Heartland Financial USA 8K Reports First Quarter Earnings | HTLF 24 Apr 06

AT THE COMPANY:	AT FINANCIAL RELATIONS BOARD:
John K. Schmidt	Leslie Loyet
Chief Operating Officer	General Inquiries
Chief Financial Officer	(312) 640-6672
(563) 589-1994	lloyet@ financialrelations board.com
jschmidt @htlf.com

FOR IMMEDIATE RELEASE

MONDAY, APRIL 24, 2006

HEARTLAND FINANCIAL USA, INC. REPORTS FIRST QUARTER EARNINGS

First Quarter 2006 Highlights

§	Net income improved by 9% over first quarter 2005

§	Net interest margin improved by 17 basis points over first quarter 2005

§	Average earning assets increased 8% over first quarter 2005

		Three Months Ended March 31,
		2006			2005
Net income (in millions)	$	5.7		$	5.3
Diluted earnings per share		.35			.32

Return on average assets		.83	%		.81	%
Return on average equity		12.28			12.06
Net interest margin		4.14			3.97

“We are delighted to report that our net interest margin continues to grow despite a yield curve that remains essentially flat. Not only are we experiencing solid loan growth, but our balance sheet remains well-positioned for an increasing rate environment.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA

Dubuque, Iowa, April 24, 2006—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported earnings for the first quarter of 2006. Net income for the quarter ended March 31, 2006, was $5.7 million, or $0.35 per diluted share, compared to net income of $5.3 million, or $0.32 per diluted share, during the first quarter of 2005. Return on average equity was 12.28 percent and return on average assets was 0.83 percent for the first quarter of 2006, compared to 12.06 percent and 0.81 percent, respectively, for the same quarter in 2005.

Lynn B. Fuller, Heartland’s chairman, president and CEO stated, “We are delighted to report that our net interest margin continues to grow despite a yield curve that remains essentially flat. Not only are we experiencing solid loan growth, but our balance sheet remains well-positioned for an increasing rate environment. Given a steady rate scenario, we anticipate our net interest margin will also hold constant for the remainder of the year.”

Net interest margin, expressed as a percentage of average earning assets, was 4.14 percent during the first quarter of 2006 compared to 3.97 percent for the first quarter of 2005 and 3.97 percent for the fourth quarter of 2005. Net interest income on a tax-equivalent basis totaled $25.7 million during the first quarter of 2006, an increase of $2.9 million or 13 percent from the $22.8 million recorded during the first quarter of 2005. Contributing to this increase was the $186.0 million or 8 percent growth in average earning assets along with a shift in balances to loans from securities. The percentage of average loans to total assets increased from 68 percent during the first quarter of 2005 to 71 percent during the first quarter of 2006. More than half of the credits in Heartland’s commercial and agricultural loan portfolios are floating rate loans, thus increases in the national prime rate, as experienced during the first quarter of 2006, have an immediate positive impact on interest income. On a tax-equivalent basis, interest income in the first quarter of 2006 totaled $44.2 million compared to $35.7 million in the first quarter of 2005, an increase of $8.5 million or 24 percent. As rates continued to move upward during the first quarter of 2006, Heartland experienced some movement in deposit balances from lower yielding accounts into higher yielding money market and certificate of deposit accounts. Interest expense for the first quarter of 2006 was $18.6 million compared to $13.0 million in the first quarter of 2005, an increase of $5.6 million or 43 percent.

Net interest income simulations reflect an asset sensitive posture leading to stronger earnings performance in a rising interest rate environment. Should the current rising rate environment reverse, net interest income would likely decline. In order to reduce the potentially negative impact a downward movement in interest rates would have on net interest income, Heartland entered into a two-year floor transaction on a notional $100.0 million in July 2005, a five-year collar transaction on a notional $50.0 million in September 2005 and an additional three-year collar transaction on a notional $50.0 million in April 2006.

Noninterest income increased by $1.5 million or 15 percent during the first quarter of 2006 compared to the same quarter in 2005. Rental income on operating leases represented $490 thousand or 33% of the increase in noninterest income. The increase in this category is directly related to the increase in the vehicles under operating lease at ULTEA, Inc., Heartland’s fleet management subsidiary, from 2,351 at March 31, 2005 to 2,462 at March 31, 2006. The other categories experiencing the largest increases were service charges and fees, loan servicing income and trust fees.

