HEARTLAND FINANCIAL USA INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - HEARTLAND FINANCIAL USA INC	form8kq22017coverpage.htm



CONTACT:	FOR IMMEDIATE RELEASE
Bryan R. McKeag	July 31, 2017
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS 2017 SECOND QUARTER RESULTS

Highlights



§	Quarterly net income available to common stockholders of $21.9 million in comparison with $20.9 million for the second quarter of the prior year
§	Diluted earnings per common share of $0.81 in comparison with $0.84 for the second quarter of the prior year
§	Net interest margin of 3.94%, fully tax-equivalent (non-GAAP)⁽¹⁾of 4.14%
§	Return on average common equity of 11.13% and return on average tangible common equity (non-GAAP)⁽²⁾ of 14.07%
§	Tangible common equity ratio (non-GAAP)⁽³⁾of 7.97%
§	Efficiency ratio, fully tax-equivalent (non-GAAP)⁽⁴⁾ of 65.61%compared to 67.95% for the second quarter of 2016
§	Demand deposits increased $36.2 million during the quarter and represent 34% of total deposits
§	Completed acquisition of Citywide Banks of Colorado, Inc. on July 7, 2017



	Quarter Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income (in millions)	$	22.0		$	21.0		$	40.0		$	41.0
Net income available to common stockholders (in millions)	21.9			20.9			39.9			40.8
Diluted earnings per common share	0.81			0.84			1.49			1.66

Return on average assets	1.06		%	1.03		%	0.97		%	1.01		%
Return on average common equity	11.13			12.58			10.44			12.63
Return on average tangible common equity (non-GAAP)⁽²⁾	14.07			16.32			13.18			16.38
Net interest margin	3.94			3.95			3.95			3.98
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	4.14			4.12			4.15			4.15

"Heartland’s second quarter 2017 financial performance was excellent. Net income available to common stockholders of nearly $22.0 million exceeded the same quarter last year by 5 percent. Results were fueled in part by a solid net interest margin of 4.14 percent on a fully tax-equivalent basis and improvement in our efficiency ratio."

Lynn B. Fuller, chairman and chief executive officer, Heartland Financial USA, Inc.

(1) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table included in this earnings release.

(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table included in this earnings release.

(3) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table included in this earnings release.

(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table include in this earnings release.

Dubuque, Iowa, Monday, July 31, 2017-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $21.9 million, or $0.81 per diluted common share, for the quarter ended June 30, 2017, compared to $20.9 million, or $0.84 per diluted common share, for the second quarter of 2016. Return on average common equity was 11.13% and return on average assets was 1.06% for the second quarter of 2017, compared to 12.58% and 1.03%, respectively, for the same quarter in 2016.

Net income available to common stockholders for the six months ended June 30, 2017, was $39.9 million or $1.49 per diluted common share, compared to $40.8 million or $1.66 per diluted common share for the six months ended June 30, 2016. Return on average common equity was 10.44%, and return on average assets was 0.97% for the first six months of 2017, compared to 12.63% and 1.01%, respectively, for the same period in 2016.

Commenting on Heartland’s second quarter results, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, "Heartland’s second quarter 2017 financial performance was excellent. Net income available to common stockholders of nearly $22.0 million exceeded the same quarter last year by 5 percent. Results were fueled in part by a solid net interest margin of 4.14 percent on a fully tax-equivalent basis and improvement in our efficiency ratio."

On February 28, 2017, Heartland completed the acquisition of Founders Bancorp, parent company of Founders Community Bank, based in San Luis Obispo, California. Based on Heartland's closing common stock price of $49.55 per share as of February 28, 2017, the aggregate consideration was $31.0 million, with 30% of the consideration paid in cash and 70% by delivery of Heartland common stock. Simultaneous with the closing of the transaction, Founders Community Bank merged into Heartland's Premier Valley Bank subsidiary. As of the close date, Founders Community Bank had, at fair value, total assets of $213.3 million, total loans of $96.4 million and total deposits of $181.5 million. The systems conversion for this transaction occurred two weeks after the closing.

On July 7, 2017, Heartland completed the acquisition of Citywide Banks of Colorado, Inc., parent company of Citywide Banks, headquartered in Aurora, Colorado. Simultaneous with the close, Citywide Banks merged into Heartland's Centennial Bank and Trust subsidiary. The aggregate consideration was approximately $211.2 million, of which $58.6 million was cash, and the remainder was settled by delivery of 3,216,161 shares of Heartland common stock. The combined entity operates as Citywide Banks. As of June 30, 2017, Citywide Banks had total assets of $1.38 billion, including $1.00 billion in net loans outstanding, and $1.20 billion of deposits. The systems conversion for this transaction is scheduled to be completed in the fourth quarter of 2017.

Commenting on merger and acquisition activity, Fuller stated, "Earlier this month, we announced the completion of our acquisition of Citywide Banks of Colorado with $1.4 billion in assets. This transaction represents the largest acquisition in our history and adds sizable market share in Denver, one of America's best growth markets."

Fully Tax-Equivalent Net Interest Margin Remains Above 4.00%

Net interest margin, expressed as a percentage of average earning assets, was 3.94% (4.14% on a fully tax-equivalent basis) during the second quarter of 2017, compared to 3.95% (4.16% on a fully tax-equivalent basis) during the first quarter of 2017 and 3.95% (4.12% on a fully tax-equivalent basis) during the second quarter of 2016.

Fuller said, "We are very pleased to see net interest margin remained strong at 4.14 percent on a fully tax-equivalent basis reflecting reductions in funding costs and improved yields in the securities portfolio."

