Highlights
- Quarterly net income available to common stockholders of $31.5 million in comparison with $23.3 million for the first quarter of the prior year, an increase of $8.2 million or 35%
- Diluted earnings per common share of $0.91 in comparison with $0.76 for the first quarter of the prior year, an increase of $0.15 or 20%
- Net interest margin of 4.12%, fully tax-equivalent (non-GAAP)(1) of 4.18%
- Return on average common equity of 9.56% and return on average tangible common equity (non-GAAP)(1) of 15.24%
- Tangible common equity ratio (non-GAAP)(1) of 8.60% in comparison to 7.59% at March 31, 2018
- Efficiency ratio, fully tax-equivalent (non-GAAP)(1) of 65.23% in comparison with 68.21% for the first quarter of 2018
- Completed the sale of Citizens Finance consumer loan portfolios and the sale of two branches at Wisconsin Bank & Trust
- Signed an agreement to sell mortgage servicing rights of Dubuque Bank and Trust Company on April 26, 2019
| | Three Months Ended
March 31, |
| | 2019 | | 2018 |
| Net income available to common stockholders (in millions) | $ | 31.5 | | | $ | 23.3 | |
| Diluted earnings per common share | 0.91 | | | 0.76 | |
| | | | |
| Return on average assets | 1.13 | % | | 0.97 | % |
| Return on average common equity | 9.56 | | | 9.32 | |
| Return on average tangible common equity (non-GAAP)(1) | 15.24 | | | 13.85 | |
| Net interest margin | 4.12 | | | 4.19 | |
| Net interest margin, fully tax-equivalent (non-GAAP)(1) | 4.18 | | | 4.26 | |
| Efficiency ratio, fully-tax equivalent (non-GAAP)(1) | 65.23 | | | 68.21 | |
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.
| "Heartland reported improved first quarter results with net income of $31.5 million, which was an impressive increase of $8.2 million or 35 percent over the same quarter of last year. We had a solid net interest margin and improved tangible common equity ratio." |
| Lynn B. Fuller, executive operating chairman, Heartland Financial USA, Inc. |
| |
DUBUQUE, Iowa, April 29, 2019 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $31.5 million, or $0.91 per diluted common share, for the quarter ended March 31, 2019, compared to $23.3 million, or $0.76 per diluted common share, for the first quarter of 2018. Return on average common equity was 9.56% and return on average assets was 1.13% for the first quarter of 2019, compared to 9.32% and 0.97%, respectively, for the same quarter in 2018.
Commenting on Heartland’s first quarter results, Lynn B. Fuller, Heartland’s executive operating chairman, said, "Heartland reported improved first quarter results with net income of $31.5 million, which was an impressive increase of $8.2 million or 35 percent over the same quarter of last year. We had a solid net interest margin and improved tangible common equity ratio."
In keeping with its focus on core businesses and execution of strategic priorities, Heartland completed the sale of two branch locations of Wisconsin Bank & Trust and sold the consumer finance loan portfolios totaling approximately $67 million of Citizens’ Finance Company. Furthermore, during the quarter, Heartland announced an agreement to sell two branches of Dubuque Bank and Trust Company, which resulted in the reclassification of $20.3 million of loans and $77.0 million of deposits as held for sale. This transaction, along with two previously announced branch sales at Illinois Bank & Trust and Citywide Banks, is expected to close in the second quarter of 2019. Heartland also reclassified commercial loans with balances of $11.8 million at March 31, 2019, to held for sale as part of a plan to exit a small lease portfolio.
On April 26, 2019, Dubuque Bank and Trust Company signed an agreement to sell substantially all its mortgage servicing rights to PNC Bank, N.A., headquartered in Pittsburgh, Pennsylvania. The servicing rights had an estimated fair value of $37.0 million and a book value of $21.0 million as of March 31, 2019. The portfolio contained approximately 20,300 of serviced residential mortgage loans with unpaid principal balances of $3.35 billion as of March 31, 2019. The serviced loans are primarily owned by Fannie Mae and Freddie Mac. The transaction has been approved by Fannie Mae and Freddie Mac and is expected to close on April 30, 2019. In the agreement, which includes customary terms and conditions, Dubuque Bank and Trust Company will provide interim servicing of the loans until the transfer date, which is expected to be in August 2019.
"During the fourth quarter of 2018, Heartland outsourced mortgage loan originations in many of our markets, and now, as a natural extension, we have decided to sell our mortgage servicing rights," said Bruce K. Lee, Heartland's president and chief executive officer.
After the completion of this transaction, Heartland will continue to originate and service conventional residential mortgages through its PrimeWest Mortgage Corporation subsidiary in Texas.
Net Interest Income Increases, Net Interest Margin Decreases, from First Quarter of 2018
Net interest margin, expressed as a percentage of average earning assets, was 4.12% (4.18% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2019, compared to 4.28% (4.34% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2018 and 4.19% (4.26% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2018.
"We are pleased with the continued strength of our fully tax-equivalent net interest margin. Our net interest margin declined 16 basis points from last quarter, which was in line with our expectations due to the sale of our higher yielding consumer finance loan portfolios in the beginning of 2019," Lee said.
Growth in total interest income on a tax-equivalent basis was primarily due to recent increases in market interest rates and the increase in average earning assets. Total interest income for the first quarter of 2019 was $120.7 million compared to $101.2 million recorded in the first quarter of 2018, an increase of $19.5 million or 19%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.4 million for the first quarter of 2019 and $1.5 million for the first quarter of 2018. With these adjustments, total interest income on a tax-equivalent basis was $122.1 million for the first quarter of 2019, an increase of $19.4 million or 19%, compared to total interest income on a tax-equivalent basis of $102.8 million for the first quarter of 2018. Average earning assets increased $1.27 billion or 14% from the first quarter of 2018, which was primarily attributable to the acquisitions completed in 2018. The average rate on earning assets increased 19 basis points to 4.89% for the first quarter of 2019 compared to 4.70% for the same quarter in 2018.
Increases in total interest expense were primarily due to recent increases in market interest rates and deposit growth from recent acquisitions. Total interest expense for the first quarter of 2019 was $17.8 million, an increase of $8.1 million or 84% from $9.6 million in the first quarter of 2018. The average interest rate paid on Heartland's interest bearing liabilities increased to 1.09% for the first quarter of 2019 compared to 0.69% for the first quarter of 2018, which was primarily due to recent increases in market interest rates. Average interest bearing deposits increased $889.5 million or 17% to $6.16 billion for the quarter ended March 31, 2019, from $5.27 billion in the same quarter in 2018, which was primarily attributable to recent acquisitions. The average interest rate paid on Heartland's interest bearing deposits increased 43 basis points to 0.87% for the first quarter of 2019 compared to 0.44% for the same quarter in 2018. Average borrowings increased $38.3 million or 9% to $466.2 million during the first quarter of 2019 from $427.9 million during the same quarter in 2018. The average interest rate paid on Heartland's borrowings was 3.96% for the first quarter of 2019 compared to 3.66% in the first quarter of 2018.
