Attached files
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| 8-K - 8-K - HEARTLAND FINANCIAL USA INC | form8kq22016coverpage.htm |
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CONTACT: | FOR IMMEDIATE RELEASE |
Bryan R. McKeag | July 25, 2016 |
Executive Vice President | |
Chief Financial Officer | |
(563) 589-1994 | |
bmckeag@htlf.com | |
HEARTLAND FINANCIAL USA, INC. REPORTS 2016 SECOND QUARTER RESULTS
Highlights
§ | Record quarterly net income available to common stockholders of $20.9 million, a 40% increase from second quarter of prior year | |
§ | Diluted earnings per common share of $0.84, a 17% increase from second quarter of prior year | |
§ | Net interest margin of 3.95%, fully taxable equivalent (non-GAAP)(1) of 4.12% | |
§ | Return on average common equity of 12.58% | |
§ | Return on average tangible common equity (non-GAAP)(2) of 16.32% | |
§ | Completed systems conversion of Centennial Bank in Denver, Colorado | |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (in millions) | $ | 21.0 | $ | 15.2 | $ | 41.0 | $ | 30.9 | |||||||
Net income available to common stockholders (in millions) | 20.9 | 15.0 | 40.8 | 30.5 | |||||||||||
Diluted earnings per common share | 0.84 | 0.72 | 1.66 | 1.47 | |||||||||||
Return on average assets | 1.03 | % | 0.91 | % | 1.01 | % | 0.94 | % | |||||||
Return on average common equity | 12.58 | 12.26 | 12.63 | 12.90 | |||||||||||
Return on average tangible common equity (non-GAAP)(2) | 16.32 | 14.14 | 16.38 | 14.88 | |||||||||||
Net interest margin | 3.95 | 3.81 | 3.98 | 3.78 | |||||||||||
Net interest margin, fully taxable equivalent (non-GAAP)(1) | 4.12 | 3.97 | 4.15 | 3.93 | |||||||||||
"Heartland continued to set new records with a strong financial performance for the second quarter and first half of 2016. Net income of $20.9 million represents a 40% increase over earnings for the second quarter of 2015 while year-to-date 2016 net income of $40.8 million represents a 34% increase over the previous year." Lynn B. Fuller, chairman and chief executive officer, Heartland Financial USA, Inc. | ||||
(1) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table included in this earnings release.
(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table included in this earnings release.
Dubuque, Iowa, Monday, July 25, 2016-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $20.9 million, or $0.84 per diluted common share, for the quarter ended June 30, 2016, compared to $15.0 million, or $0.72 per diluted common share, for the second quarter of 2015. Return on average common equity was 12.58% and return on average assets was 1.03% for the second quarter of 2016, compared to 12.26% and 0.91%, respectively, for the same quarter in 2015.
Net income available to common stockholders for the first six months of 2016 was $40.8 million, or $1.66 per diluted common share, compared to $30.5 million, or $1.47 per diluted common share, for the first six months of 2015. Return on average common equity was 12.63% and return on average assets was 1.01% for the first six months of 2016, compared to 12.90% and 0.94%, respectively, for the same period in 2015.
Commenting on Heartland’s second quarter 2016 results, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, “Heartland continued to set new records with a strong financial performance for the second quarter and first half of 2016. Net income of $20.9 million represents a 40% increase over earnings for the second quarter of 2015 while year-to-date 2016 net income of $40.8 million represents a 34% increase over the previous year.”
On February 5, 2016, Heartland completed the acquisition of CIC Bancshares, Inc., parent company of Centennial Bank, headquartered in Denver, Colorado, in a transaction valued at approximately $82.3 million. Of this amount, $15.7 million was paid in cash with the remainder of the consideration provided by the issuance of Heartland common stock, a new series of convertible preferred stock and the assumption of convertible notes and subordinated debt. Simultaneous with closing of the transaction, Centennial Bank merged into Heartland’s Summit Bank & Trust subsidiary, with the resulting institution operating under the name, Centennial Bank and Trust. As of the closing date, Centennial Bank had, at fair value, total assets of $769.7 million, total loans of $581.5 million and total deposits of $648.1 million. The systems conversion for this transaction was completed in June 2016.
Fully Taxable Equivalent Net Interest Margin Remains Above 4.00% and Interest Income Increases
Net interest margin, expressed as a percentage of average earning assets, was 3.95% (4.12% on a fully taxable equivalent basis) during the second quarter of 2016, compared to 4.02% (4.19% on a fully taxable equivalent basis) during the first quarter of 2016 and 3.81% (3.97% on a fully taxable equivalent basis) during the second quarter of 2015.
Fuller said, “We are very pleased to see net interest margin of 4.12% on a fully taxable equivalent basis for the second quarter. Heartland’s enviable margin is the result of diligent price discipline. Net interest income in dollars has increased steadily for each of the last 15 quarters.”
Interest income for the second quarter of 2016 was $81.3 million, an increase of $15.9 million or 24%, compared to the $65.4 million recorded in the second quarter of 2015. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $3.1 million for the second quarter of 2016 and $2.4 million for the second quarter of 2015. With these adjustments, interest income on a tax-equivalent basis was $84.5 million for the second quarter of 2016, an increase of $16.6 million or 25%, compared to $67.8 million for the second quarter of 2015. The increase in interest income in the second quarter of 2016, as compared to the second quarter of 2015, was primarily due to an increase in average earning assets, which totaled $7.45 billion during the second quarter of 2016 compared to $6.07 billion during the second quarter of 2015, a $1.38 billion or 23% increase. A majority of this growth was attributable to the three acquisitions completed during the last half of 2015, in addition to the acquisition of CIC Bancshares, Inc. completed in February 2016.
Interest expense for the second quarter of 2016 was $8.2 million, an increase of $416,000 or 5% from $7.8 million in the second quarter of 2015. Average interest bearing liabilities increased $912.3 million or 20% for the quarter ended June 30, 2016, as compared to the same quarter in 2015, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 8 basis points from 0.70% in the second quarter of 2015 to 0.62% in the second quarter of 2016. The average interest rate paid on savings deposits was 0.22% during the second quarter of 2016 compared to 0.23% during the second quarter of 2015, and the average interest rate paid on time deposits was 0.79% during the second quarter of 2016 compared to 0.97% during the second quarter of 2015.
Net interest income increased $15.5 million or 27% to $73.1 million in the second quarter of 2016 from the $57.6 million recorded in the second quarter of 2015. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $76.3 million during the second quarter of 2016, an increase of $16.2 million or 27% from the $60.1 million recorded during the second quarter of 2015.
Noninterest Income and Noninterest Expenses Increase
Noninterest income totaled $31.0 million during the second quarter of 2016 compared to $30.7 million during the second quarter of 2015, an increase of $365,000 or 1%. Service charges and fees totaled $8.0 million during the second quarter of 2016 compared to $5.9 million during the second quarter of 2015, an increase of $2.1 million or 36%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which is attributable to the acquisitions completed during the last half of 2015 and first quarter of 2016. Net securities gains totaled $4.6 million during the second quarter of 2016 compared to $3.1 million during the second quarter of 2015, an increase of $1.5 million or 49%. Gains on sale of loans held for sale totaled $11.3 million during the second quarter of 2016 compared to $14.6 million during the second quarter of 2015, a decrease of $3.3 million or 23%.
Fuller commented, “We are seeing solid improvement from key fee-producing business lines as we expand our footprint and offer financial services to clients of our newly-acquired banks. Specifically, in the second quarter of 2016, revenues from commercial card services and debit cards increased more than 10% over the first quarter.”
