| AT THE COMPANY: | AT FINANCIAL RELATIONS BOARD: |
| John K. Schmidt | Jeff Wilhoit |
| Chief Operating Officer | General Inquiries |
| Chief Financial Officer | (312) 640-6757 |
| (563) 589-1994 | jwilhoit@ financialrelationsboard. com |
| jschmidt @htlf.com | |
FOR IMMEDIATE RELEASE
MONDAY, JULY 25, 2005
HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER EARNINGS
Dubuque, Iowa, July 25, 2005—Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported results for the second quarter of 2005.
Second Quarter 2005 Highlights
| § | Net income improved by 18% over second quarter 2004 |
| § | Average earning assets increased 22% over second quarter 2004 |
| § | Net interest margin improved over second quarter 2004 |
| | | | Quarter Ended June 30, | | | | Six Months Ended June 30, | |
| | | | 2005 | | | | 2004 | | | | 2005 | | | | 2004 | |
| Net income (in millions) | | $ | 5.4 | | | $ | 4.6 | | | $ | 10.7 | | | $ | 9.6 | |
| Diluted earnings per share | | | .32 | | | | .29 | | | | .64 | | | | .62 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | .81 | % | | | .84 | % | | | .81 | % | | | .92 | % |
| Return on average equity | | | 12.12 | | | | 12.23 | | | | 12.09 | | | | 13.22 | |
| Net interest margin | | | 4.03 | | | | 3.71 | | | | 4.00 | | | | 3.82 | |
“Our second quarter performance was solid. We were pleased to see an improvement in our net interest margin over the previous quarter. Especially gratifying was the growth experienced in our loan portfolio.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA
Dubuque, Iowa, July 25, 2005—Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported improved earnings for the second quarter of 2005. Net income for the second quarter ended June 30, 2005, was $5.4 million, or $0.32 per diluted share, compared to net income of $4.6 million, or $0.29 per diluted share, during the second quarter of 2004. Return on average equity was 12.12 percent and return on average assets was 0.81 percent for the second quarter of 2005, compared to 12.23 percent and 0.84 percent, respectively, for the same quarter in 2004.
Net income for the first six months of 2005 was $10.7 million, or $0.64 per diluted share, compared to $9.6 million, or $0.62 per diluted share, for the same period in 2004. The year-to-date earnings during 2004 included securities gains of $1.9 million. Exclusive of securities gains, year-to-date 2005 pre-tax income increased $3.6 million or 30 percent over year-to-date 2004 pre-tax income. Return on average equity was 12.09 percent and return on average assets was 0.81 percent for the first six months of 2005, compared to 13.22 percent and 0.92 percent, respectively, for the same period in 2004.
A contributing factor to the improved earnings for the second quarter of 2005 compared to the second quarter of 2004 was the acquisition of Rocky Mountain Bank. Since this acquisition was completed on June 1, 2004, only one month of their earnings was included in the second quarter 2004 results. Rocky Mountain Bank’s contribution to net income during the second quarter of 2005 was $527,000 compared to $260,000 during the second quarter of 2004.
“Our second quarter performance was solid,” said Lynn B. Fuller, chairman, president and chief executive officer. “We were pleased to see an improvement in our net interest margin over the previous quarter. Especially gratifying was the growth experienced in our loan portfolio. The Rocky Mountain Bank acquisition will continue to contribute to improved earnings as full integration into the Heartland community banking model proceeds during the remainder of this year. Conversion to our mainframe software was completed in late April, providing Rocky Mountain Bank the opportunity to offer enhanced products and services to its customer base. Costs associated with the full integration had been somewhat of a drag on earnings and these costs will continue to diminish as the year proceeds.”
Net interest margin, expressed as a percentage of average earning assets, was 4.03 percent during the second quarter of 2005 compared to 3.71 percent for the second quarter of 2004 and 3.97 percent for the first quarter of 2005. Net interest income totaled $23.1 million during the second quarter of 2005, an increase of $5.8 million or 34 percent from the $17.3 million recorded during the second quarter of 2004. Contributing to this increase was the 22 percent growth in average earning assets, of which half resulted from internal growth and the other half from the acquisition of Rocky Mountain Bank. Rocky Mountain Bank’s net interest income during the second quarter of 2005 was $3.6 million. Interest income in the second quarter of 2005 totaled $37.6 million compared to $27.7 million in the second quarter of 2004, an increase of $9.9 million or 36 percent. Rocky Mountain Bank’s portion of the interest income was $5.3 million during the second quarter of 2005 and $1.6 million during the second quarter of 2004. Interest expense for the second quarter of 2005 was $14.5 million compared to $10.4 million in the second quarter of 2004, an increase of $4.1 million or 39 percent. Rocky Mountain Bank’s portion of the interest expense was $1.6 million during the second quarter of 2005 and $484,000 during the second quarter of 2004.
