AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
John K. Schmidt Jeff Wilhoit Shelly Faaborg
Chief Operating Officer General Inquiries Analyst Inquiries
Chief Financial Officer (312) 640-6757 (310) 854-8316
(563) 589-1994 jwilhoit @financialrelationsboard.com sfaaborg @financialrelationsboard.com
jschmidt @dubuquebank.com
FOR IMMEDIATE RELEASE
MONDAY, OCTOBER 25, 2004
HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER EARNINGS
Dubuque, Iowa, October 25, 2004 -Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported results for the third quarter of 2004.
Third Quarter 2004 Highlights
| § | Average earning assets increased 31% over third-quarter 2003 |
| § | Net interest margin improved by 19 basis points over third-quarter 2003 |
| § | Loans up $138 million or 10% since year-end 2003, exclusive of the acquisition of Rocky Mountain Bank |
| § | Acquisition of Wealth Management Group of Colonial Trust Company completed on August 31, 2004 |
| § | Loan production office opened in Rockland, MA |
| § | Redemption of 9.60% trust preferred securities completed on September 30, 2004 |
Third Quarter | First Nine Months | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
| Net income (in millions) | $ | 4.0 | $ | 5.3 | $ | 13.7 | $ | 14.0 | ||||||||
| Diluted earnings per share | .24 | .34 | .86 | .92 | ||||||||||||
| Return on average assets | .64 | % | 1.10 | % | .82 | % | 1.02 | % | ||||||||
| Return on average equity | 9.65 | 15.52 | 11.93 | 14.43 | ||||||||||||
"Steady growth in quality earning assets has characterized our performance throughout 2004, and our third quarter was no exception. We continued to execute toward our goal of doubling earnings and assets every five to seven years."-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA
Dubuque, Iowa, October 25, 2004 - Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported net income of $4.0 million, or $0.24 per diluted share, for the third quarter ended September 30, 2004. This represents a decrease of $1.2 million, or 24 percent, over net income of $5.3 million, or $0.34 per diluted share, during the third quarter of 2003. Return on average equity was 9.65 percent and return on average assets was 0.64 percent for the third quarter of 2004, compared to 15.52 percent and 1.10 percent, respectively, for the same quarter in 2003.
"Steady growth in quality earning assets has characterized our performance throughout 2004 and our third quarter was no exception," said Lynn B. Fuller, chairman, president and chief executive officer. "Despite the reduction in net income, we also maintained our focus on the bottom line during the third quarter, which was impacted by a number of items, including comparisons to unusually high gains on sales of loans and a significant reversal in the valuation allowance on our mortgage servicing rights during the 2003 third quarter. In addition, remaining unamortized issuance costs on our trust preferred securities redemption were expensed during the 2004 third quarter. Taken together, these items represented an approximate $4 million pre-tax, or $0.16 per diluted share after-tax, swing on our income statement. We ar e also pleased with the expansion of our net interest margin in a challenging rate environment.
"We continued to execute toward our goal of doubling earnings and assets every five to seven years. Nine months into the first year of our new plan period, we have now completed our acquisition of the Wealth Management Group of Colonial Trust Company; our recently completed Rocky Mountain Bank acquisition remains on schedule toward full integration; and we made good on our intent to pursue growth opportunities where we identify the talent and strategic fit with the opening of a loan production office in Rockland, Massachusetts."
The acquisition of the Wealth Management Group of Colonial Trust Company, a publicly held Arizona trust company based in Phoenix, was completed effective August 31, 2004. The total purchase price of Colonial's Wealth Management Group was $2.1 million, consisting of all cash. With the acquisition, total Heartland trust assets exceed $1.1 billion.
The acquisition of Rocky Mountain Bancorporation, the holding company for Rocky Mountain Bank, was completed effective June 1, 2004. The purchase price of $34.5 million consisted of $10.4 million in cash and the remainder in 1,387,227 shares of Heartland common stock. At September 30, 2004, Rocky Mountain Bank had total assets of $380.1 million, total loans of $277.2 million and total deposits of $293.6 million. Net income at Rocky Mountain Bank totaled $820,000 for the third quarter of 2004.
