Highlights and Developments

Quarterly loan growth of $551.9 million or 5%, exclusive of Paycheck Protection Program ("PPP") loans
Quarterly net income available to common stockholders of $49.9 million
Efficiency ratio of 57.66%
Diluted earnings per common share of $1.17
Quarterly net charge-offs of $714,000 and 30-89 day loan delinquencies were 0.06% of total loans
Citywide Banks is now operating as a division of HTLF Bank, completing the first stage of charter consolidation

	Quarter Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Net income available to common stockholders (in millions)	$	49.9		$	59.6		$	90.9		$	110.4
Diluted earnings per common share		1.17			1.41			2.14			2.61

Return on average assets		1.06	%		1.35	%		0.99	%		1.27	%
Return on average common equity		11.55			12.07			9.82			11.29
Return on average tangible common equity (non-GAAP)⁽¹⁾		18.35			18.05			15.08			16.99
Net interest margin		3.18			3.37			3.13			3.40
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.22			3.41			3.17			3.45
Efficiency ratio, fully-tax equivalent (non-GAAP)⁽¹⁾		57.66			57.11			61.02			56.86

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

"HTLF's second quarter results were excellent and exceeded our expectations. Our tremendous loan growth, solid credit metrics and an improved efficiency ratio are attributable to the continued execution of our growth strategies and provide strong momentum going into the third quarter."

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

DUBUQUE, Iowa, July 25, 2022 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ:HTLF) today reported the following results for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021:

Net income available to common stockholders of $49.9 million compared to $59.6 million, a decrease of $9.7 million or 16%.
Earnings per diluted common share of $1.17 compared to $1.41, a decrease of $0.24 or 17%.
Net interest income of $142.5 million compared to $141.2 million, an increase of $1.2 million or 1%.
Return on average common equity was 11.55% compared to 12.07%, and return on average assets was 1.06% compared to 1.35%.
Return on average tangible common equity (non-GAAP) was 18.35% compared to 18.05%.

HTLF reported the following results for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Net income available to common stockholders of $90.9 million compared to $110.4 million, a decrease of $19.5 million or 18%.
Earnings per diluted common share of $2.14 compared to $2.61, a decrease of $0.47 or 18%.
Net interest income of $277.1 million compared to $280.8 million, a decrease of $3.7 million or 1%.
Return on average common equity was 9.82% compared to 11.29%, and return on average assets was 0.99% compared to 1.27%.
Return on average tangible common equity (non-GAAP) was 15.08% compared to 16.99%.

Charter Consolidation Update

During the second quarter of 2022, the consolidation of HTLF's 11 separate bank charters advanced from planning to execution. Citywide Banks is now operating as a division of HTLF Bank, completing the first stage of charter consolidation. Each of the remaining charters will be consolidated into HTLF Bank in the following 10 stages of the project, using a template that retains their current brands, local leadership and local decision making. The final stage is expected to be completed by the end of 2023. Consolidation restructuring costs are projected to be $19-20 million, with approximately $14-15 million of expenses remaining to be incurred through 2023. Charter consolidation is designed to eliminate redundancies and improve HTLF's operating efficiency and capacity to support ongoing product and service enhancements and current and future growth. The resulting efficiencies and expansion in capacity are projected to generate financial benefits of approximately $20.0 million annually when the project is completed.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.18% (3.22% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2022 compared to 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2021.

Total interest income and average earning asset changes for the second quarter of 2022 compared to the second quarter of 2021 were:

Total interest income was $152.9 million compared to $148.1 million, which was an increase of $4.8 million or 3% and primarily attributable to an increase in average earning assets partially offset by lower yields and a reduction of PPP loan interest income. PPP loan interest income totaled $1.8 million compared to $11.2 million, which was a decrease of $9.4 million or 84%.
Total interest income on a tax-equivalent basis (non-GAAP) was $154.9 million, which was an increase of $5.0 million or 3% from $149.8 million.
Average earning assets increased $1.17 billion or 7% to $17.99 billion compared to $16.82 billion.
The average rate on earning assets decreased 12 basis points to 3.45% compared to 3.57%, which was primarily due to a shift in earning asset mix. Total average securities were 41% of total average earning assets compared to 39%.

Total interest expense and average interest bearing liability changes for the second quarter of 2022 compared to the second quarter of 2021 were:

Total interest expense was $10.4 million, an increase of $3.6 million or 52% from $6.9 million, based on an increase in the average interest rate paid and an increase in average interest bearing liabilities.
The average interest rate paid on interest bearing liabilities increased to 0.36% compared to 0.28%.
Average interest bearing deposits increased $1.68 billion or 18% to $11.08 billion from $9.41 billion.
The average interest rate paid on interest bearing deposits increased 8 basis points to 0.24% compared to 0.16%.
Average borrowings increased $25.2 million or 5% to $491.1 million from $465.9 million, and the average interest rate paid on borrowings was 3.18% compared to 2.65%.

