Exhibit 99.1
[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
FOR IMMEDIATE RELEASE
THURSDAY, OCTOBER 23, 2003
HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER EARNINGS
Dubuque, Iowa, October 23, 2003-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported results for the third quarter
of 2003.
Third Quarter 2003 Highlights
- Net income from continuing operations up 13%
- Average earning assets increased 12%
- Loans up 8% since year-end
- Deposits up 9% since year-end
- Arizona Bank & Trust opens on August 18
Nine Months
Third Quarter ended Sep. 30
_____________ _____________
2003 2002 2003 2002
Net income (in millions) $5.3 $4.8 $14.0 $12.8
Diluted earnings per share .51 .48 1.38 1.30
Return on assets 1.10% 1.13% 1.02% 1.03%
Return on common equity 15.52 16.20 14.43 15.14
Net interest margin 3.62 4.03 3.86 3.92
####
"Loan and deposit growth remained strong during the third
quarter, a testament to the efforts of our bank personnel in
securing attractively priced assets and liabilities without
sacrificing quality. Loan growth was solid across the board, but
particularly in the areas of commercial and agricultural, which
combined to add $20 million of loan outstandings to our portfolio
since the end of the second quarter. Despite the continued low
interest rate environment, we added almost $54 million of
deposits over that same period." -- Lynn B. Fuller, chairman,
president and chief executive officer, Heartland Financial USA
####
Dubuque, Iowa, October 23, 2003-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported net income from continuing
operations of $5.3 million, or $0.51 per diluted share, for the
third quarter ended September 30, 2003. This compares to net
income from continuing operations of $4.6 million, or $0.47 per
diluted share, in the third 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 third quarter of 2002 was
approximately $136,000 or $0.01 per diluted share. Total net
income was $5.3 million compared to $4.8 million in the third
quarter of 2002.
Annualized return on average equity for the third quarter of 2003
was 15.52 percent compared to 16.20 percent in the third quarter
of 2002 and 13.15 in the second quarter of 2003. Annualized
return on average assets was 1.10 percent compared to 1.13
percent in the third quarter of 2002 and 0.92 percent in the
second quarter of 2003.
For the nine-month period ended September 30, 2003, total net
income increased 9.7 percent to $14.0 million, or $1.38 per
diluted share, compared to total net income of $12.8 million, or
$1.30 per diluted share, in the same period in 2002. Return on
average equity was 14.43 percent and return on average assets was
1.02 percent for the nine-month period in 2003 compared to 15.14
percent and 1.03 percent, respectively, for the same period in
2002.
"Loan and deposit growth remained strong during the third
quarter, a testament to the efforts of our bank personnel in
securing attractively priced assets and liabilities without
sacrificing quality," said Lynn B. Fuller, chairman, president
and chief executive officer. "Loan growth was solid across the
board, but particularly in the areas of commercial and
agricultural, which combined to add $20 million of loan
outstandings to our portfolio since the end of the second
quarter. Despite the continued low interest rate environment, we
added almost $54 million of deposits over that same period.
"Prepayment activity on our mortgage-backed securities portfolio
continued during the quarter leading to further compression of
our net interest margin. We expect continued margin compression
through the end of the year, but we are confident that growth in
earning assets, primarily within the loan portfolio, combined
with reduced prepayments in our mortgage-backed securities
portfolio, will provide an opportunity to enhance yields in the
future."
Interest income in the third quarter totaled $24.8 million
compared to $25.9 million in the third quarter of 2002, affected
primarily by declining interest rates on reinvested securities.
Average earning assets increased 12 percent during the quarter to
$1.68 billion. Interest expense for the third quarter was $9.4
million, down 11 percent from $10.6 million in the third quarter
of 2002. Net interest income was $15.4 million compared to $15.3
million in the third quarter of 2002. Net interest margin,
expressed as a percentage of average earning assets, was 3.62
percent during the third quarter of 2003 compared to 4.03 percent
for the same period in 2002 and 3.82 percent for the second
quarter of 2003. During the quarter, net interest margin was
affected by accelerated prepayments in the mortgage-backed
securities portfolio.
