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

Rhea-AI Summary

Heartland Financial reported robust financial performance for Q2 2021, with net income of $59.6 million, a 98% increase year-over-year. Diluted earnings per share rose 72% to $1.41. Loan growth reached $287.7 million, excluding PPP loans, while non-time deposit growth was $133.3 million. The company declared a 14% dividend increase to $0.25 per share. Credit quality improved, with a 0.12% net charge-off ratio. Total assets at $18.37 billion reflect 3% growth since year-end 2020.

Positive

• Net income increased by 98% to $59.6 million for Q2 2021.
• Diluted earnings per share rose to $1.41, up 72% year-over-year.
• Total assets grew to $18.37 billion, an increase of 3% from the end of 2020.
• Quarterly loan growth was $287.7 million, or 13% annualized.
• Dividend increased by 14% to $0.25 per share.

Negative

• Noninterest expenses rose by 14% to $103.4 million for Q2 2021.
• Nonperforming assets decreased slightly but remain a concern at 0.50% of total assets.
• Net interest margin declined to 3.37%, down from 3.81% in Q2 2020.

Highlights and Developments

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

	Quarter Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
Net income available to common stockholders (in millions)	$	59.6			$	30.1			$	110.4			$	50.2
Diluted earnings per common share	1.41				0.82				2.61				1.36
Return on average assets	1.35		%		0.84		%		1.27		%		0.73		%
Return on average common equity	12.07				7.69				11.29				6.32
Return on average tangible common equity (non-GAAP)(1)	18.05				11.97				16.99				9.95
Net interest margin	3.37				3.81				3.40				3.81
Net interest margin, fully tax-equivalent (non-GAAP)(1)	3.41				3.85				3.45				3.85
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)	57.11				55.75				56.86				58.64

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

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

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

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

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

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

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

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

Net Interest Income and Net Interest Margin

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

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

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

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

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

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

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

Noninterest Income and Noninterest Expense

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

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

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

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

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

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

Total Assets, Total Loans and Total Deposits

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

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

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

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

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

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

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

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

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

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

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

Provision and Allowance

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

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

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

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

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

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

Nonperforming Assets

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

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

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

• Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
• Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
• Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
• Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
• Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
• Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.

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

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

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

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

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

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

CONTACT:

Bryan R. McKeag

Executive Vice President

Chief Financial Officer

(563) 589-1994

BMcKeag@htlf.com

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

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

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

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Average Balances
Assets	$	18,293,756			$	17,964,723			$	16,401,152			$	15,167,225			$	14,391,856
Loans, net of unearned	10,072,071				9,952,152				9,366,430				9,220,666				9,186,913
Deposits	15,576,345				15,044,561				13,518,020				12,650,822				12,288,378
Earning assets	16,819,978				16,460,124				15,042,079				13,868,360				13,103,159
Interest bearing liabilities	9,871,302				9,917,159				9,053,855				8,320,123				8,155,753
Common equity	1,980,904				1,963,674				1,769,575				1,661,381				1,574,902
Total stockholders' equity	2,091,609				2,074,379				1,880,280				1,772,086				1,580,997
Tangible common equity (non-GAAP)(1)	1,366,285				1,346,270				1,238,691				1,172,891				1,083,834
Key Performance Ratios
Annualized return on average assets	1.35		%		1.19		%		0.97		%		1.26		%		0.84		%
Annualized return on average common equity (GAAP)	12.07				10.49				8.50				10.90				7.69
Annualized return on average tangible common equity (non-GAAP)(1)	18.05				15.90				12.77				16.11				11.97
Annualized ratio of net charge-offs to average loans	0.12				0.06				0.01				0.92				0.11
Annualized net interest margin (GAAP)	3.37				3.44				3.51				3.51				3.81
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.41				3.48				3.55				3.55				3.85
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	57.11				56.61				54.93				54.67				55.75

