CONTACT: FOR IMMEDIATE RELEASE
John K. Schmidt MONDAY, JULY 27, 2009
Chief Operating Officer
Chief Financial Officer
(563) 589-1994
jschmidt@htlf.com
HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER 2009 EARNINGS
Second Quarter 2009 Highlights
| § | Net income for the quarter was $4.7 million |
| § | Net interest income increased $3.5 million or 12% over second quarter 2008 |
| § | Net interest margin consistent with second quarter 2008 at 3.92% |
| § | Provision for loan losses was $10.0 million compared to $5.4 million in second quarter 2008 |
| § | Deposit growth was $187.3 million or 7% since year-end 2008 |
| § | Total loans decreased $30.0 million or 1% since year-end 2008 |
| § | Galena State Bank acquired The Elizabeth State Bank on July 2, 2009, in a whole bank with loss sharing transaction facilitated by the FDIC |
| | | | Quarter Ended June 30, | | | | Six Months Ended June 30, | |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| Net income (in millions) | | $ | 4.7 | | | $ | 4.6 | | | $ | 10.8 | | | $ | 10.8 | |
| Net income available to common stockholders (in millions) | | | 3.4 | | | | 4.7 | | | | 8.2 | | | | 11.0 | |
| Diluted earnings per common share | | | 0.21 | | | | 0.29 | | | | 0.50 | | | | 0.67 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.36 | % | | | 0.56 | % | | | 0.45 | % | | | 0.67 | % |
| Return on average common equity | | | 5.74 | | | | 8.08 | | | | 6.99 | | | | 9.40 | |
| Net interest margin | | | 3.92 | | | | 3.92 | | | | 3.93 | | | | 3.90 | |
“Heartland’s second quarter results support several positive trends in 2009. Net interest margin remains steady at 3.92 percent; the composition of the balance sheet has improved and nonperforming asset growth has slowed. Strong core earnings were enhanced by residential lending revenue and securities gains. Given these positive factors, we feel very good about the earnings power of our company.”
Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, July 27, 2009—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income of $4.7 million for the quarter ended June 30, 2009, compared to net income of $4.6 million earned during the second quarter of 2008. Net income available to common stockholders was $3.4 million, or $0.21 per diluted common share, for the quarter ended June 30, 2009, compared to $4.7 million, or $0.29 per diluted common share, earned during the second quarter of 2008. Return on average common equity was 5.74 percent and return on average assets was 0.36 percent for the second quarter of 2009, compared to 8.08 percent and 0.56 percent, respectively, for the same quarter in 2008.
Net income recorded for the first six months of 2009 was $10.8 million, compared to $10.8 million recorded during the first six months of 2008. Net income available to common stockholders was $8.2 million, or $0.50 per diluted common share, for the six months ended June 30, 2009, compared to $11.0 million, or $0.67 per diluted common share, earned during the first six months of 2008. Return on average common equity was 6.99 percent and return on average assets was 0.45 percent for the first six months of 2009, compared to 9.40 percent and 0.67 percent, respectively, for the same period in 2008.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer said, “Heartland’s second quarter results support several positive trends in 2009. Net interest margin remains steady at 3.92 percent; the composition of the balance sheet has improved and nonperforming asset growth has slowed. Strong core earnings were enhanced by residential lending revenue and securities gains. Given these positive factors, we feel very good about the earnings power of our company.”
Earnings for the quarter and six months ended June 30, 2009, were positively affected by increased net interest income, loan servicing income, securities gains and gains on sale of loans. The growth in these areas was partially offset by an increase in the loan loss provision, which was $10.0 million during the second quarter of 2009 compared to $5.4 million during the second quarter of 2008. For the six-month comparative period, the loan loss provision was $16.7 million during 2009 compared to $7.1 million during 2008. Also negatively affecting earnings during the second quarter and first six months of 2009 were increased FDIC assessments and expenses associated with other real estate owned.
Net Interest Margin Maintained; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 3.92 percent during the second quarter of 2009 and the second quarter of 2008. For the six-month periods ended June 30, net interest margin, expressed as a percentage of average earning assets, was 3.93 percent during 2009 and 3.90 percent during 2008.
Fuller commented, “Under the circumstances, we are pleased that Heartland has consistently maintained its net interest margin near the 4.00 percent level over the past eight quarters. Holding margin has been and continues to be one of our main objectives during these challenging times. We remain committed to disciplined loan pricing and continue to focus on controlling our deposit costs.”
Net interest income on a tax-equivalent basis totaled $33.4 million during the second quarter of 2009, an increase of $3.6 million or 12 percent from the $29.8 million recorded during the second quarter of 2008. For the six-month period during 2009, net interest income on a tax-equivalent basis was $65.6 million, an increase of $7.1 million or 12 percent from the $58.5 million recorded during the first six months of 2008. 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 $362.7 million or 12 percent growth in average earning assets during the second quarter of 2009 compared to the same quarter in 2008 and the $349.0 million or 12 percent growth in average earning assets during the first six months of 2009 compared to the same six months of 2008.
On a tax-equivalent basis, interest income in the second quarter of 2009 totaled $51.5 million compared to $51.1 million in the second quarter of 2008, an increase of $429,000 or 1 percent. For the first six months of 2009, interest income on a tax-equivalent basis decreased $978,000 or 1 percent over the same period in 2008. Nearly half of Heartland’s commercial and agricultural loan portfolios consist of 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 3.25 percent for the first six months of 2009. During the first six months of 2008, the national prime interest rate decreased from 7.25 percent on January 1, 2008, to 5.00 percent at June 30, 2008. 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 had two $50.0 million derivative transactions on the loan portfolio that were at their floor interest rates. One of these derivative transactions matured on April 4, 2009.
Interest expense for the second quarter of 2009 was $18.1 million compared to $21.3 million in the second quarter of 2008, a decrease of $3.2 million or 15 percent. On a six-month comparative basis, interest expense decreased $8.1 million or 18 percent. Interest rates paid on Heartland’s deposits and borrowings were significantly lower during the first six months of 2009 compared to the first six months of 2008. Approximately 46 percent of Heartland’s certificate of deposit accounts will mature within the next six months at a weighted average rate of 2.55 percent.
Noninterest Income Increases; Noninterest Expense Grows
Noninterest income was $14.7 million during the second quarter of 2009 compared to $8.3 million during the second quarter of 2008, an increase of $6.4 million or 76 percent. For the first six months of 2009, noninterest income was $27.4 million compared to $16.8 million during the first six months of 2008, an increase of $10.6 million or 63 percent. The categories experiencing the largest increases for both comparative periods were loan servicing income, securities gains and gains on sale of loans. Loan servicing income increased $2.1 million or 177 percent for the quarter and $3.6 million or 145 percent for the six-month periods under comparison due to an increase in the number of residential real estate loans that Heartland services. The portfolio of mortgage loans serviced for others by Heartland totaled $1.02 billion at June 30, 2009, compared to $681.5 million at June 30, 2008. Securities gains totaled $2.2 million during the second quarter of 2009 compared to $648,000 during the second quarter of 2008. For the six-month comparative period, securities gains totaled $5.2 million during 2009 compared to $1.0 million during 2008. Securities designed to outperform in a declining rate environment were sold during the first half of 2009 and replaced with securities that are expected to outperform as rates rise. Gains on sale of loans totaled $2.2 million during the second quarter of 2009 compared to $480,000 during the second quarter of 2008. For the first six months of 2009, gains on sale of loans totaled $4.0 million compared to $984,000 for the first six months of 2008. As long-term mortgage loan rates fell below 5.00 percent during the first half of 2009, refinancing activity significantly increased on 15- and 30-year, fixed-rate mortgage loans. Heartland normally elects to sell these types of loans into the secondary market and retains the servicing on these loans.
