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
FOR IMMEDIATE RELEASE
MONDAY, JULY 30, 2007
HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER 2007 EARNINGS
Highlights
| § | Net interest margin exceeded 4.00 percent |
| § | Average earning assets increased 12 percent over second quarter 2006 |
| § | Total loans increased $220.9 million or 11 percent compared to one year ago |
| § | Recorded net charge-offs of $2.9 million |
| § | Completed the sale of Rocky Mountain Bank’s Broadus branch |
| § | Opened branch offices in New Mexico and Colorado |
| | | | Quarters Ended June 30, | | | | Six Months Ended June 30, | |
| | | | 2007 | | | | 2006 | | | | 2007 | | | | 2006 | |
| Net income (in millions) | | $ | 6.2 | | | $ | 6.2 | | | $ | 12.0 | | | $ | 10.7 | |
| Income from continuing operations (in millions) | | | 4.6 | | | | 6.0 | | | | 10.3 | | | | 10.2 | |
| Diluted earnings per share | | | 0.37 | | | | 0.37 | | | | 0.72 | | | | 0.64 | |
| Diluted earnings per share from continuing operations | | | 0.28 | | | | 0.36 | | | | 0.62 | | | | 0.61 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.79 | % | | | 0.87 | % | | | 0.77 | % | | | 0.76 | % |
| Return on average equity | | | 11.72 | | | | 13.10 | | | | 11.45 | | | | 11.34 | |
| Net interest margin | | | 4.02 | | | | 4.27 | | | | 4.03 | | | | 4.24 | |
“Heartland’s second quarter performance indicated both positive trends and some challenges. Maintaining our margin at 4.02 percent is very gratifying, as was steady growth in noninterest income and leveling off of noninterest expense growth. Our current focus is to work toward bringing nonperforming loans back to Heartland’s historical norm.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, July 30, 2007—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported stable earnings for the second quarter of 2007. Net income of $6.2 million, or $0.37 per diluted share, for the quarter ended June 30, 2007, was consistent with net income of $6.2 million, or $0.37 per diluted share, earned during the second quarter of 2006. Return on average equity was 11.72 percent and return on average assets was 0.79 percent for the second quarter of 2007, compared to 13.10 percent and 0.87 percent, respectively, for the same quarter in 2006.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer stated, “Heartland’s second quarter performance indicated both positive trends and some challenges. Maintaining our margin at 4.02 percent is very gratifying, as was steady growth in noninterest income and leveling off of noninterest expense growth. Our current focus is to work toward bringing nonperforming loans back to Heartland’s historical norm.”
Net income recorded for the first six months of 2007 was $12.0 million, or $0.72 per diluted share, an increase of $1.3 million or 12 percent over net income of $10.7 million, or $0.64 per diluted share, recorded during the first six months of 2006. Return on average equity was 11.45 percent and return on average assets was 0.77 percent for the first six months of 2007, compared to 11.34 percent and 0.76 percent, respectively, for the same period in 2006. 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 six months of 2006 was $12.0 million, or $0.72 per diluted share. Because of the non-recurring nature of this expense, management believes that this pro-forma presentation can help investors understand Heartland’s financial performance for the first six months of 2006.
The sale of Rocky Mountain Bank’s branch banking office in Broadus, Montana was completed on June 22, 2007. Included in the sale were $20.9 million of loans and $30.2 million of deposits. The results of operations of the branch have been reflected on the income statement as discontinued operations for both the current and prior periods reported. Also included on the income statement as discontinued operations for the prior periods are the results of operations of ULTEA, Inc., Heartland’s fleet leasing subsidiary, which was sold to ALD Automotive on December 22, 2006. During the second quarter of 2007, income from discontinued operations included a $2.4 million pre-tax gain recorded as a result of the sale of the Broadus branch.
Income from continuing operations was $4.6 million, or $0.28 per diluted share, during the second quarter of 2007 compared to $6.0 million, or $0.36 per diluted share, during the second quarter of 2006. The decrease in earnings from continuing operations primarily resulted from a higher provision for loan losses, which was $4.3 million during the second quarter of 2007 compared to $1.5 million during the second quarter of 2006. This increase was due, in large part, to a charge-off of $1.6 million on one credit at Galena State Bank. For the six months ended June 30, 2007, income from continuing operations was $10.3 million, or $0.62 per diluted share, compared to $10.2 million, or $0.61 per diluted share, during the same period in 2006. The provision for loan losses for the six-month comparative period was $6.2 million during 2007 compared to $2.7 million during 2006. In addition to the significant charge-off during the second quarter of 2007, the provision for loan losses increased during 2007 as a result of loan growth, an increase in nonperforming loans and the impact historical losses have on the calculation of the adequacy of Heartland’s allowance for loan and lease losses.
Fuller commented, “From an income statement perspective, the gain on sale of the Broadus branch was largely offset by the additional loan loss provision expense taken during the second quarter. Historically, our quarterly provision expense has been closer to $1.5 million rather than the $4.3 million provision taken this past quarter.”
Net Interest Margin Remains Strong; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 4.02 percent during the second quarter of 2007 compared to 4.27 percent for the second quarter of 2006 and 4.04 percent for the first quarter of 2007. Heartland’s continued expansion into the Western states of New Mexico, Montana, Arizona and Colorado, where net interest margins tend to be higher than those earned in Heartland’s Midwestern states, has been a contributing factor to the maintenance of the net interest margin above 4.00 percent. The percentage of Heartland’s assets in the West has grown from 40 percent at June 30, 2006, to 43 percent at June 30, 2007.
Net interest income on a tax-equivalent basis totaled $28.6 million during the second quarter of 2007, an increase of $1.5 million or 6 percent from the $27.1 million recorded during the second quarter of 2006. For the six-month period during 2007, net interest income on a tax-equivalent basis was $56.4 million, an increase of $3.5 million or 7 percent from the $52.9 million recorded during the first six months of 2006. Contributing to these increases was the $308.9 million or 12 percent growth in average earning assets during the comparable quarterly periods and the $311.4 million or 12 percent growth in average earning assets during the first six months of 2007 compared to 2006.
Fuller added, “While we have seen a slight contraction, overall our margin remains solid and just above the 4.00 percent level. This resulted from the pricing discipline being used at all of our subsidiary banks, which are focusing less on price and more on the unique value we bring to business and retail clients.”
On a tax-equivalent basis, interest income in the second quarter of 2007 totaled $55.4 million compared to $47.2 million in the second quarter of 2006, an increase of $8.2 million or 17 percent. For the first six months of 2007, interest income on a tax-equivalent basis increased $17.8 million or 20 percent over the same period in 2006. More than half of the loans in Heartland’s commercial and agricultural loan portfolios are floating rate loans, thus changes in the national prime rate impact interest income more quickly than if there were more fixed rate loans. Interest expense for the second quarter of 2007 was $26.8 million compared to $20.1 million in the second quarter of 2006, an increase of $6.7 million or 33 percent. On a six-month comparative basis, interest expense increased $14.2 million or 37 percent. Approximately 75 percent of Heartland’s certificate of deposit accounts will mature within the next twelve months at a weighted average rate of 4.84 percent.
