Highlights
  • Record quarterly net income available to common stockholders of $20.9 million, a 40% increase from second quarter of prior year
  • Diluted earnings per common share of $0.84, a 17% increase from second quarter of prior year
  • Net interest margin of 3.95%, fully taxable equivalent (non-GAAP) (1) of 4.12%
  • Return on average common equity of 12.58%
  • Return on average tangible common equity (non-GAAP) (2) of 16.32%
  • Completed systems conversion of Centennial Bank in Denver, Colorado
       
  Quarter Ended June 30,   Six Months Ended June 30,
  2016   2015   2016   2015
Net income (in millions) $ 21.0     $ 15.2     $ 41.0     $ 30.9  
Net income available to common stockholders (in millions) 20.9     15.0     40.8     30.5  
Diluted earnings per common share 0.84     0.72     1.66     1.47  
               
Return on average assets 1.03 %   0.91 %   1.01 %   0.94 %
Return on average common equity 12.58     12.26     12.63     12.90  
Return on average tangible common equity (non-GAAP) (2) 16.32     14.14     16.38     14.88  
Net interest margin 3.95     3.81     3.98     3.78  
Net interest margin, fully taxable equivalent (non-GAAP) (1) 4.12     3.97     4.15     3.93  

"Heartland continued to set new records with a strong financial performance for the second quarter and first half of 2016. Net income of $20.9 million represents a 40% increase over earnings for the second quarter of 2015 while year-to-date 2016 net income of $40.8 million represents a 34% increase over the previous year. " Lynn B. Fuller, chairman and chief executive officer, Heartland Financial USA, Inc.

(1) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table included in this earnings release.(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table included in this earnings release.

DUBUQUE, Iowa, July 25, 2016 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ:HTLF) today reported net income available to common stockholders of $20.9 million, or $0.84 per diluted common share, for the quarter ended June 30, 2016, compared to $15.0 million, or $0.72 per diluted common share, for the second quarter of 2015. Return on average common equity was 12.58% and return on average assets was 1.03% for the second quarter of 2016, compared to 12.26% and 0.91%, respectively, for the same quarter in 2015.

Net income available to common stockholders for the first six months of 2016 was $40.8 million, or $1.66 per diluted common share, compared to $30.5 million, or $1.47 per diluted common share, for the first six months of 2015. Return on average common equity was 12.63% and return on average assets was 1.01% for the first six months of 2016, compared to 12.90% and 0.94%, respectively, for the same period in 2015.

Commenting on Heartland's second quarter 2016 results, Lynn B. Fuller, Heartland's chairman and chief executive officer said, "Heartland continued to set new records with a strong financial performance for the second quarter and first half of 2016. Net income of $20.9 million represents a 40% increase over earnings for the second quarter of 2015 while year-to-date 2016 net income of $40.8 million represents a 34% increase over the previous year."

On February 5, 2016, Heartland completed the acquisition of CIC Bancshares, Inc., parent company of Centennial Bank, headquartered in Denver, Colorado, in a transaction valued at approximately $82.3 million. Of this amount, $15.7 million was paid in cash with the remainder of the consideration provided by the issuance of Heartland common stock, a new series of convertible preferred stock and the assumption of convertible notes and subordinated debt. Simultaneous with closing of the transaction, Centennial Bank merged into Heartland's Summit Bank & Trust subsidiary, with the resulting institution operating under the name, Centennial Bank and Trust. As of the closing date, Centennial Bank had, at fair value, total assets of $769.7 million, total loans of $581.5 million and total deposits of $648.1 million. The systems conversion for this transaction was completed in June 2016.

Fully Taxable Equivalent Net Interest Margin Remains Above 4.00% and Interest Income Increases

Net interest margin, expressed as a percentage of average earning assets, was 3.95% (4.12% on a fully taxable equivalent basis) during the second quarter of 2016, compared to 4.02% (4.19% on a fully taxable equivalent basis) during the first quarter of 2016 and 3.81% (3.97% on a fully taxable equivalent basis) during the second quarter of 2015.

Fuller said, "We are very pleased to see net interest margin of 4.12% on a fully taxable equivalent basis for the second quarter.  Heartland's enviable margin is the result of diligent price discipline. Net interest income in dollars has increased steadily for each of the last 15 quarters."

Interest income for the second quarter of 2016 was $81.3 million, an increase of $15.9 million or 24%, compared  to the $65.4 million recorded in the second quarter of 2015. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $3.1 million for the second quarter of 2016 and $2.4 million for the second quarter of 2015. With these adjustments, interest income on a tax-equivalent basis was $84.5 million for the second quarter of 2016, an increase of $16.6 million or 25%, compared to $67.8 million for the second quarter of 2015. The increase in interest income in the second quarter of 2016, as compared to the second quarter of 2015, was primarily due to an increase in average earning assets, which totaled $7.45 billion during the second quarter of 2016 compared to $6.07 billion during the second quarter of 2015, a $1.38 billion or 23% increase.  A majority of this growth was attributable to the three acquisitions completed during the last half of 2015, in addition to the acquisition of CIC Bancshares, Inc. completed in February 2016.

Interest expense for the second quarter of 2016 was $8.2 million, an increase of $416,000 or 5% from $7.8 million in the second quarter of 2015. Average interest bearing liabilities increased $912.3 million or 20% for the quarter ended June 30, 2016, as compared to the same quarter in 2015, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 8 basis points from 0.70% in the second quarter of 2015 to 0.62% in the second quarter of 2016. The average interest rate paid on savings deposits was 0.22% during the second quarter of 2016 compared to 0.23% during the second quarter of 2015, and the average interest rate paid on time deposits was 0.79% during the second quarter of 2016 compared to 0.97% during the second quarter of 2015.

Net interest income increased $15.5 million or 27% to $73.1 million in the second quarter of 2016 from the $57.6 million recorded in the second quarter of 2015. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $76.3 million during the second quarter of 2016, an increase of $16.2 million or 27% from the $60.1 million recorded during the second quarter of 2015.

