CONTACT: FOR IMMEDIATE RELEASE
John K. Schmidt MONDAY, JANUARY 26, 2009
Chief Operating Officer
Chief Financial Officer
(563) 589-1994
jschmidt@htlf.com
HEARTLAND FINANCIAL USA, INC. REPORTS ANNUAL NET INCOME OF $11.3 MILLION AND FOURTH QUARTER NET LOSS OF $2.7 MILLION FOR 2008
Highlights
| § | Net interest income in fourth quarter 2008 increased $1.7 million or 6% over fourth quarter 2007 |
| § | Average earning assets in fourth quarter 2008 increased $266.5 million or 9% over fourth quarter 2007 |
| § | Provision for loan losses in fourth quarter 2008 was $15.1 million compared to $3.3 million in fourth quarter 2007 |
| § | Deposit growth during year 2008 was $263.9 million or 11% since year-end 2007 |
| § | Loan growth during year 2008 was $124.8 million or 5% since year-end 2007 |
| § | TARP funds totaling $81.7 million received on December 19, 2008 |
| | | | Quarter Ended December 31, | | | | Year Ended December 31, | |
| | | | 2008 | | | | 2007 | | | | 2008 | | | | 2007 | |
| Net income (loss) (in millions) | | $ | (2.7 | ) | | $ | 6.8 | | | $ | 11.3 | | | $ | 25.6 | |
| Income (loss) from continuing operations (in millions) | | | (2.7 | ) | | | 6.8 | | | | 11.3 | | | | 24.0 | |
| Diluted earnings (loss) per common share | | | (0.18 | ) | | | 0.41 | | | | 0.68 | | | | 1.54 | |
| Diluted earnings (loss) per common share from continuing operations | | | (0.18 | ) | | | 0.41 | | | | 0.68 | | | | 1.44 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | (0.33 | )% | | | 0.83 | % | | | 0.33 | % | | | 0.81 | % |
| Return on average common equity | | | (5.12 | ) | | | 11.86 | | | | 4.84 | | | | 11.88 | |
| Net interest margin | | | 3.79 | | | | 3.87 | | | | 3.89 | | | | 3.95 | |
“Solid performances in many of our core operating units continue to be overshadowed by a disappointing increase in our nonperforming loans. We are pleased, however, that our two largest banks had excellent years in 2008; specifically, Dubuque Bank and Trust Company, our flagship bank, experienced its best year ever. Overall, the company maintained net interest margin at a respectable level and experienced growth in loans and deposits.”-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, January 26, 2009—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported a net loss of $2.7 million, or $0.18 per diluted common share, for the fourth quarter of 2008, compared to net income of $6.8 million, or $0.41 per diluted share, earned during the fourth quarter of 2007. Return on average common equity was negative 5.12 percent and return on average assets was negative 0.33 percent for the fourth quarter of 2008, compared to 11.86 percent and 0.83 percent, respectively, for the same quarter in 2007.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer said, “Solid performances in many of our core operating units continue to be overshadowed by a disappointing increase in our nonperforming loans. We are pleased, however, that our two largest banks had excellent years in 2008; specifically, Dubuque Bank and Trust Company, our flagship bank, experienced its best year ever. Overall, the company maintained net interest margin at a respectable level and experienced growth in loans and deposits.”
Earnings for the fourth quarter of 2008 were significantly impacted by the provision for loan losses, which was $15.1 million compared to $3.3 million for the fourth quarter of 2007. This increase in the loan loss provision was due, in large part, to the continued deterioration of economic conditions and reduced real estate values, particularly in Heartland’s Western markets located in Arizona, Montana and Colorado. The performance during 2008 was positively affected by increased net interest income primarily as a result of growth in average earning assets.
Net income recorded for the year 2008 was $11.3 million, or $0.68 per diluted share, compared to $25.6 million, or $1.54 per diluted share, recorded during the year 2007. Return on average equity was 4.84 percent and return on average assets was 0.33 percent for the year 2008, compared to 11.88 percent and 0.81 percent, respectively, for the year 2007. Income from continuing operations during year 2008 was $11.3 million, or $0.68 per diluted share, a decrease of $12.7 million or 53 percent over the $24.0 million, or $1.54 per diluted share, earned during the year 2007. The provision for loan losses was $29.3 million during 2008 compared to $10.1 million during 2007. In addition to significant charge-offs, the provision for loan losses increased as a result of loan growth, an increase in nonperforming loans and the impact historical losses has on the calculation of the adequacy of Heartland’s allowance for loan and lease losses. Performance during 2008 was positively affected by increased net interest income.
Net Interest Margin Declines; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 3.79 percent during the fourth quarter of 2008 compared to 3.87 percent for the fourth quarter of 2007. For the year ended on December 31, net interest margin, expressed as a percentage of average earning assets, was 3.89 percent during 2008 and 3.95 percent during 2007. Affecting the net interest margin throughout the second half of 2007 and all of 2008 was the impact of foregone interest on Heartland’s nonperforming loans, which had balances of $78.0 million at December 31, 2008, compared to $31.8 million at year-end 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 is reflected in net interest margin while the corresponding earnings (loss) on this investment are recorded as noninterest income.
Commenting on net interest margin, Fuller said, “Our margin slipped in the fourth quarter due to a larger nonperforming asset base and a short-term deposit promotion. We believe that continued focus on core deposits, diligent loan and deposit pricing practices, combined with sales of nonperforming assets will favorably impact our margin in the future.”
Net interest income on a tax-equivalent basis totaled $30.2 million during the fourth quarter of 2008, an increase of $1.8 million or 6 percent from the $28.4 million recorded during the fourth quarter of 2007. For the year 2008, net interest income on a tax-equivalent basis was $119.5 million, an increase of $6.5 million or 6 percent from the $113.0 million recorded during the year 2007. These increases occurred as Heartland’s interest bearing liabilities repriced downward more quickly than its interest bearing assets. Also contributing to these increases was the $266.5 million or 9 percent growth in average earning assets during the fourth quarter of 2008 compared to the same quarter in 2007 and the $215.3 million or 8 percent growth in average earning assets during the year 2008 compared to the year 2007.
On a tax-equivalent basis, interest income in the fourth quarter of 2008 totaled $51.2 million compared to $54.7 million in the fourth quarter of 2007, a decrease of $3.5 million or 6 percent. For the year 2008, interest income on a tax-equivalent basis decreased $12.4 million or 6 percent over the year 2007. Nearly half of the loans in Heartland’s commercial and agricultural loan portfolios are floating rate loans that reprice immediately upon a change in the national prime interest rate, thus changes in the national prime rate impact interest income more quickly than if there were more fixed rate loans. The national prime interest rate was 8.25% for the first eight months of 2007 and then gradually decreased during that last four months of 2007 to 7.25%. Throughout 2008, the national prime interest rate continued to decline and, by year-end, had decreased to 3.25%. A large portion of Heartland’s floating rate loans that reprice immediately with a change in national prime have interest rate floors that are currently in effect. Additionally, Heartland has two $50.0 million derivative transactions on the loan portfolio that are at their floor interest rates. Accordingly, management believes the negative impact of further reductions in the national prime interest rate on Heartland’s interest income in future periods should be softened.
