Exhibit 99
PRESS RELEASE
April 18, 2002
FROM: Heartland Financial USA, Inc.
Lynn B. Fuller - Chairman, President and CEO
(563) 589-2105
John K. Schmidt - Executive Vice President and CFO
(563) 589-1994
RE: First Quarter 2002 Earnings
RELEASE: Immediate
HEARTLAND FINANCIAL USA, INC. REPORTS A 55% INCREASE IN FIRST
QUARTER EARNINGS
(Dubuque, Iowa) Heartland Financial USA, Inc. (HTLF - OTC BB)
today announced a $1.357 million or 55% increase in earnings for
the first quarter of 2002. Net income totaled $3.813 million, or
$.39 on a diluted earnings per common share basis, for the first
quarter of 2002 compared to $2.456 million, or $.25 on a diluted
earnings per common share basis, during the same quarter in 2001.
Return on common equity was 14.19% and return on assets was .95%
for the first quarter of 2002. For the same period in 2001,
return on equity was 10.24% and return on assets was .67%.
Contributing to the improved earnings during the first quarter of
2002 was the $2.309 million or 20% growth in net interest income
due primarily to growth in earning assets. Average earning
assets went from $1.321 billion during the first quarter of 2001
to $1.457 billion during the same quarter in 2002, a change of
$136 million or 10%. Also contributing to the improved earnings
was the $1.046 million or 14% increase in noninterest income
while the increase in noninterest expense was held to $1.085
million or 8%. In addition to gains on sale of loans, the other
noninterest income category to reflect significant improvement
was service charges and fees. Exclusive of securities gains and
losses, including trading account securities gains and losses,
noninterest income experienced a $1.340 million or 19% increase.
The Company's adoption of the provision of Statement of Financial
Accounting Standards ("FAS") No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002, discontinued the
amortization of $9.507 million in unamortized goodwill. The
amount of amortization expense recorded during the first quarter
of 2001 on this goodwill was $134 thousand ($.01 on a diluted per
common share basis).
Chairman, President and Chief Executive Officer Lynn B. Fuller
noted, "I am excited about the Company's earnings performance
this quarter. Earnings for this year are off to a good start as
first quarter net income exceeded our budgeted expectations. Our
return on average equity in excess of 14% and return on average
assets of nearly 1% provides excellent evidence of the benefits
derived from the expansion and diversification efforts embarked
upon in the late 1990's."
Total assets remained stable at March 31, 2002, declining by less
than 1% since year-end 2001. Loans and leases were $1.094 billion
and deposits were $1.217 billion at the end of the first quarter,
a decrease of 1% and an increase of 1%, respectively, since year-
end 2001. Historically, the Company has not experienced
significant growth in its core business during the first quarter
of the year. Loan growth was slowed due to paydowns experienced
in the mortgage loan portfolio as customers continued to
refinance their mortgage loans into fifteen- and thirty-year
fixed rate loans, which the Company usually sells into the
secondary market. Some of this slowed growth was offset by an
increase in the commercial loan portfolio, which grew $21.606
million or 3% during the first quarter. Management feels that
opportunities for growth within the commercial loan portfolio
will continue to expand during remaining quarters of 2002.
Net interest margin, expressed as a percentage of average earning
assets, was 3.86% during the first quarter of 2002 compared to
3.54% for the same period in 2001 and 3.79% for the fourth
quarter of 2001. During the first quarter of 2001, national
prime decreased from 9.50% to 8.00%. During the first quarter of
2002, national prime remained unchanged at 4.75%. The Company
manages its balance sheet to minimize the effect a change in
interest rates has on its net interest margin. The Company has
been successful in the utilization of floors on its commercial
loan portfolio to minimize the affect downward rates have on its
interest income. If rates begin to edge upward, the Company will
not see a corresponding increase in its interest income until
rates have moved above the floors in place on these loans.
Interest income as a percentage of average earning assets went
from 8.60% during the first quarter of 2001 to 7.00% during the
first quarter of 2002, a decline of 160 basis points.
Additionally, on the liability side of the balance sheet, the
Company has locked in some funding in the three- to five-year
maturities as rates were at historical low levels. During the
last half of 2001, the Company elected to obtain additional
Federal Home Loan Bank advances to lock in these low rates in
anticipation of fixed-rate commercial loan growth and the
replacement of maturing advances during the first half of 2002.
Interest expense as a percentage of average earning assets went
from 5.06% during the first quarter of 2001 to 3.14% for the same
quarter in 2002, a decline of 192 basis points.
