EX-99 2 ex991025048k.htm EXHIBIT 99 10/25/04 8K 3Q04 Exhibit 99 10/25/04 8k 3Q04
 
AT THE COMPANY:                 AT FINANCIAL RELATIONS BOARD:
John K. Schmidt                             Jeff Wilhoit                             Shelly Faaborg
Chief Operating Officer                  General Inquiries                  Analyst Inquiries
Chief Financial Officer                    (312) 640-6757                                    (310) 854-8316
(563) 589-1994                             jwilhoit @financialrelationsboard.com     sfaaborg @financialrelationsboard.com        
jschmidt @dubuquebank.com 

 
FOR IMMEDIATE RELEASE
MONDAY, OCTOBER 25, 2004

HEARTLAND FINANCIAL USA, INC. REPORTS THIRD QUARTER EARNINGS

Dubuque, Iowa, October 25, 2004 - Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported results for the third quarter of 2004.

Third Quarter 2004 Highlights
§   Average earning assets increased 31% over third-quarter 2003
§   Net interest margin improved by 19 basis points over third-quarter 2003
§   Loans up $138 million or 10% since year-end 2003, exclusive of the acquisition of Rocky Mountain Bank
§   Acquisition of Wealth Management Group of Colonial Trust Company completed on August 31, 2004
§   Loan production office opened in Rockland, MA
§   Redemption of 9.60% trust preferred securities completed on September 30, 2004


     
Third Quarter
      
First Nine Months
  
     
2004
      
2003
      
2004
      
2003
  
Net income (in millions)
  
$
4.0
    
$
5.3
    
$
13.7
    
$
14.0
  
Diluted earnings per share
    
.24
      
.34
      
.86
      
.92
  
                                 
Return on average assets
    
.64
%
    
1.10
%
    
.82
%
    
1.02
%
Return on average equity
    
9.65
      
15.52
      
11.93
      
14.43
  


"Steady growth in quality earning assets has characterized our performance throughout 2004, and our third quarter was no exception. We continued to execute toward our goal of doubling earnings and assets every five to seven years."-- Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA


Dubuque, Iowa, October 25, 2004 - Heartland Financial USA, Inc. (Nasdaq NMS: HTLF) today reported net income of $4.0 million, or $0.24 per diluted share, for the third quarter ended September 30, 2004. This represents a decrease of $1.2 million, or 24 percent, over net income of $5.3 million, or $0.34 per diluted share, during the third quarter of 2003. Return on average equity was 9.65 percent and return on average assets was 0.64 percent for the third quarter of 2004, compared to 15.52 percent and 1.10 percent, respectively, for the same quarter in 2003.

"Steady growth in quality earning assets has characterized our performance throughout 2004 and our third quarter was no exception," said Lynn B. Fuller, chairman, president and chief executive officer. "Despite the reduction in net income, we also maintained our focus on the bottom line during the third quarter, which was impacted by a number of items, including comparisons to unusually high gains on sales of loans and a significant reversal in the valuation allowance on our mortgage servicing rights during the 2003 third quarter. In addition, remaining unamortized issuance costs on our trust preferred securities redemption were expensed during the 2004 third quarter. Taken together, these items represented an approximate $4 million pre-tax, or $0.16 per diluted share after-tax, swing on our income statement. We are also pleased with the expansion of our net interest margin in a challenging rate environment.
 
"We continued to execute toward our goal of doubling earnings and assets every five to seven years. Nine months into the first year of our new plan period, we have now completed our acquisition of the Wealth Management Group of Colonial Trust Company; our recently completed Rocky Mountain Bank acquisition remains on schedule toward full integration; and we made good on our intent to pursue growth opportunities where we identify the talent and strategic fit with the opening of a loan production office in Rockland, Massachusetts."

The acquisition of the Wealth Management Group of Colonial Trust Company, a publicly held Arizona trust company based in Phoenix, was completed effective August 31, 2004. The total purchase price of Colonial's Wealth Management Group was $2.1 million, consisting of all cash. With the acquisition, total Heartland trust assets exceed $1.1 billion.

The acquisition of Rocky Mountain Bancorporation, the holding company for Rocky Mountain Bank, was completed effective June 1, 2004. The purchase price of $34.5 million consisted of $10.4 million in cash and the remainder in 1,387,227 shares of Heartland common stock. At September 30, 2004, Rocky Mountain Bank had total assets of $380.1 million, total loans of $277.2 million and total deposits of $293.6 million. Net income at Rocky Mountain Bank totaled $820,000 for the third quarter of 2004.

