CONTACT:
John K. Schmidt
Chief Operating Officer
Chief Financial Officer
(563) 589-1994
jschmidt@htlf.com
FOR IMMEDIATE RELEASE
MONDAY, OCTOBER 29, 2007
HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER 2007 EARNINGS
Highlights
| § | Income from continuing operations increased 5 percent over third quarter 2006 |
| § | Year-to-date noninterest income grew by 10 percent over year-to-date 2006 |
| § | Total loans increased $152.0 million or 7 percent compared to one year ago |
| § | Total deposits increased $130 million or 6 percent compared to one year ago |
| § | Announced intention to open a de novo bank in Minnesota |
| | | | Quarter Ended September 30, | | | | Nine Months Ended September 30, | |
| | | | 2007 | | | | 2006 | | | | 2007 | | | | 2006 | |
| Net income (in millions) | | $ | 6.9 | | | $ | 6.9 | | | $ | 18.9 | | | $ | 17.6 | |
| Income from continuing operations (in millions) | | | 6.9 | | | | 6.6 | | | | 17.2 | | | | 16.8 | |
| Diluted earnings per share | | | 0.42 | | | | 0.41 | | | | 1.14 | | | | 1.05 | |
| Diluted earnings per share from continuing operations | | | 0.42 | | | | 0.39 | | | | 1.04 | | | | 1.00 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.86 | % | | | 0.91 | % | | | 0.80 | % | | | 0.81 | % |
| Return on average equity | | | 12.72 | | | | 13.93 | | | | 11.89 | | | | 12.23 | |
| Net interest margin | | | 3.87 | | | | 4.16 | | | | 3.98 | | | | 4.22 | |
“Several areas of Heartland’s performance stand out as very positive for the third quarter and year-to-date: Earnings from continuing operations are up over last year, noninterest income reflects very good increases, noninterest expenses continue to moderate and deposit balances are showing solid growth.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, October 29, 2007—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported stable earnings for the third quarter of 2007. Net income of $6.9 million, or $0.42 per diluted share, for the quarter ended September 30, 2007, was consistent with net income of $6.9 million, or $0.41 per diluted share, earned during the third quarter of 2006. Return on average equity was 12.72 percent and return on average assets was 0.86 percent for the third quarter of 2007, compared to 13.93 percent and 0.91 percent, respectively, for the same quarter in 2006.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer stated, “Several areas of Heartland’s performance stand out as very positive for the third quarter and year-to-date: Earnings from continuing operations are up over last year, noninterest income reflects very good increases, noninterest expenses continue to moderate and deposit balances are showing solid growth.”
Net income recorded for the first nine months of 2007 was $18.9 million, or $1.14 per diluted share, an increase of $1.3 million or 7 percent over net income of $17.6 million, or $1.05 per diluted share, recorded during the first nine months of 2006. Return on average equity was 11.89 percent and return on average assets was 0.80 percent for the first nine months of 2007, compared to 12.23 percent and 0.81 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 nine months of 2006 was $18.9 million, or $1.13 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 nine 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 the 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 nine-month period ended September 30, 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 $6.9 million, or $0.42 per diluted share, during the third quarter of 2007 compared to $6.6 million, or $0.39 per diluted share, during the third quarter of 2006. This increase in earnings from continuing operations was primarily a result of a lower provision for loan losses, which was $575,000 during the third quarter of 2007 compared to $1.4 million during the third quarter of 2006. For the nine months ended September 30, 2007, income from continuing operations was $17.2 million, or $1.04 per diluted share, compared to $16.8 million, or $1.00 per diluted share, during the same period in 2006. This increase in earnings resulted from an improvement in net interest income and noninterest income that outweighed additional provision for loan losses and noninterest expenses recorded during the nine-month comparative periods.
Net Interest Margin Constrained; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 3.87 percent during the third quarter of 2007 compared to 4.16 percent for the third quarter of 2006 and 4.02 percent for the second quarter of 2007. Contributing to the decline in net interest margin during the third quarter of 2007 was a shift in Heartland’s asset mix as a larger percentage of earning assets was held in fed funds sold or investments. Also affecting the net interest margin was the impact of foregone interest on Heartland’s nonperforming loans which had increased during the second and third quarters of 2007. Additionally, early in the third quarter of 2007 a $20.5 million investment was made in bank owned life insurance upon which interest expense associated with the funding of this investment affects net interest margin while the corresponding earnings on this investment is recorded as noninterest income. Given the asset sensitive posture of Heartland’s balance sheet, the most recent 50 basis point rate cut by the Fed and the anticipation of another 25 basis point rate cut when the Fed meets later this week, Heartland will be challenged to maintain its net interest margin at the current level.
Net interest income on a tax-equivalent basis totaled $28.2 million during the third quarter of 2007, an increase of $424,000 or 2 percent from the $27.8 million recorded during the third quarter of 2006. For the nine-month period during 2007, net interest income on a tax-equivalent basis was $84.6 million, an increase of $4.0 million or 5 percent from the $80.6 million recorded during the first nine months of 2006. Contributing to these increases was the $246.6 million or 9 percent growth in average earning assets during the comparable quarterly periods and the $289.3 million or 11 percent growth in average earning assets during the first nine months of 2007 compared to 2006.
On a tax-equivalent basis, interest income in the third quarter of 2007 totaled $55.6 million compared to $50.7 million in the third quarter of 2006, an increase of $4.9 million or 10 percent. For the first nine months of 2007, interest income on a tax-equivalent basis increased $22.7 million or 16 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 third quarter of 2007 was $27.4 million compared to $22.9 million in the third quarter of 2006, an increase of $4.5 million or 20 percent. On a nine-month comparative basis, interest expense increased $18.8 million or 31 percent. Approximately 77 percent of Heartland’s certificate of deposit accounts will mature within the next twelve months at a weighted average rate of 4.87 percent.
Noninterest Income Rises; Noninterest Expense Moderates Despite Investments in New Facilities
Noninterest income increased by $415,000 or 6 percent during the third quarter of 2007 compared to the same quarter in 2006. The categories experiencing the largest increases were trust fees, brokerage and insurance commissions and income on bank owned life insurance. For the first nine months of 2007, noninterest income increased $2.1 million or 10 percent over the same period in 2006, primarily from trust fees, brokerage and insurance commissions, gains on sale of loans and income on bank owned life insurance.
