Heartland Financial USA (HTLF) 8-K Results of Operations and Financial Condition

CONTACT:	FOR IMMEDIATE RELEASE
Bryan R. McKeag	January 25, 2021
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS ANNUAL EARNINGS AND FOURTH QUARTER RESULTS AS OF DECEMBER 31, 2020

Highlights

§	Quarterly net income available to common stockholders of $37.8 million or $0.98 per diluted common share
§	Annual net income available to common stockholders of $133.5 million or $3.57 per diluted common share
§	Net interest margin of 3.51%, fully tax-equivalent (non-GAAP)(1) of 3.55% for the fourth quarter
§	Efficiency ratio (non-GAAP)(1) for the fourth quarter of 2020 of 54.93% and 56.65% for the year
§	Nonperforming assets as a percentage of total assets of 0.53% and net charge-offs for the quarter of $216,000
§	Completed the acquisition of AimBank, Heartland's largest acquisition to date, which had assets at fair value of $1.97 billion
§	Completed the purchase and assumption of substantially all of the deposits, which totaled $415.5 million, and other certain assets and liabilities of Johnson Bank's Arizona operations
§	Approved a 10% increase in quarterly dividend to $.22 per share at the January 19, 2021 board meeting

	Quarter Ended December 31,						Year Ended December 31,
	2020			2019			2020			2019
Net income available to common stockholders (in millions)	$	37.8		$	37.9		$	133.5		$	149.1
Diluted earnings per common share	0.98			1.03			3.57			4.14
Return on average assets	0.92		%	1.17		%	0.90		%	1.24		%
Return on average common equity	8.50			9.56			8.06			10.12
Return on average tangible common equity (non-GAAP)(1)	12.77			14.65			12.28			15.73
Net interest margin	3.51			3.86			3.65			4.00
Net interest margin, fully tax-equivalent (non-GAAP)(1)	3.55			3.90			3.69			4.04
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)	54.93			60.31			56.65			62.50
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.

"Heartland successfully navigated a challenging year with net income available to common stockholders of $133.5 million, or $3.57 per diluted common share. Our success was highlighted by an improved efficiency ratio of 56.65%, strong net interest margin of 3.69% and stable credit quality."

Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc.

Dubuque, Iowa, Monday, January 25, 2021-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019:

•Net income available to common stockholders of $37.8 million, or $0.98 per diluted common share compared to $37.9 million, or $1.03 per diluted common share.

•Excluding tax-effected acquisition, integration and restructuring costs, adjusted net income available to common stockholders (non-GAAP) was $39.5 million, or $1.03 of adjusted earnings per diluted common share (non-GAAP) compared to $38.3 million or $1.04.

•Return on average common equity was 8.50% and return on average assets was 0.92% compared to 9.56% and 1.17%, respectively.

•Return on average tangible common equity (non-GAAP) was 12.77% and excluding tax-affected acquisition, integration and restructuring costs, adjusted return on average tangible common equity (non-GAAP) was 13.33% compared to 14.65% and 14.80%, respectively.

Heartland reported the following annual results for the year ended December 31, 2020 compared to the year ended December 31, 2019:

•Net income available to common stockholders of $133.5 million or $3.57 per diluted common share compared to $149.1 million or $4.14 per diluted common share.

•Excluding tax-effected acquisition, integration and restructuring costs, adjusted net income available to common stockholders (non-GAAP) was $137.7 million, or $3.69 of adjusted earnings per diluted common share (non-GAAP), compared to $154.3 million, or $4.28.

•Return on average common equity was 8.06% and return on average assets was 0.90% compared to 10.12% and 1.24%, respectively.

•Return on average tangible common equity (non-GAAP) of 12.28% and excluding tax-affected acquisition, integration and restructuring costs, adjusted return on average tangible common equity (non-GAAP) of 12.65% compared to 15.73% and 16.25%, respectively.

Commenting on Heartland’s 2020 results, Bruce K. Lee, Heartland’s president and chief executive officer, said, "Heartland successfully navigated a challenging year with net income available to common stockholders of $133.5 million, or $3.57 per diluted common share. Our success was highlighted by an improved efficiency ratio of 56.65%, strong net interest margin of 3.69% and stable credit quality."

Responses to COVID-19

In the first quarter of 2020, Heartland implemented and continues to operate under its pandemic management plan. While the measures described below remain in effect, Heartland’s pandemic management plan continues to evolve in response to the recent developments relating to the COVID-19 pandemic. To assure workplace and employee safety and business resiliency while providing relief and support to customers and communities facing challenges from the impacts of the pandemic, the following measures are in place:

•employees who can work from home continue to do so, and those employees who are working in bank offices have been placed on rotating teams to limit potential exposure to COVID-19;

•all in-person events and large meetings are canceled and have effectively transitioned to virtual meetings;

•employees receive an increase in time off and enhanced health care coverage related to testing and treatments for COVID-19;

•Heartland has installed and requires the use of personal protective equipment in bank offices;

•Heartland implemented a 20% wage premium for certain customer-facing employees through August 2020, and pandemic pay for employees unable to work due to exposure or contraction of the virus;

•Heartland has provided direct guaranteed loans from the U.S. Small Business Administration (the "SBA") to customers through Heartland’s participation in the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") and originated $1.2 billion of loans under the Paycheck Protection Program ("PPP");

•Heartland has participated in the CARES Act SBA loan payment and deferral program for existing SBA loans; and

•Heartland has contributed $1.5 million to support communities served by Heartland and its subsidiary banks, including donations of $260,000 to local schools.

The continued economic disruption resulting from the COVID-19 pandemic will make it difficult for some customers to repay the principal and interest on their loans, and Heartland's subsidiary banks have been working with customers to modify the terms of certain existing loans.

The following table shows the total loan exposure as of the end of each quarter in 2020 to customer segment profiles that Heartland currently believes will be more heavily impacted by COVID-19, dollars in thousands. The increases in total exposure at December 31, 2020 are primarily attributable to loans acquired in the fourth quarter of 2020.

	As of the Quarter Ended
	12/31/2020				9/30/2020				6/30/2020				3/31/2020
Industry	Total Exposure(1)		% of Gross Exposure(2)		Total Exposure		% of Gross Exposure(2)		Total Exposure		% of Gross Exposure(2)		Total Exposure		% of Gross Exposure(2)
Lodging	$	539,434	4.38	%	$	495,187	4.52	%	$	490,475	4.38	%	$	498,596	4.47	%
Retail trade	465,980		3.78		405,118		3.70		407,030		3.64		367,727		3.30
Retail properties	422,794		3.43		363,457		3.32		369,782		3.31		408,506		3.66
Restaurants and bars	266,053		2.16		248,053		2.26		255,701		2.29		247,239		2.22
Oil and gas	122,256		0.99		52,766		0.48		63,973		0.57		56,302		0.50
Total	$	1,816,517	14.74	%	$	1,564,581	14.28	%	$	1,586,961	14.19	%	$	1,578,370	14.15	%
(1) The increases in total exposure at December 31, 2020 are primarily attributable to loans acquired in the fourth quarter of 2020.
(2) Total loans outstanding and unfunded commitments excluding PPP loans

The ultimate impact of the COVID-19 pandemic on Heartland's financial condition and results of operations will depend on the severity and duration of the pandemic, related restrictions on business and consumer activity, roll-out and distribution of vaccines and the availability of government programs to alleviate the economic stress of the pandemic. See Heartland's "Safe Harbor Statement" below.

2020 Developments

Adoption of ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)"

On January 1, 2020, Heartland adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)," commonly referred to as "CECL." The impact of Heartland's adoption of CECL resulted in the following:

•an increase of $12.1 million to the allowance for credit losses related to loans, which included a reclassification of $6.0 million of purchased credit impaired loan discount on previously acquired loans, and a cumulative-effect adjustment to retained earnings totaling $4.6 million, net of taxes of $1.5 million;

•an increase of $13.6 million to the allowance for unfunded commitments and a cumulative-effect adjustment to retained earnings totaling $10.2 million, net of taxes of $3.4 million, and

•established an allowance for credit losses for Heartland's held to maturity debt securities of $158,000 and a cumulative-effect adjustment to retained earnings totaling $118,000, net of taxes of $40,000.

Completed the Acquisition of AimBank

On December 4, 2020, Heartland completed the acquisition of AimBank, headquartered in Levelland, Texas. Based on Heartland's closing common stock price of $41.89 on December 4, 2020, the aggregate consideration paid to AimBank common shareholders was $264.5 million, which was paid by delivery of common stock of $217.2 million and cash of $47.3 million, subject to certain hold-back provisions of the merger agreement relating to the cash consideration. AimBank was merged with and into Heartland's wholly-owned Texas subsidiary, First Bank and Trust, and the combined entity operates as First Bank and Trust. As of the closing date, AimBank had, at fair value, total assets of $1.97 billion, which included gross loans of $1.09 billion, and deposits of $1.67 billion. The systems conversion for this transaction is expected to occur in the first quarter of 2021.