Net interest income was $103.0 million during the first quarter of 2019 compared to $91.6 million during the first quarter of 2018, an increase of $11.4 million or 12%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $104.4 million during the first quarter of 2019 compared to net interest income on a tax-equivalent basis of $93.1 million during the first quarter of 2018, an increase of $11.2 million or 12%.
Noninterest Income and Noninterest Expense Increase from First Quarter 2018
Total noninterest income was $26.7 million during the first quarter of 2019 compared to $24.7 million during the first quarter of 2018, an increase of $2.0 million or 8%. Significant changes by noninterest income category were:
- Service charges and fees increased $2.7 million or 27% to $12.8 million for the first quarter of 2019 compared to $10.1 million for the same quarter of 2018. Service charges related to credit card income increased $1.1 million or 48% to $3.3 million for the first quarter of 2019 from $2.3 million for the same quarter of 2018. The remainder of the increase in service charges was primarily attributable to Heartland's larger customer base as a result of recent acquisitions.
- Net gains on sale of loans held for sale totaled $3.2 million during the first quarter of 2019 compared to $4.1 million during the same quarter in 2018, which was a decrease of $875,000 or 22%, primarily due to the outsourcing of Heartland's legacy mortgage lending operations in the fourth quarter of 2018.
For the first quarter of 2019, total noninterest expense was $88.2 million compared to $83.6 million during the first quarter of 2018, an increase of $4.6 million or 5%. Significant changes by noninterest expense category were:
- Salaries and employee benefits increased $1.6 million or 3% to $50.3 million for the first quarter of 2019 compared to $48.7 million for the same quarter in 2018.
- Professional fees increased $1.9 million or 20% to $11.4 million for the first quarter of 2019 compared to $9.4 million for the same period in 2018.
- Core deposit and customer relationship intangibles amortization increased $979,000 to $2.8 million for the first quarter of 2019 compared to $1.9 million for the first quarter of 2018, which was partially due to the write-off of $329,000 of core deposit intangibles related to the branch sales at Wisconsin Bank & Trust.
- Gains on sales/valuations of assets, net, totaled $3.0 million and $197,000 for the first quarter of 2019 and 2018, respectively, with the increase of $2.8 million primarily attributable to the sale of the Wisconsin Bank & Trust branches.
- Restructuring expenses totaled $3.2 million for the first quarter of 2019 compared to $2.6 million during the first quarter of 2018, which was an increase of $663,000 or 26%. Restructuring expenses in the first quarter of 2019 related to the wind down of Citizens' Finance Company and the legacy mortgage lending operations and consisted of severance and retention payments for employees, software discontinuation fees and expected lease buyouts.
- Other noninterest expenses were $11.2 million for the first quarter of 2019 compared to $9.8 million for the first quarter of 2018, which was an increase of $1.4 million or 14%. Included in this increase was a write-down of $475,000 on a partnership investment that qualifies for solar energy tax credits.
The increases in salaries and employee benefits, professional fees, and the remainder of the increases in core deposit and customer relationship intangibles amortization and other noninterest expenses were primarily attributable to recent acquisitions.
Heartland's effective tax rate was 20.88% for the first quarter of 2019 compared to 18.04% for the first quarter of 2018. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $281,000 for the first quarter of 2019 compared to $307,000 for the first quarter of 2018. Included in Heartland's first quarter 2019 tax calculation was a solar energy tax credit totaling $314,000. Tax-exempt interest income as a percentage of pre-tax income declined to 13.35% during the first quarter of 2019 from 20.46% during the first quarter of 2018.
Loans and Deposits Decrease Since December 31, 2018
Total assets were $11.31 billion at March 31, 2019, a decrease of $95.5 million or 1% from $11.41 billion at year-end 2018. Securities represented 22% and 24% of total assets at March 31, 2019, and December 31, 2018, respectively.
Total loans held to maturity were $7.33 billion at March 31, 2019, compared to $7.41 billion at year-end 2018, a decrease of $76.2 million or 1%. During the first quarter of 2019, the sale of two branches at Dubuque Bank and Trust Company was announced, which included $20.3 million of loans that were classified as held for sale at March 31, 2019. Heartland also reclassified commercial loans with balances of $11.8 million at March 31, 2019, to held for sale as part of a plan to exit a small lease portfolio. Exclusive of these transactions, total loans held to maturity decreased $44.0 million or less than 1% since year-end 2018. Loan changes by category were:
- Commercial and commercial real estate loans totaled $5.75 billion at March 31, 2019, compared to $5.73 billion at December 31, 2018, which was an increase of $13.3 million or less than 1%. Excluding $14.9 million of commercial and commercial real estate loans classified as held for sale during the quarter, commercial and commercial real estate loans increased $28.2 million or less than 1% since year-end.
- Agricultural and agricultural real estate loans totaled $544.8 million at March 31, 2019, compared to $565.4 million at year-end, which was a decrease of $20.6 million or 4%. Excluding $6.6 million of agricultural and agricultural real estate loans classified as held for sale during the quarter, agricultural and agricultural real estate loans decreased $14.0 million or 2% since December 31, 2018.
- Residential mortgage loans decreased $43.2 million or 6% to $630.4 million at March 31, 2019, from $673.6 million at year-end. Excluding $2.0 million of residential mortgage loans classified as held for sale during the quarter, residential mortgage loans decreased $41.2 million or 6% since year-end.
- Consumer loans decreased $27.6 million or 6% to $412.6 million at March 31, 2019, compared to $440.2 million at December 31, 2018. Excluding $8.6 million of loans classified as held for sale during the quarter, consumer loans decreased $19.0 million or 4% since year-end.
"We continued to see commercial and commercial real estate loan growth this quarter. The decreases in the residential mortgage and consumer loans were primarily the result of customers refinancing loans due to recent mortgage interest rate decreases," said Lee.
Total deposits were $9.35 billion as of March 31, 2019, compared to $9.40 billion at year-end 2018, a decrease of $43.5 million or less than 1%. The deposits classified as held for sale in conjunction with the branch sale announced at Dubuque Bank and Trust Company totaled $77.0 million at March 31, 2019. Excluding deposits classified as held for sale during the quarter, total deposits increased $33.5 million or less than 1% since December 31, 2018. Deposit changes by category were:
- Demand deposits decreased $145.8 million or 4% to $3.12 billion at March 31, 2019, compared to $3.26 billion at December 31, 2018. Excluding $17.3 million of demand deposits classified as held for sale during the quarter, demand deposits decreased $128.6 million or 4% since year-end 2018.
- Savings deposits increased $38.0 million or 1% to $5.15 billion at March 31, 2019, from $5.11 billion at December 31, 2018. Excluding savings deposits of $47.8 million classified as held for sale during the quarter, savings deposits increased $85.8 million or 2% since year-end 2018.
- Time deposits increased $64.4 million or 6% to $1.09 billion at March 31, 2019 from $1.02 billion at December 31, 2018. Excluding time deposits of $11.9 million classified as held for sale during the quarter, time deposits increased $76.2 million or 7% since year-end 2018.
"Demand deposit balances declined during the first quarter, primarily due to commercial and public fund outflows, which tend to be seasonal. However, non-time deposits represent a healthy 88 percent of total deposits at March 31, 2019," Lee stated.