Interest income for the second quarter of 2017 was $82.1 million compared to $81.3 million recorded in the second quarter of 2016. The taxable equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $3.8 million for the second quarter of 2017 and $3.1 million for the second quarter of 2016. With these adjustments, interest income on a tax-equivalent basis was $85.9 million for the second quarter of 2017, an increase of $1.4 million or 2%, compared to $84.5 million for the second quarter of 2016. The increase in interest income on a fully tax-equivalent basis in the second quarter of 2017, as compared to the second quarter of 2016, was primarily due to an increase in average earning assets, which totaled $7.59 billion during the second quarter of 2017 compared to $7.45 billion during the second quarter of 2016, a $139.4 million or 2% increase. This growth is attributable to the Founders Bancorp acquisition completed on February 28, 2017, and an increase in the average balance of the securities portfolio.

Interest expense for the second quarter of 2017 was $7.5 million, a decrease of $732,000 or 9% from $8.2 million in the second quarter of 2016. Average interest bearing liabilities decreased $217.2 million or 4% to $5.15 billion for the quarter ended June 30, 2017, from $5.36 billion in the same quarter in 2016, while the average interest rate paid on

Heartland's interest bearing deposits and borrowings declined 4 basis points from 0.62% in the second quarter of 2016 to 0.58% in the second quarter of 2017.

Net interest income was $74.6 million during the second quarter of 2017 compared to $73.1 million during the second quarter of 2016, an increase of $1.5 million or 2%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $78.4 million during the second quarter of 2017 compared to $76.3 million during the second quarter of 2016, an increase of $2.1 million or 3%.

Noninterest Income and Noninterest Expenses Decrease From Second Quarter 2016

Noninterest income totaled $25.6 million during the second quarter of 2017 compared to $31.0 million during the second quarter of 2016, a decrease of $5.4 million or 17%. Service charges and fees totaled $9.7 million during the second quarter of 2017 compared to $8.0 million during the second quarter of 2016, an increase of $1.7 million or 21%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which was the result of the CIC Bancshares, Inc. acquisition completed during the first quarter of 2016 and the Founders Bancorp acquisition completed in the first quarter of 2017, and increased interchange revenue from commercial card activity. Securities gains, net, were $1.4 million during the second quarter of 2017 compared to $4.6 million recorded during the same quarter in 2016, a decrease of $3.2 million or 70%. Net gains on sale of loans held for sale totaled $6.8 million during the second quarter of 2017 compared to $11.3 million during the second quarter of 2016, a decrease of $4.5 million or 40%, due to lower mortgage loan activity.

For the second quarter of 2017, noninterest expenses totaled $69.3 million compared to $71.0 million during the second quarter of 2016, a decrease of $1.7 million or 2%. The category with the most significant decrease was salaries and employee benefits, which decreased $859,000 or 2%. At June 30, 2017, Heartland had 1,862 full time equivalent employees compared to 1,888 full time equivalent employees at June 30, 2016.

"Heartland continues to carefully manage noninterest expenses, and we are pleased to see positive results as reflected in our efficiency ratio, which dropped into the 65% range for the quarter," added Fuller.

Heartland's effective tax rate was 26.85% for the second quarter of 2017 compared to 32.37% for the second quarter of 2016. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $310,000 during the second quarter of 2017 compared to $304,000 for the second quarter of 2016. Also included in the second quarter of 2017 tax computation was a state tax credit of $830,000 related to a partnership investment in tax credit projects. 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 23.49% during the second quarter of 2017 compared to 18.86% during the second quarter of 2016.

Loans Decrease and Deposits Increase Since December 31, 2016

Total assets were $8.20 billion at June 30, 2017, a decrease of $42.4 million or 1% from $8.25 billion at year-end 2016. Exclusive of the $213.9 million of assets acquired at fair value in the Founders Bancorp transaction, total assets decreased $256.3 million or 3% since December 31, 2016. Securities represented 25% and 26% of total assets at June 30, 2017, and December 31, 2016, respectively.

Total loans held to maturity were $5.33 billion at June 30, 2017, compared to $5.35 billion at year-end 2016, a decrease of $26.6 million or less than 1%. This change includes $96.4 million of total loans held to maturity acquired at fair value in the Founders Bancorp transaction. Exclusive of this transaction, total loans held to maturity decreased $123.1 million or 2% since December 31, 2016.

Total deposits were $6.93 billion as of June 30, 2017, compared to $6.85 billion at year-end 2016, an increase of $82.8 million or 1%. This increase included $181.5 million of deposits, at fair value, acquired in the Founders Bancorp transaction. Exclusive of this transaction, total deposits decreased $98.7 million since December 31, 2016. Demand deposits totaled $2.36 billion at June 30, 2017, which increased $153.4 million or 7% since year-end 2016, with $94.4 million of the increase attributable to the Founders Bancorp transaction. Savings deposits decreased $83.5 million or 2% to $3.70 billion at June 30, 2017 from $3.79 billion at December 31, 2016. Excluding savings deposits of $63.3 million acquired in the Founders Bancorp transaction, savings deposits decreased $146.8 million since year-end 2016.

Fuller said, "Total deposits eased a bit in the second quarter, though the key category, demand deposits, increased and now represents 34% of total deposits."

Nonperforming Assets Increase Since December 31, 2016

Nonperforming assets were $76.0 million or 0.93% of total assets at June 30, 2017, compared to $74.8 million or 0.91% of total assets at December 31, 2016. Nonperforming loans were $66.1 million or 1.24% of total loans at June 30, 2017, compared to $64.4 million or 1.20% of total loans at December 31, 2016.