Heartland Financial Capital Trust I, a trust subsidiary of Heartland, redeemed all of its $25.0 million 9.60% Trust Preferred Securities on September 30, 2004. The Trust Preferred Securities were originally issued in 1999 and were listed on the American Stock Exchange under the symbol HFT. Remaining unamortized issuance costs associated with these securities of $959,000, or $.04 per diluted share, were expensed upon redemption. As a result of this redemption, net interest income would be expected to increase by approximately $1.5 million annually under the current rate environment.

Net interest margin, expressed as a percentage of average earning assets, was 3.81 percent during the third quarter of 2004 compared to 3.62 percent for the same period in 2003 and 3.71 percent for the second quarter of 2004. Net interest income totaled $20.5 million during the third quarter of 2004, an increase of $5.7 million or 38 percent from the $14.8 million recorded during the third quarter of 2003. Contributing to this increase was the 31 percent growth in average earning assets and a shift in balances invested in federal funds and other short-term investments to higher-yielding loans. Rocky Mountain Bank’s contribution to net interest income during the third quarter of 2004 was $3.6 million. Interest income in the third quarter of 2004 totaled $32.6 million compared to $24.2 million in the third quarter of 2003. Interest expense for the third quarter of 2004 was $12.1 million compared to $9.4 million in the third quarter of 2003. A portion of the growth in interest expense was a result of the issuance of $20.0 million of 8.25% cumulative trust preferred securities on October 20, 2003, and $25.0 million of variable-rate cumulative trust preferred securities on March 17, 2004. Rocky Mountain Bank had interest income of $5.1 million and interest expense of $1.4 million during the third quarter of 2004.

Noninterest income totaled $8.7 million during the third quarter of 2004, a decrease of 23 percent from the noninterest income of $11.2 million recorded during the third quarter of 2003. The three categories contributing to this decrease were securities gains (losses), gains on sale of loans and valuation adjustments on mortgage servicing rights. During the third quarter of 2003, securities gains totaled $527,000 compared to losses of $61,000 during the third quarter of 2004. Gains on sale of loans decreased by $1.6 million or 67 percent during the quarters under comparison, as refinancing activity on residential mortgage loans was at historically high levels during 2003. Valuation adjustments on mortgage servicing rights experienced a $1.4 million reversal of the valuation allowance during the third quarter of 2003 compared to a $73,000 increase in the valuation allowance during the same quarter of 2004. The decrease in these three noninterest income categories was partially offset by a $1.2 million or 85 percent increase in service charges and fees, as the amortization on mortgage rights decreased $581,000 or 72 percent and service charges on deposit accounts increased $393,000 or 33 percent. Rocky Mountain Bank was a major contributor to the additional service charges on deposit accounts.

For the third quarter of 2004, noninterest expense increased 30 percent to $22.7 million, reflecting increased costs related to the August 2003 opening of Arizona Bank & Trust and its opening of a second branch in May 2004. Also contributing to the increased costs was the recently completed acquisition of Rocky Mountain Bank and the recognition of the remaining unamortized issuance costs on the trust preferred securities redeemed. Total full-time equivalent employees increased from 667 at quarter-end 2003 to 838 at quarter-end 2004. Of that increase, 127 are full-time equivalent employees at Rocky Mountain Bank.

For the first nine months of 2004, Heartland’s effective tax rate was 29.10 percent compared to 32.22 percent during the first nine months of 2003. The reduced effective rate was the result of federal historic rehabilitation tax credits of $550,000 and state historic rehabilitation tax credits of $325,000. Additionally, tax-exempt interest income went from 15.13 percent of pre-tax income during the first nine months of 2003 to 19.03 percent during the same period in 2004.

Total assets exceeded $2.57 billion at September 30, 2004, up $549.0 million since year-end 2003. Total loans and leases were $1.74 billion at September 30, 2004, an increase of $415.1 million since year-end 2003. Exclusive of Rocky Mountain Bank, Dubuque Bank and Trust Company, Wisconsin Community Bank and Arizona Bank & Trust were major contributors to the $137.9 million or 10 percent growth in loans, primarily in the commercial and commercial real estate category. Wisconsin Community Bank continues to record strong gains in structuring financing under the USDA and SBA loan guaranty programs. Total deposits at September 30, 2004, were $1.98 billion, an increase of $490.0 million since year-end 2003. Exclusive of Rocky Mountain Bank, the $196.4 million or 13 percent growth in deposits came primarily from New Mexico Bank & Trust and Arizona Bank & Trust.