Noninterest Income Rises Faster than Noninterest Expense Despite Investments in New Facilities
Noninterest income increased by $1.0 million or 14 percent during the second quarter of 2007 compared to the same quarter in 2006. The categories experiencing the largest increases were service charges and fees, trust fees, brokerage and insurance commissions and gains on sale of loans. For the first six months of 2007, noninterest income increased $1.7 million or 12 percent over the same period in 2006, primarily from trust fees, brokerage and insurance commissions and gains on sale of loans.
For the second quarter of 2007, noninterest expense increased $1.9 million or 8 percent in comparison with the same period in 2006. The largest component of noninterest expense, salaries and employee benefits, increased $1.5 million or 12 percent during the second quarter of 2007 in comparison to the second quarter of 2006. This growth in salaries and employee benefits expense was primarily due to additional staffing at Heartland’s operations center to provide support services to the growing number of bank subsidiaries, the formation and expansion of Summit Bank & Trust and the addition of offices at New Mexico Bank & Trust and Citizens Finance Co. For the six-month period ended June 30, 2007, noninterest expense increased $1.6 million or 3 percent when compared to the same six-month period in 2006. Exclusive of the $2.4 million judgment recorded during the first quarter of 2006, noninterest expense increased $4.0 million or 9 percent in comparison to the first six months of 2006. Again, the largest contributor to this increase was salaries and employee benefits which grew by $3.0 million or 12 percent during this six-month comparative period. In addition to staffing increases due to the expansion efforts, merit increases for all salaried employees are made on January 1 of each year. Total full-time equivalent employees increased to 1,004 at June 30, 2007, from 961 at June 30, 2006. Also included in salaries and employee benefits are the expenses related to stock options granted, which are usually awarded during the first quarter of each year. These expenses are recorded throughout the vesting period of the grants with a larger portion of the expense being recorded during the first quarter of the year due to early retirement provisions within the option agreements. Costs associated with the expansion efforts also contributed to increases in occupancy expense during the quarter and six-month comparative periods.
Fuller said, “Heartland continues to make strategic investments in future growth by expanding its banking franchise. In the second quarter, New Mexico Bank & Trust opened a new office in Santa Fe and Summit Bank & Trust in Colorado opened its second banking office - now serving the Denver suburb of Thornton along with the Broomfield market. Later in the third quarter, Arizona Bank & Trust will open a new office in Gilbert and Rocky Mountain Bank will open a second office in Billings, Montana. Another new office is also in the works for New Mexico Bank & Trust in Albuquerque, scheduled to open in early 2008. In addition, we are continuing our de novo strategy, now focusing on the Twin Cities market in Minnesota. Most likely, we will establish a loan production office followed by an application for a new state banking charter as we did in Colorado.”
Heartland’s effective tax rate was 32.53 percent for the second quarter of 2007 compared to 32.00 percent for the second quarter of 2006. On a six-month comparative basis, Heartland’s effective tax rate was 31.83 percent during 2007 and 30.70 percent during 2006. Tax-exempt interest income as a percentage of pre-tax income was 18.62 percent during the second quarter of 2007 compared to 18.25 percent during the same quarter of 2006. For the six-month periods ended June 30, 2007 and 2006, tax-exempt income as a percentage of pre-tax income was 19.57 percent and 21.42 percent, respectively. The tax-equivalent adjustment for this tax-exempt interest income was $919,000 during the second quarter of 2007 compared to $912,000 during the same quarter in 2006. For the six-month comparative period, the tax-equivalent adjustment for tax-exempt interest income was $1.8 million for both 2007 and 2006. During both years, low-income housing tax credits were projected to total $225,000 for the year.
Loans and Deposits Continue to Increase Reflecting Expansion in Western Markets
At June 30, 2007, total assets had increased $96.2 million or 6 percent annualized since year-end 2006, primarily because of loan growth. Total loans and leases were $2.3 billion at June 30, 2007, an increase of $150.4 million or 14 percent annualized since year-end 2006. The sale of the Broadus branch of Rocky Mountain Bank included loans of $20.9 million. The growth in loans was nearly balanced between our Midwestern and Western markets. The Heartland subsidiary banks experiencing notable loan growth so far this year were Dubuque Bank and Trust Company, Wisconsin Community Bank, New Mexico Bank & Trust and Rocky Mountain Bank. The commercial and commercial real estate loan category grew by $154.3 million or 21 percent annualized. Included in this change was the reclassification of $28.3 million of commercial real estate loans at Wisconsin Community Bank from the loans held for sale portfolio to the loans held to maturity portfolio as management intends to hold those loans in its portfolio.
Total deposits at June 30, 2007, were $2.4 billion, an increase of $56.5 million or 5 percent annualized since year-end 2006. The sale of the Broadus branch of Rocky Mountain Bank included deposits of $30.2 million. Nearly all of the growth in deposits occurred in our banks located in our Western markets. Demand deposits experienced a $3.2 million or 2 percent annualized decline. Savings deposit balances also experienced an $18.0 million or 4 percent annualized decline. Included in the Broadus branch sale were $3.4 million in demand deposits and $10.6 million in savings deposits. In addition to the loss of deposits due to the branch sale, the decrease in savings deposit balances primarily resulted from the loss of one large deposit account at Dubuque Bank and Trust Company. Time deposits, excluding brokered time deposits, increased $58.3 million or 11 percent annualized. Included in this Broadus branch sale were $16.2 million in time deposits. Brokered time deposit balances increased $19.4 million during the first six months of the year, primarily to replace the reduction in balances at Dubuque Bank and Trust Company and Rocky Mountain Bank. At June 30, 2007, brokered time deposits totaled $120.0 million or 5 percent of total deposits compared to $100.6 million or 4 percent of total deposits at year-end 2006.
“Our westward expansion activity continues to gather momentum as we step closer toward our goal of an equal distribution of assets between our Midwestern and Western banks. At mid-year, the ratio of our assets stood at 57 percent in our Midwestern markets and 43 percent in our Western markets,” Fuller commented.
Credit Quality Remains High Despite Increase in Nonperforming Loans
The allowance for loan and lease losses at June 30, 2007, was 1.42 percent of loans and 172 percent of nonperforming loans, compared to 1.40 percent of loans and 356 percent of nonperforming loans at December 31, 2006. Nonperforming loans were $19.1 million or 0.83 percent of total loans and leases at June 30, 2007, compared to $8.4 million or 0.39 percent of total loans and leases at December 31, 2006. The increase in nonperforming loans during the second quarter of 2007 was primarily the result of three nonperforming loans at Wisconsin Community Bank totaling $10.0 million. A majority of the $4.0 million in outstanding balances on two of these loans is covered by government guarantees. Because of the net realizable value of collateral, guarantees and other factors, management expects losses on Heartland’s nonperforming loans during the last half of the year to be more in line with our prior historical experience.
Added Fuller, “In terms of credit quality, we have never taken our eye off the ball. It’s more likely that a shift in the economy in some of our markets along with possible fraud is responsible for some of the impact. Going forward, our banks have been instructed to work out of weaker credits and shift our focus to deposit growth at this phase in the credit cycle.”
