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| CONTACT: | FOR IMMEDIATE RELEASE |
| John K. Schmidt | October 25, 2010 |
| Chief Operating Officer | |
| Chief Financial Officer | |
| (563) 589-1994 | |
| jschmidt@htlf.com | |
HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER 2010 RESULTS
Third Quarter 2010 Highlights
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| ▪ | Net income of $6.9 million for the quarter |
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| ▪ | Net interest margin of 4.18% for the quarter |
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| ▪ | Net interest income increased $2.1 million or 6% over the third quarter of 2009 |
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| ▪ | Nonperforming assets not covered by loss share agreements were $117.8 million at quarter-end, down from $118.0 million at June 30, 2010 |
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| | Quarter Ended Sept. 30, | | Nine Months Ended S ept. 30, |
| | 2010 | | 2009 | | 2010 | | 2009 |
| Net income (in millions) | $ | 6.9 | | | $ | 3.5 | | | $ | 17.3 | | | $ | 14.2 | |
| Net income available to common stockholders (in millions) | 5.6 | | | 2.2 | | | 13.4 | | | 10.4 | |
| Diluted earnings per common share | 0.34 | | | 0.13 | | | 0.81 | | | 0.64 | |
| | | | | | | | |
| Return on average assets | 0.55 | % | | 0.22 | % | | 0.45 | % | | 0.37 | % |
| Return on average common equity | 8.76 | | | 3.54 | | | 7.32 | | | 5.81 | |
| Net interest margin | 4.18 | | | 4.06 | | | 4.14 | | | 3.98 | |
“This quarter's results reflect the focus we've had on growing net interest margin and curbing the increase in nonperforming assets. Net income of $6.9 million makes this Heartland's best quarter in three years.”
Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Dubuque, Iowa, Monday, October 25, 2010-Heartland Financial USA, Inc. (NASDAQ: HTLF) today r eported net income of $6.9 million for the quarter ended September 30, 2010, compared to net income of $3.5 million for the third quarter of 2009. Net income available to common stockholders was $5.6 million, or $0.34 per diluted common share, for the quarter ended September 30, 2010, compared to $2.2 million, or $0.13 per diluted common share, for the third quarter of 2009. Return on average common equity was 8.76 percent and return on average assets was 0.55 percent for the third quarter of 2010, compared to 3.54 percent and 0.22 percent, respectively, for the same quarter in 2009.
Commenting on Heartland's third quarter results, Lynn B. Fuller, chairman, president and chief executive officer said, “This quarter's results reflect the focus we've had on growing net in terest margin and curbing the increase in nonperforming assets. Net income of $6.9 million makes this Heartland's best quarter in three years.”
Net income for the third quarter of 2010 compared to the third quarter of 2009 was positively affected by increases in net interest income, securities gains and gains on sale of loans, along with a reduction in the provision for loan losses. The effect of these improvements was mitigated by a valuation adjustment on mortgage servicing rights, a goodwill impairment charge and additional writedowns on repossessed assets that were recorded during the third quarter of 2010.
For the first nine months of 2010, net income was $17.3 million, compared to $14.2 million recorded during the first nine months of 2009. Net income available to common stockholders was $13.4 million, or $0.81 per diluted common share, for the nine months ended September 30, 2010, compared to $10.4 million, or $0.64 per diluted common share, earned during the first nine months of 2009. Return on average common equity was 7.32 percent and return on average assets was 0.45 percent for the first nine months of 2010, compared to 5.81 percent and 0.37 percent, respectively, for the same period in 2009.
Growth in net interest income during the first nine months of 2010 compared to the first nine months of 2009, along with reduced provision for loan losses and increases in service charges and trust fees, helped to offset the goodwill impairment charge and decreases in the income associated with residential mortgage loan activity and gains on the sales of securities.
Net Interest Margin Remains Above 4.00 Percent; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was 4.18 percent during the third quarter of 2010 compared to 4.06 percent for the third quarter of 2009. For the nin e-month periods ended September 30, net interest margin was 4.14 percent during 2010 and 3.98 percent during 2009.
Fuller said, “As a result of further declines in interest rates and considerable growth in demand deposits, net interest margin improved beyond our expectations. With our margin now at 4.18 percent, we are very gratified that the pricing discipline we've maintained is being rewarded. Remarkably, margin has exceeded four percent for five consecutive quarters.”
Net interest income on a tax-equivalent basis totaled $38.0 million during the third quarter of 2010, an increase of $2.2 million or 6 percent from the $35.8 million recorded during the third quarter of 2009. For the first nine months of 2010, net interest income on a tax-equivalent basis
was $110.9 million, an increase of $9.5 million or 9 percent from the $101.4 million recorded during the first nine months of 2009. These increases reflect Heartland's success in optimizing the composition of its interest bearing liabilities by de-emphasizing higher cost time deposits, which decreased to 37 percent of total average interest bearing deposits during the third quarter of 2010 from 46 percent during the third quarter of 2009. During the first nine months of 2010, time deposits were 38 percent of total average interest bearing deposits compared to 48 percent during the first nine months of 2009.
On a tax-equivalent basis, interest income in the third quarter of 2010 was $51.5 million compared to $53.0 million in the third quarter of 2009, a decrease of $1.5 million or 3 percent. For the first nine months of 2010, interest income on a tax-equivalent basis was $153.8 million compared to $155.4 million during the same period in 2009, a decrease of $1.6 million or 1 percent. The $106.3 million or 3 percent growth in average earning assets during the third quarter of 2010 and the $172.9 million or 5 percent growth in average earning ass ets during the first nine months of 2010 compared to the same periods in 2009 was offset by the impact of a decrease in the average interest rate earned on these assets. The composition of average earning assets continued to change as the percentage of loans, which are typically the highest yielding asset, to total average earning assets was 66 percent during the first nine months of 2010 compared to 70 percent during the first nine months of 2009.
Interest expense for the third quarter of 2010 was $13.6 million, a decrease of $3.7 million or 22 percent from $17.3 million in the third quarter of 2009. On a nine-month comparative basis, interest expense decreased $11.1 million or 21 percent from $54.1 million during 2009 to $43.0 million during 2010. Despite an increase in a verage interest bearing liabilities of $43.2 million or 1 percent for the quarter ended September 30, 2010, as compared to the same quarter in 2009, the average interest rates paid on Heartland's deposits and borrowings declined 51 basis points to 1.74 percent in 2010 from 2.25 percent in 2009. For the nine-month comparative period, average interest bearing liabilities increased $156.2 million or 5 percent while the average interest rate paid on these liabilities was 1.83 percent in 2010 compared to 2.43 percent in 2009, a 60 basis point decrease.
Noninterest Income Increases; Noninterest Expense Increases
Noninterest income was $12.6 million during the third quarter of 2010 compared to $11.9 million during the third quarter of 2009, an increase of $701,000 or 6 percent. Contributing to this increase was growth of $377,000 or 11 percent in service charges and fees, $318,000 or 16 percent in trust fees, $867,000 or 67 percent in securities gains and $1.5 million or 173 percent in gains on sale of loans. These improvements were mitigated by a $1.2 million valuation adjustment on mortgage servicing rights recorded during the third quarter of 2010 and a $998,000 gain on acquisition recorded during the third quarter of 2009.
For the first nine months of 2010, noninterest income was $34.0 million comp ared to $39.3 million during the first nine months of 2009, a decrease of $5.3 million or 13 percent. This decrease was primarily due to reductions of $2.9 million in loan servicing income, $1.8 million in securities gains and $641,000 in gains on sale of loans. A portion of the decreases in these noninterest income categories was offset by increases in service charges and fees, which grew by $1.1 million or 12 percent, and trust fees, which grew by $1.2 million or 21 percent during the first nine months of the year. Also negatively affecting noninterest income during the nine-month period ended on September 30, was the $1.2 million valuation adjustment on mortgage
servicing rights recorded during the third quarter of 2010 and the $998,000 gain on acquisition recorded during the third quarter of 2009. An increase in pre-payment speeds on Heartland's mortgage loan servicing portfolio during the third quarter of 2010 resulted in the valuation adjustment.