The allowance for loan losses at June 30, 2017, was 1.02% of loans and 81.78% of nonperforming loans, compared to 1.02% of loans and 84.37% of nonperforming loans at December 31, 2016. The provision for loan losses was $889,000 for the second quarter of 2017 compared to $2.1 million for the second quarter of 2016. For the six months ended June 30, 2017, provision expense was $4.5 million compared to $4.2 million recorded for the six months ended June 30, 2016.

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 30, 2018, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a diversified financial services company with assets of approximately $9.6 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 121 banking locations serving 88 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,
	2017			2016			2017			2016
Interest Income
Interest and fees on loans	$	68,094		$	69,809		$	134,992		$	138,234
Interest on securities:
Taxable	8,599			7,903			16,852			16,547
Nontaxable	5,020			3,566			10,211			7,076
Interest on federal funds sold	3			1			3			11
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	345			52			554			147
Total Interest Income	82,061			81,331			162,612			162,015
Interest Expense
Interest on deposits	4,163			4,021			7,893			8,194
Interest on short-term borrowings	90			519			227			848
Interest on other borrowings	3,228			3,673			6,884			7,148
Total Interest Expense	7,481			8,213			15,004			16,190
Net Interest Income	74,580			73,118			147,608			145,825
Provision for loan losses	889			2,118			4,530			4,185
Net Interest Income After Provision for Loan Losses	73,691			71,000			143,078			141,640
Noninterest Income
Service charges and fees	9,696			8,022			19,153			15,184
Loan servicing income	1,351			1,292			3,075			2,560
Trust fees	3,979			3,625			7,610			7,438
Brokerage and insurance commissions	976			886			2,012			1,908
Securities gains, net	1,392			4,622			3,874			8,148
Net gains on sale of loans held for sale	6,817			11,270			12,964			22,335
Valuation adjustment on commercial servicing rights	19			(46		)	24			(46		)
Income on bank owned life insurance	656			591			1,273			1,113
Other noninterest income	738			764			1,532			1,964
Total Noninterest Income	25,624			31,026			51,517			60,604
Noninterest Expense
Salaries and employee benefits	41,126			41,985			82,893			83,699
Occupancy	5,056			5,220			10,129			10,223
Furniture and equipment	2,586			2,442			5,087			4,555
Professional fees	7,583			7,486			15,892			14,496
FDIC insurance assessments	909			1,120			1,716			2,288
Advertising	1,359			1,551			3,783			2,835
Core deposit intangibles and customer relationship intangibles amortization	1,218			1,297			2,389			3,192
Other real estate and loan collection expenses	365			659			1,193			1,231
(Gain)/loss on sales/valuations of assets, net	(112		)	(43		)	300			270
Other noninterest expenses	9,208			9,303			17,656			18,540
Total Noninterest Expense	69,298			71,020			141,038			141,329
Income Before Income Taxes	30,017			31,006			53,557			60,915
Income taxes	8,059			10,036			13,589			19,936
Net Income	21,958			20,970			39,968			40,979
Preferred dividends	(13		)	(52		)	(32		)	(220		)
Interest expense on convertible preferred debt	4			31			9			31
Net Income Available to Common Stockholders	$	21,949		$	20,949		$	39,945		$	40,790
Earnings per common share-diluted	$	0.81		$	0.84		$	1.49		$	1.66
Weighted average shares outstanding-diluted	26,972,580			24,974,995			26,798,134			24,541,356



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Interest Income
Interest and fees on loans	$	68,094		$	66,898		$	69,848		$	70,046		$	69,809
Interest on securities:
Taxable	8,599			8,253			8,480			7,831			7,903
Nontaxable	5,020			5,191			4,292			3,717			3,566
Interest on federal funds sold	3			—			—			1			1
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	345			209			157			92			52
Total Interest Income	82,061			80,551			82,777			81,687			81,331
Interest Expense
Interest on deposits	4,163			3,730			3,744			4,001			4,021
Interest on short-term borrowings	90			137			119			235			519
Interest on other borrowings	3,228			3,656			3,754			3,770			3,673
Total Interest Expense	7,481			7,523			7,617			8,006			8,213
Net Interest Income	74,580			73,028			75,160			73,681			73,118
Provision for loan losses	889			3,641			2,181			5,328			2,118
Net Interest Income After Provision for Loan Losses	73,691			69,387			72,979			68,353			71,000
Noninterest Income
Service charges and fees	9,696			9,457			8,128			8,278			8,022
Loan servicing income	1,351			1,724			1,068			873			1,292
Trust fees	3,979			3,631			3,718			3,689			3,625
Brokerage and insurance commissions	976			1,036			955			1,006			886
Securities gains, net	1,392			2,482			1,608			1,584			4,622
Net gains on sale of loans held for sale	6,817			6,147			5,840			11,459			11,270
Valuation adjustment on commercial servicing rights	19			5			8			5			(46		)
Income on bank owned life insurance	656			617			542			620			591
Other noninterest income	738			794			2,588			1,028			764
Total Noninterest Income	25,624			25,893			24,455			28,542			31,026
Noninterest Expense
Salaries and employee benefits	41,126			41,767			39,115			40,733			41,985
Occupancy	5,056			5,073			5,076			5,099			5,220
Furniture and equipment	2,586			2,501			2,944			2,746			2,442
Professional fees	7,583			8,309			7,195			5,985			7,486
FDIC insurance assessments	909			807			717			1,180			1,120
Advertising	1,359			2,424			2,274			1,339			1,551
Core deposit intangibles and customer relationship intangibles amortization	1,218			1,171			1,147			1,291			1,297
Other real estate and loan collection expenses	365			828			572			640			659
(Gain)/loss on sales/valuations of assets, net	(112		)	412			414			794			(43		)
Other noninterest expenses	9,208			8,448			10,458			8,620			9,303
Total Noninterest Expense	69,298			71,740			69,912			68,427			71,020
Income Before Income Taxes	30,017			23,540			27,522			28,468			31,006
Income taxes	8,059			5,530			8,360			8,260			10,036
Net Income	21,958			18,010			19,162			20,208			20,970
Preferred dividends	(13		)	(19		)	(19		)	(53		)	(52		)
Interest expense on convertible preferred debt	4			5			3			17			31
Net Income Available to Common Stockholders	$	21,949		$	17,996		$	19,146		$	20,172		$	20,949
Earnings per common share-diluted	$	0.81		$	0.68		$	0.74		$	0.81		$	0.84
Weighted average shares outstanding-diluted	26,972,580			26,627,830			25,800,472			24,922,946			24,974,995



