Exhibit 99
[FRB WEBER SHANDWICK COMPANY LOGO] NEWS
AT THE COMPANY: AT FRB|WEBER SHANDWICK
John K. Schmidt Jeff Wilhoit Rose Tucker
Chief Financial Officer General Analysts/
(563) 589-1994 Inquiries Investors
jschmidt@dubuquebank.com (312) 640-6757 (310) 407-6522
HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER EARNINGS
Dubuque, Iowa, July 17, 2003-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported results for the second quarter
of 2003.
Second Quarter 2003 Highlights
- Net income from continuing operations up 7%
- Earning assets increased 13%
- Loans grew 7% since year-end
- Deposits grew 5% since year-end
- HTLF Capital Corp. commenced full operations on June 23
- Arizona Bank & Trust scheduled to open in early August
Six Months
Second Quarter Ended June 30
2003 2002 2003 2002
Net income (in millions) $4.2 $4.0 $8.7 $8.0
Diluted earnings per share .42 .41 .87 .81
Return on assets 0.92% 0.99% 0.98% 0.99%
Return on common equity 13.15 14.44 13.84 14.56
Net interest margin 3.82 3.94 3.99 3.86
####
"We continue to execute important elements of our strategic plan,
and our solid second quarter and first half results underscore
the effectiveness of that plan. We added over $80 million in new
loans since year-end 2002 while maintaining non-performing assets
at nearly the same low levels, and deposits exhibited steady
growth. Our overall results are particularly gratifying in light
of continued softness in the economy and our continued investment
in the growth of the company."
- -- Lynn B. Fuller, chairman, president and chief executive
officer
####
Dubuque, Iowa, July 17, 2003-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported net income from continuing
operations of $4.2 million, or $.42 per share diluted, for the
second quarter ended June 30, 2003. This compares to net income
from continuing operations of $3.9 million, or $0.40 per diluted
share, in the second quarter of 2002. In December 2002, the
company sold a branch of Wisconsin Community Bank, a Heartland
bank subsidiary. The contribution of this discontinued operation
to net income during the second quarter of 2002 was approximately
$123 thousand, or $0.01 per diluted share. Total net income was
$4.2 million versus $4.0 million in the second quarter of 2002.
Annualized return on average equity for the second quarter of
2003 was 13.15 percent, and annualized return on average assets
was .92 percent. In the second quarter of 2002, annualized
return on average equity was 14.44 percent and return on average
assets was .99 percent.
"We continue to execute on the important elements of our
strategic plan, and our solid second quarter and first half
results underscore the effectiveness of that plan," said Lynn B.
Fuller, chairman, president and chief executive officer. "We
added over $80 million in new loans since year-end 2002 while
maintaining non-performing assets at nearly the same low levels,
and deposits exhibited steady growth. Our overall results are
particularly gratifying in light of continued softness in the
economy and our continued investment in the growth of the
company. A flat yield curve led to further compression of our
net interest margin, but we believe that our disciplined approach
to asset and liability pricing served to mitigate the effects of
margin pressure to a significant degree."
Contributing to the improved earnings during the second quarter
of 2003 was the $1.4 million or 9.6 percent growth in net
interest income due primarily to growth in earning assets.
Noninterest income increased $1.6 million or 23.9 percent and
noninterest expense increased $1.9 million or 13.0 percent.
Gains on sale of loans contributed an additional $1.2 million to
noninterest income and activities within the available for sale
and trading portfolios contributed an additional $872 thousand to
noninterest income. These improvements in noninterest income were
offset by a $694 thousand valuation adjustment on mortgage
servicing rights and a $519 thousand increase in amortization on
these mortgage servicing rights as prepayments were experienced
in our servicing portfolio. A portion of the increase in
noninterest expense was attributable to the implementation of
imaging technology across all the bank subsidiaries, the addition
of HTLF Capital Corp. and expansion into the Santa Fe, New Mexico
and Phoenix, Arizona markets.
For the six-month period ended June 30, 2003, total net income
increased 9.4 percent to $8.7 million, or $.87 per diluted share,
compared to total net income of $8.0 million, or $0.81 per
diluted share in the same period in 2002. Return on average
equity was 13.84 percent, and return on average assets was .98
percent for the six-month period in 2003 compared to 14.56
percent and .99 percent, respectively, for the same period in
2002.
