GlobeNewswire Inc | Oct 26, 2020 04:00PM EDT

October 26, 2020

Dubuque, IA, Oct. 26, 2020 (GLOBE NEWSWIRE) -- Highlights and Developments

Record quarterly net income available to common stockholders of $45.5 million compared to $34.6 million for the third quarter of 2019, an increase of $10.9 million or 32% Diluted earnings per common share of $1.23 in comparison with $0.94 for the third quarter of the prior year, an increase of $0.29 or 31% Net interest margin of 3.51% (3.55% on a fully tax-equivalent basis, non-GAAP)^(1) during the third quarter of 2020, compared to 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP)^(1) during the second quarter of 2020 and 3.98% (4.02% on a fully tax-equivalent basis, non-GAAP)^(1) during the third quarter of 2019 Efficiency ratio (non-GAAP)^1 of 54.67% compared to 60.85% for the third quarter of 2019 Contributed $1.5 million for the nine months ended September 30, 2020, to support communities served by Heartland and its subsidiary banks, including recent donations of $260,000 to local schools

Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net income availableto common $ 45.5 $ 34.6 $ 95.7 $ 111.3 stockholders (inmillions)Diluted earnings per 1.23 0.94 2.59 3.11 common share Return on average 1.19 % 1.12 % 0.90 % 1.27 %assetsReturn on average 10.90 8.91 7.90 10.33 common equityReturn on averagetangible common 16.11 13.78 12.10 16.13 equity (non-GAAP)^(1)Net interest margin 3.51 3.98 3.70 4.05 Net interest margin,fully tax-equivalent 3.55 4.02 3.74 4.10 (non-GAAP)^(1)Efficiency ratio,fully-tax equivalent 54.67 60.85 57.28 63.26 (non-GAAP)^(1)

(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 set a new record of $45.5 million for quarterly net income availableto common stockholders during the third quarter of 2020, an increase of $10.9million or 32% over the same quarter of 2019. Earnings per diluted common sharetotaled $1.23, an increase of $0.29 or 31% from $0.94 in the third quarter of2019."Bruce K. Lee, president and chief executive officer, Heartland Financial USA,Inc.

Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following quarterly results:

-- net income available to common stockholders of $45.5 million, or $1.23 per diluted common share, for the quarter ended September 30, 2020, compared to $34.6 million, or $0.94 per diluted common share, for the third quarter of 2019. -- excluding tax-effected provision for credit losses of $1.3 million and tax-effected acquisition, integration and restructuring costs of $905,000, adjusted net income available to common stockholders (non-GAAP) was $47.8 million, or $1.29 of adjusted earnings per diluted common share (non-GAAP) for the third quarter of 2020, compared to $39.9 million (non-GAAP) or $1.08 of adjusted earnings per diluted common share (non-GAAP), for the third quarter of 2019, which excluded tax-effected provision for credit losses of $4.1 million and tax-effected acquisition, integration and restructuring costs of $1.2 million. -- return on average common equity was 10.90% and return on average assets was 1.19% for the third quarter of 2020, compared to 8.91% and 1.12%, respectively, for the same quarter in 2019. -- return on average tangible common equity (non-GAAP) of 16.11% and adjusted return on average tangible common equity (non-GAAP) of 16.86% for the third quarter of 2020 compared to 13.78% and 15.76%, respectively, for the third quarter of 2019.

Heartland reported the following results for the nine months ended September 30, 2020:

-- net income available to common stockholders of $95.7 million or $2.59 per diluted common share, for the nine months ended September 30, 2020, compared to $111.3 million or $3.11 per diluted common share for the nine months ended September 30, 2019. -- excluding tax-effected provision for credit losses of $39.5 million and tax-effected acquisition, integration and restructuring costs of $2.5 million, adjusted net income available to common stockholders (non-GAAP) was $137.7 million, or $3.73 of adjusted earnings per diluted common share (non-GAAP), for the nine months ended September 30, 2020, compared to $125.3 million (non-GAAP), or $3.50 of adjusted earnings per diluted common share (non-GAAP), for the nine months ended September 30, 2019, which excluded tax-effected provision for credit losses of $9.3 million and tax-effected acquisition, integration and restructuring costs of $4.8 million. -- return on average common equity was 7.90% and return on average assets was 0.90% for the first nine months of 2020, compared to 10.33% and 1.27%, respectively, for the same period in 2019. -- return on average tangible common equity (non-GAAP) of 12.10% and adjusted return on average tangible common equity (non-GAAP) of 17.08% for the nine months ended September 30, 2020, compared to 16.13% and 18.05%, respectively, for the nine months ended September 30, 2019.

"Heartland set a new record of $45.5 million for quarterly net income available to common stockholders during the third quarter of 2020, an increase of $10.9 million or 32% over the same quarter of 2019. Earnings per diluted common share totaled $1.23, an increase of $0.29 or 31% from $0.94 in the third quarter of 2019," 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. While the measures described below remain in effect, Heartlands pandemic management plan continues to evolve in response to the recent developments relating to the COVID-19 pandemic. To assure workplace and employee safety and business resiliency while providing relief and support to customers and communities facing challenges from the impacts of the pandemic, the following measures are in place:

-- employees who can work from home continue to do so, and those employees who are working in bank offices have been placed on rotating teams to limit potential exposure to COVID-19; -- all in-person events and large meetings are canceled and have transitioned to virtual meetings; -- employees receive an increase in time off and enhanced health care coverage related to testing and treatments for COVID-19; -- Heartland has installed and requires the use of personal protective equipment in bank offices; -- Heartland has implemented and extended a 20% wage premium for certain customer-facing employees, -- Heartland has provided direct guaranteed loans from the U.S. Small Business Administration (the SBA) to customers through Heartlands participation in the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) and originated $1.2 billion of loans under the Paycheck Protection Program (PPP); -- Heartland has participated in the CARES Act SBA loan payment and deferral program for existing SBA loans; and -- Heartland has contributed $1.5 million to support communities served by Heartland and its subsidiary banks, including recent donations of $260,000 to local schools.

"We are proud of our recent contributions to local schools to help teachers and students learn in a safe and healthy environment. We continue to support the communities in which we live and work during this pandemic," 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 September 30, 2020, June 30, 2020, and March 31, 2020, to customer segment profiles that Heartland currently believes will be more heavily impacted by COVID-19, dollars in thousands:

As of September 30, 2020 As of June 30, 2020 As of March 31, 2020 Total Exposure^ % of Gross Total Exposure^ % of Gross Total Exposure^ % of GrossIndustry (1) Exposure^ (1) Exposure^ (1) Exposure^ (1) (1) (1)Lodging $ 495,187 4.52 % $ 490,475 4.38 % $ 498,596 4.47 %Retail 405,118 3.70 407,030 3.64 367,727 3.30 tradeRetail 363,457 3.32 369,782 3.31 408,506 3.66 propertiesRestaurants 248,053 2.26 255,701 2.29 247,239 2.22 and barsOil and gas 52,766 0.48 63,973 0.57 56,302 0.50 Total $ 1,564,581 14.28 % $ 1,586,961 14.19 % $ 1,578,370 14.15 % (1) Total loans outstanding and unfunded commitments excluding PPP loans

As of September 30, 2020, of the approximately $1.11 billion of loans modified under COVID-19 relief programs, $860.0 million of loans have returned to full payment status, $133.0 million of loans remain in the original deferral status, and second loan modifications have been made on approximately $122.0 million of loans in Heartland's portfolio. Approximately 69% of the second loan modifications are principal and interest deferments for 90 days, and the remainder are primarily interest-only payments for 90 days.

The ultimate impact of the COVID-19 pandemic on Heartland's financial condition and results of operations will depend on 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 $12.1million 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 $4.6million, net of taxes of $1.5million; -- an increase of $13.6million to the allowance for unfunded commitments and a cumulative-effect adjustment to retained earnings totaling $10.2million, net of taxes of $3.4million, 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 an Amended and Restated Agreement and Plan of Merger with AIM Bancshares, Inc.

On October 19, 2020, Heartland entered into an Amended and Restated Agreement and Plan of Merger (the amended and restated merger agreement) relating to the acquisition of AIM Bancshares, Inc. (AIM) and its wholly-owned subsidiary, AimBank, headquartered in Levelland, Texas. The amended and restated merger agreement amends and restates the Agreement and Plan of Merger dated February 11, 2020 between Heartland and AIM (the original merger agreement). The original merger agreement was amended and restated to address certain regulatory concerns raised by the Federal Reserve Board during its review of the transaction contemplated by the original merger agreement. In response to discussions with the Federal Reserve Board, AIM and Heartland agreed that they could better serve the goals of the transaction and more easily address regulatory concerns if they adopted two sequential mergers described in the next paragraph. AIM and Heartland also agreed to adjust the cash component of the merger consideration based on increases in AIMs adjusted tangible common equity as a result of gains in AIMs available-for-sale securities portfolio, an increase in AIMs retained earnings and gains in AIMs held-to-maturity securities portfolio since the date of the original merger agreement. A holdback provision was added to the amended and restated merger agreement as a result of a certain litigation proceedings. Certain other provisions of the original merger agreement were revised to reflect other changes in economic terms and the significantly delayed closing date of the transaction.

