AT THE COMPANY: | AT FINANCIAL RELATIONS BOARD: | ||
| John K. Schmidt | Jeff Wilhoit | Deanna Hobson | |
| Chief Operating Officer | General Inquiries | Analyst Inquiries | |
| Chief Financial Officer | (312) 640-6757 | (310) 854-8300 | |
| (563) 589-1994 | jwilhoit @financial relationsboard.com | dhobson @financial relationsboard.com | |
| jschmidt @ htlf.com | |||
FOR IMMEDIATE RELEASE
MONDAY, JANUARY 24, 2005
HEARTLAND FINANCIAL USA, INC. REPORTS FOURTH QUARTER EARNINGS
Dubuque, Iowa, January 24, 2005 - Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported results for the fourth quarter of 2004.
Fourth Quarter 2004 Highlights
| § | Net income improved by 77% over fourth-quarter 2003 |
| § | Average earning assets increased 32% over fourth-quarter 2003 |
| § | Net interest margin improved by 38 basis points over fourth-quarter 2003 |
| § | Loans up $184.5 million or 12% since year-end 2003, exclusive of the acquisition of Rocky Mountain Bank |
| § | Deposits up $201.0 million or 13% since year-end 2003, exclusive of the acquisition of Rocky Mountain Bank |
Fourth Quarter | Year Ended Dec. 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
| Net income (in millions) | $ | 6.6 | $ | 3.7 | $ | 20.3 | $ | 17.7 | ||||||||
| Diluted earnings per share | .40 | .24 | 1.26 | 1.16 | ||||||||||||
| Return on average assets | 1.00 | % | .74 | % | .87 | % | .95 | % | ||||||||
| Return on average equity | 15.18 | 10.74 | 12.82 | 13.46 | ||||||||||||
| Net interest margin | 3.99 | 3.61 | 3.91 | 3.86 | ||||||||||||
"Our fourth quarter results affirm the value of the targeted growth strategies implemented during the past year. We are extremely pleased with the expansion of our net interest margin, which was primarily a result of the growth in earning assets and the early redemption of $25.0 million of 9.60% trust preferred securities."-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA
Dubuque, Iowa, January 24, 2005 - Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported a 77 percent increase in earnings for the fourth quarter of 2004. Net income for the fourth quarter ended December 31, 2004, was $6.6 million, or $0.40 per diluted share, an increase of $2.9 million over net income of $3.7 million, or $0.24 per diluted share, during the fourth quarter of 2003. Return on average equity was 15.18 percent and return on average assets was 1.00 percent for the fourth quarter of 2004, compared to 10.74 percent and 0.74 percent, respectively, for the same quarter in 2003.
"Our fourth quarter results affirm the value of the targeted growth strategies implemented during the past year," said Lynn B. Fuller, chairman, president and chief executive officer. "We are extremely pleased with the expansion of our net interest margin, which was primarily a result of the growth in earning assets and the early redemption of $25.0 million of 9.60% trust preferred securities. The more recent acquisition of Rocky Mountain Bank was a major contributor to the improved earnings during the quarter. We continue to pursue growth opportunities where we identify the talent and strategic fit, as has been evidenced by the opening of a loan production office in Crystal Lake, Illinois, under our Citizens Finance umbrella."
Net interest margin, expressed as a percentage of average earning assets, was 3.99 percent during the fourth quarter of 2004 compared to 3.61 percent for the same period in 2003 and 3.81 percent for the third quarter of 2004. Net interest income totaled $22.5 million during the fourth quarter of 2004, an increase of $7.1 million or 46 percent from the $15.4 million recorded during the fourth quarter of 2003. Contributing to this increase was the 32 percent growth in average earning assets and a shift in balances invested in federal funds and other short-term investments to higher-yielding loans. Additionally, the early redemption of all $25.0 million of our 9.60% trust preferred securities on September 30, 2004, contributed to the improvement in net interest margin. Rocky Mountain Bank’s contribution to net in terest income during the fourth quarter of 2004 was $4.1 million. Interest income in the fourth quarter of 2004 totaled $34.7 million compared to $25.2 million in the fourth quarter of 2003. Interest expense for the fourth quarter of 2004 was $12.1 million compared to $9.8 million in the fourth quarter of 2003. Rocky Mountain Bank had interest income of $5.5 million and interest expense of $1.4 million during the fourth quarter of 2004.