Net interest income changes for the second quarter of 2022 compared to the second quarter of 2021 were:

Net interest income totaled $142.5 million compared to $141.2 million, which was an increase of $1.2 million or 1%. PPP loan interest income totaled $1.8 million compared to $11.2 million, which was a decrease of $9.4 million or 84%.
Net interest income on a tax-equivalent basis (non-GAAP) totaled $144.4 million compared to $143.0 million, which was an increase of $1.5 million or 1%.

Noninterest Income and Noninterest Expense

Total noninterest income was $34.5 million during the second quarter of 2022 compared to $33.2 million during the second quarter of 2021, an increase of $1.4 million or 4%. Significant changes within the noninterest income category for the second quarter of 2022 compared to the second quarter of 2021 were:

Service charges and fees increased $2.9 million or 19% to $18.1 million from $15.1 million. Credit card revenue was $5.8 million compared to $4.3 million, which was an increase of $1.5 million or 35%.
Net security losses totaled $2.1 million compared to net gains of $2.8 million.
Net gains on sales of loans held for sale totaled $2.9 million compared to $4.8 million, which was a decrease of $1.9 million or 39% and was primarily attributable to a decrease of loans sold to the secondary market.
Other noninterest income totaled $7.9 million compared to $2.2 million, which was an increase of $5.7 million. The following items impacted other noninterest income for the second quarter of 2022 compared to the second quarter of 2021:
- Commercial swap fees and syndication income totaled $4.9 million compared to $193,000.
- Gains on the sale of VISA B shares totaled $1.9 million compared to $0.

Total noninterest expense was $106.5 million during the second quarter of 2022 compared to $103.4 million during the second quarter of 2021, which was an increase of $3.1 million or 3%. Significant changes within the noninterest expense category for the second quarter of 2022 compared to the second quarter of 2021 were:

Salaries and employee benefits totaled $64.0 million compared to $57.3 million, which was an increase of $6.7 million or 12%. The increase was primarily attributable to higher salary expenses due to inflationary wage pressures and increased health care expenses due to normalized health care usage.
Net gains on sales/valuations of assets totaled $3.2 million compared to net losses of $183,000, and the change was primarily attributable to a gain of $3.0 million associated with the sale of two branches in Illinois and a gain of $413,000 associated with the sale of an insurance subsidiary.
Acquisition, integration and restructuring costs totaled $2.4 million compared to $210,000, an increase of $2.2 million due to the progression of the charter consolidation project.

The effective tax rate was 22.89% for the second quarter of 2022 compared to 21.11% for the second quarter of 2021. The following items impacted the second quarter 2022 and 2021 tax calculations:

Solar energy tax credits of $702,000 compared to $1.3 million.
Federal low-income housing tax credits of $135,000 in each quarterly calculation.
New markets tax credits of $75,000 in each quarterly calculation.
Historic rehabilitation tax credits of $63,000 compared to $123,000.
Tax-exempt interest income as a percentage of pre-tax income of 11.05% compared to 8.49%.
Tax expense of $43,000 compared to a tax benefit of $150,000 resulting from the vesting of restricted stock units.

Total Assets, Total Loans and Total Deposits

Total assets were $19.66 billion at June 30, 2022, an increase of $383.9 million or 2% from $19.27 billion at year-end 2021. Securities represented 37% and 40% of total assets at June 30, 2022, and December 31, 2021, respectively.

Total loans held to maturity were $10.68 billion at June 30, 2022, compared to $9.95 billion at December 31, 2021, which was an increase of $723.6 million or 7%. Excluding total PPP loans, loans increased $551.9 million or 5% since March 31, 2022 and $900.5 million or 9% since December 31, 2021.

Significant changes by loan category at June 30, 2022 compared to March 31, 2022 included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $210.7 million or 4% to $5.37 billion compared to $5.15 billion.
- PPP loans originated in 2020 ("PPP I") decreased $2.9 million or 51%. PPP loans originated in 2021 ("PPP II") decreased $48.1 million or 70%.
- Excluding total PPP loans, commercial and business lending increased $261.8 million or 5% to $5.34 billion from $5.08 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $162.5 million or 5% to $3.17 billion compared to $3.00 billion.
Agricultural and agricultural real estate loans increased $70.3 million or 9% to $836.7 million compared to $766.4 million.
Consumer loans increased $37.3 million or 9% to $464.1 million from $426.8 million.