Loan servicing income increased $106,000 or 6 percent for the quarter and decreased $2.9 million or 37 percent for the nine-month periods under comparison. Included in loan servicing income is mortgage servicing rights income, which was $1.8 million during the third quarter of 2010 compared to $1.1 million during the third quarter of 2009, and amortization of mortgage servicing rights, which was $1.3 million during the thi rd quarter of 2010 compared to $576,000 during the third quarter of 2009. For the first nine months of 2010, mortgage servicing rights income was $3.4 million and the amortization of mortgage servicing rights was $2.6 million compared to $7.5 million and $3.0 million, respectively, during the first nine months of 2009. These components of loan servicing income increased during the third quarter of 2010 compared to the third quarter of 2009 as long-term mortgage loan rates fell to all-time lows during the third quarter of 2010 and resulted in increased residential mortgage loan refinancing activity. For the nine-month period ended September 30, these components of loan servicing income decreased during 2010 when compared to 2009 as the volume of mortgage loans originated and sold into the secondary market was at more normal levels during the first two quarters of 2010 instead of the abnormally high levels created by a low interest rate environment in the first two quarters of 2009. Also included in loan servi cing income are the fees collected for the servicing of mortgage loans for others, which was $778,000 during the third quarter of 2010 compared to $646,000 during the third quarter of 2009. For the first nine months of 2010, the fees collected for the servicing of mortgage loans for others was $2.2 million compared to $1.7 million during the same period in 2009. The portfolio of mortgage loans serviced for others by Heartland totaled $1.29 billion at September 30, 2010, compared to $1.08 billion at September 30, 2009.
Fuller stated, “Noninterest income increased nicely over recent quarters primarily due to another wave of residential mortgage refinancing activity and the opportunity to realize securities gains. Though service fee income was up for the quarter, we are co ncerned about the impact that recent and proposed regulatory changes may have on this line item in the future.”
For the third quarter of 2010, noninterest expense totaled $33.4 million, an increase of $3.1 million or 10 percent from the same period in 2009. This increase was primarily attributable to a goodwill impairment charge of $1.6 million recorded at Rocky Mountain Bank. This amount represents the correction of a calculation error discovered during the third quarter of 2010 related to the impairment calculation performed in the fourth quarter of 2009. After consideration of both quantitative and qualitative factors, management determined the amount was not material to the financial statements for 2009 and thus recorded such amount in the third quarter of 2010. Also contributing to the growth in noninterest expense during the third quarter of 2010 over 2009 was an $841,000 or 6 percent increase in salaries and employee benefits and a $539,000 increase in net losses on repossessed assets, which totaled $4.2 million during the third quarter of 2010 compared to $3.7 million during the third quarter of 2009.
For the nine-month period ended September 30, 2010, noninterest expense increased $2.8 million or 3 percent over the same period in 2009. In addition to the $1.6 million goodwill impairment charge recorded during the third quarter of 2010, the other primary contributor to this increase was $1.1 million of additional net losses on repossessed assets.
Heartland's effective tax rate was 32.65 percent for the first nine months of 2010 compared to 27.61 percent for the first nine months of 2009. Excluding the non-deductible goodwill impairment charge, Heartland's effective tax rate was 30.69 percent for the first nine months of 2010. Heartland's effective tax rate is affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 26.44 percent during the first nine months of 2010 compared to 31.38 percent during the first nine months of 2009. The tax-equivalent adjustment for this tax-exempt interest income was $3.7 million during the first nine months of 2010 compared to $3.3 million during the same nine months in 2009.
Loan Demand Remains Soft; Growth in Demand Deposits
At September 30, 2010, total assets had experienced a slight increase of $50.2 million or less than 2 percent annualized since year-end 2009. Securities represented 30 percent of total assets at September 30, 2010, compared to 29 percent of total assets at December 31, 2009.
Total loans and leases, exclusive of those covered by the FDIC loss share agreements, were $2.36 billion at September 30, 2010, compared to $2.33 billion at year-end 2009, an increase of $30.4 million or 2 percent annualized. Total loans and leases decreased $24.2 million during the third quarter of 2010 compared to increases of $16.5 million during the second quarter of 2010 and $38.1 million during the first quarter of 2010. The loan category experiencing the majority of the growth during the first nine months of 2010 was commercial and commercial real estate loans, which totaled $1.71 billion at September 30, 2010, an increase of $44.5 million or 4 percent annualized since year-end 2009. This growth occurred at Dubuque Bank and Trust Company and Wisconsin Community Bank.
Total deposits were $3.07 billion at September 30, 2010, compared to $3.05 billion at year-end 2009, an increase of $23.3 million or 1 percent annualized. Total deposits increased $57.5 million during the third quarter of 2010 compared to a decrease of $21.2 million during the second quarter of 2010 and a decrease of $13.0 million during the first quarter of 2010. The composition of Heartland's deposits continued to improve during the first nine months of 2010, as demand deposits increased $121.3 million or 35 percent annualized. This growth was distributed throughout the first nine months of 2010 at $44.5 million during the third quarter, $47.6 million during the second quarter and $29.2 million during the first quarter. Savings deposits grew $18.5 million or 2 percent annualized since year-end 2009. For the year 2010, savings de posits increased $20.3 million during the third quarter, decreased $19.3 million during the second quarter and increased $17.5 million during the first quarter. Conversely, time deposits, exclusive of brokered deposits, experienced a decrease of $112.1 million or 15 percent annualized since year-end 2009. This decrease was distributed throughout 2010 at $7.3 million during the third quarter, $49.6 million during the second quarter and $55.2 million during the first quarter. At September 30, 2010, brokered time deposits totaled $37.3 million or 1 percent of total deposits compared to $41.8 million or 1 percent of total deposits at year-end 2009.
“We continue to see exceptional growth in demand deposits and steady growth in savings," Fuller added. "Now, over 70 percent of total deposits are comprised of demand and savings. Overall, these deposits grew by 17 percent over last year, a reflection of the de-leveraging and increased cash reserve building that continues to take place by our commercial and retail clients.”
Nonperforming Assets Stabilize; Allowance for Loan Losses Decreases
The allowance for loan and lease losses at September 30, 2010, was 1.89 percent of loans and leases and 52.51 percent of nonperforming loans compared to 1.80 percent of loans and leases and 53.56 percent of nonperforming loans at December 31, 2009, and 1.78 percent of loans and leases and 50.31 percent of nonperforming loans at September 30, 2009. The provision for loan losses was $4.8 million for the third quarter of 2010 compared to $11.9 million for the third quarter of 2009. The reduced provision for loan losses during the third quarter of 2010 was primarily the result of additional collateral being provided by the borrowers on two large loan relationships that have been considered impaired. For the first nine months of 2010, the provision for loan losses was $23.6 million compared to $28.6 million for the first nine months of 2009. Additions to the allowance for loan and lease losses during the first two quarters of 201 0 were driven by a variety of factors including the continuation of depressed economic conditions, primarily in Heartland's Western markets of Arizona and Montana, that have resulted in increased delinquencies, reductions in the appraised values of collateral and downgrades in internal risk ratings of loans, including particularly the loans in those geographies.
Nonperforming loans, exclusive of those covered under the loss sharing agreements, were $85.2 million or 3.61 percent of total loans and leases at September 30, 2010, compared to $78.1 million or 3.35 percent of total loans and leases at December 31, 2009, and $84.0 million or 3.55 percent of total loans and leases at September 30, 2009. Approximately 65 percent, or $55.2 million, of Heartland's nonperforming loans are to 23 borrowers, with $26.9 million originated by Rocky Mountain Bank, $11.3 million originated by Summit Bank & Trust, $6.7 million originated by Wisconsin Community Bank, $5.1 million originated by Arizona Bank & Trust, $3.6 million originated by New Mexico Bank & Trust and $1.6 million originated by Riverside Community Bank. The portion of Heartland's nonperforming loans covered by government guarantees was $3.3 million at September 30, 2010. The industry breakdown for these nonperforming loans as identified using the North American Industry Classification System (NAICS) was $15.2 million lot and land development, $14.2 million lessors of real estate, $7.6 million other activities related to real estate and $6.9 million construction and development. The remaining $11.3 million was distributed among 6 other industries.
Other real estate owned, exclusive of assets covered under the loss sharing agreements, was $32.1 million at September 30, 2010, compared to $30.2 million at December 31, 2009, and $32.6 million at September 30, 2009. Liquidation strategies have been identified for all the assets held in other real estate owned. Management continues with its plans to market these properties through an orderly liquidation process instead of a quick liquidation process that would likely result in discounts greater than the projected carrying costs. Commercial and agricultural real estate comprises $30.5 million or 94.2 percent of Heartland's total other real estate owned.
