8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 of 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 27, 2020

Heartland Financial USA, Inc.

(Exact name of Registrant as specified in its charter)

Commission File Number: 001-15393

Delaware	42-1405748
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification Number)

1398 Central Avenue
Dubuque,	Iowa	52001

(Address of principal executive offices)

(563) 589-2100

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	HTLF	Nasdaq Stock Market
Depositary Shares (each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E)	HTLFP	Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On July 27, 2020, Heartland Financial USA, Inc. issued a press release announcing its earnings and an investor presentation with supplemental information for the quarter ended June 30, 2020. A copy of the press release and slide presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively.

The information furnished in Item 2.02 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release dated April 27, 2020.

99.2 Investor Presentation dated April 27, 2020.

104  Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 27, 2020	HEARTLAND FINANCIAL USA, INC.
	By:	/s/ Bryan R. McKeag
		Bryan R. McKeag
		Executive Vice President
		Chief Financial Officer

EX-99.1

CONTACT:	FOR IMMEDIATE RELEASE
Bryan R. McKeag	July 27, 2020
Executive Vice President
Chief Financial Officer
(563) 589-1994
bmckeag@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS QUARTERLY AND YEAR TO DATE RESULTS AS OF JUNE 30, 2020

Highlights and Developments

§	Quarterly net income of $30.1 million or $0.82 per diluted common share in comparison with $45.2 million or $1.26 per diluted common share for the second quarter of the prior year
§	Net interest margin of 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP)(1) during the second quarter of 2020, compared to 3.81% (3.84% on a fully tax-equivalent basis, non-GAAP)(1) during the first quarter of 2020 and 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP)(1) during the second quarter of 2019
§	Efficiency ratio (non-GAAP)1 of 55.75% compared to 64.13% for the second quarter of 2019
§	Funded approximately 4,800 Paycheck Protection Program ("PPP") loans totaling $1.20 billion
§	Arizona Bank & Trust subsidiary entered into a purchase and assumption agreement with Johnson Bank for four banking centers located in Phoenix and Scottsdale, Arizona
§	Completed the issuance of $115.0 million of preferred equity

	Quarter Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income available to common stockholders (in millions)	$	30.1		$	45.2		$	50.2		$	76.7
Diluted earnings per common share	0.82			1.26			1.36			2.17
Return on average assets	0.84		%	1.55		%	0.73		%	1.35		%
Return on average common equity	7.69			12.56			6.32			11.13
Return on average tangible common equity (non-GAAP)(1)	11.97			19.52			9.95			17.49
Net interest margin	3.81			4.06			3.81			4.09
Net interest margin, fully tax-equivalent (non-GAAP)(1)	3.85			4.10			3.85			4.14
Efficiency ratio, fully-tax equivalent (non-GAAP)(1)	55.75			64.13			58.64			64.52

(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.

"Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded $1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued $115 million of preferred stock during the quarter."

Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc.

Dubuque, Iowa, Monday, July 27, 2020-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following quarterly results:

•net income available to common stockholders of $30.1 million, or $0.82 per diluted common share, for the quarter ended June 30, 2020, compared to $45.2 million, or $1.26 per diluted common share, for the second quarter of 2019.

•excluding tax-effected provision for credit losses of $21.2 million and tax-effected acquisition, integration and restructuring costs of $532,000, adjusted net income available to common stockholders (non-GAAP) was $51.8 million, or $1.40 of adjusted earnings per diluted common share (non-GAAP) for the second quarter of 2020, compared to $49.8 million (non-GAAP), or $1.39 of adjusted earnings per diluted common share (non-GAAP), for the second quarter of 2019, which excluded tax-effected provision for credit losses of $3.9 million and tax-effected acquisition, integration and restructuring costs of $734,000.

•return on average common equity was 7.69% and return on average assets was 0.84% for the second quarter of 2020, compared to 12.56% and 1.55%, respectively, for the same quarter in 2019.

•return on average tangible common equity (non-GAAP) of 11.97% and adjusted return on average tangible common equity (non-GAAP) of 20.02% for the second quarter of 2020 compared to 19.52% and 21.41%, respectively, for the second quarter of 2019.

Heartland reported the following results for the six months ended June 30, 2020:

•net income available to common stockholders of $50.2 million or $1.36 per diluted common share, for the six months ended June 30, 2020, compared to $76.7 million or $2.17 per diluted common share for the six months ended June 30, 2019.

•excluding tax-effected provision for credit losses of $38.2 million and tax-effected acquisition, integration and restructuring costs of $1.6 million, adjusted net income available to common stockholders (non-GAAP) was $90.0 million, or $2.44 of adjusted earnings per diluted common share (non-GAAP), for the six months ended June 30, 2020, compared to $85.4 million (non-GAAP), or $2.42 of adjusted earnings per diluted common share (non-GAAP), for the six months ended June 30, 2019, which excluded tax-effected provision for credit losses of $5.2 million and tax-effected acquisition, integration and restructuring costs of $3.6 million.

•return on average common equity was 6.32% and return on average assets was 0.73% for the first six months of 2020, compared to 11.13% and 1.35%, respectively, for the same period in 2019.

•return on average tangible common equity (non-GAAP) of 9.95% and adjusted return on average tangible common equity (non-GAAP) of 17.19% for the six months ended June 30, 2020, compared to 17.49% and 19.37%, respectively, for the six months ended June 30, 2019.

"Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded $1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued $115 million of preferred stock during the quarter," said Bruce K. Lee, Heartland's president and chief executive officer.

Responses to COVID-19

In the first quarter of 2020, Heartland implemented and continues to operate under its pandemic management plan to assure workplace and employee safety and business resiliency while providing relief and support to customers and communities facing challenges from the impacts of COVID-19, which included the following measures:

•employees who can work from home continue to do so, while those who come into bank locations are on rotating teams to limit potential exposure;

•all in-person events and large meetings are canceled and have transitioned to virtual meetings;

•expanded time off program and enhanced health care coverage for COVID-19 related testing and treatments, and

•implemented and extended a 20% wage premium for certain customer-facing and call center employees.

"The health and safety of our employees continues to be our top priority. We are monitoring our markets closely and updating our responses accordingly," Lee said.

The continued economic disruption resulting from the COVID-19 pandemic will make it difficult for some customers to repay the principal and interest on their loans, and Heartland's subsidiary banks have been working with customers to modify the terms of certain existing loans.

The following table shows the total loan exposure as of June 30, 2020, and March 31, 2020, to customer segment profiles that Heartland believes will be more heavily impacted by COVID-19, dollars in thousands:

	As of June 30, 2020				As of March 31, 2020
Industry	Total Exposure(1)		% of Gross Exposure(1)		Total Exposure(1)		% of Gross Exposure(1)
Lodging	$	490,475	4.38	%	$	498,596	4.47	%
Multi-family properties	474,610		4.24		436,931		3.92
Retail trade	407,030		3.64		367,727		3.30
Retail properties	369,782		3.31		408,506		3.66
Restaurants and bars	255,701		2.29		247,239		2.22
Nursing homes/assisted living	130,103		1.16		126,267		1.13
Oil and gas	63,973		0.57		56,302		0.50
Childcare facilities	44,968		0.40		48,455		0.43
Gaming	34,618		0.31		34,790		0.31
Total	$	2,271,260	20.30	%	$	2,224,813	19.94	%
(1) Total loans outstanding, excluding PPP loans, and unfunded commitments

As of June 30, 2020, loan modifications have been made on approximately $1.10 billion of loans in Heartland's portfolio. Approximately 58% of these modifications are interest only for 90 days, and the remainder are primarily principal and interest deferments for 90 days. The original loan modifications will be expiring throughout the third quarter, and Heartland expects that the majority will be returning to full payment status. However, it is likely that some of the modifications will be extended for an additional 90 days in order to provide the necessary support for certain COVID-19 impacted customers.

Through June 30, 2020, Heartland's subsidiary banks funded approximately 4,800 PPP loans, totaling $1.20 billion. As of June 30, 2020, deferred fees totaling $35.3 million were recorded associated with the PPP loans, of which $3.7 million was recognized in income during the quarter.

The ultimate impact of the COVID-19 pandemic on Heartland's financial condition and results of operations will depend on risks and uncertainties, such as the severity and duration of the pandemic, related restrictions on business and consumer activity, and the availability of government programs to alleviate the economic stress of the pandemic. See Heartland's "Safe Harbor Statement" below.

2020 Developments

Adoption of ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)"

On January 1, 2020, Heartland adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)," commonly referred to as "CECL." The impact of Heartland's adoption of CECL ("Day 1") resulted in the following:

•an increase of $12.1 million to the allowance for credit losses related to loans, which included a reclassification of $6.0 million of purchased credit impaired loan discount on previously acquired loans, and a cumulative-effect adjustment to retained earnings totaling $4.6 million, net of taxes of $1.5 million;

•an increase of $13.6 million to the allowance for unfunded commitments and a cumulative-effect adjustment to retained earnings totaling $10.2 million, net of taxes of $3.4 million, and

•established an allowance for credit losses for Heartland's held to maturity debt securities of $158,000 and a cumulative-effect adjustment to retained earnings totaling $118,000, net of taxes of $40,000.