Interest expense for the fourth quarter of 2008 was $20.9 million compared to $26.3 million in the fourth quarter of 2007, a decrease of $5.4 million or 20 percent. On an annual comparative basis, interest expense decreased $19.0 million or 18 percent. Interest rates paid on Heartland’s deposits and borrowings were significantly lower during 2008 compared to 2007. Approximately 51 percent of Heartland’s certificate of deposit accounts will mature within the next six months at a weighted average rate of 3.15 percent.
Fuller commented, “We continue to see some improvement in our funding costs as interest rates gradually ease in response to the Federal Reserve intervention. As competition for core deposits in all of our markets remains intense, we may soon find that further improvement is not attainable without some deposit run-off. We see opportunity in serving the cash and treasury management needs of small and medium-sized businesses and are responding with new products, systems and sales programs.”
Noninterest Income Decreases; Noninterest Expense Grows
Noninterest income was $5.5 million during the fourth quarter of 2008 compared to $8.1 million during the fourth quarter of 2007, a decrease of $2.6 million or 32 percent. Included in the fourth quarter 2008 noninterest income was a loss adjustment on the cash surrender value on bank owned life insurance totaling $1.8 million compared to income of $565,000 during the fourth quarter of 2007. A large portion of Heartland’s bank owned life insurance is held in a separate account product that experienced significant market value declines during the last half of 2008. For the year 2008, noninterest income decreased $1.5 million or 5 percent over the year 2007. The adjustment on the cash surrender value on bank owned life insurance was a loss of $1.2 million for the year 2008 compared to income of $1.8 million during the year 2007. Included in the 2008 noninterest income was a $5.2 million gain on the sale of Heartland’s merchant bankcard processing services to TransFirst LLC and a $4.6 million impairment loss recorded on Heartland’s investment in perpetual preferred securities issued by Fannie Mae.
For the fourth quarter of 2008, noninterest expense increased $563,000 or 2 percent from the same period in 2007. The largest component of noninterest expense, salaries and employee benefits, increased $405,000 or 3 percent during the fourth quarter of 2008 compared to the fourth quarter of 2007. For the year 2008, noninterest expense increased $4.4 million or 4 percent when compared to the year 2007. Again, the largest component of noninterest expense, salaries and employee benefits, grew by $2.2 million or 4 percent during the annual comparative period. Total full-time equivalent employees were 1,028 at December 31, 2008, compared to 982 at December 31, 2007. Occupancy expense increased during the 2008 fourth quarter and annual periods, primarily as a result of the opening of six new banking offices during 2007 and the 2008 opening of Heartland’s 10th bank subsidiary, Minnesota Bank & Trust, and one new banking office at New Mexico Bank & Trust. The other category of noninterest expense that increased significantly during the 2008 fourth quarter and annual periods was outside services, resulting primarily from additional legal fees related to collection efforts on nonperforming loans and additional FDIC assessments as a majority of the FDIC credits at Heartland’s bank subsidiaries were utilized during 2007.
Fuller discussed Heartland's expansion plans, “In 2008 we slowed our new branch office openings to two locations in response to the economic downturn and to refocus on potential acquisition opportunities, which we believe may be offered at attractive prices. With the availability of capital via the TARP, we are seeking one or more cost-effective acquisitions that make economic sense and fit well within our current footprint.”
Heartland’s effective tax rate was 22.68 percent for the year 2008 compared to 29.05 percent for the year 2007. Heartland’s effective tax rate was affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 49.49 percent during the year 2008 compared to 19.00 percent during the year 2007. The tax-equivalent adjustment for this tax-exempt interest income was $3.9 million during the year 2008 compared to $3.7 million during the year 2007.
Loan Growth Continues; Double Digit Growth in Deposits
At December 31, 2008, total assets had increased $366.1 million or 11 percent since year-end 2007. Total loans and leases were $2.41 billion at December 31, 2008, compared to $2.28 billion at year-end 2007, an increase of $124.8 million or 5 percent. The loan categories contributing to this growth were the commercial, agricultural and consumer loan categories which increased $85.5 million, $22.0 million and $34.5 million, respectively, since year-end 2007. Most of the loan growth in the commercial and commercial real estate category occurred at Dubuque Bank and Trust Company, Riverside Community Bank, New Mexico Bank & Trust, Summit Bank & Trust and Minnesota Bank & Trust. A majority of the increase in agricultural and agricultural real estate loans occurred at Dubuque Bank and Trust Company and Wisconsin Community Bank. Growth in the consumer portfolio occurred primarily at New Mexico Bank & Trust, Wisconsin Community Bank, Rocky Mountain Bank, Summit Bank & Trust and Citizens Finance Co.
Total deposits grew to $2.64 billion at December 31, 2008, an increase of $263.9 million or 11 percent since year-end 2007. Growth in deposits was weighted more heavily in Heartland’s Western markets which were responsible for nearly 54 percent of the total growth. Demand deposits experienced an increase of $1.6 million or nearly 1 percent since year-end 2007. Savings deposit balances experienced an increase of $273.3 million or 32 percent since year-end 2007. Time deposits, exclusive of brokered deposits, increased $6.6 million or 1 percent since year-end 2007. At December 31, 2008, brokered time deposits totaled $51.5 million or 2 percent of total deposits compared to $69.0 million or 3 percent of total deposits at year-end 2007. A large portion of the growth in savings deposits is attributable to the January 2008 introduction of a new retail interest-bearing checking account product, the conversion of several retail repurchase agreement sweep accounts to a new money market sweep product initially rolled out to business depositors during the second quarter of 2008 and a promotional offer on a new money market savings product offered late in the third quarter of 2008.
Capital Purchase Program Participation
On December 19, 2008, Heartland received $81.7 million through participation in the U.S. Treasury’s Capital Purchase Program (CPP). The CPP was authorized by the government’s Troubled Asset Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008. The TARP is designed to infuse capital into the nation’s healthiest banks to increase the flow of financing to American consumers and businesses. Funds received by Heartland were allocated to debt reduction, capital maintenance at its subsidiary banks and short-term investments. Heartland intends to honor the intent of the Program by seeking high quality lending opportunities and the potential acquisition of banks in its existing markets.
Increase in Nonperforming Loans and Net Charge-offs
The allowance for loan and lease losses at December 31, 2008, was 1.48 percent of loans and leases and 45.73 percent of nonperforming loans, compared to 1.45 percent of loans and leases and 103.66 percent of nonperforming loans at December 31, 2007. The fourth quarter of 2008 provision for loan losses was $15.1 million compared to $3.3 million for the fourth quarter of 2007 and $7.1 million recorded during the third quarter of 2008. On an annual basis, the total provision for loan losses for 2008 was $29.3 million compared to $10.1 million for the year 2007. Additions to the allowance for loan and lease losses during 2008 were driven by a variety of factors including deterioration of economic conditions, downgrades in internal risk ratings, reduction in appraised values, higher levels of charge-offs and an increase in nonperforming loans, primarily in Heartland’s Western markets of Arizona, Montana and Colorado.