Net charge-offs on loans not covered by loss share agreeme nts during the third quarter of 2010 were $8.4 million compared to $6.9 million during the third quarter of 2009. Net charge-offs on loans originated by Arizona Bank & Trust represented $4.5 million or 54 percent of the total net charge-offs during the third of 2010. For the nine-month periods ended September 30, net charge-offs not covered by loss share agreements were $20.8 million in 2010 and $22.0 million in 2009. A large portion of the net charge-offs in both years was related to commercial real estate development loans and residential lot loans.
“We are encouraged that nonperforming assets have remained level with the previous quarter. We have increased the resources dedicated to resolving these special assets and stepped up efforts to market repossessed properties. The reduction and resolution of nonperforming assets continues as our highest priority. Although there can be no assurances, we are cautiously optimistic that the worst is behind us,” Fuller said.
Conference Call Details
Heart land 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 October 24, 2011, by dialing 800-406-7325, pass code 4371599, 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, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 61 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 updat e any statement in light of new information or future events.
-FINANCIAL TABLES FOLLOW-
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| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | For the Qtr. Ended Sept. 30, | | For the Nine Mos. Ended Sept. 30, |
| | 2010 | | 2009 | | 2010 | | 2009 |
| Interest Income | | | | | | | |
| Interest and fees on loans and leases | $ | 38,756 | | | $ | 38,790 | | | $ | 114,354 | | | $ | 116,696 | |
| Interest on securities and other: | | | | | | | |
| Taxable | 8,225 | | | 10,809 | | | 26,618 | | | 29,269 | |
| Nontaxable | 3,282 | | | 2,231 | | | 9,178 | | | 6,139 | |
| Interest on federal funds sold | — | | | — | | | 1 | | | 1 | |
| Interest on deposits in other financial institutions | 1 | | | 17 | | | 13 | | | 18 | |
| Total Interest Income | 50,264 | | | 51,847 | | | 150,164 | | | 152,123 | |
| Interest Expense | | | | | | | |
| Interest on deposits | 9,033 | | | 13,046 | | | 29,748 | | | 40,744 | |
| Interest on short-term borrowings | 305 | | | 154 | | | 830 | | | 539 | |
| Interest on other borrowings | 4,213 | | | 4,065 | | | 12,380 | | | 12,803 | |
| Total Interest Expense | 13,551 | | | 17,265 | | | 42,958 | | | 54,086 | |
| Net Interest Income | 36,713 | | | 34,582 | | | 107,206 | | | 98,037 | |
| Provision for loan and lease losses | 4,799 | | | 11,896 | | | 23,648 | | | 28,602 | |
| Net Interest Income After Provision for Loan and Lease Losses | 31,914 | | | 22,686 | | | 83,558 | | | 69,435 | |
| Noninterest Income | | | | | | | |
| Service charges and fees | 3,665 | | | 3,288 | | | 10,363 | | | 9,284 | |
| Loan servicing income | 1,862 | | | 1,756 | | | 4,909 | | | 7,853 | |
| Valuation adjustment on mortgage servicing rights | (1,239 | ) | | — | | | (1,239 | ) | | — | |
| Trust fees | 2,267 | | | 1,949 | | | 6,778 | | | 5,617 | |
| Brokerage and insurance commissions | 739 | | | 824 | | | 2,236 | | | 2,420 | |
| Securities gains, net | 2,158 | | | 1,291 | | | 4,664 | | | 6,462 | |
| Gain (loss) on trading account securities | 18 | | | 210 | | | (198 | ) | | 272 | |
| Gains on sale of loans | 2,394 | | | 877 | | | 4,275 | | | 4,916 | |
| Income on bank owned life insurance | 396 | | | 297 | | | 1,003 | | | 640 | |
| Gain on acquisition | — | | | 998 | | | — | | | 998 | |
| Other noninterest income | 349 | | | 418 | | | 1,245 | | | 872 | |
| Total Noninterest Income | 12,609 | | | 11,908 | | | 34,036 | | | 39,334 | |
| Noninterest Expense | | | | | | | |
| Salaries and employee benefits | 15,502 | | | 14,661 | | | 46,499 | | | 46,046 | |
| Occupancy | 2,287 | | | 2,221 | | | 6,782 | | | 6,772 | |
| Furniture and equipment | 1,515 | | | 1,594 | | | 4,561 | | | 4,936 | |
| Professional fees | 2,621 | | | 2,706 | | | 7,381 | | | 7,027 | |
| FDIC insurance assessments | 1,331 | | | 1,393 | | | 4,135 | | | 5,258 | |
| Advertising | 906 | | | 740 | | | 2,772 | | | 2,272 | |
| Intangible assets amortization | 149 | | | 199 | | | 445 | | | 668 | |
| Goodwill impairment charge | 1,639 | | | — | | | 1,639 | | | — | |
| Net loss on repossessed assets | 4,219 | | | 3,680 | | | 7,919 | | | 6,832 | |
| Other noninterest expenses | 3,277 | | | 3,129 | | | 9,789 | | | 9,275 | |
| Total Noninterest Expense | 33,446 | | | 30,323 | | | 91,922 | | | 89,086 | |
| Income Before Income Taxes | 11,077 | | | 4,271 | | | 25,672 | | | 19,683 | |
| Income taxes | 4,187 | | | 803 | | | 8,382 | | | 5,434 | |
| Net Income | 6,890 | | | 3,468 | | | 17,290 | | | 14,249 | |
| Net income attributable to noncontrolling interest, net of tax | 30 | | | 44 | | | 80 | | | 147 | |
| Net Income Attributable to Heartland | 6,920 | | | 3,512 | | | 17,370 | | | 14,396 | |
| Preferred dividends and discount | (1,336 | ) | | (1,336 | ) | | (4,008 | ) | | (4,008 | ) |
| Net Income Available to Common Stockholders | $ | 5,584 | | | $ | 2,176 | | | $ | 13,362 | | | $ | 10,388 | |
| Earnings per common share-diluted | $ | 0.34 | | | $ | 0.13 | | | $ | 0.81 | | | $ | 0.64 | |
| Weighted average shares outstanding-diluted | 16,465,650 | | | 16,340,092 | | | 16,453,670 | &n bsp; | | 16,320,205 | |
| | | | | | | | | | | | | | | | | | | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | For the Quarter Ended |
| | 9/30/2010 | | 6/30/2010 | | 3/31/2010 | | 12/31/2009 | | 9/30/2009 |
| Interest Income | | | | | | | | | |
| Interest and fees on loans and leas es | $ | 38,756 | | | $ | 38,270 | | | $ | 37,328 | | | $ | 38,191 | | | $ | 38,790 | |
| Interest on securities and other: | | | | | | | | | |
| Taxable | 8,225 | | | 8,938 | | | 9,455 | | | 10,513 | | | 10,809 | |
| Nontaxable | 3,282 | | | 3,047 | | | 2,849 | | | 2,456 | | | 2,231 | |
| Interest on federal funds sold | — | | | 1 | | | — | | | 1 | | | — | |
| Interest on deposits in other financial institutions | 1 | | | 7 | | | 5 | | | 9 | | | 17 | |
| Total Interest Income | 50,264 | | | 50,263 | | | 49,637 | | | 51,170 | | | 51, 847 | |
| Interest Expense | | | | | | | | | |
| Interest on deposits | 9,033 | | | 9,955 | | | 10,760 | | | 12,000 | | | 13,046 | |
