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

Source: Nasdaq GlobeNewswire / 25 Oct 2021 16:00:01 America/New_York

Highlights and Developments

Quarterly net income available to common stockholders of $53.9 million compared to $45.5 million for the third quarter of 2020, an increase of $8.4 million or 18%
Year to date net income available to common stockholders of $164.3 million compared to $95.7 million for the nine months ended September 30, 2020, an increase of $68.6 million or 72%
Quarterly loan growth of $262.8 million or 11% annualized, exclusive of Paycheck Protection Program ("PPP") loans
Net recoveries on previously charged off loans of $1.3 million, nonperforming assets to total assets declined to 0.46%, and 30-89 day loan delinquencies fell to 0.12% of total loans for the third quarter of 2021
PPP loan forgiveness received of $419.9 million during the third quarter of 2021
Completed offering of $150.0 million of subordinated notes with net proceeds totaling $147.6 million and fixed-to-floating interest rate set at 2.75% for the first five years
Announced an 8% increase in the regular quarterly dividend to $0.27 per common share

	Quarter Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net income available to common stockholders (in millions)	$	53.9		$	45.5		$	164.3		$	95.7
Diluted earnings per common share	1.27			1.23			3.88			2.59

Return on average assets	1.19		%	1.26		%	1.25		%	0.92		%
Return on average common equity	10.32			10.90			10.95			7.90
Return on average tangible common equity (non-GAAP)⁽¹⁾	15.14			16.11			16.34			12.10
Net interest margin	3.30			3.51			3.37			3.70
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.34			3.55			3.41			3.74
Efficiency ratio, fully-tax equivalent (non-GAAP)⁽¹⁾	60.38			54.67			58.05			57.28

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

"HTLF had another solid quarter driven by our strong balance sheet and excellent credit metrics. We were pleased with the trajectory of non-PPP loan growth, our record low level of loan delinquencies and the net recoveries on previously charged-off loans for the quarter. We are also continuing to explore ways to improve operational efficiency, including evaluating the consolidation of our 11 bank charters."

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

DUBUQUE, Iowa, Oct. 25, 2021 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020:

Net income available to common stockholders of $53.9 million compared to $45.5 million, an increase of $8.4 million or 18%.
Earnings per diluted common share of $1.27 compared to $1.23, an increase of $0.04 or 3%.
Net interest income of $142.5 million compared to $122.5 million, an increase of $20.0 million or 16%.
Return on average common equity was 10.32% and return on average assets was 1.19% compared to 10.90% and 1.26%.
Return on average tangible common equity (non-GAAP) was 15.14% compared to 16.11%.

HTLF reported the following results for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020:

Net income available to common stockholders of $164.3 million compared to $95.7 million, an increase of $68.6 million or 72%.
Earnings per diluted common share of $3.88 compared to $2.59, an increase of $1.29 or 50%.
Net interest income of $423.4 million compared to $359.2 million, an increase of $64.2 million or 18%.
Return on average common equity was 10.95% and return on average assets was 1.25% compared to 7.90% and 0.92%.
Return on average tangible common equity (non-GAAP) was 16.34% compared to 12.10%.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.30% (3.34% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2021, compared to 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2021 and 3.51% (3.55% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2020.

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

Total interest income was $149.2 million, which was an increase of $18.2 million or 14% from $131.0 million and primarily attributable to an increase in average earning assets partially offset by lower yields.
Total interest income on a tax-equivalent basis (non-GAAP) was $150.9 million, which was an increase of $18.5 million or 14% from $132.4 million.
Average earning assets increased $3.26 billion or 23% to $17.12 billion compared to $13.87 billion, which was primarily attributable to recent acquisitions and loan growth, including PPP loans.
The average rate on earning assets decreased 30 basis points to 3.50% compared to 3.80%, which was primarily due to recent decreases in market interest rates and a shift in earning asset mix. Total average securities were 41% of total average earning assets compared to 33%.

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

Total interest expense was $6.6 million, a decrease of $1.8 million or 22% from $8.5 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 interest bearing liabilities decreased to 0.27% compared to 0.40%, which was primarily due to recent decreases in market interest rates.
Average interest bearing deposits increased $1.70 billion or 22% to $9.46 billion from $7.76 billion which was primarily attributable to recent acquisitions and deposit growth.
The average interest rate paid on interest bearing deposits decreased 11 basis points to 0.14% compared to 0.25%.
Average borrowings decreased $140.5 million or 25% to $419.9 million from $560.4 million, which was primarily attributable to reduced advances from the PPP lending fund used to fund PPP loans to borrowers. Average advances from the PPP lending fund totaled $2.9 million compared to $158.3 million. The average interest rate paid on borrowings was 3.02% compared to 2.49%.

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

Net interest income totaled $142.5 million compared to $122.5 million, which was an increase of $20.0 million or 16%.
Net interest income on a tax-equivalent basis (non-GAAP) totaled $144.3 million compared to $123.9 million, which was an increase of $20.4 million or 16%.

Noninterest Income and Noninterest Expense

Total noninterest income was $32.7 million during the third quarter of 2021 compared to $31.2 million during the third quarter of 2020, an increase of $1.5 million or 5%. Significant changes within the noninterest income category for the third quarter of 2021 compared to the third quarter of 2020 were:

Service charges and fees increased $3.8 million or 32% to $15.6 million from $11.7 million. The increase was primarily attributable to acquisitions completed in the fourth quarter of 2020.
Trust fees increased $864,000 or 16% to $6.2 million from $5.4 million. The increase was primarily attributable to an increase in market value of trust assets under management.
Net gains on sales of loans held for sale totaled $5.3 million compared to $8.9 million, which was a decrease of $3.6 million or 41% and was primarily attributable to a decrease of loans sold to the secondary market.