Entered into a Definitive Merger Agreement with AIM Bancshares, Inc.

On February 11, 2020, Heartland entered into a definitive merger agreement to acquire AIM Bancshares, Inc. and its wholly-owned subsidiary, AimBank, headquartered in Levelland, Texas. In the transaction, all issued and outstanding shares of AIM Bancshares stock will be exchanged for shares of Heartland common stock and cash. Shareholders of AIM Bancshares will receive 207.0 shares of Heartland common stock and $685.00 of cash for

each share of AIM Bancshares. The transaction value will change due to fluctuations in the price of Heartland common stock and is subject to certain potential adjustments as set forth in the merger agreement. Simultaneous with the closing of the transaction, AimBank will merge with and into Heartland's Lubbock, Texas-based subsidiary, First Bank and Trust. Heartland and AIM Bancshares are currently reviewing the corporate structure and terms of the transaction. As of June 30, 2020, AimBank had total assets of approximately $1.95 billion, which included $1.19 billion of gross loans outstanding, and approximately $1.69 billion of deposits.

Entered into a Purchase and Assumption Agreement with Johnson Financial Group, Inc.

On June 9, 2020, Arizona Bank & Trust (“AB&T”), a wholly-owned subsidiary of Heartland headquartered in Phoenix, Arizona, entered into a purchase and assumption agreement, pursuant to which AB&T will acquire certain assets and will assume substantially all of the deposits and certain other liabilities of Johnson Bank’s Arizona operations, which includes four banking centers. Johnson Bank is a wholly-owned subsidiary of Johnson Financial Group, Inc. headquartered in Racine, Wisconsin. Johnson Insurance Services is not a part of this transaction.

Under the terms of the purchase and assumption agreement, AB&T will acquire Johnson Bank's Arizona banking centers, which had deposits of approximately $415.3 million and loans of approximately $168.1 million as of June 30. The actual amount of deposits assumed and loans acquired will be determined at closing, which is expected to be in the fourth quarter of 2020.

"We are excited to expand Arizona Bank & Trust's presence in the Phoenix and Scottsdale areas," commented Lynn B. Fuller, Heartland's executive operating chairman.

Issued $115.0 Million of Preferred Equity

On June 26, 2020, Heartland issued and sold 4.6 million depositary shares, each representing a 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E. The depositary shares are listed on The Nasdaq Global Select Market under the symbol "HTLFP." The net proceeds of $110.7 million are expected to be used for general corporate purposes, which may include organic and acquired growth, financing investments, capital expenditures, investments in wholly-owned subsidiaries as regulatory capital and repayment of debt.

Net Interest Income Increases and Net Interest Margin Decreases from Second Quarter of 2019

Net interest margin, expressed as a percentage of average earning assets, was 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020, compared to 3.81% (3.84% on a fully tax-equivalent basis, non-GAAP) during the first quarter of 2020 and 4.06% (4.10% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2019.

Total interest income for the second quarter of 2020 was $133.8 million compared to $127.0 million recorded in the second quarter of 2019, an increase of $6.8 million or 5%. The tax-equivalent adjustment for income taxes saved on the interest earned on nontaxable securities and loans was $1.4 million for the second quarter of 2020 and $1.3 million for the second quarter of 2019. With these adjustments, total interest income on a tax-equivalent basis was $135.2 million for the second quarter of 2020, an increase of $6.9 million or 5%, compared to total interest income on a tax-equivalent basis of $128.3 million for the second quarter of 2019.

Average earning assets of $13.10 billion increased $2.55 billion or 24% from the second quarter of 2019, which was primarily attributable to recent acquisitions and loan growth, including PPP loans. The average rate on earning assets decreased 73 basis points to 4.15% for the second quarter of 2020 compared to 4.88% for the same quarter in 2019, which was primarily due to recent decreases in market interest rates and the lower yield on PPP loans, which was 2.64% for the second quarter of 2020.

Total interest expense for the second quarter of 2020 was $9.6 million, a decrease of $10.7 million or 53% from $20.3 million in the second quarter of 2019. The average interest rate paid on Heartland's interest bearing liabilities decreased to 0.47% for the second quarter of 2020 compared to 1.18% for the second quarter of 2019, which was primarily due to recent decreases in market interest rates.

Average interest bearing deposits increased $1.28 billion or 20% to $7.79 billion for the quarter ended June 30, 2020, from $6.50 billion in the same quarter in 2019, which was primarily attributable to recent acquisitions and deposit growth. The average interest rate paid on Heartland's interest bearing deposits decreased 67 basis points to 0.32% for the second quarter of 2020 compared to 0.99% for the same quarter in 2019.

Average borrowings decreased $389,000 or less than 1% to $368.9 million during the first quarter of 2020 from $369.3 million during the same quarter in 2019. The average interest rate paid on Heartland's borrowings was 3.80% for the second quarter of 2020 compared to 4.52% in the second quarter of 2019.

Net interest income was $124.1 million during the second quarter of 2020 compared to $106.7 million during the second quarter of 2019, an increase of $17.4 million or 16%. After the tax-equivalent adjustment discussed above, net interest income on a tax-equivalent basis totaled $125.6 million during the second quarter of 2020 compared to net interest income on a tax-equivalent basis of $108.0 million during the second quarter of 2019, an increase of $17.6 million or 16%.

Noninterest Income Decreases and Noninterest Expense Increases from Second Quarter of 2019

Total noninterest income was $30.6 million during the second quarter of 2020 compared to $32.1 million during the second quarter of 2019, a decrease of $1.4 million or 4%. Significant changes by noninterest income category were:

•Service charges and fees decreased $3.7 million or 25% to $11.0 million for the second quarter of 2020 compared to $14.6 million for the second quarter of 2019. Overdraft fees and ATM fees for the second quarter of 2020 totaled $3.4 million compared to $7.1 million for the same quarter of 2019. The decrease was primarily attributable to decreased volume due to the COVID-19 pandemic and the impact of the Durbin Amendment, which was effective for Heartland on July 1, 2019.

•Loan servicing income totaled $379,000 for the second quarter of 2020 compared to $1.3 million for the second quarter of 2019, which was a decrease of $959,000 or 72%. The decrease was attributable to the sale of the mortgage servicing rights of Dubuque Bank and Trust Company in the second quarter of 2019.

•Net gains on sale of loans held for sale totaled $7.9 million during the second quarter of 2020 compared to $4.3 million during the same quarter in 2019, which was an increase of $3.5 million or 81%, primarily due to an increase in residential mortgage loan activity in response to the recent declines in mortgage interest rates.

For the second quarter of 2020, total noninterest expense was $90.4 million compared to $75.1 million during the second quarter of 2019, an increase of $15.3 million or 20%. Significant changes by noninterest expense category were:

•Net loss on sales/valuations of assets increased $19.0 million as losses totaled $701,000 in the second quarter of 2020 compared to gains of $18.3 million in the second quarter of 2019. The gains recorded in 2019 were related to branch sales and the sale of the mortgage servicing rights of Dubuque Bank and Trust Company.

Heartland's effective tax rate was 19.75% for the second quarter of 2020 compared to 23.12% for the second quarter of 2019. The following items impacted Heartland's second quarter 2020 and 2019 tax calculations:

•Solar energy tax credits of $798,000 and $911,000 for the second quarter of 2020 and 2019, respectively.

•Federal low-income housing tax credits of $195,000 and $281,000 for the second quarter of 2020 and 2019, respectively.

•New markets tax credits of $75,000 during the second quarter of 2020 compared to $0 in the second quarter of 2019.

•Tax-exempt interest income as a percentage of pre-tax income increased to 14.19% during the second quarter of 2020 compared to 8.09% for the second quarter of 2019.

•Tax expense of $66,000 in the second quarter of 2020 compared to $64,000 in the second quarter of 2019 resulting from the vesting of restricted stock unit awards.

Total Assets Increase, Total Loans Increase and Deposits Increase Since December 31, 2019

Total assets were $15.0 billion at June 30, 2020, an increase of $1.82 billion or 14% from $13.21 billion at year-end 2019. Securities represented 28% and 26% of total assets at June 30, 2020, and December 31, 2019, respectively.

Total loans held to maturity were $9.25 billion at June 30, 2020, and $8.37 billion at December 31, 2019, which was an increase of $878.9 million or 11%. Loan changes by category were:

•Commercial and business lending, which includes commercial and industrial, Paycheck Protection Program ("PPP"), and owner occupied commercial real estate loans, increased $918.6 million or 23% to $4.92 billion at June 30, 2020, compared to $4.00 billion at December 31, 2019. Excluding $1.12 billion of PPP loans, commercial and business lending decreased $205.8 million or 5% since year-end 2019.

•Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $136.5 million or 5% to $2.66 billion at June 30, 2020 from $2.52 billion at year-end 2019.

•Agricultural and agricultural real estate loans totaled $520.8 million at June 30, 2020, compared to $565.8 million at December 31, 2019, which was a decrease of $45.1 million or 8%.