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Assets
Cash and due from banks	$	141,100		$	129,386		$	151,290		$	196,234		$	222,718
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	40,676			43,765			7,434			5,855			7,232
Cash and cash equivalents	181,776			173,151			158,724			202,089			229,950
Time deposits in other financial institutions	30,241			41,539			2,105			2,105			2,105
Securities:
Available for sale, at fair value	1,789,441			1,893,528			1,845,864			1,655,696			1,566,592
Held to maturity, at cost	259,586			260,616			263,662			265,302			270,423
Other investments, at cost	21,094			21,557			21,560			22,082			22,680
Loans held for sale	48,848			49,009			61,261			78,317			82,538
Loans:
Held to maturity	5,325,082			5,361,604			5,351,719			5,438,715			5,482,258
Allowance for loan losses	(54,051		)	(54,999		)	(54,324		)	(54,653		)	(51,756		)
Loans, net	5,271,031			5,306,605			5,297,395			5,384,062			5,430,502
Premises, furniture and equipment, net	163,003			165,425			164,028			165,841			168,701
Goodwill	141,461			141,461			127,699			127,699			127,699
Core deposit intangibles and customer relationship intangibles, net	22,850			24,068			22,775			23,922			25,213
Servicing rights, net	34,736			35,441			35,778			35,906			35,654
Cash surrender value on life insurance	120,281			117,613			112,615			112,060			111,425
Other real estate, net	9,269			11,188			9,744			10,740			11,003
Other assets	111,104			120,644			123,869			116,394			119,916
Total Assets	$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215		$	8,204,401
Liabilities and Equity
Liabilities
Deposits:
Demand	$	2,355,410		$	2,319,256		$	2,202,036		$	2,238,736		$	2,149,911
Savings	3,704,579			3,940,146			3,788,089			3,753,300			3,691,791
Time	870,180			830,459			857,286			920,657			995,870
Total deposits	6,930,169			7,089,861			6,847,411			6,912,693			6,837,572
Short-term borrowings	139,130			155,025			306,459			214,105			303,707
Other borrowings	281,096			282,051			288,534			294,493			296,895
Accrued expenses and other liabilities	48,356			53,596			63,759			76,536			78,264
Total Liabilities	7,398,751			7,580,533			7,506,163			7,497,827			7,516,438
Stockholders' Equity
Preferred equity	938			938			1,357			1,357			3,777
Common stock	26,701			26,674			26,120			24,683			24,544
Capital surplus	352,500			351,423			328,376			279,316			274,682
Retained earnings	450,228			431,219			416,109			402,179			384,479
Accumulated other comprehensive income (loss)	(24,397		)	(28,942		)	(31,046		)	(3,079		)	513
Treasury stock at cost	—			—			—			(68		)	(32		)
Total Equity	805,970			781,312			740,916			704,388			687,963
Total Liabilities and Equity	$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215		$	8,204,401



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,
	2017			2016			2017			2016
Average Balances
Assets	$	8,333,301		$	8,211,326		$	8,283,681		$	8,118,198
Loans, net of unearned	5,376,826			5,582,878			5,371,271			5,470,490
Deposits	7,050,126			6,806,259			6,973,897			6,742,635
Earning assets	7,586,256			7,446,849			7,544,609			7,361,775
Interest bearing liabilities	5,146,243			5,363,477			5,168,475			5,318,320
Common stockholders' equity	791,039			669,930			771,464			649,612
Total stockholders' equity	791,977			673,707			772,575			684,739
Tangible common stockholders' equity⁽¹⁾	625,929			516,347			611,050			500,726

Key Performance Ratios
Annualized return on average assets	1.06		%	1.03		%	0.97		%	1.01		%
Annualized return on average common equity (GAAP)	11.13		%	12.58		%	10.44		%	12.63		%
Annualized return on average tangible common equity (non-GAAP)⁽²⁾	14.07		%	16.32		%	13.18		%	16.38		%
Annualized ratio of net charge-offs to average loans	0.14		%	0.01		%	0.18		%	0.04		%
Annualized net interest margin (GAAP)	3.94		%	3.95		%	3.95		%	3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾	4.14		%	4.12		%	4.15		%	4.15		%
Efficiency ratio, fully tax-equivalent⁽⁴⁾	65.61		%	67.95		%	67.75		%	67.43		%

Reconciliation of Return on Average Tangible Common Equity (non-GAAP)⁽⁵⁾
Net income available to common shareholders (GAAP)	$	21,949		$	20,949		$	39,945		$	40,790

