| 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@frbir.com |
| jschmidt@htlf.com | |
MONDAY, OCTOBER 23, 2006
HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER 2006 EARNINGS
Third Quarter 2006 Highlights
| § | Total assets surpassed $3 billion |
| § | Net income increased by 9% over third quarter 2005 |
| § | Net interest margin improved by 14 basis points compared to third quarter 2005 |
| § | Average earning assets increased 10% over third quarter 2005 |
| § | Received approvals to open Summit Bank & Trust |
| § | Negotiations for the sale of ULTEA, Inc. initiated |
| § | Office of HTLF Capital Corp. closed |
| | | | Quarter Ended September 30, | | | | Nine Months Ended September 30, | |
| | | | 2006 | | | | 2005 | | | | 2006 | | | | 2005 | |
| Net income (in millions) | | $ | 6.9 | | | $ | 6.3 | | | $ | 17.6 | | | $ | 17.0 | |
| Diluted earnings per share | | | 0.41 | | | | 0.38 | | | | 1.05 | | | | 1.01 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.91 | % | | | 0.91 | % | | | 0.81 | % | | | 0.84 | % |
| Return on average equity | | | 13.93 | | | | 13.65 | | | | 12.23 | | | | 12.62 | |
| Net interest margin | | | 4.17 | | | | 4.03 | | | | 4.22 | | | | 4.04 | |
“Heartland’s theme this year is ‘momentum’ and we are clearly seeing momentum in our third quarter and year-to-date earnings. A continued strong and stable margin, along with more productivity in our delivery system, are key reasons for an excellent quarter.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, October 23, 2006—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported increased earnings for the third quarter of 2006. Net income for the quarter ended September 30, 2006, was $6.9 million, or $0.41 per diluted share, compared to net income of $6.3 million, or $0.38 per diluted share, during the third quarter of 2005, an increase of $582,000 or 9 percent. Return on average equity was 13.93 percent and return on average assets was 0.91 percent for the third quarter of 2006, compared to 13.65 percent and 0.91 percent, respectively, for the same quarter in 2005.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer stated, “Heartland’s theme this year is ‘momentum’ and we are clearly seeing momentum in our third quarter and year-to-date earnings. A continued strong and stable margin, along with more productivity in our delivery system, are key reasons for an excellent quarter.”
Net income for the first nine months of 2006 was $17.6 million, or $1.05 per diluted share, an increase of $607,000 or 4 percent from the net income of $17.0 million, or $1.01 per diluted share, recorded for the first nine months of 2005. Return on average equity was 12.23 percent and return on average assets was 0.81 percent for the first nine months of 2006, compared to 12.62 percent and 0.84 percent, respectively, for the same period in 2005. During the first quarter of 2006, a pre-tax judgment of $2.4 million against Heartland and Wisconsin Community Bank was recorded as noninterest expense, while a $286,000 award under a counterclaim was recorded as a loan loss recovery. The net after tax effect to net income for this one-time event was $1.3 million. Exclusive of this expense, Heartland’s net income for the first nine months of 2006 was $18.9 million, or $1.13 per diluted share, an increase of $1.9 million or 11 percent over the first nine months of 2005. Because of the non-recurring nature of this expense, Heartland believes that this pro-forma presentation is important for investors to understand Heartland’s financial performance for the first nine months of 2006.
Since negotiations are underway and highly probable for the sale of ULTEA, Heartland’s fleet leasing subsidiary, the attached financial statements reflect the pending sale. The assets and liabilities of ULTEA have been classified as discontinued operations held for sale on the balance sheet for the current period and the results of operations of ULTEA have been reflected on the income statement as discontinued operations for both the current and prior periods reported. This past quarter, Heartland also closed the office of HTLF Capital Corp., its investment banking subsidiary, as its two officers left employment with the company to join another investment bank.
Referring to the anticipated sale of ULTEA and the closing of the HTLF Capital Corp. office, Fuller said, "These events represent Heartland’s commitment to focus resources on our core banking and consumer finance businesses. The divesting of non-strategic holdings is an important step in our plan to maximize shareholder value.”
Net interest margin, expressed as a percentage of average earning assets, was 4.17 percent during the third quarter of 2006 compared to 4.03 percent for the third quarter of 2005 and 4.27 percent for the second quarter of 2006. Net interest income on a tax-equivalent basis totaled $28.1 million during the third quarter of 2006, an increase of $3.4 million or 14 percent from the $24.7 million recorded during the third quarter of 2005. For the nine-month period during 2006, net interest income on a tax-equivalent basis was $81.7 million, an increase of $9.8 million or 14 percent from the $71.9 million recorded during the first nine months of 2005. Contributing to these increases was a $242.5 million or 10 percent growth in average earning assets during the quarter compared to the same quarter in 2005 and the $206.0 million or 9 percent growth in average earning assets during the first nine months of 2006 compared to the first nine months of 2005. Also contributing to this improvement was a shift in balances to loans from securities. The percentage of average loans to total average assets increased from 69 percent during the third quarter of 2005 to 71 percent during the third quarter of 2006. For the nine month comparative period, the percentage of average loans to total average assets increased from 69 percent in 2005 to 71 percent in 2006.
On a tax-equivalent basis, interest income in the third quarter of 2006 totaled $51.3 million compared to $40.3 million in the third quarter of 2005, an increase of $10.9 million or 27 percent. For the first nine months of 2006, interest income on a tax-equivalent basis increased $28.8 million or 25 percent over the same period in 2005. More than half of the loans in Heartland’s commercial and agricultural loan portfolios are floating rate loans, thus increases in the national prime rate, as experienced during the first half of 2006, have an immediate positive impact on interest income. Interest expense for the third quarter of 2006 was $23.1 million compared to $15.6 million in the third quarter of 2005, an increase of $7.5 million or 48 percent. On a nine-month comparative basis, interest expense increased $19.0 million or 45 percent. As rates continued to move upward during the first half of 2006, Heartland experienced some movement in deposit balances from lower yielding accounts into higher yielding money market and certificate of deposit accounts.