Net interest income simulations reflect an asset sensitive posture leading to stronger earnings performance in a rising rate environment. Should the current rising rate environment reverse, net interest income would likely decline. In order to mitigate the negative impact a downward movement in interest rates would have on net interest income, the Company entered into an interest rate floor transaction on July 8, 2005. A two-year contract was acquired on prime at a strike level of 5.5% on a notional amount of $100.0 million. Changes in the fair market value of this hedge transaction will flow through Heartland’s income statement.
Noninterest income improved by $452,000 or 5 percent during the second quarter of 2005 compared to the same quarter in 2004. The categories experiencing improvement were service charges and fees, trust fees and rental income on operating leases. The increase in these categories was partially offset by the reduction experienced in securities gains and valuation adjustment on mortgage servicing rights.
For the second quarter of 2005, noninterest expense increased $4.2 million or 22 percent, reflecting the inclusion of the costs related to the operations at the Company’s most recent acquisitions, Rocky Mountain Bank and the Wealth Management Group of Colonial Trust Company. Additionally, Arizona Bank & Trust opened a second branch in May 2004 and a third branch in May 2005. Rocky Mountain Bank’s portion of noninterest expense totaled $3.3 million during the second quarter of 2005 and $905,000 during the second quarter of 2004. The largest component of noninterest expense, salaries and employee benefits, was responsible for $2.3 million or 53 percent of the increase in noninterest expense during the quarters under comparison. The addition of Rocky Mountain Bank made up $1.0 million or 45 percent of the growth in this category. During the second quarter of 2005, compensation expense associated with restricted stock awards granted under the 2005 Long-Term Incentive Plan approved at Heartland’s annual stockholders’ meeting held this May totaled $242,000 and related to the six-month period ended on June 30, 2005. The remaining growth in salaries and employee benefits expense was a result of the other expansion underway. Total full-time equivalent employees increased to 884 at quarter-end 2005 from 825 at quarter-end 2004.
Heartland’s effective tax rate was 32.81 percent for the second quarter of 2005 compared to 31.43 percent during the second quarter of 2004. The lower effective rate during the second quarter of 2004 was the result of anticipated federal historic rehabilitation tax credits and low-income housing tax credits totaling $840,000. During the year 2005, these credits are anticipated to total $436,000. Tax-exempt interest income went from 17.82 percent of pre-tax income during the second quarter of 2004 to 19.14 percent during the same quarter of 2005. The tax-equivalent adjustment for this tax-exempt interest income was $830,000 during the second quarter of 2005 compared to $639,000 during the same quarter in 2004.
At June 30, 2005, total assets reached $2.71 billion, an increase of $83.0 million or 3 percent since year-end 2004. The majority of this growth occurred during the second quarter. Total loans and leases were $1.85 billion at June 30, 2005, an increase of $82.0 million or 5 percent since year-end 2004. Loan demand picked up during the second quarter of 2005 and management remains optimistic that it will continue during the remaining quarters of 2005. All the banks experienced loan growth during the second quarter, with the major contributors being Dubuque Bank and Trust Company, Galena State Bank and Trust Company and Arizona Bank & Trust. Additionally, loans held for sale increased $18.2 million or 56 percent since year-end 2004. Half of this increase was the result of additional variable-rate commercial and commercial real estate loans at Wisconsin Community Bank structured to qualify under the United States Small Business Administration’s Certified Development Company (504) Loan Program.
Total deposits at June 30, 2005, were $2.05 billion, an increase of $68.6 million or 3 percent since year-end 2004. Over 90 percent of this growth occurred during the second quarter. All deposit categories experienced growth. Consistent with prior years, demand deposits began to increase during the second quarter of the year after experiencing a decline during the first quarter of the year due to normal seasonal fluctuations that many banks experience. The Company’s two newer de novo banks, New Mexico Bank & Trust and Arizona Bank & Trust have been the most successful at attracting demand deposits. The time deposits category had the largest increase, $48.0 million or 5 percent. Except for Wisconsin Community Bank, all of the Company’s subsidiary banks were able to increase deposits in this category. Of particular note is that $17.6 million of brokered deposits that matured during the first six months were replaced with time deposits from the local markets. The only bank to experience growth in all deposit categories was New Mexico Bank & Trust.