Nonperforming Assets Increase Since December 31, 2018
Nonperforming assets increased $5.1 million or 6% to $84.4 million or 0.75% of total assets at March 31, 2019, compared to $79.3 million or 0.69% of total assets at December 31, 2018. Nonperforming loans were $79.0 million or 1.08% of total loans at March 31, 2019, compared to $72.7 million or 0.98% of total loans at December 31, 2018. The increase is primarily related to two agribusiness relationships that were originated in Heartland's Midwestern markets. At March 31, 2019, loans delinquent 30-89 days were 0.47% of total loans compared to 0.21% of total loans at December 31, 2018.
The allowance for loan losses at March 31, 2019, was 0.85% of loans and 79.29% of nonperforming loans, compared to 0.84% of loans and 85.27% of nonperforming loans at December 31, 2018. The provision for loan losses decreased $2.6 million to $1.6 million for the first quarter of 2019 compared to $4.3 million for the same quarter in 2018.
Non-GAAP Financial Measures
This press release contains references to financial measures which are not defined by generally accepted accounting principles ("GAAP"). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate Heartland's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this press release with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this press release.
Below are the non-GAAP measures included in this press release, management's reason for including each measure and the method of calculating each measure:
- Annualized return on average common tangible equity is net income available to common stockholders plus core deposit and customer relationship intangibles amortization, net of tax, divided by average common stockholders' 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 financial condition and capital strength.
- Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
- Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this press release.
- Tangible book value per common share is total common stockholders' 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 stockholders' 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 use of equity, financial condition and capital strength.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until April 28, 2020, by logging on to www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company with assets of $11.3 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 116 banking locations serving 84 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war; (iii) changes in state and federal laws, regulations and governmental policies as they impact the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions and Heartland's ability to successfully integrate acquired banks; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW-
| |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | For the Three Months Ended
March 31, |
| | 2019 | | 2018 |
| Interest Income | | | |
| Interest and fees on loans | $ | 100,456 | | | $ | 85,651 | |
| Interest on securities: | | | |
| Taxable | 15,876 | | | 11,577 | |
| Nontaxable | 3,093 | | | 3,579 | |
| Interest on federal funds sold | 4 | | | — | |
Interest on deposits with other banks and other short-term investments
| 1,292 | | | 407 | |
| Total Interest Income | 120,721 | | | 101,214 | |
| Interest Expense | | | |
| Interest on deposits | 13,213 | | | 5,766 | |
| Interest on short-term borrowings | 889 | | | 268 | |
| Interest on other borrowings | 3,664 | | | 3,596 | |
| Total Interest Expense | 17,766 | | | 9,630 | |
| Net Interest Income | 102,955 | | | 91,584 | |
| Provision for loan losses | 1,635 | | | 4,263 | |
| Net Interest Income After Provision for Loan Losses | 101,320 | | | 87,321 | |
| Noninterest Income | | | |
| Service charges and fees | 12,794 | | | 10,079 | |
| Loan servicing income | 1,729 | | | 1,754 | |
| Trust fees | 4,474 | | | 4,680 | |
| Brokerage and insurance commissions | 734 | | | 907 | |
| Securities gains/(losses), net | 1,575 | | | 1,441 | |
| Unrealized gain/(loss) on equity securities, net | 258 | | | (28 | ) |
| Net gains on sale of loans held for sale | 3,176 | | | 4,051 | |
| Valuation adjustment on servicing rights | (589 | ) | | (2 | ) |
| Income on bank owned life insurance | 899 | | | 614 | |
| Other noninterest income | 1,667 | | | 1,220 | |
| Total Noninterest Income | 26,717 | | | 24,716 | |
| Noninterest Expense | | | |
| Salaries and employee benefits | 50,285 | | | 48,710 | |
| Occupancy | 6,607 | | | 6,043 | |
| Furniture and equipment | 2,692 | | | 2,749 | |
| Professional fees | 11,379 | | | 9,448 | |
| Advertising | 2,325 | | | 1,940 | |
| Core deposit and customer relationship intangibles amortization | 2,842 | | | 1,863 | |
| Other real estate and loan collection expenses | 701 | | | 732 | |
| (Gain)/loss on sales/valuations of assets, net | (3,004 | ) | | (197 | ) |
| Restructuring expenses | 3,227 | | | 2,564 | |
| Other noninterest expenses | 11,176 | | | 9,794 | |
| Total Noninterest Expense | 88,230 | | | 83,646 | |
| Income Before Income Taxes | 39,807 | | | 28,391 | |
| Income taxes | 8,310 | | | 5,123 | |
| Net Income | 31,497 | | | 23,268 | |
| Preferred dividends | — | | | (13 | ) |
| Net Income Available to Common Stockholders | $ | 31,497 | | | $ | 23,255 | |
| Earnings per common share-diluted | $ | 0.91 | | | $ | 0.76 | |
| Weighted average shares outstanding-diluted | 34,699,839 | | | 30,645,212 | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | For the Quarter Ended |
| | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 |
| Interest Income | | | | | | | | | |
| Interest and fees on loans | $ | 100,456 | | | $ | 105,700 | | | $ | 105,733 | | | $ | 96,787 | | | $ | 85,651 | |