Noninterest income increased by $567,000 or 8 percent during the third quarter of 2006 compared to the same quarter in 2005. Recorded in other noninterest income during the third quarter of 2005 was the forgiveness of $500,000 in debt as Heartland fulfilled the job creation requirements of its Community Development Block Grant Loan Agreement with the City of Dubuque. Exclusive of this one-time income item, noninterest income increased $1.1 million or 16 percent during the periods under comparison. The categories experiencing the largest increases were service charges and fees and loan servicing income. For the first nine months of 2006, noninterest income increased $2.6 million or 14 percent over the same period in 2005. Exclusive of the forgiveness of debt recorded during 2005, noninterest income increased $3.1 million or 17 percent for the nine-month period. In addition to the aforementioned categories, trust fees and securities gains were contributors to this improvement.
For the third quarter of 2006, noninterest expense increased $2.8 million or 14 percent in comparison with the same period in 2005. The largest component of noninterest expense, salaries and employee benefits, increased $1.7 million or 15 percent during the third quarter of 2006 in comparison to the third quarter of 2005. This growth in salaries and employee benefits expense was primarily the 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 and Arizona Bank & Trust, the acquisition of the Bank of the Southwest, and the new bank being formed in Denver, Colorado, which began operations in October 2005 as a loan production office under the Rocky Mountain umbrella. For the nine-month period ended September 30, 2006, noninterest expense increased $11.5 million or 19 percent when compared to the same nine-month period in 2005. Again, the largest contributor to this increase was salaries and employee benefits, which grew by $5.1 million or 15 percent during this nine-month comparative period. In addition to staffing increases as a result of the expansion efforts, merit increases for all salaried employees are made on January 1 of each year. Total full-time equivalent employees increased to 953 at September 30, 2006, from 894 at September 30, 2005. The $2.4 million judgment against Heartland and a bank subsidiary recorded during the first quarter of 2006 was also a major factor in the increase in noninterest expense for the nine-month comparative period. Exclusive of the judgment, noninterest expense increased $9.1 million or 15 percent in comparison to the first nine months of 2005.
Fuller commented, “Our ambitious expansion plans also provided momentum through the third quarter. We received regulatory approval for Heartland’s newest de novo bank, Summit Bank & Trust, located in the Denver suburb of Broomfield, Colorado. This location is scheduled to open November 1 and represents Heartland’s 30th office in the western United States. Presently, we have new branch office locations under development or construction in Thornton, Colorado; Santa Fe, New Mexico; Gilbert, Arizona; Madison, Wisconsin and Billings, Montana.”
Heartland’s effective tax rate was 32.84 percent for the third quarter of 2006 compared to 31.87 percent during the third quarter of 2005. On a nine-month comparative basis, Heartland’s effective tax rate was 31.55 percent during 2006 and 31.85 percent during 2005. The two primary contributors to the variations in our effective tax rates during the periods were changes in the amount of tax-exempt income and tax credits. Tax-exempt interest income as a percentage of pre-tax income was 16.32 percent during the third quarter of 2006 compared to 16.81 percent during the same quarter of 2005. For the nine-month periods ended on September 30, 2006 and 2005, tax-exempt income as a percentage of pre-tax income was 19.38 percent and 18.21 percent, respectively. Income taxes recorded during the first nine months of 2005 included anticipated low-income housing and historic rehabilitation tax credits totaling $436,000 for the year. During the first nine months of 2006, these anticipated credits had decreased to approximately $225,000 for the year.
At September 30, 2006, total assets exceeded $3.0 billion, an increase of $235.3 million or 11 percent annualized since year-end 2005. Total loans and leases were $2.1 billion at September 30, 2006, an increase of $169.1 million or 12 percent annualized since year-end 2005. The May 15, 2006, acquisition of Bank of the Southwest accounted for $50.9 million or 30 percent of this growth. The Heartland subsidiary banks experiencing notable loan growth since year-end 2005 were Dubuque Bank and Trust Company, New Mexico Bank & Trust, Rocky Mountain Bank and Wisconsin Community Bank. The commercial and commercial real estate loan category grew by $148.2 million or 15 percent annualized. Exclusive of the $21.0 million in commercial and commercial real estate loans acquired in the Bank of the Southwest acquisition, this loan category increased by $127.2 million or 13 percent annualized.
Total deposits at September 30, 2006, were $2.3 billion, an increase of $173.0 million or 11 percent annualized since year-end 2005. The acquisition of Bank of the Southwest accounted for $44.4 million or 26 percent of this growth. All of Heartland’s subsidiary banks experienced growth in deposits since year-end 2005 except for First Community Bank. Demand deposits experienced a $14.4 million or 5 percent annualized increase with the Bank of the Southwest acquisition contributing $17.0 million in demand deposit balances at closing. Savings deposit balances increased by $59.2 million or 10 percent annualized. At closing, the Bank of the Southwest accounted for $17.4 million in savings deposit balances. Brokered time deposits increased $2.1 million or 2 percent and other time deposit balances increased $97.2 million or 15 percent annualized since year-end 2005. The Bank of the Southwest acquisition contributed $10.0 million in other time deposit balances. Of particular note is that a large portion of the growth in time deposits occurred in deposits from our local markets. As interest rates have continued to move upward, 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.
The allowance for loan and lease losses at September 30, 2006, was 1.45 percent of loans and 180 percent of nonperforming loans, compared to 1.42 percent of loans and 185 percent of nonperforming loans at December 31, 2005. The provision for loan losses remained constant at $1.4 million during the third quarter of 2006 compared to the same quarter of 2005 and decreased $319,000 or 7 percent during the first nine months of 2006 compared to the first nine months of 2005. Nonperforming loans were $17.1 million or 0.80 percent of total loans and leases at September 30, 2006, compared to $15.0 million or 0.77 percent of total loans and leases at December 31, 2005, and $15.0 million or 0.78 percent of total loans and leases at September 30, 2005. Loans past due ninety days or more increased to $6.4 million at September 30, 2006, from $115,000 at year-end 2005 as a result of one large credit for which workout plans are underway. Management believes that losses on Heartland’s nonperforming loans will not be significant due to the net realizable value of collateral, guarantees and other factors. Additionally, any probable losses had been specifically provided for in the allowance for loan and lease losses.