For the third quarter of 2007, noninterest expense increased $1.6 million or 7 percent in comparison with the same period in 2006. The largest component of noninterest expense, salaries and employee benefits, increased $1.3 million or 10 percent during the third quarter of 2007 in comparison to the third 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 and the formation and expansion of Summit Bank & Trust. For the nine-month period ended September 30, 2007, noninterest expense increased $3.1 million or 4 percent when compared to the same nine-month period in 2006. Exclusive of the $2.4 million judgment recorded during the first quarter of 2006, noninterest expense increased $5.5 million or 8 percent in comparison to the first nine months of 2006. Again, the largest contributor to this increase was salaries and employee benefits which grew by $4.2 million or 11 percent during this nine-month comparative period, primarily due to the expansion efforts. Total full-time equivalent employees increased to 975 at September 30, 2007, from 953 at September 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.
Fuller said, “Heartland continues to make strategic investments in future growth by expanding its banking franchise. In the recent weeks, new banking offices have been opened by Rocky Mountain Bank in Billings, Montana, and Arizona Bank & Trust in Gilbert, Arizona. Summit Bank & Trust is currently putting the finishing touches on a new office in the community of Erie, Colorado, with an opening planned for this week.”
“Heartland is continuing its de novo expansion strategy with the recent announcement of its plan to charter a new bank, Minnesota Bank & Trust. We are excited about the prospects of competing in the Twin Cities market and are planning to ramp up our presence with a Loan Production Office in Edina, the location of the proposed bank’s main office. Our goal is to open Minnesota Bank & Trust in the first quarter of next year.”
Heartland’s effective tax rate was 29.56 percent for the third quarter of 2007 compared to 32.84 percent for the third quarter of 2006. On a nine-month comparative basis, Heartland’s effective tax rate was 31.01 percent during 2007 and 31.55 percent during 2006. The decrease in Heartland’s effective tax rate during the third quarter of 2007 resulted from $1.1 million in projected federal rehabilitation tax credits associated with Dubuque Bank and Trust Company’s newly acquired 99.9 percent ownership interest in two limited liability companies that own certified historic structures. During both years, low-income housing tax credits were projected to total $225,000 for the year.
Heartland’s effective tax rate is also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 17.74 percent during the third quarter of 2007 compared to 16.46 percent during the same quarter of 2006. For the nine-month periods ended September 30, 2007 and 2006, tax-exempt income as a percentage of pre-tax income was 18.91 percent and 19.38 percent, respectively. The tax-equivalent adjustment for this tax-exempt interest income was $939,000 during the third quarter of 2007 compared to $900,000 during the same quarter in 2006. For the nine-month comparative period, the tax-equivalent adjustment for tax-exempt interest income was $2.8 million for 2007 and $2.7 million for 2006.
Loan Growth Slows; Deposits Increase
At September 30, 2007, total assets had increased $144.2 million or 6 percent annualized since year-end 2006, primarily because of loan growth. Total loans and leases were $2.3 billion at September 30, 2007, an increase of $126.3 million or 8 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 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, New Mexico Bank & Trust, Rocky Mountain Bank and Summit Bank & Trust. The commercial and commercial real estate loan category grew by $127.5 million or 11 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.
Fuller commented, “While year over year loan growth has been good, we’ve seen loan demand slow as the year has progressed. Despite this, we anticipate a reasonably good year in loan production, though we are focusing much more attention on nonperformers.”
Total deposits at September 30, 2007, were $2.4 billion, an increase of $109.6 million or 6 percent annualized since year-end 2006. The sale of the Broadus branch of Rocky Mountain Bank included deposits of $30.2 million. Growth in deposits was weighted more heavily in our Western markets. Demand deposits experienced a $3.8 million or 1 percent annualized decline of which $3.4 million is attributable to the Broadus branch sale. Savings deposit balances experienced a $27.9 million or 5 percent annualized increase despite the $10.6 million in savings deposits lost as part of the Broadus branch sale. The increase in savings deposits primarily resulted from the promotion of a new money market product, as well as additional temporary deposits by a municipality in the Galena State Bank & Trust market. Time deposits, excluding brokered time deposits, increased $70.0 million or 9 percent annualized with over half of the growth at the Midwestern banks where depositors tend to be more desirous of the term deposit product. Included in the Broadus branch sale were $16.2 million in time deposits. Brokered time deposit balances increased $15.5 million during the first nine months of the year, primarily to replace the reduction in balances at Rocky Mountain Bank as a result of the Broadus branch sale. At September 30, 2007, brokered time deposits totaled $116.1 million or 5 percent of total deposits compared to $100.6 million or 4 percent of total deposits at year-end 2006.
Credit Quality Remains Sound Despite Increase in Nonperforming Loans
The allowance for loan and lease losses at September 30, 2007, was 1.38 percent of loans and 104 percent of nonperforming loans, compared to 1.40 percent of loans and 356 percent of nonperforming loans at December 31, 2006, and 1.42 percent of loans and 172 percent of nonperforming loans at June 30, 2007. Nonperforming loans were $30.4 million or 1.33 percent of total loans and leases at September 30, 2007, compared to $8.4 million or 0.39 percent of total loans and leases at December 31, 2006, and $19.1 million or 0.83 percent of total loans and leases at June 30, 2007. The majority of the $21.9 million increase in nonperforming loans from December 31, 2006, occurred during the second and third quarters of 2007. Over half of this increase was attributable to four nonperforming loans at Wisconsin Community Bank totaling $12.1 million, of which $4.0 million in outstanding balances on two of these loans is covered by government guarantees. The remaining increase was distributed among the bank subsidiaries and related to a few loan customers. Net charge-offs during the third quarter of 2007 were $1.9 million compared to $2.9 million and $362,000 during the second and first quarters of 2007, respectively. Management monitors the loan portfolio of each bank subsidiary and, at this point, does not feel that the increase in nonperforming loans is any indication of a systemic problem but is more likely a result of a shift in the economy in some of our markets. Because of the net realizable value of collateral, guarantees and other factors, management expects losses on Heartland’s nonperforming loans for the remainder of 2007 to be significantly below the amounts experienced during the second and third quarters of the year.
Fuller commented, “Even though we have experienced an increase in nonperforming loans during the quarter, we believe the allowance for loan and lease losses is adequate and that anticipated losses from nonperforming loans will be consistent with our historical experience.”