Fuller stated, “Noninterest income continues to help offset higher provision expense. Low interest rates are fueling strong residential loan refinance activity and boosting mortgage banking revenues. At the same time, we’ve taken advantage of select opportunities to sell securities with gains while improving yields in our portfolio.”
For the second quarter of 2009, noninterest expense totaled $30.5 million, an increase of $4.9 million or 19 percent from the same period in 2008. This increase was primarily attributable to higher FDIC assessments, which totaled $2.8 million during the second quarter of 2009 compared to $266,000 during the second quarter of 2008, and net losses on repossessed assets, which totaled $2.5 million during the second quarter of 2009 compared to $42,000 during the second quarter of 2008. Included in the FDIC assessments recorded during the second quarter of 2009 was $1.7 million for the emergency special assessment. For the six-month period ended June 30, 2009, noninterest expense totaled $58.8 million, an increase of $7.4 million or 14 percent when compared to the same six-month period in 2008. Salaries and employee benefits, increased $1.9 million or 7 percent during the six-month comparative period, primarily due to the opening of Minnesota Bank & Trust in April 2008 and additional staffing at Summit Bank & Trust and New Mexico Bank & Trust to grow its customer base and at Heartland’s operations center to provide support services to the bank subsidiaries. Total full-time equivalent employees were 1,020 at June 30, 2009, compared to 1,002 at June 30, 2008. The other noninterest expense categories to experience a significant increase during the six-month periods under comparison were FDIC assessments, which were $3.9 million during the first six months of 2009 compared to $571,000 during the first six months of 2008, and net losses on repossessed assets, which were $3.2 million during the first six months of 2009 compared to $190,000 during the first six months of 2008.
Heartland’s effective tax rate was 30.05 percent for the first half of 2009 compared to 27.28 percent for the first half of 2008. Heartland’s effective tax rate during the first six months of 2009 did not include any federal rehabilitation tax credits, whereas Heartland’s effective tax rate during the first six months of 2008 included $247,000 in federal rehabilitation tax credits associated with Dubuque Bank and Trust Company’s ownership interests in limited liability companies that own certified historic structures. 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 25.21 percent during the first half of 2009 compared to 23.36 percent during the first half of 2008. The tax-equivalent adjustment for this tax-exempt interest income was $2.1 million during the first six months of 2009 compared to $1.9 million during the same six months in 2008.
Loan Growth Improves; Growth in Deposits Continues
At June 30, 2009, total assets had increased $136.5 million or 8 percent annualized since year-end 2008. Total loans and leases were $2.38 billion at June 30, 2009, compared to $2.41 billion at year-end 2008, a decrease of $30.0 million or 2 percent annualized. The only loan category to experience growth during the first six months of 2009 was agricultural and agricultural real estate loans. Nearly all of this growth occurred at Dubuque Bank and Trust Company. Loan demand improved during the second quarter of 2009. Growth in total loans and leases was $18.6 million during the second quarter of 2009 compared to a decrease of $48.6 million during the first quarter of 2009. This growth was driven primarily by activity in commercial and commercial real estate loans, which increased by $28.1 million, nearly all of which occurred at Dubuque Bank and Trust Company.
Total deposits grew to $2.83 billion at June 30, 2009, an increase of $187.3 million or 14 percent annualized since year-end 2008. With the exception of First Community Bank, Wisconsin Community Bank and Rocky Mountain Bank, all Heartland banks experienced a significant increase in deposits. This growth was weighted more heavily in Heartland’s Western markets, which were responsible for nearly 56 percent of the growth. Demand deposits increased $53.9 million or 28 percent annualized since year-end 2008. Savings deposit balances experienced an increase of $131.5 million or 23 percent annualized since year-end 2008 and time deposits, exclusive of brokered deposits, experienced an increase of $8.0 million or 1 percent annualized since year-end 2008. At June 30, 2009, brokered time deposits totaled $45.3 million or 2 percent of total deposits compared to $51.5 million or 2 percent of total deposits at year-end 2008. Deposit growth continued during the second quarter of 2009 at $38.8 million compared to $148.5 million during the first quarter of 2009.
“As commercial and retail customers continue to build cash reserves, Heartland is seeing strong organic deposit growth. Compared to one year ago, deposits increased 17 percent, with 14 percent growth in demand deposits and a 41 percent increase in savings and money market deposits. Our strategy remains to emphasize non-maturity core products over higher-cost certificates of deposit,” commented Fuller.
Nonperforming Assets Increase
The allowance for loan and lease losses at June 30, 2009, was 1.57 percent of loans and leases and 52.32 percent of nonperforming loans, compared to 1.48 percent of loans and leases and 45.73 percent of nonperforming loans at December 31, 2008. The first six months of 2009 provision for loan losses was $16.7 million compared to $7.1 million for the first six months of 2008. Additions to the allowance for loan and lease losses during the first six months of 2009 were driven by a variety of factors including deterioration of economic conditions, downgrades in internal risk ratings, reductions in appraised values and higher levels of charge-offs, primarily in Heartland’s Western markets of Arizona, Montana and Colorado.
Nonperforming loans were $71.1 million or 3.00 percent of total loans and leases at June 30, 2009, compared to $78.0 million or 3.24 percent of total loans and leases at December 31, 2008, and $67.1 million or 2.85% of total loans and leases at March 31, 2009. Approximately 65 percent, or $46.1 million, of Heartland’s nonperforming loans are to 15 borrowers, with $14.3 million originated by Rocky Mountain Bank, $9.5 million originated by Arizona Bank & Trust, $8.6 million originated by Wisconsin Community Bank, $6.8 million originated by Summit Bank & Trust, $3.3 million originated by Riverside Community Bank, $2.0 million originated by Dubuque Bank and Trust Company and $1.6 million originated by New Mexico Bank & Trust. The portion of Heartland’s nonperforming loans covered by government guarantees was $3.3 million at June 30, 2009.
Other real estate owned was $29.3 million at June 30, 2009, compared to $11.8 million at December 31, 2008, an increase of $17.6 million. All of this increase occurred during the first quarter of 2009 with $12.0 million attributable to a residential lot development loan originated at Rocky Mountain Bank. Liquidation strategies have been identified for all the assets held in other real estate owned. Management plans to market these properties under an orderly liquidation process instead of under a quick liquidation process which would most likely result in discounts greater than the projected carrying costs.
Net charge-offs during the first six months of 2009 were $15.1 million compared to $5.2 million during the first six months of 2008. A large portion of the net charge-offs was related to commercial real estate development loans and residential lot loans, primarily in the Phoenix, Arizona market. Previously, Heartland 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 loans it considered impaired by writing down the loan balance to an estimated net realizable value based on the anticipated disposition value.
“The rate of increase in nonperforming assets continued to slow in the second quarter, increasing only slightly. We view this as a favorable trend and continue in our efforts to achieve reductions in nonperforming loans and other real estate owned. Although we do not desire to generate or retain nonperforming assets, our solid margin enables us to carry some nonperforming real estate on our balance sheet while we seek opportunities to maximize the proceeds from the sales,” Fuller said.
