Attached files
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| 8-K - 8-K - HEARTLAND FINANCIAL USA INC | form8kq12018coverpage.htm |
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CONTACT: | FOR IMMEDIATE RELEASE |
Bryan R. McKeag | April 30, 2018 |
Executive Vice President | |
Chief Financial Officer | |
(563) 589-1994 | |
bmckeag@htlf.com | |
HEARTLAND FINANCIAL USA, INC. REPORTS FIRST QUARTER 2018 RESULTS
Highlights
§ | Total assets exceed $10.0 billion for the first time in company history | |
§ | Quarterly net income available to common stockholders of $23.3 million in comparison with $18.0 million for the first quarter of the prior year | |
§ | Diluted earnings per common share of $0.76 in comparison with $0.68 for the first quarter of the prior year | |
§ | Net interest margin of 4.19%, fully tax-equivalent (non-GAAP)(1) of 4.26% | |
§ | Organic loan growth of $30.1 million and organic non-time deposit growth of $106.4 million | |
§ | Return on average common equity of 9.32% and return on average tangible common equity (non-GAAP)(2) of 13.03% | |
§ | Tangible common equity ratio (non-GAAP)(3) of 7.59% | |
§ | Completed the acquisition of Signature Bancshares, Inc. with systems integrated in April | |
Quarter Ended March 31, | |||||||
2018 | 2017 | ||||||
Net income (in millions) | $ | 23.3 | $ | 18.0 | |||
Net income available to common stockholders (in millions) | 23.3 | 18.0 | |||||
Diluted earnings per common share | 0.76 | 0.68 | |||||
Return on average assets | 0.97 | % | 0.89 | % | |||
Return on average common equity | 9.32 | 9.71 | |||||
Return on average tangible common equity (non-GAAP)(2) | 13.03 | 12.25 | |||||
Net interest margin | 4.19 | 3.95 | |||||
Net interest margin, fully tax-equivalent (non-GAAP)(1) | 4.26 | 4.16 | |||||
"Heartland reported another solid quarter with net income available to common stockholders of $23.3 million, a nearly thirty percent increase over the same quarter last year. For the first time in company history, our total assets exceeded $10 billion, and total stockholders' equity exceeded $1 billion." |
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, April 30, 2018-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income available to common stockholders of $23.3 million, or $0.76 per diluted common share, for the quarter ended March 31, 2018, compared to $18.0 million, or $0.68 per diluted common share, for the first quarter of 2017. Return on average common equity was 9.32% and return on average assets was 0.97% for the first quarter of 2018, compared to 9.71% and 0.89%, respectively, for the same quarter in 2017.
Commenting on Heartland’s first quarter results, Lynn B. Fuller, Heartland’s chairman and chief executive officer said, "Heartland reported another solid quarter with net income available to common stockholders of $23.3 million, a nearly thirty percent increase over the same quarter last year. For the first time in company history, our total assets exceeded $10 billion, and total stockholders' equity exceeded $1 billion."
On February 23, 2018, Heartland completed the acquisition of Signature Bancshares, Inc., parent company of Signature Bank, based in Minnetonka, Minnesota. Based on Heartland's closing common stock price of $53.55 per share as of February 23, 2018, the aggregate consideration was $61.4 million, with approximately 10% of the consideration paid in cash and 90% paid by delivery of Heartland common stock. Simultaneous with the closing of the transaction, Signature Bank merged into Heartland's Minnesota Bank & Trust subsidiary. As of the close date, Signature Bank had, at fair value, total assets of $426.5 million, total loans of $324.5 million and total deposits of $357.3 million. The systems conversion for this transaction occurred on April 20, 2018.
In the first quarter of 2018, Heartland recorded $2.6 million of restructuring expenses related to its mortgage lending operation. The restructuring projects are primarily related to outsourcing the loan application processing, underwriting and loan closing functions. These changes will improve the customer experience, streamline operations and reduce the volatility and cost of originating mortgage loans. The restructuring is expected to be substantially completed by the end of the second quarter of 2018 and will result in a workforce reduction of approximately 100 employees and the discontinued use of several current systems.
Fully Tax-Equivalent Net Interest Margin Increases from First Quarter of 2017
Net interest margin, expressed as a percentage of average earning assets, was 4.19% (4.26% on a fully tax-equivalent basis) during the first quarter of 2018, compared to 4.14% (4.30% on a fully tax-equivalent basis) during the fourth quarter of 2017 and 3.95% (4.16% on a fully tax-equivalent basis) during the first quarter of 2017.
Fuller said, “We were pleased to see net interest margin remained solid at 4.26 percent on a fully tax-equivalent basis, which is an increase of 10 basis points from the first quarter of 2017. The strong margin reflects improved yields on earning assets."
Interest income for the first quarter of 2018 was $101.2 million compared to $80.6 million recorded in the first quarter of 2017. The taxable equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.5 million for the first quarter of 2018 and $3.9 million for the first quarter of 2017. With these adjustments, interest income on a tax-equivalent basis was $102.8 million for the first quarter of 2018, an increase of $18.3 million or 22%, compared to $84.4 million for the first quarter of 2017. Average earning assets acquired in the Signature Bancshares, Inc. transaction totaled $148.9 million. Exclusive of this transaction, average earning assets increased $1.21 billion or 16% from the first quarter of 2017. The average rate on earning assets increased 14 basis points to 4.70% for the first quarter of 2018 compared to 4.56% for the same quarter in 2017. The increase in interest income on a tax-equivalent basis was primarily due to recent increases in market interest rates and the increase in average earning assets.
Interest expense on deposits and borrowings for the first quarter of 2018 was $9.6 million, an increase of $2.1 million or 28% from $7.5 million in the first quarter of 2017. Average interest bearing deposits increased $595.3 million or 13% to $5.27 billion for the quarter ended March 31, 2018, from $4.67 billion in the same quarter in 2017. Average interest bearing deposits acquired with the Signature Bancshares Inc. transaction totaled $100.7 million. Exclusive of this transaction, average interest bearing deposits increased $494.6 million or 11%. The average interest rate paid on Heartland's interest bearing deposits increased 12 basis points to 0.44% for the first quarter of 2018 compared to 0.32% for the same quarter in 2017. Average borrowings declined $91.9 million or 18% to $427.9 million during the first quarter of 2018 from $519.8 million during the same quarter in 2017. The average interest rate paid on Heartland's borrowings was 3.66% for the first quarter of 2018 compared to 2.96% in the first quarter of 2017. The increase in the average interest rate paid on Heartland's interest bearing liabilities is primarily due to recent increases in market interest rates.