Conference Call Details
Heartland will host a conference call for investors at 3:00 p.m. CDT today. To participate, dial 800-218-0530 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 November 5, 2007, by dialing 800-405-2236, code 11097004, or by logging onto www.htlf.com.
About Heartland Financial USA, Inc.:
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 58 banking locations in 39 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 the Risk Factors section of its Annual Report on Form 10-K and in its other 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 |
| | | | 9/30/2007 | | | | 9/30/2006 | | | | 9/30/2007 | | | | 9/30/2006 | |
Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 47,406 | | | $ | 43,664 | | | $ | 140,712 | | | $ | 121,850 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 5,446 | | | | 4,591 | | | | 16,010 | | | | 12,465 | |
Nontaxable | | | 1,513 | | | | 1,441 | | | | 4,414 | | | | 4,338 | |
| Interest on federal funds sold | | | 310 | | | | 64 | | | | 310 | | | | 164 | |
| Interest on deposits in other financial institutions | | | 2 | | | | 4 | | | | 20 | | | | 16 | |
Total Interest Income | | | 54,677 | | | | 49,764 | | | | 161,466 | | | | 138,833 | |
Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 20,477 | | | | 16,862 | | | | 58,325 | | | | 44,457 | |
| Interest on short-term borrowings | | | 2,764 | | | | 2,702 | | | | 10,545 | | | | 6,876 | |
| Interest on other borrowings | | | 4,199 | | | | 3,348 | | | | 10,762 | | | | 9,543 | |
Total Interest Expense | | | 27,440 | | | | 22,912 | | | | 79,632 | | | | 60,876 | |
Net Interest Income | | | 27,237 | | | | 26,852 | | | | 81,834 | | | | 77,957 | |
| Provision for loan and lease losses | | | 575 | | | | 1,381 | | | | 6,769 | | | | 4,040 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 26,662 | | | | 25,471 | | | | 75,065 | | | | 73,917 | |
Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 2,861 | | | | 3,085 | | | | 8,287 | | | | 8,354 | |
| Loan servicing income | | | 1,068 | | | | 1,150 | | | | 3,103 | | | | 3,188 | |
| Trust fees | | | 2,089 | | | | 1,774 | | | | 6,265 | | | | 5,332 | |
| Brokerage and insurance commissions | | | 820 | | | | 450 | | | | 2,158 | | | | 1,339 | |
| Securities gains, net | | | 31 | | | | 67 | | | | 303 | | | | 428 | |
| Gain (loss) on trading account securities | | | (7 | ) | | | 53 | | | | 80 | | | | 61 | |
| Impairment loss on equity securities | | | - | | | | (76 | ) | | | - | | | | (76 | ) |
| Gains on sale of loans | | | 604 | | | | 551 | | | | 2,051 | | | | 1,678 | |
| Income on bank owned life insurance | | | 595 | | | | 250 | | | | 1,212 | | | | 769 | |
| Other noninterest income | | | (145 | ) | | | 197 | | | | 161 | | | | 418 | |
Total Noninterest Income | | | 7,916 | | | | 7,501 | | | | 23,620 | | | | 21,491 | |
Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,301 | | | | 13,039 | | | | 42,680 | | | | 38,457 | |
| Occupancy | | | 2,004 | | | | 1,828 | | | | 5,941 | | | | 5,373 | |
| Furniture and equipment | | | 1,669 | | | | 1,593 | | | | 5,124 | | | | 4,987 | |
| Outside services | | | 2,374 | | | | 2,273 | | | | 7,011 | | | | 6,954 | |
| Advertising | | | 886 | | | | 998 | | | | 2,694 | | | | 2,863 | |
| Other intangibles amortization | | | 241 | | | | 249 | | | | 652 | | | | 693 | |
| Other noninterest expenses | | | 3,272 | | | | 3,180 | | | | 9,970 | | | | 11,604 | |
Total Noninterest Expense | | | 24,747 | | | | 23,160 | | | | 74,072 | | | | 70,931 | |
Income Before Income Taxes | | | 9,831 | | | | 9,812 | | | | 24,613 | | | | 24,477 | |
| Income taxes | | | 2,906 | | | | 3,207 | | | | 7,403 | | | | 7,665 | |
Income From Continuing Operations | | | 6,925 | | | | 6,605 | | | | 17,210 | | | | 16,812 | |
Discontinued Operations | | | | | | | | | | | | | | | | |
Income from operations of discontinued operations(1) | | | - | | | | 423 | | | | 2,756 | | | | 1,191 | |
Income taxes | | | - | | | | 154 | | | | 1,085 | | | | 434 | |
Income From Discontinued Operations | | | - | | | | 269 | | | | 1,671 | | | | 757 | |
Net Income | | $ | 6,925 | | | $ | 6,874 | | | $ | 18,881 | | | $ | 17,569 | |
Earnings per common share-basic | | $ | 0.42 | | | $ | 0.42 | | | $ | 1.15 | | | $ | 1.06 | |
Earnings per common share-diluted | | $ | 0.42 | | | $ | 0.41 | | | $ | 1.14 | | | $ | 1.05 | |
Earnings per common share from continuing operations-basic | | $ | 0.42 | | | $ | 0.40 | | | $ | 1.04 | | | $ | 1.02 | |
Earnings per common share from continuing operations-diluted | | $ | 0.42 | | | $ | 0.39 | | | $ | 1.04 | | | $ | 1.00 | |
Weighted average shares outstanding-basic | | | 16,447,270 | | | | 16,521,527 | | | | 16,486,669 | | | | 16,498,127 | |
Weighted average shares outstanding-diluted | | | 16,543,635 | | | | 16,775,749 | | | | 16,619,681 | | | | 16,730,331 | |
| | | | | | | | | | | | | | | | | |
(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 |
| | | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | 9/30/2006 |
Interest Income | | | | | | |
| Interest and fees on loans and leases | | $ 47,406 | $ 47,748 | $ 45,558 | $ 44,738 | $ 43,664 |
| Interest on securities and other: | | | | | | |
| Taxable | | 5,446 | 5,267 | 5,297 | 5,128 | 4,591 |
| Nontaxable | | 1,513 | 1,443 | 1,458 | 1,445 | 1,441 |
| Interest on federal funds sold | | 310 | - | - | - | 64 |
| Interest on deposits in other financial institutions | | 2 | 8 | 10 | 6 | 4 |
Total Interest Income | | 54,677 | 54,466 | 52,323 | 51,317 | 49,764 |
Interest Expense | | | | | | |
| Interest on deposits | | 20,477 | 19,550 | 18,298 | 18,073 | 16,862 |
| Interest on short-term borrowings | | 2,764 | 3,970 | 3,811 | 2,952 | 2,702 |
| Interest on other borrowings | | 4,199 | 3,240 | 3,323 | 3,508 | 3,348 |
Total Interest Expense | | 27,440 | 26,760 | 25,432 | 24,533 | 22,912 |
Net Interest Income | | 27,237 | 27,706 | 26,891 | 26,784 | 26,852 |
| Provision for loan and lease losses | | 575 | 4,268 | 1,926 | (157) | 1,381 |
Net Interest Income After Provision for Loan and Lease Losses | | 26,662 | 23,438 | 24,965 | 26,941 | 25,471 |
Noninterest Income | | | | | | |
| Service charges and fees | | 2,861 | 2,855 | 2,571 | 2,704 | 3,085 |
| Loan servicing income | | 1,068 | 1,040 | 995 | 1,091 | 1,150 |
| Trust fees | | 2,089 | 2,055 | 2,121 | 1,926 | 1,774 |
| Brokerage and insurance commissions | | 820 | 845 | 493 | 532 | 450 |
| Securities gains, net | | 31 | 147 | 125 | 125 | 67 |
| Gain (loss) on trading account securities | | (7) | 46 | 41 | 80 | 53 |
| Impairment loss on equity securities | | - | - | - | - | (76) |
| Gains on sale of loans | | 604 | 856 | 591 | 611 | 551 |
| Income on bank owned life insurance | | 595 | 317 | 300 | 382 | 250 |
| Other noninterest income | | (145) | (68) | 374 | 8 | 197 |
Total Noninterest Income | | 7,916 | 8,093 | 7,611 | 7,459 | 7,501 |
Noninterest Expense | | | | | | |
| Salaries and employee benefits | | 14,301 | 14,210 | 14,169 | 12,518 | 13,039 |
| Occupancy | | 2,004 | 2,010 | 1,927 | 1,918 | 1,828 |
| Furniture and equipment | | 1,669 | 1,779 | 1,676 | 1,737 | 1,593 |
| Outside services | | 2,374 | 2,368 | 2,269 | 2,450 | 2,273 |
| Advertising | | 886 | 1,039 | 769 | 1,030 | 998 |
| Other intangibles amortization | | 241 | 192 | 219 | 249 | 249 |
| Other noninterest expenses | | 3,272 | 3,331 | 3,367 | 3,122 | 3,180 |
Total Noninterest Expense | | 24,747 | 24,929 | 24,396 | 23,024 | 23,160 |
Income Before Income Taxes | | 9,831 | 6,602 | 8,180 | 11,376 | 9,812 |
| Income taxes | | 2,906 | 1,965 | 2,532 | 3,913 | 3,207 |
Income From Continuing Operations | | 6,925 | 4,637 | 5,648 | 7,463 | 6,605 |
Discontinued Operations | | | | | | |
Income from operations of discontinued operations(1) | | - | 2,565 | 191 | 567 | 423 |
| Income taxes | | - | 1,017 | 68 | 497 | 154 |
Income From Discontinued Operations | | - | 1,548 | 123 | 70 | 269 |
Net Income | | $ 6,925 | $ 6,185 | $ 5,771 | $ 7,533 | $ 6,874 |
Earnings per common share-basic | | $ 0.42 | $ .38 | $ .35 | $ .46 | $ .42 |
Earnings per common share-diluted | | $ 0.42 | $ .37 | $ .34 | $ .45 | $ .41 |
Earnings per common share from continuingoperations-basic | | $ 0.42 | $ .28 | $ .34 | $ .45 | $ .40 |
Earnings per common share from continuingoperations-diluted | | $ 0.42 | $ .28 | $ .34 | $ .44 | $ .39 |
Weighted average shares outstanding-basic | | 16,447,270 | 16,451,031 | 16,542,876 | 16,531,998 | 16,521,527 |
Weighted average shares outstanding-diluted | | 16,543,635 | 16,644,286 | 16,760,688 | 16,784,656 | 16,775,749 |
| | | | | | |
(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 |
| | | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | 9/30/2006 |
Assets | | | | | | |
| Cash and cash equivalents | | $ 31,591 | $ 35,721 | $ 62,232 | $ 49,143 | $ 45,483 |
| Securities | | 648,337 | 590,194 | 587,803 | 617,040 | 593,103 |
| Loans held for sale | | 16,267 | 22,346 | 42,644 | 50,381 | 42,561 |
| Loans and leases: | | | | | | |
| Held to maturity | | 2,274,119 | 2,298,256 | 2,224,097 | 2,147,845 | 2,122,156 |
| Allowance for loan and lease losses | | (31,438) | (32,738) | (31,545) | (29,981) | (30,684) |
| Loans and leases, net | | 2,242,681 | 2,265,518 | 2,192,552 | 2,117,864 | 2,091,472 |
| Premises, furniture and equipment, net | | 119,461 | 115,885 | 112,951 | 108,567 | 106,937 |
| Goodwill | | 40,207 | 40,207 | 40,207 | 39,817 | 39,817 |
| Other intangible assets, net | | 8,378 | 8,530 | 8,997 | 9,010 | 9,198 |
| Cash surrender value on life insurance | | 54,936 | 33,810 | 33,698 | 33,371 | 32,962 |
| Assets of discontinued operations held for sale | | - | - | 20,947 | - | 51,122 |
| Other assets | | 40,597 | 42,205 | 34,329 | 33,049 | 40,934 |
Total Assets | | $ 3,202,455 | $ 3,154,416 | $ 3,136,360 | $ 3,058,242 | $ 3,053,589 |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
| Liabilities | | | | | | |
| Deposits: | | | | | | |