Net interest margin, expressed as a percentage of average earning
assets, was 3.82 percent during the second quarter of 2003
compared to 3.94 percent for the same period in 2002 and 4.12
percent for the first quarter of 2003. For the first six months
of 2003, net interest margin was 3.99 percent, compared to 3.86
percent in the same period one year ago.
Total assets at June 30, 2003, increased by 12.3 percent since
June 30, 2002, and by 3.9 percent since December 31, 2002. Total
loans and leases grew 12.6 percent to $1.26 billion compared to
the second quarter of 2002, and deposits increased 14.3 percent
to $1.40 billion over the same period. In the first six months
of 2003, total loans and leases and total deposits increased by
6.8 percent and 4.9 percent, respectively.
"Despite a slow economy, we were able to add significant loan
volume in virtually every part of our loan portfolio during the
first half of the year," added Fuller. "Commercial and
commercial real estate loan volume alone grew by over $50 million
since year-end and $100 million since last June, and we
experienced one of our best quarters ever in our residential
mortgage business. On the liability side, deposits showed strong
increases in the latest six month and twelve month periods,
demonstrating continued strong customer response to our products
despite the very low interest rate environment."
The allowance for loan and lease losses at June 30, 2003, was
1.40 percent of loans and 327 percent of nonperforming loans,
compared to 1.38 percent of loans and 202 percent of
nonperforming loans at June 30, 2002. Nonperforming loans
increased slightly to .43 percent of total loans and leases
compared to .38 percent of total loans and leases at December 31,
2002. Commensurate with its strong loan growth, the company
increased its provision for loan losses during the second quarter
of 2003 to $922 thousand compared to $630 thousand in the same
period one year ago.
In June of 2003, Heartland completed the buyout of all minority
stockholders of New Mexico Bank & Trust as agreed upon during its
formation in 1998. In exchange for their shares of New Mexico
Bank & Trust stock, the minority stockholders received a total of
383,574 shares of Heartland common stock.
Looking toward the second half of 2003, Fuller noted recent
initiatives that are expected to begin contributing to overall
results. Heartland's newest community bank, Arizona Bank &
Trust, is on schedule to open its first office in early August in
Mesa, Arizona. On June 23, Heartland announced the formation of
HTLF Capital Corp., an investment banking firm headquartered in
Denver, Colorado. HTLF Capital will focus on taxable and tax
exempt investments, including: taxable and tax-exempt municipal
leasing; hospital financing; college and university financing;
project financing; and 501(c)3 private activity funding.
"We look forward to seeing these two investments begin to bear
fruit beginning in the second half of the year," Fuller said.
"The opening of Arizona Bank & Trust in the Southwest market will
enlarge our geographic footprint, and establish a beachhead for
further expansion within the state. HTLF Capital Corp. further
elevates our presence in the financial services industry, and
opens up new sources of potential revenue for us."
About Heartland Financial USA:
Heartland is a $1.9 billion financial services company with six
banks in Iowa, Illinois, Wisconsin, New Mexico and another
pending in Arizona:
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, 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,
Fitchburg, Green Bay, Middleton, Monroe and Sheboygan,
Wisconsin
New Mexico Bank & Trust, with twelve offices in Albuquerque,
Clovis and Santa Fe, New Mexico
Arizona Bank & Trust, in formation in Mesa, Arizona
Other subsidiaries include:
ULTEA, Inc., a fleet management company with offices in
Madison and Milwaukee, Wisconsin; Chicago, Illinois and
Minnetonka, Minnesota
Citizens Finance Co., a consumer finance company with
offices in Madison and Appleton, Wisconsin; Dubuque, Iowa;
and Rockford, Illinois
HTLF Capital Corp., an investment banking firm with offices
in Denver, Colorado and Blue Springs, Missouri
Heartland's shares are traded on The Nasdaq Stock Market under
the symbol HTLF.
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 past and any future terrorist threats and attacks and
any acts of war or threats thereof, (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.
####
-FINANCIAL TABLES FOLLOW-
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended
June 30,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted) $ 25,364 $ 24,978
Interest expense 9,613 10,607
---------- ----------
Net interest income 15,751 14,371
Provision for loan and lease
losses 922 630
Noninterest income 8,411 6,786
Noninterest expense 16,575 14,666
Income tax expense 1,914 1,560
Tax equivalent adjustment 544 383
---------- ----------
Income from continuing
operations 4,207 3,918
Discontinued operations
Gain from operations of
discontinued operations - 202
Income tax expense - 79
---------- ----------
Gain on discontinued operations - 123
---------- ----------
Net income $ 4,207 $ 4,041
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 0.43 $ 0.41
Earnings per common share
- diluted 0.42 0.41
Adjusted earnings per common
share from continuing
operations - basic(1) 0.43 0.40
Adjusted earnings per common
share from continuing
operations - diluted(1) 0.42 0.40
Weighted average shares
outstanding - basic 9,874,322 9,808,922
Weighted average shares
outstanding - diluted 10,059,176 9,872,842
(1) Excludes the discontinued operations from the sale of our
Eau Claire branch in the fourth quarter of 2002 and the
related gain on sale.