Net interest income was $91.6 million during the first quarter of 2018 compared to $73.0 million during the first quarter of 2017, an increase of $18.6 million or 25%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $93.1 million during the first quarter of 2018 compared to $76.9 million during the first quarter of 2017, an increase of $16.2 million or 21%.
Noninterest Income Decreases and Noninterest Expenses Increase from First Quarter of 2017
Noninterest income totaled $24.7 million during the first quarter of 2018 compared to $25.9 million during the first quarter of 2017, a decrease of $1.2 million or 5%. Trust fees, which are based on the market value of managed assets, increased $1.0 million or 29% to $4.7 million recorded in the first quarter of 2018 compared to $3.6 million recorded in the same quarter of 2017. Securities gains, net, decreased $1.0 million or 42% to $1.4 million for the first quarter of 2018 compared to $2.5 million for the first quarter of 2017. Net gains on sale of loans held for sale totaled $4.1 million during the first quarter of 2018 compared to $6.1 million during the first quarter of 2017, a decrease of $2.1 million or 34%, primarily due to lower residential mortgage loan activity.
For the first quarter of 2018, noninterest expenses totaled $83.6 million compared to $71.7 million during the first quarter of 2017, an increase of $11.9 million or 17%. Salaries and employee benefits increased $6.9 million or 17% to $48.7 million for the first quarter of 2018 compared to $41.8 million for the same quarter in 2017, which is primarily due to the increase in full time equivalent employees. Heartland had 2,022 full time equivalent employees at March 31, 2018, compared to 1,896 full time equivalent employees at March 31, 2017. As previously discussed, Heartland recorded $2.6 million of restructuring expenses related to its mortgage lending operation during the first quarter of 2018.
Heartland's effective tax rate was 18.04% for the first quarter of 2018 compared to 23.49% for the first quarter of 2017. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $307,000 during the first quarter of 2018 compared to $304,000 for the first quarter of 2017. Heartland's effective tax rate was also affected by the passage of the Tax Cuts and Jobs Act in December 2017, which reduced the federal income tax rate from a maximum of 35% to 21% beginning January 1, 2018. The level of tax-exempt interest income as a percentage of pre-tax income was 20.46% during the first quarter of 2018 compared to 30.46% during the first quarter of 2017.
Loans and Deposits Increase Since December 31, 2017
Total assets were $10.06 billion at March 31, 2018, an increase of $245.1 million or 2% from $9.81 billion at year-end 2017. Excluding $427.1 million of assets acquired at fair value in the Signature Bancshares Inc. transaction, total assets decreased $181.9 million or 2% since December 31, 2017. The decrease in assets was primarily due to a reduction in the securities portfolio, which represented 23% and 25% of total assets at March 31, 2018, and December 31, 2017, respectively.
Total loans held to maturity were $6.75 billion at March 31, 2018, compared to $6.39 billion at year-end 2017, an increase of $354.6 million or 6%. This change includes $324.5 million of total loans held to maturity acquired at fair value in the Signature Bancshares, Inc. transaction. Exclusive of this transaction, total loans held to maturity increased $30.1 million or less than 1% since December 31, 2017.
Total deposits were $8.54 billion as of March 31, 2018, compared to $8.15 billion at year-end 2017, an increase of $394.6 million or 5%. This increase included $357.3 million of deposits, at fair value, acquired in the Signature Bancshares, Inc. transaction. Exclusive of this transaction, total deposits increased $37.3 million or less than 1% since December 31, 2017. Demand deposits increased $111.3 million or 4% to $3.09 billion at March 31, 2018 compared to $2.98 billion at December 31, 2017. Excluding $105.5 million of demand deposits attributable to the Signature Bancshares, Inc. transaction, demand deposits increased $5.8 million or less than 1% since year-end 2017. Savings deposits increased $295.8 million or 7% to $4.54 billion at March 31, 2018, from $4.24 billion at December 31, 2017. Excluding savings deposits of $195.2 million acquired in the Signature Bancshares, Inc. transaction, savings deposits increased $100.6 million or 2% since year-end 2017.
Bruce K. Lee, Heartland's president, said, "We are pleased to see organic loan growth for the third consecutive quarter, which was fueled by growth in the commercial and agricultural loan portfolios. Organic non-time deposit growth was over $106 million during the first quarter of 2018, and demand deposits now represent 36 percent of our total deposit mix."
Nonperforming Assets Increase Since December 31, 2017
Nonperforming assets were $77.1 million or 0.77% of total assets at March 31, 2018, compared to $74.6 million or 0.76% of total assets at December 31, 2017. Excluding $2.5 million of nonperforming assets acquired in the Signature Bancshares, Inc. transaction, nonperforming assets totaled $74.6 million at March 31, 2018, which is unchanged from year-end 2017. Nonperforming loans were $64.8 million or 0.96% of total loans at March 31, 2018, compared to $63.4 million or 0.99% of total loans at December 31, 2017.
The allowance for loan losses at March 31, 2018, was 0.87% of loans and 90.48% of nonperforming loans, compared to 0.87% of loans and 87.82% of nonperforming loans at December 31, 2017. The provision for loan losses increased $622,000 or 17% to $4.3 million for the first quarter of 2018 compared to $3.6 million for the same quarter in 2017. Given the size of Heartland's loan portfolio, the level of organic loan growth, acquired loans that move out of the purchase accounting pool, changes in credit quality and the variability that can occur in the factors considered when determining the appropriateness of the allowance for loan losses, Heartland's quarterly provision expense will vary from quarter to quarter.