Average common stockholders' equity (GAAP)	$	791,039		$	669,930		$	771,464		$	649,612
Less average goodwill	141,461			127,700			136,976			123,727
Less average core deposit intangibles and customer relationship intangibles, net	23,649			25,883			23,438			25,159
Average tangible common equity (non-GAAP)	$	625,929		$	516,347		$	611,050		$	500,726
Annualized return on average common equity (GAAP)	11.13		%	12.58		%	10.44		%	12.63		%
Annualized return on average tangible common equity (non-GAAP)	14.07		%	16.32		%	13.18		%	16.38		%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)⁽⁶⁾
Net Interest Income (GAAP)	$	74,580		$	73,118		$	147,608		$	145,825
Plus tax-equivalent adjustment⁽⁷⁾	3,796			3,146			7,656			6,187
Net interest income, tax-equivalent (non-GAAP)	$	78,376		$	76,264		$	155,264		$	152,012

Average earning assets	$	7,586,256		$	7,446,849		$	7,544,609		$	7,361,775

Annualized net interest margin (GAAP)	3.94		%	3.95		%	3.95		%	3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	4.14		%	4.12		%	4.15		%	4.15		%

(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table.
(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 tangible common equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles and customer 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 tax-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
	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Average Balances
Assets	$	8,333,301		$	8,233,510		$	8,280,042		$	8,172,683		$	8,211,326
Loans, net of unearned	5,376,826			5,365,654			5,473,001			5,538,088			5,582,878
Deposits	7,050,126			6,896,821			6,928,978			6,839,334			6,806,259
Earning assets	7,586,256			7,502,496			7,551,997			7,382,860			7,446,849
Interest bearing liabilities	5,146,243			5,190,955			5,206,393			5,224,172			5,363,477
Common stockholders' equity	791,039			751,671			726,455			689,637			669,930
Total stockholders' equity	791,977			752,958			727,812			692,404			673,707
Tangible common stockholders' equity⁽¹⁾	625,929			596,006			575,412			537,375			516,347

Key Performance Ratios
Annualized return on average assets	1.06		%	0.89		%	0.92		%	0.98		%	1.03		%
Annualized return on average common equity (GAAP)	11.13		%	9.71		%	10.48		%	11.64		%	12.58		%
Annualized return on average tangible common equity (non-GAAP)⁽²⁾	14.07		%	12.25		%	13.24		%	14.93		%	16.32		%
Annualized ratio of net charge-offs to average loans	0.14		%	0.22		%	0.18		%	0.17		%	0.01		%
Annualized net interest margin (GAAP)	3.94		%	3.95		%	3.96		%	3.97		%	3.95		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾	4.14		%	4.16		%	4.14		%	4.14		%	4.12		%
Efficiency ratio, fully tax-equivalent⁽⁴⁾	65.61		%	69.95		%	66.29		%	63.88		%	67.95		%

Reconciliation of Return on Average Tangible Common Equity (non-GAAP)⁽⁵⁾
Net income available to common shareholders (GAAP)	$	21,949		$	17,996		$	19,146		$	20,172		$	20,949

Average common stockholders' equity (GAAP)	$	791,039		$	751,671		$	726,455		$	689,637		$	669,930
Less average goodwill	141,461			132,440			127,699			127,699			127,699
Less average core deposit intangibles and customer relationship intangibles, net	23,649			23,225			23,344			24,563			25,884
Average tangible common equity (non-GAAP)	$	625,929		$	596,006		$	575,412		$	537,375		$	516,347
Annualized return on average common equity (GAAP)	11.13		%	9.71		%	10.48		%	11.64		%	12.58		%
Annualized return on average tangible common equity (non-GAAP)	14.07		%	12.25		%	13.24		%	14.93		%	16.32		%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)⁽⁶⁾
Net Interest Income (GAAP)	$	74,580		$	73,028		$	75,160		$	73,681		$	73,118
Plus tax-equivalent adjustment⁽⁷⁾	3,796			3,860			3,511			3,221			3,146
Net interest income, fully tax-equivalent (non-GAAP)	$	78,376		$	76,888		$	78,671		$	76,902		$	76,264

Average earning assets	$	7,586,256		$	7,502,496		$	7,551,997		$	7,382,860		$	7,446,849

Annualized net interest margin (GAAP)	3.94		%	3.95		%	3.96		%	3.97		%	3.95		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	4.14		%	4.16		%	4.14		%	4.14		%	4.12		%

(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Tangible Common Equity (non-GAAP)" table.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)" table.
(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 and customer relationship 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 tax-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⁾	2017			2016			2017			2016
Net interest income	$	74,580		$	73,118		$	147,608		$	145,825
Tax-equivalent adjustment⁽²⁾	3,796			3,146			7,656			6,187
Fully tax-equivalent net interest income	78,376			76,264			155,264			152,012
Noninterest income	25,624			31,026			51,517			60,604
Securities gains, net	(1,392		)	(4,622		)	(3,874		)	(8,148		)
Adjusted income	$	102,608		$	102,668		$	202,907		$	204,468

Total noninterest expenses	$	69,298		$	71,020		$	141,038		$	141,329
Less:
Core deposit intangibles and customer relationship intangibles amortization	1,218			1,297			2,389			3,192
Partnership investment in tax credit projects	876			—			876			—
(Gain)/loss on sales/valuations of assets, net	(112		)	(43		)	300			270
Adjusted noninterest expenses	$	67,316		$	69,766		$	137,473		$	137,867

Efficiency ratio, fully tax-equivalent (non-GAAP)	65.61		%	67.95		%	67.75		%	67.43		%



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
Reconciliation of Non-GAAP Measure-Efficiency Ratio⁽¹⁾	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Net interest income	$	74,580		$	73,028		$	75,160		$	73,681		$	73,118
Tax-equivalent adjustment⁽²⁾	3,796			3,860			3,511			3,221			3,146
Fully tax-equivalent net interest income	78,376			76,888			78,671			76,902			76,264
Noninterest income	25,624			25,893			24,455			28,542			31,026
Securities gains, net	(1,392		)	(2,482		)	(1,608		)	(1,584		)	(4,622		)
Adjusted income	$	102,608		$	100,299		$	101,518		$	103,860		$	102,668