Significant changes by loan category at June 30, 2022 compared to December 31, 2021 included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $280.1 million or 6% to $5.37 billion compared to $5.09 billion.
- PPP I loans decreased $24.3 million or 90%. PPP II loans decreased $152.5 million or 88%.
- Excluding total PPP loans, commercial and business lending increased $456.9 million or 9% to $5.34 billion from $4.89 billion.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $300.1 million or 10% to $3.17 billion compared to $2.87 billion.
Agricultural and agricultural real estate loans increased $83.0 million or 11% to $836.7 million compared to $753.8 million.
Consumer loans increased $44.6 million or 11% to $464.1 million from $419.5 million.

Total deposits were $17.23 billion as of June 30, 2022, compared to $16.42 billion at December 31, 2021. Significant deposit changes by category at June 30, 2022 compared to December 31, 2021 included:

Demand deposits decreased $408.0 million or 6% to $6.09 billion compared to $6.50 billion.
Savings deposits increased $1.16 billion or 13% to $10.06 billion from $8.90 billion.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans

Provision for credit losses for loans for the second quarter of 2022 was $1.5 million, which was an increase of $8.0 million from a provision benefit of $6.5 million recorded in the second quarter of 2021. The provision expense for the second quarter of 2022 compared to the second quarter of 2021 was impacted by several factors, including:

loan growth exclusive of PPP loans totaling $551.9 million compared to $287.7 million,
decrease in nonperforming loans of $22.4 million to $63.0 million or 0.59% of total loans compared to $85.4 million or 0.85% of total loans at June 30, 2021,
nonpass loans declined to 5.8% of total loans compared to 10.4% of total loans at June 30, 2021, and
loans delinquent 30-89 days as a percent of total loans fell to 0.06% compared to 0.17% at June 30, 2021.

The allowance for credit losses for loans totaled $101.4 million and $110.1 million at June 30, 2022, and December 31, 2021, respectively. The following items impacted the allowance for credit losses for loans for the six months ended June 30, 2022:

Provision expense for the six months ended June 30, 2022, totaled $4.2 million.
Net charge offs of $12.9 million were recorded for the first six months of 2022.

Provision and Allowance for Credit Losses for Unfunded Commitments

The allowance for unfunded commitments totaled $17.8 million at June 30, 2022, which was an increase of $2.3 million from $15.5 million at December 31, 2021. Unfunded commitments increased $628.7 million to $4.46 billion at June 30, 2022 compared to $3.83 billion at December 31, 2021.

Total Provision and Allowance for Lending Related Credit Losses

The total provision expense for lending related credit losses was $3.2 million for the second quarter of 2022 compared to provision benefit of $7.1 million for the second quarter of 2021. The total allowance for lending related credit losses was $119.1 million or 1.12% of total loans at June 30, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets decreased $4.4 million or 6% to $67.5 million or 0.34% of total assets at June 30, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $63.0 million or 0.59% of total loans at June 30, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2021. At June 30, 2022, loans delinquent 30-89 days were 0.06% of total loans compared to 0.07% of total loans at December 31, 2021.

Non-GAAP Financial Measures

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

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

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

Conference Call Details

HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until July 23, 2023, by logging on to www.htlf.com.

About HTLF

Heartland Financial USA, Inc., operating under the brand name HTLF, is a financial services company with assets of $19.66 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

Safe Harbor Statement

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

Any statements about HTLF's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "may", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of HTLF and its management. Although HTLF may make these statements based on management's experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which HTLF currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of HTLF's Annual Report on Form 10-K for the year ended December 31, 2021, include, among others:

Coronavirus Disease 2019 ("COVID-19") Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;
Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, terrorist threats or acts of war;
Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;
Liquidity and Interest Rate Risks, including the impact of capital market conditions and changes in monetary policy on our borrowings and net interest income;
Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
Strategic and External Risks, including economic, political and competitive forces impacting our business;
Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