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 April 29, 2019, 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 $10.1 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 118 banking locations serving 89 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 as they impact 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 Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Interest Income | |||||||
Interest and fees on loans | $ | 85,651 | $ | 66,898 | |||
Interest on securities: | |||||||
Taxable | 11,577 | 8,253 | |||||
Nontaxable | 3,579 | 5,191 | |||||
Interest on federal funds sold | — | — | |||||
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 407 | 209 | |||||
Total Interest Income | 101,214 | 80,551 | |||||
Interest Expense | |||||||
Interest on deposits | 5,766 | 3,730 | |||||
Interest on short-term borrowings | 268 | 137 | |||||
Interest on other borrowings | 3,596 | 3,656 | |||||
Total Interest Expense | 9,630 | 7,523 | |||||
Net Interest Income | 91,584 | 73,028 | |||||
Provision for loan losses | 4,263 | 3,641 | |||||
Net Interest Income After Provision for Loan Losses | 87,321 | 69,387 | |||||
Noninterest Income | |||||||
Service charges and fees | 10,079 | 9,457 | |||||
Loan servicing income | 1,754 | 1,724 | |||||
Trust fees | 4,680 | 3,631 | |||||
Brokerage and insurance commissions | 907 | 1,036 | |||||
Securities gains, net | 1,441 | 2,482 | |||||
Unrealized loss on equity securities, net | (28 | ) | — | ||||
Net gains on sale of loans held for sale | 4,051 | 6,147 | |||||
Valuation adjustment on commercial servicing rights | (2 | ) | 5 | ||||
Income on bank owned life insurance | 614 | 617 | |||||
Other noninterest income | 1,220 | 794 | |||||
Total Noninterest Income | 24,716 | 25,893 | |||||
Noninterest Expense | |||||||
Salaries and employee benefits | 48,710 | 41,767 | |||||
Occupancy | 6,043 | 5,073 | |||||
Furniture and equipment | 2,749 | 2,501 | |||||
Professional fees | 8,459 | 8,309 | |||||
FDIC insurance assessments | 989 | 807 | |||||
Advertising | 1,940 | 2,424 | |||||
Core deposit intangibles and customer relationship intangibles amortization | 1,863 | 1,171 | |||||
Other real estate and loan collection expenses | 732 | 828 | |||||
(Gain)/loss on sales/valuations of assets, net | (197 | ) | 412 | ||||
Restructuring expenses | 2,564 | — | |||||
Other noninterest expenses | 9,794 | 8,448 | |||||
Total Noninterest Expense | 83,646 | 71,740 | |||||
Income Before Income Taxes | 28,391 | 23,540 | |||||
Income taxes | 5,123 | 5,530 | |||||
Net Income | 23,268 | 18,010 | |||||
Preferred dividends | (13 | ) | (19 | ) | |||
Interest expense on convertible preferred debt | — | 5 | |||||
Net Income Available to Common Stockholders | $ | 23,255 | $ | 17,996 | |||
Earnings per common share-diluted | $ | 0.76 | $ | 0.68 | |||
Weighted average shares outstanding-diluted | 30,645,212 | 26,627,830 | |||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Interest Income | |||||||||||||||||||
Interest and fees on loans | $ | 85,651 | $ | 86,108 | $ | 82,906 | $ | 68,094 | $ | 66,898 | |||||||||
Interest on securities: | |||||||||||||||||||
Taxable | 11,577 | 11,119 | 10,394 | 8,599 | 8,253 | ||||||||||||||
Nontaxable | 3,579 | 4,401 | 5,086 | 5,020 | 5,191 | ||||||||||||||
Interest on federal funds sold | — | 5 | 34 | 3 | — | ||||||||||||||
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 407 | 435 | 558 | 345 | 209 | ||||||||||||||
Total Interest Income | 101,214 | 102,068 | 98,978 | 82,061 | 80,551 | ||||||||||||||
Interest Expense | |||||||||||||||||||
Interest on deposits | 5,766 | 5,313 | 5,073 | 4,163 | 3,730 | ||||||||||||||
Interest on short-term borrowings | 268 | 180 | 271 | 90 | 137 | ||||||||||||||
Interest on other borrowings | 3,596 | 3,719 | 3,790 | 3,228 | 3,656 | ||||||||||||||
Total Interest Expense | 9,630 | 9,212 | 9,134 | 7,481 | 7,523 | ||||||||||||||
Net Interest Income | 91,584 | 92,856 | 89,844 | 74,580 | 73,028 | ||||||||||||||
Provision for loan losses | 4,263 | 5,328 | 5,705 | 889 | 3,641 | ||||||||||||||
Net Interest Income After Provision for Loan Losses | 87,321 | 87,528 | 84,139 | 73,691 | 69,387 | ||||||||||||||
Noninterest Income | |||||||||||||||||||
Service charges and fees | 10,079 | 9,892 | 10,138 | 9,696 | 9,457 | ||||||||||||||
Loan servicing income | 1,754 | 1,400 | 1,161 | 1,351 | 1,724 | ||||||||||||||
Trust fees | 4,680 | 4,336 | 3,872 | 3,979 | 3,631 | ||||||||||||||
Brokerage and insurance commissions | 907 | 1,071 | 950 | 976 | 1,036 | ||||||||||||||
Securities gains, net | 1,441 | 1,420 | 1,679 | 1,392 | 2,482 | ||||||||||||||
Unrealized loss on equity securities, net | (28 | ) | — | — | — | — | |||||||||||||
Net gains on sale of loans held for sale | 4,051 | 4,290 | 4,997 | 6,817 | 6,147 | ||||||||||||||