For the first quarter of 2006, noninterest expense increased $3.4 million or 15 percent in comparison with the same period in 2005. The largest component of noninterest expense, salaries and employee benefits, represented $1.9 million or 56 percent of the increase in noninterest expense from the first quarter of 2005 to the first quarter of 2006. In addition to the merit increases for all salaried employees that are made on January 1 of each year, the growth in salaries and employee benefits expense was a result of additional staffing at the holding company to provide support services to the growing number of bank subsidiaries, the addition of branches at New Mexico Bank & Trust, Riverside Community Bank and Arizona Bank & Trust, and the new bank subsidiary being formed in Denver, Colorado, which began operations in October 2005 as a loan production office under the Rocky Mountain umbrella. Total full-time equivalent employees increased to 938 at March 31, 2006, from 859 at March 31, 2005.

Fuller commented, “We continue to monitor the expense growth, particularly as it relates to our investment in new branches and our de novo, Summit Bank & Trust in Broomfield, Colorado. As I have noted in the past, however, the increase in noninterest expense should be seen as a measure of our commitment to build the infrastructure necessary to compete in our attractive western markets.”

In December 2005, Heartland and Wisconsin Community Bank were parties to a trial in which it was alleged that the contract relating to the 2002 sale of Wisconsin Community Bank’s Eau Claire branch was breached. The plaintiff alleged damages of $2.4 million, while Heartland and Wisconsin Community Bank alleged damages of $600,000 in a counterclaim. Written arguments from both parties were submitted to the judge by the January 27, 2006, deadline. As of this release date, Heartland had not been notified of a decision on the case. Heartland believes the claims against it and Wisconsin Community Bank are without merit and continues to defend their positions vigorously.

Heartland’s effective tax rate was 31.42 percent for the first quarter of 2006 compared to 30.80 percent during the first quarter of 2005. The lower effective rate during the first quarter of 2005 was due to the low-income housing tax credits totaling $440,000. During the year 2006, these credits decreased to approximately $225,000. Tax-exempt interest income as a percentage of pre-tax income was 19.25 percent during the first quarter of 2006 compared to 18.94 percent during the same quarter of 2005. The tax-equivalent adjustment for this tax-exempt interest income was $868,000 during the first quarter of 2006 compared to $775,000 during the same quarter in 2005. This increase in tax-exempt interest income partially mitigated the impact that reduced tax credits had on income taxes recorded during the first quarter of 2006.

At March 31, 2006, total assets remained steady during the quarter at $2.8 billion. Total loans and leases were $2.0 billion at March 31, 2006, an increase of $37.8 million or 8 percent annualized since year-end 2005. This growth was an improvement over the $10.3 million or 2 percent annualized increase in loans experienced during the first quarter of 2005. The Heartland subsidiary banks experiencing notable loan growth since year-end 2005 were Dubuque Bank and Trust Company, New Mexico Bank & Trust and Rocky Mountain Bank. The commercial and commercial real estate loan category grew by $59.1 million or 18 percent annualized.

Total deposits at March 31, 2006, were $2.13 billion, an increase of $13.7 million for the quarter or nearly 3 percent annualized. As with loans, this was an improvement over the $6.7 million or 1 percent annualized growth experienced during the first quarter of 2005. Except for First Community Bank, New Mexico Bank & Trust and Rocky Mountain Bank, all of Heartland’s subsidiary banks increased deposits during the first quarter of 2006. Demand deposits experienced a $17.8 million or 20 percent annualized decline, in large part, due to normal seasonal fluctuations that many banks experience during the first quarter of the year. Savings deposit balances increased by $24.6 million or 13 percent annualized and time deposit balances increased $6.8 million or 3 percent annualized. Of particular note is that all of the growth in time deposits occurred in deposits from local markets as total brokered deposits decreased from $145.5 million at year-end 2005 to $115.4 million at March 31, 2006, and exclusive of brokered deposits, time deposits increased $37.0 million or 17 percent annualized. As interest rates have increased, many deposit customers have shifted a portion of their lower yielding deposit balances into higher yielding money market and certificate of deposit accounts. The Heartland bank subsidiaries have priced these products competitively in order to retain existing deposit customers, as well as to attract new customers.