According to Fuller, “Our asset quality measures continue to hold steady compared to recent quarters. The increase in loan delinquencies during the quarter is related to one large credit for which workout plans are underway and on target for resolution before year-end. Adjusting for this credit, total non-performing loans are currently at their lowest level this year.”
As previously disclosed, Heartland and Wisconsin Community Bank, a wholly-owned bank subsidiary, were defendants in a lawsuit regarding a breach of contract claim relating to the 2002 sale of Wisconsin Community Bank’s Eau Claire branch. Heartland and Wisconsin Community Bank filed a counterclaim against the plaintiff. The matters were tried in the State of Wisconsin Circuit Court, St. Croix County, in December, 2005. On May 3, 2006, Heartland was notified by the court that a verdict was entered awarding the plaintiff $2.4 million for its original claim and awarding Heartland $286,000 for its counterclaim against the plaintiff. Heartland recorded the judgments in the quarter ended March 31, 2006. Heartland has filed an appeal to the court ruling and recently learned that the plaintiff subsequently filed a cross-appeal. We do not expect any resolution on this issue until sometime in 2007.
Conference Call Details
Heartland will host a conference call for investors at 3:00 p.m. CDT today. To participate, dial 800-218-0204 at least five minutes before start time or log onto www.htlf.com. If you are unable to participate on the call, a replay will be available through October 30, 2006, by dialing 800-405-2236, code 11071427, or by logging onto www.htlf.com.
About Heartland Financial USA:
Heartland Financial USA, Inc. is a $3.0 billion diversified financial services company providing banking, mortgage, wealth management, insurance, fleet management and consumer finance services to individuals and businesses. The Company currently has 55 banking locations in 37 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Massachusetts.
Additional information about Heartland Financial USA, Inc. is available through our website at www.htlf.com.
Safe Harbor Statement
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 Nine Months Ended |
| | | | 9/30/2006 | | | | 9/30/2005 | | | | 9/30/2006 | | | | 9/30/2005 | |
Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 44,191 | | | $ | 34,649 | | | $ | 123,254 | | | $ | 97,105 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 4,591 | | | | 3,329 | | | | 12,465 | | | | 10,427 | |
Nontaxable | | | 1,441 | | | | 1,385 | | | | 4,338 | | | | 4,043 | |
| Interest on federal funds sold | | | 123 | | | | 44 | | | | 424 | | | | 148 | |
| Interest on deposits in other financial institutions | | | 4 | | | | 62 | | | | 16 | | | | 209 | |
Total Interest Income | | | 50,350 | | | | 39,469 | | | | 140,497 | | | | 111,932 | |
Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 17,056 | | | | 11,446 | | | | 44,995 | | | | 30,910 | |
| Interest on short-term borrowings | | | 2,721 | | | | 1,379 | | | | 6,927 | | | | 3,775 | |
| Interest on other borrowings | | | 3,348 | | | | 2,797 | | | | 9,543 | | | | 7,800 | |
Total Interest Expense | | | 23,125 | | | | 15,622 | | | | 61,465 | | | | 42,485 | |
Net Interest Income | | | 27,225 | | | | 23,847 | | | | 79,032 | | | | 69,447 | |
| Provision for loan and lease losses | | | 1,381 | | | | 1,375 | | | | 4,043 | | | | 4,362 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 25,844 | | | | 22,472 | | | | 74,989 | | | | 65,085 | |
Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,120 | | | | 2,437 | | | | 8,459 | | | | 6,984 | |
| Loan servicing income | | | 1,150 | | | | 823 | | | | 3,188 | | | | 2,207 | |
| Trust fees | | | 1,774 | | | | 1,588 | | | | 5,332 | | | | 4,788 | |
| Brokerage commissions | | | 271 | | | | 185 | | | | 883 | | | | 663 | |
| Insurance commissions | | | 179 | | | | 129 | | | | 456 | | | | 395 | |
| Securities gains, net | | | 67 | | | | 60 | | | | 428 | | | | 93 | |
| Gain (loss) on trading account securities | | | 53 | | | | (3 | ) | | | 61 | | | | (11 | ) |
| Impairment loss on equity securities | | | (76 | ) | | | - | | | | (76 | ) | | | - | |
| Gains on sale of loans | | | 551 | | | | 796 | | | | 1,678 | | | | 1,972 | |
| Valuation adjustment on mortgage servicing rights | | | - | | | | 24 | | | | - | | | | 6 | |
| Income on bank owned life insurance | | | 250 | | | | 216 | | | | 769 | | | | 714 | |
| Other noninterest income | | | 199 | | | | 716 | | | | 427 | | | | 1,210 | |
Total Noninterest Income | | | 7,538 | | | | 6,971 | | | | 21,605 | | | | 19,021 | |
Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 13,125 | | | | 11,437 | | | | 38,714 | | | | 33,625 | |
| Occupancy | | | 1,834 | | | | 1,435 | | | | 5,392 | | | | 4,543 | |
| Furniture and equipment | | | 1,601 | | | | 1,622 | | | | 5,018 | | | | 4,526 | |
| Outside services | | | 2,273 | | | | 2,043 | | | | 6,958 | | | | 5,930 | |
| Advertising | | | 1,099 | | | | 799 | | | | 3,238 | | | | 2,363 | |