The allowance for loan and lease losses at June 30, 2005, was 1.44 percent of loans and 179 percent of nonperforming loans, compared to 1.41 percent of loans and 252 percent of nonperforming loans at December 31, 2004. Nonperforming loans increased to $14.9 million or 0.80 percent of total loans and leases compared to $13.4 million or 0.75 percent of total loans and leases at March 31, 2005, and $9.9 million or 0.56 percent of total loans and leases at December 31, 2004. Contributing to the increase in nonperforming loans during the second quarter of 2005 was a $3.4 million loan at Rocky Mountain Bank. The overall increase in nonperforming loans at Rocky Mountain Bank since acquisition has not been a surprise as nearly all these loans were identified as potential problem loans during due diligence. Because of the net realizable value of collateral, guarantees and other factors, anticipated losses on Heartland’s nonperforming loans, including those at Rocky Mountain Bank, are not expected to be significant and have been specifically provided for in the allowance for loan and lease losses.
“Looking ahead, we continue to see signs that loan demand will remain strong throughout the remainder of the year. Development of our branch network also continues. We most recently opened a new location in Phoenix, Arizona and construction has begun on three sites in Albuquerque, New Mexico; one site in Kalispell, Montana; and one site in Rockford, Illinois. Plans are underway to begin construction on a site in Santa Fe, New Mexico and a site in Chandler, Arizona for completion late this year or early in the first quarter of 2006,”explained Fuller.
About Heartland Financial USA:
Heartland Financial USA, Inc. is a financial services company providing banking, mortgage, investment, insurance, trust, fleet management and consumer finance services to individuals and businesses in 42 communities in nine states -- Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota 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 website at www.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 Company 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 Six Months Ended |
| | | | 6/30/2005 | | | | 6/30/2004 | | | | 6/30/2005 | | | | 6/30/2004 | |
Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 32,596 | | | $ | 23,897 | | | $ | 62,584 | | | $ | 45,657 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 3,567 | | | | 2,698 | | | | 7,098 | | | | 6,306 | |
Nontaxable | | | 1,333 | | | | 1,064 | | | | 2,658 | | | | 2,090 | |
| Interest on federal funds sold | | | 57 | | | | 9 | | | | 104 | | | | 14 | |
| Interest on interest bearing deposits in other financial institutions | | | 79 | | | | 46 | | | | 147 | | | | 90 | |
Total Interest Income | | | 37,632 | | | | 27,714 | | | | 72,591 | | | | 54,157 | |
Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 10,282 | | | | 6,987 | | | | 19,464 | | | | 13,556 | |
| Interest on short-term borrowings | | | 1,709 | | | | 699 | | | | 2,973 | | | | 1,296 | |
| Interest on other borrowings | | | 2,540 | | | | 2,741 | | | | 5,046 | | | | 5,175 | |
Total Interest Expense | | | 14,531 | | | | 10,427 | | | | 27,483 | | | | 20,027 | |
Net Interest Income | | | 23,101 | | | | 17,287 | | | | 45,108 | | | | 34,130 | |
| Provision for loan and lease losses | | | 1,636 | | | | 991 | | | | 3,000 | | | | 2,347 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 21,465 | | | | 16,296 | | | | 42,108 | | | | 31,783 | |
Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 2,778 | | | | 2,468 | | | | 5,467 | | | | 4,595 | |
| Trust fees | | | 1,605 | | | | 1,121 | | | | 3,200 | | | | 2,141 | |
| Brokerage commissions | | | 255 | | | | 350 | | | | 478 | | | | 628 | |
| Insurance commissions | | | 129 | | | | 158 | | | | 266 | | | | 382 | |