In the first merger, AIM will merge with and into AimBank, and holders of shares of AIM common stock will receive one share of AimBank common stock for each share of AIM common stock owned by such holders. In the second merger, which will occur immediately following the consummation of the AIM/AimBank merger, AimBank will merge with and into Heartlands wholly owned subsidiary, First Bank & Trust. In the second merger transaction, all issued and outstanding shares of AimBank common stock will be exchanged for shares of Heartland common stock and cash. As a result, each share of AimBank common stock received by shareholders of AIM in the first merger will be exchanged for 207.0 shares of Heartland common stock and $685.00 of cash. 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 amended and restated merger agreement, including but not limited to adjustments based on changes in the adjusted tangible common equity of AIM. Heartland expects this transaction to close in the fourth quarter of 2020. As of September 30, 2020, AimBank had total assets of approximately $1.85 billion, which included $1.14 billion of gross loans outstanding, and approximately $1.60 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 Banks 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 $392.2 million and loans of approximately $183.8 million as of September 30, 2020. 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 and is subject to certain potential adjustments as set forth in the purchase and assumption agreement.

"We are looking forward to completing the acquisitions of AimBank and four Johnson Bank branches in the fourth quarter," commented Lynn B. Fuller, Heartland's executive operating chairman.

Branch Optimization

In the third quarter of 2020, Heartland's subsidiary banks approved plans to consolidate six branch locations, which included one branch in the Midwest region, four branches in the Western region and one in the Southwestern region and resulted in $1.2 million of fixed asset write-downs. The branch consolidations are expected to be completed in early 2021. Heartland continues to review its branch network for optimization and consolidation opportunities, which may result in additional write-downs of fixed assets in future periods.

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

Net interest margin, expressed as a percentage of average earning assets, was 3.51% (3.55% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2020, compared to 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020 and 3.98% (4.02% on a fully tax-equivalent basis, non-GAAP) during the third quarter of 2019.

Total interest income and average earning asset changes for the third quarter of 2020 compared to the third quarter of 2019 were:

-- Heartland recorded $131.0 million of total interest income, which was a decrease of $2.4 million or 2% from $133.4 million, based on a decrease in the average rate on earning assets, which was partially offset by an increase in average earning assets. -- Total interest income on a tax-equivalent basis was $132.4 million, which was a decrease of $2.2 million or 2% from $134.5 million. -- Average earning assets increased $2.77 billion or 25% to $13.87 billion compared to $11.10 billion for the third quarter of 2019, which was primarily attributable to recent acquisitions and loan growth, including PPP loans. -- The average rate on earning assets decreased 101 basis points to 3.80% compared to 4.81%, which was primarily due to recent decreases in market interest rates and the lower yield on PPP loans, which was 2.63% for the third quarter of 2020.

Total interest expense and average interest bearing liability changes for the third quarter of 2020 compared to the third quarter of 2019 were:

-- Total interest expense was $8.5 million, a decrease of $13.6 million or 62% from $22.1 million, based on a decrease in the average interest rate paid, which was partially offset by an increase in average interest bearing liabilities. -- The average interest rate paid on Heartland's interest bearing liabilities decreased to 0.40% compared to 1.22%, which was primarily due to recent decreases in market interest rates. -- Average interest bearing deposits increased $966.9 million or 14% to $7.76 billion from $6.79 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits from government stimulus payments and other COVID-19 relief programs. -- The average interest rate paid on Heartland's interest bearing deposits decreased 80 basis points to 0.25% compared to 1.05%. -- Average borrowings increased $178.3 million or 47% to $560.4 million from $382.2 million. The average interest rate paid on Heartland's borrowings was 2.49% compared to 4.27%.

Net interest income increased for the third quarter of 2020 compared to the third quarter of 2019:

-- Net interest income totaled $122.5 million compared to $111.3 million, which was an increase of $11.2 million or 10%. -- Net interest income on a tax-equivalent basis totaled $123.9 million compared to $112.5 million, which was an increase of $11.4 million or 10%.

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

Total noninterest income was $31.2 million during the third quarter of 2020 compared to $29.4 million during the third quarter of 2019, an increase of $1.8 million or 6%. Significant changes by noninterest income category for the third quarter of 2020 compared to the third quarter of 2019 were:

-- Net gains on sale of loans held for sale totaled $8.9 million compared to $4.7 million, which was an increase of $4.2 million or 90%, primarily due to an increase in residential mortgage loan activity in response to the recent declines in mortgage interest rates. -- Other noninterest income was $1.7 million compared to $3.2 million, which was a decrease of $1.5 million or 46%. Commercial swap fee income totaled $16,000 compared to $1.6 million.

Total noninterest expense was $90.4 million during the third quarter of 2020 compared to $93.0 million during the third quarter of 2019, which was a decrease of $2.6 million or 3%. Significant changes within the noninterest expense category for the third quarter of 2020 compared to the third quarter of 2019 were:

-- Professional fees increased $1.5 million or 14% to $12.8 million compared to $11.3 million. Included in professional fees for the third quarter of 2020 was $1.6 million of expense for FDIC insurance assessments compared to a benefit of $911,000 in the third quarter of 2019. -- Advertising expense decreased $1.7 million or 65% to $928,000 compared to $2.6 million. The decrease was primarily attributable to a reduction of in-person customer events.

-- Net losses on sales/valuations of assets totaled $1.8 million compared to $356,000, which was an increase of $1.4 million. The increase was primarily attributable to losses and writedowns on fixed assets associated with branch optimization activities. -- Other noninterest expenses totaled $9.8 million compared to $12.0 million, which was a decrease of $2.2 million or 18%. The decrease was primarily attributable to reduced travel expenses and customer entertainment activities because meetings have transitioned to virtual formats.

Heartland's effective tax rate was 22.20% for the third quarter of 2020 compared to 18.66% for the third quarter of 2019. The following items impacted Heartland's third quarter 2020 and 2019 tax calculations:

-- Solar energy tax credits of $965,000 compared to $2.0 million. -- Federal low-income housing tax credits of $195,000 compared to $281,000. -- New markets tax credits of $75,000 compared to $0. -- Tax-exempt interest income as a percentage of pre-tax income of 8.48% compared to 10.08%.

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

Total assets were $15.61 billion at September 30, 2020, an increase of $2.40 billion or 18% from $13.21 billion at year-end 2019. Securities represented 33% and 26% of total assets at September 30, 2020, and December 31, 2019, respectively.

Total loans held to maturity were $9.10 billion at September 30, 2020, and $8.37 billion at December 31, 2019, which was an increase of $731.7 million or 9%. 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 $923.1 million or 23% to $4.93 billion at September 30, 2020, compared to $4.00 billion at December 31, 2019. Excluding $1.13 billion of PPP loans, commercial and business lending decreased $205.0 million or 5% since year-end 2019. -- Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $54.5 million or 2% to $2.58 billion at September 30, 2020 from $2.52 billion at year-end 2019. -- Agricultural and agricultural real estate loans totaled $508.1 million at September 30, 2020, compared to $565.8 million at December 31, 2019, which was a decrease of $57.8 million or 10%.

-- Residential mortgage loans decreased $130.4 million or 16% to $701.9 million at September 30, 2020, from $832.3 million at December 31, 2019.

-- Consumer loans decreased $57.7 million or 13% to $385.7 million at September 30, 2020, compared to $443.3 million at December 31, 2019.

Total deposits were $12.77 billion as of September 30, 2020, compared to $11.04 billion at year-end 2019, an increase of $1.72 billion or 16%. Deposit changes by category were:

-- Demand deposits increased $1.48 billion or 42% to $5.02 billion at September 30, 2020, compared to $3.54 billion at December 31, 2019.

-- Savings deposits increased $434.7 million or 7% to $6.74 billion at September 30, 2020, from $6.31 billion at December 31, 2019.

-- Time deposits decreased $190.7 million or 16% to $1.00 billion at September 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

Provision and Allowance for Credit Losses for Loans Provision expense for credit losses for loans for the third quarter of 2020 was $4.7 million, which was a decrease of $20.3 million from $25.0 million recorded in the prior quarter and a decrease of $460,000 from $5.2 million recorded in the third quarter of 2019. The provision expense for the third quarter of 2020 was impacted by several factors, including:

-- decreases in balances of loans held to maturity of $147.2 million from the prior quarter; -- modest changes in credit quality marked by delinquencies of 0.17% of total loans and nonpass loans of 8.7% of total loans for the third quarter compared to delinquencies of 0.22% of total loans and nonpass loans of 8.1% of total loans for the second quarter; -- consistent macroeconomic outlook compared to the second quarter of 2020, and -- the charge off of one $5.9 million commercial and industrial loan originated in California for which no specific reserve was previously established.