	For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2021				2020				2021				2020
Average Balances
Assets	$	18,293,756			$	14,391,856			$	18,130,148			$	13,770,015
Loans, net of unearned	10,072,071				9,186,913				10,012,443				8,775,566
Deposits	15,576,345				12,288,378				15,311,921				11,629,785
Earning assets	16,819,978				13,103,159				16,641,045				12,497,307
Interest bearing liabilities	9,871,302				8,155,753				9,894,103				7,998,847
Common equity	1,980,904				1,574,902				1,972,337				1,597,292
Total stockholders' equity	2,091,609				1,580,997				2,083,042				1,600,340
Tangible common stockholders' equity	1,366,285				1,083,834				1,356,333				1,104,770
Key Performance Ratios
Annualized return on average assets	1.35		%		0.84		%		1.27		%		0.73		%
Annualized return on average common equity (GAAP)	12.07				7.69				11.29				6.32
Annualized return on average tangible common equity (non-GAAP)(1)	18.05				11.97				16.99				9.95
Annualized ratio of net charge-offs to average loans	0.12				0.11				0.09				0.17
Annualized net interest margin (GAAP)	3.37				3.81				3.40				3.81
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.41				3.85				3.45				3.85
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	57.11				55.75				56.86				58.64
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Common Share Data
Book value per common share	$	48.50			$	46.13			$	46.77			$	46.11			$	44.42
Tangible book value per common share (non-GAAP)(1)	$	33.98			$	31.53			$	32.07			$	32.91			$	31.14
Common shares outstanding, net of treasury stock	42,245,452				42,173,675				42,093,862				36,885,390				36,844,744
Tangible common equity ratio (non-GAAP)(1)	8.08		%		7.54		%		7.81		%		8.03		%		7.89		%
Other Selected Trend Information
Effective tax rate	21.11		%		22.50		%		18.52		%		22.20		%		19.75		%
Full time equivalent employees	2,091				2,131				2,013				1,827				1,821
Loans Held to Maturity
Commercial and industrial	$	2,518,908			$	2,421,260			$	2,534,799			$	2,303,646			$	2,364,400
Paycheck Protection Program ("PPP")	829,175				1,155,328				957,785				1,128,035				1,124,430
Owner occupied commercial real estate	1,940,134				1,837,559				1,776,406				1,494,902				1,433,271
Commercial and business lending	5,288,217				5,414,147				5,268,990				4,926,583				4,922,101
Non-owner occupied commercial real estate	1,987,369				1,967,183				1,921,481				1,659,683				1,543,623
Real estate construction	854,295				796,027				863,220				917,765				1,115,843
Commercial real estate lending	2,841,664				2,763,210				2,784,701				2,577,448				2,659,466
Total commercial lending	8,129,881				8,177,357				8,053,691				7,504,031				7,581,567
Agricultural and agricultural real estate	679,608				683,969				714,526				508,058				520,773
Residential mortgage	800,884				786,994				840,442				701,899				735,762
Consumer	401,641				402,136				414,392				385,658				408,728
Total loans held to maturity	$	10,012,014			$	10,050,456			$	10,023,051			$	9,099,646			$	9,246,830
Total unfunded loan commitments	$	3,433,062			$	3,306,042			$	3,246,953			$	2,980,484			$	3,065,283
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Allowance for Credit Losses-Loans
Balance, beginning of period	$	130,172			$	131,606			$	103,377			$	119,937			$	97,350
Allowance for acquired purchased credit deteriorated loans	—				—				12,313				—				—
Provision (benefit) for credit losses	(6,466		)		16				16,132				4,741				25,007
Charge-offs	(3,497		)		(2,126		)		(1,104		)		(21,753		)		(3,564		)
Recoveries	517				676				888				452				1,144
Balance, end of period	$	120,726			$	130,172			$	131,606			$	103,377			$	119,937
Allowance for Unfunded Commitments
Balance, beginning of period	$	14,619			$	15,280			$	14,330			$	17,392			$	15,468
Provision (benefit) for credit losses	(617		)		(661		)		950				(3,062		)		1,924
Balance, end of period	$	14,002			$	14,619			$	15,280			$	14,330			$	17,392
Allowance for lending related credit losses	$	134,728			$	144,791			$	146,886			$	117,707			$	137,329
Provision for Credit Losses
Provision (benefit) for credit losses-loans	$	(6,466	)		$	16			$	6,572			$	4,741			$	25,007
Provision for credit losses-acquired loans	—				—				9,560				—				—
Provision (benefit) for credit losses-unfunded commitments	(617		)		(661		)		(1,372		)		(3,062		)		1,924
Provision for credit losses-acquired unfunded commitments	—				—				2,322				—				—
Provision (benefit) for credit losses-held to maturity securities	3				(3		)		(10		)		(1		)		(135		)
Total provision (benefit) for credit losses	$	(7,080	)		$	(648	)		$	17,072			$	1,678			$	26,796