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

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended June 30,						For the Six Months Ended June 30,
		2022			2021			2022			2021
Interest Income
Interest and fees on loans	$	108,718		$	111,915		$	211,087		$	224,354
Interest on securities:
Taxable		38,098			31,546			70,718			61,989
Nontaxable		5,508			4,561			11,710			9,064
Interest on federal funds sold		—			—			—			1
Interest on deposits with other banks and short-term investments		563			60			634			126
Total Interest Income		152,887			148,082			294,149			295,534
Interest Expense
Interest on deposits		6,530			3,790			9,507			8,185
Interest on short-term borrowings		88			98			134			250
Interest on other borrowings		3,808			2,976			7,368			6,276
Total Interest Expense		10,426			6,864			17,009			14,711
Net Interest Income		142,461			141,218			277,140			280,823
Provision (benefit) for credit losses		3,246			(7,080	)		6,491			(7,728	)
Net Interest Income After Provision (Benefit) for Credit Losses		139,215			148,298			270,649			288,551
Noninterest Income
Service charges and fees		18,066			15,132			33,317			28,803
Loan servicing income		834			873			1,120			1,711
Trust fees		5,679			6,039			11,758			11,816
Brokerage and insurance commissions		839			865			1,708			1,718
Securities gains/(losses), net		(2,089	)		2,842			783			2,812
Unrealized gain/ (loss) on equity securities, net		(121	)		83			(404	)		(27	)
Net gains on sale of loans held for sale		2,901			4,753			6,312			11,173
Valuation adjustment on servicing rights		—			(526	)		1,658			391
Income on bank owned life insurance		523			937			1,047			1,766
Other noninterest income		7,907			2,166			11,809			3,318
Total Noninterest Income		34,539			33,164			69,108			63,481
Noninterest Expense
Salaries and employee benefits		64,032			57,332			130,206			116,394
Occupancy		7,094			7,399			14,456			15,317
Furniture and equipment		3,033			3,501			6,552			6,594
Professional fees		15,987			16,237			31,143			29,727
Advertising		1,283			1,649			2,838			3,118
Core deposit and customer relationship intangibles amortization		2,083			2,415			4,137			4,931
Other real estate and loan collection expenses, net		78			414			273			549
(Gain)/loss on sales/valuations of assets, net		(3,230	)		183			(3,184	)		377
Acquisition, integration and restructuring costs		2,412			210			2,988			3,138
Partnership investment in tax credit projects		737			1,345			814			1,380
Other noninterest expenses		12,970			12,691			27,053			24,274
Total Noninterest Expense		106,479			103,376			217,276			205,799
Income Before Income Taxes		67,275			78,086			122,481			146,233
Income taxes		15,402			16,481			27,519			31,814
Net Income		51,873			61,605			94,962			114,419
Preferred dividends		(2,012	)		(2,012	)		(4,025	)		(4,025	)
Net Income Available to Common Stockholders	$	49,861		$	59,593		$	90,937		$	110,394
Earnings per common share-diluted	$	1.17		$	1.41		$	2.14		$	2.61
Weighted average shares outstanding-diluted		42,565,391			42,359,873			42,562,639			42,357,133


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	6/30/2022			3/31/2022			12/31/2021			9/30/2021			6/30/2021
Interest Income
Interest and fees on loans	$	108,718		$	102,369		$	107,721		$	112,062		$	111,915
Interest on securities:
Taxable		38,098			32,620			30,637			32,384			31,546
Nontaxable		5,508			6,202			5,595			4,609			4,561
Interest on federal funds sold		—			—			—			—			—
Interest on deposits with other banks and short-term investments		563			71			86			132			60
Total Interest Income		152,887			141,262			144,039			149,187			148,082
Interest Expense
Interest on deposits		6,530			2,977			3,168			3,444			3,790
Interest on short-term borrowings		88			46			123			98			98
Interest on other borrowings		3,808			3,560			3,554			3,102			2,976
Total Interest Expense		10,426			6,583			6,845			6,644			6,864
Net Interest Income		142,461			134,679			137,194			142,543			141,218
Provision (benefit) for credit losses		3,246			3,245			(5,313	)		(4,534	)		(7,080	)
Net Interest Income After Provision (Benefit) for Credit Losses		139,215			131,434			142,507			147,077			148,298
Noninterest Income
Service charges and fees		18,066			15,251			15,349			15,551			15,132
Loan servicing income		834			286			781			784			873
Trust fees		5,679			6,079			6,380			6,221			6,039
Brokerage and insurance commissions		839			869			962			866			865
Securities gains/(losses), net		(2,089	)		2,872			1,563			1,535			2,842
Unrealized gain/ (loss) on equity securities, net		(121	)		(283	)		(27	)		112			83
Net gains on sale of loans held for sale		2,901			3,411			4,151			5,281			4,753
Valuation adjustment on servicing rights		—			1,658			502			195			(526	)
Income on bank owned life insurance		523			524			1,056			940			937
Other noninterest income		7,907			3,902			2,013			1,239			2,166
Total Noninterest Income		34,539			34,569			32,730			32,724			33,164
Noninterest Expense
Salaries and employee benefits		64,032			66,174			63,031			60,689			57,332
Occupancy		7,094			7,362			7,282			7,366			7,399
Furniture and equipment		3,033			3,519			3,364			3,365			3,501
Professional fees		15,987			15,156			17,631			17,242			16,237
Advertising		1,283			1,555			2,218			1,921			1,649
Core deposit and customer relationship intangibles amortization		2,083			2,054			2,169			2,295			2,415
Other real estate and loan collection expenses, net		78			195			363			78			414
(Gain)/loss on sales/valuations of assets, net		(3,230	)		46			214			(3	)		183
Acquisition, integration and restructuring costs		2,412			576			1,989			204			210
Partnership investment in tax credit projects		737			77			2,549			2,374			1,345
Other noninterest expenses		12,970			14,083			14,576			15,096			12,691
Total Noninterest Expense		106,479			110,797			115,386			110,627			103,376
Income Before Income Taxes		67,275			55,206			59,851			69,174			78,086
Income taxes		15,402			12,117			10,271			13,250			16,481
Net Income		51,873			43,089			49,580			55,924			61,605
Preferred dividends		(2,012	)		(2,013	)		(2,012	)		(2,013	)		(2,012	)
Net Income Available to Common Stockholders	$	49,861		$	41,076		$	47,568		$	53,911		$	59,593
Earnings per common share-diluted	$	1.17		$	0.97		$	1.12		$	1.27		$	1.41
Weighted average shares outstanding-diluted		42,565,391			42,540,953			42,479,442			42,415,993			42,359,873