Noninterest income in the third quarter totaled $1.2 million, an
increase of 62 percent from noninterest income of $6.9 million in
the third quarter of 2002. The increase in noninterest income was
driven primarily by a $1.4 million valuation adjustment on
mortgage servicing rights as well as $2.4 million gain on the
sales of loans. For the third quarter of 2003, noninterest
expense increased 17 percent to $17.4 million, reflecting
increased costs related to the opening of offices in the last
twelve months in Santa Fe, New Mexico; Fitchburg, Wisconsin; and
Mesa, Arizona as well as the formation of HTLF Capital Corp., an
investment banking firm headquartered in Denver, Colorado.
Total assets totaled $1.95 billion at September 30, 2003, an
increase of 13.2 percent since September 30, 2002, and 9.1
percent since December 31, 2002. Total loans and leases were
$1.27 billion at the end of the quarter compared to $1.16 billion
at the end of the third quarter of 2002, and deposits totaled
$1.46 billion compared $1.29 billion over the same period.
The allowance for loan and lease losses at September 30, 2003,
was 1.42 percent of loans and 330 percent of nonperforming loans,
compared to 1.34 percent of loans and 253 percent of
nonperforming loans at September 30, 2002. Nonperforming loans
decreased to .43 percent of total loans and leases compared to
..53 percent of total loans and leases at September 30, 2002. The
provision for loan losses during the third quarter of 2003 was
$950 thousand compared to $167 thousand in the same period one
year ago. The reduced provision in 2002 resulted primarily from a
$685 thousand recovery on a prior-year charge-off.
Fuller noted progress on two of the company's recent operational
initiatives. Heartland's newest community bank, Arizona Bank &
Trust, opened its flagship office on August 18 in Mesa, Arizona.
HTLF Capital Corp. began full operations in June with a focus on
taxable and tax-exempt investments including: municipal leasing,
hospital financing, college and university financing, project
financing, and 501(c)3 private activity funding.
"We are pleased with the acceptance experienced by Arizona Bank &
Trust since opening. Deposits and loans have met expectations,
and this positive start bodes well for our long-term expansion
plans in the southwestern United States," added Fuller. "In
addition, we are encouraged by the production pipeline at HTLF
Capital Corp., which indicates the company's prospects for
reaching the break-even point within one year of operation are
good."
About Heartland Financial USA:
Heartland is a $1.9 billion financial services company with seven
banks in Iowa, Illinois, Wisconsin, New Mexico and 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, with one office 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
September 30,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted) (1) $ 24,761 $ 25,932
Interest expense 9,400 10,589
---------- ----------
Net interest income 15,361 15,343
Provision for loan and lease
losses 950 167
Noninterest income 11,202 6,911
Noninterest expense 17,406 14,922
Income tax expense 2,391 2,087
Tax equivalent adjustment (1) 5,552 437
---------- ----------
Income from continuing
operations 5,264 4,641
Discontinued operations
Gain from operations of
discontinued operations - 224
Income tax expense - 88
---------- ----------
Gain on discontinued operations - 136
---------- ----------
Net income $ 5,264 $ 4,777
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 0.52 $ 0.49
Earnings per common share
- diluted 0.51 0.48
Adjusted earnings per common
share from continuing
operations - basic(2) 0.52 0.47
Adjusted earnings per common
share from continuing
operations - diluted(2) 0.51 0.47
Weighted average shares
outstanding - basic 10,141,884 9,819,148
Weighted average shares
outstanding - diluted 10,319,556 9,894,883
(1) Tax equivalent basis is calculated using an effective tax
rate of 34%.
