Heartland Financial USA, Inc. ("HTLF") Reports Annual Earnings and Fourth Quarter Results as of December 31, 2023

Rhea-AI Summary

Heartland Financial USA, Inc. (HTLF) reported a net loss of ($72.4) million in Q4 2023, with adjusted earnings of $45.6 million. Loan growth and average customer deposits increased by 2%. The company's new strategic plan, HTLF 3.0, includes investment in growth, expansion of Treasury Management products, and creation of digital platforms. The charter consolidation initiative resulted in an expense of $1.3 million. Net interest margin improved by 34 basis points to 3.52%. Noninterest income decreased by $111.8 million, while noninterest expense increased by $13.1 million. Total assets decreased by 4%, and total deposits decreased by 5%. Customer demand deposits decreased by 6%, while customer savings deposits increased by 3%. Wholesale and institutional deposits decreased by 42%. Provision for credit losses for loans was $12.8 million.

Positive

• Loan growth and average customer deposits increased by 2%.
• Net interest margin improved by 34 basis points to 3.52%.
• Total assets decreased by 4%, and total deposits decreased by 5%.
• Customer savings deposits increased by 3%.

Negative

• Net loss of ($72.4) million in Q4 2023.
• Noninterest income decreased by $111.8 million.
• Wholesale and institutional deposits decreased by 42%.

Insights

Financial Analyst

The reported net loss of Heartland Financial USA, Inc. (HTLF) of ($72.4) million or ($1.69) per diluted common share for the fourth quarter stands out as a significant deviation from the net income of $58.6 million reported in the same quarter of the previous year. This drastic shift can be attributed to a one-time balance sheet repositioning that resulted in a $140.0 million pre-tax loss, which should be considered a non-recurring event when analyzing the company's operational performance.

However, when excluding these one-time events, the adjusted earnings available to common stockholders of $45.6 million or $1.06 per diluted common share present a more stable view of the company's profitability. This adjusted figure is a more reliable indicator of the company's earning potential and should be given more weight by investors assessing the company's performance. The growth in loan volume by 2% and the increase in average customer deposits by 2% are positive indicators that suggest a solid customer base and potential for future revenue growth.

It's also worth noting the tangible common equity ratio improvement, which indicates a stronger capital position and may provide a buffer against future losses. The net interest margin improvement is another positive sign, suggesting that the company is managing its interest-earning assets and liabilities effectively despite the decrease in net interest income.

Market Research Analyst

The initiation of HTLF 3.0, Heartland Financial's new strategic plan, indicates a forward-looking approach to business operations with a focus on digital platforms and treasury management expansion. The emphasis on banker expansion and talent acquisition in key growth markets could position HTLF for increased market share and revenue diversification. The strategic plan seems to be a response to the evolving financial services landscape, where digitalization and personalized services are becoming more critical.

Investors should monitor the execution of HTLF 3.0 closely as it could lead to improved efficiency, enhanced EPS growth and higher return on assets. The consolidation of charters completed in the fourth quarter is a step towards streamlining operations, which could lead to cost savings and a more unified brand presence.

However, the decrease in net interest income and the reported losses on sales/valuations of facilities could be areas of concern, indicating potential challenges in the real estate and loan segments of the business. These factors could impact the company's financial performance in the short term but may be outweighed by long-term strategic benefits if HTLF 3.0 is successfully implemented.

Economist

The reported increase in customer savings and time deposits, along with the decrease in customer demand deposits, reflects a shift in consumer behavior potentially influenced by the broader economic environment, such as interest rate changes. This shift could have implications for HTLF's liquidity management and interest rate risk.

The increase in the average interest rate paid on deposits and borrowings is consistent with the rising interest rate environment observed in the broader economy, which could pressure the company's net interest margin in the future despite the current improvement. The efficiency ratio, particularly the adjusted efficiency ratio on a fully tax-equivalent basis, is a critical measure of the company's operational efficiency and has remained relatively stable, suggesting management's effectiveness in controlling costs relative to income.

Lastly, the provision for credit losses for loans indicates that HTLF is anticipating potential loan defaults, which is a prudent measure in an uncertain economic climate. This provision is a sign that the company is actively managing its credit risk exposure.

Fourth Quarter Highlights

• Net loss available to common stockholders of ($72.4) million or ($1.69) per diluted common share.
• Adjusted earnings available to common stockholders of $45.6 million, or $1.06 per diluted common share (non-GAAP), which excludes losses related to balance sheet repositioning, losses on sale or write-down of assets, FDIC special assessment expense, and restructuring costs.
• Loan growth of $196.2 million or 2%.
• Average customer deposits grew $270.7 million or 2%.
• Common equity ratio increased to 9.27%; Tangible common equity ratio (non-GAAP) improved 80 basis points to 6.53%.
• Net interest margin, fully tax-equivalent (non-GAAP) improved 34 basis points to 3.52%.
• Consolidated final charter, with an expense of $1.3 million in the quarter, and initiated HTLF 3.0, the Company's new strategic plan which includes:
  • Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix.
  • Expanding Treasury Management products and capabilities.
  • Creation of consumer and small business digital platforms.
  • Footprint and facilities optimization, with a focus on efficient return on capital.
• In the quarter we took the following actions as part of HTLF 3.0:
  • An $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss.
  • Centralized retail management span of control with restructuring costs of $944,000.
  • Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities.
    
    

	Quarter Ended December 31,								Year Ended December 31,
	2023				2022				2023				2022
Earnings Summary:
Net income/(loss) available to common stockholders (in millions)	$	(72.4	)		$	58.6			$	71.9			$	204.1
Diluted earnings/(loss) per common share		(1.69	)			1.37				1.68				4.79
Return on average assets	(1.42		)%			1.21	%			0.40	%			1.08	%
Return on average common equity		(16.61	)			15.02				4.19				11.74
Return on average tangible common equity (non-GAAP)(1)		(24.88	)			25.19				6.91				18.56
Net interest margin		3.47				3.61				3.29				3.32
Net interest margin, fully tax-equivalent (non-GAAP)(1)		3.52				3.65				3.33				3.37
Efficiency ratio		293.86				60.05				79.58				61.03
Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)(1)		59.31				54.33				59.06				57.74
Adjusted Earnings Summary (1):
Adjusted earnings available to common stockholders (in millions)	$	45.6			$	62.5			$	193.9			$	209.5
Adjusted diluted earnings per common share		1.06				1.46				4.53				4.91
Adjusted annualized return on average assets		0.96	%			1.28	%			1.01	%			1.11	%
Adjusted annualized return on average common equity		10.46				16.00				11.31				12.06
Adjusted annualized return on average tangible common equity		16.38				26.77				17.82				19.03
(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.

“2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.”

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

DENVER, Jan. 29, 2024 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022:

• Net income/(loss) available to common stockholders of ($72.4) million compared to $58.6 million, a decrease of $131.0 million or 223%. Adjusted earnings available to common stockholders⁽¹⁾ of $45.6 million compared to $62.5 million, a decrease of $16.9 million or 27%.
• Earnings/(loss) per diluted common share of ($1.69) compared to $1.37, a decrease of $3.06. Adjusted diluted earnings per common share⁽¹⁾ of $1.06 compared to $1.46, a decrease of $0.40.
• Net interest income of $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
• Return on average assets of (1.42%) compared to 1.21%. Adjusted annualized return on average assets⁽¹⁾ of 0.96% compared to 1.28%.
• Return on average common equity of (16.61%) compared to 15.02%. Adjusted annualized return on average common equity⁽¹⁾ of 10.46% compared to 16.00%.
• Return on average tangible common equity⁽¹⁾ of (24.88%) compared to 25.19%. Adjusted annualized return on average tangible common equity⁽¹⁾ of 16.38% compared to 26.77%.

