CONTACT: FOR IMMEDIATE RELEASE
John K. Schmidt MONDAY, JANUARY 25, 2010
Chief Operating Officer
Chief Financial Officer
(563) 589-1994
jschmidt@htlf.com
HEARTLAND FINANCIAL USA, INC. REPORTS FOURTH QUARTER 2009 EARNINGS
Fourth Quarter 2009 Highlights
| § | Net loss of $7.9 million for the quarter resulting from a non-cash goodwill impairment charge of $12.7 million |
| § | Net income of $6.4 million for the year |
| § | Net income exclusive of goodwill impairment charge of $4.8 million for the quarter and $19.0 million for the year |
| § | Net interest margin of 4.04% for the quarter and 3.99% for the year |
| § | Allowance for loan and lease losses increased to 1.80% of total loans and leases |
| § | Nonperforming assets decreased during the quarter to $108.8 million at year-end |
| § | Deposit growth was $410.2 million or 15% since year-end 2008 |
| § | Total loans decreased $73.9 million or 3% since year-end 2008 |
| | | | Quarter Ended December 31, | | | | Year Ended December 31, | |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| Net income (loss) (in millions) | | $ | (7.9 | ) | | $ | (2.7 | ) | | $ | 6.4 | | | $ | 11.0 | |
| Net income (loss), exclusive of goodwill impairment charge (in millions) | | | 4.8 | | | | (2.7 | ) | | | 19.0 | | | | 11.0 | |
| Net income (loss) available to common stockholders (in millions) | | | (9.2 | ) | | | (2.9 | ) | | | 1.2 | | | | 11.1 | |
| Net income (loss) available to common stockholders, exclusive of goodwill impairment charge (in millions) | | | 3.5 | | | | (2.9 | ) | | | 13.9 | | | | 11.1 | |
| Diluted earnings (loss) per common share | | | (0.56 | ) | | | (0.18 | ) | | | 0.07 | | | | 0.68 | |
| Diluted earnings (loss) per common share, exclusive of goodwill impairment charge | | | 0.21 | | | | (0.18 | ) | | | 0.85 | | | | 0.68 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | (0.92 | )% | | | (0.33 | )% | | | 0.03 | % | | | 0.33 | % |
| Return on average common equity | | | (14.76 | ) | | | (5.12 | ) | | | 0.51 | | | | 4.84 | |
| Net interest margin | | | 4.04 | | | | 3.79 | | | | 3.99 | | | | 3.89 | |
“Heartland continues to experience solid operating income fueled by our exceptional net interest margin and strong noninterest income. Given the reality that credit quality is generally a reflection of the economies in the communities we serve, we are optimistic that the drop in nonperforming loans may signal an improving trend.”
Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, January 25, 2010—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported a net loss of $7.9 million for the quarter ended December 31, 2009, compared to a net loss of $2.7 million for the fourth quarter of 2008. Net loss available to common stockholders was $9.2 million, or $0.56 per diluted common share, for the quarter ended December 31, 2009, compared to $2.9 million, or $0.18 per diluted common share, for the fourth quarter of 2008. Return on average common equity was negative 14.76 percent and return on average assets was negative 0.92 percent for the fourth quarter of 2009, compared to negative 5.12 percent and negative 0.33 percent, respectively, for the same quarter in 2008.
The fourth quarter 2009 net loss resulted primarily from a $12.7 million goodwill impairment charge recorded during the quarter. This non-cash charge, which had no impact on operations, liquidity or capital, was due to the adverse economic conditions in Heartland’s Arizona and Montana markets. Excluding this non-cash goodwill impairment charge, net income for the fourth quarter of 2009 would have been $4.8 million, net income available to common stockholders would have been $3.5 million, or $0.21 per diluted common share, return on average common equity would have been 5.62 percent and return on average assets would have been 0.35 percent.
Earnings for the fourth quarter of 2009 in comparison to the fourth quarter of 2008 were positively affected by a smaller loan loss provision and increases in net interest income, loan servicing income, income on bank owned life insurance, securities gains and gains on sale of loans. The loan loss provision was $10.8 million during the fourth quarter of 2009 compared to $15.1 million during the fourth quarter of 2008. A higher loan loss provision during the fourth quarter of 2008 was 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. Increased salaries and employee benefits, FDIC assessments and expenses associated with other real estate owned negatively impacted earnings during the fourth quarter of 2009.
Net income recorded for the year 2009 was $6.4 million, compared to $11.0 million recorded during the year 2008. Net income available to common stockholders was $1.2 million, or $0.07 per diluted common share, for the year 2009, compared to $11.1 million, or $0.68 per diluted common share, earned during the year 2008. Return on average common equity was 0.51 percent and return on average assets was 0.03 percent for the year 2009, compared to 4.84 percent and 0.33 percent, respectively, for the year 2008. Excluding the goodwill impairment charge, net income for the year 2009 would have been $19.0 million, net income available to common stockholders would have been $13.9 million, or $0.85 per diluted common share, return on average common equity would have been 5.76 percent and return on average assets would have been 0.36 percent.
Lynn B. Fuller, Heartland’s chairman, president and chief executive officer said, “Heartland continues to experience solid operating income fueled by our exceptional net interest margin and strong noninterest income. Given the reality that credit quality is generally a reflection of the economies in the communities we serve, we are optimistic that the drop in nonperforming loans may signal an improving trend.”
Earnings for the year 2009 in comparison to the year 2008 were positively affected by increased net interest income, loan servicing income, income on bank owned life insurance, 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 $39.4 million during the year 2009 compared to $29.3 million during the year 2008. Also negatively affecting earnings during the year 2009 were increased salaries and employee benefits, FDIC assessments and expenses associated with other real estate owned. Included in the earnings for 2009 was a $1.3 million gain recorded as a result of the July 2, 2009, acquisition of The Elizabeth State Bank. During the fourth quarter of 2009, other noninterest income included $1.1 million in payments due from the FDIC under loss share agreements associated with The Elizabeth State Bank acquisition.
Goodwill Impairment
Heartland’s goodwill, which is related to acquisitions in prior years, is evaluated for impairment on an annual basis or when events or circumstances suggest impairment may have occurred. Due to the adverse economic conditions in Heartland’s Arizona and Montana markets, management engaged an independent third party valuation expert to value the goodwill of those banks. As a result of these valuations, Heartland recorded a goodwill impairment charge of $5.2 million at Arizona Bank & Trust and $7.5 million at Rocky Mountain Bank. After the impairment charge was recorded, Heartland’s goodwill totaled $27.5 million or less than 1 percent of total assets.
The goodwill impairment charge is a non-cash accounting adjustment that does not affect cash flows, liquidity or tangible capital. As goodwill is excluded from regulatory capital, the impairment charge did not impact regulatory capital ratios of Heartland, Arizona Bank & Trust or Rocky Mountain Bank. The goodwill impairment charge has been classified as a noninterest expense item and is not tax-deductible.
Fuller stated, “The recognition of goodwill impairment at two of our banks was difficult, but it reduced a non-earning asset without any impact to our capital ratios. All Heartland banks continue to be ‘well-capitalized’ under regulatory standards.”
Non-GAAP Financial Measures
This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the U.S., often referred to as GAAP. Heartland has disclosed in this release certain non-GAAP financial measures to provide meaningful supplemental information regarding its operational performance and to enhance readers’ overall understanding of its operating financial performance. Management believes that the impact of the goodwill impairment charge to earnings in the current period impairs the ability of the reader to evaluate trends in results of operations without information that reports results of operations without the charge. These non-GAAP financial measures are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. The following schedule presents performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measurements to the GAAP financial measurements. For the non-GAAP financial measurements, net income (loss), exclusive of goodwill impairment charge is defined as net income (loss) as presented in accordance with GAAP less any goodwill impairment charge recorded during the period.