Total noninterest expense was $110.6 million during the third quarter of 2021 compared to $90.4 million during the third quarter of 2020, which was an increase of $20.2 million or 22%. Significant changes within the noninterest expense category for the third quarter of 2021 compared to the third quarter of 2020 were:

Salaries and employee benefits totaled $60.7 million compared to $51.0 million, which was an increase of $9.7 million or 19%. The increase was primarily attributable to higher salary and health care expenses as a result of more full time equivalent employees and normalized health care usage. Full-time equivalent employees increased 336 to 2,163 compared to 1,827 which was primarily attributable to the acquisitions completed in the fourth quarter of 2020 and the addition of specialized commercial and agribusiness lending teams during the third quarter of 2021.
Professional fees increased $4.4 million or 35% to $17.2 million compared to $12.8 million. The increase was primarily attributable to the utilization of external resources to support automation and technology projects, higher cloud based computing expenses and acquisitions completed in the fourth quarter of 2020.
Other noninterest expenses increased $5.3 million or 54% to $15.1 million compared to $9.8 million. The following items impacted the third quarter of 2021 compared to the third quarter of 2020:
- Travel and staff and customer entertainment expenses increased $860,000 to $1.2 million from $310,000. Travel and customer events were limited in the third quarter of 2020 due to the pandemic.
- Credit card processing and rebate expenses increased $1.8 million or 126% to $3.3 million from $1.4 million, which was primarily attributable to increased volume.
- Fraud losses increased $458,000 or 99% to $919,000 from $461,000. The increase was primarily attributable to check fraud and wire fraud transactions given the heightened fraud environment.

The remainder of the increase was primarily attributable to acquisitions completed in the fourth quarter of 2020.

The effective tax rate was 19.15% for the third quarter of 2021 compared to 22.20% for the third quarter of 2020. The following items impacted the third quarter 2021 and 2020 tax calculations:

Solar energy tax credits of $2.1 million compared to $965,000.
Federal low-income housing tax credits of $135,000 compared to $195,000.
New markets tax credits of $75,000 in each quarterly calculation.
Historic rehabilitation tax credits of $327,000 compared to $0.
Tax-exempt interest income as a percentage of pre-tax income of 9.32% compared to 8.48%.

Total Assets, Total Loans and Total Deposits

Total assets were $19.00 billion at September 30, 2021, an increase of $1.09 billion or 6% from $17.91 billion at year-end 2020. Securities represented 40% and 35% of total assets at September 30, 2021, and December 31, 2020, respectively.

Total loans held to maturity were $9.85 billion at September 30, 2021, $10.01 billion at June 30, 2021, and $10.02 billion at December 31, 2020. Excluding total PPP loans, loans increased $262.8 million or 11% annualized during the third quarter of 2021 and $380.4 million or 6% annualized since year-end 2020.

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

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $205.4 million or 4% to $5.08 billion compared to $5.29 billion.
- PPP loans originated in 2020 ("PPP I") decreased $299.9 million or 80%. PPP loans originated in 2021 ("PPP II") decreased $120.0 million or 26%.
- Excluding total PPP loans, commercial and business lending increased $214.6 million or 5% to $4.67 billion from $4.46 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, decreased $7.2 million or less than 1% to $2.83 billion compared to $2.84 billion.
Residential mortgage loans increased $39.5 million or 5% to $840.4 million from $800.9 million.
Consumer loans increased $10.9 million or 3% to $412.6 million from $401.6 million.

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

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $186.1 million or 4%, to $5.08 billion compared to $5.27 billion.
- PPP I loans decreased $883.5 million or 92%. PPP II loans totaled $335.0 million.
- Excluding total PPP loans, commercial and business lending increased $362.4 million or 8% to $4.67 billion from $4.31 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $49.8 million or 2% to $2.83 billion compared to $2.78 billion.
Agriculture and agricultural real estate loans decreased $29.9 million or 4% to $684.7 million compared to $714.5 million.

Total deposits were $16.02 billion as of September 30, 2021, $15.62 billion as of June 30, 2021 and $14.98 billion at year-end 2020. Significant deposit changes by category at September 30, 2021 compared to June 30, 2021 included:

Demand deposits increased $238.4 million or 4% to $6.54 billion compared to $6.30 billion.
Savings deposits increased $227.0 million or 3% to $8.42 billion from $8.19 billion.
Time deposits decreased $58.3 million or 5% to $1.07 billion from $1.13 billion.

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

Demand deposits increased $848.9 million or 15% to $6.54 billion compared to $5.69 billion.
Savings deposits increased $396.5 million or 5% to $8.42 billion from $8.02 billion.
Time deposits decreased $203.1 million or 16% to $1.07 billion from $1.27 billion.

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

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision benefit for credit losses for loans for the third quarter of 2021 was $4.4 million, which was a decrease of $9.2 million from provision expense of $4.7 million recorded in the third quarter of 2020. The provision benefit for the third quarter of 2021 was impacted by several factors, including:

decrease in nonperforming loans of $2.1 million to $83.2 or 0.84% of total loans compared to $85.4 million or 0.85% of total loans at June 30, 2021,
nonpass loans declined to 9.15% of total loans compared to 10.37% of total loans at June 30, 2021,
loans delinquent 30-89 days as a percent of total loans fell to 0.12% compared to 0.17% at June 30, 2021,
net recoveries of $1.3 million, and
stable macroeconomic factors compared to the second quarter of 2021.

The allowance for credit losses for loans totaled $117.5 million and $131.6 million at September 30, 2021, and December 31, 2020, respectively. The following items have impacted the allowance for credit losses for loans for the nine months ended September 30, 2021:

Provision benefit for the nine months ended September 30, 2021, totaled $10.9 million.
Net charge offs of $3.2 million were recorded for the first nine months of 2021.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $14.0 million at September 30, 2021, which was a decrease of $1.3 million from $15.3 million at December 31, 2020. Unfunded commitments increased $336.5 million to $3.58 billion at September 30, 2021 compared to $3.25 billion at December 31, 2020.

Total Provision and Allowance for Lending Related Credit Losses
The total provision benefit for lending related credit losses was $4.5 million for the third quarter of 2021 compared to provision expense of $1.7 million for the third quarter of 2020. The total allowance for lending related credit losses was $131.5 million at September 30, 2021, which was 1.33% of total loans as of September 30, 2021, compared to $146.9 million or 1.47% of total loans as of December 31, 2020. Excluding PPP loans, the allowance for lending related credit losses as a percentage of total loans was 1.39% and 1.62% as of September 30, 2021, and December 31, 2020, respectively.

Nonperforming Assets

Nonperforming assets decreased $6.8 million or 7% to $88.1 million or 0.46% of total assets at September 30, 2021, compared to $95.0 million or 0.53% of total assets at December 31, 2020. Nonperforming loans were $83.2 million or 0.84% of total loans at September 30, 2021, compared to $88.1 million or 0.88% of total loans at December 31, 2020. At September 30, 2021, loans delinquent 30-89 days were 0.12% of total loans compared to 0.23% of total loans at December 31, 2020.

