Exhibit 99.1
[FINANCIAL RELATIONS BOARD 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, JANUARY 22, 2004
HEARTLAND FINANCIAL USA, INC. REPORTS FOURTH QUARTER EARNINGS
Dubuque, Iowa, January 22, 2004-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported results for the fourth quarter
of 2003.
Fourth Quarter 2004 Highlights
- Total assets surpassed $2 billion
- Average earning assets increased 12%
- Loans up 15% since year-end 2002
- Deposits up 12% since year-end 2002
Fourth Quarter Year Ended Dec. 31
2003 2002 2003 2002
____ ____ ____ ____
Net income (in millions) $3.7 $6.1 $17.7 $18.9
Diluted earnings per
share .24 .41 1.16 1.28
Income from continuing
operations 3.7 4.2 17.7 16.6
Adjusted diluted earnings
per share .24 .28 1.16 1.12
Return on average
assets .74% 1.39% .95% 1.13%
Return on average
equity 10.74 20.06 13.46 16.44
Net interest margin 3.60 4.06 3.79 3.96
***
"We have a stated goal of doubling our earnings and assets every
five to seven years. With 2003 representing the fifth year of our
latest growth plan, we are pleased to have achieved our asset
goal, and expect to accomplish our earnings goal very early in
2004. In those last five years, we have expanded into nine new
markets with seventeen bank offices, and we have seen our growing
customer base respond enthusiastically to our decentralized,
community based operating model." -- Lynn B. Fuller, chairman,
president and chief executive officer, Heartland Financial USA
***
Dubuque, Iowa, January 22, 2004-Heartland Financial USA, Inc.
(Nasdaq NMS: HTLF) today reported net income from continuing
operations of $3.7 million, or $0.24 per diluted share, for the
fourth quarter ended December 31, 2003. This compares to net
income from continuing operations of $4.2 million, or $0.28 per
diluted share, in the fourth quarter of 2002. Total net income
was $3.7 million compared to $6.1 million in the fourth quarter
of 2002. Fourth quarter 2002 results included the sale proceeds
from the Eau Claire branch of Wisconsin Community Bank, a bank
subsidiary of Heartland, which was sold effective December 15,
2002. The contribution of this discontinued operation to net
income during the fourth quarter of 2002 was approximately $1.9
million or $0.13 per diluted share, which included a $1.6 million
gain on disposal. Also affecting earnings during the quarter were
costs associated with expansion efforts underway in several of
the Company's newer markets.
For the year ended December 31, 2003, income from continuing
operations increased 6.8 percent to $17.7 million, or $1.16 per
diluted share, compared to $16.6 million, or $1.12 per diluted
share, in the year 2002. Total net income was $17.7 million, or
$1.16 per diluted share, during the year 2003 compared to $18.9
million, or $1.28 per diluted share, in the year 2002. The
contribution of the discontinued operation of the Eau Claire
branch to net income during the year 2002 was approximately $2.3
million or $0.16 per diluted share, which includes the $1.6
million gain on disposal during the fourth quarter. Return on
average equity was 13.46 percent and return on average assets was
..95 percent for the year 2003 compared to 16.44 percent and 1.13
percent, respectively, for the year 2002.
"We have a stated goal of doubling our earnings and assets every
five to seven years," said Lynn B. Fuller, chairman, president
and chief executive officer. "With 2003 representing the fifth
year of our latest growth plan, we are pleased to have achieved
our asset goal, and expect to accomplish our earnings goal very
early in 2004. In those last five years, we have expanded into
nine new markets with seventeen bank offices, and we have seen
our growing customer base respond enthusiastically to our
decentralized, community based operating model.