The allowance for loan and lease losses at March 31, 2002, was
1.38% of loans and 177% of nonperforming loans, compared to 1.33%
of loans and 180% of nonperforming loans, at year-end 2001.
Nonperforming loans increased to .78% of total loans and leases
at March 31, 2002, compared to .73% of total loans and leases at
December 31, 2001. This increase was primarily the result of one
agricultural credit at New Mexico Bank and Trust for which a
workout plan is in process. The $985 thousand provision for loan
losses made during the first quarter of 2002, an increase of $264
thousand or 37% when compared to the same period in 2001,
resulted primarily from the increase in nonperforming loans and
growth experienced in the commercial loan portfolio.
Heartland is a $1.6 billion financial services company with six
banks in Iowa, Illinois, Wisconsin and New Mexico:
Dubuque Bank and Trust Company, with eight offices in
Dubuque, Epworth, Farley and Holy Cross, Iowa
Galena State Bank and Trust Company, with three offices in
Galena and Stockton, Illinois
First Community Bank, FSB, with three offices in Keokuk, Iowa
and Carthage, Illinois
Riverside Community Bank, with three offices in Rockford,
Illinois
Wisconsin Community Bank, with six offices in Cottage Grove,
Middleton, Sheboygan, Green Bay, Monroe and Eau Claire,
Wisconsin
New Mexico Bank and Trust, with eight offices in Albuquerque
and Clovis, New Mexico
Other subsidiaries include:
ULTEA, Inc., a fleet leasing company with offices in Madison
and Milwaukee, Wisconsin
Citizens Finance Co., a consumer finance company with offices
in Madison and Appleton, Wisconsin; Dubuque, Iowa; and
Rockford, Illinois
Additional information about Heartland is available through our
website at www.htlf.com.
This release may contain, and future oral and written statements
of the Company and its management may contain, forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, plans, objectives, future
performance and business of the Company. Forward-looking
statements, which may be based upon beliefs, expectations and
assumptions of the Company's management and on information
currently available to management, are generally identifiable by
the use of words such as believe, expect, anticipate, plan,
intend, estimate, may, will, would, could, should or similar
expressions. Additionally, all statements in this release,
including forward-looking statements, speak only as of the date
they are made, and the Company undertakes no obligation to update
any statement in light of new information or future events.
A number of factors, many of which are beyond the ability of the
Company to control or predict, could cause actual results to
differ materially from those in its forward-looking statements.
These factors include, among others, the following: (i) the
strength of the local and national economy; (ii) the economic
impact of September 11th, (iii) changes in state and federal
laws, regulations and governmental policies concerning the
Company's general business; (iv) changes in interest rates and
prepayment rates of the Company's assets; (v) increased
competition in the financial services sector and the inability to
attract new customers; (vi) changes in technology and the ability
to develop and maintain secure and reliable electronic systems;
(vii) the loss of key executives or employees; (viii) changes
in consumer spending; (ix) unexpected results of acquisitions;
(x) unexpected outcomes of existing or new litigation involving
the Company; and (xi) changes in accounting policies and
practices. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should
not be placed on such statements. Additional information
concerning the Company and its business, including other factors
that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and
Exchange Commission.
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended
March 31,
2002 2001
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted) $ 25,131 $ 28,022
Interest expense 11,278 16,478
---------- ----------
Net interest income 13,853 11,544
Provision for loan and lease
losses 985 721
Noninterest income 8,472 7,426
Noninterest expense 15,358 14,273
Income tax expense 1,885 1,238
Tax equivalent adjustment 284 282
---------- ----------
Net income $ 3,813 $ 2,456
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 0.39 $ 0.26
Earnings per common share
- diluted 0.39 0.25
Dividends declared per common
share 0.10 0.09
Weighted average shares
outstanding - basic 9,729,332 9,618,210
Weighted average shares
outstanding - diluted 9,793,766 9,724,761
AVERAGE BALANCES
Assets $1,630,312 $1,476,725
Loans and leases, net of
unearned 1,087,221 1,046,744
Deposits 1,213,712 1,096,192
Earning assets 1,457,072 1,321,222
Stockholders' equity 108,965 97,243
EARNINGS PERFORMANCE RATIOS