| Interest on securities: | | | | | | | | | |
| Taxable | 15,876 | | | 15,851 | | | 14,433 | | | 12,270 | | | 11,577 | |
| Nontaxable | 3,093 | | | 3,467 | | | 3,490 | | | 3,584 | | | 3,579 | |
| Interest on federal funds sold | 4 | | | — | | | — | | | — | | | — | |
| Interest on deposits with other banks and other short-term investments | 1,292 | | | 1,285 | | | 1,238 | | | 768 | | | 407 | |
| Total Interest Income | 120,721 | | | 126,303 | | | 124,894 | | | 113,409 | | | 101,214 | |
| Interest Expense | | | | | | | | | |
| Interest on deposits | 13,213 | | | 11,826 | | | 10,092 | | | 7,983 | | | 5,766 | |
| Interest on short-term borrowings | 889 | | | 417 | | | 464 | | | 547 | | | 268 | |
| Interest on other borrowings | 3,664 | | | 3,777 | | | 3,660 | | | 3,470 | | | 3,596 | |
| Total Interest Expense | 17,766 | | | 16,020 | | | 14,216 | | | 12,000 | | | 9,630 | |
| Net Interest Income | 102,955 | | | 110,283 | | | 110,678 | | | 101,409 | | | 91,584 | |
| Provision for loan losses | 1,635 | | | 9,681 | | | 5,238 | | | 4,831 | | | 4,263 | |
| Net Interest Income After Provision for Loan Losses | 101,320 | | | 100,602 | | | 105,440 | | | 96,578 | | | 87,321 | |
| Noninterest Income | | | | | | | | | |
| Service charges and fees | 12,794 | | | 13,660 | | | 12,895 | | | 12,072 | | | 10,079 | |
| Loan servicing income | 1,729 | | | 2,061 | | | 1,670 | | | 1,807 | | | 1,754 | |
| Trust fees | 4,474 | | | 4,599 | | | 4,499 | | | 4,615 | | | 4,680 | |
| Brokerage and insurance commissions | 734 | | | 1,618 | | | 1,111 | | | 877 | | | 907 | |
| Securities gains/(losses), net | 1,575 | | | 48 | | | (145 | ) | | (259 | ) | | 1,441 | |
| Unrealized gain/(loss) on equity securities, net | 258 | | | 115 | | | 54 | | | 71 | | | (28 | ) |
| Net gains on sale of loans held for sale | 3,176 | | | 3,189 | | | 7,410 | | | 6,800 | | | 4,051 | |
| Valuation adjustment on servicing rights | (589 | ) | | (58 | ) | | 230 | | | (216 | ) | | (2 | ) |
| Income on bank owned life insurance | 899 | | | 587 | | | 892 | | | 700 | | | 614 | |
| Other noninterest income | 1,667 | | | 1,226 | | | 1,149 | | | 1,167 | | | 1,220 | |
| Total Noninterest Income | 26,717 | | | 27,045 | | | 29,765 | | | 27,634 | | | 24,716 | |
| Noninterest Expense | | | | | | | | | |
| Salaries and employee benefits | 50,285 | | | 46,729 | | | 49,921 | | | 50,758 | | | 48,710 | |
| Occupancy | 6,607 | | | 6,622 | | | 6,348 | | | 6,315 | | | 6,043 | |
| Furniture and equipment | 2,692 | | | 3,126 | | | 3,470 | | | 3,184 | | | 2,749 | |
| Professional fees | 11,379 | | | 10,630 | | | 12,800 | | | 10,632 | | | 9,448 | |
| Advertising | 2,325 | | | 2,726 | | | 2,754 | | | 2,145 | | | 1,940 | |
| Core deposit and customer relationship intangibles amortization | 2,842 | | | 2,592 | | | 2,626 | | | 2,274 | | | 1,863 | |
| Other real estate and loan collection expenses | 701 | | | 574 | | | 784 | | | 948 | | | 732 | |
| (Gain)/loss on sales/valuations of assets, net | (3,004 | ) | | (35 | ) | | 912 | | | 1,528 | | | (197 | ) |
| Restructuring expenses | 3,227 | | | — | | | — | | | — | | | 2,564 | |
| Other noninterest expenses | 11,176 | | | 15,857 | | | 12,924 | | | 11,098 | | | 9,794 | |
| Total Noninterest Expense | 88,230 | | | 88,821 | | | 92,539 | | | 88,882 | | | 83,646 | |
| Income Before Income Taxes | 39,807 | | | 38,826 | | | 42,666 | | | 35,330 | | | 28,391 | |
| Income taxes | 8,310 | | | 6,685 | | | 8,956 | | | 7,451 | | | 5,123 | |
| Net Income | 31,497 | | | 32,141 | | | 33,710 | | | 27,879 | | | 23,268 | |
| Preferred dividends | — | | | — | | | (13 | ) | | (13 | ) | | (13 | ) |
| Net Income Available to Common Stockholders | $ | 31,497 | | | $ | 32,141 | | | $ | 33,697 | | | $ | 27,866 | | | $ | 23,255 | |
| Earnings per common share-diluted | $ | 0.91 | | | $ | 0.93 | | | $ | 0.97 | | | $ | 0.85 | | | $ | 0.76 | |
| Weighted average shares outstanding-diluted | 34,699,839 | | | 34,670,180 | | | 34,644,187 | | | 32,830,751 | | | 30,645,212 | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | As of |
| | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 |
| Assets | | | | | | | | | |
| Cash and due from banks | $ | 174,198 | | | $ | 223,135 | | | $ | 196,847 | | | $ | 193,069 | | | $ | 143,071 | |
| Interest bearing deposits with other banks and other short-term investments | 318,303 | | | 50,495 | | | 240,528 | | | 194,937 | | | 123,275 | |
| Cash and cash equivalents | 492,501 | | | 273,630 | | | 437,375 | | | 388,006 | | | 266,346 | |
| Time deposits in other financial institutions | 4,675 | | | 4,672 | | | 5,836 | | | 6,803 | | | 6,297 | |
| Securities: | | | | | | | | | |
| Carried at fair value | 2,400,460 | | | 2,450,709 | | | 2,274,215 | | | 2,197,117 | | | 2,027,665 | |
| Held to maturity, at cost | 88,089 | | | 236,283 | | | 239,908 | | | 244,271 | | | 249,766 | |
| Other investments, at cost | 27,506 | | | 28,396 | | | 26,656 | | | 26,725 | | | 22,982 | |
| Loans held for sale | 69,716 | | | 119,801 | | | 77,727 | | | 55,684 | | | 24,376 | |
| Loans: | | | | | | | | | |
| Held to maturity | 7,331,544 | | | 7,407,697 | | | 7,365,493 | | | 7,477,697 | | | 6,746,015 | |
| Allowance for loan losses | (62,639 | ) | | (61,963 | ) | | (61,221 | ) | | (61,324 | ) | | (58,656 | ) |
| Loans, net | 7,268,905 | | | 7,345,734 | | | 7,304,272 | | | 7,416,373 | | | 6,687,359 | |
| Premises, furniture and equipment, net | 190,215 | | | 194,676 | | | 198,224 | | | 199,959 | | | 172,862 | |
| Goodwill | 391,668 | | | 391,668 | | | 391,668 | | | 391,668 | | | 270,305 | |
| Core deposit and customer relationship intangibles, net | 44,637 | | | 47,479 | | | 50,071 | | | 52,698 | | | 41,063 | |
