Executive Summary

Q3 2024 was solid on core fundamentals: GAAP EPS rose to $1.44 (benefiting from a $29.7M gain on the Montana branch sale), while adjusted EPS was $1.17; net interest margin (FTE) expanded to 3.78% and the tangible common equity (TCE) ratio improved 86 bps to 8.14% .
Asset quality optics improved as nonperforming loans fell to $69.9M (0.61% of loans), though this was aided by elevated charge-offs ($32.1M) tied largely to a previously reserved food manufacturing credit; provision was $6.3M total (loans and unfunded) .
Deposit mix improved: customer deposits rose $217.6M QoQ while wholesale/institutional deposits fell $221.0M QoQ; overall deposits were flat QoQ but down 8% YTD on balance sheet repositioning .
Management reiterated UMB merger integration progress and maintained an expected close in Q1 2025—a key near-term catalyst for the stock’s narrative, alongside margin expansion and capital improvement .
No Q3 call transcript was available; HTLF canceled its earnings calls following the merger announcement earlier in 2024. As a result, Q&A color and estimate vs actual comparisons are limited this quarter .

What Went Well and What Went Wrong

What Went Well
- Margin and capital: Net interest margin (FTE) increased to 3.78% from 3.73% QoQ; TCE ratio rose to 8.14% (up 86 bps QoQ) on balance sheet actions and AOCI improvement .
- Funding mix: Customer deposits increased $217.6M QoQ while wholesale/institutional deposits decreased $221.0M QoQ, lowering funding costs and supporting margin .
- Asset quality optics: Nonperforming loans fell 33% QoQ to $69.9M (0.61% of loans) as charge-offs and cures reduced problem assets; CEO highlighted “solid” quarter execution and ongoing UMB integration progress: “we’re excited about closing the transaction, expected in Q1 2025” .
What Went Wrong
- Credit costs: Total charge-offs were $32.1M in Q3, largely tied to a food manufacturing syndication loan in bankruptcy; provision for lending-related credit losses was $6.3M .
- Noninterest income pressure: Securities losses were $9.5M; capital markets fees remained subdued; total noninterest income was $19.0M vs $28.4M in Q3’23 .
- Expense items still elevated in areas: Professional fees rose 28% YoY, partly legal and special asset costs, despite overall GAAP expenses declining due to the Montana disposal gain .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024	Consensus
Net Income to Common ($M)	$46.1	$37.7	$62.1	NA*
Diluted EPS ($)	$1.08	$0.88	$1.44	NA*
Adjusted Diluted EPS ($)	$1.12	$1.15	$1.17	NA*
Net Interest Income ($M)	$145.8	$158.7	$157.9	NA*
Noninterest Income ($M)	$28.4	$18.2	$19.0	NA*
Adjusted Revenue (non-GAAP) ($M)	$176.4	$188.9	$188.0	NA*
NIM (FTE, %)	3.18%	3.73%	3.78%	NA*
Efficiency Ratio (GAAP, %)	63.77%	65.69%	48.58%	NA*
Provision for Credit Losses ($M)	$1.52	$9.01	$6.28	NA*
ROAA (%)	0.94%	0.84%	1.38%	NA*
ROATCE (non-GAAP, %)	16.32%	12.28%	18.32%	NA*

Notes: Adjusted EPS excludes the $29.7M gain on the Montana sale, $9.5M securities losses, and $2.9M fixed asset losses (and tax effects) .
NA* = S&P Global consensus was unavailable via our data feed this quarter.

KPIs and Balance Sheet

KPI	Q3 2023	Q2 2024	Q3 2024
Total Assets ($B)	$20.13	$18.81	$18.27
Loans HTM ($B)	$11.87	$11.61	$11.44
Total Deposits ($B)	$17.10	$14.96	$14.95
Customer Deposits ($B)	$14.80	$14.13	$14.35
Wholesale & Institutional Deposits ($B)	$2.30	$0.823	$0.602
TCE Ratio (%)	5.73	7.28	8.14
CET1 Ratio (%)	11.37	11.68	12.66
NPLs/Loans (%)	0.44	0.89	0.61
Net Charge-offs / Avg Loans (ann., %)	0.12	0.23	0.99
Employees (FTE)	1,965	1,843	1,725

Context and Drivers

GAAP EPS of $1.44 reflects the net $29.7M Montana branch sale gain, partially offset by $9.5M securities losses and $2.9M fixed asset losses; adjusted EPS of $1.17 strips these non-core items .
NIM expansion stems from paying down high-cost wholesale deposits and higher asset yields; wholesale/institutional deposits declined 55% YTD to $601.9M .
Asset quality: NPLs fell to 0.61% of loans as charge-offs and cures outpaced inflows; however, charge-offs were elevated and largely tied to a previously reserved food manufacturing credit in bankruptcy .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
UMB Merger Close Timing	Close timeline	“Expected Q1 2025” (Q2 release)	“Expected Q1 2025” (Q3 release)	Maintained

No formal quantitative revenue/margin/expense guidance was provided in the earnings materials this quarter .