| Other intangibles amortization | | | 260 | | | | 254 | | | | 726 | | | | 761 | |
| Other noninterest expenses | | | 3,106 | | | | 2,916 | | | | 11,307 | | | | 8,086 | |
Total Noninterest Expense | | | 23,298 | | | | 20,506 | | | | 71,353 | | | | 59,834 | |
Income Before Income Taxes | | | 10,084 | | | | 8,937 | | | | 25,241 | | | | 24,272 | |
| Income taxes | | | 3,304 | | | | 2,828 | | | | 7,937 | | | | 7,689 | |
Income From Continuing Operations | | | 6,780 | | | | 6,109 | | | | 17,304 | | | | 16,583 | |
Discontinued Operations | | | | | | | | | | | | | | | | |
Income from operations of discontinued subsidiary | | | 151 | | | | 298 | | | | 427 | | | | 616 | |
Income taxes | | | 57 | | | | 115 | | | | 162 | | | | 237 | |
Income From Discontinued Operations | | | 94 | | | | 183 | | | | 265 | | | | 379 | |
Net Income | | $ | 6,874 | | | $ | 6,292 | | | $ | 17,569 | | | $ | 16,962 | |
Earnings per common share-basic | | $ | .42 | | | $ | .38 | | | $ | 1.06 | | | $ | 1.03 | |
Earnings per common share-diluted | | $ | .41 | | | $ | .38 | | | $ | 1.05 | | | $ | 1.01 | |
Earnings per common share from continuing operations- basic | | $ | .41 | | | $ | .37 | | | $ | 1.05 | | | $ | 1.01 | |
Earnings per common share from continuing operations- diluted | | $ | .40 | | | $ | .37 | | | $ | 1.03 | | | $ | 0.99 | |
Weighted average shares outstanding-basic | | | 16,521,527 | | | | 16,398,747 | | | | 16,498,127 | | | | 16,432,300 | |
Weighted average share outstanding-diluted | | | 16,775,749 | | | | 16,693,661 | | | | 16,730,331 | | | | 16,728,435 | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | For the Quarters Ended |
| | | 9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | 9/30/2005 |
Interest Income | | | | | | |
| Interest and fees on loans and leases | | $ 44,191 | $ 41,283 | $ 37,780 | $ 36,139 | $ 34,649 |
| Interest on securities and other: | | | | | | |
| Taxable | | 4,591 | 3,991 | 3,883 | 3,469 | 3,329 |
| Nontaxable | | 1,441 | 1,469 | 1,428 | 1,469 | 1,385 |
| Interest on federal funds sold | | 123 | 127 | 174 | 327 | 44 |
| Interest on deposits in other financial institutions | | 4 | 7 | 5 | 68 | 62 |
Total Interest Income | | 50,350 | 46,877 | 43,270 | 41,472 | 39,469 |
Interest Expense | | | | | | |
| Interest on deposits | | 17,056 | 14,852 | 13,087 | 12,473 | 11,446 |
| Interest on short-term borrowings | | 2,721 | 2,331 | 1,875 | 1,598 | 1,379 |
| Interest on other borrowings | | 3,348 | 3,151 | 3,044 | 2,906 | 2,797 |
Total Interest Expense | | 23,125 | 20,334 | 18,006 | 16,977 | 15,622 |
Net Interest Income | | 27,225 | 26,543 | 25,264 | 24,495 | 23,847 |
| Provision for loan and lease losses | | 1,381 | 1,487 | 1,175 | 2,171 | 1,375 |
Net Interest Income After Provision for Loan and Lease Losses | | 25,844 | 25,056 | 24,089 | 22,324 | 22,472 |
Noninterest Income | | | | | | |
| Service charges and fees | | 3,120 | 2,738 | 2,601 | 2,339 | 2,437 |
| Loan servicing income | | 1,150 | 1,058 | 980 | 886 | 823 |
| Trust fees | | 1,774 | 1,741 | 1,817 | 1,742 | 1,588 |
| Brokerage commissions | | 271 | 369 | 243 | 193 | 185 |
| Insurance commissions | | 179 | 141 | 136 | 150 | 129 |
| Securities gains, net | | 67 | 229 | 132 | 105 | 60 |
| Gain (loss) on trading account securities | | 53 | (25) | 33 | - | (3) |
| Impairment loss on equity securities | | (76) | - | - | - | - |
| Gains on sale of loans | | 551 | 577 | 550 | 600 | 796 |
| Valuation adjustment on mortgage servicing rights | | - | - | - | 33 | 24 |
| Income on bank owned life insurance | | 250 | 230 | 289 | 308 | 216 |
| Other noninterest income | | 199 | 91 | 137 | 97 | 716 |
Total Noninterest Income | | 7,538 | 7,149 | 6,918 | 6,453 | 6,971 |
Noninterest Expense | | | | | | |
| Salaries and employee benefits | | 13,125 | 12,781 | 12,808 | 11,622 | 11,437 |
| Occupancy | | 1,834 | 1,793 | 1,765 | 1,370 | 1,435 |
| Furniture and equipment | | 1,601 | 1,728 | 1,689 | 1,673 | 1,622 |
| Outside services | | 2,273 | 2,565 | 2,120 | 2,314 | 2,043 |
| Advertising | | 1,099 | 1,020 | 1,119 | 945 | 799 |
| Other intangibles amortization | | 260 | 238 | 228 | 253 | 254 |
| Other noninterest expenses | | 3,106 | 3,040 | 5,161 | 2,759 | 2,916 |
Total Noninterest Expense | | 23,298 | 23,165 | 24,890 | 20,936 | 20,506 |
Income Before Income Taxes | | 10,084 | 9,040 | 6,117 | 7,841 | 8,937 |
| Income taxes | | 3,304 | 2,886 | 1,747 | 2,170 | 2,828 |
Income From Continuing Operations | | 6,780 | 6,154 | 4,370 | 5,671 | 6,109 |
Discontinued Operations | | | | | | |
| Income from operations of discontinued subsidiary | | 151 | 110 | 166 | 147 | 298 |
| Income taxes | | 57 | 42 | 63 | 54 | 115 |
Income From Discontinued Operations | | 94 | 68 | 103 | 93 | 183 |
Net Income | | $ 6,874 | $ 6,222 | $ 4,473 | $ 5,764 | $ 6,292 |
Earnings per common share-basic | | $.42 | $.38 | $.27 | $.35 | $.38 |
Earnings per common share-diluted | | $.41 | $.37 | $.27 | $.34 | $.38 |
Earnings per common share from continuing operations-basic | | $.41 | $.37 | $.27 | $.35 | $.37 |
