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

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8-K/A - 8-K/A - HEARTLAND FINANCIAL USA INC	form8kaq32017coverpage.htm



CONTACT:	FOR IMMEDIATE RELEASE
Bryan R. McKeag	October 30, 2017
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS 2017 THIRD QUARTER RESULTS

Highlights



§	Quarterly net income available to common stockholders of $21.6 million in comparison with $20.2 million for the third quarter of the prior year
§	Diluted earnings per common share of $0.72 in comparison with $0.81 for the third quarter of the prior year
§	Net interest margin of 4.08%, fully tax-equivalent (non-GAAP)⁽¹⁾of 4.26%
§	Organic loan growth of $62.9 million and organic non-time deposit growth of $89.3 million during the third quarter of 2017
§	Return on average common equity of 8.99% and return on average tangible common equity (non-GAAP)⁽²⁾ of 12.41%
§	Tangible common equity ratio (non-GAAP)⁽³⁾of 7.46%
§	Purchased Citywide Banks of Colorado, Inc., on July 7, 2017 and completed related systems conversions on October 13, 2017



	Quarter Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (in millions)	$	21.6		$	20.2		$	61.6		$	61.2
Net income available to common stockholders (in millions)	21.6			20.2			61.6			61.0
Diluted earnings per common share	0.72			0.81			2.21			2.48

Return on average assets	0.89		%	0.98		%	0.94		%	1.00		%
Return on average common equity	8.99			11.64			9.88			12.28
Return on average tangible common equity (non-GAAP)⁽²⁾	12.41			14.93			12.90			15.87
Net interest margin	4.08			3.97			4.00			3.98
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾	4.26			4.14			4.19			4.15

"Heartland reported a very good quarter with net income available to common stockholders of $21.6 million, a seven percent increase over the same quarter last year. We had several accomplishments during the quarter including completion of our largest acquisition to date. We achieved net organic growth in loans and deposits while making improvements in net interest margin.”

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.

Dubuque, Iowa, Monday, October 30, 2017-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $21.6 million, or $0.72 per diluted common share, for the quarter ended September 30, 2017, compared to $20.2 million, or $0.81 per diluted common share, for the third quarter of 2016. Return on average common equity was 8.99% and return on average assets was 0.89% for the third quarter of 2017, compared to 11.64% and 0.98%, respectively, for the same quarter in 2016.

Net income available to common stockholders for the nine months ended September 30, 2017, was $61.6 million or $2.21 per diluted common share, compared to $61.0 million or $2.48 per diluted common share for the nine months ended September 30, 2016. Return on average common equity was 9.88%, and return on average assets was 0.94% for the first nine months of 2017, compared to 12.28% and 1.00%, respectively, for the same period in 2016.

Commenting on Heartland’s third quarter results, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, "Heartland reported a very good quarter with net income available to common stockholders of $21.6 million, a seven percent increase over the same quarter last year. We had several accomplishments during the quarter including completion of our largest acquisition to date. We achieved net organic growth in loans and deposits while making improvements in net interest margin.”

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 the close date, Citywide Banks of Colorado, Inc., had, at fair value, total assets of $1.49 billion, including $985.4 million in net loans outstanding, and $1.21 billion of deposits. The systems conversion for this transaction occurred on October 13, 2017.

During the third quarter, Heartland sold substantially all of its Government National Mortgage Association ("GNMA") loan servicing portfolio, which contained loans with an unpaid principal balance of approximately $773.9 million. The sale reduced the book value of Heartland's servicing rights by approximately $6.9 million. The transaction did not have a significant impact on Heartland's results of operations.

Fully Tax-Equivalent Net Interest Margin Increases

Net interest margin, expressed as a percentage of average earning assets, was 4.08% (4.26% on a fully tax-equivalent basis) during the third quarter of 2017, compared to 3.94% (4.14% on a fully tax-equivalent basis) during the second quarter of 2017 and 3.97% (4.14% on a fully tax-equivalent basis) during the third quarter of 2016.

Fuller said, “We were very pleased to see a solid increase in net interest margin on a fully tax-equivalent basis, which increased by 12 basis points to 4.26 percent from the previous quarter and stands at 4.19 percent year-to-date. The strong margin reflects improved yields on earning assets."

Interest income for the third quarter of 2017 was $99.0 million compared to $81.7 million recorded in the third quarter of 2016. The taxable equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $3.9 million for the third quarter of 2017 and $3.2 million for the third quarter of 2016. With these adjustments, interest income on a tax-equivalent basis was $102.9 million for the third quarter of 2017, an increase of $18.0 million or 21%, compared to $84.9 million for the third quarter of 2016. The increase in interest income on a fully tax-equivalent basis in the third quarter of 2017, as compared to the third quarter of 2016, was primarily due to the acquisitions completed in 2017. Average earning assets acquired in the Founders Bancorp transaction totaled $147.6 million, and the Citywide Banks of Colorado, Inc. transaction added $1.20 billion of average earning assets. Exclusive of these transactions, average earning assets increased $140.2 million or 2% from the third quarter of 2016. The average rate on earning assets increased 10 basis points to 4.68% for the third quarter of 2017 compared to 4.58% for the same quarter in 2016.

Interest expense for the third quarter of 2017 was $9.1 million, an increase of $1.1 million or 14% from $8.0 million in the third quarter of 2016. Average interest bearing deposits increased $520.3 million or 11% to $5.19 billion for the quarter ended September 30, 2017, from $4.67 billion in the same quarter in 2016. Average interest bearing deposits acquired with the Founders Bancorp transaction and the Citywide Banks of Colorado, Inc., transaction totaled $713.3 million. Exclusive of these transactions, average interest bearing deposits decreased $193.0 million or 3%. The average interest rate paid on Heartland's interest bearing deposits increased 5 basis points to 0.39% for the third quarter of 2017 compared to 0.34% for the same quarter in 2016. Average borrowings acquired in the Citywide Banks of Colorado, Inc., transaction totaled $51.8 million, and exclusive of this transaction, average borrowings declined $98.6 million or 18% during the third quarter of 2017 compared to the same quarter in 2016. The average interest rate paid on Heartland's borrowings was 3.16% for the third quarter of 2017 compared to 2.86% in the third quarter of 2016.