| | | For the Quarter Ended December 31, | | For the Year Ended December 31, |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) as reported | | $ | (7,875 | ) | | $ | (2,744 | ) | | $ | 6,374 | | | $ | 11,012 | |
| Goodwill impairment charge | | | 12,659 | | | | - | | | | 12,659 | | | | - | |
| Net income (loss), exclusive of goodwill impairment charge | | $ | 4,784 | | | $ | (2,744 | ) | | $ | 19,033 | | | $ | 11,012 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) available to common stockholders | | $ | (9,170 | ) | | $ | (2,861 | ) | | $ | 1,218 | | | $ | 11,114 | |
| Goodwill impairment charge | | | 12,659 | | | | - | | | | 12,659 | | | | - | |
| Net income (loss) available to common stockholders, exclusive of goodwill impairment charge | | $ | 3,489 | | | $ | (2,861 | ) | | $ | 13,877 | | | $ | 11,114 | |
| | | | | | | | | | | | | | | | | |
| GAAP earnings (loss) per common share-diluted | | $ | (0.56 | ) | | $ | (0.18 | ) | | $ | 0.07 | | | $ | 0.68 | |
| Earnings (loss) per common share-diluted, exclusive of goodwill impairment charge | | $ | 0.21 | | | $ | (0.18 | ) | | $ | 0.85 | | | $ | 0.68 | |
| GAAP return on average assets | | | (0.92 | )% | | | (0.33 | )% | | | 0.03 | % | | | 0.33 | % |
| Return on average assets, exclusive of goodwill impairment charge | | | 0.35 | % | | | (0.33 | )% | | | 0.36 | % | | | 0.33 | % |
| GAAP return on average equity | | | (14.76 | )% | | | (5.12 | )% | | | 0.51 | % | | | 4.84 | % |
| Return on average equity, exclusive of goodwill impairment charge | | | 5.62 | % | | | (5.12 | )% | | | 5.76 | % | | | 4.84 | % |
| GAAP return on average tangible equity | | | (17.87 | )% | | | (6.48 | )% | | | 0.62 | % | | | 5.85 | % |
| Return on average tangible equity, exclusive of goodwill impairment charge | | | 6.80 | % | | | (6.48 | )% | | | 7.02 | % | | | 5.85 | % |
| GAAP efficiency ratio | | | 92.19 | % | | | 68.37 | % | | | 73.07 | % | | | 68.78 | % |
| Efficiency ratio, exclusive of goodwill impairment charge | | | 65.32 | % | | | 68.37 | % | | | 66.09 | % | | | 68.78 | % |
Net Interest Margin Improves; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 4.04 percent during the fourth quarter of 2009 compared to 3.79 percent during the fourth quarter of 2008. For the year ended December 31, net interest margin, expressed as a percentage of average earning assets, was 3.99 percent during 2009 and 3.89 percent during 2008. Success at growing net interest margin has been a direct result of continued price discipline. Management is committed to maintaining margin near the 4.00 percent level and will not compete for loans or deposits strictly for the sake of growth.
Fuller commented, “Heartland’s net interest margin of 4.04 percent is a strong indicator of the earnings power of our company. The combination of slow or negative loan growth and little room for further reductions in deposit rates will likely result in our margin holding at or near the present level. We still believe a key driver of better performance will be improving credit trends.”
Net interest income on a tax-equivalent basis totaled $35.9 million during the fourth quarter of 2009, an increase of $5.7 million or 19 percent from the $30.2 million recorded during the fourth quarter of 2008. For the year 2009, net interest income on a tax-equivalent basis was $137.3 million, an increase of $17.7 million or 15 percent from the $119.6 million recorded during the year 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 $348.2 million or 11 percent growth in average earning assets during the fourth quarter of 2009 compared to the same quarter in 2008 and the $360.7 million or 12 percent growth in average earning assets during the year 2009 compared to the year 2008.
On a tax-equivalent basis, interest income in the fourth quarter of 2009 totaled $52.4 million compared to $51.2 million in the fourth quarter of 2008, an increase of $1.2 million or 2 percent. For the year 2009, interest income on a tax-equivalent basis totaled $207.8 million compared to $206.5 million for the year 2008, an increase of $1.3 million or 1 percent. The increase in net interest income attributable to the growth in average earnings assets was almost equally offset by the impact of a decrease in the average interest rate earned on these assets of 51 basis points during the quarter and 67 basis points during the year 2009 as compared to the same periods 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 remained unchanged at 3.25 percent throughout the year 2009 whereas throughout the year 2008, the national prime interest rate decreased from a high of 7.25 percent on January 1 to a low of 3.25 percent at December 31. A portion of the negative impact decreasing interest rates would have on Heartland’s interest income was reduced because 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 which matured on April 4, 2009.
Interest expense for the fourth quarter of 2009 was $16.4 million compared to $20.9 million in the fourth quarter of 2008, a decrease of $4.5 million or 21 percent. On an annual comparative basis, interest expense totaled $70.5 million during 2009 compared to $86.9 million during 2008, a decrease of $16.4 million or 19 percent. Interest rates paid on Heartland’s deposits and borrowings were significantly lower during the year 2009 compared to the year 2008. Despite increases in average interest bearing liabilities of 10 percent over both the quarter and year ended December 31, 2009, as compared to the same periods in 2008, the average interest rates paid on Heartland’s deposits and borrowings declined 84 basis points in the quarter and the year ended December 31, 2009, compared to the same periods in 2008. Approximately 35 percent of Heartland’s certificate of deposit accounts will mature within the next six months at a weighted average rate of 1.91 percent.
Noninterest Income Increases; Noninterest Expense Grows
Noninterest income was $13.4 million during the fourth quarter of 2009 compared to $5.5 million during the fourth quarter of 2008, an increase of $7.9 million or 142 percent. Included in noninterest income during the fourth quarter of 2009 was $1.1 million in payments due from the FDIC under loss share agreements associated with The Elizabeth State Bank acquisition. Included in the fourth quarter 2008 noninterest income was a $1.8 million loss on the cash surrender on bank owned life insurance. 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 2009, noninterest income was $52.7 million compared to $30.2 million during the year 2008, an increase of $22.5 million or 75 percent. Included in the 2008 noninterest income were a $5.2 million gain on the sale of Heartland’s merchant bankcard processing services and a $4.6 million impairment loss on Heartland’s investment in perpetual preferred securities issued by Fannie Mae. 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 $798,000 or 79 percent for the quarter and $5.1 million or 110 percent for the yearly 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 $1.15 billion at December 31, 2009, compared to $712.9 million at December 31, 2008. Securities gains totaled $2.2 million during the fourth quarter of 2009 compared to $510,000 during the fourth quarter of 2008. For the annual comparative period, securities gains totaled $8.6 million during 2009 compared to $1.5 million during 2008. Securities designed to outperform in a declining rate environment were sold during 2009 and replaced with securities that are expected to outperform as rates rise. Gains on sale of loans totaled $1.2 million during the fourth quarter of 2009 compared to $331,000 during the fourth quarter of 2008. For the year 2009, gains on sale of loans totaled $6.1 million compared to $1.6 million for the year 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 continued to help offset higher provision expense. Residential loan refinance activity slowed during the last half of the year, but substantially outpaced 2008. Also contributing to the increase in noninterest income was loan servicing income, securities gains and the gain on our acquisition of The Elizabeth State Bank.”
For the fourth quarter of 2009, noninterest expense totaled $43.4 million, an increase of $19.3 million or 80 percent from the same period in 2008. Exclusive of the $12.7 million goodwill impairment charge, noninterest expense totaled $30.7 million, an increase of $6.6 million or 27 percent. This increase was primarily attributable to higher salaries and employee benefits, which totaled $14.4 million during the fourth quarter of 2009 compared to $12.3 million during the fourth quarter of 2008, higher FDIC assessments, which totaled $1.3 million during the fourth quarter of 2009 compared to $491,000 during the fourth quarter of 2008, and net losses on repossessed assets, which totaled $4.0 million during the fourth quarter of 2009 compared to $310,000 during the fourth quarter of 2008. The salaries and employee benefits expense during the fourth quarter of 2008 included adjustments in the accrual for incentive compensation payouts and the discretionary contribution under Heartland’s retirement plan as earnings for the quarter had decreased significantly. For the year 2009, noninterest expense totaled $132.5 million, an increase of $30.3 million or 30 percent when compared to the year 2008. Exclusive of the $12.7 million goodwill impairment charge, noninterest expense totaled $119.8 million during 2009, an increase of $17.6 million or 17 percent. The noninterest expense categories contributing to the increase during the annual periods under comparison were employee salaries and benefits, which were $60.5 million during the year 2009 compared to $56.8 million during the year 2008, FDIC assessments, which were $6.6 million during the year 2009 compared to $1.4 million during the year 2008, and net losses on repossessed assets, which were $10.8 million during the year 2009 compared to $827,000 during the year 2008. Salaries and employee benefits increased $3.7 million or 7 percent during the annual comparative period, primarily due to the opening of Minnesota Bank & Trust in April 2008 and additional staffing at New Mexico Bank & Trust to grow its customer base, at Heartland’s operations center to provide support services to the bank subsidiaries and at Galena State Bank as a result of The Elizabeth State Bank acquisition. Total full-time equivalent employees averaged 1,024 during the year 2009, compared to 1,006 during the year 2008.
Excluding the non-deductible goodwill impairment charge, Heartland’s effective tax rate was 27.44 percent for the year 2009 compared to 23.12 percent for the year 2008. Heartland’s effective tax rate during the year 2009 did not include any federal rehabilitation tax credits, whereas Heartland’s effective tax rate during the year 2008 included $570,000 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 exclusive of the non-deductible goodwill impairment charge, was 32.08 percent during the year 2009 compared to 50.45 percent during the year 2008. The tax-equivalent adjustment for this tax-exempt interest income was $4.5 million during the year 2009 compared to $3.9 million during the year 2008.