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	6/30/2022			3/31/2022			12/31/2021			9/30/2021			6/30/2021
Assets
Cash and due from banks	$	221,077		$	198,559		$	163,895		$	192,247		$	208,702
Interest bearing deposits with other banks and short-term investments		163,717			406,343			271,704			135,158			240,426
Cash and cash equivalents		384,794			604,902			435,599			327,405			449,128
Time deposits in other financial institutions		1,855			2,894			2,894			3,138			3,138
Securities:
Carried at fair value		7,106,218			7,025,243			7,530,374			7,449,936			6,543,978
Held to maturity, at cost, less allowance for credit losses		81,939			81,785			84,709			85,354			85,439
Other investments, at cost		85,899			82,751			82,567			83,332			76,809
Loans held for sale		18,803			22,685			21,640			37,078			33,248
Loans:
Held to maturity		10,678,218			10,177,385			9,954,572			9,854,907			10,012,014
Allowance for credit losses		(101,353	)		(100,522	)		(110,088	)		(117,533	)		(120,726	)
Loans, net		10,576,865			10,076,863			9,844,484			9,737,374			9,891,288
Premises, furniture and equipment, net		206,818			213,752			215,827			221,996			226,358
Goodwill		576,005			576,005			576,005			576,005			576,005
Core deposit and customer relationship intangibles, net		28,851			30,934			32,988			35,157			37,452
Servicing rights, net		8,288			8,102			6,890			6,351			6,201
Cash surrender value on life insurance		192,474			192,267			191,722			190,576			189,619
Other real estate, net		4,528			1,422			1,927			4,744			6,314
Other assets		385,062			311,274			246,923			237,779			246,029
Total Assets	$	19,658,399		$	19,230,879		$	19,274,549		$	18,996,225		$	18,371,006
Liabilities and Equity
Liabilities
Deposits:
Demand	$	6,087,304		$	6,376,249		$	6,495,326		$	6,537,722		$	6,299,289
Savings		10,059,678			9,236,427			8,897,909			8,416,204			8,189,223
Time		1,078,568			1,054,008			1,024,020			1,068,317			1,126,606
Total deposits		17,225,550			16,666,684			16,417,255			16,022,243			15,615,118
Short-term borrowings		97,749			107,372			131,597			265,620			152,563
Other borrowings		372,538			372,290			372,072			371,765			271,244
Accrued expenses and other liabilities		188,494			152,676			171,447			164,345			172,295
Total Liabilities		17,884,331			17,299,022			17,092,371			16,823,973			16,211,220
Stockholders' Equity
Preferred equity		110,705			110,705			110,705			110,705			110,705
Common stock		42,439			42,370			42,275			42,250			42,245
Capital surplus		1,076,766			1,073,048			1,071,956			1,068,913			1,066,765
Retained earnings		1,031,076			992,655			962,994			926,834			883,484
Accumulated other comprehensive income (loss)		(486,918	)		(286,921	)		(5,752	)		23,550			56,587
Total Equity		1,774,068			1,931,857			2,182,178			2,172,252			2,159,786
Total Liabilities and Equity	$	19,658,399		$	19,230,879		$	19,274,549		$	18,996,225		$	18,371,006


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	6/30/2022			3/31/2022			12/31/2021			9/30/2021			6/30/2021
Average Balances
Assets	$	19,559,091		$	19,229,872		$	19,151,691		$	18,608,775		$	18,293,756
Loans, net of unearned		10,477,368			10,043,594			9,886,027			9,920,047			10,072,071
Deposits		17,044,479			16,459,378			16,265,476			15,817,778			15,576,345
Earning assets		17,987,734			17,757,067			17,681,917			17,123,824			16,819,978
Interest bearing liabilities		11,575,319			10,453,400			10,207,255			9,881,350			9,871,302
Common equity		1,731,393			2,003,424			2,061,973			2,072,593			1,980,904
Total stockholders' equity		1,842,098			2,114,129			2,172,678			2,183,298			2,091,609
Tangible common equity (non-GAAP)⁽¹⁾		1,125,543			1,395,488			1,451,950			1,460,309			1,366,285