Heartland's allowance for credit losses for loans totaled $103.4 million and $70.4 million at September 30, 2020, and December 31, 2019, respectively. The following items have impacted Heartland's allowance for credit losses for loans for the nine months ended September 30, 2020:

-- The allowance for credit losses for loans increased $12.1 million after the adoption of CECL on January 1, 2020. -- Provision expense for the nine months ended September 30, 2020, totaled $49.6 million. -- Net charge offs of $28.7 million have been recorded for the first nine months of 2020, which included $21.3 million of net charge offs for the third quarter. During the third quarter of 2020, Heartland charged off $13.9 million on individually assessed loans with principal balances of $17.1 million that had been specifically reserved in the second quarter of 2020 in addition to the charge off of the $5.9 million loan previously described.

Heartland expects that net charge offs could remain elevated in future periods as customers ability to repay loans is adversely impacted by economic disruptions caused by the COVID-19 pandemic.

Provision and Allowance for Credit Losses for Unfunded Commitments Heartland's allowance for unfunded commitments totaled $13.9 million after the adoption of CECL on January 1, 2020. Unfunded commitments declined $84.8 million or 3% during the quarter to $2.98 billion at September 30, 2020, and as a result, Heartland recorded a benefit to provision for credit losses for unfunded loan commitments of $3.1 million. At September 30, 2020, the allowance for unfunded commitments was $14.3 million.

Total Provision and Allowance for Lending Related Credit LossesThe total provision for lending related credit losses was $1.7 million for the third quarter of 2020. The total allowance for lending related credit losses was $117.7 million at September 30, 2020, which was 1.29% of loans as of September 30, 2020.

Nonperforming Assets and Loan Delinquencies Decrease Since December 31, 2019

Nonperforming assets decreased $1.7 million or 2% to $85.9 million or 0.55% of total assets at September 30, 2020, compared to $87.6 million or 0.66% of total assets at December 31, 2019. Nonperforming loans were $80.7 million or 0.89% of total loans at September 30, 2020, compared to $80.7 million or 0.96% of total loans at December 31, 2019. At September 30, 2020, loans delinquent 30-89 days were 0.17% of total loans compared to 0.33% of total loans at December 31, 2019. COVID-19 payment deferral and loan modification programs could delay the recognition of net charge-offs, delinquencies and nonaccrual status for loans that would have otherwise moved into past due or nonaccrual status.

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. -- Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. -- Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength. -- Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. -- Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength. -- 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 DetailsHeartland 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. A replay will be available until October 25, 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 $15.61 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 113 banking locations serving 82 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Any statements about Heartlands expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These forward-looking statements include information about possible or assumed future results of Heartlands operations or performance. These forward-looking statements are generally identified by the use of the words believe, expect, intent, anticipate, plan, estimate, project, will, would, could, should, may, view, opportunity, potential, or similar expressions that are used in this release, and future oral and written statements of Heartland and its management. Although Heartland has made these statements based on managements experience and best estimate of future events, the ability of Heartland to predict results or the actual effect of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed below and in the risk factors in Heartland's reports filed with the Securities and Exchange Commission (SEC), include, among others:

-- The impact of the COVID-19 pandemic on Heartland and U.S. and global financial markets;

-- Measures enacted by the U.S. federal and state governments and adopted 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 the provision for credit losses and net charge-offs of Heartland; -- Civil unrest in the communities that Heartland serves; -- Levels of unemployment in the geographic areas in which Heartland operates; -- Real estate market values in these geographic 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 and regulatory changes affecting banking, tax, securities, insurance and monetary and financial matters; -- Monetary and fiscal policies of the U.S. Government including policies of the U.S. Department of Treasury and the Federal Reserve Board; -- The quality or composition of the loan and investment portfolios of Heartland; -- Demand for loan products and financial services, deposit flows and competition in Heartlands 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; -- The ability of Heartland to implement technological changes as planned and to develop and maintain secure and reliable electronic delivery systems; -- Heartlands ability to retain key executives and employees; and -- The ability of Heartland 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 COVID-19 pandemics severity, its duration and the extent of its impact on Heartlands business, financial condition, results of operations, liquidity and prospects remain uncertain. The deterioration in general business and economic conditions and turbulence in domestic and global financial markets caused by the COVID-19 pandemic have negatively affected Heartlands net income, total equity and book value per common share, and continued economic deterioration could adversely affect 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 believe that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.

These risks and uncertainties should be considered in evaluating forward-looking statements made by Heartland or on its behalf, and undue reliance should not be placed on these statements. There can be no assurance that other factors not currently anticipated by Heartland will not materially and adversely affect Heartlands business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the recent outbreak of the COVID-19 pandemic and the impact of varying governmental responses that affect Heartlands customers and the economies where they operate. Please take into account that forward-looking statements speak only as of the date they are made, and except as required by applicable law, Heartland does not undertake any obligation to publicly correct or update any forward-looking statement. Further information concerning Heartland and its business, including additional factors that could materially affect Heartlands financial results, is included in Heartlands filings with the SEC.

-FINANCIAL TABLES FOLLOW- ###







HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA For the Quarter Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019Interest Income Interest and fees $ 102,657 $ 110,566 $ 316,076 $ 317,049 on loansInterest on securities:Taxable 25,016 18,567 70,109 50,566 Nontaxable 3,222 2,119 8,749 7,766 Interest on federal ? ? ? 4 funds soldInterest ondeposits with otherbanks and 72 2,151 847 5,742 short-terminvestmentsTotal Interest 130,967 133,403 395,781 381,127 IncomeInterest Expense Interest on 4,962 17,982 25,678 47,333 depositsInterest onshort-term 78 250 435 1,477 borrowingsInterest on other 3,430 3,850 10,514 11,333 borrowingsTotal Interest 8,470 22,082 36,627 60,143 ExpenseNet Interest Income 122,497 111,321 359,154 320,984 Provision for 1,678 5,201 49,994 11,754 credit lossesNet Interest IncomeAfter Provision for 120,819 106,120 309,160 309,230 Credit LossesNoninterest Income Service charges and 11,749 12,366 34,742 39,789 feesLoan servicing 638 821 1,980 3,888 incomeTrust fees 5,357 4,959 15,356 14,258 Brokerage andinsurance 649 962 1,977 2,724 commissionsSecurities gains, 1,300 2,013 4,964 7,168 netUnrealized gain/(loss) on equity 155 144 604 514 securities, netNet gains on saleof loans held for 8,894 4,673 21,411 12,192 saleValuationadjustment on (120) (626) (1,676) (1,579) servicing rightsIncome on bankowned life 868 881 2,533 2,668 insuranceOther noninterest 1,726 3,207 5,779 6,556 incomeTotal Noninterest 31,216 29,400 87,670 88,178 IncomeNoninterest Expense Salaries and 50,978 49,927 151,053 150,107 employee benefitsOccupancy 6,732 6,594 19,705 19,627 Furniture and 2,500 2,862 8,601 8,690 equipmentProfessional fees 12,802 11,276 38,951 36,642 Advertising 928 2,622 4,128 7,551 Core deposit andcustomerrelationship 2,492 2,899 8,169 9,054 intangiblesamortizationOther real estateand loan collection 335 (89) 872 774 expenses, net(Gain)/loss onsales/valuations of 1,763 356 2,480 (20,934) assets, netAcquisition,integration and 1,146 1,500 3,195 6,043 restructuring costsPartnershipinvestment in tax 927 3,052 1,902 4,992 credit projectsOther noninterest 9,793 11,968 32,638 33,749 expensesTotal Noninterest 90,396 92,967 271,694 256,295 ExpenseIncome Before 61,639 42,553 125,136 141,113 Income TaxesIncome taxes 13,681 7,941 27,007 29,835 Net Income 47,958 34,612 98,129 111,278 Preferred dividends (2,437) ? (2,437) ? Net IncomeAvailable to Common $ 45,521 $ 34,612 $ 95,692 $ 111,278 StockholdersEarnings per common $ 1.23 $ 0.94 $ 2.59 $ 3.11 share-dilutedWeighted averageshares 36,995,572 36,835,191 36,955,970 35,817,899 outstanding-diluted



HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA For the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Interest Income Interest and fees $ 102,657 $ 107,005 $ 106,414 $ 107,566 $ 110,566 on loansInterest on securities:Taxable 25,016 23,362 21,731 22,581 18,567 Nontaxable 3,222 3,344 2,183 2,102 2,119 Interest on federal ? ? ? ? ? funds soldInterest ondeposits with otherbanks and 72 54 721 953 2,151 short-terminvestmentsTotal Interest 130,967 133,765 131,049 133,202 133,403 IncomeInterest Expense Interest on 4,962 6,134 14,582 16,401 17,982 depositsInterest onshort-term 78 61 296 271 250 borrowingsInterest on other 3,430 3,424 3,660 3,785 3,850 borrowingsTotal Interest 8,470 9,619 18,538 20,457 22,082 ExpenseNet Interest Income 122,497 124,146 112,511 112,745 111,321 Provision for 1,678 26,796 21,520 4,903 5,201 credit lossesNet Interest IncomeAfter Provision for 120,819 97,350 90,991 107,842 106,120 Credit LossesNoninterest Income Service charges and 11,749 10,972 12,021 12,368 12,366 feesLoan servicing 638 379 963 955 821 incomeTrust fees 5,357 4,977 5,022 5,141 4,959 Brokerage andinsurance 649 595 733 1,062 962 commissionsSecurities gains, 1,300 2,006 1,658 491 2,013 netUnrealized gain/(loss) on equity 155 680 (231) 11 144 securities, netNet gains on saleof loans held for 8,894 7,857 4,660 3,363 4,673 saleValuationadjustment on (120) 9 (1,565) 668 (626) servicing rightsIncome on bankowned life 868 1,167 498 1,117 881 insuranceOther noninterest 1,726 1,995 2,058 2,854 3,207 incomeTotal Noninterest 31,216 30,637 25,817 28,030 29,400 IncomeNoninterest Expense Salaries and 50,978 50,118 49,957 50,234 49,927 employee benefitsOccupancy 6,732 6,502 6,471 5,802 6,594 Furniture and 2,500 2,993 3,108 3,323 2,862 equipmentProfessional fees 12,802 13,676 12,473 11,082 11,276 Advertising 928 995 2,205 2,274 2,622 Core deposit andcustomerrelationship 2,492 2,696 2,981 2,918 2,899 intangiblesamortizationOther real estateand loan collection 335 203 334 261 (89) expenses, net(Gain)/loss onsales/valuations of 1,763 701 16 1,512 356 assets, netAcquisition,integration and 1,146 673 1,376 537 1,500 restructuring costsPartnershipinvestment in tax 927 791 184 3,038 3,052 credit projectsOther noninterest 9,793 11,091 11,754 11,885 11,968 expensesTotal Noninterest 90,396 90,439 90,859 92,866 92,967 ExpenseIncome Before 61,639 37,548 25,949 43,006 42,553 Income TaxesIncome taxes 13,681 7,417 5,909 5,155 7,941 Net Income 47,958 30,131 20,040 37,851 34,612 Preferred dividends (2,437) ? ? ? ? Net IncomeAvailable to Common $ 45,521 $ 30,131 $ 20,040 $ 37,851 $ 34,612 StockholdersEarnings per common $ 1.23 $ 0.82 $ 0.54 $ 1.03 $ 0.94 share-dilutedWeighted averageshares 36,995,572 36,915,630 36,895,591 36,840,519 36,835,191 outstanding-diluted



HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA As of 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Assets Cash and due $ 175,284 $ 211,429 $ 175,587 $ 206,607 $ 243,395 from banksInterestbearingdeposits withother banks 156,371 242,149 64,156 172,127 204,372 andshort-terminvestmentsCash and cash 331,655 453,578 239,743 378,734 447,767 equivalentsTime depositsin other 3,129 3,128 3,568 3,564 3,711 financialinstitutionsSecurities: Carried at 4,950,698 4,126,351 3,488,621 3,312,796 3,020,568 fair valueHeld tomaturity, atcost, less 88,700 90,579 91,875 91,324 87,965 allowance forcredit lossesOtherinvestments, 35,940 35,902 35,370 31,321 29,042 at costLoans held 65,969 54,382 22,957 26,748 35,427 for saleLoans: Held to 9,099,646 9,246,830 8,374,236 8,367,917 7,971,608 maturityAllowancefor credit (103,377) (119,937) (97,350) (70,395) (66,222) lossesLoans, net 8,996,269 9,126,893 8,276,886 8,297,522 7,905,386 Premises,furniture and 200,028 198,481 200,960 200,525 199,235 equipment,netGoodwill 446,345 446,345 446,345 446,345 427,097 Core depositand customerrelationship 40,520 43,011 45,707 48,688 49,819 intangibles,netServicing 5,752 5,469 5,220 6,736 6,271 rights, netCashsurrender 173,111 172,813 172,140 171,625 171,471 value on lifeinsuranceOther real 5,050 5,539 6,074 6,914 6,425 estate, netOther assets 269,498 263,682 259,043 186,755 179,078 Total Assets $ 15,612,664 $ 15,026,153 $ 13,294,509 $ 13,209,597 $ 12,569,262 Liabilities and EquityLiabilities Deposits: Demand $ 5,022,567 $ 4,831,151 $ 3,696,974 $ 3,543,863 $ 3,581,127 Savings 6,742,151 6,810,296 6,366,610 6,307,425 5,770,754 Time 1,002,392 1,067,252 1,110,441 1,193,043 1,117,975 Total 12,767,110 12,708,699 11,174,025 11,044,331 10,469,856 depositsShort-term 306,706 88,631 121,442 182,626 107,853 borrowingsOther 524,045 306,459 276,150 275,773 278,417 borrowingsAccruedexpenses and 203,199 174,987 169,178 128,730 149,293 otherliabilitiesTotal 13,801,060 13,278,776 11,740,795 11,631,460 11,005,419 LiabilitiesStockholders' EquityPreferred 110,705 110,705 ? ? ? equityCommon stock 36,885 36,845 36,807 36,704 36,696 Capital 847,377 844,202 842,780 839,857 838,543 surplusRetained 761,211 723,067 700,298 702,502 670,816 earningsAccumulatedother 55,426 32,558 (26,171) (926) 17,788 comprehensiveincome/(loss)Total Equity 1,811,604 1,747,377 1,553,714 1,578,137 1,563,843 TotalLiabilities $ 15,612,664 $ 15,026,153 $ 13,294,509 $ 13,209,597 $ 12,569,262 and Equity





HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEEDATA For the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Average BalancesAssets $ 15,167,225 $ 14,391,856 $ 13,148,173 $ 12,798,770 $ 12,293,332 Loans, net of 9,220,666 9,186,913 8,364,220 8,090,476 7,883,678 unearnedDeposits 12,650,822 12,288,378 10,971,193 10,704,643 10,253,643 Earning assets 13,868,360 13,103,159 11,891,455 11,580,295 11,102,581 Interestbearing 8,320,123 8,155,753 7,841,941 7,513,701 7,174,944 liabilitiesCommon equity 1,661,381 1,574,902 1,619,682 1,570,258 1,541,369 Totalstockholders' 1,772,086 1,580,997 1,619,682 1,570,258 1,541,369 equityTangiblecommon equity 1,172,891 1,083,834 1,125,705 1,087,495 1,062,568 (non-GAAP)^(1) KeyPerformance RatiosAnnualizedreturn on 1.19 % 0.84 % 0.61 % 1.17 % 1.12 %average assetsAnnualizedreturn on 10.90 7.69 4.98 9.56 8.91 average commonequity (GAAP)Annualizedreturn onaverage 16.11 11.97 8.00 14.65 13.78 tangiblecommon equity(non-GAAP)^(1)Annualizedadjustedreturn onaverage 16.86 20.02 14.46 16.22 15.76 tangiblecommon equity(non-GAAP)^(1)Annualizedratio of net 0.92 0.11 0.24 0.04 0.14 charge-offs toaverage loansAnnualized netinterest 3.51 3.81 3.81 3.86 3.98 margin (GAAP)Annualized netinterestmargin, fully 3.55 3.85 3.84 3.90 4.02 tax-equivalent(non-GAAP)^(1)Efficiencyratio, fully 54.67 55.75 61.82 60.31 60.85 tax-equivalent(non-GAAP)^(1)(1) Refer to "Non-GAAP Measures" in this earnings release for additionalinformation on the usage and presentation of these non-GAAP measures, and referto these financial tables for the reconciliations to the most directlycomparable GAAP measures.