Loan Demand Declines; Growth in Deposits Continues
At December 31, 2009, total assets had increased $382.7 million or 11 percent since year-end 2008. Securities represented 29 percent of total assets at December 31, 2009, compared to 25 percent at December 31, 2008. Additional securities were purchased during 2009 as deposit growth outpaced loan growth.
Total loans and leases, exclusive of those covered by the FDIC loss share agreements, were $2.33 billion at December 31, 2009, compared to $2.41 billion at year-end 2008, a decrease of $73.9 million or 3 percent. The only loan category to experience growth during the year 2009 was agricultural and agricultural real estate loans, which also experienced a slight decrease during the fourth quarter of 2009. Nearly all of this growth occurred at Dubuque Bank and Trust Company. Total loans and leases, exclusive of The Elizabeth State Bank acquisition, decreased $36.7 million during the fourth quarter of 2009 compared to a decrease of $7.2 million during the third quarter of 2009, an increase of $18.6 million during the second quarter of 2009 and a decrease of $48.6 million during the first quarter of 2009.
Total deposits grew to $3.05 billion at December 31, 2009, an increase of $410.2 million or 16 percent since year-end 2008. The Elizabeth State Bank acquisition accounted for $49.5 million of this growth. With the exception of First Community Bank, all Heartland banks experienced an increase in deposits. This growth was weighted more heavily in Heartland’s Midwestern markets, which were responsible for nearly 57 percent of the growth. Growth in demand and savings deposits is attributable to an increased emphasis on non-maturity core deposit products over higher-cost certificates of deposit. Additionally, commercial and retail customers have continued to build cash reserves. Demand deposits increased $77.6 million or 20 percent since year-end 2008 with $6.9 million coming from The Elizabeth State Bank acquisition. Savings deposit balances experienced an increase of $426.0 million or 38 percent since year-end 2008 with $21.0 million coming from The Elizabeth State Bank acquisition. Time deposits, exclusive of brokered deposits, experienced a decrease of $83.8 million or 8 percent since year-end 2008 despite the $21.6 million assumed in The Elizabeth State Bank acquisition. Brokered time deposits decreased from $51.5 million or 2 percent of total deposits at year-end 2008, to $41.8 million or 1 percent of total deposits at year-end 2009. Deposit growth, exclusive of The Elizabeth State Bank acquisition, was $106.0 million during the fourth quarter of 2009, $67.4 million during the third quarter of 2009, $38.8 million during the second quarter of 2009 and $148.5 million during the first quarter of 2009.
“I am extremely pleased with our continued success in growing non-maturity core deposits versus higher-cost certificates of deposit. We have been quite successful in rolling out new products and value-added services that reward deeper banking relationships, allowing us to take advantage of this environment in which deposits are plentiful,” commented Fuller.
Nonperforming Assets Decrease During the Quarter; Allowance for Loan Losses Increases For the Quarter
The allowance for loan and lease losses at December 31, 2009, was 1.80 percent of loans and leases and 53.56 percent of nonperforming loans, compared to 1.78 percent of loans and leases and 50.31 percent of nonperforming loans at September 30, 2009, and 1.48 percent of loans and leases and 45.73 percent of nonperforming loans at December 31, 2008. The provision for loan losses was $39.4 million for the year 2009 compared to $29.3 million for the year 2008. Additions to the allowance for loan and lease losses during 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, exclusive of those covered under the loss sharing agreements, were $78.1 million or 3.35 percent of total loans and leases at December 31, 2009, compared to $84.0 million or 3.55 percent of total loans and leases at September 30, 2009, and $78.0 million or 3.24 percent of total loans and leases at December 31, 2008. Approximately 64 percent, or $50.1 million, of Heartland’s nonperforming loans are to 20 borrowers, with $15.0 million originated by Rocky Mountain Bank, $13.7 million originated by Summit Bank & Trust, $7.5 million originated by Wisconsin Community Bank, $6.5 million originated by Arizona Bank & Trust, $2.9 million originated by New Mexico Bank & Trust, $2.9 million originated by Riverside Community Bank and $1.6 million originated by Dubuque Bank and Trust. The portion of Heartland’s nonperforming loans covered by government guarantees was $3.3 million at December 31, 2009.
Other real estate owned, exclusive of assets covered under the loss sharing agreements, was $30.2 million at December 31, 2009, compared to $32.6 million at September 30, 2009, and $11.8 million at December 31, 2008. A majority of the increase during 2009 was attributable to the real estate securing two loans originated at Rocky Mountain Bank, which at December 31, 2009, had a market value totaling $13.5 million, comprised of $8.9 million on a residential subdivision development project in Bozeman, Montana and $4.6 million on a condominium development project in Big Sky, Montana. 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 year 2009 were $33.2 million compared to $26.7 million during the year 2008. A large portion of the net charge-offs was related to commercial real estate development loans and residential lot loans.
“We are encouraged that nonperforming assets dropped by $8 million during the quarter, but we still have room for improvement in this area. The reduction of nonperforming assets continues as our number one priority. As with others in our industry, we remain highly dependent on the direction of the economies in the markets we serve,” Fuller said.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-941-8609 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 April 25, 2010, by dialing 800-406-7325, pass code 4199372, or by logging onto www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a $4.0 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 December 31, | | For the Year Ended December 31, |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| Interest Income | | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 38,191 | | | $ | 39,905 | | | $ | 154,887 | | | $ | 164,349 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | |
Taxable | | | 10,513 | | | | 8,503 | | | | 39,782 | | | | 31,231 | |
Nontaxable | | | 2,456 | | | | 1,692 | | | | 8,595 | | | | 6,688 | |
| Interest on federal funds sold | | | 1 | | | | 32 | | | | 2 | | | | 299 | |
| Interest on deposits in other financial institutions | | | 9 | | | | 8 | | | | 27 | | | | 18 | |
Total Interest Income | | | 51,170 | | | | 50,140 | | | | 203,293 | | | | 202,585 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 12,000 | | | | 15,729 | | | | 52,744 | | | | 64,104 | |
| Interest on short-term borrowings | | | 194 | | | | 522 | | | | 733 | | | | 4,571 | |
| Interest on other borrowings | | | 4,250 | | | | 4,662 | | | | 17,053 | | | | 18,224 | |
Total Interest Expense | | | 16,444 | | | | 20,913 | | | | 70,530 | | | | 86,899 | |
Net Interest Income | | | 34,726 | | | | 29,227 | | | | 132,763 | | | | 115,686 | |