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Asset Quality
Nonaccrual loans	$	85,268			$	91,718			$	87,386			$	79,040			$	91,609
Loans past due ninety days or more	97				171				720				1,681				1,360
Other real estate owned	6,314				6,236				6,624				5,050				5,539
Other repossessed assets	50				239				240				130				29
Total nonperforming assets	$	91,729			$	98,364			$	94,970			$	85,901			$	98,537
Performing troubled debt restructured loans	$	2,122			$	2,394			$	2,370			$	11,818			$	2,636
Nonperforming Assets Activity
Balance, beginning of period	$	98,364			$	94,970			$	85,901			$	98,537			$	85,371
Net loan charge offs	(2,980		)		(1,450		)		(216		)		(21,301		)		(2,420		)
New nonperforming loans	7,989				14,936				8,664				11,834				26,857
Acquired nonperforming assets	—				—				12,781				—				—
Reduction of nonperforming loans(1)	(10,948		)		(8,884		)		(10,811		)		(1,994		)		(9,911		)
Net OREO/repossessed assets sales proceeds and losses	(696		)		(1,208		)		(1,349		)		(1,175		)		(1,360		)
Balance, end of period	$	91,729			$	98,364			$	94,970			$	85,901			$	98,537
Asset Quality Ratios
Ratio of nonperforming loans to total loans	0.85		%		0.91		%		0.88		%		0.89		%		1.01		%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.87				0.94				0.90				1.02				1.03
Ratio of nonperforming assets to total assets	0.50				0.54				0.53				0.55				0.66
Annualized ratio of net loan charge-offs to average loans	0.12				0.06				0.01				0.92				0.11
Allowance for loan credit losses as a percent of loans	1.21				1.30				1.31				1.14				1.30
Allowance for lending related credit losses as a percent of loans	1.35				1.44				1.47				1.29				1.49
Allowance for loan credit losses as a percent of nonperforming loans	141.42				141.66				149.37				128.07				129.01
Loans delinquent 30-89 days as a percent of total loans	0.17				0.16				0.23				0.17				0.22
(1) Includes principal reductions, transfers to performing status and transfers to OREO.

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

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

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

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	59,593			$	50,801			$	37,795			$	45,521			$	30,131
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,907				1,988				1,975				1,969				2,130
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	61,500			$	52,789			$	39,770			$	47,490			$	32,261
Average common equity (GAAP)	$	1,980,904			$	1,963,674			$	1,769,575			$	1,661,381			$	1,574,902
Less average goodwill	576,005				576,005				488,151				446,345				446,345
Less average core deposit and customer relationship intangibles, net	38,614				41,399				42,733				42,145				44,723
Average tangible common equity (non-GAAP)	$	1,366,285			$	1,346,270			$	1,238,691			$	1,172,891			$	1,083,834
Annualized return on average common equity (GAAP)	12.07		%		10.49		%		8.50		%		10.90		%		7.69		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%		15.90		%		12.77		%		16.11		%		11.97		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	141,218			$	139,605			$	132,575			$	122,497			$	124,146
Plus tax-equivalent adjustment(1)	1,762				1,761				1,529				1,390				1,416
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980			$	141,366			$	134,104			$	123,887			$	125,562
Average earning assets	$	16,819,978			$	16,460,124			$	15,042,079			$	13,868,360			$	13,103,159
Annualized net interest margin (GAAP)	3.37		%		3.44		%		3.51		%		3.51		%		3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41				3.48				3.55				3.55				3.85
Net purchase accounting discount amortization on loans included in annualized net interest margin	0.09				0.12				0.10				0.10				0.16