Noninterest Income and Noninterest Expenses Increase

Noninterest income totaled $31.0 million during the second quarter of 2016 compared to $30.7 million during the second quarter of 2015, an increase of $365,000 or 1%. Service charges and fees totaled $8.0 million during the second quarter of 2016 compared to $5.9 million during the second quarter of 2015, an increase of $2.1 million or 36%. This increase was primarily attributable to a larger demand deposit customer base, a portion of which is attributable to the acquisitions completed during the last half of 2015 and first quarter of 2016. Net securities gains totaled $4.6 million during the second quarter of 2016 compared to $3.1 million during the second quarter of 2015, an increase of $1.5 million or 49%. Gains on sale of loans held for sale totaled $11.3 million during the second quarter of 2016 compared to $14.6 million during the second quarter of 2015, a decrease of $3.3 million or 23%.

Fuller commented, "We are seeing solid improvement from key fee-producing business lines as we expand our footprint and offer financial services to clients of our newly-acquired banks. Specifically, in the second quarter of 2016, revenues from commercial card services and debit cards increased more than 10% over the first quarter."

For the second quarter of 2016, noninterest expenses totaled $71.0 million compared to $63.5 million during the second quarter of 2015, an increase of $7.5 million or 12%. The categories with the most significant increases were the following: salaries and employee benefits, which increased $5.1 million or 14%; occupancy, which increased $1.2 million or 30%; and professional fees, which increased $2.2 million or 43%. These increases were primarily attributable to the recent acquisitions.

Heartland's effective tax rate was 32.37% for the second quarter of 2016 compared to 20.83% for the second quarter of 2015. Included in Heartland's income taxes for the second quarter of 2015 were federal historic rehabilitation tax credits totaling $2.9 million associated with Heartland's ownership interest in a qualifying real estate project. Federal low-income housing tax credits included in the determination of Heartland's income taxes totaled $304,000 during the second quarter of 2016 compared to $145,000 during the second quarter of 2015. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 18.86% during the second quarter of 2016 compared to 23.35% during the second quarter of 2015.

Loans and Deposits Increase Since Year-End Due to First Quarter Acquisition

Total assets were $8.20 billion at June 30, 2016, an increase of $509.6 million or 7% since year-end 2015. Included in this growth, at fair value, were $769.7 million of assets acquired in the CIC Bancshares, Inc. transaction. Securities represented 23% of total assets at June 30, 2016, compared to 24% at December 31, 2015.

Total loans and leases held to maturity were $5.48 billion at June 30, 2016, compared to $5.00 billion at year-end 2015, an increase of $480.8 million or 10%. This increase includes $581.5 million of total loans and leases held to maturity, at fair value, acquired in the CIC Bancshares, Inc. transaction. Exclusive of this transaction, total loans and leases held to maturity decreased $20.7 million during the second quarter of 2016 and $80.0 million during the first quarter of 2016.

Total deposits were $6.84 billion as of June 30, 2016, compared to $6.41 billion at year-end 2015, an increase of $431.7 million or 7%. This increase included $648.1 million of deposits, at fair value, acquired in the CIC Bancshares, Inc. acquisition. Exclusive of this transaction, total deposits decreased $86.8 million during the second quarter of 2016 and $129.6 million during the first quarter of 2016, with both decreases primarily attributable to reduced time deposits. Demand deposits totaled $2.15 billion at June 30, 2016, an increase of $235.8 million or 12% since year-end 2015, with $164.3 million of the increase attributable to the CIC Bancshares, Inc. transaction. Exclusive of this transaction, demand deposits increased $70.4 million during the second quarter of 2016 and $1.1 million during the first quarter of 2016.

Nonperforming Assets Increase

Nonperforming assets were $68.6 million or 0.84% of total assets at June 30, 2016, compared to $51.7 million or 0.67% of total assets at December 31, 2015. Exclusive of $3.5 million of nonperforming assets, at fair value, acquired in the CIC Bancshares, Inc. transaction, nonperforming assets increased $13.4 million or 26% since year-end 2015. Nonperforming loans were $57.1 million or 1.04% of total loans and leases at June 30, 2016, compared to $39.7 million or 0.79% of total loans and leases at December 31, 2015.

The allowance for loan and lease losses at June 30, 2016, was 0.94% of loans and leases and 90.72% of nonperforming loans compared to 0.97% of loans and leases and 122.77% of nonperforming loans at December 31, 2015. The provision for loan losses was $2.1 million for the second quarter of 2016 compared to $5.7 million for the second quarter of 2015.

Fuller commented, "Overall credit quality remains sound, with nonperforming assets moving up, impacted by one large, well-collateralized legacy credit that moved to nonperforming status during the second quarter, as well as continued recognition of a small number of credits from the recently acquired bank portfolios."

Conference Call DetailsHeartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. A replay will be available until July 24, 2017, by logging on to www.htlf.com .

About Heartland Financial USA, Inc.Heartland Financial USA, Inc. is a diversified financial services company with assets exceeding $8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 108 banking locations serving 85 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com .

Safe Harbor StatementThis release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war, (iii) changes in state and federal laws, regulations and governmental policies concerning the company's general business; (iv) changes in interest rates and prepayment rates of the company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the potential impact of acquisitions, (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.