Completed the Purchase and Assumption of Johnson Bank's Arizona Operations

On December 4, 2020, Arizona Bank & Trust (“AB&T”), a wholly-owned subsidiary of Heartland headquartered in Phoenix, Arizona, completed its acquisition of certain assets and assumed substantially all of the deposits and certain other liabilities of Johnson Bank’s Arizona operations, which includes four banking centers. Johnson Bank is a wholly-owned subsidiary of Johnson Financial Group, Inc. headquartered in Racine, Wisconsin. As of the closing date, AB&T acquired, at fair value, total assets of $420.1 million, which included gross loans of $150.7 million, and deposits of $415.5 million. The systems conversion occurred simultaneously with the closing of the transaction.

"The acquisition of AimBank is the largest transaction in our history and adds sizable market share in the West Texas region. The addition of the Johnson Bank branches is a great expansion of our footprint in the Phoenix market," said Lynn B. Fuller, Heartland's executive operating chairman.

Branch Optimization

In the second half of 2020, Heartland's member banks approved plans to consolidate eight branch locations, which includes two branches in the Midwest region, five branches in the Western region and one in the Southwestern region, and resulted in $1.2 million and $2.3 million of fixed asset write-downs in the third and fourth quarters of 2020, respectively. The branch consolidations are expected to be completed in early 2021. Heartland continues to review its branch network for optimization and consolidation opportunities, which may result in additional write-downs of fixed assets in future periods.

Net Interest Income Increases and Net Interest Margin Decreases from Fourth Quarter of 2019

Net interest margin, expressed as a percentage of average earning assets, was 3.51% (3.55% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2020, compared to 3.86% (3.90% on a fully tax-equivalent basis, non-GAAP) during the fourth quarter of 2019.

Total interest income and average earning asset changes for the fourth quarter of 2020 compared to the fourth quarter of 2019 were:

•Heartland recorded $140.8 million of total interest income, which was an increase of $7.6 million or 6% from $133.2 million, based on an increase in average earning assets, which was partially offset by a decrease in the average rate on earning assets.

•Total interest income on a tax-equivalent basis was $142.4 million, which was an increase of $8.0 million or 6% from $134.3 million.

•Average earning assets increased $3.46 billion or 30% to $15.04 billion compared to $11.58 billion, which was primarily attributable to recent acquisitions and loan growth, including PPP loans.

•The average rate on earning assets decreased 83 basis points to 3.77% compared to 4.60%, which was primarily due to recent decreases in market interest rates.

Total interest expense and average interest bearing liability changes for the fourth quarter of 2020 compared to the fourth quarter of 2019 were:

•Total interest expense was $8.3 million, a decrease of $12.2 million or 60% from $20.5 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 Heartland's interest bearing liabilities decreased to 0.36% compared to 1.08%, which was primarily due to recent decreases in market interest rates.

•Average interest bearing deposits increased $1.13 billion or 16% to $8.25 billion from $7.12 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits from government stimulus payments and other COVID-19 relief programs.

•The average interest rate paid on Heartland's interest bearing deposits decreased 69 basis points to 0.22% compared to 0.91%.

•Average borrowings increased $409.9 million to $802.5 million from $392.7 million. The average interest rate paid on Heartland's borrowings was 1.81% compared to 4.10%.

Net interest income increased for the fourth quarter of 2020 compared to the fourth quarter of 2019:

•Net interest income totaled $132.6 million compared to $112.7 million, which was an increase of $19.8 million or 18%.

•Net interest income on a tax-equivalent basis (non-GAAP) totaled $134.1 million compared to $113.9 million, which was an increase of $20.3 million or 18%.

Noninterest Income and Noninterest Expense Increase from Fourth Quarter of 2019

Total noninterest income was $32.6 million during the fourth quarter of 2020 compared to $28.0 million during the fourth quarter of 2019, an increase of $4.6 million or 16%. Significant changes by noninterest income category for the fourth quarter of 2020 compared to the fourth quarter of 2019 were:

•Net securities gains totaled $2.8 million compared to $491,000, which was an increase of $2.3 million.

•Net gains of sales of loans held for sale increased $3.7 million to $7.1 million compared to $3.4 million, primarily due to an increase in residential mortgage loan activity in response to the recent declines in mortgage interest rates.

•Other noninterest income totaled $1.7 million compared to $2.9 million, which was a decrease of $1.1 million or 40%. Included in other noninterest income for the fourth quarter of 2019 was $891,000 related to proceeds on life insurance policies, and there was no similar income in the fourth quarter of 2020.

Total noninterest expense for the fourth quarter of 2020 was $99.3 million compared to $92.9 million for the same quarter of 2019, which was an increase of $6.4 million or 7%. Significant changes by noninterest expense category were:

•Salaries and employee benefits totaled $51.6 million compared to $50.2 million, which was an increase of $1.4 million or 3% and primarily attributable to an increase in full time equivalent employees from recent acquisitions.

•Professional fees totaled $15.1 million compared to $11.1 million, which was an increase of $4.0 million or 36%. Included in professional fees for the fourth quarter of 2020 were FDIC insurance assessments of $1.8 million compared to $0 for the fourth quarter of 2019. The remainder of the increase was primarily attributable to recent technology and process improvement projects.

•Advertising expense totaled $1.1 million compared to $2.3 million, which was a decrease of $1.2 million or 51%. The decrease was primarily attributable to a reduction of in-person customer events and overall reduction in marketing spend.

•Net losses on sales/valuation of assets totaled $2.6 million compared to $1.5 million. The losses recorded in the fourth quarter of 2020 included $2.3 million of write-downs on fixed assets associated with branch optimization activities. Net losses on sales/valuation of assets in the fourth quarter of 2019 included write-downs on fixed assets and buildings held for sale totaling $2.4 million, which was partially offset by an additional gain of $1.2 million associated with the re-evaluation of remaining contingencies from the mortgage servicing rights sale.

•Acquisition, integration and restructuring costs totaled $2.2 million compared to $537,000, which was an increase of $1.6 million and primarily attributable to the acquisitions completed in the fourth quarter of 2020.

•Partnership investment in tax credit projects totaled $1.9 million compared to $3.0 million, which was a decrease of $1.1 million or 37%. Fewer tax credit projects were placed in service in the fourth quarter of 2020 compared to the same quarter of the prior year.

•Other noninterest expenses totaled $11.0 million compared to $11.9 million, which was a decrease of $892,000 or 8%. The reduction was primarily attributable to reduced travel expenses and customer entertainment activities because meetings have transitioned to virtual formats.

Heartland's effective tax rate was 18.52% for the fourth quarter of 2020 compared to 11.99% for the fourth quarter of 2019. The following items impacted Heartland's fourth quarter 2020 and 2019 tax calculations:

•solar energy tax credits of $461,000 and $764,000;

•federal low-income housing tax credits of $195,000 and $281,000;

•new markets tax credits of $75,000 compared to $0;

•historic rehabilitation tax credits of $1.1 million and $1.8 million;

•tax-exempt interest income as a percentage of pre-tax income of 11.82% compared to 10.08%; and

•tax benefits of $617,000 and $1.9 million related to the release of valuation allowances on deferred tax assets.

For the years ended December 31, 2020 and 2019, Heartland's effective tax rate was 20.72% and 19.00%, respectively.

Loans and Deposits Increase Since December 31, 2019

Total assets were $17.91 billion at December 31, 2020, an increase of $4.70 billion or 36% from $13.21 billion at year-end 2019. Excluding $1.97 billion of assets acquired at fair value in the AimBank transaction and $420.1 million of assets acquired at fair value in the Johnson Bank branch transaction, total assets increased $2.31 billion or 17% since year-end 2019. Securities represented 35% and 26% of total assets at December 31, 2020, and December 31, 2019, respectively.

Total loans held to maturity were $10.02 billion at December 31, 2020, compared to $8.37 billion at year-end 2019, an increase of $1.66 billion or 20%. This change includes $1.24 billion of total loans held to maturity acquired at fair value in the AimBank and Johnson Bank branch transactions. Excluding loans acquired in the fourth quarter of 2020 and PPP loans, total loans held to maturity organically decreased $487.3 million or 6% since December 31, 2019. Loan changes by category were:

•Total commercial and business lending, which includes commercial and industrial ("C&I"), PPP, and owner occupied commercial real estate loans, increased $1.27 billion or 32% to $5.27 billion at December 31, 2020, compared to $4.00 billion at December 31, 2019.