Conference Call Details
Heartland will host a conference call for investors at 3:00 p.m. CDT today. To participate, dial 800-218-9073 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 August 6, 2007, by dialing 800-405-2236, code 11093081, or by logging onto www.htlf.com.
About Heartland Financial USA:
Heartland Financial USA, Inc. is a $3.2 billion diversified financial services company providing banking, mortgage, wealth management, insurance and consumer finance services to individuals and businesses. The Company currently has 56 banking locations in 38 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana and Colorado. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, 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 Heartland’s financial condition, results of operations, plans, objectives, future performance and business. 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, (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 its 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 |
| | | | 6/30/2007 | | | | 6/30/2006 | | | | 6/30/2007 | | | | 6/30/2006 | |
Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 47,748 | | | $ | 40,824 | | | $ | 93,306 | | | $ | 78,186 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 5,267 | | | | 3,991 | | | | 10,564 | | | | 7,874 | |
Nontaxable | | | 1,443 | | | | 1,469 | | | | 2,901 | | | | 2,897 | |
| Interest on federal funds sold | | | - | | | | 41 | | | | - | | | | 100 | |
| Interest on deposits in other financial institutions | | | 8 | | | | 7 | | | | 18 | | | | 12 | |
Total Interest Income | | | 54,466 | | | | 46,332 | | | | 106,789 | | | | 89,069 | |
Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 19,550 | | | | 14,668 | | | | 37,848 | | | | 27,595 | |
| Interest on short-term borrowings | | | 3,970 | | | | 2,316 | | | | 7,781 | | | | 4,174 | |
| Interest on other borrowings | | | 3,240 | | | | 3,151 | | | | 6,563 | | | | 6,195 | |
Total Interest Expense | | | 26,760 | | | | 20,135 | | | | 52,192 | | | | 37,964 | |
Net Interest Income | | | 27,706 | | | | 26,197 | | | | 54,597 | | | | 51,105 | |
| Provision for loan and lease losses | | | 4,268 | | | | 1,484 | | | | 6,194 | | | | 2,659 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 23,438 | | | | 24,713 | | | | 48,403 | | | | 48,446 | |
Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 2,855 | | | | 2,700 | | | | 5,426 | | | | 5,269 | |
| Loan servicing income | | | 1,040 | | | | 1,058 | | | | 2,035 | | | | 2,038 | |
| Trust fees | | | 2,055 | | | | 1,741 | | | | 4,176 | | | | 3,558 | |
| Brokerage and insurance commissions | | | 845 | | | | 510 | | | | 1,338 | | | | 889 | |
| Securities gains, net | | | 147 | | | | 229 | | | | 272 | | | | 361 | |
| Gain (loss) on trading account securities | | | 46 | | | | (25 | ) | | | 87 | | | | 8 | |
| Gains on sale of loans | | | 856 | | | | 577 | | | | 1,447 | | | | 1,127 | |
| Income on bank owned life insurance | | | 317 | | | | 230 | | | | 617 | | | | 519 | |
| Other noninterest income | | | (68 | ) | | | 87 | | | | 306 | | | | 221 | |
Total Noninterest Income | | | 8,093 | | | | 7,107 | | | | 15,704 | | | | 13,990 | |
Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,210 | | | | 12,696 | | | | 28,379 | | | | 25,418 | |
| Occupancy | | | 2,010 | | | | 1,787 | | | | 3,937 | | | | 3,545 | |
| Furniture and equipment | | | 1,779 | | | | 1,717 | | | | 3,455 | | | | 3,394 | |
| Outside services | | | 2,368 | | | | 2,557 | | | | 4,637 | | | | 4,681 | |
| Advertising | | | 1,039 | | | | 914 | | | | 1,808 | | | | 1,865 | |
| Other intangibles amortization | | | 192 | | | | 227 | | | | 411 | | | | 444 | |
| Other noninterest expenses | | | 3,331 | | | | 3,118 | | | | 6,698 | | | | 8,424 | |
Total Noninterest Expense | | | 24,929 | | | | 23,016 | | | | 49,325 | | | | 47,771 | |
Income Before Income Taxes | | | 6,602 | | | | 8,804 | | | | 14,782 | | | | 14,665 | |
| Income taxes | | | 1,965 | | | | 2,802 | | | | 4,497 | | | | 4,458 | |
Income From Continuing Operations | | | 4,637 | | | | 6,002 | | | | 10,285 | | | | 10,207 | |
Discontinued Operations | | | | | | | | | | | | | | | | |
Income from operations of discontinued operations(1) | | | 2,565 | | | | 346 | | | | 2,756 | | | | 768 | |
Income taxes | | | 1,017 | | | | 126 | | | | 1,085 | | | | 280 | |
Income From Discontinued Operations | | | 1,548 | | | | 220 | | | | 1,671 | | | | 488 | |
Net Income | | $ | 6,185 | | | $ | 6,222 | | | $ | 11,956 | | | $ | 10,695 | |
Earnings per common share-basic | | $ | 0.38 | | | $ | 0.38 | | | $ | 0.72 | | | $ | 0.65 | |
Earnings per common share-diluted | | $ | 0.37 | | | $ | 0.37 | | | $ | 0.72 | | | $ | 0.64 | |
Earnings per common share from continuing operations-basic | | $ | 0.28 | | | $ | 0.36 | | | $ | 0.62 | | | $ | 0.62 | |
Earnings per common share from continuing operations-diluted | | $ | 0.28 | | | $ | 0.36 | | | $ | 0.62 | | | $ | 0.61 | |
Weighted average shares outstanding-basic | | | 16,451,031 | | | | 16,540,587 | | | | 16,496,885 | | | | 16,485,886 | |
Weighted average shares outstanding-diluted | | | 16,644,286 | | | | 16,798,654 | | | | 16,699,895 | | | | 16,727,750 | |
| | | | | | | | | | | | | | | | | |
(1)Includes a gain of $2,442 on the sale of Rocky Mountain Bank’s Broadus branch during the second quarter of 2007 |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | For the Quarters Ended | |
| | | 6/30/2007 | | | 3/31/2007 | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | |
Interest Income | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 47,748 | | | $ | 45,558 | | | $ | 44,738 | | | $ | 43,664 | | | $ | 40,824 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 5,267 | | | | 5,297 | | | | 5,128 | | | | 4,591 | | | | 3,991 | |