For the second quarter of 2016, noninterest expenses totaled $71.0 million compared to $63.5 million during the second quarter of 2015, an increase of $7.5 million or 12%. The categories with the most significant increases were the following: salaries and employee benefits, which increased $5.1 million or 14%; occupancy, which increased $1.2 million or 30%; and professional fees, which increased $2.2 million or 43%. These increases were primarily attributable to the recent acquisitions.
Heartland's effective tax rate was 32.37% for the second quarter of 2016 compared to 20.83% for the second quarter of 2015. Included in Heartland's income taxes for the second quarter of 2015 were federal historic rehabilitation tax credits totaling $2.9 million associated with Heartland's ownership interest in a qualifying real estate project. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $304,000 during the second quarter of 2016 compared to $145,000 during the second quarter of 2015. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 18.86% during the second quarter of 2016 compared to 23.35% during the second quarter of 2015.
Loans and Deposits Increase Since Year-End Due to First Quarter Acquisition
Total assets were $8.20 billion at June 30, 2016, an increase of $509.6 million or 7% since year-end 2015. Included in this growth, at fair value, were $769.7 million of assets acquired in the CIC Bancshares, Inc. transaction. Securities represented 23% of total assets at June 30, 2016, compared to 24% at December 31, 2015.
Total loans and leases held to maturity were $5.48 billion at June 30, 2016, compared to $5.00 billion at year-end 2015, an increase of $480.8 million or 10%. This increase includes $581.5 million of total loans and leases held to maturity, at fair value, acquired in the CIC Bancshares, Inc. transaction. Exclusive of this transaction, total loans and leases held to maturity decreased $20.7 million during the second quarter of 2016 and $80.0 million during the first quarter of 2016.
Total deposits were $6.84 billion as of June 30, 2016, compared to $6.41 billion at year-end 2015, an increase of $431.7 million or 7%. This increase included $648.1 million of deposits, at fair value, acquired in the CIC Bancshares, Inc. acquisition. Exclusive of this transaction, total deposits decreased $86.8 million during the second quarter of 2016 and $129.6 million during the first quarter of 2016, with both decreases primarily attributable to reduced time deposits. Demand deposits totaled $2.15 billion at June 30, 2016, an increase of $235.8 million or 12% since year-end 2015, with $164.3 million of the increase attributable to the CIC Bancshares, Inc. transaction. Exclusive of this transaction, demand deposits increased $70.4 million during the second quarter of 2016 and $1.1 million during the first quarter of 2016.
Nonperforming Assets Increase
Nonperforming assets were $68.6 million or 0.84% of total assets at June 30, 2016, compared to $51.7 million or 0.67% of total assets at December 31, 2015. Exclusive of $3.5 million of nonperforming assets, at fair value, acquired in the CIC Bancshares, Inc. transaction, nonperforming assets increased $13.4 million or 26% since year-end 2015. Nonperforming loans were $57.1 million or 1.04% of total loans and leases at June 30, 2016, compared to $39.7 million or 0.79% of total loans and leases at December 31, 2015.
The allowance for loan and lease losses at June 30, 2016, was 0.94% of loans and leases and 90.72% of nonperforming loans compared to 0.97% of loans and leases and 122.77% of nonperforming loans at December 31, 2015. The provision for loan losses was $2.1 million for the second quarter of 2016 compared to $5.7 million for the second quarter of 2015.
Fuller commented, "Overall credit quality remains sound, with nonperforming assets moving up, impacted by one large, well-collateralized legacy credit that moved to nonperforming status during the second quarter, as well as continued recognition of a small number of credits from the recently acquired bank portfolios."
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until July 24, 2017, by logging on to www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a diversified financial services company with assets exceeding $8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 108 banking locations serving 85 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 the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war, (iii) changes in state and federal laws, regulations and governmental policies concerning the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions, (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW-
###
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest Income | |||||||||||||||
Interest and fees on loans and leases | $ | 69,809 | $ | 55,824 | $ | 138,234 | $ | 108,873 | |||||||
Interest on securities: | |||||||||||||||
Taxable | 7,952 | 6,739 | 16,687 | 13,871 | |||||||||||
Nontaxable | 3,566 | 2,874 | 7,076 | 5,790 | |||||||||||
Interest on federal funds sold | 1 | 1 | 11 | 2 | |||||||||||
Interest on deposits in other financial institutions | 3 | 3 | 7 | 7 | |||||||||||
Total Interest Income | 81,331 | 65,441 | 162,015 | 128,543 | |||||||||||
Interest Expense | |||||||||||||||
Interest on deposits | 4,021 | 3,819 | 8,194 | 7,991 | |||||||||||
Interest on short-term borrowings | 519 | 212 | 848 | 410 | |||||||||||
Interest on other borrowings | 3,673 | 3,766 | 7,148 | 8,568 | |||||||||||
Total Interest Expense | 8,213 | 7,797 | 16,190 | 16,969 | |||||||||||
Net Interest Income | 73,118 | 57,644 | 145,825 | 111,574 | |||||||||||
Provision for loan and lease losses | 2,118 | 5,674 | 4,185 | 7,345 | |||||||||||
Net Interest Income After Provision for Loan and Lease Losses | 71,000 | 51,970 | 141,640 | 104,229 | |||||||||||
Noninterest Income | |||||||||||||||
Service charges and fees | 8,022 | 5,900 | 15,184 | 11,304 | |||||||||||
Loan servicing income | 1,292 | 1,163 | 2,560 | 2,204 | |||||||||||
Trust fees | 3,625 | 3,913 | 7,438 | 7,544 | |||||||||||
Brokerage and insurance commissions | 886 | 916 | 1,908 | 2,003 | |||||||||||
Securities gains, net | 4,622 | 3,110 | 8,148 | 7,463 | |||||||||||
Gains on sale of loans held for sale | 11,270 | 14,599 | 22,335 | 28,341 | |||||||||||
Valuation adjustment on commercial servicing rights | (46 | ) | — | (46 | ) | — | |||||||||