Nonperforming loans were $78.0 million or 3.24 percent of total loans and leases at December 31, 2008, compared to $31.8 million or 1.40 percent of total loans and leases at December 31, 2007. Approximately 73 percent, or $56.9 million, of Heartland’s nonperforming loans are to eighteen borrowers, with $21.3 million originated by Rocky Mountain Bank, $15.3 million originated by Arizona Bank & Trust, $7.7 million originated by Summit Bank & Trust, $7.1 million originated by Wisconsin Community Bank, $3.1 million originated by Riverside Community Bank, $1.4 million originated by First Community Bank and $1.0 million originated by Dubuque Bank and Trust Company. The portion of Heartland’s nonperforming loans covered by government guarantees was $2.9 million at December 31, 2008.
Net charge-offs during 2008 were $26.7 million compared to $6.9 million during 2007. Nearly 57 percent of the net charge-offs were related to commercial real estate development loans and residential lot loans. Heartland has generally recognized the charge-off on a loan when the loan was resolved, sold or transferred to other real estate owned. However, in the third quarter of 2008, Heartland began to recognize charge-offs on certain collateral dependent loans by writing down the loan balance to an estimated net realizable value based on the anticipated disposition value.
Fuller concluded, “Achieving a substantial reduction in nonperforming loans was our primary objective in 2008 and remains our number one priority in 2009. While economic conditions in many of our banking markets have continued to deteriorate, we are taking steps to begin disposing of repossessed assets and hope to report steady improvement on this front as the new year progresses.”
Conference Call Details
Heartland will host a conference call for investors at 4:00 p.m. EDT today. To participate, dial 800-218-8862 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 February 2, 2009, by dialing 800-405-2236, passcode 11124950, or by logging onto www.htlf.com.
About Heartland Financial USA, Inc.:
Heartland Financial USA, Inc. is a $3.6 billion diversified financial services company providing banking, mortgage, wealth management, insurance and consumer finance services to individuals and businesses. Heartland currently has 61 banking locations in 41 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Minnesota. 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 Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland’s financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland’s management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (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. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW-
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | | For the Quarter Ended | | For the Year Ended |
| | | | 12/31/2008 | | | | 12/31/2007 | | | | 12/31/2008 | | | | 12/31/2007 | |
| Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 39,905 | | | $ | 46,083 | | | $ | 164,349 | | | $ | 186,795 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 8,503 | | | | 5,927 | | | | 31,231 | | | | 21,937 | |
Nontaxable | | | 1,692 | | | | 1,665 | | | | 6,688 | | | | 6,079 | |
| Interest on federal funds sold | | | 32 | | | | 77 | | | | 299 | | | | 387 | |
| Interest on deposits in other financial institutions | | | 8 | | | | 13 | | | | 18 | | | | 33 | |
Total Interest Income | | | 50,140 | | | | 53,765 | | | | 202,585 | | | | 215,231 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 15,729 | | | | 19,540 | | | | 64,104 | | | | 77,865 | |
| Interest on short-term borrowings | | | 522 | | | | 2,748 | | | | 4,571 | | | | 13,293 | |
| Interest on other borrowings | | | 4,662 | | | | 3,971 | | | | 18,224 | | | | 14,733 | |
Total Interest Expense | | | 20,913 | | | | 26,259 | | | | 86,899 | | | | 105,891 | |
Net Interest Income | | | 29,227 | | | | 27,506 | | | | 115,686 | | | | 109,340 | |
| Provision for loan and lease losses | | | 15,106 | | | | 3,304 | | | | 29,319 | | | | 10,073 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 14,121 | | | | 24,202 | | | | 86,367 | | | | 99,267 | |
| Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,034 | | | | 2,821 | | | | 11,654 | | | | 11,108 | |
| Loan servicing income | | | 1,015 | | | | 1,273 | | | | 4,600 | | | | 4,376 | |
| Trust fees | | | 1,747 | | | | 1,788 | | | | 7,906 | | | | 8,053 | |
| Brokerage and insurance commissions | | | 1,002 | | | | 939 | | | | 3,719 | | | | 3,097 | |
| Securities gains, net | | | 510 | | | | 38 | | | | 1,525 | | | | 341 | |
| Loss on trading account securities | | | (531 | ) | | | (185 | ) | | | (998 | ) | | | (105 | ) |
| Impairment loss on securities | | | (347 | ) | | | - | | | | (5,151 | ) | | | - | |
| Gains on sale of loans | | | 331 | | | | 1,527 | | | | 1,610 | | | | 3,578 | |
| Income (loss) on bank owned life insurance | | | (1,780 | ) | | | 565 | | | | (1,184 | ) | | | 1,777 | |
| Gain on sale of merchant bankcard processing services | | | - | | | | - | | | | 5,200 | | | | - | |
| Other noninterest income | | | 543 | | | | (676 | ) | | | 1,315 | | | | (515 | ) |
Total Noninterest Income | | | 5,524 | | | | 8,090 | | | | 30,196 | | | | 31,710 | |
| Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 12,293 | | | | 11,888 | | | | 56,752 | | | | 54,568 | |
| Occupancy | | | 2,220 | | | | 1,961 | | | | 9,019 | | | | 7,902 | |
| Furniture and equipment | | | 1,767 | | | | 1,848 | | | | 6,968 | | | | 6,972 | |
| Outside services | | | 3,068 | | | | 2,544 | | | | 11,322 | | | | 9,555 | |
| Advertising | | | 909 | | | | 948 | | | | 3,762 | | | | 3,642 | |
| Other intangibles amortization | | | 235 | | | | 240 | | | | 943 | | | | 892 | |
| Other noninterest expenses | | | 3,605 | | | | 4,105 | | | | 13,193 | | | | 14,075 | |
Total Noninterest Expense | | | 24,097 | | | | 23,534 | | | | 101,959 | | | | 97,606 | |