| Nontaxable | | | 1,443 | | | | 1,458 | | | | 1,445 | | | | 1,441 | | | | 1,469 | |
| Interest on federal funds sold | | | - | | | | - | | | | - | | | | 64 | | | | 41 | |
| Interest on deposits in other financial institutions | | | 8 | | | | 10 | | | | 6 | | | | 4 | | | | 7 | |
Total Interest Income | | | 54,466 | | | | 52,323 | | | | 51,317 | | | | 49,764 | | | | 46,332 | |
Interest Expense | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 19,550 | | | | 18,298 | | | | 18,073 | | | | 16,862 | | | | 14,668 | |
| Interest on short-term borrowings | | | 3,970 | | | | 3,811 | | | | 2,952 | | | | 2,702 | | | | 2,316 | |
| Interest on other borrowings | | | 3,240 | | | | 3,323 | | | | 3,508 | | | | 3,348 | | | | 3,151 | |
Total Interest Expense | | | 26,760 | | | | 25,432 | | | | 24,533 | | | | 22,912 | | | | 20,135 | |
Net Interest Income | | | 27,706 | | | | 26,891 | | | | 26,784 | | | | 26,852 | | | | 26,197 | |
| Provision for loan and lease losses | | | 4,268 | | | | 1,926 | | | | (157 | ) | | | 1,381 | | | | 1,484 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 23,438 | | | | 24,965 | | | | 26,941 | | | | 25,471 | | | | 24,713 | |
Noninterest Income | | | | | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 2,855 | | | | 2,571 | | | | 2,704 | | | | 3,085 | | | | 2,700 | |
| Loan servicing income | | | 1,040 | | | | 995 | | | | 1,091 | | | | 1,150 | | | | 1,058 | |
| Trust fees | | | 2,055 | | | | 2,121 | | | | 1,926 | | | | 1,774 | | | | 1,741 | |
| Brokerage and insurance commissions | | | 845 | | | | 493 | | | | 532 | | | | 450 | | | | 510 | |
| Securities gains, net | | | 147 | | | | 125 | | | | 125 | | | | 67 | | | | 229 | |
| Gain (loss) on trading account securities | | | 46 | | | | 41 | | | | 80 | | | | 53 | | | | (25 | ) |
| Impairment loss on equity securities | | | - | | | | - | | | | - | | | | (76 | ) | | | - | |
| Gains on sale of loans | | | 856 | | | | 591 | | | | 611 | | | | 551 | | | | 577 | |
| Income on bank owned life insurance | | | 317 | | | | 300 | | | | 382 | | | | 250 | | | | 230 | |
| Other noninterest income | | | (68 | ) | | | 374 | | | | 8 | | | | 197 | | | | 87 | |
Total Noninterest Income | | | 8,093 | | | | 7,611 | | | | 7,459 | | | | 7,501 | | | | 7,107 | |
Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,210 | | | | 14,169 | | | | 12,518 | | | | 13,039 | | | | 12,696 | |
| Occupancy | | | 2,010 | | | | 1,927 | | | | 1,918 | | | | 1,828 | | | | 1,787 | |
| Furniture and equipment | | | 1,779 | | | | 1,676 | | | | 1,737 | | | | 1,593 | | | | 1,717 | |
| Outside services | | | 2,368 | | | | 2,269 | | | | 2,450 | | | | 2,273 | | | | 2,557 | |
| Advertising | | | 1,039 | | | | 769 | | | | 1,030 | | | | 998 | | | | 914 | |
| Other intangibles amortization | | | 192 | | | | 219 | | | | 249 | | | | 249 | | | | 227 | |
| Other noninterest expenses | | | 3,331 | | | | 3,367 | | | | 3,122 | | | | 3,180 | | | | 3,118 | |
Total Noninterest Expense | | | 24,929 | | | | 24,396 | | | | 23,024 | | | | 23,160 | | | | 23,016 | |
Income Before Income Taxes | | | 6,602 | | | | 8,180 | | | | 11,376 | | | | 9,812 | | | | 8,804 | |
| Income taxes | | | 1,965 | | | | 2,532 | | | | 3,913 | | | | 3,207 | | | | 2,802 | |
Income From Continuing Operations | | | 4,637 | | | | 5,648 | | | | 7,463 | | | | 6,605 | | | | 6,002 | |
Discontinued Operations | | | | | | | | | | | | | | | | | | | | |
Income from operations of discontinued operations(1) | | | 2,565 | | | | 191 | | | | 567 | | | | 423 | | | | 346 | |
| Income taxes | | | 1,017 | | | | 68 | | | | 497 | | | | 154 | | | | 126 | |
Income From Discontinued Operations | | | 1,548 | | | | 123 | | | | 70 | | | | 269 | | | | 220 | |
Net Income | | $ | 6,185 | | | $ | 5,771 | | | $ | 7,533 | | | $ | 6,874 | | | $ | 6,222 | |
Earnings per common share-basic | | $ | .38 | | | $ | .35 | | | $ | .46 | | | $ | .42 | | | $ | .38 | |
Earnings per common share-diluted | | $ | .37 | | | $ | .34 | | | $ | .45 | | | $ | .41 | | | $ | .37 | |
Earnings per common share from continuingoperations-basic | | $ | .28 | | | $ | .34 | | | $ | .45 | | | $ | .40 | | | $ | .36 | |
Earnings per common share from continuingoperations-diluted | | $ | .28 | | | $ | .34 | | | $ | .44 | | | $ | .39 | | | $ | .36 | |
Weighted average shares outstanding-basic | | | 16,451,031 | | | | 16,542,876 | | | | 16,531,998 | | | | 16,521,527 | | | | 16,540,587 | |
Weighted average shares outstanding-diluted | | | 16,644,286 | | | | 16,760,688 | | | | 16,784,656 | | | | 16,775,749 | | | | 16,798,654 | |
| | | | | | | | | | | | | | | | | | | | | |
(1)Includes a gain of $2,442 on the sale of Rocky Mountain Bank’s Broadus branch during the second quarter of 2007 | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | As Of | |
| | | 6/30/2007 | | | 3/31/2007 | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | |
Assets | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 35,721 | | | $ | 62,232 | | | $ | 49,143 | | | $ | 45,483 | | | $ | 47,385 | |
| Securities | | | 590,194 | | | | 587,803 | | | | 617,040 | | | | 593,103 | | | | 526,784 | |
| Loans held for sale | | | 22,346 | | | | 42,644 | | | | 50,381 | | | | 42,561 | | | | 44,686 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | |
| Held to maturity | | | 2,298,256 | | | | 2,224,097 | | | | 2,147,845 | | | | 2,122,156 | | | | 2,077,393 | |
| Allowance for loan and lease losses | | | (32,738 | ) | | | (31,545 | ) | | | (29,981 | ) | | | (30,684 | ) | | | (29,941 | ) |
| Loans and leases, net | | | 2,265,518 | | | | 2,192,552 | | | | 2,117,864 | | | | 2,091,472 | | | | 2,047,452 | |
| Assets under operating lease | | | - | | | | - | | | | - | | | | - | | | | 39,852 | |
