195,952
Annualized return on average common equity (GAAP)		10.47	%			12.93	%			11.28	%			10.80	%
Annualized return on average tangible common equity (non-GAAP)		16.34	%			20.76	%			17.83	%			16.79	%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	145,756			$	155,876			$	445,100			$	433,016
Plus tax-equivalent adjustment(1)		2,152				2,151				6,497				6,247
Net interest income, fully tax-equivalent (non-GAAP)	$	147,908			$	158,027			$	451,597			$	439,263
Average earning assets	$	18,439,010			$	18,157,795			$	18,451,907			$	17,969,001
Annualized net interest margin (GAAP)		3.14	%			3.41	%			3.23	%			3.22	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.18				3.45				3.27				3.27
Purchase accounting discount amortization on loans included in annualized net interest margin		0.01				0.03				0.02				0.05
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)	For the Quarter EndedSeptember 30,								For the Nine Months EndedSeptember 30,
		2023				2022				2023				2022
Net interest income (GAAP)	$	145,756			$	155,876			$	445,100			$	433,016
Tax-equivalent adjustment(1)		2,152				2,151				6,497				6,247
Fully tax-equivalent net interest income		147,908				158,027				451,597				439,263
Noninterest income (GAAP)		28,383				29,181				90,875				98,289
Securities (gains)/losses, net		114				1,055				1,532				272
Unrealized (gain)/loss on equity securities, net		(13	)			211				(165	)			615
Valuation adjustment on servicing rights		—				—				—				(1,658	)
Adjusted revenue (non-GAAP)	$	176,392			$	188,474			$	543,839			$	536,781
Total noninterest expenses (GAAP)	$	111,053			$	108,883			$	331,542			$	326,159
Less:
Core deposit and customer relationship intangibles amortization		1,625				1,856				5,128				5,993
Partnership investment in tax credit projects		1,136				979				1,828				1,793
(Gain)/loss on sales/valuation of assets, net		108				(251	)			(2,149	)			(3,435	)
Acquisition, integration and restructuring costs		2,429				2,156				5,994				5,144
Core expenses (non-GAAP)	$	105,755			$	104,143			$	320,741			$	316,664
Efficiency ratio (GAAP)		63.77	%			58.84	%			61.86	%			61.39	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		59.95	%			55.26	%			58.98	%			58.99	%
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)
Total noninterest expenses (GAAP)	$	111,053			$	108,883			$	331,542			$	326,159
Core expenses (non-GAAP)		105,755				104,143				320,741				316,664
Average assets	$	20,207,920			$	19,775,341			$	20,182,808			$	19,523,433
Total noninterest expenses to average assets (GAAP)		2.18	%			2.18	%			2.20	%			2.23	%
Core expenses to average assets (non-GAAP)		2.08	%			2.09	%			2.12	%			2.17	%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	94			$	365			$	261			$	980
Professional fees		1,617				1,480				3,619				3,495
Advertising		178				131				522				287
Other noninterest expenses		540				180				1,592				382
Total acquisition, integration and restructuring costs	$	2,429			$	2,156			$	5,994			$	5,144
After tax impact on diluted earnings per common share(1)	$	0.04			$	0.04			$	0.11			$	0.10
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

 

CONTACT:

Bryan R. McKeag

Executive Vice President

Chief Financial Officer

(563) 589-1994

BMcKeag@htlf.com