•C&I and owner occupied commercial real estate loans increased $307.7 million or 8% to $4.31 billion at December 31, 2020, compared to $4.00 billion at December 31, 2019. Excluding $368.9 million of C&I and owner occupied commercial real estate loans acquired in the fourth quarter of 2020, C&I and owner occupied commercial real estate loans organically decreased $61.2 million or 2% since year-end 2019.

•PPP loans totaled $957.8 million at December 31, 2020, compared to $0 at year-end 2019. Excluding $53.1 million of PPP loans acquired in the fourth quarter of 2020, PPP loans increased $904.7 million since year-end 2019.

•Commercial real estate lending, which includes non-owner occupied commercial real estate and real estate construction loans, increased $261.7 million or 10% to $2.78 billion at December 31, 2020 from $2.52 billion at year-end 2019. Excluding $319.6 million of commercial real estate loans acquired in the fourth quarter of 2020, total commercial real estate loans organically decreased $57.8 million or 2% since year-end 2019.

•Agricultural and agricultural real estate loans totaled $714.5 million at December 31, 2020, compared to $565.8 million at December 31, 2019, which was an increase of $148.7 million or 26%. Excluding $247.5 million of loans acquired in the fourth quarter of 2020, agricultural and agricultural real estate loans organically decreased $98.8 million or 17% since year-end 2019, which was primarily attributable to scheduled paydowns.

•Residential mortgage loans increased $8.2 million or 1% to $840.4 million at December 31, 2020, from $832.3 million at December 31, 2019. Excluding $197.3 million of loans acquired in the fourth quarter of 2020, residential mortgage loans organically decreased $189.2 million or 23% since year-end 2019, primarily as a result of customers refinancing loans due to the recent decreases in residential mortgage interest rates.

•Consumer loans decreased $28.9 million or 7% to $414.4 million at December 31, 2020, compared to $443.3 million at December 31, 2019. Excluding $51.4 million of loans acquired in the fourth quarter of 2020, consumer loans organically decreased $80.3 million or 18% since year-end 2019, primarily as a result of customers refinancing loans due to the recent decreases in residential mortgage interest rates.

Total deposits were $14.98 billion as of December 31, 2020, compared to $11.04 billion at year-end, which was an increase of $3.94 billion or 36%. This increase includes $2.09 billion of deposits acquired at fair value in the AimBank and Johnson Bank branch transactions. Excluding the deposits acquired at fair value in the fourth quarter of 2020, total deposits organically increased $1.85 billion or 17% since December 31, 2019. Deposit changes by category were:

•Demand deposits increased $2.14 billion or 61% to $5.69 billion at December 31, 2020, compared to $3.54 billion at December 31, 2019. Excluding $776.8 million of demand deposits acquired in the fourth quarter of 2020, demand deposits organically increased $1.37 billion or 39% since year-end 2019.

•Savings deposits increased $1.71 billion or 27% to $8.02 billion at December 31, 2020, from $6.31 billion at December 31, 2019. Excluding savings deposits of $976.3 million acquired in the fourth quarter of 2020, savings deposits organically increased $736.0 million or 12% since year-end 2019.

•Time deposits increased $78.3 million or 7% to $1.27 billion at December 31, 2020 from $1.19 billion at December 31, 2019. Excluding time deposits of $332.9 million acquired in the fourth quarter of 2020, time deposits organically decreased $254.5 million or 21% since year-end 2019.

Growth in non-time deposits was positively impacted by federal government stimulus payments and other COVID-19 relief programs.

Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of organic loan growth and organic deposit growth, which are non-GAAP measures.

Provision and Allowance for Credit Losses

Provision and Allowance for Credit Losses for Loans

Provision expense for credit losses for loans for the fourth quarter of 2020 was $16.1 million, which was an increase of $11.4 million from $4.7 million recorded in the prior quarter and an increase of $11.2 million from $4.9 million recorded in the fourth quarter of 2019. The provision expense for the fourth quarter of 2020 was impacted by several factors, including:

•Provision expense of $9.6 million was recorded for purchased non-credit deteriorated ("non-PCD") loans acquired in the fourth quarter.

•An increase of $3.8 million in reserves for nonaccrual loans compared to the third quarter of 2020.

•Decreases in loan balances, excluding PPP loans and acquired loans, of $91.0 million during the quarter.

•Consistent macroeconomic outlook compared to the third quarter of 2020.

•Net charge offs of $216,000 or 0.01% of average loans.

Heartland's allowance for credit losses for loans totaled $131.6 million at December 31, 2020, compared to $103.4 million at September 30, 2020, and $70.4 million at December 31, 2019, respectively. The following items have impacted Heartland's allowance for credit losses for loans for the year ended December 31, 2020:

•The allowance for credit losses for loans increased $12.1 million after the adoption of CECL on January 1, 2020.

•Allowance for credit losses for loans of $12.3 million was recorded in the fourth quarter associated with the purchased credit deteriorated ("PCD") loans in the AimBank and Johnson Bank transactions.

•Provision expense for the year ended December 31, 2020, totaled $65.7 million.

•Net charge offs of $28.9 million were recorded for the year or 0.32% of average loans.

Heartland expects that net charge offs could be elevated in future periods as customers’ ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.

Provision and Allowance for Credit Losses for Unfunded Commitments

Heartland's allowance for unfunded commitments totaled $15.3 million and $13.9 million at December 31, 2020 and after the adoption of CECL on January 1, 2020, respectively. The following changes impacted Heartland's allowance for credit losses for unfunded commitments during 2020:

•Provision expense for unfunded commitments totaled $1.4 million for the year, which included $2.3 million of provision expense recorded for unfunded commitments acquired in the fourth quarter of 2020.

•Unfunded commitments increased $273.2 million or 9% to $3.25 billion at December 31, 2020 compared to $2.97 billion at December 31, 2019, which was primarily attributable to the acquisitions in the fourth quarter of 2020.

Total Provision and Allowance for Lending Related Credit Losses

The total provision for lending related credit losses was $17.1 million for the fourth quarter of 2020, which included $11.9 million of provision expense for acquired non-PCD loans and unfunded commitments. The total allowance for lending related credit losses was $146.9 million at December 31, 2020, which was 1.47% of loans as of December

31, 2020, compared to $70.4 million or 0.84% of total loans as of December 31, 2019. Excluding PPP loans, which are fully guaranteed, the total allowance for lending related credit losses was 1.62% of loans at December 31, 2020.

Nonperforming Assets as a Percentage of Total Assets Decreases Since December 31, 2019

Nonperforming assets increased $7.4 million or 8% to $95.0 million, which was 0.53% of total assets at December 31, 2020, compared to $87.6 million or 0.66% of total assets at December 31, 2019. Nonperforming loans were $88.1 million or 0.88% of total loans at December 31, 2020, compared to $80.7 million or 0.96% of total loans at December 31, 2019. At December 31, 2020, loans delinquent 30-89 days were 0.23% of total loans compared to 0.33% of total loans at December 31, 2019. COVID-19 payment deferral and loan modification programs could delay the recognition of net charge-offs, delinquencies and nonaccrual status for loans that would have otherwise moved into past due or nonaccrual status.

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 Heartland's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this 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.

•Adjusted net income, adjusted return on average tangible common equity and adjusted diluted earnings per share exclude tax-effected acquisition, integration and restructuring costs. Management believes the presentation of these non-GAAP measures are useful to compare net income, return on average tangible common equity and earnings per share results excluding the variability of acquisition, integration and restructuring costs.

•Annualized adjusted return on average assets is net income available to common stockholders plus acquisition, integration and restructuring costs, net of tax, divided by average assets. Management believes this measure is useful to compare the return on average assets excluding the variability of acquisition, integration and restructuring costs.

•Organic deposit growth is exclusive of deposits obtained through acquisitions. Management believes that this measure provides a more complete understanding of underlying trends in deposit growth notwithstanding dispositions and acquisitions.

•Organic loan growth is exclusive of loans obtained through acquisitions and PPP loans. Management believes that this measure provides a more complete understanding of underlying trends in loan growth notwithstanding dispositions and acquisitions.