Valuation adjustment on commercial servicing rights | (2 | ) | (8 | ) | 5 | 19 | 5 | ||||||||||||
Income on bank owned life insurance | 614 | 733 | 766 | 656 | 617 | ||||||||||||||
Other noninterest income | 1,220 | 2,394 | 1,409 | 738 | 794 | ||||||||||||||
Total Noninterest Income | 24,716 | 25,528 | 24,977 | 25,624 | 25,893 | ||||||||||||||
Noninterest Expense | |||||||||||||||||||
Salaries and employee benefits | 48,710 | 43,289 | 45,225 | 41,126 | 41,767 | ||||||||||||||
Occupancy | 6,043 | 5,892 | 6,223 | 5,056 | 5,073 | ||||||||||||||
Furniture and equipment | 2,749 | 3,148 | 2,826 | 2,586 | 2,501 | ||||||||||||||
Professional fees | 8,459 | 8,537 | 8,450 | 7,583 | 8,309 | ||||||||||||||
FDIC insurance assessments | 989 | 985 | 894 | 909 | 807 | ||||||||||||||
Advertising | 1,940 | 2,088 | 1,358 | 1,359 | 2,424 | ||||||||||||||
Core deposit intangibles and customer relationship intangibles amortization | 1,863 | 1,825 | 1,863 | 1,218 | 1,171 | ||||||||||||||
Other real estate and loan collection expenses | 732 | 687 | 581 | 365 | 828 | ||||||||||||||
(Gain)/loss on sales/valuations of assets, net | (197 | ) | 833 | 1,342 | (112 | ) | 412 | ||||||||||||
Restructuring expenses | 2,564 | — | — | — | — | ||||||||||||||
Other noninterest expenses | 9,794 | 10,594 | 9,997 | 9,208 | 8,448 | ||||||||||||||
Total Noninterest Expense | 83,646 | 77,878 | 78,759 | 69,298 | 71,740 | ||||||||||||||
Income Before Income Taxes | 28,391 | 35,178 | 30,357 | 30,017 | 23,540 | ||||||||||||||
Income taxes | 5,123 | 21,506 | 8,725 | 8,059 | 5,530 | ||||||||||||||
Net Income | 23,268 | 13,672 | 21,632 | 21,958 | 18,010 | ||||||||||||||
Preferred dividends | (13 | ) | (13 | ) | (13 | ) | (13 | ) | (19 | ) | |||||||||
Interest expense on convertible preferred debt | — | — | 3 | 4 | 5 | ||||||||||||||
Net Income Available to Common Stockholders | $ | 23,255 | $ | 13,659 | $ | 21,622 | $ | 21,949 | $ | 17,996 | |||||||||
Earnings per common share-diluted | $ | 0.76 | $ | 0.45 | $ | 0.72 | $ | 0.81 | $ | 0.68 | |||||||||
Weighted average shares outstanding-diluted | 30,645,212 | 30,209,043 | 29,910,437 | 26,972,580 | 26,627,830 | ||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
As Of | |||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Assets | |||||||||||||||||||
Cash and due from banks | $ | 143,071 | $ | 168,723 | $ | 180,751 | $ | 141,100 | $ | 129,386 | |||||||||
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 123,275 | 27,280 | 70,985 | 40,676 | 43,765 | ||||||||||||||
Cash and cash equivalents | 266,346 | 196,003 | 251,736 | 181,776 | 173,151 | ||||||||||||||
Time deposits in other financial institutions | 6,297 | 9,820 | 19,793 | 30,241 | 41,539 | ||||||||||||||
Securities: | |||||||||||||||||||
Available for sale, at fair value | 2,027,665 | 2,216,753 | 2,093,385 | 1,789,441 | 1,893,528 | ||||||||||||||
Held to maturity, at cost | 249,766 | 253,550 | 256,355 | 259,586 | 260,616 | ||||||||||||||
Other investments, at cost | 22,982 | 22,563 | 23,176 | 21,094 | 21,557 | ||||||||||||||
Loans held for sale | 24,376 | 44,560 | 35,795 | 48,848 | 49,009 | ||||||||||||||
Loans: | |||||||||||||||||||
Held to maturity | 6,746,015 | 6,391,464 | 6,373,415 | 5,325,082 | 5,361,604 | ||||||||||||||
Allowance for loan losses | (58,656 | ) | (55,686 | ) | (54,885 | ) | (54,051 | ) | (54,999 | ) | |||||||||
Loans, net | 6,687,359 | 6,335,778 | 6,318,530 | 5,271,031 | 5,306,605 | ||||||||||||||
Premises, furniture and equipment, net | 172,862 | 174,301 | 178,961 | 163,003 | 165,425 | ||||||||||||||
Goodwill | 270,305 | 236,615 | 236,615 | 141,461 | 141,461 | ||||||||||||||
Core deposit intangibles and customer relationship intangibles, net | 41,063 | 35,203 | 37,028 | 22,850 | 24,068 | ||||||||||||||
Servicing rights, net | 25,471 | 25,857 | 26,599 | 34,736 | 35,441 | ||||||||||||||
Cash surrender value on life insurance | 143,444 | 142,818 | 142,073 | 120,281 | 117,613 | ||||||||||||||
Other real estate, net | 11,801 | 10,777 | 13,226 | 9,269 | 11,188 | ||||||||||||||
Other assets | 106,126 | 106,141 | 122,355 | 111,104 | 120,644 | ||||||||||||||
Total Assets | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | $ | 8,361,845 | |||||||||
Liabilities and Equity | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Demand | $ | 3,094,457 | $ | 2,983,128 | $ | 3,009,940 | $ | 2,355,410 | $ | 2,319,256 | |||||||||
Savings | 4,536,106 | 4,240,328 | 4,227,340 | 3,704,579 | 3,940,146 | ||||||||||||||
Time | 910,977 | 923,453 | 994,604 | 870,180 | 830,459 | ||||||||||||||
Total deposits | 8,541,540 | 8,146,909 | 8,231,884 | 6,930,169 | 7,089,861 | ||||||||||||||
Short-term borrowings | 131,240 | 324,691 | 171,871 | 139,130 | 155,025 | ||||||||||||||
Other borrowings | 276,118 | 285,011 | 301,473 | 281,096 | 282,051 | ||||||||||||||