Income on bank owned life insurance | 591 | 459 | 1,113 | 983 | |||||||||||
Other noninterest income | 764 | 601 | 1,964 | 1,482 | |||||||||||
Total Noninterest Income | 31,026 | 30,661 | 60,604 | 61,324 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and employee benefits | 41,985 | 36,851 | 83,699 | 73,489 | |||||||||||
Occupancy | 5,220 | 4,028 | 10,223 | 8,287 | |||||||||||
Furniture and equipment | 2,442 | 2,176 | 4,555 | 4,282 | |||||||||||
Professional fees | 7,486 | 5,249 | 14,496 | 11,293 | |||||||||||
FDIC insurance assessments | 1,120 | 899 | 2,288 | 1,855 | |||||||||||
Advertising | 1,551 | 1,333 | 2,835 | 2,514 | |||||||||||
Intangible assets amortization | 1,297 | 715 | 3,192 | 1,346 | |||||||||||
Other real estate and loan collection expenses | 659 | 753 | 1,231 | 1,218 | |||||||||||
(Gain)/loss on sales/valuations of assets, net | (43 | ) | 1,509 | 270 | 1,862 | ||||||||||
Other noninterest expenses | 9,303 | 9,969 | 18,540 | 16,950 | |||||||||||
Total Noninterest Expense | 71,020 | 63,482 | 141,329 | 123,096 | |||||||||||
Income Before Income Taxes | 31,006 | 19,149 | 60,915 | 42,457 | |||||||||||
Income taxes | 10,036 | 3,989 | 19,936 | 11,588 | |||||||||||
Net Income | 20,970 | 15,160 | 40,979 | 30,869 | |||||||||||
Preferred dividends | (52 | ) | (204 | ) | (220 | ) | (408 | ) | |||||||
Interest expense on convertible preferred debt | 31 | — | 31 | — | |||||||||||
Net Income Available to Common Stockholders | $ | 20,949 | $ | 14,956 | $ | 40,790 | $ | 30,461 | |||||||
Earnings per common share-diluted | $ | 0.84 | $ | 0.72 | $ | 1.66 | $ | 1.47 | |||||||
Weighted average shares outstanding-diluted | 24,974,995 | 20,877,236 | 24,541,356 | 20,681,800 | |||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||||||
Interest Income | |||||||||||||||||||
Interest and fees on loans and leases | $ | 69,809 | $ | 68,425 | $ | 59,905 | $ | 58,328 | $ | 55,824 | |||||||||
Interest on securities: | |||||||||||||||||||
Taxable | 7,952 | 8,735 | 6,917 | 5,858 | 6,739 | ||||||||||||||
Nontaxable | 3,566 | 3,510 | 3,311 | 3,077 | 2,874 | ||||||||||||||
Interest on federal funds sold | 1 | 10 | 21 | 1 | 1 | ||||||||||||||
Interest on deposits in other financial institutions | 3 | 4 | 3 | 4 | 3 | ||||||||||||||
Total Interest Income | 81,331 | 80,684 | 70,157 | 67,268 | 65,441 | ||||||||||||||
Interest Expense | |||||||||||||||||||
Interest on deposits | 4,021 | 4,173 | 3,772 | 3,767 | 3,819 | ||||||||||||||
Interest on short-term borrowings | 519 | 329 | 200 | 228 | 212 | ||||||||||||||
Interest on other borrowings | 3,673 | 3,475 | 3,485 | 3,549 | 3,766 | ||||||||||||||
Total Interest Expense | 8,213 | 7,977 | 7,457 | 7,544 | 7,797 | ||||||||||||||
Net Interest Income | 73,118 | 72,707 | 62,700 | 59,724 | 57,644 | ||||||||||||||
Provision for loan and lease losses | 2,118 | 2,067 | 2,171 | 3,181 | 5,674 | ||||||||||||||
Net Interest Income After Provision for Loan and Lease Losses | 71,000 | 70,640 | 60,529 | 56,543 | 51,970 | ||||||||||||||
Noninterest Income | |||||||||||||||||||
Service charges and fees | 8,022 | 7,162 | 6,654 | 6,350 | 5,900 | ||||||||||||||
Loan servicing income | 1,292 | 1,268 | 1,704 | 1,368 | 1,163 | ||||||||||||||
Trust fees | 3,625 | 3,813 | 3,230 | 3,507 | 3,913 | ||||||||||||||
Brokerage and insurance commissions | 886 | 1,022 | 917 | 869 | 916 | ||||||||||||||
Securities gains, net | 4,622 | 3,526 | 3,913 | 1,767 | 3,110 | ||||||||||||||
Impairment loss on securities | — | — | (769 | ) | — | — | |||||||||||||
Gains on sale of loans held for sale | 11,270 | 11,065 | 7,085 | 9,823 | 14,599 | ||||||||||||||
Valuation adjustment on commercial servicing rights | (46 | ) | — | — | — | — | |||||||||||||
Income on bank owned life insurance | 591 | 522 | 644 | 372 | 459 | ||||||||||||||
Other noninterest income | 764 | 1,200 | 1,003 | 924 | 601 | ||||||||||||||
Total Noninterest Income | 31,026 | 29,578 | 24,381 | 24,980 | 30,661 | ||||||||||||||
Noninterest Expense | |||||||||||||||||||
Salaries and employee benefits | 41,985 | 41,714 | 33,583 | 37,033 | 36,851 | ||||||||||||||
Occupancy | 5,220 | 5,003 | 4,334 | 4,307 | 4,028 | ||||||||||||||
Furniture and equipment | 2,442 | 2,113 | 2,344 | 2,121 | 2,176 | ||||||||||||||
Professional fees | 7,486 | 7,010 | 6,503 | 5,251 | 5,249 | ||||||||||||||
FDIC insurance assessments | 1,120 | 1,168 | 886 | 1,018 | 899 | ||||||||||||||
Advertising | 1,551 | 1,284 | 1,624 | 1,327 | 1,333 | ||||||||||||||
Intangible assets amortization | 1,297 | 1,895 | 898 | 734 | 715 | ||||||||||||||
Other real estate and loan collection expenses | 659 | 572 | 723 | 496 | 753 | ||||||||||||||
(Gain)/loss on sales/valuations of assets, net | (43 | ) | 313 | 4,238 | 721 | 1,509 | |||||||||||||
Other noninterest expenses | 9,303 | 9,237 | 10,821 | 8,988 | 9,969 | ||||||||||||||
Total Noninterest Expense | 71,020 | 70,309 | 65,954 | 61,996 | 63,482 | ||||||||||||||
Income Before Income Taxes | 31,006 | 29,909 | 18,956 | 19,527 | 19,149 | ||||||||||||||
Income taxes | 10,036 | 9,900 | 4,365 | 4,945 | 3,989 | ||||||||||||||
Net Income | 20,970 | 20,009 | 14,591 | 14,582 | 15,160 | ||||||||||||||
Preferred dividends | (52 | ) | (168 | ) | (204 | ) | (205 | ) | (204 | ) | |||||||||
Interest expense on convertible preferred debt | 31 | — | — | — | — | ||||||||||||||
Net Income Available to Common Stockholders | $ | 20,949 | $ | 19,841 | $ | 14,387 | $ | 14,377 | $ | 14,956 | |||||||||
Earnings per common share-diluted | $ | 0.84 | $ | 0.82 | $ | 0.67 | $ | 0.69 | $ | 0.72 | |||||||||
Weighted average shares outstanding-diluted | 24,974,995 | 24,117,384 | 21,491,699 | 20,893,312 | 20,877,236 | ||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
As Of | |||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||||||
Assets | |||||||||||||||||||
Cash and due from banks | $ | 222,718 | $ | 124,060 | $ | 237,841 | $ | 76,954 | $ | 111,909 | |||||||||
Federal funds sold and other short-term investments | 7,232 | 9,168 | 20,958 | 14,151 | 7,813 | ||||||||||||||
Cash and cash equivalents | 229,950 | 133,228 | 258,799 | 91,105 | 119,722 | ||||||||||||||
Time deposits in other financial institutions | 2,105 | 2,355 | 2,355 | 2,355 | 2,355 | ||||||||||||||
Securities: | |||||||||||||||||||
Available for sale, at fair value | 1,566,592 | 1,690,516 | 1,578,434 | 1,261,687 | 1,315,699 | ||||||||||||||
