Heartland Financial to consolidate 11 bank charters into one

Heartland Financial USA in Dubuque, Iowa, said it would consolidate its 11 bank charters into one in a bid for administrative efficiency.

The $19.3 billion-asset banking company, whose footprint stretches across much of the central U.S. and the West, said this week it would fold its various state charters into one in Colorado. It expects to begin the process this summer and complete it in stages by late next year.

Its respective banks will continue to operate under their existing, separate brands in each market and maintain local leadership, President and CEO Bruce Lee said during the company’s earnings call this week.

Lee said Heartland — which rebranded itself as HTLF last year — chose Colorado for multiple reasons, including its central location within the company’s footprint. Additionally, Colorado regulators “have experience with multistate banking operations. So that was one of the benefits. They also have experience handling charters of our size,” Lee said. “Clearly, it emphasizes our growing presence in the West and the Southwest. And Colorado has very favorable [economic] growth. So there are a lot of factors that went into it.”

Heartland reported restructuring charges of $1.9 million in the fourth quarter tied to the project. It estimated additional costs of $17 million to $18 million over the next two years.

“The consolidation will reduce run-rate costs, create operating leverage for future growth and present some treasury revenue opportunities,” Chief Financial Officer Bryan McKeag said on the call. “These benefits will layer in over the next two years, and we are confident that in total [the cost savings] will reach $20 million on an annualized basis when the consolidations are completed in late 2023."

The consolidation plan, approved by the Heartland board, awaits regulatory approval.

Additionally, company executives said on the call they would continue to downsize Heartland’s branch network. "In 2021, we closed, consolidated and sold 12 branches, or 8% of our network. In 2022, we plan to close or sell 13 more branches, or another 10%," Lee said.

Separately this week, Heartland named Kevin Quinn chief banking officer, a new position created to fold two regional president positions into one. Quinn previously was a regional president for the company.

Heartland reported fourth-quarter net income of $47.6 million, or $1.12 per share, up from $37.8 million, or 98 cents, a year earlier.