Accrued expenses and other liabilities | 55,460 | 62,671 | 68,715 | 48,356 | 53,596 | ||||||||||||||
Total Liabilities | 9,004,358 | 8,819,282 | 8,773,943 | 7,398,751 | 7,580,533 | ||||||||||||||
Stockholders' Equity | |||||||||||||||||||
Preferred equity | 938 | 938 | 938 | 938 | 938 | ||||||||||||||
Common stock | 31,068 | 29,953 | 29,946 | 26,701 | 26,674 | ||||||||||||||
Capital surplus | 557,990 | 503,709 | 503,262 | 352,500 | 351,423 | ||||||||||||||
Retained earnings | 500,959 | 481,331 | 468,556 | 450,228 | 431,219 | ||||||||||||||
Accumulated other comprehensive loss | (39,450 | ) | (24,474 | ) | (21,018 | ) | (24,397 | ) | (28,942 | ) | |||||||||
Total Equity | 1,051,505 | 991,457 | 981,684 | 805,970 | 781,312 | ||||||||||||||
Total Liabilities and Equity | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | $ | 8,361,845 | |||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Average Balances | |||||||||||||||||||
Assets | $ | 9,759,936 | $ | 9,807,621 | $ | 9,639,844 | $ | 8,333,301 | $ | 8,233,510 | |||||||||
Loans, net of unearned | 6,525,553 | 6,343,923 | 6,286,264 | 5,376,826 | 5,365,654 | ||||||||||||||
Deposits | 8,251,140 | 8,293,006 | 8,100,028 | 7,050,126 | 6,896,821 | ||||||||||||||
Earning assets | 8,857,801 | 8,891,432 | 8,726,228 | 7,586,256 | 7,502,496 | ||||||||||||||
Interest bearing liabilities | 5,694,337 | 5,663,816 | 5,697,713 | 5,146,243 | 5,190,955 | ||||||||||||||
Common stockholders' equity | 1,011,580 | 986,026 | 954,511 | 791,039 | 751,671 | ||||||||||||||
Total stockholders' equity | 1,012,518 | 986,964 | 955,449 | 791,977 | 752,958 | ||||||||||||||
Tangible common stockholders' equity(1) | 723,898 | 713,018 | 691,464 | 625,929 | 596,006 | ||||||||||||||
Key Performance Ratios | |||||||||||||||||||
Annualized return on average assets | 0.97 | % | 0.55 | % | 0.89 | % | 1.06 | % | 0.89 | % | |||||||||
Annualized return on average common equity (GAAP) | 9.32 | % | 5.50 | % | 8.99 | % | 11.13 | % | 9.71 | % | |||||||||
Annualized return on average tangible common equity (non-GAAP)(2) | 13.03 | % | 7.60 | % | 12.41 | % | 14.07 | % | 12.25 | % | |||||||||
Annualized ratio of net charge-offs to average loans | 0.08 | % | 0.28 | % | 0.31 | % | 0.14 | % | 0.22 | % | |||||||||
Annualized net interest margin (GAAP) | 4.19 | % | 4.14 | % | 4.08 | % | 3.94 | % | 3.95 | % | |||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | 4.26 | % | 4.30 | % | 4.26 | % | 4.14 | % | 4.16 | % | |||||||||
Efficiency ratio, fully tax-equivalent(4) | 68.21 | % | 62.26 | % | 64.54 | % | 65.61 | % | 69.95 | % | |||||||||
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)(5) | |||||||||||||||||||
Net income available to common shareholders (GAAP) | $ | 23,255 | $ | 13,659 | $ | 21,622 | $ | 21,949 | $ | 17,996 | |||||||||
Average common stockholders' equity (GAAP) | $ | 1,011,580 | $ | 986,026 | $ | 954,511 | $ | 791,039 | $ | 751,671 | |||||||||
Less average goodwill | 250,172 | 236,615 | 226,097 | 141,461 | 132,440 | ||||||||||||||
Less average core deposit intangibles and customer relationship intangibles, net | 37,510 | 36,393 | 36,950 | 23,649 | 23,225 | ||||||||||||||
Average tangible common equity (non-GAAP) | $ | 723,898 | $ | 713,018 | $ | 691,464 | $ | 625,929 | $ | 596,006 | |||||||||
Annualized return on average common equity (GAAP) | 9.32 | % | 5.50 | % | 8.99 | % | 11.13 | % | 9.71 | % | |||||||||
Annualized return on average tangible common equity (non-GAAP) | 13.03 | % | 7.60 | % | 12.41 | % | 14.07 | % | 12.25 | % | |||||||||
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)(6) | |||||||||||||||||||
Net Interest Income (GAAP) | $ | 91,584 | $ | 92,856 | $ | 89,844 | $ | 74,580 | $ | 73,028 | |||||||||
Plus tax-equivalent adjustment(7) | 1,544 | 3,558 | 3,925 | 3,796 | 3,860 | ||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) | $ | 93,128 | $ | 96,414 | $ | 93,769 | $ | 78,376 | $ | 76,888 | |||||||||
Average earning assets | $ | 8,857,801 | $ | 8,891,432 | $ | 8,726,228 | $ | 7,586,256 | $ | 7,502,496 | |||||||||
Annualized net interest margin (GAAP) | 4.19 | % | 4.14 | % | 4.08 | % | 3.94 | % | 3.95 | % | |||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.26 | % | 4.30 | % | 4.26 | % | 4.14 | % | 4.16 | % | |||||||||
(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 21% for the quarter ended March 31, 2018, and 35% for all prior quarters. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
Reconciliation of Non-GAAP Measure-Efficiency Ratio(1) | For the Quarter Ended | ||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Net interest income | $ | 91,584 | $ | 92,856 | $ | 89,844 | $ | 74,580 | $ | 73,028 | |||||||||
Tax-equivalent adjustment(2) | 1,544 | 3,558 | 3,925 | 3,796 | 3,860 | ||||||||||||||
Fully tax-equivalent net interest income | 93,128 | 96,414 | 93,769 | 78,376 | 76,888 | ||||||||||||||