| Demand | | $ 367,617 | $ 368,234 | $ 360,744 | $ 371,465 | $ 367,133 |
| Savings | | 850,845 | 804,949 | 825,600 | 822,915 | 813,573 |
| Brokered time deposits | | 116,082 | 119,958 | 118,151 | 100,572 | 147,669 |
| Other time deposits | | 1,086,732 | 1,075,024 | 1,045,330 | 1,016,705 | 962,809 |
| Total deposits | | 2,421,276 | 2,368,165 | 2,349,825 | 2,311,657 | 2,291,184 |
| Short-term borrowings | | 256,822 | 274,141 | 304,342 | 275,694 | 239,531 |
| Other borrowings | | 268,716 | 268,758 | 210,804 | 224,523 | 243,987 |
| Liabilities of discontinued operations held for sale | | - | - | 32,086 | - | 47,424 |
| Accrued expenses and other liabilities | | 33,366 | 31,709 | 27,453 | 36,657 | 29,480 |
Total Liabilities | | 2,980,180 | 2,942,773 | 2,924,510 | 2,848,531 | 2,851,606 |
Stockholders’ Equity | | 222,275 | 211,643 | 211,850 | 209,711 | 201,983 |
Total Liabilities and Stockholders’ Equity | | $ 3,202,455 | $ 3,154,416 | $ 3,136,360 | $ 3,058,242 | $ 3,053,589 |
| | | | | | | |
Common Share Data | | | | | | |
| Book value per common share | | $ 13.48 | $ 12.88 | $ 12.85 | $ 12.65 | $ 12.22 |
| FAS 115 effect on book value per common share | | $ 0.13 | $ (0.15) | $ 0.10 | $ 0.05 | $ 0.01 |
| Common shares outstanding, net of treasury stock | | 16,492,245 | 16,437,459 | 16,484,541 | 16,572,080 | 16,530,266 |
| | | | | | | |
Tangible Capital Ratio(1) | | 5.62% | 5.35% | 5.38% | 5.46% | 5.18% |
(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 Nine Months Ended |
| | | | 9/30/2007 | 9/30/2006 | 9/30/2007 | 9/30/2006 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | | $ 3,176,715 | $ 2,985,231 | $ 3,136,034 | $ 2,888,938 |
| Loans and leases, net of unearned | | | 2,287,264 | 2,112,091 | 2,268,127 | 2,044,926 |
| Deposits | | | 2,415,158 | 2,229,536 | 2,344,847 | 2,146,842 |
| Earning assets | | | 2,890,761 | 2,644,161 | 2,845,735 | 2,556,435 |
| Interest bearing liabilities | | | 2,558,460 | 2,327,554 | 2,513,295 | 2,248,654 |
| Stockholders’ equity | | | 216,038 | 195,737 | 212,339 | 192,020 |
| Tangible stockholders’ equity | | | 174,637 | 152,755 | 170,607 | 151,809 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Annualized return on average assets | | | 0.86% | 0.91% | 0.80% | 0.81% |
| Annualized return on average equity | | | 12.72 | 13.93 | 11.89 | 12.23 |
| Annualized return on average tangible equity | | | 15.91 | 17.85 | 14.80 | 15.47 |
Annualized net interest margin(1) | | | 3.87 | 4.16 | 3.98 | 4.22 |
Efficiency ratio(2) | | | 68.63 | 65.82 | 68.62 | 69.75 |
(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 |
| | | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | 9/30/2006 |
| | | | | | | |
Average Balances | | | | | | |
| Assets | | $ 3,176,715 | $ 3,158,088 | $ 3,073,337 | $ 3,051,995 | $ 2,985,231 |
| Loans and leases, net of unearned | | 2,287,264 | 2,302,037 | 2,214,852 | 2,151,870 | 2,112,091 |
| Deposits | | 2,415,158 | 2,348,386 | 2,270,678 | 2,263,567 | 2,229,536 |
| Earning assets | | 2,890,761 | 2,857,840 | 2,790,087 | 2,716,768 | 2,644,161 |
| Interest bearing liabilities | | 2,558,460 | 2,524,956 | 2,457,797 | 2,391,269 | 2,327,554 |
| Stockholders’ equity | | 216,038 | 211,639 | 209,338 | 204,438 | 195,737 |
| Tangible stockholders’ equity | | 174,637 | 169,641 | 167,566 | 162,053 | 152,755 |
| | | | | | | |
Earnings Performance Ratios | | | | | | |
| Annualized return on average assets | | 0.86% | 0.79% | 0.76% | 0.98% | 0.91% |
| Annualized return on average equity | | 12.72 | 11.72 | 11.18 | 14.62 | 13.93 |
| Annualized return on average tangible equity | | 15.91 | 14.62 | 13.97 | 18.44 | 17.85 |
Annualized net interest margin(1) | | 3.87 | 4.02 | 4.04 | 4.04 | 4.16 |
Efficiency ratio(2) | | 68.63 | 68.17 | 69.10 | 65.74 | 65.82 |
(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
| 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 | the Year | the Nine Months | The Year |
| | Ended | Ended | Ended | Ended |
| | 9/30/2007 | 12/31/2006 | 9/30/2006 | 12/31/2005 |
Loan and Lease Data | | | | |
| Commercial and commercial real estate | $ 1,611,226 | $ 1,483,738 | $ 1,452,239 | $ 1,304,080 |
| Residential mortgage | 224,732 | 225,343 | 221,828 | 219,671 |
| Agricultural and agricultural real estate | 226,550 | 233,748 | 244,710 | 230,357 |
| Consumer | 204,545 | 194,652 | 193,058 | 181,019 |
| Direct financing leases, net | 10,902 | 14,359 | 14,079 | 21,586 |
| Unearned discount and deferred loan fees | (3,836) | (3,995) | (3,758) | (3,647) |
Total loans and leases | $ 2,274,119 | $ 2,147,845 | $ 2,122,156 | $ 1,953,066 |
| | | | | |
Asset Quality | | | | |
| Nonaccrual loans | $ 30,286 | $ 8,104 | $ 10,699 | $ 14,877 |
| Loans past due ninety days or more as to interest orprincipal payments | 69 | 315 | 6,359 | 115 |
| Other real estate owned | 2,129 | 1,575 | 1,450 | 1,586 |
| Other repossessed assets | 392 | 349 | 355 | 471 |