HTLF reported the following results for the year ended December 31, 2023 compared to the year ended December 31, 2022:

• Net income available to common stockholders of $71.9 million compared to $204.1 million, a decrease of $132.3 million or 65%. Adjusted earnings available to common stockholders⁽¹⁾ of $193.9 million compared to $209.5 million, a decrease of $15.6 million or 7%.
• Earnings per diluted common share of $1.68 compared to $4.79, a decrease of $3.11. Adjusted diluted earnings per common share⁽¹⁾ of $4.53 compared to $4.91, a decrease of $0.38 or 8%.
• Net interest income of $601.2 million compared to $598.2 million, an increase of $3.0 million or 1%.
• Return on average assets of 0.40% compared to 1.08%. Adjusted annualized return on average assets⁽¹⁾ of 1.01% compared to 1.11%.
• Return on average common equity of 4.19% compared to 11.74%. Adjusted annualized return on average common equity⁽¹⁾ of 11.31% compared to 12.06%.
• Return on average tangible common equity (non-GAAP) of 6.91% compared to 18.56%. Adjusted annualized return on average tangible common equity⁽¹⁾ of 17.82% compared to 19.03%.

Commenting on HTLF's 2023 results, Bruce K. Lee, HTLF’s president and chief executive officer, said, “2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital. The balance sheet repositioning, retail span of control and facilities optimization initiatives we executed during the quarter represent the beginning of HTLF 3.0.”

Announced and Initiated HTLF 3.0

HTLF’s new strategic plan, HTLF 3.0, was announced and initiated in the fourth quarter of 2023. HTLF 3.0's initiatives include:

• Investing in growth through banker expansion and talent acquisition in the Central Valley of California, Denver, Kansas City, Milwaukee, Minneapolis, and Phoenix.
• Expanding Treasury Management products and capabilities.
• Creation of consumer and small business digital platforms.
• Footprint and facilities optimization, with a focus on efficient return on capital.

In the quarter we took the following actions as part of HTLF 3.0:

• A $865.4 million balance sheet repositioning resulting in a $140.0 million pre-tax loss.
• Centralized retail management span of control with restructuring costs of $944,000.
• Footprint consolidation resulting in $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities.
  

Charter Consolidation Update

During the fourth quarter of 2023, Dubuque Bank and Trust Company was consolidated into HTLF Bank, which successfully completed the consolidation of all 11 charters. Total consolidation restructuring costs were $17 million, of which $1.3 million were incurred in the fourth quarter of 2023.

Net Interest Income and Net Interest Margin

Net interest margin was 3.47% (3.52% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2023, compared to 3.61% (3.65% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2022.

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

• Total interest income was $255.9 million compared to $204.7 million, an increase of $51.2 million or 25%, primarily attributable to higher yields and an increase in average loans.
• Total interest income on a tax-equivalent basis was $257.9 million, an increase of $51.1 million or 25%, from $206.9 million.
• Average earning assets decreased $321.9 million or 2% to $17.85 billion compared to $18.17 billion, which was primarily attributable to the balance sheet repositioning completed in the fourth quarter of 2023.
• The average rate on earning assets increased 121 basis points to 5.73% from 4.52%, primarily due to recent interest rate increases.

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

• Total interest expense was $99.7 million, an increase of $60.3 million from $39.5 million, due to increases in the average interest rate paid and the average balance of interest-bearing liabilities.
• The average interest rate paid on interest-bearing liabilities increased 180 basis points to 3.11% from 1.31%.
• Average interest-bearing deposits increased $638.2 million or 6% to $11.95 billion from $11.31 billion, primarily due to growth in time deposits. Total average interest-bearing deposits were 72% of total average deposits compared to 65%.
• The average interest rate paid on HTLF's interest-bearing deposits increased 179 basis points to 2.92% from 1.13%.
• Average borrowings increased $103.4 million or 15% to $773.7 million from $670.2 million, and the average interest rate paid on borrowings was 5.99% compared to 4.30%.
  

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

• Net interest income totaled $156.1 million compared to $165.2 million, a decrease of $9.1 million or 5%.
• Net interest income on a tax-equivalent basis (non-GAAP) totaled $158.2 million compared to $167.4 million, a decrease of $9.2 million or 5%.

Noninterest Income and Noninterest Expense

Total noninterest income was ($111.8) million during the fourth quarter of 2023 compared to $30.0 million during the fourth quarter of 2022, a decrease of $141.8 million. Significant changes by noninterest income category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:

• Service charges and fees increased $1.3 million or 7% to $18.7 million from $17.4 million, which was primarily attributable to an increase in debit interchange volume.
• Net securities losses totaled $140.0 million compared to net securities losses of $153,000, which was an increase of $139.9 million attributable to the balance sheet repositioning strategy executed in the quarter.
• Net gains of sales of loans held for sale decreased $794,000 to $94,000 compared to $888,000, primarily due to a decrease of loans sold to the secondary market as HTLF exits mortgage loan originations through PrimeWest.
  

Total noninterest expense for the fourth quarter of 2023 was $130.3 million compared to $117.2 million for the same quarter of 2022, which was an increase of $13.1 million or 11%. Significant changes within the noninterest expense category for the fourth quarter of 2023 compared to the fourth quarter of 2022 were:

• Salaries and employee benefits totaled $64.8 million compared to $61.6 million, which was an increase of $3.2 million or 5%. The fourth quarter of 2023 included $813,000 higher severance related expenses and the fourth quarter of 2022 included a $1.5 million benefit associated with the employer tax credit. Increases in other components of salary expenses during the fourth quarter of 2023 were largely offset by lower incentive compensation expense.
• FDIC insurance assessment of $10.3 million, which included a one-time special assessment of $8.1 million in the fourth quarter of 2023 compared to $1.9 million in the fourth quarter of 2022, which was an increase of $8.4 million.
• Acquisition, integration and restructuring costs totaled $4.4 million compared to $2.4 million, an increase of $1.9 million or 79% due to the addition of HTLF 3.0 initiatives and the completion of the charter consolidation project.
• Partnership investment in tax credit projects increased $326,000 or 10% to $3.6 million compared to $3.2 million. The expense is dependent upon the number and timing of tax credit projects placed into service.

HTLF's effective tax rate was 27.97% for the fourth quarter of 2023 compared to 18.67% for the fourth quarter of 2022. The following items impacted HTLF's fourth quarter 2023 and 2022 tax calculations:

• Various tax credits of $3.8 million compared to $3.6 million.
• Tax expense of $1.3 million compared to $561,000 resulting from disallowed interest expense related to tax-exempt loans and securities, aligning with the increases in total interest expense.
• Tax-exempt interest income as a percentage of pre-tax income of (7.93%) compared to 10.85%.
  

For the years ended December 31, 2023 and 2022, HTLF's effective tax rate was 17.42% and 20.76%, respectively.

Total Assets, Total Loans and Total Deposits

Total assets were $19.41 billion at December 31, 2023, a decrease of $832.5 million or 4% from $20.24 billion at year-end 2022. Securities represented 29% and 35% of total assets at December 31, 2023, and December 31, 2022, respectively, primarily due to the balance sheet repositioning.

Total loans held to maturity were $12.07 billion at December 31, 2023, compared to $11.87 billion at September 30, 2023 and $11.43 billion at December 31, 2022. Loans increased $196.2 million or 2% during the fourth quarter of 2023 and $640.3 million or 6% since year-end 2022.

Significant changes by loan category at December 31, 2023 compared to September 30, 2023 included:

• Commercial and business lending, which includes commercial and industrial, PPP, and owner occupied commercial real estate loans, increased $267.8 million or 4% to $6.29 billion at December 31, 2023, compared to $6.03 billion at September 30, 2023.
• Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, decreased $120.5 million or 3% to $3.57 billion from $3.69 billion.
• Agricultural and agricultural real estate loans totaled $919.2 million compared to $842.1 million, an increase of $77.1 million or 9%.
• Residential loans totaled $797.8 million compared to $813.8 million, a decrease of $16.0 million or 2%.
• Consumer loans decreased $12.2 million or 2% to $493.2 million from $505.4 million.
  