•Residential mortgage loans decreased $96.5 million or 12% to $735.8 million at June 30, 2020, from $832.3 million at December 31, 2019.

•Consumer loans decreased $34.6 million or 8% to $408.7 million at June 30, 2020, compared to $443.3 million at December 31, 2019.

Total deposits were $12.71 billion as of June 30, 2020, compared to $11.04 billion at year-end 2019, an increase of $1.66 billion or 15%. Deposit changes by category were:

•Demand deposits increased $1.29 billion or 36% to $4.83 billion at June 30, 2020, compared to $3.54 billion at December 31, 2019.

•Savings deposits increased $502.9 million or 8% to $6.81 billion at June 30, 2020, from $6.31 billion at December 31, 2019.

•Time deposits decreased $125.8 million or 11% to $1.07 billion at June 30, 2020 from $1.19 billion at December 31, 2019.

Growth in non-time deposits was positively impacted by federal government stimulus payments and other COVID-19 relief programs.

Provision and Allowance for Credit Losses for Loans Increase Since December 31, 2019

Heartland's allowance for credit losses for loans totaled $119.9 million and $70.4 million at June 30, 2020, and December 31, 2019, respectively. The allowance for credit losses for loans totaled $82.5 million after the adoption of CECL on January 1, 2020, which was an increase of $12.1 million since year-end 2019. Provision expense for the second quarter of 2020 totaled $25.0 million compared to $19.9 million for the first quarter of 2020 and $4.9 million in the second quarter of 2019. Heartland recorded $11.6 million of provision expense for one fracking sand company relationship that was individually assessed for allowance for credit losses in the second quarter.

The allowance for credit losses for loans at June 30, 2020, was 1.30% of loans compared to 0.84% of loans at December 31, 2019. Net charge offs for the second quarter of 2020 totaled $2.4 million compared to $3.7 million for the second quarter of 2019, which was a decrease of $1.3 million or 35%. Heartland expects that net charge offs will increase in the second half of 2020 as customers’ ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.

Heartland's allowance for unfunded commitments totaled $13.9 million after the adoption of CECL on January 1, 2020. Heartland recorded $1.9 million of provision for credit losses related to unfunded loan commitments in the second quarter of 2020. At June 30, 2020, the allowance for unfunded commitments was $17.4 million, and unfunded loan commitments totaled $3.06 billion.

The total allowance for credit related lending losses was $137.3 million at June 30, 2020, which was 1.49% of loans as of June 30, 2020.

Nonperforming Assets Increase Since December 31, 2019

Nonperforming assets increased $11.0 million or 13% to $98.5 million or 0.66% of total assets at June 30, 2020, compared to $87.6 million or 0.66% of total assets at December 31, 2019. Nonperforming loans were $93.0 million or 1.01% of total loans at June 30, 2020, compared to $80.7 million or 0.96% of total loans at December 31, 2019. Included in new nonperforming loans at June 30, 2020 was one fracking sand company relationship with an unpaid principal balance of $14.6 million. At June 30, 2020, loans delinquent 30-89 days were 0.22% of total loans compared to 0.33% of total loans at December 31, 2019. Heartland expects that nonperforming assets and delinquent loans will increase through 2020 as customers’ ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.

Non-GAAP Financial Measures

This press 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 Heartland'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 press 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 press release.

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

•Annualized return on average tangible common equity is net income available to common stockholders plus core deposit and customer relationship intangibles amortization, net of tax, divided by 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.

•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 press release.

•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.

•Adjusted net income, adjusted return on average tangible common equity and adjusted diluted earnings per share exclude tax-effected provision for credit losses and acquisition, integration and restructuring costs. Management believes the presentation of these non-GAAP measures are useful to compare net income,

return on average tangible common equity and earnings per share results excluding the variability of credit loss provisions and acquisition, integration and restructuring costs.

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 866-928-9948 at least five minutes before the 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 26, 2021, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a diversified financial services company with assets of $15.03 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 114 banking locations serving 83 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement

This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed below and in the risk factors in Heartland's reports filed with the Securities and Exchange Commission, contained, among others: the impact of the COVID-19 pandemic on Heartland and U.S. and global financial markets; containment measures enacted by the U.S. federal and state governments and by private businesses in response to the COVID-19 pandemic; the deterioration of the U.S. economy in general and in the local economies in which Heartland conducts its operations; increasing credit losses due to deterioration in the financial condition of its borrowers, based on declining oil prices and asset and collateral values, which may continue to increase Heartland’s provision for credit losses and net charge-offs; civil unrest in the communities that Heartland serves; levels of unemployment in the subsidiary banks’ lending areas; real estate market values in the subsidiary banks’ lending areas; future natural disasters and increases to flood insurance premiums; the effects of past and any future terrorist threats and attacks, acts of war or threats thereof; the level of prepayments on loans and mortgage-backed securities; legislative/regulatory changes affecting banking, taxes, securities, insurance and monetary and financial matters; monetary and fiscal policies of the U.S. Government including policies of the United States Department of the Treasury and the Federal Reserve; the quality or composition of Heartland’s loan or investment portfolios; demand for loan products and financial services, deposit flows and competition in Heartland’s market areas; changes in accounting principles and guidelines; the timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet; Heartland’s ability to implement technological changes as anticipated and to develop and maintain secure and reliable electronic delivery systems; Heartland’s ability to retain key executives and employees and the ability of Heartland and its subsidiaries to successfully consummate acquisitions and integrate acquired operations.

The COVID-19 pandemic is adversely affecting Heartland and its customers, counterparties, employees and third-party service providers. The pandemic’s severity, its duration and the extent of its impact on Heartland’s business, financial condition, results of operations, liquidity and prospects remain uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Heartland’s net income and the value of its assets and liabilities, reduce the availability of funding to Heartland, lead to a tightening of credit and increase stock price volatility. Some economists and investment banks also predict that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.

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,
	2020		2019		2020		2019
Interest Income
Interest and fees on loans	$	107,005	$	106,027	$	213,419	$	206,483
Interest on securities:
Taxable	23,362		16,123		45,093		31,999
Nontaxable	3,344		2,554		5,527		5,647
Interest on federal funds sold	—		—		—		4
Interest on deposits with other banks and short-term investments	54		2,299		775		3,591
Total Interest Income	133,765		127,003		264,814		247,724
Interest Expense
Interest on deposits	6,134		16,138		20,716		29,351
Interest on short-term borrowings	61		338		357		1,227
Interest on other borrowings	3,424		3,819		7,084		7,483
Total Interest Expense	9,619		20,295		28,157		38,061
Net Interest Income	124,146		106,708		236,657		209,663
Provision for credit losses	26,796		4,918		48,316		6,553
Net Interest Income After Provision for Credit Losses	97,350		101,790		188,341		203,110
Noninterest Income
Service charges and fees	10,972		14,629		22,993		27,423
Loan servicing income	379		1,338		1,342		3,067
Trust fees	4,977		4,825		9,999		9,299
Brokerage and insurance commissions	595		1,028		1,328		1,762
Securities gains, net	2,006		3,580		3,664		5,155
Unrealized gain/ (loss) on equity securities, net	680		112		449		370
Net gains on sale of loans held for sale	7,857		4,343		12,517		7,519
Valuation adjustment on servicing rights	9		(364)		(1,556)		(953)
Income on bank owned life insurance	1,167		888		1,665		1,787
Other noninterest income	1,995		1,682		4,053		3,349
Total Noninterest Income	30,637		32,061		56,454		58,778
Noninterest Expense
Salaries and employee benefits	50,118		49,895		100,075		100,180
Occupancy	6,502		6,426		12,973		13,033
Furniture and equipment	2,993		3,136		6,101		5,828
Professional fees	13,676		14,344		26,149		25,366
Advertising	995		2,609		3,200		4,929
Core deposit and customer relationship intangibles amortization	2,696		3,313		5,677		6,155
Other real estate and loan collection expenses, net	203		162		537		863
(Gain)/loss on sales/valuations of assets, net	701		(18,286)		717		(21,290)
Acquisition, integration and restructuring costs	673		929		2,049		4,543
Partnership investment in tax credit projects	791		1,465		975		1,940
Other noninterest expenses	11,091		11,105		22,845		21,781
Total Noninterest Expense	90,439		75,098		181,298		163,328
Income Before Income Taxes	37,548		58,753		63,497		98,560
Income taxes	7,417		13,584		13,326		21,894
Net Income	$	30,131	$	45,169	$	50,171	$	76,666
Earnings per common share-diluted	$	0.82	$	1.26	$	1.36	$	2.17
Weighted average shares outstanding-diluted	36,915,630		35,879,259		36,919,555		35,295,407