Total noninterest expenses	$	69,298		$	71,740		$	69,912		$	68,427		$	71,020
Less:
Core deposit intangibles and customer relationship intangibles amortization	1,218			1,171			1,147			1,291			1,297
Partnership investment in tax credit projects	876			—			1,051			—			—
(Gain)/loss on sales/valuation of assets, net	(112		)	412			414			794			(43		)
Adjusted noninterest expenses	$	67,316		$	70,157		$	67,300		$	66,342		$	69,766

Efficiency ratio, fully tax-equivalent (non-GAAP)	65.61		%	69.95		%	66.29		%	63.88		%	67.95		%

(1) 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 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
	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Common Share Data
Book value per common share	$	30.15		$	29.26		$	28.31		$	28.48		$	27.88
Tangible book value per common share (non-GAAP)⁽¹⁾	$	24.00		$	23.05		$	22.55		$	22.34		$	21.65
ASC 320 effect on book value per common share	$	(0.87	)	$	(1.06	)	$	(1.15	)	$	0.03		$	0.21
Common shares outstanding, net of treasury stock	26,701,226			26,674,121			26,119,929			24,681,380			24,543,376
Tangible common equity ratio (non-GAAP)⁽²⁾	7.97		%	7.50		%	7.28		%	6.85		%	6.60		%

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)⁽³⁾
Common stockholders' equity (GAAP)	$	805,032		$	780,374		$	739,559		$	703,031		$	684,186
Less goodwill	141,461			141,461			127,699			127,699			127,699
Less core deposit intangibles and customer relationship intangibles, net	22,850			24,068			22,775			23,922			25,213
Tangible common stockholders' equity (non-GAAP)	$	640,721		$	614,845		$	589,085		$	551,410		$	531,274

Common shares outstanding, net of treasury stock	26,701,226			26,674,121			26,119,929			24,681,380			24,543,376
Common stockholders' equity (book value) per share (GAAP)	$	30.15		$	29.26		$	28.31		$	28.48		$	27.88
Tangible book value per common share (non-GAAP)	$	24.00		$	23.05		$	22.55		$	22.34		$	21.65

Reconciliation of Tangible Common Equity Ratio(non-GAAP)⁽⁴⁾
Total assets (GAAP)	$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215		$	8,204,401
Less goodwill	141,461			141,461			127,699			127,699			127,699
Less core deposit intangibles and customer relationship intangibles, net	22,850			24,068			22,775			23,922			25,213
Total tangible assets (non-GAAP)	$	8,040,410		$	8,196,316		$	8,096,605		$	8,050,594		$	8,051,489
Tangible common equity ratio (non-GAAP)	7.97		%	7.50		%	7.28		%	6.85		%	6.60		%

Loan Data
Loans held to maturity:
Commercial and commercial real estate	$	3,803,011		$	3,849,748		$	3,825,847		$	3,900,612		$	3,930,879
Residential mortgage	596,385			604,902			617,924			625,965			644,267
Agricultural and agricultural real estate	495,243			481,125			489,318			489,387			480,883
Consumer	431,052			427,962			420,613			425,582			428,730
Unearned discount and deferred loan fees	(609		)	(2,133		)	(1,983		)	(2,831		)	(2,501		)
Total loans held to maturity	$	5,325,082		$	5,361,604		$	5,351,719		$	5,438,715		$	5,482,258

Other Selected Trend Information
Effective tax rate	26.85		%	23.49		%	30.38		%	29.02		%	32.37		%
Full time equivalent employees	1,862			1,896			1,864			1,846			1,888
Total residential mortgage loan applications	$	308,113		$	248,614		$	304,018		$	445,107		$	440,907
Residential mortgage loans originated	$	216,637		$	161,851		$	278,065		$	324,337		$	324,633
Residential mortgage loans sold	$	180,296		$	172,521		$	269,333		$	315,917		$	302,448
Residential mortgage loan servicing portfolio	$	4,340,243		$	4,338,311		$	4,308,580		$	4,259,459		$	4,203,429

(1) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table.
(2) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table.
(3) Tangible book value per common share is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, 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 common equity ratio is total common stockholders' equity less goodwill and core deposit intangibles and customer relationship intangibles, net, divided by total assets less goodwill and core deposit intangibles and customer relationship intangibles, 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
	6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016
Allowance for Loan Losses
Balance, beginning of period	$	54,999		$	54,324		$	54,653		$	51,756		$	49,738
Provision for loan losses	889			3,641			2,181			5,328			2,118
Charge-offs	(2,766		)	(3,718		)	(3,555		)	(3,283		)	(2,951		)
Recoveries	929			752			1,045			852			2,851
Balance, end of period	$	54,051		$	54,999		$	54,324		$	54,653		$	51,756

Asset Quality
Nonaccrual loans	$	65,393		$	62,868		$	64,299		$	57,799		$	57,053
Loans past due ninety days or more as to interest or principal payments	698			872			86			105			—
Other real estate owned	9,269			11,188			9,744			10,740			11,003
Other repossessed assets	675			739			663			821			564
Total nonperforming assets	$	76,035		$	75,667		$	74,792		$	69,465		$	68,620

Performing troubled debt restructured loans	$	11,157		$	11,010		$	10,380		$	10,281		$	9,923