Earnings per common share from continuing operations-diluted | | $.40 | $.37 | $.26 | $.34 | $.37 |
Weighted average shares outstanding-basic | | 16,521,527 | 16,540,587 | 16,430,504 | 16,367,210 | 16,398,747 |
Weighted average shares outstanding-diluted | | 16,775,749 | 16,798,654 | 16,638,458 | 16,659,995 | 16,693,661 |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | As Of |
| | | 9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | 9/30/2005 |
Assets | | | | | | |
| Cash and cash equivalents | | $ 45,483 | $ 47,385 | $ 48,355 | $ 81,021 | $ 70,953 |
| Securities | | 593,103 | 526,784 | 520,062 | 527,767 | 498,054 |
| Loans held for sale | | 42,561 | 44,686 | 38,885 | 40,745 | 47,987 |
| Loans and leases: | | | | | | |
Held to maturity | | 2,122,156 | 2,077,393 | 1,990,852 | 1,953,066 | 1,915,430 |
| Allowance for loan and lease losses | | (30,684) | (29,941) | (28,674) | (27,791) | (27,362) |
| Loans and leases, net | | 2,091,472 | 2,047,452 | 1,962,178 | 1,925,275 | 1,888,068 |
| Assets under operating lease | | - | 39,852 | 39,634 | 40,644 | 40,222 |
| Premises, furniture and equipment, net | | 106,937 | 105,146 | 102,462 | 92,769 | 91,087 |
| Goodwill | | 39,817 | 40,531 | 35,398 | 35,398 | 35,398 |
| Other intangible assets, net | | 9,198 | 9,327 | 8,958 | 9,159 | 9,354 |
| Cash surrender value on life insurance | | 32,962 | 33,386 | 33,124 | 32,804 | 32,460 |
| Assets of discontinued operations held for sale | | 51,122 | - | - | - | - |
| Other assets | | 40,934 | 40,762 | 33,705 | 32,750 | 32,853 |
Total Assets | | $ 3,053,589 | $ 2,935,311 | $ 2,822,761 | $ 2,818,332 | $ 2,746,436 |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
| Liabilities | | | | | | |
| Deposits: | | | | | | |
| Demand | | $ 367,133 | $ 378,211 | $ 334,940 | $ 352,707 | $ 349,763 |
| Savings | | 813,573 | 799,884 | 778,960 | 754,360 | 741,104 |
| Brokered time deposits | | 147,669 | 155,079 | 115,416 | 145,534 | 140,880 |
| Other time deposits | | 962,809 | 920,055 | 902,539 | 865,577 | 851,712 |
| Total deposits | | 2,291,184 | 2,253,229 | 2,131,855 | 2,118,178 | 2,083,459 |
| Short-term borrowings | | 239,531 | 229,723 | 232,506 | 255,623 | 214,808 |
| Other borrowings | | 243,987 | 225,650 | 232,025 | 220,871 | 229,653 |
| Liabilities of discontinued operations held for sale | | 47,424 | - | - | - | - |
| Accrued expenses and other liabilities | | 29,480 | 35,251 | 36,243 | 35,848 | 33,338 |
Total Liabilities | | 2,851,606 | 2,743,853 | 2,632,629 | 2,630,520 | 2,561,258 |
Stockholders’ Equity | | 201,983 | 191,458 | 190,132 | 187,812 | 185,178 |
Total Liabilities and Stockholders’ Equity | | $ 3,053,589 | $ 2,935,311 | $ 2,822,761 | $ 2,818,332 | $ 2,746,436 |
| | | | | | | |
Common Share Data | | | | | | |
| Book value per common share | | $ 12.22 | $ 11.59 | $ 11.49 | $ 11.46 | $ 11.31 |
| FAS 115 effect on book value per common share | | $ 0.01 | $ (0.30) | $ (0.13) | $ (0.06) | $ 0.06 |
| Common shares outstanding, net of treasury stock | | 16,530,266 | 16,520,820 | 16,547,079 | 16,390,416 | 16,368,161 |
| | | | | | | |
Tangible Capital Ratio(1) | | 5.18% | 5.02% | 5.36% | 5.28% | 5.31% |
(1) Total stockholders’ equity less intangible assets (excluding mortgage servicing rights) divided by total assets less intangible assets (excluding mortgage servicing rights).
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | | For the Quarters Ended | For the Nine Months Ended |
| | | | 9/30/2006 | 9/30/2005 | 9/30/2006 | 9/30/2005 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | | $ 2,985,231 | $ 2,747,631 | $ 2,888,938 | $ 2,683,814 |
| Loans and leases, net of unearned | | | 2,137,075 | 1,931,553 | 2,067,648 | 1,867,281 |
| Deposits | | | 2,257,369 | 2,075,004 | 2,175,609 | 2,025,280 |
| Earning assets | | | 2,672,820 | 2,430,300 | 2,586,108 | 2,380,047 |
| Interest bearing liabilities | | | 2,353,394 | 2,149,563 | 2,275,226 | 2,110,948 |
| Stockholders’ equity | | | 195,737 | 182,906 | 192,020 | 179,638 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Annualized return on average assets | | | 0.91% | 0.91% | 0.81% | 0.84% |
| Annualized return on average equity | | | 13.93 | 13.65 | 12.23 | 12.62 |
Annualized net interest margin(1) | | | 4.17 | 4.03 | 4.22 | 4.04 |
Efficiency ratio(2) | | | 65.45 | 64.90 | 69.35 | 65.88 |
(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 net security gains
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | |
| | | For the Quarters Ended |
| | | 9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | 9/30/2005 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | $ 2,985,231 | $ 2,883,367 | $ 2,798,216 | $ 2,782,541 | $ 2,747,631 |
| Loans and leases, net of unearned | | 2,137,075 | 2,071,562 | 1,994,308 | 1,963,686 | 1,931,553 |
| Deposits | | 2,257,369 | 2,165,673 | 2,103,785 | 2,101,318 | 2,075,004 |
| Earning assets | | 2,672,820 | 2,578,312 | 2,507,189 | 2,490,747 | 2,430,300 |
| Interest bearing liabilities | | 2,353,394 | 2,268,561 | 2,203,721 | 2,173,596 | 2,149,563 |
