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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Large accelerated filer
x
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Accelerated Filer
¨
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Non-accelerated filer
¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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Part I
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Part II
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101 Financial statements formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.
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HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
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Three Months Ended
March 31, |
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2018
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2017
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$
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23,268
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$
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18,010
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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6,802
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7,023
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Provision for loan losses
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4,263
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3,641
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Net amortization of premium on securities
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5,823
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7,226
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Securities gains, net
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(1,441
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)
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(2,482
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)
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Unrealized loss on equity securities, net
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28
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—
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Stock based compensation
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1,858
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1,782
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Loans originated for sale
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(112,433
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)
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(164,324
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)
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Proceeds on sales of loans held for sale
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135,506
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180,404
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Net gains on sale of loans held for sale
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(2,889
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)
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(3,828
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)
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Decrease in accrued interest receivable
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3,239
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93
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Decrease in prepaid expenses
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194
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84
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Increase in accrued interest payable
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1,029
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825
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Capitalization of servicing rights
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(1,183
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)
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(2,226
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)
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Valuation allowance on commercial servicing rights
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2
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(5
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)
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(Gain)/loss on sales/valuations of assets, net
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(197
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)
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412
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Net excess tax benefit from stock based compensation
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611
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888
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Other, net
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(5,441
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)
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(13,767
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)
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NET CASH PROVIDED BY OPERATING ACTIVITIES
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59,039
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33,756
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Proceeds from the sale of securities available for sale
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392,246
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221,637
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Proceeds from the redemption of time deposits in other financial institutions
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8,767
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5,867
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Proceeds from the maturity of and principal paydowns on securities available for sale
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49,603
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47,515
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Proceeds from the maturity of and principal paydowns on securities held to maturity
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3,570
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2,823
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Proceeds from the maturity of and principal paydowns on time deposits in other financial institutions
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4,368
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3,185
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Proceeds from the maturity of and principal paydowns on other investments
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677
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1,521
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Purchase of securities available for sale
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(244,289
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)
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(312,769
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)
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Purchase of other investments
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(644
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)
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(968
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)
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Net (increase) decrease in loans
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(32,314
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)
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80,916
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Capital expenditures
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(2,356
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)
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(3,588
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)
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Net cash and cash equivalents received in acquisitions
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5,543
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33,698
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Proceeds from the sale of equipment
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615
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3
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Proceeds on sale of OREO and other repossessed assets
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668
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585
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NET CASH PROVIDED BY INVESTING ACTIVITIES
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$
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186,454
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$
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80,425
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Three Months Ended
March 31, |
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(Dollars and number of shares in thousands, except per share data)
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2018
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2017
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Net income
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$
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23,268
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$
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18,010
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Preferred dividends
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(13
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)
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(19
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)
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Interest expense on convertible preferred debt
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—
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5
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Net income available to common stockholders
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$
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23,255
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$
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17,996
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Weighted average common shares outstanding for basic earnings per share
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30,442
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26,335
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Assumed incremental common shares issued upon non-vested restricted stock units
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203
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293
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Weighted average common shares for diluted earnings per share
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30,645
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26,628
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Earnings per common share — basic
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$
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0.76
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$
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0.68
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Earnings per common share — diluted
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$
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0.76
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$
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0.68
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Number of antidilutive common stock equivalents excluded from diluted earnings per share computation
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—
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—
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2018
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2017
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Shares
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Weighted-Average Grant Date
Fair Value
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Shares
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Weighted-Average Grant Date
Fair Value
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Outstanding at January 1
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301,578
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$
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34.74
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346,817
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$
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27.61
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Granted
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87,249
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55.25
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92,267
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47.50
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Vested
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(107,553
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)
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30.79
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(103,897
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)
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24.74
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Forfeited
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(19,113
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)
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43.62
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(7,765
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)
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31.03
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Outstanding at March 31
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262,161
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$
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42.60
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327,422
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$
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34.04
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2018
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2017
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Shares
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Weighted-Average
Exercise Price
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Shares
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Weighted-Average
Exercise Price
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Outstanding at January 1
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6,500
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$
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18.60
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26,400
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$
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18.60
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Granted
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—
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—
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—
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—
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Exercised
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(6,500
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)
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18.60
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(5,500
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)
