 |  | |
| CONTACT: | FOR IMMEDIATE RELEASE |
| Bryan R. McKeag | January 26, 2015 |
| Executive Vice President | |
| Chief Financial Officer | |
| (563) 589-1994 | |
| bmckeag@htlf.com | |
HEARTLAND FINANCIAL USA, INC. REPORTS FOURTH QUARTER 2014 RESULTS
Quarterly Highlights
| § | Net income available to common stockholders of $12.1 million or $0.64 per diluted common share |
| § | Return on average common equity of 11.77% |
| § | Return on average tangible common equity of 13.22% |
| § | Net interest margin at 3.94% |
| § | Loan growth of $78.4 million or 8% annualized since September 30, 2014 |
| § | Ratio of nonperforming assets to total assets of 0.73%, the lowest since 2007 |
| § | Completed private offering of $75.0 million Subordinated Notes |
| § | Completed acquisition of Community Banc-Corp of Sheboygan, Inc. on January 16, 2015 |
| § | Completed merger of Galena State Bank & Trust Co. into Illinois Bank & Trust effective January 23, 2015 |
Quarter Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net income (in millions) | $ | 12.3 | $ | 7.9 | $ | 41.9 | $ | 36.9 | |||||||
| Net income available to common stockholders (in millions) | 12.1 | 7.7 | 41.1 | 35.7 | |||||||||||
| Diluted earnings per common share | 0.64 | 0.42 | 2.19 | 2.04 | |||||||||||
| Return on average assets | 0.80 | % | 0.55 | % | 0.70 | % | 0.70 | % | |||||||
| Return on average common equity | 11.77 | 8.79 | 10.62 | 10.87 | |||||||||||
| Return on average tangible common equity | 13.22 | 9.93 | 12.04 | 12.06 | |||||||||||
| Net interest margin | 3.94 | 3.82 | 3.96 | 3.78 | |||||||||||
“I am pleased to report an excellent fourth quarter and an excellent year for Heartland in 2014. Net income increased by 15 percent over 2013, making this Heartland’s second best year in its 33-year history.” Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc. | ||||
Dubuque, Iowa, Monday, January 26, 2015-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $12.1 million, or $0.64 per diluted common share, for the quarter ended December 31, 2014, compared to $7.7 million, or $0.42 per diluted common share, for the fourth quarter of 2013. Return on average common equity was 11.77% and return on average assets was 0.80% for the fourth quarter of 2014, compared to 8.79% and 0.55%, respectively, for the same quarter in 2013.
Net income for the fourth quarter of 2014 was $4.4 million higher than the fourth quarter of 2013, primarily as a result of a $5.8 million increase in net interest income, in large part due to growth in loans.
Net income available to common stockholders for the year ended December 31, 2014, was $41.1 million, or $2.19 per diluted common share, compared to $35.7 million, or $2.04 per diluted common share, recorded during the prior year. Return on average common equity was 10.62% and return on average assets was 0.70% for 2014, compared to 10.87% and 0.70%, respectively, for 2013.
Commenting on Heartland’s results for 2014, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, “I am pleased to report an excellent fourth quarter and an excellent year for Heartland in 2014. Net income increased by 15 percent over 2013, making this Heartland’s second best year in its 33-year history.”
Subsequent to the quarter-end, Heartland completed the acquisition of Community Banc-Corp of Sheboygan, Inc., the parent company of Community Bank & Trust in Sheboygan, Wisconsin, in an all stock transaction that closed on January 16, 2015. Simultaneous with the closing, Community Bank & Trust was merged into Heartland's Wisconsin Bank & Trust subsidiary. Community Bank & Trust had total assets of approximately $528 million as of December 31, 2014. Upon completion of this merger, Wisconsin became Heartland's third state with banking assets greater than $1 billion.
Net Interest Margin Increases in Dollars; Net Interest Margin As Percentage Remains Steady
Net interest margin, expressed as a percentage of average earning assets, was 3.94% during the fourth quarter of 2014 compared to 3.96% during the third quarter of 2014 and 3.82% during the fourth quarter of 2013.
Fuller said, “Net interest margin held up well throughout 2014, ending the year at 3.94 percent despite continued pressure from very low interest rates. Margin has been maintained as a result of loan growth, a slowing in the decrease in asset yields and improvement in our funding cost.”
Interest income increased $4.8 million or 9% to $60.4 million in the fourth quarter of 2014 from the $55.6 million recorded in the fourth quarter of 2013. After adjustment to add $2.5 million for the fourth quarter of 2014 and $2.4 million for the fourth quarter of 2013 for income taxes saved on the interest earned on nontaxable securities and loans, on a tax-equivalent basis, interest income in the fourth quarter of 2014 was $62.9 million compared to $58.0 million in the fourth quarter of 2013. The increase in interest income in the fourth quarter of 2014, as compared to the fourth quarter of 2013, was primarily due to an increase in average earning assets, which increased $446.5 million or 9% during the fourth quarter of 2014 compared to the fourth quarter of 2013. Also contributing to the increase in interest income during the fourth quarter of 2014 compared to the fourth quarter of 2013 was a change in the composition of average earning assets from lower-yielding investments to higher-yielding loans. The percentage of average net loans and leases to total earning assets was 70% during the fourth quarter of 2014 compared to 65% during the fourth quarter of 2013.
Interest expense for the fourth quarter of 2014 was $8.2 million, a decrease of $1.1 million or 11% from $9.3 million in the fourth quarter of 2013. Even though average interest bearing liabilities increased $201.5 million or 5% for the quarter ended December 31, 2014, as compared to the same quarter in 2013, the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 15 basis points from 0.94% in the fourth quarter of 2013 to 0.79% in the fourth quarter of 2014. Contributing to this improvement in interest expense was a continued favorable change in the mix of deposits. Average savings balances, the lowest cost interest-bearing deposits, as a percentage of total average interest bearing deposits were 76% during the fourth quarter of 2014, compared to 74% for the fourth quarter of 2013. The average interest rate paid on savings deposits was 0.28% during the fourth quarter of 2014 compared to 0.33% during the fourth quarter of 2013 and the average interest rate paid on time deposits was 1.09% during the fourth quarter of 2014 compared to 1.39% during the fourth quarter of 2013.
Net interest income increased $5.8 million or 13% to $52.2 million in the fourth quarter of 2014 from the $46.4 million recorded in the fourth quarter of 2013. Net interest income on a tax-equivalent basis totaled $54.7 million during the
fourth quarter of 2014, an increase of $5.9 million or 12% from the $48.8 million recorded during the fourth quarter of 2013.
Noninterest Income Increases; Noninterest Expenses Remain Steady
Noninterest income totaled $21.2 million during the fourth quarter of 2014 compared to $17.6 million during the fourth quarter of 2013, an increase of $3.6 million or 20%. The largest contributor to this increase was gains on sale of loans held for sale, which increased $2.4 million or 45% for the comparative quarters.
For the fourth quarters of both 2014 and 2013, noninterest expenses totaled $53.9 million. Included in noninterest expenses were $1.0 million during the fourth quarter of 2014 and $495,000 during the fourth quarter of 2013 in costs associated with partnership investments in commercial and residential real estate projects that qualify for historic rehabilitation tax credits. These credits are included as a reduction to income tax expense as further described below. Excluding the effect of the costs associated with tax credit investments, noninterest expenses decreased $486,000 or 1% during the fourth quarter of 2014 in comparison to the fourth quarter of 2013.
Heartland's effective tax rate was 26.08% for the fourth quarter of 2014 compared to 0.58% for the fourth quarter of 2013. Included in Heartland's income taxes were federal historic rehabilitation tax credits associated with Heartland's ownership interest in qualifying real estate projects totaling $1.3 million during the fourth quarter of 2014 compared to $914,000 during the fourth quarter of 2013. For tax purposes, these investments are expected to generate capital losses upon disposal. Due to the uncertainty of Heartland's ability to utilize these potential capital losses, additions to a valuation allowance for these potential losses was recorded in the amount of $406,000 during the fourth quarter of 2014 and $246,000 during the fourth quarter of 2013. Also, separate from the historic rehabilitation tax credits, federal low-income housing tax credits included in Heartland's income taxes totaled $189,000 during the fourth quarter of 2014 compared to $200,000 during the fourth quarter of 2013. These tax credits, including valuation allowance additions, as a percentage of pre-tax income, were 6.54% during the fourth quarter of 2014 compared to 10.88% during the fourth quarter of 2013. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 28.54% during the fourth quarter of 2014 compared to 56.34% during the fourth quarter of 2013. The tax-equivalent adjustment for this tax-exempt interest income was $2.5 million during the fourth quarter of 2014 compared to $2.4 million during the fourth quarter of 2013.