| Securities gains (losses), net | | | (20 | ) | | | 327 | | | | 33 | | | | 1,867 | |
| Gain (loss) on trading account securities | | | (26 | ) | | | (10 | ) | | | (8 | ) | | | 75 | |
| Rental income on operating leases | | | 3,845 | | | | 3,461 | | | | 7,416 | | | | 6,923 | |
| Gains on sale of loans | | | 868 | | | | 845 | | | | 1,580 | | | | 1,372 | |
| Valuation adjustment on mortgage servicing rights | | | (34 | ) | | | 186 | | | | (18 | ) | | | 113 | |
| Other noninterest income | | | 640 | | | | 682 | | | | 1,341 | | | | 1,213 | |
Total Noninterest Income | | | 10,040 | | | | 9,588 | | | | 19,755 | | | | 19,309 | |
Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 11,529 | | | | 9,270 | | | | 22,711 | | | | 18,091 | |
| Occupancy | | | 1,534 | | | | 1,215 | | | | 3,160 | | | | 2,278 | |
| Furniture and equipment | | | 1,542 | | | | 1,325 | | | | 2,909 | | | | 2,452 | |
| Depreciation on equipment under operating leases | | | 3,141 | | | | 2,869 | | | | 6,069 | | | | 5,730 | |
| Outside services | | | 1,888 | | | | 1,471 | | | | 3,816 | | | | 2,972 | |
| FDIC deposit insurance assessment | | | 69 | | | | 61 | | | | 139 | | | | 112 | |
| Advertising | | | 767 | | | | 637 | | | | 1,576 | | | | 1,176 | |
| Other intangible amortization | | | 237 | | | | 144 | | | | 507 | | | | 232 | |
| Other noninterest expenses | | | 2,752 | | | | 2,220 | | | | 5,323 | | | | 4,185 | |
Total Noninterest Expense | | | 23,459 | | | | 19,212 | | | | 46,210 | | | | 37,228 | |
Income Before Income Taxes | | | 8,046 | | | | 6,672 | | | | 15,653 | | | | 13,864 | |
| Income taxes | | | 2,640 | | | | 2,097 | | | | 4,983 | | | | 4,223 | |
Net Income | | $ | 5,406 | | | $ | 4,575 | | | $ | 10,670 | | | $ | 9,641 | |
Earnings per common share-basic | | $ | 0.33 | | | $ | 0.29 | | | $ | 0.65 | | | $ | 0.63 | |
Earnings per common share-diluted | | $ | 0.32 | | | $ | 0.29 | | | $ | 0.64 | | | $ | 0.62 | |
Weighted average shares outstanding-basic | | | 16,420,073 | | | | 15,597,584 | | | | 16,450,097 | | | | 15,382,398 | |
Weighted average share outstanding-diluted | | | 16,722,383 | | | | 15,836,341 | | | | 16,754,056 | | | | 15,624,993 | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | For the Quarters Ended |
| | | 6/30/2005 | 3/31/2005 | 12/31/2004 | 9/30/2004 | 6/30/2004 |
Interest Income | | | | | | |
| Interest and fees on loans and leases | | $ 32,596 | $ 29,988 | $ 29,320 | $ 28,041 | $ 23,897 |
| Interest on securities and other: | | | | | | |
| Taxable | | 3,567 | 3,531 | 3,846 | 3,248 | 2,698 |
| Nontaxable | | 1,333 | 1,325 | 1,301 | 1,183 | 1,064 |
| Interest on federal funds sold | | 57 | 47 | 128 | 33 | 9 |
| Interest on interest bearing deposits in other financial institutions | | 79 | 68 | 71 | 66 | 46 |
Total Interest Income | | 37,632 | 34,959 | 34,666 | 32,571 | 27,714 |
Interest Expense | | | | | | |
| Interest on deposits | | 10,282 | 9,182 | 8,879 | 8,413 | 6,987 |
| Interest on short-term borrowings | | 1,709 | 1,264 | 1,106 | 693 | 699 |
| Interest on other borrowings | | 2,540 | 2,506 | 2,148 | 2,998 | 2,741 |
Total Interest Expense | | 14,531 | 12,952 | 12,133 | 12,104 | 10,427 |
Net Interest Income | | 23,101 | 22,007 | 22,533 | 20,467 | 17,287 |
| Provision for loan and lease losses | | 1,636 | 1,364 | 1,446 | 1,053 | 991 |
Net Interest Income After Provision for Loan and Lease Losses | | 21,465 | 20,643 | 21,087 | 19,414 | 16,296 |
Noninterest Income | | | | | | |
| Service charges and fees | | 2,778 | 2,689 | 2,636 | 2,688 | 2,468 |
| Trust fees | | 1,605 | 1,595 | 1,631 | 1,196 | 1,121 |
| Brokerage commissions | | 255 | 223 | 259 | 213 | 350 |
| Insurance commissions | | 129 | 137 | 201 | 174 | 158 |
| Securities gains (losses), net | | (20) | 53 | 55 | (61) | 327 |
| Gain (loss) on trading account securities | | (26) | 18 | 11 | (32) | (10) |