| Interest on short-term borrowings | 305 | | | 291 | | | 234 | | | 194 | | | 154 | |
| Interest on other borrowings | 4,213 | | | 4,208 | | | 3,959 | | | 4,250 | | | 4,065 | |
| Total Interest Expense | 13,551 | | | 14,454 | | | 14,953 | | | 16,444 | | | 17,265 | |
| Net Interest Income | 36,713 | | | 35,809 | | | 34,684 | | | 34,726 | | | 34,582 | |
| Provision for loan and lease losses | 4,799 | | | 9,955 | | | 8,894 | | | 10,775 | | | 11,896 | |
| Net Interest Income After Provision for Loan and Lease Losses | 31,914 | | | 25,854 | | | 25,790 | | | 23,951 | | | 22,686 | |
| Noninterest Income | | | | | | | | | |
| Service charges and fees | 3,665 | | | 3,494 | | | 3,204 | | | 3,257 | | | 3,288 | |
| Loan servicing income | 1,862 | | | 1,620 | | | 1,427 | | | 1,813 | | | 1,756 | |
| Valuation adjustment on mortgage servicing rights | (1,239 | ) | | — | | | — | | | — | | | — | |
| Trust fees | 2,267 | | | 2,330 | | | 2,181 | | | 2,156 | | | 1,949 | |
| Brokerage and insurance commissions | 739 | | | 785 | | | 712 | | | 697 | | | 824 | |
| Securities gains, net | 2,158 | | | 1,050 | | | 1,456 | | | 2,186 | | | 1,291 | |
| Gain (loss) on trading account securities | 18 | | | (264 | ) | | 48 | | | (61 | ) | | 210 | |
| Impairment loss on securities | — | | | — | | | — | | | (40 | ) | | — | |
| Gains on sale of loans | 2,394 | | | 1,083 | | | 798 | | | 1,168 | | | 877 | |
| Income on bank owned life insurance | 396 | | | 293 | | | 314 | | | 362 | | | 297 | |
| Gain on acquisition | — | | | — | | | — | | | 298 | | | 998 | |
| Other noninterest income | 349 | | | 443 | | | 453 | | | 1,534 | | | 418 | |
| Total Noninterest Income | 12,609 | | | 10,834 | | | 10,593 | | | 13,370 | | | 11,908 | |
| Noninterest Expense | | | | | | | | | |
| Salaries and employee benefits | 15,502 | | | 15,574 | | | 15,423 | | | 14,419 | | | 14,661 | |
| Occupancy | 2,287 | | | 2,201 | | | 2,294 | | | 2,220 | | | 2,221 | |
| Furnitu re and equipment | 1,515 | | | 1,599 | | | 1,447 | | | 1,638 | | | 1,594 | |
| Professional fees | 2,621 | | | 2,549 | | | 2,211 | | | 2,100 | | | 2,706 | |
| FDIC insurance assessments | 1,331 | | | 1,384 | | | 1,420 | | &n bsp; | 1,320 | | | 1,393 | |
| Advertising | 906 | | | 1,052 | | | 814 | | | 1,065 | | | 740 | |
| Goodwill impairment charge | 1,639 | | | — | | | — | | | 12,659 | | | — | |
| Intangible assets amortization | 149 | | | 145 | | | 151 | | | 198 | | | 199 | |
| Net loss on repossessed assets | 4,219 | | | 1,636 | | | 2,064 | | | 4,015 | | | 3,680 | |
| Other noninterest expenses | 3,277 | | | 3,435 | | | 3,077 | | | 3,800 | | | 3,129 | |
| Total Noninterest Expense | 33,446 | | | 29,575 | | | 28,901 | | | 43,434 | | | 30,323 | |
| Income (Loss) Before Income Taxes | 11,077 | | | 7,113 | | | 7,482 | | | (6,113 | ) | | 4,271 | |
| Income taxes | 4,187 | | | 2,035 | | | 2,160 | | | 1,762 | | | 803 | |
| Net Income (Loss) | 6,890 | | | 5,078 | | | 5,322 | | | (7,875 | ) | | 3,468 | |
| Net income available to noncontrolling interest, net of tax | 30 | | | 25 | | | 25 | | | 41 | | | 44 | |
| Net Income (Loss) Attributable to Heartland | 6,920 | | | 5,103 | | | 5,347 | | | (7,834 | ) | | 3,512 | |
| Preferred dividends and discount | (1,336 | ) | | (1,336 | ) | | (1,336 | ) | | (1,336 | ) | | (1,336 | ) |
| Net Income (Loss) Available to Common Stockholders | $ | 5,584 | | | $ | 3,767 | | | $ | 4,011 | | | $ | (9,170 | ) | | $ | 2,176 | |
| Earnings (loss) per common share-diluted | $ | 0.34 | | | $ | 0.23 | | | $ | 0.24 | | | $ | (0.56 | ) | | $ | 0.13 | |
| Weighted average shares outstanding-diluted | 16,465,650 | | | 16,459,978 | | | 16,435,844 | | | 16,345,095 | | | 16,340,092 | |
| | | | | | | | | | | | | | | | | | | |
| HEARTLAND FINANCIAL USA, INC. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) |
| DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
| | As Of |
| | 9/30/2010 | | 6/30/2010 | | 3/31/2010 | | 12/31/2009 | | 9/30/2009 |
| Assets | | | | | | | | | |
| Cash and cash equivalents | $ | 141,702 | | | $ | 75,771 | | | $ | 78,010 | | | $ | 182,410 | | | $ | 82,508 | |
| Securities | 1,211,297 | | | 1,213,875 | | | 1,234,339 | | | 1,175,217 | | | 1,105,744 | |
| Loans held for sale | 41,047 | | | 25,750 | | | 16,002 | | | 17,310 | | | 19,923 | |
| Loans and leases: | | | | | | | | | |
| Held to maturity | 2,361,567 | | | 2,385,772 | | | 2,369,233 | | | 2,331,142 | | | 2,367,871 | |
| Loans covered by loss share agreements | 23,557 | | | 25,420 | | | 27,968 | | | 31,860 | | | 36,175 | |
| Allowance for loan and lease losses | (44,732 | ) | | (48,314 | ) | | (46,350 | ) | | (41,848 | ) | | (42,260 | ) |
| Loans and lease s, net | 2,340,392 | | | 2,362,878 | | | 2,350,851 | | | 2,321,154 | | | 2,361,786 | |
| Premises, furniture and equipment, net | 121,940 | | | 122,066 | | | 121,033 | | | 118,835 | | | 117,140 | |
| Goodwill | 25,909 | | | 27,548 | | | 27,548 | | | 27,548 | | | 40,207 | |
| Other intangible assets, net | 11,510 | | | 12,426 | | | 12,320 | | | 12,380 | | | 12,101 | |
| Cash surrender value on life insurance | 62,038 | | | 62,113 | | | 61,525 | | | 55,516 | | | 55,141 | |
| Other real estate, net | 32,408 | | | 32,882 | | | 28,652 | | | 30,568 | | | 33,342 | |
| FDIC indemnification asset | 1,939 | | | 1,952 | | | 2,357 | | | 5,532 | | | 4,393 | |
| Other assets | 73,002 | | | 71,168 | | | 65,604 | | | 66,521 | | | 47,328 | |
| Total Assets | $ | 4,063,184 | | | $ | 4,008,429 | | | $ | 3,998,241 | | | $ | 4,012,991 | | | $ | 3,879,613 | |
| Liabilities and Equity | | | | | | | | | |
| Liabilities | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Demand | $ | 581,957 | | | $ | 537,468 | | | $ | 489,807 | | | $ | 460,645 | & nbsp; | | $ | 451,645 | |
| Savings | 1,572,891 | | | 1,552,546 | | | 1,571,881 | | | 1,554,358 | | | 1,386,059 | |
| Brokered time deposits | 37,285 | | | 37,285 | | | 37,285 | | | 41,791 | | | 43,473 | |
| Other time deposits | 881,510 | | | 888,847 | | | 938,438 | | | 993,595 | | | 1,063,237 | |
| Total deposits | 3,073,643 | | | 3,016,146 | | | 3,037,411 | | | 3,050,389 | | | 2,944,414 | |
| Short-term borrowings | 196,533 | | | 200,515 | | | 190,732 | | | 162,349 | | | 111,346 | |
| Other borrowings | 413,448 | | | 425,994 | | | 426,039 | | | 451,429 | | | 457,444 | |
| Accrued expenses and other liabilities | 43,234 | | | 38,273 | | | 28,226 | | | 33,767 | | | 38,044 | |