Noninterest income | 24,716 | 25,528 | 24,977 | 25,624 | 25,893 | ||||||||||||||
Securities gains, net | (1,441 | ) | (1,420 | ) | (1,679 | ) | (1,392 | ) | (2,482 | ) | |||||||||
Unrealized loss on equity securities | 28 | — | — | — | — | ||||||||||||||
Gain on extinguishment of debt | — | (1,280 | ) | — | — | — | |||||||||||||
Adjusted income | $ | 116,431 | $ | 119,242 | $ | 117,067 | $ | 102,608 | $ | 100,299 | |||||||||
Total noninterest expenses | $ | 83,646 | $ | 77,878 | $ | 78,759 | $ | 69,298 | $ | 71,740 | |||||||||
Less: | |||||||||||||||||||
Core deposit intangibles and customer relationship intangibles amortization | 1,863 | 1,825 | 1,863 | 1,218 | 1,171 | ||||||||||||||
Partnership investment in tax credit projects | — | 984 | — | 876 | — | ||||||||||||||
(Gain)/loss on sales/valuation of assets, net | (197 | ) | 833 | 1,342 | (112 | ) | 412 | ||||||||||||
Restructuring expenses | 2,564 | — | — | — | — | ||||||||||||||
Adjusted noninterest expenses | $ | 79,416 | $ | 74,236 | $ | 75,554 | $ | 67,316 | $ | 70,157 | |||||||||
Efficiency ratio, fully tax-equivalent (non-GAAP) | 68.21 | % | 62.26 | % | 64.54 | % | 65.61 | % | 69.95 | % | |||||||||
(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 21% for the quarter ended March 31, 2018, and 35% for all prior quarters. | |||||||||||||||||||
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 | |||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Common Share Data | |||||||||||||||||||
Book value per common share | $ | 33.81 | $ | 33.07 | $ | 32.75 | $ | 30.15 | $ | 29.26 | |||||||||
Tangible book value per common share (non-GAAP)(1) | $ | 23.79 | $ | 23.99 | $ | 23.61 | $ | 24.00 | $ | 23.05 | |||||||||
Common shares outstanding, net of treasury stock | 31,068,239 | 29,953,356 | 29,946,069 | 26,701,226 | 26,674,121 | ||||||||||||||
Tangible common equity ratio (non-GAAP)(2) | 7.59 | % | 7.53 | % | 7.46 | % | 7.97 | % | 7.50 | % | |||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(3) | |||||||||||||||||||
Common stockholders' equity (GAAP) | $ | 1,050,567 | $ | 990,518 | $ | 980,746 | $ | 805,032 | $ | 780,374 | |||||||||
Less goodwill | 270,305 | 236,615 | 236,615 | 141,461 | 141,461 | ||||||||||||||
Less core deposit intangibles and customer relationship intangibles, net | 41,063 | 35,203 | 37,028 | 22,850 | 24,068 | ||||||||||||||
Tangible common stockholders' equity (non-GAAP) | $ | 739,199 | $ | 718,700 | $ | 707,103 | $ | 640,721 | $ | 614,845 | |||||||||
Common shares outstanding, net of treasury stock | 31,068,239 | 29,953,356 | 29,946,069 | 26,701,226 | 26,674,121 | ||||||||||||||
Common stockholders' equity (book value) per share (GAAP) | $ | 33.81 | $ | 33.07 | $ | 32.75 | $ | 30.15 | $ | 29.26 | |||||||||
Tangible book value per common share (non-GAAP) | $ | 23.79 | $ | 23.99 | $ | 23.61 | $ | 24.00 | $ | 23.05 | |||||||||
Reconciliation of Tangible Common Equity Ratio (non-GAAP)(4) | |||||||||||||||||||
Total assets (GAAP) | $ | 10,055,863 | $ | 9,810,739 | $ | 9,755,627 | $ | 8,204,721 | $ | 8,361,845 | |||||||||
Less goodwill | 270,305 | 236,615 | 236,615 | 141,461 | 141,461 | ||||||||||||||
Less core deposit intangibles and customer relationship intangibles, net | 41,063 | 35,203 | 37,028 | 22,850 | 24,068 | ||||||||||||||
Total tangible assets (non-GAAP) | $ | 9,744,495 | $ | 9,538,921 | $ | 9,481,984 | $ | 8,040,410 | $ | 8,196,316 | |||||||||
Tangible common equity ratio (non-GAAP) | 7.59 | % | 7.53 | % | 7.46 | % | 7.97 | % | 7.50 | % | |||||||||
Loan Data | |||||||||||||||||||
Loans held to maturity: | |||||||||||||||||||
Commercial and commercial real estate | $ | 5,129,777 | $ | 4,809,875 | $ | 4,777,856 | $ | 3,803,011 | $ | 3,849,748 | |||||||||
Residential mortgage | 624,725 | 624,279 | 635,611 | 596,385 | 604,902 | ||||||||||||||
Agricultural and agricultural real estate | 518,386 | 511,588 | 511,764 | 495,243 | 481,125 | ||||||||||||||
Consumer | 474,929 | 447,484 | 450,088 | 431,052 | 427,962 | ||||||||||||||
Unearned discount and deferred loan fees | (1,802 | ) | (1,762 | ) | (1,904 | ) | (609 | ) | (2,133 | ) | |||||||||
Total loans held to maturity | $ | 6,746,015 | $ | 6,391,464 | $ | 6,373,415 | $ | 5,325,082 | $ | 5,361,604 | |||||||||
Other Selected Trend Information | |||||||||||||||||||
Effective tax rate | 18.04 | % | 61.13 | % | 28.74 | % | 26.85 | % | 23.49 | % | |||||||||
Full time equivalent employees | 2,022 | 2,008 | 2,024 | 1,862 | 1,896 | ||||||||||||||
Total residential mortgage loan applications | $ | 234,825 | $ | 232,946 | $ | 271,476 | $ | 308,113 | $ | 248,614 | |||||||||
Residential mortgage loans originated | $ | 149,768 | $ | 185,580 | $ | 198,911 | $ | 216,637 | $ | 161,851 | |||||||||
Residential mortgage loans sold | $ | 127,963 | $ | 168,527 | $ | 188,501 | $ | 180,296 | $ | 172,521 | |||||||||
