Heartland Financial USA (HTLF) 10-K/A 2003 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

xANNUAL REPORT PURSUANT TO SECTION 13 OF THE

 SECURITIES EXCHANGE ACT OF 1984

For the fiscal year ended December 31, 2003

Commission File Number: 0-24724

HEARTLAND FINANCIAL USA, INC.
(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

42-1405748

(I.R.S. Employer identification number)

1398 Central Avenue, Dubuque, Iowa 52001

(Address of principal executive offices) (Zip Code)

(563) 589-2100

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Trust Preferred Securities

(issued by Heartland Financial Capital Trust I)

(Title of Exchange Class)

American Stock Exchange

(Name of Each Exchange on which Registered)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock $1.00 par value

Preferred Share Purchase Rights

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x

The index to exhibits follows the signature page.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x  Noo

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the last sales price quoted on the over-the-counter market bulletin board on June 30, 2003, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $255,261,888.* Such figures include 2,298,708 shares of the Registrant's Common Stock (restated to reflect the three-for-two stock split effected in the form of a dividend on December 29, 2003) held in a fiduciary capacity by the Trust Department of the Dubuque Bank and Trust Company, a wholly-owned subsidiary of the Registrant.

*      Based on the last sales price of the Registrant's common stock on June 30, 2003, and reports of beneficial ownership filed by directors and executive officers of Registrant and by beneficial owners of more than 5% of the outstanding shares of common stock of Registrant; however, such determination of shares owned by affiliates does not constitute an admission of affiliate status or beneficial interest in shares of Registrant's common stock.

As of March 9, 2004, the Registrant had issued and outstanding 15,171,786 shares of common stock, $1.00 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2004 Annual Meeting of Stockholders are incorporated by reference into Part III.

EXPLANATORY NOTE

This Amendment No. 1 to Heartland Financial USA, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003, is being filed to add the Independent Auditors' Report to Item 8 of Part II. This Independent Auditors' Report was inadvertently omitted from the original Annuarl Report on Form 10-K filed on March 15, 2004. In accordance with Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the Registrant has included in this Amendment No. 1 only Item 8. of Part II. The remainder of the information contained in the original filing is not amended hereby.