| Provision for loan and lease losses | | | 10,775 | | | | 15,106 | | | | 39,377 | | | | 29,319 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 23,951 | | | | 14,121 | | | | 93,386 | | | | 86,367 | |
| Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,257 | | | | 3,034 | | | | 12,541 | | | | 11,654 | |
| Loan servicing income | | | 1,813 | | | | 1,015 | | | | 9,666 | | | | 4,600 | |
| Trust fees | | | 2,156 | | | | 1,747 | | | | 7,773 | | | | 7,906 | |
| Brokerage and insurance commissions | | | 697 | | | | 1,002 | | | | 3,117 | | | | 3,719 | |
| Securities gains, net | | | 2,186 | | | | 510 | | | | 8,648 | | | | 1,525 | |
| Gain (loss) on trading account securities | | | (61 | ) | | | (531 | ) | | | 211 | | | | (998 | ) |
| Impairment loss on securities | | | (40 | ) | | | (347 | ) | | | (40 | ) | | | (5,151 | ) |
| Gains on sale of loans | | | 1,168 | | | | 331 | | | | 6,084 | | | | 1,610 | |
| Income (loss) on bank owned life insurance | | | 362 | | | | (1,780 | ) | | | 1,002 | | | | (1,184 | ) |
| Gain on acquisition | | | 298 | | | | - | | | | 1,296 | | | | - | |
| Gain on sale of merchant bankcard processing services | | | - | | | | - | | | | - | | | | 5,200 | |
| Other noninterest income | | | 1,534 | | | | 543 | | | | 2,406 | | | | 1,315 | |
Total Noninterest Income | | | 13,370 | | | | 5,524 | | | | 52,704 | | | | 30,196 | |
| Noninterest Expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,419 | | | | 12,293 | | | | 60,465 | | | | 56,752 | |
| Occupancy | | | 2,220 | | | | 2,220 | | | | 8,992 | | | | 9,019 | |
| Furniture and equipment | | | 1,638 | | | | 1,767 | | | | 6,574 | | | | 6,968 | |
| Professional fees | | | 2,100 | | | | 2,577 | | | | 9,127 | | | | 9,876 | |
| FDIC insurance assessments | | | 1,320 | | | | 491 | | | | 6,578 | | | | 1,446 | |
| Advertising | | | 1,065 | | | | 909 | | | | 3,337 | | | | 3,762 | |
| Goodwill impairment charge | | | 12,659 | | | | - | | | | 12,659 | | | | - | |
| Intangible assets amortization | | | 198 | | | | 235 | | | | 866 | | | | 943 | |
| Net loss on repossessed assets | | | 4,015 | | | | 310 | | | | 10,847 | | | | 827 | |
| Other noninterest expenses | | | 3,800 | | | | 3,356 | | | | 13,075 | | | | 12,646 | |
Total Noninterest Expense | | | 43,434 | | | | 24,158 | | | | 132,520 | | | | 102,239 | |
Income (Loss) Before Income Taxes | | | (6,113 | ) | | | (4,513 | ) | | | 13,570 | | | | 14,324 | |
| Income taxes | | | 1,762 | | | | (1,769 | ) | | | 7,196 | | | | 3,312 | |
Net Income (Loss) | | $ | (7,875 | ) | | $ | (2,744 | ) | | $ | 6,374 | | | $ | 11,012 | |
Net income attributable to noncontrolling interest, net of tax | | | 41 | | | | 61 | | | | 188 | | | | 280 | |
Net Income (Loss) Attributable to Heartland | | | (7,834 | ) | | | (2,683 | ) | | | 6,562 | | | | 11,292 | |
Preferred dividends and discount | | | (1,336 | ) | | | (178 | ) | | | (5,344 | ) | | | (178 | ) |
Net Income (Loss) Available to Common Stockholders | | $ | (9,170 | ) | | $ | (2,861 | ) | | $ | 1,218 | | | $ | 11,114 | |
| | | | | | | | | | | | | | | | | |
| Earnings (loss) per common share-diluted | | $ | (0.56 | ) | | $ | (0.18 | ) | | $ | 0.07 | | | $ | 0.68 | |
| Weighted average shares outstanding-diluted | | | 16,345,095 | | | | 16,324,106 | | | | 16,325,320 | | | | 16,365,815 | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | For the Quarter Ended | |
| | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| Interest Income | | | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 38,191 | | | $ | 38,790 | | | $ | 38,423 | | | $ | 39,483 | | | $ | 39,905 | |
| Interest on securities and other: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 10,513 | | | | 10,809 | | | | 10,039 | | | | 8,421 | | | | 8,503 | |
Nontaxable | | | 2,456 | | | | 2,231 | | | | 2,025 | | | | 1,883 | | | | 1,692 | |
| Interest on federal funds sold | | | 1 | | | | - | | | | - | | | | 1 | | | | 32 | |
| Interest on deposits in other financial institutions | | | 9 | | | | 17 | | | | - | | | | 1 | | | | 8 | |
Total Interest Income | | | 51,170 | | | | 51,847 | | | | 50,487 | | | | 49,789 | | | | 50,140 | |
| Interest Expense | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 12,000 | | | | 13,046 | | | | 13,576 | | | | 14,122 | | | | 15,729 | |
| Interest on short-term borrowings | | | 194 | | | | 154 | | | | 173 | | | | 212 | | | | 522 | |
| Interest on other borrowings | | | 4,250 | | | | 4,065 | | | | 4,360 | | | | 4,378 | | | | 4,662 | |
Total Interest Expense | | | 16,444 | | | | 17,265 | | | | 18,109 | | | | 18,712 | | | | 20,913 | |
Net Interest Income | | | 34,726 | | | | 34,582 | | | | 32,378 | | | | 31,077 | | | | 29,227 | |
| Provision for loan and lease losses | | | 10,775 | | | | 11,896 | | | | 10,041 | | | | 6,665 | | | | 15,106 | |
Net Interest Income After Provision for Loan and Lease Losses | | | 23,951 | | | | 22,686 | | | | 22,337 | | | | 24,412 | | | | 14,121 | |
| Noninterest Income | | | | | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 3,257 | | | | 3,288 | | | | 3,109 | | | | 2,887 | | | | 3,034 | |
| Loan servicing income | | | 1,813 | | | | 1,756 | | | | 3,311 | | | | 2,786 | | | | 1,015 | |
| Trust fees | | | 2,156 | | | | 1,949 | | | | 1,971 | | | | 1,697 | | | | 1,747 | |
| Brokerage and insurance commissions | | | 697 | | | | 824 | | | | 715 | | | | 881 | | | | 1,002 | |
| Securities gains, net | | | 2,186 | | | | 1,291 | | | | 2,206 | | | | 2,965 | | | | 510 | |
| Gain (loss) on trading account securities | | | (61 | ) | | | 210 | | | | 348 | | | | (286 | ) | | | (531 | ) |
| Impairment loss on securities | | | (40 | ) | | | - | | | | - | | | | - | | | | (347 | ) |
| Gains on sale of loans | | | 1,168 | | | | 877 | | | | 2,231 | | | | 1,808 | | | | 331 | |
| Income (loss) on bank owned life insurance | | | 362 | | | | 297 | | | | 213 | | | | 130 | | | | (1,780 | ) |
| Gain on acquisition | | | 298 | | | | 998 | | | | - | | | | - | | | | - | |
| Other noninterest income | | | 1,534 | | | | 418 | | | | 560 | | | | (106 | ) | | | 543 | |
Total Noninterest Income | | | 13,370 | | | | 11,908 | | | | 14,664 | | | | 12,762 | | | | 5,524 | |
| Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 14,419 | | | | 14,661 | | | | 14,952 | | | | 16,433 | | | | 12,293 | |
| Occupancy | | | 2,220 | | | | 2,221 | | | | 2,176 | | | | 2,375 | | | | 2,220 | |
| Furniture and equipment | | | 1,638 | | | | 1,594 | | | | 1,695 | | | | 1,647 | | | | 1,767 | |
| Professional fees | | | 2,100 | | | | 2,706 | | | | 2,151 | | | | 2,170 | | | | 2,577 | |
| FDIC insurance assessments | | | 1,320 | | | | 1,393 | | | | 2,818 | | | | 1,047 | | | | 491 | |
| Advertising | | | 1,065 | | | | 740 | | | | 949 | | | | 583 | | | | 909 | |
| Goodwill impairment charge | | | 12,659 | | | | - | | | | - | | | | - | | | | - | |
| Intangible assets amortization | | | 198 | | | | 199 | | | | 234 | | | | 235 | | | | 235 | |
| Net loss on repossessed assets | | | 4,015 | | | | 3,680 | | | | 2,532 | | | | 620 | | | | 310 | |
| Other noninterest expenses | | | 3,800 | | | | 3,129 | | | | 2,970 | | | | 3,176 | | | | 3,356 | |
Total Noninterest Expense | | | 43,434 | | | | 30,323 | | | | 30,477 | | | | 28,286 | | | | 24,158 | |
Income (Loss) Before Income Taxes | | | (6,113 | ) | | | 4,271 | | | | 6,524 | | | | 8,888 | | | | (4,513 | ) |
| Income taxes | | | 1,762 | | | | 803 | | | | 1,812 | | | | 2,819 | | | | (1,769 | ) |
Net Income (Loss) | | $ | (7,875 | ) | | $ | 3,468 | | | $ | 4,712 | | | $ | 6,069 | | | $ | (2,744 | ) |