Residential mortgage loan servicing portfolio | $ | 3,535,988 | $ | 3,558,090 | $ | 3,557,866 | $ | 4,340,243 | $ | 4,338,311 | |||||||||
(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 | |||||||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||
Balance, beginning of period | $ | 55,686 | $ | 54,885 | $ | 54,051 | $ | 54,999 | $ | 54,324 | |||||||||
Provision for loan losses | 4,263 | 5,328 | 5,705 | 889 | 3,641 | ||||||||||||||
Charge-offs | (2,224 | ) | (5,628 | ) | (5,759 | ) | (2,766 | ) | (3,718 | ) | |||||||||
Recoveries | 931 | 1,101 | 888 | 929 | 752 | ||||||||||||||
Balance, end of period | $ | 58,656 | $ | 55,686 | $ | 54,885 | $ | 54,051 | $ | 54,999 | |||||||||
Asset Quality | |||||||||||||||||||
Nonaccrual loans | $ | 64,806 | $ | 62,581 | $ | 63,456 | $ | 65,393 | $ | 62,868 | |||||||||
Loans past due ninety days or more as to interest or principal payments | 22 | 830 | 2,348 | 698 | 872 | ||||||||||||||
Other real estate owned | 11,801 | 10,777 | 13,226 | 9,269 | 11,188 | ||||||||||||||
Other repossessed assets | 423 | 411 | 773 | 675 | 739 | ||||||||||||||
Total nonperforming assets | $ | 77,052 | $ | 74,599 | $ | 79,803 | $ | 76,035 | $ | 75,667 | |||||||||
Performing troubled debt restructured loans | $ | 3,206 | $ | 6,617 | $ | 10,040 | $ | 11,157 | $ | 11,010 | |||||||||
Nonperforming Assets Activity | |||||||||||||||||||
Balance, beginning of period | $ | 74,599 | $ | 79,803 | $ | 76,035 | $ | 75,667 | $ | 74,792 | |||||||||
Net loan charge offs | (1,293 | ) | (4,527 | ) | (4,871 | ) | (1,837 | ) | (2,966 | ) | |||||||||
New nonperforming loans | 8,546 | 9,911 | 9,117 | 13,700 | 14,819 | ||||||||||||||
Acquired nonperforming assets | 2,459 | — | 7,991 | — | — | ||||||||||||||
Reduction of nonperforming loans(1) | (6,549 | ) | (7,177 | ) | (5,183 | ) | (7,443 | ) | (10,037 | ) | |||||||||
OREO/Repossessed assets sales proceeds | (657 | ) | (2,917 | ) | (3,328 | ) | (3,734 | ) | (715 | ) | |||||||||
OREO/Repossessed assets writedowns, net | (16 | ) | (146 | ) | (56 | ) | (259 | ) | (279 | ) | |||||||||
Net activity at Citizens Finance Co. | (37 | ) | (348 | ) | 98 | (59 | ) | 53 | |||||||||||
Balance, end of period | $ | 77,052 | $ | 74,599 | $ | 79,803 | $ | 76,035 | $ | 75,667 | |||||||||
Asset Quality Ratios | |||||||||||||||||||
Ratio of nonperforming loans to total loans | 0.96 | % | 0.99 | % | 1.03 | % | 1.24 | % | 1.19 | % | |||||||||
Ratio of nonperforming assets to total assets | 0.77 | % | 0.76 | % | 0.82 | % | 0.93 | % | 0.90 | % | |||||||||
Annualized ratio of net loan charge-offs to average loans | 0.08 | % | 0.28 | % | 0.31 | % | 0.14 | % | 0.22 | % | |||||||||
Allowance for loan losses as a percent of loans | 0.87 | % | 0.87 | % | 0.86 | % | 1.02 | % | 1.03 | % | |||||||||
Allowance for loan losses as a percent of nonperforming loans | 90.48 | % | 87.82 | % | 83.41 | % | 81.78 | % | 86.29 | % | |||||||||
Loans delinquent 30-89 days as a percent of total loans | 0.21 | % | 0.27 | % | 0.33 | % | 0.38 | % | 0.44 | % | |||||||||
(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 | |||||||||||||||||||||
March 31, 2018 | March 31, 2017 | ||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||
Earning Assets | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 1,827,611 | $ | 11,577 | 2.57 | % | $ | 1,449,054 | $ | 8,253 | 2.31 | % | |||||||||
Nontaxable(1) | 448,641 | 4,530 | 4.09 | 645,534 | 7,986 | 5.02 | |||||||||||||||
Total securities | 2,276,252 | 16,107 | 2.87 | 2,094,588 | 16,239 | 3.14 | |||||||||||||||
Interest bearing deposits with the Federal Reserve Bank and other banks and other short-term investments | 112,024 | 407 | 1.47 | 96,270 | 209 | 0.88 | |||||||||||||||
Federal funds sold | — | — | — | 314 | — | — | |||||||||||||||
Loans:(2) | |||||||||||||||||||||
Commercial and commercial real estate(1) | 4,910,797 | 62,813 | 5.19 | 3,813,258 | 45,913 | 4.88 | |||||||||||||||
Residential mortgage | 642,181 | 6,851 | 4.33 | 646,532 | 6,683 | 4.19 | |||||||||||||||
Agricultural and agricultural real estate(1) | 513,780 | 6,004 | 4.74 | 483,079 | 5,554 | 4.66 | |||||||||||||||
Consumer | 458,795 | 8,660 | 7.66 | 422,785 | 8,053 | 7.72 | |||||||||||||||
Fees on loans | 1,916 | — | 1,760 | — | |||||||||||||||||
Less: allowance for loan losses | (56,028 | ) | — | — | (54,330 | ) | — | — | |||||||||||||
Net loans | 6,469,525 | 86,244 | 5.41 | 5,311,324 | 67,963 | 5.19 | |||||||||||||||
Total earning assets | 8,857,801 | 102,758 | 4.70 | % | 7,502,496 | 84,411 | 4.56 | % | |||||||||||||
Nonearning Assets | 902,135 | 731,014 | |||||||||||||||||||
Total Assets | $ | 9,759,936 | $ | 8,233,510 | |||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||
Savings | $ | 4,358,508 | $ | 3,791 | 0.35 | % | $ | 3,838,001 | $ | 2,105 | 0.22 | % | |||||||||
Time, $100,000 and over | 377,443 | 776 | 0.83 | 348,782 | 725 | 0.84 | |||||||||||||||