Earnings Call Themes & Trends

Note: No Q3 earnings call transcript was available; themes are drawn from the Q1–Q3 press releases.

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
Margin & Deposit Costs	NIM (FTE) rose to 3.57%; deposit cost stable at 2.11% (Q1). NIM (FTE) up to 3.73%; deposit cost 2.08% (Q2) .	NIM (FTE) 3.78%; cost of deposits 2.18% .	NIM improving; deposit costs ticked up slightly.
Credit Quality	NPAs down to 0.51% of assets; low provision (Q1) .	Provision elevated due to food manufacturing credit; NPLs up vs YE (Q2) .	NPLs improved QoQ in Q3; idiosyncratic stress persists .
Balance Sheet Repositioning	Announced Rocky Mountain Bank sale; wholesale deposits reduced $312M (Q1) .	Sold ~$108M securities at loss to de-risk; TCE ratio improved (Q2) .	Closed Montana sale; $29.7M gain; additional securities sales; further wholesale reduction (Q3) .
Strategy/Tech (HTLF 3.0)	Investment in bankers, treasury, and digital; footprint optimization (Q1) .	Integration planning with UMB advanced (Q2) .	Continued UMB integration planning; confidence in Q1’25 close (Q3) .
Regulatory/Legal	FDIC special assessment ($2.0M) (Q1) .	Shareholder investigation PRs surfaced after merger announcement (July) .	No new FDIC special charge; merger/legal backdrop ongoing (Q3) .

Management Commentary

“HTLF delivered a solid third quarter. Net interest margin increased as we continue to pay down high cost wholesale deposits. Our tangible common equity ratio improved to 8.14%... We continue to work closely with our partners at UMB on integration planning... excited about closing the transaction, expected in Q1 2025.” — Bruce K. Lee, President & CEO .
Post quarter-end, HTLF terminated fair value hedges in early October; $10.3M of hedge-related interest income was recorded in Q3 vs $5.6M in Q3’23; no additional interest income will be recorded going forward .
Strategy execution continues: balance sheet de-risking (securities sales), footprint optimization (Montana sale), and deposit mix improvement to support margin and capital .

Q&A Highlights

No Q3 earnings call transcript was available in our document set. HTLF previously canceled earnings calls following the merger announcement with UMB (noted in Q1 filing) .

Estimates Context

We attempted to retrieve S&P Global consensus for Q3’24 EPS and revenue; data was unavailable due to a missing mapping for HTLF in the SPGI feed, so we cannot quantify beats/misses this quarter (consensus column marked NA*) [GetEstimates error]. Values marked NA* indicate consensus from S&P Global was unavailable.

Key Takeaways for Investors

Core momentum intact: NIM (FTE) expanded to 3.78% and TCE climbed to 8.14%, supported by reduced wholesale funding and balance sheet repositioning—constructive for forward earnings power in a stable-rate backdrop .
Credit narrative mixed but manageable: headline asset quality improved (NPLs down 33% QoQ), though the quarter absorbed outsized, largely reserved charge-offs tied to a single borrower; watch special assets and remaining CRE/ag exposures into Q4 .
Funding mix is a tailwind: customer deposit growth and wholesale runoff should continue to aid margin and liquidity, albeit with some near-term variability in deposit betas/costs .
Non-GAAP vs GAAP: GAAP EPS was boosted by the Montana sale gain and offset by securities and fixed asset losses; adjusted EPS of $1.17 better reflects underlying run-rate profitability .
UMB merger remains the central catalyst: integration work is ongoing with a maintained Q1 2025 close timeline; regulatory/legal noise (shareholder investigations) persists but is typical for announced transactions .
Operating leverage focus: Adjusted efficiency ratio held near 58% (TE basis), suggesting continued discipline while investing in banker talent and digital capabilities under HTLF 3.0 .
Setup into Q4: With hedges terminated (removing that income tailwind) and idiosyncratic credit largely recognized, investor focus should center on sustaining NIM, stabilizing credit costs, and milestone progress toward merger closing .

Citations:

Q3 2024 earnings press release and financial tables –
Q2 2024 earnings press release and financial tables –
Q1 2024 earnings press release and financial tables; call cancellation note –
July 2024 third-party shareholder investigation press releases (merger-related)

HEARTLAND FINANCIAL USA INC (HTLF)·Q3 2024 Earnings Summary