Income (Loss) Before Income Taxes | | | (4,452 | ) | | | 8,758 | | | | 14,604 | | | | 33,371 | |
| Income taxes | | | (1,769 | ) | | | 2,006 | | | | 3,312 | | | | 9,409 | |
Income (Loss) From Continuing Operations | | | (2,683 | ) | | | 6,752 | | | | 11,292 | | | | 23,962 | |
| Discontinued Operations | | | | | | | | | | | | | | | | |
Income from operations of discontinued operations | | | - | | | | - | | | | - | | | | 2,756 | |
Income taxes | | | - | | | | - | | | | - | | | | 1,085 | |
Income From Discontinued Operations | | | - | | | | - | | | | - | | | | 1,671 | |
Net Income (Loss) | | $ | (2,683 | ) | | $ | 6,752 | | | $ | 11,292 | | | $ | 25,633 | |
Preferred dividends and discount | | | (178 | ) | | | - | | | | (178 | ) | | | - | |
Net Income (Loss) Available to Common Stockholders | | $ | (2,861 | ) | | $ | 6,752 | | | $ | 11,114 | | | $ | 25,633 | |
| Earnings per common share-diluted | | $ | (0.18 | ) | | $ | 0.41 | | | $ | 0.68 | | | $ | 1.54 | |
Earnings per common share from continuing operations-diluted | | $ | (0.18 | ) | | $ | 0.41 | | | $ | 0.68 | | | $ | 1.44 | |
| Weighted average shares outstanding-diluted | | | 16,324,106 | | | | 16,574,540 | | | | 16,365,815 | | | | 16,596,806 | |
| | | | | | | | | | | | | | | | | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | For the Quarter Ended | |
| | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| Interest Income | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 39,905 | | | $ | 40,990 | | | $ | 40,555 | | | $ | 42,899 | | | $ | 46,083 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 8,503 | | | | 8,228 | | | | 7,885 | | | | 6,615 | | | | 5,927 | |
| Nontaxable | | | 1,692 | | | | 1,670 | | | | 1,679 | | | | 1,647 | | | | 1,665 | |
| Interest on federal funds sold | | | 32 | | | | 85 | | | | 51 | | | | 131 | | | | 77 | |
| Interest on deposits in other financial institutions | | | 8 | | | | 3 | | | | 2 | | | | 5 | | | | 13 | |
| Total Interest Income | | | 50,140 | | | | 50,976 | | | | 50,172 | | | | 51,297 | | | | 53,765 | |
| Interest Expense | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 15,729 | | | | 15,622 | | | | 15,657 | | | | 17,096 | | | | 19,540 | |
| Interest on short-term borrowings | | | 522 | | | | 776 | | | | 1,087 | | | | 2,186 | | | | 2,748 | |
| Interest on other borrowings | | | 4,662 | | | | 4,692 | | | | 4,593 | | | | 4,277 | | | | 3,971 | |
| Total Interest Expense | | | 20,913 | | | | 21,090 | | | | 21,337 | | | | 23,559 | | | | 26,259 | |
| Net Interest Income | | | 29,227 | | | | 29,886 | | | | 28,835 | | | | 27,738 | | | | 27,506 | |
| Provision for loan and lease losses | | | 15,106 | | | | 7,083 | | | | 5,369 | | | | 1,761 | | | | 3,304 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 14,121 | | | | 22,803 | | | | 23,466 | | | | 25,977 | | | | 24,202 | |
| Noninterest Income | | | | | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,034 | | | | 3,125 | | | | 2,880 | | | | 2,615 | | | | 2,821 | |
| Loan servicing income | | | 1,015 | | | | 1,094 | | | | 1,195 | | | | 1,296 | | | | 1,273 | |
| Trust fees | | | 1,747 | | | | 2,070 | | | | 2,068 | | | | 2,021 | | | | 1,788 | |
| Brokerage and insurance commissions | | | 1,002 | | | | 942 | | | | 883 | | | | 892 | | | | 939 | |
| Securities gains, net | | | 510 | | | | 5 | | | | 648 | | | | 362 | | | | 38 | |
| Loss on trading account securities | | | (531 | ) | | | (33 | ) | | | (227 | ) | | | (207 | ) | | | (185 | ) |
| Impairment loss on securities | | | (347 | ) | | | (4,688 | ) | | | (30 | ) | | | (86 | ) | | | - | |
| Gains on sale of loans | | | 331 | | | | 295 | | | | 480 | | | | 504 | | | | 1,527 | |
| Income (loss) on bank owned life insurance | | | (1,780 | ) | | | (247 | ) | | | 380 | | | | 463 | | | | 565 | |
| Gain on sale of merchant bankcard processing services | | | - | | | | 5,200 | | | | - | | | | - | | | | - | |
| Other noninterest income | | | 543 | | | | 117 | | | | 41 | | | | 614 | | | | (676 | ) |
| Total Noninterest Income | | | 5,524 | | | | 7,880 | | | | 8,318 | | | | 8,474 | | | | 8,090 | |
| Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 12,293 | | | | 15,000 | | | | 14,666 | | | | 14,793 | | | | 11,888 | |
| Occupancy | | | 2,220 | | | | 2,262 | | | | 2,193 | | | | 2,344 | | | | 1,961 | |
| Furniture and equipment | | | 1,767 | | | | 1,662 | | | | 1,771 | | | | 1,768 | | | | 1,848 | |
| Outside services | | | 3,068 | | | | 3,096 | | | | 2,648 | | | | 2,510 | | | | 2,544 | |
| Advertising | | | 909 | | | | 1,012 | | | | 1,046 | | | | 795 | | | | 948 | |
| Other intangibles amortization | | | 235 | | | | 236 | | | | 236 | | | | 236 | | | | 240 | |
| Other noninterest expenses | | | 3,605 | | | | 3,392 | | | | 2,878 | | | | 3,318 | | | | 4,105 | |
| Total Noninterest Expense | | | 24,097 | | | | 26,660 | | | | 25,438 | | | | 25,764 | | | | 23,534 | |
| Income (Loss) Before Income Taxes | | | (4,452 | ) | | | 4,023 | | | | 6,346 | | | | 8,687 | | | | 8,758 | |
| Income taxes | | | (1,769 | ) | | | 1,018 | | | | 1,643 | | | | 2,420 | | | | 2,006 | |
| Income (Loss) From Continuing Operations | | | (2,683 | ) | | | 3,005 | | | | 4,703 | | | | 6,267 | | | | 6,752 | |
| Discontinued Operations | | | | | | | | | | | | | | | | | | | | |
| Income from operations of discontinued operations | | | - | | | | - | | | | - | | | | - | | | | - | |
| Income taxes | | | - | | | | - | | | | - | | | | - | | | | - | |
| Income From Discontinued Operations | | | - | | | | - | | | | - | | | | - | | | | - | |
| Net Income (Loss) | | $ | (2,683 | ) | | $ | 3,005 | | | $ | 4,703 | | | $ | 6,267 | | | $ | 6,752 | |
| Preferred dividends and discount | | | (178 | ) | | | - | | | | - | | | | - | | | | - | |
| Net Income (Loss) Available to Common Stockholders | | $ | (2,861 | ) | | $ | 3,005 | | | $ | 4,703 | | | $ | 6,267 | | | $ | 6,752 | |