Total nonperforming assets | $ 32,876 | $ 10,343 | $ 18,863 | $ 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 | 6,769 | 3,883 | 4,040 | 6,533 |
| Provision for loan and lease losses from discontinuedoperations | - | (5) | (5) | 31 |
| Loans charged off | (6,536) | (3,989) | (2,655) | (4,579) |
| Recoveries | 1,362 | 1,733 | 948 | 1,152 |
| Reclass for unfunded commitments to other liabilities | - | - | - | (319) |
| Additions related to acquired bank | - | 591 | 591 | - |
| Reductions related to discontinued operations | (138) | (23) | (23) | - |
Balance, end of period | $ 31,438 | $ 29,981 | $ 30,684 | $ 27,791 |
| | | | | |
Asset Quality Ratios | | | | |
| Ratio of nonperforming loans to total loans and leases | 1.33% | 0.39% | 0.80% | 0.77% |
| Ratio of nonperforming assets to total assets | 1.03 | 0.34 | 0.62 | 0.60 |
| Ratio of net loan chargeoffs to average loans and leases | 0.23 | 0.11 | 0.08 | 0.18 |
| Allowance for loan losses as a percent of loans and leases | 1.38 | 1.40 | 1.45 | 1.42 |
| Allowance for loan losses as a percent of nonperforming loans and leases | 103.57 | 356.11 | 179.88 | 185.37 |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | | For the Quarters Ended | |
| | | | 9/30/2007 | | | | 9/30/2006 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 474,366 | | | $ | 5,446 | | | 4.55 | % | | $ | 426,368 | | | $ | 4,591 | | | 4.27 | % |
Nontaxable(1) | | | 136,834 | | | | 2,271 | | | 6.58 | | | | 131,289 | | | | 2,200 | | | 6.65 | |
Total securities | | | 611,200 | | | | 7,717 | | | 5.01 | | | | 557,657 | | | | 6,791 | | | 4.83 | |
| Interest bearing deposits | | | 764 | | | | 2 | | | 1.04 | | | | 286 | | | | 4 | | | 5.55 | |
| Federal funds sold | | | 24,180 | | | | 310 | | | 5.09 | | | | 4,594 | | | | 64 | | | 5.53 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,609,044 | | | | 31,757 | | | 7.83 | | | | 1,457,416 | | | | 28,914 | | | 7.87 | |
Residential mortgage | | | 239,447 | | | | 4,069 | | | 6.74 | | | | 229,855 | | | | 3,820 | | | 6.59 | |
Agricultural and agricultural real estate(1) | | | 227,630 | | | | 4,650 | | | 8.10 | | | | 218,466 | | | | 4,358 | | | 7.91 | |
Consumer | | | 199,823 | | | | 5,351 | | | 10.62 | | | | 192,245 | | | | 4,876 | | | 10.06 | |
Direct financing leases, net | | | 11,320 | | | | 171 | | | 5.99 | | | | 14,109 | | | | 219 | | | 6.16 | |
Fees on loans | | | - | | | | 1,589 | | | | | | | - | | | | 1,618 | | | - | |
Less: allowance for loan and lease losses | | | (32,647 | ) | | | - | | | - | | | | (30,467 | ) | | | - | | | - | |
Net loans and leases | | | 2,254,617 | | | | 47,587 | | | 8.37 | | | | 2,081,624 | | | | 43,805 | | | 8.35 | |
Total earning assets | | | 2,890,761 | | | $ | 55,616 | | | 7.63 | % | | | 2,644,161 | | | $ | 50,664 | | | 7.60 | % |
Nonearning Assets | | | 285,954 | | | | | | | | | | | 341,070 | | | | | | | | |
Total Assets | | $ | 3,176,715 | | | | | | | | | | $ | 2,985,231 | | | | | | | | |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 850,988 | | | $ | 6,021 | | | 2.81 | % | | $ | 791,790 | | | $ | 5,177 | | | 2.59 | % |
Time, $100,000 and over | | | 305,748 | | | | 3,848 | | | 4.99 | | | | 220,582 | | | | 2,410 | | | 4.33 | |
Other time deposits | | | 888,706 | | | | 10,608 | | | 4.74 | | | | 859,106 | | | | 9,275 | | | 4.28 | |
| Short-term borrowings | | | 243,820 | | | | 2,764 | | | 4.50 | | | | 227,349 | | | | 2,702 | | | 4.72 | |
| Other borrowings | | | 269,198 | | | | 4,199 | | | 6.19 | | | | 228,727 | | | | 3,348 | | | 5.81 | |
Total interest bearing liabilities | | | 2,558,460 | | | | 27,440 | | | 4.26 | | | | 2,327,554 | | | | 22,912 | | | 3.91 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 369,716 | | | | | | | | | | | 358,058 | | | | | | | | |
| Accrued interest and other liabilities | | | 32,501 | | | | | | | | | | | 103,882 | | | | | | | | |
Total noninterest bearing liabilities | | | 402,217 | | | | | | | | | | | 461,940 | | | | | | | | |
Stockholders’ Equity | | | 216,038 | | | | | | | | | | | 195,737 | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 3,176,715 | | | | | | | | | | $ | 2,985,231 | | | | | | | | |
Net interest income(1) | | | | | | $ | 28,176 | | | | | | | | | | $ | 27,752 | | | | |
Net interest spread(1) | | | | | | | | | | 3.37 | % | | | | | | | | | | 3.69 | % |
Net interest income to total earning assets(1) | | | | | | | | | | 3.87 | % | | | | | | | | | | 4.16 | % |
| Interest bearing liabilities to earning assets | | | 88.50 | % | | | | | | | | | | 88.03 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 | |
| | | | 9/30/2007 | | | | 9/30/2006 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 468,616 | | | $ | 16,010 | | | 4.57 | % | | $ | 404,779 | | | $ | 12,465 | | | 4.12 | % |
Nontaxable(1) | | | 132,831 | | | | 6,677 | | | 6.72 | | | | 131,109 | | | | 6,657 | | | 6.79 | |
Total securities | | | 601,447 | | | | 22,687 | | | 5.04 | | | | 535,888 | | | | 19,122 | | | 4.77 | |