“Competition for retail deposit growth appears to be growing in intensity as rates gradually move higher. While we realize we need to pay competitive rates, our primary focus continues to be on relationship building and targeted promotions,” Fuller stated.

The allowance for loan and lease losses at March 31, 2006, was 1.44 percent of loans and 172 percent of nonperforming loans, compared to 1.42 percent of loans and 185 percent of nonperforming loans at December 31, 2005. Provision for loan losses increased $94,000 or 7 percent during the first quarter of 2006 compared to the same quarter of 2005, primarily as a result of the growth experienced in the loan portfolio. Nonperforming loans were $16.7 million or .84 percent of total loans and leases at March 31, 2006, compared to $15.0 million or 0.77 percent of total loans and leases at December 31, 2005, primarily due to two credits at Rocky Mountain Bank. Management does not feel this increase is an indication of any trend developing and, because of the net realizable value of collateral, guarantees and other factors, does not expect losses on Heartland’s nonperforming loans to be significant and has specifically provided for any probable losses in the allowance for loan and lease losses.

According to Fuller, “Asset quality continues as one of Heartland’s franchise strengths. Despite a slight uptick in nonperforming loans, we continue to emphasize credit quality and disciplined lending ahead of loan volume.”

About Heartland Financial USA:

Heartland Financial USA, Inc. is a $2.8 billion diversified financial services company providing banking, mortgage, wealth management, insurance, fleet management and consumer finance services to individuals and businesses in 43 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
		3/31/2006		3/31/2005
Interest Income
Interest and fees on loans and leases	$	37,918	$	29,988
Interest on securities and other:
Taxable		3,883		3,531
Nontaxable		1,428		1,325
Interest on federal funds sold		174		47
Interest on interest bearing deposits in other financial institutions		5		68
Total Interest Income		43,408		34,959
Interest Expense
Interest on deposits		13,087		9,182
Interest on short-term borrowings		2,451		1,264
Interest on other borrowings		3,044		2,506
Total Interest Expense		18,582		12,952
Net Interest Income		24,826		22,007
Provision for loan and lease losses		1,458		1,364
Net Interest Income After Provision for Loan and Lease Losses		23,368		20,643
Noninterest Income
Service charges and fees		2,601		2,240
Loan servicing income		980		658
Trust fees		1,817		1,595	��
Brokerage commissions		243		223
Insurance commissions		136		137
Securities gains (losses), net		132		53
Gain (loss) on trading account securities		33		18
Rental income on operating leases		4,061		3,571
Gains on sale of loans		550		532
Valuation adjustment on mortgage servicing rights		-		16
Income on bank owned life insurance		293		263
Other noninterest income		339		409
Total Noninterest Income		11,185		9,715
Noninterest Expense
Salaries and employee benefits		13,084		11,182
Occupancy		1,793		1,626
Furniture and equipment		1,691		1,367
Depreciation on equipment under operating leases		3,255		2,928
Outside services		2,156		1,998
Advertising		1,124		809
Other intangible amortization		228		270
Other noninterest expenses		2,844		2,571
Total Noninterest Expense		26,175		22,751
Income Before Income Taxes		8,378		7,607
Income taxes		2,632		2,343
Net Income	$	5,746	$	5,264
Earnings per common share-basic	$	.35	$	.32
Earnings per common share-diluted	$	.35	$	.32
Weighted average shares outstanding-basic		16,430,504		16,479,244
Weighted average share outstanding-diluted		16,638,458		16,704,808