-FINANCIAL TABLES FOLLOW-
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended June 30,   For the Six Months Ended June 30,
  2016   2015   2016   2015
Interest Income              
Interest and fees on loans and leases $ 69,809     $ 55,824     $ 138,234     $ 108,873  
Interest on securities:              
Taxable 7,952     6,739     16,687     13,871  
Nontaxable 3,566     2,874     7,076     5,790  
Interest on federal funds sold 1     1     11     2  
Interest on deposits in other financial institutions 3     3     7     7  
Total Interest Income 81,331     65,441     162,015     128,543  
Interest Expense              
Interest on deposits 4,021     3,819     8,194     7,991  
Interest on short-term borrowings 519     212     848     410  
Interest on other borrowings 3,673     3,766     7,148     8,568  
Total Interest Expense 8,213     7,797     16,190     16,969  
Net Interest Income 73,118     57,644     145,825     111,574  
Provision for loan and lease losses 2,118     5,674     4,185     7,345  
Net Interest Income After Provision for Loan and Lease Losses 71,000     51,970     141,640     104,229  
Noninterest Income              
Service charges and fees 8,022     5,900     15,184     11,304  
Loan servicing income 1,292     1,163     2,560     2,204  
Trust fees 3,625     3,913     7,438     7,544  
Brokerage and insurance commissions 886     916     1,908     2,003  
Securities gains, net 4,622     3,110     8,148     7,463  
Gains on sale of loans held for sale 11,270     14,599     22,335     28,341  
Valuation adjustment on commercial servicing rights (46 )       (46 )    
Income on bank owned life insurance 591     459     1,113     983  
Other noninterest income 764     601     1,964     1,482  
Total Noninterest Income 31,026     30,661     60,604     61,324  
Noninterest Expense              
Salaries and employee benefits 41,985     36,851     83,699     73,489  
Occupancy 5,220     4,028     10,223     8,287  
Furniture and equipment 2,442     2,176     4,555     4,282  
Professional fees 7,486     5,249     14,496     11,293  
FDIC insurance assessments 1,120     899     2,288     1,855  
Advertising 1,551     1,333     2,835     2,514  
Intangible assets amortization 1,297     715     3,192     1,346  
Other real estate and loan collection expenses 659     753     1,231     1,218  
(Gain)/loss on sales/valuations of assets, net (43 )   1,509     270     1,862  
Other noninterest expenses 9,303     9,969     18,540     16,950  
Total Noninterest Expense 71,020     63,482     141,329     123,096  
Income Before Income Taxes 31,006     19,149     60,915     42,457  
Income taxes 10,036     3,989     19,936     11,588  
Net Income 20,970     15,160     40,979     30,869  
Preferred dividends (52 )   (204 )   (220 )   (408 )
Interest expense on convertible preferred debt 31         31      
Net Income Available to Common Stockholders $ 20,949     $ 14,956     $ 40,790     $ 30,461  
Earnings per common share-diluted $ 0.84     $ 0.72     $ 1.66     $ 1.47  
Weighted average shares outstanding-diluted 24,974,995     20,877,236     24,541,356     20,681,800  

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
Interest Income                  
Interest and fees on loans and leases $ 69,809     $ 68,425     $ 59,905     $ 58,328     $ 55,824  
Interest on securities:                  
Taxable 7,952     8,735     6,917     5,858     6,739  
Nontaxable 3,566     3,510     3,311     3,077     2,874  
Interest on federal funds sold 1     10     21     1     1  
Interest on deposits in other financial institutions 3     4     3     4     3  
Total Interest Income 81,331     80,684     70,157     67,268     65,441  
Interest Expense                  
Interest on deposits 4,021     4,173     3,772     3,767     3,819  
Interest on short-term borrowings 519     329     200     228     212  
Interest on other borrowings 3,673     3,475     3,485     3,549     3,766  
Total Interest Expense 8,213     7,977     7,457     7,544     7,797  
Net Interest Income 73,118     72,707     62,700     59,724     57,644  
Provision for loan and lease losses 2,118     2,067     2,171     3,181     5,674  
Net Interest Income After Provision for Loan and Lease Losses 71,000     70,640     60,529     56,543     51,970  
Noninterest Income                  
Service charges and fees 8,022     7,162     6,654     6,350     5,900  
Loan servicing income 1,292     1,268     1,704     1,368     1,163  
Trust fees 3,625     3,813     3,230     3,507     3,913  
Brokerage and insurance commissions 886     1,022     917     869     916  
Securities gains, net 4,622     3,526     3,913     1,767     3,110  
Impairment loss on securities         (769 )        
Gains on sale of loans held for sale 11,270     11,065     7,085     9,823     14,599  
Valuation adjustment on commercial servicing rights (46 )                
Income on bank owned life insurance 591     522     644     372     459  
Other noninterest income 764     1,200     1,003     924     601  
Total Noninterest Income 31,026     29,578     24,381     24,980     30,661  
Noninterest Expense                  
Salaries and employee benefits 41,985     41,714     33,583     37,033     36,851  
Occupancy 5,220     5,003     4,334     4,307     4,028  
Furniture and equipment 2,442     2,113     2,344     2,121     2,176  
Professional fees 7,486     7,010     6,503     5,251     5,249  
FDIC insurance assessments 1,120     1,168     886     1,018     899  
Advertising 1,551     1,284     1,624     1,327     1,333  
Intangible assets amortization 1,297     1,895     898     734     715  
Other real estate and loan collection expenses 659     572     723     496     753  
(Gain)/loss on sales/valuations of assets, net (43 )   313     4,238     721     1,509  
Other noninterest expenses 9,303     9,237     10,821     8,988     9,969  
Total Noninterest Expense 71,020     70,309     65,954     61,996     63,482  
Income Before Income Taxes 31,006     29,909     18,956     19,527     19,149  
Income taxes 10,036     9,900     4,365     4,945     3,989  
Net Income 20,970     20,009     14,591     14,582     15,160  
Preferred dividends (52 )   (168 )   (204 )   (205 )   (204 )
Interest expense on convertible preferred debt 31                  
Net Income Available to Common Stockholders $ 20,949     $ 19,841     $ 14,387     $ 14,377     $ 14,956  
Earnings per common share-diluted $ 0.84     $ 0.82     $ 0.67     $ 0.69     $ 0.72  
Weighted average shares outstanding-diluted 24,974,995     24,117,384     21,491,699     20,893,312     20,877,236  