Key Performance Ratios
Annualized return on average assets		1.06	%		0.91	%		1.03	%		1.19	%		1.35	%
Annualized return on average common equity (GAAP)		11.55			8.32			9.15			10.32			12.07
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾		18.35			12.41			13.47			15.14			18.05
Annualized ratio of net charge-offs/(recoveries) to average loans		0.03			0.49			0.03			(0.05	)		0.12
Annualized net interest margin (GAAP)		3.18			3.08			3.08			3.30			3.37
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.22			3.12			3.12			3.34			3.41
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾		57.66			64.65			63.86			60.38			57.11

	For the Quarter Ended June 30,						For the Six Months Ended June 30,
		2022			2021			2022			2021
Average Balances
Assets	$	19,559,091		$	18,293,756		$	19,395,391		$	18,130,148
Loans, net of unearned		10,477,368			10,072,071			10,261,679			10,012,443
Deposits		17,044,479			15,576,345			16,753,544			15,311,921
Earning assets		17,987,734			16,819,978			17,873,037			16,641,045
Interest bearing liabilities		11,575,319			9,871,302			11,017,459			9,894,103
Common equity		1,731,393			1,980,904			1,866,657			1,972,337
Total stockholders' equity		1,842,098			2,091,609			1,977,362			2,083,042
Tangible common stockholders' equity		1,125,543			1,366,285			1,259,769			1,356,333

Key Performance Ratios
Annualized return on average assets		1.06	%		1.35	%		0.99	%		1.27	%
Annualized return on average common equity (GAAP)		11.55			12.07			9.82			11.29
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾		18.35			18.05			15.08			16.99
Annualized ratio of net charge-offs/(recoveries) to average loans		0.03			0.12			0.25			0.09
Annualized net interest margin (GAAP)		3.18			3.37			3.13			3.40
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.22			3.41			3.17			3.45
Efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾		57.66			57.11			61.02			56.86

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


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	6/30/2022			3/31/2022			12/31/2021			9/30/2021			6/30/2021
Common Share Data
Book value per common share	$	39.19		$	42.98		$	49.00		$	48.79		$	48.50
Tangible book value per common share (non-GAAP)⁽¹⁾	$	24.94		$	28.66		$	34.59		$	34.33		$	33.98
Common shares outstanding, net of treasury stock		42,439,439			42,369,908			42,275,264			42,250,092			42,245,452
Tangible common equity ratio (non-GAAP)⁽¹⁾		5.56	%		6.52	%		7.84	%		7.89	%		8.08	%

Other Selected Trend Information
Effective tax rate		22.89	%		21.95	%		17.16	%		19.15	%		21.11	%
Full time equivalent employees		2,087			2,208			2,249			2,163			2,091

Loans Held to Maturity
Commercial and industrial	$	3,059,519		$	2,814,513		$	2,645,085		$	2,538,369		$	2,518,908
Paycheck Protection Program ("PPP")		23,031			74,065			199,883			409,247			829,175
Owner occupied commercial real estate		2,282,833			2,266,076			2,240,334			2,135,227			1,940,134
Commercial and business lending		5,365,383			5,154,654			5,085,302			5,082,843			5,288,217
Non-owner occupied commercial real estate		2,321,718			2,161,761			2,010,591			2,020,487			1,987,369
Real estate construction		845,045			842,483			856,119			814,001			854,295
Commercial real estate lending		3,166,763			3,004,244			2,866,710			2,834,488			2,841,664
Total commercial lending		8,532,146			8,158,898			7,952,012			7,917,331			8,129,881
Agricultural and agricultural real estate		836,703			766,443			753,753			684,670			679,608
Residential mortgage		845,270			825,242			829,283			840,356			800,884
Consumer		464,099			426,802			419,524			412,550			401,641
Total loans held to maturity	$	10,678,218		$	10,177,385		$	9,954,572		$	9,854,907		$	10,012,014

Total unfunded loan commitments	$	4,458,874		$	4,130,316		$	3,830,219		$	3,583,417		$	3,433,062