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarters Ended
	3/31/2006	12/31/2005	9/30/2005	6/30/2005	3/31/2005
Interest Income
Interest and fees on loans and leases	$ 37,918	$ 36,283	$ 34,975	$ 32,596	$ 29,988
Interest on securities and other:
Taxable	3,883	3,469	3,329	3,567	3,531
Nontaxable	1,428	1,469	1,385	1,333	1,325
Interest on federal funds sold	174	327	44	57	47
Interest on interest bearing deposits in other financial institutions	5	68	62	79	68
Total Interest Income	43,408	41,616	39,795	37,632	34,959
Interest Expense
Interest on deposits	13,087	12,473	11,446	10,282	9,182
Interest on short-term borrowings	2,451	2,146	1,866	1,709	1,264
Interest on other borrowings	3,044	2,915	2,806	2,540	2,506
Total Interest Expense	18,582	17,534	16,118	14,531	12,952
Net Interest Income	24,826	24,082	23,677	23,101	22,007
Provision for loan and lease losses	1,458	2,169	1,395	1,636	1,364
Net Interest Income After Provision for Loan and Lease Losses	23,368	21,913	22,282	21,465	20,643
Noninterest Income
Service charges and fees	2,601	2,339	2,437	2,307	2,240
Loan servicing income	980	886	823	726	658
Trust fees	1,817	1,742	1,588	1,605	1,595
Brokerage commissions	243	193	185	255	223
Insurance commissions	136	150	129	129	137
Securities gains (losses), net	132	105	60	(20)	53
Gain (loss) on trading account securities	33	-	(3)	(26)	18
Rental income on operating leases	4,061	4,045	4,002	3,845	3,571
Gains on sale of loans	550	600	796	644	532
Valuation adjustment on mortgage servicing rights	-	33	24	(34)	16
Income on bank owned life insurance	293	317	220	243	263
Other noninterest income	339	277	882	366	409
Total Noninterest Income	11,185	10,687	11,143	10,040	9,715
Noninterest Expense
Salaries and employee benefits	13,084	11,898	11,720	11,529	11,182
Occupancy	1,793	1,399	1,458	1,534	1,626
Furniture and equipment	1,691	1,658	1,620	1,542	1,367
Depreciation on equipment under operating leases	3,255	3,275	3,253	3,141	2,928
Outside services	2,156	2,345	2,080	1,957	1,998
Advertising	1,124	952	805	767	809
Other intangibles amortization	228	253	254	237	270
Other noninterest expenses	2,844	2,832	3,000	2,752	2,571
Total Noninterest Expense	26,175	24,612	24,190	23,459	22,751
Income Before Income Taxes	8,378	7,988	9,235	8,046	7,607
Income taxes	2,632	2,224	2,943	2,640	2,343
Net Income	$ 5,746	$ 5,764	$ 6,292	$ 5,406	$ 5,264
Earnings per common share-basic	$ .35	$ .35	$ .38	$ .33	$ .32
Earnings per common share-diluted	$ .35	$ .35	$ .38	$ .32	$ .32
Weighted average shares outstanding-basic	16,430,504	16,367,210	16,398,747	16,420,073	16,479,244
Weighted average shares outstanding-diluted	16,638,458	16,659,995	16,693,661	16,722,383	16,704,808

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	03/31/2006	12/31/2005	9/30/2005	6/30/2005	3/31/2005
Assets
Cash and cash equivalents	$ 48,355	$ 81,021	$ 70,953	$ 85,011	$ 83,533
Time deposits in other financial institutions	-	-	-	-	1,190
Securities	520,062	527,767	498,054	507,985	524,448
Loans held for sale	38,885	40,745	47,987	50,329	41,710
Loans and leases:
Held to maturity	1,990,852	1,953,066	1,915,430	1,854,926	1,783,256
Allowance for loan and lease losses	(28,674)	(27,791)	(27,362)	(26,676)	(26,011)
Loans and leases, net	1,962,178	1,925,275	1,888,068	1,828,250	1,757,245
Assets under operating lease	39,634	40,644	40,222	41,045	37,379
Premises, furniture and equipment, net	102,462	92,769	91,087	88,440	85,234
Goodwill	35,398	35,398	35,398	35,398	35,398
Other intangible assets, net	8,958	9,159	9,354	9,568	9,855
Cash surrender value on life insurance	33,124	32,804	32,460	32,439	32,165
Other assets	32,883	32,750	32,853	33,563	23,580
Total Assets	$ 2,821,939	$ 2,818,332	$ 2,746,436	$ 2,712,028	$ 2,631,737