Acquired The Elizabeth State Bank
On July 2, 2009, Heartland acquired all deposits of The Elizabeth State Bank in Elizabeth, Illinois through its subsidiary Galena State Bank based in Galena, Illinois in a whole bank loss sharing transaction facilitated by the FDIC. Bank branches previously owned and operated by The Elizabeth State Bank reopened on Monday, July 6, 2009, as Galena State Bank branches. As of April 30, 2009, The Elizabeth State Bank had loans of approximately $43 million and deposits of approximately $48 million. Galena State Bank paid a premium of 1.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, Galena State Bank agreed to purchase approximately $52.3 million of assets. The FDIC will retain the remaining assets for later disposition.
Commenting on the acquisition, Fuller said, “The Elizabeth State Bank is precisely the type of growth opportunity we have been seeking. The acquisition strengthens our Galena State Bank subsidiary through increased market share and adds more convenience to current customers. The FDIC deserves credit for arranging a smooth transition.”
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 800-762-8908 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 until October 27, 2009, by dialing 800-406-7325, pass code 4110374, or by logging onto www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a $3.8 billion diversified financial services company providing banking, mortgage, wealth management, insurance and consumer finance services to individuals and businesses. Heartland currently has 63 banking locations in 42 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 June 30, | | For the Six Months Ended June 30, |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 38,423 | | | $ | 40,555 | | | $ | 77,906 | | | $ | 83,454 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 10,039 | | | | 7,885 | | | | 18,460 | | | | 14,500 | |
Nontaxable | | | 2,025 | | | | 1,679 | | | | 3,908 | | | | 3,326 | |
| Interest on federal funds sold | | | - | | | | 51 | | | | 1 | | | | 182 | |
| Interest on deposits in other financial institutions | | | - | | | | 2 | | | | 1 | | | | 7 | |
Total Interest Income | | | 50,487 | | | | 50,172 | | | | 100,276 | | | | 101,469 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 13,576 | | | | 15,657 | | | | 27,698 | | | | 32,753 | |
| Interest on short-term borrowings | | | 173 | | | | 1,087 | | | | 385 | | | | 3,273 | |
| Interest on other borrowings | | | 4,360 | | | | 4,593 | | | | 8,738 | | | | 8,870 | |
Total Interest Expense | | | 18,109 | | | | 21,337 | | | | 36,821 | | | | 44,896 | |
Net Interest Income | | | 32,378 | | | | 28,835 | | | | 63,455 | | | | 56,573 | |
| Provision for loan and lease losses | | | 10,041 | | | | 5,369 | | | | 16,706 | | | | 7,130 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 22,337 | | | | 23,466 | | | | 46,749 | | | | 49,443 | |
| Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,109 | | | | 2,880 | | | | 5,996 | | | | 5,495 | |
| Loan servicing income | | | 3,311 | | | | 1,195 | | | | 6,097 | | | | 2,491 | |
| Trust fees | | | 1,971 | | | | 2,068 | | | | 3,668 | | | | 4,089 | |
| Brokerage and insurance commissions | | | 715 | | | | 883 | | | | 1,596 | | | | 1,775 | |
| Securities gains, net | | | 2,206 | | | | 648 | | | | 5,171 | | | | 1,010 | |
| Gain (loss) on trading account securities | | | 348 | | | | (227 | ) | | | 62 | | | | (434 | ) |
| Impairment loss on securities | | | - | | | | (30 | ) | | | - | | | | (116 | ) |
| Gains on sale of loans | | | 2,231 | | | | 480 | | | | 4,039 | | | | 984 | |
| Income on bank owned life insurance | | | 213 | | | | 380 | | | | 343 | | | | 843 | |
| Other noninterest income | | | 560 | | | | 41 | | | | 454 | | | | 655 | |
Total Noninterest Income | | | 14,664 | | | | 8,318 | | | | 27,426 | | | | 16,792 | |
| Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,952 | | | | 14,666 | | | | 31,385 | | | | 29,459 | |
| Occupancy | | | 2,176 | | | | 2,193 | | | | 4,551 | | | | 4,537 | |
| Furniture and equipment | | | 1,695 | | | | 1,771 | | | | 3,342 | | | | 3,539 | |
| Professional fees | | | 2,151 | | | | 2,382 | | | | 4,321 | | | | 4,587 | |
| FDIC assessments | | | 2,818 | | | | 266 | | | | 3,865 | | | | 571 | |
| Advertising | | | 949 | | | | 1,046 | | | | 1,532 | | | | 1,841 | |
| Other intangibles amortization | | | 234 | | | | 236 | | | | 469 | | | | 472 | |
| Net loss on repossessed assets | | | 2,532 | | | | 42 | | | | 3,152 | | | | 190 | |
| Other noninterest expenses | | | 2,970 | | | | 2,978 | | | | 6,146 | | | | 6,148 | |
Total Noninterest Expense | | | 30,477 | | | | 25,580 | | | | 58,763 | | | | 51,344 | |
Income Before Income Taxes | | | 6,524 | | | | 6,204 | | | | 15,412 | | | | 14,891 | |
| Income taxes | | | 1,812 | | | | 1,643 | | | | 4,631 | | | | 4,063 | |
Net Income | | $ | 4,712 | | | $ | 4,561 | | | $ | 10,781 | | | $ | 10,828 | |
Net income attributable to noncontrolling interest, net of tax | | | 44 | | | | 142 | | | | 103 | | | | 142 | |
Net Income Attributable to Heartland | | | 4,756 | | | | 4,703 | | | | 10,884 | | | | 10,970 | |
Preferred dividends and discount | | | (1,336 | ) | | | - | | | | (2,672 | ) | | | - | |
Net Income Available to Common Stockholders | | $ | 3,420 | | | $ | 4,703 | | | $ | 8,212 | | | $ | 10,970 | |
| | | | | | | | | | | �� | | | | | | |
| Earnings per common share-diluted | | $ | 0.21 | | | $ | 0.29 | | | $ | 0.50 | | | $ | 0.67 | |
| Weighted average shares outstanding-diluted | | | 16,323,724 | | | | 16,388,885 | | | | 16,310,384 | | | | 16,413,396 | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | For the Quarter Ended | |
| | | 6/30/2009 | | | 03/31/2009 | | | 12/31/2008 | | | 09/30/2008 | | | 06/30/2008 | |
| Interest Income | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 38,423 | | | $ | 39,483 | | | $ | 39,905 | | | $ | 40,990 | | | $ | 40,555 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 10,039 | | | | 8,421 | | | | 8,503 | | | | 8,228 | | | | 7,885 | |