Net interest income was $89.8 million during the third quarter of 2017 compared to $73.7 million during the third quarter of 2016, an increase of $16.2 million or 22%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $93.8 million during the third quarter of 2017 compared to $76.9 million during the third quarter of 2016, an increase of $16.9 million or 22%.

Noninterest Income Decreases and Noninterest Expenses Increase From Third Quarter 2016

Noninterest income totaled $25.0 million during the third quarter of 2017 compared to $28.5 million during the third quarter of 2016, a decrease of $3.6 million or 12%. Service charges and fees totaled $10.1 million during the third quarter of 2017 compared to $8.3 million during the third quarter of 2016, an increase of $1.9 million or 22%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which was the result of the Founders Bancorp acquisition completed in the first quarter of 2017, and the recent Citywide Banks of Colorado, Inc., transaction and increased interchange revenue from commercial card activity. Net gains on sale of loans held for sale totaled $5.0 million during the third quarter of 2017 compared to $11.5 million during the third quarter of 2016, a decrease of $6.5 million or 56%, due to lower mortgage loan activity.

For the third quarter of 2017, noninterest expenses totaled $78.8 million compared to $68.4 million during the third quarter of 2016, an increase of $10.3 million or 15%. Salaries and employee benefits increased $4.5 million or 11% to $45.2 million for the third quarter of 2017 compared to $40.7 million for the same quarter in 2016. At September 30, 2017, Heartland had 2,024 full time equivalent employees compared to 1,846 full time equivalent employees at September 30, 2016. Professional fees increased $2.5 million or 41% to $8.5 million for the third quarter of 2017 from $6.0 million in the third quarter of 2016. The noninterest expenses in the third quarter of 2017 included $2.8 million of expenses for staff retention, deconversion, professional fees and write-downs of fixed assets related to the acquisition of Citywide Banks of Colorado, Inc.,

"We are also gratified to note significant progress toward lowering Heartland’s efficiency ratio, which has improved over the past two quarters and was 64.5 percent for the third quarter," Fuller stated.

Heartland's effective tax rate was 28.74% for the third quarter of 2017 compared to 29.02% for the third quarter of 2016. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $307,000 during the third quarter of 2017 compared to $304,000 for the third quarter of 2016. 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 24.01% during the third quarter of 2017 compared to 21.01% during the third quarter of 2016.

Loans and Deposits Increase Since December 31, 2016

Total assets were $9.76 billion at September 30, 2017, an increase of $1.51 billion or 18% from $8.25 billion at year-end 2016. Excluding $213.9 million of assets acquired at fair value in the Founders Bancorp transaction and $1.49 billion of assets acquired at fair value in the Citywide Banks of Colorado, Inc., transaction, total assets decreased $199.1 million or 2% since December 31, 2016. Securities represented 24% and 26% of total assets at September 30, 2017, and December 31, 2016, respectively.

Total loans held to maturity were $6.37 billion at September 30, 2017, compared to $5.35 billion at year-end 2016, an increase of $1.02 billion or 19%. This change includes $96.4 million of total loans held to maturity acquired at fair value in the Founders Bancorp transaction and $985.4 million of total loans held to maturity acquired at fair value in the CItywide Banks of Colorado, Inc., transaction. Exclusive of these transactions, total loans held to maturity decreased

$60.2 million or 1% since December 31, 2016. Excluding loans acquired in the Citywide Banks of Colorado, Inc., transaction, total loans held to maturity increased $62.9 million during the third quarter of 2017

Total deposits were $8.23 billion as of September 30, 2017, compared to $6.85 billion at year-end 2016, an increase of $1.38 billion or 20%. This increase included $181.5 million of deposits, at fair value, acquired in the Founders Bancorp transaction and $1.21 billion of deposits, at fair value, acquired in the Citywide Banks of Colorado, Inc., transaction. Exclusive of these transactions, total deposits decreased $7.1 million or less than 1% since December 31, 2016. Demand deposits increased $807.9 million or 37% to $3.01 billion at September 30, 2017 compared to $2.20 billion at December 31, 2016. Excluding $626.7 million of demand deposits attributable to the Founders Bancorp and Citywide Banks of Colorado, Inc., transactions, demand deposits increased $181.2 million or 8% since year-end 2016. Savings deposits increased $439.3 million or 12% to $4.23 billion at September 30, 2017 from $3.79 billion at December 31, 2016. Excluding savings deposits of $619.0 million acquired in the Founders Bancorp and Citywide Banks of Colorado, Inc., transactions, savings deposits decreased $179.7 million or 5% since year-end 2016. Excluding $1.21 billion of deposits acquired in the Citywide Banks of Colorado, Inc., transaction, total deposits increased $91.6 million during the third quarter.

Fuller said, "We are very pleased with organic deposit growth of 5.2 percent annualized for the third quarter and continued improvement in deposit mix. The result of our continued emphasis on non-time deposits is an enviable mix of nearly 37 percent demand deposits and 51 percent savings and money market deposits."

Nonperforming Assets Increase Since December 31, 2016

Nonperforming assets were $79.8 million or 0.82% of total assets at September 30, 2017, compared to $74.8 million or 0.91% of total assets at December 31, 2016. Nonperforming loans were $65.8 million or 1.03% of total loans at September 30, 2017, compared to $64.4 million or 1.20% of total loans at December 31, 2016.