| Rental income on operating leases | | 3,845 | 3,571 | 3,432 | 3,425 | 3,461 |
| Gains on sale of loans | | 868 | 712 | 1,224 | 814 | 845 |
| Valuation adjustment on mortgage servicing rights | | (34) | 16 | 52 | (73) | 186 |
| Other noninterest income | | 640 | 701 | 350 | 337 | 682 |
Total Noninterest Income | | 10,040 | 9,715 | 9,851 | 8,681 | 9,588 |
Noninterest Expense | | | | | | |
| Salaries and employee benefits | | 11,529 | 11,182 | 10,755 | 10,597 | 9,270 |
| Occupancy | | 1,534 | 1,626 | 1,363 | 1,337 | 1,215 |
| Furniture and equipment | | 1,542 | 1,367 | 1,447 | 1,423 | 1,325 |
| Depreciation on equipment under operating leases | | 3,141 | 2,928 | 2,832 | 2,798 | 2,869 |
| Outside services | | 1,888 | 1,928 | 1,997 | 2,026 | 1,471 |
| FDIC deposit insurance assessment | | 69 | 70 | 64 | 65 | 61 |
| Advertising | | 767 | 809 | 653 | 829 | 637 |
| Other intangibles amortization | | 237 | 270 | 275 | 257 | 144 |
| Other noninterest expenses | | 2,752 | 2,571 | 2,629 | 3,361 | 2,220 |
Total Noninterest Expense | | 23,459 | 22,751 | 22,015 | 22,693 | 19,212 |
Income Before Income Taxes | | 8,046 | 7,607 | 8,923 | 5,402 | 6,672 |
| Income taxes | | 2,640 | 2,343 | 2,330 | 1,384 | 2,097 |
Net Income | | $ 5,406 | $ 5,264 | $ 6,593 | $ 4,018 | $ 4,575 |
Earnings per common share-basic | | $ .33 | $ .32 | $ .40 | $ .24 | $ .29 |
Earnings per common share-diluted | | $ .32 | $ .32 | $ .40 | $ .24 | $ .29 |
Weighted average shares outstanding-basic | | 16,420,073 | 16,479,244 | 16,339,343 | 16,420,197 | 15,597,584 |
Weighted average shares outstanding-diluted | | 16,722,383 | 16,704,808 | 16,579,602 | 16,663,051 | 15,836,341 |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | As Of |
| | | 6/30/2005 | 3/31/2005 | 12/31/2004 | 9/30/2004 | 6/30/2004 |
Assets | | | | | | |
| Cash and cash equivalents | | $ 85,011 | $ 83,533 | $ 73,749 | $ 95,053 | $ 94,944 |
| Time deposits in other financial institutions | | - | 1,190 | 1,178 | 1,166 | 1,154 |
| Securities | | 507,985 | 524,448 | 553,284 | 503,775 | 460,922 |
| Loans held for sale | | 50,329 | 41,710 | 32,161 | 33,731 | 42,198 |
| Loans and leases: | | | | | | |
Held to maturity | | 1,854,926 | 1,783,256 | 1,772,954 | 1,737,614 | 1,689,109 |
| Allowance for loan and lease losses | | (26,676) | (26,011) | (24,973) | (24,520) | (23,901) |
| Loans and leases, net | | 1,828,250 | 1,757,245 | 1,747,981 | 1,713,094 | 1,665,208 |
| Assets under operating lease | | 41,045 | 37,379 | 35,188 | 34,410 | 33,285 |
| Premises, furniture and equipment, net | | 88,440 | 85,234 | 79,353 | 77,619 | 73,249 |
| Goodwill | | 35,398 | 35,398 | 35,374 | 37,271 | 31,967 |
| Other intangible assets, net | | 9,568 | 9,855 | 10,162 | 9,413 | 9,690 |
| Other assets | | 66,002 | 55,745 | 60,625 | 61,838 | 64,219 |
Total Assets | | $ 2,712,028 | $ 2,631,737 | $ 2,629,055 | $ 2,567,370 | $ 2,476,836 |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
| Liabilities | | | | | | |
| Deposits: | | | | | | |
| Demand | | $ 329,577 | $ 314,430 | $ 323,014 | $ 300,811 | $ 301,875 |
| Savings | | 764,918 | 750,982 | 750,870 | 761,926 | 685,014 |
| Time | | 957,918 | 925,163 | 909,962 | 919,711 | 842,989 |
| Total deposits | | 2,052,413 | 1,990,575 | 1,983,846 | 1,982,448 | 1,829,878 |
| Short-term borrowings | | 231,532 | 221,081 | 231,475 | 180,395 | 225,284 |
| Other borrowings | | 211,654 | 215,423 | 196,193 | 194,650 | 219,056 |
| Accrued expenses and other liabilities | | 34,183 | 28,659 | 41,759 | 39,324 | 38,410 |
Total Liabilities | | 2,529,782 | 2,455,738 | 2,453,273 | 2,396,817 | 2,312,628 |
Stockholders’ Equity | | 182,246 | 175,999 | 175,782 | 170,553 | 164,208 |
Total Liabilities and Stockholders’ Equity | | $ 2,712,028 | $ 2,631,737 | $ 2,629,055 | $ 2,567,370 | $ 2,476,836 |
| | | | | | | |