Nontaxable | | | 2,025 | | | | 1,883 | | | | 1,692 | | | | 1,670 | | | | 1,679 | |
| Interest on federal funds sold | | | - | | | | 1 | | | | 32 | | | | 85 | | | | 51 | |
| Interest on deposits in other financial institutions | | | - | | | | 1 | | | | 8 | | | | 3 | | | | 2 | |
Total Interest Income | | | 50,487 | | | | 49,789 | | | | 50,140 | | | | 50,976 | | | | 50,172 | |
| Interest Expense | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 13,576 | | | | 14,122 | | | | 15,729 | | | | 15,622 | | | | 15,657 | |
| Interest on short-term borrowings | | | 173 | | | | 212 | | | | 522 | | | | 776 | | | | 1,087 | |
| Interest on other borrowings | | | 4,360 | | | | 4,378 | | | | 4,662 | | | | 4,692 | | | | 4,593 | |
Total Interest Expense | | | 18,109 | | | | 18,712 | | | | 20,913 | | | | 21,090 | | | | 21,337 | |
Net Interest Income | | | 32,378 | | | | 31,077 | | | | 29,227 | | | | 29,886 | | | | 28,835 | |
| Provision for loan and lease losses | | | 10,041 | | | | 6,665 | | | | 15,106 | | | | 7,083 | | | | 5,369 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 22,337 | | | | 24,412 | | | | 14,121 | | | | 22,803 | | | | 23,466 | |
| Noninterest Income | | | | | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,109 | | | | 2,887 | | | | 3,034 | | | | 3,125 | | | | 2,880 | |
| Loan servicing income | | | 3,311 | | | | 2,786 | | | | 1,015 | | | | 1,094 | | | | 1,195 | |
| Trust fees | | | 1,971 | | | | 1,697 | | | | 1,747 | | | | 2,070 | | | | 2,068 | |
| Brokerage and insurance commissions | | | 715 | | | | 881 | | | | 1,002 | | | | 942 | | | | 883 | |
| Securities gains, net | | | 2,206 | | | | 2,965 | | | | 510 | | | | 5 | | | | 648 | |
| Gain (loss) on trading account securities | | | 348 | | | | (286 | ) | | | (531 | ) | | | (33 | ) | | | (227 | ) |
| Impairment loss on securities | | | - | | | | - | | | | (347 | ) | | | (4,688 | ) | | | (30 | ) |
| Gains on sale of loans | | | 2,231 | | | | 1,808 | | | | 331 | | | | 295 | | | | 480 | |
| Income (loss) on bank owned life insurance | | | 213 | | | | 130 | | | | (1,780 | ) | | | (247 | ) | | | 380 | |
| Gain on sale of merchant bankcard processing services | | | - | | | | - | | | | - | | | | 5,200 | | | | - | |
| Other noninterest income | | | 560 | | | | (106 | ) | | | 543 | | | | 117 | | | | 41 | |
Total Noninterest Income | | | 14,664 | | | | 12,762 | | | | 5,524 | | | | 7,880 | | | | 8,318 | |
| Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,952 | | | | 16,433 | | | | 12,293 | | | | 15,000 | | | | 14,666 | |
| Occupancy | | | 2,176 | | | | 2,375 | | | | 2,220 | | | | 2,262 | | | | 2,193 | |
| Furniture and equipment | | | 1,695 | | | | 1,647 | | | | 1,767 | | | | 1,662 | | | | 1,771 | |
| Professional fees | | | 2,151 | | | | 2,170 | | | | 2,577 | | | | 2,712 | | | | 2,382 | |
| FDIC assessments | | | 2,818 | | | | 1,047 | | | | 491 | | | | 384 | | | | 266 | |
| Advertising | | | 949 | | | | 583 | | | | 909 | | | | 1,012 | | | | 1,046 | |
| Other intangibles amortization | | | 234 | | | | 235 | | | | 235 | | | | 236 | | | | 236 | |
| Net loss on repossessed assets | | | 2,532 | | | | 620 | | | | 310 | | | | 327 | | | | 42 | |
| Other noninterest expenses | | | 2,970 | | | | 3,176 | | | | 3,356 | | | | 3,142 | | | | 2,978 | |
Total Noninterest Expense | | | 30,477 | | | | 28,286 | | | | 24,158 | | | | 26,737 | | | | 25,580 | |
Income (Loss) Before Income Taxes | | | 6,524 | | | | 8,888 | | | | (4,513 | ) | | | 3,946 | | | | 6,204 | |
| Income taxes | | | 1,812 | | | | 2,819 | | | | (1,769 | ) | | | 1,018 | | | | 1,643 | |
Net Income (Loss) | | $ | 4,712 | | | $ | 6,069 | | | $ | (2,744 | ) | | $ | 2,928 | | | $ | 4,561 | |
Net income available to noncontrolling interest, net of tax | | | 44 | | | | 59 | | | | 61 | | | | 77 | | | | 142 | |
Net Income (Loss) Attributable to Heartland | | $ | 4,756 | | | $ | 6,128 | | | $ | (2,683 | ) | | $ | 3,005 | | | $ | 4,703 | |
Preferred dividends and discount | | | (1,336 | ) | | | (1,336 | ) | | | (178 | ) | | | - | | | | - | |
Net Income (Loss) Available to Common Stockholders | | $ | 3,420 | | | $ | 4,792 | | | $ | (2,861 | ) | | $ | 3,005 | | | $ | 4,703 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) per common share-diluted | | $ | 0.21 | | | $ | 0.29 | | | $ | (0.18 | ) | | $ | 0.18 | | | $ | 0.29 | |
| Weighted average shares outstanding-diluted | | | 16,323,724 | | | | 16,296,839 | | | | 16,324,106 | | | | 16,355,393 | | | | 16,388,885 | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | As Of | |
| | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | |
| Assets | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 39,961 | | | $ | 87,261 | | | $ | 51,303 | | | $ | 67,074 | | | $ | 41,292 | |
| Securities | | | 1,061,211 | | | | 1,006,172 | | | | 903,705 | | | | 760,143 | | | | 795,624 | |
| Loans held for sale | | | 24,339 | | | | 18,263 | | | | 19,695 | | | | 9,812 | | | | 11,437 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | |
| Held to maturity | | | 2,375,027 | | | | 2,356,391 | | | | 2,405,001 | | | | 2,364,259 | | | | 2,295,406 | |
| Allowance for loan and lease losses | | | (37,234 | ) | | | (37,277 | ) | | | (35,651 | ) | | | (34,845 | ) | | | (34,931 | ) |
| Loans and leases, net | | | 2,337,793 | | | | 2,319,114 | | | | 2,369,350 | | | | 2,329,414 | | | | 2,260,475 | |
| Premises, furniture and equipment, net | | | 117,914 | | | | 119,569 | | | | 120,500 | | | | 120,225 | | | | 118,063 | |
| Goodwill | | | 40,207 | | | | 40,207 | | | | 40,207 | | | | 40,207 | | | | 40,207 | |
| Other intangible assets, net | | | 11,591 | | | | 9,606 | | | | 8,079 | | | | 8,332 | | | | 8,434 | |
| Cash surrender value on life insurance | | | 54,817 | | | | 54,581 | | | | 54,431 | | | | 55,684 | | | | 56,430 | |
| Other real estate, net | | | 29,311 | | | | 29,317 | | | | 11,750 | | | | 9,387 | | | | 4,196 | |