| Total Liabilities | 3,726,858 | | | 3,680,928 | | | 3,682,408 | | | 3,697,934 | | | 3,551,248 | |
| Equity | | | | | | | | | |
| Preferred equity | 78,168 | | | 77,853 | | | 77,539 | | | 77,224 | | | 76,909 | |
| Common equity | 255,430 | | | 246,922 | | | 235,543 | | | 235,057 | | | 248,583 | |
| Tota l Heartland Stockholders' Equity | 333,598 | | | 324,775 | | | 313,082 | | | 312,281 | | | 325,492 | |
| Noncontrolling interest | 2,728 | | | 2,726 | | | 2,751 | | | 2,776 | | | 2,873 | |
| Total Equity | 336,326 | | | 327,501 | | | 315,833 | | | 315,057 | | | 328,365 | |
| Total Liabilities and Equity | $ | 4,063,184 | | | $ | 4,008,429 | | | $ | 3,998,241 | | | $ | 4,012,991 | | | $ | 3,879,613 | |
| Common Share Data | | | | | | | | | |
| Book value per common share | $ | 15.58 | | | $ | 15.08 | | | $ | 14.4 | | | $ | 14.38 | | | $ | 15.23 | |
| FAS 115 effect on book value per common share | $ | 1.25 | | | $ | 0.93 | | | $ | 0.28 | | | $ | 0.38 | | | $ | 0.62 | |
| Common shares out standing, net of treasury stock | 16,392,091 | | | 16,375,460 | | | 16,357,874 | | | 16,346,362 | | | 16,321,953 | |
Tangible Capital Ratio(1) | 5.63 | % | | 5.45 | % | | 5.17 | % | | 5.14 | % | | 5.35 | % |
(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 Nine Months Ended |
| | | 9/30/2010 | | 9/30/2009 | 9/30/2010 | | 9/30/2009 |
| Average Balances | | | | | | | |
| Assets | | $ | 4,012,107 | | | $ | 3,853,658 | | $ | 4,010,084 | | | $ | 3,758,622 | |
| Loans and leases, net of unearned | | 2,427,141 | | | 2,430,161 | | 2,416,330 | | | 2,412,778 | |
| Deposits | | 3,018,928 | | | 2,912,325 | | 3,028,173 | | | 2,792,322 | |
| Earning assets | | 3,602,953 | | | 3,496,607 | | 3,581,675 | | | 3,408,798 | |
| Interest bearing liabilities | | 3,084,742 | | | 3,041,502 | | 3,137,922 | | | 2,981,723 | |
| Common stockholders' equity | | 252,781 | | | 243,542 | | 244,208 | | | 239,206 | |
| Total stockholders' equity | | 333,346 | | | 323,040 | | 324,494 | | | 318,361 | |
| Tangible common stockholders' equity | | 222,771 | | | 200,370 | | 214,035 | | | 195,806 | |
| Earnings Performance Ratios | | | | | | | |
| Annualized return on average assets | | 0.55 | % | | 0.22 | % | 0.45 | % | | 0.37 | % |
| Annualized return on average common equity | | 8.76 | % | | 3.54 | % | 7.32 | % | | 5.81 | % |
| Annualized return on average common tangible equity | | 9.94 | % | | 4.31 | % | 8.35 | % | | 7.09 | % |
An nualized net interest margin(1) | | 4.18 | % | | 4.06 | % | 4.14 | % | | 3.98 | % |
Efficiency ratio(2) | | 69.05 | % | | 65.55 | % | 65.54 | % | | 66.37 | % |
| Annualized return on average assets excluding goodwill impairment | | 0.71 | % | | 0.22 | % | 0.50 | % | | 0.37 | % |
| Annualized return on average common equity excluding goodwill impairment | | 11.34 | % | | 3.54 | % | 8.21 | % | | 5.81 | % |
| Annualized return on average comm on tangible equity excluding goodwill impairment | | 12.86 | % | | 4.31 | % | 9.37 | % | | 7.09 | % |
Efficiency ratio excluding goodwill impairment(2) | | 65.67 | % | | 65.55 | % | 64.38 | % | | 66.37 | % |
(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 |
| | For the Quarter Ended |
| | 9/30/2010 | | 6/30/2010 | | 3/31/2010 | | 12/31/2009 | | 9/30/2009 |
| Average Balances | | | | | | | | | |
| Assets | $ | 4,012,107 | | | $ | 4,033,350 | | | $ | 3,984,794 | | | $ | 3,975,107 | | | $ | 3,853,658 | |
| Loans and leases, net of unearned | 2,427,141 | | | 2,437,357 | | | 2,384,490 | | | 2,410,459 | | | 2,430,161 | |
| Deposits | 3,018,928 | | | 3,040,763 | | | 3,024,827 | | | 3,013,644 | | | 2,912,325 | |
| Earning assets | 3,602,953 | | | 3,632,056 | | | 3,510,015 | | | 3,525,624 | | | 3,496,607 | |
| Interest bearing liabilities | 3,084,742 | | | 3,165,862 | | | 3,163,161 | | | 3,127,792 | | | 3,041,502 | |
| Common stockholders' equity | 252,781 | | | 241,816 | | | 238,028 | | | 246,505 | | | 243,542 | |
| Total stockholders' equity | 333,346 | | | 322,110 | | | 318,027 | | | 326,254 | | | 323,040 | |
| Tangible common stockholders' equity | 222,771 | | | 211,640 | | | 207,695 | | | 203,573 | | | 200,370 | |
| Earnings Performance Ratios | | | | | | | | | |
| Annualized return on average assets | 0.55 | % | | 0.37 | % | | 0.41 | % | | (0.92 | )% | | 0.22 | % |
| Annualized return on average common equity | 8.76 | % | | 6.25 | % | | 6.83 | % | | (14.76 | )% | | 3.54 | % |
| Annualized return on average common tangible equity | 9.94 | % | | 7.14 | % | | 7.83 | % | | (17.87 | )% | | 4.31 | % |
Annualized net interest margin(1) | 4.18 | % | | 4.09 | % | | 4.14 | % | | 4.04 | % | | 4.06 | % |
Efficiency ratio(2) | 69.05 | % | | 63.14 | % | | 64.27 | % | | 92.19 | % | | 65.55 | % |
| Annualized return on average assets excluding goodwill impairment | 0.71 | % | | 0.37 | % | | 0.41 | % | | 0.35 | % | | 0.22 | % |
| Annualized return on average common equity excluding goodwill impairment | 11.34 | % | | 6.25 | % | | 6.83 | % | | 5.62 | % | | 3.54 | % |
| Annualized return on average common tangible equity excluding goodwill impairment | 12.86 | % | | 7.14 | % | | 7.83 | % | | 6.80 | % | | 4.31 | % |
Efficiency ratio excluding goodwill impairment(2) | 65.67 | % | | 63.14 | % | | 64.27 | % | | 65.32 | % | | 65.55 | % |
(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 the Quarter Ended 9/30/2010 | As of and For the Quarter Ended 6/30/2010 | As of and For the Quarter Ended 3/31/2010 | As of and For the Quarter Ended 12/31/2009 | As of and For the Quarter Ended 9/30/2009 |
| Loan and Lease Data | | | | | | | | | |
| Loans held to maturity: | | | | | & nbsp; | | | | |
| Commercial and commercial real estate | $ | 1,714,592 | | | $ | 1,740,856 | | | $ | 1,710,669 | | | $ | 1,670,108 | | | $ | 1,694,589 | |
| Residential mortgage | 170,543 | | | 169,105 | | | 175,065 | | | 175,059 | | | 184,292 | |
| Agricultural and agricultural real estate | 260,393 | | | 255,576 | | | 258,239 | | | 256,780 | | | 257,738 | |
| Consumer | 219,731 | | | 223,800 | | | 228,311 | | | 231,709 | | | 233,259 | |
| Direct financing leases, net | 1,233 | | | 1,420 | | | 1,951 | | | 2,326 | | | 2,882 | |
| Unearned discount and deferred loan fees | (4,925 | ) | | (4,985 | ) | | (5,002 | ) | | (4,840 | ) | | (4,889 | ) |
| Total loans and leases held to maturity | $ | 2,361,567 | | | $ | 2,385,772 | | | $ | 2,369,233 | | | $ | 2,331,142 | | | $ | 2,367,871 | |