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Demand	$ 334,940	$ 352,707	$ 349,763	$ 329,577	$ 314,430
Savings	778,960	754,360	741,104	764,918	750,982
Time	1,017,955	1,011,111	992,592	957,918	925,163
Total deposits	2,131,855	2,118,178	2,083,459	2,052,413	1,990,575
Short-term borrowings	232,506	255,623	214,808	231,532	221,081
Other borrowings	232,025	220,871	229,653	211,654	215,423
Accrued expenses and other liabilities	34,148	35,848	33,338	34,183	28,659
Total Liabilities	2,630,534	2,630,520	2,561,258	2,529,782	2,455,738
Stockholders’ Equity	191,405	187,812	185,178	182,246	175,999
Total Liabilities and Stockholders’ Equity	$ 2,821,939	$ 2,818,332	$ 2,746,436	$ 2,712,028	$ 2,631,737

Common Share Data
Book value per common share	$ 11.57	$ 11.46	$ 11.31	$ 11.11	$ 10.68
FAS 115 effect on book value per common share	$ (0.13)	$ (0.06)	$ 0.06	$ 0.15	$ (0.08)
Common shares outstanding, net of treasury	16,547,079	16,390,416	16,368,161	16,399,470	16,481,082

HEARTLAND FINANCIAL USA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

	For the Quarters Ended
	03/31/2006	12/31/2005	9/30/2005	6/30/2005	3/31/2005

Average Balances
Assets	$ 2,798,216	$ 2,782,541	$ 2,747,631	$ 2,680,435	$ 2,623,349
Loans and leases, net of unearned	2,001,778	1,971,707	1,939,220	1,865,302	1,805,551
Deposits	2,103,785	2,101,318	2,075,004	2,022,879	1,977,957
Earning assets	2,514,629	2,498,735	2,437,936	2,381,733	2,328,670
Interest bearing liabilities	2,243,951	2,214,483	2,190,156	2,146,900	2,094,528
Stockholders’ equity	189,803	185,229	182,906	178,894	177,075

Earnings Performance Ratios
Annualized return on average assets	0.83%	0.82%	0.91%	0.81%	0.81%
Annualized return on average equity	12.28	12.35	13.65	12.12	12.06
Annualized net interest margin⁽¹⁾	4.14	3.97	3.99	4.03	3.97
Efficiency ratio⁽²⁾	71.23	69.22	67.96	69.02	70.12
Efficiency ratio, banks only⁽²⁾	63.47	62.24	62.62	62.15	64.55

⁽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 Quarter	the Year	the Quarter	the Year
	Ended	Ended	Ended	Ended
	3/31/2006	12/31/2005	3/31/2005	12/31/2004
Loan and Lease Data
Commercial and commercial real estate	$ 1,363,204	$ 1,304,080	$ 1,155,975	$ 1,162,103
Residential mortgage	211,349	219,671	216,247	212,842
Agricultural and agricultural real estate	217,701	230,357	223,528	217,860
Consumer	180,929	181,019	174,488	167,109
Direct financing leases, net	21,170	21,586	16,139	16,284
Unearned discount and deferred loan fees	(3,501)	(3,647)	(3,121)	(3,244)
Total loans and leases	$ 1,990,852	$ 1,953,066	$ 1,783,256	$ 1,772,954

Asset Quality
Nonaccrual loans	$ 16,115	$ �� 14,877	$ 12,825	$ 9,837
Loans past due ninety days or more as to interest or principal payments	599	115	538	88
Other real estate owned	2,612	1,586	423	425
Other repossessed assets	387	471	196	313
Total nonperforming assets	$ 19,713	$ 17,049	$ 13,982	$ 10,663

Allowance for Loan and Lease Losses
Balance, beginning of period	$ 27,791	$ 24,973	$ 24,973	$ 18,490
Provision for loan and lease losses	1,458	6,564	1,364	4,846
Loans charged off	(778)	(4,579)	(962)	(3,617)
Recoveries	203	1,152	636	1,005
Reclass for unfunded commitments to other liabilities	-	(319)	-	-
Addition related to acquired bank	-	-	-	4,249
Balance, end of period	$ 28,674	$ 27,791	$ 26,011	$ 24,973

Asset Quality Ratios
Ratio of nonperforming loans to total loans and leases	0.84%	0.77%	0.75%	0.56%
Ratio of nonperforming assets to total assets	0.70	0.60	0.53	0.41
Ratio of net loan chargeoffs to average loans and leases	0.03	0.18	0.02	0.16
Allowance for loan losses as a percent of loans and leases	1.44	1.42	1.46	1.41
Allowance for loan losses as a percent of nonperforming	171.56	185.37	194.65	251.62