| Stockholders’ equity | | 195,737 | 190,519 | 189,803 | 185,229 | 182,906 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Annualized return on average assets | | 0.91% | 0.87% | 0.65% | 0.82% | 0.91% |
| Annualized return on average equity | | 13.93 | 13.10 | 9.56 | 12.35 | 13.65 |
Annualized net interest margin(1) | | 4.17 | 4.27 | 4.23 | 4.04 | 4.03 |
Efficiency ratio(2) | | 65.45 | 67.39 | 75.61 | 65.97 | 64.90 |
(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 net 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 Nine Months Ended | the Year | the Nine Months | the Year |
| | Ended | Ended | Ended | Ended |
| | 9/30/2006 | 12/31/2005 | 9/30/2005 | 12/31/2004 |
Loan and Lease Data | | | | |
| Commercial and commercial real estate | $ 1,452,239 | $ 1,304,080 | $ 1,254,404 | $ 1,162,103 |
| Residential mortgage | 221,828 | 219,671 | 226,124 | 212,842 |
| Agricultural and agricultural real estate | 244,710 | 230,357 | 233,948 | 217,860 |
| Consumer | 193,058 | 181,019 | 181,950 | 167,109 |
| Direct financing leases, net | 14,079 | 21,586 | 22,454 | 16,284 |
| Unearned discount and deferred loan fees | (3,758) | (3,647) | (3,450) | (3,244) |
Total loans and leases | $ 2,122,156 | $ 1,953,066 | $ 1,915,430 | $ 1,772,954 |
| | | | | |
Asset Quality | | | | |
| Nonaccrual loans | $ 10,699 | $ 14,877 | $ 14,552 | $ 9,837 |
Loans past due ninety days or more as to interest or principal payments | 6,359 | 115 | 470 | 88 |
| Other real estate owned | 1,450 | 1,586 | 1,532 | 425 |
| Other repossessed assets | 355 | 471 | 488 | 313 |
Total nonperforming assets | $ 18,863 | $ 17,049 | $ 17,042 | $ 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 from continuing operations | 4,043 | 6,533 | 4,362 | 4,846 |
Provision for loan and lease losses from discontinued operations | (8) | 31 | 33 | - |
| Loans charged off | (2,658) | (4,579) | (2,570) | (3,617) |
| Recoveries | 948 | 1,152 | 883 | 1,005 |
| Reclass for unfunded commitments to other liabilities | - | (319) | (319) | - |
| Addition related to acquired bank | 591 | - | - | 4,249 |
| Reduction related to discontinued operations | (23) | - | - | - |
Balance, end of period | $ 30,684 | $ 27,791 | $ 27,362 | $ 24,973 |
| | | | | |
Asset Quality Ratios | | | | |
| Ratio of nonperforming loans to total loans and leases | 0.80% | 0.77% | 0.78% | 0.56% |
| Ratio of nonperforming assets to total assets | 0.62 | 0.60 | 0.62 | 0.41 |
| Ratio of net loan chargeoffs to average loans and leases | 0.08 | 0.18 | 0.09 | 0.16 |
Allowance for loan losses as a percent of loans and leases | 1.45 | 1.42 | 1.43 | 1.41 |
| Allowance for loan losses as a percent of nonperforming loans and leases | 179.88 | 185.37 | 182.15 | 251.62 |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | For the Quarters Ended |
| | | 9/30/2006 | | 9/30/2005 |
| | | Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 426,368 | | | $ | 4,591 | | | 4.27 | % | | $ | 390,530 | | | $ | 3,329 | | | 3.38 | % |
Nontaxable(1) | | | 131,289 | | | | 2,200 | | | 6.65 | | | | 123,660 | | | | 2,131 | | | 6.84 | |
Total securities | | | 557,657 | | | | 6,791 | | | 4.83 | | | | 514,190 | | | | 5,460 | | | 4.21 | |
| Interest bearing deposits | | | 286 | | | | 4 | | | 5.55 | | | | 6,470 | | | | 62 | | | 3.80 | |
| Federal funds sold | | | 8,269 | | | | 123 | | | 5.90 | | | | 5,108 | | | | 44 | | | 3.42 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,461,223 | | | | 28,996 | | | 7.87 | | | | 1,253,099 | | | | 21,188 | | | 6.71 | |
Residential mortgage | | | 231,036 | | | | 3,842 | | | 6.60 | | | | 245,876 | | | | 3,697 | | | 5.97 | |
Agricultural and agricultural real estate(1) | | | 237,689 | | | | 4,756 | | | 7.94 | | | | 236,249 | | | | 4,154 | | | 6.98 | |
Consumer | | | 193,018 | | | | 4,892 | | | 10.06 | | | | 182,114 | | | | 4,137 | | | 9.01 | |
Direct financing leases, net | | | 14,109 | | | | 219 | | | 6.16 | | | | 14,215 | | | | 212 | | | 5.92 | |
Fees on loans | | | - | | | | 1,627 | | | - | | | | - | | | | 1,351 | | | - | |
Less: allowance for loan and lease losses | | | (30,467 | ) | | | - | | | - | | | | (27,021 | ) | | | - | | | - | |
Net loans and leases | | | 2,106,608 | | | | 44,332 | | | 8.35 | | | | 1,904,532 | | | | 34,739 | | | 7.24 | |
Total earning assets | | | 2,672,820 | | | | 51,250 | | | 7.61 | | | | 2,430,300 | | | | 40,305 | | | 6.58 | |
Nonearning Assets | | | 312,411 | | | | - | | | - | | | | 317,331 | | | | - | | | - | |
Total Assets | | $ | 2,985,231 | | | $ | 51,250 | | | 6.81 | % | | $ | 2,747,631 | | | $ | 40,305 | | | 5.82 | % |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 801,758 | | | $ | 5,223 | | | 2.58 | % | | $ | 757,885 | | | $ | 3,035 | | | 1.59 | % |
Time, $100,000 and over | | | 225,206 | | | | 2,459 | | | 4.33 | | | | 218,204 | | | | 1,811 | | | 3.29 | |
Other time deposits | | | 868,849 | | | | 9,374 | | | 4.28 | | | | 759,421 | | | | 6,600 | | | 3.45 | |
| Short-term borrowings | | | 228,854 | | | | 2,721 | | | 4.72 | | | | 199,306 | | | | 1,379 | | | 2.75 | |