| Other assets | | | 49,587 | | | | 46,010 | | | | 51,248 | | | | 45,704 | | | | 42,913 | |
| Total Assets | | $ | 3,766,731 | | | $ | 3,730,100 | | | $ | 3,630,268 | | | $ | 3,445,982 | | | $ | 3,379,071 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand | | $ | 436,985 | | | $ | 409,921 | | | $ | 383,061 | | | $ | 373,193 | | | $ | 383,136 | |
| Savings | | | 1,259,861 | | | | 1,185,756 | | | | 1,128,312 | | | | 1,042,364 | | | | 894,074 | |
| Brokered time deposits | | | 45,322 | | | | 44,631 | | | | 51,474 | | | | 81,895 | | | | 79,515 | |
| Other time deposits | | | 1,085,335 | | | | 1,148,413 | | | | 1,077,385 | | | | 1,070,455 | | | | 1,052,160 | |
| Total deposits | | | 2,827,503 | | | | 2,788,721 | | | | 2,640,232 | | | | 2,567,907 | | | | 2,408,885 | |
| Short-term borrowings | | | 132,301 | | | | 117,766 | | | | 210,184 | | | | 176,543 | | | | 263,137 | |
| Other borrowings | | | 457,508 | | | | 477,640 | | | | 437,833 | | | | 440,146 | | | | 444,006 | |
| Accrued expenses and other liabilities | | | 31,459 | | | | 30,496 | | | | 33,396 | | | | 32,993 | | | | 32,187 | |
| Total Liabilities | | | 3,448,771 | | | | 3,414,623 | | | | 3,321,645 | | | | 3,217,589 | | | | 3,148,215 | |
| | | | | | | | | | | | | | | | | | | | | |
| Equity | | | | | | | | | | | | | | | | | | | | |
| Preferred equity | | | 76,594 | | | | 76,279 | | | | 75,578 | | | | - | | | | - | |
| Common equity | | | 238,449 | | | | 236,237 | | | | 230,025 | | | | 225,312 | | | | 227,698 | |
| Total Heartland Stockholders’ Equity | | | 315,043 | | | | 312,516 | | | | 305,603 | | | | 225,312 | | | | 227,698 | |
| Noncontrolling interest | | | 2,917 | | | | 2,961 | | | | 3,020 | | | | 3,081 | | | | 3,158 | |
| Total Equity | | | 317,960 | | | | 315,477 | | | | 308,623 | | | | 228,393 | | | | 230,856 | |
| Total Liabilities and Equity | | $ | 3,766,731 | | | $ | 3,730,100 | | | $ | 3,630,268 | | | $ | 3,445,982 | | | $ | 3,379,071 | |
| | | | | | | | | | | | | | | | | | | | | |
| Common Share Data | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 14.62 | | | $ | 14.50 | | | $ | 14.13 | | | $ | 13.86 | | | $ | 13.99 | |
| FAS 115 effect on book value per common share | | $ | (0.02 | ) | | $ | .10 | | | $ | (0.13 | ) | | $ | (0.28 | ) | | $ | (0.07 | ) |
| Common shares outstanding, net of treasury stock | | | 16,310,825 | | | | 16,294,828 | | | | 16,274,490 | | | | 16,252,891 | | | | 16,270,872 | |
| | | | | | | | | | | | | | | | | | | | | |
Tangible Capital Ratio(1) | | | 5.24 | % | | | 5.23 | % | | | 5.19 | % | | | 5.33 | % | | | 5.50 | % |
(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 Quarters Ended | | For the Six Months Ended |
| | | 6/30/2009 | 6/30/2008 | | 6/30/2009 | 6/30/2008 |
| | | | | | | |
| Average Balances | | | | | | |
| Assets | | $ 3,763,003 | $ 3,354,880 | | $ 3,711,104 | $ 3,312,207 |
| Loans and leases, net of unearned | | 2,384,568 | 2,286,392 | | 2,404,087 | 2,285,513 |
| Deposits | | 2,790,322 | 2,396,963 | | 2,732,321 | 2,367,799 |
| Earning assets | | 3,420,233 | 3,057,505 | | 3,364,894 | 3,015,860 |
| Interest bearing liabilities | | 2,984,903 | 2,712,487 | | 2,951,833 | 2,675,224 |
| Common stockholders’ equity | | 238,878 | 234,005 | | 237,038 | 234,574 |
| Total stockholder’s equity | | 318,077 | 234,005 | | 316,022 | 234,574 |
| Tangible common stockholders’ equity | | 195,483 | 189,669 | | 193,524 | 190,116 |
| | | | | | | |
| Earnings Performance Ratios | | | | | | |
| Annualized return on average assets | | 0.36% | 0.56% | | 0.45% | 0.67% |
| Annualized return on average common equity | | 5.74% | 8.08% | | 6.99% | 9.40% |
| Annualized return on average common tangible equity | | 7.02% | 9.97% | | 8.56% | 11.60% |
Annualized net interest margin(1) | | 3.92% | 3.92% | | 3.93% | 3.90% |
Efficiency ratio(2) | | 66.40% | 67.92% | | 66.92% | 68.96% |
(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 | |
| | | 06/30/2009 | | | 03/31/2009 | | | 12/31/2008 | | | 09/30/2008 | | | 06/30/2008 | |
| | | | | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | | | | |
| Assets | | $ | 3,763,003 | | | $ | 3,659,204 | | | $ | 3,492,105 | | | $ | 3,399,199 | | | $ | 3,354,880 | |
| Loans and leases, net of unearned | | | 2,384,568 | | | | 2,423,605 | | | | 2,396,816 | | | | 2,339,539 | | | | 2,286,392 | |
| Deposits | | | 2,790,322 | | | | 2,674,320 | | | | 2,587,372 | | | | 2,499,988 | | | | 2,396,963 | |
| Earning assets | | | 3,420,233 | | | | 3,309,556 | | | | 3,177,472 | | | | 3,100,208 | | | | 3,057,505 | |
| Interest bearing liabilities | | | 2,984,903 | | | | 2,918,763 | | | | 2,837,795 | | | | 2,750,004 | | | | 2,712,487 | |
| Common stockholders’ equity | | | 238,878 | | | | 235,200 | | | | 222,509 | | | | 227,111 | | | | 234,005 | |
| Total stockholders’ equity | | | 318,077 | | | | 313,968 | | | | 233,824 | | | | 227,111 | | | | 234,005 | |
| Tangible common stockholders’ equity | | | 195,483 | | | | 191,577 | | | | 178,645 | | | | 183,012 | | | | 189,669 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | 0.36 | % | | | 0.53 | % | | | (0.33) | % | | | 0.35 | % | | | 0.56 | % |
| Annualized return on average common equity | | | 5.74 | % | | | 8.26 | % | | | (5.12) | % | | | 5.26 | % | | | 8.08 | % |
| Annualized return on average common tangible equity | | | 7.02 | % | | | 10.14 | % | | | (6.37) | % | | | 6.53 | % | | | 9.97 | % |
Annualized net interest margin(1) | | | 3.92 | % | | | 3.94 | % | | | 3.79 | % | | | 3.96 | % | | | 3.92 | % |
Efficiency ratio(2) | | | 66.40 | % | | | 67.48 | % | | | 68.37 | % | | | 68.79 | % | | | 67.92 | % |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%
(2) Noninterest expense divided by the sum of net interest income and noninterest income less net security gains
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | As of and For | | | As of and For | | | As of and For | | | As of and For | |