Heartland Financial Capital Trust I, a trust subsidiary of Heartland, redeemed all of its $25.0 million 9.60% Trust Preferred Securities on September 30, 2004. The Trust Preferred Securities were originally issued in 1999 and were listed on the American Stock Exchange under the symbol HFT. Remaining unamortized issuance costs associated with these securities of $959,000, or $.04 per diluted share, were expensed upon redemption. As a result of this redemption, net interest income would be expected to increase by approximately $1.5 million annually under the current rate environment.
Net interest margin, expressed as a percentage of average earning assets, was 3.81 percent during the third quarter of 2004 compared to 3.62 percent for the same period in 2003 and 3.71 percent for the second quarter of 2004. Net interest income totaled $20.5 million during the third quarter of 2004, an increase of $5.7 million or 38 percent from the $14.8 million recorded during the third quarter of 2003. Contributing to this increase was the 31 percent growth in average earning assets and a shift in balances invested in federal funds and other short-term investments to higher-yielding loans. Rocky Mountain Bank’s contribution to net interest income during the third quarter of 2004 was $3.6 million. Interest income in the third quarter of 2004 totaled $32.6 million compared to $24.2 million in the third quart er of 2003. Interest expense for the third quarter of 2004 was $12.1 million compared to $9.4 million in the third quarter of 2003. A portion of the growth in interest expense was a result of the issuance of $20.0 million of 8.25% cumulative trust preferred securities on October 20, 2003, and $25.0 million of variable-rate cumulative trust preferred securities on March 17, 2004. Rocky Mountain Bank had interest income of $5.1 million and interest expense of $1.4 million during the third quarter of 2004.
Noninterest income totaled $8.7 million during the third quarter of 2004, a decrease of 23 percent from the noninterest income of $11.2 million recorded during the third quarter of 2003. The three categories contributing to this decrease were securities gains (losses), gains on sale of loans and valuation adjustments on mortgage servicing rights. During the third quarter of 2003, securities gains totaled $527,000 compared to losses of $61,000 during the third quarter of 2004. Gains on sale of loans decreased by $1.6 million or 67 percent during the quarters under comparison, as refinancing activity on residential mortgage loans was at historically high levels during 2003. Valuation adjustments on mortgage servicing rights experienced a $1.4 million reversal of the valuation allowance during the third quarter of 200 3 compared to a $73,000 increase in the valuation allowance during the same quarter of 2004. The decrease in these three noninterest income categories was partially offset by a $1.2 million or 85 percent increase in service charges and fees, as the amortization on mortgage rights decreased $581,000 or 72 percent and service charges on deposit accounts increased $393,000 or 33 percent. Rocky Mountain Bank was a major contributor to the additional service charges on deposit accounts.
For the third quarter of 2004, noninterest expense increased 30 percent to $22.7 million, reflecting increased costs related to the August 2003 opening of Arizona Bank & Trust and its opening of a second branch in May 2004. Also contributing to the increased costs was the recently completed acquisition of Rocky Mountain Bank and the recognition of the remaining unamortized issuance costs on the trust preferred securities redeemed. Total full-time equivalent employees increased from 667 at quarter-end 2003 to 838 at quarter-end 2004. Of that increase, 127 are full-time equivalent employees at Rocky Mountain Bank.
For the first nine months of 2004, Heartland’s effective tax rate was 29.10 percent compared to 32.22 percent during the first nine months of 2003. The reduced effective rate was the result of federal historic rehabilitation tax credits of $550,000 and state historic rehabilitation tax credits of $325,000. Additionally, tax-exempt interest income went from 15.13 percent of pre-tax income during the first nine months of 2003 to 19.03 percent during the same period in 2004.
Total assets exceeded $2.57 billion at September 30, 2004, up $549.0 million since year-end 2003. Total loans and leases were $1.74 billion at September 30, 2004, an increase of $415.1 million since year-end 2003. Exclusive of Rocky Mountain Bank, Dubuque Bank and Trust Company, Wisconsin Community Bank and Arizona Bank & Trust were major contributors to the $137.9 million or 10 percent growth in loans, primarily in the commercial and commercial real estate category. Wisconsin Community Bank continues to record strong gains in structuring financing under the USDA and SBA loan guaranty programs. Total deposits at September 30, 2004, were $1.98 billion, an increase of $490.0 million since year-end 2003. Exclusive of Rocky Mountain Bank, the $196.4 million or 13 percent growth in deposits came primarily from New M exico Bank & Trust and Arizona Bank & Trust.