Net income available to noncontrolling interest, net of tax | | | 41 | | | | 44 | | | | 44 | | | | 59 | | | | 61 | |
Net Income (Loss) Attributable to Heartland | | $ | (7,834 | ) | | $ | 3,512 | | | $ | 4,756 | | | $ | 6,128 | | | $ | (2,683 | ) |
Preferred dividends and discount | | | (1,336 | ) | | | (1,336 | ) | | | (1,336 | ) | | | (1,336 | ) | | | (178 | ) |
Net Income (Loss) Available to Common Stockholders | | $ | (9,170 | ) | | $ | 2,176 | | | $ | 3,420 | | | $ | 4,792 | | | $ | (2,861 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) per common share-diluted | | $ | (0.56 | ) | | $ | 0.13 | | | $ | 0.21 | | | $ | 0.29 | | | $ | (0.18 | ) |
| Weighted average shares outstanding-diluted | | | 16,345,095 | | | | 16,340,092 | | | | 16,323,724 | | | | 16,296,839 | | | | 16,324,106 | |
| HEARTLAND FINANCIAL USA, INC. | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |
| | | As Of | |
| | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| Assets | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 182,410 | | | $ | 82,508 | | | $ | 39,961 | | | $ | 87,261 | | | $ | 51,303 | |
| Securities | | | 1,175,217 | | | | 1,105,744 | | | | 1,061,211 | | | | 1,006,172 | | | | 903,705 | |
| Loans held for sale | | | 17,310 | | | | 19,923 | | | | 24,339 | | | | 18,263 | | | | 19,695 | |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | |
| Held to maturity | | | 2,331,142 | | | | 2,367,871 | | | | 2,375,027 | | | | 2,356,391 | | | | 2,405,001 | |
| Loans covered by loss share agreements | | | 31,860 | | | | 36,175 | | | | - | | | | - | | | | - | |
| Allowance for loan and lease losses | | | (41,848 | ) | | | (42,260 | ) | | | (37,234 | ) | | | (37,277 | ) | | | (35,651 | ) |
| Loans and leases, net | | | 2,321,154 | | | | 2,361,786 | | | | 2,337,793 | | | | 2,319,114 | | | | 2,369,350 | |
| Premises, furniture and equipment, net | | | 118,835 | | | | 117,140 | | | | 117,914 | | | | 119,569 | | | | 120,500 | |
| Goodwill | | | 27,548 | | | | 40,207 | | | | 40,207 | | | | 40,207 | | | | 40,207 | |
| Other intangible assets, net | | | 12,380 | | | | 12,101 | | | | 11,591 | | | | 9,606 | | | | 8,079 | |
| Cash surrender value on life insurance | | | 55,516 | | | | 55,141 | | | | 54,817 | | | | 54,581 | | | | 54,431 | |
| Other real estate, net | | | 30,568 | | | | 33,342 | | | | 29,311 | | | | 29,317 | | | | 11,750 | |
| FDIC indemnification asset | | | 5,532 | | | | 4,393 | | | | - | | | | - | | | | - | |
| Other assets | | | 66,521 | | | | 47,328 | | | | 49,587 | | | | 46,010 | | | | 51,248 | |
| Total Assets | | $ | 4,012,991 | | | $ | 3,879,613 | | | $ | 3,766,731 | | | $ | 3,730,100 | | | $ | 3,630,268 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand | | $ | 460,645 | | | $ | 451,645 | | | $ | 436,985 | | | $ | 409,921 | | | $ | 383,061 | |
| Savings | | | 1,554,358 | | | | 1,386,059 | | | | 1,259,861 | | | | 1,185,756 | | | | 1,128,312 | |
| Brokered time deposits | | | 41,791 | | | | 43,473 | | | | 45,322 | | | | 44,631 | | | | 51,474 | |
| Other time deposits | | | 993,595 | | | | 1,063,237 | | | | 1,085,335 | | | | 1,148,413 | | | | 1,077,385 | |
| Total deposits | | | 3,050,389 | | | | 2,944,414 | | | | 2,827,503 | | | | 2,788,721 | | | | 2,640,232 | |
| Short-term borrowings | | | 162,349 | | | | 111,346 | | | | 132,301 | | | | 117,766 | | | | 210,184 | |
| Other borrowings | | | 451,429 | | | | 457,444 | | | | 457,508 | | | | 477,640 | | | | 437,833 | |
| Accrued expenses and other liabilities | | | 33,767 | | | | 38,044 | | | | 31,459 | | | | 30,496 | | | | 33,396 | |
| Total Liabilities | | | 3,697,934 | | | | 3,551,248 | | | | 3,448,771 | | | | 3,414,623 | | | | 3,321,645 | |
| | | | | | | | | | | | | | | | | | | | | |
| Equity | | | | | | | | | | | | | | | | | | | | |
| Preferred equity | | | 77,224 | | | | 76,909 | | | | 76,594 | | | | 76,279 | | | | 75,578 | |
| Common equity | | | 235,057 | | | | 248,583 | | | | 238,449 | | | | 236,237 | | | | 230,025 | |
| Total Heartland Stockholders’ Equity | | | 312,281 | | | | 325,492 | | | | 315,043 | | | | 312,516 | | | | 305,603 | |
| Noncontrolling interest | | | 2,776 | | | | 2,873 | | | | 2,917 | | | | 2,961 | | | | 3,020 | |
| Total Equity | | | 315,057 | | | | 328,365 | | | | 317,960 | | | | 315,477 | | | | 308,623 | |
| Total Liabilities and Equity | | $ | 4,012,991 | | | $ | 3,879,613 | | | $ | 3,766,731 | | | $ | 3,730,100 | | | $ | 3,630,268 | |
| | | | | | | | | | | | | | | | | | | | | |
| Common Share Data | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 14.38 | | | $ | 15.23 | | | $ | 14.62 | | | $ | 14.50 | | | $ | 14.13 | |
| FAS 115 effect on book value per common share | | $ | 0.38 | | | $ | 0.62 | | | $ | (0.02 | ) | | $ | .10 | | | $ | (0.13 | ) |
| Common shares outstanding, net of treasury stock | | | 16,346,362 | | | | 16,321,953 | | | | 16,310,825 | | | | 16,294,828 | | | | 16,274,490 | |
| | | | | | | | | | | | | | | | | | | | | |
Tangible Capital Ratio(1) | | | 5.14 | % | | | 5.35 | % | | | 5.24 | % | | | 5.23 | % | | | 5.19 | % |
(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 | |
| | | 12/31/2009 | | | 12/31/2008 | | | 12/31/2009 | | | 12/31/2008 | |
| | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | |
| Assets | | $ | 3,975,107 | | | $ | 3,492,105 | | | $ | 3,812,743 | | | $ | 3,378,930 | |
| Loans and leases, net of unearned | | | 2,410,459 | | | | 2,396,816 | | | | 2,412,198 | | | | 2,326,845 | |
| Deposits | | | 3,013,644 | | | | 2,587,372 | | | | 2,847,653 | | | | 2,455,739 | |
| Earning assets | | | 3,525,624 | | | | 3,177,472 | | | | 3,438,005 | | | | 3,077,350 | |
| Interest bearing liabilities | | | 3,127,792 | | | | 2,837,795 | | | | 3,018,240 | | | | 2,734,562 | |
| Common stockholders’ equity | | | 246,505 | | | | 222,509 | | | | 241,032 | | | | 229,692 | |
| Total stockholder’s equity | | | 326,254 | | | | 233,824 | | | | 320,335 | | | | 232,521 | |
| Tangible common stockholders’ equity | | | 203,573 | | | | 175,541 | | | | 197,749 | | | | 185,472 | |
| | | | | | | | | | | | | | | | | |
| Earnings Performance Ratios | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | (0.92 | )% | | | (0.33 | )% | | | 0.03 | % | | | 0.33 | % |
| Annualized return on average common equity | | | (14.76 | ) | | | (5.12 | ) | | | 0.51 | | | | 4.84 | |
| Annualized return on average common tangible equity | | | (17.87 | ) | | | (6.48 | ) | | | 0.62 | | | | 5.85 | |
Annualized net interest margin(1) | | | 4.04 | | | | 3.79 | | | | 3.99 | | | | 3.89 | |
Efficiency ratio(2) | | | 92.19 | | | | 68.37 | | | | 73.07 | | | | 68.78 | |
(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 | |
| | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| | | | | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | | | | |
| Assets | | $ | 3,975,107 | | | $ | 3,853,658 | | | $ | 3,763,003 | | | $ | 3,659,204 | | | $ | 3,492,105 | |
| Loans and leases, net of unearned | | | 2,410,459 | | | | 2,430,161 | | | | 2,384,568 | | | | 2,423,605 | | | | 2,396,816 | |
| Deposits | | | 3,013,644 | | | | 2,912,325 | | | | 2,790,322 | | | | 2,674,320 | | | | 2,587,372 | |
| Earning assets | | | 3,525,624 | | | | 3,496,607 | | | | 3,420,233 | | | | 3,309,556 | | | | 3,177,472 | |
| Interest bearing liabilities | | | 3,127,792 | | | | 3,041,502 | | | | 2,984,903 | | | | 2,918,763 | | | | 2,837,795 | |
| Common stockholders’ equity | | | 246,505 | | | | 243,542 | | | | 238,878 | | | | 235,200 | | | | 222,509 | |