| | | The Six Months | | | The Year | | | The Six Months | | | The Year | |
| | | Ended | | | Ended | | | Ended | | | Ended | |
| | | 6/30/2009 | | | 12/31/2008 | | | 6/30/2008 | | | 12/31/2007 | |
| Loan and Lease Data | | | | | | | | | | | | |
| Commercial and commercial real estate | | $ | 1,701,933 | | | $ | 1,718,071 | | | $ | 1,628,589 | | | $ | 1,632,597 | |
| Residential mortgage | | | 187,016 | | | | 203,921 | | | | 210,670 | | | | 217,044 | |
| Agricultural and agricultural real estate | | | 255,340 | | | | 247,664 | | | | 240,300 | | | | 225,663 | |
| Consumer | | | 231,986 | | | | 234,061 | | | | 212,238 | | | | 199,518 | |
| Direct financing leases, net | | | 3,615 | | | | 5,829 | | | | 7,489 | | | | 9,158 | |
| Unearned discount and deferred loan fees | | | (4,863 | ) | | | (4,545 | ) | | | (3,880 | ) | | | (3,813 | ) |
| Total loans and leases | | $ | 2,375,027 | | | $ | 2,405,001 | | | $ | 2,295,406 | | | $ | 2,280,167 | |
| | | | | | | | | | | | | | | | | |
| Asset Quality | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 71,116 | | | $ | 76,953 | | | $ | 42,857 | | | $ | 30,694 | |
| Loans and leases past due ninety days or more as to interest or principal payments | | | 54 | | | | 1,005 | | | | 51 | | | | 1,134 | |
| Other real estate owned | | | 29,311 | | | | 11,750 | | | | 4,196 | | | | 2,195 | |
| Other repossessed assets | | | 1,477 | | | | 1,484 | | | | 419 | | | | 438 | |
| Total nonperforming assets | | $ | 101,958 | | | $ | 91,192 | | | $ | 47,523 | | | $ | 34,461 | |
| | | | | | | | | | | | | | | | | |
| Allowance for Loan and Lease Losses | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | $ | 35,651 | | | $ | 32,993 | | | $ | 32,993 | | | $ | 29,981 | |
| Provision for loan and lease losses | | | 16,706 | | | | 29,319 | | | | 7,130 | | | | 10,073 | |
| Loans charged off | | | (16,041 | ) | | | (27,747 | ) | | | (5,876 | ) | | | (8,564 | ) |
| Recoveries | | | 918 | | | | 1,086 | | | | 684 | | | | 1,641 | |
| Reductions related to discontinued operations | | | - | | | | - | | | | - | | | | (138 | ) |
| Balance, end of period | | $ | 37,234 | | | $ | 35,651 | | | $ | 34,931 | | | $ | 32,993 | |
| | | | | | | | | | | | | | | | | |
| Asset Quality Ratios | | | | | | | | | | | | | | | | |
| Ratio of nonperforming loans and leases to total loans and leases | | | 3.00 | % | | | 3.24 | % | | | 1.87 | % | | | 1.40 | % |
| Ratio of nonperforming assets to total assets | | | 2.71 | % | | | 2.51 | % | | | 1.41 | % | | | 1.06 | % |
| Annualized ratio of net loan charge-offs to average loans and leases | | | 1.28 | % | | | 1.15 | % | | | 0.46 | % | | | 0.30 | % |
Allowance for loan and lease losses as a percent of loans and leases | | | 1.57 | % | | | 1.48 | % | | | 1.52 | % | | | 1.45 | % |
Allowance for loan and lease losses as a percent ofnonperforming loans and leases loans and leases | | | 52.32 | % | | | 45.73 | % | | | 81.41 | % | | | 103.66 | % |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | | For the Quarters Ended | |
| | | | 6/30/2009 | | | | 6/30/2008 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 891,873 | | | $ | 10,038 | | | 4.51 | % | | $ | 642,011 | | | $ | 7,885 | | | 4,94 | % |
Nontaxable(1) | | | 178,433 | | | | 2,879 | | | 6,47 | % | | | 152,470 | | | | 2,468 | | | 6.51 | % |
Total securities | | | 1,070,306 | | | | 12,917 | | | 4.84 | % | | | 794,481 | | | | 10,353 | | | 5.24 | % |
| Interest bearing deposits | | | 1,727 | | | | 2 | | | 0.46 | % | | | 395 | | | | 2 | | | 2.04 | % |
| Federal funds sold | | | 139 | | | | - | | | 0.00 | % | | | 9,313 | | | | 51 | | | 2.20 | % |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,676,614 | | | | 25,092 | | | 6.00 | | | | 1,614,240 | | | | 26,626 | | | 6.63 | |
Residential mortgage | | | 217,054 | | | | 3,225 | | | 5.96 | % | | | 218,908 | | | | 3,508 | | | 6.45 | % |
Agricultural and agricultural real estate(1) | | | 257,283 | | | | 4,224 | | | 6.59 | | | | 239,105 | | | | 4,340 | | | 7.30 | |
Consumer | | | 229,298 | | | | 5,038 | | | 8.81 | % | | | 206,227 | | | | 4,897 | | | 9.55 | % |
Direct financing leases, net | | | 4,319 | | | | 60 | | | 5.57 | % | | | 7,912 | | | | 115 | | | 5.85 | % |
Fees on loans | | | - | | | | 991 | | | - | | | | - | | | | 1,228 | | | - | |
Less: allowance for loan and lease losses | | | (36,507) | | | | - | | | - | | | | (33,076) | | | | - | | | - | |
Net loans and leases | | | 2,348,061 | | | | 38,630 | | | 6.60 | % | | | 2,253,316 | | | | 40,714 | | | 7.27 | % |
Total earning assets | | | 3,420,233 | | | $ | 51,549 | | | 6.05 | % | | | 3,057,505 | | | $ | 51,120 | | | 6.72 | % |
| Nonearning Assets | | | 342,770 | | | | | | | | | | | 297,375 | | | | | | | | |
| Total Assets | | $ | 3,763,003 | | | $ | 51,549 | | | | | | $ | 3,354,880 | | | $ | 51,120 | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 1,213,206 | | | $ | 4,568 | | | 1.51 | % | | $ | 876,075 | | | $ | 3,763 | | | 1.73 | % |
Time, $100,000 and over | | | 389,827 | | | | 2,965 | | | 3.05 | % | | | 295,184 | | | | 3,017 | | | 4.11 | % |
Other time deposits | | | 763,416 | | | | 6,043 | | | 3.17 | % | | | 860,375 | | | | 8,877 | | | 4.15 | % |
| Short-term borrowings | | | 142,600 | | | | 173 | | | 0.49 | % | | | 253,789 | | | | 1,087 | | | 1.72 | % |
| Other borrowings | | | 475,854 | | | | 4,360 | | | 3.68 | % | | | 427,064 | | | | 4,593 | | | 4.33 | % |
Total interest bearing liabilities | | | 2,984,903 | | | | 18,109 | | | 2.43 | % | | | 2,712,487 | | | | 21,337 | | | 3.16 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 423,873 | | | | | | | | | | | 365,329 | | | | | | | | |
| Accrued interest and other liabilities | | | 36,150 | | | | | | | | | | | 43,059 | | | | | | | | |
Total noninterest bearing liabilities | | | 460,023 | | | | | | | | | | | 408,388 | | | | | | | | |
| Stockholders’ Equity | | | 318,077 | | | | | | | | | | | 234,005 | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 3,763,003 | | | $ | 18,109 | | | | | | $ | 3,354,880 | | | $ | 21,337 | | | | |