Held to maturity, at cost | 270,423 | 271,300 | 279,117 | 282,200 | 283,258 | ||||||||||||||
Other investments, at cost | 22,680 | 22,325 | 21,443 | 19,292 | 20,455 | ||||||||||||||
Loans held for sale | 82,538 | 76,565 | 74,783 | 102,569 | 105,898 | ||||||||||||||
Loans and leases: | |||||||||||||||||||
Held to maturity | 5,482,258 | 5,503,005 | 5,001,486 | 4,642,523 | 4,449,823 | ||||||||||||||
Allowance for loan and lease losses | (51,756 | ) | (49,738 | ) | (48,685 | ) | (47,105 | ) | (45,614 | ) | |||||||||
Loans and leases, net | 5,430,502 | 5,453,267 | 4,952,801 | 4,595,418 | 4,404,209 | ||||||||||||||
Premises, furniture and equipment, net | 168,701 | 164,788 | 150,148 | 147,486 | 143,423 | ||||||||||||||
Other real estate, net | 11,003 | 11,338 | 11,524 | 17,041 | 16,983 | ||||||||||||||
Goodwill | 127,699 | 127,699 | 97,852 | 56,828 | 54,162 | ||||||||||||||
Core deposit intangibles, net | 25,213 | 26,510 | 22,019 | 14,937 | 13,642 | ||||||||||||||
Servicing rights, net | 35,654 | 34,910 | 34,926 | 33,758 | 31,584 | ||||||||||||||
Cash surrender value on life insurance | 111,425 | 110,834 | 110,297 | 99,564 | 96,693 | ||||||||||||||
Other assets | 119,916 | 128,144 | 100,256 | 81,644 | 108,924 | ||||||||||||||
Total Assets | $ | 8,204,401 | $ | 8,253,779 | $ | 7,694,754 | $ | 6,805,884 | $ | 6,717,007 | |||||||||
Liabilities and Equity | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Demand | $ | 2,149,911 | $ | 2,079,521 | $ | 1,914,141 | $ | 1,632,005 | $ | 1,536,355 | |||||||||
Savings | 3,691,791 | 3,702,431 | 3,367,479 | 2,936,611 | 2,816,666 | ||||||||||||||
Time | 995,870 | 1,142,368 | 1,124,203 | 938,621 | 964,248 | ||||||||||||||
Total deposits | 6,837,572 | 6,924,320 | 6,405,823 | 5,507,237 | 5,317,269 | ||||||||||||||
Short-term borrowings | 303,707 | 325,741 | 293,898 | 335,845 | 477,918 | ||||||||||||||
Other borrowings | 296,895 | 265,760 | 263,214 | 302,086 | 296,594 | ||||||||||||||
Accrued expenses and other liabilities | 78,264 | 68,415 | 68,646 | 69,707 | 46,020 | ||||||||||||||
Total Liabilities | 7,516,438 | 7,584,236 | 7,031,581 | 6,214,875 | 6,137,801 | ||||||||||||||
Stockholders' Equity | |||||||||||||||||||
Preferred equity | 3,777 | 3,777 | 81,698 | 81,698 | 81,698 | ||||||||||||||
Common stock | 24,544 | 24,520 | 22,436 | 20,640 | 20,616 | ||||||||||||||
Capital surplus | 274,682 | 273,310 | 216,436 | 149,613 | 148,789 | ||||||||||||||
Retained earnings | 384,479 | 366,014 | 348,630 | 337,421 | 325,106 | ||||||||||||||
Accumulated other comprehensive income (loss) | 513 | 1,924 | (6,027 | ) | 1,731 | 3,059 | |||||||||||||
Treasury stock at cost | (32 | ) | (2 | ) | — | (94 | ) | (62 | ) | ||||||||||
Total Equity | 687,963 | 669,543 | 663,173 | 591,009 | 579,206 | ||||||||||||||
Total Liabilities and Equity | $ | 8,204,401 | $ | 8,253,779 | $ | 7,694,754 | $ | 6,805,884 | $ | 6,717,007 | |||||||||
HEARTLAND FINANCIAL USA, INC | ||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||||||||||
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Average Balances | ||||||||||||||||
Assets | $ | 8,211,326 | $ | 6,625,797 | $ | 8,118,198 | $ | 6,540,509 | ||||||||
Loans and leases, net of unearned | 5,582,878 | 4,447,124 | 5,470,490 | 4,357,855 | ||||||||||||
Deposits | 6,806,259 | 5,302,235 | 6,742,635 | 5,232,398 | ||||||||||||
Earning assets | 7,446,849 | 6,069,844 | 7,361,775 | 5,964,112 | ||||||||||||
Interest bearing liabilities | 5,363,477 | 4,451,200 | 5,318,320 | 4,424,840 | ||||||||||||
Common stockholders' equity | 669,930 | 489,394 | 649,612 | 476,295 | ||||||||||||
Total stockholders' equity | 673,707 | 571,092 | 684,739 | 557,933 | ||||||||||||
Tangible common stockholders' equity(1) | 516,347 | 424,245 | 500,726 | 412,834 | ||||||||||||
Key Performance Ratios | ||||||||||||||||
Annualized return on average assets | 1.03 | % | 0.91 | % | 1.01 | % | 0.94 | % | ||||||||
Annualized return on average common equity | 12.58 | % | 12.26 | % | 12.63 | % | 12.90 | % | ||||||||
Annualized return on average common tangible equity(2) | 16.32 | % | 14.14 | % | 16.38 | % | 14.88 | % | ||||||||
Annualized ratio of net charge-offs to average loans and leases | 0.01 | % | 0.17 | % | 0.04 | % | 0.15 | % | ||||||||
Annualized net interest margin, fully tax equivalent(3) | 4.12 | % | 3.97 | % | 4.15 | % | 3.93 | % | ||||||||
Efficiency ratio, fully taxable equivalent(4) | 67.95 | % | 67.43 | % | 67.43 | % | 69.14 | % | ||||||||
Reconciliation of Return on Average Common Tangible Equity (non-GAAP)(5) | ||||||||||||||||
Net income available to common shareholders (GAAP) | $ | 20,949 | $ | 14,956 | $ | 40,790 | $ | 30,461 | ||||||||
Average common stockholders' equity (GAAP) | $ | 669,930 | $ | 489,394 | $ | 649,612 | $ | 476,295 | ||||||||
Less average goodwill | 127,700 | 51,107 | 123,727 | 50,817 | ||||||||||||
Less average other intangibles, net | 25,883 | 14,042 | 25,159 | 12,644 | ||||||||||||
Average common tangible equity (non-GAAP) | $ | 516,347 | $ | 424,245 | $ | 500,726 | $ | 412,834 | ||||||||
Annualized return on average common equity (GAAP) | 12.58 | % | 12.26 | % | 12.63 | % | 12.90 | % | ||||||||
Annualized return on average common tangible equity (non-GAAP) | 16.32 | % | 14.14 | % | 16.38 | % | 14.88 | % | ||||||||
Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)(6) | ||||||||||||||||
Net Interest Income (GAAP) | $ | 73,118 | $ | 57,644 | $ | 145,825 | $ | 111,574 | ||||||||
Plus taxable equivalent adjustment(7) | 3,146 | 2,408 | 6,187 | 4,801 | ||||||||||||
Net interest income - taxable equivalent (non-GAAP) | $ | 76,264 | $ | 60,052 | $ | 152,012 | $ | 116,375 | ||||||||
Average earning assets | $ | 7,446,849 | $ | 6,069,844 | $ | 7,361,775 | $ | 5,964,112 | ||||||||
Annualized net interest margin (GAAP) | 3.95 | % | 3.81 | % | 3.98 | % | 3.78 | % | ||||||||
Annualized net interest margin, fully taxable equivalent (non-GAAP) | 4.12 | % | 3.97 | % | 4.15 | % | 3.93 | % | ||||||||
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles, net. | ||||||||||||||||
(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table above. | ||||||||||||||||
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table above. | ||||||||||||||||
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure. | ||||||||||||||||
(5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||