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18.60
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Forfeited
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—
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—
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—
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—
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Outstanding at March 31
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—
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$
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—
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20,900
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$
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18.60
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Options exercisable at March 31
|
—
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$
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—
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20,900
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$
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18.60
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Amortized
Cost
|
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Gross
Unrealized
Gains
|
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Gross
Unrealized
Losses
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Estimated
Fair
Value
|
||||||||
March 31, 2018
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||||||||
U.S. government corporations and agencies
|
$
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11,254
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$
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3
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$
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(69
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)
|
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$
|
11,188
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|
Mortgage and asset-backed securities
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1,691,092
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|
3,968
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(47,456
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)
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1,647,604
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Obligations of states and political subdivisions
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361,475
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1,132
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(10,427
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)
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352,180
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Total debt securities
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2,063,821
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5,103
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(57,952
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)
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2,010,972
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Equity securities
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16,693
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—
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—
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|
|
16,693
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|
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Total
|
$
|
2,080,514
|
|
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$
|
5,103
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|
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$
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(57,952
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)
|
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$
|
2,027,665
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December 31, 2017
|
|
|
|
|
|
|
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U.S. government corporations and agencies
|
$
|
5,358
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|
|
$
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8
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|
|
$
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(38
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)
|
|
$
|
5,328
|
|
Mortgage and asset-backed securities
|
1,785,467
|
|
|
5,856
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|
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(37,587
|
)
|
|
1,753,736
|
|
||||
Obligations of states and political subdivisions
|
441,060
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|
|
4,669
|
|
|
(4,714
|
)
|
|
441,015
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|
||||
Total debt securities
|
2,231,885
|
|
|
10,533
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|
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(42,339
|
)
|
|
2,200,079
|
|
||||
Equity securities
|
16,296
|
|
|
378
|
|
|
—
|
|
|
16,674
|
|
||||
Total
|
$
|
2,248,181
|
|
|
$
|
10,911
|
|
|
$
|
(42,339
|
)
|
|
$
|
2,216,753
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
249,766
|
|
|
$
|
9,699
|
|
|
$
|
(827
|
)
|
|
$
|
258,638
|
|
Total
|
$
|
249,766
|
|
|
$
|
9,699
|
|
|
$
|
(827
|
)
|
|
$
|
258,638
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
253,550
|
|
|
$
|
12,460
|
|
|
$
|
(516
|
)
|
|
$
|
265,494
|
|
Total
|
$
|
253,550
|
|
|
$
|
12,460
|
|
|
$
|
(516
|
)
|
|
$
|
265,494
|
|
|
March 31, 2018
|
||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due in 1 year or less
|
$
|
5,397
|
|
|
$
|
5,392
|
|
Due in 1 to 5 years
|
56,369
|
|
|
56,209
|
|
||
Due in 5 to 10 years
|
116,517
|
|
|
112,484
|
|
||
Due after 10 years
|
194,446
|
|
|
189,283
|
|
||
Total debt securities
|
372,729
|
|
|
363,368
|
|
||
Mortgage and asset-backed securities
|
1,691,092
|
|
|
1,647,604
|
|
||
Equity securities
|
16,693
|
|
|
16,693
|
|
||
Total investment securities
|
$
|
2,080,514
|
|
|
$
|
2,027,665
|
|
|
March 31, 2018
|
||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due in 1 year or less
|
$
|
2,486
|
|
|
$
|
2,523
|
|
Due in 1 to 5 years
|
27,627
|
|
|
28,231
|
|
||
Due in 5 to 10 years
|
104,170
|
|
|
106,538
|
|
||
Due after 10 years
|
115,483
|
|
|
121,346
|
|
||
Total investment securities
|
$
|
249,766
|
|
|
$
|
258,638
|
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Proceeds from sales
|
$
|
392,246
|
|
|
$
|
221,637
|
|
Gross security gains
|
3,013
|
|
|
3,830
|
|
||
Gross security losses
|
1,572
|
|
|
1,339
|
|
Securities available for sale
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government corporations and agencies
|
$
|
10,685
|
|
|
$
|
(69
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,685
|
|
|
$
|
(69
|
)
|
Mortgage and asset-backed securities
|
923,293
|
|
|
(18,459
|
)
|
|
379,672
|
|
|
(28,997
|
)
|
|
1,302,965
|
|
|
(47,456
|
)
|
||||||
Obligations of states and political subdivisions
|
177,100
|
|
|
(3,456
|
)
|
|
131,574
|
|
|
(6,971
|
)
|
|
308,674
|
|
|
(10,427
|
)
|
||||||
Total debt securities
|
1,111,078
|
|
|
(21,984
|
)
|
|
511,246
|
|
|
(35,968
|
)
|
|
1,622,324
|
|
|
(57,952
|
)
|
||||||
Total temporarily impaired securities
|
$
|
1,111,078
|
|
|
$
|
(21,984
|
)
|
|
$
|
511,246
|
|
|
$
|
(35,968
|
)
|
|
$
|
1,622,324
|
|
|
$
|
(57,952
|
)
|
December 31, 2017
|
|||||||||||||||||||||||
U.S. government corporations and agencies
|
$
|
4,819
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,819
|
|
|
$
|
(38
|
)
|
Mortgage and asset-backed securities
|
851,070
|
|
|
(11,533
|
)
|
|
399,978
|
|
|
(26,054
|
)
|
|
1,251,048
|
|
|
(37,587
|
)
|
||||||
Obligations of states and political subdivisions
|
93,040
|
|
|
(667
|
)
|
|
159,180
|
|
|
(4,047
|
)
|
|
252,220
|
|
|
(4,714
|
)
|
||||||
Total debt securities
|
948,929
|
|
|
(12,238
|
)
|
|
559,158
|
|
|
(30,101
|
)
|
|
1,508,087
|
|
|
(42,339
|
)
|
||||||
Total temporarily impaired securities
|
$
|
948,929
|
|
|
$
|
(12,238
|
)
|
|
$
|
559,158
|
|
|
$
|
(30,101
|
)
|
|
$
|
1,508,087
|
|
|
$
|
(42,339
|
)
|
Securities held to maturity
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Obligations of states and political subdivisions
|
$
|
30,496
|
|
|
$
|
(272
|
)
|
|
$
|
7,907
|
|
|
$
|
(555
|
)
|
|
$
|
38,403
|
|
|
$
|
(827
|
)
|
Total temporarily impaired securities
|
$
|
30,496
|
|
|
$
|
(272
|
)
|
|
$
|
7,907
|
|
|
$
|
(555
|
)
|
|
$
|
38,403
|
|
|
$
|
(827
|
)
|
December 31, 2017
|
|||||||||||||||||||||||
Obligations of states and political subdivisions
|
$
|
8,512
|
|
|
$
|
(49
|
)
|
|
$
|
8,989
|
|
|
$
|
(467
|
)
|
|
$
|
17,501
|
|
|
$
|
(516
|
)
|
Total temporarily impaired securities
|
$
|
8,512
|
|
|
$
|
(49
|
)
|
|
$
|
8,989
|
|
|
$
|
(467
|
)
|
|
$
|
17,501
|
|
|
$
|
(516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Loans receivable held to maturity:
|
|
|
|
||||
Commercial
|
$
|
1,806,683
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
3,323,094
|
|
|
3,163,269
|
|
||
Agricultural and agricultural real estate
|
518,386
|
|
|
511,588
|
|
||
Residential real estate
|
624,725
|
|
|
624,279
|
|
||
Consumer
|
474,929
|
|
|
447,484
|
|
||
Gross loans receivable held to maturity
|
6,747,817
|
|
|
6,393,226
|
|
||
Unearned discount
|
(1,620
|
)
|
|
(556
|
)
|
||
Deferred loan fees
|
(182
|
)
|
|
(1,206
|
)
|
||
Total net loans receivable held to maturity
|
6,746,015
|
|
|
6,391,464
|
|
||
Allowance for loan losses
|
(58,656
|
)
|
|
(55,686
|
)
|
||
Loans receivable, net
|
$
|
6,687,359
|
|
|
$
|
6,335,778
|
|
|
Allowance For Loan Losses
|
|
Gross Loans Receivable Held to Maturity
|
||||||||||||||||||||
|
Ending Balance
Under ASC
310-10-35
|
|
Ending Balance
Under ASC
450-20
|
|
Total
|
|
Ending Balance Evaluated for Impairment
Under ASC
310-10-35
|
|
Ending Balance Evaluated for Impairment
Under ASC
450-20
|
|
Total
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial
|
$
|
2,425
|
|
|
$
|
16,970
|
|
|
$
|
19,395
|
|
|
$
|
9,005
|
|
|
$
|
1,797,678
|
|
|
$
|
1,806,683
|
|
Commercial real estate
|
736
|
|
|
22,733
|
|
|
23,469
|
|
|
22,920
|
|
|
3,300,174
|
|
|
3,323,094
|
|
||||||
Agricultural and agricultural real estate
|
787
|
|
|
3,929
|
|
|
4,716
|
|
|
16,896
|
|
|
501,490
|
|
|
518,386
|
|
||||||
Residential real estate
|
386
|
|
|
1,755
|
|
|
2,141
|
|
|
28,324
|
|
|
596,401
|
|
|
624,725
|
|
||||||
Consumer
|
1,137
|
|
|
7,798
|
|
|
8,935
|
|
|
6,427
|
|
|
468,502
|
|
|
474,929
|
|
||||||
Total
|
$
|
5,471
|
|
|
$
|
53,185
|
|
|
$
|
58,656
|
|
|
$
|
83,572
|
|
|
$
|
6,664,245
|
|
|
$
|
6,747,817
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial
|
$
|
1,613
|
|
|
$
|
16,485
|
|
|
$
|
18,098
|
|
|
$
|
7,415
|
|
|
$
|
1,639,191
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
766
|
|
|
21,184
|
|
|
21,950
|
|
|
23,705
|
|
|
3,139,564
|
|
|
3,163,269
|
|
||||||
Agricultural and agricultural real estate
|
546
|
|
|
3,712
|
|
|
4,258
|
|
|
13,304
|
|
|
498,284
|
|
|
511,588
|
|
||||||
Residential real estate
|
430
|
|
|
1,794
|
|
|
2,224
|
|
|
27,141
|
|
|
597,138
|
|
|
624,279
|
|
||||||
Consumer
|
1,400
|
|
|
7,756
|
|
|
9,156
|
|
|
6,903
|
|
|
440,581
|
|
|
447,484
|
|
||||||
Total
|
$
|
4,755
|
|
|
$
|
50,931
|
|
|
$
|
55,686
|
|
|
$
|
78,468
|
|
|
$
|
6,314,758
|
|
|
$
|
6,393,226
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Nonaccrual loans
|
$
|
60,644
|
|
|
$
|
58,272
|
|
Nonaccrual troubled debt restructured loans
|
4,162
|
|
|
4,309
|
|
||
Total nonaccrual loans
|
$
|
64,806
|
|
|
$
|
62,581
|
|
Accruing loans past due 90 days or more
|
$
|
22
|
|
|
$
|
830
|
|
Performing troubled debt restructured loans
|
$
|
3,206
|
|
|
$
|
6,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Number
of Loans
|
|
Pre-
Modification
Recorded
Investment
|
|
Post-
Modification
Recorded
Investment
|
|
Number
of Loans
|
|
Pre-
Modification
Recorded
Investment
|
|
Post-
Modification
Recorded
Investment
|
||||||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Residential real estate
|
5
|
|
|
877
|
|
|
752
|
|
|
3
|
|
|
348
|
|
|
348
|
|
||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
5
|
|
|
$
|
877
|
|
|
$
|
752
|
|
|
3
|
|
|
$
|
348
|
|
|
$
|
348
|
|
|
|
|
|
|
|
|
|
|
With Payment Defaults During the Following Periods
|
||||||||||||
|
Three Months Ended
March 31, |
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Number of Loans
|
|
Recorded Investment
|
|
Number of Loans
|
|
Recorded Investment
|
||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Residential real estate
|
3
|
|
|
519
|
|
|
—
|
|
|
—
|
|
||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
3
|
|
|
$
|
519
|
|
|
—
|
|
|
$
|
—
|
|
|
Pass
|
|
Nonpass
|
|
Total
|
||||||
March 31, 2018
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,677,338
|
|
|
$
|
129,345
|
|
|
$
|
1,806,683
|
|
Commercial real estate
|
3,146,622
|
|
|
176,472
|
|
|
3,323,094
|
|
|||
Total commercial and commercial real estate
|
4,823,960
|
|
|
305,817
|
|
|
5,129,777
|
|
|||
Agricultural and agricultural real estate
|
442,484
|
|
|
75,902
|
|
|
518,386
|
|
|||
Residential real estate
|
585,886
|
|
|
38,839
|
|
|
624,725
|
|
|||
Consumer
|
461,786
|
|
|
13,143
|
|
|
474,929
|
|
|||
Total gross loans receivable held to maturity
|
$
|
6,314,116
|
|
|
$
|
433,701
|
|
|
$
|
6,747,817
|
|
December 31, 2017
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,552,783
|
|
|
$
|
93,823
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
2,985,501
|
|
|
177,768
|
|
|
3,163,269
|
|
|||
Total commercial and commercial real estate
|
4,538,284
|
|
|
271,591
|
|
|
4,809,875
|
|
|||
Agricultural and agricultural real estate
|
451,539
|
|
|
60,049
|
|
|
511,588
|
|
|||
Residential real estate
|
586,623
|
|
|
37,656
|
|
|
624,279
|
|
|||
Consumer
|
432,936
|
|
|
14,548
|
|
|
447,484
|
|
|||
Total gross loans receivable held to maturity
|
$
|
6,009,382
|
|
|
$
|
383,844
|
|
|
$
|
6,393,226
|
|
|
Accruing Loans
|
|
|
|
|
||||||||||||||||||||||
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due |
|
90 Days or
More
Past Due
|
|
Total
Past Due
|
|
Current
|
|
Nonaccrual
|
|
Total Loans
|
||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
2,906
|
|
|
$
|
1,883
|
|
|
$
|
—
|
|
|
$
|
4,789
|
|
|
$
|
1,793,565
|
|
|
$
|
8,329
|
|
|
$
|
1,806,683
|
|
Commercial real estate
|
403
|
|
|
740
|
|
|
—
|
|
|
1,143
|
|
|
3,305,043
|
|
|
16,908
|
|
|
3,323,094
|
|
|||||||
Total commercial and commercial real estate
|
3,309
|
|
|
2,623
|
|
|
—
|
|
|
5,932
|
|
|
5,098,608
|
|
|
25,237
|
|
|
5,129,777
|
|
|||||||
Agricultural and agricultural real estate
|
1,147
|
|
|
69
|
|
|
22
|
|
|
1,238
|
|
|
500,320
|
|
|
16,828
|
|
|
518,386
|
|
|||||||
Residential real estate
|
2,891
|
|
|
66
|
|
|
—
|
|
|
2,957
|
|
|
602,927
|
|
|
18,841
|
|
|
624,725
|
|
|||||||
Consumer
|
2,618
|
|
|
1,477
|
|
|
—
|
|
|
4,095
|
|
|
466,934
|
|
|
3,900
|
|
|
474,929
|
|
|||||||
Total gross loans receivable held to maturity
|
$
|
9,965
|
|
|
$
|
4,235
|
|
|
$
|
22
|
|
|
$
|
14,222
|
|
|
$
|
6,668,789
|
|
|
$
|
64,806
|
|
|
$
|
6,747,817
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
1,246
|
|
|
$
|
259
|
|
|
$
|
100
|
|
|
$
|
1,605
|
|
|
$
|
1,637,773
|
|
|
$
|
7,228
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
4,769
|
|
|
2,326
|
|
|
—
|
|
|
7,095
|
|
|
3,139,576
|
|
|
16,598
|
|
|
3,163,269
|
|
|||||||
Total commercial and commercial real estate
|
6,015
|
|
|
2,585
|
|
|
100
|
|
|
8,700
|
|
|
4,777,349
|
|
|
23,826
|
|
|
4,809,875
|
|
|||||||
Agricultural and agricultural real estate
|
604
|
|
|
134
|
|
|
—
|
|
|
738
|
|
|
497,546
|
|
|
13,304
|
|
|
511,588
|
|
|||||||
Residential real estate
|
2,022
|
|
|
270
|
|
|
—
|
|
|
2,292
|
|
|
601,120
|
|
|
20,867
|
|
|
624,279
|
|
|||||||
Consumer
|
4,734
|
|
|
943
|
|
|
730
|
|
|
6,407
|
|
|
436,493
|
|
|
4,584
|
|
|
447,484
|
|
|||||||
Total gross loans receivable held to maturity
|
$
|
13,375
|
|
|
$
|
3,932
|
|
|
$
|
830
|
|
|
$
|
18,137
|
|
|
$
|
6,312,508
|
|
|
$
|
62,581
|
|
|
$
|
6,393,226
|
|
|
Unpaid
Contractual
Balance
|
|
Loan
Balance
|
|
Related
Allowance
Recorded
|
|
Year-
to-
Date
Avg.