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

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

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

Conference Call Details
HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join, please register in advance of the conference using the link provided below. Upon registering, participant dial-in numbers, Direct Event passcode and unique registrant ID will be provided. Direct Event online registration can be found at: http://www.directeventreg.com/registration/event/1492767. In the 10 minutes prior to the call start time, participants need to use the conference access information provided in the email received at the point of registering. A replay will be available until October 24, 2022, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., operating under the brand name HTLF, is a financial services company with assets of $19.00 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, residential mortgage, wealth management, investment and insurance. Additional information is available at www.htlf.com.

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

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

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

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

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Interest Income
Interest and fees on loans	$	112,062		$	102,657		$	336,416		$	316,076
Interest on securities:
Taxable	32,384			25,016			94,373			70,109
Nontaxable	4,609			3,222			13,673			8,749
Interest on federal funds sold	—			—			1			—
Interest on deposits with other banks and short-term investments	132			72			258			847
Total Interest Income	149,187			130,967			444,721			395,781
Interest Expense
Interest on deposits	3,444			4,962			11,629			25,678
Interest on short-term borrowings	98			78			348			435
Interest on other borrowings	3,102			3,430			9,378			10,514
Total Interest Expense	6,644			8,470			21,355			36,627
Net Interest Income	142,543			122,497			423,366			359,154
Provision (benefit) for credit losses	(4,534		)	1,678			(12,262		)	49,994
Net Interest Income After Provision for Credit Losses	147,077			120,819			435,628			309,160
Noninterest Income
Service charges and fees	15,551			11,749			44,354			34,742
Loan servicing income	784			638			2,495			1,980
Trust fees	6,221			5,357			18,037			15,356
Brokerage and insurance commissions	866			649			2,584			1,977
Securities gains/(losses), net	1,535			1,300			4,347			4,964
Unrealized gain/ (loss) on equity securities, net	112			155			85			604
Net gains on sale of loans held for sale	5,281			8,894			16,454			21,411
Valuation adjustment on servicing rights	195			(120		)	586			(1,676		)
Income on bank owned life insurance	940			868			2,706			2,533
Other noninterest income	1,239			1,726			4,557			5,779
Total Noninterest Income	32,724			31,216			96,205			87,670
Noninterest Expense
Salaries and employee benefits	60,689			50,978			177,083			151,053
Occupancy	7,366			6,732			22,683			19,705
Furniture and equipment	3,365			2,500			9,959			8,601
Professional fees	17,242			12,802			46,969			38,951
Advertising	1,921			928			5,039			4,128
Core deposit and customer relationship intangibles amortization	2,295			2,492			7,226			8,169
Other real estate and loan collection expenses, net	78			335			627			872
(Gain)/loss on sales/valuations of assets, net	(3		)	1,763			374			2,480
Acquisition, integration and restructuring costs	204			1,146			3,342			3,195
Partnership investment in tax credit projects	2,374			927			3,754			1,902
Other noninterest expenses	15,096			9,793			39,370			32,638
Total Noninterest Expense	110,627			90,396			316,426			271,694
Income Before Income Taxes	69,174			61,639			215,407			125,136
Income taxes	13,250			13,681			45,064			27,007
Net Income	55,924			47,958			170,343			98,129
Preferred dividends	(2,013		)	(2,437		)	(6,038		)	(2,437		)
Net Income Available to Common Stockholders	$	53,911		$	45,521		$	164,305		$	95,692
Earnings per common share-diluted	$	1.27		$	1.23		$	3.88		$	2.59
Weighted average shares outstanding-diluted	42,415,993			36,995,572			42,381,313			36,955,970

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Interest Income
Interest and fees on loans	$	112,062		$	111,915		$	112,439		$	108,865		$	102,657
Interest on securities:
Taxable	32,384			31,546			30,443			28,154			25,016
Nontaxable	4,609			4,561			4,503			3,735			3,222
Interest on federal funds sold	—			—			1			—			—
Interest on deposits with other banks and short-term investments	132			60			66			77			72
Total Interest Income	149,187			148,082			147,452			140,831			130,967
Interest Expense
Interest on deposits	3,444			3,790			4,395			4,609			4,962
Interest on short-term borrowings	98			98			152			175			78
Interest on other borrowings	3,102			2,976			3,300			3,472			3,430
Total Interest Expense	6,644			6,864			7,847			8,256			8,470
Net Interest Income	142,543			141,218			139,605			132,575			122,497
Provision (benefit) for credit losses	(4,534		)	(7,080		)	(648		)	17,072			1,678
Net Interest Income After Provision for Credit Losses	147,077			148,298			140,253			115,503			120,819
Noninterest Income
Service charges and fees	15,551			15,132			13,671			12,725			11,749
Loan servicing income	784			873			838			997			638
Trust fees	6,221			6,039			5,777			5,506			5,357
Brokerage and insurance commissions	866			865			853			779			649
Securities gains/(losses), net	1,535			2,842			(30		)	2,829			1,300
Unrealized gain/ (loss) on equity securities, net	112			83			(110		)	36			155
Net gains on sale of loans held for sale	5,281			4,753			6,420			7,104			8,894
Valuation adjustment on servicing rights	195			(526		)	917			(102		)	(120		)
Income on bank owned life insurance	940			937			829			1,021			868
Other noninterest income	1,239			2,166			1,152			1,726			1,726
Total Noninterest Income	32,724			33,164			30,317			32,621			31,216
Noninterest Expense
Salaries and employee benefits	60,689			57,332			59,062			51,615			50,978
Occupancy	7,366			7,399			7,918			6,849			6,732
Furniture and equipment	3,365			3,501			3,093			3,913			2,500
Professional fees	17,242			16,237			13,490			15,117			12,802
Advertising	1,921			1,649			1,469			1,107			928
Core deposit and customer relationship intangibles amortization	2,295			2,415			2,516			2,501			2,492
Other real estate and loan collection expenses, net	78			414			135			468			335
(Gain)/loss on sales/valuations of assets, net	(3		)	183			194			2,621			1,763
Acquisition, integration and restructuring costs	204			210			2,928			2,186			1,146
Partnership investment in tax credit projects	2,374			1,345			35			1,899			927
Other noninterest expenses	15,096			12,691			11,583			10,993			9,793
Total Noninterest Expense	110,627			103,376			102,423			99,269			90,396
Income Before Income Taxes	69,174			78,086			68,147			48,855			61,639
Income taxes	13,250			16,481			15,333			9,046			13,681
Net Income	55,924			61,605			52,814			39,809			47,958
Preferred dividends	(2,013		)	(2,012		)	(2,013		)	(2,014		)	(2,437		)
Net Income Available to Common Stockholders	$	53,911		$	59,593		$	50,801		$	37,795		$	45,521
Earnings per common share-diluted	$	1.27		$	1.41		$	1.20		$	0.98		$	1.23
Weighted average shares outstanding-diluted	42,415,993			42,359,873			42,335,747			38,534,082			36,995,572