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	6/30/2020		3/31/2020		12/31/2019		9/30/2019		6/30/2019
Interest Income
Interest and fees on loans	$	107,005	$	106,414	$	107,566	$	110,566	$	106,027
Interest on securities:
Taxable	23,362		21,731		22,581		18,567		16,123
Nontaxable	3,344		2,183		2,102		2,119		2,554
Interest on federal funds sold	—		—		—		—		—
Interest on deposits with other banks and short-term investments	54		721		953		2,151		2,299
Total Interest Income	133,765		131,049		133,202		133,403		127,003
Interest Expense
Interest on deposits	6,134		14,582		16,401		17,982		16,138
Interest on short-term borrowings	61		296		271		250		338
Interest on other borrowings	3,424		3,660		3,785		3,850		3,819
Total Interest Expense	9,619		18,538		20,457		22,082		20,295
Net Interest Income	124,146		112,511		112,745		111,321		106,708
Provision for credit losses	26,796		21,520		4,903		5,201		4,918
Net Interest Income After Provision for Credit Losses	97,350		90,991		107,842		106,120		101,790
Noninterest Income
Service charges and fees	10,972		12,021		12,368		12,366		14,629
Loan servicing income	379		963		955		821		1,338
Trust fees	4,977		5,022		5,141		4,959		4,825
Brokerage and insurance commissions	595		733		1,062		962		1,028
Securities gains, net	2,006		1,658		491		2,013		3,580
Unrealized gain/ (loss) on equity securities, net	680		(231)		11		144		112
Net gains on sale of loans held for sale	7,857		4,660		3,363		4,673		4,343
Valuation adjustment on servicing rights	9		(1,565)		668		(626)		(364)
Income on bank owned life insurance	1,167		498		1,117		881		888
Other noninterest income	1,995		2,058		2,854		3,207		1,682
Total Noninterest Income	30,637		25,817		28,030		29,400		32,061
Noninterest Expense
Salaries and employee benefits	50,118		49,957		50,234		49,927		49,895
Occupancy	6,502		6,471		5,802		6,594		6,426
Furniture and equipment	2,993		3,108		3,323		2,862		3,136
Professional fees	13,676		12,473		11,082		11,276		14,344
Advertising	995		2,205		2,274		2,622		2,609
Core deposit and customer relationship intangibles amortization	2,696		2,981		2,918		2,899		3,313
Other real estate and loan collection expenses, net	203		334		261		(89)		162
(Gain)/loss on sales/valuations of assets, net	701		16		1,512		356		(18,286)
Acquisition, integration and restructuring costs	673		1,376		537		1,500		929
Partnership investment in tax credit projects	791		184		3,038		3,052		1,465
Other noninterest expenses	11,091		11,754		11,885		11,968		11,105
Total Noninterest Expense	90,439		90,859		92,866		92,967		75,098
Income Before Income Taxes	37,548		25,949		43,006		42,553		58,753
Income taxes	7,417		5,909		5,155		7,941		13,584
Net Income	$	30,131	$	20,040	$	37,851	$	34,612	$	45,169
Earnings per common share-diluted	$	0.82	$	0.54	$	1.03	$	0.94	$	1.26
Weighted average shares outstanding-diluted	36,915,630		36,895,591		36,840,519		36,835,191		35,879,259

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	6/30/2020		3/31/2020		12/31/2019		9/30/2019		6/30/2019
Assets
Cash and due from banks	$	211,429	$	175,587	$	206,607	$	243,395	$	198,664
Interest bearing deposits with other banks and short-term investments	242,149		64,156		172,127		204,372		443,475
Cash and cash equivalents	453,578		239,743		378,734		447,767		642,139
Time deposits in other financial institutions	3,128		3,568		3,564		3,711		4,430
Securities:
Carried at fair value	4,126,351		3,488,621		3,312,796		3,020,568		2,561,887
Held to maturity, at cost, less allowance for credit losses	90,579		91,875		91,324		87,965		88,166
Other investments, at cost	35,902		35,370		31,321		29,042		31,366
Loans held for sale	54,382		22,957		26,748		35,427		34,575
Loans:
Held to maturity	9,246,830		8,374,236		8,367,917		7,971,608		7,853,051
Allowance for credit losses	(119,937)		(97,350)		(70,395)		(66,222)		(63,850)
Loans, net	9,126,893		8,276,886		8,297,522		7,905,386		7,789,201
Premises, furniture and equipment, net	198,481		200,960		200,525		199,235		198,329
Goodwill	446,345		446,345		446,345		427,097		427,097
Core deposit and customer relationship intangibles, net	43,011		45,707		48,688		49,819		52,718
Servicing rights, net	5,469		5,220		6,736		6,271		7,180
Cash surrender value on life insurance	172,813		172,140		171,625		171,471		170,421
Other real estate, net	5,539		6,074		6,914		6,425		6,646
Other assets	263,682		259,043		186,755		179,078		146,135
Total Assets	$	15,026,153	$	13,294,509	$	13,209,597	$	12,569,262	$	12,160,290
Liabilities and Equity
Liabilities
Deposits:
Demand	$	4,831,151	$	3,696,974	$	3,543,863	$	3,581,127	$	3,426,758
Savings	6,810,296		6,366,610		6,307,425		5,770,754		5,533,503
Time	1,067,252		1,110,441		1,193,043		1,117,975		1,148,296
Total deposits	12,708,699		11,174,025		11,044,331		10,469,856		10,108,557
Short-term borrowings	88,631		121,442		182,626		107,853		107,260
Other borrowings	306,459		276,150		275,773		278,417		282,863
Accrued expenses and other liabilities	174,987		169,178		128,730		149,293		139,823
Total Liabilities	13,278,776		11,740,795		11,631,460		11,005,419		10,638,503
Stockholders' Equity
Preferred equity	110,705		—		—		—		—
Common stock	36,845		36,807		36,704		36,696		36,690
Capital surplus	844,202		842,780		839,857		838,543		837,150
Retained earnings	723,067		700,298		702,502		670,816		642,808
Accumulated other comprehensive income/(loss)	32,558		(26,171)		(926)		17,788		5,139
Total Equity	1,747,377		1,553,714		1,578,137		1,563,843		1,521,787
Total Liabilities and Equity	$	15,026,153	$	13,294,509	$	13,209,597	$	12,569,262	$	12,160,290

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
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Average Balances
Assets	$	14,391,856		$	13,148,173		$	12,798,770		$	12,293,332		$	11,708,538
Loans, net of unearned	9,186,913			8,364,220			8,090,476			7,883,678			7,648,562
Deposits	12,288,378			10,971,193			10,704,643			10,253,643			9,790,756
Earning assets	13,103,159			11,891,455			11,580,295			11,102,581			10,552,166
Interest bearing liabilities	8,155,753			7,841,941			7,513,701			7,174,944			6,872,449
Common equity	1,574,902			1,619,682			1,570,258			1,541,369			1,442,388
Total stockholders' equity	1,580,997			1,619,682			1,570,258			1,541,369			1,442,388
Tangible common equity (non-GAAP)(1)	1,083,834			1,125,705			1,087,495			1,062,568			981,878
Key Performance Ratios
Annualized return on average assets	0.84		%	0.61		%	1.17		%	1.12		%	1.55		%
Annualized return on average common equity (GAAP)	7.69			4.98			9.56			8.91			12.56
Annualized return on average tangible common equity (non-GAAP)(1)	11.97			8.00			14.65			13.78			19.52
Annualized adjusted return on average tangible common equity (non-GAAP)(1)	20.02			14.46			16.22			15.76			21.41
Annualized ratio of net charge-offs to average loans	0.11			0.24			0.04			0.14			0.19
Annualized net interest margin (GAAP)	3.81			3.81			3.86			3.98			4.06
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.85			3.84			3.90			4.02			4.10
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	55.75			61.82			60.31			60.85			64.13
(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.