The allowance for loan and lease losses at September 30, 2004, was 1.41 percent of loans and 229 percent of nonperforming loans, compared to 1.40 percent of loans and 333 percent of nonperforming loans at December 31, 2003. Nonperforming loans increased to $10.7 million or 0.62 percent of total loans and leases compared to $5.6 million or 0.42 percent of total loans and leases at December 31, 2003. Exclusive of the $3.3 million in total nonperforming loans at Rocky Mountain Bank, total nonperforming loans increased $1.8 million, due primarily to one large credit in the Dubuque market.

"Our acquired and de novo bank assets will continue to benefit from Heartland’s commitment to quality and pricing discipline," continued Fuller. "As we position ourselves for 2005, our accomplishments in the third quarter underscore our dedication to targeted growth."

About Heartland Financial USA:
 
Heartland is a $2.6 billion financial services company with eight banks in Iowa, Illinois, Wisconsin, New Mexico, Arizona and Montana:

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 eight offices in Cottage Grove, Fitchburg, Green Bay, Middleton, Monroe and Sheboygan, Wisconsin; Minneapolis, Minnesota; and Rockland, Massachusetts
New Mexico Bank & Trust, with twelve offices in Albuquerque, Clovis, Melrose, Portales and Santa Fe, New Mexico
Arizona Bank & Trust, with two offices in Mesa and Chandler, Arizona
Rocky Mountain Bank, with eight offices in Bigfork, Billings, Bozeman, Broadus, Plains, Plentywood, Stevensville and Whitehall, Montana

Other subsidiaries include:

ULTEA, Inc., a fleet management company with offices in Madison, Wisconsin and Chicago, Illinois
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

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 Quarters Ended
  
For the Nine Months Ended
   
9/30/2004
9/30/2003
  
9/30/2004
9/30/2003
Interest Income
            
Interest and fees on loans and leases
  
$28,041
$21,527
  
$73,698
$64,269
Interest on securities and other:
            
Taxable
  
3,248
1,497
  
9,554
6,728
Nontaxable
  
1,183
998
  
3,273
2,909
Interest on federal funds sold
  
33
149
  
47
279
Interest on interest bearing deposits in other
financial institutions
  
66
38
  
156
135
Total Interest Income
  
32,571
24,209
  
86,728
74,320
Interest Expense
            
Interest on deposits
  
8,413
6,866
  
21,969
20,971
Interest on short-term borrowings
  
693
581
  
1,989
1,759
Interest on other borrowings
  
2,998
1,953
  
8,173
5,815
Total Interest Expense
  
12,104
9,400
  
32,131
28,545
Net Interest Income
  
20,467
14,809
  
54,597
45,775
Provision for loan and lease losses
  
1,053
950
  
3,400
3,176
Net Interest Income After Provision for Loan
and Lease Losses
  
19,414
13,859
  
51,197
42,599
Noninterest Income
            
Service charges and fees
  
2,688
1,452
  
7,283
4,208
Trust fees
  
1,196
951
  
3,337
2,761
Brokerage commissions
  
213
236
  
841
599
Insurance commissions
  
174
141
  
556
557
Securities gains (losses), net
  
(61)
527
  
1,806
1,685
Gain (loss) on trading account securities
  
(32)
80
  
43
329
Impairment loss on equity securities
  
-
(69)
  