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Assets
Cash and due from banks	$	192,247		$	208,702		$	198,177		$	219,243		$	175,284
Interest bearing deposits with other banks and short-term investments	135,158			240,426			269,685			118,660			156,371
Cash and cash equivalents	327,405			449,128			467,862			337,903			331,655
Time deposits in other financial institutions	3,138			3,138			3,138			3,129			3,129
Securities:
Carried at fair value	7,449,936			6,543,978			6,370,495			6,127,975			4,950,698
Held to maturity, at cost, less allowance for credit losses	85,354			85,439			85,293			88,839			88,700
Other investments, at cost	83,332			76,809			74,935			75,253			35,940
Loans held for sale	37,078			33,248			43,037			57,949			65,969
Loans:
Held to maturity	9,854,907			10,012,014			10,050,456			10,023,051			9,099,646
Allowance for credit losses	(117,533		)	(120,726		)	(130,172		)	(131,606		)	(103,377		)
Loans, net	9,737,374			9,891,288			9,920,284			9,891,445			8,996,269
Premises, furniture and equipment, net	221,996			226,358			225,047			226,094			200,028
Goodwill	576,005			576,005			576,005			576,005			446,345
Core deposit and customer relationship intangibles, net	35,157			37,452			39,867			42,383			40,520
Servicing rights, net	6,351			6,201			6,953			6,052			5,752
Cash surrender value on life insurance	190,576			189,619			188,521			187,664			173,111
Other real estate, net	4,744			6,314			6,236			6,624			5,050
Other assets	237,779			246,029			236,754			281,024			269,498
Total Assets	$	18,996,225		$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664
Liabilities and Equity
Liabilities
Deposits:
Demand	$	6,537,722		$	6,299,289		$	6,175,946		$	5,688,810		$	5,022,567
Savings	8,416,204			8,189,223			8,179,251			8,019,704			6,742,151
Time	1,068,317			1,126,606			1,203,854			1,271,391			1,002,392
Total deposits	16,022,243			15,615,118			15,559,051			14,979,905			12,767,110
Short-term borrowings	265,620			152,563			140,597			167,872			306,706
Other borrowings	371,765			271,244			349,514			457,042			524,045
Accrued expenses and other liabilities	164,345			172,295			139,058			224,289			203,199
Total Liabilities	16,823,973			16,211,220			16,188,220			15,829,108			13,801,060
Stockholders' Equity
Preferred equity	110,705			110,705			110,705			110,705			110,705
Common stock	42,250			42,245			42,174			42,094			36,885
Capital surplus	1,068,913			1,066,765			1,063,497			1,062,083			847,377
Retained earnings	926,834			883,484			833,171			791,630			761,211
Accumulated other comprehensive income	23,550			56,587			6,660			72,719			55,426
Total Equity	2,172,252			2,159,786			2,056,207			2,079,231			1,811,604
Total Liabilities and Equity	$	18,996,225		$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	9/30/2021				6/30/2021			3/31/2021			12/31/2020			9/30/2020
Average Balances
Assets	$	18,608,775			$	18,293,756		$	17,964,723		$	16,401,152		$	15,167,225
Loans, net of unearned	9,920,047				10,072,071			9,952,152			9,366,430			9,220,666
Deposits	15,817,778				15,576,345			15,044,561			13,518,020			12,650,822
Earning assets	17,123,824				16,819,978			16,460,124			15,042,079			13,868,360
Interest bearing liabilities	9,881,350				9,871,302			9,917,159			9,053,855			8,320,123
Common equity	2,072,593				1,980,904			1,963,674			1,769,575			1,661,381
Total stockholders' equity	2,183,298				2,091,609			2,074,379			1,880,280			1,772,086
Tangible common equity (non-GAAP)⁽¹⁾	1,460,309				1,366,285			1,346,270			1,238,691			1,172,891

Key Performance Ratios
Annualized return on average assets	1.19			%	1.35		%	1.19		%	0.97		%	1.26		%
Annualized return on average common equity (GAAP)	10.32				12.07			10.49			8.50			10.90
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾	15.14				18.05			15.90			12.77			16.11
Annualized ratio of net charge-offs/(recoveries) to average loans	(0.05		)		0.12			0.06			0.01			0.92
Annualized net interest margin (GAAP)	3.30				3.37			3.44			3.51			3.51
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.34				3.41			3.48			3.55			3.55
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾	60.38				57.11			56.61			54.93			54.67

	For the Quarter Ended September 30,							For the Nine Months Ended September 30,
	2021				2020			2021			2020
Average Balances
Assets	$	18,608,775			$	15,167,225		$	18,291,444		$	14,239,151
Loans, net of unearned	9,920,047				9,220,666			9,981,306			8,925,016
Deposits	15,817,778				12,650,822			15,482,394			11,972,615
Earning assets	17,123,824				13,868,360			16,803,740			12,957,661
Interest bearing liabilities	9,881,350				8,320,123			9,889,806			8,106,721
Common equity	2,072,593				1,661,381			2,006,123			1,618,811
Total stockholders' equity	2,183,298				1,772,086			2,116,828			1,658,006
Tangible common stockholders' equity	1,460,309				1,172,891			1,391,373			1,127,642

Key Performance Ratios
Annualized return on average assets	1.19			%	1.26		%	1.25		%	0.92		%
Annualized return on average common equity (GAAP)	10.32				10.90			10.95			7.90
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾	15.14				16.11			16.34			12.10
Annualized ratio of net charge-offs/(recoveries) to average loans	(0.05		)		0.92			0.04			0.43
Annualized net interest margin (GAAP)	3.30				3.51			3.37			3.70
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.34				3.55			3.41			3.74
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾	60.38				54.67			58.05			57.28

(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
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Common Share Data
Book value per common share	$	48.79		$	48.50		$	46.13		$	46.77		$	46.11
Tangible book value per common share (non-GAAP)⁽¹⁾	$	34.33		$	33.98		$	31.53		$	32.07		$	32.91
Common shares outstanding, net of treasury stock	42,250,092			42,245,452			42,173,675			42,093,862			36,885,390
Tangible common equity ratio (non-GAAP)⁽¹⁾	7.89		%	8.08		%	7.54		%	7.81		%	8.03		%

