HTLF Announces Closing of $150 Million Offering of Subordinated Notes

Wednesday, September 8, 2021

DUBUQUE, Iowa, Sept. 08, 2021 -- Heartland Financial USA, Inc. (Nasdaq: HTLF) announced today the completion of a public offering of $150.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “notes”). The notes are intended to qualify as Tier 2 capital for regulatory purposes. Piper Sandler & Co. acted as sole underwriter in the offering.

HTLF expects to use the net proceeds for general corporate purposes, which may include, without limitation, providing capital to support HTLF’s organic growth or growth through strategic acquisitions, financing investments, capital expenditures, investments in the subsidiary banks as regulatory capital, and repaying indebtedness. A portion of the proceeds may be used to retire higher interest rate senior debt, including $21.25 million principal amount of a note payable to an unaffiliated bank which matures at July 24, 2028 and which is currently accruing interest at 5.425% per annum. HTLF may also retire certain trust preferred securities where the rates and terms make it advantageous to do so.

The notes will initially bear interest at a rate of 2.75% per annum, with interest during this fixed rate period (from and including the date of original issuance to, but excluding, September 15, 2026 or the date of earlier redemption) payable semi-annually in arrears. The notes will mature on September 15, 2031, and become redeemable at HTLF’s option beginning on September 15, 2026, and on every interest payment date thereafter, or in whole but not in part, upon the occurrence of a tax event, capital event or investment company event, subject to certain exceptions. Starting on September 15, 2026, the interest rate will be reset quarterly to a benchmark interest rate per annum expected to be equal to the then current three-month term SOFR (Secured Overnight Financing Rate) plus 210 basis points, with interest during this period payable quarterly in arrears. Notwithstanding the foregoing, if the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the notes, nor shall there be any sale of the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering of notes was made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. The notes being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the registration statement, prospectus or prospectus supplement.