| Earnings per common share-diluted | | $ | (0.18 | ) | | $ | 0.18 | | | $ | 0.29 | | | $ | 0.38 | | | $ | 0.41 | |
| Earnings per common share from continuingoperations-diluted | | $ | (0.18 | ) | | $ | 0.18 | | | $ | 0.29 | | | $ | 0.38 | | | $ | 0.41 | |
| Weighted average shares outstanding-diluted | | | 16,324,106 | | | | 16,355,393 | | | | 16,388,885 | | | | 16,465,985 | | | | 16,574,540 | |
| | | | | | | | | | | | | | | | | | | | | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | As Of | |
| | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| Assets | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 51,303 | | | $ | 67,074 | | | $ | 41,292 | | | $ | 50,141 | | | $ | 46,832 | |
| Securities | | | 903,705 | | | | 760,143 | | | | 795,624 | | | | 734,690 | | | | 689,949 | |
| Loans held for sale | | | 19,695 | | | | 9,812 | | | | 11,437 | | | | 11,222 | | | | 12,679 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | |
| Held to maturity | | | 2,405,001 | | | | 2,364,259 | | | | 2,295,406 | | | | 2,271,663 | | | | 2,280,167 | |
| Allowance for loan and lease losses | | | (35,651 | ) | | | (34,845 | ) | | | (34,931 | ) | | | (33,695 | ) | | | (32,993 | ) |
| Loans and leases, net | | | 2,369,350 | | | | 2,329,414 | | | | 2,260,475 | | | | 2,237,968 | | | | 2,247,174 | |
| Premises, furniture and equipment, net | | | 120,500 | | | | 120,225 | | | | 118,063 | | | | 119,542 | | | | 120,285 | |
| Goodwill | | | 40,207 | | | | 40,207 | | | | 40,207 | | | | 40,207 | | | | 40,207 | |
| Other intangible assets, net | | | 8,079 | | | | 8,332 | | | | 8,434 | | | | 8,416 | | | | 8,369 | |
| Cash surrender value on life insurance | | | 54,431 | | | | 55,684 | | | | 56,430 | | | | 56,018 | | | | 55,532 | |
| Other assets | | | 62,998 | | | | 55,091 | | | | 47,109 | | | | 42,276 | | | | 43,099 | |
| Total Assets | | $ | 3,630,268 | | | $ | 3,445,982 | | | $ | 3,379,071 | | | $ | 3,300,480 | | | $ | 3,264,126 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand | | $ | 383,061 | | | $ | 373,193 | | | $ | 383,136 | | | $ | 377,709 | | | $ | 381,499 | |
| Savings | | | 1,128,312 | | | | 1,042,364 | | | | 894,074 | | | | 863,067 | | | | 855,036 | |
| Brokered time deposits | | | 51,474 | | | | 81,895 | | | | 79,515 | | | | 89,439 | | | | 68,984 | |
| Other time deposits | | | 1,077,385 | | | | 1,070,455 | | | | 1,052,160 | | | | 1,090,724 | | | | 1,070,780 | |
| Total deposits | | | 2,640,232 | | | | 2,567,907 | | | | 2,408,885 | | | | 2,420,939 | | | | 2,376,299 | |
| Short-term borrowings | | | 210,184 | | | | 176,543 | | | | 263,137 | | | | 226,106 | | | | 354,146 | |
| Other borrowings | | | 437,833 | | | | 440,146 | | | | 444,006 | | | | 380,479 | | | | 263,607 | |
| Accrued expenses and other liabilities | | | 36,416 | | | | 36,074 | | | | 35,345 | | | | 37,103 | | | | 39,474 | |
| Total Liabilities | | | 3,324,665 | | | | 3,220,670 | | | | 3,151,373 | | | | 3,064,627 | | | | 3,033,526 | |
| | | | | | | | | | | | | | | | | | | | | |
| Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | |
| Preferred equity | | | 75,578 | | | | - | | | | - | | | | - | | | | - | |
| Common equity | | | 230,025 | | | | 225,312 | | | | 227,698 | | | | 235,853 | | | | 230,600 | |
| Total Stockholders’ Equity | | | 305,603 | | | | 225,312 | | | | 227,698 | | | | 235,853 | | | | 230,600 | |
| Total Liabilities and Stockholders’ Equity | | $ | 3,630,268 | | | $ | 3,445,982 | | | $ | 3,379,071 | | | $ | 3,300,480 | | | $ | 3,264,126 | |
| | | | | | | | | | | | | | | | | | | | | |
| Common Share Data | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 14.13 | | | $ | 13.86 | | | $ | 13.99 | | | $ | 14.46 | | | $ | 14.04 | |
| FAS 115 effect on book value per common share | | $ | (0.13 | ) | | $ | (0.28 | ) | | $ | (0.07 | ) | | $ | 0.52 | | | $ | 0.37 | |
| Common shares outstanding, net of treasury stock | | | 16,274,490 | | | | 16,252,891 | | | | 16,270,872 | | | | 16,312,384 | | | | 16,427,016 | |
| | | | | | | | | | | | | | | | | | | | | |
Tangible Capital Ratio(1) | | | 5.19 | % | | | 5.33 | % | | | 5.50 | % | | | 5.88 | % | | | 5.78 | % |
(1) Total common 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 Quarter Ended For the Year Ended | |
| | | 12/31/2008 | | | 12/31/2007 | | | 12/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | |
| Assets | | $ | 3,492,105 | | | $ | 3,211,155 | | | $ | 3,378,930 | | | $ | 3,154,824 | |
| Loans and leases | | | 2,396,816 | | | | 2,283,591 | | | | 2,326,845 | | | | 2,272,021 | |
| Deposits | | | 2,587,372 | | | | 2,409,315 | | | | 2,455,740 | | | | 2,361,003 | |
| Earning assets | | | 3,177,472 | | | | 2,910,942 | | | | 3,077,350 | | | | 2,862,036 | |
| Interest bearing liabilities | | | 2,837,795 | | | | 2,571,327 | | | | 2,734,562 | | | | 2,527,839 | |
| Total stockholders’ equity | | | 233,824 | | | | 225,945 | | | | 232,521 | | | | 215,740 | |
| Common stockholders’ equity | | | 222,509 | | | | 225,945 | | | | 229,692 | | | | 215,740 | |
| Tangible common stockholders’ equity | | | 183,284 | | | | 184,871 | | | | 189,836 | | | | 174,172 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Earnings Performance Ratios | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | (0.33 | )% | | | 0.83 | % | | | 0.33 | % | | | 0.81 | % |
| Annualized return on average common equity | | | (5.12 | ) | | | 11.86 | | | | 4.84 | | | | 11.88 | |
| Annualized return on average common tangible equity | | | (6.21 | ) | | | 14.49 | | | | 5.85 | | | | 14.72 | |
Annualized net interest margin(1) | | | 3.79 | | | | 3.87 | | | | 3.89 | | | | 3.95 | |
Efficiency ratio(2) | | | 68.37 | | | | 64.54 | | | | 68.78 | | | | 67.59 | |
(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 Quarter Ended | |
| | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | | | | |
| Assets | | $ | 3,492,105 | | | $ | 3,399,199 | | | $ | 3,354,880 | | | $ | 3,269,534 | | | $ | 3,211,155 | |