The allowance for loan losses at September 30, 2017, was 0.86% of loans and 83.41% of nonperforming loans, compared to 1.02% of loans and 84.37% of nonperforming loans at December 31, 2016. At September 30, 2017, there were $1.70 billion of acquired loans, which are net of $42.8 million of valuation reserves that are not subject to the allowance. At December 31, 2016, there were $930.7 million of acquired loans, net of $25.3 million of valuation reserves that are not subject to the allowance. Excluding those loans covered by the valuation reserves, the ratio of the allowance for loan losses to outstanding loans was 1.17% at September 30, 2017, and 1.22% at December 31, 2016.

The provision for loan losses was $5.7 million for the third quarter of 2017 compared to $5.3 million for the third quarter of 2016. Provision for loan losses recorded for the third quarter of 2017 included a $2.2 million allowance for impairment recorded on an agribusiness relationship at Dubuque Bank and Trust associated with updated collateral values. Total charge-offs for the third quarter of 2017 were $5.8 million compared to $3.3 million for the third quarter of 2016, and the increase is primarily attributable to $3.0 million of charge-offs related to two commercial and industrial loan relationships at Dubuque Bank and Trust and Arizona Bank & Trust.

Summarizing the quarter and year-to-date, Fuller concluded, “In short, Heartland is demonstrating consistent improvement in its financial performance, while capitalizing on opportunities for profitable growth.”

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 October 29, 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 $9.8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 117 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 in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained, 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 and Heartland's ability to successfully integrate acquired banks; (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 September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Interest Income
Interest and fees on loans	$	82,906		$	70,046		$	217,898		$	208,280
Interest on securities:
Taxable	10,394			7,917			27,246			24,604
Nontaxable	5,086			3,717			15,297			10,793
Interest on federal funds sold	34			1			37			12
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	558			6			1,112			13
Total Interest Income	98,978			81,687			261,590			243,702
Interest Expense
Interest on deposits	5,073			4,001			12,966			12,195
Interest on short-term borrowings	271			235			498			1,083
Interest on other borrowings	3,790			3,770			10,674			10,918
Total Interest Expense	9,134			8,006			24,138			24,196
Net Interest Income	89,844			73,681			237,452			219,506
Provision for loan losses	5,705			5,328			10,235			9,513
Net Interest Income After Provision for Loan Losses	84,139			68,353			227,217			209,993
Noninterest Income
Service charges and fees	10,138			8,278			29,291			23,462
Loan servicing income	1,161			873			4,236			3,433
Trust fees	3,872			3,689			11,482			11,127
Brokerage and insurance commissions	950			1,006			2,962			2,914
Securities gains, net	1,679			1,584			5,553			9,732
Net gains on sale of loans held for sale	4,997			11,459			17,961			33,794
Valuation adjustment on commercial servicing rights	5			5			29			(41		)
Income on bank owned life insurance	766			620			2,039			1,733
Other noninterest income	1,409			1,028			2,941			2,992
Total Noninterest Income	24,977			28,542			76,494			89,146
Noninterest Expense
Salaries and employee benefits	45,225			40,733			128,118			124,432
Occupancy	6,223			5,099			16,352			15,322
Furniture and equipment	2,826			2,746			7,913			7,301
Professional fees	8,450			5,985			24,342			20,481
FDIC insurance assessments	894			1,180			2,610			3,468
Advertising	1,358			1,339			5,141			4,174
Core deposit intangibles and customer relationship intangibles amortization	1,863			1,291			4,252			4,483
Other real estate and loan collection expenses	581			640			1,774			1,871
(Gain)/loss on sales/valuations of assets, net	1,342			794			1,642			1,064
Other noninterest expenses	9,997			8,620			27,653			27,160
Total Noninterest Expense	78,759			68,427			219,797			209,756
Income Before Income Taxes	30,357			28,468			83,914			89,383
Income taxes	8,725			8,260			22,314			28,196
Net Income	21,632			20,208			61,600			61,187
Preferred dividends	(13		)	(53		)	(45		)	(273		)
Interest expense on convertible preferred debt	3			17			12			48
Net Income Available to Common Stockholders	$	21,622		$	20,172		$	61,567		$	60,962
Earnings per common share-diluted	$	0.72		$	0.81		$	2.21		$	2.48
Weighted average shares outstanding-diluted	29,910,437			24,922,946			27,833,924			24,580,897