"During a difficult economic environment like the current one, we
are fortunate to be able to rely on our proven ability to grow
customer relationships. This customer commitment resulted in
continued solid growth in deposits and quality loans during the
fourth quarter. Total deposits grew by 12 percent compared to one
year ago, while total loans and leases grew by 15 percent over
the same period. As we had anticipated last quarter, prepayment
activity on our mortgage-backed securities portfolio continued to
impact our net interest margin in the fourth quarter as interest
rates again neared historic lows. Also, net interest margin was
impacted by the negative carrying costs associated with the
completion of a private placement offering of $20 million of
8.25% cumulative capital securities. The proceeds from this
offering will be used for future acquisitions or the retirement
of debt. Despite these factors, we were able to maintain net
interest margin near third quarter levels."
Interest income, tax equivalent adjusted, in the fourth quarter
totaled $25.8 million compared to $26.1 million in the fourth
quarter of 2002, affected primarily by declining interest rates
on reinvested securities. Average earning assets increased 13
percent during the quarter to $1.76 billion. Interest expense for
the fourth quarter was $9.8 million, down 3 percent from $10.1
million in the fourth quarter of 2002. Net interest income
remained the same at $16.0 million during the fourth quarters of
2003 and 2002. Net interest margin, expressed as a percentage of
average earning assets, was 3.60 percent during the fourth
quarter of 2003 compared to 4.06 percent for the same period in
2002 and 3.62 percent for the third quarter of 2003.
Noninterest income in the fourth quarter totaled $8.5 million, a
decrease of 6 percent from noninterest income of $9.0 million in
the fourth quarter of 2002. The decrease in noninterest income
was driven primarily by a reduction in gains on sales of loans.
Partially offsetting this reduction was a significant increase in
service fees, particularly as a result of the growth in the
Company's mortgage loan servicing portfolio. For the fourth
quarter of 2003, noninterest expense increased 7 percent to $17.7
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 surpassed $2.0 billion at December 31, 2003, an
increase of 13 percent or $232.1 million since December 31, 2002.
Total loans and leases were $1.35 billion at the end of 2003
compared to $1.17 billion at the end of 2002, and deposits
totaled $1.49 billion compared $1.34 billion.
The allowance for loan and lease losses at December 31, 2003, was
1.37 percent of loans and 333 percent of nonperforming loans,
compared to 1.37 percent of loans and 359 percent of
nonperforming loans at December 31, 2002. Nonperforming loans
increased to $5.1 million or .41 percent of total loans and
leases compared to $3.9 million or .38 percent of total loans and
leases at December 31, 2002. This increase was attributable to a
few credits and is not felt to be an indication of a trend. The
provision for loan losses during the fourth quarter of 2003 was
$1.0 million compared to $1.8 million in the same period one year
ago.
Looking ahead, Fuller cited operational improvements as well as
Heartland's ability to grow both sides of its balance sheet as
factors that should contribute to further growth in 2004.
Heartland has begun implementation of important technology
upgrades designed to maximize information flow and reduce
processing costs. Fuller also noted progress toward the opening
of a new operations center in the summer of 2004 that will
further centralize and streamline key back office functions,
resulting in additional cost savings and efficiencies.
Heartland's recently opened Arizona Bank & Trust in Mesa, Arizona
has been well received as deposits exceeded $20 million and loans
exceeded $17 million at the end of its first four full months of
operation. Plans are underway for the opening of a second office
in 2004.
"The investments we have made during 2003 and will continue to
make during 2004 are critical components to the future success of
our Company. At the same time, we continue to look for
opportunities to further leverage the resources of Heartland even
though, in the short term, they may be a drag on earnings," added
Fuller. "Additionally, we have begun to see signs that the
economy may be on its way toward recovery. Coupled with a strong
and growing portfolio of earning assets, we feel we are well
positioned to take advantage of opportunities that an economic
recovery would afford."