| Loans and leases, net of unearned | | | 2,396,816 | | | | 2,339,539 | | | | 2,286,392 | | | | 2,284,634 | | | | 2,283,591 | |
| Deposits | | | 2,587,372 | | | | 2,499,988 | | | | 2,396,963 | | | | 2,338,634 | | | | 2,409,315 | |
| Earning assets | | | 3,177,472 | | | | 3,100,208 | | | | 3,057,505 | | | | 2,974,215 | | | | 2,910,942 | |
| Interest bearing liabilities | | | 2,837,795 | | | | 2,750,004 | | | | 2,712,487 | | | | 2,637,962 | | | | 2,571,327 | |
| Total stockholders’ equity | | | 233,824 | | | | 227,111 | | | | 234,005 | | | | 235,144 | | | | 225,945 | |
| Common stockholders’ equity | | | 222,509 | | | | 227,111 | | | | 234,005 | | | | 235,144 | | | | 225,945 | |
| Tangible common stockholders’ equity | | | 183,284 | | | | 187,509 | | | | 193,950 | | | | 194,600 | | | | 184,871 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | (0.33 | )% | | | 0.35 | % | | | 0.56 | % | | | 0.77 | % | | | 0.83 | % |
| Annualized return on average common equity | | | (5.12 | ) | | | 5.26 | | | | 8.08 | | | | 10.72 | | | | 11.86 | |
| Annualized return on average common tangible equity | | | (6.21 | ) | | | 6.38 | | | | 9.75 | | | | 12.95 | | | | 14.49 | |
Annualized net interest margin(1) | | | 3.79 | | | | 3.96 | | | | 3.92 | | | | 3.88 | | | | 3.87 | |
Efficiency ratio(2) | | | 68.37 | | | | 68.79 | | | | 67.92 | | | | 70.02 | | | | 64.54 | |
(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 | |
| | | the Year | | | the Year | | | the Year | |
| | | Ended | | | Ended | | | Ended | |
| | | 12/31/2008 | | | 12/31/2007 | | | 12/31/2006 | |
| Loan and Lease Data | | | | | | | | | |
| Commercial and commercial real estate | | $ | 1,718,071 | | | $ | 1,632,597 | | | $ | 1,483,738 | |
| Residential mortgage | | | 203,921 | | | | 217,044 | | | | 225,343 | |
| Agricultural and agricultural real estate | | | 247,664 | | | | 225,663 | | | | 233,748 | |
| Consumer | | | 234,061 | | | | 199,518 | | | | 194,652 | |
| Direct financing leases, net | | | 5,829 | | | | 9,158 | | | | 14,359 | |
| Unearned discount and deferred loan fees | | | (4,545 | ) | | | (3,813 | ) | | | (3,995 | ) |
| Total loans and leases | | $ | 2,405,001 | | | $ | 2,280,167 | | | $ | 2,147,845 | |
| | | | | | | | | | | | | |
| Asset Quality | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 76,953 | | | $ | 30,694 | | | $ | 8,104 | |
| Loans and leases past due ninety days or more as tointerest or principal payments | | | 1,005 | | | | 1,134 | | | | 315 | |
| Other real estate owned | | | 11,750 | | | | 2,195 | | | | 1,575 | |
| Other repossessed assets | | | 1,484 | | | | 438 | | | | 349 | |
| Total nonperforming assets | | $ | 91,192 | | | $ | 34,461 | | | $ | 10,343 | |
| | | | | | | | | | | | | |
| Allowance for Loan and Lease Losses | | | | | | | | | | | | |
| Balance, beginning of period | | $ | 32,993 | | | $ | 29,981 | | | $ | 27,791 | |
| Provision for loan and lease losses from continuingoperations | | | 29,319 | | | | 10,073 | | | | 3,883 | |
| Provision for loan and lease losses from discontinuedoperations | | | - | | | | - | | | | (5 | ) |
| Loans charged off | | | (27,747 | ) | | | (8,564 | ) | | | (3,989 | ) |
| Recoveries | | | 1,086 | | | | 1,641 | | | | 1,733 | |
| Additions related to acquired bank | | | - | | | | - | | | | 591 | |
| Reductions related to discontinued operations | | | - | | | | (138 | ) | | | (23 | ) |
| Balance, end of period | | $ | 35,651 | | | $ | 32,993 | | | $ | 29,981 | |
| | | | | | | | | | | | | |
| Asset Quality Ratios | | | | | | | | | | | | |
| Ratio of nonperforming loans and leases to total loans and leases | | | 3.24 | % | | | 1.40 | % | | | 0.39 | % |
| Ratio of nonperforming assets to total assets | | | 2.51 | | | | 1.06 | | | | 0.34 | |
| Ratio of net loan chargeoffs to average loans and leases | | | 1.15 | | | | 0.30 | | | | 0.11 | |
Allowance for loan and lease losses as a percent ofloans and leases | | | 1.48 | | | | 1.45 | | | | 1.40 | |
Allowance for loan and lease losses as a percent ofnonperforming loans and leases loans and leases | | | 45.73 | | | | 103.66 | | | | 356.11 | |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | For the Quarter Ended | |
| | | 12/31/2008 | | | 12/31/2007 | |
| | | Average | | | | | | | | | Average | | | | | | | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | |
Taxable | $ | 644,850 | | $ | 8,504 | | | 5.25 | % | $ | 503,504 | | $ | 5,927 | | | 4.67 | % |
Nontaxable(1) | | 154,906 | | | 2,483 | | | 6.38 | | | 147,715 | | | 2,400 | | | 6.45 | |
Total securities | | 799,756 | | | 10,987 | | | 5.47 | | | 651,219 | | | 8,327 | | | 5.07 | |
| Interest bearing deposits | | 1,343 | | | 8 | | | 2.37 | | | 749 | | | 13 | | | 6.89 | |
| Federal funds sold | | 15,240 | | | 32 | | | 0.84 | | | 6,827 | | | 77 | | | 4.47 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | 1,692,305 | | | 26,518 | | | 6.23 | | | 1,617,292 | | | 31,349 | | | 7.69 | |
Residential mortgage | | 226,260 | | | 3,390 | | | 5.96 | | | 233,829 | | | 3,904 | | | 6.62 | |
Agricultural and agricultural real estate(1) | | 243,703 | | | 4,078 | | | 6.66 | | | 224,981 | | | 4,481 | | | 7.90 | |
Consumer | | 228,372 | | | 5,095 | | | 8.88 | | | 197,394 | | | 5,173 | | | 10.40 | |
Direct financing leases, net | | 6,176 | | | 92 | | | 5.93 | | | 10,096 | | | 154 | | | 6.05 | |
Fees on loans | | - | | | 948 | | | - | | | - | | | 1,196 | | | - | |
Less: allowance for loan and lease losses | | (35,683) | | | - | | | - | | | (31,445 | ) | | - | | | - | |
Net loans and leases | | 2,361,133 | | | 40,121 | | | 6.76 | | | 2,252,147 | | | 46,257 | | | 8.15 | |
Total earning assets | | 3,177,472 | | $ | 51,148 | | | 6.40 | % | | 2,910,942 | | $ | 54,674 | | | 7.45 | % |
| Nonearning Assets | | 314,633 | | | | | | | | | 300,213 | | | | | | | |
| Total Assets | $ | 3,492,105 | | | | | | | | $ | 3,211,155 | | | | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | |