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 866-928-9948 at least five minutes before start time. A replay will be available until January 24, 2022, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a diversified financial services company with assets of $17.91 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. As of December 31, 2020, Heartland had 142 banking locations serving 102 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement

This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Any statements about Heartland’s expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These forward-looking statements include information about possible or assumed future results of Heartland’s operations or performance. These forward-looking statements are generally identified by the use of the words ‘‘believe”, “expect’’, ‘‘intent”, “anticipate’’, ‘‘plan”, “estimate’’, ‘‘project”, ‘‘will”, ‘‘would”, ‘‘could”, ‘‘should’’, “may”, “view”, “opportunity”, “potential”, or similar expressions that are used in this release, and future oral and written statements of Heartland and its management. Although Heartland has made these statements based on management’s experience and best estimate of future events, the ability of Heartland to predict results or the actual effect 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 are detailed below and in the risk factors in Heartland's reports filed with the Securities and Exchange Commission (“SEC”), include, among others:

•The impact of the COVID-19 pandemic on Heartland and U.S. and global financial markets;

•Measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;

•The deterioration of the U.S. economy in general and in the local economies in which Heartland conducts its operations;

•Increasing credit losses due to deterioration in the financial condition of its borrowers, based on declining oil prices and asset and collateral values, which may continue to increase the provision for credit losses and net charge-offs of Heartland;

•Civil unrest in the communities that Heartland serves;

•Levels of unemployment in the geographic areas in which Heartland operates;

•Real estate market values in these geographic areas;

•Future natural disasters and increases to flood insurance premiums;

•The effects of past and any future terrorist threats and attacks, acts of war or threats thereof;

•The level of prepayments on loans and mortgage-backed securities;

•Legislative and regulatory changes affecting banking, tax, securities, insurance and monetary and financial matters;

•Monetary and fiscal policies of the U.S. Government including policies of the U.S. Department of Treasury and the Federal Reserve Board;

•The quality or composition of the loan and investment portfolios of Heartland;

•Demand for loan products and financial services, deposit flows and competition in Heartland’s market areas;

•Changes in accounting principles and guidelines;

•The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet;

•The ability of Heartland to implement technological changes as planned and to develop and maintain secure and reliable electronic delivery systems;

•Heartland’s ability to retain key executives and employees; and

•The ability of Heartland to successfully consummate acquisitions and integrate acquired operations.

The COVID-19 pandemic is adversely affecting Heartland and its customers, counterparties, employees and third-party service providers. The COVID-19 pandemic’s severity, its duration and the extent of its impact on Heartland’s business, financial condition, results of operations, liquidity and prospects remain uncertain. The deterioration in general business and economic conditions and turbulence in domestic and global financial markets caused by the COVID-19 pandemic have negatively affected Heartland’s net income, total equity and book value per common share, and continued economic deterioration could adversely affect the value of its assets and liabilities, reduce the availability of funding to Heartland, lead to a tightening of credit and increase stock price volatility. Some economists and investment banks believe that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.

These risks and uncertainties should be considered in evaluating forward-looking statements made by Heartland or on its behalf, and undue reliance should not be placed on these statements. There can be no assurance that other factors not currently anticipated by Heartland will not materially and adversely affect Heartland’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 Heartland’s customers and the economies where they operate. Please take into account that forward-looking statements speak only as of the date they are made, and except as required by applicable law, Heartland does not undertake any obligation to publicly correct or update any forward-looking statement. Further information concerning Heartland and its business, including additional factors that could materially affect Heartland’s financial results, is included in Heartland’s filings with the SEC.

-FINANCIAL TABLES FOLLOW-

###

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,				For the Year Ended December 31,
	2020		2019		2020		2019
Interest Income
Interest and fees on loans	$	108,865	$	107,566	$	424,941	$	424,615
Interest on securities:
Taxable	28,154		22,581		98,263		73,147
Nontaxable	3,735		2,102		12,484		9,868
Interest on federal funds sold	—		—		—		4
Interest on deposits with other banks and short-term investments	77		953		924		6,695
Total Interest Income	140,831		133,202		536,612		514,329
Interest Expense
Interest on deposits	4,609		16,401		30,287		63,734
Interest on short-term borrowings	175		271		610		1,748
Interest on other borrowings	3,472		3,785		13,986		15,118
Total Interest Expense	8,256		20,457		44,883		80,600
Net Interest Income	132,575		112,745		491,729		433,729
Provision for credit losses	17,072		4,903		67,066		16,657
Net Interest Income After Provision for Credit Losses	115,503		107,842		424,663		417,072
Noninterest Income
Service charges and fees	12,725		12,368		47,467		52,157
Loan servicing income	997		955		2,977		4,843
Trust fees	5,506		5,141		20,862		19,399
Brokerage and insurance commissions	779		1,062		2,756		3,786
Securities gains, net	2,829		491		7,793		7,659
Unrealized gain on equity securities, net	36		11		640		525
Net gains on sale of loans held for sale	7,104		3,363		28,515		15,555
Valuation adjustment on servicing rights	(102)		668		(1,778)		(911)
Income on bank owned life insurance	1,021		1,117		3,554		3,785
Other noninterest income	1,726		2,854		7,505		9,410
Total Noninterest Income	32,621		28,030		120,291		116,208
Noninterest Expense
Salaries and employee benefits	51,615		50,234		202,668		200,341
Occupancy	6,849		5,802		26,554		25,429
Furniture and equipment	3,913		3,323		12,514		12,013
Professional fees	15,117		11,082		54,068		47,697
Advertising	1,107		2,274		5,235		9,825
Core deposit and customer relationship intangibles amortization	2,501		2,918		10,670		11,972
Other real estate and loan collection expenses, net	468		261		1,340		1,035
(Gain)/loss on sales/valuations of assets, net	2,621		1,512		5,101		(19,422)
Acquisition, integration and restructuring costs	2,186		537		5,381		6,580
Partnership investment in tax credit projects	1,899		3,038		3,801		8,030
Other noninterest expenses	10,993		11,885		43,631		45,661
Total Noninterest Expense	99,269		92,866		370,963		349,161
Income Before Income Taxes	48,855		43,006		173,991		184,119
Income taxes	9,046		5,155		36,053		34,990
Net Income	39,809		37,851		137,938		149,129
Preferred dividends	(2,014)		—		(4,451)		—
Net Income Available to Common Stockholders	$	37,795	$	37,851	$	133,487	$	149,129
Earnings per common share-diluted	$	0.98	$	1.03	$	3.57	$	4.14
Weighted average shares outstanding-diluted	38,534,082		36,840,519		37,356,524		36,061,908

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2020		9/30/2020		6/30/2020		3/31/2020		12/31/2019
Interest Income
Interest and fees on loans	$	108,865	$	102,657	$	107,005	$	106,414	$	107,566
Interest on securities:
Taxable	28,154		25,016		23,362		21,731		22,581
Nontaxable	3,735		3,222		3,344		2,183		2,102
Interest on federal funds sold	—		—		—		—		—
Interest on deposits with other banks and short-term investments	77		72		54		721		953
Total Interest Income	140,831		130,967		133,765		131,049		133,202
Interest Expense
Interest on deposits	4,609		4,962		6,134		14,582		16,401
Interest on short-term borrowings	175		78		61		296		271
Interest on other borrowings	3,472		3,430		3,424		3,660		3,785
Total Interest Expense	8,256		8,470		9,619		18,538		20,457
Net Interest Income	132,575		122,497		124,146		112,511		112,745
Provision for credit losses	17,072		1,678		26,796		21,520		4,903
Net Interest Income After Provision for Credit Losses	115,503		120,819		97,350		90,991		107,842
Noninterest Income
Service charges and fees	12,725		11,749		10,972		12,021		12,368
Loan servicing income	997		638		379		963		955
Trust fees	5,506		5,357		4,977		5,022		5,141
Brokerage and insurance commissions	779		649		595		733		1,062
Securities gains, net	2,829		1,300		2,006		1,658		491
Unrealized gain on equity securities, net	36		155		680		(231)		11
Net gains on sale of loans held for sale	7,104		8,894		7,857		4,660		3,363
Valuation adjustment on servicing rights	(102)		(120)		9		(1,565)		668
Income on bank owned life insurance	1,021		868		1,167		498		1,117
Other noninterest income	1,726		1,726		1,995		2,058		2,854
Total Noninterest Income	32,621		31,216		30,637		25,817		28,030
Noninterest Expense
Salaries and employee benefits	51,615		50,978		50,118		49,957		50,234
Occupancy	6,849		6,732		6,502		6,471		5,802
Furniture and equipment	3,913		2,500		2,993		3,108		3,323
Professional fees	15,117		12,802		13,676		12,473		11,082
Advertising	1,107		928		995		2,205		2,274
Core deposit and customer relationship intangibles amortization	2,501		2,492		2,696		2,981		2,918
Other real estate and loan collection expenses, net	468		335		203		334		261
(Gain)/loss on sales/valuations of assets, net	2,621		1,763		701		16		1,512
Acquisition, integration and restructuring costs	2,186		1,146		673		1,376		537
Partnership investment in tax credit projects	1,899		927		791		184		3,038
Other noninterest expenses	10,993		9,793		11,091		11,754		11,885
Total Noninterest Expense	99,269		90,396		90,439		90,859		92,866
Income Before Income Taxes	48,855		61,639		37,548		25,949		43,006
Income taxes	9,046		13,681		7,417		5,909		5,155
Net Income	39,809		47,958		30,131		20,040		37,851
Preferred dividends	(2,014)		(2,437)		—		—		—
Net Income Available to Common Stockholders	$	37,795	$	45,521	$	30,131	$	20,040	$	37,851
Earnings per common share-diluted	$	0.98	$	1.23	$	0.82	$	0.54	$	1.03
Weighted average shares outstanding-diluted	38,534,082		36,995,572		36,915,630		36,895,591		36,840,519