| Servicing rights, net | 28,968 | | | 31,072 | | | 32,039 | | | 31,996 | | | 25,471 | |
| Cash surrender value on life insurance | 163,764 | | | 162,892 | | | 162,216 | | | 159,302 | | | 143,444 | |
| Other real estate, net | 5,391 | | | 6,153 | | | 11,908 | | | 11,074 | | | 11,801 | |
| Other assets | 136,000 | | | 114,841 | | | 123,017 | | | 120,244 | | | 106,126 | |
| Total Assets | $ | 11,312,495 | | | $ | 11,408,006 | | | $ | 11,335,132 | | | $ | 11,301,920 | | | $ | 10,055,863 | |
| Liabilities and Equity | | | | | | | | | |
| Liabilities | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Demand | $ | 3,118,909 | | | $ | 3,264,737 | | | $ | 3,427,819 | | | $ | 3,399,598 | | | $ | 3,094,457 | |
| Savings | 5,145,929 | | | 5,107,962 | | | 4,958,430 | | | 4,864,773 | | | 4,536,106 | |
| Time | 1,088,104 | | | 1,023,730 | | | 1,125,914 | | | 1,224,773 | | | 910,977 | |
| Total deposits | 9,352,942 | | | 9,396,429 | | | 9,512,163 | | | 9,489,144 | | | 8,541,540 | |
| Deposits held for sale | 118,564 | | | 106,409 | | | 50,312 | | | — | | | — | |
| Short-term borrowings | 104,314 | | | 227,010 | | | 131,139 | | | 229,890 | | | 131,240 | |
| Other borrowings | 268,312 | | | 274,905 | | | 277,563 | | | 258,708 | | | 276,118 | |
| Accrued expenses and other liabilities | 96,261 | | | 78,078 | | | 83,562 | | | 68,431 | | | 55,460 | |
| Total Liabilities | 9,940,393 | | | 10,082,831 | | | 10,054,739 | | | 10,046,173 | | | 9,004,358 | |
| Stockholders' Equity | | | | | | | | | |
| Preferred equity | — | | | — | | | — | | | 938 | | | 938 | |
| Common stock | 34,604 | | | 34,477 | | | 34,473 | | | 34,438 | | | 31,068 | |
| Capital surplus | 745,596 | | | 743,095 | | | 742,080 | | | 740,128 | | | 557,990 | |
| Retained earnings | 603,506 | | | 579,252 | | | 553,662 | | | 524,786 | | | 500,959 | |
| Accumulated other comprehensive loss | (11,604 | ) | | (31,649 | ) | | (49,822 | ) | | (44,543 | ) | | (39,450 | ) |
| Total Equity | 1,372,102 | | | 1,325,175 | | | 1,280,393 | | | 1,255,747 | | | 1,051,505 | |
| Total Liabilities and Equity | $ | 11,312,495 | | | $ | 11,408,006 | | | $ | 11,335,132 | | | $ | 11,301,920 | | | $ | 10,055,863 | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | For the Quarter Ended |
| | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 |
| Average Balances | | | | | | | | | |
| Assets | $ | 11,267,214 | | | $ | 11,371,247 | | | $ | 11,291,289 | | | $ | 10,643,306 | | | $ | 9,759,936 | |
| Loans, net of unearned | 7,412,855 | | | 7,436,497 | | | 7,462,176 | | | 7,123,182 | | | 6,525,553 | |
| Deposits | 9,356,204 | | | 9,596,807 | | | 9,530,743 | | | 9,018,945 | | | 8,251,140 | |
| Earning assets | 10,129,957 | | | 10,225,409 | | | 10,154,591 | | | 9,614,800 | | | 8,857,801 | |
| Interest bearing liabilities | 6,622,149 | | | 6,557,185 | | | 6,544,949 | | | 6,205,187 | | | 5,694,337 | |
| Common stockholders' equity | 1,336,250 | | | 1,290,691 | | | 1,263,226 | | | 1,139,876 | | | 1,011,580 | |
| Total stockholders' equity | 1,336,250 | | | 1,290,691 | | | 1,263,795 | | | 1,140,814 | | | 1,012,518 | |
| Tangible common stockholders' equity (non-GAAP) | 898,092 | | | 849,851 | | | 819,966 | | | 767,732 | | | 723,898 | |
| | | | | | | | | | |
| Key Performance Ratios | | | | | | | | | |
| Annualized return on average assets | 1.13 | % | | 1.12 | % | | 1.18 | % | | 1.05 | % | | 0.97 | % |
| Annualized return on average common equity (GAAP) | 9.56 | % | | 9.88 | % | | 10.58 | % | | 9.81 | % | | 9.32 | % |
Annualized return on average tangible common
equity (non-GAAP)(1) | 15.24 | % | | 15.96 | % | | 17.31 | % | | 15.50 | % | | 13.85 | % |
| Annualized ratio of net charge-offs to average loans | 0.05 | % | | 0.48 | % | | 0.28 | % | | 0.12 | % | | 0.08 | % |
| Annualized net interest margin (GAAP) | 4.12 | % | | 4.28 | % | | 4.32 | % | | 4.23 | % | | 4.19 | % |
| Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 4.18 | % | | 4.34 | % | | 4.38 | % | | 4.30 | % | | 4.26 | % |
| Efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 65.23 | % | | 59.35 | % | | 62.51 | % | | 64.94 | % | | 68.21 | % |
| | | | | | | | | | |
| Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | | | | | | | | | |
| Net income available to common shareholders (GAAP) | $ | 31,497 | | | $ | 32,141 | | | $ | 33,697 | | | $ | 27,866 | | | $ | 23,255 | |
| Plus core deposit and customer relationship intangibles amortization, net of tax(2) | 2,245 | | | 2,048 | | | 2,075 | | | 1,796 | | | 1,472 | |
| Adjusted net income available to common shareholders (non-GAAP) | $ | 33,742 | | | $ | 34,189 | | | $ | 35,772 | | | $ | 29,662 | | | $ | 24,727 | |
| | | | | | | | | | |
| Average common stockholders' equity (GAAP) | $ | 1,336,250 | | | $ | 1,290,691 | | | $ | 1,263,226 | | | $ | 1,139,876 | | | $ | 1,011,580 | |
| Less average goodwill | 391,668 | | | 391,668 | | | 391,668 | | | 325,781 | | | 250,172 | |
| Less average core deposit and customer relationship intangibles, net | 46,490 | | | 49,172 | | | 51,592 | | | 46,363 | | | 37,510 | |
| Average tangible common stockholders' equity (non-GAAP) | $ | 898,092 | | | $ | 849,851 | | | $ | 819,966 | | | $ | 767,732 | | | $ | 723,898 | |
| Annualized return on average common equity (GAAP) | 9.56 | % | | 9.88 | % | | 10.58 | % | | 9.81 | % | | 9.32 | % |
| Annualized return on average tangible common equity (non-GAAP) | 15.24 | % | | 15.96 | % | | 17.31 | % | | 15.50 | % | | 13.85 | % |
| | | | | | | | | | |
| Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | | | | | | | | | |
| Net Interest Income (GAAP) | $ | 102,955 | | | $ | 110,283 | | | $ | 110,678 | | | $ | 101,409 | | | $ | 91,584 | |