Significant changes by loan category at December 31, 2023 compared to December 31, 2022 included:

• Commercial and business lending, which includes commercial and industrial, PPP, and owner occupied commercial real estate loans, increased $552.3 million or 10% to $6.29 billion at December 31, 2023, compared to $5.74 billion at December 31, 2022.
• Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $158.4 million or 5% to $3.57 billion from $3.41 billion.
• Agricultural and agricultural real estate loans totaled $919.2 million, a decrease of $1.3 million or less than 1% from $920.5 million.
• Residential loans totaled $797.8 million compared to $853.4 million, a decrease of $55.5 million or 7%.
• Consumer loans decreased $13.5 million or 3% to $493.2 million from $506.7 million.
  

Total deposits were $16.20 billion as of December 31, 2023, compared to $17.10 billion at September 30, 2023, which was a decrease of $899.3 million or 5%. Total deposits were $16.2 billion as of December 31, 2023, compared to $17.51 billion at December 31, 2022, a decrease of $1.31 billion or 7%.

Total customer deposits were $14.86 billion as of December 31, 2023, compared to $14.80 billion at September 30, 2023, which was an increase of $58.8 million or less than 1%. Significant customer deposit changes by category at December 31, 2023, compared to September 30, 2023, included:

• Customer demand deposits decreased $292.5 million or 6% to $4.50 billion compared to $4.79 billion.
• Customer savings deposits increased $220.8 million or 3% to $8.41 billion compared to $8.19 billion.
• Customer time deposits increased $130.5 million or 7% to $1.94 billion compared to $1.81 billion.
  

Total customer deposits were $14.86 billion at December 31, 2023 compared to $15.22 billion at December 31, 2022, which was a decrease of $367.3 million or 2%. Significant customer deposit changes by category at December 31, 2023 compared to December 31, 2022, included:

• Customer demand deposits decreased $1.20 billion or 21% to $4.50 billion compared to $5.70 billion.
• Customer savings deposits decreased $259.7 million or 3% to $8.41 billion compared to $8.67 billion.
• Customer time deposits increased $1.09 billion to $1.94 billion compared to $851.5 million.
  

Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $958.1 million or 42% from $2.30 billion at September 30, 2023. Significant wholesale and institutional deposit changes by category at December 31, 2023, compared to September 30, 2023, included:

• Wholesale and institutional savings deposits decreased $170.1 million or 30% to $394.4 million compared to $564.5 million.
• Wholesale time deposits decreased $788.0 million or 45% to $950.9 million compared to $1.74 billion.

Total wholesale and institutional deposits were $1.35 billion as of December 31, 2023, which was a decrease of $943.9 million or 41% from $2.29 billion at December 31, 2022. Significant wholesale and institutional deposit changes by category at December 31, 2023 compared to December 31, 2022 included:

• Wholesale and institutional savings deposits decreased $929.1 million or 70% to $394.4 million compared to $1.32 billion.
• Wholesale time deposits decreased $14.8 million or 2% to $950.9 million compared to $965.7 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the fourth quarter of 2023 was $12.8 million, which was an increase of $10.7 million from $2.1 million of provision benefit recorded in the fourth quarter of 2022. The provision expense for the fourth quarter of 2023 was primarily impacted by a customer that moved to non accrual due to its abrupt decision to discontinue business operations.

HTLF's allowance for credit losses for loans totaled $122.6 million at December 31, 2023, compared to $109.5 million at December 31, 2022, respectively. The following items impacted HTLF's allowance for credit losses for loans for the year ended December 31, 2023:

• Provision expense for the year ended December 31, 2023, totaled $25.4 million.
• Net charge-offs of $12.4 million were recorded for the year or 0.11% of average loans. Net charge-offs of $392,000 were recorded in the fourth quarter of 2022 or 0.01% of average loans.

Provision and Allowance for Credit Losses for Unfunded Commitments
HTLF's allowance for unfunded commitments totaled $16.5 million and $20.2 million at December 31, 2023 and December 31, 2022, respectively. The following impacted HTLF's allowance for credit losses for unfunded commitments during 2023:

• Provision benefit for the year ended December 31, 2023, totaled $3.7 million.
• Unfunded commitments decreased $103.9 million or 2% to $4.63 billion at December 31, 2023 compared to $4.73 billion at December 31, 2022.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $11.7 million for the fourth quarter of 2023 compared to $3.4 million for the fourth quarter of 2022. The total allowance for lending related credit losses was $139.0 million at December 31, 2023, which was 1.15% of total loans as of December 31, 2023, compared to $129.7 million or 1.13% of total loans as of December 31, 2022.

Nonperforming Assets

Nonperforming assets increased $43.6 million or 65% to $110.5 million, which was 0.57% of total assets at December 31, 2023, compared to $66.9 million or 0.33% of total assets at December 31, 2022. The increase was primarily driven by a well-collateralized long-term manufacturing customer who is experiencing cash flow challenges due to a recent acquisition. Nonperforming loans were $97.9 million or 0.81% of total loans at December 31, 2023, compared to $58.5 million or 0.51% of total loans at December 31, 2022. At December 31, 2023, loans delinquent 30-89 days were 0.09% of total loans compared to 0.04% of total loans at December 31, 2022.

Non-GAAP Financial Measures

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

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

• Adjusted earnings available to common stockholders, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability net income available to common stockholders as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
• Adjusted annualized return on average assets, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
• Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
• Adjusted efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
• Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. Net interest margin, fully tax equivalent, is net interest income adjusted for the tax-favored status of certain loans and securities divided by average earning assets.
• Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
• Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
• Adjusted annualized return on average common equity, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
• Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
• Adjusted annualized return on average tangible common equity, adjusts net income available to common stockholders for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
• Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.
  

Conference Call Details

HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until January 28, 2025, by logging on to www.htlf.com.

About HTLF

Heartland Financial USA, Inc., operating under the brand name HTLF, is a bank holding company with assets of $19.41 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

Safe Harbor Statement

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

Any statements about the company's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of the company's operations or performance. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "intent", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "may", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of the company and its management. Although the company may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of the company to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which the company currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of the company’s Annual Report on Form 10-K for the year ended December 31, 2022, include, among others:

• Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, supply chain issues, labor shortages, terrorist threats or acts of war;
• Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values due to climate and other borrower industry risks, which may impact the provision for credit losses and net charge-offs;
• Liquidity and Interest Rate Risks, including the impact of capital market conditions, rising interest rates and changes in monetary policy on our borrowings and net interest income;
• Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
• Strategic and External Risks, including economic, political, and competitive forces impacting our business;
• Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
• Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.
  

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF's business, financial condition and results of operations. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to or correct or update any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF's financial results, is included in HTLF’s filings with the SEC.

-FINANCIAL TABLES FOLLOW-

CONTACT:
Kevin L. Thompson
Executive Vice President
Chief Financial Officer
(563) 589-1994
kthompson@htlf.com 