-
(239)
Rental income on operating leases
  
3,425
3,447
  
10,348
10,342
Gains on sale of loans
  
814
2,446
  
2,186
5,667
Valuation adjustment on mortgage servicing rights
  
(73)
1,360
  
40
368
Other noninterest income
  
337
631
  
1,550
1,811
Total Noninterest Income
  
8,681
11,202
  
27,990
28,088
Noninterest Expense
            
Salaries and employee benefits
  
10,597
8,579
  
28,688
24,414
Occupancy
  
1,337
1,021
  
3,615
2,877
Furniture and equipment
  
1,423
1,064
  
3,875
2,912
Depreciation on equipment under operating leases
  
2,798
2,859
  
8,528
8,471
Outside services
  
2,985
1,286
  
5,957
3,558
FDIC deposit insurance assessment
  
65
54
  
177
161
Advertising
  
829
679
  
2,005
1,765
Core deposit intangibles amortization
  
257
101
  
489
303
Other noninterest expenses
  
2,402
1,763
  
6,587
5,577
Total Noninterest Expense
  
22,693
17,406
  
59,921
50,038
Income Before Income Taxes
  
5,402
7,655
  
19,266
20,649
Income taxes
  
1,384
2,391
  
5,607
6,654
Net Income
  
$4,018
5,264
  
13,659
13,995
Earnings per common share-basic
  
$.24
$.35
  
$.87
$.94
Earnings per common share-diluted
  
$.24
$.34
  
$.86
$.92
Weighted average shares outstanding-basic
  
16,420,197
15,212,826
  
15,707,041
14,940,012
Weighted average shares outstanding-diluted
  
16,663,051
15,479,334
  
15,949,761
15,216,908


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
   
For the Quarters Ended
   
9/30/2004
6/30/2004
3/31/2004
12/31/2003
9/30/2003
Interest Income
            
Interest and fees on loans and leases
  
$28,041
$23,897
$21,760
$21,667
$21,527
Interest on securities and other:
            
Taxable
  
3,248
2,698
3,608
2,372
1,497
Nontaxable
  
1,183
1,064
1,026
1,043
998
Interest on federal funds sold
  
33
9
5
76
149
Interest on interest bearing deposits in other financial institutions
  
66
46
44
39
38
Total Interest Income
  
32,571
27,714
26,443
25,197
24,209
Interest Expense
            
Interest on deposits
  
8,413
6,987
6,569
6,792
6,866
Interest on short-term borrowings
  
693
699
597
591
581
Interest on other borrowings
  
2,998
2,741
2,434
2,399
1,983
Total Interest Expense
  
12,104
10,427
9,600
9,782
9,400
Net Interest Income
  
20,467
17,287
16,843
15,415
14,809
Provision for loan and lease losses
  
1,053
991
1,356
1,007
950
Net Interest Income After Provision for Loan and Lease Losses
  
19,414
16,296
15,487
14,408
13,859
Noninterest Income
            
Service charges and fees
  
2,688
2,468
2,127
1,999
1,452
Trust fees
  
1,196
1,121
1,020
1,053
951
Brokerage commissions
  
213
350
278
264
236
Insurance commissions
  
174
158
224
146
141
Securities gains (losses), net
  
(61)
327
1,540
138
527
Gain (loss) on trading account securities
  
(32)
(10)
85
124
80
Impairment loss on equity securities
  
-
-
-
(78)
(69)
Rental income on operating leases
  
3,425
3,461
3,462
3,465
3,447
Gains on sale of loans
  
814
845
527
672
2,446
Valuation adjustment on mortgage servicing rights
  
(73)
186
(73)
(30)
1,360
Other noninterest income
  
337
682
531
700
631
Total Noninterest Income
  
8,681
9,588
9,721
8,453
11,202
Noninterest Expense
            
Salaries and employee benefits
  
10,597
9,270
8,821
8,699
8,579
Occupancy
  
1,337
1,215
1,063
1,003
1,021
Furniture and equipment
  
1,423
1,325
1,127
1,203
1,064
Depreciation on equipment under operating leases
  
2,798
2,869
2,861
2,882
2,859
Outside services
  
2,985
1,471
1,501
1,137
1,286
FDIC deposit insurance assessment
  
65
61
51
57
54
Advertising
  
829
637
539
589
679
Core deposit intangibles amortization
  
257
144
88
101
101
Other noninterest expenses
  
2,402
2,220
1,965
1,983
1,763
Total Noninterest Expense
  
22,693
19,212
18,016
17,654
17,406
Income Before Income Taxes
  
5,402
6,672
7,192
5,207
7,655
Income taxes
  
1,384
2,097
2,126
1,483
2,391
Net Income
  
$4,018
4,575
5,066
3,724
5,264
Earnings per common share-basic
  
$.24
$.29
$.33
$.25
$.35
Earnings per common share-diluted
  
$.24
$.29
$.33
$.24
$.34
Weighted average shares outstanding-basic
  
16,420,197
15,597,584
15,167,212
15,124,871
15,212,826
Weighted average shares outstanding-diluted
  