Increase in Loans and Deposits
Total assets were $6.05 billion at December 31, 2014, an increase of $129.0 million since year-end 2013. Securities represented 28% of total assets at December 31, 2014, compared to 32% at year-end 2013.
Total loans and leases held to maturity were $3.88 billion at December 31, 2014, compared to $3.50 billion at year-end 2013, an increase of $379.8 million or 11%, with $78.4 million of this growth occurring in the fourth quarter, $103.6 million in the third quarter, $117.0 million in the second quarter and $80.8 million during the first quarter. A majority of the year-to-date growth occurred in the commercial and commercial real estate loan portfolio, which increased $263.3 million or 11% since year-end 2013, with $33.6 million of this growth occurring during the fourth quarter, $59.0 million during the third quarter, $102.9 million during the second quarter and $67.8 million during the first quarter.
Fuller commented, “An important contributor to Heartland’s exceptional performance is solid loan growth, which continued at a strong pace. For the fourth quarter, loans increased at an annualized rate of 8.3 percent and grew by 10.9 percent for all of 2014, a rate nearly double that of our peers.”
Total deposits were $4.77 billion as of December 31, 2014, compared to $4.67 billion at year-end 2013, an increase of $101.5 million or 2%. Demand deposits totaled $1.30 billion at December 31, 2014, an increase of $56.6 million or 5% since year-end 2013. Also increasing during 2014, savings deposits grew to $2.69 billion, an increase of $152.3 million or 6%. Certificates of deposit totaled $785.3 million at December 31, 2014, a decrease of $107.3 million or 12%.
Fuller said, “We continue to experience a favorable change in our deposit mix, with sustained growth of no-cost demand deposits, now representing 27 percent of total deposits. Non-time categories now represent 84 percent of total deposits.”
Decrease in Nonperforming Assets; Increase in Provision for Loan Losses
Nonperforming loans, exclusive of those covered under loss sharing agreements, were $24.6 million or 0.63% of total loans and leases at December 31, 2014, compared to $42.4 million or 1.21% of total loans and leases at December 31, 2013. Approximately 28%, or $6.8 million, of Heartland's nonperforming loans have individual loan balances exceeding $1.0 million, the largest of which is $3.8 million. These nonperforming loans, to an aggregate of three borrowers, are spread over two different industry classifications and are all located in Heartland's Western markets.
Other real estate owned declined $10.8 million or 36% to $19.0 million at December 31, 2014, compared to $29.9 million at December 31, 2013. Liquidation strategies have been identified for all the assets held in other real estate owned. Management continues to market these properties through an orderly liquidation process instead of a quick liquidation process in order to avoid discounts greater than the projected carrying costs.
The allowance for loan and lease losses at December 31, 2014, was 1.07% of loans and leases and 168.58% of nonperforming loans compared to 1.19% of loans and leases and 98.27% of nonperforming loans at December 31, 2013. The provision for loan losses was $2.9 million for the fourth quarter of 2014 compared to $2.0 million for the fourth quarter of 2013.
Net charge-offs on loans during the fourth quarter of 2014 were $3.1 million compared to $1.7 million during the fourth quarter of 2013.
“With nonperforming loans currently at 0.63 percent of total loans, Heartland’s credit quality can be described as exceptional. Looking back several years, we are proud to see this ratio approaching pre-recession levels,” Fuller concluded.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. If you are unable to participate on the call, a replay will be available until January 25, 2016, by logging on to www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company providing banking, mortgage, wealth management, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 86 banking locations in 63 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas and Missouri and loan production offices in California, Nevada, Wyoming, Idaho, North Dakota, Oregon, Washington and Nebraska. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war, (iii) changes in state and federal laws, regulations and governmental policies concerning the Company's general business; (iv) changes in interest rates and prepayment rates of the Company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions, (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW-
###
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
| For the Quarter Ended December 31, | For the Year Ended December 31, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Interest Income | |||||||||||||||
| Interest and fees on loans and leases | $ | 50,226 | $ | 44,995 | $ | 194,022 | $ | 164,702 | |||||||
| Interest on securities: | |||||||||||||||
| Taxable | 6,972 | 7,327 | 29,727 | 21,501 | |||||||||||
| Nontaxable | 3,190 | 3,294 | 13,269 | 13,295 | |||||||||||
| Interest on federal funds sold | — | 1 | 1 | 1 | |||||||||||
| Interest on deposits in other financial institutions | 3 | 3 | 23 | 12 | |||||||||||
| Total Interest Income | 60,391 | 55,620 | 237,042 | 199,511 | |||||||||||
| Interest Expense | |||||||||||||||
| Interest on deposits | 4,144 | 5,057 | 18,154 | 19,968 | |||||||||||
| Interest on short-term borrowings | 222 | 421 | 877 | 808 | |||||||||||
| Interest on other borrowings | 3,854 | 3,785 | 14,938 | 14,907 | |||||||||||
| Total Interest Expense | 8,220 | 9,263 | 33,969 | 35,683 | |||||||||||
| Net Interest Income | 52,171 | 46,357 | 203,073 | 163,828 | |||||||||||
| Provision for loan and lease losses | 2,866 | 2,049 | 14,501 | 9,697 | |||||||||||
| Net Interest Income After Provision for Loan and Lease Losses | 49,305 | 44,308 | 188,572 | 154,131 | |||||||||||
| Noninterest Income | |||||||||||||||
| Service charges and fees | 5,078 | 4,885 | 20,085 | 17,660 | |||||||||||
| Loan servicing income | 1,360 | 783 | 5,583 | 1,648 | |||||||||||
| Trust fees | 3,350 | 2,944 | 13,097 | 11,708 | |||||||||||
| Brokerage and insurance commissions | 1,115 | 1,246 | 4,440 | 4,561 | |||||||||||
| Securities gains, net | 1,208 | 509 | 3,668 | 7,121 | |||||||||||
| Gain (loss) on trading account securities | — | 582 | (38 | ) | 1,421 | ||||||||||
| Gains on sale of loans held for sale | 7,778 | 5,353 | 31,337 | 40,195 | |||||||||||
