-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N+sIsL1YVbaO00efOkHzEx/FGu+YvxKO7zBVhMuQFPAf7HwE6C/Edlf9PcfBsTfy 0dAFSHyYzGZA2OR2ND4vmw== 0000920112-03-000053.txt : 20031024 0000920112-03-000053.hdr.sgml : 20031024 20031024144756 ACCESSION NUMBER: 0000920112-03-000053 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030930 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20031024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEARTLAND FINANCIAL USA INC CENTRAL INDEX KEY: 0000920112 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 421405748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15393 FILM NUMBER: 03956285 BUSINESS ADDRESS: STREET 1: 1398 CENTRAL AVE CITY: DUBUQUE STATE: IA ZIP: 52001 BUSINESS PHONE: 5635892000 MAIL ADDRESS: STREET 1: 1398 CENTRAL AVE CITY: DUBUQUE STATE: IA ZIP: 52001 8-K 1 f8k903press.txt FORM 8-K: SEPTEMBER 30, 2003, EARNINGS PRESS RELEASE SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report October 24, 2003 (Date of earliest event reported) (October 23, 2003) HEARTLAND FINANCIAL, USA, INC. (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 0-24724 42-1405748 (Commission File Number) (I.R.S. Employer Identification Number) 1398 Central Avenue, Dubuque, Iowa 52001 (Address of principal executive offices) (Zip Code) (563) 589-2100 (Registrant's telephone number, including area code) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. None. (b) PRO FORMA FINANCIAL INFORMATION. None. (c) EXHIBITS. 99 Press Release dated October 23, 2003. Item 9. Regulation FD Disclosure On October 23, 2003, Heartland Financial USA, Inc. issued a press release announcing its earnings for the quarter ended September 30, 2003. The information contained in this Item 9 of the Current Report is being furnished pursuant to "Item 12. Results of Operations and Financial Condition" of Form 8-K in accordance with SEC Release Nos. 33-8216 and 34-47583. The press release is attached hereto as Exhibit 99. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HEARTLAND FINANCIAL USA, INC. Dated: October 24, 2003 By:/s/ John K. Schmidt --------------------------- John K. Schmidt Executive Vice President and Chief Financial Officer EX-99 3 fx990903press.txt EXHIBIT 99: EARNINGS PRESS RELEASE 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 -----END PRIVACY-ENHANCED MESSAGE-----