Other Selected Trend Information
Effective tax rate	19.15		%	21.11		%	22.50		%	18.52		%	22.20		%
Full time equivalent employees	2,163			2,091			2,131			2,013			1,827

Loans Held to Maturity
Commercial and industrial	$	2,538,369		$	2,518,908		$	2,421,260		$	2,534,799		$	2,303,646
Paycheck Protection Program ("PPP")	409,247			829,175			1,155,328			957,785			1,128,035
Owner occupied commercial real estate	2,135,227			1,940,134			1,837,559			1,776,406			1,494,902
Commercial and business lending	5,082,843			5,288,217			5,414,147			5,268,990			4,926,583
Non-owner occupied commercial real estate	2,020,487			1,987,369			1,967,183			1,921,481			1,659,683
Real estate construction	814,001			854,295			796,027			863,220			917,765
Commercial real estate lending	2,834,488			2,841,664			2,763,210			2,784,701			2,577,448
Total commercial lending	7,917,331			8,129,881			8,177,357			8,053,691			7,504,031
Agricultural and agricultural real estate	684,670			679,608			683,969			714,526			508,058
Residential mortgage	840,356			800,884			786,994			840,442			701,899
Consumer	412,550			401,641			402,136			414,392			385,658
Total loans held to maturity	$	9,854,907		$	10,012,014		$	10,050,456		$	10,023,051		$	9,099,646

Total unfunded loan commitments	$	3,583,417		$	3,433,062		$	3,306,042		$	3,246,953		$	2,980,484

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

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Allowance for Credit Losses-Loans
Balance, beginning of period	$	120,726		$	130,172		$	131,606		$	103,377		$	119,937
Allowance for acquired purchased credit deteriorated loans	—			—			—			12,313			—
Provision (benefit) for credit losses	(4,448		)	(6,466		)	16			16,132			4,741
Charge-offs	(1,167		)	(3,497		)	(2,126		)	(1,104		)	(21,753		)
Recoveries	2,422			517			676			888			452
Balance, end of period	$	117,533		$	120,726		$	130,172		$	131,606		$	103,377

Allowance for Unfunded Commitments
Balance, beginning of period	$	14,002		$	14,619		$	15,280		$	14,330		$	17,392
Provision (benefit) for credit losses	(35		)	(617		)	(661		)	950			(3,062		)
Balance, end of period	$	13,967		$	14,002		$	14,619		$	15,280		$	14,330

Allowance for lending related credit losses	$	131,500		$	134,728		$	144,791		$	146,886		$	117,707

Provision for Credit Losses
Provision (benefit) for credit losses-loans	$	(4,448	)	$	(6,466	)	$	16		$	6,572		$	4,741
Provision for credit losses-acquired loans	—			—			—			9,560			—
Provision (benefit) for credit losses-unfunded commitments	(35		)	(617		)	(661		)	(1,372		)	(3,062		)
Provision for credit losses-acquired unfunded commitments	—			—			—			2,322			—
Provision (benefit) for credit losses-held to maturity securities	(51		)	3			(3		)	(10		)	(1		)
Total provision (benefit) for credit losses	$	(4,534	)	$	(7,080	)	$	(648	)	$	17,072		$	1,678

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Asset Quality
Nonaccrual loans	$	82,375			$	85,268			$	91,718			$	87,386			$	79,040
Loans past due ninety days or more	861				97				171				720				1,681
Other real estate owned	4,744				6,314				6,236				6,624				5,050
Other repossessed assets	166				50				239				240				130
Total nonperforming assets	$	88,146			$	91,729			$	98,364			$	94,970			$	85,901

Performing troubled debt restructured loans	$	1,817			$	2,122			$	2,394			$	2,370			$	11,818

Nonperforming Assets Activity
Balance, beginning of period	$	91,729			$	98,364			$	94,970			$	85,901			$	98,537
Net loan (charge offs)/recoveries	1,255				(2,980		)		(1,450		)		(216		)		(21,301		)
New nonperforming loans	6,908				7,989				14,936				8,664				11,834
Acquired nonperforming assets	—				—				—				12,781				—
Reduction of nonperforming loans⁽¹⁾	(8,581		)		(10,948		)		(8,884		)		(10,811		)		(1,994		)
Net OREO/repossessed assets sales proceeds and losses	(3,165		)		(696		)		(1,208		)		(1,349		)		(1,175		)
Balance, end of period	$	88,146			$	91,729			$	98,364			$	94,970			$	85,901

Asset Quality Ratios
Ratio of nonperforming loans to total loans	0.84			%	0.85			%	0.91			%	0.88			%	0.89			%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.86				0.87				0.94				0.90				1.02
Ratio of nonperforming assets to total assets	0.46				0.50				0.54				0.53				0.55
Annualized ratio of net loan charge-offs/(recoveries) to average loans	(0.05		)		0.12				0.06				0.01				0.92
Allowance for loan credit losses as a percent of loans	1.19				1.21				1.30				1.31				1.14
Allowance for lending related credit losses as a percent of loans	1.33				1.35				1.44				1.47				1.29
Allowance for loan credit losses as a percent of nonperforming loans	141.20				141.42				141.66				149.37				128.07
Loans delinquent 30-89 days as a percent of total loans	0.12				0.17				0.16				0.23				0.17