| Valuation adjustment on mortgage servicing rights | — | — | — | 496 | |||||||||||
| Income on bank owned life insurance | 399 | 426 | 1,472 | 1,555 | |||||||||||
| Other noninterest income | 945 | 846 | 2,580 | 3,253 | |||||||||||
| Total Noninterest Income | 21,233 | 17,574 | 82,224 | 89,618 | |||||||||||
| Noninterest Expense | |||||||||||||||
| Salaries and employee benefits | 31,415 | 30,121 | 129,843 | 118,224 | |||||||||||
| Occupancy | 3,905 | 3,663 | 15,746 | 13,459 | |||||||||||
| Furniture and equipment | 2,097 | 2,007 | 8,105 | 8,040 | |||||||||||
| Professional fees | 5,072 | 5,270 | 18,241 | 17,532 | |||||||||||
| FDIC insurance assessments | 960 | 1,036 | 3,808 | 3,544 | |||||||||||
| Advertising | 1,442 | 1,458 | 5,524 | 5,294 | |||||||||||
| Intangible assets amortization | 487 | 469 | 2,223 | 1,063 | |||||||||||
| Other real estate and loan collection expenses | 524 | 1,999 | 2,309 | 4,445 | |||||||||||
| Loss on sales/valuations of assets, net | 116 | 641 | 2,105 | 3,034 | |||||||||||
| Other noninterest expenses | 7,930 | 7,237 | 27,896 | 21,926 | |||||||||||
| Total Noninterest Expense | 53,948 | 53,901 | 215,800 | 196,561 | |||||||||||
| Income Before Income Taxes | 16,590 | 7,981 | 54,996 | 47,188 | |||||||||||
| Income taxes | 4,327 | 46 | 13,096 | 10,335 | |||||||||||
| Net Income | 12,263 | 7,935 | 41,900 | 36,853 | |||||||||||
| Net income attributable to noncontrolling interest, net of tax | — | — | — | (64 | ) | ||||||||||
| Net Income Attributable to Heartland | 12,263 | 7,935 | 41,900 | 36,789 | |||||||||||
| Preferred dividends and discount | (204 | ) | (204 | ) | (817 | ) | (1,093 | ) | |||||||
| Net Income Available to Common Stockholders | $ | 12,059 | $ | 7,731 | $ | 41,083 | $ | 35,696 | |||||||
| Earnings per common share-diluted | $ | 0.64 | $ | 0.42 | $ | 2.19 | $ | 2.04 | |||||||
| Weighted average shares outstanding-diluted | 18,762,272 | 18,360,470 | 18,741,921 | 17,460,066 | |||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Interest Income | |||||||||||||||||||
| Interest and fees on loans and leases | $ | 50,226 | $ | 49,311 | $ | 48,101 | $ | 46,384 | $ | 44,995 | |||||||||
| Interest on securities: | |||||||||||||||||||
| Taxable | 6,972 | 7,547 | 7,447 | 7,761 | 7,327 | ||||||||||||||
| Nontaxable | 3,190 | 3,249 | 3,708 | 3,122 | 3,294 | ||||||||||||||
| Interest on federal funds sold | — | 1 | — | — | 1 | ||||||||||||||
| Interest on deposits in other financial institutions | 3 | 6 | 7 | 7 | 3 | ||||||||||||||
| Total Interest Income | 60,391 | 60,114 | 59,263 | 57,274 | 55,620 | ||||||||||||||
| Interest Expense | |||||||||||||||||||
| Interest on deposits | 4,144 | 4,655 | 4,577 | 4,778 | 5,057 | ||||||||||||||
| Interest on short-term borrowings | 222 | 227 | 202 | 226 | 421 | ||||||||||||||
| Interest on other borrowings | 3,854 | 3,741 | 3,685 | 3,658 | 3,785 | ||||||||||||||
| Total Interest Expense | 8,220 | 8,623 | 8,464 | 8,662 | 9,263 | ||||||||||||||
| Net Interest Income | 52,171 | 51,491 | 50,799 | 48,612 | 46,357 | ||||||||||||||
| Provision for loan and lease losses | 2,866 | 2,553 | 2,751 | 6,331 | 2,049 | ||||||||||||||
| Net Interest Income After Provision for Loan and Lease Losses | 49,305 | 48,938 | 48,048 | 42,281 | 44,308 | ||||||||||||||
| Noninterest Income | |||||||||||||||||||
| Service charges and fees | 5,078 | 4,857 | 5,254 | 4,896 | 4,885 | ||||||||||||||
| Loan servicing income | 1,360 | 1,319 | 1,393 | 1,511 | 783 | ||||||||||||||
| Trust fees | 3,350 | 3,194 | 3,343 | 3,210 | 2,944 | ||||||||||||||
| Brokerage and insurance commissions | 1,115 | 1,044 | 1,158 | 1,123 | 1,246 | ||||||||||||||
| Securities gains, net | 1,208 | 825 | 854 | 781 | 509 | ||||||||||||||
| Gain (loss) on trading account securities | — | — | — | (38 | ) | 582 | |||||||||||||
| Gains on sale of loans held for sale | 7,778 | 8,384 | 8,796 | 6,379 | 5,353 | ||||||||||||||
| Valuation adjustment on mortgage servicing rights | — | — | — | — | — | ||||||||||||||
| Income on bank owned life insurance | 399 | 371 | 339 | 363 | 426 | ||||||||||||||
| Other noninterest income | 945 | 612 | 398 | 625 | 846 | ||||||||||||||
| Total Noninterest Income | 21,233 | 20,606 | 21,535 | 18,850 | 17,574 | ||||||||||||||
| Noninterest Expense | |||||||||||||||||||
| Salaries and employee benefits | 31,415 | 33,546 | 32,563 | 32,319 | 30,121 | ||||||||||||||
| Occupancy | 3,905 | 3,807 | 3,984 | 4,050 | 3,663 | ||||||||||||||
| Furniture and equipment | 2,097 | 2,033 | 2,085 | 1,890 | 2,007 | ||||||||||||||
| Professional fees | 5,072 | 4,429 | 4,214 | 4,526 | 5,270 | ||||||||||||||
| FDIC insurance assessments | 960 | 888 | 980 | 980 | 1,036 | ||||||||||||||
| Advertising | 1,442 | 1,383 | 1,511 | 1,188 | 1,458 | ||||||||||||||
| Intangible assets amortization | 487 | 521 | 591 | 624 | 469 | ||||||||||||||
| Other real estate and loan collection expenses | 524 | 215 | 518 | 1,052 | 1,999 | ||||||||||||||
| Loss on sales/valuations of assets, net | 116 | 447 | 1,379 | 163 | 641 | ||||||||||||||
| Other noninterest expenses | 7,930 | 7,386 | 6,834 | 5,746 | 7,237 | ||||||||||||||
| Total Noninterest Expense | 53,948 | 54,655 | 54,659 | 52,538 | 53,901 | ||||||||||||||
| Income Before Income Taxes | 16,590 | 14,889 | 14,924 | 8,593 | 7,981 | ||||||||||||||
| Income taxes | 4,327 | 2,916 | 4,150 | 1,703 | 46 | ||||||||||||||
| Net Income | 12,263 | 11,973 | 10,774 | 6,890 | 7,935 | ||||||||||||||
| Net income attributable to noncontrolling interest, net of tax | — | — | — | — | — | ||||||||||||||
| Net Income Attributable to Heartland | 12,263 | 11,973 | 10,774 | 6,890 | 7,935 | ||||||||||||||
| Preferred dividends and discount | (204 | ) | (205 | ) | (204 | ) | (204 | ) | (204 | ) | |||||||||
| Net Income Available to Common Stockholders | $ | 12,059 | $ | 11,768 | $ | 10,570 | $ | 6,686 | $ | 7,731 | |||||||||
| Earnings per common share-diluted | $ | 0.64 | $ | 0.63 | $ | 0.56 | $ | 0.36 | $ | 0.42 | |||||||||
| Weighted average shares outstanding-diluted | 18,762,272 | 18,752,748 | 18,746,735 | 18,724,936 | 18,360,470 | ||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| As Of | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Assets | |||||||||||||||||||
| Cash and due from banks | $ | 64,150 | $ | 63,400 | $ | 98,613 | $ | 84,744 | $ | 118,441 | |||||||||
| Federal funds sold and other short-term investments | 9,721 | 4,436 | 4,047 | 3,884 | 6,829 | ||||||||||||||
| Cash and cash equivalents | 73,871 | 67,836 | 102,660 | 88,628 | 125,270 | ||||||||||||||