Loan
Balance
|
|
Year-
to-
Date
Interest
Income
Recognized
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Impaired loans with a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
2,816
|
|
|
$
|
2,816
|
|
|
$
|
2,425
|
|
|
$
|
2,472
|
|
|
$
|
—
|
|
Commercial real estate
|
11,180
|
|
|
9,324
|
|
|
736
|
|
|
9,520
|
|
|
8
|
|
|||||
Total commercial and commercial real estate
|
13,996
|
|
|
12,140
|
|
|
3,161
|
|
|
11,992
|
|
|
8
|
|
|||||
Agricultural and agricultural real estate
|
1,536
|
|
|
1,536
|
|
|
787
|
|
|
1,537
|
|
|
—
|
|
|||||
Residential real estate
|
1,693
|
|
|
1,693
|
|
|
386
|
|
|
1,608
|
|
|
3
|
|
|||||
Consumer
|
2,859
|
|
|
2,859
|
|
|
1,137
|
|
|
3,069
|
|
|
9
|
|
|||||
Total impaired loans with a related allowance
|
$
|
20,084
|
|
|
$
|
18,228
|
|
|
$
|
5,471
|
|
|
$
|
18,206
|
|
|
$
|
20
|
|
Impaired loans without a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
7,308
|
|
|
$
|
6,189
|
|
|
$
|
—
|
|
|
$
|
5,449
|
|
|
$
|
49
|
|
Commercial real estate
|
14,202
|
|
|
13,596
|
|
|
—
|
|
|
13,879
|
|
|
97
|
|
|||||
Total commercial and commercial real estate
|
21,510
|
|
|
19,785
|
|
|
—
|
|
|
19,328
|
|
|
146
|
|
|||||
Agricultural and agricultural real estate
|
17,388
|
|
|
15,360
|
|
|
—
|
|
|
12,954
|
|
|
1
|
|
|||||
Residential real estate
|
26,635
|
|
|
26,631
|
|
|
—
|
|
|
26,878
|
|
|
109
|
|
|||||
Consumer
|
3,757
|
|
|
3,568
|
|
|
—
|
|
|
3,912
|
|
|
22
|
|
|||||
Total impaired loans without a related allowance
|
$
|
69,290
|
|
|
$
|
65,344
|
|
|
$
|
—
|
|
|
$
|
63,072
|
|
|
$
|
278
|
|
Total impaired loans held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
10,124
|
|
|
$
|
9,005
|
|
|
$
|
2,425
|
|
|
$
|
7,921
|
|
|
$
|
49
|
|
Commercial real estate
|
25,382
|
|
|
22,920
|
|
|
736
|
|
|
23,399
|
|
|
105
|
|
|||||
Total commercial and commercial real estate
|
35,506
|
|
|
31,925
|
|
|
3,161
|
|
|
31,320
|
|
|
154
|
|
|||||
Agricultural and agricultural real estate
|
18,924
|
|
|
16,896
|
|
|
787
|
|
|
14,491
|
|
|
1
|
|
|||||
Residential real estate
|
28,328
|
|
|
28,324
|
|
|
386
|
|
|
28,486
|
|
|
112
|
|
|||||
Consumer
|
6,616
|
|
|
6,427
|
|
|
1,137
|
|
|
6,981
|
|
|
31
|
|
|||||
Total impaired loans held to maturity
|
$
|
89,374
|
|
|
$
|
83,572
|
|
|
$
|
5,471
|
|
|
$
|
81,278
|
|
|
$
|
298
|
|
|
Unpaid
Contractual
Balance
|
|
Loan
Balance
|
|
Related
Allowance
Recorded
|
|
Year-to-
Date
Avg.
Loan
Balance
|
|
Year-to-
Date
Interest
Income
Recognized
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Impaired loans with a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
2,292
|
|
|
$
|
2,292
|
|
|
$
|
1,613
|
|
|
$
|
3,607
|
|
|
$
|
39
|
|
Commercial real estate
|
11,925
|
|
|
10,068
|
|
|
766
|
|
|
11,479
|
|
|
34
|
|
|||||
Total commercial and commercial real estate
|
14,217
|
|
|
12,360
|
|
|
2,379
|
|
|
15,086
|
|
|
73
|
|
|||||
Agricultural and agricultural real estate
|
1,539
|
|
|
1,539
|
|
|
546
|
|
|
3,437
|
|
|
—
|
|
|||||
Residential real estate
|
1,568
|
|
|
1,568
|
|
|
430
|
|
|
2,056
|
|
|
15
|
|
|||||
Consumer
|
2,634
|
|
|
2,634
|
|
|
1,400
|
|
|
2,370
|
|
|
41
|
|
|||||
Total impaired loans with a related allowance
|
$
|
19,958
|
|
|
$
|
18,101
|
|
|
$
|
4,755
|
|
|
$
|
22,949
|
|
|
$
|
129
|
|
Impaired loans without a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
6,243
|
|
|
$
|
5,123
|
|
|
$
|
—
|
|
|
$
|
2,586
|
|
|
$
|
165
|
|
Commercial real estate
|
14,243
|
|
|
13,637
|
|
|
—
|
|
|
20,148
|
|
|
514
|
|
|||||
Total commercial and commercial real estate
|
20,486
|
|
|
18,760
|
|
|
—
|
|
|
22,734
|
|
|
679
|
|
|||||
Agricultural and agricultural real estate
|
13,793
|
|
|
11,765
|
|
|
—
|
|
|
9,654
|
|
|
—
|
|
|||||
Residential real estate
|
25,573
|
|
|
25,573
|
|
|
—
|
|
|
26,024
|
|
|
277
|
|
|||||
Consumer
|
4,269
|
|
|
4,269
|
|
|
—
|
|
|
3,884
|
|
|
73
|
|
|||||
Total impaired loans without a related allowance
|
$
|
64,121
|
|
|
$
|
60,367
|
|
|
$
|
—
|
|
|
$
|
62,296
|
|
|
$
|
1,029
|
|
Total impaired loans held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
8,535
|
|
|
$
|
7,415
|
|
|
$
|
1,613
|
|
|
$
|
6,193
|
|
|
$
|
204
|
|
Commercial real estate
|
26,168
|
|
|
23,705
|
|
|
766
|
|
|
31,627
|
|
|
548
|
|
|||||
Total commercial and commercial real estate
|
34,703
|
|
|
31,120
|
|
|
2,379
|
|
|
37,820
|
|
|
752
|
|
|||||
Agricultural and agricultural real estate
|
15,332
|
|
|
13,304
|
|
|
546
|
|
|
13,091
|
|
|
—
|
|
|||||
Residential real estate
|
27,141
|
|
|
27,141
|
|
|
430
|
|
|
28,080
|
|
|
292
|
|
|||||
Consumer
|
6,903
|
|
|
6,903
|
|
|
1,400
|
|
|
6,254
|
|
|
114
|
|
|||||
Total impaired loans held to maturity
|
$
|
84,079
|
|
|
$
|
78,468
|
|
|
$
|
4,755
|
|
|
$
|
85,245
|
|
|
$
|
1,158
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Impaired
Purchased Loans |
|
Non
Impaired
Purchased Loans |
|
Total
Purchased
Loans
|
|
Impaired
Purchased Loans |
|
Non
Impaired
Purchased Loans |
|
Total
Purchased
Loans
|
||||||||||||
Commercial
|
$
|
3,142
|
|
|
$
|
262,107
|
|
|
$
|
265,249
|
|
|
$
|
952
|
|
|
$
|
187,375
|
|
|
$
|
188,327
|
|
Commercial real estate
|
2,474
|
|
|
1,078,724
|
|
|
1,081,198
|
|
|
2,572
|
|
|
1,052,469
|
|
|
1,055,041
|
|
||||||
Agricultural and agricultural real estate
|
—
|
|
|
26
|
|
|
26
|
|
|
—
|
|
|
1,242
|
|
|
1,242
|
|
||||||
Residential real estate
|
199
|
|
|
181,020
|
|
|
181,219
|
|
|
214
|
|
|
173,909
|
|
|
174,123
|
|
||||||
Consumer loans
|
—
|
|
|
78,613
|
|
|
78,613
|
|
|
—
|
|
|
51,292
|
|
|
51,292
|
|
||||||
Total loans
|
$
|
5,815
|
|
|
$
|
1,600,490
|
|
|
$
|
1,606,305
|
|
|
$
|
3,738
|
|
|
$
|
1,466,287
|
|
|
$
|
1,470,025
|
|
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at December 31, 2017
|
$
|
18,098
|
|
|
$
|
21,950
|
|
|
$
|
4,258
|
|
|
$
|
2,224
|
|
|
$
|
9,156
|
|
|
$
|
55,686
|
|
Charge-offs
|
(794
|
)
|
|
(125
|
)
|
|
—
|
|
|
(16
|
)
|
|
(1,289
|
)
|
|
(2,224
|
)
|
||||||
Recoveries
|
104
|
|
|
448
|
|
|
14
|
|
|
75
|
|
|
290
|
|
|
931
|
|
||||||
Provision
|
1,987
|
|
|
1,196
|
|
|
444
|
|
|
(142
|
)
|
|
778
|
|
|
4,263
|
|
||||||
Balance at March 31, 2018
|
$
|
19,395
|
|
|
$
|
23,469
|
|
|
$
|
4,716
|
|
|
$
|
2,141
|
|
|
$
|
8,935
|
|
|
$
|
58,656
|
|
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at December 31, 2016
|
$
|
14,765
|
|
|
$
|
24,319
|
|
|
$
|
4,210
|
|
|
$
|
2,263
|
|
|
$
|
8,767
|
|
|
$
|
54,324
|
|
Charge-offs
|
(230
|
)
|
|
(608
|
)
|
|
(871
|
)
|
|
(265
|
)
|
|
(1,744
|
)
|
|
(3,718
|
)
|
||||||
Recoveries
|
234
|
|
|