Noninterest income totaled $9.9 million during the fourth quarter of 2004, an increase of 17 percent from the noninterest income of $8.5 million recorded during the fourth quarter of 2003. The three categories contributing to this increase were service charges and fees, trust fees and gains on sale of loans. Service charges on deposit accounts increased $361,000 or 31 percent during the fourth quarter of 2004, of which $251,000 was due to the addition of Rocky Mountain Bank to the Heartland family of bank subsidiaries. Trust fees improved during the fourth quarter of 2004 by $578,000 or 55 percent, primarily as a result of the $442,000 additional fees generated by the accounts acquired from the Wealth Management Group of Colonial Trust Company on August 31, 2004. Gains on sale of loans increased by $552,000 or 82 p ercent during the quarters under comparison, of which $357,000 was attributable to the sale of the guaranteed portion of a few loans structured under the USDA loan program by Heartland Business Bank, a division of our Wisconsin Community Bank subsidiary.
For the fourth quarter of 2004, noninterest expense increased 25 percent to $22.0 million, reflecting increased costs related to recently completed acquisitions of Rocky Mountain Bank and the Wealth Management Group of Colonial Trust Company. Additionally, Arizona Bank & Trust opened a second branch in May 2004. Total full-time equivalent employees increased from 674 at year-end 2003 to 853 at year-end 2004. Of that increase, 127 are full-time equivalent employees at Rocky Mountain Bank and 13 are full-time equivalent employees of the acquired trust operations in Arizona. Noninterest expense at Rocky Mountain Bank totaled $2.9 million during the fourth quarter of 2004.
For the year 2004, Heartland’s effective tax rate was 28.16 percent compared to 31.47 percent during the year 2003. The reduced effective rate was the result of federal historic rehabilitation tax credits of $675,000 and state historic rehabilitation tax credits of $843,000. Additionally, tax-exempt interest income went from 16.39 percent of pre-tax income during 2003 to 18.16 percent during 2004.
Total assets exceeded $2.63 billion at December 31, 2004, up $612.2 million since year-end 2003. Total loans and leases were $1.77 billion at December 31, 2004, an increase of $450.4 million since year-end 2003. Dubuque Bank and Trust Company, Wisconsin Community Bank, New Mexico Bank & Trust and Arizona Bank & Trust were major contributors to the $184.5 million or 12 percent growth in loans, exclusive of Rocky Mountain Bank, 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 December 31, 2004, were $1.98 billion, an increase of $491.4 million since year-end 2003. Exclusive of Rocky Mountain Bank, the $201.0 million or 13 percent growth in deposits came primarily from New Mexico Bank & Trust and Arizona Bank & Trust.
The allowance for loan and lease losses at December 31, 2004, was 1.41 percent of loans and 252 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 $9.9 million or 0.56 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 $3.0 million in total nonperforming loans at Rocky Mountain Bank, total nonperforming loans increased $1.4 million, due primarily to one large credit in the Dubuque market.
"We embark upon the new year with great enthusiasm," continued Fuller. "Our accomplishments during 2004 have laid the groundwork for another successful year."
About Heartland Financial USA:
Heartland Financial USA, Inc. is a financial services company providing a complete line of banking, mortgage, investment, insurance and trust services to individuals and businesses in 42 communities in eight states -- Iowa, Illinois, Wisconsin, New Mexico, Arizona, Colorado, Montana and Massachusetts. Heartland Financial USA, Inc. is listed on Nasdaq. Its trading symbol is HTLF.