The allowance for loan and lease losses at September 30, 2004, was 1.41 percent of loans and 229 percent of nonperforming loans, compared to 1.40 percent of loans and 333 percent of nonperforming loans at December 31, 2003. Nonperforming loans increased to $10.7 million or 0.62 percent of total loans and leases compared to $5.6 million or 0.42 percent of total loans and leases at December 31, 2003. Exclusive of the $3.3 million in total nonperforming loans at Rocky Mountain Bank, total nonperforming loans increased $1.8 million, due primarily to one large credit in the Dubuque market.
"Our acquired and de novo bank assets will continue to benefit from Heartland’s commitment to quality and pricing discipline," continued Fuller. "As we position ourselves for 2005, our accomplishments in the third quarter underscore our dedication to targeted growth."
About Heartland Financial USA:
Heartland is a $2.6 billion financial services company with eight banks in Iowa, Illinois, Wisconsin, New Mexico, Arizona and Montana:
Dubuque Bank and Trust Company, with eight offices in Dubuque, Epworth, Farley and Holy Cross, Iowa
Galena State Bank and Trust Company, with three offices in Galena and Stockton, Illinois
First Community Bank, with three offices in Keokuk, Iowa and Carthage, Illinois
Riverside Community Bank, with three offices in Rockford, Illinois
Wisconsin Community Bank, with eight offices in Cottage Grove, Fitchburg, Green Bay, Middleton, Monroe and Sheboygan, Wisconsin; Minneapolis, Minnesota; and Rockland, Massachusetts
New Mexico Bank & Trust, with twelve offices in Albuquerque, Clovis, Melrose, Portales and Santa Fe, New Mexico
Arizona Bank & Trust, with two offices in Mesa and Chandler, Arizona
Rocky Mountain Bank, with eight offices in Bigfork, Billings, Bozeman, Broadus, Plains, Plentywood, Stevensville and Whitehall, Montana
Other subsidiaries include:
ULTEA, Inc., a fleet management company with offices in Madison, Wisconsin and Chicago, Illinois
Citizens Finance Co., a consumer finance company with offices in Madison and Appleton, Wisconsin; Dubuque, Iowa; and Rockford, Illinois
HTLF Capital Corp., an investment banking firm with offices in Denver, Colorado
Heartland’s shares are traded on The Nasdaq Stock Market under the symbol HTLF.
Additional information about Heartland is available through our website atwww.htlf.com.
This release may contain, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as believe, expect, anticipate, plan, intend, estimate, may, will, would, could, should or similar expressions. Additionally, all statements in this release, including forward-looking statements, speak only as of the date they are made, and the Com pany undertakes no obligation to update any statement in light of new information or future events.
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war or threats thereof, (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.