212
|
|
|
1
|
|
|
2
|
|
|
303
|
|
|
752
|
|
||||||
Provision
|
1,411
|
|
|
(126
|
)
|
|
643
|
|
|
183
|
|
|
1,530
|
|
|
3,641
|
|
||||||
Balance at March 31, 2017
|
$
|
16,180
|
|
|
$
|
23,797
|
|
|
$
|
3,983
|
|
|
$
|
2,183
|
|
|
$
|
8,856
|
|
|
$
|
54,999
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Core deposit intangibles
|
$
|
69,731
|
|
|
$
|
28,939
|
|
|
$
|
40,792
|
|
|
$
|
62,008
|
|
|
$
|
27,086
|
|
|
$
|
34,922
|
|
Customer relationship intangibles
|
1,177
|
|
|
906
|
|
|
271
|
|
|
1,177
|
|
|
896
|
|
|
281
|
|
||||||
Mortgage servicing rights
|
42,249
|
|
|
19,084
|
|
|
23,165
|
|
|
42,139
|
|
|
18,891
|
|
|
23,248
|
|
||||||
Commercial servicing rights
|
6,740
|
|
|
4,434
|
|
|
2,306
|
|
|
6,719
|
|
|
4,110
|
|
|
2,609
|
|
||||||
Total
|
$
|
119,897
|
|
|
$
|
53,363
|
|
|
$
|
66,534
|
|
|
$
|
112,043
|
|
|
$
|
50,983
|
|
|
$
|
61,060
|
|
|
Core
Deposit
Intangibles
|
|
Customer
Relationship
Intangibles
|
|
Mortgage
Servicing
Rights
|
|
Commercial
Servicing
Rights
|
|
Total
|
||||||||||
Nine months ending December 31, 2018
|
$
|
5,957
|
|
|
$
|
29
|
|
|
$
|
6,776
|
|
|
$
|
471
|
|
|
$
|
13,233
|
|
Year ending December 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
7,092
|
|
|
38
|
|
|
4,097
|
|
|
522
|
|
|
11,749
|
|
|||||
2020
|
6,220
|
|
|
37
|
|
|
3,512
|
|
|
411
|
|
|
10,180
|
|
|||||
2021
|
5,323
|
|
|
36
|
|
|
2,927
|
|
|
354
|
|
|
8,640
|
|
|||||
2022
|
4,175
|
|
|
34
|
|
|
2,341
|
|
|
290
|
|
|
6,840
|
|
|||||
2023
|
3,691
|
|
|
33
|
|
|
1,756
|
|
|
163
|
|
|
5,643
|
|
|||||
Thereafter
|
8,334
|
|
|
64
|
|
|
1,756
|
|
|
95
|
|
|
10,249
|
|
|||||
Total
|
$
|
40,792
|
|
|
$
|
271
|
|
|
$
|
23,165
|
|
|
$
|
2,306
|
|
|
$
|
66,534
|
|
|
2018
|
|
2017
|
||||
Balance at January 1,
|
$
|
23,248
|
|
|
$
|
32,088
|
|
Originations
|
1,162
|
|
|
2,132
|
|
||
Amortization
|
(1,245
|
)
|
|
(2,261
|
)
|
||
Balance at period end
|
$
|
23,165
|
|
|
$
|
31,959
|
|
Fair value of mortgage servicing rights
|
$
|
40,434
|
|
|
$
|
47,564
|
|
Mortgage servicing rights, net to servicing portfolio
|
0.66
|
%
|
|
0.74
|
%
|
|
2018
|
|
2017
|
||||
Balance at January 1,
|
$
|
2,609
|
|
|
$
|
3,690
|
|
Originations
|
21
|
|
|
93
|
|
||
Amortization
|
(322
|
)
|
|
(306
|
)
|
||
Valuation allowance on commercial servicing rights
|
(2
|
)
|
|
5
|
|
||
Balance at period end
|
$
|
2,306
|
|
|
$
|
3,482
|
|
Fair value of commercial servicing rights
|
$
|
2,781
|
|
|
$
|
4,040
|
|
Commercial servicing rights, net to servicing portfolio
|
1.84
|
%
|
|
2.17
|
%
|
March 31, 2018
|
Book Value-
Less than
20 Years
|
|
Fair Value-
Less than
20 Years
|
|
Impairment-
Less than
20 Years
|
|
Book Value-
More than
20 Years
|
|
Fair Value-
More than
20 Years
|
|
Impairment-
More than
20 Years
|
||||||||||||
Citywide Banks
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
36
|
|
|
$
|
—
|
|
Premier Valley Bank
|
72
|
|
|
104
|
|
|
—
|
|
|
286
|
|
|
272
|
|
|
14
|
|
||||||
Wisconsin Bank & Trust
|
368
|
|
|
534
|
|
|
—
|
|
|
1,554
|
|
|
1,825
|
|
|
—
|
|
||||||
Total
|
$
|
446
|
|
|
$
|
648
|
|
|
$
|
—
|
|
|
$
|
1,873
|
|
|
$
|
2,133
|
|
|
$
|
14
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Citywide Banks
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
37
|
|
|
$
|
—
|
|
Premier Valley Bank
|
83
|
|
|
110
|
|
|
—
|
|
|
303
|
|
|
291
|
|
|
12
|
|
||||||
Wisconsin Bank & Trust
|
446
|
|
|
619
|
|
|
—
|
|
|
1,747
|
|
|
2,153
|
|
|
—
|
|
||||||
Total
|
$
|
537
|
|
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
2,084
|
|
|
$
|
2,481
|
|
|
$
|
12
|
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance
Sheet
Category
|
|
Receive
Rate
|
|
Weighted
Average
Pay Rate
|
|
Maturity
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
$
|
25,000
|
|
|
$
|
239
|
|
|
Other assets
|
|
2.178
|
%
|
|
2.255
|
%
|
|
03/17/2021
|
Interest rate swap
|
20,000
|
|
|
(380
|
)
|
|
Other liabilities
|
|
1.704
|
|
|
3.355
|
|
|
01/07/2020
|
||
Interest rate swap
|
10,000
|
|
|
69
|
|
|
Other assets
|
|
2.286
|
|
|
1.674
|
|
|
03/26/2019
|
||
Interest rate swap
|
10,000
|
|
|
68
|
|
|
Other assets
|
|
2.178
|
|
|
1.658
|
|
|
03/18/2019
|
||
Interest rate swap
|
32,667
|
|
|
1,010
|
|
|
Other assets
|
|
4.240
|
|
|
3.674
|
|
|
05/10/2021
|
||
Interest rate swap
|
20,000
|
|
|
316
|
|
|
Other assets
|
|
2.125
|
|
|
2.390
|
|
|
06/15/2024
|
||
Interest rate swap
|
20,000
|
|
|
339
|
|
|
Other assets
|
|
2.006
|
|
|
2.352
|
|
|
03/01/2024
|
||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
$
|
25,000
|
|
|
$
|
(106
|
)
|
|
Other liabilities
|
|
1.600
|
%
|
|
2.255
|
%
|
|
03/17/2021
|
Interest rate swap
|
20,000
|
|
|
(621
|
)
|
|
Other liabilities
|
|
1.350
|
|
|
3.355
|
|
|
01/07/2020
|
||
Interest rate swap
|
10,000
|
|
|
30
|
|
|
Other assets
|
|
1.329
|
|
|
1.674
|
|
|
03/26/2019
|
||
Interest rate swap
|
10,000
|
|
|
29
|
|
|
Other assets
|
|
1.600
|
|
|
1.658
|
|
|
03/18/2019
|
||
Interest rate swap
|
33,667
|
|
|
759
|
|
|
Other assets
|
|
3.932
|
|
|
3.674
|
|
|
05/10/2021
|
||
Interest rate swap
(1)
|
20,000
|
|
|
(177
|
)
|
|
Other liabilities
|
|
1.588
|
|
|
2.390
|
|
|
06/15/2024
|
||
Interest rate swap
(2)
|
20,000
|
|
|
(149
|
)
|
|
Other Liabilities
|
|
1.481
|
|
|
2.352
|
|
|
03/01/2024
|
|
Effective Portion
|
|
Ineffective Portion
|
||||||||||||
|
Recognized in OCI
|
|
Reclassified from AOCI into Income
|
|
Recognized in Income on Derivatives
|
||||||||||
|
Amount of
Gain (Loss)
|
|
Category
|
|
Amount of
Gain (Loss)
|
|
Category
|
|
Amount of
Gain (Loss)
|
||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
1,896
|
|
|
Interest expense
|
|
$
|
(197
|
)
|
|
Other income
|
|
$
|
—
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
533
|
|
|
Interest expense
|
|
$
|
(397
|
)
|
|
Other income
|
|
$
|
—
|
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Category
|
||||
March 31, 2018
|
|
|
|
|
|
||||
Fair value hedges
|
$
|
35,436
|
|
|
$
|
(105
|
)
|
|
Other liabilities
|
December 31, 2017
|
|
|
|
|
|
||||
Fair value hedges
|
$
|
35,635
|
|
|
$
|
(999
|
)
|
|
Other liabilities
|
|
|
Amount of Gain (Loss)
|
|
Income Statement Category
|
||
Three Months Ended March 31, 2018
|
|
|
|
|
||
Fair value hedges
|
|
$
|
894
|
|
|
Interest income
|
Three Months Ended March 31, 2017
|
|
|
|
|
||
Fair value hedges
|
|
$
|
194
|
|
|
Interest income
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Category
|
||||
March 31, 2018
|
|
|
|
|
|
||||
Embedded derivatives
|
$
|
13,907
|
|
|
$
|
461
|
|
|
Other assets
|