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Interest Income
Interest and fees on loans	$	82,906		$	68,094		$	66,898		$	69,848		$	70,046
Interest on securities:
Taxable	10,394			8,599			8,253			8,480			7,831
Nontaxable	5,086			5,020			5,191			4,292			3,717
Interest on federal funds sold	34			3			—			—			1
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	558			345			209			157			92
Total Interest Income	98,978			82,061			80,551			82,777			81,687
Interest Expense
Interest on deposits	5,073			4,163			3,730			3,744			4,001
Interest on short-term borrowings	271			90			137			119			235
Interest on other borrowings	3,790			3,228			3,656			3,754			3,770
Total Interest Expense	9,134			7,481			7,523			7,617			8,006
Net Interest Income	89,844			74,580			73,028			75,160			73,681
Provision for loan losses	5,705			889			3,641			2,181			5,328
Net Interest Income After Provision for Loan Losses	84,139			73,691			69,387			72,979			68,353
Noninterest Income
Service charges and fees	10,138			9,696			9,457			8,128			8,278
Loan servicing income	1,161			1,351			1,724			1,068			873
Trust fees	3,872			3,979			3,631			3,718			3,689
Brokerage and insurance commissions	950			976			1,036			955			1,006
Securities gains, net	1,679			1,392			2,482			1,608			1,584
Net gains on sale of loans held for sale	4,997			6,817			6,147			5,840			11,459
Valuation adjustment on commercial servicing rights	5			19			5			8			5
Income on bank owned life insurance	766			656			617			542			620
Other noninterest income	1,409			738			794			2,588			1,028
Total Noninterest Income	24,977			25,624			25,893			24,455			28,542
Noninterest Expense
Salaries and employee benefits	45,225			41,126			41,767			39,115			40,733
Occupancy	6,223			5,056			5,073			5,076			5,099
Furniture and equipment	2,826			2,586			2,501			2,944			2,746
Professional fees	8,450			7,583			8,309			7,195			5,985
FDIC insurance assessments	894			909			807			717			1,180
Advertising	1,358			1,359			2,424			2,274			1,339
Core deposit intangibles and customer relationship intangibles amortization	1,863			1,218			1,171			1,147			1,291
Other real estate and loan collection expenses	581			365			828			572			640
(Gain)/loss on sales/valuations of assets, net	1,342			(112		)	412			414			794
Other noninterest expenses	9,997			9,208			8,448			10,458			8,620
Total Noninterest Expense	78,759			69,298			71,740			69,912			68,427
Income Before Income Taxes	30,357			30,017			23,540			27,522			28,468
Income taxes	8,725			8,059			5,530			8,360			8,260
Net Income	21,632			21,958			18,010			19,162			20,208
Preferred dividends	(13		)	(13		)	(19		)	(19		)	(53		)
Interest expense on convertible preferred debt	3			4			5			3			17
Net Income Available to Common Stockholders	$	21,622		$	21,949		$	17,996		$	19,146		$	20,172
Earnings per common share-diluted	$	0.72		$	0.81		$	0.68		$	0.74		$	0.81
Weighted average shares outstanding-diluted	29,910,437			26,972,580			26,627,830			25,800,472			24,922,946



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Assets
Cash and due from banks	$	180,751		$	141,100		$	129,386		$	151,290		$	196,234
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	70,985			40,676			43,765			7,434			5,855
Cash and cash equivalents	251,736			181,776			173,151			158,724			202,089
Time deposits in other financial institutions	19,793			30,241			41,539			2,105			2,105
Securities:
Available for sale, at fair value	2,093,385			1,789,441			1,893,528			1,845,864			1,655,696
Held to maturity, at cost	256,355			259,586			260,616			263,662			265,302
Other investments, at cost	23,176			21,094			21,557			21,560			22,082
Loans held for sale	35,795			48,848			49,009			61,261			78,317
Loans:
Held to maturity	6,373,415			5,325,082			5,361,604			5,351,719			5,438,715
Allowance for loan losses	(54,885		)	(54,051		)	(54,999		)	(54,324		)	(54,653		)
Loans, net	6,318,530			5,271,031			5,306,605			5,297,395			5,384,062
Premises, furniture and equipment, net	178,961			163,003			165,425			164,028			165,841
Goodwill	236,615			141,461			141,461			127,699			127,699
Core deposit intangibles and customer relationship intangibles, net	37,028			22,850			24,068			22,775			23,922
Servicing rights, net	26,599			34,736			35,441			35,778			35,906
Cash surrender value on life insurance	142,073			120,281			117,613			112,615			112,060
Other real estate, net	13,226			9,269			11,188			9,744			10,740
Other assets	122,355			111,104			120,644			123,869			116,394
Total Assets	$	9,755,627		$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215
Liabilities and Equity
Liabilities
Deposits:
Demand	$	3,009,940		$	2,355,410		$	2,319,256		$	2,202,036		$	2,238,736
Savings	4,227,340			3,704,579			3,940,146			3,788,089			3,753,300
Time	994,604			870,180			830,459			857,286			920,657
Total deposits	8,231,884			6,930,169			7,089,861			6,847,411			6,912,693
Short-term borrowings	171,871			139,130			155,025			306,459			214,105
Other borrowings	301,473			281,096			282,051			288,534			294,493
Accrued expenses and other liabilities	68,715			48,356			53,596			63,759			76,536
Total Liabilities	8,773,943			7,398,751			7,580,533			7,506,163			7,497,827
Stockholders' Equity
Preferred equity	938			938			938			1,357			1,357
Common stock	29,946			26,701			26,674			26,120			24,683
Capital surplus	503,262			352,500			351,423			328,376			279,316
Retained earnings	468,556			450,228			431,219			416,109			402,179
Accumulated other comprehensive loss	(21,018		)	(24,397		)	(28,942		)	(31,046		)	(3,079		)
Treasury stock at cost	—			—			—			—			(68		)
Total Equity	981,684			805,970			781,312			740,916			704,388
Total Liabilities and Equity	$	9,755,627		$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Average Balances
Assets	$	9,639,844		$	8,172,683		$	8,740,703		$	8,136,492
Loans, net of unearned	6,286,264			5,538,088			5,679,620			5,493,187
Deposits	8,100,028			6,839,334			7,353,399			6,775,103
Earning assets	8,726,228			7,382,860			7,942,810			7,368,856
Interest bearing liabilities	5,697,713			5,224,172			5,346,826			5,286,708
Common stockholders' equity	954,511			689,637			833,150			663,050
Total stockholders' equity	955,449			692,404			834,203			687,312
Tangible common stockholders' equity⁽¹⁾	691,464			537,375			638,149			513,031