Savings | $ | 1,069,632 | | $ | 5,601 | | | 2.08 | % | $ | 848,746 | | $ | 5,272 | | | 2.46 | % |
Time, $100,000 and over | | 369,588 | | | 3,331 | | | 3.59 | | | 317,085 | | | 3,913 | | | 4.90 | |
Other time deposits | | 764,787 | | | 6,797 | | | 3.54 | | | 868,105 | | | 10,355 | | | 4.73 | |
| Short-term borrowings | | 195,219 | | | 522 | | | 1.06 | | | 273,882 | | | 2,748 | | | 3.98 | |
| Other borrowings | | 438,569 | | | 4,662 | | | 4.23 | | | 263,509 | | | 3,971 | | | 5.98 | |
Total interest bearing liabilities | | 2,837,795 | | | 20,913 | | | 2.93 | | | 2,571,327 | | | 26,259 | | | 4.05 | |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | 383,365 | | | | | | | | | 375,379 | | | | | | | |
| Accrued interest and other liabilities | | 37,121 | | | | | | | | | 38,504 | | | | | | | |
Total noninterest bearing liabilities | | 420,486 | | | | | | | | | 413,883 | | | | | | | |
| Stockholders’ Equity | | 233,824 | | | | | | | | | 225,945 | | | | | | | |
| Total Liabilities and Stockholders’ Equity | $ | 3,492,105 | | | | | | | | $ | 3,211,155 | | | | | | | |
Net interest income(1) | | | | $ | 30,235 | | | | | | | | $ | 28,415 | | | | |
Net interest spread(1) | | | | | | | | 3.47 | % | | | | | | | | 3.40 | % |
Net interest income to total earning assets(1) | | | | | | | | 3.79 | % | | | | | | | | 3.87 | % |
| Interest bearing liabilities to earning assets | | 89.31 | % | | | | | | | | 88.33 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | |
(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 Year Ended | |
| | | 12/31/2008 | | | 12/31/2007 | |
| | | Average | | | | | | | | | Average | | | | | | | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | |
Taxable | $ | 616,525 | | $ | 31,232 | | | 5.07 | % | $ | 477,338 | | $ | 21,937 | | | 4.60 | % |
Nontaxable(1) | | 151,828 | | | 9,813 | | | 6.46 | | | 136,552 | | | 9,077 | | | 6.65 | |
Total securities | | 768,353 | | | 41,045 | | | 5.34 | | | 613,890 | | | 31,014 | | | 5.05 | |
| Interest bearing deposits | | 706 | | | 18 | | | 2.55 | | | 700 | | | 33 | | | 4.71 | |
| Federal funds sold | | 15,494 | | | 299 | | | 1.93 | | | 7,295 | | | 387 | | | 5.31 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | 1,645,264 | | | 108,651 | | | 6.60 | | | 1,597,247 | | | 125,916 | | | 7.88 | |
Residential mortgage | | 223,334 | | | 14,169 | | | 6.34 | | | 240,932 | | | 16,303 | | | 6.77 | |
Agricultural and agricultural real estate(1) | | 238,328 | | | 16,933 | | | 7.10 | | | 225,471 | | | 18,209 | | | 8.08 | |
Consumer | | 212,430 | | | 20,004 | | | 9.42 | | | 196,432 | | | 20,655 | | | 10.52 | |
Direct financing leases, net | | 7,489 | | | 445 | | | 5.94 | | | 11,939 | | | 714 | | | 5.98 | |
Fees on loans | | - | | | 4,914 | | | - | | | - | | | 5,696 | | | - | |
Less: allowance for loan and lease losses | | (34,048 | ) | | - | | | - | | | (31,870) | | | - | | | - | |
Net loans and leases | | 2,292,797 | | | 165,116 | | | 7.20 | | | 2,240,151 | | | 187,493 | | | 8.37 | |
Total earning assets | | 3,077,350 | | $ | 206,478 | | | 6.71 | % | | 2,862,036 | | $ | 218,927 | | | 7.65 | % |
| Nonearning Assets | | 301,580 | | | | | | | | | 292,788 | | | | | | | |
| Total Assets | $ | 3,378,930 | | | | | | | | $ | 3,154,824 | | | | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | |
Savings | $ | 938,701 | | $ | 18,176 | | | 1.94 | % | $ | 831,675 | | $ | 22,404 | | | 2.69 | % |
Time, $100,000 and over | | 336,926 | | | 13,422 | | | 3.98 | | | 291,073 | | | 14,307 | | | 4.92 | |
Other time deposits | | 807,617 | | | 32,506 | | | 4.02 | | | 876,146 | | | 41,154 | | | 4.70 | |
| Short-term borrowings | | 233,856 | | | 4,571 | | | 1.95 | | | 287,428 | | | 13,293 | | | 4.62 | |
| Other borrowings | | 417,462 | | | 18,224 | | | 4.37 | | | 241,517 | | | 14,733 | | | 6.10 | |
Total interest bearing liabilities | | 2,734,562 | | | 86,899 | | | 3.18 | | | 2,527,839 | | | 105,891 | | | 4.19 | |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | 372,496 | | | | | | | | | 362,109 | | | | | | | |
| Accrued interest and other liabilities | | 39,351 | | | | | | | | | 49,136 | | | | | | | |
Total noninterest bearing liabilities | | 411,847 | | | | | | | | | 411,245 | | | | | | | |
| Stockholders’ Equity | | 232,521 | | | | | | | | | 215,740 | | | | | | | |
| Total Liabilities and Stockholders’ Equity | $ | 3,378,930 | | | | | | | | $ | 3,154,824 | | | | | | | |
Net interest income(1) | | | | $ | 119,579 | | | | | | | | $ | 113,036 | | | | |
Net interest spread(1) | | | | | | | | 3.53 | % | | | | | | | | 3.46 | % |
Net interest income to total earning assets(1) | | | | | | | | 3.89 | % | | | | | | | | 3.95 | % |
| Interest bearing liabilities to earning assets | | 88.86 | % | | | | | | | | 88.32 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | |
(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 Year Ended 12/31/2008 | | | As of and For the Year Ended 12/31/2007 | | | As of and For the Year Ended 12/31/2006 | |
| Total Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 1,041,247 | | $ | 976,489 | | $ | 843,282 | |
| New Mexico Bank & Trust | | | | | 773,726 | | | 672,863 | | | 638,712 | |
| Rocky Mountain Bank | | | | | 476,762 | | | 427,437 | | | 438,972 | |
| Wisconsin Community Bank | | | | | 429,707 | | | 399,532 | | | 413,108 | |
| Riverside Community Bank | | | | | 244,613 | | | 225,206 | | | 199,483 | |
| Galena State Bank & Trust Co. | | | | | 222,886 | | | 215,698 | | | 219,863 | |
| Arizona Bank & Trust | | | | | 219,830 | | | 222,576 | | | 223,567 | |
| First Community Bank | | | | | 123,058 | | | 127,305 | | | 118,010 | |
| Summit Bank & Trust | | | | | 77,638 | | | 46,668 | | | 21,590 | |
| Minnesota Bank & Trust | | | | | 25,695 | | | - | | | - | |
| Total Deposits | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 749,250 | | $ | 670,257 | | $ | 636,527 | |