(1) Includes principal reductions, transfers to performing status and transfers to OREO.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	September 30, 2021								June 30, 2021								September 30, 2020
	Average Balance				Interest		Rate		Average Balance				Interest		Rate		Average Balance				Interest		Rate
Earning Assets
Securities:
Taxable	$	6,244,097			$	32,384	2.06	%	$	5,862,683			$	31,546	2.16	%	$	4,125,700			$	25,016	2.41	%
Nontaxable⁽¹⁾	759,073				5,835		3.05		740,601				5,773		3.13		429,710				4,078		3.78
Total securities	7,003,170				38,219		2.17		6,603,284				37,319		2.27		4,555,410				29,094		2.54
Interest on deposits with other banks and short-term investments	322,430				132		0.16		271,891				60		0.09		215,361				72		0.13
Federal funds sold	—				—		—		—				—		—		—				—		—
Loans:⁽²⁾
Commercial and industrial⁽¹⁾	2,588,270				28,224		4.33		2,469,742				28,562		4.64		2,331,467				27,777		4.74
PPP loans	602,675				11,186		7.36		1,047,559				11,186		4.28		1,128,488				7,462		2.63
Owner occupied commercial real estate	1,990,538				20,048		4.00		1,858,891				20,097		4.34		1,463,538				17,359		4.72
Non-owner occupied commercial real estate	1,964,609				22,129		4.47		1,980,374				21,734		4.40		1,589,073				18,860		4.72
Real estate construction	835,976				9,591		4.55		815,738				9,212		4.53		1,023,490				11,628		4.52
Agricultural and agricultural real estate	674,510				7,415		4.36		672,560				7,267		4.33		514,442				5,968		4.62
Residential mortgage	855,734				9,068		4.20		827,291				9,255		4.49		774,850				8,915		4.58
Consumer	407,735				4,889		4.76		399,916				5,152		5.17		395,318				5,222		5.26
Less: allowance for credit losses-loans	(121,823		)		—		—		(127,268		)		—		—		(123,077		)		—		—
Net loans	9,798,224				112,550		4.56		9,944,803				112,465		4.54		9,097,589				103,191		4.51
Total earning assets	17,123,824				150,901		3.50	%	16,819,978				149,844		3.57	%	13,868,360				132,357		3.80	%
Nonearning Assets	1,484,951								1,473,778								1,298,865
Total Assets	$	18,608,775							$	18,293,756							$	15,167,225
Interest Bearing Liabilities
Savings	$	8,364,326			$	2,240	0.11	%	$	8,234,151			$	2,233	0.11	%	$	6,723,962			$	1,940	0.11	%
Time deposits	1,097,126				1,204		0.44		1,171,266				1,557		0.53		1,035,715				3,022		1.16
Short-term borrowings	139,001				98		0.28		169,822				98		0.23		128,451				78		0.24
Other borrowings	280,897				3,102		4.38		296,063				2,976		4.03		431,995				3,430		3.16
Total interest bearing liabilities	9,881,350				6,644		0.27	%	9,871,302				6,864		0.28	%	8,320,123				8,470		0.40	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	6,356,326								6,170,928								4,891,145
Accrued interest and other liabilities	187,801								159,917								183,871
Total noninterest bearing liabilities	6,544,127								6,330,845								5,075,016
Equity	2,183,298								2,091,609								1,772,086
Total Liabilities and Equity	$	18,608,775							$	18,293,756							$	15,167,225
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾					$	144,257							$	142,980							$	123,887
Net interest spread⁽¹⁾							3.23	%							3.29	%							3.40	%
Net interest income, fully tax-equivalent (non-GAAP^)(1)(3) to total earning assets							3.34	%							3.41	%							3.55	%
Interest bearing liabilities to earning assets	57.71			%					58.69			%					59.99			%

(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) 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 Nine Months Ended
	September 30, 2021								September 30, 2020
	Average Balance				Interest		Rate		Average Balance				Interest		Rate
Earning Assets
Securities:
Taxable	$	5,935,295			$	94,373	2.13	%	$	3,546,471			$	70,109	2.64	%
Nontaxable⁽¹⁾	743,534				17,308		3.11		384,026				11,074		3.85
Total securities	6,678,829				111,681		2.24	%	3,930,497				81,183		2.76	%
Interest bearing deposits with other banks and other short-term investments	266,701				258		0.13		202,390				847		0.56
Federal funds sold	4,622				1		0.03		—				—		—
Loans:⁽²⁾
Commercial and industrial⁽¹⁾	2,519,608				85,008		4.51	%	2,463,546				90,990		4.93	%
PPP loans	879,489				32,521		4.94		683,262				13,479		2.64
Owner occupied commercial real estate	1,876,929				59,710		4.25		1,440,981				53,610		4.97
Non-owner occupied commercial real estate	1,961,016				65,984		4.50		1,534,293				57,445		5.00
Real estate construction	819,452				28,501		4.65		1,056,493				37,062		4.69
Agricultural and agricultural real estate	676,091				22,733		4.50		533,290				19,178		4.80
Residential mortgage	844,337				28,153		4.46		796,497				28,922		4.85
Consumer	404,384				15,408		5.09		416,654				17,002		5.45
Less: allowance for credit losses-loans	(127,718		)		—		—		(100,242		)		—		—
Net loans	9,853,588				338,018		4.59		8,824,774				317,688		4.81
Total earning assets	16,803,740				449,958		3.58	%	12,957,661				399,718		4.12	%
Nonearning Assets	1,487,704								1,281,490
Total Assets	$	18,291,444							$	14,239,151
Interest Bearing Liabilities
Savings	$	8,211,478			$	6,903	0.11	%	$	6,564,582			$	14,394	0.29	%
Time deposits	1,166,858				4,726		0.54		1,092,698				11,284		1.38
Short-term borrowings	182,583				348		0.25		117,526				435		0.49
Other borrowings	328,887				9,378		3.81		331,915				10,514		4.23
Total interest bearing liabilities	9,889,806				21,355		0.29	%	8,106,721				36,627		0.60	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	6,104,058								4,315,335
Accrued interest and other liabilities	180,752								159,089
Total noninterest bearing liabilities	6,284,810								4,474,424
Stockholders' Equity	2,116,828								1,658,006
Total Liabilities and Stockholders' Equity	$	18,291,444							$	14,239,151
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾					$	428,603							$	363,091
Net interest spread⁽¹⁾							3.29	%							3.52	%
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾ to total earning assets							3.41	%							3.74	%
Interest bearing liabilities to earning assets	58.85			%					62.56			%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
	As of and For the Quarter Ended
	9/30/2021		6/30/2021		3/31/2021		12/31/2020		9/30/2020
Total Assets
Arizona Bank & Trust	$	1,808,943	$	1,645,816	$	1,614,740	$	1,529,800	$	1,039,253
Bank of Blue Valley	1,460,751		1,419,003		1,425,434		1,376,080		1,424,261
Citywide Banks	2,685,554		2,611,842		2,632,199		2,628,963		2,639,516
Dubuque Bank and Trust Company	1,968,612		1,990,040		1,932,234		1,853,078		1,838,260
First Bank & Trust	2,855,671		2,882,969		2,991,053		3,171,961		1,289,187
Illinois Bank & Trust	1,680,558		1,671,240		1,584,561		1,525,503		1,500,012
Minnesota Bank & Trust	872,291		955,638		995,692		1,000,168		1,007,548
New Mexico Bank & Trust	2,586,951		2,494,257		2,356,918		2,032,637		2,002,663
Premier Valley Bank	1,198,540		1,126,807		1,062,607		1,076,615		1,042,437
Rocky Mountain Bank	718,956		646,821		620,800		616,157		617,169
Wisconsin Bank & Trust	1,209,954		1,252,096		1,264,009		1,267,488		1,262,069
Total Deposits
Arizona Bank & Trust	$	1,617,732	$	1,450,248	$	1,453,888	$	1,357,158	$	886,174
Bank of Blue Valley	1,192,868		1,168,617		1,178,114		1,138,264		1,142,910
Citywide Banks	2,282,703		2,174,237		2,231,320		2,181,511		2,163,051
Dubuque Bank and Trust Company	1,705,753		1,471,564		1,565,782		1,456,908		1,591,561
First Bank & Trust	2,367,353		2,361,391		2,427,920		2,622,716		936,366
Illinois Bank & Trust	1,509,847		1,512,106		1,426,426		1,338,677		1,307,513
Minnesota Bank & Trust	734,292		762,549		813,693		789,555		804,045
New Mexico Bank & Trust	2,206,099		2,195,838		2,077,304		1,749,963		1,747,527
Premier Valley Bank	988,579		963,459		896,715		836,984		855,913
Rocky Mountain Bank	602,155		568,961		549,894		538,012		533,429
Wisconsin Bank & Trust	1,048,367		1,093,119		1,067,735		1,057,369		1,011,843