| Plus tax-equivalent adjustment(2) | 1,412 | | | 1,565 | | | 1,544 | | | 1,575 | | | 1,544 | |
| Net interest income, fully tax-equivalent (non-GAAP) | $ | 104,367 | | | $ | 111,848 | | | $ | 112,222 | | | $ | 102,984 | | | $ | 93,128 | |
| | | | | | | | | | |
| Average earning assets | $ | 10,129,957 | | | $ | 10,225,409 | | | $ | 10,154,591 | | | $ | 9,614,800 | | | $ | 8,857,801 | |
| | | | | | | | | | |
| Annualized net interest margin (GAAP) | 4.12 | % | | 4.28 | % | | 4.32 | % | | 4.23 | % | | 4.19 | % |
| Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.18 | % | | 4.34 | % | | 4.38 | % | | 4.30 | % | | 4.26 | % |
| |
| (1) Refer to the "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) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
| |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
| | |
| | For the Quarter Ended | |
| Reconciliation of Efficiency Ratio (non-GAAP) | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 | |
| Net interest income | $ | 102,955 | | | $ | 110,283 | | | $ | 110,678 | | | $ | 101,409 | | | $ | 91,584 | | |
| Tax-equivalent adjustment(1) | 1,412 | | | 1,565 | | | 1,544 | | | 1,575 | | | 1,544 | | |
| Fully tax-equivalent net interest income | 104,367 | | | 111,848 | | | 112,222 | | | 102,984 | | | 93,128 | | |
| Noninterest income | 26,717 | | | 27,045 | | | 29,765 | | | 27,634 | | | 24,716 | | |
| Securities (gains)/losses, net | (1,575 | ) | | (48 | ) | | 145 | | | 259 | | | (1,441 | ) | |
| Unrealized (gain)/loss on equity securities, net | (258 | ) | | (115 | ) | | (54 | ) | | (71 | ) | | 28 | | |
| Valuation adjustment on servicing rights | 589 | | | 58 | | | (230 | ) | | 216 | | | 2 | | |
| Adjusted income | $ | 129,840 | | | $ | 138,788 | | | $ | 141,848 | | | $ | 131,022 | | | $ | 116,433 | | |
| | | | | | | | | | | |
| Total noninterest expenses | $ | 88,230 | | | $ | 88,821 | | | $ | 92,539 | | | $ | 88,882 | | | $ | 83,646 | | |
| Less: | | | | | | | | | | |
| Core deposit and customer relationship intangibles amortization | 2,842 | | | 2,592 | | | 2,626 | | | 2,274 | | | 1,863 | | |
| Partnership investment in tax credit projects | 475 | | | 3,895 | | | 338 | | | — | | | — | | |
| (Gain)/loss on sales/valuation of assets, net | (3,004 | ) | | (35 | ) | | 912 | | | 1,528 | | | (197 | ) | |
| Restructuring expenses | 3,227 | | | — | | | — | | | — | | | 2,564 | | |
| Adjusted noninterest expenses | $ | 84,690 | | | $ | 82,369 | | | $ | 88,663 | | | $ | 85,080 | | | $ | 79,416 | | |
| | | | | | | | | | | |
| Efficiency ratio, fully tax-equivalent (non-GAAP) | 65.23 | % | | 59.35 | % | | 62.51 | % | | 64.94 | % | | 68.21 | % | |
| | | | | | | | | | | |
| (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 AND FULL TIME EQUIVALENT EMPLOYEE DATA |
| | As of and for the Quarter Ended |
| | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 |
| Common Share Data | | | | | | | | | |
| Book value per common share | $ | 39.65 | | | $ | 38.44 | | | $ | 37.14 | | | $ | 36.44 | | | $ | 33.81 | |
| Tangible book value per common share (non-GAAP)(1) | $ | 27.04 | | | $ | 25.70 | | | $ | 24.33 | | | $ | 23.53 | | | $ | 23.79 | |
| Common shares outstanding, net of treasury stock | 34,603,611 | | | 34,477,499 | | | 34,473,029 | | | 34,438,445 | | | 31,068,239 | |
| Tangible common equity ratio (non-GAAP)(1) | 8.60 | % | | 8.08 | % | | 7.70 | % | | 7.46 | % | | 7.59 | % |
| | | | | | | | | | |
| Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | | | | | | | | | |
| Common stockholders' equity (GAAP) | $ | 1,372,102 | | | $ | 1,325,175 | | | $ | 1,280,393 | | | $ | 1,254,809 | | | $ | 1,050,567 | |
| Less goodwill | 391,668 | | | 391,668 | | | 391,668 | | | 391,668 | | | 270,305 | |
| Less core deposit and customer relationship intangibles, net | 44,637 | | | 47,479 | | | 50,071 | | | 52,698 | | | 41,063 | |
| Tangible common stockholders' equity (non-GAAP) | $ | 935,797 | | | $ | 886,028 | | | $ | 838,654 | | | $ | 810,443 | | | $ | 739,199 | |
| | | | | | | | | | |
| Common shares outstanding, net of treasury stock | 34,603,611 | | | 34,477,499 | | | 34,473,029 | | | 34,438,445 | | | 31,068,239 | |
| Common stockholders' equity (book value) per share (GAAP) | $ | 39.65 | | | $ | 38.44 | | | $ | 37.14 | | | $ | 36.44 | | | $ | 33.81 | |
| Tangible book value per common share (non-GAAP) | $ | 27.04 | | | $ | 25.70 | | | $ | 24.33 | | | $ | 23.53 | | | $ | 23.79 | |
| | | | | | | | | | |
| Reconciliation of Tangible Common Equity Ratio (non-GAAP) | | | | | | | | | |
| Tangible common stockholders' equity (non-GAAP) | $ | 935,797 | | | $ | 886,028 | | | $ | 838,654 | | | $ | 810,443 | | | $ | 739,199 | |
| | | | | | | | | | |
| Total assets (GAAP) | $ | 11,312,495 | | | $ | 11,408,006 | | | $ | 11,335,132 | | | $ | 11,301,920 | | | $ | 10,055,863 | |
| Less goodwill | 391,668 | | | 391,668 | | | 391,668 | | | 391,668 | | | 270,305 | |
| Less core deposit and customer relationship intangibles, net | 44,637 | | | 47,479 | | | 50,071 | | | 52,698 | | | 41,063 | |
| Total tangible assets (non-GAAP) | $ | 10,876,190 | | | $ | 10,968,859 | | | $ | 10,893,393 | | | $ | 10,857,554 | | | $ | 9,744,495 | |
| Tangible common equity ratio (non-GAAP) | 8.60 | % | | 8.08 | % | | 7.70 | % | | 7.46 | % | | 7.59 | % |
| | | | | | | | | | |
| Loan Data | | | | | | | | | |
| Loans held to maturity: | | | | | | | | | |
| Commercial and commercial real estate | $ | 5,745,051 | | | $ | 5,731,712 | | | $ | 5,610,953 | | | $ | 5,721,138 | | | $ | 5,129,777 | |
| Residential mortgage | 630,433 | | | 673,603 | | | 676,941 | | | 683,051 | | | 624,725 | |
| Agricultural and agricultural real estate | 544,805 | | | 565,408 | | | 574,048 | | | 562,353 | | | 518,386 | |