| Total stockholders’ equity | | | 326,254 | | | | 323,040 | | | | 318,077 | | | | 313,968 | | | | 233,824 | |
| Tangible common stockholders’ equity | | | 203,573 | | | | 200,370 | | | | 195,483 | | | | 191,577 | | | | 175,541 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Annualized return on average assets | | | (0.92 | )% | | | 0.22 | % | | | 0.36 | % | | | 0.53 | % | | | (0.33 | )% |
| Annualized return on average common equity | | | (14.76 | ) | | | 3.54 | | | | 5.74 | | | | 8.26 | | | | (5.12 | ) |
| Annualized return on average common tangible equity | | | (17.87 | ) | | | 4.31 | | | | 7.02 | | | | 10.14 | | | | (6.48 | ) |
Annualized net interest margin(1) | | | 4.04 | | | | 4.06 | | | | 3.92 | | | | 3.94 | | | | 3.79 | |
Efficiency ratio(2) | | | 92.19 | | | | 65.55 | | | | 66.40 | | | | 67.48 | | | | 68.37 | |
(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 | | | As of and | | | As of and | | | As of and | | | As of and | |
| | | For the | | | For the | | | For the | | | For the | | | For the | |
| | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | |
| | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| Loan and Lease Data | | | | | | | | | | | | | | | |
| Loans held to maturity: | | | | | | | | | | | | | | | |
| Commercial and commercial real estate | | $ | 1,670,108 | | | $ | 1,694,589 | | | $ | 1,701,933 | | | $ | 1,673,882 | | | $ | 1,718,071 | |
| Residential mortgage | | | 175,059 | | | | 184,292 | | | | 187,016 | | | | 190,179 | | | | 203,921 | |
| Agricultural and agricultural real estate | | | 256,780 | | | | 257,738 | | | | 255,340 | | | | 259,320 | | | | 247,664 | |
| Consumer | | | 231,709 | | | | 233,259 | | | | 231,986 | | | | 232,507 | | | | 234,061 | |
| Direct financing leases, net | | | 2,326 | | | | 2,882 | | | | 3,615 | | | | 4,989 | | | | 5,829 | |
| Unearned discount and deferred loan fees | | | (4,840 | ) | | | (4,889 | ) | | | (4,863 | ) | | | (4,486 | ) | | | (4,545 | ) |
| Total loans and leases held to maturity | | $ | 2,331,142 | | | $ | 2,367,871 | | | $ | 2,375,027 | | | $ | 2,356,391 | | | $ | 2,405,001 | |
| Loans covered under loss share agreements: | | | | | | | | | | | | | | | | | | | | |
| Commercial and commercial real estate | | $ | 15,068 | | | $ | 17,109 | | | $ | - | | | $ | - | | | $ | - | |
| Residential mortgage | | | 8,984 | | | | 10,201 | | | | - | | | | - | | | | - | |
| Agricultural and agricultural real estate | | | 3,626 | | | | 4,117 | | | | - | | | | - | | | | - | |
| Consumer | | | 4,182 | | | | 4,748 | | | | - | | | | - | | | | - | |
| Total loans and leases covered under loss share agreements | | $ | 31,860 | | | $ | 36,175 | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Asset Quality | | | | | | | | | | | | | | | | | | | | |
| Not covered under loss share agreements: | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 78,118 | | | $ | 78,940 | | | $ | 71,116 | | | $ | 67,140 | | | $ | 76,953 | |
| Loans and leases past due ninety days or more as to interest or principal payments | | | 17 | | | | 5,063 | | | | 54 | | | | - | | | | 1,005 | |
| Other real estate owned | | | 30,205 | | | | 32,643 | | | | 29,311 | | | | 29,317 | | | | 11,750 | |
| Other repossessed assets | | | 501 | | | | 565 | | | | 1,477 | | | | 1,501 | | | | 1,484 | |
| Total nonperforming assets not covered under loss share agreements | | $ | 108,841 | | | $ | 117,211 | | | $ | 101,958 | | | $ | 97,958 | | | $ | 91,192 | |
| Covered under loss share agreements: | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 4,170 | | | $ | 4,102 | | | $ | - | | | $ | - | | | $ | - | |
| Loans and leases past due ninety days or more as to interest or principal payments | | | - | | | | - | | | | - | | | | - | | | | - | |
| Other real estate owned | | | 363 | | | | 599 | | | | - | | | | - | | | | - | |
| Other repossessed assets | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total nonperforming assets covered under loss share agreements | | $ | 4,533 | | | $ | 4,701 | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for Loan and Lease Losses | | | | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | $ | 42,260 | | | $ | 37,234 | | | $ | 37,277 | | | $ | 35,651 | | | $ | 34,845 | |
| Provision for loan and lease losses | | | 10,775 | | | | 11,896 | | | | 10,041 | | | | 6,665 | | | | 15,106 | |
| Charge offs on loans not covered by loss share agreements | | | (10,115 | ) | | | (7,465 | ) | | | (10,406 | ) | | | (5,635 | ) | | | (14,412 | ) |
| Charge offs on loans covered by loss share agreements | | | (1,344 | ) | | | - | | | | - | | | | - | | | | - | |
| Recoveries | | | 272 | | | | 595 | | | | 322 | | | | 596 | | | | 112 | |
| Balance, end of period | | $ | 41,848 | | | $ | 42,260 | | | $ | 37,234 | | | $ | 37,277 | | | $ | 35,651 | |
| | | | | | | | | | | | | | | | | | | | | |
| Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements | | | | | | | | | | | | | | | | | | | | |
| Ratio of nonperforming loans and leases to total loans and leases | | | 3.35 | % | | | 3.55 | % | | | 3.00 | % | | | 2.85 | % | | | 3.24 | % |
| Ratio of nonperforming assets to total assets | | | 2.71 | % | | | 3.02 | % | | | 2.71 | % | | | 2.63 | % | | | 2.51 | % |
| Annualized ratio of net loan charge-offs to average loans and leases | | | 1.84 | % | | | 1.12 | % | | | 1.70 | % | | | 0.84 | % | | | 2.37 | % |
| Allowance for loan and lease losses as a percent of loans and leases | | | 1.80 | % | | | 1.78 | % | | | 1.57 | % | | | 1.58 | % | | | 1.48 | % |
| Allowance for loan and lease losses as a percent of nonperforming loans and leases | | | 53.56 | % | | | 50.31 | % | | | 52.32 | % | | | 55.52 | % | | | 45.73 | % |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | | For the Quarter Ended | |
| | | December 31, 2009 | | | December 31, 2008 | |
| | | Average | | | | | | | | | Average | | | | | | | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | |
Taxable | $ | 936,525 | | $ | 10,513 | | | 4.45 | % | $ | 644,850 | | $ | 8,504 | | | 5.25 | % |
Nontaxable(1) | | 213,662 | | | 3,462 | | | 6.43 | % | | 154,906 | | | 2,483 | | | 6.38 | % |
Total securities | | 1,150,187 | | | 13,975 | | | 4.82 | % | | 799,756 | | | 10,987 | | | 5.47 | % |
| Interest bearing deposits | | 4,568 | | | 9 | | | 0.78 | % | | 1,343 | | | 8 | | | 2.37 | % |
| Federal funds sold | | 2,238 | | | 1 | | | 0.18 | % | | 15,240 | | | 32 | | | 0.84 | % |
| Loans and leases: | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | 1,699,909 | | | 25,221 | | | 5.89 | % | | 1,692,305 | | | 26,518 | | | 6.23 | % |
Residential mortgage | | 209,481 | | | 2,866 | | | 5.43 | % | | 226,260 | | | 3,390 | | | 5.96 | % |
Agricultural and agricultural real estate(1) | | 263,216 | | | 4,086 | | | 6.16 | % | | 243,703 | | | 4,078 | | | 6.66 | % |
Consumer | | 235,369 | | | 5,180 | | | 8.73 | % | | 228,372 | | | 5,095 | | | 8.88 | % |
Direct financing leases, net | | 2,484 | | | 37 | | | 5.91 | % | | 6,176 | | | 92 | | | 5.93 | % |
Fees on loans | | - | | | 1,000 | | | - | | | - | | | 948 | | | - | |
Less: allowance for loan and lease losses | | (41,827) | | | - | | | - | | | (35,683) | | | - | | | - | |
Net loans and leases | | 2,368,632 | | | 38,390 | | | 6.43 | % | | 2,361,133 | | | 40,121 | | | 6.76 | % |
Total earning assets | | 3,525,625 | | | 52,375 | | | 5.89 | % | | 3,177,472 | | | 51,148 | | | 6.40 | % |
| Nonearning Assets | | 449,482 | | | | | | | | | 314,633 | | | | | | | |