Common Share Data | | | | | | |
| Book value per common share | | $ 11.11 | $ 10.68 | $ 10.69 | $ 10.44 | $ 9.98 |
| FAS 115 effect on book value per common share | | $ 0.15 | $ (0.08) | $ 0.18 | $ 0.27 | $ (0.08) |
| Common shares outstanding, net of treasury | | 16,399,470 | 16,481,082 | 16,441,058 | 16,336,073 | 16,452,884 |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | | | | | |
| | | For the Quarters Ended | | For the Six Months Ended |
| | | 6/30/2005 | 6/30/2004 | | 6/30/2005 | 6/30/2004 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | $ 2,680,435 | $ 2,200,577 | | $ 2,651,892 | $ 2,102,497 |
| Loans and leases, net of unearned | | 1,865,302 | 1,511,657 | | 1,835,427 | 1,433,077 |
| Deposits | | 2,022,879 | 1,614,932 | | 2,000,418 | 1,544,705 |
| Earning assets | | 2,381,733 | 1,945,763 | | 2,355,202 | 1,863,908 |
| Interest bearing liabilities | | 2,146,900 | 1,752,683 | | 2,120,714 | 1,676,828 |
| Stockholders' equity | | 178,894 | 150,396 | | 177,985 | 146,647 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Return on average assets | | 0.81% | 0.84% | | 0.81% | 0.92% |
| Return on average equity | | 12.12 | 12.23 | | 12.09 | 13.22 |
Net interest margin(1) | | 4.03 | 3.71 | | 4.00 | 3.82 |
Efficiency ratio(2) | | 69.02 | 70.66 | | 69.56 | 70.48 |
Efficiency ratio, banks only(2) | | 62.15 | 62.09 | | 63.32 | 61.99 |
| | | | | | | |
| |
| |
| |
| | | For the Quarters Ended |
| | | 6/30/2005 | 3/31/2005 | 12/31/2004 | 9/30/2004 | 6/30/2004 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | $ 2,680,435 | $ 2,623,349 | $ 2,623,235 | $ 2,504,249 | $ 2,200,577 |
| Loans and leases, net of unearned | | 1,865,302 | 1,805,551 | 1,788,204 | 1,743,516 | 1,511,657 |
| Deposits | | 2,022,879 | 1,977,957 | 2,015,814 | 1,909,129 | 1,614,932 |
| Earning assets | | 2,381,733 | 2,328,670 | 2,323,172 | 2,214,971 | 1,945,763 |
| Interest bearing liabilities | | 2,146,900 | 2,094,528 | 2,082,590 | 1,998,116 | 1,752,683 |
| Stockholders’ equity | | 178,894 | 177,075 | 172,742 | 165,618 | 150,396 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Return on average assets | | 0.81% | 0.81% | 1.00% | 0.64% | 0.84% |
| Return on average equity | | 12.12 | 12.06 | 15.18 | 9.65 | 12.23 |
Net interest margin(1) | | 4.03 | 3.97 | 3.99 | 3.81 | 3.71 |
Efficiency ratio(2) | | 69.02 | 70.12 | 66.49 | 75.81 | 70.66 |
Efficiency ratio, banks only(2) | | 62.15 | 64.55 | 60.74 | 64.47 | 62.09 |
(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 | As of and For | As of and For |
| | the Six Months | the Year | the Six Months | the Year |
| | Ended | Ended | Ended | Ended |
| | 6/30/2005 | 12/31/2004 | 6/30/2004 | 12/31/2003 |
Loan and Lease Data | | | | |
| Commercial and commercial real estate | $ 1,199,450 | $ 1,162,103 | $ 1,079,115 | $ 860,552 |
| Residential mortgage | 227,377 | 212,842 | 212,534 | 148,376 |
| Agricultural and agricultural real estate | 231,548 | 217,860 | 229,963 | 166,182 |
| Consumer | 181,907 | 167,109 | 157,139 | 136,601 |
| Direct financing leases, net | 17,922 | 16,284 | 13,335 | 13,621 |
| Unearned discount and deferred loan fees | (3,278) | (3,244) | (2,977) | (2,783) |
Total loans and leases | $ 1,854,926 | $ 1,772,954 | $ 1,689,109 | $ 1,322,549 |
| | | | | |
Asset Quality | | | | |
| Nonaccrual loans | $ 14,523 | $ 9,837 | $ 7,168 | $ 5,092 |
| Loans past due ninety days or more as to interest or principal payments | 378 | 88 | 392 | 458 |
| Other real estate owned | 1,611 | 425 | 433 | 599 |
| Other repossessed assets | 386 | 313 | 299 | 285 |
Total nonperforming assets | $ 16,898 | $ 10,663 | $ 8,292 | $ 6,434 |
| | | | | |
Allowance for Loan and Lease Losses | | | | |
| Balance, beginning of period | $ 24,973 | $ 18,490 | $ 18,490 | $ 16,091 |
| Provision for loan and lease losses | 3,000 | 4,846 | 2,347 | 4,183 |