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	2,049,081			$	1,945,502			$	1,968,526			$	1,700,899			$	1,636,672
Less goodwill	576,005				576,005				576,005				446,345				446,345
Less core deposit and customer relationship intangibles, net	37,452				39,867				42,383				40,520				43,011
Tangible common equity (non-GAAP)	$	1,435,624			$	1,329,630			$	1,350,138			$	1,214,034			$	1,147,316
Common shares outstanding, net of treasury stock	42,245,452				42,173,675				42,093,862				36,885,390				36,844,744
Common equity (book value) per share (GAAP)	$	48.50			$	46.13			$	46.77			$	46.11			$	44.42
Tangible book value per common share (non-GAAP)	$	33.98			$	31.53			$	32.07			$	32.91			$	31.14
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,435,624			$	1,329,630			$	1,350,138			$	1,214,034			$	1,147,316
Total assets (GAAP)	$	18,371,006			$	18,244,427			$	17,908,339			$	15,612,664			$	15,026,153
Less goodwill	576,005				576,005				576,005				446,345				446,345
Less core deposit and customer relationship intangibles, net	37,452				39,867				42,383				40,520				43,011
Total tangible assets (non-GAAP)	$	17,757,549			$	17,628,555			$	17,289,951			$	15,125,799			$	14,536,797
Tangible common equity ratio (non-GAAP)	8.08		%		7.54		%		7.81		%		8.03		%		7.89		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
Net interest income (GAAP)	$	141,218			$	139,605			$	132,575			$	122,497			$	124,146
Tax-equivalent adjustment(1)	1,762				1,761				1,529				1,390				1,416
Fully tax-equivalent net interest income	142,980				141,366				134,104				123,887				125,562
Noninterest income	33,164				30,317				32,621				31,216				30,637
Securities (gains)/losses, net	(2,842		)		30				(2,829		)		(1,300		)		(2,006		)
Unrealized (gain)/loss on equity securities, net	(83		)		110				(36		)		(155		)		(680		)
Valuation adjustment on servicing rights	526				(917		)		102				120				(9		)
Adjusted revenue (non-GAAP)	$	173,745			$	170,906			$	163,962			$	153,768			$	153,504
Total noninterest expenses (GAAP)	$	103,376			$	102,423			$	99,269			$	90,396			$	90,439
Less:
Core deposit and customer relationship intangibles amortization	2,415				2,516				2,501				2,492				2,696
Partnership investment in tax credit projects	1,345				35				1,899				927				791
Loss on sales/valuation of assets, net	183				194				2,621				1,763				701
Acquisition, integration and restructuring costs	210				2,928				2,186				1,146				673
Adjusted noninterest expenses (non-GAAP)	$	99,223			$	96,750			$	90,062			$	84,068			$	85,578
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%		56.61		%		54.93		%		54.67		%		55.75		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44			$	534			$	232			$	—			$	122
Occupancy	1				9				—				—				—
Furniture and equipment	41				607				423				496				15
Professional fees	63				670				1,422				476				505
Advertising	6				156				42				8				4
Other noninterest expenses	55				952				67				166				27
Total acquisition, integration and restructuring costs	$	210			$	2,928			$	2,186			$	1,146			$	673
After tax impact on diluted earnings per common share(1)	$	—			$	0.05			$	0.04			$	0.02			$	0.01
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2021				2020				2021				2020
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	59,593			$	30,131			$	110,394			$	50,171
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,907				2,130				3,895				4,485
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	61,500			$	32,261			$	114,289			$	54,656
Average common equity (GAAP)	$	1,980,904			$	1,574,902			$	1,972,337			$	1,597,292
Less average goodwill	576,005				446,345				576,005				446,345
Less average core deposit and customer relationship intangibles, net	38,614				44,723				39,999				46,177
Average tangible common equity (non-GAAP)	$	1,366,285			$	1,083,834			$	1,356,333			$	1,104,770
Annualized return on average common equity (GAAP)	12.07		%		7.69		%		11.29		%		6.32		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%		11.97		%		16.99		%		9.95		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	141,218			$	124,146			$	280,823			$	236,657
Plus tax-equivalent adjustment(1)	1,762				1,416				3,523				2,547
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980			$	125,562			$	284,346			$	239,204
Average earning assets	$	16,819,978			$	13,103,159			$	16,641,045			$	12,497,307
Annualized net interest margin (GAAP)	3.37		%		3.81		%		3.40		%		3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41				3.85				3.45				3.85
Purchase accounting discount amortization on loans included in annualized net interest margin	0.09				0.16				0.11				0.10
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2021				2020				2021				2020