ITEM 8.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
	Notes		December 31,  2003			December 31, 2002
ASSETS
Cash and due from banks		4	$	68,424		$	61,106
Federal funds sold and other short-term investments				3,445			39,886
Cash and cash equivalents				71,869			100,992
Time deposits in other financial institutions				1,132			1,677
Securities:		5
Trading, at fair value			��	1,073			915
Available for sale-at fair value (cost of $441,606 for 2003 and $381,398 for 2002)				450,680			389,900
Loans and leases:		6
Held for sale				25,678			23,167
Held to maturity				1,322,549			1,152,069
Allowance for loan and lease losses		7		(18,490	)		(16,091	)
Loans and leases, net				1,329,737			1,159,145
Assets under operating lease				31,636			30,367
Premises, furniture and equipment, net		8		49,842			35,591
Other real estate, net				599			452
Goodwill, net				20,167			16,050
Core deposit premium and mortgage servicing rights		9		5,069			4,879
Other assets				56,562			46,011
TOTAL ASSETS			$	2,018,366		$	1,785,979
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:		10
Demand			$	246,282		$	197,516
Savings				569,286			511,979
Time				676,920			628,490
Total deposits				1,492,488			1,337,985
Short-term borrowings		11		176,835			161,379
Other borrowings		12		173,958			126,299
Accrued expenses and other liabilities				34,162			36,275
TOTAL LIABILITIES				1,877,443			1,661,938
STOCKHOLDERS' EQUITY:		16,17,18,19
Preferred stock (par value $1 per share; authorized, 184,000 shares, none issued or outstanding)				-			-
Series A Junior Participating preferred stock (par value $1 per share; authorized,				-			-
16,000 shares, none issued or outstanding)
Common stock (par value $1 per share; authorized, 16,000,000 shares at
December 31, 2003 and December 31, 2002; issued 15,261,714 and 9,905,783 shares at December 31, 2003 and December 31, 2002, respectively)				15,262			9,906
Capital surplus				20,065			16,725
Retained earnings				102,584			94,048
Accumulated other comprehensive income				4,794			4,230
Treasury stock at cost (98,211 shares at December 31, 2003 and 59,369 shares at
December 31, 2002, respectively)				(1,782	)		(868	)
TOTAL STOCKHOLDERS' EQUITY				140,923			124,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	2,018,366		$	1,785,979
See accompanying Notes to Consolidated Financial Statements.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
			For the Years Ended December 31,
	Notes		2003			2002			2001
INTEREST INCOME:
Interest and fees on loans and leases		6	$	85,936		$	83,553		$	89,452
Interest on securities:
Taxable				9,100			13,132			14,143
Nontaxable				3,952			2,757			1,790
Interest on federal funds sold				355			322			1,981
Interest on interest bearing deposits in other financial institutions				174			248			243
TOTAL INTEREST INCOME				99,517			100,012			107,609
INTEREST EXPENSE:
Interest on deposits		10		27,763			31,395			45,783
Interest on short-term borrowings				2,350			2,643			4,515
Interest on other borrowings				8,214			8,294			8,322
TOTAL INTEREST EXPENSE				38,327			42,332			58,620
NET INTEREST INCOME				61,190			57,680			48,989
Provision for loan and lease losses		7		4,183			3,553			4,258
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE     LOSSES				57,007			54,127			44,731
NONINTEREST INCOME:
Service charges and fees				6,207			5,977			4,667
Trust fees				3,814			3,407			3,148
Brokerage commissions				863			658			615
Insurance commissions				703			765			807
Securities gains, net				1,823			790			1,489
Gain (loss) on trading account securities				453			(598	)		(417	)
Impairment loss on equity securities				(317	)		(267	)		(773	)
Rental income on operating leases				13,807			14,602			15,446
Gains on sale of loans				6,339			4,656			2,738
Valuation adjustment on mortgage servicing rights				338			(469	)		-
Other noninterest income				2,511			1,124			900
TOTAL NONINTEREST INCOME				36,541			30,645			28,620
NONINTEREST EXPENSES:
Salaries and employee benefits		15		33,113			28,571			25,182
Occupancy		16		3,880			3,178			3,014
Furniture and equipment				4,115			3,273			3,144
Depreciation on equipment under operating leases				11,353			11,555			11,805
Outside services				4,695			4,318			3,433
FDIC deposit insurance assessment				218			209			208
Advertising				2,354			1,917			1,588
Goodwill amortization				-			-			1,057
Core deposit premium amortization				404			495			615
Other noninterest expenses				7,560			7,143			6,646
TOTAL NONINTEREST EXPENSES				67,692			60,659			56,692
INCOME BEFORE INCOME TAXES				25,856			24,113			16,659
Income taxes		14		8,137			7,523			5,530
INCOME FROM CONTINUING OPERATIONS				17,719			16,590			11,129
Discontinued operations
Income from operation of discontinued branch (including gain on sale of $2,602)				-			3,751			469
Income taxes				-			1,474			184
Income on discontinued operation				-			2,277			285
NET INCOME			$	17,719		$	18,867		$	11,414
EARNINGS PER COMMON SHARE -  BASIC			$	1.18		$	1.28		$	0.79
EARNINGS PER COMMON SHARE - DILUTED			$	1.16		$	1.28		$	0.79
CASH DIVIDENDS DECLARED PER COMMON SHARE			$	0.27		$	0.27		$	0.27
See accompanying Notes to Consolidated Financial Statements.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2003, 2002 and 2001
(Dollars in thousands)
	2003			2002			2001
Cash Flows From Operating Activities:
Net income	$	17,719		$	18,867		$	11,414
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,543			15,203			16,616
Provision for loan and lease losses		4,183			3,553			4,283
Provision for income taxes less than (in excess of) payments		716			1,996			(635	)
Net amortization of premium on securities		7,580			4,420			1,285
Securities gains, net		(1,823	)		(790	)		(1,489	)
(Increase) decrease in trading account securities		(158	)		613			(1,528	)
Loss on impairment of equity securities		317			267			773
Loans originated for sale		(434,851	)		(278,650	)		(207,332	)
Proceeds on sales of loans		438,679			287,106			201,565