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Net income available to common stockholders (GAAP)	$	53,911		$	59,593		$	50,801		$	37,795		$	45,521
Plus core deposit and customer relationship intangibles amortization, net of tax⁽¹⁾	1,814			1,907			1,988			1,975			1,969
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	55,725		$	61,500		$	52,789		$	39,770		$	47,490

Average common equity (GAAP)	$	2,072,593		$	1,980,904		$	1,963,674		$	1,769,575		$	1,661,381
Less average goodwill	576,005			576,005			576,005			488,151			446,345
Less average core deposit and customer relationship intangibles, net	36,279			38,614			41,399			42,733			42,145
Average tangible common equity (non-GAAP)	$	1,460,309		$	1,366,285		$	1,346,270		$	1,238,691		$	1,172,891
Annualized return on average common equity (GAAP)	10.32		%	12.07		%	10.49		%	8.50		%	10.90		%
Annualized return on average tangible common equity (non-GAAP)	15.14		%	18.05		%	15.90		%	12.77		%	16.11		%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	142,543		$	141,218		$	139,605		$	132,575		$	122,497
Plus tax-equivalent adjustment⁽¹⁾	1,714			1,762			1,761			1,529			1,390
Net interest income, fully tax-equivalent (non-GAAP)	$	144,257		$	142,980		$	141,366		$	134,104		$	123,887

Average earning assets	$	17,123,824		$	16,819,978		$	16,460,124		$	15,042,079		$	13,868,360

Annualized net interest margin (GAAP)	3.30		%	3.37		%	3.44		%	3.51		%	3.51		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.34			3.41			3.48			3.55			3.55
Net purchase accounting discount amortization on loans included in annualized net interest margin	0.08			0.09			0.12			0.10			0.10

*Reconciliation of Tangible Book Value Per Common Share (non-GAAP)*
Common equity (GAAP)	$	2,061,547		$	2,049,081		$	1,945,502		$	1,968,526		$	1,700,899
Less goodwill	576,005			576,005			576,005			576,005			446,345
Less core deposit and customer relationship intangibles, net	35,157			37,452			39,867			42,383			40,520
Tangible common equity (non-GAAP)	$	1,450,385		$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034

Common shares outstanding, net of treasury stock	42,250,092			42,245,452			42,173,675			42,093,862			36,885,390
Common equity (book value) per share (GAAP)	$	48.79		$	48.50		$	46.13		$	46.77		$	46.11
Tangible book value per common share (non-GAAP)	$	34.33		$	33.98		$	31.53		$	32.07		$	32.91

*Reconciliation of Tangible Common Equity Ratio (non-GAAP)*
Tangible common equity (non-GAAP)	$	1,450,385		$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034

Total assets (GAAP)	$	18,996,225		$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664
Less goodwill	576,005			576,005			576,005			576,005			446,345
Less core deposit and customer relationship intangibles, net	35,157			37,452			39,867			42,383			40,520
Total tangible assets (non-GAAP)	$	18,385,063		$	17,757,549		$	17,628,555		$	17,289,951		$	15,125,799
Tangible common equity ratio (non-GAAP)	7.89		%	8.08		%	7.54		%	7.81		%	8.03		%

(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
*Reconciliation of Efficiency Ratio (non-GAAP)*	9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Net interest income (GAAP)	$	142,543			$	141,218			$	139,605			$	132,575			$	122,497
Tax-equivalent adjustment⁽¹⁾	1,714				1,762				1,761				1,529				1,390
Fully tax-equivalent net interest income	144,257				142,980				141,366				134,104				123,887
Noninterest income	32,724				33,164				30,317				32,621				31,216
Securities (gains)/losses, net	(1,535		)		(2,842		)		30				(2,829		)		(1,300		)
Unrealized (gain)/loss on equity securities, net	(112		)		(83		)		110				(36		)		(155		)
Valuation adjustment on servicing rights	(195		)		526				(917		)		102				120
Adjusted revenue (non-GAAP)	$	175,139			$	173,745			$	170,906			$	163,962			$	153,768

Total noninterest expenses (GAAP)	$	110,627			$	103,376			$	102,423			$	99,269			$	90,396
Less:
Core deposit and customer relationship intangibles amortization	2,295				2,415				2,516				2,501				2,492
Partnership investment in tax credit projects	2,374				1,345				35				1,899				927
(Gain)/loss on sales/valuation of assets, net	(3		)		183				194				2,621				1,763
Acquisition, integration and restructuring costs	204				210				2,928				2,186				1,146
Adjusted noninterest expenses (non-GAAP)	$	105,757			$	99,223			$	96,750			$	90,062			$	84,068
Efficiency ratio, fully tax-equivalent (non-GAAP)	60.38			%	57.11			%	56.61			%	54.93			%	54.67			%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	—			$	44			$	534			$	232			$	—
Occupancy	—				1				9				—				—
Furniture and equipment	7				41				607				423				496
Professional fees	145				63				670				1,422				476
Advertising	11				6				156				42				8
(Gain)/loss on sales/valuations of assets, net	39				—				—				—				—
Other noninterest expenses	2				55				952				67				166
Total acquisition, integration and restructuring costs	$	204			$	210			$	2,928			$	2,186			$	1,146
After tax impact on diluted earnings per common share⁽¹⁾	$	—			$	—			$	0.05			$	0.04			$	0.02