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,								For the Year Ended December 31,
	2023				2022				2023				2022
Interest Income
Interest and fees on loans	$	192,861			$	143,970			$	697,997			$	477,970
Interest on securities:
Taxable		54,573				53,178				223,521				169,544
Nontaxable		6,278				6,132				25,268				24,006
Interest on federal funds sold		—				11				3				11
Interest on deposits with other banks and short-term investments		2,174				1,410				7,007				3,125
Total Interest Income		255,886				204,701				953,796				674,656
Interest Expense
Interest on deposits		88,071				32,215				319,688				56,880
Interest on borrowings		5,874				2,223				10,311				2,717
Interest on term debt		5,804				5,043				22,560				16,823
Total Interest Expense		99,749				39,481				352,559				76,420
Net Interest Income		156,137				165,220				601,237				598,236
Provision for credit losses		11,738				3,387				21,707				15,370
Net Interest Income After Provision for Credit Losses		144,399				161,833				579,530				582,866
Noninterest Income
Service charges and fees		18,708				17,432				74,024				68,031
Loan servicing income		158				790				1,561				2,741
Trust fees		4,905				5,440				20,715				22,570
Brokerage and insurance commissions		729				629				2,794				2,986
Capital market fees		1,676				1,824				10,007				11,543
Securities gains (losses), net		(140,007	)			(153	)			(141,539	)			(425	)
Unrealized gain (loss) on equity securities, net		75				(7	)			240				(622	)
Net gains on sale of loans held for sale		94				888				3,880				9,032
Valuation adjustment on servicing rights		—				—				—				1,658
Income on bank owned life insurance		729				600				3,771				2,341
Other noninterest income		1,132				2,532				3,621				8,409
Total Noninterest Income		(111,801	)			29,975				(20,926	)			128,264
Noninterest Expense
Salaries and employee benefits		64,766				61,611				251,276				254,478
Occupancy		6,509				6,905				26,847				28,155
Furniture and equipment		2,901				3,019				11,599				12,499
Professional fees		17,060				16,320				58,667				58,606
FDIC insurance assessments		10,313				1,866				19,940				7,000
Advertising		1,677				1,829				8,347				6,221
Core deposit and customer relationship intangibles amortization		1,611				1,841				6,739				7,834
Other real estate and loan collection expenses, net		505				373				1,489				950
(Gain) loss on sales/valuations of assets, net		2,072				2,388				(77	)			(1,047	)
Acquisition, integration and restructuring costs		4,365				2,442				10,359				7,586
Partnership investment in tax credit projects		3,573				3,247				5,401				5,040
Other noninterest expenses		14,933				15,377				61,240				56,055
Total Noninterest Expense		130,285				117,218				461,827				443,377
Income Before Income Taxes		(97,687	)			74,590				96,777				267,753
Income taxes		(27,324	)			13,936				16,857				55,573
Net Income/(Loss)		(70,363	)			60,654				79,920				212,180
Preferred dividends		(2,012	)			(2,012	)			(8,050	)			(8,050	)
Net Income/(Loss) Available to Common Stockholders	$	(72,375	)		$	58,642			$	71,870			$	204,130
Earnings/(loss) per common share-diluted	$	(1.69	)		$	1.37			$	1.68			$	4.79
Weighted average shares outstanding-diluted		42,838,405				42,699,752				42,791,795				42,630,703

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Interest Income
Interest and fees on loans	$	192,861			$	182,394			$	168,899			$	153,843			$	143,970
Interest on securities:
Taxable		54,573				54,800				58,172				55,976				53,178
Nontaxable		6,278				6,584				6,378				6,028				6,132
Interest on federal funds sold		—				3				—				—				11
Interest on deposits with other banks and short-term investments		2,174				1,651				2,051				1,131				1,410
Total Interest Income		255,886				245,432				235,500				216,978				204,701
Interest Expense
Interest on deposits		88,071				92,744				81,975				56,898				32,215
Interest on borrowings		5,874				1,167				848				2,422				2,223
Interest on term debt		5,804				5,765				5,545				5,446				5,043
Total Interest Expense		99,749				99,676				88,368				64,766				39,481
Net Interest Income		156,137				145,756				147,132				152,212				165,220
Provision for credit losses		11,738				1,516				5,379				3,074				3,387
Net Interest Income After Provision for Credit Losses		144,399				144,240				141,753				149,138				161,833
Noninterest Income
Service charges and fees		18,708				18,553				19,627				17,136				17,432
Loan servicing income		158				278				411				714				790
Trust fees		4,905				4,734				5,419				5,657				5,440
Brokerage and insurance commissions		729				692				677				696				629
Capital markets fees		1,676				1,845				4,037				2,449				1,824
Securities gains (losses), net		(140,007	)			(114	)			(314	)			(1,104	)			(153	)
Unrealized gain (loss) on equity securities, net		75				13				(41	)			193				(7	)
Net gains on sale of loans held for sale		94				905				1,050				1,831				888
Valuation adjustment on servicing rights		—				—				—				—				—
Income on bank owned life insurance		729				858				1,220				964				600
Other noninterest income		1,132				619				407				1,463				2,532
Total Noninterest Income		(111,801	)			28,383				32,493				29,999				29,975
Noninterest Expense
Salaries and employee benefits		64,766				62,262				62,099				62,149				61,611
Occupancy		6,509				6,438				6,691				7,209				6,905
Furniture and equipment		2,901				2,720				3,063				2,915				3,019
Professional fees		17,060				13,616				15,194				12,797				16,320
FDIC insurance assessments		10,313				3,313				3,035				3,279				1,866
Advertising		1,677				1,633				3,052				1,985				1,829
Core deposit and customer relationship intangibles amortization		1,611				1,625				1,715				1,788				1,841
Other real estate and loan collection expenses, net		505				481				348				155				373
(Gain) loss on sales/valuations of assets, net		2,072				108				(3,372	)			1,115				2,388
Acquisition, integration and restructuring costs		4,365				2,429				1,892				1,673				2,442
Partnership investment in tax credit projects		3,573				1,136				154				538				3,247
Other noninterest expenses		14,933				15,292				15,575				15,440				15,377
Total Noninterest Expense		130,285				111,053				109,446				111,043				117,218
Income Before Income Taxes		(97,687	)			61,570				64,800				68,094				74,590
Income taxes		(27,324	)			13,479				15,384				15,318				13,936
Net Income/(Loss)		(70,363	)			48,091				49,416				52,776				60,654
Preferred dividends		(2,012	)			(2,013	)			(2,012	)			(2,013	)			(2,012	)
Net Income/(Loss) Available to Common Stockholders	$	(72,375	)		$	46,078			$	47,404			$	50,763			$	58,642
Earnings/(loss) per common share-diluted	$	(1.69	)		$	1.08			$	1.11			$	1.19			$	1.37
Weighted average shares outstanding-diluted		42,838,405				42,812,563				42,757,603				42,742,878				42,699,752

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Assets
Cash and due from banks	$	275,554			$	248,756			$	317,303			$	274,354			$	309,045
Interest-bearing deposits with other banks and other short-term investments		47,459				99,239				82,884				87,757				54,042
Cash and cash equivalents		323,013				347,995				400,187				362,111				363,087
Time deposits in other financial institutions		1,240				1,490				1,490				1,740				1,740
Securities:
Carried at fair value		4,646,891				5,482,687				5,798,041				6,096,657				6,147,144
Held to maturity, at cost		838,241				835,468				834,673				832,098				829,403
Other investments, at cost		91,277				90,001				72,291				72,364				74,567
Loans held for sale		5,071				6,262				14,353				10,425				5,277
Loans:
Held to maturity		12,068,645				11,872,436				11,717,974				11,495,353				11,428,352
Allowance for credit losses		(122,566	)			(110,208	)			(111,198	)			(112,707	)			(109,483	)
Loans, net		11,946,079				11,762,228				11,606,776				11,382,646				11,318,869
Premises, furniture and equipment, net		181,070				187,436				190,420				191,267				197,330
Goodwill		576,005				576,005				576,005				576,005				576,005
Core deposit and customer relationship intangibles, net		18,415				20,026				21,651				23,366				25,154
Servicing rights, net		—				—				—				—				7,840
Cash surrender value on life insurance		197,085				196,694				195,793				194,419				193,403
Other real estate, net		12,548				14,362				2,677				7,438				8,401
Other assets		574,772				609,139				510,359				432,008				496,008
Total Assets	$	19,411,707			$	20,129,793			$	20,224,716			$	20,182,544			$	20,244,228
Liabilities and Equity
Liabilities
Deposits:
Demand	$	4,500,304			$	4,792,813			$	4,897,858			$	5,119,554			$	5,701,340
Savings		8,805,597				8,754,911				8,772,596				9,256,609				9,994,391
Time		2,895,813				3,553,269				3,993,089				3,305,183				1,817,278
Total deposits		16,201,714				17,100,993				17,663,543				17,681,346				17,513,009
Borrowings		622,255				392,634				44,364				92,337				376,117
Term debt		372,396				372,059				372,403				372,097				371,753
Accrued expenses and other liabilities		282,225				438,577				285,416				207,359				248,294
Total Liabilities		17,478,590				18,304,263				18,365,726				18,353,139				18,509,173
Stockholders' Equity
Preferred equity		110,705				110,705				110,705				110,705				110,705
Common stock		42,688				42,656				42,645				42,559				42,467
Capital surplus		1,090,740				1,088,267				1,087,358				1,084,112				1,080,964
Retained earnings		1,141,501				1,226,740				1,193,522				1,158,948				1,120,925
Accumulated other comprehensive income/(loss)		(452,517	)			(642,838	)			(575,240	)			(566,919	)			(620,006	)
Total Equity		1,933,117				1,825,530				1,858,990				1,829,405				1,735,055
Total Liabilities and Equity	$	19,411,707			$	20,129,793			$	20,224,716			$	20,182,544			$	20,244,228