Nonperforming Assets Activity
Balance, beginning of period	$	75,667		$	74,792		$	69,465		$	68,620		$	60,153
Net loan charge offs	(1,837		)	(2,966		)	(2,510		)	(2,431		)	(100		)
New nonperforming loans	13,700			14,819			23,035			10,884			19,994
Reduction of nonperforming loans⁽¹⁾	(7,443		)	(10,037		)	(13,707		)	(6,983		)	(10,313		)
OREO/Repossessed assets sales proceeds	(3,734		)	(715		)	(1,037		)	(343		)	(918		)
OREO/Repossessed assets writedowns, net	(259		)	(279		)	(274		)	(521		)	(337		)
Net activity at Citizens Finance Co.	(59		)	53			(180		)	239			141
Balance, end of period	$	76,035		$	75,667		$	74,792		$	69,465		$	68,620

Asset Quality Ratios
Ratio of nonperforming loans to total loans	1.24		%	1.19		%	1.20		%	1.06		%	1.04		%
Ratio of nonperforming assets to total assets	0.93		%	0.90		%	0.91		%	0.85		%	0.84		%
Annualized ratio of net loan charge-offs to average loans	0.14		%	0.22		%	0.18		%	0.17		%	0.01		%
Allowance for loan losses as a percent of loans	1.02		%	1.03		%	1.02		%	1.00		%	0.94		%
Allowance for loan losses as a percent of nonperforming loans	81.78		%	86.29		%	84.37		%	94.39		%	90.72		%
Loans delinquent 30-89 days as a percent of total loans	0.38		%	0.44		%	0.37		%	0.40		%	0.73		%

(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, 2017								June 30, 2016
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
Earning Assets
Securities:
Taxable	$	1,516,745		$	8,599		2.27	%	$	1,468,896		$	7,903		2.16	%
Nontaxable⁽¹⁾	624,915			7,723			4.96		430,086			5,486			5.13
Total securities	2,141,660			16,322			3.06		1,898,982			13,389			2.84
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	121,778			345			1.14		10,727			52			1.95
Federal funds sold	1,262			3			0.95		5,114			1			0.08
Loans:⁽²⁾
Commercial and commercial real estate⁽¹⁾	3,824,061			46,912			4.92		3,866,861			46,889			4.88
Residential mortgage	633,344			6,509			4.12		803,952			8,286			4.15
Agricultural and agricultural real estate⁽¹⁾	488,222			5,807			4.77		481,625			5,504			4.60
Consumer	431,199			8,289			7.71		430,440			8,273			7.73
Fees on loans				1,670			—					2,083			—
Less: allowance for loan losses	(55,270		)	—			—		(50,852		)	—			—
Net loans	5,321,556			69,187			5.21		5,532,026			71,035			5.16
Total earning assets	7,586,256			85,857			4.54	%	7,446,849			84,477			4.56	%
Nonearning Assets	747,045								764,477
Total Assets	$	8,333,301							$	8,211,326
Interest Bearing Liabilities
Savings	$	3,881,219		$	2,505		0.26	%	$	3,699,971		$	2,028		0.22	%
Time, $100,000 and over	350,786			727			0.83		421,151			733			0.70
Other time deposits	479,164			931			0.78		586,810			1,260			0.86
Short-term borrowings	153,565			90			0.24		373,768			519			0.56
Other borrowings	281,509			3,228			4.60		281,777			3,673			5.24
Total interest bearing liabilities	5,146,243			7,481			0.58	%	5,363,477			8,213			0.62	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	2,338,957								2,098,327
Accrued interest and other liabilities	56,124								75,815
Total noninterest bearing liabilities	2,395,081								2,174,142
Stockholders' Equity	791,977								673,707
Total Liabilities and Stockholders' Equity	$	8,333,301							$	8,211,326
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾				$	78,376							$	76,264
Net interest spread⁽¹⁾							3.96	%							3.94	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets⁽³⁾							4.14	%							4.12	%
Interest bearing liabilities to earning assets	67.84		%						72.02		%

Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾
Net interest income, fully tax-equivalent (non-GAAP)				$	78,376							$	76,264
Adjustments for tax-equivalent interest⁽¹⁾				(3,796		)						(3,146		)
Net interest income (GAAP)				$	74,580							$	73,118

Average earning assets	$	7,586,256							$	7,446,849
Annualized net interest margin (GAAP)				3.94		%						3.95		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)				4.14		%						4.12		%

(1)Computed on a tax-equivalent basis using an effective tax rate of 35%
(2) Nonaccrual loans are included in the average loans outstanding.
(3) Annualized net interest margin, fully tax-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.