| Loans covered under loss share agreements: | | | | | | | | | |
| Commercial and commercial real estate | $ | 11,703 | | | $ | 12,266 | | | $ | 13,241 | | | $ | 15,068 | | | $ | 17,109 | |
| Residential mortgage | 6,545 | | | 7,148 | | | 8,064 | | | 8,984 | | | 10,201 | |
| Agricultural and agricultural real estate | 2,807 | | | 3,346 | | | 2,806 | | | 3,626 | | | 4,117 | |
| Consumer | 2,502 | | | 2,660 | | | 3,857 | | | 4,182 | | | 4,748 | |
| Total loans and leases covered under loss share agreements | $ | 23,557 | | | $ | 25,420 | | | $ | 27,968 | | | $ | 31,860 | | | $ | 36,175 | |
| Asset Quality | | | | | | | | | |
| Not covered under loss share agreements: | | | | | | | | | |
| Nonaccrual loans | $ | 85,190 | | | $ | 84,925 | | | $ | 78,239 | | | $ | 78,118 | | | $ | 78,940 | |
| Loans and leases past due ninety days or more as to interest or principal payments | — | | | &mdash ; | | | 47 | | | 17 | | | 5,063 | |
| Other real estate owned | 32,129 | | | 32,554 | | | 28,290 | | | 30,205 | | | 32,643 | |
| Other repossessed assets | 492 | | | 486 | | | 528 | | | 501 | | | 565 | |
| Total nonperforming assets not covered under loss share agreements | $ | 117,811 | | | $ | 117,965 | | | $ | 107,104 | | | $ | 108,841 | | | $ | 117,211 | |
| Covered under loss share agreements: | | | | | | | | | |
| Nonaccrual loans | $ | 5,330 | | | $ | 4,949 | | | $ | 4,621 | | | $ | 4,170 | | | $ | 4,102 | |
| Loans and leases past due ninety days or more as to interest or principal payments | — | | | — | | | — | | | — | | | — | |
| Other real estate owned | 279 | | | 328 | | | 362 | | | 363 | | | 599 | |
| Other repossessed assets | — | | | — | | | — | | | — | | | — | |
| Total nonperforming assets covered under loss share agreements | $ | 5,609 | | | $ | 5,277 | | | $ | 4,983 | | | $ | 4,533 | | | $ | 4,701 | |
| Allowance for Loan and Lease Losses | | | | | | | | | |
| Balance, beginning of period | $ | 48,314 | | | $ | 46,350 | | | $ | 41,848 | | | $ | 42,260 | | | $ | 37,234 | |
| Provision for loan and lease losses | 4,799 | | | 9,955 | | | 8,894 | | | 10,775 | | | 11,896 | |
| Charge offs on loans not covered by loss share agreements | (8,735 | ) | | (8,879 | ) | | (4,505 | ) | | (10,115 | ) | | (7,465 | ) |
| Charge offs on loans covered by loss share agreements | (43 | ) | | (46 | ) | | (264 | ) | | (1,344 | ) | | — | |
| Recoveries | 397 | | | 934 | | | 377 | | | 272 | | | 595 | |
| Balance, end of period | $ | 44,732 | | | $ | 48,314 | | | $ | 46,350 | | | $ | 41,848 | | | $ | 42,260 | |
| Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements | | | | | | | | | |
| Ratio of nonperforming loans and leases to total loans and leases | 3.61 | % | | 3.56 | % | | 3.30 | % | | 3.35 | % | | 3.55 | % |
| Ratio of nonperforming assets to total assets | 2.90 | % | | 2.94 | % | | 2.68 | % | | 2.71 | % | | 3.02 | % |
| Annualized ratio of net loan charge-offs to average loans and leases | 1.37 | % | | 1.32 | % | | 0.75 | % | | 1.84 | % | | 1.12 | % |
| Allowance for loan and lease losses as a percent of loans and leases | 1.89 | % | | 2.03 | % | | 1.96 | % | | 1.80 | % | | 1.78 | % |
| Allowance for loan and lease losses as a percent of nonperforming loans and leases | 52.51 | % | | 56.89 | % | | 59.21 | % | | 53.56 | % | | 50.31 | % |
| | | | | | | | | | | | | | | | | | | | | |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | For the Quarter Ended |
| | September 30, 2010 | | September 30, 2009 |
| | Average | | | | | | Average | | | | |
| | Balance | | Interest | | Rate | | Balance | | Interest | | Rate |
| Earning Assets | | | | | | | | | | | |
| Securities: | | | | | | | | | | | |
| Taxable | $ | 945,261 | | | $ | 8,225 | | | 3.45 | % | | $ | 904,721 | | | $ | 10,810 | | | 4.74 | % |
Nontaxable(1) | 274,819 | | | 4,228 | | | 6.10 | | | 194,621 | | | 3,246 | | | 6.62 | |
| Total securities | 1,220,080 | | | 12,453 | | | 4.05 | | | 1,099,342 | | | 14,056 | | | 5.07 | |
| Interest bearing deposits | 3,584 | | | 1 | | | 0.11 | | | 4,845 | | | 15 | | | 1.23 | |
| Federal funds sold | 960 | | | — | | | — | | | 179 | | | — | | | — | |
| Loans and leases: | | | | | | | | | | | |
Commercial and commercial real estate (1) | 1,733,120 | | | 26,195 | | | 6.00 | | | 1,716,855 | | | 25,399 | | | 5.87 | |
| Residential mortgage | 209,400 | | | 2,777 | | | 5.26 | | | 213,799 | | | 3,056 | | | 5.67 | |
Agricultural and agricultural real estate (1) | 261,640 | | | 4,022 | | | 6.10 | | | 262,241 | | | 4,231 | | | 6.40 | |
| Consumer | 221,661 | | | 5,051 | | | 9.04 | | | 233,905 | | | 5,134 | | | 8.71 | |
| Direct financing leases, n et | 1,320 | | | 19 | | | 5.71 | | | 3,361 | | | 48 | | | 5.67 | |
| Fees on loans | — | | | 1,016 | | | — | | | — | | | 1,128 | | | — | |
| Less: allowance for loan and lease losses | (48,812 | ) | | — | | | — | | | (37,920 | ) | | — | | | — | |
| Net loans and leases | 2,378,329 | | | 39,080 | | | 6.52 | | | 2,392,241 | | | 38,996 | | | 6.47 | |
| Total earning assets | 3,602,953 | | | 51,534 | | | 5.67 | % | | 3,496,607 | | | 53,067 | | | 6.02 | % |
| Nonearning Assets | 409,154 | | | | | | | 357,051 | | | | | |
| Total Assets | $ | 4,012,107 | | | $ | 51,534 | | | | | $ | 3,853,658 | | | $ | 53,067 | | | |
| Interest Bearing Liabilities | | | | | | | | | | | |
| Interest bearing deposits | | | &nb sp; | | | | | | | | |
| Savings | $ | 1,546,129 | | | $ | 3,041 | | | 0.78 | | | $ | 1,329,415 | | | $ | 4,690 | | | 1.40 | |
| Time, $100,000 and over | 282,587 | | | 1,808 | | | 2.54 | | | 366,573 | | | 2,655 | | | 2.87 | |
| Other time deposits | 637,516 | | | 4,184 | | | 2.60 | | | 760,816 | | | 5,701 | | | 2.97 | |
| Short-term borrowings | 195,298 | | | 305 | | | 0.62 | | | 125,863 | | | 154 | | | 0.49 | |
| Other borrowings | 423,212 | | | 4,213 | | | 3.95 | | | 458,835 | | | 4,065 | | | 3.51 | |
| Total interest bearing liabilities | 3,084,742 | | | 13,551 | | | 1.74 | % | | 3,041,502 | | | 17,265 | | | 2.25 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | |
| Noninterest bearing deposits | 552,696 | | | | | | | 455,521 | | | | | |
| Accrued interest and other liabilities | 41,323 | | | | | | | 33,595 | | | | | |
| Total noninterest bearing liabilities | 594,019 | | | | | | | 489,116 | | | | | |
| Stockholders' Equity | 333,346 | | | | | | | 323,040 | | | | | |