| Interest bearing deposits | | | 683 | | | | 20 | | | 3.92 | | | | 477 | | | | 16 | | | 4.48 | |
| Federal funds sold | | | 7,490 | | | | 310 | | | 5.53 | | | | 4,436 | | | | 164 | | | 4.94 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,590,559 | | | | 94,567 | | | 7.95 | | | | 1,409,859 | | | | 79,967 | | | 7.58 | |
Residential mortgage | | | 243,299 | | | | 12,399 | | | 6.81 | | | | 224,677 | | | | 10,920 | | | 6.50 | |
Agricultural and agricultural real estate(1) | | | 225,606 | | | | 13,728 | | | 8.14 | | | | 210,577 | | | | 12,478 | | | 7.92 | |
Consumer | | | 196,110 | | | | 15,482 | | | 10.55 | | | | 185,974 | | | | 13,765 | | | 9.90 | |
Direct financing leases, net | | | 12,553 | | | | 560 | | | 5.96 | | | | 13,839 | | | | 628 | | | 6.07 | |
Fees on loans | | | - | | | | 4,500 | | | - | | | | - | | | | 4,452 | | | - | |
Less: allowance for loan and lease losses | | | (32,012 | ) | | | - | | | - | | | | (29,292 | ) | | | - | | | - | |
Net loans and leases | | | 2,236,115 | | | | 141,236 | | | 8.44 | | | | 2,015,634 | | | | 122,210 | | | 8.11 | |
Total earning assets | | | 2,845,735 | | | $ | 164,253 | | | 7.72 | % | | | 2,556,435 | | | $ | 141,512 | | | 7.40 | % |
Nonearning Assets | | | 290,299 | | | | | | | | | | | 332,503 | | | | | | | | |
Total Assets | | $ | 3,136,034 | | | | | | | | | | $ | 2,888,938 | | | | | | | | |
Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 825,967 | | | $ | 17,132 | | | 2.77 | % | | $ | 774,788 | | | $ | 13,534 | | | 2.34 | % |
Time, $100,000 and over | | | 282,393 | | | | 10,394 | | | 4.92 | | | | 216,043 | | | | 6,502 | | | 4.02 | |
Other time deposits | | | 878,808 | | | | 30,799 | | | 4.69 | | | | 812,457 | | | | 24,421 | | | 4.02 | |
| Short-term borrowings | | | 291,941 | | | | 10,545 | | | 4.83 | | | | 217,848 | | | | 6,876 | | | 4.22 | |
| Other borrowings | | | 234,186 | | | | 10,762 | | | 6.14 | | | | 227,518 | | | | 9,543 | | | 5.61 | |
Total interest bearing liabilities | | | 2,513,295 | | | | 79,632 | | | 4.24 | | | | 2,248,654 | | | | 60,876 | | | 3.62 | |
Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 357,679 | | | | | | | | | | | 343,554 | | | | | | | | |
| Accrued interest and other liabilities | | | 52,721 | | | | | | | | | | | 104,710 | | | | | | | | |
Total noninterest bearing liabilities | | | 410,400 | | | | | | | | | | | 448,264 | | | | | | | | |
Stockholders’ Equity | | | 212,339 | | | | | | | | | | | 192,020 | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 3,136,034 | | | | | | | | | | $ | 2,888,938 | | | | | | | | |
Net interest income(1) | | | | | | $ | 84,621 | | | | | | | | | | $ | 80,636 | | | | |
Net interest spread(1) | | | | | | | | | | 3.48 | | | | | | | | | | | 3.78 | |
Net interest income to total earning assets(1) | | | | | | | | | | 3.98 | % | | | | | | | | | | 4.22 | % |
| Interest bearing liabilities to earning assets | | | 88.22 | % | | | | | | | | | | 87.96 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 9/30/2007 | | | As of and For the Year Ended 12/31/2006 | | | As of and For the Nine Months Ended 9/30/2006 | | | As of and For the Year Ended 12/31/2005 | |
Total Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 902,139 | | $ | 843,282 | | $ | 851,884 | | $ | 833,885 | |
| New Mexico Bank & Trust | | 660,490 | | | 638,712 | | | 585,458 | | | 557,062 | |
| Wisconsin Community Bank | | 420,803 | | | 413,108 | | | 419,821 | | | 390,842 | |
| Rocky Mountain Bank | | 431,850 | | | 438,972 | | | 441,851 | | | 388,149 | |
| Galena State Bank and Trust Company | | 230,055 | | | 219,863 | | | 235,174 | | | 241,719 | |
| Riverside Community Bank | | 217,232 | | | 199,483 | | | 198,058 | | | 195,099 | |
| Arizona Bank & Trust | | 228,507 | | | 223,567 | | | 225,915 | | | 136,832 | |
| First Community Bank | | 122,157 | | | 118,010 | | | 117,640 | | | 121,337 | |
| Summit Bank & Trust | | 47,625 | | | 21,590 | | | - | | | - | |
Total Deposits | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 640,883 | | $ | 636,527 | | $ | 640,856 | | $ | 608,687 | |
| New Mexico Bank & Trust | | 464,948 | | | 437,708 | | | 414,206 | | | 388,935 | |
| Wisconsin Community Bank | | 343,827 | | | 336,015 | | | 334,042 | | | 311,436 | |
| Rocky Mountain Bank | | 323,306 | | | 335,053 | | | 332,870 | | | 306,967 | |
| Galena State Bank and Trust Company | | 196,606 | | | 178,388 | | | 192,253 | | | 179,437 | |
| Riverside Community Bank | | 180,561 | | | 162,319 | | | 157,452 | | | 153,791 | |
| Arizona Bank & Trust | | 175,374 | | | 176,438 | | | 182,945 | | | 118,959 | |
| First Community Bank | | 100,512 | | | 95,287 | | | 92,773 | | | 95,506 | |
| Summit Bank & Trust | | 33,531 | | | 6,514 | | | - | | | - | |
Return on Average Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.28 | % | | 1.45 | % | | 1.47 | % | | 1.28 | % |
| New Mexico Bank & Trust | | 1.30 | | | 1.21 | | | 1.14 | | | 1.10 | |
| Wisconsin Community Bank | | 0.51 | | | 0.53 | | | 0.37 | | | 0.63 | |