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
	For the Quarters Ended
	3/31/2006							3/31/2005
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	395,503		$	3,883	3.98	%	$	416,740		$	3,531	3.44	%
Nontaxable⁽¹⁾		129,570			2,197	6.88			116,890			2,038	7.07
Total securities		525,073			6,080	4.70			533,630			5,569	4.23
Interest bearing deposits		426			5	4.76			6,973			68	3.95
Federal funds sold		15,501			174	4.55			7,859			47	2.43
Loans and leases:
Commercial and commercial real estate⁽¹⁾		1,357,353			24,332	7.27			1,177,548			17,992	6.20
Residential mortgage		223,340			3,481	6.32			221,207			3,433	6.29
Agricultural and agricultural real estate⁽¹⁾		219,026			4,238	7.85			220,484			3,641	6.70
Consumer		180,965			4,265	9.56			169,922			3,544	8.46
Direct financing leases, net		21,094			339	6.52			16,390			227	5.62
Fees on loans		-			1,362	-			-			1,213	-
Less: allowance for loan and lease losses		(28,149	)		-	-			(25,343	)		-	-
Net loans and leases		1,973,629			38,017	7.81			1,780,208			30,050	6.85
Total earning assets		2,514,629			44,276	7.14			2,328,670			35,734	6.22
Nonearning Assets		283,507			-	-			294,679			-	-
Total Assets	$	2,798,216		$	44,276	6.42	%	$	2,623,349		$	35,734	5.52	%
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	763,914		$	3,840	2.04	%	$	750,706		$	2,040	1.10	%
Time, $100,000 and over		221,249			2,061	3.78			166,486			1,187	2.89
Other time deposits		785,248			7,186	3.71			745,458			5,955	3.24
Short-term borrowings		243,446			2,451	4.08			229,261			1,264	2.24
Other borrowings		230,094			3,044	5.37			202,617			2,506	5.02
Total interest bearing liabilities		2,243,951			18,582	3.36			2,094,528			12,952	2.51
Noninterest Bearing Liabilities
Noninterest bearing deposits		333,374			-	-			315,307			-	-
Accrued interest and other liabilities		31,088			-	-			36,439			-	-
Total noninterest bearing liabilities		364,462			-	-			351,746			-	-
Stockholders’ Equity		189,803			-	-			177,075			-	-
Total Liabilities and Stockholders’ Equity	$	2,798,216		$	18,582	2.69	%	$	2,623,349		$	12,952	2.00	%
Net interest income⁽¹⁾				$	25,694						$	22,782
Net interest income to total earning assets⁽¹⁾						4.14	%						3.97	%
Interest bearing liabilities to earning assets		89.24	%						89.95	%

⁽¹⁾Tax equivalent basis is calculated using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
		As of and For the Quarter Ended March 31, 2006			As of and For the Year Ended December 31, 2005			As of and For the Quarter Ended March 31, 2005			As of and For the Year Ended December 31, 2004
Total Assets
Dubuque Bank and Trust Company	$	816,469		$	833,885		$	772,048		$	750,517
New Mexico Bank & Trust		531,240			557,062			482,680			490,582
Wisconsin Community Bank		386,014			390,842			379,271			385,116
Rocky Mountain Bank		387,890			388,149			374,148			374,242
Galena State Bank and Trust Company		242,884			241,719			219,405			220,018
Riverside Community Bank		193,453			195,099			188,794			193,314
Arizona Bank & Trust		138,060			136,832			94,046			85,850
First Community Bank		119,891			121,337			120,112			116,654

Total Deposits
Dubuque Bank and Trust Company	$	612,723		$	608,687		$	576,145		$	579,895
New Mexico Bank & Trust		387,243			388,935			349,870			325,527
Wisconsin Community Bank		318,274			311,436			318,534			327,221
Rocky Mountain Bank		305,266			306,967			290,219			290,390
Galena State Bank and Trust Company		180,988			179,437			163,654			168,109
Riverside Community Bank		156,452			153,791			146,050			143,797
Arizona Bank & Trust		120,533			118,959			67,029			73,199
First Community Bank		92,562			95,506			96,251			95,529