| New Mexico Bank & Trust | | | | | 507,561 | | | 459,530 | | | 437,708 | |
| Rocky Mountain Bank | | | | | 370,630 | | | 305,933 | | | 335,053 | |
| Wisconsin Community Bank | | | | | 338,025 | | | 321,647 | | | 336,015 | |
| Riverside Community Bank | | | | | 197,785 | | | 187,052 | | | 162,319 | |
| Galena State Bank & Trust Co. | | | | | 185,042 | | | 177,040 | | | 178,388 | |
| Arizona Bank & Trust | | | | | 155,909 | | | 155,093 | | | 176,438 | |
| First Community Bank | | | | | 102,515 | | | 103,602 | | | 95,287 | |
| Summit Bank & Trust | | | | | 60,278 | | | 30,860 | | | 6,514 | |
| Minnesota Bank & Trust | | | | | 10,459 | | | - | | | - | |
| Return on Average Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | | 1.38 | % | | 1.34 | % | | 1.45 | % |
| New Mexico Bank & Trust | | | | | 1.06 | | | 1.48 | | | 1.21 | |
| Rocky Mountain Bank | | | | | 0.33 | | | 1.51 | | | 1.18 | |
| Wisconsin Community Bank | | | | | 0.27 | | | 0.62 | | | 0.53 | |
| Riverside Community Bank | | | | | 0.42 | | | 0.55 | | | 0.64 | |
| Galena State Bank & Trust Co. | | | | | 1.10 | | | 0.92 | | | 1.35 | |
| Arizona Bank & Trust | | | | | (1.75 | ) | | (0.08 | ) | | 0.47 | |
| First Community Bank | | | | | 0.45 | | | 1.30 | | | 1.01 | |
| Summit Bank & Trust | | | | | (4.57 | ) | | (2.43 | ) | | (6.31 | ) |
| Minnesota Bank & Trust | | | | | (7.43 | ) | | - | | | - | |
| Net Interest Margin | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | | 3.56 | % | | 3.40 | % | | 3.61 | % |
| New Mexico Bank & Trust | | | | | 4.57 | | | 4.80 | | | 5.05 | |
| Rocky Mountain Bank | | | | | 4.25 | | | 4.76 | | | 5.16 | |
| Wisconsin Community Bank | | | | | 3.61 | | | 3.45 | | | 3.83 | |
| Riverside Community Bank | | | | | 3.21 | | | 3.39 | | | 3.71 | |
| Galena State Bank & Trust Co. | | | | | 3.42 | | | 3.40 | | | 3.45 | |
| Arizona Bank & Trust | | | | | 3.89 | | | 4.56 | | | 4.92 | |
| First Community Bank | | | | | 3.44 | | | 3.80 | | | 3.95 | |
| Summit Bank & Trust | | | | | 3.93 | | | 5.10 | | | 6.98 | |
| Minnesota Bank & Trust | | | | | 2.60 | | | - | | | - | |
| Net Income (Loss) | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 13,846 | | $ | 11,907 | | $ | 11,990 | |
| New Mexico Bank & Trust | | | | | 7,456 | | | 8,727 | | | 6,873 | |
| Rocky Mountain Bank | | | | | 1,508 | | | 6,622 | | | 4,840 | |
| Wisconsin Community Bank | | | | | 1,073 | | | 2,355 | | | 2,109 | |
| Riverside Community Bank | | | | | 1,017 | | | 1,055 | | | 1,252 | |
| Galena State Bank & Trust Co. | | | | | 2,433 | | | 1,895 | | | 3,167 | |
| Arizona Bank & Trust | | | | | (3,856 | ) | | (154 | ) | | 902 | |
| First Community Bank | | | | | 548 | | | 1,476 | | | 1,197 | |
| Summit Bank & Trust | | | | | (2,754 | ) | | (965 | ) | | (1,220 | ) |
| Minnesota Bank & Trust | | | | | (1,401 | ) | | - | | | - | |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | | | | As of 12/31/2008 | | | As of 12/31/2007 | | | As of 12/31/2006 | |
| Total Portfolio Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 669,856 | | $ | 637,782 | | $ | 581,166 | |
| New Mexico Bank & Trust | | | | | 494,877 | | | 455,383 | | | 410,438 | |
| Rocky Mountain Bank | | | | | 326,086 | | | 316,776 | | | 309,943 | |
| Wisconsin Community Bank | | | | | 291,164 | | | 285,010 | | | 272,407 | |
| Riverside Community Bank | | | | | 165,347 | | | 146,925 | | | 137,102 | |
| Galena State Bank & Trust Co. | | | | | 141,428 | | | 144,152 | | | 158,222 | |
| Arizona Bank & Trust | | | | | 139,723 | | | 160,309 | | | 160,614 | |
| First Community Bank | | | | | 79,261 | | | 84,475 | | | 81,498 | |
| Summit Bank & Trust | | | | | 60,725 | | | 27,493 | | | 14,953 | |
| Minnesota Bank & Trust | | | | | 13,134 | | | - | | | - | |
| Allowance For Loan and Lease Losses | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 9,307 | | $ | 7,827 | | $ | 7,235 | |
| New Mexico Bank & Trust | | | | | 6,847 | | | 6,079 | | | 5,352 | |
| Rocky Mountain Bank | | | | | 4,678 | | | 4,061 | | | 4,044 | |
| Wisconsin Community Bank | | | | | 4,297 | | | 4,520 | | | 4,570 | |
| Riverside Community Bank | | | | | 2,293 | | | 1,885 | | | 1,747 | |
| Galena State Bank & Trust Co. | | | | | 1,962 | | | 1,830 | | | 2,049 | |
| Arizona Bank & Trust | | | | | 2,330 | | | 3,605 | | | 2,133 | |
| First Community Bank | | | | | 1,110 | | | 1,179 | | | 1,182 | |
| Summit Bank & Trust | | | | | 874 | | | 367 | | | 192 | |
| Minnesota Bank & Trust | | | | | 164 | | | - | | | - | |
| Nonperforming Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | $ | 7,840 | | $ | 3,344 | | $ | 1,216 | |
| New Mexico Bank & Trust | | | | | 11,426 | | | 1,130 | | | 2,206 | |
| Rocky Mountain Bank | | | | | 17,254 | | | 2,099 | | | 822 | |
| Wisconsin Community Bank | | | | | 10,746 | | | 12,152 | | | 1,966 | |
| Riverside Community Bank | | | | | 6,410 | | | 2,671 | | | 602 | |
| Galena State Bank & Trust Co. | | | | | 4,625 | | | 1,707 | | | 370 | |
| Arizona Bank & Trust | | | | | 8,278 | | | 5,541 | | | 254 | |
| First Community Bank | | | | | 5,102 | | | 1,312 | | | 588 | |
| Summit Bank & Trust | | | | | 5,486 | | | 1,376 | | | - | |
| Minnesota Bank & Trust | | | | | - | | | - | | | - | |
| Allowance As a Percent of Total Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | | | 1.39 | % | | 1.23 | % | | 1.24 | % |
| New Mexico Bank & Trust | | | | | 1.38 | | | 1.33 | | | 1.30 | |
| Rocky Mountain Bank | | | | | 1.43 | | | 1.28 | | | 1.30 | |
| Wisconsin Community Bank | | | | | 1.48 | | | 1.59 | | | 1.68 | |
| Riverside Community Bank | | | | | 1.39 | | | 1.28 | | | 1.27 | |
| Galena State Bank & Trust Co. | | | | | 1.39 | | | 1.27 | | | 1.30 | |
| Arizona Bank & Trust | | | | | 1.67 | | | 2.25 | | | 1.33 | |
| First Community Bank | | | | | 1.40 | | | 1.40 | | | 1.45 | |
| Summit Bank & Trust | | | | | 1.44 | | | 1.33 | | | 1.28 | |
| Minnesota Bank & Trust | | | | | 1.25 | | | - | | | - | |