	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Average Balances
Assets	$	14,391,856		$	11,708,538		$	13,770,015		$	11,489,095
Loans, net of unearned	9,186,913			7,648,562			8,775,566			7,531,360
Deposits	12,288,378			9,790,756			11,629,785			9,574,680
Earning assets	13,103,159			10,552,166			12,497,307			10,342,229
Interest bearing liabilities	8,155,753			6,872,449			7,998,847			6,747,990
Common equity	1,574,902			1,442,388			1,597,292			1,389,612
Total stockholders' equity	1,580,997			1,442,388			1,600,340			1,389,612
Tangible common stockholders' equity	1,083,834			981,878			1,104,770			940,217
Key Performance Ratios
Annualized return on average assets	0.84		%	1.55		%	0.73		%	1.35		%
Annualized return on average common equity (GAAP)	7.69			12.56			6.32			11.13
Annualized return on average tangible common equity (non-GAAP)(1)	11.97			19.52			9.95			17.49
Annualized adjusted return on average tangible common equity (non-GAAP)(1)	20.02			21.41			17.19			19.37
Annualized ratio of net charge-offs to average loans	0.11			0.19			0.17			0.12
Annualized net interest margin (GAAP)	3.81			4.06			3.81			4.09
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.85			4.10			3.85			4.14
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	55.75			64.13			58.64			64.52
(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
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Common Share Data
Book value per common share	$	44.42		$	42.21		$	43.00		$	42.62		$	41.48
Tangible book value per common share (non-GAAP)(1)	$	31.14		$	28.84		$	29.51		$	29.62		$	28.40
Common shares outstanding, net of treasury stock	36,844,744			36,807,217			36,704,278			36,696,190			36,690,061
Tangible common equity ratio (non-GAAP)(1)	7.89		%	8.29		%	8.52		%	8.99		%	8.92		%
Other Selected Trend Information
Effective tax rate	19.75		%	22.77		%	11.99		%	18.66		%	23.12		%
Full time equivalent employees	1,821			1,817			1,908			1,962			2,040
Loans Held to Maturity(2)
Commercial and industrial	$	2,364,400		$	2,550,490		$	2,530,809		$	2,388,861		$	2,325,025
Paycheck Protection Program ("PPP")	1,124,430			—			—			—			—
Owner occupied commercial real estate	1,433,271			1,431,038			1,472,704			1,392,415			1,354,996
Commercial and business lending	4,922,101			3,981,528			4,003,513			3,781,276			3,680,021
Non-owner occupied commercial real estate	1,543,623			1,551,787			1,495,877			1,378,020			1,372,343
Real estate construction	1,115,843			1,069,700			1,027,081			980,298			943,109
Commercial real estate lending	2,659,466			2,621,487			2,522,958			2,358,318			2,315,452
Total commercial lending	7,581,567			6,603,015			6,526,471			6,139,594			5,995,473
Agricultural and agricultural real estate	520,773			550,107			565,837			571,596			559,054
Residential mortgage	735,762			792,540			832,277			823,056			849,576
Consumer	408,728			428,574			443,332			437,362			448,948
Total loans held to maturity	$	9,246,830		$	8,374,236		$	8,367,917		$	7,971,608		$	7,853,051
Total unfunded loan commitments	$	3,065,283		$	2,782,679		$	2,973,732		$	2,659,729		$	2,530,946
(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.
(2) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2020		3/31/2020		12/31/2019		9/30/2019		6/30/2019
Allowance for Credit Losses-Loans
Balance, beginning of period	$	97,350	$	70,395	$	66,222	$	63,850	$	62,639
Impact of ASU 2016-13 adoption	—		12,071		—		—		—
Provision for credit losses	25,007		19,865		4,903		5,201		4,918
Charge-offs	(3,564)		(6,301)		(2,018)		(4,842)		(4,780)
Recoveries	1,144		1,320		1,288		2,013		1,073
Balance, end of period	$	119,937	$	97,350	$	70,395	$	66,222	$	63,850
Allowance for Unfunded Commitments(1)
Balance, beginning of period	$	15,468	$	248	$	—	$	—	$	—
Impact of ASU 2016-13 adoption	—		13,604		—		—		—
Provision for credit losses	1,924		1,616		—		—		—
Balance, end of period	$	17,392	$	15,468	$	—	$	—	$	—
Allowance for lending related credit losses	$	137,329	$	112,818	$	70,395	$	66,222	$	63,850
Provision for Credit Losses
Provision for credit losses-loans	$	25,007	$	19,865	$	4,903	$	5,201	$	4,918
Provision for credit losses-unfunded commitments	1,924		1,616		—		—		—
Provision for credit losses-held to maturity securities(2)	(135)		39		—		—		—
Total provision for credit losses	$	26,796	$	21,520	$	4,903	$	5,201	$	4,918
(1) Prior to the adoption of ASU 2016-13, the allowance for unfunded commitments was immaterial and therefore prior periods have not been shown in this table.
(2) Prior to ASU 2016-13, there was no requirement to record provision for credit losses for held to maturity securities.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Asset Quality
Nonaccrual loans	$	91,609		$	79,280		$	76,548		$	72,208		$	79,619
Loans past due ninety days or more	1,360			—			4,105			40			285
Other real estate owned	5,539			6,074			6,914			6,425			6,646
Other repossessed assets	29			17			11			13			39
Total nonperforming assets	$	98,537		$	85,371		$	87,578		$	78,686		$	86,589
Performing troubled debt restructured loans	$	2,636		$	2,858		$	3,794		$	3,199		$	3,539
Nonperforming Assets Activity
Balance, beginning of period	$	85,371		$	87,578		$	78,686		$	86,589		$	84,399
Net loan charge offs	(2,420)			(4,981)			(730)			(2,829)			(3,707)
New nonperforming loans	26,857			15,796			13,751			6,818			13,688
Acquired nonperforming assets	—			—			3,262			—			230
Reduction of nonperforming loans(1)	(9,911)			(11,937)			(5,859)			(8,861)			(6,246)
Net OREO/repossessed assets sales proceeds and losses	(1,360)			(1,085)			(1,532)			(3,031)			(1,775)
Balance, end of period	$	98,537		$	85,371		$	87,578		$	78,686		$	86,589
Asset Quality Ratios
Ratio of nonperforming loans to total loans	1.01		%	0.95		%	0.96		%	0.91		%	1.02		%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	1.03			0.98			1.01			0.95			1.06
Ratio of nonperforming assets to total assets	0.66			0.64			0.66			0.63			0.71
Annualized ratio of net loan charge-offs to average loans	0.11			0.24			0.04			0.14			0.19
Allowance for loan credit losses as a percent of loans	1.30			1.16			0.84			0.83			0.81
Allowance for lending related credit losses as a percent of loans(2)	1.49			1.35			0.84			0.83			0.81
Allowance for loan credit losses as a percent of nonperforming loans	129.01			122.79			87.28			91.66			79.91
Loans delinquent 30-89 days as a percent of total loans	0.22			0.38			0.33			0.28			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, 2020							March 31, 2020							June 30, 2019
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	3,375,245		$	23,362	2.78	%	$	3,132,103		$	21,731	2.79	%	$	2,217,863		$	16,123	2.92	%
Nontaxable(1)	433,329			4,233		3.93		288,535			2,763		3.85		324,164			3,233		4.00
Total securities	3,808,574			27,595		2.91		3,420,638			24,494		2.88		2,542,027			19,356		3.05
Interest on deposits with other banks and short-term investments	210,347			54		0.10		181,320			721		1.60		424,262			2,299		2.17
Federal funds sold	—			—		—		—			—		—		—			—		—
Loans:(2)(3)
Commercial and industrial(1)	2,453,066			30,759		5.04		2,607,513			32,454		5.01		2,436,443			31,991		5.27
PPP loans	916,405			6,017		2.64		—			—		—		—			—		—
Owner occupied commercial real estate	1,426,019			17,670		4.98		1,433,160			18,581		5.21		1,312,149			18,659		5.70
Non-owner occupied commercial real estate	1,540,958			19,055		4.97		1,472,268			19,530		5.34		1,134,298			17,683		6.25
Real estate construction	1,100,514			12,589		4.60		1,045,836			12,845		4.94		900,733			13,195		5.88
Agricultural and agricultural real estate	532,668			6,171		4.66		552,968			7,039		5.12		566,315			7,465		5.29
Residential mortgage	795,149			9,586		4.85		819,730			10,421		5.11		872,633			11,129		5.12
Consumer	422,134			5,685		5.42		432,745			6,095		5.66		425,991			6,494		6.11
Less: allowance for loan losses	(102,675)			—		—		(74,723)			—		—		(62,685)			—		—
Net loans	9,084,238			107,532		4.76		8,289,497			106,965		5.19		7,585,877			106,616		5.64
Total earning assets	13,103,159			135,181		4.15	%	11,891,455			132,180		4.47	%	10,552,166			128,271		4.88	%
Nonearning Assets	1,288,697							1,256,718							1,156,372
Total Assets	$	14,391,856						$	13,148,173						$	11,708,538
Interest Bearing Liabilities
Savings	$	6,690,504		$	2,372	0.14	%	$	6,277,528		$	10,082	0.65	%	$	5,360,355		$	11,895	0.89	%
Time deposits	1,096,386			3,762		1.38		1,146,619			4,500		1.58		1,142,842			4,243		1.49
Short-term borrowings	82,200			61		0.30		141,807			296		0.84		92,977			338		1.46
Other borrowings	286,663			3,424		4.80		275,987			3,660		5.33		276,275			3,819		5.54
Total interest bearing liabilities	8,155,753			9,619		0.47	%	7,841,941			18,538		0.95	%	6,872,449			20,295		1.18
Noninterest Bearing Liabilities
Noninterest bearing deposits	4,501,488							3,547,046							3,287,559
Accrued interest and other liabilities	153,618							139,504							106,142
Total noninterest bearing liabilities	4,655,106							3,686,550							3,393,701
Equity	1,580,997							1,619,682							1,442,388
Total Liabilities and Equity	$	14,391,856						$	13,148,173						$	11,708,538
Net interest income, fully tax-equivalent (non-GAAP)(4)				$	125,562						$	113,642						$	107,976
Net interest spread(1)						3.68	%						3.52	%						3.70	%
Net interest income, fully tax-equivalent (non-GAAP)(4) to total earning assets						3.85	%						3.84	%						4.10	%
Interest bearing liabilities to earning assets	62.24		%					65.95		%					65.13		%
(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) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.
(4) 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, 2020							June 30, 2019
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	3,253,675		$	45,093	2.79	%	$	2,193,576		$	31,999	2.94	%
Nontaxable(1)	360,932			6,996		3.90		357,757			7,148		4.03
Total securities	3,614,607			52,089		2.90		2,551,333			39,147		3.09
Interest bearing deposits with other banks and other short-term investments	195,833			775		0.80		321,922			3,591		2.25
Federal funds sold	—			—		—		278			4		2.90
Loans:(2)(3)
Commercial and industrial(1)	2,530,349			63,213		5.02		2,381,953			62,380		5.28
PPP loans	458,202			6,017		2.64		—			—		—
Owner occupied commercial real estate	1,429,560			36,251		5.10		1,285,930			36,190		5.68
Non-owner occupied commercial real estate	1,506,583			38,585		5.15		1,130,756			35,106		6.26
Real estate construction	1,073,175			25,434		4.77		866,548			25,066		5.83
Agricultural and agricultural real estate	542,818			13,210		4.89		567,330			14,668		5.21
Residential mortgage	807,440			20,007		4.98		878,691			21,415		4.91
Consumer	427,439			11,780		5.54		420,152			12,837		6.16
Less: allowance for loan losses	(88,699)			—		—		(62,664)			—		—
Net loans	8,686,867			214,497		4.97		7,468,696			207,662		5.61
Total earning assets	12,497,307			267,361		4.30	%	10,342,229			250,404		4.88	%
Nonearning Assets	1,272,708							1,146,866
Total Assets	$	13,770,015						$	11,489,095
Interest Bearing Liabilities
Savings	$	6,484,016		$	12,454	0.39	%	$	5,241,428		$	21,978	0.85	%
Time deposits	1,121,502			8,262		1.48		1,089,091			7,373		1.37
Short-term borrowings	112,004			357		0.64		143,901			1,227		1.72
Other borrowings	281,325			7,084		5.06		273,570			7,483		5.52
Total interest bearing liabilities	7,998,847			28,157		0.71	%	6,747,990			38,061		1.14	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	4,024,267							3,244,161
Accrued interest and other liabilities	146,561							107,332
Total noninterest bearing liabilities	4,170,828							3,351,493
Stockholders' Equity	1,600,340							1,389,612
Total Liabilities and Stockholders' Equity	$	13,770,015						$	11,489,095
Net interest income, fully tax-equivalent (non-GAAP)(4)				$	239,204						$	212,343
Net interest spread(1)						3.59	%						3.74	%
Net interest income, fully tax-equivalent (non-GAAP)(4) to total earning assets						3.85	%						4.14	%
Interest bearing liabilities to earning assets	64.00		%					65.25		%
(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) In conjunction with the adoption of ASU 2016-13, Heartland reclassified loan balances to more closely align with FDIC codes. All prior period balances have been adjusted.
(4) 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.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
	As of and For the Quarter Ended
	6/30/2020		3/31/2020		12/31/2019		9/30/2019		6/30/2019
Total Assets
Citywide Banks	$	2,546,942	$	2,271,889	$	2,294,512	$	2,335,811	$	2,261,591
New Mexico Bank & Trust	1,899,194		1,670,097		1,763,037		1,607,498		1,534,236
Dubuque Bank and Trust Company	1,849,035		1,591,312		1,646,105		1,547,014		1,680,539
Illinois Bank & Trust	1,470,000		1,295,984		1,301,172		839,721		852,830
Bank of Blue Valley	1,380,159		1,222,358		1,307,688		1,346,342		1,319,226
First Bank & Trust	1,256,710		1,163,181		1,137,714		1,158,320		1,088,796
Wisconsin Bank & Trust	1,203,108		1,079,582		1,090,412		1,032,016		1,042,463
Premier Valley Bank	1,031,899		889,280		903,220		888,401		847,076
Arizona Bank & Trust	970,775		866,107		784,240		695,236		732,783
Minnesota Bank & Trust	951,236		778,724		718,724		718,035		631,339
Rocky Mountain Bank	590,764		576,245		532,191		528,094		503,126
Total Deposits
Citywide Banks	$	2,147,642	$	1,868,404	$	1,829,217	$	1,895,894	$	1,833,259
New Mexico Bank & Trust	1,698,584		1,451,041		1,565,070		1,413,170		1,346,304
Dubuque Bank and Trust Company	1,496,559		1,363,164		1,290,756		1,275,131		1,157,881
Illinois Bank & Trust	1,318,866		1,139,945		1,167,905		768,267		769,577
Bank of Blue Valley	1,138,818		1,008,362		1,016,743		1,091,243		1,077,183
First Bank & Trust	959,886		900,399		893,419		903,410		844,793
Wisconsin Bank & Trust	1,050,766		920,168		941,109		880,217		892,020
Premier Valley Bank	869,165		706,479		707,814		719,141		689,384
Arizona Bank & Trust	865,430		754,464		693,975		578,694		646,728
Minnesota Bank & Trust	820,199		648,560		574,369		600,175		515,310
Rocky Mountain Bank	519,029		496,465		468,314		462,825		438,349

