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I Dip In for a Little Heartland Financial Fixed-Rate Reset Preferred

This morning I took a nibble on the Dubuque, Iowa community bank Heartland Financial (HTLF) 7% fixed rate reset preferred shares (HTLFP).

HTLF is a $20 billion in assets regional/community banker which appears to be generally well managed, although net income was off a bit in the quarter ending 9/30/2022–primarily because their salaries and benefit cost jumped quite a bit from last year. Of course they have the typical losses on investment portfolios, as most banks and insurance company’s have had during this credit tightening cycle.

The fixed rate reset issue (HTLFP) has traded strongly since issuance in 2020 spending much of the time in the $26-$27/share area, but now is down to around $25.

The issue has a 1st optional redemption date on 7/15/2025—and the great thing is that the reset is at 6.675% plus the 5 year treasury (now 3.85%)–all things being equal this probably means the issue will be redeemed on 7/15/2025 or alternatively the coupon moves to over 10%.

Of course I don’t make recommendations, but I find this a good time (around $25) to lock in a decent 7% yield.

9 thoughts on “I Dip In for a Little Heartland Financial Fixed-Rate Reset Preferred”

  1. Has anyone ever done their DD regarding if these smaller companies such as HTLFP and others paid their dividends thru the pandemic and other rough patches?

  2. There are a couple of their California branches near me, one is in San Luis Obispo about 10 miles north along US 101 and the other in Paso Robles, about 15 miles further north of San Luis. Don’t know much about them, used to be called Founders Community Banks I believe. I do know we are a highly agricultural area, wineries, strawberry fields, broccoli fields, etc. and AG loans seems to be one of their specialties. I bought a few shares, I also have a bit of WSBCP, FITBP and ONBPP. Thanks Tim !

      1. goin2cali: Yes, moved here from Los Angeles area in 1981 and never looked back 🙂 Many more people here now, but still nice place to live.

  3. I prefer the higher yielding SI pref. So much fake news out there this yields over 12% today. Why wait for a reset.

    A few other banks yielding close to 8% as well like sbny pref. I expect SI pref will line up over time once the short sellers are out and the ftx drama rolls over.

    1. SI: ” Silvergate Bank is a commercial bank that opened in 1988, and has focused its strategy on creating the banking platform for innovators, especially in the digital currency industry….”
      yikes! crypto — P’frd down to 10.88, the common of $240 high to 16.76, wonder why…. Fake news?
      good luck

      1. Yeah, that’s too dangerous a proposition for my blood…still a lot of blood letting to be had in the crypto world before all is said and done.

  4. good choice imo I like the 5yt resets for the ‘safer’ bucket..will add this to the list. I have WTFCP bot on dip to 24.50 a keeper and might add WSBCP which I have on watch.

  5. Welcome to the party. I had one tranche in this and picked up some more on this weeks dip.
    I read about the recent shareholder lawsuit and decided the way it was settled was good. The official complaint from converted shareholders from recent bank buyouts was they didn’t like the move towards consolidating the banks under one charter and changing the names of the smaller regional banks to the Heartland name.
    There may of been a stipulation in the original merger agreement with family stockholders to keep the names but consolidating operations seems to make sense although as Tim pointed out expenses have went up this past year.

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