Dubuque-based financial institution reports 10% earnings decline for year

Heartland Financial USA on Monday reported net income of $37.8 million in the final quarter of 2020, marking the end of a year defined by changes and challenges due to the COVID-19 pandemic.

Earnings for the fourth quarter, which ended Dec. 31, were nearly identical to the final three months of 2019, when the Dubuque-based financial institution reported income of $37.9 million.

Over the course of the full year, Heartland’s net income was $133.5 million, down about 10% from the previous year’s earnings of $149.1 million.

Executive Operating Chairman Lynn Fuller framed the year as a triumph in the face of multiple difficulties.

“Based on all the challenges of 2020 — the continued low interest rates, the state shutdowns and the overall impact of the pandemic — we still had a very good year,” he said.

President and CEO Bruce Lee emphasized that Heartland is well-positioned for the year ahead.

In the final month of 2020, the company completed a pair of large-scale acquisitions that dramatically increased the company’s presence in Arizona and Texas. Lee said those acquisitions will likely add over $40 million in net income to the 2021 total.

The deals in Arizona and Texas also underscored how the company has rapidly expanded its presence in other regions.

“With these two acquisitions, over 60% of Heartland’s assets are now in the west and southwest regions, where we see the greatest economic growth in the U.S.,” Lee said.

Officials emphasized that COVID-19 will continue to have a major impact both short- and long-term.

In response to the pandemic, Heartland made a series of operational changes that remain in place today, including canceling all large meetings and in-person events and asking all employees able to work from home to do so.

While a new year and the rollout of vaccines have begun, Lee emphasized that there won’t be an immediate return to normalcy for employees or clients.

“We had higher hopes, quite frankly, for the rollout of the vaccine,” he said. “It has gone much, much slower (than expected). And each state is a little different, and we operate in 12 states, so we have to deal with what each state is doing.”

Despite these setbacks, Lee believes things will get “back to normal or closer to normal” in the mid- to late second quarter.

The pandemic also underscored the continued shift toward more digital banking.

As brick-and-mortar banking facilities temporarily closed, in-branch transactions at Heartland facilities fell by 35% compared with pre-COVID-19 levels. Meanwhile, the number of online and mobile transactions has increased 16%.

Lee acknowledged that “consumer behaviors have changed” and noted that three bank branches closed last year and eight more will be consolidated in 2021. The status of 10% of Heartland’s branches are “under review” as the company assesses its footprint moving forward.

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