| Time deposits in other financial institutions | 2,605 | 2,605 | 3,105 | 3,355 | 3,355 | ||||||||||||||
| Securities: | |||||||||||||||||||
| Trading, at fair value | — | — | — | — | 1,801 | ||||||||||||||
| Available for sale, at fair value | 1,401,868 | 1,369,703 | 1,412,809 | 1,400,756 | 1,633,902 | ||||||||||||||
| Held to maturity, at cost | 284,587 | 255,312 | 257,217 | 257,927 | 237,498 | ||||||||||||||
| Other investments, at cost | 20,498 | 20,514 | 20,932 | 18,755 | 21,843 | ||||||||||||||
| Loans held for sale | 70,514 | 93,054 | 87,173 | 54,862 | 46,665 | ||||||||||||||
| Loans and leases: | |||||||||||||||||||
| Held to maturity | 3,876,745 | 3,798,305 | 3,694,734 | 3,577,776 | 3,496,952 | ||||||||||||||
| Loans covered by loss share agreements | 1,258 | 3,850 | 4,379 | 5,466 | 5,749 | ||||||||||||||
| Allowance for loan and lease losses | (41,449 | ) | (41,698 | ) | (40,892 | ) | (38,573 | ) | (41,685 | ) | |||||||||
| Loans and leases, net | 3,836,554 | 3,760,457 | 3,658,221 | 3,544,669 | 3,461,016 | ||||||||||||||
| Premises, furniture and equipment, net | 130,713 | 132,240 | 133,127 | 135,054 | 135,714 | ||||||||||||||
| Other real estate, net | 19,016 | 20,475 | 24,395 | 28,083 | 29,852 | ||||||||||||||
| Goodwill | 35,583 | 35,583 | 35,583 | 35,583 | 35,583 | ||||||||||||||
| Other intangible assets, net | 33,932 | 33,399 | 32,732 | 32,690 | 32,959 | ||||||||||||||
| Cash surrender value on life insurance | 82,638 | 82,224 | 81,840 | 81,486 | 81,110 | ||||||||||||||
| FDIC indemnification asset | — | 83 | 124 | 190 | 249 | ||||||||||||||
| Other assets | 59,983 | 61,324 | 64,000 | 65,064 | 76,899 | ||||||||||||||
| Total Assets | $ | 6,052,362 | $ | 5,934,809 | $ | 5,913,918 | $ | 5,747,102 | $ | 5,923,716 | |||||||||
| Liabilities and Equity | |||||||||||||||||||
| Liabilities | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand | $ | 1,295,193 | $ | 1,274,439 | $ | 1,221,703 | $ | 1,195,457 | $ | 1,238,581 | |||||||||
| Savings | 2,687,493 | 2,599,850 | 2,556,784 | 2,582,166 | 2,535,242 | ||||||||||||||
| Time | 785,336 | 852,430 | 862,995 | 885,741 | 892,676 | ||||||||||||||
| Total deposits | 4,768,022 | 4,726,719 | 4,641,482 | 4,663,364 | 4,666,499 | ||||||||||||||
| Short-term borrowings | 330,264 | 348,305 | 420,494 | 256,250 | 408,756 | ||||||||||||||
| Other borrowings | 396,255 | 334,513 | 329,715 | 334,916 | 350,109 | ||||||||||||||
| Accrued expenses and other liabilities | 61,504 | 41,873 | 49,806 | 35,237 | 58,892 | ||||||||||||||
| Total Liabilities | 5,556,045 | 5,451,410 | 5,441,497 | 5,289,767 | 5,484,256 | ||||||||||||||
| Stockholders' Equity | |||||||||||||||||||
| Preferred equity | 81,698 | 81,698 | 81,698 | 81,698 | 81,698 | ||||||||||||||
| Common stock | 18,511 | 18,477 | 18,468 | 18,455 | 18,399 | ||||||||||||||
| Capital surplus | 95,816 | 94,393 | 93,334 | 92,199 | 91,632 | ||||||||||||||
| Retained earnings | 298,764 | 288,555 | 278,632 | 269,908 | 265,067 | ||||||||||||||
| Accumulated other comprehensive income (loss) | 1,528 | 276 | 289 | (4,903 | ) | (17,336 | ) | ||||||||||||
| Treasury stock at cost | — | — | — | (22 | ) | — | |||||||||||||
| Total Heartland Stockholders' Equity | 496,317 | 483,399 | 472,421 | 457,335 | 439,460 | ||||||||||||||
| Noncontrolling interest | — | — | — | — | — | ||||||||||||||
| Total Equity | 496,317 | 483,399 | 472,421 | 457,335 | 439,460 | ||||||||||||||
| Total Liabilities and Equity | $ | 6,052,362 | $ | 5,934,809 | $ | 5,913,918 | $ | 5,747,102 | $ | 5,923,716 | |||||||||
| 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, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Average Balances | |||||||||||||||||
| Assets | $ | 5,974,188 | $ | 5,604,487 | $ | 5,857,488 | $ | 5,083,131 | |||||||||
| Loans and leases, net of unearned | 3,899,465 | 3,341,252 | 3,744,830 | 3,016,433 | |||||||||||||
| Deposits | 4,784,592 | 4,512,170 | 4,698,936 | 4,013,252 | |||||||||||||
| Earning assets | 5,508,287 | 5,061,822 | 5,384,275 | 4,582,296 | |||||||||||||
| Interest bearing liabilities | 4,123,478 | 3,921,951 | 4,101,071 | 3,545,737 | |||||||||||||
| Common stockholders' equity | 406,664 | 349,056 | 386,844 | 328,454 | |||||||||||||
| Total stockholders' equity | 488,362 | 430,754 | 468,542 | 411,056 | |||||||||||||
| Tangible common stockholders' equity | 361,916 | 308,802 | 341,134 | 293,505 | |||||||||||||
| Key Performance Ratios | |||||||||||||||||
| Annualized return on average assets | 0.80 | % | 0.55 | % | 0.70 | % | 0.70 | % | |||||||||
| Annualized return on average common equity | 11.77 | % | 8.79 | % | 10.62 | % | 10.87 | % | |||||||||
| Annualized return on average common tangible equity | 13.22 | % | 9.93 | % | 12.04 | % | 12.16 | % | |||||||||
| Annualized ratio of net charge-offs to average loans and leases | 0.32 | % | 0.20 | % | 0.39 | % | 0.10 | % | |||||||||
Annualized net interest margin(1) | 3.94 | % | 3.82 | % | 3.96 | % | 3.78 | % | |||||||||
Efficiency ratio, fully taxable equivalent(2) | 69.99 | % | 79.43 | % | 71.61 | % | 75.05 | % | |||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||
| (2) Refer to the "Non-GAAP Reconciliation-Efficiency Ratio" tables that follow for details of this non-GAAP measure. | |||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Average Balances | |||||||||||||||||||
| Assets | $ | 5,974,188 | $ | 5,882,792 | $ | 5,800,104 | $ | 5,770,350 | $ | 5,604,487 | |||||||||
| Loans and leases, net of unearned | 3,899,465 | 3,812,218 | 3,692,159 | 3,571,127 | 3,341,252 | ||||||||||||||
| Deposits | 4,784,592 | 4,710,177 | 4,665,993 | 4,633,192 | 4,512,170 | ||||||||||||||
| Earning assets | 5,508,287 | 5,426,336 | 5,321,149 | 5,278,331 | 5,061,822 | ||||||||||||||
| Interest bearing liabilities | 4,123,478 | 4,099,526 | 4,091,233 | 4,089,691 | 3,921,951 | ||||||||||||||
| Common stockholders' equity | 406,664 | 393,740 | 380,561 | 365,889 | 349,056 | ||||||||||||||
| Total stockholders' equity | 488,362 | 475,438 | 462,259 | 447,587 | 430,754 | ||||||||||||||
| Tangible common stockholders' equity | 361,916 | 348,423 | 334,747 | 318,898 | 308,802 | ||||||||||||||
| Key Performance Ratios | |||||||||||||||||||
| Annualized return on average assets | 0.80 | % | 0.79 | % | 0.73 | % | 0.47 | % | 0.55 | % | |||||||||
| Annualized return on average common equity | 11.77 | % | 11.86 | % | 11.14 | % | 7.41 | % | 8.79 | % | |||||||||
| Annualized return on average common tangible equity | 13.22 | % | 13.40 | % | 12.66 | % | 8.50 | % | 9.93 | % | |||||||||