For the Quarter Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019Average BalancesAssets $ 15,167,225 $ 12,293,332 $ 14,239,151 $ 11,760,120 Loans, net of 9,220,666 7,883,678 8,925,016 7,650,090 unearnedDeposits 12,650,822 10,253,643 11,972,615 9,803,488 Earning assets 13,868,360 11,102,581 12,957,661 10,598,465 Interestbearing 8,320,123 7,174,944 8,106,721 6,891,871 liabilitiesCommon equity 1,661,381 1,541,369 1,618,811 1,440,754 Totalstockholders' 1,772,086 1,541,369 1,658,006 1,440,754 equityTangiblecommon 1,172,891 1,062,568 1,127,642 981,449 stockholders'equity KeyPerformance RatiosAnnualizedreturn on 1.19 % 1.12 % 0.90 % 1.27 %average assetsAnnualizedreturn on 10.90 8.91 7.90 10.33 average commonequity (GAAP)Annualizedreturn onaverage 16.11 13.78 12.10 16.13 tangiblecommon equity(non-GAAP)^(1)Annualizedadjustedreturn onaverage 16.86 15.76 17.08 18.05 tangiblecommon equity(non-GAAP)^(1)Annualizedratio of net 0.92 0.14 0.43 0.13 charge-offs toaverage loansAnnualized netinterest 3.51 3.98 3.70 4.05 margin (GAAP)Annualized netinterestmargin, fully 3.55 4.02 3.74 4.10 tax-equivalent(non-GAAP)^(1)Efficiencyratio, fully 54.67 60.85 57.28 63.26 tax-equivalent(non-GAAP)^(1) (1) Refer to "Non-GAAP Measures" in this earnings release for additionalinformation on the usage and presentation of these non-GAAP measures, and referto these financial tables for the reconciliations to the most directlycomparable 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 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Common Share DataBook value per $ 46.11 $ 44.42 $ 42.21 $ 43.00 $ 42.62 common shareTangible bookvalue per $ 32.91 $ 31.14 $ 28.84 $ 29.51 $ 29.62 common share(non-GAAP)^(1)Common sharesoutstanding, 36,885,390 36,844,744 36,807,217 36,704,278 36,696,190 net of treasurystockTangible commonequity ratio 8.03 % 7.89 % 8.29 % 8.52 % 8.99 %(non-GAAP)^(1) Other SelectedTrend InformationEffective tax 22.20 % 19.75 % 22.77 % 11.99 % 18.66 %rateFull timeequivalent 1,827 1,821 1,817 1,908 1,962 employees Loans Held to Maturity^(2)Commercial and $ 2,303,646 $ 2,364,400 $ 2,550,490 $ 2,530,809 $ 2,388,861 industrialPaycheckProtection 1,128,035 1,124,430 ? ? ? Program ("PPP")Owner occupiedcommercial real 1,494,902 1,433,271 1,431,038 1,472,704 1,392,415 estateCommercial andbusiness 4,926,583 4,922,101 3,981,528 4,003,513 3,781,276 lendingNon-owneroccupied 1,659,683 1,543,623 1,551,787 1,495,877 1,378,020 commercial realestateReal estate 917,765 1,115,843 1,069,700 1,027,081 980,298 constructionCommercial real 2,577,448 2,659,466 2,621,487 2,522,958 2,358,318 estate lendingTotalcommercial 7,504,031 7,581,567 6,603,015 6,526,471 6,139,594 lendingAgriculturaland 508,058 520,773 550,107 565,837 571,596 agriculturalreal estateResidential 701,899 735,762 792,540 832,277 823,056 mortgageConsumer 385,658 408,728 428,574 443,332 437,362 Total loansheld to $ 9,099,646 $ 9,246,830 $ 8,374,236 $ 8,367,917 $ 7,971,608 maturity Total unfundedloan $ 2,980,484 $ 3,065,283 $ 2,782,679 $ 2,973,732 $ 2,659,729 commitments (1) Refer to "Non-GAAP Measures" in this earnings release for additionalinformation on the usage and presentation of these non-GAAP measures, and referto these financial tables for the reconciliations to the most directlycomparable GAAP measures.(2) In conjunction with the adoption of ASU 2016-13, Heartland reclassifiedloan balances to more closely align with FDIC codes. All prior period balanceshave been adjusted.



CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA As of and for the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Allowance forCredit Losses-LoansBalance,beginning of $ 119,937 $ 97,350 $ 70,395 $ 66,222 $ 63,850 periodImpact of ASU2016-13 ? ? 12,071 ? ? adoptionProvision for 4,741 25,007 19,865 4,903 5,201 credit lossesCharge-offs (21,753) (3,564) (6,301) (2,018) (4,842) Recoveries 452 1,144 1,320 1,288 2,013 Balance, end of $ 103,377 $ 119,937 $ 97,350 $ 70,395 $ 66,222 period Allowance forUnfunded Commitments^(1)Balance,beginning of $ 17,392 $ 15,468 $ 248 $ ? $ ? periodImpact of ASU2016-13 ? ? 13,604 ? ? adoptionProvision for (3,062) 1,924 1,616 ? ? credit lossesBalance, end of $ 14,330 $ 17,392 $ 15,468 $ ? $ ? period Allowance forlending related $ 117,707 $ 137,329 $ 112,818 $ 70,395 $ 66,222 credit losses Provision for Credit LossesProvision forcredit $ 4,741 $ 25,007 $ 19,865 $ 4,903 $ 5,201 losses-loansProvision forcredit (3,062) 1,924 1,616 ? ? losses-unfundedcommitmentsProvision forcreditlosses-held to (1) (135) 39 ? ? maturitysecurities^(2)Total provisionfor credit $ 1,678 $ 26,796 $ 21,520 $ 4,903 $ 5,201 losses (1) Prior to the adoption of ASU 2016-13, the allowance for unfundedcommitments was immaterial and therefore prior periods have not been shown inthis table.(2) Prior to ASU 2016-13, there was no requirement to record provision forcredit losses for held to maturity securities.



CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA As of and for the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Asset Quality Nonaccrual $ 79,040 $ 91,609 $ 79,280 $ 76,548 $ 72,208 loansLoans pastdue ninety 1,681 1,360 ? 4,105 40 days or moreOther real 5,050 5,539 6,074 6,914 6,425 estate ownedOtherrepossessed 130 29 17 11 13 assetsTotalnonperforming $ 85,901 $ 98,537 $ 85,371 $ 87,578 $ 78,686 assets Performingtroubled debt $ 11,818 $ 2,636 $ 2,858 $ 3,794 $ 3,199 restructuredloans NonperformingAssets ActivityBalance,beginning of $ 98,537 $ 85,371 $ 87,578 $ 78,686 $ 86,589 periodNet loan (21,301) (2,420) (4,981) (730) (2,829) charge offsNewnonperforming 11,834 26,857 15,796 13,751 6,818 loansAcquirednonperforming ? ? ? 3,262 ? assetsReduction ofnonperforming (1,994) (9,911) (11,937) (5,859) (8,861) loans^(1)Net OREO/repossessedassets sales (1,175) (1,360) (1,085) (1,532) (3,031) proceeds andlossesBalance, end $ 85,901 $ 98,537 $ 85,371 $ 87,578 $ 78,686 of period Asset Quality RatiosRatio ofnonperforming 0.89 % 1.01 % 0.95 % 0.96 % 0.91 %loans tototal loansRatio ofnonperformingloans andperforming 1.02 1.03 0.98 1.01 0.95 trouble debtrestructuredloans tototal loansRatio ofnonperforming 0.55 0.66 0.64 0.66 0.63 assets tototal assetsAnnualizedratio of netloan 0.92 0.11 0.24 0.04 0.14 charge-offsto averageloansAllowance forloan creditlosses as a 1.14 1.30 1.16 0.84 0.83 percent ofloansAllowance forlendingrelated 1.29 1.49 1.35 0.84 0.83 credit lossesas a percentof loans^(2)Allowance forloan creditlosses as a 128.07 129.01 122.79 87.28 91.66 percent ofnonperformingloansLoansdelinquent30-89 days as 0.17 0.22 0.38 0.33 0.28 a percent oftotal loans (1) Includes principal reductions, transfers to performing status and transfersto OREO.(2) Prior to the adoption of ASU 2016-13, the reserve for unfunded commitmentswas immaterial.



HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS For the Quarter Ended September 30, 2020 June 30, 2020 September 30, 2019 Average Interest Rate Average Interest Rate Average Interest Rate Balance Balance BalanceEarning Assets Securities: Taxable $ 4,125,700 $ 25,016 2.41 % $ 3,375,245 $ 23,362 2.78 % $ 2,658,107 $ 18,567 2.77 %Nontaxable^(1) 429,710 4,078 3.78 433,329 4,233 3.93 266,933 2,682 3.99 Total securities 4,555,410 29,094 2.54 3,808,574 27,595 2.91 2,925,040 21,249 2.88 Interest on depositswith other banks and 215,361 72 0.13 210,347 54 0.10 358,327 2,151 2.38 short-term investmentsFederal funds sold ? ? ? ? ? ? ? ? ? Loans:^(2)(3) Commercial and 2,331,467 27,777 4.74 2,453,066 30,759 5.04 2,469,770 33,410 5.37 industrial^(1)PPP loans 1,128,488 7,462 2.63 916,405 6,017 2.64 ? ? ? Owner occupied 1,463,538 17,359 4.72 1,426,019 17,670 4.98 1,364,901 19,422 5.65 commercial real estateNon-owner occupied 1,589,073 18,860 4.72 1,540,958 19,055 4.97 1,217,879 19,009 6.19 commercial real estateReal estate 1,023,490 11,628 4.52 1,100,514 12,589 4.60 969,292 13,957 5.71 constructionAgricultural andagricultural real 514,442 5,968 4.62 532,668 6,171 4.66 564,729 7,643 5.37 estateResidential mortgage 774,850 8,915 4.58 795,149 9,586 4.85 859,904 11,007 5.08 Consumer 395,318 5,222 5.26 422,134 5,685 5.42 437,203 6,695 6.08 Less: allowance for (123,077) ? ? (102,675) ? ? (64,464) ? ? loan lossesNet loans 9,097,589 103,191 4.51 9,084,238 107,532 4.76 7,819,214 111,143 5.64 Total earning assets 13,868,360 132,357 3.80 % 13,103,159 135,181 4.15 % 11,102,581 134,543 4.81 %Nonearning Assets 1,298,865 1,288,697 1,190,751 Total Assets $ 15,167,225 $ 14,391,856 $ 12,293,332 Interest Bearing LiabilitiesSavings $ 6,723,962 $ 1,940 0.11 % $ 6,690,504 $ 2,372 0.14 % $ 5,643,722 $ 13,301 0.94 %Time deposits 1,035,715 3,022 1.16 1,096,386 3,762 1.38 1,149,064 4,681 1.62 Short-term borrowings 128,451 78 0.24 82,200 61 0.30 102,440 250 0.97 Other borrowings 431,995 3,430 3.16 286,663 3,424 4.80 279,718 3,850 5.46 Total interest bearing 8,320,123 8,470 0.40 % 8,155,753 9,619 0.47 % 7,174,944 22,082 1.22 liabilitiesNoninterest Bearing LiabilitiesNoninterest bearing 4,891,145 4,501,488 3,460,857 depositsAccrued interest and 183,871 153,618 116,162 other liabilitiesTotal noninterest 5,075,016 4,655,106 3,577,019 bearing liabilitiesEquity 1,772,086 1,580,997 1,541,369 Total Liabilities and $ 15,167,225 $ 14,391,856 $ 12,293,332 EquityNet interest income,fully tax-equivalent $ 123,887 $ 125,562 $ 112,461 (non-GAAP)^(4)Net interest spread^(1) 3.40 % 3.68 % 3.59 %Net interest income,fully tax-equivalent 3.55 % 3.85 % 4.02 %(non-GAAP)^(4) to totalearning assetsInterest bearingliabilities to earning 59.99 % 62.24 % 64.62 % assets (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 loansoutstanding.(3) In conjunction with the adoption of ASU 2016-13, Heartland reclassifiedloan balances to more closely align with FDIC codes. All prior period balanceshave been adjusted.(4) Refer to "Non-GAAP Measures" in this earnings release for additionalinformation on the usage and presentation of these non-GAAP measures, and referto these financial tables for the reconciliations to the most directlycomparable GAAP measures.



HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS For the Nine Months Ended September 30, 2020 September 30, 2019 Average Interest Rate Average Interest Rate Balance BalanceEarning Assets Securities: Taxable $ 3,546,471 $ 70,109 2.64 % $ 2,350,120 $ 50,566 2.88 %Nontaxable^(1) 384,026 11,074 3.85 327,150 9,830 4.02 Total 3,930,497 81,183 2.76 2,677,270 60,396 3.02 securitiesInterestbearingdeposits withother banks 202,390 847 0.56 334,191 5,742 2.30 and othershort-terminvestmentsFederal funds ? ? ? 185 4 2.89 soldLoans:^(2)(3) Commercial and 2,463,546 90,990 4.93 2,394,412 95,790 5.35 industrial^(1)PPP loans 683,262 13,479 2.64 ? ? ? Owner occupiedcommercial 1,440,981 53,610 4.97 1,309,573 55,612 5.68 real estateNon-owneroccupied 1,534,293 57,445 5.00 1,169,295 54,115 6.19 commercialreal estateReal estate 1,056,493 37,062 4.69 914,911 39,023 5.70 constructionAgriculturaland 533,290 19,178 4.80 562,407 22,311 5.30 agriculturalreal estateResidential 796,497 28,922 4.85 873,088 32,422 4.96 mortgageConsumer 416,654 17,002 5.45 426,404 19,532 6.12 Less:allowance for (100,242) ? ? (63,271) ? ? loan lossesNet loans 8,824,774 317,688 4.81 7,586,819 318,805 5.62 Total earning 12,957,661 399,718 4.12 % 10,598,465 384,947 4.86 %assetsNonearning 1,281,490 1,161,655 AssetsTotal Assets $ 14,239,151 $ 11,760,120 InterestBearing LiabilitiesSavings $ 6,564,582 $ 14,394 0.29 % $ 5,376,999 $ 35,279 0.88 %Time deposits 1,092,698 11,284 1.38 % 1,109,302 12,054 1.45 Short-term 117,526 435 0.49 % 129,928 1,477 1.52 borrowingsOther 331,915 10,514 4.23 % 275,642 11,333 5.50 borrowingsTotal interestbearing 8,106,721 36,627 0.60 % 6,891,871 60,143 1.17 %liabilitiesNoninterestBearing LiabilitiesNoninterestbearing 4,315,335 3,317,187 depositsAccruedinterest and 159,089 110,308 otherliabilitiesTotalnoninterest 4,474,424 3,427,495 bearingliabilitiesStockholders' 1,658,006 1,440,754 EquityTotalLiabilitiesand $ 14,239,151 $ 11,760,120 Stockholders'EquityNet interestincome, fully $ 363,091 $ 324,804 tax-equivalent(non-GAAP)^(4)Net interest 3.52 % 3.69 %spread^(1)Net interestincome, fullytax-equivalent 3.74 % 4.10 %(non-GAAP)^(4)to totalearning assetsInterestbearing 62.56 % 65.03 % liabilities toearning assets (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 loansoutstanding.(3) In conjunction with the adoption of ASU 2016-13, Heartland reclassifiedloan balances to more closely align with FDIC codes. All prior period balanceshave been adjusted.(4) Refer to "Non-GAAP Measures" in this earnings release for additionalinformation on the usage and presentation of these non-GAAP measures, and referto these financial tables for the reconciliations to the most directlycomparable GAAP measures.



HEARTLAND FINANCIAL USA, INC.SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)DOLLARS IN THOUSANDS As of and For the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Total AssetsCitywide $ 2,639,516 $ 2,546,942 $ 2,271,889 $ 2,294,512 $ 2,335,811 BanksNewMexico 2,002,663 1,899,194 1,670,097 1,763,037 1,607,498 Bank &TrustDubuqueBank and 1,838,260 1,849,035 1,591,312 1,646,105 1,547,014 TrustCompanyIllinoisBank & 1,500,012 1,470,000 1,295,984 1,301,172 839,721 TrustBank ofBlue 1,424,261 1,380,159 1,222,358 1,307,688 1,346,342 ValleyFirstBank & 1,289,187 1,256,710 1,163,181 1,137,714 1,158,320 TrustWisconsinBank & 1,262,069 1,203,108 1,079,582 1,090,412 1,032,016 TrustPremierValley 1,042,437 1,031,899 889,280 903,220 888,401 BankArizonaBank & 1,039,253 970,775 866,107 784,240 695,236 TrustMinnesotaBank & 1,007,548 951,236 778,724 718,724 718,035 TrustRockyMountain 617,169 590,764 576,245 532,191 528,094 BankTotal DepositsCitywide $ 2,163,051 $ 2,147,642 $ 1,868,404 $ 1,829,217 $ 1,895,894 BanksNewMexico 1,747,527 1,698,584 1,451,041 1,565,070 1,413,170 Bank &TrustDubuqueBank and 1,591,561 1,496,559 1,363,164 1,290,756 1,275,131 TrustCompanyIllinoisBank & 1,307,513 1,318,866 1,139,945 1,167,905 768,267 TrustBank ofBlue 1,142,910 1,138,818 1,008,362 1,016,743 1,091,243 ValleyFirstBank & 936,366 959,886 900,399 893,419 903,410 TrustWisconsinBank & 1,011,843 1,050,766 920,168 941,109 880,217 TrustPremierValley 855,913 869,165 706,479 707,814 719,141 BankArizonaBank & 886,174 865,430 754,464 693,975 578,694 TrustMinnesotaBank & 804,045 820,199 648,560 574,369 600,175 TrustRockyMountain 533,429 519,029 496,465 468,314 462,825 Bank



HEARTLAND FINANCIAL USA, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEEDATA For the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Reconciliationof AnnualizedReturn onAverage TangibleCommon Equity(non-GAAP)Net incomeavailable tocommon $ 45,521 $ 30,131 $ 20,040 $ 37,851 $ 34,612 stockholders(GAAP)Plus coredeposit andcustomerrelationship 1,969 2,130 2,355 2,305 2,291 intangiblesamortization,net of tax^(1)Net incomeavailable tocommonstockholders $ 47,490 $ 32,261 $ 22,395 $ 40,156 $ 36,903 excludingintangibleamortization(non-GAAP) Average common $ 1,661,381 $ 1,574,902 $ 1,619,682 $ 1,570,258 $ 1,541,369 equity (GAAP)Less average 446,345 446,345 446,345 433,374 427,097 goodwillLess averagecore depositand customer 42,145 44,723 47,632 49,389 51,704 relationshipintangibles,netAveragetangible $ 1,172,891 $ 1,083,834 $ 1,125,705 $ 1,087,495 $ 1,062,568 common equity(non-GAAP)Annualizedreturn on 10.90 % 7.69 % 4.98 % 9.56 % 8.91 %average commonequity (GAAP)Annualizedreturn onaverage 16.11 % 11.97 % 8.00 % 14.65 % 13.78 %tangiblecommon equity(non-GAAP) Reconciliationof AnnualizedNet Interest Margin, FullyTax-Equivalent(non-GAAP)Net Interest $ 122,497 $ 124,146 $ 112,511 $ 112,745 $ 111,321 Income (GAAP)Plustax-equivalent 1,390 1,416 1,131 1,109 1,140 adjustment^(1)Net interestincome, fully $ 123,887 $ 125,562 $ 113,642 $ 113,854 $ 112,461 tax-equivalent(non-GAAP) Average $ 13,868,360 $ 13,103,159 $ 11,891,455 $ 11,580,295 $ 11,102,581 earning assets Annualized netinterest 3.51 % 3.81 % 3.81 % 3.86 % 3.98 %margin (GAAP)Annualized netinterestmargin, fully 3.55 3.85 3.84 3.90 4.02 tax-equivalent(non-GAAP)Purchaseaccountingdiscountamortizationon loans 0.10 0.16 0.09 0.17 0.23 included inannualized netinterestmargin