Additional information about Heartland Financial USA, Inc. is available through our websiteatwww.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 Years Ended | |||||
| 12/31/2004 | 12/31/2003 | 12/31/2004 | 12/31/2003 | |||
Interest Income | ||||||
| Interest and fees on loans and leases | $ 29,320 | $ 21,667 |
| $ 103,018 | $ 85,936 | |
| Interest on securities and other: | ||||||
| Taxable | 3,846 | 2,372 |
| 13,400 | 9,100 | |
| Nontaxable | 1,301 | 1,043 |
| 4,574 | 3,952 | |
| Interest on federal funds sold | 128 | 76 |
| 175 | 355 | |
| Interest on interest bearing deposits in other financial institutions | 71 | 39 |
| 227 | 174 | |
Total Interest Income | 34,666 | 25,197 |
| 121,394 | 99,517 | |
Interest Expense | ||||||
| Interest on deposits | 8,879 | 6,792 |
| 30,848 | 27,763 | |
| Interest on short-term borrowings | 1,106 | 591 |
| 3,095 | 2,350 | |
| Interest on other borrowings | 2,148 | 2,399 |
| 10,321 | 8,214 | |
Total Interest Expense | 12,133 | 9,782 |
| 44,264 | 38,327 | |
Net Interest Income | 22,533 | 15,415 |
| 77,130 | 61,190 | |
| Provision for loan and lease losses | 1,446 | 1,007 |
| 4,846 | 4,183 | |
Net Interest Income After Provision for Loanand Lease Losses | 21,087 | 14,408 |
| 72,284 | 57,007 | |
Noninterest Income | ||||||
| Service charges and fees | 2,654 | 1,999 |
| 9,937 | 6,207 | |
| Trust fees | 1,631 | 1,053 |
| 4,968 | 3,814 | |
| Brokerage commissions | 259 | 264 |
| 1,100 | 863 | |
| Insurance commissions | 201 | 146 |
| 757 | 703 | |
| Securities gains (losses), net | 55 | 138 |
| 1,861 | 1,823 | |
| Gain (loss) on trading account securities | 11 | 124 |
| 54 | 453 | |
| Impairment loss on equity securities | - | (78) |
| - | (317) | |
| Rental income on operating leases | 3,432 | 3,465 |
| 13,780 | 13,807 | |
| Gains on sale of loans | 1,224 | 672 |
| 3,410 | 6,339 | |
| Valuation adjustment on mortgage servicing rights | 34 | (30) |
| 74 | 338 | |
| Other noninterest income | 350 | 700 |
| 1,900 | 2,511 | |
Total Noninterest Income |
| 9,851 | 8,453 |
| 37,841 | 36,541 |
Noninterest Expense | ||||||
| Salaries and employee benefits | 10,755 | 8,699 |
| 39,443 | 33,113 | |
| Occupancy | 1,363 | 1,003 |
| 4,978 | 3,880 | |
| Furniture and equipment | 1,447 | 1,203 |
| 5,322 | 4,115 | |
| Depreciation on equipment under operating leases | 2,832 | 2,882 |
| 11,360 | 11,353 | |
| Outside services | 1,997 | 1,137 |
| 6,995 | 4,695 | |
| FDIC deposit insurance assessment | 64 | 57 |
| 241 | 218 | |
| Advertising | 653 | 589 |
| 2,658 | 2,354 | |
| Other intangibles amortization | 275 | 101 |
| 764 | 404 | |
| Other noninterest expenses | 2,629 | 1,983 |
| 10,175 | 7,560 | |
Total Noninterest Expense | 22,015 | 17,654 |
| 81,936 | 67,692 | |
Income Before Income Taxes | 8,923 | 5,207 |
| 28,189 | 25,856 | |
| Income taxes | 2,330 | 1,483 |
| 7,937 | 8,137 | |
Net Income | $ 6,593 | 3,724 |
| 20,252 | 17,719 | |
Earnings per common share-basic | $ .40 | $ .25 |
| $ 1.28 | $ 1.18 | |
Earnings per common share-diluted | $ .40 | $ .24 |
| $ 1.26 | $ 1.16 | |
Weighted average shares outstanding-basic | 16,339,343 | 15,124,871 |
| 15,869,429 | 14,984,472 | |
Weighted average shares outstanding-diluted | 16,566,787 | 15,386,486 |