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Average Balances
Assets	$	19,667,825			$	20,207,920			$	20,221,511			$	20,118,005			$	19,913,849
Loans, net of unearned		11,938,272				11,800,064				11,625,442				11,378,078				11,117,513
Total deposits		16,709,394				17,507,813				17,689,138				17,505,867				17,319,218
Customer deposits		14,969,948				14,699,235				14,655,535				15,123,181				15,739,698
Earning assets		17,853,957				18,439,010				18,523,552				18,392,649				18,175,838
Interest-bearing liabilities		12,721,680				13,158,631				13,209,794				12,582,234				11,980,032
Common equity		1,729,086				1,746,818				1,727,013				1,655,860				1,548,739
Total stockholders' equity		1,839,791				1,857,523				1,837,718				1,766,565				1,659,444
Tangible common equity (non-GAAP)(1)		1,133,888				1,149,992				1,128,527				1,055,617				946,688
Key Performance Ratios
Annualized return on average assets	(1.42		)%			0.94	%			0.98	%			1.06	%			1.21	%
Adjusted annualized return on average assets (non-GAAP)(1)		0.96				0.98				0.96				1.12				1.28
Annualized return on average common equity (GAAP)		(16.61	)			10.47				11.01				12.43				15.02
Adjusted annualized return on average common equity (non-GAAP)(1)		10.46				10.92				10.80				13.16				16.00
Annualized return on average tangible common equity (non-GAAP)(1)		(24.89	)			16.32				17.31				20.03				25.17
Adjusted annualized return on average tangible common equity (non-GAAP)(1)		16.38				17.02				17.00				21.17				26.77
Annualized ratio of net charge-offs (recoveries) to average loans		0.01				0.12				0.32				(0.04	)			(0.06	)
Annualized net interest margin (GAAP)		3.47				3.14				3.19				3.36				3.61
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)		3.52				3.18				3.23				3.40				3.65
Efficiency ratio (GAAP)		293.86				63.77				60.93				60.94				60.05
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)		59.31				59.95				59.88				57.16				54.33
Annualized ratio of total noninterest expenses to average assets (GAAP)		2.63				2.18				2.17				2.24				2.34
Annualized ratio of core expenses to average assets (non-GAAP)(1)		2.23				2.08				2.16				2.14				2.14
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