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As Of
  6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
Assets                  
Cash and due from banks $ 222,718     $ 124,060     $ 237,841     $ 76,954     $ 111,909  
Federal funds sold and other short-term investments 7,232     9,168     20,958     14,151     7,813  
Cash and cash equivalents 229,950     133,228     258,799     91,105     119,722  
Time deposits in other financial institutions 2,105     2,355     2,355     2,355     2,355  
Securities:                  
Available for sale, at fair value 1,566,592     1,690,516     1,578,434     1,261,687     1,315,699  
Held to maturity, at cost 270,423     271,300     279,117     282,200     283,258  
Other investments, at cost 22,680     22,325     21,443     19,292     20,455  
Loans held for sale 82,538     76,565     74,783     102,569     105,898  
Loans and leases:                  
Held to maturity 5,482,258     5,503,005     5,001,486     4,642,523     4,449,823  
Allowance for loan and lease losses (51,756 )   (49,738 )   (48,685 )   (47,105 )   (45,614 )
Loans and leases, net 5,430,502     5,453,267     4,952,801     4,595,418     4,404,209  
Premises, furniture and equipment, net 168,701     164,788     150,148     147,486     143,423  
Other real estate, net 11,003     11,338     11,524     17,041     16,983  
Goodwill 127,699     127,699     97,852     56,828     54,162  
Core deposit intangibles, net 25,213     26,510     22,019     14,937     13,642  
Servicing rights, net 35,654     34,910     34,926     33,758     31,584  
Cash surrender value on life insurance 111,425     110,834     110,297     99,564     96,693  
Other assets 119,916     128,144     100,256     81,644     108,924  
Total Assets $ 8,204,401     $ 8,253,779     $ 7,694,754     $ 6,805,884     $ 6,717,007  
Liabilities and Equity                  
Liabilities                  
Deposits:                  
 Demand $ 2,149,911     $ 2,079,521     $ 1,914,141     $ 1,632,005     $ 1,536,355  
 Savings 3,691,791     3,702,431     3,367,479     2,936,611     2,816,666  
 Time 995,870     1,142,368     1,124,203     938,621     964,248  
Total deposits 6,837,572     6,924,320     6,405,823     5,507,237     5,317,269  
Short-term borrowings 303,707     325,741     293,898     335,845     477,918  
Other borrowings 296,895     265,760     263,214     302,086     296,594  
Accrued expenses and other liabilities 78,264     68,415     68,646     69,707     46,020  
Total Liabilities 7,516,438     7,584,236     7,031,581     6,214,875     6,137,801  
Stockholders' Equity                  
Preferred equity 3,777     3,777     81,698     81,698     81,698  
Common stock 24,544     24,520     22,436     20,640     20,616  
Capital surplus 274,682     273,310     216,436     149,613     148,789  
Retained earnings 384,479     366,014     348,630     337,421     325,106  
Accumulated other comprehensive income (loss) 513     1,924     (6,027 )   1,731     3,059  
Treasury stock at cost (32 )   (2 )       (94 )   (62 )
Total Equity 687,963     669,543     663,173     591,009     579,206  
Total Liabilities and Equity $ 8,204,401     $ 8,253,779     $ 7,694,754     $ 6,805,884     $ 6,717,007  

HEARTLAND FINANCIAL USA, INC
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended June 30,   For the Six Months Ended June 30,
  2016   2015   2016   2015
Average Balances              
Assets $ 8,211,326     $ 6,625,797     $ 8,118,198     $ 6,540,509  
Loans and leases, net of unearned 5,582,878     4,447,124     5,470,490     4,357,855  
Deposits 6,806,259     5,302,235     6,742,635     5,232,398  
Earning assets 7,446,849     6,069,844     7,361,775     5,964,112  
Interest bearing liabilities 5,363,477     4,451,200     5,318,320     4,424,840  
Common stockholders' equity 669,930     489,394     649,612     476,295  
Total stockholders' equity 673,707     571,092     684,739     557,933  
Tangible common stockholders' equity (1) 516,347     424,245     500,726     412,834  
               
Key Performance Ratios              
Annualized return on average assets 1.03 %   0.91 %   1.01 %   0.94 %
Annualized return on average common equity 12.58 %   12.26 %   12.63 %   12.90 %
Annualized return on average common tangible equity (2) 16.32 %   14.14 %   16.38 %   14.88 %
Annualized ratio of net charge-offs to average loans and leases 0.01 %   0.17 %   0.04 %   0.15 %
Annualized net interest margin, fully tax equivalent (3) 4.12 %   3.97 %   4.15 %   3.93 %
Efficiency ratio, fully taxable equivalent (4) 67.95 %   67.43 %   67.43 %   69.14 %
               
Reconciliation of Return on Average Common Tangible Equity (non-GAAP) (5)              
Net income available to common shareholders (GAAP) $ 20,949     $ 14,956     $ 40,790     $ 30,461  
               
Average common stockholders' equity (GAAP) $ 669,930     $ 489,394     $ 649,612     $ 476,295  
Less average goodwill 127,700     51,107     123,727     50,817  
Less average other intangibles, net 25,883     14,042     25,159     12,644  
Average common tangible equity (non-GAAP) $ 516,347     $ 424,245     $ 500,726     $ 412,834  
               
Annualized return on average common equity (GAAP) 12.58 %   12.26 %   12.63 %   12.90 %
Annualized return on average common tangible equity (non-GAAP) 16.32 %   14.14 %   16.38 %   14.88 %
               
Reconciliation of Annualized Net Interest Margin,  Fully Taxable Equivalent (non-GAAP) (6)              
Net Interest Income (GAAP) $ 73,118     $ 57,644     $ 145,825     $ 111,574  
Plus taxable equivalent adjustment (7) 3,146     2,408     6,187     4,801  
Net interest income - taxable equivalent (non-GAAP) $ 76,264     $ 60,052     $ 152,012     $ 116,375  
               
Average earning assets $ 7,446,849     $ 6,069,844     $ 7,361,775     $ 5,964,112  
               
Annualized net interest margin (GAAP) 3.95 %   3.81 %   3.98 %   3.78 %
Annualized net interest margin, fully taxable equivalent (non-GAAP) 4.12 %   3.97 %   4.15 %   3.93 %
 