| Premises, furniture and equipment, net | | | 115,885 | | | | 112,951 | | | | 108,567 | | | | 106,937 | | | | 105,146 | |
| Goodwill | | | 40,207 | | | | 40,207 | | | | 39,817 | | | | 39,817 | | | | 40,531 | |
| Other intangible assets, net | | | 8,530 | | | | 8,997 | | | | 9,010 | | | | 9,198 | | | | 9,327 | |
| Cash surrender value on life insurance | | | 33,810 | | | | 33,698 | | | | 33,371 | | | | 32,962 | | | | 33,386 | |
| Assets of discontinued operations held for sale | | | - | | | | 20,947 | | | | - | | | | 51,122 | | | | - | |
| Other assets | | | 42,205 | | | | 34,329 | | | | 33,049 | | | | 40,934 | | | | 40,762 | |
Total Assets | | $ | 3,154,416 | | | $ | 3,136,360 | | | $ | 3,058,242 | | | $ | 3,053,589 | | | $ | 2,935,311 | |
| | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand | | $ | 368,234 | | | $ | 360,744 | | | $ | 371,465 | | | $ | 367,133 | | | $ | 378,211 | |
| Savings | | | 804,949 | | | | 825,600 | | | | 822,915 | | | | 813,573 | | | | 799,884 | |
| Brokered time deposits | | | 119,958 | | | | 118,151 | | | | 100,572 | | | | 147,669 | | | | 155,079 | |
| Other time deposits | | | 1,075,024 | | | | 1,045,330 | | | | 1,016,705 | | | | 962,809 | | | | 920,055 | |
| Total deposits | | | 2,368,165 | | | | 2,349,825 | | | | 2,311,657 | | | | 2,291,184 | | | | 2,253,229 | |
| Short-term borrowings | | | 274,141 | | | | 304,342 | | | | 275,694 | | | | 239,531 | | | | 229,723 | |
| Other borrowings | | | 268,758 | | | | 210,804 | | | | 224,523 | | | | 243,987 | | | | 225,650 | |
| Liabilities of discontinued operations held for sale | | | - | | | | 32,086 | | | | - | | | | 47,424 | | | | - | |
| Accrued expenses and other liabilities | | | 31,709 | | | | 27,453 | | | | 36,657 | | | | 29,480 | | | | 35,251 | |
Total Liabilities | | | 2,942,773 | | | | 2,924,510 | | | | 2,848,531 | | | | 2,851,606 | | | | 2,743,853 | |
Stockholders’ Equity | | | 211,643 | | | | 211,850 | | | | 209,711 | | | | 201,983 | | | | 191,458 | |
Total Liabilities and Stockholders’ Equity | | $ | 3,154,416 | | | $ | 3,136,360 | | | $ | 3,058,242 | | | $ | 3,053,589 | | | $ | 2,935,311 | |
| | | | | | | | | | | | | | | | | | | | | |
Common Share Data | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 12.88 | | | $ | 12.85 | | | $ | 12.65 | | | $ | 12.22 | | | $ | 11.59 | |
| FAS 115 effect on book value per common share | | $ | (0.15 | ) | | $ | 0.10 | | | $ | 0.05 | | | $ | 0.01 | | | $ | (0.30 | ) |
| Common shares outstanding, net of treasury stock | | | 16,437,459 | | | | 16,484,541 | | | | 16,572,080 | | | | 16,530,266 | | | | 16,520,820 | |
| | | | | | | | | | | | | | | | | | | | | |
Tangible Capital Ratio(1) | | | 5.35 | % | | | 5.38 | % | | | 5.46 | % | | | 5.18 | % | | | 5.02 | % |
(1) Total stockholders’ equity less goodwill and 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 Six Months Ended | |
| | | 6/30/2007 | | | 6/30/2006 | | | 6/30/2007 | | | 6/30/2006 | |
| | | | | | | | | | | | | |
Average Balances | | | | | | | | | | | | |
| Assets | | $ | 3,158,088 | | | $ | 2,883,367 | | | $ | 3,115,713 | | | $ | 2,840,791 | |
| Loans and leases, net of unearned | | | 2,302,037 | | | | 2,049,261 | | | | 2,258,445 | | | | 2,011,343 | |
| Deposits | | | 2,348,386 | | | | 2,137,116 | | | | 2,309,532 | | | | 2,105,495 | |
| Earning assets | | | 2,857,840 | | | | 2,548,918 | | | | 2,823,964 | | | | 2,512,570 | |
| Interest bearing liabilities | | | 2,524,956 | | | | 2,242,116 | | | | 2,491,376 | | | | 2,209,203 | |
| Stockholders’ equity | | | 211,639 | | | | 190,519 | | | | 210,489 | | | | 190,161 | |
| Tangible stockholders’ equity | | | 169,641 | | | | 150,842 | | | | 168,605 | | | | 151,366 | |
| | | | | | | | | | | | | | | | | |
Earnings Performance Ratios | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | 0.79 | % | | | 0.87 | % | | | 0.77 | % | | | 0.76 | % |
| Annualized return on average equity | | | 11.72 | | | | 13.10 | | | | 11.45 | | | | 11.34 | |
| Annualized return on average tangible equity | | | 14.62 | | | | 16.54 | | | | 14.30 | | | | 14.25 | |
Annualized net interest margin(1) | | | 4.02 | | | | 4.27 | | | | 4.03 | | | | 4.24 | |
Efficiency ratio(2) | | | 68.17 | | | | 67.72 | | | | 68.62 | | | | 71.82 | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%
(2) Noninterest expense divided by the sum of net interest income and noninterest income less net security gains
| | | For the Quarters Ended | |
| | | 6/30/2007 | | | 3/31/2007 | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | |
| | | | | | | | | | | | | | | | |
Average Balances | | | | | | | | | | | | | | | |
| Assets | | $ | 3,158,088 | | | $ | 3,073,337 | | | $ | 3,051,995 | | | $ | 2,985,231 | | | $ | 2,883,367 | |
| Loans and leases, net of unearned | | | 2,302,037 | | | | 2,214,852 | | | | 2,151,870 | | | | 2,112,091 | | | | 2,049,261 | |
| Deposits | | | 2,348,386 | | | | 2,270,678 | | | | 2,263,567 | | | | 2,229,536 | | | | 2,137,116 | |
| Earning assets | | | 2,857,840 | | | | 2,790,087 | | | | 2,716,768 | | | | 2,644,161 | | | | 2,548,918 | |
| Interest bearing liabilities | | | 2,524,956 | | | | 2,457,797 | | | | 2,391,269 | | | | 2,327,554 | | | | 2,242,116 | |
| Stockholders’ equity | | | 211,639 | | | | 209,338 | | | | 204,438 | | | | 195,737 | | | | 190,519 | |
| Tangible stockholders’ equity | | | 169,641 | | | | 167,566 | | | | 162,053 | | | | 152,755 | | | | 150,842 | |
| | | | | | | | | | | | | | | | | | | | | |
Earnings Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | 0.79 | % | | | 0.76 | % | | | 0.98 | % | | | 0.91 | % | | | 0.87 | % |
| Annualized return on average equity | | | 11.72 | | | | 11.18 | | | | 14.62 | | | | 13.93 | | | | 13.10 | |