-FINANCIAL TABLES FOLLOW-
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| For the Quarters Ended | For the Nine Months Ended | |||||
| 9/30/2004 | 9/30/2003 | 9/30/2004 | 9/30/2003 | |||
Interest Income | ||||||
| Interest and fees on loans and leases | $28,041 | $21,527 | $73,698 | $64,269 | ||
| Interest on securities and other: | ||||||
| Taxable | 3,248 | 1,497 | 9,554 | 6,728 | ||
| Nontaxable | 1,183 | 998 | 3,273 | 2,909 | ||
| Interest on federal funds sold | 33 | 149 | 47 | 279 | ||
Interest on interest bearing deposits in other financial institutions | 66 | 38 | 156 | 135 | ||
Total Interest Income | 32,571 | 24,209 | 86,728 | 74,320 | ||
Interest Expense | ||||||
| Interest on deposits | 8,413 | 6,866 | 21,969 | 20,971 | ||
| Interest on short-term borrowings | 693 | 581 | 1,989 | 1,759 | ||
| Interest on other borrowings | 2,998 | 1,953 | 8,173 | 5,815 | ||
Total Interest Expense | 12,104 | 9,400 | 32,131 | 28,545 | ||
Net Interest Income | 20,467 | 14,809 | 54,597 | 45,775 | ||
| Provision for loan and lease losses | 1,053 | 950 | 3,400 | 3,176 | ||
Net Interest Income After Provision for Loan and Lease Losses | 19,414 | 13,859 | 51,197 | 42,599 | ||
Noninterest Income | ||||||
| Service charges and fees | 2,688 | 1,452 | 7,283 | 4,208 | ||
| Trust fees | 1,196 | 951 | 3,337 | 2,761 | ||
| Brokerage commissions | 213 | 236 | 841 | 599 | ||
| Insurance commissions | 174 | 141 | 556 | 557 | ||
| Securities gains (losses), net | (61) | 527 | 1,806 | 1,685 | ||
| Gain (loss) on trading account securities | (32) | 80 | 43 | 329 | ||
| Impairment loss on equity securities | - | (69) | - | (239) | ||
| Rental income on operating leases | 3,425 | 3,447 | 10,348 | 10,342 | ||
| Gains on sale of loans | 814 | 2,446 | 2,186 | 5,667 | ||
| Valuation adjustment on mortgage servicing rights | (73) | 1,360 | 40 | 368 | ||
| Other noninterest income | 337 | 631 | 1,550 | 1,811 | ||
Total Noninterest Income | 8,681 | 11,202 | 27,990 | 28,088 | ||
Noninterest Expense | ||||||
| Salaries and employee benefits | 10,597 | 8,579 | 28,688 | 24,414 | ||
| Occupancy | 1,337 | 1,021 | 3,615 | 2,877 | ||
| Furniture and equipment | 1,423 | 1,064 | 3,875 | 2,912 | ||
| Depreciation on equipment under operating leases | 2,798 | 2,859 | 8,528 | 8,471 | ||
| Outside services | 2,985 | 1,286 | 5,957 | 3,558 | ||
| FDIC deposit insurance assessment | 65 | 54 | 177 | 161 | ||
| Advertising | 829 | 679 | 2,005 | 1,765 | ||
| Core deposit intangibles amortization | 257 | 101 | 489 | 303 | ||
| Other noninterest expenses | 2,402 | 1,763 | 6,587 | 5,577 | ||
Total Noninterest Expense | 22,693 | 17,406 | 59,921 | 50,038 | ||
Income Before Income Taxes | 5,402 | 7,655 | 19,266 | 20,649 | ||
| Income taxes | 1,384 | 2,391 | 5,607 | 6,654 | ||
Net Income | $4,018 | 5,264 | 13,659 | 13,995 | ||
Earnings per common share-basic | $.24 | $.35 | $.87 | $.94 | ||
Earnings per common share-diluted | $.24 | $.34 | $.86 | $.92 | ||
Weighted average shares outstanding-basic | 16,420,197 | 15,212,826 | 15,707,041 | 14,940,012 | ||
Weighted average shares outstanding-diluted | 16,663,051 | 15,479,334 | 15,949,761 | 15,216,908 | ||
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| For the Quarters Ended | ||||||
| 9/30/2004 | 6/30/2004 | 3/31/2004 | 12/31/2003 | 9/30/2003 | ||
Interest Income | ||||||