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Six Months Ended
	June 30, 2017								June 30, 2016
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
Earning Assets
Securities:
Taxable	$	1,483,087		$	16,852		2.29	%	$	1,488,664		$	16,547		2.24	%
Nontaxable⁽¹⁾	635,168			15,709			4.99		423,655			10,886			5.17
Total securities	2,118,255			32,561			3.10		1,912,319			27,433			2.88
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	109,095			554			1.02		11,180			147			2.64
Federal funds sold	791			3			0.76		18,120			11			0.12
Loans:⁽²⁾
Commercial and commercial real estate⁽¹⁾	3,818,689			92,825			4.90		3,805,401			93,643			4.95
Residential mortgage	639,902			13,192			4.16		769,043			15,885			4.15
Agricultural and agricultural real estate⁽¹⁾	485,665			11,361			4.72		474,801			11,233			4.76
Consumer	427,015			16,342			7.72		421,245			16,196			7.73
Fees on loans				3,430			—					3,654			—
Less: allowance for loan losses	(54,803		)	—			—		(50,334		)	—			—
Net loans	5,316,468			137,150			5.20		5,420,156			140,611			5.22
Total earning assets	7,544,609			170,268			4.55	%	7,361,775			168,202			4.59	%
Nonearning Assets	739,072								756,423
Total Assets	$	8,283,681							$	8,118,198
Interest Bearing Liabilities
Savings	$	3,859,730		$	4,610		0.24	%	$	3,628,089		$	3,922		0.22	%
Time, $100,000 and over	349,789			1,452			0.84		459,885			1,604			0.70
Other time deposits	481,736			1,831			0.77		614,556			2,668			0.87
Short-term borrowings	194,272			227			0.24		342,464			848			0.50
Other borrowings	282,948			6,884			4.91		273,326			7,148			5.26
Total interest bearing liabilities	5,168,475			15,004			0.59	%	5,318,320			16,190			0.61	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	2,282,642								2,040,105
Accrued interest and other liabilities	59,989								75,034
Total noninterest bearing liabilities	2,342,631								2,115,139
Stockholders' Equity	772,575								684,739
Total Liabilities and Stockholders' Equity	$	8,283,681							$	8,118,198
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾				$	155,264							$	152,012
Net interest spread⁽¹⁾							3.96	%							3.98	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets⁽³⁾							4.15	%							4.15	%
Interest bearing liabilities to earning assets	68.51		%						72.24		%

Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾
Net interest income, fully tax-equivalent (non-GAAP)				$	155,264							$	152,012
Adjustments for tax-equivalent interest⁽¹⁾				(7,656		)						(6,187		)
Net interest income (GAAP)				$	147,608							$	145,825

Average earning assets	$	7,544,609							$	7,361,775
Annualized net interest margin (GAAP)				3.95		%						3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)				4.15		%						4.15		%

(1)Computed on a tax-equivalent basis using an effective tax rate of 35%.
(2) Nonaccrual loans are included in the average loans outstanding.
(3) Annualized net interest margin, fully tax-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.



HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
	As of and For the Quarter Ended
	6/30/2017		3/31/2017		12/31/2016		9/30/2016		6/30/2016
Total Assets
Dubuque Bank and Trust Company	$	1,441,655	$	1,436,038	$	1,497,775	$	1,448,796	$	1,473,461
New Mexico Bank & Trust	1,407,991		1,382,480		1,374,647		1,318,203		1,321,113
Wisconsin Bank & Trust	1,035,628		1,033,633		1,065,715		1,068,288		1,080,224
Premier Valley Bank	850,956		854,838		640,684		635,620		629,423
Centennial Bank and Trust	817,859		839,505		901,782		892,723		909,697
Morrill & Janes Bank and Trust Company	748,286		871,819		863,544		862,767		843,069
Illinois Bank & Trust	740,153		746,669		742,173		748,801		742,697
Arizona Bank & Trust	566,339		578,597		582,266		574,561		577,002
Rocky Mountain Bank	476,829		479,121		477,063		481,346		473,583
Minnesota Bank & Trust	216,957		213,789		229,114		238,745		230,004
Total Portfolio Loans
Dubuque Bank and Trust Company	$	884,640	$	903,617	$	905,242	$	906,347	$	928,869
New Mexico Bank & Trust	934,734		906,477		924,249		917,679		870,109
Wisconsin Bank & Trust	662,502		644,380		650,254		711,714		732,503
Premier Valley Bank	447,148		440,406		348,879		354,610		376,275
Centennial Bank and Trust	558,573		572,254		609,760		638,006		668,547
Morrill & Janes Bank and Trust Company	515,896		546,123		548,544		538,666		522,518
Illinois Bank & Trust	447,887		469,105		473,008		469,236		466,983
Arizona Bank & Trust	377,358		384,028		384,706		385,926		390,078
Rocky Mountain Bank	335,173		330,921		347,839		357,346		362,475
Minnesota Bank & Trust	144,112		142,736		144,098		139,581		144,009
Total Deposits
Dubuque Bank and Trust Company	$	1,178,368	$	1,212,899	$	1,231,016	$	1,182,947	$	1,159,942
New Mexico Bank & Trust	1,190,758		1,184,675		1,091,436		1,101,550		1,062,410
Wisconsin Bank & Trust	874,845		868,033		899,676		889,957		911,915
Premier Valley Bank	681,298		708,226		510,142		520,814		514,522
Centennial Bank and Trust	682,872		712,377		733,449		767,128		775,417
Morrill & Janes Bank and Trust Company	627,857		721,075		738,036		676,176		696,073
Illinois Bank & Trust	669,532		641,750		636,419		671,104		653,582
Arizona Bank & Trust	493,419		501,111		477,213		493,331		497,599
Rocky Mountain Bank	416,436		420,067		414,344		420,581		405,888
Minnesota Bank & Trust	193,365		189,324		194,368		214,651		207,228
Net Income
Dubuque Bank and Trust Company	$	3,477	$	2,056	$	806	$	5,112	$	4,475
New Mexico Bank & Trust	5,855		4,419		4,061		3,824		5,642
Wisconsin Bank & Trust	3,448		1,968		2,970		3,368		3,399
Premier Valley Bank	2,573		1,306		2,969		1,804		1,695
Centennial Bank and Trust	746		1,366		1,572		925		256
Morrill & Janes Bank and Trust Company	2,210		2,227		2,519		1,707		2,133
Illinois Bank & Trust	1,984		1,991		1,917		2,179		2,397
Arizona Bank & Trust	1,073		1,486		1,305		2,034		2,121
Rocky Mountain Bank	1,732		1,521		1,229		1,456		1,484
Minnesota Bank & Trust	563		591		888		675		559

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HEARTLAND FINANCIAL USA INC Reports