HBL Subordinated Notes – Indicative Pricing

17 April 2023


HEARTLAND BANK SUBORDINATED NOTES - INDICATIVE PRICING

Heartland Bank Limited (Heartland) has announced an offer of up to NZ$75 million (with the right to
accept oversubscriptions of up to an additional NZ$50 million at Heartland’s discretion) of unsecured
subordinated notes (Notes) to New Zealand investors and certain overseas institutional investors.

The offer opens today, 17 April 2023, and is expected to close at 11.00am on 21 April 2023.

The indicative Issue Margin range for the Notes is 3.20% - 3.45% per annum. The actual Issue Margin
(which may be above, below or within the indicative Issue Margin range) and interest rate for the first 5
years, until the First Optional Redemption Date (28 April 2028), will be announced via NZX on or about
21 April 2023 following a bookbuild process. The Notes are expected to be issued on 28 April 2023.

The interest rate for the first 5 years, until the First Optional Redemption Date (28 April 2028), will be a
fixed rate equal to the sum of the Swap Rate on the Rate Set Date (21 April 2023) plus the Issue Margin,
but in any case will be no less than the minimum interest rate of 7.30% per annum.

Details of the offer and the Notes are contained in the Limited Disclosure Document dated 11 April 2023
(LDD), which is available on the Disclose Register at https://disclose-register.companiesoffice.govt.nz/
under Heartland’s offer number OFR13495. Copies of the LDD, the investor presentation for the offer
and the indicative terms sheet are available at www.heartland.co.nz/unsecured-subordinated-notes-
offer, or by contacting one of the Joint Lead Managers to the offer (listed below) or your usual financial
advice provider. The LDD must be given to investors before they decide to acquire any Notes.

There is no public pool for the offer, with all of the Notes being reserved for clients of the Joint Lead
Managers, Primary Market Participants and other approved financial intermediaries. Investors can
register their interest by contacting a Joint Lead Manager or their usual financial advice provider.

This offer is being made in accordance with the Financial Markets Conduct Act 2013.


Arranger and Joint Lead Manager


0800 772 142


Joint Lead Managers



0800 275 269 0800 226 263 0800 367 227


ENDS

The person who authorised this announcement:

Leanne Lazarus
Chief Executive Officer, Heartland Bank Limited

For further information and media enquiries, please contact:

Nicola Foley
Group Head of Communications, Heartland Group Holdings Limited
+64 27 345 6809
nicola.foley@heartland.co.nz
Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland, New Zealand”

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JOINT LEAD MANAGERS:
Summary
Terms Sheet
For an issue of up to NZ$75 million
Heartland Bank Limited
unsecured subordinated notes
(with the right to accept oversubscriptions
of up to an additional NZ$50 million)
as at 17 April 2023

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This terms sheet (Terms Sheet) is a summary only. More details are contained in the Limited Disclosure Document (LDD) dated 11 April
2023. The LDD is available free of charge on the online Disclose Register maintained by the Companies Office at www.disclose-
register.companiesoffice.govt.nz (offer number OFR13495) or can be obtained from the Joint Lead Managers or your usual financial
advice provider.
This investment is riskier than a bank deposit. The Heartland Bank Limited (Heartland) unsecured subordinated notes (Notes) are complex
financial products that are not suitable for many investors. If you do not fully understand how they work or the risks associated with them,
you should not invest in them. You should read the LDD and you can seek advice from a financial advice provider to help you make an
investment decision.
Capitalised terms used but not defined in this Terms Sheet have the meaning given to them in the LDD unless the context
otherwise requires.
Key dates for the Offer
LDD lodgement Tuesday, 11 April 2023
Opening Date Monday, 17 April 2023
Rate Set Date Friday, 21 April 2023
Closing Time Friday, 11.00am on 21 April 2023
Issue Date/Allotment Date Friday, 28 April 2023
Expected date of initial quotation
and trading of the Notes on the NZX
Debt Market
Monday, 1 May 2023

Key dates for the Notes
First Interest Payment Date 28 July 2023
Interest Payment Dates

Quarterly in arrear on each 28 January, 28 April, 28 July and 28 October during
the term of the Notes, commencing on 28 July 2023; and

on the date on which the Notes are repaid
First Optional Redemption Date 28 April 2028
Maturity Date 28 April 2033

Dates may change
The “Key dates for the Offer” (listed above) are indicative only and subject to change. Heartland may, in its absolute discretion, vary these
dates (including by opening or closing the Offer early and extending the Closing Time). If the Closing Time is extended, all subsequent
dates may also be extended. Any such changes will not affect the validity of any applications received.
Heartland reserves the right to cancel the Offer and the issue of the Notes.