December 31, 2017
|
|
|
|
|
|
||||
Embedded derivatives
|
$
|
14,045
|
|
|
$
|
738
|
|
|
Other assets
|
|
|
Amount of Gain (Loss)
|
|
Income Statement Category
|
||
Three Months Ended March 31, 2018
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
277
|
|
|
Other noninterest income
|
Three Months Ended March 31, 2017
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
117
|
|
|
Other noninterest income
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Category
|
||||
March 31, 2018
|
|
|
|
|
|
||||
Embedded conversion option
|
$
|
—
|
|
|
$
|
—
|
|
|
Other liabilities
|
December 31, 2017
|
|
|
|
|
|
||||
Embedded conversion option
|
$
|
—
|
|
|
$
|
—
|
|
|
Other liabilities
|
|
|
Amount of Gain (Loss)
|
|
Income Statement Category
|
||
Three Months Ended March 31, 2018
|
|
|
|
|
||
Embedded conversion option
|
|
$
|
—
|
|
|
Other noninterest income
|
Three Months Ended March 31, 2017
|
|
|
|
|
||
Embedded conversion option
|
|
$
|
97
|
|
|
Other noninterest income
|
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance Sheet
Category
|
|
Weighted
Average
Receive
Rate
|
|
Weighted
Average
Pay
Rate
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer interest rate swaps
|
|
$
|
162,882
|
|
|
$
|
3,763
|
|
|
Other assets
|
|
4.82
|
%
|
|
4.73
|
%
|
Customer interest rate swaps
|
|
162,882
|
|
|
(3,763
|
)
|
|
Other liabilities
|
|
4.73
|
|
|
4.82
|
|
||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer interest rate swaps
|
|
$
|
126,766
|
|
|
$
|
2,377
|
|
|
Other assets
|
|
4.70
|
%
|
|
4.03
|
%
|
Customer interest rate swaps
|
|
126,766
|
|
|
(2,377
|
)
|
|
Other liabilities
|
|
4.03
|
|
|
4.70
|
|
|
Balance Sheet
Category
|
|
Notional
Amount
|
|
Fair
Value
|
||||
March 31, 2018
|
|
|
|
|
|
||||
Interest rate lock commitments (mortgage)
|
Other assets
|
|
$
|
65,591
|
|
|
$
|
1,959
|
|
Forward commitments
|
Other assets
|
|
55,118
|
|
|
283
|
|
||
Forward commitments
|
Other liabilities
|
|
91,625
|
|
|
(320
|
)
|
||
Undesignated interest rate swaps
|
Other liabilities
|
|
13,907
|
|
|
(461
|
)
|
||
December 31, 2017
|
|
|
|
|
|
|
|
||
Interest rate lock commitments (mortgage)
|
Other assets
|
|
$
|
53,588
|
|
|
$
|
1,738
|
|
Forward commitments
|
Other assets
|
|
37,286
|
|
|
80
|
|
||
Forward commitments
|
Other liabilities
|
|
118,632
|
|
|
(232
|
)
|
||
Undesignated interest rate swaps
|
Other liabilities
|
|
14,045
|
|
|
(738
|
)
|
|
Fair Value Measurements at
March 31, 2018
|
||||||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Year-to-
Date (Gains)
Losses
|
||||||||||
Collateral dependent impaired loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
2,923
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,923
|
|
|
$
|
—
|
|
Commercial real estate
|
8,316
|
|
|
—
|
|
|
—
|
|
|
8,316
|
|
|
—
|
|
|||||
Agricultural and agricultural real estate
|
8,041
|
|
|
—
|
|
|
—
|
|
|
8,041
|
|
|
—
|
|
|||||
Residential real estate
|
1,421
|
|
|
—
|
|
|
—
|
|
|
1,421
|
|
|
4
|
|
|||||
Consumer
|
1,721
|
|
|
—
|
|
|
—
|
|
|
1,721
|
|
|
—
|
|
|||||
Total collateral dependent impaired loans
|
$
|
22,422
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,422
|
|
|
$
|
4
|
|
Loans held for sale
|
$
|
24,376
|
|
|
$
|
—
|
|
|
$
|
24,376
|
|
|
$
|
—
|
|
|
$
|
288
|
|
Other real estate owned
|
$
|
11,801
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,801
|
|
|
$
|
16
|
|
Premises, furniture and equipment held for sale
|
$
|
1,477
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,477
|
|
|
$
|
(115
|
)
|
Commercial servicing rights
|
$
|
272
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
272
|
|
|
$
|
2
|
|
|
Fair Value Measurements at
December 31, 2017
|
|||||||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Year-to-
Date (Gains) Losses |
|||||||||||
Collateral dependent impaired loans:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial
|
$
|
3,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,212
|
|
|
$
|
1,119
|
|
|
Commercial real estate
|
9,480
|
|
|
—
|
|
|
—
|
|
|
9,480
|
|
|
322
|
|
||||||
Agricultural and agricultural real estate
|
8,406
|
|
|
—
|
|
|
—
|
|
|
8,406
|
|
|
2,028
|
|
||||||
Residential real estate
|
1,137
|
|
|
—
|
|
|
—
|
|
|
1,137
|
|
|
—
|
|
||||||
Consumer
|
1,234
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|
—
|
|
||||||
Total collateral dependent impaired loans
|
$
|
23,469
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
$
|
23,469
|
|
|
$
|
3,469
|
|
Loans held for sale
|
$
|
44,560
|
|
|
$
|
—
|
|
|
$
|
44,560
|
|
|
$
|
—
|
|
|
$
|
190
|
|
|
Other real estate owned
|
$
|
10,777
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,777
|
|
|
$
|
737
|
|
|
Premises, furniture and equipment held for sale
|
$
|
1,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,977
|
|
|
$
|
192
|
|
|
Commercial servicing rights
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
(21
|
)
|
|
For the Three Months Ended
March 31, 2018 |
|
For the Year Ended
December 31, 2017
|
||||
Balance at January 1,
|
$
|
1,738
|
|
|
$
|
2,790
|
|
Total gains (losses) included in earnings
|
17
|
|
|
(1,479
|
)
|
||
Issuances
|
492
|
|
|
1,875
|
|
||
Settlements
|
(288
|
)
|
|
(1,448
|
)
|
||
Balance at period end
|
$
|
1,959
|
|
|
$
|
1,738
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
In-scope of Topic 606
|
|
|
|
||||
Service charges and fees
|
|
|
|
||||
Service charges and fees on deposit accounts
|
$
|
2,618
|
|
|
$
|
2,160
|
|
Overdraft fees
|
2,208
|
|
|
2,193
|
|
||
Customer service fees
|
77
|
|
|
49
|
|
||
Credit card fee income
|
2,190
|
|
|
2,033
|
|
||
Debit card income
|
2,985
|
|
|
3,021
|
|
||
Other service charges
|
1
|
|
|
1
|
|
||
Total service charges and fees
|
10,079
|
|
|
9,457
|
|
||
Trust fees
|
4,680
|
|
|
3,631
|
|
||
Brokerage and insurance commissions
|
907
|
|
|
1,036
|
|
||
Total noninterest income in-scope of Topic 606
|
15,666
|
|
|
14,124
|
|
||
|
|
|
|
||||
Out-of-scope of Topic 606
|
|
|
|
||||
Loan servicing income
|
1,754
|
|
|
1,724
|
|
||
Securities gains, net
|
1,441
|
|
|
2,482
|
|
||
Unrealized loss on equity securities, net
|
(28
|
)
|
|
—
|
|
||
Net gains on sale of loans held for sale
|
4,051
|
|
|
6,147
|
|
||
Valuation adjustment on commercial servicing rights
|
(2
|
)
|
|
5
|
|
||
Income on bank owned life insurance
|
614
|
|
|
617
|
|
||
Other noninterest income
|
1,220
|
|
|
794
|
|
||
Total noninterest income out-of-scope of Topic 606
|
9,050
|
|
|
11,769
|
|
||
Total noninterest income
|
$