| Annualized return on average tangible equity | | | 14.62 | | | | 13.97 | | | | 18.44 | | | | 17.85 | | | | 16.54 | |
Annualized net interest margin(1) | | | 4.02 | | | | 4.04 | | | | 4.04 | | | | 4.16 | | | | 4.27 | |
Efficiency ratio(2) | | | 68.17 | | | | 69.10 | | | | 65.74 | | | | 65.82 | | | | 67.72 | |
(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 Six Months | | | the Year | | | the Six Months | | | The Year | |
| | | Ended | | | Ended | | | Ended | | | Ended | |
| | | 6/30/2007 | | | 12/31/2006 | | | 6/30/2006 | | | 12/31/2005 | |
Loan and Lease Data | | | | | | | | | | | | |
| Commercial and commercial real estate | | $ | 1,638,076 | | | $ | 1,483,738 | | | $ | 1,421,228 | | | $ | 1,304,080 | |
| Residential mortgage | | | 224,851 | | | | 225,343 | | | | 213,673 | | | | 219,671 | |
| Agricultural and agricultural real estate | | | 228,968 | | | | 233,748 | | | | 233,072 | | | | 230,357 | |
| Consumer | | | 198,496 | | | | 194,652 | | | | 193,008 | | | | 181,019 | |
| Direct financing leases, net | | | 11,983 | | | | 14,359 | | | | 20,051 | | | | 21,586 | |
| Unearned discount and deferred loan fees | | | (4,118 | ) | | | (3,995 | ) | | | (3,639 | ) | | | (3,647 | ) |
Total loans and leases | | $ | 2,298,256 | | | $ | 2,147,845 | | | $ | 2,077,393 | | | $ | 1,953,066 | |
| | | | | | | | | | | | | | | | | |
Asset Quality | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 18,834 | | | $ | 8,104 | | | $ | 11,817 | | | $ | 14,877 | |
| Loans past due ninety days or more as to interest orprincipal payments | | | 225 | | | | 315 | | | | 343 | | | | 115 | |
| Other real estate owned | | | 1,941 | | | | 1,575 | | | | 1,693 | | | | 1,586 | |
| Other repossessed assets | | | 367 | | | | 349 | | | | 329 | | | | 471 | |
Total nonperforming assets | | $ | 21,367 | | | $ | 10,343 | | | $ | 14,182 | | | $ | 17,049 | |
| | | | | | | | | | | | | | | | | |
Allowance for Loan and Lease Losses | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | $ | 29,981 | | | $ | 27,791 | | | $ | 27,791 | | | $ | 24,973 | |
| Provision for loan and lease losses from continuingoperations | | | 6,194 | | | | 3,883 | | | | 2,659 | | | | 6,533 | |
| Provision for loan and lease losses from discontinuedoperations | | | - | | | | (5 | ) | | | (2 | ) | | | 31 | |
| Loans charged off | | | (4,404 | ) | | | (3,989 | ) | | | (1,792 | ) | | | (4,579 | ) |
| Recoveries | | | 1,105 | | | | 1,733 | | | | 694 | | | | 1,152 | |
| Reclass for unfunded commitments to other liabilities | | | - | | | | - | | | | - | | | | (319 | ) |
| Additions related to acquired bank | | | - | | | | 591 | | | | 591 | | | | - | |
| Reductions related to discontinued operations | | | (138 | ) | | | (23 | ) | | | - | | | | - | |
Balance, end of period | | $ | 32,738 | | | $ | 29,981 | | | $ | 29,941 | | | $ | 27,791 | |
| | | | | | | | | | | | | | | | | |
Asset Quality Ratios | | | | | | | | | | | | | | | | |
| Ratio of nonperforming loans to total loans and leases | | | 0.83 | % | | | 0.39 | % | | | 0.59 | % | | | 0.77 | % |
| Ratio of nonperforming assets to total assets | | | 0.68 | | | | 0.34 | | | | 0.48 | | | | 0.60 | |
| Ratio of net loan chargeoffs to average loans and leases | | | 0.14 | | | | 0.11 | | | | 0.05 | | | | 0.18 | |
Allowance for loan losses as a percent of loans andleases | | | 1.42 | | | | 1.40 | | | | 1.44 | | | | 1.42 | |
Allowance for loan losses as a percent of nonperforming loans and leases loans and leases loans and leases | | | 171.77 | | | | 356.11 | | | | 246.23 | | | | 185.37 | |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | | For the Quarters Ended | |
| | | | 6/30/2007 | | | | 6/30/2006 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 457,093 | | | $ | 5,267 | | | 4.62 | % | | $ | 392,465 | | | $ | 3,990 | | | 4.08 | % |
Nontaxable(1) | | | 130,592 | | | | 2,191 | | | 6.73 | | | | 132,467 | | | | 2,262 | | | 6.85 | |
Total securities | | | 587,685 | | | | 7,458 | | | 5.09 | | | | 524,932 | | | | 6,252 | | | 4.78 | |
| Interest bearing deposits | | | 804 | | | | 8 | | | 3.99 | | | | 718 | | | | 7 | | | 3.91 | |
| Federal funds sold | | | - | | | | - | | | - | | | | 3,299 | | | | 41 | | | 4.98 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,619,230 | | | | 32,244 | | | 7.99 | | | | 1,418,541 | | | | 26,795 | | | 7.58 | |
Residential mortgage | | | 247,491 | | | | 4,208 | | | 6.82 | | | | 222,014 | | | | 3,640 | | | 6.58 | |
Agricultural and agricultural real estate(1) | | | 227,382 | | | | 4,648 | | | 8.20 | | | | 209,352 | | | | 4,175 | | | 8.00 | |
Consumer | | | 195,322 | | | | 5,146 | | | 10.57 | | | | 185,570 | | | | 4,638 | | | 10.02 | |
Direct financing leases, net | | | 12,612 | | | | 189 | | | 6.01 | | | | 13,784 | | | | 208 | | | 6.05 | |
Fees on loans | | | - | | | | 1,484 | | | - | | | | - | | | | 1,488 | | | - | |
Less: allowance for loan and lease losses | | | (32,686 | ) | | | - | | | - | | | | (29,292 | ) | | | - | | | - | |
Net loans and leases | | | 2,269,351 | | | | 47,919 | | | 8.47 | | | | 2,019,969 | | | | 40,944 | | | 8.13 | |
Total earning assets | | | 2,857,840 | | | $ | 55,385 | | | 7.77 | % | | | 2,548,918 | | | $ | 47,244 | | | 7.43 | % |
Nonearning Assets | | | 300,248 | | | | | | | | | | | 334,449 | | | | | | | | |
Total Assets | | $ | 3,158,088 | | | | | | | | | | $ | 2,883,367 | | | | | | | | |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 822,832 | | | $ | 5,678 | | | 2.77 | % | | $ | 780,438 | | | $ | 4,549 | | | 2.34 | % |
Time, $100,000 and over | | | 290,014 | | | | 3,556 | | | 4.92 | | | | 211,052 | | | | 2,079 | | | 3.95 | |
Other time deposits | | | 879,375 | | | | 10,316 | | | 4.71 | | | | 802,192 | | | | 8,040 | | | 4.02 | |
| Short-term borrowings | | | 319,584 | | | | 3,970 | | | 4.98 | | | | 223,688 | | | | 2,316 | | | 4.15 | |