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
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income (GAAP)	$	30,131		$	20,040		$	37,851		$	34,612		$	45,169
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	2,130			2,355			2,305			2,291			2,617
Net income excluding intangible amortization (non-GAAP)	$	32,261		$	22,395		$	40,156		$	36,903		$	47,786
Average common equity (GAAP)	$	1,574,902		$	1,619,682		$	1,570,258		$	1,541,369		$	1,442,388
Less average goodwill	446,345			446,345			433,374			427,097			410,642
Less average core deposit and customer relationship intangibles, net	44,723			47,632			49,389			51,704			49,868
Average tangible common equity (non-GAAP)	$	1,083,834		$	1,125,705		$	1,087,495		$	1,062,568		$	981,878
Annualized return on average common equity (GAAP)	7.69		%	4.98		%	9.56		%	8.91		%	12.56		%
Annualized return on average tangible common equity (non-GAAP)	11.97		%	8.00		%	14.65		%	13.78		%	19.52		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	124,146		$	112,511		$	112,745		$	111,321		$	106,708
Plus tax-equivalent adjustment(1)	1,416			1,131			1,109			1,140			1,268
Net interest income, fully tax-equivalent (non-GAAP)	$	125,562		$	113,642		$	113,854		$	112,461		$	107,976
Average earning assets	$	13,103,159		$	11,891,455		$	11,580,295		$	11,102,581		$	10,552,166
Annualized net interest margin (GAAP)	3.81		%	3.81		%	3.86		%	3.98		%	4.06		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.85			3.84			3.90			4.02			4.10
Purchase accounting discount amortization on loans included in annualized net interest margin	0.16			0.09			0.17			0.23			0.18

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	1,636,672		$	1,553,714		$	1,578,137		$	1,563,843		$	1,521,787
Less goodwill	446,345			446,345			446,345			427,097			427,097
Less core deposit and customer relationship intangibles, net	43,011			45,707			48,688			49,819			52,718
Tangible common equity (non-GAAP)	$	1,147,316		$	1,061,662		$	1,083,104		$	1,086,927		$	1,041,972
Common shares outstanding, net of treasury stock	36,844,744			36,807,217			36,704,278			36,696,190			36,690,061
Common equity (book value) per share (GAAP)	$	44.42		$	42.21		$	43.00		$	42.62		$	41.48
Tangible book value per common share (non-GAAP)	$	31.14		$	28.84		$	29.51		$	29.62		$	28.40
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,147,316		$	1,061,662		$	1,083,104		$	1,086,927		$	1,041,972
Total assets (GAAP)	$	15,026,153		$	13,294,509		$	13,209,597		$	12,569,262		$	12,160,290
Less goodwill	446,345			446,345			446,345			427,097			427,097
Less core deposit and customer relationship intangibles, net	43,011			45,707			48,688			49,819			52,718
Total tangible assets (non-GAAP)	$	14,536,797		$	12,802,457		$	12,714,564		$	12,092,346		$	11,680,475
Tangible common equity ratio (non-GAAP)	7.89		%	8.29		%	8.52		%	8.99		%	8.92		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Net interest income (GAAP)	$	124,146		$	112,511		$	112,745		$	111,321		$	106,708
Tax-equivalent adjustment(1)	1,416			1,131			1,109			1,140			1,268
Fully tax-equivalent net interest income	125,562			113,642			113,854			112,461			107,976
Noninterest income	30,637			25,817			28,030			29,400			32,061
Securities gains, net	(2,006)			(1,658)			(491)			(2,013)			(3,580)
Unrealized (gain)/loss on equity securities, net	(680)			231			(11)			(144)			(112)
Gain on extinguishment of debt	—			—			—			(375)			—
Valuation adjustment on servicing rights	(9)			1,565			(668)			626			364
Adjusted revenue (non-GAAP)	$	153,504		$	139,597		$	140,714		$	139,955		$	136,709
Total noninterest expenses (GAAP)	$	90,439		$	90,859		$	92,866		$	92,967		$	75,098
Less:
Core deposit and customer relationship intangibles amortization	2,696			2,981			2,918			2,899			3,313
Partnership investment in tax credit projects	791			184			3,038			3,052			1,465
(Gain)/loss on sales/valuation of assets, net	701			16			1,512			356			(18,286)
Acquisition, integration and restructuring costs	673			1,376			537			1,500			929
Adjusted noninterest expenses (non-GAAP)	$	85,578		$	86,302		$	84,861		$	85,160		$	87,677
Efficiency ratio, fully tax-equivalent (non-GAAP)	55.75		%	61.82		%	60.31		%	60.85		%	64.13		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	122		$	44		$	—		$	100		$	100
Occupancy	—			—			11			—			10
Furniture and equipment	15			24			7			(4)			84
Professional fees	505			996			462			855			624
Advertising	4			89			31			115			52
(Gain)/loss on sales/valuations of assets, net	—			—			—			—			—
Other noninterest expenses	27			223			26			434			59
Total acquisition, integration and restructuring costs	$	673		$	1,376		$	537		$	1,500		$	929
After tax impact on diluted earnings per share(1)	$	0.01		$	0.03		$	0.01		$	0.03		$	0.02
Reconciliation of Adjusted Net Income and Adjusted Diluted EPS (non-GAAP)
Net income (GAAP)	$	30,131		$	20,040		$	37,851		$	34,612		$	45,169
Provision for credit losses(1)	21,169			17,001			3,873			4,109			3,885
Acquisition, integration and restructuring costs(1)	532			1,087			424			1,185			734
Adjusted net income (non-GAAP)	$	51,832		$	38,128		$	42,148		$	39,906		$	49,788
Diluted earnings per share (GAAP)	$	0.82		$	0.54		$	1.03		$	0.94		$	1.26
Adjusted diluted earnings per share (non-GAAP)	$	1.40		$	1.03		$	1.14		$	1.08		$	1.39
Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP)
Adjusted net income (non-GAAP)	$	51,832		$	38,128		$	42,148		$	39,906		$	49,788
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	2,130			2,355			2,305			2,291			2,617
Adjusted net income excluding intangible amortization (non-GAAP)	$	53,962		$	40,483		$	44,453		$	42,197		$	52,405
Average tangible common equity (non-GAAP)	$	1,083,834		$	1,125,705		$	1,087,495		$	1,062,568		$	981,878
Annualized adjusted return on average tangible common equity (non-GAAP)	20.02		%	14.46		%	16.22		%	15.76		%	21.41		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