	For the Quarter Ended December 31,								For the Year Ended December 31,
	2023				2022				2023				2022
Average Balances
Assets	$	19,667,825			$	19,913,849			$	20,053,004			$	19,621,839
Loans, net of unearned		11,938,272				11,117,513				11,687,313				10,608,831
Deposits		16,709,394				17,319,218				17,351,294				17,029,398
Earning assets		17,853,957				18,175,838				18,301,190				18,021,134
Interest-bearing liabilities		12,721,680				11,980,032				12,919,125				11,437,921
Common equity		1,729,086				1,548,739				1,714,983				1,738,041
Total stockholders' equity		1,839,791				1,659,444				1,825,688				1,848,746
Tangible common equity (non-GAAP)(1)		1,133,888				946,688				1,117,311				1,133,124
Key Performance Ratios
Annualized return on average assets	(1.42		)%			1.21	%			0.40	%			1.08	%
Adjusted annualized return on average assets (non-GAAP)(1)		0.96				1.28				1.01				1.11
Annualized return on average common equity (GAAP)		(16.61	)			15.02				4.19				11.74
Adjusted annualized return on average common equity (non-GAAP)(1)		10.46				16.00				11.31				12.06
Annualized return on average tangible common equity (non-GAAP)(1)		(24.89	)			25.17				6.89				18.55
Adjusted annualized return on average tangible common equity (non-GAAP)(1)		16.38				26.77				17.82				19.03
Annualized ratio of net charge-offs (recoveries) to average loans		0.01				(0.06	)			0.11				0.11
Annualized net interest margin (GAAP)		3.47				3.61				3.29				3.32
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)		3.52				3.65				3.33				3.37
Efficiency ratio (GAAP)		293.86				60.05				79.58				61.03
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)		59.31				54.33				59.06				57.74
Annualized ratio of total noninterest expenses to average assets (GAAP)		2.63				2.34				2.30				2.26
Annualized ratio of core expenses to average assets (non-GAAP)(1)		2.23				2.14				2.15				2.16
(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
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Common Share Data
Book value per common share	$	42.69			$	40.20			$	41.00			$	40.38			$	38.25
Tangible book value per common share (non-GAAP)(1)		28.77				26.23				26.98				26.30				24.09
ASC 320 effect on book value per common share		(11.00	)			(16.27	)			(14.04	)			(13.35	)			(14.58	)
Common shares outstanding, net of treasury stock		42,688,008				42,656,303				42,644,544				42,558,726				42,467,394
Capital Ratios
Common equity ratio		9.27	%			8.49	%			8.65	%			8.54	%			8.16	%
Tangible common equity ratio (non-GAAP)(1)		6.53				5.73				5.86				5.72				5.21
Tier 1 leverage ratio		9.44				9.59				9.40				9.25				9.13
Common equity tier 1 ratio(2)		10.97				11.37				11.33				11.28				11.07
Total risk based capital ratio(2)		14.53				14.90				14.93				14.98				14.76
Other Selected Trend Information
Effective tax rate		27.97	%			21.89	%			23.74	%			22.50	%			18.68	%
Full time equivalent employees		1,970				1,965				1,966				1,991				2,002
Loans Held to Maturity
Commercial and industrial	$	3,652,047			$	3,591,809			$	3,590,680			$	3,498,345			$	3,464,414
Paycheck Protection Program ("PPP")		2,777				3,750				4,139				8,258				11,025
Owner occupied commercial real estate		2,638,175				2,429,659				2,398,698				2,312,538				2,265,307
Commercial and business lending		6,292,999				6,025,218				5,993,517				5,819,141				5,740,746
Non-owner occupied commercial real estate		2,553,711				2,656,358				2,530,736				2,421,341				2,330,940
Real estate construction		1,011,716				1,029,554				1,013,134				1,102,186				1,076,082
Commercial real estate lending		3,565,427				3,685,912				3,543,870				3,523,527				3,407,022
Total commercial lending		9,858,426				9,711,130				9,537,387				9,342,668				9,147,768
Agricultural and agricultural real estate		919,184				842,116				839,817				810,183				920,510
Residential mortgage		797,829				813,803				828,437				841,084				853,361
Consumer		493,206				505,387				512,333				501,418				506,713
Total loans held to maturity	$	12,068,645			$	11,872,436			$	11,717,974			$	11,495,353			$	11,428,352
Total unfunded loan commitments	$	4,625,768			$	4,813,798			$	4,905,147			$	4,867,925			$	4,729,677
Deposits
Demand-customer	$	4,500,304			$	4,792,813			$	4,897,858			$	5,119,554			$	5,701,340
Savings-customer		8,411,240				8,190,430				8,149,596				8,501,337				8,670,898
Savings-wholesale and institutional		394,357				564,481				623,000				755,272				1,323,493
Total savings		8,805,597				8,754,911				8,772,596				9,256,609				9,994,391
Time-customer		1,944,884				1,814,335				1,597,849				1,071,476				851,539
Time-wholesale		950,929				1,738,934				2,395,240				2,233,707				965,739
Total time		2,895,813				3,553,269				3,993,089				3,305,183				1,817,278
Total deposits	$	16,201,714			$	17,100,993			$	17,663,543			$	17,681,346			$	17,513,009
Total customer deposits	$	14,856,428			$	14,797,578			$	14,645,303			$	14,692,367			$	15,223,777
Total wholesale and institutional deposits		1,345,286				2,303,415				3,018,240				2,988,979				2,289,232
Total deposits	$	16,201,714			$	17,100,993			$	17,663,543			$	17,681,346			$	17,513,009
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.
(2) December 31, 2023 calculation is preliminary.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Allowance for Credit Losses-Loans
Balance, beginning of period	$	110,208			$	111,198			$	112,707			$	109,483			$	105,715
Provision (benefit) for credit losses		12,750				2,672				7,829				2,184				2,075
Charge-offs		(3,886	)			(3,964	)			(9,613	)			(2,151	)			(2,668	)
Recoveries		3,494				302				275				3,191				4,361
Balance, end of period	$	122,566			$	110,208			$	111,198			$	112,707			$	109,483
Allowance for Unfunded Commitments
Balance, beginning of period	$	17,480			$	18,636			$	21,086			$	20,196			$	18,884
Provision for credit losses		(1,012	)			(1,156	)			(2,450	)			890				1,312
Balance, end of period	$	16,468			$	17,480			$	18,636			$	21,086			$	20,196
Allowance for lending related credit losses	$	139,034			$	127,688			$	129,834			$	133,793			$	129,679
Provision for Credit Losses
Provision (benefit) for credit losses-loans	$	12,750			$	2,672			$	7,829			$	2,184			$	2,075
Provision for credit losses-unfunded commitments		(1,012	)			(1,156	)			(2,450	)			890				1,312
Total provision (benefit) for credit losses	$	11,738			$	1,516			$	5,379			$	3,074			$	3,387
Asset Quality
Nonaccrual loans	$	95,426			$	51,304			$	61,956			$	58,066			$	58,231
Loans past due ninety days or more		2,507				511				1,459				174				273
Other real estate owned		12,548				14,362				2,677				7,438				8,401
Other repossessed assets		—				1				5				24				26
Total nonperforming assets	$	110,481			$	66,178			$	66,097			$	65,702			$	66,931
Nonperforming Assets Activity
Balance, beginning of period	$	66,178			$	66,097			$	65,702			$	66,931			$	73,268
Net loan (charge offs) recoveries		(392	)			(3,662	)			(9,338	)			1,040				1,693
New nonperforming loans		61,193				19,295				19,805				4,626				1,439
Reduction of nonperforming loans(1)		(14,278	)			(14,691	)			(5,253	)			(5,711	)			(8,875	)
OREO/Repossessed assets sales proceeds		(2,220	)			(861	)			(4,819	)			(1,184	)			(594	)
Balance, end of period	$	110,481			$	66,178			$	66,097			$	65,702			$	66,931
Asset Quality Ratios
Ratio of nonperforming loans to total loans		0.81	%			0.44	%			0.54	%			0.51	%			0.51	%
Ratio of nonperforming assets to total assets		0.57				0.33				0.33				0.33				0.33
Annualized ratio of net loan charge-offs (recoveries) to average loans		0.01				0.12				0.32				(0.04	)			(0.06	)
Allowance for loan credit losses as a percent of loans		1.02				0.93				0.95				0.98				0.96
Allowance for lending related credit losses as a percent of loans		1.15				1.08				1.11				1.16				1.13
Allowance for loan credit losses as a percent of nonperforming loans		125.15				212.70				175.35				193.52				187.14
Loans delinquent 30-89 days as a percent of total loans		0.09				0.12				0.12				0.10				0.04
(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
	December 31, 2023										September 30, 2023										December 31, 2022
	Average Balance				Interest			Rate			Average Balance				Interest			Rate			Average Balance				Interest			Rate
Earning Assets
Securities:
Taxable	$	5,119,970			$	54,573		4.23	%		$	5,726,057			$	54,800		3.80	%		$	6,122,313			$	53,178		3.45	%
Nontaxable(1)		759,464				7,681		4.01				881,162				8,085		3.64				890,368				7,762		3.46
Total securities		5,879,434				62,254		4.20				6,607,219				62,885		3.78				7,012,681				60,940		3.45
Interest on deposits with other banks and other short-term investments		146,027				2,174		5.91				142,301				1,651		4.60				151,405				1,410		3.69
Federal funds sold		—				—		—				152				3		7.83				739				11		5.91
Loans:(2)
Commercial and industrial(1)		3,624,034				66,980		7.33				3,610,677				63,001		6.92				3,346,843				45,290		5.37
PPP loans		3,064				8		1.04				3,948				11		1.11				12,252				397		12.86
Owner occupied commercial real estate		2,436,234				31,714		5.16				2,412,501				30,127		4.95				2,277,055				26,194		4.56
Non-owner occupied commercial real estate		2,688,805				42,417		6.26				2,586,011				38,779		5.95				2,286,298				29,273		5.08
Real estate construction		1,035,010				20,200		7.74				1,027,544				19,448		7.51				1,050,802				16,585		6.26
Agricultural and agricultural real estate		844,353				13,069		6.14				822,957				12,582		6.07				785,647				10,159		5.13