Return on Average Assets
Dubuque Bank and Trust Company		1.37	%		1.28	%		1.33	%		1.38	%
New Mexico Bank & Trust		1.05			1.10			1.15			1.13
Wisconsin Community Bank		0.78			0.63			0.49			0.59
Rocky Mountain Bank		0.88			0.72			0.50			1.05
Galena State Bank and Trust Company		1.23			1.22			1.26			1.33
Riverside Community Bank		0.42			0.83			0.73			0.97
Arizona Bank & Trust		0.21			0.19			(0.06	)		(1.35	)
First Community Bank		1.03			1.00			1.08			1.00

Net Interest Margin
Dubuque Bank and Trust Company		3.57	%		3.48	%		3.51	%		3.58	%
New Mexico Bank & Trust		5.09			4.75			4.74			4.98
Wisconsin Community Bank		3.98			3.75			3.66			3.50
Rocky Mountain Bank		5.37			4.93			4.46			4.63
Galena State Bank and Trust Company		3.35			3.43			3.61			3.43
Riverside Community Bank		3.78			3.76			3.84			3.74
Arizona Bank & Trust		4.79			5.03			5.26			4.94
First Community Bank		3.91			3.80			3.67			3.72

Net Income
Dubuque Bank and Trust Company	$	2,734		$	10,156		$	2,536		$	10,427
New Mexico Bank & Trust		1,385			5,565			1,372			4,712
Wisconsin Community Bank		735			2,444			457			2,208
Rocky Mountain Bank		829			2,757			457			2,332
Galena State Bank and Trust Company		724			2,808			684			2,926
Riverside Community Bank		199			1,608			342			1,731
Arizona Bank & Trust		71			199			(14	)		(822	)
First Community Bank		303			1,198			313			1,145

HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS

	Total Portfolio Loans		Allowance For Loan and Lease Losses		Nonperforming Loans		Allowance As Percent Of Total Loans
As of March 31, 2006:
Dubuque Bank and Trust Company	$	594,028	$	7,366	$	997	1.24	%
New Mexico Bank & Trust		338,486		4,761		2,145	1.41
Wisconsin Community Bank		263,261		4,233		1,334	1.61
Rocky Mountain Bank		286,347		4,246		9,295	1.48
Galena State Bank and Trust Company		180,246		2,205		1,185	1.22
Riverside Community Bank		131,571		1,740		421	1.32
Arizona Bank & Trust		98,321		1,345		-	1.37
First Community Bank		83,006		1,247		893	1.50


As of December 31, 2005:
Dubuque Bank and Trust Company	$	575,293	$	7,376	$	2,745	1.28	%
New Mexico Bank & Trust		330,609		4,497		2,359	1.36
Wisconsin Community Bank		270,837		4,285		1,321	1.58
Rocky Mountain Bank		279,230		4,048		5,634	1.45
Galena State Bank and Trust Company		176,813		2,181		965	1.23
Riverside Community Bank		132,781		1,674		462	1.26
Arizona Bank & Trust		94,285		1,181		7	1.25
First Community Bank		83,506		1,191		992	1.43


As of March 31, 2005:
Dubuque Bank and Trust Company	$	535,563	$	6,793	$	3,426	1.27	%
New Mexico Bank & Trust		296,900		4,341		2,501	1.46
Wisconsin Community Bank		253,951		4,142		876	1.63
Rocky Mountain Bank		261,863		4,077		3,751	1.56
Galena State Bank and Trust Company		151,297		1,805		189	1.19
Riverside Community Bank		128,923		1,752		1,657	1.36
Arizona Bank & Trust		69,986		877		-	1.25
First Community Bank		75,764		1,002		693	1.32


As of December 31, 2004:
Dubuque Bank and Trust Company	$	525,456	$	6,584	$	2,405	1.25	%
New Mexico Bank & Trust		297,695		4,232		725	1.42
Rocky Mountain Bank		262,240		3,947		596	1.51
Wisconsin Community Bank		265,916		4,098		2,966	1.54
Galena State Bank and Trust Company		145,013		1,749		697	1.21
Riverside Community Bank		129,390		1,553		1,662	1.20
Arizona Bank & Trust		61,630		771		-	1.25
First Community Bank		76,047		999		572	1.31

Heartland Financial USA (HTLF) 8-KHeartland Financial Usa, Inc. Reports First Quarter Earnings