| Interest and fees on loans and leases | $28,041 | $23,897 | $21,760 | $21,667 | $21,527 | |
| Interest on securities and other: | ||||||
| Taxable | 3,248 | 2,698 | 3,608 | 2,372 | 1,497 | |
| Nontaxable | 1,183 | 1,064 | 1,026 | 1,043 | 998 | |
| Interest on federal funds sold | 33 | 9 | 5 | 76 | 149 | |
| Interest on interest bearing deposits in other financial institutions | 66 | 46 | 44 | 39 | 38 | |
Total Interest Income | 32,571 | 27,714 | 26,443 | 25,197 | 24,209 | |
Interest Expense | ||||||
| Interest on deposits | 8,413 | 6,987 | 6,569 | 6,792 | 6,866 | |
| Interest on short-term borrowings | 693 | 699 | 597 | 591 | 581 | |
| Interest on other borrowings | 2,998 | 2,741 | 2,434 | 2,399 | 1,983 | |
Total Interest Expense | 12,104 | 10,427 | 9,600 | 9,782 | 9,400 | |
Net Interest Income | 20,467 | 17,287 | 16,843 | 15,415 | 14,809 | |
| Provision for loan and lease losses | 1,053 | 991 | 1,356 | 1,007 | 950 | |
Net Interest Income After Provision for Loanand Lease Losses | 19,414 | 16,296 | 15,487 | 14,408 | 13,859 | |
Noninterest Income | ||||||
| Service charges and fees | 2,688 | 2,468 | 2,127 | 1,999 | 1,452 | |
| Trust fees | 1,196 | 1,121 | 1,020 | 1,053 | 951 | |
| Brokerage commissions | 213 | 350 | 278 | 264 | 236 | |
| Insurance commissions | 174 | 158 | 224 | 146 | 141 | |
| Securities gains (losses), net | (61) | 327 | 1,540 | 138 | 527 | |
| Gain (loss) on trading account securities | (32) | (10) | 85 | 124 | 80 | |
| Impairment loss on equity securities | - | - | - | (78) | (69) | |
| Rental income on operating leases | 3,425 | 3,461 | 3,462 | 3,465 | 3,447 | |
| Gains on sale of loans | 814 | 845 | 527 | 672 | 2,446 | |
| Valuation adjustment on mortgage servicing rights | (73) | 186 | (73) | (30) | 1,360 | |
| Other noninterest income | 337 | 682 | 531 | 700 | 631 | |
Total Noninterest Income | 8,681 | 9,588 | 9,721 | 8,453 | 11,202 | |
Noninterest Expense | ||||||
| Salaries and employee benefits | 10,597 | 9,270 | 8,821 | 8,699 | 8,579 | |
| Occupancy | 1,337 | 1,215 | 1,063 | 1,003 | 1,021 | |
| Furniture and equipment | 1,423 | 1,325 | 1,127 | 1,203 | 1,064 | |
| Depreciation on equipment under operating leases | 2,798 | 2,869 | 2,861 | 2,882 | 2,859 | |
| Outside services | 2,985 | 1,471 | 1,501 | 1,137 | 1,286 | |
| FDIC deposit insurance assessment | 65 | 61 | 51 | 57 | 54 | |
| Advertising | 829 | 637 | 539 | 589 | 679 | |
| Core deposit intangibles amortization | 257 | 144 | 88 | 101 | 101 | |
| Other noninterest expenses | 2,402 | 2,220 | 1,965 | 1,983 | 1,763 | |
Total Noninterest Expense | 22,693 | 19,212 | 18,016 | 17,654 | 17,406 | |
Income Before Income Taxes | 5,402 | 6,672 | 7,192 | 5,207 | 7,655 | |
| Income taxes | 1,384 | 2,097 | 2,126 | 1,483 | 2,391 | |
Net Income | $4,018 | 4,575 | 5,066 | 3,724 | 5,264 | |
Earnings per common share-basic | $.24 | $.29 | $.33 | $.25 | $.35 | |
Earnings per common share-diluted | $.24 | $.29 | $.33 | $.24 | $.34 | |
Weighted average shares outstanding-basic | 16,420,197 | 15,597,584 | 15,167,212 | 15,124,871 | 15,212,826 | |
Weighted average shares outstanding-diluted | 16,663,051 | 15,836,341 | 15,425,803 | 15,386,486 | 15,479,334 | |
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Interim periods unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| As of | ||||||