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


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2022			3/31/2022			12/31/2021			9/30/2021			6/30/2021
Allowance for Credit Losses-Loans
Balance, beginning of period	$	100,522		$	110,088		$	117,533		$	120,726		$	130,172
Provision (benefit) for credit losses		1,545			2,628			(6,808	)		(4,448	)		(6,466	)
Charge-offs		(1,473	)		(13,217	)		(1,953	)		(1,167	)		(3,497	)
Recoveries		759			1,023			1,316			2,422			517
Balance, end of period	$	101,353		$	100,522		$	110,088		$	117,533		$	120,726

Allowance for Unfunded Commitments
Balance, beginning of period	$	16,079		$	15,462		$	13,967		$	14,002		$	14,619
Provision (benefit) for credit losses		1,701			617			1,495			(35	)		(617	)
Balance, end of period	$	17,780		$	16,079		$	15,462		$	13,967		$	14,002

Allowance for lending related credit losses	$	119,133		$	116,601		$	125,550		$	131,500		$	134,728

Provision for Credit Losses
Provision (benefit) for credit losses-loans	$	1,545		$	2,628		$	(6,808	)	$	(4,448	)	$	(6,466	)
Provision (benefit) for credit losses-unfunded commitments		1,701			617			1,495			(35	)		(617	)
Provision (benefit) for credit losses-held to maturity securities		—			—			—			(51	)		3
Total provision (benefit) for credit losses	$	3,246		$	3,245		$	(5,313	)	$	(4,534	)	$	(7,080	)

Asset Quality
Nonaccrual loans	$	62,909		$	64,174		$	69,369		$	82,375		$	85,268
Loans past due ninety days or more		95			246			550			861			97
Other real estate owned		4,528			1,422			1,927			4,744			6,314
Other repossessed assets		—			34			43			166			50
Total nonperforming assets	$	67,532		$	65,876		$	71,889		$	88,146		$	91,729

Performing troubled debt restructured loans	$	1,350		$	882		$	817		$	1,817		$	2,122

Nonperforming Assets Activity
Balance, beginning of period	$	65,876		$	71,889		$	88,146		$	91,729		$	98,364
Net loan (charge offs)/recoveries		(714	)		(12,194	)		(637	)		1,255			(2,980	)
New nonperforming loans		8,590			15,832			5,886			6,908			7,989
Reduction of nonperforming loans⁽¹⁾		(5,244	)		(8,448	)		(18,429	)		(8,581	)		(10,948	)
Net OREO/repossessed assets sales proceeds and losses		(976	)		(1,203	)		(3,077	)		(3,165	)		(696	)
Balance, end of period	$	67,532		$	65,876		$	71,889		$	88,146		$	91,729

Asset Quality Ratios
Ratio of nonperforming loans to total loans		0.59	%		0.63	%		0.70	%		0.84	%		0.85	%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans		0.60			0.64			0.71			0.86			0.87
Ratio of nonperforming assets to total assets		0.34			0.34			0.37			0.46			0.50
Annualized ratio of net loan charge-offs/(recoveries) to average loans		0.03			0.49			0.03			(0.05	)		0.12
Allowance for loan credit losses as a percent of loans		0.95			0.99			1.11			1.19			1.21
Allowance for lending related credit losses as a percent of loans		1.12			1.15			1.26			1.33			1.35
Allowance for loan credit losses as a percent of nonperforming loans		160.87			156.04			157.45			141.20			141.42
Loans delinquent 30-89 days as a percent of total loans		0.06			0.10			0.07			0.12			0.17