Key Performance Ratios
Annualized return on average assets	0.89		%	0.98		%	0.94		%	1.00		%
Annualized return on average common equity (GAAP)	8.99		%	11.64		%	9.88		%	12.28		%
Annualized return on average tangible common equity (non-GAAP)⁽²⁾	12.41		%	14.93		%	12.90		%	15.87		%
Annualized ratio of net charge-offs to average loans	0.31		%	0.17		%	0.23		%	0.09		%
Annualized net interest margin (GAAP)	4.08		%	3.97		%	4.00		%	3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾	4.26		%	4.14		%	4.19		%	4.15		%
Efficiency ratio, fully tax-equivalent⁽⁴⁾	64.54		%	63.88		%	66.58		%	66.23		%

Reconciliation of Return on Average Tangible Common Equity (non-GAAP)⁽⁵⁾
Net income available to common shareholders (GAAP)	$	21,622		$	20,172		$	61,567		$	60,962

Average common stockholders' equity (GAAP)	$	954,511		$	689,637		$	833,150		$	663,050
Less average goodwill	226,097			127,699			167,009			125,061
Less average core deposit intangibles and customer relationship intangibles, net	36,950			24,563			27,992			24,958
Average tangible common equity (non-GAAP)	$	691,464		$	537,375		$	638,149		$	513,031
Annualized return on average common equity (GAAP)	8.99		%	11.64		%	9.88		%	12.28		%
Annualized return on average tangible common equity (non-GAAP)	12.41		%	14.93		%	12.90		%	15.87		%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)⁽⁶⁾
Net Interest Income (GAAP)	$	89,844		$	73,681		$	237,452		$	219,506
Plus tax-equivalent adjustment⁽⁷⁾	3,925			3,221			11,581			9,408
Net interest income, tax-equivalent (non-GAAP)	$	93,769		$	76,902		$	249,033		$	228,914

Average earning assets	$	8,726,228		$	7,382,860		$	7,942,810		$	7,368,856

Annualized net interest margin (GAAP)	4.08		%	3.97		%	4.00		%	3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	4.26		%	4.14		%	4.19		%	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
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Average Balances
Assets	$	9,639,844		$	8,333,301		$	8,233,510		$	8,280,042		$	8,172,683
Loans, net of unearned	6,286,264			5,376,826			5,365,654			5,473,001			5,538,088
Deposits	8,100,028			7,050,126			6,896,821			6,928,978			6,839,334
Earning assets	8,726,228			7,586,256			7,502,496			7,551,997			7,382,860
Interest bearing liabilities	5,697,713			5,146,243			5,190,955			5,206,393			5,224,172
Common stockholders' equity	954,511			791,039			751,671			726,455			689,637
Total stockholders' equity	955,449			791,977			752,958			727,812			692,404
Tangible common stockholders' equity⁽¹⁾	691,464			625,929			596,006			575,412			537,375

Key Performance Ratios
Annualized return on average assets	0.89		%	1.06		%	0.89		%	0.92		%	0.98		%
Annualized return on average common equity (GAAP)	8.99		%	11.13		%	9.71		%	10.48		%	11.64		%
Annualized return on average tangible common equity (non-GAAP)⁽²⁾	12.41		%	14.07		%	12.25		%	13.24		%	14.93		%
Annualized ratio of net charge-offs to average loans	0.31		%	0.14		%	0.22		%	0.18		%	0.17		%
Annualized net interest margin (GAAP)	4.08		%	3.94		%	3.95		%	3.96		%	3.97		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾	4.26		%	4.14		%	4.16		%	4.14		%	4.14		%
Efficiency ratio, fully tax-equivalent⁽⁴⁾	64.54		%	65.61		%	69.95		%	66.29		%	63.88		%

Reconciliation of Return on Average Tangible Common Equity (non-GAAP)⁽⁵⁾
Net income available to common shareholders (GAAP)	$	21,622		$	21,949		$	17,996		$	19,146		$	20,172

Average common stockholders' equity (GAAP)	$	954,511		$	791,039		$	751,671		$	726,455		$	689,637
Less average goodwill	226,097			141,461			132,440			127,699			127,699
Less average core deposit intangibles and customer relationship intangibles, net	36,950			23,649			23,225			23,344			24,563
Average tangible common equity (non-GAAP)	$	691,464		$	625,929		$	596,006		$	575,412		$	537,375
Annualized return on average common equity (GAAP)	8.99		%	11.13		%	9.71		%	10.48		%	11.64		%
Annualized return on average tangible common equity (non-GAAP)	12.41		%	14.07		%	12.25		%	13.24		%	14.93		%

Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)⁽⁶⁾
Net Interest Income (GAAP)	$	89,844		$	74,580		$	73,028		$	75,160		$	73,681
Plus tax-equivalent adjustment⁽⁷⁾	3,925			3,796			3,860			3,511			3,221
Net interest income, fully tax-equivalent (non-GAAP)	$	93,769		$	78,376		$	76,888		$	78,671		$	76,902

Average earning assets	$	8,726,228		$	7,586,256		$	7,502,496		$	7,551,997		$	7,382,860

Annualized net interest margin (GAAP)	4.08		%	3.94		%	3.95		%	3.96		%	3.97		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	4.26		%	4.14		%	4.16		%	4.14		%	4.14		%

(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 September 30,						For the Nine Months Ended September 30,
Reconciliation of Non-GAAP Measure-Efficiency Ratio⁽¹⁾	2017			2016			2017			2016
Net interest income	$	89,844		$	73,681		$	237,452		$	219,506
Tax-equivalent adjustment⁽²⁾	3,925			3,221			11,581			9,408
Fully tax-equivalent net interest income	93,769			76,902			249,033			228,914
Noninterest income	24,977			28,542			76,494			89,146
Securities gains, net	(1,679		)	(1,584		)	(5,553		)	(9,732		)
Adjusted income	$	117,067		$	103,860		$	319,974		$	308,328