Other time deposits | 530,485 | 1,199 | 0.92 | 484,336 | 900 | 0.75 | |||||||||||||||
Short-term borrowings | 147,738 | 268 | 0.74 | 235,432 | 137 | 0.24 | |||||||||||||||
Other borrowings | 280,163 | 3,596 | 5.21 | 284,404 | 3,656 | 5.21 | |||||||||||||||
Total interest bearing liabilities | 5,694,337 | 9,630 | 0.69 | % | 5,190,955 | 7,523 | 0.59 | % | |||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||
Noninterest bearing deposits | 2,984,704 | 2,225,702 | |||||||||||||||||||
Accrued interest and other liabilities | 68,377 | 63,895 | |||||||||||||||||||
Total noninterest bearing liabilities | 3,053,081 | 2,289,597 | |||||||||||||||||||
Stockholders' Equity | 1,012,518 | 752,958 | |||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 9,759,936 | $ | 8,233,510 | |||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(1) | $ | 93,128 | $ | 76,888 | |||||||||||||||||
Net interest spread(1) | 4.01 | % | 3.97 | % | |||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(3) | 4.26 | % | 4.16 | % | |||||||||||||||||
Interest bearing liabilities to earning assets | 64.29 | % | 69.19 | % | |||||||||||||||||
Reconciliation of annualized net interest margin, fully tax-equivalent (non-GAAP)(3) | |||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) | $ | 93,128 | $ | 76,888 | |||||||||||||||||
Adjustments for tax-equivalent interest(1) | (1,544 | ) | (3,860 | ) | |||||||||||||||||
Net interest income (GAAP) | $ | 91,584 | $ | 73,028 | |||||||||||||||||
Average earning assets | $ | 8,857,801 | $ | 7,502,496 | |||||||||||||||||
Annualized net interest margin (GAAP) | 4.19 | % | 3.95 | % | |||||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP) | 4.26 | % | 4.16 | % | |||||||||||||||||
(1) Computed on a tax-equivalent basis using an effective tax rate of 21% for the quarter ended March 31, 2018, and 35% for all prior quarters. | |||||||||||||||||||||
(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 | |||||||||||||||
3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||
Total Assets | |||||||||||||||
Citywide Banks(1) | $ | 2,299,818 | $ | 2,289,956 | $ | 2,391,727 | $ | 817,859 | $ | 839,505 | |||||
Dubuque Bank and Trust Company | 1,490,100 | 1,443,419 | 1,479,647 | 1,441,655 | 1,436,038 | ||||||||||
New Mexico Bank & Trust | 1,416,788 | 1,453,534 | 1,425,185 | 1,407,991 | 1,382,480 | ||||||||||
Wisconsin Bank & Trust | 1,017,053 | 1,079,222 | 1,030,192 | 1,035,628 | 1,033,633 | ||||||||||
Premier Valley Bank | 805,014 | 925,078 | 886,495 | 850,956 | 854,838 | ||||||||||
Illinois Bank & Trust | 751,371 | 783,127 | 761,285 | 740,153 | 746,669 | ||||||||||
Morrill & Janes Bank and Trust Company | 648,568 | 654,871 | 719,246 | 748,286 | 871,819 | ||||||||||
Arizona Bank & Trust | 633,474 | 602,182 | 566,951 | 566,339 | 578,597 | ||||||||||
Minnesota Bank & Trust | 631,852 | 210,157 | 217,246 | 216,957 | 213,789 | ||||||||||
Rocky Mountain Bank | 490,917 | 487,136 | 486,790 | 476,829 | 479,121 | ||||||||||
Total Deposits | |||||||||||||||
Citywide Banks(1) | $ | 1,914,726 | $ | 1,895,540 | $ | 1,924,605 | $ | 682,872 | $ | 712,377 | |||||
Dubuque Bank and Trust Company | 1,193,271 | 1,084,415 | 1,139,512 | 1,178,368 | 1,212,899 | ||||||||||
New Mexico Bank & Trust | 1,202,051 | 1,229,324 | 1,221,134 | 1,190,758 | 1,184,675 | ||||||||||
Wisconsin Bank & Trust | 835,919 | 890,835 | 852,489 | 874,845 | 868,033 | ||||||||||
Premier Valley Bank | 660,070 | 705,142 | 714,605 | 681,298 | 708,226 | ||||||||||
Illinois Bank & Trust | 674,391 | 692,227 | 691,680 | 669,532 | 641,750 | ||||||||||
Morrill & Janes Bank and Trust Company | 558,174 | 563,638 | 605,390 | 627,857 | 721,075 | ||||||||||
Arizona Bank & Trust | 567,515 | 522,490 | 500,270 | 493,419 | 501,111 | ||||||||||
Minnesota Bank & Trust | 533,893 | 178,036 | 189,749 | 193,365 | 189,324 | ||||||||||
Rocky Mountain Bank | 429,000 | 424,487 | 426,405 | 416,436 | 420,067 | ||||||||||
Net Income | |||||||||||||||
Citywide Banks(1) | $ | 5,463 | $ | 1,069 | $ | 4,541 | $ | 746 | $ | 1,366 | |||||
Dubuque Bank and Trust Company | 3,214 | 9,027 | 703 | 3,477 | 2,056 | ||||||||||
New Mexico Bank & Trust | 6,444 | 2,954 | 4,972 | 5,855 | 4,419 | ||||||||||
Wisconsin Bank & Trust | 2,617 | 2,210 | 3,368 | 3,448 | 1,968 | ||||||||||
Premier Valley Bank | 2,373 | 1,508 | 2,907 | 2,573 | 1,306 | ||||||||||
Illinois Bank & Trust | 2,712 | 794 | 2,286 | 1,984 | 1,991 | ||||||||||
Morrill & Janes Bank and Trust Company | 1,186 | 650 | 1,760 | 2,210 | 2,227 | ||||||||||
Arizona Bank & Trust | 2,104 | (103 | ) | 1,451 | 1,073 | 1,486 | |||||||||
Minnesota Bank & Trust | 762 | 106 | 791 | 563 | 591 | ||||||||||
Rocky Mountain Bank | 1,172 | 1,769 | 1,631 | 1,732 | 1,521 | ||||||||||
(1) Formerly known as Centennial Bank and Trust. | |||||||||||||||