For the Six Months Ended
June 30,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted) $ 51,169 $ 49,574
Interest expense 19,145 21,650
---------- ----------
Net interest income 32,024 27,924
Provision for loan and lease
losses 2,226 1,611
Noninterest income 16,886 14,772
Noninterest expense 32,632 29,313
Income tax expense 4,263 3,366
Tax equivalent adjustment 1,058 667
---------- ----------
Income from continuing
operations 8,731 7,739
Discontinued operations
Gain from operations of
discontinued operations - 403
Income tax expense - 158
---------- ----------
Gain on discontinued operations - 245
---------- ----------
Net income $ 8,731 $ 7,984
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 0.88 $ 0.82
Earnings per common share
- diluted 0.87 0.81
Adjusted earnings per common
share from continuing
operations - basic(1) 0.88 0.79
Adjusted earnings per common
share from continuing
operations - diluted(1) 0.87 0.79
Weighted average shares
outstanding - basic 9,883,047 9,769,443
Weighted average shares
outstanding - diluted 10,071,359 9,831,652
(1) Excludes the discontinued operations from the sale of our
Eau Claire branch in the fourth quarter of 2002 and the
related gain on sale.
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended
June 30,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,841,648 $1,633,707
Loans and leases, net of
unearned 1,242,316 1,102,715
Deposits 1,389,854 1,218,097
Earning assets 1,652,935 1,462,024
Stockholders' equity 128,335 112,228
EARNINGS PERFORMANCE RATIOS
Return on average assets 0.92% 0.99%
Return on average equity 13.15 14.44
Net interest margin 3.82 3.94
Net interest margin, excluding
fleet leasing company debt 3.88 4.03
Efficiency ratio 69.98 69.57
Efficiency ratio, banks only 61.80 58.06
NONINTEREST INCOME
Service charges and fees $ 1,449 $ 1,697
Trust fees 858 904
Brokerage commissions 216 203
Insurance commissions 166 160
Securities gains, net 478 75
Gain (loss) on trading account
securities 277 (214)
Rental income on operating leases 3,477 3,674
Gain on sale of loans 1,689 522
Valuation adjustment on
mortgage servicing rights (694) (326)
Impairment loss on equity
securities (22) -
Other noninterest income 517 91
---------- ----------
Total noninterest income $ 8,411 $ 6,786
========== ==========
NONINTEREST EXPENSE
Salaries and employee benefits $ 8,075 $ 6,841
Occupancy 939 763
Furniture and equipment 973 814
Depreciation on equipment
under operating leases 2,825 2,879
Outside services 1,162 1,107
FDIC deposit insurance
assessment 54 53
Advertising 613 383
Core deposit intangibles
amortization 101 123
Other noninterest expenses 1,833 1,703
---------- ----------
Total noninterest expense $ 16,575 $ 14,666
========== ==========
For the Six Months Ended
June 30,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,804,822 $1,632,010
Loans and leases, net of
unearned 1,219,851 1,094,968
Deposits 1,358,240 1,215,904
Earning assets 1,619,026 1,459,548
Stockholders' equity 127,188 110,597
EARNINGS PERFORMANCE RATIOS
Return on average assets 0.98% 0.99%
Return on average equity 13.84 14.56
Net interest margin 3.99 3.86
Net interest margin, excluding
fleet leasing company debt 4.05 3.96
Efficiency ratio 68.34 68.91
Efficiency ratio, banks only 59.16 57.77
NONINTEREST INCOME
Service charges and fees $ 2,756 $ 3,144
Trust fees 1,810 1,736
Brokerage commissions 363 330
Insurance commissions 416 377
Securities gains, net 1,158 156
Gain (loss) on trading account
securities 249 (242)
Rental income on operating leases 6,895 7,530
Gain on sale of loans 3,221 1,529
Valuation adjustment on
mortgage servicing rights (992) (326)
Impairment loss on equity
securities (170) -
Other noninterest income 1,180 538
---------- ----------
Total noninterest income $ 16,886 $ 14,772
========== ==========
NONINTEREST EXPENSE
Salaries and employee benefits $ 15,835 $ 13,746
Occupancy 1,856 1,526
Furniture and equipment 1,848 1,618
Depreciation on equipment
under operating leases 5,612 5,909