Total noninterest expenses	$	78,759		$	68,427		$	219,797		$	209,756
Less:
Core deposit intangibles and customer relationship intangibles amortization	1,863			1,291			4,252			4,483
Partnership investment in tax credit projects	—			—			876			—
(Gain)/loss on sales/valuations of assets, net	1,342			794			1,642			1,064
Adjusted noninterest expenses	$	75,554		$	66,342		$	213,027		$	204,209

Efficiency ratio, fully tax-equivalent (non-GAAP)	64.54		%	63.88		%	66.58		%	66.23		%



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⁾	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Net interest income	$	89,844		$	74,580		$	73,028		$	75,160		$	73,681
Tax-equivalent adjustment⁽²⁾	3,925			3,796			3,860			3,511			3,221
Fully tax-equivalent net interest income	93,769			78,376			76,888			78,671			76,902
Noninterest income	24,977			25,624			25,893			24,455			28,542
Securities gains, net	(1,679		)	(1,392		)	(2,482		)	(1,608		)	(1,584		)
Adjusted income	$	117,067		$	102,608		$	100,299		$	101,518		$	103,860

Total noninterest expenses	$	78,759		$	69,298		$	71,740		$	69,912		$	68,427
Less:
Core deposit intangibles and customer relationship intangibles amortization	1,863			1,218			1,171			1,147			1,291
Partnership investment in tax credit projects	—			876			—			1,051			—
(Gain)/loss on sales/valuation of assets, net	1,342			(112		)	412			414			794
Adjusted noninterest expenses	$	75,554		$	67,316		$	70,157		$	67,300		$	66,342

Efficiency ratio, fully tax-equivalent (non-GAAP)	64.54		%	65.61		%	69.95		%	66.29		%	63.88		%

(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
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Common Share Data
Book value per common share	$	32.75		$	30.15		$	29.26		$	28.31		$	28.48
Tangible book value per common share (non-GAAP)⁽¹⁾	$	23.61		$	24.00		$	23.05		$	22.55		$	22.34
ASC 320 effect on book value per common share	$	(0.67	)	$	(0.87	)	$	(1.06	)	$	(1.15	)	$	0.03
Common shares outstanding, net of treasury stock	29,946,069			26,701,226			26,674,121			26,119,929			24,681,380
Tangible common equity ratio (non-GAAP)⁽²⁾	7.46		%	7.97		%	7.50		%	7.28		%	6.85		%

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)⁽³⁾
Common stockholders' equity (GAAP)	$	980,746		$	805,032		$	780,374		$	739,559		$	703,031
Less goodwill	236,615			141,461			141,461			127,699			127,699
Less core deposit intangibles and customer relationship intangibles, net	37,028			22,850			24,068			22,775			23,922
Tangible common stockholders' equity (non-GAAP)	$	707,103		$	640,721		$	614,845		$	589,085		$	551,410

Common shares outstanding, net of treasury stock	29,946,069			26,701,226			26,674,121			26,119,929			24,681,380
Common stockholders' equity (book value) per share (GAAP)	$	32.75		$	30.15		$	29.26		$	28.31		$	28.48
Tangible book value per common share (non-GAAP)	$	23.61		$	24.00		$	23.05		$	22.55		$	22.34

Reconciliation of Tangible Common Equity Ratio (non-GAAP)⁽⁴⁾
Total assets (GAAP)	$	9,755,627		$	8,204,721		$	8,361,845		$	8,247,079		$	8,202,215
Less goodwill	236,615			141,461			141,461			127,699			127,699
Less core deposit intangibles and customer relationship intangibles, net	37,028			22,850			24,068			22,775			23,922
Total tangible assets (non-GAAP)	$	9,481,984		$	8,040,410		$	8,196,316		$	8,096,605		$	8,050,594
Tangible common equity ratio (non-GAAP)	7.46		%	7.97		%	7.50		%	7.28		%	6.85		%

Loan Data
Loans held to maturity:
Commercial and commercial real estate	$	4,777,856		$	3,803,011		$	3,849,748		$	3,825,847		$	3,900,612
Residential mortgage	635,611			596,385			604,902			617,924			625,965
Agricultural and agricultural real estate	511,764			495,243			481,125			489,318			489,387
Consumer	450,088			431,052			427,962			420,613			425,582
Unearned discount and deferred loan fees	(1,904		)	(609		)	(2,133		)	(1,983		)	(2,831		)
Total loans held to maturity	$	6,373,415		$	5,325,082		$	5,361,604		$	5,351,719		$	5,438,715

Other Selected Trend Information
Effective tax rate	28.74		%	26.85		%	23.49		%	30.38		%	29.02		%
Full time equivalent employees	2,024			1,862			1,896			1,864			1,846
Total residential mortgage loan applications	$	271,476		$	308,113		$	248,614		$	304,018		$	445,107
Residential mortgage loans originated	$	198,911		$	216,637		$	161,851		$	278,065		$	324,337
Residential mortgage loans sold	$	188,501		$	180,296		$	172,521		$	269,333		$	315,917
Residential mortgage loan servicing portfolio	$	3,557,866		$	4,340,243		$	4,338,311		$	4,308,580		$	4,259,459

(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
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Allowance for Loan Losses
Balance, beginning of period	$	54,051		$	54,999		$	54,324		$	54,653		$	51,756
Provision for loan losses	5,705			889			3,641			2,181			5,328
Charge-offs	(5,759		)	(2,766		)	(3,718		)	(3,555		)	(3,283		)
Recoveries	888			929			752			1,045			852
Balance, end of period	$	54,885		$	54,051		$	54,999		$	54,324		$	54,653