Residential mortgage		810,069				9,531		4.67				827,402				9,482		4.55				858,767				9,168		4.24
Consumer		496,703				9,597		7.67				509,024				9,615		7.49				499,849				7,426		5.89
Less: allowance for credit losses-loans		(109,776	)			—		—				(110,726	)			—		—				(106,500	)			—		—
Net loans		11,828,496				193,516		6.49				11,689,338				183,045		6.21				11,011,013				144,492		5.21
Total earning assets		17,853,957				257,944		5.73	%			18,439,010				247,584		5.33	%			18,175,838				206,853		4.52	%
Nonearning Assets		1,813,868										1,768,910										1,738,011
Total Assets	$	19,667,825									$	20,207,920									$	19,913,849
Interest-bearing Liabilities
Savings	$	8,782,197			$	53,807		2.43	%		$	8,737,581			$	49,195		2.23	%		$	9,987,692			$	25,950		1.03	%
Time deposits		3,165,788				34,264		4.29				3,945,371				43,549		4.38				1,322,094				6,265		1.88
Borrowings		401,463				5,874		5.80				103,567				1,167		4.47				298,804				2,223		2.95
Term debt		372,232				5,804		6.19				372,112				5,765		6.15				371,442				5,043		5.39
Total interest-bearing liabilities		12,721,680				99,749		3.11	%			13,158,631				99,676		3.01	%			11,980,032				39,481		1.31	%
Noninterest-bearing Liabilities
Noninterest-bearing deposits		4,761,409										4,824,861										6,009,432
Accrued interest and other liabilities		344,945										366,905										264,941
Total noninterest-bearing liabilities		5,106,354										5,191,766										6,274,373
Equity		1,839,791										1,857,523										1,659,444
Total Liabilities and Equity	$	19,667,825									$	20,207,920									$	19,913,849
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)					$	158,195									$	147,908									$	167,372
Net interest spread(1)								2.62	%									2.32	%									3.21	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)								3.52	%									3.18	%									3.65	%
Interest-bearing liabilities to earning assets		71.25	%									71.36	%									65.91	%
(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 Year Ended
	December 31, 2023										December 31, 2022
	Average Balance				Interest			Rate			Average Balance				Interest			Rate
Earning Assets
Securities:
Taxable	$	5,723,603			$	223,521		3.91	%		$	6,335,586			$	169,544		2.68	%
Nontaxable(1)		864,288				31,292		3.62				965,474				30,387		3.15
Total securities		6,587,891				254,813		3.87				7,301,060				199,931		2.74
Interest-bearing deposits with other banks and other short-term investments		136,964				7,007		5.12				216,786				3,125		1.44
Federal funds sold		38				3		7.89				192				11		5.73
Loans:(2)
Commercial and industrial(1)		3,566,610				236,532		6.63				3,070,890				140,310		4.57
PPP loans		5,797				69		1.19				50,464				6,884		13.64
Owner occupied commercial real estate		2,375,883				116,641		4.91				2,272,088				93,936		4.13
Non-owner occupied commercial real estate		2,517,645				147,528		5.86				2,196,922				99,202		4.52
Real estate construction		1,047,192				76,307		7.29				923,316				48,258		5.23
Agricultural and agricultural real estate		837,861				49,260		5.88				778,526				34,064		4.38
Residential mortgage		832,562				37,669		4.52				852,541				34,276		4.02
Consumer		503,763				36,522		7.25				464,084				23,058		4.97
Less: allowance for credit losses-loans		(111,016	)			—		—				(105,735	)			—		—
Net loans		11,576,297				700,528		6.05				10,503,096				479,988		4.57
Total earning assets		18,301,190				962,351		5.26	%			18,021,134				683,055		3.79	%
Nonearning Assets		1,751,814										1,600,705
Total Assets	$	20,053,004									$	19,621,839
Interest-bearing Liabilities
Savings	$	9,043,067			$	182,179		2.01	%		$	9,737,100			$	46,623		0.48	%
Time deposits		3,299,405				137,509		4.17				1,160,538				10,257		0.88
Borrowings		204,524				10,311		5.04				168,404				2,717		1.61
Term debt		372,129				22,560		6.06				371,879				16,823		4.52
Total interest-bearing liabilities		12,919,125				352,559		2.73	%			11,437,921				76,420		0.67	%
Noninterest-bearing Liabilities
Noninterest-bearing deposits		5,008,822										6,131,760
Accrued interest and other liabilities		299,369										203,412
Total noninterest-bearing liabilities		5,308,191										6,335,172
Equity		1,825,688										1,848,746
Total Liabilities and Equity	$	20,053,004									$	19,621,839
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)					$	609,792									$	606,635
Net interest spread(1)								2.53	%									3.12	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)								3.33	%									3.37	%
Interest-bearing liabilities to earning assets		70.59	%									63.47	%
(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
	For the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Earnings available to common stockholders (GAAP)	$	(72,375	)		$	46,078			$	47,404			$	50,763			$	58,642
Plus core deposit and customer relationship intangibles amortization, net of tax(2)		1,229				1,240				1,309				1,364				1,410
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	(71,146	)		$	47,318			$	48,713			$	52,127			$	60,052
Average common equity (GAAP)	$	1,729,086			$	1,746,818			$	1,727,013			$	1,655,860			$	1,548,739
Less average goodwill		576,005				576,005				576,005				576,005				576,005
Less average core deposit and customer relationship intangibles, net		19,193				20,821				22,481				24,238				26,046
Average tangible common equity (non-GAAP)	$	1,133,888			$	1,149,992			$	1,128,527			$	1,055,617			$	946,688
Annualized return on average common equity (GAAP)	(16.61		)%			10.47	%			11.01	%			12.43	%			15.02	%
Annualized return on average tangible common equity (non-GAAP)	(24.89		)%			16.32	%			17.31	%			20.03	%			25.17	%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	156,137			$	145,756			$	147,132			$	152,212			$	165,220
Plus tax-equivalent adjustment(1)		2,058				2,152				2,136				2,209				2,152
Net interest income, fully tax-equivalent (non-GAAP)	$	158,195			$	147,908			$	149,268			$	154,421			$	167,372
Average earning assets	$	17,853,957			$	18,439,010			$	18,523,552			$	18,392,649			$	18,175,838
Annualized net interest margin (GAAP)		3.47	%			3.14	%			3.19	%			3.36	%			3.61	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.52				3.18				3.23				3.40				3.65
Net purchase accounting discount amortization on loans included in annualized net interest margin		0.02				0.01				0.03				0.02				0.03
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	1,822,412			$	1,714,825			$	1,748,285			$	1,718,700			$	1,624,350
Less goodwill		576,005				576,005				576,005				576,005				576,005
Less core deposit and customer relationship intangibles, net		18,415				20,026				21,651				23,366				25,154
Tangible common equity (non-GAAP)	$	1,227,992			$	1,118,794			$	1,150,629			$	1,119,329			$	1,023,191
Common shares outstanding, net of treasury stock		42,688,008				42,656,303				42,644,544				42,558,726				42,467,394
Common equity (book value) per share (GAAP)	$	42.69			$	40.20			$	41.00			$	40.38			$	38.25
Tangible book value per common share (non-GAAP)	$	28.77			$	26.23			$	26.98			$	26.30			$	24.09
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,227,992			$	1,118,794			$	1,150,629			$	1,119,329			$	1,023,191
Total assets (GAAP)	$	19,411,707			$	20,129,793			$	20,224,716			$	20,182,544			$	20,244,228
Less goodwill		576,005				576,005				576,005				576,005				576,005
Less core deposit and customer relationship intangibles, net		18,415				20,026				21,651				23,366				25,154
Total tangible assets (non-GAAP)	$	18,817,287			$	19,533,762			$	19,627,060			$	19,583,173			$	19,643,069
Tangible common equity ratio (non-GAAP)		6.53	%			5.73	%			5.86	%			5.72	%			5.21	%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)
Net interest income (GAAP)	$	156,137			$	145,756			$	147,132			$	152,212			$	165,220
Tax-equivalent adjustment(1)		2,058				2,152				2,136				2,209				2,152
Fully tax-equivalent net interest income		158,195				147,908				149,268				154,421				167,372
Noninterest income		(111,801	)			28,383				32,493				29,999				29,975
Securities (gains)/losses, net		140,007				114				314				1,104				153
Unrealized (gain) loss on equity securities, net		(75	)			(13	)			41				(193	)			7
Valuation adjustment on servicing rights		—				—				—				—				—
Adjusted revenue (non-GAAP)	$	186,326			$	176,392			$	182,116			$	185,331			$	197,507
Total noninterest expenses (GAAP)	$	130,285			$	111,053			$	109,446			$	111,043			$	117,218
Less:
Core deposit and customer relationship intangibles amortization		1,611				1,625				1,715				1,788				1,841
Partnership investment in tax credit projects		3,573				1,136				154				538				3,247
(Gain) loss on sales/valuation of assets, net		2,072				108				(3,372	)			1,115				2,388
Acquisition, integration and restructuring costs		4,365				2,429				1,892				1,673				2,442
FDIC special assessment		8,145				—				—				—				—
Core expenses (non-GAAP)	$	110,519			$	105,755			$	109,057			$	105,929			$	107,300
Efficiency ratio (GAAP)		293.86	%			63.77	%			60.93	%			60.94	%			60.05	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		59.31	%			59.95	%			59.88	%			57.16	%			54.33	%
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)
Total noninterest expenses (GAAP)	$	130,285			$	111,053			$	109,446			$	111,043			$	117,218
Core expenses (non-GAAP)		110,519				105,755				109,057				105,929				107,300
Average assets	$	19,667,825			$	20,207,920			$	20,221,511			$	20,118,005			$	19,913,849
Total noninterest expenses to average assets (GAAP)		2.63	%			2.18	%			2.17	%			2.24	%			2.34	%