| 9/30/2004 | 12/31/2003 | 9/30/2003 | 12/31/2002 | |||
Assets | ||||||
| Cash and cash equivalents | $95,053 | $71,869 | $149,016 | $100,992 | ||
| Time deposits in other financial institutions | 1,166 | 1,132 | 1,216 | 1,677 | ||
| Securities | 503,775 | 451,753 | 382,613 | 390,815 | ||
| Loans held for sale | 33,731 | 25,678 | 19,477 | 23,167 | ||
| Loans and leases: | ||||||
| Loans and leases | 1,737,614 | 1,322,549 | 1,249,096 | 1,152,069 | ||
| Allowance for loan and lease losses | (24,520) | (18,490) | (18,041) | (16,091) | ||
| Loans and leases, net | 1,713,094 | 1,304,059 | 1,231,055 | 1,135,978 | ||
| Assets under operating lease | 34,410 | 31,636 | 31,000 | 30,367 | ||
| Premises, furniture and equipment, net | 77,619 | 49,842 | 47,230 | 35,591 | ||
| Goodwill, net | 37,271 | 20,167 | 20,167 | 16,050 | ||
| Core deposit premium and mortgage servicing rights | 9,413 | 5,069 | 5,133 | 4,879 | ||
| Other assets | 61,838 | 57,161 | 60,999 | 46,463 | ||
Total Assets | $2,567,370 | $2,018,366 | $1,947,906 | $1,785,979 | ||
Liabilities and Stockholders’ Equity | ||||||
| Liabilities | ||||||
| Deposits: | ||||||
| Demand | $300,811 | $246,282 | $218,822 | $197,516 | ||
| Savings | 761,926 | 569,286 | 559,582 | 511,979 | ||
| Time | 919,711 | 676,920 | 678,761 | 628,490 | ||
| Total Deposits | 1,982,448 | 1,492,488 | 1,457,165 | 1,337,985 | ||
| Short-term borrowings | 180,395 | 176,835 | 167,567 | 161,379 | ||
| Other Borrowings | 194,650 | 173,958 | 153,194 | 126,299 | ||
| Accrued expenses and other liabilities | 39,324 | 34,162 | 32,858 | 36,275 | ||
Total Liabilities | 2,396,817 | 1,877,443 | 1,810,784 | 1,661,938 | ||
Stockholders’ Equity | 170,553 | 140,923 | 137,122 | 124,041 | ||
Total Liabilities and Stockholders’ Equity | $2,567,370 | $2,018,366 | $1,947,906 | $1,785,979 | ||
Common Share Data | ||||||
| Book value per common share | $10.44 | $9.29 | $9.07 | $8.40 | ||
| FAS 115 effect on book value per common share | 0.27 | 0.30 | 0.26 | 0.29 | ||
| Common shares outstanding, net of treasury | 16,336,073 | 15,163,503 | 15,127,724 | 14,769,621 | ||
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| For the Quarters Ended | For the Nine Months Ended | |||||
| 9/30/2004 | 9/30/2003 | 9/30/2004 | 9/30/2003 | |||
Average Balances | ||||||
| Assets | $2,504,249 | $1,899,523 | $2,236,414 | $1,836,389 | ||
| Loans and leases, net of unearned | 1,743,516 | 1,253,515 | 1,536,557 | 1,231,072 | ||
| Deposits | 1,909,129 | 1,433,563 | 1,666,179 | 1,383,348 | ||
| Earning assets | 2,214,971 | 1,684,543 | 1,980,929 | 1,640,865 | ||
| Interest bearing liabilities | 1,998,116 | 1,515,626 | 1,783,924 | 1,474,237 | ||
| Stockholders' equity | 165,618 | 134,552 | 152,970 | 129,643 | ||
Earnings Performance Ratios | ||||||
| Return on average assets | 0.64% | 1.10% | 0.82% | 1.02% | ||
| Return on average equity | 9.65 | 15.52 | 11.93 | 14.43 | ||
Net interest margin(1) | 3.81 | 3.62 | 3.81 | 3.87 | ||
Net interest margin, excluding fleet leasingcompany debt(1) | 3.85 | 3.68 | 3.86 | 3.93 | ||
Efficiency ratio(2) | 75.81 | 66.79 | 72.41 | 67.75 | ||
Efficiency ratio, banks only(2) | 64.47 | 60.82 | 63.12 | 59.71 | ||
| For the Quarters Ended | ||||||
| 9/30/2004 | 6/30/2004 | 3/31/2004 | 12/31/2003 | 9/30/2003 | ||
Average Balances | ||||||