Net gain on sales of loans		(6,339	)		(4,656	)		(2,738	)
Increase (decrease) in accrued interest receivable		(104	)		235			1,603
Increase (decrease) in accrued interest payable		468			491			(1,597	)
Other, net		(1,805	)		199			(4,923	)
Net cash provided by operating activities		40,125			48,854			17,297
Cash Flows From Investing Activities:
Purchase of time deposits		(95	)		(1,068	)		-
Proceeds on maturities of time deposits		700			3			959
Proceeds from the sale of securities available for sale		81,545			47,086			65,010
Proceeds from the maturity of and principal paydowns on securities available for sale		188,529			151,099			109,436
Purchase of securities available for sale		(334,944	)		(263,566	)		(267,354	)
Net increase in loans and leases		(171,795	)		(109,282	)		(55,118	)
Purchase of bank-owned life insurance policies		(10,000	)		-			(8,568	)
Increase in assets under operating leases		(12,622	)		(6,495	)		(11,663	)
Capital expenditures		(18,677	)		(7,398	)		(4,602	)
Cash and cash equivalents received for sale of operation		-			30,469			-
Proceeds on sale of OREO and other repossessed assets		1,249			1,192			790
Net cash used by investing activities		(276,110	)		(157,960	)		(171,110	)
Cash Flows from Financing Activities:
Net increase in demand deposits and and savings accounts		106,073			58,758			111,338
Net increase (decrease) in time deposit accounts		48,430			77,802			(7,492	)
Net increase in short-term borrowings		15,456			676			20,794
Proceeds from other borrowings		52,750			7,840			69,381
Repayments of other borrowings		(5,091	)		(25,330	)		(28,448	)
Purchase of treasury stock		(7,999	)		(1,348	)		(1,026	)
Proceeds from sale of common stock		1,339			2,076			1,689
Dividends		(4,096	)		(3,926	)		(3,560	)
Net cash provided by financing activities		206,862			116,548			162,676
Net increase (decrease) in cash and cash equivalents		(29,123	)		7,442			8,863
Cash and cash equivalents at beginning of year		100,992			93,550			84,687
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	71,869		$	100,992		$	93,550
Supplemental disclosures:
Cash paid for income/franchise taxes	$	7,795		$	6,648		$	6,365
Cash paid for interest	$	38,694		$	41,841		$	61,790
Securities held to maturity transferred to securities available for sale	$	-		$	-		$	2,154
See accompanying Notes to Consolidated Financial Statements.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
For the years ended December 31, 2003, 2002 and 2001 (Dollars in thousands, except per share data)
	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance at January 1, 2001	$	9,906	$	18,812		$	71,253		$	1,301		$	(5,126	)	$	96,146
Net Income-2001							11,414									11,414
Unrealized gain on securities available for sale										3,796						3,796
Unrealized gain (loss) on derivatives arising during the period net of reclassification of $46										350						350
Reclassification adjustment for net security gains realized in net income										(716	)					(716	)
Income taxes										(1,166	)					(1,166	)
Comprehensive income																13,678
Cash dividends declared:
Common, $.25 per share							(3,560	)								(3,560	)
Purchase of 118,884 shares of common stock													(1,026	)		(1,026	)
Sale of 211,197 shares of common stock				(696	)								2,548			1,852
Balance at December 31, 2001	$	9,906	$	18,116		$	79,107		$	3,565		$	(3,604	)	$	107,090
Net Income-2002							18,867									18,867
Unrealized gain on securities available for sale										3,630						3,630
Unrealized gain (loss) on derivatives arising during the period,net of reclassification of $667										(2,100	)					(2,100	)
Reclassification adjustment for net security gains realized in net income										(523	)					(523	)
Income taxes										(342	)					(342	)
Comprehensive income																19,532
Cash dividends declared:
Common, $.27 per share							(3,926	)								(3,926	)
Purchase of 143,314 shares of common stock													(1,348	)		(1,348	)
Sale of 393,307 shares of common stock				(1,391	)								4,084			2,693
Balance at December 31, 2002	$	9,906	$	16,725		$	94,048		$	4,230		$	(868	)	$	124,041
Net Income-2003							17,719									17,719
Unrealized gain on securities available for sale										2,153						2,153
Unrealized gain (loss) on derivatives arising during the period, net of reclassification of $123										208						208
Reclassification adjustment for net security gains realized in net income										(1,506	)					(1,506	)
Income taxes										(291	)					(291	)
Comprehensive income																18,283
Cash dividends declared:
Common, $.27 per share							(4,096	)								(4,096	)
Three-for-two stock split		5,087					(5,087	)
Purchase of 427,344 shares of common stock													(7,999	)		(7,999	)
Issuance of 821,226 shares of common stock		269		3,340									7,085			10,694
Balance at December 31, 2003	$	15,262	$	20,065		$	102,584		$	4,794		$	(1,782	)	$	140,923
See accompanying Notes to Consolidated Financial Statements.

INDEPENDENT AUDITORS’ REPORT

The Board of Directors

Heartland Financial USA, Inc.:

We have audited the accompanying consolidated balance sheets of Heartland Financial USA, Inc. and subsidiaries (the Company) as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Heartland Financial USA, Inc. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 1 to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets, as of January 1, 2002.

KPMG LLP

Des Moines, Iowa

January 21, 2004  

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 17, 2004.

	HEARTLAND FINANCIAL USA, INC.
Date:  March 17, 2004	By:	/s/ Lynn B. Fuller
		Principal Executive Officer

Date:  March 17, 2004	By:	/s/ John K. Schmidt
		Executive Vice President and Principal Financial and Accounting Officer

 3.    INDEX OF EXHIBITS

31.1     Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

31.2     Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).