| Consumer | 412,573 | | | 440,158 | | | 506,181 | | | 512,899 | | | 474,929 | |
| Unearned discount and deferred loan fees | (1,318 | ) | | (3,184 | ) | | (2,630 | ) | | (1,744 | ) | | (1,802 | ) |
| Total loans held to maturity | $ | 7,331,544 | | | $ | 7,407,697 | | | $ | 7,365,493 | | | $ | 7,477,697 | | | $ | 6,746,015 | |
| | | | | | | | | | |
| Other Selected Trend Information | | | | | | | | | |
| Effective tax rate | 20.88 | % | | 17.22 | % | | 20.99 | % | | 21.09 | % | | 18.04 | % |
| Full time equivalent employees | 1,976 | | | 2,045 | | | 2,124 | | | 2,216 | | | 2,022 | |
| | | | | | | | | | |
| (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 |
| | 3/31/2019 | | 12/31/2018 | | 9/30/2018 | | 6/30/2018 | | 3/31/2018 |
| Allowance for Loan Losses | | | | | | | | | |
| Balance, beginning of period | $ | 61,963 | | | $ | 61,221 | | | $ | 61,324 | | | $ | 58,656 | | | $ | 55,686 | |
| Provision for loan losses | 1,635 | | | 9,681 | | | 5,238 | | | 4,831 | | | 4,263 | |
| Charge-offs | (1,950 | ) | | (9,777 | ) | | (6,120 | ) | | (3,164 | ) | | (2,224 | ) |
| Recoveries | 991 | | | 838 | | | 779 | | | 1,001 | | | 931 | |
| Balance, end of period | $ | 62,639 | | | $ | 61,963 | | | $ | 61,221 | | | $ | 61,324 | | | $ | 58,656 | |
| | | | | | | | | | |
| Asset Quality | | | | | | | | | |
| Nonaccrual loans | $ | 77,294 | | | $ | 71,943 | | | $ | 73,060 | | | $ | 69,376 | | | $ | 64,806 | |
| Loans past due ninety days or more | 1,706 | | | 726 | | | 154 | | | 54 | | | 22 | |
| Other real estate owned | 5,391 | | | 6,153 | | | 11,908 | | | 11,074 | | | 11,801 | |
| Other repossessed assets | 8 | | | 459 | | | 495 | | | 499 | | | 423 | |
| Total nonperforming assets | $ | 84,399 | | | $ | 79,281 | | | $ | 85,617 | | | $ | 81,003 | | | $ | 77,052 | |
| | | | | | | | | | |
| Performing troubled debt restructured loans | $ | 3,460 | | | $ | 4,026 | | | $ | 4,180 | | | $ | 4,012 | | | $ | 3,206 | |
| | | | | | | | | | |
| Nonperforming Assets Activity | | | | | | | | | |
| Balance, beginning of period | $ | 79,281 | | | $ | 85,617 | | | $ | 81,003 | | | $ | 77,052 | | | $ | 74,599 | |
| Net loan charge offs | (959 | ) | | (8,939 | ) | | (5,341 | ) | | (2,163 | ) | | (1,293 | ) |
| New nonperforming loans | 15,314 | | | 17,332 | | | 16,965 | | | 16,254 | | | 8,546 | |
| Acquired nonperforming assets | — | | | — | | | — | | | 7,973 | | | 2,459 | |
| Reduction of nonperforming loans(1) | (6,238 | ) | | (6,065 | ) | | (5,085 | ) | | (15,696 | ) | | (6,549 | ) |
| OREO/Repossessed assets sales proceeds | (2,092 | ) | | (8,390 | ) | | (1,064 | ) | | (1,541 | ) | | (657 | ) |
| OREO/Repossessed assets writedowns, net | (462 | ) | | (230 | ) | | (886 | ) | | (993 | ) | | (16 | ) |
| Net activity at Citizens Finance Co. | (445 | ) | | (44 | ) | | 25 | | | 117 | | | (37 | ) |
| Balance, end of period | $ | 84,399 | | | $ | 79,281 | | | $ | 85,617 | | | $ | 81,003 | | | $ | 77,052 | |
| |
| Asset Quality Ratios | | | | | | | | | |
| Ratio of nonperforming loans to total loans | 1.08 | % | | 0.98 | % | | 0.99 | % | | 0.93 | % | | 0.96 | % |
| Ratio of nonperforming assets to total assets | 0.75 | % | | 0.69 | % | | 0.76 | % | | 0.72 | % | | 0.77 | % |
| Annualized ratio of net loan charge-offs to average loans | 0.05 | % | | 0.48 | % | | 0.28 | % | | 0.12 | % | | 0.08 | % |
| Allowance for loan losses as a percent of loans | 0.85 | % | | 0.84 | % | | 0.83 | % | | 0.82 | % | | 0.87 | % |
| Allowance for loan losses as a percent of nonperforming loans | 79.29 | % | | 85.27 | % | | 83.62 | % | | 88.32 | % | | 90.48 | % |
| Loans delinquent 30-89 days as a percent of total loans | 0.47 | % | | 0.21 | % | | 0.62 | % | | 0.30 | % | | 0.21 | % |
| | | | | | | | | | |
| (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 |
| | March 31, 2019 | | December 31, 2018 | | March 31, 2018 |
| | Average
Balance | | Interest | | Rate | | Average
Balance | | Interest | | Rate | | Average
Balance | | Interest | | Rate |
| Earning Assets | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | |
| Taxable | $ | 2,169,016 | | | $ | 15,876 | | | 2.97 | % | | $ | 2,184,096 | | | $ | 15,851 | | | 2.88 | % | | $ | 1,827,611 | | | $ | 11,577 | | | 2.57 | % |
| Nontaxable(1) | 391,724 | | | 3,915 | | | 4.05 | | | 427,332 | | | 4,388 | | | 4.07 | | | 448,641 | | | 4,530 | | | 4.09 | |
| Total securities | 2,560,740 | | | 19,791 | | | 3.13 | | | 2,611,428 | | | 20,239 | | | 3.07 | | | 2,276,252 | | | 16,107 | | | 2.87 | |
| Interest on deposits with other banks and other short-term investments | 218,445 | | | 1,292 | | | 2.40 | | | 238,087 | | | 1,285 | | | 2.14 | | | 112,024 | | | 407 | | | 1.47 | |
| Federal funds sold | 560 | | | 4 | | | 2.90 | | | 309 | | | — | | | — | | | — | | | — | | | — | |
| Loans:(2) | | | | | | | | | | | | | | | | | |
| Commercial and commercial real estate(1) | 5,745,180 | | | 78,083 | | | 5.51 | | | 5,644,475 | | | 77,822 | | | 5.47 | | | 4,910,797 | | | 62,813 | | | 5.19 | |
| Residential mortgage | 673,682 | | | 7,179 | | | 4.32 | | | 704,012 | | | 8,682 | | | 4.89 | | | 642,181 | | | 6,851 | | | 4.33 | |
| Agricultural and agricultural real estate(1) | 554,506 | | | 7,301 | | | 5.34 | | | 568,904 | | | 7,752 | | | 5.41 | | | 513,780 | | | 6,004 | | | 4.74 | |
| Consumer | 439,487 | | | 6,479 | | | 5.98 | | | 519,106 | | | 9,355 | | | 7.15 | | | 458,795 | | | 8,660 | | | 7.66 | |
| Fees on loans | | | 2,004 | | | — | | | — | | | 2,733 | | | — | | | | | 1,916 | | | — | |
| Less: allowance for loan losses | (62,643 | ) | | — | | | — | | | (60,912 | ) | | — | | | — | | | (56,028 | ) | | — | | | — | |