(2) 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 Nine Months Ended
September 30,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted) (1) $ 75,930 $ 75,506
Interest expense 28,545 32,239
---------- ----------
Net interest income 47,385 43,267
Provision for loan and lease
losses 3,176 1,778
Noninterest income 28,088 21,683
Noninterest expense 50,038 44,235
Income tax expense 6,654 5,453
Tax equivalent adjustment (1) 1,610 1,104
---------- ----------
Income from continuing
operations 13,995 12,380
Discontinued operations
Gain from operations of
discontinued operations - 627
Income tax expense - 246
---------- ----------
Gain on discontinued operations - 381
---------- ----------
Net income $ 13,995 $ 12,761
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 1.41 $ 1.30
Earnings per common share
- diluted 1.38 1.30
Adjusted earnings per common
share from continuing
operations - basic(2) 1.41 1.26
Adjusted earnings per common
share from continuing
operations - diluted(2) 1.38 1.26
Weighted average shares
outstanding - basic 9,960,008 9,785,180
Weighted average shares
outstanding - diluted 10,144,605 9,849,890
(1) Tax equivalent basis is calculated using an effective tax
rate of 34%.
(2) 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
September 30,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,899,523 $1,681,632
Loans and leases, net of
unearned 1,253,515 1,135,481
Deposits 1,433,563 1,265,459
Earning assets 1,684,543 1,510,709
Stockholders' equity 134,552 116,974
EARNINGS PERFORMANCE RATIOS
Return on average assets 1.10% 1.13%
Return on average equity 15.52 16.20
Net interest margin 3.62 4.03
Net interest margin, excluding
fleet leasing company debt 3.68 4.12
Efficiency ratio(1) 66.85 68.83
Efficiency ratio, banks only(1) 60.88 56.71
NONINTEREST INCOME
Service charges and fees $ 1,452 $ 1,585
Trust fees 951 871
Brokerage commissions 236 122
Insurance commissions 141 158
Securities gains, net 527 573
Gain (loss) on trading account
securities 80 (450)
Rental income on operating leases 3,447 3,583
Gain on sale of loans 2,446 1,049
Valuation adjustment on
mortgage servicing rights 1,360 (503)
Impairment loss on equity
securities (69) (267)
Other noninterest income 631 190
---------- ----------
Total noninterest income $ 11,202 $ 6,911
NONINTEREST EXPENSE
Salaries and employee benefits $ 8,579 $ 7,109
Occupancy 1,021 785
Furniture and equipment 1,064 777
Depreciation on equipment
under operating leases 2,859 2,845
Outside services 1,286 1,037
FDIC deposit insurance
assessment 54 51
Advertising 679 405
Core deposit intangibles
amortization 101 124
Other noninterest expenses 1,763 1,789
---------- ----------
Total noninterest expense $ 17,406 $ 14,922
========== ==========
(1) Noninterest expense divided by the sum of net interest income
and noninterest income less security gains.
For the Nine Months Ended
September 30,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,836,389 $1,648,550
Loans and leases, net of
unearned 1,231,072 1,108,473
Deposits 1,383,348 1,232,423
Earning assets 1,640,865 1,476,602
Stockholders' equity 129,643 112,722
EARNINGS PERFORMANCE RATIOS
Return on average assets 1.02% 1.03%
Return on average equity 14.43 15.14
Net interest margin 3.86 3.92
Net interest margin, excluding
fleet leasing company debt 3.92 3.98
Efficiency ratio 67.81 68.88
Efficiency ratio, banks only 59.77 57.22
NONINTEREST INCOME
Service charges and fees $ 4,208 $ 4,729
Trust fees 2,761 2,607
Brokerage commissions 599 452
Insurance commissions 557 535
Securities gains, net 1,685 729
Gain (loss) on trading account
securities 329 (692)
Rental income on operating leases 10,342 11,113
Gain on sale of loans 5,667 2,578
Valuation adjustment on
mortgage servicing rights 368 (829)
Impairment loss on equity
securities (239) (267)
Other noninterest income 1,811 728
---------- ----------
Total noninterest income $ 28,088 $ 21,683
NONINTEREST EXPENSE
Salaries and employee benefits $ 24,414 $ 20,855
Occupancy 2,877 2,311
Furniture and equipment 2,912 2,395
Depreciation on equipment
under operating leases 8,471 8,754
Outside services 3,558 3,018
FDIC deposit insurance
assessment 161 157
Advertising 1,765 1,239
Core deposit intangibles
amortization 303 371
Other noninterest expenses 5,577 5,135
---------- ----------
Total noninterest expense $ 50,038 $ 44,235
========== ==========
(1) Noninterest expense divided by the sum of net interest income
and noninterest income less security gains.