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	12/31/2020		9/30/2020		6/30/2020		3/31/2020		12/31/2019
Assets
Cash and due from banks	$	219,243	$	175,284	$	211,429	$	175,587	$	206,607
Interest bearing deposits with other banks and other short-term investments	118,660		156,371		242,149		64,156		172,127
Cash and cash equivalents	337,903		331,655		453,578		239,743		378,734
Time deposits in other financial institutions	3,129		3,129		3,128		3,568		3,564
Securities:
Carried at fair value	6,127,975		4,950,698		4,126,351		3,488,621		3,312,796
Held to maturity, at cost	88,839		88,700		90,579		91,875		91,324
Other investments, at cost	75,253		35,940		35,902		35,370		31,321
Loans held for sale	57,949		65,969		54,382		22,957		26,748
Loans:
Held to maturity	10,023,051		9,099,646		9,246,830		8,374,236		8,367,917
Allowance for credit losses	(131,606)		(103,377)		(119,937)		(97,350)		(70,395)
Loans, net	9,891,445		8,996,269		9,126,893		8,276,886		8,297,522
Premises, furniture and equipment, net	226,094		200,028		198,481		200,960		200,525
Goodwill	576,005		446,345		446,345		446,345		446,345
Core deposit and customer relationship intangibles, net	42,383		40,520		43,011		45,707		48,688
Servicing rights, net	6,052		5,752		5,469		5,220		6,736
Cash surrender value on life insurance	187,664		173,111		172,813		172,140		171,625
Other real estate, net	6,624		5,050		5,539		6,074		6,914
Other assets	281,024		269,498		263,682		259,043		186,755
Total Assets	$	17,908,339	$	15,612,664	$	15,026,153	$	13,294,509	$	13,209,597
Liabilities and Equity
Liabilities
Deposits:
Demand	$	5,688,810	$	5,022,567	$	4,831,151	$	3,696,974	$	3,543,863
Savings	8,019,704		6,742,151		6,810,296		6,366,610		6,307,425
Time	1,271,391		1,002,392		1,067,252		1,110,441		1,193,043
Total deposits	14,979,905		12,767,110		12,708,699		11,174,025		11,044,331
Short-term borrowings	167,872		306,706		88,631		121,442		182,626
Other borrowings	457,042		524,045		306,459		276,150		275,773
Accrued expenses and other liabilities	224,289		203,199		174,987		169,178		128,730
Total Liabilities	15,829,108		13,801,060		13,278,776		11,740,795		11,631,460
Stockholders' Equity
Preferred equity	110,705		110,705		110,705		—		—
Common stock	42,094		36,885		36,845		36,807		36,704
Capital surplus	1,062,083		847,377		844,202		842,780		839,857
Retained earnings	791,630		761,211		723,067		700,298		702,502
Accumulated other comprehensive income/(loss)	72,719		55,426		32,558		(26,171)		(926)
Total Equity	2,079,231		1,811,604		1,747,377		1,553,714		1,578,137
Total Liabilities and Equity	$	17,908,339	$	15,612,664	$	15,026,153	$	13,294,509	$	13,209,597

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Average Balances
Assets	$	16,401,152		$	15,167,225		$	14,391,856		$	13,148,173		$	12,798,770
Loans, net of unearned	9,366,430			9,220,666			9,186,913			8,364,220			8,090,476
Deposits	13,518,020			12,650,822			12,288,378			10,971,193			10,704,643
Earning assets	15,042,079			13,868,360			13,103,159			11,891,455			11,580,295
Interest bearing liabilities	9,053,855			8,320,123			8,155,753			7,841,941			7,513,701
Common equity	1,769,575			1,661,381			1,574,902			1,619,682			1,570,258
Total stockholders' equity	1,880,280			1,772,086			1,580,997			1,619,682			1,570,258
Tangible common equity (non-GAAP)(1)	1,238,691			1,172,891			1,083,834			1,125,705			1,087,495
Key Performance Ratios
Annualized return on average assets	0.92		%	1.19		%	0.84		%	0.61		%	1.17		%
Annualized adjusted return on average assets (non-GAAP)(1)	0.96			1.22			0.86			0.65			1.19
Annualized return on average common equity (GAAP)	8.50			10.90			7.69			4.98			9.56
Annualized return on average tangible common equity (non-GAAP)(1)	12.77			16.11			11.97			8.00			14.65
Annualized adjusted return on average tangible common equity (non-GAAP)(1)	13.33			16.41			12.17			8.39			14.80
Annualized ratio of net charge-offs to average loans	0.01			0.92			0.11			0.24			0.04
Annualized net interest margin (GAAP)	3.51			3.51			3.81			3.81			3.86
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.55			3.55			3.85			3.84			3.90
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	54.93			54.67			55.75			61.82			60.31
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