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


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	June 30, 2022							March 31, 2022							June 30, 2021
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	6,419,615		$	38,098	2.38	%	$	6,501,664		$	32,620	2.03	%	$	5,862,683		$	31,546	2.16	%
Nontaxable⁽¹⁾		915,880			6,972	3.05			1,106,951			7,851	2.88			740,601			5,773	3.13
Total securities		7,335,495			45,070	2.46			7,608,615			40,471	2.16			6,603,284			37,319	2.27
Interest on deposits with other banks and short-term investments		277,773			563	0.81			216,451			71	0.13			271,891			60	0.09
Federal funds sold		—			—	—			11			—	—			—			—	—
Loans:⁽²⁾
Commercial and industrial⁽¹⁾		3,002,822			30,441	4.07			2,744,336			27,053	4.00			2,469,742			28,562	4.64
PPP loans		41,370			1,801	17.46			132,050			4,323	13.28			1,047,559			11,186	4.28
Owner occupied commercial real estate		2,294,524			22,863	4.00			2,243,522			21,278	3.85			1,858,891			20,097	4.34
Non-owner occupied commercial real estate		2,179,048			22,871	4.21			2,060,548			21,163	4.17			1,980,374			21,734	4.40
Real estate construction		878,555			10,015	4.57			847,250			9,276	4.44			815,738			9,212	4.53
Agricultural and agricultural real estate		782,610			7,933	4.07			745,348			7,006	3.81			672,560			7,267	4.33
Residential mortgage		849,174			8,358	3.95			843,881			8,085	3.89			827,291			9,255	4.49
Consumer		449,265			4,949	4.42			426,659			4,655	4.42			399,916			5,152	5.17
Less: allowance for credit losses-loans		(102,902	)		—	—			(111,604	)		—	—			(127,268	)		—	—
Net loans		10,374,466			109,231	4.22			9,931,990			102,839	4.20			9,944,803			112,465	4.54
Total earning assets		17,987,734			154,864	3.45	%		17,757,067			143,381	3.27	%		16,819,978			149,844	3.57	%
Nonearning Assets		1,571,357							1,472,805							1,473,778
Total Assets	$	19,559,091						$	19,229,872						$	18,293,756
Interest Bearing Liabilities
Savings	$	9,995,497		$	5,372	0.22	%	$	8,889,950		$	2,394	0.11	%	$	8,234,151		$	2,233	0.11	%
Time deposits		1,088,765			1,158	0.43			1,071,675			583	0.22			1,171,266			1,557	0.53
Short-term borrowings		118,646			88	0.30			119,588			46	0.16			169,822			98	0.23
Other borrowings		372,411			3,808	4.10			372,187			3,560	3.88			296,063			2,976	4.03
Total interest bearing liabilities		11,575,319			10,426	0.36	%		10,453,400			6,583	0.26	%		9,871,302			6,864	0.28	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		5,960,217							6,497,753							6,170,928
Accrued interest and other liabilities		181,457							164,590							159,917
Total noninterest bearing liabilities		6,141,674							6,662,343							6,330,845
Equity		1,842,098							2,114,129							2,091,609
Total Liabilities and Equity	$	19,559,091						$	19,229,872						$	18,293,756
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾				$	144,438						$	136,798						$	142,980
Net interest spread⁽¹⁾						3.09	%						3.01	%						3.29	%
Net interest income, fully tax-equivalent (non-GAAP^)(1)(3) to total earning assets						3.22	%						3.12	%						3.41	%
Interest bearing liabilities to earning assets		64.35	%						58.87	%						58.69	%

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


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Six Months Ended
	June 30, 2022							June 30, 2021
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	6,460,412		$	70,718	2.21	%	$	5,778,333		$	61,989	2.16	%
Nontaxable⁽¹⁾		1,010,888			14,823	2.96			735,636			11,473	3.15
Total securities		7,471,300			85,541	2.31	%		6,513,969			73,462	2.27	%
Interest bearing deposits with other banks and other short-term investments		247,281			634	0.52			238,376			126	0.11
Federal funds sold		6			—	—			6,971			1	0.03
Loans:⁽²⁾
Commercial and industrial⁽¹⁾		2,874,694			57,494	4.03	%		2,485,210			56,784	4.61	%
PPP loans		86,460			6,124	14.28			1,020,190			21,335	4.22
Owner occupied commercial real estate		2,268,963			44,141	3.92			1,818,932			39,662	4.40
Non-owner occupied commercial real estate		2,119,925			44,034	4.19			1,958,938			43,855	4.51
Real estate construction		862,989			19,291	4.51			811,053			18,910	4.70
Agricultural and agricultural real estate		764,082			14,939	3.94			676,895			15,318	4.56
Residential mortgage		846,542			16,443	3.92			838,545			19,085	4.59
Consumer		438,024			9,604	4.42			402,680			10,519	5.27
Less: allowance for credit losses-loans		(107,229	)		—	—			(130,714	)		—	—
Net loans		10,154,450			212,070	4.21			9,881,729			225,468	4.60
Total earning assets		17,873,037			298,245	3.37	%		16,641,045			299,057	3.62	%
Nonearning Assets		1,522,354							1,489,103
Total Assets	$	19,395,391						$	18,130,148
Interest Bearing Liabilities
Savings	$	9,445,778		$	7,766	0.17	%	$	8,133,787		$	4,663	0.12	%
Time deposits		1,080,267			1,741	0.32			1,202,301			3,522	0.59
Short-term borrowings		119,115			134	0.23			204,735			250	0.25
Other borrowings		372,299			7,368	3.99			353,280			6,276	3.58
Total interest bearing liabilities		11,017,459			17,009	0.31	%		9,894,103			14,711	0.30	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		6,227,499							5,975,833
Accrued interest and other liabilities		173,071							177,170
Total noninterest bearing liabilities		6,400,570							6,153,003
Stockholders' Equity		1,977,362							2,083,042
Total Liabilities and Stockholders' Equity	$	19,395,391

Heartland Financial USA, Inc. ("HTLF") Reports Quarterly and Year to Date Results as of June 30, 2022