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table above.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table above.
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure.
(5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(6) Annualized net interest margin, fully taxable equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(7) Computed on a tax equivalent basis using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
  6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
Average Balances                  
Assets $ 8,211,326     $ 8,025,070     $ 7,241,104     $ 6,726,196     $ 6,625,797  
Loans and leases, net of unearned 5,582,878     5,358,102     4,827,844     4,654,179     4,447,124  
Deposits 6,806,259     6,679,010     5,938,905     5,423,418     5,302,235  
Earning assets 7,446,849     7,276,703     6,512,565     6,161,495     6,069,844  
Interest bearing liabilities 5,363,477     5,273,164     4,781,797     4,491,089     4,451,200  
Common stockholders' equity 669,930     629,294     533,845     500,399     489,394  
Total stockholders' equity 673,707     695,771     615,543     582,097     571,092  
Tangible common stockholders' equity (1) 516,347     485,108     446,370     431,304     424,245  
                   
Key Performance Ratios                  
Annualized return on average assets 1.03 %   0.99 %   0.79 %   0.85 %   0.91 %
Annualized return on average common equity 12.58 %   12.68 %   10.69 %   11.40 %   12.26 %
Annualized return on average common tangible equity (2) 16.32 %   16.45 %   12.79 %   13.22 %   14.14 %
Annualized ratio of net charge-offs to average loans and leases 0.01 %   0.08 %   0.05 %   0.14 %   0.17 %
Annualized net interest margin, fully tax equivalent (3) 4.12 %   4.19 %   3.99 %   4.01 %   3.97 %
Efficiency ratio, fully taxable equivalent (4) 67.95 %   66.90 %   68.53 %   69.85 %   67.43 %
                   
Reconciliation of Return on Average Common Tangible Equity (non-GAAP) (5)                  
Net income available to common shareholders (GAAP) $ 20,949     $ 19,841     $ 14,387     $ 14,377     $ 14,956  
                   
Average common stockholders' equity (GAAP) $ 669,930     $ 629,294     $ 533,845     $ 500,399     $ 489,394  
Less average goodwill 127,700     119,750     70,222     55,073     51,107  
Less average other intangibles, net 25,833     24,436     17,253     14,022     14,042  
Average common tangible equity (non-GAAP) $ 516,397     $ 485,108     $ 446,370     $ 431,304     $ 424,245  
Annualized return on average common equity (GAAP) 12.58 %   12.68 %   10.69 %   11.40 %   12.26 %
Annualized return on average common tangible equity (non-GAAP) 16.32 %   16.45 %   12.79 %   13.22 %   14.14 %
                   
Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP) (6)                  
Net Interest Income (GAAP) $ 73,118     $ 72,707     $ 62,700     $ 59,724     $ 57,644  
Plus taxable equivalent adjustment (7) 3,146     3,041     2,827     2,588     2,408  
Net interest income, fully taxable equivalent (non-GAAP) $ 76,264     $ 75,748     $ 65,527     $ 62,312     $ 60,052  
                   
Average earning assets $ 7,446,849     $ 7,276,703     $ 6,512,565     $ 6,161,495     $ 6,069,844  
                   
Annualized net interest margin (GAAP) 3.95 %   4.02 %   3.82 %   3.85 %   3.81 %
Annualized net interest margin, fully taxable equivalent (non-GAAP) 4.12 %   4.19 %   3.99 %   4.01 %   3.97 %
 
(1) Calculated as common stockholders' equity less goodwill and core deposit intangibles, net.
(2) Refer to the "Reconciliation of Return on Average Common Tangible Equity (non-GAAP)" table above.
(3) Refer to the "Reconciliation of Annualized Net Interest Margin, Fully Taxable Equivalent (non-GAAP)" table above.
(4) Refer to the "Reconciliation of Non-GAAP Measure-Efficiency Ratio" table that follows for details of this non-GAAP measure.
(5) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(6) Annualized net interest margin, fully taxable equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(7) Computed on a tax equivalent basis using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended June 30,   For the Six Months Ended June 30,
Reconciliation of Non-GAAP Measure-Efficiency Ratio (1) 2016   2015   2016   2015
Net interest income $ 73,118     $ 57,644     $ 145,825     $ 111,574  
Taxable equivalent adjustment (2) 3,146     2,408     6,187     4,801  
Fully taxable equivalent net interest income 76,264     60,052     152,012     116,375  
Noninterest income 31,026     30,661     60,604     61,324  
Securities gains, net (4,622 )   (3,110 )   (8,148 )   (7,463 )
Adjusted income $ 102,668     $ 87,603     $ 204,468     $ 170,236  
               
Total noninterest expenses $ 71,020     $ 63,482     $ 141,329     $ 123,096  
Less:              
Intangible assets amortization 1,297     715     3,192     1,346  
Partnership investment in historic rehabilitation tax credits     2,190         2,190  
(Gain)/loss on sales/valuations of assets, net (43 )   1,509     270     1,862  
Adjusted noninterest expenses $ 69,766     $ 59,068     $ 137,867     $ 117,698  
               
Efficiency ratio, fully taxable equivalent 67.95 %   67.43 %   67.43 %   69.14 %
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Non-GAAP Measure-Efficiency Ratio (1) For the Quarter Ended
6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
Net interest income $ 73,118     $ 72,707     $ 62,700     $ 59,724     $ 57,644  
Taxable equivalent adjustment (2) 3,146     3,041     2,827     2,588     2,408  
Fully taxable equivalent net interest income 76,264     75,748     65,527     62,312     60,052  
Noninterest income 31,026     29,578     24,381     24,980     30,661  
Securities gains, net (4,622 )   (3,526 )   (3,913 )   (1,767 )   (3,110 )
Impairment loss on securities         769          
Adjusted income $ 102,668     $ 101,800     $ 86,764     $ 85,525     $ 87,603  
                   