| Assets | $2,504,249 | $2,200,577 | $2,004,416 | $1,984,090 | $1,899,523 | |
| Loans and leases, net of unearned | 1,743,516 | 1,511,657 | 1,354,497 | 1,305,486 | 1,253,515 | |
| Deposits | 1,909,129 | 1,614,932 | 1,474,477 | 1,471,140 | 1,433,563 | |
| Earning assets | 2,214,971 | 1,945,763 | 1,782,054 | 1,760,932 | 1,684,543 | |
| Interest bearing liabilities | 1,998,116 | 1,752,683 | 1,600,973 | 1,583,143 | 1,515,626 | |
| Stockholders’ equity | 165,618 | 150,396 | 142,897 | 137,563 | 134,552 | |
Earnings Performance Ratios | ||||||
| Return on average assets | 0.64% | 0.84% | 1.02% | 0.74% | 1.10% | |
| Return on average equity | 9.65 | 12.23 | 14.26 | 10.74 | 15.52 | |
Net interest margin(1) | 3.81 | 3.71 | 3.94 | 3.61 | 3.62 | |
Net interest margin, excluding fleet leasing company debt(1) | 3.85 | 3.75 | 3.99 | 3.66 | 3.68 | |
Efficiency ratio(2) | 75.81 | 70.66 | 70.29 | 72.56 | 66.79 | |
Efficiency ratio, banks only(2) | 64.47 | 62.76 | 61.86 | 63.90 | 60.82 | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%
(2) Noninterest expense divided by the sum of net interest income and noninterest income less security gains
| HEARTLAND FINANCIAL USA, INC. | ||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||
| As of and For | As of and For | |||
| the Nine Months Ended | As of and For The Year | the Nine Months Ended | As of and For The Year | |
| 9/30/2004 | 12/31/2003 | 9/30/2003 | 12/31/2002 | |
Loan and Lease Data | ||||
| Commercial and commercial real estate | $1,118,421 | $860,552 | $800,437 | $733,324 |
| Residential mortgage | 221,697 | 148,376 | 140,371 | 133,435 |
| Agricultural and agricultural real estate | 224,226 | 166,182 | 168,808 | 155,383 |
| Consumer | 163,107 | 136,601 | 132,443 | 120,591 |
| Direct financing leases, net | 13,030 | 13,621 | 9,595 | 12,308 |
| Unearned discount and deferred loan fees | (2,867) | (2,783) | (2,558) | (2,972) |
Total loans and leases | $1,737,614 | $1,322,549 | $1,249,096 | $1,152,069 |
Asset Quality | ||||
| Nonaccrual loans | $10,205 | $5,092 | $4,612 | $3,944 |
| Loans past due ninety days or more as to interest or principal payments | 491 | 458 | 862 | 541 |
| Other real estate owned | 361 | 599 | 1,082 | 452 |
| Other repossessed assets | 321 | 285 | 346 | 279 |
Total nonperforming assets | $11,378 | $6,434 | $6,902 | $5,216 |
Allowance for Loan and Lease Losses | ||||
| Balance, beginning of period | $18,490 | $16,091 | $16,091 | $14,660 |
| Provision for loan and lease losses continuingoperations | 3,400 | 4,183 | 3,176 | 3,553 |
| Provision for loan and lease losses discontinuedoperations | - | - | - | (329) |
| Loans charged off | (2,472) | (2,392) | (1,714) | (3,203) |
| Recoveries | 853 | 608 | 488 | 1,410 |
| Addition related to acquired bank | 4,249 | - | - | - |
Balance, end of period | $24,520 | $18,490 | $18,041 | $16,091 |
Asset Quality Ratios | ||||
| Ratio of nonperforming loans to total loans and leases | 0.62% | 0.42% | 0.44% | 0.39% |
| Ratio of nonperforming assets to total assets | 0.44 | 0.32 | 0.35 | 0.29 |
| Ratio of net loan chargeoffs to average loans and leases | 0.11 | 0.14 | 0.10 | 0.16 |
Allowance for loan losses as a percent of loans and leases | 1.41 | 1.40 | 1.44 | 1.40 |
Allowance for loan losses as a percent of nonperforming loans and leases | 229.24 | 333.11 | 329.60 | 358.77 |