|
24,716
|
|
|
$
|
25,893
|
|
(Dollars in thousands, except per share data)
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
STATEMENT OF INCOME DATA
|
|
|
|
||||
Interest income
|
$
|
101,214
|
|
|
$
|
80,551
|
|
Interest expense
|
9,630
|
|
|
7,523
|
|
||
Net interest income
|
91,584
|
|
|
73,028
|
|
||
Provision for loan losses
|
4,263
|
|
|
3,641
|
|
||
Net interest income after provision for loan losses
|
87,321
|
|
|
69,387
|
|
||
Noninterest income
|
24,716
|
|
|
25,893
|
|
||
Noninterest expenses
|
83,646
|
|
|
71,740
|
|
||
Income taxes
|
5,123
|
|
|
5,530
|
|
||
Net income
|
23,268
|
|
|
18,010
|
|
||
Preferred dividends
|
(13
|
)
|
|
(19
|
)
|
||
Interest expense on convertible preferred debt
|
—
|
|
|
5
|
|
||
Net income available to common stockholders
|
$
|
23,255
|
|
|
$
|
17,996
|
|
|
|
|
|
||||
Key Performance Ratios
|
|
|
|
||||
Annualized return on average assets
|
0.97
|
%
|
|
0.89
|
%
|
||
Annualized return on average common equity (GAAP)
|
9.32
|
%
|
|
9.71
|
%
|
||
Annualized return on average tangible common equity (non-GAAP)
(1)
|
13.03
|
%
|
|
12.25
|
%
|
||
Annualized ratio of net charge-offs to average loans
|
0.08
|
%
|
|
0.22
|
%
|
||
Annualized net interest margin (GAAP)
|
4.19
|
%
|
|
3.95
|
%
|
||
Annualized net interest margin, fully tax-equivalent (non-GAAP)
(2)
|
4.26
|
%
|
|
4.16
|
%
|
||
Efficiency ratio, fully tax-equivalent
(3)
|
68.21
|
%
|
|
69.95
|
%
|
||
|
|
|
|
||||
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(4)
|
|
|
|
||||
Net income available to common shareholders (GAAP)
|
$
|
23,255
|
|
|
$
|
17,996
|
|
|
|
|
|
||||
Average common stockholders' equity (GAAP)
|
$
|
1,011,580
|
|
|
$
|
751,671
|
|
Less average goodwill
|
250,172
|
|
|
132,440
|
|
||
Less average other intangibles, net
|
37,510
|
|
|
23,225
|
|
||
Average tangible common equity (non-GAAP)
|
$
|
723,898
|
|
|
$
|
596,006
|
|
Annualized return on average common equity (GAAP)
|
9.32
|
%
|
|
9.71
|
%
|
||
Annualized return on average tangible common equity (non-GAAP)
|
13.03
|
%
|
|
12.25
|
%
|
||
|
|
|
|
||||
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
(5)
|
|
|
|
||||
Net Interest Income (GAAP)
|
$
|
91,584
|
|
|
$
|
73,028
|
|
Plus tax-equivalent adjustment
(6)
|
1,544
|
|
|
3,860
|
|
||
Net interest income - tax-equivalent (non-GAAP)
|
$
|
93,128
|
|
|
$
|
76,888
|
|
|
|
|
|
||||
Average earning assets
|
$
|
8,857,801
|
|
|
$
|
7,502,496
|
|
Net interest margin (GAAP)
|
4.19
|
%
|
|
3.95
|
%
|
||
Net interest margin, fully tax-equivalent (non-GAAP)
|
4.26
|
%
|
|
4.16
|
%
|
||
|
|
|
|
||||
Reconciliation of Non-GAAP Measure-Efficiency Ratio
(7)
|
|
|
|
||||
Net Interest Income (GAAP)
|
$
|
91,584
|
|
|
$
|
73,028
|
|
Plus tax-equivalent adjustment
(6)
|
1,544
|
|
|
3,860
|
|
||
Net interest income - tax-equivalent (non-GAAP)
|
93,128
|
|
|
76,888
|
|
||
Noninterest income
|
24,716
|
|
|
25,893
|
|
||
Securities gains, net
|
(1,441
|
)
|
|
(2,482
|
)
|
||
Unrealized loss on equity securities, net
|
28
|
|
|
—
|
|
||
Adjusted income
|
$
|
116,431
|
|
|
$
|
100,299
|
|
|
|
|
|
(Dollars in thousands, except per share data)
|
As Of and For the Quarter Ended
|
||||||||||||||||||
|
3/31/2018
|
|
12/31/2017
|
|
9/30/2017
|
|
6/30/2017
|
|
3/31/2017
|
||||||||||
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
2,300,413
|
|
|
$
|
2,492,866
|
|
|
$
|
2,372,916
|
|
|
$
|
2,070,121
|
|
|
$
|
2,175,701
|
|
Loans held for sale
|
24,376
|
|
|
44,560
|
|
|
35,795
|
|
|
48,848
|
|
|
49,009
|
|
|||||
Total loans receivable
(1)
|
6,746,015
|
|
|
6,391,464
|
|
|
6,373,415
|
|
|
5,325,082
|
|
|
5,361,604
|
|
|||||
Allowance for loan losses
|
58,656
|
|
|
55,686
|
|
|
54,885
|
|
|
54,051
|
|
|
54,999
|
|
|||||
Total assets
|
10,055,863
|
|
|
9,810,739
|
|
|
9,755,627
|
|
|
8,204,721
|
|
|
8,361,845
|
|
|||||
Total deposits
|
8,541,540
|
|
|
8,146,909
|
|
|
8,231,884
|
|
|
6,930,169
|
|
|
7,089,861
|
|
|||||
Long-term obligations
|
276,118
|
|
|
285,011
|
|
|
301,473
|
|
|
281,096
|
|
|
282,051
|
|
|||||
Preferred equity
|
938
|
|
|
938
|
|
|
938
|
|
|
938
|
|
|
938
|
|
|||||
Common stockholders’ equity
|
1,050,567
|
|
|
990,519
|
|
|
980,746
|
|
|
805,032
|
|
|
780,374
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Share Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share (GAAP)
|
$
|
33.81
|
|
|
$
|
33.07
|
|
|
$
|
32.75
|
|
|
$
|
30.15
|
|
|
$
|
29.26
|
|
Tangible book value per common share (non-GAAP)
(2)
|
$
|
23.79
|
|
|
$
|
23.99
|
|
|
$
|
23.61
|
|
|
$
|
24.00
|
|
|
$
|
23.05
|
|
Common shares outstanding, net of treasury stock
|
31,068,239
|
|
|
29,953,356
|
|
|
29,946,069
|
|
|
26,701,226
|
|
|
26,674,121
|
|
|||||
Tangible common equity ratio (non-GAAP)
(3)
|
7.59
|
%
|
|
7.53
|
%
|
|
7.46
|
%
|
|
7.97
|
%
|
|
7.50
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stockholders' equity (GAAP)
|
$
|
1,050,567
|
|
|
$
|
990,518
|
|
|
$
|
980,746
|
|
|
$
|
805,032
|
|
|
$
|
780,374
|
|
Less goodwill
|
270,305
|
|
|
236,615
|
|
|
236,615
|
|
|
141,461
|
|
|
141,461
|
|
|||||
Less core deposit intangibles and customer relationship
intangibles, net |
41,063
|
|
|
35,203
|
|
|
37,028
|
|
|
22,850
|
|
|
24,068
|
|
|||||
Tangible common stockholders' equity (non-GAAP)
|
$
|
739,199
|
|
|
$
|
718,700
|
|
|
$
|
707,103
|
|
|
$
|
640,721
|
|
|
$
|
614,845
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common shares outstanding, net of treasury stock
|
31,068,239
|
|
|
29,953,356
|
|
|
29,946,069
|
|
|
26,701,226
|
|
|
26,674,121
|
|
|||||
Common stockholders' equity (book value) per share (GAAP)
|
$
|
33.81
|
|
|
$
|
33.07
|
|
|
$
|
32.75
|
|
|
$
|
30.15
|
|
|
$
|
29.26
|
|
Tangible book value per common share (non-GAAP)
|
$
|
23.79
|
|
|
$
|
23.99
|
|
|
$
|
23.61
|
|
|
$
|
24.00
|
|
|
$
|
23.05
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (GAAP)
|
$
|
10,055,863
|
|
|
$
|
9,810,739
|
|
|
$
|
9,755,627
|
|
|
$
|
8,204,721
|
|
|
$
|
8,361,845
|
|
Less goodwill
|
270,305
|
|
|
236,615
|
|
|
236,615
|
|
|
141,461
|
|
|
141,461
|
|
|||||
Less core deposit intangibles and customer relationship
intangibles, net |
41,063
|
|
|
35,203
|
|
|
37,028
|
|
|
22,850
|
|
|
24,068
|
|
|||||
Total tangible assets (non-GAAP)
|
$
|
9,744,495
|
|
|
$
|
9,538,921
|
|
|
$
|
9,481,984
|
|
|
$
|
8,040,410
|
|
|
$
|
8,196,316
|
|
Tangible common equity ratio (non-GAAP)
|
7.59
|
%
|
|
7.53
|
%
|
|
7.46
|
%
|
|
7.97
|
%
|
|
7.50
|
%
|
|||||
|
|||||||||||||||||||
(1) Excludes loans held for sale.