| 16,095,873 | 15,258,441 | |
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| For the Quarters Ended | ||||||
| 12/31/2004 | 9/30/2004 | 6/30/2004 | 3/31/2004 | 12/31/2003 | ||
Interest Income | ||||||
| Interest and fees on loans and leases | $ 29,320 | $ 28,041 | $ 23,897 | $ 21,760 | $ 21,667 | |
| Interest on securities and other: | ||||||
| Taxable | 3,846 | 3,248 | 2,698 | 3,608 | 2,372 | |
| Nontaxable | 1,301 | 1,183 | 1,064 | 1,026 | 1,043 | |
| Interest on federal funds sold | 128 | 33 | 9 | 5 | 76 | |
| Interest on interest bearing deposits in otherfinancial institutions | 71 | 66 | 46 | 44 | 39 | |
Total Interest Income | 34,666 | 32,571 | 27,714 | 26,443 | 25,197 | |
Interest Expense | ||||||
| Interest on deposits | 8,879 | 8,413 | 6,987 | 6,569 | 6,792 | |
| Interest on short-term borrowings | 1,106 | 693 | 699 | 597 | 591 | |
| Interest on other borrowings | 2,148 | 2,998 | 2,741 | 2,434 | 2,399 | |
Total Interest Expense | 12,133 | 12,104 | 10,427 | 9,600 | 9,782 | |
Net Interest Income | 22,533 | 20,467 | 17,287 | 16,843 | 15,415 | |
| Provision for loan and lease losses | 1,446 | 1,053 | 991 | 1,356 | 1,007 | |
Net Interest Income After Provision for Loanand Lease Losses | 21,087 | 19,414 | 16,296 | 15,487 | 14,408 | |
Noninterest Income | ||||||
| Service charges and fees | 2,654 | 2,688 | 2,468 | 2,127 | 1,999 | |
| Trust fees | 1,631 | 1,196 | 1,121 | 1,020 | 1,053 | |
| Brokerage commissions | 259 | 213 | 350 | 278 | 264 | |
| Insurance commissions | 201 | 174 | 158 | 224 | 146 | |
| Securities gains (losses), net | 55 | (61) | 327 | 1,540 | 138 | |
| Gain (loss) on trading account securities | 11 | (32) | (10) | 85 | 124 | |
| Impairment loss on equity securities | - | - | - | - | (78) | |
| Rental income on operating leases | 3,432 | 3,425 | 3,461 | 3,462 | 3,465 | |
| Gains on sale of loans | 1,224 | 814 | 845 | 527 | 672 | |
| Valuation adjustment on mortgage servicing rights | 34 | (73) | 186 | (73) | (30) | |
| Other noninterest income | 350 | 337 | 682 | 531 | 700 | |
Total Noninterest Income | 9,851 | 8,681 | 9,588 | 9,721 | 8,453 | |
Noninterest Expense | ||||||
| Salaries and employee benefits | 10,755 | 10,597 | 9,270 | 8,821 | 8,699 | |
| Occupancy | 1,363 | 1,337 | 1,215 | 1,063 | 1,003 | |
| Furniture and equipment | 1,447 | 1,423 | 1,325 | 1,127 | 1,203 | |
| Depreciation on equipment under operating leases | 2,832 | 2,798 | 2,869 | 2,861 | 2,882 | |
| Outside services | 1,997 | 2,026 | 1,471 | 1,501 | 1,137 | |
| FDIC deposit insurance assessment | 64 | 65 | 61 | 51 | 57 | |
| Advertising | 653 | 829 | 637 | 539 | 589 | |
| Other intangibles amortization | 275 | 257 | 144 | 88 | 101 | |
| Other noninterest expenses | 2,629 | 3,361 | 2,220 | 1,965 | 1,983 | |
Total Noninterest Expense | 22,015 | 22,693 | 19,212 | 18,016 | 17,654 | |
Income Before Income Taxes | 8,923 | 5,402 | 6,672 | 7,192 | 5,207 | |
| Income taxes | 2,330 | 1,384 | 2,097 | 2,126 | 1,483 | |
Net Income | $ 6,593 | 4,018 | 4,575 | 5,066 | 3,724 | |
Earnings per common share-basic | $ .40 | $ .24 | $ .29 | $ .33 | $ .25 | |
Earnings per common share-diluted | $ .40 | $ .24 | $ .29 | $ .33 | $ .24 | |