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Key risks
Investments in debt securities have risks. A key risk is that Heartland does not meet its commitments to repay you or pay you interest.
Section 6 of the LDD discusses the main factors that give rise to this risk.
Overview of the Notes

Issuer Heartland Bank Limited.
Description of the Debt
Securities
Unsecured subordinated notes.
Ranking in Liquidation
In a liquidation of Heartland, each Note gives the Holder the right to payment of an amount
equal to the Face Value plus all accrued but unpaid interest. The right of Holders to payment
of this amount will rank:

behind the claims of all depositors and other creditors of Heartland, except for the
claims and rights described below;

equally with the claims of other Holders and holders of any other securities and
obligations that rank equally with the Notes; and

ahead of the rights of Heartland 's shareholders and holders of any other securities
and obligations of Heartland that rank behind the Notes.
In a liquidation of Heartland, it is unlikely that there will be surplus assets available for the
liquidator to pay any amount to Holders in respect of the Notes.
Offer Amount
Up to NZ$75 million. Heartland reserves the right to accept oversubscriptions of up to an
additional NZ$50 million at its discretion.
Purpose
The Offer will raise Tier 2 Capital to help Heartland meet its regulatory capital requirements
and manage its capital position.
The proceeds of the Offer will be used for Heartland's general corporate purposes.
Regulatory Capital The Notes will be treated as Tier 2 Capital.
Credit Ratings

Senior Credit Rating of the
Issuer
Notes Credit Rating
Fitch Australia Pty Limited BBB (Stable) BB+
A credit rating is not a recommendation to buy, sell or hold the Notes or any securities
issued by Heartland. Ratings are subject to suspension, revision or withdrawal at any
time.
No Guarantee
The Notes are not guaranteed by any member of the Heartland Banking Group, Heartland
Group Holdings Limited (Heartland's parent company) or any other person.
No Public Pool
There will be no public pool for the Notes. All Notes will be reserved for subscription by
clients of the Joint Lead Managers, Primary Market Participants and other persons invited to
join the Bookbuild.
Repayment
Subject to an Early Redemption (see below), the Notes must be repaid by Heartland on the
Maturity Date (28 April 2033).

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Amount that is Payable to
Holders if the Notes are Repaid
Holders will receive the Face Value of the Notes plus all accrued but unpaid interest on the
Notes when the Notes are repaid.
Early Redemption
Heartland may choose to repay:

all or some of the Notes early on the First Optional Redemption Date or on any
Interest Payment Date after that date; or