Outside services 2,272 1,981
FDIC deposit insurance
assessment 107 106
Advertising 1,086 834
Core deposit intangibles
amortization 202 247
Other noninterest expenses 3,814 3,346
---------- ----------
Total noninterest expense $ 32,632 $ 29,313
========== ==========
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
Six Months Year
Ended Ended
June 30, December 31
2003 2002
----------------------------
BALANCE SHEET DATA
Total Assets $1,855,235 $1,785,979
Securities 372,068 390,815
Total loans and leases 1,255,418 1,175,236
Allowance for loan &
lease losses 17,600 16,091
Total deposits 1,403,233 1,337,985
Long-term debt 146,206 126,299
Total stockholders' equity 136,952 124,041
PER COMMON SHARE DATA
Book value per common share $ 13.48 $ 12.60
FAS 115 effect on book value
per common share 0.57 0.43
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 797,282 $ 743,520
Residential mortgage 165,647 145,931
Agricultural and agricultural
real estate 161,551 155,596
Consumer 123,226 120,853
Direct financing leases, net 10,365 12,308
Unearned discount and deferred
loan fees (2,653) (2,972)
---------- ----------
Total Loans and Leases $1,255,418 $1,175,236
========== ==========
ASSET QUALITY
Nonaccrual loans $ 4,727 $ 3,944
Restructured loans - -
Loans past due ninety days or
more as to interest or
principal payments 649 541
Other real estate owned 488 452
Other repossessed assets 287 279
---------- ----------
Total nonperforming assets $ 6,151 $ 5,216
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 16,091 $ 14,660
Provision for loan and lease
losses continuing
operations 2,226 3,553
Provision for loan and lease
losses discontinued
operations - (329)
Loans charged off (1,040) (3,203)
Recoveries 323 1,410
---------- ----------
Balance, end of period $ 17,600 $ 16,091
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.43% 0.38%
Ratio of nonperforming assets
to total assets 0.33 0.29
Ratio of net loan chargeoffs
to average loans and leases 0.06 0.16
Allowance for loan losses as
a percent of loans 1.40 1.37
Allowance for loan and leases
to nonperforming loans and
leases 327.41 358.77
As of and As of and
For the For the
Six Months Year
Ended Ended
June 30, December 31,
2002 2001
----------------------------
BALANCE SHEET DATA
Total Assets $1,652,238 $1,644,064
Securities 346,408 325,217
Total loans and leases 1,115,039 1,105,205
Allowance for loan &
lease losses 15,409 14,660
Total deposits 1,228,077 1,205,159
Long-term debt 136,321 143,789
Total stockholders' equity 114,724 107,090
PER COMMON SHARE DATA
Book value per common share $ 11.68 $ 11.06
FAS 115 effect on book value
per common share 0.44 0.37
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 693,091 $ 651,479
Residential mortgage 138,198 168,912
Agricultural and agricultural
real estate 150,136 145,460
Consumer 123,098 127,874
Direct financing leases, net 13,958 15,570
Unearned discount and deferred
loan fees (3,442) (4,090)
---------- ----------
Total Loans and Leases $1,115,039 $1,105,205
========== ==========
ASSET QUALITY
Nonaccrual loans $ 6,918 $ 7,269
Restructured loans - 354
Loans past due ninety days or
more as to interest or
principal payments 728 500
Other real estate owned 108 130
Other repossessed assets 241 343
---------- ----------
Total nonperforming assets $ 7,995 $ 8,596
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 14,660 $ 13,592
Provision for loan and lease
losses continuing
operations 1,611 4,258
Provision for loan and lease
losses discontinued
operations (10) 25
Loans charged off (1,267) (3,757)
Recoveries 415 542
---------- ----------
Balance, end of period $ 15,409 $ 14,660
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.69% 0.73%
Ratio of nonperforming assets
to total assets 0.48 0.52
Ratio of net loan chargeoffs
to average loans and leases 0.08 0.30
Allowance for loan losses as
a percent of loans 1.38 1.33
Allowance for loan and leases
to nonperforming loans
and leases 201.50 180.47