Reconciliationof TangibleBook Value Per Common Share(non-GAAP)Common equity $ 1,700,899 $ 1,636,672 $ 1,553,714 $ 1,578,137 $ 1,563,843 (GAAP)Less goodwill 446,345 446,345 446,345 446,345 427,097 Less coredeposit andcustomer 40,520 43,011 45,707 48,688 49,819 relationshipintangibles,netTangiblecommon equity $ 1,214,034 $ 1,147,316 $ 1,061,662 $ 1,083,104 $ 1,086,927 (non-GAAP) Common sharesoutstanding, 36,885,390 36,844,744 36,807,217 36,704,278 36,696,190 net oftreasury stockCommon equity(book value) $ 46.11 $ 44.42 $ 42.21 $ 43.00 $ 42.62 per share(GAAP)Tangible bookvalue per $ 32.91 $ 31.14 $ 28.84 $ 29.51 $ 29.62 common share(non-GAAP) Reconciliationof TangibleCommon Equity Ratio(non-GAAP)Tangiblecommon equity $ 1,214,034 $ 1,147,316 $ 1,061,662 $ 1,083,104 $ 1,086,927 (non-GAAP) Total assets $ 15,612,664 $ 15,026,153 $ 13,294,509 $ 13,209,597 $ 12,569,262 (GAAP)Less goodwill 446,345 446,345 446,345 446,345 427,097 Less coredeposit andcustomer 40,520 43,011 45,707 48,688 49,819 relationshipintangibles,netTotal tangibleassets $ 15,125,799 $ 14,536,797 $ 12,802,457 $ 12,714,564 $ 12,092,346 (non-GAAP)Tangiblecommon equity 8.03 % 7.89 % 8.29 % 8.52 % 8.99 %ratio(non-GAAP) (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 DATAReconciliation For the Quarter Endedof EfficiencyRatio 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019(non-GAAP)Net interest $ 122,497 $ 124,146 $ 112,511 $ 112,745 $ 111,321 income (GAAP)Tax-equivalent 1,390 1,416 1,131 1,109 1,140 adjustment^(1)Fullytax-equivalent 123,887 125,562 113,642 113,854 112,461 net interestincomeNoninterest 31,216 30,637 25,817 28,030 29,400 incomeSecurities (1,300) (2,006) (1,658) (491) (2,013) gains, netUnrealized(gain)/loss onequity (155) (680) 231 (11) (144) securities,netGain onextinguishment ? ? ? ? (375) of debtValuationadjustment on 120 (9) 1,565 (668) 626 servicingrightsAdjustedrevenue $ 153,768 $ 153,504 $ 139,597 $ 140,714 $ 139,955 (non-GAAP) Totalnoninterest $ 90,396 $ 90,439 $ 90,859 $ 92,866 $ 92,967 expenses(GAAP)Less: Core depositand customerrelationship 2,492 2,696 2,981 2,918 2,899 intangiblesamortizationPartnershipinvestment in 927 791 184 3,038 3,052 tax creditprojects(Gain)/loss onsales/ 1,763 701 16 1,512 356 valuation ofassets, netAcquisition,integrationand 1,146 673 1,376 537 1,500 restructuringcostsAdjustednoninterest $ 84,068 $ 85,578 $ 86,302 $ 84,861 $ 85,160 expenses(non-GAAP)Efficiencyratio, fully 54.67 % 55.75 % 61.82 % 60.31 % 60.85 %tax-equivalent(non-GAAP) Acquisition,integrationand restructuringcostsSalaries andemployee $ ? $ 122 $ 44 $ ? $ 100 benefitsOccupancy ? ? ? 11 ? Furniture and 496 15 24 7 (4) equipmentProfessional 476 505 996 462 855 feesAdvertising 8 4 89 31 115 (Gain)/loss onsales/ ? ? ? ? ? valuations ofassets, netOthernoninterest 166 27 223 26 434 expensesTotalacquisition,integration $ 1,146 $ 673 $ 1,376 $ 537 $ 1,500 andrestructuringcostsAfter taximpact ondiluted $ 0.02 $ 0.01 $ 0.03 $ 0.01 $ 0.03 earnings pershare^(1) Reconciliationof AdjustedNet IncomeAvailable toCommon Stockholdersand AdjustedDiluted EPS(non-GAAP)Net incomeavailable tocommon $ 45,521 $ 30,131 $ 20,040 $ 37,851 $ 34,612 stockholders(GAAP)Provision forcredit losses^ 1,325 21,169 17,001 3,873 4,109 (1)Acquisition,integrationand 905 532 1,087 424 1,185 restructuringcosts^(1)Adjusted netincomeavailable to $ 47,751 $ 51,832 $ 38,128 $ 42,148 $ 39,906 commonstockholders(non-GAAP)Dilutedearnings per $ 1.23 $ 0.82 $ 0.54 $ 1.03 $ 0.94 common share(GAAP)Adjusteddilutedearnings per $ 1.29 $ 1.40 $ 1.03 $ 1.14 $ 1.08 common share(non-GAAP) Reconciliationof AnnualizedAdjustedReturn on AverageTangibleCommon Equity(non-GAAP)Adjusted netincomeavailable to $ 47,751 $ 51,832 $ 38,128 $ 42,148 $ 39,906 commonstockholders(non-GAAP)Plus coredeposit andcustomerrelationship 1,969 2,130 2,355 2,305 2,291 intangiblesamortization,net of tax^(1)Adjusted netincomeavailable tocommonstockholders $ 49,720 $ 53,962 $ 40,483 $ 44,453 $ 42,197 excludingintangibleamortization(non-GAAP)Averagetangible $ 1,172,891 $ 1,083,834 $ 1,125,705 $ 1,087,495 $ 1,062,568 common equity(non-GAAP)Annualizedadjustedreturn onaverage 16.86 % 20.02 % 14.46 % 16.22 % 15.76 %tangiblecommon equity(non-GAAP) (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 For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019Reconciliationof AnnualizedReturn onAverage TangibleCommon Equity(non-GAAP)Net incomeavailable tocommon $ 45,521 $ 34,612 $ 95,692 $ 111,278 stockholders(GAAP)Plus coredeposit andcustomerrelationship 1,969 2,291 6,454 7,153 intangiblesamortization,net of tax^(1)Net incomeavailable tocommonstockholders $ 47,490 $ 36,903 $ 102,146 $ 118,431 excludingintangibleamortization(non-GAAP) Average common $ 1,661,381 $ 1,541,369 $ 1,618,811 $ 1,440,754 equity (GAAP)Less average 446,345 427,097 446,345 409,932 goodwillLess averagecore depositand customer 42,145 51,704 44,824 49,373 relationshipintangibles,netAveragetangible $ 1,172,891 $ 1,062,568 $ 1,127,642 $ 981,449 common equity(non-GAAP)Annualizedreturn on 10.90 % 8.91 % 7.90 % 10.33 %average commonequity (GAAP)Annualizedreturn onaverage 16.11 % 13.78 % 12.10 % 16.13 %tangiblecommon equity(non-GAAP) Reconciliationof AnnualizedNet Interest Margin, FullyTax-Equivalent(non-GAAP)Net Interest $ 122,497 $ 111,321 $ 359,154 $ 320,984 Income (GAAP)Plustax-equivalent 1,390 1,140 3,937 3,820 adjustment^(1)Net interestincome, fully $ 123,887 $ 112,461 $ 363,091 $ 324,804 tax-equivalent(non-GAAP) Average $ 13,868,360 $ 11,102,581 $ 12,957,661 $ 10,598,465 earning assets Annualized netinterest 3.51 % 3.98 % 3.70 % 4.05 %margin (GAAP)Annualized netinterestmargin, fully 3.55 4.02 3.74 4.10 tax-equivalent(non-GAAP)Purchaseaccountingdiscountamortizationon loans 0.10 0.23 0.12 0.19 included inannualized netinterestmargin (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 DATAReconciliation For the Quarter Ended September For the Nine Months Endedof Efficiency 30, September 30,Ratio(non-GAAP) 2020 2019 2020 2019