(6) Annualized net interest margin, fully taxable equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | ||||||||||||||||
(7) Computed on a tax equivalent basis using an effective tax rate of 35%. | ||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||||||
Average Balances | |||||||||||||||||||
Assets | $ | 8,211,326 | $ | 8,025,070 | $ | 7,241,104 | $ | 6,726,196 | $ | 6,625,797 | |||||||||
Loans and leases, net of unearned | 5,582,878 | 5,358,102 | 4,827,844 | 4,654,179 | 4,447,124 | ||||||||||||||
Deposits | 6,806,259 | 6,679,010 | 5,938,905 | 5,423,418 | 5,302,235 | ||||||||||||||
Earning assets | 7,446,849 | 7,276,703 | 6,512,565 | 6,161,495 | 6,069,844 | ||||||||||||||
Interest bearing liabilities | 5,363,477 | 5,273,164 | 4,781,797 | 4,491,089 | 4,451,200 | ||||||||||||||
Common stockholders' equity | 669,930 | 629,294 | 533,845 | 500,399 | 489,394 | ||||||||||||||
Total stockholders' equity | 673,707 | 695,771 | 615,543 | 582,097 | 571,092 | ||||||||||||||
Tangible common stockholders' equity(1) | 516,347 | 485,108 | 446,370 | 431,304 | 424,245 | ||||||||||||||
Key Performance Ratios | |||||||||||||||||||
Annualized return on average assets | 1.03 | % | 0.99 | % | 0.79 | % | 0.85 | % | 0.91 | % | |||||||||
Annualized return on average common equity | 12.58 | % | 12.68 | % | 10.69 | % | 11.40 | % | 12.26 | % | |||||||||
Annualized return on average common tangible equity(2) | 16.32 | % | 16.45 | % | 12.79 | % | 13.22 | % | 14.14 | % | |||||||||
Annualized ratio of net charge-offs to average loans and leases | 0.01 | % | 0.08 | % | 0.05 | % | 0.14 | % | 0.17 | % | |||||||||
Annualized net interest margin, fully tax equivalent(3) | 4.12 | % | 4.19 | % | 3.99 | % | 4.01 | % | 3.97 | % | |||||||||
Efficiency ratio, fully taxable equivalent(4) | 67.95 | % | 66.90 | % | 68.53 | % | 69.85 | % | 67.43 | % | |||||||||
Reconciliation of Return on Average Common Tangible Equity (non-GAAP)(5) | |||||||||||||||||||
Net income available to common shareholders (GAAP) | $ | 20,949 | $ | 19,841 | $ | 14,387 | $ | 14,377 | $ | 14,956 | |||||||||
Average common stockholders' equity (GAAP) | $ | 669,930 | $ | 629,294 | $ | 533,845 | $ | 500,399 | $ | 489,394 | |||||||||
Less average goodwill | 127,700 | 119,750 | 70,222 | 55,073 | 51,107 | ||||||||||||||
Less average other intangibles, net | 25,833 | 24,436 | 17,253 | 14,022 | 14,042 | ||||||||||||||
Average common tangible equity (non-GAAP) | $ | 516,397 | $ | 485,108 | $ | 446,370 | $ | 431,304 | $ | 424,245 | |||||||||
Annualized return on average common equity (GAAP) | 12.58 | % | 12.68 | % | 10.69 | % | 11.40 | % | 12.26 | % | |||||||||
Annualized return on average common tangible equity (non-GAAP) | 16.32 | % | 16.45 | % | 12.79 | % | 13.22 | % | 14.14 | % | |||||||||
Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)(6) | |||||||||||||||||||
Net Interest Income (GAAP) | $ | 73,118 | $ | 72,707 | $ | 62,700 | $ | 59,724 | $ | 57,644 | |||||||||
Plus taxable equivalent adjustment(7) | 3,146 | 3,041 | 2,827 | 2,588 | 2,408 | ||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP) | $ | 76,264 | $ | 75,748 | $ | 65,527 | $ | 62,312 | $ | 60,052 | |||||||||
Average earning assets | $ | 7,446,849 | $ | 7,276,703 | $ | 6,512,565 | $ | 6,161,495 | $ | 6,069,844 | |||||||||
Annualized net interest margin (GAAP) | 3.95 | % | 4.02 | % | 3.82 | % | 3.85 | % | 3.81 | % | |||||||||
Annualized net interest margin, fully taxable equivalent (non-GAAP) | 4.12 | % | 4.19 | % | 3.99 | % | 4.01 | % | 3.97 | % | |||||||||
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles, net. | |||||||||||||||||||
(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table above. | |||||||||||||||||||
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table above. | |||||||||||||||||||
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure. | |||||||||||||||||||
(5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||
(6) Annualized net interest margin, fully taxable equivalent is a non-GAAP measure, which 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. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||
(7) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||
Reconciliation of Non-GAAP Measure-Efficiency Ratio(1) | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net interest income | $ | 73,118 | $ | 57,644 | $ | 145,825 | $ | 111,574 | |||||||||||
Taxable equivalent adjustment(2) | 3,146 | 2,408 | 6,187 | 4,801 | |||||||||||||||
Fully taxable equivalent net interest income | 76,264 | 60,052 | 152,012 | 116,375 | |||||||||||||||
Noninterest income | 31,026 | 30,661 | 60,604 | 61,324 | |||||||||||||||
Securities gains, net | (4,622 | ) | (3,110 | ) | (8,148 | ) | (7,463 | ) | |||||||||||
Adjusted income | $ | 102,668 | $ | 87,603 | $ | 204,468 | $ | 170,236 | |||||||||||
Total noninterest expenses | $ | 71,020 | $ | 63,482 | $ | 141,329 | $ | 123,096 | |||||||||||
Less: | |||||||||||||||||||
Intangible assets amortization | 1,297 | 715 | 3,192 | 1,346 | |||||||||||||||
Partnership investment in historic rehabilitation tax credits | — | 2,190 | — | 2,190 | |||||||||||||||
(Gain)/loss on sales/valuations of assets, net | (43 | ) | 1,509 | 270 | 1,862 | ||||||||||||||
Adjusted noninterest expenses | $ | 69,766 | $ | 59,068 | $ | 137,867 | $ | 117,698 | |||||||||||
Efficiency ratio, fully taxable equivalent | 67.95 | % | 67.43 | % | 67.43 | % | 69.14 | % | |||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
Reconciliation of Non-GAAP Measure-Efficiency Ratio(1) | For the Quarter Ended | ||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||||||
Net interest income | $ | 73,118 | $ | 72,707 | $ | 62,700 | $ | 59,724 | $ | 57,644 | |||||||||
Taxable equivalent adjustment(2) | 3,146 | 3,041 | 2,827 | 2,588 | 2,408 | ||||||||||||||
Fully taxable equivalent net interest income | 76,264 | 75,748 | 65,527 | 62,312 | 60,052 | ||||||||||||||
Noninterest income | 31,026 | 29,578 | 24,381 | 24,980 | 30,661 | ||||||||||||||
Securities gains, net | (4,622 | ) | (3,526 | ) | (3,913 | ) | (1,767 | ) | (3,110 | ) | |||||||||
Impairment loss on securities | — | — | 769 | — | — | ||||||||||||||
Adjusted income | $ | 102,668 | $ | 101,800 | $ | 86,764 | $ | 85,525 | $ | 87,603 | |||||||||
Total noninterest expenses | $ | 71,020 | $ | 70,309 | $ | 65,954 | $ | 61,996 | $ | 63,482 | |||||||||
Less: | |||||||||||||||||||