	For the Quarter Ended December 31,						For the Year Ended December 31,
	2020			2019			2020			2019
Average Balances
Assets	$	16,401,152		$	12,798,770		$	14,782,605		$	12,021,917
Loans, net of unearned	9,366,430			8,090,476			9,035,973			7,761,091
Deposits	13,518,020			10,704,643			12,361,077			10,030,629
Earning assets	15,042,079			11,580,295			13,481,613			10,845,940
Interest bearing liabilities	9,053,855			7,513,701			8,344,798			7,048,607
Common equity	1,769,575			1,570,258			1,656,708			1,473,396
Total stockholders' equity	1,880,280			1,570,258			1,713,878			1,473,396
Tangible common equity (non-GAAP)(1)	1,238,691			1,087,495			1,155,556			1,008,178
Key Performance Ratios
Annualized return on average assets	0.92		%	1.17		%	0.90		%	1.24		%
Annualized adjusted return on average assets (non-GAAP)(1)	0.96			1.19			0.93			1.28
Annualized return on average common equity (GAAP)	8.50			9.56			8.06			10.12
Annualized return on average tangible common equity (non-GAAP)(1)	12.77			14.65			12.28			15.73
Annualized adjusted return on average tangible common equity (non-GAAP)(1)	13.33			14.80			12.65			16.25
Annualized ratio of net charge-offs to average loans	0.01			0.04			0.32			0.11
Annualized net interest margin (GAAP)	3.51			3.86			3.65			4.00
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.55			3.90			3.69			4.04
Efficiency ratio, fully tax-equivalent(1)	54.93			60.31			56.65			62.50
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Common Share Data
Book value per common share	$	46.77		$	46.11		$	44.42		$	42.21		$	43.00
Tangible book value per common share (non-GAAP)(1)	$	32.07		$	32.91		$	31.14		$	28.84		$	29.51
Common shares outstanding, net of treasury stock	42,093,862			36,885,390			36,844,744			36,807,217			36,704,278
Tangible common equity ratio (non-GAAP)(1)	7.81		%	8.03		%	7.89		%	8.29		%	8.52		%
Other Selected Trend Information
Effective tax rate	18.52		%	22.20		%	19.75		%	22.77		%	11.99		%
Full time equivalent employees	2,013			1,827			1,821			1,817			1,908
Loans Held to Maturity(2)
Commercial and industrial	$	2,534,799		$	2,303,646		$	2,364,400		$	2,550,490		$	2,530,809
Paycheck Protection Program ("PPP")	957,785			1,128,035			1,124,430			—			—
Owner occupied commercial real estate	1,776,406			1,494,902			1,433,271			1,431,038			1,472,704
Commercial and business lending	5,268,990			4,926,583			4,922,101			3,981,528			4,003,513
Non-owner occupied commercial real estate	1,921,481			1,659,683			1,543,623			1,551,787			1,495,877
Real estate construction	863,220			917,765			1,115,843			1,069,700			1,027,081
Commercial real estate lending	2,784,701			2,577,448			2,659,466			2,621,487			2,522,958
Total commercial lending	8,053,691			7,504,031			7,581,567			6,603,015			6,526,471
Agricultural and agricultural real estate	714,526			508,058			520,773			550,107			565,837
Residential mortgage	840,442			701,899			735,762			792,540			832,277
Consumer	414,392			385,658			408,728			428,574			443,332
Total loans held to maturity	$	10,023,051		$	9,099,646		$	9,246,830		$	8,374,236		$	8,367,917
Total unfunded loan commitments	$	3,246,953		$	2,980,484		$	3,065,283		$	2,782,679		$	2,973,732
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.
(2) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	12/31/2020		9/30/2020		6/30/2020		3/31/2020		12/31/2019
Allowance for Credit Losses-Loans
Balance, beginning of period	$	103,377	$	119,937	$	97,350	$	70,395	$	66,222
Impact of ASU 2016-13 adoption	—		—		—		12,071		—
Allowance for acquired purchased credit deteriorated loans	12,313		—		—		—		—
Provision for credit losses	16,132		4,741		25,007		19,865		4,903
Charge-offs	(1,104)		(21,753)		(3,564)		(6,301)		(2,018)
Recoveries	888		452		1,144		1,320		1,288
Balance, end of period	$	131,606	$	103,377	$	119,937	$	97,350	$	70,395
Allowance for Unfunded Commitments(1)
Balance, beginning of period	$	14,330	$	17,392	$	15,468	$	248	$	—
Impact of ASU 2016-13 adoption	—		—		—		13,604		—
Provision for credit losses	950		(3,062)		1,924		1,616		—
Balance, end of period	$	15,280	$	14,330	$	17,392	$	15,468	$	—
Allowance for lending related credit losses	$	146,886	$	117,707	$	137,329	$	112,818	$	70,395
Provision for Credit Losses
Provision for credit losses-loans	$	6,572	$	4,741	$	25,007	$	19,865	$	4,903
Provision for credit losses-acquired loans	9,560		—		—		—		—
Provision for credit losses-unfunded commitments	(1,372)		(3,062)		1,924		1,616		—
Provision for credit losses-acquired unfunded commitments	2,322		—		—		—		—
Provision for credit losses-held to maturity securities(2)	(10)		(1)		(135)		39		—
Total provision for credit losses	$	17,072	$	1,678	$	26,796	$	21,520	$	4,903
(1) Prior to the adoption of ASU 2016-13, the allowance for unfunded commitments was immaterial and therefore prior periods have not been shown in this table.
(2) Prior to the adoption of ASU 2016-13, there was no requirement to record provision for credit losses for held to maturity securities.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Asset Quality
Nonaccrual loans	$	87,386		$	79,040		$	91,609		$	79,280		$	76,548
Loans past due ninety days or more	720			1,681			1,360			—			4,105
Other real estate owned	6,624			5,050			5,539			6,074			6,914
Other repossessed assets	240			130			29			17			11
Total nonperforming assets	$	94,970		$	85,901		$	98,537		$	85,371		$	87,578
Performing troubled debt restructured loans	$	2,370		$	11,818		$	2,636		$	2,858		$	3,794
Nonperforming Assets Activity
Balance, beginning of period	$	85,901		$	98,537		$	85,371		$	87,578		$	78,686
Net loan charge offs	(216)			(21,301)			(2,420)			(4,981)			(730)
New nonperforming loans	8,664			11,834			26,857			15,796			13,751
Acquired nonperforming assets	12,781			—			—			—			3,262
Reduction of nonperforming loans(1)	(10,811)			(1,994)			(9,911)			(11,937)			(5,859)
OREO/Repossessed assets sales proceeds	(1,349)			(1,175)			(1,360)			(1,085)			(1,532)
Balance, end of period	$	94,970		$	85,901		$	98,537		$	85,371		$	87,578
Asset Quality Ratios
Ratio of nonperforming loans to total loans	0.88		%	0.89		%	1.01		%	0.95		%	0.96		%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.90		%	1.02		%	1.03		%	0.98		%	1.01		%
Ratio of nonperforming assets to total assets	0.53		%	0.55		%	0.66		%	0.64		%	0.66		%
Annualized ratio of net loan charge-offs to average loans	0.01		%	0.92		%	0.11		%	0.24		%	0.04		%
Allowance for loan credit losses as a percent of loans	1.31		%	1.14		%	1.30		%	1.16		%	0.84		%
Allowance for lending related credit losses as a percent of loans(2)	1.47		%	1.29		%	1.49		%	1.35		%	0.84		%
Allowance for loan credit losses as a percent of nonperforming loans	149.37		%	128.07		%	129.01		%	122.79		%	87.28		%
Loans delinquent 30-89 days as a percent of total loans	0.23		%	0.17		%	0.22		%	0.38		%	0.33		%
(1) Includes principal reductions, transfers to performing status and transfers to OREO.
(2) Prior to the adoption of ASU 2016-13, the reserve for unfunded commitments was immaterial.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	December 31, 2020							September 30, 2020							December 31, 2019
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	4,957,680		$	28,154	2.26	%	$	4,125,700		$	25,016	2.41	%	$	3,033,480		$	22,581	2.95	%