Core expenses to average assets (non-GAAP)		2.23	%			2.08	%			2.16	%			2.14	%			2.14	%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	1,425			$	94			$	93			$	74			$	424
Occupancy		1,092				—				—				—				—
Furniture and equipment		19				—				—				—				—
Professional fees		793				1,617				1,068				934				1,587
Advertising		28				178				222				122				95
Other noninterest expenses		1,008				540				509				543				336
Total acquisition, integration and restructuring costs	$	4,365			$	2,429			$	1,892			$	1,673			$	2,442
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Reconciliation of Adjusted Earnings
Net income/(loss)	$	(70,363	)		$	48,091			$	49,416			$	52,776			$	60,654
Loss from sale of securities		140,007				114				314				1,104				153
(Gain) loss on sales/valuation of assets, net		2,072				108				(3,372	)			1,115				2,388
Acquisition, integration and restructuring costs		4,365				2,429				1,892				1,673				2,442
FDIC special assessment		8,145				—				—				—				—
Total adjustments		154,589				2,651				(1,166	)			3,892				4,983
Tax effect of adjustments(2)		(36,638	)			(628	)			276				(922	)			(1,166	)
Adjusted earnings	$	47,588			$	50,114			$	48,526			$	55,746			$	64,471
Preferred dividends		(2,012	)			(2,013	)			(2,012	)			(2,013	)			(2,012	)
Adjusted earnings available to common stockholders	$	45,576			$	48,101			$	46,514			$	53,733			$	62,459
Plus core deposit and customer relationship intangibles amortization, net of tax(2)		1,229				1,240				1,309				1,364				1,410
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	46,805			$	49,341			$	47,823			$	55,097			$	63,869
Reconciliation of Adjusted Annualized Return on Average Assets
Average assets	$	19,667,825			$	20,207,920			$	20,221,511			$	20,118,005			$	19,913,849
Adjusted annualized return on average assets (non-GAAP)		0.96	%			0.98	%			0.96	%			1.12	%			1.28	%
Reconciliation of Adjusted Annualized Return on Average Common Equity
Average common stockholders' equity (GAAP)	$	1,729,086			$	1,746,818			$	1,727,013			$	1,655,860			$	1,548,739
Adjusted annualized average common equity (non-GAAP)		10.46	%			10.92	%			10.80	%			13.16	%			16.00	%
Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity
Average tangible common equity (non-GAAP)	$	1,133,888			$	1,149,992			$	1,128,527			$	1,055,617			$	946,688
Adjusted annualized average tangible common equity (non-GAAP)		16.38	%			17.02	%			17.00	%			21.17	%			26.77	%
Reconciliation of Adjusted Diluted Earnings Per Common Share
Weighted average shares outstanding-diluted		42,838,405				42,812,563				42,757,603				42,742,878				42,699,752
Adjusted diluted earnings per common share	$	1.06			$	1.12			$	1.09			$	1.26			$	1.46
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,								For the Year Ended December 31,
	2023				2022				2023				2022
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Earnings available to common stockholders (GAAP)	$	(72,375	)		$	58,642			$	71,870			$	204,130
Plus core deposit and customer relationship intangibles amortization, net of tax(2)		1,229				1,410				5,142				6,071
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	(71,146	)		$	60,052			$	77,012			$	210,201
Average common equity (GAAP)	$	1,729,086			$	1,548,739			$	1,714,983			$	1,738,041
Less average goodwill		576,005				576,005				576,005				576,005
Less average core deposit and customer relationship intangibles, net		19,193				26,046				21,667				28,912
Average tangible common equity (non-GAAP)	$	1,133,888			$	946,688			$	1,117,311			$	1,133,124
Annualized return on average common equity (GAAP)	(16.61		)%			15.02	%			4.19	%			11.74	%
Annualized return on average tangible common equity (non-GAAP)	(24.89		)%			25.17	%			6.89	%			18.55	%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	156,137			$	165,220			$	601,237			$	598,236
Plus tax-equivalent adjustment(1)		2,058				2,152				8,555				8,399
Net interest income, fully tax-equivalent (non-GAAP)	$	158,195			$	167,372			$	609,792			$	606,635
Average earning assets	$	17,853,957			$	18,175,838			$	18,301,190			$	18,021,134
Annualized net interest margin (GAAP)		3.47	%			3.61	%			3.29	%			3.32	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.52				3.65				3.33				3.37
Net purchase accounting discount amortization on loans included in annualized net interest margin		0.02				0.03				0.02				0.04
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,								For the Year Ended December 31,
	2023				2022				2023				2022
Reconciliation of Efficiency Ratio (non-GAAP)
Net interest income (GAAP)	$	156,137			$	165,220			$	601,237			$	598,236
Tax-equivalent adjustment(1)		2,058				2,152				8,555				8,399
Fully tax-equivalent net interest income		158,195				167,372				609,792				606,635
Noninterest income		(111,801	)			29,975				(20,926	)			128,264
Securities (gains)/losses, net		140,007				153				141,539				425
Unrealized (gain) loss on equity securities, net		(75	)			7				(240	)			622
Valuation adjustment on servicing rights		—				—				—				(1,658	)
Adjusted revenue (non-GAAP)	$	186,326			$	197,507			$	730,165			$	734,288
Total noninterest expenses (GAAP)	$	130,285			$	117,218			$	461,827			$	443,377
Less:
Core deposit and customer relationship intangibles amortization		1,611				1,841				6,739				7,834
Partnership investment in tax credit projects		3,573				3,247				5,401				5,040
(Gain) loss on sales/valuations of assets, net		2,072				2,388				(77	)			(1,047	)
Acquisition, integration and restructuring costs		4,365				2,442				10,359				7,586
FDIC special assessment		8,145				—				8,145				—
Core expenses (non-GAAP)	$	110,519			$	107,300			$	431,260			$	423,964
Efficiency ratio (GAAP)		293.86	%			60.05	%			79.58	%			61.03	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		59.31	%			54.33	%			59.06	%			57.74	%
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)
Total noninterest expenses (GAAP)	$	130,285			$	117,218			$	461,827			$	443,377
Core expenses (non-GAAP)		110,519				107,300				431,260				423,964
Average assets	$	19,667,825			$	19,913,849			$	20,053,004			$	19,621,839
Total noninterest expenses to average assets (GAAP)		2.63	%			2.34	%			2.30	%			2.26	%
Core expenses to average assets (non-GAAP)		2.23	%			2.14	%			2.15	%			2.16	%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	1,425			$	424			$	1,686			$	1,404
Occupancy		1,092				—				1,092				—
Furniture and equipment		19				—				19				—
Professional fees		793				1,587				4,412				5,082
Advertising		28				95				550				382
Other noninterest expenses		1,008				336				2,600				718
Total acquisition, integration and restructuring costs	$	4,365			$	2,442			$	10,359			$	7,586
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,								For the Year Ended December 31,
	2023				2022				2023				2022
Reconciliation of Adjusted Earnings (non-GAAP)
Net income/(loss)	$	(70,363	)		$	60,654			$	79,920			$	212,180
Loss from sale of securities		140,007				153				141,539				425
(Gain) loss on sales/valuation of assets, net		2,072				2,388				(77	)			(1,047	)
Acquisition, integration and restructuring costs		4,365				2,442				10,359				7,586
FDIC special assessment		8,145				—				8,145				—
Total adjustments		154,589				4,983				159,966				6,964
Tax effect of adjustments(2)		(36,638	)			(1,166	)			(37,912	)			(1,567	)
Adjusted earnings	$	47,588			$	64,471			$	201,974			$	217,577
Preferred dividends		(2,012	)			(2,012	)			(8,050	)			(8,050	)
Adjusted earnings available to common stockholders	$	45,576			$	62,459			$	193,924			$	209,527
Plus core deposit and customer relationship intangibles amortization, net of tax(2)		1,229				1,410				5,142				6,071
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	46,805			$	63,869			$	199,066			$	215,598
Reconciliation of Adjusted Annualized Return on Average Assets
Average assets	$	19,667,825			$	19,913,849			$	20,053,004			$	19,621,839
Adjusted annualized return on average assets (non-GAAP)		0.96	%			1.28	%			1.01	%			1.11	%
Reconciliation of Adjusted Annualized Return on Average Common Equity
Average common stockholders' equity (GAAP)	$	1,729,086			$	1,548,739			$	1,714,983			$	1,738,041
Adjusted annualized average common equity (non-GAAP)		10.46	%			16.00	%			11.31	%			12.06	%
Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity
Average tangible common equity (non-GAAP)	$	1,133,888			$	946,688			$	1,117,311			$	1,133,124
Adjusted annualized average tangible common equity (non-GAAP)		16.38	%			26.77	%			17.82	%			19.03	%
Reconciliation of Adjusted Diluted Earnings Per Common Share
Weighted average shares outstanding-diluted		42,838,405				42,699,752				42,791,795				42,630,703
Adjusted diluted earnings per common share	$	1.06			$	1.46			$	4.53			$	4.91
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

FAQ

What were the net earnings/loss available to common stockholders in Q4 2023?

The net loss available to common stockholders was ($72.4) million.

What was the adjusted earnings available to common stockholders in Q4 2023?

The adjusted earnings available to common stockholders was $45.6 million.

What was the loan growth in Q4 2023?

The loan growth was $196.2 million or 2%.

What was the increase in average customer deposits in Q4 2023?

Average customer deposits grew by $270.7 million or 2%.

What was the expense of the charter consolidation initiative in Q4 2023?

The expense of the charter consolidation initiative was $1.3 million.