| Net loans | 7,350,212 | | | 101,046 | | | 5.58 | | | 7,375,585 | | | 106,344 | | | 5.72 | | | 6,469,525 | | | 86,244 | | | 5.41 | |
| Total earning assets | 10,129,957 | | | 122,133 | | | 4.89 | % | | 10,225,409 | | | 127,868 | | | 4.96 | % | | 8,857,801 | | | 102,758 | | | 4.70 | % |
| Nonearning Assets | 1,137,257 | | | | | | | 1,145,838 | | | | | | | 902,135 | | | | | |
| Total Assets | $ | 11,267,214 | | | | | | | $ | 11,371,247 | | | | | | | $ | 9,759,936 | | | | | |
| Interest Bearing Liabilities(3) | | | | | | | | | | | | | | | | | |
| Savings | $ | 5,121,179 | | | $ | 10,083 | | | 0.80 | % | | $ | 5,071,573 | | | $ | 8,817 | | | 0.69 | % | | $ | 4,358,508 | | | $ | 3,791 | | | 0.35 | % |
| Time deposits | 1,034,744 | | | 3,130 | | | 1.23 | | | 1,088,122 | | | 3,009 | | | 1.10 | | | 907,928 | | | 1,975 | | | 0.88 | |
| Short-term borrowings | 195,390 | | | 889 | | | 1.85 | | | 121,053 | | | 417 | | | 1.37 | | | 147,738 | | | 268 | | | 0.74 | |
| Other borrowings | 270,836 | | | 3,664 | | | 5.49 | | | 276,437 | | | 3,777 | | | 5.42 | | | 280,163 | | | 3,596 | | | 5.21 | |
| Total interest bearing liabilities | 6,622,149 | | | 17,766 | | | 1.09 | % | | 6,557,185 | | | 16,020 | | | 0.97 | % | | 5,694,337 | | | 9,630 | | | 0.69 | % |
| Noninterest Bearing Liabilities(3) | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | 3,200,281 | | | | | | | 3,437,112 | | | | | | | 2,984,704 | | | | | |
| Accrued interest and other liabilities | 108,534 | | | | | | | 86,259 | | | | | | | 68,377 | | | | | |
| Total noninterest bearing liabilities | 3,308,815 | | | | | | | 3,523,371 | | | | | | | 3,053,081 | | | | | |
| Stockholders' Equity | 1,336,250 | | | | | | | 1,290,691 | | | | | | | 1,012,518 | | | | | |
| Total Liabilities and Stockholders' Equity | $ | 11,267,214 | | | | | | | $ | 11,371,247 | | | | | | | $ | 9,759,936 | | | | | |
| Net interest income, fully tax-equivalent (non-GAAP)(1) | | | $ | 104,367 | | | | | | | $ | 111,848 | | | | | | | $ | 93,128 | | | |
| Net interest spread(1) | | | | | 3.80 | % | | | | | | 3.99 | % | | | | | | 4.01 | % |
| Net interest income, fully tax-equivalent (non-GAAP) to total earning assets | | | | | 4.18 | % | | | | | | 4.34 | % | | | | | | 4.26 | % |
| | | | | | | | | | | | | | | | | | |
| (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) Includes deposits held for sale |
| |
| HEARTLAND FINANCIAL USA, INC. |
| SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) |
| DOLLARS IN THOUSANDS |
| | As of and For the Quarter Ended |
| | 3/31/2019 | 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 |
| Total Assets | | | | | |
| Citywide Banks | $ | 2,214,105 | | $ | 2,307,284 | | $ | 2,300,018 | | $ | 2,295,261 | | $ | 2,299,818 | |
| Dubuque Bank and Trust Company | 1,550,487 | | 1,480,914 | | 1,523,447 | | 1,500,108 | | 1,490,100 | |
| New Mexico Bank & Trust | 1,500,024 | | 1,492,555 | | 1,465,020 | | 1,466,311 | | 1,416,788 | |
| First Bank & Trust | 1,099,759 | | 1,109,929 | | 1,112,464 | | 1,123,559 | | — | |
| Wisconsin Bank & Trust | 1,031,305 | | 1,114,352 | | 1,051,160 | | 1,034,075 | | 1,017,053 | |
| Premier Valley Bank | 855,473 | | 849,696 | | 851,358 | | 846,215 | | 805,014 | |
| Illinois Bank & Trust | 810,357 | | 804,907 | | 795,132 | | 815,905 | | 751,371 | |
| Arizona Bank & Trust | 669,806 | | 658,714 | | 650,032 | | 653,596 | | 633,474 | |
| Minnesota Bank & Trust | 657,187 | | 666,564 | | 649,179 | | 660,469 | | 631,852 | |
| Morrill & Janes Bank and Trust Company | 564,833 | | 571,012 | | 592,786 | | 602,630 | | 648,568 | |
| Rocky Mountain Bank | 489,135 | | 490,453 | | 492,063 | | 504,243 | | 490,917 | |
| Total Deposits(1) | | | | | |
| Citywide Banks | $ | 1,802,701 | | $ | 1,848,373 | | $ | 1,905,830 | | $ | 1,867,626 | | $ | 1,914,726 | |
| Dubuque Bank and Trust Company | 1,245,553 | | 1,214,541 | | 1,217,976 | | 1,136,431 | | 1,193,271 | |
| New Mexico Bank & Trust | 1,313,708 | | 1,307,464 | | 1,267,844 | | 1,242,673 | | 1,202,051 | |
| First Bank & Trust | 857,313 | | 861,629 | | 875,170 | | 887,181 | | — | |
| Wisconsin Bank & Trust | 872,090 | | 927,821 | | 891,167 | | 874,035 | | 835,919 | |
| Premier Valley Bank | 676,849 | | 639,194 | | 706,125 | | 696,460 | | 660,070 | |
| Illinois Bank & Trust | 735,101 | | 715,482 | | 726,790 | | 753,022 | | 674,391 | |
| Arizona Bank & Trust | 593,089 | | 574,762 | | 550,530 | | 558,895 | | 567,515 | |
| Minnesota Bank & Trust | 546,706 | | 560,399 | | 544,513 | | 561,257 | | 533,893 | |
| Morrill & Janes Bank and Trust Company | 473,712 | | 489,471 | | 511,154 | | 498,798 | | 558,174 | |
| Rocky Mountain Bank | 426,503 | | 424,700 | | 429,167 | | 443,359 | | 429,000 | |
| Net Income | | | | | |
| Citywide Banks | $ | 7,283 | | $ | 7,005 | | $ | 7,762 | | $ | 7,018 | | $ | 5,463 | |
| Dubuque Bank and Trust Company | 5,011 | | 6,002 | | 4,458 | | 4,426 | | 3,214 | |
| New Mexico Bank & Trust | 7,847 | | 6,007 | | 7,104 | | 7,043 | | 6,444 | |
| First Bank & Trust | 2,792 | | 3,334 | | 3,932 | | 1,925 | | — | |
| Wisconsin Bank & Trust | 4,707 | | 3,229 | | 3,735 | | 2,470 | | 2,617 | |
| Premier Valley Bank | 2,411 | | 2,930 | | 3,006 | | 2,664 | | 2,373 | |
| Illinois Bank & Trust | 2,632 | | 2,180 | | 2,419 | | 2,421 | | 2,712 | |
| Arizona Bank & Trust | 2,780 | | 1,951 | | 2,660 | | 3,623 | | 2,104 | |
| Minnesota Bank & Trust | 1,454 | | 1,038 | | 2,167 | | 581 | | 762 | |
| Morrill & Janes Bank and Trust Company | 1,172 | | 324 | | 165 | | 961 | | 1,186 | |
| Rocky Mountain Bank | 1,358 | | 1,230 | | 1,210 | | 1,185 | | 1,172 | |
| |
| (1) Includes deposits held for sale. |
| CONTACT: |
| Bryan R. McKeag |
| Executive Vice President |
| Chief Financial Officer |
| (563) 589-1994 |
| bmckeag@htlf.com |