Intangible assets amortization | 1,297 | 1,895 | 898 | 734 | 715 | ||||||||||||||
Partnership investment in historic rehabilitation tax credits | — | — | 1,362 | 805 | 2,190 | ||||||||||||||
(Gain)/loss on sales/valuation of assets, net | (43 | ) | 313 | 4,238 | 721 | 1,509 | |||||||||||||
Adjusted noninterest expenses | $ | 69,766 | $ | 68,101 | $ | 59,456 | $ | 59,736 | $ | 59,068 | |||||||||
Efficiency ratio, fully taxable equivalent | 67.95 | % | 66.90 | % | 68.53 | % | 69.85 | % | 67.43 | % | |||||||||
(1) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable 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 historic rehabilitation tax credits. 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 the table. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||
(2) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA | |||||||||||||||||||
As of and for the Quarter Ended | |||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/15 | 6/30/2015 | |||||||||||||||
Common Share Data | |||||||||||||||||||
Book value per common share | $ | 27.88 | $ | 27.15 | $ | 25.92 | $ | 24.68 | $ | 24.13 | |||||||||
Tangible book value per common share (non-GAAP)(1) | $ | 21.65 | $ | 20.86 | $ | 20.57 | $ | 21.20 | $ | 20.84 | |||||||||
ASC 320 effect on book value per common share | $ | 0.21 | $ | 0.23 | $ | (0.18 | ) | $ | 0.22 | $ | 0.21 | ||||||||
Common shares outstanding, net of treasury stock | 24,543,376 | 24,519,928 | 22,435,693 | 20,637,321 | 20,614,325 | ||||||||||||||
Tangible capital ratio (non-GAAP)(2) | 6.60 | % | 6.32 | % | 6.09 | % | 6.50 | % | 6.46 | % | |||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(3) | |||||||||||||||||||
Common stockholders' equity (GAAP) | $ | 684,186 | $ | 665,766 | $ | 581,475 | $ | 509,311 | $ | 497,508 | |||||||||
Less goodwill | 127,699 | 127,699 | 97,852 | 56,828 | 54,162 | ||||||||||||||
Less other intangible assets, net | 25,213 | 26,510 | 22,019 | 14,937 | 13,642 | ||||||||||||||
Tangible common stockholders' equity (non-GAAP) | $ | 531,274 | $ | 511,557 | $ | 461,604 | $ | 437,546 | $ | 429,704 | |||||||||
Common shares outstanding, net of treasury stock | 24,543,376 | 24,519,928 | 22,435,693 | 20,637,321 | 20,614,325 | ||||||||||||||
Common stockholders' equity (book value) per share (GAAP) | $ | 27.88 | $ | 27.15 | $ | 25.92 | $ | 24.68 | $ | 24.13 | |||||||||
Tangible book value per common share (non-GAAP) | $ | 21.65 | $ | 20.86 | $ | 20.57 | $ | 21.20 | $ | 20.84 | |||||||||
Reconciliation of Tangible Capital Ratio (non-GAAP)(4) | |||||||||||||||||||
Total assets (GAAP) | $ | 8,204,401 | $ | 8,253,779 | $ | 7,694,754 | $ | 6,805,884 | $ | 6,717,007 | |||||||||
Less goodwill | 127,699 | 127,699 | 97,852 | 56,828 | 54,162 | ||||||||||||||
Less other intangible assets, net | 25,213 | 26,510 | 22,019 | 14,937 | 13,642 | ||||||||||||||
Total tangible assets (non-GAAP) | $ | 8,051,489 | $ | 8,099,570 | $ | 7,574,883 | $ | 6,734,119 | $ | 6,649,203 | |||||||||
Tangible capital ratio (non-GAAP) | 6.60 | % | 6.32 | % | 6.09 | % | 6.50 | % | 6.46 | % | |||||||||
Loan and Lease Data | |||||||||||||||||||
Loans held to maturity: | |||||||||||||||||||
Commercial and commercial real estate | $ | 3,930,879 | $ | 3,951,839 | $ | 3,605,574 | $ | 3,303,098 | $ | 3,199,717 | |||||||||
Residential mortgage | 644,267 | 666,184 | 539,555 | 491,667 | 443,026 | ||||||||||||||
Agricultural and agricultural real estate | 480,883 | 471,271 | 471,870 | 469,381 | 444,110 | ||||||||||||||
Consumer | 428,730 | 417,114 | 386,867 | 379,903 | 364,441 | ||||||||||||||
Unearned discount and deferred loan fees | (2,501 | ) | (3,403 | ) | (2,380 | ) | (1,526 | ) | (1,471 | ) | |||||||||
Total loans and leases held to maturity | $ | 5,482,258 | $ | 5,503,005 | $ | 5,001,486 | $ | 4,642,523 | $ | 4,449,823 | |||||||||
Other Selected Trend Information | |||||||||||||||||||
Effective tax rate | 32.37 | % | 33.10 | % | 23.03 | % | 25.32 | % | 20.83 | % | |||||||||
Full time equivalent employees | 1,888 | 1,907 | 1,799 | 1,736 | 1,788 | ||||||||||||||
Total Residential Mortgage Loan Applications | $ | 440,907 | $ | 406,999 | $ | 307,163 | $ | 443,294 | $ | 615,463 | |||||||||
Residential Mortgage Loans Originated | $ | 324,633 | $ | 238,266 | $ | 258,939 | $ | 370,956 | $ | 421,798 | |||||||||
Residential Mortgage Loans Sold | $ | 302,448 | $ | 220,381 | $ | 260,189 | $ | 360,172 | $ | 402,151 | |||||||||
Residential Mortgage Loan Servicing Portfolio | $ | 4,203,429 | $ | 4,112,519 | $ | 4,057,861 | $ | 3,963,677 | $ | 3,785,794 | |||||||||
(1) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table above. | |||||||||||||||||||
(2) Refer to the " Reconciliation of Tangible Capital Ratio (non-GAAP)" table above. | |||||||||||||||||||
(3) Tangible book value per common share is total common stockholders' equity less goodwill and intangible assets, net divided by common shares outstanding, net of treasury. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||
(4) The tangible capital ratio is total common stockholders' equity less goodwill and intangible assets, net divided by total assets less goodwill and intangible assets, net. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
As of and for the Quarter Ended | |||||||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||||||
Allowance for Loan and Lease Losses | |||||||||||||||||||
Balance, beginning of period | $ | 49,738 | $ | 48,685 | $ | 47,105 | $ | 45,614 | $ | 41,854 | |||||||||
Provision for loan and lease losses | 2,118 | 2,067 | 2,171 | 3,181 | 5,674 | ||||||||||||||
Charge-offs | (2,951 | ) | (1,605 | ) | (1,837 | ) | (2,439 | ) | (2,734 | ) | |||||||||
Recoveries | 2,851 | 591 | 1,246 | 749 | 820 | ||||||||||||||
Balance, end of period | $ | 51,756 | $ | 49,738 | $ | 48,685 | $ | 47,105 | $ | 45,614 | |||||||||
Asset Quality | |||||||||||||||||||
Nonaccrual loans | $ | 57,053 | $ | 47,750 | $ | 39,655 | $ | 32,577 | $ | 26,710 | |||||||||
Loans and leases past due ninety days or more as to interest or principal payments | — | 639 | — | 1,181 | — | ||||||||||||||
Other real estate owned | 11,003 | 11,338 | 11,524 | 17,041 | 16,983 | ||||||||||||||
Other repossessed assets | 564 | 426 | 485 | 626 | 544 | ||||||||||||||
Total nonperforming assets | $ | 68,620 | $ | 60,153 | $ | 51,664 | $ | 51,425 | $ | 44,237 | |||||||||
Performing troubled debt restructured loans | $ | 9,923 | $ | 10,711 | $ | 10,968 | $ | 10,154 | $ | 10,903 | |||||||||