| Rocky Mountain Bank | | 1.60 | | | 1.18 | | | 0.89 | | | 0.72 | |
| Galena State Bank and Trust Company | | 0.61 | | | 1.35 | | | 1.29 | | | 1.22 | |
| Riverside Community Bank | | 0.46 | | | 0.64 | | | 0.66 | | | 0.83 | |
| Arizona Bank & Trust | | 0.13 | | | 0.47 | | | 0.41 | | | 0.19 | |
| First Community Bank | | 1.28 | | | 1.01 | | | 0.97 | | | 1.00 | |
| Summit Bank & Trust | | (2.85 | ) | | (6.31 | ) | | - | | | - | |
Net Interest Margin | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 3.40 | % | | 3.61 | % | | 3.66 | % | | 3.48 | % |
| New Mexico Bank & Trust | | 4.77 | | | 5.05 | | | 5.13 | | | 4.75 | |
| Wisconsin Community Bank | | 3.48 | | | 3.83 | | | 3.93 | | | 3.75 | |
| Rocky Mountain Bank | | 4.80 | | | 5.16 | | | 5.17 | | | 4.93 | |
| Galena State Bank and Trust Company | | 3.39 | | | 3.45 | | | 3.41 | | | 3.43 | |
| Riverside Community Bank | | 3.48 | | | 3.71 | | | 3.77 | | | 3.76 | |
| Arizona Bank & Trust | | 4.73 | | | 4.92 | | | 4.93 | | | 5.03 | |
| First Community Bank | | 3.84 | | | 3.95 | | | 3.90 | | | 3.80 | |
| Summit Bank & Trust | | 5.46 | | | 6.98 | | | - | | | - | |
Net Income (Loss) | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 8,421 | | $ | 11,990 | | $ | 9,077 | | $ | 10,156 | |
| New Mexico Bank & Trust | | 6,323 | | | 6,873 | | | 4,721 | | | 5,565 | |
| Wisconsin Community Bank | | 1,588 | | | 2,109 | | | 1,074 | | | 2,444 | |
| Rocky Mountain Bank | | 5,296 | | | 4,840 | | | 2,674 | | | 2,757 | |
| Galena State Bank and Trust Company | | 992 | | | 3,167 | | | 2,315 | | | 2,808 | |
| Riverside Community Bank | | 706 | | | 1,252 | | | 973 | | | 1,608 | |
| Arizona Bank & Trust | | 226 | | | 902 | | | 549 | | | 199 | |
| First Community Bank | | 1,145 | | | 1,197 | | | 859 | | | 1,198 | |
| Summit Bank & Trust | | (778 | ) | | (1,220 | ) | | - | | | - | |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | As of 9/30/2007 | | | As of 12/31/2006 | | | As of 9/30/2006 | | | As of 12/31/2005 | |
Total Portfolio Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 630,104 | | $ | 581,166 | | $ | 600,066 | | $ | 575,293 | |
| New Mexico Bank & Trust | | 439,801 | | | 410,438 | | | 373,735 | | | 330,609 | |
| Wisconsin Community Bank | | 295,864 | | | 272,407 | | | 287,357 | | | 270,837 | |
| Rocky Mountain Bank | | 313,994 | | | 309,943 | | | 319,946 | | | 279,230 | |
| Galena State Bank and Trust Company | | 149,612 | | | 158,222 | | | 168,206 | | | 176,813 | |
| Riverside Community Bank | | 142,260 | | | 137,102 | | | 135,251 | | | 132,781 | |
| Arizona Bank & Trust | | 163,295 | | | 160,614 | | | 157,660 | | | 94,285 | |
| First Community Bank | | 85,554 | | | 81,498 | | | 82,453 | | | 83,506 | |
| Summit Bank & Trust | | 31,611 | | | 14,953 | | | - | | | - | |
Allowance For Loan and Lease Losses | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 7,712 | | $ | 7,235 | | $ | 7,459 | | $ | 7,376 | |
| New Mexico Bank & Trust | | 5,837 | | | 5,352 | | | 5,216 | | | 4,497 | |
| Wisconsin Community Bank | | 4,494 | | | 4,570 | | | 4,719 | | | 4,285 | |
| Rocky Mountain Bank | | 4,041 | | | 4,044 | | | 4,645 | | | 4,048 | |
| Galena State Bank and Trust Company | | 1,992 | | | 2,049 | | | 2,235 | | | 2,181 | |
| Riverside Community Bank | | 1,815 | | | 1,747 | | | 1,536 | | | 1,674 | |
| Arizona Bank & Trust | | 2,392 | | | 2,133 | | | 1,972 | | | 1,181 | |
| First Community Bank | | 1,103 | | | 1,182 | | | 1,254 | | | 1,191 | |
| Summit Bank & Trust | | 392 | | | 192 | | | - | | | - | |
Nonperforming Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 4,338 | | $ | 1,216 | | $ | 2,554 | | $ | 2,745 | |
| New Mexico Bank & Trust | | 3,060 | | | 2,206 | | | 2,499 | | | 2,359 | |
| Wisconsin Community Bank | | 14,082 | | | 1,966 | | | 4,223 | | | 1,321 | |
| Rocky Mountain Bank | | 2,033 | | | 822 | | | 3,463 | | | 5,634 | |
| Galena State Bank and Trust Company | | 1,587 | | | 370 | | | 1,619 | | | 965 | |
| Riverside Community Bank | | 1,542 | | | 602 | | | 778 | | | 462 | |
| Arizona Bank & Trust | | 2,137 | | | 254 | | | - | | | 7 | |
| First Community Bank | | 884 | | | 588 | | | 1,458 | | | 992 | |
| Summit Bank & Trust | | - | | | - | | | - | | | - | |
Allowance As a Percent of Total Loans | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.22 | % | | 1.24 | % | | 1.24 | % | | 1.28 | % |
| New Mexico Bank & Trust | | 1.33 | | | 1.30 | | | 1.40 | | | 1.36 | |
| Wisconsin Community Bank | | 1.52 | | | 1.68 | | | 1.64 | | | 1.58 | |
| Rocky Mountain Bank | | 1.29 | | | 1.30 | | | 1.45 | | | 1.45 | |
| Galena State Bank and Trust Company | | 1.33 | | | 1.30 | | | 1.33 | | | 1.23 | |
| Riverside Community Bank | | 1.28 | | | 1.27 | | | 1.14 | | | 1.26 | |
| Arizona Bank & Trust | | 1.46 | | | 1.33 | | | 1.25 | | | 1.25 | |
| First Community Bank | | 1.29 | | | 1.45 | | | 1.52 | | | 1.43 | |
| Summit Bank & Trust | | 1.24 | | | 1.28 | | | - | | | - | |
| | | | | | | | | | | | | |