| Other borrowings | | | 213,151 | | | | 3,240 | | | 6.10 | | | | 224,746 | | | | 3,151 | | | 5.62 | |
Total interest bearing liabilities | | | 2,524,956 | | | | 26,760 | | | 4.25 | | | | 2,242,116 | | | | 20,135 | | | 3.60 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 356,165 | | | | | | | | | | | 343,434 | | | | | | | | |
| Accrued interest and other liabilities | | | 65,328 | | | | | | | | | | | 107,298 | | | | | | | | |
Total noninterest bearing liabilities | | | 421,493 | | | | | | | | | | | 450,732 | | | | | | | | |
Stockholders’ Equity | | | 211,639 | | | | | | | | | | | 190,519 | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 3,158,088 | | | | | | | | | | $ | 2,883,367 | | | | | | | | |
Net interest income(1) | | | | | | $ | 28,625 | | | | | | | | | | $ | 27,109 | | | | |
Net interest spread(1) | | | | | | | | | | 3.52 | % | | | | | | | | | | 3.83 | % |
Net interest income to total earning assets(1) | | | | | | | | | | 4.02 | % | | | | | | | | | | 4.27 | % |
| Interest bearing liabilities to earning assets | | | 88.35 | % | | | | | | | | | | 87.96 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 | |
| | | | 6/30/2007 | | | | 6/30/2006 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 465,742 | | | $ | 10,564 | | | 4.57 | % | | $ | 393,984 | | | $ | 7,874 | | | 4.03 | % |
Nontaxable(1) | | | 130,830 | | | | 4,406 | | | 6.79 | | | | 131,018 | | | | 4,457 | | | 6.86 | |
Total securities | | | 596,572 | | | | 14,970 | | | 5.06 | | | | 525,002 | | | | 12,331 | | | 4.74 | |
| Interest bearing deposits | | | 642 | | | | 18 | | | 5.65 | | | | 572 | | | | 12 | | | 4.23 | |
| Federal funds sold | | | - | | | | - | | | - | | | | 4,358 | | | | 100 | | | 4.63 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,581,298 | | | | 62,810 | | | 8.01 | | | | 1,386,080 | | | | 51,053 | | | 7.43 | |
Residential mortgage | | | 245,219 | | | | 8,330 | | | 6.85 | | | | 222,087 | | | | 7,100 | | | 6.45 | |
Agricultural and agricultural real estate(1) | | | 224,508 | | | | 9,078 | | | 8.15 | | | | 206,633 | | | | 8,120 | | | 7.92 | |
Consumer | | | 194,251 | | | | 10,131 | | | 10.52 | | | | 182,840 | | | | 8,889 | | | 9.80 | |
Direct financing leases, net | | | 13,169 | | | | 389 | | | 5.96 | | | | 13,703 | | | | 409 | | | 6.02 | |
Fees on loans | | | - | | | | 2,911 | | | - | | | | - | | | | 2,834 | | | - | |
Less: allowance for loan and lease losses | | | (31,695 | ) | | | - | | | - | | | | (28,705 | ) | | | - | | | - | |
Net loans and leases | | | 2,226,750 | | | | 93,649 | | | 8.48 | | | | 1,982,638 | | | | 78,405 | | | 7.97 | |
Total earning assets | | | 2,823,964 | | | $ | 108,637 | | | 7.76 | % | | | 2,512,570 | | | $ | 90,848 | | | 7.29 | % |
Nonearning Assets | | | 291,749 | | | | | | | | | | | 328,221 | | | | | | | | |
Total Assets | | $ | 3,115,713 | | | | | | | | | | $ | 2,840,791 | | | | | | | | |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 813,402 | | | $ | 11,111 | | | 2.75 | % | | $ | 766,287 | | | $ | 8,357 | | | 2.20 | % |
Time, $100,000 and over | | | 270,687 | | | | 6,546 | | | 4.88 | | | | 213,774 | | | | 4,092 | | | 3.86 | |
Other time deposits | | | 873,802 | | | | 20,191 | | | 4.66 | | | | 789,132 | | | | 15,146 | | | 3.87 | |
| Short-term borrowings | | | 316,806 | | | | 7,781 | | | 4.95 | | | | 213,096 | | | | 4,174 | | | 3.95 | |
| Other borrowings | | | 216,679 | | | | 6,563 | | | 6.11 | | | | 226,914 | | | | 6,195 | | | 5.51 | |
Total interest bearing liabilities | | | 2,491,376 | | | | 52,192 | | | 4.22 | | | | 2,209,203 | | | | 37,964 | | | 3.47 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 351,641 | | | | | | | | | | | 336,302 | | | | | | | | |
| Accrued interest and other liabilities | | | 62,207 | | | | | | | | | | | 105,125 | | | | | | | | |
Total noninterest bearing liabilities | | | 413,848 | | | | | | | | | | | 441,427 | | | | | | | | |
Stockholders’ Equity | | | 210,489 | | | | | | | | | | | 190,161 | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 3,115,713 | | | | | | | | | | $ | 2,840,791 | | | | | | | | |
Net interest income(1) | | | | | | $ | 56,445 | | | | | | | | | | $ | 52,884 | | | | |
Net interest spread(1) | | | | | | | | | | 3.54 | % | | | | | | | | | | 3.82 | % |
Net interest income to total earning assets(1) | | | | | | | | | | 4.03 | % | | | | | | | | | | 4.24 | % |
| Interest bearing liabilities to earning assets | | | 88.22 | % | | | | | | | | | | 87.93 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 Six Months Ended 6/30/2007 | | | As of and For the Year Ended 12/31/2006 | | | As of and For the Six Months Ended 6/30/2006 | | | As of and For the Year Ended 12/31/2005 | |
Total Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 883,975 | | $ | 843,282 | | $ | 827,761 | | $ | 833,885 | |
| New Mexico Bank & Trust | | 671,766 | | | 638,712 | | | 577,555 | | | 557,062 | |
| Wisconsin Community Bank | | 423,331 | | | 413,108 | | | 393,371 | | | 390,842 | |
| Rocky Mountain Bank | | 436,832 | | | 438,972 | | | 401,111 | | | 388,149 | |
| Galena State Bank and Trust Company | | 208,853 | | | 219,863 | | | 237,562 | | | 241,719 | |
| Riverside Community Bank | | 212,450 | | | 199,483 | | | 209,760 | | | 195,099 | |
| Arizona Bank & Trust | | 237,301 | | | 223,567 | | | 222,700 | | | 136,832 | |
| First Community Bank | | 119,483 | | | 118,010 | | | 117,249 | | | 121,337 | |
| Summit Bank & Trust | | 40,705 | | | 21,590 | | | - | | | - | |
Total Deposits | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 618,630 | | $ | 636,527 | | $ | 624,125 | | $ | 608,687 | |
| New Mexico Bank & Trust | | 473,438 | | | 437,708 | | | 429,968 | | | 388,935 | |
| Wisconsin Community Bank | | 337,323 | | | 336,015 | | | 317,334 | | | 311,436 | |