| Loans charged off | (1,777) | (3,617) | (1,728) | (2,392) |
| Recoveries | 799 | 1,005 | 543 | 608 |
| Reclass for unfunded commitments to other liabilities | (319) | - | - | - |
| Addition related to acquired bank | - | 4,249 | 4,249 | - |
Balance, end of period | $ 26,676 | $ 24,973 | $ 23,901 | $ 18,490 |
| | | | | |
Asset Quality Ratios | | | | |
| Ratio of nonperforming loans to total loans and leases | 0.80% | 0.56% | 0.45% | 0.42% |
| Ratio of nonperforming assets to total assets | 0.62 | 0.41 | 0.33 | 0.32 |
| Ratio of net loan chargeoffs to average loans and leases | 0.05 | 0.16 | 0.08 | 0.14 |
Allowance for loan losses as a percent of loans and leases | 1.44 | 1.41 | 1.42 | 1.40 |
Allowance for loan losses as a percent of nonperforming loans and leases loans and
leases | 179.02 | 251.62 | 316.15 | 333.11 |
HEARTALND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | For the Quarters Ended |
| | | 6/30/2005 | | 6/30/2004 |
| | | Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 408,720 | | | $ | 3,568 | | | 3.50 | % | | $ | 355,576 | | | $ | 2,698 | | | 3.05 | % |
Nontaxable(1) | | | 118,125 | | | | 2,050 | | | 6.96 | | | | 90,279 | | | | 1,637 | | | 7.29 | |
Total securities | | | 526,845 | | | | 5,618 | | | 4.28 | | | | 445,855 | | | | 4,335 | | | 3.91 | |
| Interest bearing deposits | | | 7,574 | | | | 80 | | | 4.24 | | | | 5,861 | | | | 46 | | | 3.16 | |
| Federal funds sold | | | 8,508 | | | | 57 | | | 2.69 | | | | 3,296 | | | | 9 | | | 1.10 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,211,184 | | | | 19,453 | | | 6.44 | | | | 986,723 | | | | 14,072 | | | 5.74 | |
Residential mortgage | | | 233,383 | | | | 3,474 | | | 5.97 | | | | 180,334 | | | | 2,642 | | | 5.89 | |
Agricultural and agricultural real estate(1) | | | 228,259 | | | | 3,993 | | | 7.02 | | | | 187,422 | | | | 3,094 | | | 6.64 | |
Consumer | | | 179,474 | | | | 3,828 | | | 8.56 | | | | 143,619 | | | | 2,927 | | | 8.20 | |
Direct financing leases, net | | | 13,002 | | | | 278 | | | 8.58 | | | | 13,559 | | | | 208 | | | 6.17 | |
Fees on loans | | | - | | | | 1,681 | | | - | | | | - | | | | 1,020 | | | - | |
| Less: allowance for loan and lease losses | | | (26,496 | ) | | | - | | | - | | | | (20,906 | ) | | | - | | | - | |
Net loans and leases | | | 1,838,806 | | | | 32,707 | | | 7.13 | | | | 1,490,751 | | | | 23,963 | | | 6.47 | |
Total earning assets | | | 2,381,733 | | | | 38,462 | | | 6.48 | | | | 1,945,763 | | | | 28,353 | | | 5.86 | |
Nonearning Assets | | | 298,702 | | | | - | | | - | | | | 254,814 | | | | - | | | - | |
Total Assets | | $ | 2,680,435 | | | $ | 38,462 | | | 5.76 | % | | $ | 2,200,577 | | | $ | 28,353 | | | 5.18 | % |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 754,578 | | | $ | 2,553 | | | 1.36 | % | | $ | 619,816 | | | $ | 1,266 | | | 0.82 | % |
Time, $100,000 and over | | | 196,886 | | | | 1,500 | | | 3.06 | | | | 147,569 | | | | 944 | | | 2.57 | |
Other time deposits | | | 749,708 | | | | 6,229 | | | 3.33 | | | | 590,045 | | | | 4,777 | | | 3.26 | |
| Short-term borrowings | | | 234,301 | | | | 1,709 | | | 2.93 | | | | 201,690 | | | | 699 | | | 1.39 | |
| Other borrowings | | | 211,427 | | | | 2,540 | | | 4.82 | | | | 193,563 | | | | 2,741 | | | 5.70 | |
Total interest bearing liabilities | | | 2,146,900 | | | | 14,531 | | | 2.71 | | | | 1,752,683 | | | | 10,427 | | | 2.39 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 321,707 | | | | - | | | - | | | | 257,502 | | | | - | | | - | |
| Accrued interest and other liabilities | | | 32,934 | | | | - | | | - | | | | 39,996 | | | | - | | | - | |
Total noninterest bearing liabilities | | | 354,641 | | | | - | | | - | | | | 297,498 | | | | - | | | - | |
Stockholders’ Equity | | | 178,894 | | | | - | | | - | | | | 150,396 | | | | - | | | - | |