all (but not some) of the Notes early on any Interest Payment Date if a Tax Event or
a Regulatory Event has occurred.
Early Redemption is subject to certain conditions, including Heartland obtaining the Reserve
Bank’s prior written approval (which the Reserve Bank may not provide) and Heartland
satisfying the Solvency Condition.
Holders have no right to require early redemption, and Holders should not assume
that Heartland will choose to repay the Notes prior to the Maturity Date or that
Heartland will be able to satisfy the conditions that apply to Early Redemption.
Interest Rate
The interest rate will be a fixed rate for a period of 5 years, after which it will change to a
floating rate that resets at quarterly intervals.
The interest rate for the first 5 years until the First Optional Redemption Date (28 April 2028)
will be a fixed rate equal to the sum of the Swap Rate (a reference rate for a 5 year period)
on the Rate Set Date (21 April 2023) plus the Issue Margin, but in any case will be no less
than 7.30% per annum.
The interest rate from (and including) the First Optional Redemption Date will be a floating
rate which will be reset quarterly to be equal to the sum of the applicable 3 Month Bank Bill
Rate (a benchmark interest rate for a 3 month period) plus the Issue Margin.
If the sum of the 3 Month Bank Bill Rate plus the Issue Margin is less than 0% per annum,
the floating rate will be deemed to be 0% per annum.
The initial interest rate and the Issue Margin will be determined by Heartland following the
Bookbuild on the Rate Set Date (21 April 2023), and will be announced by Heartland via NZX
on or about that date.
Each time the interest rate is reset after the First Optional Redemption Date, the new interest
rate will be announced by Heartland via NZX on or about the date it is reset.
Issue Margin
The indicative Issue Margin range is 3.20% - 3.45% per annum.
The Issue Margin (which may be above, below or within the indicative Issue Margin range)
will be determined by Heartland in consultation with the Joint Lead Managers through the
Bookbuild. The Issue Margin will be announced by Heartland via NZX on or about the Rate
Set Date.
The Issue Margin will not change.
Swap Rate
The mid-market rate for an interest rate swap with a term of 5 years commencing on the
Issue Date, as calculated by the Arranger in consultation with Heartland, according to market
convention, with reference to Bloomberg Page ICNZ4 (or any successor page) on the Rate
Set Date, expressed as a percentage per annum, adjusted for quarterly payments and
rounded, if necessary, to the nearest 2 decimal places with 0.005 being rounded up.
3 Month Bank Bill Rate
In relation to an Interest Payment Date after the First Optional Redemption Date, the FRA
rate administered by the New Zealand Financial Benchmark Facility (NZFBF) (or any person
that takes over the administration of that rate) for bank bills having a term of, or of about, 3
months as displayed at or about 10.45am (New Zealand time) or such later time as Heartland
may determine on the previous Interest Payment Date on Bloomberg BKBM page 'GDCO
2805' (or any successor page) or if that rate is not displayed by 10.45am (New Zealand time)
or such later time as Heartland may determine on that date, the equivalent rate provided by
the NZFBF (or any person that takes over the administration of that rate) at or around that

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time on that date, in each case expressed as a percentage per annum and rounded, if
necessary, to the nearest 4 decimal places with 0.00005% being rounded up.
Heartland is able to replace the 3 Month Bank Bill Rate with an alternative reference rate if
the 3 Month Bank Bill Rate becomes unavailable.
Calculation of Interest
Payments
Until the First Optional Redemption Date (28 April 2028) interest will be payable in equal
amounts on each Interest Payment Date.
After the First Optional Redemption Date the interest payable on each Interest Payment Date
will be calculated on the basis of the actual number of days from (and including) the previous
Interest Payment Date to (but excluding) the Interest Payment Date.
Solvency Condition
The payment of interest or principal in respect of a Note at any time before the Maturity Date
or the liquidation of Heartland is subject to the following conditions:

Heartland must be Solvent at the time the payment is due; and

Heartland must be able to pay the amount and remain Solvent immediately after
paying the amount.
The Solvency Condition does not apply to payments that are required to be made on the
Maturity Date or if Heartland is in liquidation.
No Event of Default for Failure
to Satisfy the Solvency
Condition or Due to Reserve
Bank
No Event of Default arises if Heartland fails to pay an amount on the Notes on account of not
satisfying the Solvency Condition or (in the case of early repayment only) the Reserve Bank
has not given its prior written approval to the repayment.
Unpaid Interest Accumulates
If interest is not paid on an Interest Payment Date because the Solvency Condition is not
satisfied, the unpaid interest will remain owing, will itself bear interest (at the same rate as the
Notes), and will be payable on the earlier of the next Business Day on which the Solvency
Condition is satisfied and the Maturity Date.
Events of Default
The Notes have very limited events of default, as described below:

Payment default: An event of default will occur if Heartland fails to pay any amount
due in respect of the Notes within 15 Business Days of its due date.

Commencement of liquidation: An event of default will occur on the
commencement of liquidation of Heartland.
Limited Enforcement Rights and
Rights in Liquidation of
Heartland
Holders' rights are limited if an event of default occurs, as described below:
If a payment default occurs, Holders may only bring proceedings:

to recover any amount then due and payable but unpaid on the Notes (subject to
satisfaction of the Solvency Condition if the payment of the unpaid amount was
subject to the Solvency Condition);

for specific performance of any other obligation in respect of the Notes; or

for the liquidation of Heartland.
In the case of the commencement of liquidation of Heartland, the Face Value of each Note
and any accrued but unpaid interest on the Notes will immediately become due and payable,
and Holders may claim in the liquidation for that amount (on a subordinated basis). It is
unlikely that a Holder will receive payment of any amount owing on its Notes in a liquidation.
No Restrictions on Issuing
Further Securities or Creating
Further Liabilities
There are no restrictions on Heartland issuing further securities or creating further liabilities
after the Notes have been issued that rank equally with, or in priority to, the Notes in a
liquidation of Heartland.
Heartland could therefore, at any time after the Issue Date, issue further securities or create
further liabilities that rank equally with or in priority to the Notes.