Total noninterest expenses $ 71,020     $ 70,309     $ 65,954     $ 61,996     $ 63,482  
Less:                  
Intangible assets amortization 1,297     1,895     898     734     715  
Partnership investment in historic rehabilitation tax credits         1,362     805     2,190  
(Gain)/loss on sales/valuation of assets, net (43 )   313     4,238     721     1,509  
Adjusted noninterest expenses $ 69,766     $ 68,101     $ 59,456     $ 59,736     $ 59,068  
                   
Efficiency ratio, fully taxable equivalent 67.95 %   66.90 %   68.53 %   69.85 %   67.43 %
                   
(1) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax equivalent basis, which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities and historic rehabilitation tax credits. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items, as noted in the table. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(2) Computed on a tax equivalent basis using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
  As of and for the Quarter Ended
  6/30/2016   3/31/2016   12/31/2015   9/30/15   6/30/2015
Common Share Data                  
Book value per common share $ 27.88     $ 27.15     $ 25.92     $ 24.68     $ 24.13  
Tangible book value per common share (non-GAAP) (1) $ 21.65     $ 20.86     $ 20.57     $ 21.20     $ 20.84  
ASC 320 effect on book value per common share $ 0.21     $ 0.23     $ (0.18 )   $ 0.22     $ 0.21  
Common shares outstanding, net of treasury stock 24,543,376     24,519,928     22,435,693     20,637,321     20,614,325  
Tangible capital ratio (non-GAAP) (2) 6.60 %   6.32 %   6.09 %   6.50 %   6.46 %
                   
Reconciliation of Tangible Book Value Per Common Share (non-GAAP) (3)                  
Common stockholders' equity (GAAP) $ 684,186     $ 665,766     $ 581,475     $ 509,311     $ 497,508  
Less goodwill 127,699     127,699     97,852     56,828     54,162  
Less other intangible assets, net 25,213     26,510     22,019     14,937     13,642  
Tangible common stockholders' equity (non-GAAP) $ 531,274     $ 511,557     $ 461,604     $ 437,546     $ 429,704  
                   
Common shares outstanding, net of treasury stock 24,543,376     24,519,928     22,435,693     20,637,321     20,614,325  
Common stockholders' equity (book value) per share (GAAP) $ 27.88     $ 27.15     $ 25.92     $ 24.68     $ 24.13  
Tangible book value per common share (non-GAAP) $ 21.65     $ 20.86     $ 20.57     $ 21.20     $ 20.84  
                   
Reconciliation of Tangible Capital Ratio (non-GAAP) (4)                  
Total assets (GAAP) $ 8,204,401     $ 8,253,779     $ 7,694,754     $ 6,805,884     $ 6,717,007  
Less goodwill 127,699     127,699     97,852     56,828     54,162  
Less other intangible assets, net 25,213     26,510     22,019     14,937     13,642  
Total tangible assets (non-GAAP) $ 8,051,489     $ 8,099,570     $ 7,574,883     $ 6,734,119     $ 6,649,203  
Tangible capital ratio (non-GAAP) 6.60 %   6.32 %   6.09 %   6.50 %   6.46 %
                   
Loan and Lease Data                  
Loans held to maturity:                  
Commercial and commercial real estate $ 3,930,879     $ 3,951,839     $ 3,605,574     $ 3,303,098     $ 3,199,717  
Residential mortgage 644,267     666,184     539,555     491,667     443,026  
Agricultural and agricultural real estate 480,883     471,271     471,870     469,381     444,110  
Consumer 428,730     417,114     386,867     379,903     364,441  
Unearned discount and deferred loan fees (2,501 )   (3,403 )   (2,380 )   (1,526 )   (1,471 )
Total loans and leases held to maturity $ 5,482,258     $ 5,503,005     $ 5,001,486     $ 4,642,523     $ 4,449,823  
                   
Other Selected Trend Information                  
Effective tax rate 32.37 %   33.10 %   23.03 %   25.32 %   20.83 %
Full time equivalent employees 1,888     1,907     1,799     1,736     1,788  
Total Residential Mortgage Loan Applications $ 440,907     $ 406,999     $ 307,163     $ 443,294     $ 615,463  
Residential Mortgage Loans Originated $ 324,633     $ 238,266     $ 258,939     $ 370,956     $ 421,798  
Residential Mortgage Loans Sold $ 302,448     $ 220,381     $ 260,189     $ 360,172     $ 402,151  
Residential Mortgage Loan Servicing Portfolio $ 4,203,429     $ 4,112,519     $ 4,057,861     $ 3,963,677     $ 3,785,794  
                   
(1) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table above.
(2) Refer to the " Reconciliation of Tangible Capital Ratio (non-GAAP)" table above.
(3) Tangible book value per common share is total common stockholders' equity less goodwill and intangible assets, net divided by common shares outstanding, net of treasury. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(4) The tangible capital ratio is total common stockholders' equity less goodwill and intangible assets, net divided by total assets less goodwill and intangible assets, net. This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not be considered a substitute for operating results determined in accordance with GAAP.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As of and for the Quarter Ended
  6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
Allowance for Loan and Lease Losses                  
Balance, beginning of period $ 49,738     $ 48,685     $ 47,105     $ 45,614     $ 41,854  
Provision for loan and lease losses 2,118     2,067     2,171     3,181     5,674  
Charge-offs (2,951 )   (1,605 )   (1,837 )   (2,439 )   (2,734 )
Recoveries 2,851     591     1,246     749     820  
Balance, end of period $ 51,756     $ 49,738     $ 48,685     $ 47,105     $ 45,614  
                   
Asset Quality                  
Nonaccrual loans $ 57,053     $ 47,750     $ 39,655     $ 32,577     $ 26,710  
Loans and leases past due ninety days or more as to interest or principal payments     639         1,181      
Other real estate owned 11,003     11,338     11,524     17,041     16,983  
Other repossessed assets 564     426     485     626     544  
Total nonperforming assets $ 68,620     $ 60,153     $ 51,664     $ 51,425     $ 44,237  
                   
Performing troubled debt restructured loans $ 9,923     $ 10,711     $ 10,968     $ 10,154     $ 10,903  
                   