Total Liabilities and Stockholders’ Equity | | $ | 2,680,435 | | | $ | 14,531 | | | 2.17 | % | | $ | 2,200,577 | | | $ | 10,427 | | | 1.91 | % |
Net interest income(1) | | | | | | $ | 23,931 | | | | | | | | | | $ | 17,926 | | | | |
Net interest income to total earning assets(1) | | | | | | | | | | 4.03 | % | | | | | | | | | | 3.71 | % |
| Interest bearing liabilities to earning assets | | | 90.14 | % | | | | | | | | | | 90.08 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | For the Six Months Ended |
| | 6/30/2005 | | 6/30/2004 |
| | Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | |
Taxable | $ | 412,730 | | | $ | 7,099 | | | 3.47 | % | | $ | 354,099 | | | $ | 6,306 | | | 3.58 | % |
Nontaxable(1) | | 117,508 | | | | 4,089 | | | 7.02 | | | | 88,493 | | | | 3,215 | | | 7.31 | |
Total securities | | 530,238 | | | | 11,188 | | | 4.25 | | | | 442,592 | | | | 9,521 | | | 4.33 | |
| Interest bearing deposits | | 7,274 | | | | 147 | | | 4.08 | | | | 5,452 | | | | 14 | | | 0.52 | |
| Federal funds sold | | 8,183 | | | | 104 | | | 2.56 | | | | 2,668 | | | | 90 | | | 6.78 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | 1,194,366 | | | | 37,445 | | | 6.32 | | | | 935,999 | | | | 26,907 | | | 5.78 | |
Residential mortgage | | 227,295 | | | | 6,907 | | | 6.13 | | | | 167,250 | | | | 4,910 | | | 5.90 | |
Agricultural and agricultural real estate(1) | | 224,372 | | | | 7,634 | | | 6.86 | | | | 177,421 | | | | 5,819 | | | 6.60 | |
Consumer | | 174,698 | | | | 7,372 | | | 8.51 | | | | 138,922 | | | | 5,768 | | | 8.35 | |
Direct financing leases, net | | 14,696 | | | | 505 | | | 6.93 | | | | 13,485 | | | | 417 | | | 6.22 | |
Fees on loans | | - | | | | 2,894 | | | - | | | | - | | | | 1,959 | | | - | |
| Less: allowance for loan and lease losses | | (25,920 | ) | | | - | | | - | | | | (19,881 | ) | | | - | | | - | |
Net loans and leases | | 1,809,507 | | | | 62,757 | | | 6.99 | | | | 1,413,196 | | | | 45,780 | | | 6.51 | |
Total earning assets | | 2,355,202 | | | | 74,196 | | | 6.35 | | | | 1,863,908 | | | | 55,405 | | | 5.98 | |
Nonearning Assets | | 296,690 | | | | - | | | - | | | | 238,589 | | | | - | | | - | |
Total Assets | $ | 2,651,892 | | | $ | 74,196 | | | 5.64 | % | | $ | 2,102,497 | | | $ | 55,405 | | | 5.30 | % |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | |
Savings | $ | 752,642 | | | $ | 4,593 | | | 1.23 | % | | $ | 594,220 | | | $ | 2,433 | | | 0.82 | % |
Time, $100,000 and over | | 181,686 | | | | 2,687 | | | 2.98 | | | | 142,183 | | | | 1,791 | | | 2.53 | |
Other time deposits | | 747,583 | | | | 12,184 | | | 3.29 | | | | 566,361 | | | | 9,332 | | | 3.31 | |
| Short-term borrowings | | 231,781 | | | | 2,973 | | | 2.59 | | | | 185,528 | | | | 1,296 | | | 1.40 | |
| Other borrowings | | 207,022 | | | | 5,046 | | | 4.92 | | | | 188,536 | | | | 5,175 | | | 5.52 | |
Total interest bearing liabilities | | 2,120,714 | | | | 27,483 | | | 2.61 | | | | 1,676,828 | | | | 20,027 | | | 2.40 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | 318,507 | | | | - | | | - | | | | 241,941 | | | | - | | | - | |
| Accrued interest and other liabilities | | 34,686 | | | | - | | | - | | | | 37,081 | | | | - | | | - | |
Total noninterest bearing liabilities | | 353,193 | | | | - | | | - | | | | 297,022 | | | | - | | | - | |
Stockholders’ Equity | | 177,985 | | | | - | | | - | | | | 146,647 | | | | - | | | - | |
Total Liabilities and Stockholders’ Equity | $ | 2,651,892 | | | $ | 27,483 | | | 2.09 | % | | $ | 2,102,497 | | | $ | 20,027 | | | 1.92 | % |
Net interest income(1) | | | | | $ | 46,713 | | | | | | | | | | $ | 35,378 | | | | |
Net interest income to total earning assets(1) | | | | | | | | | 4.00 | % | | | | | | | | | | 3.82 | % |
| Interest bearing liabilities to earning assets | | 90.04 | % | | | | | | | | | | 89.96 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%. |