Nonperforming Assets Activity | |||||||||||||||||||
Balance, beginning of period | $ | 60,153 | $ | 51,664 | $ | 51,425 | $ | 44,237 | $ | 46,533 | |||||||||
Net loan charge offs | (100 | ) | (1,014 | ) | (591 | ) | (1,690 | ) | (1,914 | ) | |||||||||
New nonperforming loans | 19,994 | 12,171 | 9,686 | 7,996 | 4,676 | ||||||||||||||
Acquired nonperforming assets | — | 3,516 | 4,956 | 5,328 | — | ||||||||||||||
Reduction of nonperforming loans (1) | (10,313 | ) | (3,563 | ) | (6,768 | ) | (2,758 | ) | (1,409 | ) | |||||||||
OREO/Repossessed assets sales proceeds | (918 | ) | (2,411 | ) | (2,980 | ) | (1,074 | ) | (3,202 | ) | |||||||||
OREO/Repossessed assets writedowns, net | (337 | ) | (182 | ) | (3,909 | ) | (756 | ) | (565 | ) | |||||||||
Net activity at Citizens Finance Co. | 141 | (28 | ) | (155 | ) | 142 | 118 | ||||||||||||
Balance, end of period | $ | 68,620 | $ | 60,153 | $ | 51,664 | $ | 51,425 | $ | 44,237 | |||||||||
Asset Quality Ratios | |||||||||||||||||||
Ratio of nonperforming loans and leases to total loans and leases | 1.04 | % | 0.88 | % | 0.79 | % | 0.73 | % | 0.60 | % | |||||||||
Ratio of nonperforming assets to total assets | 0.84 | % | 0.73 | % | 0.67 | % | 0.76 | % | 0.66 | % | |||||||||
Annualized ratio of net loan charge-offs to average loans and leases | 0.01 | % | 0.08 | % | 0.05 | % | 0.14 | % | 0.17 | % | |||||||||
Allowance for loan and lease losses as a percent of loans and leases | 0.94 | % | 0.90 | % | 0.97 | % | 1.01 | % | 1.03 | % | |||||||||
Allowance for loan and lease losses as a percent of nonperforming loans and leases | 90.72 | % | 102.79 | % | 122.77 | % | 139.54 | % | 170.78 | % | |||||||||
Loans delinquent 30-89 days as a percent of total loans | 0.73 | % | 0.45 | % | 0.31 | % | 0.40 | % | 0.31 | % | |||||||||
(1) Includes principal reductions, transfers to performing status and transfers to OREO | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
DOLLARS IN THOUSANDS | |||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||
Earning Assets | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 1,468,896 | $ | 7,952 | 2.18 | % | $ | 1,324,870 | $ | 6,739 | 2.04 | % | |||||||||
Nontaxable(1) | 430,086 | 5,486 | 5.13 | 325,023 | 4,422 | 5.46 | |||||||||||||||
Total securities | 1,898,982 | 13,438 | 2.85 | 1,649,893 | 11,161 | 2.71 | |||||||||||||||
Interest bearing deposits | 10,727 | 3 | 0.11 | 10,889 | 3 | 0.11 | |||||||||||||||
Federal funds sold | 5,114 | 1 | 0.08 | 5,109 | 1 | 0.08 | |||||||||||||||
Loans and leases: (2) | |||||||||||||||||||||
Commercial and commercial real estate(1) | 3,866,861 | 46,889 | 4.88 | 3,122,239 | 37,666 | 4.84 | |||||||||||||||
Residential mortgage | 803,952 | 8,286 | 4.15 | 538,170 | 5,415 | 4.04 | |||||||||||||||
Agricultural and agricultural real estate(1) | 481,625 | 5,504 | 4.60 | 428,284 | 5,280 | 4.94 | |||||||||||||||
Consumer | 430,440 | 8,273 | 7.73 | 358,431 | 7,204 | 8.06 | |||||||||||||||
Fees on loans | — | 2,083 | — | — | 1,119 | — | |||||||||||||||
Less: allowance for loan and lease losses | (50,852 | ) | — | — | (43,171 | ) | — | — | |||||||||||||
Net loans and leases | 5,532,026 | 71,035 | 5.16 | 4,403,953 | 56,684 | 5.16 | |||||||||||||||
Total earning assets | 7,446,849 | 84,477 | 4.56 | % | 6,069,844 | 67,849 | 4.48 | % | |||||||||||||
Nonearning Assets | 764,477 | 555,953 | |||||||||||||||||||
Total Assets | $ | 8,211,326 | $ | 6,625,797 | |||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||
Savings | $ | 3,699,971 | $ | 2,028 | 0.22 | % | $ | 2,852,272 | $ | 1,642 | 0.23 | % | |||||||||
Time, $100,000 and over | 421,151 | 733 | 0.70 | 348,661 | 794 | 0.91 | |||||||||||||||
Other time deposits | 586,810 | 1,260 | 0.86 | 552,115 | 1,383 | 1.00 | |||||||||||||||
Short-term borrowings | 373,768 | 519 | 0.56 | 373,021 | 212 | 0.23 | |||||||||||||||
Other borrowings | 281,777 | 3,673 | 5.24 | 325,131 | 3,766 | 4.65 | |||||||||||||||
Total interest bearing liabilities | 5,363,477 | 8,213 | 0.62 | % | 4,451,200 | 7,797 | 0.70 | % | |||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||
Noninterest bearing deposits | 2,098,327 | 1,549,187 | |||||||||||||||||||
Accrued interest and other liabilities | 75,815 | 54,318 | |||||||||||||||||||
Total noninterest bearing liabilities | 2,174,142 | 1,603,505 | |||||||||||||||||||
Stockholders' Equity | 673,707 | 571,092 | |||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 8,211,326 | $ | 6,625,797 | |||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP)(1) | $ | 76,264 | $ | 60,052 | |||||||||||||||||
Net interest spread(1) | 3.94 | % | 3.78 | % | |||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP) to total earning assets(1) | 4.12 | % | 3.97 | % | |||||||||||||||||
Interest bearing liabilities to earning assets | 72.02 | % | 73.33 | % | |||||||||||||||||
Reconciliation to Reported Net Interest Income | |||||||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP) | $ | 76,264 | $ | 60,052 | |||||||||||||||||
Adjustments for taxable equivalent interest(1) | (3,146 | ) | (2,408 | ) | |||||||||||||||||
Net interest income (GAAP) | $ | 73,118 | $ | 57,644 | |||||||||||||||||
(1) Computed on a tax equivalent basis using an effective tax rate of 35% | |||||||||||||||||||||
(2) Nonaccrual loans are included in the average loans outstanding. | |||||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
DOLLARS IN THOUSANDS | |||||||||||||||||||||
For the Six Months Ended | |||||||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||
Earning Assets | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 1,488,664 | $ | 16,687 | 2.25 | % | $ | 1,304,304 | $ | 13,871 | 2.14 | % | |||||||||
Nontaxable(1) | 423,655 | 10,886 | 5.17 | 328,163 | 8,908 | 5.47 | |||||||||||||||
Total securities | 1,912,319 | 27,573 | 2.90 | 1,632,467 | 22,779 | 2.81 | |||||||||||||||
Interest bearing deposits | 11,180 | 7 | 0.13 | 10,046 | 7 | 0.14 | |||||||||||||||
Federal funds sold | 18,120 | 11 | 0.12 | 6,356 | 2 | 0.06 | |||||||||||||||
Loans and leases: (2) | |||||||||||||||||||||
Commercial and commercial real estate(1) | 3,805,401 | 93,643 | 4.95 | 3,072,995 | 73,541 | 4.83 | |||||||||||||||
Residential mortgage | 769,043 | 15,885 | 4.15 | 508,723 | 10,298 | 4.08 | |||||||||||||||
Agricultural and agricultural real estate(1) | 474,801 | 11,233 | 4.76 | 423,295 | 10,310 | 4.91 | |||||||||||||||