Nonperforming Assets Activity                  
Balance, beginning of period $ 60,153     $ 51,664     $ 51,425     $ 44,237     $ 46,533  
Net loan charge offs (100 )   (1,014 )   (591 )   (1,690 )   (1,914 )
New nonperforming loans 19,994     12,171     9,686     7,996     4,676  
Acquired nonperforming assets     3,516     4,956     5,328      
Reduction of nonperforming loans (1) (10,313 )   (3,563 )   (6,768 )   (2,758 )   (1,409 )
OREO/Repossessed assets sales proceeds (918 )   (2,411 )   (2,980 )   (1,074 )   (3,202 )
OREO/Repossessed assets writedowns, net (337 )   (182 )   (3,909 )   (756 )   (565 )
Net activity at Citizens Finance Co. 141     (28 )   (155 )   142     118  
Balance, end of period $ 68,620     $ 60,153     $ 51,664     $ 51,425     $ 44,237  
 
Asset Quality Ratios                  
Ratio of nonperforming loans and leases to total loans and leases 1.04 %   0.88 %   0.79 %   0.73 %   0.60 %
Ratio of nonperforming assets to total assets 0.84 %   0.73 %   0.67 %   0.76 %   0.66 %
Annualized ratio of net loan charge-offs to average loans and leases 0.01 %   0.08 %   0.05 %   0.14 %   0.17 %
Allowance for loan and lease losses as a percent of loans and leases 0.94 %   0.90 %   0.97 %   1.01 %   1.03 %
Allowance for loan and lease losses as a percent of nonperforming loans and leases 90.72 %   102.79 %   122.77 %   139.54 %   170.78 %
Loans delinquent 30-89 days as a percent of total loans 0.73 %   0.45 %   0.31 %   0.40 %   0.31 %
                   
(1) Includes principal reductions, transfers to performing status and transfers to OREO

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Quarter Ended
  June 30, 2016   June 30, 2015
  Average Balance   Interest   Rate   Average Balance   Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 1,468,896     $ 7,952     2.18 %   $ 1,324,870     $ 6,739     2.04 %
Nontaxable (1) 430,086     5,486     5.13     325,023     4,422     5.46  
Total securities 1,898,982     13,438     2.85     1,649,893     11,161     2.71  
Interest bearing deposits 10,727     3     0.11     10,889     3     0.11  
Federal funds sold 5,114     1     0.08     5,109     1     0.08  
Loans and leases: (2)                      
Commercial and commercial real estate (1) 3,866,861     46,889     4.88     3,122,239     37,666     4.84  
Residential mortgage 803,952     8,286     4.15     538,170     5,415     4.04  
Agricultural and agricultural real estate (1) 481,625     5,504     4.60     428,284     5,280     4.94  
Consumer 430,440     8,273     7.73     358,431     7,204     8.06  
Fees on loans     2,083             1,119      
Less: allowance for loan and lease losses (50,852 )           (43,171 )        
Net loans and leases 5,532,026     71,035     5.16     4,403,953     56,684     5.16  
Total earning assets 7,446,849     84,477     4.56 %   6,069,844     67,849     4.48 %
Nonearning Assets 764,477             555,953          
Total Assets $ 8,211,326             $ 6,625,797          
Interest Bearing Liabilities                      
Savings $ 3,699,971     $ 2,028     0.22 %   $ 2,852,272     $ 1,642     0.23 %
Time, $100,000 and over 421,151     733     0.70     348,661     794     0.91  
Other time deposits 586,810     1,260     0.86     552,115     1,383     1.00  
Short-term borrowings 373,768     519     0.56     373,021     212     0.23  
Other borrowings 281,777     3,673     5.24     325,131     3,766     4.65  
Total interest bearing liabilities 5,363,477     8,213     0.62 %   4,451,200     7,797     0.70 %
Noninterest Bearing Liabilities                      
Noninterest bearing deposits 2,098,327             1,549,187          
Accrued interest and other liabilities 75,815             54,318          
Total noninterest bearing liabilities 2,174,142             1,603,505          
Stockholders' Equity 673,707             571,092          
Total Liabilities and Stockholders' Equity $ 8,211,326             $ 6,625,797          
Net interest income, fully taxable equivalent (non-GAAP) (1)     $ 76,264             $ 60,052      
Net interest spread (1)         3.94 %           3.78 %
Net interest income, fully taxable equivalent (non-GAAP) to total earning assets (1)         4.12 %           3.97 %
Interest bearing liabilities to earning assets 72.02 %           73.33 %        
                       
                       
Reconciliation to Reported Net Interest Income                      
Net interest income, fully taxable equivalent (non-GAAP)     $ 76,264             $ 60,052      
Adjustments for taxable equivalent interest (1)     (3,146 )           (2,408 )    
Net interest income (GAAP)     $ 73,118             $ 57,644      
                       