About Heartland Financial USA:
Heartland is a $2.0 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
December 31,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted)(1) $ 25,770 $ 26,079
Interest expense 9,782 10,093
---------- ----------
Net interest income 15,988 15,986
Provision for loan and lease
losses 1,007 1,775
Noninterest income 8,453 8,962
Noninterest expense 17,654 16,424
Income tax expense 1,483 2,070
Tax equivalent adjustment(1) 573 469
---------- ----------
Income from continuing
operations 3,724 4,210
Discontinued operations
Gain from operations of
discontinued operations - 3,124
Income tax expense - 1,228
---------- ----------
Gain on discontinued operations - 1,896
---------- ----------
Net income $ 3,724 $ 6,106
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 0.25 $ 0.41
Earnings per common share
- diluted 0.24 0.41
Adjusted earnings per
share from continuing
operations - basic(2) 0.25 0.29
Adjusted earnings per
share from continuing
operations - diluted(2) 0.24 0.28
Weighted average shares
outstanding - basic 15,124,871 14,716,752
Weighted average shares
outstanding - diluted 15,386,486 14,835,401
(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 Year Ended
December 31,
2003 2002
----------------------------
INCOME STATEMENT DATA
Interest income (tax equivalent
adjusted)(1) $ 101,700 $ 101,585
Interest expense 38,327 42,332
---------- ----------
Net interest income 63,373 59,253
Provision for loan and lease
losses 4,183 3,553
Noninterest income 36,541 30,645
Noninterest expense 67,692 60,659
Income tax expense 8,137 7,523
Tax equivalent adjustment(1) 2,183 1,573
---------- ----------
Income from continuing
operations 17,719 16,590
Discontinued operations
Gain from operations of
discontinued operations - 3,751
Income tax expense - 1,474
---------- ----------
Gain on discontinued operations - 2,277
---------- ----------
Net income $ 17,719 $ 18,867
========== ==========
PER COMMON SHARE DATA
Earnings per common share
- basic $ 1.18 $ 1.28
Earnings per common share
- diluted 1.16 1.28
Adjusted earnings per
share from continuing
operations - basic(2) 1.18 1.13
Adjusted earnings per
share from continuing
operations - diluted(2) 1.16 1.12
Weighted average shares
outstanding - basic 14,984,472 14,687,324
Weighted average shares
outstanding - diluted 15,258,441 14,783,421
(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
December 31,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,984,090 $1,740,807
Loans and leases, net of
unearned 1,305,486 1,170,711
Deposits 1,471,140 1,311,427
Interest bearing liabilities 1,583,143 1,403,140
Earning assets 1,760,932 1,562,850
Stockholders' equity 137,563 120,792
EARNINGS PERFORMANCE RATIOS
Return on average assets 0.74% 1.39%
Return on average equity 10.74 20.06
Net interest margin 3.60 4.06
Net interest margin, excluding
fleet leasing company debt 3.66 4.13
Efficiency ratio(1) 72.64 65.99
Efficiency ratio, banks only(1) 63.97 55.52
NONINTEREST INCOME
Service charges and fees $ 1,999 $ 1,248
Trust fees 1,053 800
Brokerage commissions 264 206
Insurance commissions 146 230
Securities gains, net 138 61
Gain (loss) on trading account
securities 124 94
Rental income on operating leases 3,465
3,489
Gain on sale of loans 672 2,078
Valuation adjustment on
mortgage servicing rights (30) 360
Impairment loss on equity
securities (78) -
Other noninterest income 700 396
---------- ----------
Total noninterest income $ 8,453 $ 8,962
NONINTEREST EXPENSE
Salaries and employee benefits $ 8,699 $ 7,716
Occupancy 1,003 867
Furniture and equipment 1,203 878
Depreciation on equipment
under operating leases 2,882 2,801
Outside services 1,137 1,300
FDIC deposit insurance
assessment 57 52
Advertising 589 678
Core deposit intangibles
amortization 101 124
Other noninterest expenses 1,983 2,008
---------- ----------
Total noninterest expense $ 17,654 $ 16,424
========== ==========
(1) Noninterest expense divided by the sum of net interest income
and noninterest income less security gains.