| Annualized ratio of net charge-offs to average loans and leases | 0.32 | % | 0.18 | % | 0.05 | % | 1.07 | % | 0.20 | % | |||||||||
Annualized net interest margin(1) | 3.94 | % | 3.96 | % | 4.04 | % | 3.92 | % | 3.82 | % | |||||||||
Efficiency ratio, fully taxable equivalent(2) | 69.99 | % | 70.76 | % | 70.97 | % | 74.94 | % | 79.43 | % | |||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||||
| (2) Refer to the "Non-GAAP Reconciliation-Efficiency Ratio" tables that follow for details of this non-GAAP measure. | |||||||||||||||||||
| 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, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Reconciliation of Non-GAAP Measure-Efficiency Ratio | |||||||||||||||||
| Net interest income | $ | 52,171 | $ | 46,357 | $ | 203,073 | $ | 163,828 | |||||||||
Taxable equivalent adjustment(1) | 2,550 | 2,416 | 10,297 | 9,465 | |||||||||||||
| Fully taxable equivalent net interest income | 54,721 | 48,773 | 213,370 | 173,293 | |||||||||||||
| Noninterest income | 21,233 | 17,574 | 82,224 | 89,618 | |||||||||||||
| Securities gains, net | (1,208 | ) | (509 | ) | (3,668 | ) | (7,121 | ) | |||||||||
| Adjusted income | $ | 74,746 | $ | 65,838 | $ | 291,926 | $ | 255,790 | |||||||||
| Total noninterest expenses | $ | 53,948 | $ | 53,901 | $ | 215,800 | $ | 196,561 | |||||||||
| Less: | |||||||||||||||||
| Intangible assets amortization | 487 | 469 | 2,223 | 1,063 | |||||||||||||
| Partnership investment in historic rehabilitation tax credits | 1,028 | 495 | 2,436 | 495 | |||||||||||||
| Loss on sales/valuations of assets, net | 116 | 641 | 2,105 | 3,034 | |||||||||||||
| Adjusted noninterest expenses | $ | 52,317 | $ | 52,296 | $ | 209,036 | $ | 191,969 | |||||||||
Efficiency ratio, fully taxable equivalent(2) | 69.99 | % | 79.43 | % | 71.61 | % | 75.05 | % | |||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||
| (2) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable equivalent net interest income and noninterest income. Noninterest income and noninterest expenses exclude items that management believes are not comparable among the periods presented. This measure should not be considered a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP measure provides supplemental useful information for proper understanding of the financial results. | |||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Reconciliation of Non-GAAP Measure-Efficiency Ratio | |||||||||||||||||||
| Net interest income | $ | 52,171 | $ | 51,491 | $ | 50,799 | $ | 48,612 | $ | 46,357 | |||||||||
Taxable equivalent adjustment(1) | 2,550 | 2,613 | 2,762 | 2,372 | 2,416 | ||||||||||||||
| Fully taxable equivalent net interest income | 54,721 | 54,104 | 53,561 | 50,984 | 48,773 | ||||||||||||||
| Noninterest income | 21,233 | 20,606 | 21,535 | 18,850 | 17,574 | ||||||||||||||
| Securities gains, net | (1,208 | ) | (825 | ) | (854 | ) | (781 | ) | (509 | ) | |||||||||
| Adjusted income | $ | 74,746 | $ | 73,885 | $ | 74,242 | $ | 69,053 | $ | 65,838 | |||||||||
| Total noninterest expenses | $ | 53,948 | $ | 54,655 | $ | 54,659 | $ | 52,538 | $ | 53,901 | |||||||||
| Less: | |||||||||||||||||||
| Intangible assets amortization | 487 | 521 | 591 | 624 | 469 | ||||||||||||||
| Partnership investment in historic rehabilitation tax credits | 1,028 | 1,408 | — | — | 495 | ||||||||||||||
| Loss on sales/valuation of assets, net | 116 | 447 | 1,379 | 163 | 641 | ||||||||||||||
| Adjusted noninterest expenses | $ | 52,317 | $ | 52,279 | $ | 52,689 | $ | 51,751 | $ | 52,296 | |||||||||
Efficiency ratio, fully taxable equivalent(2) | 69.99 | % | 70.76 | % | 70.97 | % | 74.94 | % | 79.43 | % | |||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||||
| (2) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable equivalent net interest income and noninterest income. Noninterest income and noninterest expenses exclude items that management believes are not comparable among the periods presented. This measure should not be considered a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP measure provides supplemental useful information for proper understanding of the financial results. | |||||||||||||||||||
| 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 | |||||||||||||||||||
| 12/31/14 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Common Share Data | |||||||||||||||||||
| Book value per common share | $ | 22.40 | $ | 21.74 | $ | 21.16 | $ | 20.36 | $ | 19.44 | |||||||||
Tangible book value per common share(1) | $ | 19.99 | $ | 19.30 | $ | 18.69 | $ | 17.86 | $ | 16.90 | |||||||||
| ASC 320 effect on book value per common share | $ | 0.19 | $ | 0.10 | $ | 0.13 | $ | (0.16 | ) | $ | (0.82 | ) | |||||||
| Common shares outstanding, net of treasury stock | 18,511,125 | 18,477,463 | 18,467,646 | 18,454,048 | 18,399,156 | ||||||||||||||
Tangible capital ratio(2) | 6.16 | % | 6.06 | % | 5.88 | % | 5.78 | % | 5.29 | % | |||||||||
| Loan and Lease Data | |||||||||||||||||||
| Loans held to maturity: | |||||||||||||||||||
| Commercial and commercial real estate | $ | 2,743,140 | $ | 2,709,544 | $ | 2,650,517 | $ | 2,547,625 | $ | 2,479,880 | |||||||||
| Residential mortgage | 380,341 | 360,309 | 341,697 | 365,162 | 349,349 | ||||||||||||||
| Agricultural and agricultural real estate | 423,827 | 404,423 | 389,918 | 370,348 | 376,735 | ||||||||||||||
| Consumer | 330,555 | 326,148 | 315,234 | 297,978 | 294,145 | ||||||||||||||
| Unearned discount and deferred loan fees | (1,118 | ) | (2,119 | ) | (2,632 | ) | (3,337 | ) | (3,157 | ) | |||||||||
| Total loans and leases held to maturity | $ | 3,876,745 | $ | 3,798,305 | $ | 3,694,734 | $ | 3,577,776 | $ | 3,496,952 | |||||||||
| Loans covered under loss share agreements: | |||||||||||||||||||
| Commercial and commercial real estate | $ | 54 | $ | 1,188 | $ | 1,208 | $ | 2,292 | $ | 2,314 | |||||||||
| Residential mortgage | 1,204 | 1,762 | 1,995 | 2,062 | 2,280 | ||||||||||||||
| Agricultural and agricultural real estate | — | 573 | 567 | 502 | 543 | ||||||||||||||
| Consumer | — | 327 | 609 | 610 | 612 | ||||||||||||||
| Total loans and leases covered under loss share agreements | $ | 1,258 | $ | 3,850 | $ | 4,379 | $ | 5,466 | $ | 5,749 | |||||||||
| Other Selected Trend Information | |||||||||||||||||||
| Effective tax rate | 26.08 | % | 19.59 | % | 27.81 | % | 19.82 | % | 0.57 | % | |||||||||
| Full time equivalent employees | 1,631 | 1,646 | 1,658 | 1,668 | 1,676 | ||||||||||||||
| Trust assets under management | $ | 1,860,546 | $ | 1,820,612 | $ | 1,859,643 | $ | 1,736,308 | $ | 1,621,970 | |||||||||