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
Nine Months Year
Ended Ended
September 30, December 31,
2003 2002
----------------------------
BALANCE SHEET DATA
Total Assets $1,947,906 $1,785,979
Securities 382,613 390,815
Total loans and leases 1,268,573 1,175,236
Allowance for loan &
lease losses 18,041 16,091
Total deposits 1,457,165 1,337,985
Long-term debt 153,194 126,299
Total stockholders' equity 137,122 124,041
PER COMMON SHARE DATA
Book value per common share $ 13.60 $ 12.60
FAS 115 effect on book value
per common share 0.39 0.43
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 809,596 $ 743,520
Residential mortgage 150,338 145,931
Agricultural and agricultural
real estate 168,923 155,596
Consumer 132,679 120,853
Direct financing leases, net 9,595 12,308
Unearned discount and deferred
loan fees (2,558) (2,972)
---------- ----------
Total Loans and Leases $1,268,573 $1,175,236
========== ==========
ASSET QUALITY
Nonaccrual loans $ 4,612 $ 3,944
Restructured loans - -
Loans past due ninety days or
more as to interest or
principal payments 862 541
Other real estate owned 1,082 452
Other repossessed assets 346 279
---------- ----------
Total nonperforming assets $ 6,902 $ 5,216
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 16,091 $ 14,660
Provision for loan and lease
losses continuing
operations 3,176 3,553
Provision for loan and lease
losses discontinued
operations - (329)
Loans charged off (1,714) (3,203)
Recoveries 488 1,410
---------- ----------
Balance, end of period $ 18,041 $ 16,091
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.43% 0.38%
Ratio of nonperforming assets
to total assets 0.35 0.29
Ratio of net loan chargeoffs
to average loans and leases 0.10 0.16
Allowance for loan losses as
a percent of loans 1.42 1.37
Allowance for loan and leases
to nonperforming loans and
leases 329.60 358.77
As of and As of and
For the For the
Nine Months Year
Ended Ended
September 30, December 31,
2002 2001
----------------------------
BALANCE SHEET DATA
Total Assets $1,720,241 $1,644,064
Securities 380,211 325,217
Total loans and leases 1,164,386 1,105,205
Allowance for loan &
lease losses 15,565 14,660
Total deposits 1,290,373 1,205,159
Long-term debt 130,219 143,789
Total stockholders' equity 119,588 107,090
PER COMMON SHARE DATA
Book value per common share $ 12.19 $ 11.06
FAS 115 effect on book value
per common share 0.54 0.37
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 731,294 $ 651,479
Residential mortgage 144,221 168,912
Agricultural and agricultural
real estate 157,830 145,460
Consumer 121,020 127,874
Direct financing leases, net 13,266 15,570
Unearned discount and deferred
loan fees (3,245) (4,090)
---------- ----------
Total Loans and Leases $1,164,386 $1,105,205
========== ==========
ASSET QUALITY
Nonaccrual loans $ 5,296 $ 7,269
Restructured loans - 354
Loans past due ninety days or
more as to interest or
principal payments 861 500
Other real estate owned 322 130
Other repossessed assets 424 343
---------- ----------
Total nonperforming assets $ 6,903 $ 8,596
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 14,660 $ 13,592
Provision for loan and lease
losses continuing
operations 1,778 4,258
Provision for loan and lease
losses discontinued
operations - 25
Loans charged off (2,123) (3,757)
Recoveries 1,250 542
---------- ----------
Balance, end of period $ 15,565 $ 14,660
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.53% 0.73%
Ratio of nonperforming assets
to total assets 0.40 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 1.34 1.33
Allowance for loan and leases
to nonperforming loans
and leases 252.80 180.47