Net interest $ 122,497 $ 111,321 $ 359,154 $ 320,984 income (GAAP)Tax-equivalent 1,390 1,140 3,937 3,820 adjustment^(1)Fullytax-equivalent 123,887 112,461 363,091 324,804 net interestincomeNoninterest 31,216 29,400 87,670 88,178 incomeSecurities (1,300) (2,013) (4,964) (7,168) gains, netUnrealized(gain)/loss on (155) (144) (604) (514) equitysecurities, netGain onextinguishment ? (375) ? (375) of debtValuationadjustment on 120 626 1,676 1,579 servicingrightsAdjustedrevenue $ 153,768 $ 139,955 $ 446,869 $ 406,504 (non-GAAP) Totalnoninterest $ 90,396 $ 92,967 $ 271,694 $ 256,295 expenses (GAAP)Less: Core depositand customerrelationship 2,492 2,899 8,169 9,054 intangiblesamortizationPartnershipinvestment in 927 3,052 1,902 4,992 tax creditprojects(Gain)/loss onsales/valuation 1,763 356 2,480 (20,934) of assets, netAcquisition,integration and 1,146 1,500 3,195 6,043 restructuringcostsAdjustednoninterest $ 84,068 $ 85,160 $ 255,948 $ 257,140 expenses(non-GAAP)Efficiencyratio, fully 54.67 % 60.85 % 57.28 % 63.26 %tax-equivalent(non-GAAP) Acquisition,integration and restructuringcostsSalaries andemployee $ ? $ 100 $ 166 $ 816 benefitsOccupancy ? ? ? 1,204 Furniture and 496 (4) 535 80 equipmentProfessional 476 855 1,977 1,903 feesAdvertising 8 115 101 172 (Gain)/loss onsales/ ? ? ? 1,003 valuations ofassets, netOthernoninterest 166 434 416 865 expensesTotalacquisition,integration and $ 1,146 $ 1,500 $ 3,195 $ 6,043 restructuringcostsAfter taximpact ondiluted $ 0.02 $ 0.03 $ 0.07 $ 0.13 earnings pershare^(1) Reconciliationof Adjusted NetIncomeAvailable toCommon Stockholdersand AdjustedDiluted EPS(non-GAAP)Net incomeavailable tocommon $ 45,521 $ 34,612 $ 95,692 $ 111,278 stockholders(GAAP)Provision forcredit losses^ 1,325 4,109 39,495 9,286 (1)Acquisition,integration and 905 1,185 2,524 4,774 restructuringcosts^(1)Adjusted netincomeavailable $ 47,751 $ 39,906 $ 137,711 $ 125,338 commonstockholders(non-GAAP)Dilutedearnings per $ 1.23 $ 0.94 $ 2.59 $ 3.11 common share(GAAP)Adjusteddilutedearnings per $ 1.29 $ 1.08 $ 3.73 $ 3.50 common share(non-GAAP) Reconciliationof AnnualizedAdjusted Returnon Average Tangible CommonEquity(non-GAAP)Adjusted netincomeavailable to $ 47,751 $ 39,906 $ 137,711 $ 125,338 commonstockholders(non-GAAP)Plus coredeposit andcustomerrelationship 1,969 2,291 6,454 7,153 intangiblesamortization,net of tax^(1)Adjusted netincomeavailable tocommonstockholders $ 49,720 $ 42,197 $ 144,165 $ 132,491 excludingintangibleamortization(non-GAAP)Averagetangible common $ 1,172,891 $ 1,062,568 $ 1,127,642 $ 981,449 equity(non-GAAP)Annualizedadjusted returnon average 16.86 % 15.76 % 17.08 % 18.05 %tangible commonequity(non-GAAP)

(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 EMPLOYEEDATA As of and For the Quarter Ended 9/30/2020 6/30/2020 3/31/ 12/31/ 9/30/ 2020 2019 2019PPP loan balances $ 1,128,035 $ 1,124,430 $ ? $ ? $ ? Average PPP loan 1,128,488 916,405 ? ? ? balances PPP fee income $ 4,542 $ 3,655 $ ? $ ? $ ? PPP interest income 2,920 2,362 ? ? ? Total PPP interest $ 7,462 $ 6,017 $ ? $ ? $ ? income Selected ratiosexcluding PPP loans and interest incomeAnnualized netinterest margin 3.59 % 3.90 % ? % ? % ? %(GAAP)Annualized netinterest margin, 3.64 3.95 ? ? ? fully tax-equivalent(non-GAAP)^(1)Ratio ofnonperforming loans 1.01 1.14 ? ? ? to total loansRatio ofnonperforming loansand performing 1.16 1.18 ? ? ? trouble debtrestructured loansto total loansRatio ofnonperforming assets 0.59 0.71 ? ? ? to total assetsAnnualized ratio ofnet loan charge-offs 1.05 0.12 ? ? ? to average loansAllowance for loancredit losses as a 1.30 1.48 ? ? ? percent of loansAllowance forlending related 1.48 1.69 ? ? ? credit losses as apercent of loansLoans delinquent30-89 days as a 0.19 0.26 ? ? ? percent of totalloans After tax impact ofPPP interest income $ 0.16 $ 0.13 $ ? $ ? $ ? on diluted earningsper share^(1)

As of and For the Nine Months Ended September 30, September 2020 30, 2019PPP loan balances $ 1,128,035 $ ? PPP average loan balances 683,262 ? PPP fee income $ 8,197 $ ? PPP interest income 5,282 ? Total PPP interest income $ 13,479 $ ? Selected ratios excluding PPP loans and interest incomeAnnualized net interest margin (GAAP) 3.76 % ? %Annualized net interest margin, fully 3.80 ? tax-equivalent (non-GAAP)^(1)Annualized ratio of net loan charge-offs to 0.47 ? average loans After tax impact of PPP interest income on diluted $ 0.29 $ ? earnings per share^(1) (1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

About Heartland FinancialAbout Heartland Financial USA, Inc. Heartland is a diversified financial services company with assets of $15.61 billion. The Company provides banking, mortgage, private client, investment, treasury management, card services, and insurance to individuals and businesses. Heartland currently has 113 banking locations serving 82 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Any statements about Heartlands expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These forward-looking statements include information about possible or assumed future results of Heartlands operations or performance. These forward-looking statements are generally identified by the use of the words believe, expect, intent, anticipate, plan, estimate, project, will, would, could, should, may, view, opportunity, potential, or similar expressions that are used in this release, and future oral and written statements of Heartland and its management. Although Heartland has made these statements based on managements experience and best estimate of future events, the ability of Heartland to predict results or the actual effect of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed below and in the risk factors in Heartland's reports filed with the Securities and Exchange Commission (SEC), include, among others:

-- The impact of the COVID-19 pandemic on Heartland and U.S. and global financial markets; -- Measures enacted by the U.S. federal and state governments and adopted 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 the provision for credit losses and net charge-offs of Heartland; -- Civil unrest in the communities that Heartland serves; -- Levels of unemployment in the geographic areas in which Heartland operates; -- Real estate market values in these geographic 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 and regulatory changes affecting banking, tax, securities, insurance and monetary and financial matters; -- Monetary and fiscal policies of the U.S. Government including policies of the U.S. Department of Treasury and the Federal Reserve Board; -- The quality or composition of the loan and investment portfolios of Heartland; -- Demand for loan products and financial services, deposit flows and competition in Heartlands 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; -- The ability of Heartland to implement technological changes as planned and to develop and maintain secure and reliable electronic delivery systems; -- Heartlands ability to retain key executives and employees; and -- The ability of Heartland 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 COVID-19 pandemics severity, its duration and the extent of its impact on Heartlands business, financial condition, results of operations, liquidity and prospects remain uncertain. The deterioration in general business and economic conditions and turbulence in domestic and global financial markets caused by the COVID-19 pandemic have negatively affected Heartlands net income, total equity and book value per common share, and continued economic deterioration could adversely affect 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 believe that a recession or depression may result from the continued spread of COVID-19 and the economic consequences.

These risks and uncertainties should be considered in evaluating forward-looking statements made by Heartland or on its behalf, and undue reliance should not be placed on these statements. There can be no assurance that other factors not currently anticipated by Heartland will not materially and adversely affect Heartlands business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the recent outbreak of the COVID-19 pandemic and the impact of varying governmental responses that affect Heartlands customers and the economies where they operate. Please take into account that forward-looking statements speak only as of the date they are made, and except as required by applicable law, Heartland does not undertake any obligation to publicly correct or update any forward-looking statement. Further information concerning Heartland and its business, including additional factors that could materially affect Heartlands financial results, is included in Heartlands filings with the SEC.

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ContactEVP, Chief Financial Officer Bryan R. McKeagBMcKeag@htlf.com 563.589.1994