Consumer | 421,245 | 16,196 | 7.73 | 352,842 | 14,092 | 8.05 | |||||||||||||||
Fees on loans | 3,654 | — | 2,315 | — | |||||||||||||||||
Less: allowance for loan and lease losses | (50,334 | ) | — | — | (42,612 | ) | — | — | |||||||||||||
Net loans and leases | 5,420,156 | 140,611 | 5.22 | 4,315,243 | 110,556 | 5.17 | |||||||||||||||
Total earning assets | 7,361,775 | 168,202 | 4.59 | % | 5,964,112 | 133,344 | 4.51 | % | |||||||||||||
Nonearning Assets | 756,423 | 576,397 | |||||||||||||||||||
Total Assets | $ | 8,118,198 | $ | 6,540,509 | |||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||
Savings | $ | 3,628,089 | $ | 3,922 | 0.22 | % | $ | 2,841,675 | $ | 3,437 | 0.24 | % | |||||||||
Time, $100,000 and over | 459,885 | 1,604 | 0.70 | 346,523 | 1,632 | 0.95 | |||||||||||||||
Other time deposits | 614,556 | 2,668 | 0.87 | 544,187 | 2,922 | 1.08 | |||||||||||||||
Short-term borrowings | 342,464 | 848 | 0.50 | 334,105 | 410 | 0.25 | |||||||||||||||
Other borrowings | 273,326 | 7,148 | 5.26 | 358,350 | 8,568 | 4.82 | |||||||||||||||
Total interest bearing liabilities | 5,318,320 | 16,190 | 0.61 | % | 4,424,840 | 16,969 | 0.77 | % | |||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||
Noninterest bearing deposits | 2,040,105 | 1,500,013 | |||||||||||||||||||
Accrued interest and other liabilities | 75,034 | 57,663 | |||||||||||||||||||
Total noninterest bearing liabilities | 2,115,139 | 1,557,676 | |||||||||||||||||||
Stockholders' Equity | 684,739 | 557,993 | |||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 8,118,198 | $ | 6,540,509 | |||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP)(1) | $ | 152,012 | $ | 116,375 | |||||||||||||||||
Net interest spread(1) | 3.98 | % | 3.74 | % | |||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP) to total earning assets(1) | 4.15 | % | 3.93 | % | |||||||||||||||||
Interest bearing liabilities to earning assets | 72.24 | % | 74.19 | % | |||||||||||||||||
Reconciliation to Reported Net Interest Income | |||||||||||||||||||||
Net interest income, fully taxable equivalent (non-GAAP) | $ | 152,012 | $ | 116,375 | |||||||||||||||||
Adjustments for taxable equivalent interest(1) | (6,187 | ) | (4,801 | ) | |||||||||||||||||
Net interest income (GAAP) | $ | 145,825 | $ | 111,574 | |||||||||||||||||
(1) Computed on a tax equivalent basis using an effective tax rate of 35%. | |||||||||||||||||||||
(2) Nonaccrual loans are included in the average loans outstanding. | |||||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | |||||||||||||||
DOLLARS IN THOUSANDS | |||||||||||||||
As of and For the Quarter Ended | |||||||||||||||
6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | |||||||||||
Total Assets | |||||||||||||||
Dubuque Bank and Trust Company | $ | 1,473,461 | $ | 1,498,771 | $ | 1,617,322 | $ | 1,431,767 | $ | 1,541,610 | |||||
New Mexico Bank & Trust | 1,321,113 | 1,304,886 | 1,336,004 | 1,282,784 | 1,141,575 | ||||||||||
Wisconsin Bank & Trust | 1,080,224 | 1,094,872 | 1,139,337 | 1,098,405 | 1,150,867 | ||||||||||
Centennial Bank and Trust(1) | 909,697 | 927,040 | 161,806 | 155,114 | 152,672 | ||||||||||
Morrill & Janes Bank and Trust Company | 843,069 | 872,274 | 902,918 | 845,067 | 860,781 | ||||||||||
Illinois Bank & Trust | 742,697 | 718,074 | 757,478 | 769,170 | 784,162 | ||||||||||
Premier Valley Bank | 629,423 | 751,137 | 765,451 | — | — | ||||||||||
Arizona Bank & Trust | 577,002 | 558,369 | 591,066 | 599,119 | 510,838 | ||||||||||
Rocky Mountain Bank | 473,583 | 479,010 | 491,522 | 501,093 | 508,262 | ||||||||||
Minnesota Bank & Trust | 230,004 | 220,955 | 214,303 | 188,633 | 195,201 | ||||||||||
Total Portfolio Loans | |||||||||||||||
Dubuque Bank and Trust Company | $ | 928,869 | $ | 941,683 | $ | 956,517 | $ | 953,273 | $ | 945,574 | |||||
New Mexico Bank & Trust | 870,109 | 815,739 | 794,744 | 777,433 | 658,543 | ||||||||||
Wisconsin Bank & Trust | 732,503 | 758,789 | 793,508 | 844,557 | 876,321 | ||||||||||
Centennial Bank and Trust(1) | 668,547 | 683,085 | 101,449 | 94,127 | 95,275 | ||||||||||
Morrill & Janes Bank and Trust Company | 522,518 | 536,738 | 539,198 | 527,217 | 520,978 | ||||||||||
Illinois Bank & Trust | 466,983 | 465,783 | 465,937 | 473,859 | 455,247 | ||||||||||
Premier Valley Bank | 376,275 | 376,840 | 383,929 | — | — | ||||||||||
Arizona Bank & Trust | 390,078 | 402,431 | 444,501 | 444,916 | 383,588 | ||||||||||
Rocky Mountain Bank | 362,475 | 364,189 | 370,440 | 380,304 | 375,860 | ||||||||||
Minnesota Bank & Trust | 144,009 | 137,412 | 134,137 | 128,700 | 127,172 | ||||||||||
Total Deposits | |||||||||||||||
Dubuque Bank and Trust Company | $ | 1,159,942 | $ | 1,144,470 | $ | 1,209,074 | $ | 1,120,999 | $ | 1,144,932 | |||||
New Mexico Bank & Trust | 1,062,410 | 1,066,076 | 1,085,052 | 1,047,358 | 891,003 | ||||||||||
Wisconsin Bank & Trust | 911,915 | 921,071 | 974,001 | 904,803 | 985,804 | ||||||||||
Centennial Bank and Trust(1) | 775,417 | 779,607 | 128,759 | 139,826 | 122,928 | ||||||||||
Morrill & Janes Bank and Trust Company | 696,073 | 698,365 | 713,589 | 650,123 | 662,524 | ||||||||||
Illinois Bank & Trust | 653,582 | 629,235 | 631,010 | 641,024 | 645,354 | ||||||||||
Premier Valley Bank | 514,522 | 635,188 | 647,022 | — | — | ||||||||||
Arizona Bank & Trust | 497,599 | 468,312 | 500,490 | 491,254 | 405,680 | ||||||||||
Rocky Mountain Bank | 405,888 | 409,787 | 417,426 | 428,234 | 417,647 | ||||||||||
Minnesota Bank & Trust | 207,228 | 200,343 | 194,373 | 163,291 | 172,547 | ||||||||||
Net Income (Loss) | |||||||||||||||
Dubuque Bank and Trust Company | $ | 4,475 | $ | 6,073 | $ | 3,587 | $ | 4,477 | $ | 7,416 | |||||
New Mexico Bank & Trust | 5,642 | 4,094 | 2,576 | 3,220 | 3,658 | ||||||||||
Wisconsin Bank & Trust | 3,399 | 3,379 | 2,443 | 3,886 | 2,950 | ||||||||||
Centennial Bank and Trust(1) | 256 | 824 | 62 | (6 | ) | (81 | ) | ||||||||
Morrill & Janes Bank and Trust Company | 2,133 | 2,525 | 1,096 | 2,024 | 1,566 | ||||||||||
Illinois Bank & Trust | 2,397 | 2,027 | 574 | 1,877 | 1,309 | ||||||||||
Premier Valley Bank | 1,695 | 1,960 | 1,008 | — | — | ||||||||||
Arizona Bank & Trust | 2,121 | 1,841 | 968 | 1,254 | 998 | ||||||||||
Rocky Mountain Bank | 1,484 | 1,064 | 1,506 | 1,471 | 1,196 | ||||||||||
Minnesota Bank & Trust | 559 | 531 | 166 | 411 | 223 | ||||||||||
(1) Formerly known as Summit Bank & Trust. | |||||||||||||||