Net interest income(1) | | | | | | $ | 33,440 | | | | | | | | | | $ | 29,783 | | | | |
Net interest spread(1) | | | | | | | | | | 3.61 | % | | | | | | | | | | 3.56 | % |
Net interest income to total earning assets(1) | | | | | | | | | | 3.92 | % | | | | | | | | | | 3.92 | % |
| Interest bearing liabilities to earning assets | | | 87.27 | % | | | | | | | | | | 88.72 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS | |
| | | | For the Six Months Ended | |
| | | | 6/30/2009 | | | | 6/30/2008 | |
| | | | Average | | | | | | | | | | | Average | | | | | | | | |
| | | | Balance | | | | Interest | | | Rate | | | | Balance | | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 825,928 | | | $ | 18,459 | | | 4.51 | % | | $ | 599,435 | | | $ | 14,500 | | | 4.86 | % |
Nontaxable(1) | | | 169,290 | | | | 5,599 | | | 6.67 | % | | | 149,206 | | | | 4,889 | | | 6.59 | % |
Total securities | | | 995,218 | | | | 24,058 | | | 4.87 | % | | | 748,641 | | | | 19,389 | | | 5.21 | % |
| Interest bearing deposits | | | 1,181 | | | | 3 | | | 0.51 | % | | | 414 | | | | 7 | | | 3.40 | % |
| Federal funds sold | | | 462 | | | | 1 | | | 0.44 | % | | | 14,159 | | | | 182 | | | 2.58 | % |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,685,205 | | | | 51,234 | | | 6.13 | % | | | 1,618,875 | | | | 55,223 | | | 6.86 | % |
Residential mortgage | | | 226,966 | | | | 6,674 | | | 5.93 | % | | | 221,905 | | | | 7,209 | | | 6.53 | % |
Agricultural and agricultural real estate(1) | | | 256,671 | | | | 8,316 | | | 6.53 | % | | | 234,035 | | | | 8,664 | | | 7.44 | % |
Consumer | | | 230,313 | | | | 10,011 | | | 8.77 | % | | | 202,348 | | | | 9,828 | | | 9.77 | % |
Direct financing leases, net | | | 4,932 | | | | 128 | | | 5.23 | % | | | 8,350 | | | | 248 | | | 5.97 | % |
Fees on loans | | | - | | | | 1,957 | | | - | | | | - | | | | 2,610 | | | - | |
Less: allowance for loan and lease losses | | | (36,054 | ) | | | - | | | - | | | | (32,867 | ) | | | - | | | - | |
Net loans and leases | | | 2,368,033 | | | | 78,320 | | | 6.67 | % | | | 2,252,646 | | | | 83,782 | | | 7.48 | % |
Total earning assets | | | 3,364,894 | | | $ | 102,382 | | | 6.14 | % | | | 3,015,860 | | | $ | 103,360 | | | 6.89 | % |
| Nonearning Assets | | | 346,210 | | | | | | | | | | | 296,347 | | | | | | | | |
| Total Assets | | $ | 3,711,104 | | | $ | 102,382 | | | | | | $ | 3,312,207 | | | $ | 103,360 | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 1,164,760 | | | $ | 9,092 | | | 1.57 | % | | $ | 852,032 | | | $ | 7,798 | | | 1.84 | % |
Time, $100,000 and over | | | 392,387 | | | | 6,203 | | | 3.19 | % | | | 301,972 | | | | 6,564 | | | 4.37 | % |
Other time deposits | | | 766,430 | | | | 12,403 | | | 3.26 | % | | | 852,841 | | | | 18,391 | | | 4.34 | % |
| Short-term borrowings | | | 156,713 | | | | 385 | | | 0.50 | % | | | 277,703 | | | | 3,273 | | | 2.37 | % |
| Other borrowings | | | 471,543 | | | | 8,738 | | | 3.74 | % | | | 390,676 | | | | 8,870 | | | 4.57 | % |
Total interest bearing liabilities | | | 2,951,833 | | | | 36,821 | | | 2.52 | % | | | 2,675,224 | | | | 44,896 | | | 3.37 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 408,744 | | | | | | | | | | | 360,954 | | | | | | | | |
| Accrued interest and other liabilities | | | 34,505 | | | | | | | | | | | 41,455 | | | | | | | | |
Total noninterest bearing liabilities | | | 443,249 | | | | | | | | | | | 402,409 | | | | | | | | |
| Stockholders’ Equity | | | 316,022 | | | | | | | | | | | 234,574 | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 3,711,104 | | | $ | 36,821 | | | | | | $ | 3,312,207 | | | $ | 44,896 | | | | |
Net interest income(1) | | | | | | $ | 65,561 | | | | | | | | | | $ | 58,464 | | | | |
Net interest spread(1) | | | | | | | | | | 3.62 | % | | | | | | | | | | 3.52 | % |
Net interest income to total earning assets(1) | | | | | | | | | | 3.93 | % | | | | | | | | | | 3.90 | % |
| Interest bearing liabilities to earning assets | | | 87.72 | % | | | | | | | | | | 88.71 | % | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35%. |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | As of and For the Quarter Ended 6/30/2009 | | | As of and For the Year Ended 12/31/2008 | | | As of and For the Quarter Ended 6/30/2008 | | | As of and For the Year Ended 12/31/2007 | |
| Total Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 1,097,161 | | $ | 1,041,247 | | $ | 1,035,876 | | $ | 976,489 | |
| New Mexico Bank & Trust | | 791,019 | | | 773,726 | | | 702,549 | | | 672,863 | |
| Rocky Mountain Bank | | 470,220 | | | 476,762 | | | 452,121 | | | 427,437 | |
| Wisconsin Community Bank | | 434,362 | | | 429,707 | | | 396,439 | | | 399,532 | |
| Riverside Community Bank | | 270,354 | | | 244,613 | | | 246,414 | | | 225,206 | |
| Galena State Bank & Trust Co. | | 231,655 | | | 222,886 | | | 216,920 | | | 215,698 | |
| Arizona Bank & Trust | | 251,562 | | | 219,830 | | | 227,704 | | | 222,576 | |
| First Community Bank | | 125,069 | | | 123,058 | | | 123,367 | | | 127,305 | |
| Summit Bank & Trust | | 91,211 | | | 77,638 | | | 58,162 | | | 46,668 | |
| Minnesota Bank & Trust | | 34,547 | | | 25,695 | | | 16,537 | | | - | |
| Total Deposits | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 798,927 | | $ | 749,250 | | $ | 679,235 | | $ | 670,257 | |
| New Mexico Bank & Trust | | 552,650 | | | 507,561 | | | 488,834 | | | 459,530 | |
| Rocky Mountain Bank | | 364,159 | | | 370,630 | | | 327,772 | | | 305,933 | |
| Wisconsin Community Bank | | 330,327 | | | 338,025 | | | 289,389 | | | 321,647 | |
| Riverside Community Bank | | 220,097 | | | 197,785 | | | 181,517 | | | 187,052 | |
| Galena State Bank & Trust Co. | | 196,035 | | | 185,042 | | | 179,877 | | | 177,040 | |
| Arizona Bank & Trust | | 198,310 | | | 155,909 | | | 169,629 | | | 155,093 | |
| First Community Bank | | 99,772 | | | 102,515 | | | 101,677 | | | 103,602 | |