| Rocky Mountain Bank | | 324,151 | | | 335,053 | | | 320,845 | | | 306,967 | |
| Galena State Bank and Trust Company | | 178,110 | | | 178,388 | | | 189,077 | | | 179,437 | |
| Riverside Community Bank | | 171,209 | | | 162,319 | | | 161,468 | | | 153,791 | |
| Arizona Bank & Trust | | 194,806 | | | 176,438 | | | 168,800 | | | 118,959 | |
| First Community Bank | | 98,854 | | | 95,287 | | | 92,320 | | | 95,506 | |
| Summit Bank & Trust | | 23,534 | | | 6,514 | | | - | | | - | |
Return on Average Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.26 | % | | 1.45 | % | | 1.50 | % | | 1.28 | % |
| New Mexico Bank & Trust | | 1.28 | | | 1.21 | | | 1.11 | | | 1.10 | |
| Wisconsin Community Bank | | 0.49 | | | 0.53 | | | 0.10 | | | 0.63 | |
| Rocky Mountain Bank | | 1.66 | | | 1.18 | | | 0.83 | | | 0.72 | |
| Galena State Bank and Trust Company | | 0.24 | | | 1.35 | | | 1.25 | | | 1.22 | |
| Riverside Community Bank | | 0.36 | | | 0.64 | | | 0.50 | | | 0.83 | |
| Arizona Bank & Trust | | 0.08 | | | 0.47 | | | 0.25 | | | 0.19 | |
| First Community Bank | | 1.35 | | | 1.01 | | | 0.99 | | | 1.00 | |
| Summit Bank & Trust | | (3.09 | ) | | (6.31 | ) | | - | | | - | |
Net Interest Margin | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 3.48 | % | | 3.61 | % | | 3.67 | % | | 3.48 | % |
| New Mexico Bank & Trust | | 4.76 | | | 5.05 | | | 5.17 | | | 4.75 | |
| Wisconsin Community Bank | | 3.62 | | | 3.83 | | | 3.95 | | | 3.75 | |
| Rocky Mountain Bank | | 4.73 | | | 5.16 | | | 5.24 | | | 4.93 | |
| Galena State Bank and Trust Company | | 3.50 | | | 3.45 | | | 3.37 | | | 3.43 | |
| Riverside Community Bank | | 3.62 | | | 3.71 | | | 3.80 | | | 3.76 | |
| Arizona Bank & Trust | | 4.90 | | | 4.92 | | | 4.85 | | | 5.03 | |
| First Community Bank | | 3.94 | | | 3.95 | | | 3.89 | | | 3.80 | |
| Summit Bank & Trust | | 6.17 | | | 6.98 | | | - | | | - | |
Net Income (Loss) | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 5,438 | | $ | 11,990 | | $ | 6,103 | | $ | 10,156 | |
| New Mexico Bank & Trust | | 4,106 | | | 6,873 | | | 2,990 | | | 5,565 | |
| Wisconsin Community Bank | | 1,005 | | | 2,109 | | | 198 | | | 2,444 | |
| Rocky Mountain Bank | | 3,683 | | | 4,840 | | | 1,610 | | | 2,757 | |
| Galena State Bank and Trust Company | | 259 | | | 3,167 | | | 1,495 | | | 2,808 | |
| Riverside Community Bank | | 361 | | | 1,252 | | | 479 | | | 1,608 | |
| Arizona Bank & Trust | | 90 | | | 902 | | | 193 | | | 199 | |
| First Community Bank | | 790 | | | 1,197 | | | 581 | | | 1,198 | |
| Summit Bank & Trust | | (498 | ) | | (1,220 | ) | | - | | | - | |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | As of 6/30/2007 | | | As of 12/31/2006 | | | As of 6/30/2006 | | | As of 12/31/2005 | |
Total Portfolio Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 629,792 | | $ | 581,166 | | $ | 597,613 | | $ | 575,293 | |
| New Mexico Bank & Trust | | 451,046 | | | 410,438 | | | 351,367 | | | 330,609 | |
| Wisconsin Community Bank | | 319,088 | | | 272,407 | | | 281,955 | | | 270,837 | |
| Rocky Mountain Bank | | 314,995 | | | 309,943 | | | 297,859 | | | 279,230 | |
| Galena State Bank and Trust Company | | 151,956 | | | 158,222 | | | 173,575 | | | 176,813 | |
| Riverside Community Bank | | 141,191 | | | 137,102 | | | 136,702 | | | 132,781 | |
| Arizona Bank & Trust | | 164,685 | | | 160,614 | | | 157,988 | | | 94,285 | |
| First Community Bank | | 83,687 | | | 81,498 | | | 78,046 | | | 83,506 | |
| Summit Bank & Trust | | 31,993 | | | 14,953 | | | - | | | - | |
Allowance For Loan and Lease Losses | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 7,813 | | $ | 7,235 | | $ | 7,300 | | $ | 7,376 | |
| New Mexico Bank & Trust | | 5,842 | | | 5,352 | | | 5,091 | | | 4,497 | |
| Wisconsin Community Bank | | 5,452 | | | 4,570 | | | 4,523 | | | 4,285 | |
| Rocky Mountain Bank | | 4,287 | | | 4,044 | | | 4,435 | | | 4,048 | |
| Galena State Bank and Trust Company | | 2,032 | | | 2,049 | | | 2,148 | | | 2,181 | |
| Riverside Community Bank | | 1,769 | | | 1,747 | | | 1,692 | | | 1,674 | |
| Arizona Bank & Trust | | 2,404 | | | 2,133 | | | 1,972 | | | 1,181 | |
| First Community Bank | | 1,099 | | | 1,182 | | | 1,161 | | | 1,191 | |
| Summit Bank & Trust | | 401 | | | 192 | | | - | | | - | |
Nonperforming Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 801 | | $ | 1,216 | | $ | 308 | | $ | 2,745 | |
| New Mexico Bank & Trust | | 1,492 | | | 2,206 | | | 1,795 | | | 2,359 | |
| Wisconsin Community Bank | | 12,950 | | | 1,966 | | | 2,203 | | | 1,321 | |
| Rocky Mountain Bank | | 1,736 | | | 822 | | | 5,517 | | | 5,634 | |
| Galena State Bank and Trust Company | | 462 | | | 370 | | | 674 | | | 965 | |
| Riverside Community Bank | | 477 | | | 602 | | | 188 | | | 462 | |
| Arizona Bank & Trust | | 107 | | | 254 | | | 50 | | | 7 | |
| First Community Bank | | 468 | | | 588 | | | 1,037 | | | 992 | |
| Summit Bank & Trust | | - | | | - | | | - | | | - | |
Allowance As a Percent of Total Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.24 | % | | 1.24 | % | | 1.22 | % | | 1.28 | % |
| New Mexico Bank & Trust | | 1.30 | | | 1.30 | | | 1.45 | | | 1.36 | |
| Wisconsin Community Bank | | 1.71 | | | 1.68 | | | 1.60 | | | 1.58 | |
| Rocky Mountain Bank | | 1.36 | | | 1.30 | | | 1.49 | | | 1.45 | |
| Galena State Bank and Trust Company | | 1.34 | | | 1.30 | | | 1.24 | | | 1.23 | |
| Riverside Community Bank | | 1.25 | | | 1.27 | | | 1.24 | | | 1.26 | |
| Arizona Bank & Trust | | 1.46 | | | 1.33 | | | 1.25 | | | 1.25 | |
| First Community Bank | | 1.31 | | | 1.45 | | | 1.49 | | | 1.43 | |
| Summit Bank & Trust | | 1.25 | | | 1.28 | | | - | | | - | |
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