(1) Computed on a tax equivalent basis using an effective tax rate of 35%
(2) Nonaccrual loans are included in the average loans outstanding.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Six Months Ended
  June 30, 2016   June 30, 2015
  Average Balance   Interest   Rate   Average Balance   Interest   Rate
Earning Assets                      
Securities:                      
Taxable $ 1,488,664     $ 16,687     2.25 %   $ 1,304,304     $ 13,871     2.14 %
Nontaxable (1) 423,655     10,886     5.17     328,163     8,908     5.47  
Total securities 1,912,319     27,573     2.90     1,632,467     22,779     2.81  
Interest bearing deposits 11,180     7     0.13     10,046     7     0.14  
Federal funds sold 18,120     11     0.12     6,356     2     0.06  
Loans and leases: (2)                      
Commercial and commercial real estate (1) 3,805,401     93,643     4.95     3,072,995     73,541     4.83  
Residential mortgage 769,043     15,885     4.15     508,723     10,298     4.08  
Agricultural and agricultural real estate (1) 474,801     11,233     4.76     423,295     10,310     4.91  
Consumer 421,245     16,196     7.73     352,842     14,092     8.05  
Fees on loans     3,654             2,315      
Less: allowance for loan and lease losses (50,334 )           (42,612 )        
Net loans and leases 5,420,156     140,611     5.22     4,315,243     110,556     5.17  
Total earning assets 7,361,775     168,202     4.59 %   5,964,112     133,344     4.51 %
Nonearning Assets 756,423             576,397          
Total Assets $ 8,118,198             $ 6,540,509          
Interest Bearing Liabilities                      
Savings $ 3,628,089     $ 3,922     0.22 %   $ 2,841,675     $ 3,437     0.24 %
Time, $100,000 and over 459,885     1,604     0.70     346,523     1,632     0.95  
Other time deposits 614,556     2,668     0.87     544,187     2,922     1.08  
Short-term borrowings 342,464     848     0.50     334,105     410     0.25  
Other borrowings 273,326     7,148     5.26     358,350     8,568     4.82  
Total interest bearing liabilities 5,318,320     16,190     0.61 %   4,424,840     16,969     0.77 %
Noninterest Bearing Liabilities                      
Noninterest bearing deposits 2,040,105             1,500,013          
Accrued interest and other liabilities 75,034             57,663          
Total noninterest bearing liabilities 2,115,139             1,557,676          
Stockholders' Equity 684,739             557,993          
Total Liabilities and Stockholders' Equity $ 8,118,198             $ 6,540,509          
Net interest income, fully taxable equivalent (non-GAAP) (1)     $ 152,012             $ 116,375      
Net interest spread (1)         3.98 %           3.74 %
Net interest income, fully taxable equivalent (non-GAAP) to total earning assets (1)         4.15 %           3.93 %
Interest bearing liabilities to earning assets 72.24 %           74.19 %        
                       
                       
Reconciliation to Reported Net Interest Income                      
Net interest income, fully taxable equivalent (non-GAAP)     $ 152,012             $ 116,375      
Adjustments for taxable equivalent interest (1)     (6,187 )           (4,801 )    
Net interest income (GAAP)     $ 145,825             $ 111,574      
                       
(1) Computed on a tax equivalent basis using an effective tax rate of 35%.
(2) Nonaccrual loans are included in the average loans outstanding.

HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
  As of and For the Quarter Ended
  6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Total Assets          
Dubuque Bank and Trust Company $ 1,473,461   $ 1,498,771   $ 1,617,322   $ 1,431,767   $ 1,541,610  
New Mexico Bank & Trust 1,321,113   1,304,886   1,336,004   1,282,784   1,141,575  
Wisconsin Bank & Trust 1,080,224   1,094,872   1,139,337   1,098,405   1,150,867  
Centennial Bank and Trust (1) 909,697   927,040   161,806   155,114   152,672  
Morrill & Janes Bank and Trust Company 843,069   872,274   902,918   845,067   860,781  
Illinois Bank & Trust 742,697   718,074   757,478   769,170   784,162  
Premier Valley Bank 629,423   751,137   765,451      
Arizona Bank & Trust 577,002   558,369   591,066   599,119   510,838  
Rocky Mountain Bank 473,583   479,010   491,522   501,093   508,262  
Minnesota Bank & Trust 230,004   220,955   214,303   188,633   195,201  
Total Portfolio Loans          
Dubuque Bank and Trust Company $ 928,869   $ 941,683   $ 956,517   $ 953,273   $ 945,574  
New Mexico Bank & Trust 870,109   815,739   794,744   777,433   658,543  
Wisconsin Bank & Trust 732,503   758,789   793,508   844,557   876,321  
Centennial Bank and Trust (1) 668,547   683,085   101,449   94,127   95,275  
Morrill & Janes Bank and Trust Company 522,518   536,738   539,198   527,217   520,978  
Illinois Bank & Trust 466,983   465,783   465,937   473,859   455,247  
Premier Valley Bank 376,275   376,840   383,929      
Arizona Bank & Trust 390,078   402,431   444,501   444,916   383,588  
Rocky Mountain Bank 362,475   364,189   370,440   380,304   375,860  
Minnesota Bank & Trust 144,009   137,412   134,137   128,700   127,172  
Total Deposits          
Dubuque Bank and Trust Company $ 1,159,942   $ 1,144,470   $ 1,209,074   $ 1,120,999   $ 1,144,932  
New Mexico Bank & Trust 1,062,410   1,066,076   1,085,052   1,047,358   891,003  
Wisconsin Bank & Trust 911,915   921,071   974,001   904,803   985,804  
Centennial Bank and Trust (1) 775,417   779,607   128,759   139,826   122,928  
Morrill & Janes Bank and Trust Company 696,073   698,365   713,589   650,123   662,524  
Illinois Bank & Trust 653,582   629,235   631,010   641,024   645,354  
Premier Valley Bank 514,522   635,188   647,022      
Arizona Bank & Trust 497,599   468,312   500,490   491,254   405,680  
Rocky Mountain Bank 405,888   409,787   417,426   428,234   417,647  
Minnesota Bank & Trust 207,228   200,343   194,373   163,291   172,547  
Net Income (Loss)          
Dubuque Bank and Trust Company $ 4,475   $ 6,073   $ 3,587   $ 4,477   $ 7,416  
New Mexico Bank & Trust 5,642   4,094   2,576   3,220   3,658  
Wisconsin Bank & Trust 3,399   3,379   2,443   3,886   2,950  
Centennial Bank and Trust (1) 256   824   62   (6 ) (81 )
Morrill & Janes Bank and Trust Company 2,133   2,525   1,096   2,024   1,566  
Illinois Bank & Trust 2,397   2,027   574   1,877   1,309  
Premier Valley Bank 1,695   1,960   1,008      
Arizona Bank & Trust 2,121   1,841   968   1,254   998  
Rocky Mountain Bank 1,484   1,064   1,506   1,471   1,196  
Minnesota Bank & Trust 559   531   166   411   223  
           
(1) Formerly known as Summit Bank & Trust.

 
CONTACT:Bryan R. McKeagExecutive Vice PresidentChief Financial Officer(563) 589-1994bmckeag@htlf.com

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