|
|||||||||||||||||||
(2) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table.
|
|||||||||||||||||||
(3) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table.
|
|||||||||||||||||||
(4) Tangible book value per common share is total common stockholders' equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of Heartland. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
|
|||||||||||||||||||
(5) The tangible common equity ratio is total common stockholders' equity less goodwill and core deposit intangibles, net divided by total assets less goodwill and core deposit intangibles, net. This ratio is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of Heartland. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees
|
$
|
10,079
|
|
|
$
|
9,457
|
|
|
$
|
622
|
|
|
7
|
%
|
Loan servicing income
|
1,754
|
|
|
1,724
|
|
|
30
|
|
|
2
|
|
|||
Trust fees
|
4,680
|
|
|
3,631
|
|
|
1,049
|
|
|
29
|
|
|||
Brokerage and insurance commissions
|
907
|
|
|
1,036
|
|
|
(129
|
)
|
|
(12
|
)
|
|||
Securities gains, net
|
1,441
|
|
|
2,482
|
|
|
(1,041
|
)
|
|
(42
|
)
|
|||
Unrealized loss on equity securities, net
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|
100
|
|
|||
Net gains on sale of loans held for sale
|
4,051
|
|
|
6,147
|
|
|
(2,096
|
)
|
|
(34
|
)
|
|||
Valuation adjustment on commercial servicing rights
|
(2
|
)
|
|
5
|
|
|
(7
|
)
|
|
(140
|
)
|
|||
Income on bank owned life insurance
|
614
|
|
|
617
|
|
|
(3
|
)
|
|
—
|
|
|||
Other noninterest income
|
1,220
|
|
|
794
|
|
|
426
|
|
|
54
|
|
|||
Total noninterest income
|
$
|
24,716
|
|
|
$
|
25,893
|
|
|
$
|
(1,177
|
)
|
|
(5
|
)%
|
|
Three Months Ended
March 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees on deposit accounts
|
$
|
2,618
|
|
|
$
|
2,160
|
|
|
$
|
458
|
|
|
21
|
%
|
Overdraft fees
|
2,208
|
|
|
2,193
|
|
|
15
|
|
|
1
|
|
|||
Customer service fees
|
77
|
|
|
49
|
|
|
28
|
|
|
57
|
|
|||
Credit card fee income
|
2,190
|
|
|
2,033
|
|
|
157
|
|
|
8
|
|
|||
Debit card income
|
2,985
|
|
|
3,021
|
|
|
(36
|
)
|
|
(1
|
)
|
|||
Other service charges
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Total service charges and fees
|
$
|
10,079
|
|
|
$
|
9,457
|
|
|
$
|
622
|
|
|
7
|
%
|
|
Three Months Ended
March 31, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commercial and agricultural loan servicing fees
(1)
|
$
|
749
|
|
|
$
|
813
|
|
|
$
|
(64
|
)
|
|
(8
|
)%
|
Residential mortgage servicing fees
|
2,250
|
|
|
3,172
|
|
|
(922
|
)
|
|
(29
|
)
|
|||
Mortgage servicing rights amortization
|
(1,245
|
)
|
|
(2,261
|
)
|
|
1,016
|
|
|
(45
|
)
|
|||
Total loan servicing income
|
$
|
1,754
|
|
|
$
|
1,724
|
|
|
$
|
30
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|||||||
(1) Includes servicing fees for commercial, commercial real estate, agricultural and agricultural real estate loans.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Salaries and employee benefits
|
$
|
48,710
|
|
|
$
|
41,767
|
|
|
$
|
6,943
|
|
|
17
|
%
|
Occupancy
|
6,043
|
|
|
5,073
|
|
|
970
|
|
|
19
|
|
|||
Furniture and equipment
|
2,749
|
|
|
2,501
|
|
|
248
|
|
|
10
|
|
|||
Professional fees
|
8,459
|
|
|
8,309
|
|
|
150
|
|
|
2
|
|
|||
FDIC insurance assessments
|
989
|
|
|
807
|
|
|
182
|
|
|
23
|
|
|||
Advertising
|
1,940
|
|
|
2,424
|
|
|
(484
|
)
|
|
(20
|
)
|
|||
Core deposit intangibles and customer relationship intangibles amortization
|
1,863
|
|
|
1,171
|
|
|
692
|
|
|
59
|
|
|||
Other real estate and loan collection expenses
|
732
|
|
|
828
|
|
|
(96
|
)
|
|
(12
|
)
|
|||
(Gain)/loss on sales/valuations of assets, net
|
(197
|
)
|
|
412
|
|
|
(609
|
)
|
|
(148
|
)
|
|||
Restructuring expenses
|
2,564
|
|
|
—
|
|
|
2,564
|
|
|
100
|
|
|||
Other noninterest expenses
|
9,794
|
|
|
8,448
|
|
|
1,346
|
|
|
16
|
|
|||
Total noninterest expenses
|
$
|
83,646
|
|
|
$
|
71,740
|
|
|
$
|
11,906
|
|
|
17
|
%
|
LOAN PORTFOLIO
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Loans receivable held to maturity:
|
|
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,806,683
|
|
|
26.77
|
%
|
|
$
|
1,646,606
|
|
|
25.76
|
%
|
Commercial real estate
|
3,323,094
|
|
|
49.25
|
|
|
3,163,269
|
|
|
49.48
|
|
||
Agricultural and agricultural real estate
|
518,386
|
|
|
7.68
|
|
|
511,588
|
|
|
8.00
|
|
||
Residential mortgage
|
624,725
|
|
|
9.26
|
|
|
624,279
|
|
|
9.76
|
|
||
Consumer
|
474,929
|
|
|
7.04
|
|
|
447,484
|
|
|
7.00
|
|
||
Gross loans receivable held to maturity
|
6,747,817
|
|
|
100.00
|
%
|
|
6,393,226
|
|
|
100.00
|
%
|
||
Unearned discount
|
(1,620
|
)
|
|
|
|
(556
|
)
|
|
|
||||
Deferred loan fees
|
(182
|
)
|
|
|
|
(1,206
|
)
|
|
|
||||
Total net loans receivable held to maturity
|
6,746,015
|
|
|
|
|
6,391,464
|
|
|
|
||||
Allowance for loan losses
|
(58,656
|
)
|
|
|
|
(55,686
|
)
|
|
|
||||
Loans receivable, net
|
$
|
6,687,359
|
|
|
|
|
$
|
6,335,778
|
|
|
|
|
LOANS SECURED BY REAL ESTATE
|
|||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Residential real estate, excluding residential construction and residential lot loans
|
$
|
1,050,029
|
|
|
$
|
1,080,066
|
|
Industrial, manufacturing, business and commercial
|
919,286
|
|
|
935,614
|
|
||
Agriculture
|
258,749
|
|
|
256,452
|
|
||
Retail
|
351,129
|
|
|
348,749
|
|
||
Office
|
365,836
|
|
|
356,782
|
|
||
Land development and lots
|
170,603
|
|
|
162,273
|
|
||
Hotel, resort and hospitality
|
172,749
|
|
|
167,396
|
|
||
Multi-family
|
222,084
|
|
|
211,862
|
|
||
Food and beverage
|
99,714
|
|
|
108,977
|
|
||
Warehousing
|
167,218
|
|
|
125,372
|
|
||
Health services
|
141,584
|
|
|
155,529
|
|
||
Residential construction
|
120,595
|
|
|
134,848
|
|
||
All other
|
182,853
|
|
|
187,508
|
|
||
Loans acquired in the quarter
|
215,017
|
|
|
—
|
|
||
Purchase accounting valuations
|
(25,035
|
)
|
|
(25,331
|
)
|
||
Total loans secured by real estate
|
$
|
4,412,411
|
|
|
$
|
4,206,097
|
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
55,686
|
|
|
$
|
54,324
|
|
Provision for loan losses
|
4,263
|
|
|
3,641
|
|
||
Recoveries on loans previously charged off
|
931
|
|
|
752
|
|
||
Charge-offs on loans
|
(2,224
|
)
|
|
(3,718
|
)
|
||
Balance at end of period
|
$
|
58,656
|
|
|
$
|
54,999
|
|
Annualized ratio of net charge offs to average loans
|
0.08
|
%
|
|
0.22
|
%
|
|
|
|
|
|
|
|
|
SECURITIES PORTFOLIO COMPOSITION
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
U.S. government corporations and agencies
|
$
|
11,188
|
|
|
0.49
|
%
|
|
$
|
5,328
|
|
|
0.21
|
%
|
Mortgage and asset-backed securities
|
1,647,604
|
|
|
71.61
|
|
|
1,753,736
|
|
|
70.35
|
|
||
Obligation of states and political subdivisions
|
601,946
|
|
|
26.17
|
|
|
694,565
|
|
|
27.86
|
|
||
Equity securities
|
16,693
|
|
|
0.73
|
|
|
16,674
|
|
|
0.67
|
|
||
Other securities
|
22,982
|
|
|
1.00
|
|
|
22,563
|
|
|
0.91
|
|
||
Total securities
|
$
|
2,300,413
|
|
|
100.00
|
%
|
|
$
|
2,492,866
|
|
|
100.00
|
%
|
DEPOSITS
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Demand
|
$
|
3,094,457
|
|
|
36.23
|
%
|
|
$
|
2,983,128
|
|
|
36.62
|
%
|
Savings
|
4,536,106
|
|
|
53.10
|
|
|
4,240,328
|
|
|
52.05
|
|
||
Time
|
910,977
|
|
|
10.67
|
|
|
923,453
|
|
|
11.33
|
|
||
Total
|
$
|
8,541,540
|
|
|
100.00
|
%
|
|
$
|
8,146,909
|
|
|
100.00
|
%
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Securities sold under agreement to repurchase
|
$
|
104,799
|
|
|
$
|
107,957
|
|
Federal funds purchased
|
5,100
|
|
|
168,250
|
|
||
Advances from the FHLB
|
—
|
|
|
40,000
|
|
||
Notes payable to unaffiliated banks
|
15,000
|
|
|
—
|
|
||
Other short-term borrowings
|
6,341
|
|
|
8,484
|
|
||
Total
|
$
|
131,240
|
|
|
$
|
324,691
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Advances from the FHLB
|
$
|
3,629
|
|
|
$
|
6,702
|
|
Wholesale repurchase agreements
|
30,000
|
|
|
30,000
|
|
||
Trust preferred securities
|
122,061
|
|
|
121,886
|
|
||
Senior notes
|
6,000
|
|
|
11,000
|
|
||
Note payable to unaffiliated bank
|
32,667
|
|
|
33,667
|
|
||
Contracts payable for purchase of real estate and other assets
|
1,858
|
|
|
1,881
|
|
||
Subordinated notes
|
74,036
|
|
|
74,000
|
|
||
Other borrowings
|
5,867
|
|
|
5,875
|
|
||
Total
|
$
|
276,118
|
|
|
$
|
285,011
|
|
|
Total
Capital
(to Risk-
Weighted
Assets)
|
|
Tier 1
Capital
(to Risk-
Weighted
Assets)
|
|
Common
Equity
Tier 1
(to Risk-
Weighted