| Total Residential Mortgage Loan Applications | $ | 383,845 | $ | 445,039 | $ | 460,533 | $ | 316,829 | $ | 293,115 | |||||||||
| Residential Mortgage Loans Originated | $ | 293,268 | $ | 312,428 | $ | 277,895 | $ | 175,249 | $ | 232,150 | |||||||||
| Residential Mortgage Loans Sold | $ | 281,250 | $ | 283,677 | $ | 208,429 | $ | 149,993 | $ | 214,334 | |||||||||
| Residential Mortgage Loan Servicing Portfolio | $ | 3,498,724 | $ | 3,362,717 | $ | 3,198,510 | $ | 3,107,589 | $ | 3,045,893 | |||||||||
| (1) Total common stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by common shares outstanding, net of treasury. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. | |||||||||||||||||||
| (2) Total common stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less intangible assets (excluding mortgage servicing rights). This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Allowance for Loan and Lease Losses | |||||||||||||||||||
| Balance, beginning of period | $ | 41,698 | $ | 40,892 | $ | 38,573 | $ | 41,685 | $ | 41,311 | |||||||||
| Provision for loan and lease losses | 2,866 | 2,553 | 2,751 | 6,331 | 2,049 | ||||||||||||||
| Charge-offs on loans not covered by loss share agreements | (4,020 | ) | (2,649 | ) | (1,392 | ) | (10,617 | ) | (3,197 | ) | |||||||||
| Charge-offs on loans covered by loss share agreements | — | — | (8 | ) | (41 | ) | — | ||||||||||||
| Recoveries | 905 | 894 | 913 | 1,215 | 1,522 | ||||||||||||||
| Recoveries on loans covered by loss share agreements | — | 8 | 55 | — | — | ||||||||||||||
| Balance, end of period | $ | 41,449 | $ | 41,698 | $ | 40,892 | $ | 38,573 | $ | 41,685 | |||||||||
| Asset Quality | |||||||||||||||||||
| Not covered under loss share agreements: | |||||||||||||||||||
| Nonaccrual loans | $ | 24,588 | $ | 30,130 | $ | 29,076 | $ | 31,928 | $ | 42,394 | |||||||||
| Loans and leases past due ninety days or more as to interest or principal payments | — | — | — | — | 24 | ||||||||||||||
| Other real estate owned | 19,016 | 19,873 | 23,761 | 28,033 | 29,794 | ||||||||||||||
| Other repossessed assets | 445 | 506 | 414 | 397 | 397 | ||||||||||||||
| Total nonperforming assets not covered under loss share agreements | $ | 44,049 | $ | 50,509 | $ | 53,251 | $ | 60,358 | $ | 72,609 | |||||||||
| Covered under loss share agreements: | |||||||||||||||||||
| Nonaccrual loans | $ | 278 | $ | 297 | $ | 297 | $ | 820 | $ | 783 | |||||||||
| Other real estate owned | — | 602 | 634 | 50 | 58 | ||||||||||||||
| Total nonperforming assets covered under loss share agreements | $ | 278 | $ | 899 | $ | 931 | $ | 870 | $ | 841 | |||||||||
| Performing troubled debt restructured loans | $ | 12,133 | $ | 11,994 | $ | 12,076 | $ | 12,548 | $ | 19,353 | |||||||||
| Nonperforming Assets Activity | |||||||||||||||||||
| Balance, beginning of period | $ | 51,408 | $ | 54,182 | $ | 61,228 | $ | 73,450 | $ | 81,384 | |||||||||
| Net loan charge offs | (3,115 | ) | (1,747 | ) | (432 | ) | (9,443 | ) | (1,675 | ) | |||||||||
| New nonperforming loans | 4,825 | 5,911 | 4,264 | 5,328 | 6,981 | ||||||||||||||
Reduction of nonperforming loans(1) | (6,599 | ) | (2,679 | ) | (4,145 | ) | (3,303 | ) | (4,951 | ) | |||||||||
| OREO/Repossessed assets sales proceeds | (1,509 | ) | (4,313 | ) | (5,878 | ) | (4,731 | ) | (6,907 | ) | |||||||||
| OREO/Repossessed assets writedowns, net | (588 | ) | (38 | ) | (902 | ) | (80 | ) | (1,387 | ) | |||||||||
| Net activity at Citizens Finance Co. | (95 | ) | 92 | 47 | 7 | 5 | |||||||||||||
| Balance, end of period | $ | 44,327 | $ | 51,408 | $ | 54,182 | $ | 61,228 | $ | 73,450 | |||||||||
| Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements | |||||||||||||||||||
| Ratio of nonperforming loans and leases to total loans and leases | 0.63 | % | 0.79 | % | 0.79 | % | 0.89 | % | 1.21 | % | |||||||||
| Ratio of nonperforming assets to total assets | 0.73 | % | 0.85 | % | 0.90 | % | 1.06 | % | 1.23 | % | |||||||||
| Annualized ratio of net loan charge-offs to average loans and leases | 0.32 | % | 0.18 | % | 0.05 | % | 1.07 | % | 0.20 | % | |||||||||
| Allowance for loan and lease losses as a percent of loans and leases | 1.07 | % | 1.10 | % | 1.11 | % | 1.08 | % | 1.19 | % | |||||||||
| Allowance for loan and lease losses as a percent of nonperforming loans and leases | 168.58 | % | 138.40 | % | 140.64 | % | 120.81 | % | 98.27 | % | |||||||||
| Loans delinquent 30-89 days as a percent of total loans | 0.21 | % | 0.32 | % | 0.25 | % | 0.31 | % | 0.32 | % | |||||||||
| (1) Includes principal reductions and transfers to performing status | |||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| December 31, 2014 | December 31, 2013 | ||||||||||||||||||||
| Average | Average | ||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
| Earning Assets | |||||||||||||||||||||
| Securities: | |||||||||||||||||||||
| Taxable | $ | 1,278,709 | $ | 6,972 | 2.16 | % | $ | 1,354,055 | $ | 7,327 | 2.15 | % | |||||||||
Nontaxable(1) | 362,832 | 4,908 | 5.37 | 395,449 | 5,063 | 5.08 | |||||||||||||||
| Total securities | 1,641,541 | 11,880 | 2.87 | 1,749,504 | 12,390 | 2.81 | |||||||||||||||
| Interest bearing deposits | 8,928 | 3 | 0.13 | 9,320 | 3 | 0.13 | |||||||||||||||
| Federal funds sold | 683 | — | — | 3,629 | 1 | 0.11 | |||||||||||||||
Loans and leases:(2) | |||||||||||||||||||||
Commercial and commercial real estate(1) | 2,701,006 | 32,613 | 4.79 | 2,310,060 | 28,951 | 4.97 | |||||||||||||||
| Residential mortgage | 458,781 | 4,803 | 4.15 | 382,446 | 4,177 | 4.33 | |||||||||||||||
Agricultural and agricultural real estate(1) | 411,431 | 5,050 | 4.87 | 361,153 | 4,651 | 5.11 | |||||||||||||||
| Consumer | 328,247 | 6,664 | 8.05 | 287,593 | 6,316 | 8.71 | |||||||||||||||
| Fees on loans | — | 1,928 | — | — | 1,547 | — | |||||||||||||||
| Less: allowance for loan and lease losses | (42,330 | ) | — | — | (41,883 | ) | — | — | |||||||||||||
| Net loans and leases | 3,857,135 | 51,058 | 5.25 | 3,299,369 | 45,642 | 5.49 | |||||||||||||||
| Total earning assets | 5,508,287 | 62,941 | 4.53 | % | 5,061,822 | 58,036 | 4.55 | % | |||||||||||||
| Nonearning Assets | 465,901 | 542,665 | |||||||||||||||||||
| Total Assets | $ | 5,974,188 | $ | 5,604,487 | |||||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||||
| Savings | $ | 2,640,560 | $ | 1,858 | 0.28 | % | $ | 2,443,175 | $ | 2,037 | 0.33 | % | |||||||||
| Time, $100,000 and over | 331,770 | 833 | 1.00 | 331,321 | 1,008 | 1.21 | |||||||||||||||
| Other time deposits | 497,832 | 1,453 | 1.16 | 531,761 | 2,012 | 1.50 | |||||||||||||||