Return on average assets 0.95% 0.67%
Return on average equity 14.19 10.24
Net interest margin 3.86 3.54
Net interest margin, excluding
fleet leasing company debt 3.96 3.70
Efficiency ratio 69.04 77.58
Efficiency ratio, banks only 59.25 66.14
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
As of and As of and
for the for the
quarter year
ended ended
March 31 December 31
2002 2001
----------------------------
BALANCE SHEET DATA
Total Assets $1,631,437 $1,644,064
Securities 361,127 325,217
Total loans and leases 1,093,805 1,105,205
Allowance for loan &
lease losses 15,075 14,660
Total deposits 1,217,199 1,205,159
Long-term debt 140,483 143,789
Total stockholders' equity 110,411 107,090
PER COMMON SHARE DATA
Book value per common share $ 11.24 $ 11.06
FAS 115 effect on book value
per common share 0.30 0.37
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 673,085 $ 651,479
Residential mortgage 142,704 168,912
Agricultural and agricultural
real estate 143,887 145,460
Consumer 124,045 127,874
Direct financing leases, net 13,793 15,570
Unearned discount and deferred
loan fees (3,709) (4,090)
---------- ----------
Total Loans and Leases $1,093,805 $1,105,205
========== ==========
ASSET QUALITY
Nonaccrual loans $ 7,425 $ 7,623
Restructured loans - -
Loans past due ninety days or
more as to interest or
principal payments 1,069 500
Other real estate owned 245 130
Other repossessed assets 291 343
---------- ----------
Total nonperforming assets $ 9,030 $ 8,596
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 14,660 $ 13,592
Provision charged to operating
expense 985 4,283
Loans charged off (837) (3,757)
Recoveries 267 542
Additions related to
acquisitions - -
---------- ----------
Balance, end of period $ 15,075 $ 14,660
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.78% 0.73%
Ratio of nonperforming assets
to total assets 0.55 0.52
Ratio of net loan chargeoffs
to average loans and leases 0.05 0.30
Allowance for loan losses as
a percent of loans 1.38 1.33
Allowance for loan losses as
percent of nonperforming
loans and leases 177.49 180.47
As of and As of and
for the for the
quarter year
ended ended
March 31 December 31
2001 2000
----------------------------
BALANCE SHEET DATA
Total Assets $1,512,050 $1,466,387
Securities 262,601 228,065
Total loans and leases 1,057,788 1,042,096
Allowance for loan &
lease losses 14,100 13,592
Total deposits 1,105,103 1,101,313
Long-term debt 119,466 102,856
Total stockholders' equity 99,344 96,146
PER COMMON SHARE DATA
Book value per common share $ 10.33 $ 10.00
FAS 115 effect on book value
per common share 0.30 0.14
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 578,633 $ 550,366
Residential mortgage 203,703 215,638
Agricultural and agricultural
real estate 135,034 133,614
Consumer 127,109 128,685
Direct financing leases, net 17,249 17,590
Unearned discount and deferred
loan fees (3,940) (3,797)
---------- ----------
Total Loans and Leases $1,057,788 $1,042,096
========== ==========
ASSET QUALITY
Nonaccrual loans $ 4,887 $ 5,860
Restructured loans 354 357
Loans past due ninety days or
more as to interest or
principal payments 433 523
Other real estate owned 257 489
Other repossessed assets 260 219
---------- ----------
Total nonperforming assets $ 6,191 $ 7,448
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 13,592 $ 10,844
Provision charged to operating
expense 721 3,301
Loans charged off (298) (2,280)
Recoveries 85 585
Additions related to
acquisitions - 1,142
---------- ----------
Balance, end of period $ 14,100 $ 13,592
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.54% 0.65%
Ratio of nonperforming assets
to total assets 0.41 0.51
Ratio of net loan chargeoffs
to average loans and leases 0.02 0.17
Allowance for loan losses as
a percent of loans 1.33 1.30
Allowance for loan losses as
percent of nonperforming
loans and leases 248.51 201.60
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the
Quarter Ended
March 31,
2002 2001
-------------------
NONINTEREST INCOME
Service charges and fees $ 1,933 $ 1,461
Trust fees 832 766
Brokerage commissions 127 126
Insurance commissions 217 251
Securities gains, net 81 572
Loss on trading account securities (28) (225)
Rental income on operating leases 3,856 3,854
Gain on sale of loans 1,007 393
Other noninterest income 447 228
-------- --------
Total noninterest income $ 8,472 $ 7,426
======== ========
NONINTEREST EXPENSE
Salaries and employee benefits $ 6,985 $ 6,210
Occupancy 777 825
Furniture and equipment 818 806
Depreciation on equipment under
operating leases 3,030 2,918
Outside services 881 753
FDIC deposit insurance assessment 53 51
Advertising 452 379
Goodwill and core deposit
intangibles amortization 254 418
Other noninterest expenses 2,108 1,913
-------- --------
Total noninterest expense $ 15,358 $ 14,273
======== ========