On January 29, 2024, Heartland Financial USA Inc (HTLF, Financial) released its 8-K filing, disclosing its financial results for the fourth quarter and full year ended December 31, 2023. The multi-bank holding company, which offers a comprehensive suite of banking services to a diverse customer base, faced a challenging quarter with a reported net loss available to common stockholders of ($72.4) million or ($1.69) per diluted common share. This represents a significant decrease from the net income of $58.6 million, or $1.37 per diluted common share, in the same quarter of the previous year.
Despite the reported net loss, HTLF's adjusted earnings, which exclude losses related to balance sheet repositioning and other non-recurring expenses, stood at $45.6 million, or $1.06 per diluted common share. The company also reported a loan growth of $196.2 million or 2% and an increase in average customer deposits of $270.7 million or 2%. Additionally, the common equity ratio increased to 9.27%, and the tangible common equity ratio (non-GAAP) improved by 80 basis points to 6.53%.
HTLF's net interest margin, on a fully tax-equivalent basis, improved by 34 basis points to 3.52%. However, the efficiency ratio was significantly higher due to the reported net loss, standing at 293.86% for the quarter, compared to 60.05% for the same period in the previous year. The adjusted efficiency ratio, on a fully tax-equivalent basis, was 59.31%.
For the year ended December 31, 2023, HTLF reported a net income available to common stockholders of $71.9 million, a decrease of 65% compared to $204.1 million in the previous year. The adjusted earnings available to common stockholders for the year were $193.9 million, a decrease of 7% from $209.5 million in the prior year.
The company's president and chief executive officer, Bruce K. Lee, commented on the results and strategic initiatives, stating:
"2023 was a year of significant progress and successful execution of HTLF’s strategic plans. With the completion of the charter consolidation initiative in the fourth quarter, we are now able to focus on HTLF 3.0, a set of initiatives that will drive improved efficiency, enhance EPS growth, deliver higher return on assets, and more efficient use of capital."
HTLF's strategic plan, HTLF 3.0, includes investing in growth through banker expansion and talent acquisition, expanding Treasury Management products and capabilities, creating consumer and small business digital platforms, and optimizing footprint and facilities with a focus on efficient return on capital.
HTLF's balance sheet repositioning resulted in a pre-tax loss of $140.0 million, and the company incurred restructuring costs of $944,000 due to centralized retail management span of control and $1.1 million in restructuring costs and $2.1 million in losses on sales/valuations of facilities due to footprint consolidation.
The company's net interest income for the fourth quarter was $156.1 million, a decrease of $9.1 million or 5% compared to the same quarter in the previous year. Total noninterest income was ($111.8) million, a decrease of $141.8 million, primarily due to net securities losses of $140.0 million related to the balance sheet repositioning strategy executed in the quarter.
As Heartland Financial USA Inc navigates through its strategic initiatives and the challenges faced in the fourth quarter, investors and stakeholders will be closely monitoring the company's performance and the impact of HTLF 3.0 on future growth and profitability.
Explore the complete 8-K earnings release (here) from Heartland Financial USA Inc for further details.