Nontaxable(1)	543,845			4,728		3.46		429,710			4,078		3.78		271,792			2,661		3.88
Total securities	5,501,525			32,882		2.38		4,555,410			29,094		2.54		3,305,272			25,242		3.03
Interest on deposits with other banks and other short-term investments	292,436			77		0.10		215,361			72		0.13		251,599			953		1.50
Federal funds sold	427			—		—		—			—		—		—			—		—
Loans:(2)(3)
Commercial and industrial(1)	2,357,056			27,523		4.65		2,331,467			27,777		4.74		2,444,961			32,006		5.19
PPP loans	1,064,863			11,806		4.41		1,128,488			7,462		2.63		—			—		—
Owner occupied commercial real estate	1,597,446			18,605		4.63		1,463,538			17,359		4.72		1,416,338			19,241		5.39
Non-owner occupied commercial real estate	1,756,443			20,733		4.70		1,589,073			18,860		4.72		1,388,677			18,952		5.41
Real estate construction	859,941			9,723		4.50		1,023,490			11,628		4.52		1,003,797			13,645		5.39
Agricultural and agricultural real estate	554,596			6,535		4.69		514,442			5,968		4.62		566,419			7,314		5.12
Residential mortgage	785,852			9,288		4.70		774,850			8,915		4.58		830,277			10,454		5.00
Consumer	390,233			5,188		5.29		395,318			5,222		5.26		440,007			6,504		5.86
Less: allowance for credit losses-loans	(118,739)			—		—		(123,077)			—		—		(67,052)			—		—
Net loans	9,247,691			109,401		4.71		9,097,589			103,191		4.51		8,023,424			76,110		5.35
Total earning assets	15,042,079			142,360		3.77	%	13,868,360			132,357		3.80	%	11,580,295			134,311		4.60	%
Nonearning Assets	1,359,073							1,298,865							1,218,475
Total Assets	$	16,401,152						$	15,167,225						$	12,798,770
Interest Bearing Liabilities
Savings	$	7,176,563		$	2,166	0.12	%	$	6,723,962		$	1,940	0.11	%	$	5,986,007		$	11,790	0.78	%
Time deposits	1,074,746			2,443		0.90		1,035,715			3,022		1.16		1,135,025			4,611		1.61
Short-term borrowings	268,464			175		0.26		128,451			78		0.24		115,680			271		0.93
Other borrowings	534,082			3,472		2.59		431,995			3,430		3.16		276,989			3,785		5.42
Total interest bearing liabilities	9,053,855			8,256		0.36	%	8,320,123			8,470		0.40	%	7,513,701			20,457		1.08	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	5,266,711							4,891,145							3,583,611
Accrued interest and other liabilities	200,306							183,871							131,200
Total noninterest bearing liabilities	5,467,017							5,075,016							3,714,811
Equity	1,880,280							1,772,086							1,570,258
Total Liabilities and Equity	$	16,401,152						$	15,167,225						$	12,798,770
Net interest income, fully tax-equivalent (non-GAAP)(4)				$	134,104						$	123,887						$	113,854
Net interest spread(1)						3.41	%						3.40	%						3.52	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(4)						3.55	%						3.55	%						3.90	%
Interest bearing liabilities to earning assets	60.19		%					59.99		%					64.88		%
(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) In conjunction with the adoption of ASU 2016-1, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.
(4) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Year Ended
	December 31, 2020							December 31, 2019
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	3,901,202		$	98,263	2.52	%	$	2,522,365		$	73,147	2.90	%
Nontaxable(1)	424,199			15,802		3.73		313,197			12,491		3.99
Total securities	4,325,401			114,065		2.64		2,835,562			85,638		3.02
Interest bearing deposits with other banks and other short-term investments	225,024			924		0.41		313,373			6,695		2.14
Federal funds sold	107			—		—		138			4		2.90
Loans:(2)(3)
Commercial and industrial(1)	2,437,183			118,513		4.86		2,445,552			127,796		5.23
PPP loans	779,183			25,285		3.25		—			—		—
Owner occupied commercial real estate	1,480,109			72,215		4.88		1,337,910			74,853		5.59
Non-owner occupied commercial real estate	1,589,932			78,178		4.92		1,173,233			73,067		6.23
Real estate construction	1,007,086			46,785		4.65		947,933			52,668		5.56
Agricultural and agricultural real estate	538,646			25,713		4.77		563,944			29,625		5.25
Residential mortgage	793,821			38,210		4.81		862,663			42,876		4.97
Consumer	410,013			22,190		5.41		429,856			26,036		6.06
Less: allowance for credit losses-loans	(104,892)			—		—		(64,224)			—		—
Net loans	8,931,081			427,089		4.78		7,696,867			426,921		5.55
Total earning assets	13,481,613			542,078		4.02	%	10,845,940			519,258		4.79	%
Nonearning Assets	1,300,992							1,175,977
Total Assets	$	14,782,605						$	12,021,917
Interest Bearing Liabilities
Savings	$	6,718,413		$	16,560	0.25	%	$	5,530,503		$	47,069	0.85	%
Time deposits	1,088,185			13,727		1.26		1,115,785			16,665		1.49
Short-term borrowings	155,467			610		0.39		126,337			1,748		1.38
Other borrowings	382,733			13,986		3.65		275,982			15,118		5.48
Total interest bearing liabilities	8,344,798			44,883		0.54	%	7,048,607			80,600		1.14	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	4,554,479							3,384,341
Accrued interest and other liabilities	169,450							115,573
Total noninterest bearing liabilities	4,723,929							3,499,914
Equity	1,713,878							1,473,396
Total Liabilities and Equity	$	14,782,605						$	12,021,917
Net interest income, fully tax-equivalent (non-GAAP)(4)				$	497,195						$	438,658
Net interest spread(1)						3.48	%						3.65	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(4)						3.69	%						4.04	%
Interest bearing liabilities to earning assets	61.90		%					64.99		%
(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) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.
(4) 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
	12/31/2020		9/30/2020		6/30/2020		3/31/2020		12/31/2019
Total Assets
First Bank & Trust	$	3,171,961	$	1,289,187	$	1,256,710	$	1,163,181	$	1,137,714
Citywide Banks	2,628,963		2,639,516		2,546,942		2,271,889		2,294,512
New Mexico Bank & Trust	2,032,637		2,002,663		1,899,194		1,670,097		1,763,037
Dubuque Bank and Trust Company	1,853,078		1,838,260		1,849,035		1,591,312		1,646,105
Arizona Bank & Trust	1,529,800		1,039,253		970,775		866,107		784,240
Illinois Bank & Trust	1,525,503		1,500,012		1,470,000		1,295,984		1,301,172
Bank of Blue Valley	1,376,080		1,424,261		1,380,159		1,222,358		1,307,688
Wisconsin Bank & Trust	1,267,488		1,262,069		1,203,108		1,079,582		1,090,412
Premier Valley Bank	1,076,615		1,042,437		1,031,899		889,280		903,220
Minnesota Bank & Trust	1,000,168		1,007,548		951,236		778,724		718,724
Rocky Mountain Bank	616,157		617,169		590,764		576,245		532,191
Total Deposits
First Bank & Trust	$	2,622,716	$	936,366	$	959,886	$	900,399	$	893,419
Citywide Banks	2,181,511		2,163,051		2,147,642		1,868,404		1,829,217
New Mexico Bank & Trust	1,749,963		1,747,527		1,698,584		1,451,041		1,565,070
Dubuque Bank and Trust Company	1,456,908		1,591,561		1,496,559		1,363,164		1,290,756
Arizona Bank & Trust	1,357,158		886,174		865,430		754,464		693,975
Illinois Bank & Trust	1,338,677		1,307,513		1,318,866		1,139,945		1,167,905
Bank of Blue Valley	1,138,264		1,142,910		1,138,818		1,008,362		1,016,743
Wisconsin Bank & Trust	1,057,369		1,011,843		1,050,766		920,168		941,109
Premier Valley Bank	836,984		855,913		869,165		706,479		707,814
Minnesota Bank & Trust	789,555		804,045		820,199		648,560		574,369
Rocky Mountain Bank	538,012		533,429		519,029		496,465		468,314