| Total Liabilities and Stockholders' Equity | $ | 4,012,107 | | | | | | | $ | 3,853,658 | | | | | |
Net interest income (1) | | | $ | 37,983 | | | | | | | $ | 35,802 | | | |
Net interest spread (1) | | | | | 3.93 | % | | | | | | 3.77 | % |
Net interest income to total earning assets (1) | | | | | 4.18 | % | | | | | | 4.06 | % |
| Interest bearing li abilities to earning assets | 85.62 | % | | | | | | 86.98 | % | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35% |
| | | | | | | | | | | | | | | | | | | | | |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS |
| | For the Nine Months Ended |
| | September 30, 2010 | | September 30, 2009 |
| | Average | | | | | | Average | | | | |
| | Balance | | Interest | | Rate | | Balance | | Interest | | Rate |
| Earning Assets | | | | | | | | | | | |
| Securities: | | | | | | | | | | | |
| Taxable | $ | 950,772 | | | $ | 26,618 | | | 3.74 | % | | $ | 852,192 | | | $ | 29,269 | | | 4.59 | % |
Nontaxable (1) | 256,544 | | | 12,033 | | | 6.27 | | | 177,734 | | | 8,845 | | | 6.65 | |
| Total securities | 1,207,316 | | | 38,651 | | | 4.28 | | | 1,029,926 | | | 38,114 | | | 4.95 | |
| Interest bearing deposits | 3,662 | | | 13 | | | 0.47 | | | 2,402 | | | 18 | | | 1.00 | |
| Federal funds sol d | 642 | | | 1 | | | 0.21 | | | 368 | | | 1 | | | 0.36 | |
| Loans and leases: | | | | | | | | | | | |
Commercial and commercia l real estate (1) | 1,726,399 | | | 76,8 53 | | | 5.95 | | | 1,695,755 | | | 76,633 | | | 6.04 | |
| Residential mortgage | 201,410 | | | 7,994 | | | 5.31 | | | 222,577 | | | 9,730 | | | 5.84 | |
Agricultural and agricultural real estate (1) | 260,237 | | | 12,104 | | | 6.22 | | | 258,528 | | | 12,547 | | | 6.49 | |
| Consumer | 226,555 | | | 15,054 | | | 8.88 | | | 231,510 | | | 15,145 | | | 8.75 | |
| Direct financing leases, net | 1,729 | | | 76 | | | 5.88 | | | 4,408 | &n bsp; | | 176 | | | 5.34 | |
| Fees on loans | — | | | 3,084 | | | — | | | — | | | 3,085 | | | — | |
| Less: allowance for loan and lease losses | (46,275 | ) | | — | | | — | | | (36,676 | ) | | — | | | — | |
| Net loans and leases | 2,370,055 | | | 115,165 | | | 6.50 | | | 2,376,102 | | | 117,316 | | | 6.60 | |
| Total earning assets | 3,581,675 | | | 153,830 | | | 5.74 | % | | 3,408,798 | | | 155,449 | | | 6.10 | % |
| Nonearning Assets | 428,409 | | | | | | | 349,824 | | | | | |
| Total Assets | $ | 4,010,084 | | | $ | 153,830 | | | | | $ | 3,758,622 | | | $ | 155,449 | | | |
| Interest Bearing Liabilities | | | | | | | | | | | |
| Interest bearing deposits | | | | | | | | | | | |
| Savings | $ | 1,557,363 | | | $ | 10,930 | | | 0.94 | | | $ | 1,219,645 | | | $ | 13,782 | | | 1.51 | |
| Time, $100,000 and over | 302,643 | | | 5,790 | &nb sp; | | 2.56 | | | 383,783 | | | 8,858 | | | 3.09 | |
| Other time deposits | 657,019 | | | 13,028 | | | 2.65 | | | 764,558 | | | 18,104 | | | 3.17 | |
| Short-term borrowings | 192,357 | | | 830 | | | 0.58 | | | 146,430 | | | 539 | | | 0.49 | |
| Other borrowing s | 428,540 | | | 12,380 | | | 3.86 | | | 467,307 | | | 12,803 | | | 3.66 | |
| Total interest bearing liabilities | 3,137,922 | | | 42,958 | | | 1.83 | % | | 2,981,723 | | | 54,086 | | | 2.43 | % |
| Noninterest Bearing Liabilities | | | | | | | | | | | |
| Noninterest bearing deposits | 511,148 | | | | | | | 424,336 | | | | | |
| Accrued interest and other liabilities | 36,520 | | | | | | | 34,202 | | | | | |
| Total noninterest bearing liabilities | 547,668 | | | | | | | 458,538 | | | | | |
| Stockholders' Equity | 324,494 | | | | | | | 318,361 | | | | | |
| Total Liabilities and Stockholders' Equity | $ | 4,010,084 | | | | | | | $ | 3,758,622 | | | | | |
Net interest income (1) | | | $ | 110,872 | | | | | | | $ | 101,363 | | | |
Net interest spread (1) | | | | | 3.91 | % | | | | | | 3.67 | % |
Net interest income to total earning assets (1) | | | | | 4.14 | % | | | | | | 3.98 | % |
| Interest bearing liabilities to earning assets | 87.61 | % | | | | | | 87.47 | % | | | | |
(1) Tax equivalent basis is calculated using an effective tax rate of 35% |
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HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | As of and For the Qtr. Ended 9/30/2010 | As of and For the Qtr. Ended 6/30/2010 | As of and For the Qtr. Ended 3/31/2010 | As of and For the Qtr. Ended 12/31/2009 | As of and For the Qtr. Ended 9/30/2009 |
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| Total Assets | | | | | |
| Dubuque Bank and Trust Company | $ | 1,201,966 | | $ | 1,128,580 | | $ | 1,160,474 | | $ | 1,249,124 | | $ | 1,104,217 | |
| New Mexico Bank & Trust | 891,642 | | 878,518 | | 849,428 | | 868,295 | | 785,146 | |
| Wisconsin Community Bank | 461,822 | | 4 58,468 | | 456,510 | | 448,106 | | 433,900 | |
| Rocky Mountain Bank | 438,923 | | 439,241 | | 454,558 | | 469,723 | | 468,695 | |
| Galena State Bank & Trust Co. | 289,558 | | 283,038 | | 287,495 | | 291,412 | | 288,501 | |
| Riverside Community Bank | 297,272 | | 295,671 | | 283,195 | | 283,258 | | 277,639 | |
| Arizona Bank & Trust | 251,245 | | 267,959 | | 267,453 | | 258,280 | | 268,600 | |
| First Community Bank | 114,686 | | 118,887 | | 11 9,962 | | 121,492 | | 121,938 | |
| Summit Bank & Trust | 100,843 | | 97,332 | | 95,442 | | 97,025 | | 99,724 | |
| Minnesota Bank & Trust | 57,832 | | 55,722 | | 54,318 | | 49,330 | | 39,283 | |
| Total Deposits | | | | | |
| Dubuque Bank and Trust Company | $ | 825,773 | | $ | 784,955 | | $ | 806,574 | | $ | 864,133 | | $ | 815,553 | |
| New Mexico Bank & Trust | 655,724 | | 624,454 | | 608,030 | | 589,468 | | 563,414 | |
| Wisconsin Community Bank | 363,868 | | 358,034 | | 355,880 | | 358,994 | | 338,328 | |
| Rocky Mountain Bank | 349,853 | | 350,636 | | 363,842 | | 376,487 | | 364,570 | |
| Galena State Bank & Trust Co. | 250,749 | | 243,964 | | 250,621 | | 253,073 | | 244,389 | |
| Riverside Community Bank | 242,717 | | 242,964 | | 233,440 | | 232,459 | | 226,791 | |
| Arizona Bank & Trust | 204,663 | | 229,885 | | 230,699 | | 202,730 | | 215,092 | |
| First Community Bank | 92,802 | | 97,057 | | 98,691 | | 100,328 | | 99,351 | |
| Summit Bank & Trust | 79,823 | | 82,445 | | 81,414 | | 85,131 | | 89,130 | |
| Minnesota Bank & Trust | 41,316 | | 41,234 | | 39,912 | | 34,616 | | 24,364 | |
| Net Income (Loss) | | | | | |
| Dubuque Bank and Trust Company | $ | 5,727 | | $ | 3,304 | | $ | 4,921 | | $ | 3,751 | | $ | 3,863 | |