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Business Days (for Interest
Payment Purposes)
A day that is not a Saturday or Sunday and on which commercial banks are open for general
business in Wellington and Auckland.
Business Day Convention
If an Interest Payment Date on or before the First Optional Redemption Date is not a
Business Day, Heartland will make payment on the next Business Day, and no adjustment
will be made to the amount of interest payable as a result of the delay in payment.
If an Interest Payment Date after the First Optional Redemption Date is not a Business Day,
then the Interest Payment Date will be the next Business Day, unless that day falls in the next
calendar month, in which case it will be the preceding Business Day, and, in either case, the
amount of interest payable will be adjusted to reflect the actual payment date.
Record Date (for Payment
Purposes)
In the case of:

a payment of interest, the date which is 10 days before the relevant Interest
Payment Date or, if that day is not a Business Day, the immediately preceding
Business Day; or

a payment of any other amount, a date determined by Heartland and notified to
NZX,
or in either case such other date as may be required by NZX.
Brokerage 0.50% on firm allocations plus 0.50% brokerage, payable by Heartland.
No Underwriting The Offer is not underwritten.
Minimum Subscription Amount NZ$5,000 and in multiples of NZ$1,000 thereafter.
Face Value / Issue Price NZ$1.00 per Note.
ISIN NZHBLD01T2L8
Quotation
Heartland intends to quote the Notes on the NZX Debt Market. NZX ticker code HBL1T2 has
been reserved for the Notes.
NZX is a licensed market operator, and the NZX Debt Market is a licensed market, under the
Financial Markets Conduct Act 2013.
Documents
LDD relating to the offer of Notes dated 11 April 2023.
Deed Poll and terms of the Notes.
Other documents and information are available on the online Disclose Register maintained
by the Companies Office at www.disclose-register.companiesoffice.govt.nz (offer number
OFR13495).
Governing Law New Zealand.
Approved Issuer Levy
Heartland intends to register the Notes for approved issuer levy (AIL) and, where it is eligible
to do so in respect of interest paid to a non-resident Holder that is subject to the non-resident
withholding tax rules (and unless otherwise elected by the Holder), to pay AIL in lieu of
deducting non-resident withholding tax. If the Notes qualify for the 0% rate of AIL, Heartland
intends to apply the 0% rate, otherwise it will apply AIL at the applicable rate. The amount of
any AIL paid will be deducted from payments to the relevant Holder.
Selling Restrictions
The LDD only constitutes an offer of Notes to investors in New Zealand and to certain
overseas institutional investors in accordance with the selling restrictions set out in the LDD.

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Heartland has not taken and will not take any action that would permit a public or regulated
offering of the Notes, or possession or distribution of any offering material in respect of the
Notes, in any country or jurisdiction where action for that purpose is required (other than New
Zealand).
The Notes may only be offered for sale or sold in compliance with all applicable laws and
regulations in any jurisdiction in which they are offered, sold or delivered.
The LDD and any disclosure statement, information memorandum, prospectus, circular,
advertisement or other offering material in respect of the Notes may only be published,
delivered or distributed in compliance with all applicable laws and regulations (including those
of the country or jurisdiction in which the material is published, delivered or distributed).
Specific selling restrictions will apply to an initial offer of the Notes in Australia, the European
Union (excluding Austria), Hong Kong, Japan, Singapore, the United Kingdom and the United
States or to US Persons.
Arranger
Westpac Banking Corporation (ABN 33 007 457 141) (acting through its New Zealand
branch) (Westpac).
Joint Lead Managers
Bank of New Zealand, Craigs Investment Partners Limited, Forsyth Barr Limited and
Westpac.
Registrar Link Market Services Limited.