| Total Assets | $ | 3,975,107 | | $ | 52,375 | | | | | $ | 3,492,105 | | $ | 51,148 | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | |
Savings | $ | 1,469,913 | | $ | 4,625 | | | 1.25 | % | $ | 1,069,632 | | $ | 5,601 | | | 2.08 | % |
Time, $100,000 and over | | 341,288 | | | 2,344 | | | 2.72 | % | | 369,588 | | | 3,331 | | | 3.59 | % |
Other time deposits | | 725,580 | | | 5,031 | | | 2.75 | % | | 764,787 | | | 6,797 | | | 3.54 | % |
| Short-term borrowings | | 133,666 | | | 194 | | | 0.58 | % | | 195,219 | | | 522 | | | 1.06 | % |
| Other borrowings | | 457,345 | | | 4,250 | | | 3.69 | % | | 438,569 | | | 4,662 | | | 4.23 | % |
Total interest bearing liabilities | | 3,127,792 | | | 16,444 | | | 2.09 | % | | 2,837,795 | | | 20,913 | | | 2.93 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | 476,863 | | | | | | | | | 383,365 | | | | | | | |
| Accrued interest and other liabilities | | 44,198 | | | | | | | | | 37,121 | | | | | | | |
Total noninterest bearing liabilities | | 521,061 | | | | | | | | | 420,486 | | | | | | | |
| Stockholders’ Equity | | 326,254 | | | | | | | | | 233,824 | | | | | | | |
| Total Liabilities and Stockholders’ Equity | $ | 3,975,107 | | $ | 16,444 | | | | | $ | 3,492,105 | | $ | 20,913 | | | | |
Net interest income(1) | | | | $ | 35,931 | | | | | | | | $ | 30,235 | | | | |
Net interest spread(1) | | | | | | | | 3.81 | % | | | | | | | | 3.47 | % |
Net interest income to total earning assets(1) | | | | | | | | 4.04 | % | | | | | | | | 3.79 | % |
| Interest bearing liabilities to earning assets | | 88.72 | % | | | | | | | | 89.31 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | |
(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 | |
| | | December 31, 2009 | | | December 31, 2008 | |
| | | Average | | | | | | | | | Average | | | | | | | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| Earning Assets | | | | | | | | | | | | | | | | | | |
| Securities: | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 873,276 | | | $ | 39,782 | | | | 4.56 | % | | $ | 616,525 | | | $ | 31,232 | | | | 5.07 | % |
Nontaxable(1) | | | 186,716 | | | | 12,307 | | | | 6.59 | % | | | 151,828 | | | | 9,813 | | | | 6.46 | % |
Total securities | | | 1,059,992 | | | | 52,089 | | | | 4.91 | % | | | 768,353 | | | | 41,045 | | | | 5.34 | % |
| Interest bearing deposits | | | 2,943 | | | | 27 | | | | 0.92 | % | | | 706 | | | | 18 | | | | 2.55 | % |
| Federal funds sold | | | 835 | | | | 2 | | | | 0.24 | % | | | 15,494 | | | | 299 | | | | 1.93 | % |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and commercial real estate(1) | | | 1,696,794 | | | | 101,854 | | | | 6.00 | % | | | 1,645,264 | | | | 108,651 | | | | 6.60 | % |
Residential mortgage | | | 219,303 | | | | 12,596 | | | | 5.74 | % | | | 223,334 | | | | 14,169 | | | | 6.34 | % |
Agricultural and agricultural real estate(1) | | | 259,700 | | | | 16,633 | | | | 6.40 | % | | | 238,328 | | | | 16,933 | | | | 7.10 | % |
Consumer | | | 232,475 | | | | 20,325 | | | | 8.74 | % | | | 212,430 | | | | 20,004 | | | | 9.42 | % |
Direct financing leases, net | | | 3,927 | | | | 213 | | | | 5.42 | % | | | 7,489 | | | | 445 | | | | 5.94 | % |
Fees on loans | | | - | | | | 4,085 | | | | - | | | | - | | | | 4,914 | | | | - | |
Less: allowance for loan and lease losses | | | (37,964 | ) | | | - | | | | - | | | | (34,048 | ) | | | - | | | | - | |
Net loans and leases | | | 2,374,235 | | | | 155,706 | | | | 6.56 | % | | | 2,292,797 | | | | 165,116 | | | | 7.20 | % |
Total earning assets | | | 3,438,005 | | | | 207,824 | | | | 6.04 | % | | | 3,077,350 | | | | 206,478 | | | | 6.71 | % |
| Nonearning Assets | | | 374,738 | | | | | | | | | | | | 301,580 | | | | | | | | | |
| Total Assets | | $ | 3,812,743 | | | $ | 207,824 | | | | | | | $ | 3,378,930 | | | $ | 206,478 | | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | | | | | | | | | | | | | | |
Savings | | $ | 1,282,212 | | | $ | 18,407 | | | | 1.44 | % | | $ | 938,701 | | | $ | 18,176 | | | | 1.94 | % |
Time, $100,000 and over | | | 373,159 | | | | 11,202 | | | | 3.00 | % | | | 336,926 | | | | 13,422 | | | | 3.98 | % |
Other time deposits | | | 754,814 | | | | 23,135 | | | | 3.06 | % | | | 807,617 | | | | 32,506 | | | | 4.02 | % |
| Short-term borrowings | | | 143,239 | | | | 733 | | | | 0.51 | % | | | 233,856 | | | | 4,571 | | | | 1.95 | % |
| Other borrowings | | | 464,816 | | | | 17,053 | | | | 3.67 | % | | | 417,462 | | | | 18,224 | | | | 4.37 | % |
Total interest bearing liabilities | | | 3,018,240 | | | | 70,530 | | | | 2.34 | % | | | 2,734,562 | | | | 86,899 | | | | 3.18 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest bearing deposits | | | 437,468 | | | | | | | | | | | | 372,496 | | | | | | | | | |
| Accrued interest and other liabilities | | | 36,700 | | | | | | | | | | | | 39,351 | | | | | | | | | |
Total noninterest bearing liabilities | | | 474,168 | | | | | | | | | | | | 411,847 | | | | | | | | | |
| Stockholders’ Equity | | | 320,335 | | | | | | | | | | | | 232,521 | | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 3,812,743 | | | $ | 70,530 | | | | | | | $ | 3,378,930 | | | $ | 86,899 | | | | | |
Net interest income(1) | | | | | | $ | 137,294 | | | | | | | | | | | $ | 119,579 | | | | | |
Net interest spread(1) | | | | | | | | | | | 3.71 | % | | | | | | | | | | | 3.53 | % |
Net interest income to total earning assets(1) | | | | | | | | | | | 3.99 | % | | | | | | | | | | | 3.89 | % |
| Interest bearing liabilities to earning assets | | | 87.79 | % | | | | | | | | | | | 88.86 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(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 | | | As of and | | | As of and | | | As of and | | | As of and | |
| | | | For the | | | For the | | | For the | | | For the | | | For the | |
| | | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | | | Qtr. Ended | |
| | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| Total Assets | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 1,249,124 | | $ | 1,104,217 | | $ | 1,097,161 | | $ | 1,107,204 | | $ | 1,041,247 | |
| New Mexico Bank & Trust | | | 868,295 | | | 785,146 | | | 791,019 | | | 762,980 | | | 773,726 | |
| Rocky Mountain Bank | | | 469,723 | | | 468,695 | | | 470,220 | | | 481,577 | | | 476,762 | |
| Wisconsin Community Bank | | | 448,106 | | | 433,900 | | | 434,362 | | | 427,734 | | | 429,707 | |
| Galena State Bank & Trust Co. | | | 291,412 | | | 288,501 | | | 231,655 | | | 228,711 | | | 222,886 | |
| Riverside Community Bank | | | 283,258 | | | 277,639 | | | 270,354 | | | 254,965 | | | 244,613 | |
| Arizona Bank & Trust | | | 258,280 | | | 268,600 | | | 251,562 | | | 227,840 | | | 219,830 | |
| First Community Bank | | | 121,492 | | | 121,938 | | | 125,069 | | | 123,785 | | | 123,058 | |
| Summit Bank & Trust | | | 97,025 | | | 99,724 | | | 91,211 | | | 78,892 | | | 77,638 | |
| Minnesota Bank & Trust | | | 49,330 | | | 39,283 | | | 34,547 | | | 30,625 | | | 25,695 | |
| Total Deposits | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 864,133 | | $ | 815,553 | | $ | 798,927 | | $ | 806,425 | | $ | 749,250 | |
| New Mexico Bank & Trust | | | 589,468 | | | 563,414 | | | 552,650 | | | 535,753 | | | 507,561 | |
| Rocky Mountain Bank | | | 376,487 | | | 364,570 | | | 364,159 | | | 375,708 | | | 370,630 | |
| Wisconsin Community Bank | | | 358,994 | | | 338,328 | | | 330,327 | | | 336,670 | | | 338,025 | |
| Galena State Bank & Trust Co. | | | 253,073 | | | 244,389 | | | 196,035 | | | 193,697 | | | 185,042 | |