| Short-term borrowings | 311,738 | 222 | 0.28 | 276,785 | 421 | 0.60 | |||||||||||||||
| Other borrowings | 341,578 | 3,854 | 4.48 | 338,909 | 3,785 | 4.43 | |||||||||||||||
| Total interest bearing liabilities | 4,123,478 | 8,220 | 0.79 | % | 3,921,951 | 9,263 | 0.94 | % | |||||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||||
| Noninterest bearing deposits | 1,314,430 | 1,205,913 | |||||||||||||||||||
| Accrued interest and other liabilities | 47,918 | 45,869 | |||||||||||||||||||
| Total noninterest bearing liabilities | 1,362,348 | 1,251,782 | |||||||||||||||||||
| Stockholders' Equity | 488,362 | 430,754 | |||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 5,974,188 | $ | 5,604,487 | |||||||||||||||||
Net interest income(1) | $ | 54,721 | $ | 48,773 | |||||||||||||||||
Net interest spread(1) | 3.74 | % | 3.61 | % | |||||||||||||||||
Net interest income to total earning assets(1) | 3.94 | % | 3.82 | % | |||||||||||||||||
| Interest bearing liabilities to earning assets | 74.86 | % | 77.48 | % | |||||||||||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35% | |||||||||||||||||||||
| (2) Nonaccrual loans are included in average loans outstanding. | |||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||||
| For the Year Ended | |||||||||||||||||||||
| December 31, 2014 | December 31, 2013 | ||||||||||||||||||||
| Average | Average | ||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
| Earning Assets | |||||||||||||||||||||
| Securities: | |||||||||||||||||||||
| Taxable | $ | 1,296,991 | $ | 29,727 | 2.29 | % | $ | 1,198,777 | $ | 21,501 | 1.79 | % | |||||||||
Nontaxable(1) | 375,788 | 20,414 | 5.43 | 395,578 | 20,452 | 5.17 | |||||||||||||||
| Total securities | 1,672,779 | 50,141 | 3.00 | 1,594,355 | 41,953 | 2.63 | |||||||||||||||
| Interest bearing deposits | 7,678 | 23 | 0.30 | 9,242 | 12 | 0.13 | |||||||||||||||
| Federal funds sold | 509 | 1 | 0.20 | 1,417 | 1 | 0.07 | |||||||||||||||
Loans and leases:(2) | |||||||||||||||||||||
Commercial and commercial real estate(1) | 2,611,150 | 126,592 | 4.85 | 2,078,594 | 105,239 | 5.06 | |||||||||||||||
| Residential mortgage | 430,950 | 18,359 | 4.26 | 344,606 | 14,511 | 4.21 | |||||||||||||||
Agricultural and agricultural real estate(1) | 388,974 | 19,558 | 5.03 | 331,622 | 17,494 | 5.28 | |||||||||||||||
| Consumer | 313,756 | 26,034 | 8.30 | 261,611 | 24,210 | 9.25 | |||||||||||||||
| Fees on loans | 0 | 6,632 | — | 0 | 5,556 | — | |||||||||||||||
| Less: allowance for loan and lease losses | (41,521 | ) | — | — | (39,151 | ) | — | — | |||||||||||||
| Net loans and leases | 3,703,309 | 197,175 | 5.32 | 2,977,282 | 167,010 | 5.61 | |||||||||||||||
| Total earning assets | 5,384,275 | 247,340 | 4.59 | % | 4,582,296 | 208,976 | 4.56 | % | |||||||||||||
| Nonearning Assets | 473,213 | 500,835 | |||||||||||||||||||
| Total Assets | $ | 5,857,488 | $ | 5,083,131 | |||||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||||
| Savings | 2,589,649 | 8,042 | 0.31 | % | 2,101,295 | 6,674 | 0.32 | % | |||||||||||||
| Time, $100,000 and over | 330,428 | 3,474 | 1.05 | 315,623 | 4,403 | 1.40 | |||||||||||||||
| Other time deposits | 535,483 | 6,638 | 1.24 | 532,157 | 8,891 | 1.67 | |||||||||||||||
| Short-term borrowings | 308,942 | 877 | 0.28 | 257,084 | 808 | 0.31 | |||||||||||||||
| Other borrowings | 336,569 | 14,938 | 4.44 | 339,578 | 14,907 | 4.39 | |||||||||||||||
| Total interest bearing liabilities | 4,101,071 | 33,969 | 0.83 | % | 3,545,737 | 35,683 | 1.01 | % | |||||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||||
| Noninterest bearing deposits | 1,243,376 | 1,064,177 | |||||||||||||||||||
| Accrued interest and other liabilities | 44,499 | 62,161 | |||||||||||||||||||
| Total noninterest bearing liabilities | 1,287,875 | 1,126,338 | |||||||||||||||||||
| Stockholders' Equity | 468,542 | 411,056 | |||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 5,857,488 | $ | 5,083,131 | |||||||||||||||||
Net interest income(1) | $ | 213,371 | $ | 173,293 | |||||||||||||||||
Net interest spread(1) | 3.76 | % | 3.55 | % | |||||||||||||||||
Net interest income to total earning assets(1) | 3.96 | % | 3.78 | % | |||||||||||||||||
| Interest bearing liabilities to earning assets | 76.17 | % | 77.38 | % | |||||||||||||||||
| (1) Computed on a tax equivalent basis using an effective tax rate of 35% | |||||||||||||||||||||
| (2) Nonaccrual loans are included in the average loans outstanding. | |||||||||||||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
| SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | |||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||
| As of and For the Quarter Ended | |||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||
| Total Assets | |||||||||||||||
| Dubuque Bank and Trust Company | $ | 1,508,573 | $ | 1,389,241 | $ | 1,393,391 | $ | 1,346,025 | $ | 1,540,049 | |||||
| New Mexico Bank & Trust | 1,142,580 | 1,069,722 | 1,050,117 | 1,020,381 | 1,032,441 | ||||||||||
| Morrill & Janes Bank and Trust Company | 898,161 | 867,346 | 837,148 | 859,998 | 890,984 | ||||||||||
| Wisconsin Bank & Trust | 650,658 | 664,630 | 658,773 | 631,501 | 643,430 | ||||||||||
| Illinois Bank & Trust | 486,919 | 505,492 | 506,150 | 490,147 | 443,114 | ||||||||||
| Arizona Bank & Trust | 470,997 | 471,661 | 467,966 | 472,141 | 450,320 | ||||||||||
| Rocky Mountain Bank | 468,671 | 480,345 | 472,079 | 456,201 | 467,443 | ||||||||||
| Galena State Bank & Trust Co. | 291,623 | 293,442 | 297,298 | 281,981 | 290,457 | ||||||||||
| Minnesota Bank & Trust | 167,808 | 165,580 | 165,250 | 157,965 | 170,517 | ||||||||||
| Summit Bank & Trust | 134,145 | 137,774 | 135,721 | 116,154 | 113,719 | ||||||||||
| Total Deposits | |||||||||||||||
| Dubuque Bank and Trust Company | $ | 1,211,896 | $ | 1,055,036 | $ | 1,001,798 | $ | 1,066,711 | $ | 1,116,154 | |||||
| New Mexico Bank & Trust | 860,465 | 828,637 | 814,523 | 790,172 | 765,572 | ||||||||||
| Morrill & Janes Bank and Trust Company | 703,016 | 686,833 | 680,176 | 673,325 | 692,038 | ||||||||||
| Wisconsin Bank & Trust | 554,722 | 564,674 | 558,654 | 544,323 | 531,371 | ||||||||||
| Illinois Bank & Trust | 366,752 | 401,888 | 392,053 | 403,643 | 353,046 | ||||||||||
| Arizona Bank & Trust | 351,635 | 390,167 | 382,011 | 381,121 | 368,059 | ||||||||||
| Rocky Mountain Bank | 395,609 | 395,728 | 384,856 | 379,017 | 380,011 | ||||||||||
| Galena State Bank & Trust Co. | 233,605 | 252,704 | 257,029 | 244,682 | 244,505 | ||||||||||
| Minnesota Bank & Trust | 150,146 | 148,453 | 148,260 | 142,750 | 154,812 | ||||||||||