Asset Quality
Nonaccrual loans	$	63,456		$	65,393		$	62,868		$	64,299		$	57,799
Loans past due ninety days or more as to interest or principal payments	2,348			698			872			86			105
Other real estate owned	13,226			9,269			11,188			9,744			10,740
Other repossessed assets	773			675			739			663			821
Total nonperforming assets	$	79,803		$	76,035		$	75,667		$	74,792		$	69,465

Performing troubled debt restructured loans	$	10,040		$	11,157		$	11,010		$	10,380		$	10,281

Nonperforming Assets Activity
Balance, beginning of period	$	76,035		$	75,667		$	74,792		$	69,465		$	68,620
Net loan charge offs	(4,871		)	(1,837		)	(2,966		)	(2,510		)	(2,431		)
New nonperforming loans	9,117			13,700			14,819			23,035			10,884
Acquired nonperforming assets	7,991			—			—			—			—
Reduction of nonperforming loans⁽¹⁾	(5,183		)	(7,443		)	(10,037		)	(13,707		)	(6,983		)
OREO/Repossessed assets sales proceeds	(3,328		)	(3,734		)	(715		)	(1,037		)	(343		)
OREO/Repossessed assets writedowns, net	(56		)	(259		)	(279		)	(274		)	(521		)
Net activity at Citizens Finance Co.	98			(59		)	53			(180		)	239
Balance, end of period	$	79,803		$	76,035		$	75,667		$	74,792		$	69,465

Asset Quality Ratios
Ratio of nonperforming loans to total loans	1.03		%	1.24		%	1.19		%	1.20		%	1.06		%
Ratio of nonperforming assets to total assets	0.82		%	0.93		%	0.90		%	0.91		%	0.85		%
Annualized ratio of net loan charge-offs to average loans	0.31		%	0.14		%	0.22		%	0.18		%	0.17		%
Allowance for loan losses as a percent of loans	0.86		%	1.02		%	1.03		%	1.02		%	1.00		%
Allowance for loan losses as a percent of nonperforming loans	83.41		%	81.78		%	86.29		%	84.37		%	94.39		%
Loans delinquent 30-89 days as a percent of total loans	0.33		%	0.38		%	0.44		%	0.37		%	0.40		%

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



HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	September 30, 2017								September 30, 2016
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
Earning Assets
Securities:
Taxable	$	1,667,076		$	10,394		2.47	%	$	1,415,446		$	7,917		2.23	%
Nontaxable⁽¹⁾	643,925			7,825			4.82		473,152			5,719			4.81
Total securities	2,311,001			18,219			3.13		1,888,598			13,636			2.87
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	164,809			558			1.34		7,026			6			0.34
Federal funds sold	18,874			34			0.71		1,409			1			0.28
Loans:⁽²⁾
Commercial and commercial real estate⁽¹⁾	4,647,414			59,121			5.05		3,908,623			48,334			4.92
Residential mortgage	683,186			7,300			4.24		717,374			7,248			4.02
Agricultural and agricultural real estate⁽¹⁾	504,970			6,175			4.85		486,008			5,719			4.68
Consumer	450,694			9,032			7.95		426,083			8,256			7.71
Fees on loans				2,464			—					1,708			—
Less: allowance for loan losses	(54,720		)	—			—		(52,261		)	—			—
Net loans	6,231,544			84,092			5.35		5,485,827			71,265			5.17
Total earning assets	8,726,228			102,903			4.68	%	7,382,860			84,908			4.58	%
Nonearning Assets	913,616								789,823
Total Assets	$	9,639,844							$	8,172,683
Interest Bearing Liabilities
Savings	$	4,205,946		$	3,162		0.30	%	$	3,697,426		$	2,066		0.22	%
Time, $100,000 and over	408,560			787			0.76		399,498			813			0.81
Other time deposits	573,178			1,124			0.78		570,445			1,122			0.78
Short-term borrowings	209,795			271			0.51		258,783			235			0.36
Other borrowings	300,234			3,790			5.01		298,020			3,770			5.03
Total interest bearing liabilities	5,697,713			9,134			0.64	%	5,224,172			8,006			0.61	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	2,912,344								2,171,965
Accrued interest and other liabilities	74,338								84,142
Total noninterest bearing liabilities	2,986,682								2,256,107
Stockholders' Equity	955,449								692,404
Total Liabilities and Stockholders' Equity	$	9,639,844							$	8,172,683
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾				$	93,769							$	76,902
Net interest spread⁽¹⁾							4.04	%							3.97	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets⁽³⁾							4.26	%							4.14	%
Interest bearing liabilities to earning assets	65.29		%						70.76		%

Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾
Net interest income, fully tax-equivalent (non-GAAP)				$	93,769							$	76,902
Adjustments for tax-equivalent interest⁽¹⁾				(3,925		)						(3,221		)
Net interest income (GAAP)				$	89,844							$	73,681

Average earning assets	$	8,726,228							$	7,382,860
Annualized net interest margin (GAAP)				4.08		%						3.97		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)				4.26		%						4.14		%