For the Year Ended
December 31,
2003 2002
----------------------------
AVERAGE BALANCES
Assets $1,873,315 $1,671,614
Loans and leases, net of
unearned 1,249,676 1,124,032
Deposits 1,405,296 1,252,174
Interest bearing liabilities 1,501,464 1,331,499
Earning assets 1,670,882 1,498,164
Stockholders' equity 131,623 114,740
EARNINGS PERFORMANCE RATIOS
Return on average assets 0.95% 1.13%
Return on average equity 13.46 16.44
Net interest margin 3.79 3.96
Net interest margin, excluding
fleet leasing company debt 3.85 4.04
Efficiency ratio(1) 69.01 68.07
Efficiency ratio, banks only(1) 60.83 56.75
NONINTEREST INCOME
Service charges and fees $ 6,207 $ 5,977
Trust fees 3,814 3,407
Brokerage commissions 863 658
Insurance commissions 703 765
Securities gains, net 1,823 790
Gain (loss) on trading account
securities 453 (598)
Rental income on operating leases 13,807 14,602
Gain on sale of loans 6,339 4,656
Valuation adjustment on
mortgage servicing rights 338 (469)
Impairment loss on equity
securities (317) (267)
Other noninterest income 2,511 1,124
---------- ----------
Total noninterest income $ 36,541 $ 30,645
NONINTEREST EXPENSE
Salaries and employee benefits $ 33,113 $ 28,571
Occupancy 3,880 3,178
Furniture and equipment 4,115 3,273
Depreciation on equipment
under operating leases 11,353 11,555
Outside services 4,695 4,318
FDIC deposit insurance
assessment 218 209
Advertising 3,354 1,917
Core deposit intangibles
amortization 404 495
Other noninterest expenses 7,560 7,143
---------- ----------
Total noninterest expense $ 67,692 $ 60,659
========== ==========
(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
Year Year
Ended Ended
December 31, December 31,
2003 2002
----------------------------
BALANCE SHEET DATA
Total Assets $2,018,117 $1,785,979
Securities 451,753 390,815
Total loans and leases 1,348,227 1,175,236
Allowance for loan &
lease losses 18,490 16,091
Demand deposits 246,282 197,516
Total deposits 1,492,488 1,337,985
Long-term debt 173,958 126,299
Total stockholders' equity 140,674 124,041
PER COMMON SHARE DATA
Book value per common share $ 9.28 $ 8.40
FAS 115 effect on book value
per common share 0.30 0.29
LOAN AND LEASE DATA
Commercial and commercial
real estate $ 881,821 $ 743,520
Residential mortgage 152,580 145,931
Agricultural and agricultural
real estate 166,182 155,596
Consumer 136,806 120,853
Direct financing leases, net 13,621 12,308
Unearned discount and deferred
loan fees (2,783) (2,972)
---------- ----------
Total Loans and Leases $1,348,227 $1,175,236
========== ==========
ASSET QUALITY
Nonaccrual loans $ 5,092 $ 3,944
Restructured loans - -
Loans past due ninety days or
more as to interest or
principal payments 458 541
Other real estate owned 599 452
Other repossessed assets 285 279
---------- ----------
Total nonperforming assets $ 6,434 $ 5,216
========== ==========
ALLOWANCE FOR LOAN AND
LEASE LOSSES
Balance, beginning of period $ 16,091 $ 14,660
Provision for loan and lease
losses continuing
operations 4,183 3,553
Provision for loan and lease
losses discontinued
operations - (329)
Loans charged off (2,392) (3,203)
Recoveries 608 1,410
---------- ----------
Balance, end of period $ 18,490 $ 16,091
========== ==========
ASSET QUALITY RATIOS
Ratio of nonperforming loans
to total loans & leases 0.41% 0.38%
Ratio of nonperforming assets
to total assets 0.32 0.29
Ratio of net loan chargeoffs
to average loans and leases 0.14 0.16
Allowance for loan losses as
a percent of loans 1.37 1.37
Allowance for loan and leases
to nonperforming loans and
leases 333.11 358.77