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,
	2020			2019			2020			2019
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income (GAAP)	$	30,131		$	45,169		$	50,171		$	76,666
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	2,130			2,617			4,485			4,862
Net income excluding intangible amortization (non-GAAP)	$	32,261		$	47,786		$	54,656		$	81,528
Average common equity (GAAP)	$	1,574,902		$	1,442,388		$	1,597,292		$	1,389,612
Less average goodwill	446,345			410,642			446,345			401,207
Less average core deposit and customer relationship intangibles, net	44,723			49,868			46,177			48,188
Average tangible common equity (non-GAAP)	$	1,083,834		$	981,878		$	1,104,770		$	940,217
Annualized return on average common equity (GAAP)	7.69		%	12.56		%	6.32		%	11.13		%
Annualized return on average tangible common equity (non-GAAP)	11.97		%	19.52		%	9.95		%	17.49		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	124,146		$	106,708		$	236,657		$	209,663
Plus tax-equivalent adjustment(1)	1,416			1,268			2,547			2,680
Net interest income, fully tax-equivalent (non-GAAP)	$	125,562		$	107,976		$	239,204		$	212,343
Average earning assets	$	13,103,159		$	10,552,166		$	12,497,307		$	10,342,229
Annualized net interest margin (GAAP)	3.81		%	4.06		%	3.81		%	4.09		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.85			4.10			3.85			4.14
Purchase accounting discount amortization on loans included in annualized net interest margin	0.16			0.18			0.10			0.17
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Net interest income (GAAP)	$	124,146		$	106,708		$	236,657		$	209,663
Tax-equivalent adjustment(1)	1,416			1,268			2,547			2,680
Fully tax-equivalent net interest income	125,562			107,976			239,204			212,343
Noninterest income	30,637			32,061			56,454			58,778
Securities gains, net	(2,006)			(3,580)			(3,664)			(5,155)
Unrealized (gain)/loss on equity securities, net	(680)			(112)			(449)			(370)
Gain on extinguishment of debt	—			—			—			—
Valuation adjustment on servicing rights	(9)			364			1,556			953
Adjusted revenue (non-GAAP)	$	153,504		$	136,709		$	293,101		$	266,549
Total noninterest expenses (GAAP)	$	90,439		$	75,098		$	181,298		$	163,328
Less:
Core deposit and customer relationship intangibles amortization	2,696			3,313			5,677			6,155
Partnership investment in tax credit projects	791			1,465			975			1,940
(Gain)/loss on sales/valuation of assets, net	701			(18,286)			717			(21,290)
Acquisition, integration and restructuring costs	673			929			2,049			4,543
Adjusted noninterest expenses (non-GAAP)	$	85,578		$	87,677		$	171,880		$	171,980
Efficiency ratio, fully tax-equivalent (non-GAAP)	55.75		%	64.13		%	58.64		%	64.52		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	122		$	100		$	166		$	716
Occupancy	—			10			—			1,204
Furniture and equipment	15			84			39			84
Professional fees	505			624			1,501			1,048
Advertising	4			52			93			57
(Gain)/loss on sales/valuations of assets, net	—			—			—			1,003
Other noninterest expenses	27			59			250			431
Total acquisition, integration and restructuring costs	$	673		$	929		$	2,049		$	4,543
After tax impact on diluted earnings per share(1)	$	0.01		$	0.02		$	0.04		$	0.10
Reconciliation of Adjusted Net Income and Adjusted Diluted EPS (non-GAAP)
Net income (GAAP)	$	30,131		$	45,169		$	50,171		$	76,666
Provision for credit losses(1)	21,169			3,885			38,170			5,177
Acquisition, integration and restructuring costs(1)	532			734			1,619			3,589
Adjusted net income (non-GAAP)	$	51,832		$	49,788		$	89,960		$	85,432
Diluted earnings per share (GAAP)	$	0.82		$	1.26		$	1.36		$	2.17
Adjusted diluted earnings per share (non-GAAP)	$	1.40		$	1.39		$	2.44		$	2.42
Reconciliation of Annualized Adjusted Return on Average Tangible Common Equity (non-GAAP)
Adjusted net income (non-GAAP)	$	51,832		$	49,788		$	89,960		$	85,432
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	2,130			2,617			4,485			4,862
Adjusted net income excluding intangible amortization (non-GAAP)	$	53,962		$	52,405		$	94,445		$	90,294
Average tangible common equity (non-GAAP)	$	1,083,834		$	981,878		$	1,104,770		$	940,217
Annualized adjusted return on average tangible common equity (non-GAAP)	20.02		%	21.41		%	17.19		%	19.37		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and For the Quarter Ended
	6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
PPP loan balances	$	1,124,430		$	—		$	—		$	—		$	—
Average PPP loan balances	916,405
PPP fee income	$	3,655		$	—		$	—		$	—		$	—
PPP interest income	2,362			—			—			—			—
Total PPP interest income	$	6,017		$	—		$	—		$	—		$	—
Selected ratios excluding PPP loans and interest income
Annualized net interest margin (GAAP)	3.90		%	—		%	—		%	—		%	—		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.95			—			—			—			—
Ratio of nonperforming loans to total loans	1.14			—			—			—			—
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans	1.18			—			—			—			—
Ratio of nonperforming assets to total assets	0.71			—			—			—			—
Annualized ratio of net loan charge-offs to average loans	0.12			—			—			—			—
Allowance for loan credit losses as a percent of loans	1.48			—			—			—			—
Allowance for lending related credit losses as a percent of loans	1.69			—			—			—			—
Loans delinquent 30-89 days as a percent of total loans	0.26			—			—			—			—
After tax impact of PPP interest income on diluted earnings per share(1)	$	0.13		$	—		$	—		$	—		$	—

	As of and For the Six Months Ended
	June 30, 2020			June 30, 2019
PPP loan balances	$	1,124,430		$	—
PPP average loan balances	458,202			—
PPP fee income	$	3,655		$	—
PPP interest income	2,362			—
Total PPP interest income	$	6,017		$	—
Selected ratios excluding PPP loans and interest income
Annualized net interest margin (GAAP)	3.85		%	—		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.90			—
Annualized ratio of net loan charge-offs to average loans	0.18			—
After tax impact of PPP interest income on diluted earnings per share(1)	$	0.13		$	—
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

EX-99.2

Heartland Financial USA, Inc. COVID-19 Credit Overview Commercial and Ag Portfolios 2nd Quarter 2020