| Other borrowings | | | 228,727 | | | | 3,348 | | | 5.81 | | | | 214,747 | | | | 2,797 | | | 5.17 | |
Total interest bearing liabilities | | | 2,353,394 | | | | 23,125 | | | 3.90 | | | | 2,149,563 | | | | 15,622 | | | 2.88 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 361,556 | | | | - | | | - | | | | 339,494 | | | | - | | | - | |
| Accrued interest and other liabilities | | | 74,544 | | | | - | | | - | | | | 75,668 | | | | - | | | - | |
Total noninterest bearing liabilities | | | 436,100 | | | | - | | | - | | | | 415,162 | | | | - | | | - | |
Stockholders’ Equity | | | 195,737 | | | | - | | | - | | | | 182,906 | | | | - | | | - | |
Total Liabilities and Stockholders’ Equity | | $ | 2,985,231 | | | $ | 23,125 | | | 3.07 | % | | $ | 2,747,631 | | | $ | 15,622 | | | 2.26 | % |
Net interest income(1) | | | | | | $ | 28,125 | | | | | | | | | | $ | 24,683 | | | | |
Net interest income to total earning assets(1) | | | | | | | | | | 4.17 | % | | | | | | | | | | 4.03 | % |
| Interest bearing liabilities to earning assets | | | 88.05 | % | | | | | | | | | | 88.45 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 Nine Months Ended |
| | | 9/30/2006 | | 9/30/2005 |
| | | Average Balance | | Interest | | Rate | | Average Balance | | Interest | | Rate |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 404,779 | | | $ | 12,465 | | | 4.12 | % | | $ | 405,330 | | | $ | 10,427 | | | 3.44 | % |
Nontaxable(1) | | | 131,109 | | | | 6,657 | | | 6.79 | | | | 119,558 | | | | 6,221 | | | 6.96 | |
Total securities | | | 535,888 | | | | 19,122 | | | 4.77 | | | | 524,888 | | | | 16,648 | | | 4.24 | |
| Interest bearing deposits | | | 477 | | | | 16 | | | 4.48 | | | | 7,006 | | | | 209 | | | 3.99 | |
| Federal funds sold | | | 11,387 | | | | 424 | | | 4.98 | | | | 7,158 | | | | 148 | | | 2.76 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,413,626 | | | | 80,199 | | | 7.59 | | | | 1,213,944 | | | | 58,633 | | | 6.46 | |
Residential mortgage | | | 225,824 | | | | 10,983 | | | 6.50 | | | | 233,488 | | | | 10,604 | | | 6.07 | |
Agricultural and agricultural real estate(1) | | | 227,566 | | | | 13,503 | | | 7.93 | | | | 228,331 | | | | 11,788 | | | 6.90 | |
Consumer | | | 186,793 | | | | 13,811 | | | 9.89 | | | | 177,170 | | | | 11,509 | | | 8.69 | |
Direct financing leases, net | | | 13,839 | | | | 628 | | | 6.07 | | | | 14,348 | | | | 589 | | | 5.49 | |
Fees on loans | | | - | | | | 4,490 | | | - | | | | - | | | | 4,245 | | | - | |
Less: allowance for loan and lease losses | | | (29,292 | ) | | | - | | | - | | | | (26,286 | ) | | | - | | | - | |
Net loans and leases | | | 2,038,356 | | | | 123,614 | | | 8.11 | | | | 1,840,995 | | | | 97,368 | | | 7.07 | |
Total earning assets | | | 2,586,108 | | | | 143,176 | | | 7.40 | | | | 2,380,047 | | | | 114,373 | | | 6.42 | |
Nonearning Assets | | | 302,830 | | | | - | | | - | | | | 303,767 | | | | - | | | - | |
Total Assets | | $ | 2,888,938 | | | $ | 143,176 | | | 6.63 | % | | $ | 2,683,814 | | | $ | 114,373 | | | 5.70 | % |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 785,680 | | | $ | 13,657 | | | 2.32 | % | | $ | 754,389 | | | $ | 7,628 | | | 1.35 | % |
Time, $100,000 and over | | | 220,731 | | | | 6,650 | | | 4.03 | | | | 193,859 | | | | 4,498 | | | 3.10 | |
Other time deposits | | | 821,898 | | | | 24,688 | | | 4.02 | | | | 751,529 | | | | 18,784 | | | 3.34 | |
| Short-term borrowings | | | 219,399 | | | | 6,927 | | | 4.22 | | | | 203,872 | | | | 3,775 | | | 2.48 | |
| Other borrowings | | | 227,518 | | | | 9,543 | | | 5.61 | | | | 207,299 | | | | 7,800 | | | 5.03 | |
Total interest bearing liabilities | | | 2,275,226 | | | | 61,465 | | | 3.61 | | | | 2,110,948 | | | | 42,485 | | | 2.69 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 347,300 | | | | - | | | - | | | | 325,503 | | | | - | | | - | |
| Accrued interest and other liabilities | | | 74,392 | | | | - | | | - | | | | 67,725 | | | | - | | | - | |
Total noninterest bearing liabilities | | | 421,692 | | | | - | | | - | | | | 393,228 | | | | - | | | - | |
Stockholders’ Equity | | | 192,020 | | | | - | | | - | | | | 179,638 | | | | - | | | - | |
Total Liabilities and Stockholders’ Equity | | $ | 2,888,938 | | | $ | 61,465 | | | 2.84 | % | | $ | 2,683,814 | | | $ | 42,485 | | | 2.12 | % |
Net interest income(1) | | | | | | $ | 81,711 | | | | | | | | | | $ | 71,888 | | | | |
Net interest income to total earning assets(1) | | | | | | | | | | 4.22 | % | | | | | | | | | | 4.04 | % |
| Interest bearing liabilities to earning assets | | | 87.98 | % | | | | | | | | | | 88.69 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 Nine Months Ended 9/30/2006 | | | | | As of and For the Year Ended 12/31/2005 | | | As of and For the Nine Months Ended 9/30/2005 | | | As of and For
the Year Ended 12/31/2004 | |
Total Assets | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 851,884 | | | | $ | 833,885 | | $ | 801,932 | | $ | 750,517 | |
| New Mexico Bank & Trust | | 585,458 | | | | | 557,062 | | | 517,326 | | | 490,582 | |