Assets)
|
|
Tier 1
Capital
(to Average Assets)
|
||||||||
March 31, 2018
|
13.46
|
%
|
|
11.75
|
%
|
|
10.17
|
%
|
|
9.66
|
%
|
||||
Minimum capital requirement
|
8.00
|
%
|
|
6.00
|
%
|
|
4.50
|
%
|
|
4.00
|
%
|
||||
Well capitalized requirement
|
10.00
|
%
|
|
8.00
|
%
|
|
6.50
|
%
|
|
5.00
|
%
|
||||
Minimum capital requirement, including fully-phased in capital conservation buffer (2019)
|
10.50
|
%
|
|
8.50
|
%
|
|
7.00
|
%
|
|
N/A
|
|
||||
Risk-weighted assets
|
$
|
7,779,234
|
|
|
$
|
7,779,234
|
|
|
$
|
7,779,234
|
|
|
N/A
|
|
|
Average Assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
9,459,723
|
|
|||
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
13.45
|
%
|
|
11.70
|
%
|
|
10.07
|
%
|
|
9.20
|
%
|
||||
Minimum capital requirement
|
8.00
|
%
|
|
6.00
|
%
|
|
4.50
|
%
|
|
4.00
|
%
|
||||
Well capitalized requirement
|
10.00
|
%
|
|
8.00
|
%
|
|
6.50
|
%
|
|
5.00
|
%
|
||||
Minimum capital requirement, including fully-phased in capital conservation buffer (2019)
|
10.50
|
%
|
|
8.50
|
%
|
|
7.00
|
%
|
|
N/A
|
|
||||
Risk-weighted assets
|
$
|
7,511,544
|
|
|
$
|
7,511,544
|
|
|
$
|
7,511,544
|
|
|
N/A
|
|
|
Average Assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
9,552,227
|
|
|
2018
|
|
2017
|
||||||||||
|
Net Interest
Margin
|
|
% Change
From Base
|
|
Net Interest
Margin
|
|
% Change
From Base
|
||||||
Year 1
|
|
|
|
|
|
|
|
||||||
Down 100 Basis Points
|
$
|
362,642
|
|
|
(3.02
|
)%
|
|
$
|
288,697
|
|
|
(2.40
|
)%
|
Base
|
$
|
373,953
|
|
|
|
|
$
|
295,788
|
|
|
|
||
Up 200 Basis Points
|
$
|
377,453
|
|
|
0.94
|
%
|
|
$
|
299,112
|
|
|
1.12
|
%
|
Year 2
|
|
|
|
|
|
|
|
|
|||||
Down 100 Basis Points
|
$
|
346,225
|
|
|
(7.41
|
)%
|
|
$
|
270,796
|
|
|
(8.45
|
)%
|
Base
|
$
|
379,901
|
|
|
1.59
|
%
|
|
$
|
293,625
|
|
|
(0.73
|
)%
|
Up 200 Basis Points
|
$
|
404,390
|
|
|
8.14
|
%
|
|
$
|
310,771
|
|
|
5.07
|
%
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
(1)
|
||
|
|
|
101
|
|
Financial statement formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.
|
HEARTLAND FINANCIAL USA, INC.
|
(Registrant)
|
|
|
/s/ Lynn B. Fuller
|
By: Lynn B. Fuller
|
Chairman and Chief Executive Officer
|
(Principal Executive Officer and Duly Authorized Officer)
|
|
|
/s/ Bryan R. McKeag
|
By: Bryan R. McKeag
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer and Duly Authorized Officer)
|
|
|
/s/ Janet M. Quick
|
By: Janet M. Quick
|
Executive Vice President and Deputy Chief Financial Officer
|
(Principal Accounting Officer and Duly Authorized Officer)
|
|
Dated: May 8, 2018
|
1.
|
Definitions
. For purpose of this Agreement and except as otherwise provided for herein, these terms shall have the following definitions:
|
•
|
operations, marketing, products, product development, and other plans;
|
•
|
compensation practices;
|
•
|
pricing and sales policies, techniques, and concepts;
|
•
|
customer lists, records, and documents;
|
•
|
prospective customer lists, records, and documents;
|
•
|
information regarding employees and suppliers of the Company;
|
•
|
the financial affairs of the Company;
|
•
|
training and other manuals and internal policies;
|
•
|
business opportunities or ventures being considered or pursued by the Company;
|
•
|
patents, trademarks, copyrights, inventions, works of authorship, ideas, processes, formulas, source code, programs, know how, and improvements; and
|
•
|
any other Company information in any form that is not generally known to any competitor of the Company or any other Person who could derive economic value from such information.
|
2.
|
Nonsolicitation
|
a.
|
Customers.
During the period of employment and for one year thereafter, the Employee shall not, without the prior written consent of the Company, solicit, call on, sell to, encourage, or arrange to have any other person solicit, call on, sell to, or otherwise provide any Services or any other competitive product or service designed, developed, distributed, sold, or marketed by the Company or its Affiliates during the period of the Employee’s employment by the Company to any of the customers of the Company. This subsection 2.a. shall not prohibit the Employee from providing any services or products that the Company does not offer as of the time of the Employee’s termination of employment with the Company.
|
b.
|
Company Employees.
During the period of employment and for one year thereafter, the Employee shall not, without the prior written consent of the Company, solicit, recruit, encourage, or arrange to have any other Person solicit, recruit or encourage any Company employee to terminate his/her employment with the Company to seek employment with a bank, credit union, financial institution, investment company, or other Person who competes directly or indirectly with the Company.
|
3.
|
Choice of Law; Remedies
. This Agreement shall be interpreted according to the laws of the state in which the entity for which the Employee works is headquartered. The parties agree that, regardless of any choice of law provisions of any jurisdiction, the Agreement shall be enforceable in any Court of competent jurisdiction in that state, and the parties expressly consent to the jurisdiction therein. The Company shall be entitled to an injunction to enforce this Agreement, as well as any other remedies at law or in equity. Should the Company need to commence legal action to enforce any provision of this Agreement or protects its rights under the Agreement; the Company shall recover its attorneys’ fees incurred in such legal action.
|
4.
|
Successors
. This Agreement shall inure to the benefit of and shall be enforceable by any Affiliate and by any successor or assignee of the Company and or any Affiliate.
|
5.
|
Prior Agreements
. This Agreement is intended as a clarification and amplification of any existing prior agreements between the parties, which prior agreements relate to the subject matter of the Agreement.
|
6.
|
Amendment
. No changes in or additions to the terms of this Agreement shall be valid or binding unless reduced to writing and signed by both parties
.
|
7.
|
Severability
. The Employee and the Company agree that the covenants contained in this Agreement, or any of its paragraphs, sentences, or clauses are severable and separate, and the enforceability of any specific covenant or restriction shall not affect the validity or enforceability of any other covenant or restriction set forth herein. Each such covenant on the part of the Employee shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of the Employee against the Company or any Affiliate whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Company of said covenants.
|
8.
|
Waiver of Default
. Any waiver by the Company of any default or violation under this Agreement shall not constitute a waiver of any other default or violation on a different occasion.
|
9.
|
Termination; Effective Date
. The Employee’s employment may be terminated by either the Company or the Employee in accordance with applicable law. This Agreement shall be in effect commencing on the date of the Agreement and, except as expressly provided for in this Agreement, shall continue in effect for one year after the Employee ceases to be employed by the Company.
|
10.
|
Consent
. The Employee acknowledges that he/she has had sufficient time to read, has read, and understands this Agreement. The Employee acknowledges having received a copy of this Agreement.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
|
|
|
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
|
|
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
|
|
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 8, 2018
|
|
|
/s/ Lynn B. Fuller
|
|
Lynn B. Fuller
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
|
|
|
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
|
|
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
|
|
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 8, 2018
|
|
|
/s/ Bryan R. McKeag
|
|
Bryan R. McKeag
|
|
Executive Vice President
|
|
Chief Financial Officer
|
/s/ Lynn B. Fuller
|
|
Lynn B. Fuller
|
|
Chief Executive Officer
|
|
|
|
Date:
|
May 8, 2018
|
/s/ Bryan R. McKeag
|
|
Bryan R. McKeag
|
|
Executive Vice President
|
|
Chief Financial Officer
|
|
|
|
Date:
|
May 8, 2018
|