Customer Segment Profiles Affected by COVID-19 Loans $ Loans % Loans $ Loans % Industry 06/30/20 06/30/20 03/31/20 03/31/20 Lodging $490,475 4.38% $498,596 4.47% Multi-Family $474,610 4.24% $436,931 3.92% Retail Trade $407,030 3.64% $367,727 3.30% Retail Properties $369,782 3.31% $408,506 3.66% Restaurant & Bars $255,701 2.29% $247,239 2.22% Nursing / Assisted $130,103 1.16% $126,267 1.13% Oil & Gas $63,973 0.57% $56,302 0.50% Child Care $44,968 0.40% $48,455 0.43% Gaming $34,618 0.31% $34,790 0.31% Total $2,271,260 20.30% $2,224,813 19.94% Industry segments most effected were determined considering the following: • Impact of Federal/State stay at home or shelter in place directives • Impact of State mandated business closures and restrictions • Significant increase in unemployment – reduction in consumer spending and ability to continue to pay rent • Implementation of corporate travel restrictions coupled with decline in leisure travel • Cancellation of events of all types and sizes • Cancellation of schools coupled with a sudden rise in telecommuting • Residents within nursing homes/assisted living centers are deemed an at-risk population • PPP loans in the profiled categories equaled $187 million as of 6/30/20 (excluded from above figures) Note: Outstanding exposure + undisbursed commitments, dollars in thousands Amounts as of 6/30/20 exclude PPP Loans 2

COVID Related Loan Modifications Modification Types Balances of % of Total P&I Loans Category Interest Only Payments 1 2 Loan Category Modified Loans Payment Deferred Other Commercial $1,017,948 16% 60% 39% 1% Agriculture $31,836 6% 83% 12% 5% Residential $43,545 6% 0% 100% 0% Consumer $9,532 2% 0% 100% 0% Total Modifications $1,102,862 14% 58% 41% 1% Larger Exposure Balances of % of Total % of Total Commercial Loans Segment Loan Segments Modified 1 Loans 2 Modifications 1 Lodging $250,447 51% 23% Multi-Family $86,419 18% 8% Retail Trade $27,868 7% 3% Retail Properties $88,094 24% 8% Restaurant & Bars $120,723 47% 11% Comments: • Payment modifications are for 90 days with some local exceptions granted • Commercial modifications represent 92% of all modifications • As of July 23, 2020, approximately $347.7 million or 32% of the $1.1 billion of COVID Loan modifications as of June 30, 2020 have returned to normal payment status (1) Balances of Loans Modified are as of June 30, 2020, dollars in thousands (2) Total Loans used for base of calculation are as of June 30, 2020, excluding PPP Loans 3

Lodging Portfolio Overview Lodging Portfolio Detail, 06/30/20 Portfolio Highlights • Pre-Covid Statistics: Outstanding Loans $425,374 Unfunded Commitments $65,101 • Analyzed population included loans with Total Portfolio $490,475 greater than $1 million in exposure and Average Exposure per Loan $2,568 represented 97.3% of total portfolio % of HTLF Exposure 4.38% • $174 million of analyzed population is under development with 55% drawn Geographic Distribution • 76% of exposure represents flagged Minnesota properties 1.5% Montana 1.7% Colorado • Disciplined underwriting 21.2% Arizona Kansas / Missouri – Weighted Average DSCR of 1.64 3.9% 10.0% – Weighted Average LTV of 70% New Mexico California 11.1% 10.2% • Exposure well dispersed across 11 state footprint Texas Wisconsin 7.7% • $250.5 million of loan modifications processed 13.0% Iowa as of 6/30/20 Illinois 12.1% 7.6% • $35.4 million have returned to regular payment schedules as of 7/23/20 Note: Dollars in thousands, excluding PPP Loans 4

Multi-Family Portfolio Overview Multi-Family Portfolio Detail, 06/30/20 Portfolio Highlights • Pre-Covid Statistics: Outstanding Loans $353,878 Unfunded Commitments $120,732 • Analyzed population included loans with Total Portfolio $474,610 greater than $1 million in exposure and Average Exposure per Loan $1,368 represented 77.4% of total portfolio % of HTLF Exposure 4.24% • Disciplined underwriting Geographic Distribution – Weighted average DSCR of 1.35 Montana – Weighed average of LTV of 65% 2.2% Minnesota • Exposure well dispersed across 11 state 3.0% Colorado Arizona footprint 23.4% 5.1% Kansas / Missouri 2.3% • Granular population - average loan amount of $1.4 million California New Mexico 8.4% 17.9% • $86.4 million of loan modifications processed as of 6/30/20 Texas 9.6% • $18.3 million have returned to regular payment Iowa Wisconsin schedules as of 7/23/20 Illinois 9.1% 10.4% 8.6% Note: Dollars in thousands, excluding PPP Loans 5

Retail Trade Portfolio Overview Retail Trade Portfolio Detail, 06/30/20 Portfolio Highlights • Pre-Covid Statistics: Outstanding Loans $307,951 Unfunded Commitments $99,079 • Analyzed population included loans with Total Portfolio $407,030 greater than $1 million in exposure and Average Exposure per Loan $474 represented 69.4% of total portfolio % of HTLF Exposure 3.64% • Disciplined underwriting Geographic Distribution – Weighted average DSCR of 8.98 • Exposure well dispersed across 11 state footprint Montana Minnesota Colorado Arizona 5.8% 3.2% • Granular population - average loan amount of 7.7% 16.3% $474 thousand • $27.9 million of loan modifications processed New Mexico Kansas / Missouri 13.7% 8.8% as of 6/30/20 California • $5.8 million have returned to regular payment Wisconsin 5.6% 4.8% Texas schedules as of 7/23/20 5.4% Illinois Iowa 9.0% 19.7% Note: Dollars in thousands, excluding PPP Loans 6

Retail Properties Portfolio Overview Retail Properties Portfolio Detail, 06/30/20 Portfolio Highlights Outstanding Loans $344,173 • Pre-Covid Statistics: Unfunded Commitments $25,609 • Analyzed population included loans with Total Portfolio $369,782 greater than $1 million in exposure and Average Exposure per Loan $1,091 represented 79.9% of total portfolio % of HTLF Exposure 3.31% • Disciplined underwriting Geographic Distribution – Weighted average DSCR of 1.89 – Weighted average LTV of 59% Minnesota 12.0% Colorado • Exposure well dispersed across 11 state Kansas / Missouri Montana 14.5% footprint 3.7% 7.8% Arizona • Average loan amount of $1.1 million 4.7% California 12.5% • $88.1 million of loan modifications processed to date as of 6/30/20 New Mexico Texas 7.4% 18.4% • $34.1 million have returned to regular payment Illinois 15.0% schedules as of 7/23/20 Iowa Wisconsin 1.9% 2.1% Note: Dollars in thousands, excluding PPP Loans 7

Restaurants & Bars Portfolio Overview Restaurants & Bars Portfolio Detail, 06/30/20 Portfolio Highlights Outstanding Loans $237,949 • Pre-Covid Statistics: Unfunded Commitments $17,752 • Analyzed population included loans with Total Portfolio $255,701 greater than $1 million in exposure and Average Exposure per Loan $386 represented 77.6% of total portfolio % of HTLF Exposure 2.29% • Disciplined underwriting Geographic Distribution – Weighted average DSCR of 2.46 Kansas / Missouri • 22% of analyzed exposure represents 3.0% franchised restaurants Montana Colorado Minnesota 1.2% 17.6% 5.7% • Exposure well dispersed across 11 state Arizona California footprint 4.7% 9.8% • Granular population - average loan amount of $386 thousand New Mexico Texas 17.5% 15.7% • $120.7 million of loan modifications processed as of 6/30/2020 Wisconsin Illinois 8.8% 10.7% • $50.7 million have returned to regular payment schedules as of 7/23/20 Iowa 5.3% Note: Dollars in thousands, excluding PPP Loans 8

Agriculture Portfolio Overview Agriculture Portfolio Detail, 06/30/20 Portfolio Highlights Cotton • Ag portfolio represents 6.4% of total loans Other 4.1% Farming • 7.6% or $45.5 million of total portfolio is FSA 12.7% Dairy guaranteed Corn/Beans/ 21.2% • 80% of Ag loans have a Pass rating Hay 27.4% • 22% of HTLF Sub-Standard loans are from the Hog and Ag Portfolio Wheat Beef Pig 6.7% • Crop insurance is required on credit exposures 22.8% 5.1% greater than $500,000 Geographic Distribution Agriculture Loans Outstanding (dollars in thousands) NM 8.0% MT 14.0% WI 32.7% KS/MO 7.3% TX 6.8% IA 26.7% Other HTLF Markets 4.5% Pie Charts are based on outstanding exposure + undisbursed commitments Total Loans used for base of calculation are as of June 30, 2020, excluding PPP Loans 9

Construction Portfolio Overview Comments: . Well distributed over geographic footprint . Diversified by property type (1) Balances of Loans as of June 30, 2020

XML

Cover	Jul. 27, 2020
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Jul. 27, 2020
Entity Registrant Name	Heartland Financial USA, Inc.
Entity File Number	001-15393
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	42-1405748
Entity Address, Address Line One	1398 Central Avenue
Entity Address, City or Town	Dubuque,
Entity Address, State or Province	IA
Entity Address, Postal Zip Code	52001
City Area Code	563
Local Phone Number	589-2100
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000920112
Common Stock, par value $1.00 per share
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	HTLF
Security Exchange Name	NASDAQ
Depositary Shares (each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E)
Entity Information [Line Items]
Title of 12(b) Security	Depositary Shares (each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E)
Trading Symbol	HTLFP
Security Exchange Name	NASDAQ