(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 Nine Months Ended
	September 30, 2017								September 30, 2016
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
Earning Assets
Securities:
Taxable	$	1,545,091		$	27,246		2.36	%	$	1,464,080		$	24,604		2.24	%
Nontaxable⁽¹⁾	638,119			23,534			4.93		440,275			16,605			5.04
Total securities	2,183,210			50,780			3.11		1,904,355			41,209			2.89
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments	127,870			1,112			1.16		9,785			13			0.18
Federal funds sold	6,885			37			0.72		12,509			12			0.13
Loans:⁽²⁾
Commercial and commercial real estate⁽¹⁾	4,097,967			151,946			4.96		3,840,060			141,977			4.94
Residential mortgage	654,488			20,492			4.19		751,694			23,133			4.11
Agricultural and agricultural real estate⁽¹⁾	492,170			17,536			4.76		478,564			16,952			4.73
Consumer	434,995			25,374			7.80		422,869			24,452			7.72
Fees on loans				5,894			—					5,362			—
Less: allowance for loan losses	(54,775		)	—			—		(50,980		)	—			—
Net loans	5,624,845			221,242			5.26		5,442,207			211,876			5.20
Total earning assets	7,942,810			273,171			4.60	%	7,368,856			253,110			4.59	%
Nonearning Assets	797,893								767,636
Total Assets	$	8,740,703							$	8,136,492
Interest Bearing Liabilities
Savings	$	3,976,403		$	7,772		0.26	%	$	3,651,370		$	5,988		0.22	%
Time, $100,000 and over	369,595			2,239			0.81		439,609			2,417			0.73
Other time deposits	512,551			2,955			0.77		599,745			3,790			0.84
Short-term borrowings	199,503			498			0.33		314,367			1,083			0.46
Other borrowings	288,774			10,674			4.94		281,617			10,918			5.18
Total interest bearing liabilities	5,346,826			24,138			0.60	%	5,286,708			24,196			0.61	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	2,494,850								2,084,379
Accrued interest and other liabilities	64,824								78,093
Total noninterest bearing liabilities	2,559,674								2,162,472
Stockholders' Equity	834,203								687,312
Total Liabilities and Stockholders' Equity	$	8,740,703							$	8,136,492
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾				$	249,033							$	228,914
Net interest spread⁽¹⁾							4.00	%							3.98	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets⁽³⁾							4.19	%							4.15	%
Interest bearing liabilities to earning assets	67.32		%						71.74		%

Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)⁽³⁾
Net interest income, fully tax-equivalent (non-GAAP)				$	249,033							$	228,914
Adjustments for tax-equivalent interest⁽¹⁾				(11,581		)						(9,408		)
Net interest income (GAAP)				$	237,452							$	219,506

Average earning assets	$	7,942,810							$	7,368,856
Annualized net interest margin (GAAP)				4.00		%						3.98		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)				4.19		%						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
	9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Total Assets
Citywide Banks⁽¹⁾	$	2,391,727	$	817,859	$	839,505	$	901,782	$	892,723
Dubuque Bank and Trust Company	1,479,647		1,441,655		1,436,038		1,497,775		1,448,796
New Mexico Bank & Trust	1,425,185		1,407,991		1,382,480		1,374,647		1,318,203
Wisconsin Bank & Trust	1,030,192		1,035,628		1,033,633		1,065,715		1,068,288
Premier Valley Bank	886,495		850,956		854,838		640,684		635,620
Illinois Bank & Trust	761,285		740,153		746,669		742,173		748,801
Morrill & Janes Bank and Trust Company	719,246		748,286		871,819		863,544		862,767
Arizona Bank & Trust	566,951		566,339		578,597		582,266		574,561
Rocky Mountain Bank	486,790		476,829		479,121		477,063		481,346
Minnesota Bank & Trust	217,246		216,957		213,789		229,114		238,745
Total Portfolio Loans
Citywide Banks⁽¹⁾	$	1,540,016	$	558,573	$	572,254	$	609,760	$	638,006
Dubuque Bank and Trust Company	868,370		884,640		903,617		905,242		906,347
New Mexico Bank & Trust	989,367		934,734		906,477		924,249		917,679
Wisconsin Bank & Trust	684,530		662,502		644,380		650,254		711,714
Premier Valley Bank	458,443		447,148		440,406		348,879		354,610
Illinois Bank & Trust	462,150		447,887		469,105		473,008		469,236
Morrill & Janes Bank and Trust Company	468,197		515,896		546,123		548,544		538,666
Arizona Bank & Trust	401,516		377,358		384,028		384,706		385,926
Rocky Mountain Bank	338,305		335,173		330,921		347,839		357,346
Minnesota Bank & Trust	142,650		144,112		142,736		144,098		139,581
Total Deposits
Citywide Banks⁽¹⁾	$	1,924,605	$	682,872	$	712,377	$	733,449	$	767,128
Dubuque Bank and Trust Company	1,139,512		1,178,368		1,212,899		1,231,016		1,182,947
New Mexico Bank & Trust	1,221,134		1,190,758		1,184,675		1,091,436		1,101,550
Wisconsin Bank & Trust	852,489		874,845		868,033		899,676		889,957
Premier Valley Bank	714,605		681,298		708,226		510,142		520,814
Illinois Bank & Trust	691,680		669,532		641,750		636,419		671,104
Morrill & Janes Bank and Trust Company	605,390		627,857		721,075		738,036		676,176
Arizona Bank & Trust	500,270		493,419		501,111		477,213		493,331
Rocky Mountain Bank	426,405		416,436		420,067		414,344		420,581
Minnesota Bank & Trust	189,749		193,365		189,324		194,368		214,651
Net Income
Citywide Banks⁽¹⁾	$	4,541	$	746	$	1,366	$	1,572	$	925
Dubuque Bank and Trust Company	703		3,477		2,056		806		5,112
New Mexico Bank & Trust	4,972		5,855		4,419		4,061		3,824
Wisconsin Bank & Trust	3,368		3,448		1,968		2,970		3,368
Premier Valley Bank	2,907		2,573		1,306		2,969		1,804
Illinois Bank & Trust	2,286		1,984		1,991		1,917		2,179
Morrill & Janes Bank and Trust Company	1,760		2,210		2,227		2,519		1,707
Arizona Bank & Trust	1,451		1,073		1,486		1,305		2,034
Rocky Mountain Bank	1,631		1,732		1,521		1,229		1,456
Minnesota Bank & Trust	791		563		591		888		675

(1) Formerly known as Centennial Bank and Trust.

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HEARTLAND FINANCIAL USA INC Reports