| New Mexico Bank & Trust | 2,972 | | 1,828 | | 2,341 | | 1,640 | | 1,955 | |
| Wisconsin Community Bank | 2,157 | | 2,271 | | 1,367 | | 770 | | 1,198 | |
| Rocky Mountain Bank | (695 | ) | 1,204 | | (596 | ) | (6,399 | ) | (463 | ) |
| Galena State Bank & Trust Co. | 877 | | 967 | | 1,046 | | 663 | | 962 | |
| Riverside Community Bank | (140 | ) | 290 | | 640 | | (55 | ) | 283 | |
| Arizona Bank & Trust | 42 | | (2,004 | ) | (2,900 | ) | (5,117 | ) | (1,227 | ) |
| First Community Bank | (374 | ) | 19 | | 399 | | (225 | ) | 101 | |
| Summit Bank & Trust | 201 | | 399 | | (118 | ) | (490 | ) | (1,366 | ) |
| Minnesota Bank & Trust | (147 | ) | (134 | ) | (123 | ) | (203 | ) | (221 | ) |
| Return on Average Assets | | | | | |
| Dubuque Bank and Trust Company | 1.99 | % | 1.13 | % | 1.66 | % | 1.25 | % | 1.40 | % |
| New Mexico Bank & Trust | 1.34 | | 0.83 | | 1.12 | | 0.79 | | 0.99 | |
| Wisconsin Community Bank | 1.85 | | 1.98 | | 1.23 | | 0.69 | | 1.09 | |
| Rocky Mountain Bank | (0.63 | ) | 1.08 | | (0.53 | ) | (5.30 | ) | (0.39 | ) |
| Galena State Bank & Trust Co. | 1.21 | | 1.35 | | 1.46 | | 0.90 | | 1.34 | |
| Riverside Community Bank | (0.19 | ) | 0.40 | | 0.93 | | (0.08 | ) | 0.41 | |
| Arizona Bank & Trust | (0.06 | ) | (2.95 | ) | (4.62 | ) | (7.60 | ) | (1.86 | ) |
| First Community Bank | (1.26 | ) | 0.06 | | 1.35 | | (0.72 | ) | 0.32 | |
| Summit Bank & Trust | 0.79 | | 1.65 | | (0.50 | ) | (1.94 | ) | (5.62 | ) |
| Minnesota Bank & Trust | (1.00 | ) | (1.00 | ) | (0.95 | ) | (1.95 | ) | (2.42 | ) |
| Net Interest Margin as a Percentage of Average Earning Assets | | | | | |
| Dubuque Bank and Trust Company | 4.01 | % | 4.04 | % | 4.05 | % | 3.98 | % | 3.98 | % |
| New Mexico Bank & Trust | 4.35 | | 3.94 | | 4.18 | | 4.23 | | 4.67 | |
| Wisconsin Community Bank | 4.60 | | 4.35 | | 3.80 | &n bsp; | 3.91 | | 3.76 | |
| Rocky Mountain Bank | 3.81 | | 3.79 | | 3.90 | | 3.68 | | 3.80 | |
| Galena State Bank & Trust Co. | 3.53 | | 3.56 | | 3.48 | | 3.46 | | 3.47 | |
| Riverside Community Bank | 4.30 | | 3.84 | | 3.95 | | 4.14 | | 3.86 | |
| Arizona Bank & Trust | 3.77 | | 3.46 | | 3.64 | | 3.58 | | 3.33 | |
| First Community Bank | 3.40 | | 3.58 | | 3.79 | | 4.24 | | 4.31 | |
| Summit Bank & Trust | 3.22 | | 3.98 | | 3.29 | | 3.00 | | 2.47 | |
| Minnesota Bank & Trust | 3.14 | | 3.24 | | 3.24 | | 4.16 | | 3.86 | |
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HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS |
| | As of | | As of | | As of | | As of | | As of |
| | 9/30/2010 | | 6/30/2010 | | 3/31/2010 | | 12/31/2009 | | 9/30/2009 |
| Total Portfolio Loans and Leases | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 672,401 | | | $ | 698,562 | | | $ | 681,668 | | | $ | 658,274 | | | $ | 653,579 | |
| New Mexico Bank & Trust | 511,279 | | | 513,257 | | | 509,696 | | | 502,497 | | | 513,560 | |
| Wisconsin Community Bank | 325,543 | | | 323,024 | | | 314,102 | | | 274,487 | | | 289,558 | |
| Rocky Mountain Bank | 260,832 | | | 272,035 | | | 281,079 | | | 292,914 | | | 302,494 | |
| Galena State Bank & Trust Co. | 131,955 | | | 133,666 | | | 131,539 | | | 134,104 | | | 136,700 | |
| Riverside Community Bank | 165,539 | | | 159,137 | | | 157,511 | | | 161,280 | | | 161,025 | |
| Arizona Bank & Trust | 129,871 | | | 129,445 | | | 131,115 | | | 138,604 | | | 142,387 | |
| First Community Bank | 64,375 | | | 64,666 | | | 66,560 | | | 72,113 | | | 73,722 | |
| Summit Bank & Trust | 52,396 | | | 53,543 | | | 58,272 | | | 58,108 | | | 58,410 | |
| Minnesota Bank & Trust | 26,868 | | | 25,058 | | | 24,997 | | | 24,472 | | | 22,118 | |
| Allowance Fo r Loan and Lease Losses | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 9,874 | | | $ | 12,343 | | | $ | 10,395 | | | $ | 10,486 | | | $ | 10,318 | |
| New Mexico Bank & Trust | 8,297 | | | 8,388 | | | 7,999 | | | 7,578 | | | 7,641 | |
| Wisconsin Community Bank | 4,518 | | | 4,306 | | | 5,328 | | | 5,390 | | | 5,133 | |
| Rocky Mountain Bank | 5,181 | | | 6,465 | | | 7,434 | | | 5,897 | | | 6,152 | |
| Galena State Bank & Trust Co. | 1,743 | | | 1,543 | | | 1,466 | | | 1,989 | | | 1,897 | |
| Riverside Community Bank | 3,109 | | | 2,751 | | | 2,425 | | | 2,395 | | | 2,475 | |
| Arizona Bank & Trust | 5,915 | | | 7,912 | | | 7,056 | | | 3,825 | | | 4,380 | |
| First Community Bank | 2,087 | | | 1,262 | | | 993 | | | 1,072 | | | 1,122 | |
| Summit Bank & Trust | 1,312 | | | 913 | | | 994 | | | 926 | | | 930 | |
| Minnesota Bank & Trust | 270 | | | 242 | | | 240 | | | 295 | | | 276 | |
| Nonperforming Loans and Leases | | | | | | | | | |
| Dubuque Bank and Trust Company | $ | 4,880 | | | $ | 5,754 | | | $ | 6,408 | | | $ | 6,102 | | | $ | 7,365 | |
| New Mexico Bank & Trust | 14,651 | | | 15,901 | | | 13,998 | | | 14,069 | | | 18,693 | |
| Wisconsin Community Bank | 12,070 | | | 10,159 | | | 15,773 | | | 14,396 | | | 13,276 | |
| Rocky Mountain Bank | 29,986 | | | 31,981 | | | 21,558 | | | 18,443 | | | 17,286 | |
| Galena State Bank & Trust Co. | 2,976 | | | 2,605 | | | 1,372 | | | 1,545 | | | 2,045 | |
| Riverside Community Bank | 7,662 | &n bsp; | | 7,722 | | | 5,543 | | | 8,104 | | | 9,493 | |
| Arizona Bank & Trust | 5,758 | | | 5,165 | | | 4,922 | | | 5,158 | | | 5,689 | |
| First Community Bank | 2,850 | | | 2,338 | | | 2,512 | | | 2,736 | | | 3,866 | |
| Summit Bank & Trust | 3,694 | &nbs p; | | 2,691 | | | 5,513 | | | 6,719 | | | 5,528 | |
| Minnesota Bank & Trust | — | | | — | | | — | | | 19 | | | — | |
| Allowance As a Percent of Total Loans and Leases | | | | | | | | | |
| Dubuque Bank and Trust Company | 1.47 | % | | 1.77 | % | | 1.52 | % | | 1.59 | % | | 1.58 | % |
| New Mexico Bank & Trust | 1.62 | | | 1.63 | | | 1.57 | | | 1.51 | | | 1.49 | |
| Wisconsin Community Bank | 1.39 | | | 1.33 | | | 1.70 | | | 1.96 | | | 1.77 | |
| Rocky Mountain Bank | 1.99 | | | 2.38 | | | 2.64 | | | 2.01 | | | 2.03 | |
| Galena State Bank & Trust Co. | 1.32 | | | 1.15 | | | 1.11 | | | 1.48 | | | 1.39 | |
| Riverside Community Bank | 1.88 | | | 1.73 | | | 1.54 | | | 1.48 | | | 1.54 | |
| Arizona Bank & Trust | 4.55 | | | 6.11 | | | 5.38 | | | 2.76 | | | 3.08 | |
| First Community Bank | 3.24 | | | 1.95 | | | 1.49 | | | 1.49 | | | 1.52 | |
| Summit Bank & Trust | 2.50 | | | 1.71 | | | 1.71 | | | 1.59 | | | 1.59 | |
| Minnesota Bank & Trust | 1.00 | | | 0.97 | | | 0.96 | | | 1.21 | | | 1.25 | |