(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 September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Net income available to common stockholders (GAAP)	$	53,911		$	45,521		$	164,305		$	95,692
Plus core deposit and customer relationship intangibles amortization, net of tax⁽¹⁾	1,814			1,969			5,709			6,454
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	55,725		$	47,490		$	170,014		$	102,146

Average common equity (GAAP)	$	2,072,593		$	1,661,381		$	2,006,123		$	1,618,811
Less average goodwill	576,005			446,345			576,005			446,345
Less average core deposit and customer relationship intangibles, net	36,279			42,145			38,745			44,824
Average tangible common equity (non-GAAP)	$	1,460,309		$	1,172,891		$	1,391,373		$	1,127,642
Annualized return on average common equity (GAAP)	10.32		%	10.90		%	10.95		%	7.90		%
Annualized return on average tangible common equity (non-GAAP)	15.14		%	16.11		%	16.34		%	12.10		%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	142,543		$	122,497		$	423,366		$	359,154
Plus tax-equivalent adjustment⁽¹⁾	1,714			1,390			5,237			3,937
Net interest income, fully tax-equivalent (non-GAAP)	$	144,257		$	123,887		$	428,603		$	363,091

Average earning assets	$	17,123,824		$	13,868,360		$	16,803,740		$	12,957,661

Annualized net interest margin (GAAP)	3.30		%	3.51		%	3.37		%	3.70		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.34			3.55			3.41			3.74
Purchase accounting discount amortization on loans included in annualized net interest margin	0.08			0.10			0.10			0.12

(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 September 30,								For the Nine Months Ended September 30,
*Reconciliation of Efficiency Ratio (non-GAAP)*	2021				2020				2021				2020
Net interest income (GAAP)	$	142,543			$	122,497			$	423,366			$	359,154
Tax-equivalent adjustment⁽¹⁾	1,714				1,390				5,237				3,937
Fully tax-equivalent net interest income	144,257				123,887				428,603				363,091
Noninterest income	32,724				31,216				96,205				87,670
Securities gains, net	(1,535		)		(1,300		)		(4,347		)		(4,964		)
Unrealized (gain)/loss on equity securities, net	(112		)		(155		)		(85		)		(604		)
Valuation adjustment on servicing rights	(195		)		120				(586		)		1,676
Adjusted revenue (non-GAAP)	$	175,139			$	153,768			$	519,790			$	446,869

Total noninterest expenses (GAAP)	$	110,627			$	90,396			$	316,426			$	271,694
Less:
Core deposit and customer relationship intangibles amortization	2,295				2,492				7,226				8,169
Partnership investment in tax credit projects	2,374				927				3,754				1,902
Loss on sales/valuation of assets, net	(3		)		1,763				374				2,480
Acquisition, integration and restructuring costs	204				1,146				3,342				3,195
Adjusted noninterest expenses (non-GAAP)	$	105,757			$	84,068			$	301,730			$	255,948
Efficiency ratio, fully tax-equivalent (non-GAAP)	60.38			%	54.67			%	58.05			%	57.28			%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	—			$	—			$	578			$	166
Occupancy	—				—				10				—
Furniture and equipment	7				496				655				535
Professional fees	145				476				878				1,977
Advertising	11				8				173				101
(Gain)/loss on sales/valuations of assets, net	39				—				39				—
Other noninterest expenses	2				166				1,009				416
Total acquisition, integration and restructuring costs	$	204			$	1,146			$	3,342			$	3,195
After tax impact on diluted earnings per common share⁽¹⁾	$	—			$	0.02			$	0.06			$	0.07

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and For the Quarter Ended
	9/30/2021				6/30/2021			3/31/2021			12/31/2020			9/30/2020
PPP I loan balances	$	74,255			$	374,174		$	739,562		$	957,785		$	1,128,035
Average PPP I loan balances	174,930				597,703			841,262			1,064,863			1,128,488

PPP I fee income	$	3,886			$	7,313		$	7,464		$	9,109		$	4,542
PPP I interest income	403				1,445			2,087			2,697			2,920
Total PPP I interest income	$	4,289			$	8,758		$	9,551		$	11,806		$	7,462

PPP II loan balances	$	334,992			$	455,001		$	415,766		$	—		$	—
Average PPP II loan balances	427,745				449,856			151,255			—			—

PPP II fee income	$	5,784			$	1,263		$	223		$	—		$	—
PPP II interest income	1,113				1,165			375			—			—
Total PPP II interest income	$	6,897			$	2,428		$	598		$	—		$	—

Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.15			%	3.31		%	3.39		%	3.44		%	3.59		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.20				3.35			3.44			3.48			3.64
Ratio of nonperforming loans to total loans	0.88				0.93			1.03			0.97			1.01
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	0.90				0.95			1.06			1.00			1.16
Ratio of nonperforming assets to total assets	0.47				0.52			0.58			0.56			0.59
Annualized ratio of net loan charge-offs/(recoveries) to average loans	(0.05		)		0.13			0.07			0.01			1.05
Allowance for loan credit losses as a percent of loans	1.24				1.31			1.46			1.45			1.30
Allowance for lending related credit losses as a percent of loans	1.39				1.47			1.63			1.62			1.48
Loans delinquent 30-89 days as a percent of total loans	0.12				0.18			0.18			0.25			0.19
After tax impact of total PPP interest income on diluted earnings per common share⁽¹⁾	$	0.21			$	0.21		$	0.19		$	0.24		$	0.16

	As of and For the Nine Months Ended
	September 30, 2021			September 30, 2020
Average PPP I loan balances	$	535,524		$	683,262
Average PPP II loan balances	343,965			—

PPP I and II fee income	$	25,933		$	8,197
PPP I and II interest income	6,588			5,282
Total PPP I and II interest income	$	32,521		$	13,479

Selected ratios excluding total PPP loans and total PPP interest income
Annualized net interest margin (GAAP)	3.28		%	3.76		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	3.33			3.80
Annualized ratio of net loan charge-offs to average loans	0.05			0.47

After tax impact of total PPP interest income on diluted earnings per common share⁽¹⁾	$	0.61		$	0.29

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

CONTACT:

Bryan R. McKeag

Executive Vice President

Chief Financial Officer

(563) 589-1994

BMcKeag@htlf.com

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

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