Net interest income (GAAP)	$	141,218			$	124,146			$	280,823			$	236,657
Tax-equivalent adjustment(1)	1,762				1,416				3,523				2,547
Fully tax-equivalent net interest income	142,980				125,562				284,346				239,204
Noninterest income	33,164				30,637				63,481				56,454
Securities gains, net	(2,842		)		(2,006		)		(2,812		)		(3,664		)
Unrealized (gain)/loss on equity securities, net	(83		)		(680		)		27				(449		)
Valuation adjustment on servicing rights	526				(9		)		(391		)		1,556
Adjusted revenue (non-GAAP)	$	173,745			$	153,504			$	344,651			$	293,101
Total noninterest expenses (GAAP)	$	103,376			$	90,439			$	205,799			$	181,298
Less:
Core deposit and customer relationship intangibles amortization	2,415				2,696				4,931				5,677
Partnership investment in tax credit projects	1,345				791				1,380				975
Loss on sales/valuation of assets, net	183				701				377				717
Acquisition, integration and restructuring costs	210				673				3,138				2,049
Adjusted noninterest expenses (non-GAAP)	$	99,223			$	85,578			$	195,973			$	171,880
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%		55.75		%		56.86		%		58.64		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44			$	122			$	578			$	166
Occupancy	1				—				10				—
Furniture and equipment	41				15				648				39
Professional fees	63				505				733				1,501
Advertising	6				4				162				93
Other noninterest expenses	55				27				1,007				250
Total acquisition, integration and restructuring costs	$	210			$	673			$	3,138			$	2,049
After tax impact on diluted earnings per common share(1)	$	—			$	0.01			$	0.06			$	0.04
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and For the Quarter Ended
	6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020
PPP I loan balances	$	374,174			$	739,562			$	957,785			$	1,128,035			$	1,124,430
Average PPP I loan balances	597,703				841,262				1,064,863				1,128,488				916,405
PPP I fee income	$	7,313			$	7,464			$	9,109			$	4,542			$	3,655
PPP I interest income	1,445				2,087				2,697				2,920				2,362
Total PPP I interest income	$	8,758			$	9,551			$	11,806			$	7,462			$	6,017
PPP II loan balances	$	455,001			$	415,766			$	—			$	—			$	—
Average PPP II loan balances	449,856				151,255				—				—				—
PPP II fee income	$	1,263			$	223			$	—			$	—			$	—
PPP II interest income	1,165				375				—				—				—
Total PPP II interest income	$	2,428			$	598			$	—			$	—			$	—
Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.31		%		3.39		%		3.44		%		3.59		%		3.90		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.35				3.44				3.48				3.64				3.95
Ratio of nonperforming loans to total loans	0.93				1.03				0.97				1.01				1.14
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.95				1.06				1.00				1.16				1.18
Ratio of nonperforming assets to total assets	0.52				0.58				0.56				0.59				0.71
Annualized ratio of net loan charge-offs to average loans	0.13				0.07				0.01				1.05				0.12
Allowance for loan credit losses as a percent of loans	1.31				1.46				1.45				1.30				1.48
Allowance for lending related credit losses as a percent of loans	1.47				1.63				1.62				1.48				1.69
Loans delinquent 30-89 days as a percent of total loans	0.18				0.18				0.25				0.19				0.26
After tax impact of total PPP interest income on diluted earnings per common share(1)	$	0.21			$	0.19			$	0.24			$	0.16			$	0.13

	As of and For the Six Months Ended
	June 30, 2021				June 30, 2020
Average PPP I loan balances	$	718,810			$	458,202
Average PPP II loan balances	301,380				—
PPP I and II fee income	$	16,263			$	3,655
PPP I and II interest income	5,072				2,362
Total PPP I and II interest income	$	21,335			$	6,017
Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.35		%		3.85		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.40				3.90
Annualized ratio of net loan charge-offs to average loans	0.10				0.18
After tax impact of total PPP interest income on diluted earnings per common share(1)	$	0.40			$	0.13
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

FAQ

What was Heartland Financial's net income for Q2 2021?

Heartland Financial reported a net income of $59.6 million for Q2 2021.

How much did diluted earnings per share increase for HTLF?

Diluted earnings per share for HTLF increased by 72% to $1.41.

What was the total asset value for HTLF as of June 30, 2021?

As of June 30, 2021, HTLF's total assets were $18.37 billion.

What is the recent dividend declared by HTLF?

HTLF announced a 14% increase in the regular quarterly dividend to $0.25 per share.

What was the loan growth for HTLF in the second quarter of 2021?

Loan growth for HTLF in Q2 2021 was $287.7 million, or 13% annualized.