 Dubuque, IA, July 27, 2020 GLOBE NEWSWIRE -- Highlights and Developments Quarterly net income of 30.1 million or 0.82 per diluted common share in comparison with 45.2 million or 1.26 per diluted common share for the second quarter of the prior year Net interest margin of 3.81 3.85 on a fully tax-equivalent basis, non-GAAP1 during the second quarter of 2020, compared to 3.81 3.84 on a fully tax-equivalent basis, non-GAAP1 during the first quarter of 2020 and 4.06 4.10 on a fully tax-equivalent basis, non-GAAP1 during the second quarter of 2019 Efficiency ratio non-GAAP1 of 55.75 compared to 64.13 for the second quarter of 2019 Funded approximately 4,800 Paycheck Protection Program PPP loans totaling 1.20 billion Arizona Bank Trust subsidiary entered into a purchase and assumption agreement with Johnson Bank for four banking centers located in Phoenix and Scottsdale, Arizona Completed the issuance of 115.0 million of preferred equity Quarter Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income available to common stockholders in millions 30.1 45.2 50.2 76.7 Diluted earnings per common share 0.82 1.26 1.36 2.17 Return on average assets 0.84 1.55 0.73 1.35 Return on average common equity 7.69 12.56 6.32 11.13 Return on average tangible common equity non-GAAP1 11.97 19.52 9.95 17.49 Net interest margin 3.81 4.06 3.81 4.09 Net interest margin, fully tax-equivalent non-GAAP1 3.85 4.10 3.85 4.14 Efficiency ratio, fully-tax equivalent non-GAAP1 55.75 64.13 58.64 64.52 1 Refer to Non-GAAP Measures in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded 1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued 115 million of preferred stock during the quarter. Bruce K. Lee, president and chief executive officer, Heartland Financial USA, Inc. Dubuque, Iowa, Monday, July 27, 2020-Heartland Financial USA, Inc. NASDAQ: HTLF today reported the following quarterly results: 1. net income available to common stockholders of 30.1 million, or 0.82 per diluted common share, for the quarter ended June 30, 2020, compared to 45.2 million, or 1.26 per diluted common share, for the second quarter of 2019. 2. excluding tax-effected provision for credit losses of 21.2 million and tax-effected acquisition, integration and restructuring costs of 532,000, adjusted net income available to common stockholders non-GAAP was 51.8 million, or 1.40 of adjusted earnings per diluted common share non-GAAP for the second quarter of 2020, compared to 49.8 million non-GAAP, or 1.39 of adjusted earnings per diluted common share non-GAAP, for the second quarter of 2019, which excluded tax-effected provision for credit losses of 3.9 million and tax-effected acquisition, integration and restructuring costs of 734,000. 3. return on average common equity was 7.69 and return on average assets was 0.84 for the second quarter of 2020, compared to 12.56 and 1.55, respectively, for the same quarter in 2019. 4. return on average tangible common equity non-GAAP of 11.97 and adjusted return on average tangible common equity non-GAAP of 20.02 for the second quarter of 2020 compared to 19.52 and 21.41, respectively, for the second quarter of 2019.Heartland reported the following results for the six months ended June 30, 2020: 1. net income available to common stockholders of 50.2 million or 1.36 per diluted common share, for the six months ended June 30, 2020, compared to 76.7 million or 2.17 per diluted common share for the six months ended June 30, 2019. 2. excluding tax-effected provision for credit losses of 38.2 million and tax-effected acquisition, integration and restructuring costs of 1.6 million, adjusted net income available to common stockholders non-GAAP was 90.0 million, or 2.44 of adjusted earnings per diluted common share non-GAAP, for the six months ended June 30, 2020, compared to 85.4 million non-GAAP, or 2.42 of adjusted earnings per diluted common share non-GAAP, for the six months ended June 30, 2019, which excluded tax-effected provision for credit losses of 5.2 million and tax-effected acquisition, integration and restructuring costs of 3.6 million. 3. return on average common equity was 6.32 and return on average assets was 0.73 for the first six months of 2020, compared to 11.13 and 1.35, respectively, for the same period in 2019. 4. return on average tangible common equity non-GAAP of 9.95 and adjusted return on average tangible common equity non-GAAP of 17.19 for the six months ended June 30, 2020, compared to 17.49 and 19.37, respectively, for the six months ended June 30, 2019.Heartland had a very successful second quarter, which was driven by a solid net interest margin and strong efficiency ratio. In addition, we funded 1.2 billion of Paycheck Protection Program loans, announced the purchase of four banking centers in Phoenix and Scottsdale, Arizona and issued 115 million of preferred stock during the quarter, said Bruce K. Lee, Heartlands president and chief executive officer. Responses to COVID-19 In the first quarter of 2020, Heartland implemented and continues to operate under its pandemic management plan to assure workplace and employee safety and business resiliency while providing relief and support to customers and communities facing challenges from the impacts of COVID-19, which included the following measures: 1. employees who can work from home continue to do so, while those who come into bank locations are on rotating teams to limit potential exposure; 2. all in-person events and large meetings are canceled and have transitioned to virtual meetings; 3. expanded time off program and enhanced health care coverage for COVID-19 related testing and treatments, and 4. implemented and extended a 20 wage premium for certain customer-facing and call center employees.The health and safety of our employees continues to be our top priority. We are monitoring our markets closely and updating our responses accordingly, Lee said.The continued economic disruption resulting from the COVID-19 pandemic will make it difficult for some customers to repay the principal and interest on their loans, and Heartlands subsidiary banks have been working with customers to modify the terms of certain existing loans.The following table shows the total loan exposure as of June 30, 2020, and March 31, 2020, to customer segment profiles that Heartland believes will be more heavily impacted by COVID-19, dollars in thousands: As of June 30, 2020 As of March 31, 2020 Industry Total Exposure1 of Gross Exposure1 Total Exposure1 of Gross Exposure1 Lodging 490,475 4.38 498,596 4.47 Multi-family properties 474,610 4.24 436,931 3.92 Retail trade 407,030 3.64 367,727 3.30 Retail properties 369,782 3.31 408,506 3.66 Restaurants and bars 255,701 2.29 247,239 2.22 Nursing homesassisted living 130,103 1.16 126,267 1.13 Oil and gas 63,973 0.57 56,302 0.50 Childcare facilities 44,968 0.40 48,455 0.43 Gaming 34,618 0.31 34,790 0.31 Total 2,271,260 20.30 2,224,813 19.94 1 Total loans outstanding, excluding PPP loans, and unfunded commitments As of June 30, 2020, loan modifications have been made on approximately 1.10 billion of loans in Heartlands portfolio. Approximately 58 of these modifications are interest only for 90 days, and the remainder are primarily principal and interest deferments for 90 days. The original loan modifications will be expiring throughout the third quarter, and Heartland expects that the majority will be returning to full payment status. However, it is likely that some of the modifications will be extended for an additional 90 days in order to provide the necessary support for certain COVID-19 impacted customers.Through June 30, 2020, Heartlands subsidiary banks funded approximately 4,800 PPP loans, totaling 1.20 billion. As of June 30, 2020, deferred fees totaling 35.3 million were recorded associated with the PPP loans, of which 3.7 million was recognized in income during the quarter. The ultimate impact of the COVID-19 pandemic on Heartlands financial condition and results of operations will depend on risks and uncertainties, such as the severity and duration of the pandemic, related restrictions on business and consumer activity, and the availability of government programs to alleviate the economic stress of the pandemic. See Heartlands 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. 