| Riverside Community Bank | | | 232,459 | | | 226,791 | | | 220,097 | | | 209,176 | | | 197,785 | |
| Arizona Bank & Trust | | | 202,730 | | | 215,092 | | | 198,310 | | | 176,393 | | | 155,909 | |
| First Community Bank | | | 100,328 | | | 99,351 | | | 99,772 | | | 100,441 | | | 102,515 | |
| Summit Bank & Trust | | | 85,131 | | | 89,130 | | | 79,991 | | | 66,259 | | | 60,278 | |
| Minnesota Bank & Trust | | | 34,616 | | | 24,364 | | | 18,477 | | | 15,598 | | | 10,459 | |
| Net Income (Loss) | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 3,751 | | $ | 3,863 | | $ | 4,144 | | $ | 3,787 | | $ | 1,962 | |
| New Mexico Bank & Trust | | | 1,640 | | | 1,955 | | | 1,434 | | | 3,257 | | | 704 | |
| Rocky Mountain Bank | | | (6,399 | ) | | (463 | ) | | 204 | | | 724 | | | (1,021 | ) |
| Wisconsin Community Bank | | | 770 | | | 1,198 | | | 1,464 | | | 1,011 | | | (649 | ) |
| Galena State Bank & Trust Co. | | | 663 | | | 962 | | | 513 | | | 905 | | | 239 | |
| Riverside Community Bank | | | (55 | ) | | 283 | | | (326 | ) | | 502 | | | (204 | ) |
| Arizona Bank & Trust | | | (5,117 | ) | | (1,227 | ) | | (1,151 | ) | | (2,695 | ) | | (791 | ) |
| First Community Bank | | | (225 | ) | | 101 | | | (209 | ) | | 316 | | | 2 | |
| Summit Bank & Trust | | | (490 | ) | | (1,366 | ) | | (1,169 | ) | | (432 | ) | | (579 | ) |
| Minnesota Bank & Trust | | | (203 | ) | | (221 | ) | | (225 | ) | | (291 | ) | | (304 | ) |
| Return on Average Assets | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | 1.25 | % | | 1.40 | % | | 1.50 | % | | 1.43 | % | | 0.77 | % |
| New Mexico Bank & Trust | | | 0.79 | | | 0.99 | | | 0.73 | | | 1.72 | | | 0.38 | |
| Rocky Mountain Bank | | | (5.30 | ) | | (0.39 | ) | | 0.17 | | | 0.61 | | | (0.87 | ) |
| Wisconsin Community Bank | | | 0.69 | | | 1.09 | | | 1.35 | | | 0.95 | | | (0.62 | ) |
| Galena State Bank & Trust Co. | | | 0.90 | | | 1.34 | | | 0.90 | | | 1.64 | | | 0.42 | |
| Riverside Community Bank | | | (0.08 | ) | | 0.41 | | | (0.50 | ) | | 0.82 | | | (0.33 | ) |
| Arizona Bank & Trust | | | (7.60 | ) | | (1.86 | ) | | (1.88 | ) | | (4.94 | ) | | (1.44 | ) |
| First Community Bank | | | (0.72 | ) | | 0.32 | | | (0.67 | ) | | 1.05 | | | 0.01 | |
| Summit Bank & Trust | | | (1.94 | ) | | (5.62 | ) | | (5.59 | ) | | (2.23 | ) | | (3.07 | ) |
| Minnesota Bank & Trust | | | (1.95 | ) | | (2.42 | ) | | (2.77 | ) | | (4.32 | ) | | (5.52 | ) |
| Net Interest Margin as a Percentage of Average Earning Assets | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | 3.98 | % | | 3.98 | % | | 3.72 | % | | 3.59 | % | | 3.60 | % |
| New Mexico Bank & Trust | | | 4.23 | | | 4.67 | | | 4.38 | | | 4.70 | | | 4.45 | |
| Rocky Mountain Bank | | | 3.68 | | | 3.80 | | | 3.82 | | | 4.17 | | | 3.86 | |
| Wisconsin Community Bank | | | 3.91 | | | 3.76 | | | 4.12 | | | 3.65 | | | 3.38 | |
| Galena State Bank & Trust Co. | | | 3.46 | | | 3.47 | | | 3.59 | | | 3.43 | | | 3.42 | |
| Riverside Community Bank | | | 4.14 | | | 3.86 | | | 3.38 | | | 2.98 | | | 3.06 | |
| Arizona Bank & Trust | | | 3.58 | | | 3.33 | | | 3.20 | | | 3.88 | | | 3.60 | |
| First Community Bank | | | 4.24 | | | 4.31 | | | 3.60 | | | 3.53 | | | 3.33 | |
| Summit Bank & Trust | | | 3.00 | | | 2.47 | | | 3.17 | | | 3.38 | | | 3.42 | |
| Minnesota Bank & Trust | | | 4.16 | | | 3.86 | | | 3.94 | | | 3.11 | | | 2.22 | |
HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | | | As of | | | As of | | | As of | | | As of | | | As of | |
| | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | | | 3/31/2009 | | | 12/31/2008 | |
| Total Portfolio Loans and Leases | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 658,274 | | $ | 653,579 | | $ | 669,925 | | $ | 662,047 | | $ | 669,856 | |
| New Mexico Bank & Trust | | | 502,497 | | | 513,560 | | | 499,597 | | | 480,147 | | | 494,877 | |
| Rocky Mountain Bank | | | 292,914 | | | 302,494 | | | 314,523 | | | 312,335 | | | 326,086 | |
| Wisconsin Community Bank | | | 274,487 | | | 289,558 | | | 298,817 | | | 295,852 | | | 291,164 | |
| Galena State Bank & Trust Co. | | | 134,104 | | | 136,700 | | | 130,011 | | | 130,791 | | | 141,428 | |
| Riverside Community Bank | | | 161,280 | | | 161,025 | | | 159,977 | | | 161,304 | | | 165,347 | |
| Arizona Bank & Trust | | | 138,604 | | | 142,387 | | | 135,198 | | | 138,647 | | | 139,723 | |
| First Community Bank | | | 72,113 | | | 73,722 | | | 72,676 | | | 74,120 | | | 79,261 | |
| Summit Bank & Trust | | | 58,108 | | | 58,410 | | | 60,948 | | | 62,157 | | | 60,725 | |
| Minnesota Bank & Trust | | | 24,472 | | | 22,118 | | | 19,977 | | | 14,796 | | | 13,134 | |
| Allowance For Loan and Lease Losses | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 10,486 | | $ | 10,318 | | $ | 9,478 | | $ | 9,333 | | $ | 9,307 | |
| New Mexico Bank & Trust | | | 7,578 | | | 7,641 | | | 7,080 | | | 6,607 | | | 6,847 | |
| Rocky Mountain Bank | | | 5,897 | | | 6,152 | | | 5,743 | | | 4,938 | | | 4,678 | |
| Wisconsin Community Bank | | | 5,390 | | | 5,133 | | | 4,386 | | | 4,345 | | | 4,297 | |
| Galena State Bank & Trust Co. | | | 1,989 | | | 1,897 | | | 1,711 | | | 1,782 | | | 1,962 | |
| Riverside Community Bank | | | 2,395 | | | 2,475 | | | 2,270 | | | 2,215 | | | 2,293 | |
| Arizona Bank & Trust | | | 3,825 | | | 4,380 | | | 2,520 | | | 3,933 | | | 2,330 | |
| First Community Bank | | | 1,072 | | | 1,122 | | | 989 | | | 1,023 | | | 1,110 | |
| Summit Bank & Trust | | | 926 | | | 930 | | | 922 | | | 1,075 | | | 874 | |
| Minnesota Bank & Trust | | | 295 | | | 276 | | | 234 | | | 185 | | | 164 | |
| Nonperforming Loans and Leases | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | $ | 6,102 | | $ | 7,365 | | $ | 6,474 | | $ | 6,180 | | $ | 7,840 | |
| New Mexico Bank & Trust | | | 14,069 | | | 18,693 | | | 10,283 | | | 10,094 | | | 11,426 | |
| Rocky Mountain Bank | | | 18,443 | | | 17,286 | | | 18,570 | | | 12,854 | | | 17,254 | |
| Wisconsin Community Bank | | | 14,396 | | | 13,276 | | | 12,173 | | | 13,075 | | | 10,746 | |
| Galena State Bank & Trust Co. | | | 1,545 | | | 2,045 | | | 2,425 | | | 3,040 | | | 4,625 | |
| Riverside Community Bank | | | 8,104 | | | 9,493 | | | 8,457 | | | 6,105 | | | 6,410 | |
| Arizona Bank & Trust | | | 5,158 | | | 5,689 | | | 5,806 | | | 5,234 | | | 8,278 | |
| First Community Bank | | | 2,736 | | | 3,866 | | | 2,893 | | | 4,291 | | | 5,102 | |
| Summit Bank & Trust | | | 6,719 | | | 5,528 | | | 3,305 | | | 5,460 | | | 5,486 | |
| Minnesota Bank & Trust | | | 19 | | | - | | | - | | | - | | | - | |
| Allowance As a Percent of Total Loans and Leases | | | | | | | | | | | | | | | | |
| Dubuque Bank and Trust Company | | | 1.59 | % | | 1.58 | % | | 1.41 | % | | 1.41 | % | | 1.39 | % |
| New Mexico Bank & Trust | | | 1.51 | | | 1.49 | | | 1.42 | | | 1.38 | | | 1.38 | |
| Rocky Mountain Bank | | | 2.01 | | | 2.03 | | | 1.83 | | | 1.58 | | | 1.43 | |
| Wisconsin Community Bank | | | 1.96 | | | 1.77 | | | 1.47 | | | 1.47 | | | 1.48 | |
| Galena State Bank & Trust Co. | | | 1.48 | | | 1.39 | | | 1.32 | | | 1.36 | | | 1.39 | |
| Riverside Community Bank | | | 1.48 | | | 1.54 | | | 1.42 | | | 1.37 | | | 1.39 | |
| Arizona Bank & Trust | | | 2.76 | | | 3.08 | | | 1.86 | | | 2.84 | | | 1.67 | |
| First Community Bank | | | 1.49 | | | 1.52 | | | 1.36 | | | 1.38 | | | 1.40 | |
| Summit Bank & Trust | | | 1.59 | | | 1.59 | | | 1.51 | | | 1.73 | | | 1.44 | |
| Minnesota Bank & Trust | | | 1.21 | | | 1.25 | | | 1.17 | | | 1.25 | | | 1.25 | |