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	37,795		$	45,521		$	30,131		$	20,040		$	37,851
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,975			1,969			2,130			2,355			2,305
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	39,770		$	47,490		$	32,261		$	22,395		$	40,156
Average common equity (GAAP)	$	1,769,575		$	1,661,381		$	1,574,902		$	1,619,682		$	1,570,258
Less average goodwill	488,151			446,345			446,345			446,345			433,374
Less average core deposit and customer relationship intangibles, net	42,733			42,145			44,723			47,632			49,389
Average tangible common equity (non-GAAP)	$	1,238,691		$	1,172,891		$	1,083,834		$	1,125,705		$	1,087,495
Annualized return on average common equity (GAAP)	8.50		%	10.90		%	7.69		%	4.98		%	9.56		%
Annualized return on average tangible common equity (non-GAAP)	12.77		%	16.11		%	11.97		%	8.00		%	14.65		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	132,575		$	122,497		$	124,146		$	112,511		$	112,745
Plus tax-equivalent adjustment(1)	1,529			1,390			1,416			1,131			1,109
Net interest income, fully tax-equivalent (non-GAAP)	$	134,104		$	123,887		$	125,562		$	113,642		$	113,854
Average earning assets	$	15,042,079		$	13,868,360		$	13,103,159		$	11,891,455		$	11,580,295
Annualized net interest margin (GAAP)	3.51		%	3.51		%	3.81		%	3.81		%	3.86		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.55			3.55			3.85			3.84			3.90
Purchase accounting discount amortization on loans included in annualized net interest margin	0.10			0.10			0.16			0.09			0.17
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	1,968,526		$	1,700,899		$	1,636,672		$	1,553,714		$	1,578,137
Less goodwill	576,005			446,345			446,345			446,345			446,345
Less core deposit and customer relationship intangibles, net	42,383			40,520			43,011			45,707			48,688
Tangible common equity (non-GAAP)	$	1,350,138		$	1,214,034		$	1,147,316		$	1,061,662		$	1,083,104
Common shares outstanding, net of treasury stock	42,093,862			36,885,390			36,844,744			36,807,217			36,704,278
Common equity (book value) per share (GAAP)	$	46.77		$	46.11		$	44.42		$	42.21		$	43.00
Tangible book value per common share (non-GAAP)	$	32.07		$	32.91		$	31.14		$	28.84		$	29.51
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,350,138		$	1,214,034		$	1,147,316		$	1,061,662		$	1,083,104
Total assets (GAAP)	$	17,908,339		$	15,612,664		$	15,026,153		$	13,294,509		$	13,209,597
Less goodwill	576,005			446,345			446,345			446,345			446,345
Less core deposit and customer relationship intangibles, net	42,383			40,520			43,011			45,707			48,688
Total tangible assets (non-GAAP)	$	17,289,951		$	15,125,799		$	14,536,797		$	12,802,457		$	12,714,564
Tangible common equity ratio (non-GAAP)	7.81		%	8.03		%	7.89		%	8.29		%	8.52		%
(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
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Net interest income (GAAP)	$	132,575		$	122,497		$	124,146		$	112,511		$	112,745
Tax-equivalent adjustment(1)	1,529			1,390			1,416			1,131			1,109
Fully tax-equivalent net interest income	134,104			123,887			125,562			113,642			113,854
Noninterest income	32,621			31,216			30,637			25,817			28,030
Securities gains, net	(2,829)			(1,300)			(2,006)			(1,658)			(491)
Unrealized gain on equity securities, net	(36)			(155)			(680)			231			(11)
Gain on extinguishment of debt	—			—			—			—			—
Valuation adjustment on servicing rights	102			120			(9)			1,565			(668)
Adjusted revenue (non-GAAP)	$	163,962		$	153,768		$	153,504		$	139,597		$	140,714
Total noninterest expenses (GAAP)	$	99,269		$	90,396		$	90,439		$	90,859		$	92,866
Less:
Core deposit and customer relationship intangibles amortization	2,501			2,492			2,696			2,981			2,918
Partnership investment in tax credit projects	1,899			927			791			184			3,038
(Gain)/loss on sales/valuation of assets, net	2,621			1,763			701			16			1,512
Acquisition, integration and restructuring costs	2,186			1,146			673			1,376			537
Adjusted noninterest expenses (non-GAAP)	$	90,062		$	84,068		$	85,578		$	86,302		$	84,861
Efficiency ratio, fully tax-equivalent (non-GAAP)	54.93		%	54.67		%	55.75		%	61.82		%	60.31		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	232		$	—		$	122		$	44		$	—
Occupancy	—			—			—			—			11
Furniture and equipment	423			496			15			24			7
Professional fees	1,422			476			505			996			462
Advertising	42			8			4			89			31
(Gain)/loss on sales/valuations of assets, net	—			—			—			—			—
Other noninterest expenses	67			166			27			223			26
Total acquisition, integration and restructuring costs	$	2,186		$	1,146		$	673		$	1,376		$	537
After tax impact on diluted earnings per share(1)	$	0.04		$	0.02		$	0.01		$	0.03		$	0.01
Reconciliation of Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS (non-GAAP)
Net income available to common stockholders (GAAP)	$	37,795		$	45,521		$	30,131		$	20,040		$	37,851
Acquisition, integration and restructuring costs(1)	1,727			905			532			1,087			424
Adjusted net income available to common stockholders (non-GAAP)	$	39,522		$	46,426		$	30,663		$	21,127		$	38,275
Diluted earnings per common share (GAAP)	$	0.98		$	1.23		$	0.82		$	0.54		$	1.03
Adjusted diluted earnings per common share (non-GAAP)	$	1.03		$	1.25		$	0.83		$	0.57		$	1.04
Reconciliation of Annualized Adjusted Return on Average Assets (non-GAAP)
Adjusted net income available to common stockholders (non-GAAP)	$	39,522		$	46,426		$	30,663		$	21,127		$	38,275
Average assets (GAAP)	$	16,401,152		$	15,167,225		$	14,391,856		$	13,148,173		$	12,798,770
Annualized adjusted return on average assets (non-GAAP)	0.96		%	1.22		%	0.86		%	0.65		%	1.19		%
Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP)
Adjusted net income available to common stockholders (non-GAAP)	$	39,522		$	46,426		$	30,663		$	21,127		$	38,275
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,976			1,969			2,130			2,355			2,305
Adjusted net income available to common stockholders excluding intangible amortization (non-GAAP)	$	41,498		$	48,395		$	32,793		$	23,482		$	40,580
Average tangible common equity (non-GAAP)	$	1,238,691		$	1,172,891		$	1,083,834		$	1,125,705		$	1,087,495
Annualized adjusted return on average tangible common equity (non-GAAP)	13.33		%	16.41		%	12.17		%	8.39		%	14.80		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,						For the Year Ended December 31,
	2020			2019			2020			2019
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	37,795		$	37,851		$	133,487		$	149,129
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,976			2,305			8,429			9,458
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	39,771		$	40,156		$	141,916		$	158,587
Average common equity (GAAP)	$	1,769,575		$	1,570,258		$	1,656,708		$	1,473,396
Less average goodwill	488,151			433,374			456,854			415,841
Less average core deposit and customer relationship intangibles, net	42,733			49,389			44,298			49,377
Average tangible common equity (non-GAAP)	$	1,238,691		$	1,087,495		$	1,155,556		$	1,008,178
Annualized return on average common equity (GAAP)	8.50		%	9.56		%	8.06		%	10.12		%
Annualized return on average tangible common equity (non-GAAP)	12.77		%	14.65		%	12.28		%	15.73		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	132,575		$	112,745		$	491,729		$	433,729
Plus tax-equivalent adjustment(1)	1,529			1,109			5,466			4,929
Net interest income, fully tax-equivalent (non-GAAP)	$	134,104		$	113,854		$	497,195		$	438,658
Average earning assets	$	15,042,079		$	11,580,295		$	13,481,613		$	10,845,940
Annualized net interest margin (GAAP)	3.51		%	3.86		%	3.65		%	4.00		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.55			3.90			3.69			4.04
Purchase accounting discount amortization on loans included in annualized net interest margin	0.10			0.17			0.12			0.18
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,						For the Year Ended December 31,
Reconciliation of Efficiency Ratio (non-GAAP)	2020			2019			2020			2019
Net interest income (GAAP)	$	132,575		$	112,745		$	491,729		$	433,729
Tax-equivalent adjustment(1)	1,529			1,109			5,466			4,929
Fully tax-equivalent net interest income	134,104			113,854			497,195			438,658
Noninterest income	32,621			28,030			120,291			116,208
Securities gains, net	(2,829)			(491)			(7,793)			(7,659)
Unrealized gain on equity securities, net	(36)			(11)			(640)			(525)
Gain on extinguishment of debt	—			—			—			(375)
Valuation adjustment on servicing rights	102			(668)			1,778			911
Adjusted income (non-GAAP)	$	163,962		$	140,714		$	610,831		$	547,218
Total noninterest expenses (GAAP)	$	99,269		$	92,866		$	370,963		$	349,161
Less:
Core deposit and customer relationship intangibles amortization	2,501			2,918			10,670			11,972
Partnership investment in tax credit projects	1,899			3,038			3,801			8,030
(Gain)/loss on sales/valuations of assets, net	2,621			1,512			5,101			(19,422)
Acquisition, integration and restructuring costs	2,186			537			5,381			6,580
Adjusted noninterest expenses (non-GAAP)	$	90,062		$	84,861		$	346,010		$	342,001
Efficiency ratio, fully tax-equivalent (non-GAAP)	54.93		%	60.31		%	56.65		%	62.50		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	232		$	—		$	398		$	816
Occupancy	—			11			—			1,215
Furniture and equipment	423			7			958			87
Professional fees	1,422			462			3,399			2,365
Advertising	42			31			143			203
(Gain)/loss on sales/valuations of assets, net	—			—			—			1,003
Other noninterest expenses	67			26			483			891
Total acquisition, integration and restructuring costs	$	2,186		$	537		$	5,381		$	6,580
After tax impact on diluted earnings per share(1)	$	0.04		$	0.01		$	0.11		$	0.14
Reconciliation of Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS (non-GAAP)
Net income available to common stockholders (GAAP)	$	37,795		$	37,851		$	133,487		$	149,129
Acquisition, integration and restructuring costs(1)	1,727			424			4,251			5,198
Adjusted net income available common stockholders (non-GAAP)	$	39,522		$	38,275		$	137,738		$	154,327
Diluted earnings per common share (GAAP)	$	0.98		$	1.03		$	3.57		$	4.14
Adjusted diluted earnings per common share (non-GAAP)	$	1.03		$	1.04		$	3.69		$	4.28
Reconciliation of Annualized Adjusted Return on Average Assets (non-GAAP)
Adjusted net income available to common stockholders (non-GAAP)	$	39,522		$	38,275		$	137,738		$	154,327
Average assets (GAAP)	$	16,401,152		$	12,798,770		$	14,782,605		$	12,021,917
Annualized adjusted return on average assets (non-GAAP)	0.96		%	1.19		%	0.93		%	1.28		%
Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP)
Adjusted net income available to common stockholders (non-GAAP)	$	39,522		$	38,275		$	137,738		$	154,327
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,975			2,305			8,429			9,458
Adjusted net income available to common stockholders excluding intangible amortization (non-GAAP)	$	41,497		$	40,580		$	146,167		$	163,785
Average tangible common equity (non-GAAP)	$	1,238,691		$	1,087,495		$	1,155,556		$	1,008,178
Annualized adjusted return on average tangible common equity (non-GAAP)	13.33		%	14.80		%	12.65		%	16.25		%
(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
	As of and For the Quarter Ended
	12/31/2020			9/30/2020			6/30/2020			3/31/2020		12/31/2019
PPP loan balances	$	957,785		$	1,128,035		$	1,124,430		$	—	$	—
Average PPP loans balances	1,064,863			1,128,488			916,405			—		—
PPP fee income	$	9,109		$	4,542		$	3,655		$	—	$	—
PPP interest income	2,697			2,920			2,362			—		—
Total PPP interest income	$	11,806		$	7,462		$	6,017		$	—	$	—
Selected ratios excluding PPP loans and interest income
Annualized net interest margin (GAAP)	3.44		%	3.59		%	3.90		%	—		—
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.48			3.64			3.95			—		—
Ratio of nonperforming loans to total loans	0.97			1.01			1.14			—		—
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	1.00			1.16			1.18			—		—
Ratio of nonperforming assets to total assets	0.56			0.59			0.71			—		—
Annualized ratio of net loan charge-offs to average loans	0.01			1.05			0.12			—		—
Allowance for loan credit losses as a percent of loans	1.45			1.30			1.48			—		—
Allowance for lending related credit losses as a percent of loans	1.62			1.48			1.69			—		—
Loans delinquent 30-89 days as a percent of total loans	0.25			0.19			0.26			—		—
After tax impact of PPP interest income on diluted earnings per share(1)	$	0.24		$	0.16		$	0.13		$	—	$	—

	As of and For the Year Ended
	December 31, 2020			December 31, 2019
PPP loan balances	$	957,785		$	—
Average PPP loan balances	779,183			—
PPP fee income	$	17,306		$	—
PPP interest income	7,979			—
Total PPP interest income	$	25,285		$	—
Selected ratios excluding PPP loans and interest income
Annualized net interest margin (GAAP)	3.67		%	—		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.72			—
Annualized ratio of net loan charge-offs to average loans	0.35			—
After tax impact of PPP interest income on diluted earnings per share(1)	$	0.53		$	—
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.