| Wisconsin Community Bank | | 419,821 | | | | | 390,842 | | | 391,408 | | | 385,116 | |
| Rocky Mountain Bank | | 441,851 | | | | | 388,149 | | | 405,706 | | | 374,242 | |
| Galena State Bank and Trust Company | | 235,174 | | | | | 241,719 | | | 240,292 | | | 220,018 | |
| Riverside Community Bank | | 198,058 | | | | | 195,099 | | | 198,273 | | | 193,314 | |
| Arizona Bank & Trust | | 225,915 | | | | | 136,832 | | | 123,374 | | | 85,850 | |
| First Community Bank | | 117,640 | | | | | 121,337 | | | 120,848 | | | 116,654 | |
| | | | | | | | | | | | | | | |
Total Deposits | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 640,856 | | | | $ | 608,687 | | $ | 583,556 | | $ | 579,895 | |
| New Mexico Bank & Trust | | 414,206 | | | | | 388,935 | | | 384,854 | | | 325,527 | |
| Wisconsin Community Bank | | 334,042 | | | | | 311,436 | | | 307,103 | | | 327,221 | |
| Rocky Mountain Bank | | 332,870 | | | | | 306,967 | | | 314,132 | | | 290,390 | |
| Galena State Bank and Trust Company | | 192,253 | | | | | 179,437 | | | 175,619 | | | 168,109 | |
| Riverside Community Bank | | 157,452 | | | | | 153,791 | | | 148,470 | | | 143,797 | |
| Arizona Bank & Trust | | 182,945 | | | | | 118,959 | | | 106,578 | | | 73,199 | |
| First Community Bank | | 92,773 | | | | | 95,506 | | | 94,687 | | | 95,529 | |
| | | | | | | | | | | | | | | |
Return on Average Assets | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.47 | % | | | | 1.28 | % | | 1.30 | % | | 1.38 | % |
| New Mexico Bank & Trust | | 1.14 | | | | | 1.10 | | | 1.13 | | | 1.13 | |
| Wisconsin Community Bank | | 0.37 | | | | | 0.63 | | | 0.64 | | | 0.59 | |
| Rocky Mountain Bank | | 0.89 | | | | | 0.72 | | | 0.63 | | | 1.05 | |
| Galena State Bank and Trust Company | | 1.29 | | | | | 1.22 | | | 1.23 | | | 1.33 | |
| Riverside Community Bank | | 0.66 | | | | | 0.83 | | | 0.87 | | | 0.97 | |
| Arizona Bank & Trust | | 0.41 | | | | | 0.19 | | | 0.15 | | | (1.35 | ) |
| First Community Bank | | 0.97 | | | | | 1.00 | | | 0.99 | | | 1.00 | |
| | | | | | | | | | | | | | | |
Net Interest Margin | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 3.66 | % | | | | 3.48 | % | | 3.50 | % | | 3.58 | % |
| New Mexico Bank & Trust | | 5.13 | | | | | 4.75 | | | 4.72 | | | 4.98 | |
| Wisconsin Community Bank | | 3.93 | | | | | 3.75 | | | 3.80 | | | 3.50 | |
| Rocky Mountain Bank | | 5.17 | | | | | 4.93 | | | 5.00 | | | 4.63 | |
| Galena State Bank and Trust Company | | 3.41 | | | | | 3.43 | | | 3.46 | | | 3.43 | |
| Riverside Community Bank | | 3.77 | | | | | 3.76 | | | 3.81 | | | 3.74 | |
| Arizona Bank & Trust | | 4.93 | | | | | 5.03 | | | 5.24 | | | 4.94 | |
| First Community Bank | | 3.90 | | | | | 3.80 | | | 3.72 | | | 3.72 | |
| | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 9,077 | | | | $ | 10,156 | | $ | 7,639 | | $ | 10,427 | |
| New Mexico Bank & Trust | | 4,721 | | | | | 5,565 | | | 4,220 | | | 4,712 | |
| Wisconsin Community Bank | | 1,074 | | | | | 2,444 | | | 1,862 | | | 2,208 | |
| Rocky Mountain Bank | | 2,674 | | | | | 2,757 | | | 1,801 | | | 2,332 | |
| Galena State Bank and Trust Company | | 2,315 | | | | | 2,808 | | | 2,084 | | | 2,926 | |
| Riverside Community Bank | | 973 | | | | | 1,608 | | | 1,247 | | | 1,731 | |
| Arizona Bank & Trust | | 549 | | | | | 199 | | | 109 | | | (822 | ) |
| First Community Bank | | 859 | | | | | 1,198 | | | 888 | | | 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 September 30, 2006: | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 600,066 | | $ | 7,459 | | $ | 2,554 | | 1.24 | % |
| New Mexico Bank & Trust | | | 373,735 | | | 5,216 | | | 2,499 | | 1.40 | |
| Wisconsin Community Bank | | | 287,357 | | | 4,719 | | | 4,223 | | 1.64 | |
| Rocky Mountain Bank | | | 319,946 | | | 4,645 | | | 3,463 | | 1.45 | |
| Galena State Bank and Trust Company | | | 168,206 | | | 2,235 | | | 1,619 | | 1.33 | |
| Riverside Community Bank | | | 135,251 | | | 1,536 | | | 778 | | 1.14 | |
| Arizona Bank & Trust | | | 157,660 | | | 1,972 | | | - | | 1.25 | |
| First Community Bank | | | 82,453 | | | 1,254 | | | 1,458 | | 1.52 | |
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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 | |
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As of September 30, 2005: | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 571,773 | | $ | 7,079 | | $ | 2,806 | | 1.24 | % |
| New Mexico Bank & Trust | | | 314,458 | | | 4,271 | | | 1,844 | | 1.36 | |
| Wisconsin Community Bank | | | 266,811 | | | 4,565 | | | 1,352 | | 1.71 | |
| Rocky Mountain Bank | | | 272,423 | | | 4,049 | | | 5,991 | | 1.49 | |
| Galena State Bank and Trust Company | | | 173,606 | | | 2,119 | | | 1,430 | | 1.22 | |
| Riverside Community Bank | | | 135,623 | | | 1,671 | | | 278 | | 1.23 | |
| Arizona Bank & Trust | | | 90,811 | | | 1,129 | | | 8 | | 1.24 | |
| First Community Bank | | | 80,144 | | | 1,115 | | | 877 | | 1.39 | |
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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 | |