| Summit Bank & Trust | 111,859 | 118,896 | 118,275 | 104,598 | 101,447 | ||||||||||
| Net Income (Loss) | |||||||||||||||
| Dubuque Bank and Trust Company | $ | 5,184 | $ | 4,480 | $ | 4,135 | $ | 2,381 | $ | 5,009 | |||||
| New Mexico Bank & Trust | 2,015 | 3,201 | 2,855 | 2,199 | 1,575 | ||||||||||
| Morrill & Janes Bank and Trust Company | 2,157 | 1,626 | 1,711 | 1,301 | 1,145 | ||||||||||
| Wisconsin Bank & Trust | 1,737 | 1,077 | 1,299 | 1,068 | 1,850 | ||||||||||
| Illinois Bank & Trust | 701 | 814 | 393 | 527 | 433 | ||||||||||
| Arizona Bank & Trust | 1,159 | 551 | 1,243 | 837 | 125 | ||||||||||
| Rocky Mountain Bank | 1,684 | 1,448 | 388 | 1,049 | 576 | ||||||||||
| Galena State Bank & Trust Co. | 1,020 | 724 | 1,072 | 802 | 403 | ||||||||||
| Minnesota Bank & Trust | 395 | 106 | 59 | 122 | (31 | ) | |||||||||
| Summit Bank & Trust | (491 | ) | (65 | ) | (82 | ) | (434 | ) | 44 | ||||||
| Return on Average Assets | |||||||||||||||
| Dubuque Bank and Trust Company | 1.43 | % | 1.27 | % | 1.20 | % | 0.67 | % | 1.36 | % | |||||
| New Mexico Bank & Trust | 0.72 | 1.20 | 1.10 | 0.88 | 0.61 | ||||||||||
| Morrill & Janes Bank and Trust Company | 0.99 | 0.76 | 0.81 | 0.62 | 0.66 | ||||||||||
| Wisconsin Bank & Trust | 1.05 | 0.65 | 0.82 | 0.69 | 1.16 | ||||||||||
| Illinois Bank & Trust | 0.56 | 0.60 | 0.31 | 0.49 | 0.38 | ||||||||||
| Arizona Bank & Trust | 0.97 | 0.47 | 1.05 | 0.74 | 0.12 | ||||||||||
| Rocky Mountain Bank | 1.42 | 1.22 | 0.34 | 0.92 | 0.49 | ||||||||||
| Galena State Bank & Trust Co. | 1.39 | 0.97 | 1.51 | 1.15 | 0.54 | ||||||||||
| Minnesota Bank & Trust | 0.98 | 0.26 | 0.15 | 0.32 | (0.07 | ) | |||||||||
| Summit Bank & Trust | (1.46 | ) | (0.19 | ) | (0.26 | ) | (1.57 | ) | 0.15 | ||||||
| Net Interest Margin as a Percentage of Average Earning Assets | |||||||||||||||
| Dubuque Bank and Trust Company | 3.69 | % | 3.63 | % | 3.67 | % | 3.72 | % | 3.59 | % | |||||
| New Mexico Bank & Trust | 3.73 | 3.85 | 3.96 | 3.80 | 3.63 | ||||||||||
| Morrill & Janes Bank and Trust Company | 3.35 | 3.51 | 3.50 | 3.17 | 2.97 | ||||||||||
| Wisconsin Bank & Trust | 4.09 | 4.24 | 4.27 | 4.41 | 4.39 | ||||||||||
| Illinois Bank & Trust | 3.52 | 3.40 | 3.57 | 3.45 | 3.17 | ||||||||||
| Arizona Bank & Trust | 4.28 | 4.23 | 4.47 | 4.37 | 4.35 | ||||||||||
| Rocky Mountain Bank | 4.74 | 4.44 | 4.36 | 4.21 | 4.22 | ||||||||||
| Galena State Bank & Trust Co. | 3.76 | 3.47 | 3.79 | 3.74 | 3.47 | ||||||||||
| Minnesota Bank & Trust | 4.02 | 3.84 | 3.88 | 3.79 | 3.64 | ||||||||||
| Summit Bank & Trust | 3.74 | 3.81 | 3.98 | 4.03 | 3.79 | ||||||||||
| HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
| SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | |||||||||||||||||||
| DOLLARS IN THOUSANDS | |||||||||||||||||||
| As of | |||||||||||||||||||
| 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
| Total Portfolio Loans and Leases | |||||||||||||||||||
| Dubuque Bank and Trust Company | $ | 952,114 | $ | 917,092 | $ | 908,729 | $ | 897,860 | $ | 915,377 | |||||||||
| New Mexico Bank & Trust | 635,402 | 609,170 | 575,685 | 556,928 | 529,808 | ||||||||||||||
| Morrill & Janes Bank and Trust Company | 440,899 | 445,100 | 429,326 | 400,243 | 384,685 | ||||||||||||||
| Wisconsin Bank & Trust | 502,310 | 509,364 | 496,486 | 465,969 | 459,594 | ||||||||||||||
| Illinois Bank & Trust | 246,382 | 239,362 | 233,668 | 227,920 | 186,739 | ||||||||||||||
| Arizona Bank & Trust | 342,731 | 335,648 | 328,438 | 343,298 | 329,211 | ||||||||||||||
| Rocky Mountain Bank | 354,455 | 356,049 | 339,479 | 317,513 | 316,702 | ||||||||||||||
| Galena State Bank & Trust Co. | 183,390 | 179,840 | 181,135 | 183,012 | 183,639 | ||||||||||||||
| Minnesota Bank & Trust | 110,920 | 104,061 | 105,142 | 98,818 | 101,491 | ||||||||||||||
| Summit Bank & Trust | 90,515 | 88,199 | 84,040 | 72,898 | 73,150 | ||||||||||||||
| Allowance For Loan and Lease Losses | |||||||||||||||||||
| Dubuque Bank and Trust Company | $ | 9,403 | $ | 9,143 | $ | 9,441 | $ | 8,839 | $ | 10,303 | |||||||||
| New Mexico Bank & Trust | 6,863 | 6,688 | 6,628 | 6,388 | 7,202 | ||||||||||||||
| Morrill & Janes Bank and Trust Company | 2,305 | 2,077 | 1,741 | 1,137 | 406 | ||||||||||||||
| Wisconsin Bank & Trust | 5,216 | 5,327 | 4,564 | 4,281 | 4,850 | ||||||||||||||
| Illinois Bank & Trust | 3,203 | 3,842 | 3,335 | 2,835 | 3,121 | ||||||||||||||
| Arizona Bank & Trust | 3,258 | 3,432 | 3,754 | 3,913 | 4,133 | ||||||||||||||
| Rocky Mountain Bank | 3,450 | 4,048 | 4,179 | 3,965 | 4,148 | ||||||||||||||
| Galena State Bank & Trust Co. | 1,531 | 1,501 | 1,553 | 1,716 | 1,916 | ||||||||||||||
| Minnesota Bank & Trust | 1,116 | 1,052 | 1,071 | 1,021 | 1,091 | ||||||||||||||
| Summit Bank & Trust | 1,554 | 996 | 1,099 | 1,054 | 1,334 | ||||||||||||||
| Nonperforming Loans and Leases | |||||||||||||||||||
| Dubuque Bank and Trust Company | $ | 3,067 | $ | 6,151 | $ | 5,718 | $ | 7,729 | $ | 15,641 | |||||||||
| New Mexico Bank & Trust | 6,416 | 5,550 | 4,781 | 5,195 | 6,880 | ||||||||||||||
| Morrill & Janes Bank and Trust Company | 380 | 519 | 368 | 129 | 160 | ||||||||||||||
| Wisconsin Bank & Trust | 2,967 | 3,335 | 3,617 | 4,904 | 6,165 | ||||||||||||||
| Illinois Bank & Trust | 4,893 | 6,530 | 6,213 | 5,213 | 3,325 | ||||||||||||||
| Arizona Bank & Trust | 2,156 | 2,732 | 2,946 | 3,200 | 4,413 | ||||||||||||||
| Rocky Mountain Bank | 1,954 | 3,008 | 3,471 | 3,271 | 3,326 | ||||||||||||||
| Galena State Bank & Trust Co. | 1,046 | 1,081 | 826 | 939 | 1,077 | ||||||||||||||
| Minnesota Bank & Trust | — | — | — | — | — | ||||||||||||||
| Summit Bank & Trust | 1,076 | 583 | 567 | 584 | 688 | ||||||||||||||
| Allowance As a Percent of Total Loans and Leases | |||||||||||||||||||
| Dubuque Bank and Trust Company | 0.99 | % | 1.00 | % | 1.04 | % | 0.98 | % | 1.13 | % | |||||||||
| New Mexico Bank & Trust | 1.08 | 1.10 | 1.15 | 1.15 | 1.36 | ||||||||||||||
| Morrill & Janes Bank and Trust Company | 0.52 | 0.47 | 0.41 | 0.28 | 0.11 | ||||||||||||||
| Wisconsin Bank & Trust | 1.04 | 1.05 | 0.92 | 0.92 | 1.06 | ||||||||||||||
| Illinois Bank & Trust | 1.30 | 1.61 | 1.43 | 1.24 | 1.67 | ||||||||||||||
| Arizona Bank & Trust | 0.95 | 1.02 | 1.14 | 1.14 | 1.26 | ||||||||||||||
| Rocky Mountain Bank | 0.97 | 1.14 | 1.23 | 1.25 | 1.31 | ||||||||||||||
| Galena State Bank & Trust Co. | 0.83 | 0.83 | 0.86 | 0.94 | 1.04 | ||||||||||||||
| Minnesota Bank & Trust | 1.01 | 1.01 | 1.02 | 1.03 | 1.07 | ||||||||||||||
| Summit Bank & Trust | 1.72 | 1.13 | 1.31 | 1.45 | 1.82 | ||||||||||||||