Weighted average shares outstanding-basic | 16,339,343 | 16,420,197 | 15,597,584 | 15,167,212 | 15,124,871 | |
Weighted average shares outstanding-diluted | 16,566,787 | 16,663,051 | 15,836,341 | 15,425,803 | 15,386,486 | |
| HEARTLAND FINANCIAL USA, INC. | ||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||||
| As Of | ||||||||
| 12/31/2004 |
| 12/31/2003 |
| 12/31/2002 | ||||
Assets | ||||||||
| Cash and cash equivalents | $ 73,749 |
| $ 71,869 |
| $ 100,992 | |||
| Time deposits in other financial institutions | 1,178 |
| 1,132 |
| 1,677 | |||
| Securities | 553,284 |
| 451,753 |
| 390,815 | |||
| Loans held for sale | 32,161 |
| 25,678 |
| 23,167 | |||
| Loans and leases: | ||||||||
| Loans and leases | 1,772,954 |
| 1,322,549 |
| 1,152,069 | |||
| Allowance for loan and lease losses | (24,973) |
| (18,490) |
| (16,091) | |||
| Loans and leases, net | 1,747,981 |
| 1,304,059 |
| 1,135,978 | |||
| Assets under operating lease | 35,188 |
| 31,636 |
| 30,367 | |||
| Premises, furniture and equipment, net | 79,353 |
| 49,842 |
| 35,591 | |||
| Goodwill, net | 36,909 |
| 20,167 |
| 16,050 | |||
| Other intangible assets, net | 10,162 |
| 5,069 |
| 4,879 | |||
| Other assets | 60,625 |
| 57,161 |
| 46,463 | |||
Total Assets | $ 2,630,590 |
| $ 2,018,366 |
| $ 1,785,979 | |||
Liabilities and Stockholders’ Equity | ||||||||
| Liabilities | ||||||||
| Deposits: | ||||||||
| Demand | $ 323,014 |
| $ 246,282 |
| $ 197,516 | |||
| Savings | 750,870 |
| 569,286 |
| 511,979 | |||
| Time | 909,962 |
| 676,920 |
| 628,490 | |||
| Total Deposits | 1,983,846 |
| 1,492,488 |
| 1,337,985 | |||
| Short-term borrowings | 231,475 |
| 176,835 |
| 161,379 | |||
| Other Borrowings | 196,193 |
| 173,958 |
| 126,299 | |||
| Accrued expenses and other liabilities | 43,294 |
| 34,162 |
| 36,275 | |||
Total Liabilities | 2,454,808 |
| 1,877,443 |
| 1,661,938 | |||
Stockholders’ Equity | 175,782 |
| 140,923 |
| 124,041 | |||
Total Liabilities and Stockholders’ Equity | $ 2,630,590 |
| $ 2,018,366 |
| $ 1,785,979 | |||
Common Share Data | ||||||||
| Book value per common share | $ 10.69 |
| $ 9.29 |
| $ 8.40 | |||
| FAS 115 effect on book value per common share | 0.18 |
| 0.30 |
| 0.29 | |||
| Common shares outstanding, net of treasury | 16,441,058 |
| 15,163,503 |
| 14,769,621 | |||
| HEARTLAND FINANCIAL USA, INC. | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||||||
| For the Quarters Ended | For the Years Ended | |||||
| 12/31/2004 | 12/31/2003 |
| 12/31/2004 | 12/31/2003 | ||
Average Balances | ||||||
| Assets | $ 2,623,235 | $ 1,984,090 |
| $ 2,333,119 | $ 1,873,315 | |
| Loans and leases, net of unearned | 1,788,204 | 1,305,486 |
| 1,599,468 | 1,249,676 | |
| Deposits | 2,015,814 | 1,471,140 |
| 1,753,588 | 1,405,296 | |
| Earning assets | 2,323,172 | 1,760,932 |
| 2,066,234 | 1,670,882 | |
| Interest bearing liabilities | 2,082,590 | 1,583,143 |
| 1,858,590 | 1,501,464 | |
| Stockholders' equity | 172,742 | 137,563 |
| 157,912 | 131,623 | |
Earnings Performance Ratios | ||||||
| Return on average assets | 1.00% | 0.74% |
| 0.87% | 0.95% | |
| Return on average equity | 15.18 | 10.74 |
| 12.82 | 13.46 | |
Net interest margin(1) | 3.99 | 3.61 |
| 3.87 | 3.80 | |