| Summit Bank & Trust | | 79,991 | | | 60,278 | | | 33,167 | | | 30,860 | |
| Minnesota Bank & Trust | | 18,477 | | | 10,459 | | | 708 | | | - | |
| Return on Average Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.47 | % | | 1.38 | % | | 1.58 | % | | 1.34 | % |
| New Mexico Bank & Trust | | 1.22 | | | 1.06 | | | 1.12 | | | 1.48 | |
| Rocky Mountain Bank | | 0.39 | | | 0.33 | | | 0.76 | | | 1.51 | |
| Wisconsin Community Bank | | 0.15 | | | 0.27 | | | 0.64 | | | 0.62 | |
| Riverside Community Bank | | 0.14 | | | 0.42 | | | 0.56 | | | 0.55 | |
| Galena State Bank & Trust Co. | | 1.26 | | | 1.10 | | | 1.40 | | | 0.92 | |
| Arizona Bank & Trust | | (3.32 | ) | | (1.75 | ) | | (1.80 | ) | | (0.08 | ) |
| First Community Bank | | 0.17 | | | 0.45 | | | 0.77 | | | 1.30 | |
| Summit Bank & Trust | | (3.98 | ) | | (4.57 | ) | | (3.81 | ) | | (2.43 | ) |
| Minnesota Bank & Trust | | (3.32 | ) | | (7.43 | ) | | (8.65 | ) | | - | |
| Net Interest Margin as a Percentage of Average Earning Assets | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 3.66 | % | | 3.56 | % | | 3.55 | % | | 3.40 | % |
| New Mexico Bank & Trust | | 4.54 | | | 4.57 | | | 4.61 | | | 4.80 | |
| Rocky Mountain Bank | | 4.17 | | | 4.25 | | | 4.36 | | | 4.76 | |
| Wisconsin Community Bank | | 3.88 | | | 3.61 | | | 3.68 | | | 3.45 | |
| Riverside Community Bank | | 3.19 | | | 3.21 | | | 3.24 | | | 3.39 | |
| Galena State Bank & Trust Co. | | 3.52 | | | 3.42 | | | 3.47 | | | 3.40 | |
| Arizona Bank & Trust | | 3.52 | | | 3.89 | | | 4.05 | | | 4.56 | |
| First Community Bank | | 3.57 | | | 3.44 | | | 3.60 | | | 3.80 | |
| Summit Bank & Trust | | 3.27 | | | 3.93 | | | 4.24 | | | 5.10 | |
| Minnesota Bank & Trust | | 3.61 | | | 2.60 | | | 2.25 | | | - | |
| Net Income (Loss) | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 7,930 | | $ | 13,846 | | $ | 7,737 | | $ | 11,907 | |
| New Mexico Bank & Trust | | 4,691 | | | 7,456 | | | 3,817 | | | 8,727 | |
| Rocky Mountain Bank | | 927 | | | 1,508 | | | 1,670 | | | 6,622 | |
| Wisconsin Community Bank | | 2,475 | | | 1,073 | | | 1,265 | | | 2,355 | |
| Riverside Community Bank | | 176 | | | 1,017 | | | 658 | | | 1,055 | |
| Galena State Bank & Trust Co. | | 1,418 | | | 2,433 | | | 1,509 | | | 1,895 | |
| Arizona Bank & Trust | | (3,845 | ) | | (3,856 | ) | | (1,987 | ) | | (154 | ) |
| First Community Bank | | 107 | | | 548 | | | 470 | | | 1,476 | |
| Summit Bank & Trust | | (1,601 | ) | | (2,754 | ) | | (965 | ) | | (965 | ) |
| Minnesota Bank & Trust | | (515 | ) | | (1,401 | ) | | (711 | ) | | - | |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | As of 6/30/2009 | | | As of 12/31/2008 | | | As of 6/30/2008 | | | As of 12/31/2007 | |
| Total Portfolio Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 669,925 | | $ | 669,856 | | $ | 656,649 | | $ | 637,782 | |
| New Mexico Bank & Trust | | 499,597 | | | 494,877 | | | 452,595 | | | 455,383 | |
| Rocky Mountain Bank | | 314,523 | | | 326,086 | | | 323,487 | | | 316,776 | |
| Wisconsin Community Bank | | 298,817 | | | 291,164 | | | 284,000 | | | 285,010 | |
| Riverside Community Bank | | 159,977 | | | 165,347 | | | 158,296 | | | 146,925 | |
| Galena State Bank & Trust Co. | | 130,011 | | | 141,428 | | | 134,939 | | | 144,152 | |
| Arizona Bank & Trust | | 135,198 | | | 139,723 | | | 142,521 | | | 160,309 | |
| First Community Bank | | 72,676 | | | 79,261 | | | 76,994 | | | 84,475 | |
| Summit Bank & Trust | | 60,948 | | | 60,725 | | | 42,423 | | | 27,493 | |
| Minnesota Bank & Trust | | 19,977 | | | 13,134 | | | 611 | | | - | |
| Allowance For Loan and Lease Losses | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 9,478 | | $ | 9,307 | | $ | 8,072 | | $ | 7,827 | |
| New Mexico Bank & Trust | | 7,080 | | | 6,847 | | | 6,462 | | | 6,079 | |
| Rocky Mountain Bank | | 5,743 | | | 4,678 | | | 4,774 | | | 4,061 | |
| Wisconsin Community Bank | | 4,386 | | | 4,297 | | | 4,719 | | | 4,520 | |
| Riverside Community Bank | | 2,270 | | | 2,293 | | | 2,089 | | | 1,885 | |
| Galena State Bank & Trust Co. | | 1,711 | | | 1,962 | | | 1,709 | | | 1,830 | |
| Arizona Bank & Trust | | 2,520 | | | 2,330 | | | 3,433 | | | 3,605 | |
| First Community Bank | | 989 | | | 1,110 | | | 1,327 | | | 1,179 | |
| Summit Bank & Trust | | 922 | | | 874 | | | 601 | | | 367 | |
| Minnesota Bank & Trust | | 234 | | | 164 | | | 8 | | | - | |
| Nonperforming Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 6,474 | | $ | 7,840 | | $ | 3,778 | | $ | 3,344 | |
| New Mexico Bank & Trust | | 10,283 | | | 11,426 | | | 4,061 | | | 1,130 | |
| Rocky Mountain Bank | | 18,570 | | | 17,254 | | | 6,773 | | | 2,099 | |
| Wisconsin Community Bank | | 12,173 | | | 10,746 | | | 11,289 | | | 12,152 | |
| Riverside Community Bank | | 8,457 | | | 6,410 | | | 2,664 | | | 2,671 | |
| Galena State Bank & Trust Co. | | 2,425 | | | 4,625 | | | 3,135 | | | 1,707 | |
| Arizona Bank & Trust | | 5,806 | | | 8,278 | | | 6,639 | | | 5,541 | |
| First Community Bank | | 2,893 | | | 5,102 | | | 2,555 | | | 1,312 | |
| Summit Bank & Trust | | 3,305 | | | 5,486 | | | 1,390 | | | 1,376 | |
| Minnesota Bank & Trust | | - | | | - | | | - | | | - | |
| Allowance As a Percent of Total Loans and Leases | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | 1.41 | % | | 1.39 | % | | 1.23 | % | �� | 1.23 | % |
| New Mexico Bank & Trust | | 1.42 | | | 1.38 | | | 1.43 | | | 1.33 | |
| Rocky Mountain Bank | | 1.83 | | | 1.43 | | | 1.48 | | | 1.28 | |
| Wisconsin Community Bank | | 1.47 | | | 1.48 | | | 1.66 | | | 1.59 | |
| Riverside Community Bank | | 1.42 | | | 1.39 | | | 1.32 | | | 1.28 | |
| Galena State Bank & Trust Co. | | 1.32 | | | 1.39 | | | 1.27 | | | 1.27 | |
| Arizona Bank & Trust | | 1.86 | | | 1.67 | | | 2.41 | | | 2.25 | |
| First Community Bank | | 1.36 | | | 1.40 | | | 1.72 | | | 1.40 | |
| Summit Bank & Trust | | 1.51 | | | 1.44 | | | 1.42 | | | 1.33 | |
| Minnesota Bank & Trust | | 1.17 | | | 1.25 | | | 1.31 | | | - | |