Net interest margin,excluding fleet leasingcompany debt(1) | 4.04 | 3.66 |
| 3.91 | 3.86 | |
Efficiency ratio(2) | 66.49 | 72.56 |
| 70.72 | 68.94 | |
Efficiency ratio, banks only(2) | 60.74 | 63.90 |
| 62.44 | 59.77 | |
| For the Quarters Ended | ||||||
| 12/31/2004 | 9/30/2004 | 6/30/2004 | 3/31/2004 | 12/31/2003 | ||
Average Balances | ||||||
| Assets | $ 2,623,235 | $ 2,504,249 | $ 2,200,577 | $ 2,004,416 | $ 1,984,090 | |
| Loans and leases, net of unearned | 1,788,204 | 1,743,516 | 1,511,657 | 1,354,497 | 1,305,486 | |
| Deposits | 2,015,814 | 1,909,129 | 1,614,932 | 1,474,477 | 1,471,140 | |
| Earning assets | 2,323,172 | 2,214,971 | 1,945,763 | 1,782,054 | 1,760,932 | |
| Interest bearing liabilities | 2,082,590 | 1,998,116 | 1,752,683 | 1,600,973 | 1,583,143 | |
| Stockholders’ equity | 172,742 | 165,618 | 150,396 | 142,897 | 137,563 | |
Earnings Performance Ratios | ||||||
| Return on average assets | 1.00% | .64% | 0.84% | 1.02% | 0.74% | |
| Return on average equity | 15.18 | 9.65 | 12.23 | 14.26 | 10.74 | |
Net interest margin(1) | 3.99 | 3.81 | 3.71 | 3.94 | 3.61 | |
Net interest margin,excluding fleet leasingcompany debt(1) | 4.04 | 3.85 | 3.75 | 3.99 | 3.66 | |
Efficiency ratio(2) | 66.49 | 75.81 | 71.19 | 71.02 | 72.56 | |
Efficiency ratio, banks only(2) | 60.74 | 64.47 | 62.76 | 61.86 | 63.90 | |
(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 The Years Ended | ||||
| 12/31/2004 | 12/31/2003 | 12/31/2002 | ||
Loan and Lease Data | ||||
| Commercial and commercial real estate | $ 1,162,103 | $ 860,552 | $ 733,324 | |
| Residential mortgage |
| 212,842 | 148,376 | 133,435 |
| Agricultural and agricultural real estate | 217,860 | 166,182 | 155,383 | |
| Consumer | 167,109 | 136,601 | 120,591 | |
| Direct financing leases, net | 16,284 | 13,621 | 12,308 | |
| Unearned discount and deferred loan fees | (3,244) | (2,783) | (2,972) | |
Total loans and leases | $ 1,772,954 | $ 1,322,549 | $ 1,152,069 | |
Asset Quality | ||||
| Nonaccrual loans | $ 9,838 | $ 5,092 | $ 3,944 | |
| Loans past due ninety days or more as to interest or principal payments | 88 | 458 | 541 | |
| Other real estate owned | 425 | 599 | 452 | |
| Other repossessed assets | 313 | 285 | 279 | |
Total nonperforming assets | $ 10,664 | $ 6,434 | $ 5,216 | |
Allowance for Loan and Lease Losses | ||||
| Balance, beginning of period | $ 18,490 | $ 16,091 | $ 14,660 | |
| Provision for loan and lease losses continuingoperations | 4,846 | 4,183 | 3,553 | |
| Provision for loan and lease losses discontinuedoperations | - | - | (329) | |
| Loans charged off | (3,617) | (2,392) | (3,203) | |
| Recoveries | 1,005 | 608 | 1,410 | |
| Addition related to acquired bank | 4,249 | - | - | |
Balance, end of period | $ 24,973 | $ 18,490 | $ 16,091 | |
Asset Quality Ratios | ||||
| Ratio of nonperforming loans to total loans and leases | 0.56% | 0.42% | 0.39% | |
| Ratio of nonperforming assets to total assets | 0.41 | 0.32 | 0.29 | |
| Ratio of net loan chargeoffs to average loans and leases | 0.16 | 0.14 | 0.16 | |
| Allowance for loan losses as a percent of loans and leases | 1.41 | 1.40 | 1.40 | |
| Allowance for loan losses as a percent of nonperformingloans and leases | 251.61 | 333.11 | 358.77 | |