16,663,051
15,836,341
15,425,803
15,386,486
15,479,334


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Interim periods unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
   
As of
   
9/30/2004
12/31/2003
  
9/30/2003
12/31/2002
Assets
            
Cash and cash equivalents
  
$95,053
$71,869
  
$149,016
$100,992
Time deposits in other financial institutions
  
1,166
1,132
  
1,216
1,677
Securities
  
503,775
451,753
  
382,613
390,815
Loans held for sale
  
33,731
25,678
  
19,477
23,167
Loans and leases:
            
Loans and leases
  
1,737,614
1,322,549
  
1,249,096
1,152,069
Allowance for loan and lease losses
  
(24,520)
(18,490)
  
(18,041)
(16,091)
Loans and leases, net
  
1,713,094
1,304,059
  
1,231,055
1,135,978
Assets under operating lease
  
34,410
31,636
  
31,000
30,367
Premises, furniture and equipment, net
  
77,619
49,842
  
47,230
35,591
Goodwill, net
  
37,271
20,167
  
20,167
16,050
Core deposit premium and mortgage servicing rights
 
9,413
5,069
  
5,133
4,879
Other assets
 
61,838
57,161
  
60,999
46,463
Total Assets
  
$2,567,370
$2,018,366
  
$1,947,906
$1,785,979
             
Liabilities and Stockholders’ Equity
            
Liabilities
            
Deposits:
            
Demand
  
$300,811
$246,282
  
$218,822
$197,516
Savings
  
761,926
569,286
  
559,582
511,979
Time
  
919,711
676,920
  
678,761
628,490
Total Deposits
  
1,982,448
1,492,488
  
1,457,165
1,337,985
Short-term borrowings
  
180,395
176,835
  
167,567
161,379
Other Borrowings
  
194,650
173,958
  
153,194
126,299
Accrued expenses and other liabilities
  
39,324
34,162
  
32,858
36,275
Total Liabilities
  
2,396,817
1,877,443
  
1,810,784
1,661,938
Stockholders’ Equity
  
170,553
140,923
  
137,122
124,041
Total Liabilities and Stockholders’ Equity
  
$2,567,370
$2,018,366
  
$1,947,906
$1,785,979
             
Common Share Data
            
Book value per common share
  
$10.44
$9.29
  
$9.07
$8.40
FAS 115 effect on book value per common share
  
0.27
0.30
  
0.26
0.29
Common shares outstanding, net of treasury
  
16,336,073
15,163,503
  
15,127,724
14,769,621


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
             
   
For the Quarters Ended
  
For the Nine Months Ended
   
9/30/2004
9/30/2003
  
9/30/2004
9/30/2003
             
Average Balances
            
Assets
  
$2,504,249
$1,899,523
  
$2,236,414
$1,836,389
Loans and leases, net of unearned
  
1,743,516
1,253,515
  
1,536,557
1,231,072
Deposits
  
1,909,129
1,433,563
  
1,666,179
1,383,348
Earning assets
  
2,214,971
1,684,543
  
1,980,929
1,640,865
Interest bearing liabilities
  
1,998,116
1,515,626
  
1,783,924
1,474,237
Stockholders' equity
  
165,618
134,552
  
152,970
129,643
             
Earnings Performance Ratios
            
Return on average assets
  
0.64%
1.10%
  
0.82%
1.02%
Return on average equity
  
9.65
15.52
  
11.93
14.43
Net interest margin(1)
  
3.81
3.62
  
3.81
3.87
Net interest margin, excluding fleet leasing company
debt(1)
  
3.85
3.68
  
3.86
3.93
Efficiency ratio(2)
  
75.81
66.79
  
72.41
67.75
Efficiency ratio, banks only(2)
  
64.47
60.82
  
63.12
59.71
             


 
 
 
   
For the Quarters Ended
   
9/30/2004
6/30/2004
3/31/2004
12/31/2003
9/30/2003
             
Average Balances
            
Assets
  
$2,504,249
$2,200,577
$2,004,416
$1,984,090
$1,899,523
Loans and leases, net of unearned
  
1,743,516
1,511,657
1,354,497
1,305,486
1,253,515
Deposits
  
1,909,129
1,614,932
1,474,477
1,471,140
1,433,563
Earning assets
  
2,214,971
1,945,763
1,782,054
1,760,932
1,684,543
Interest bearing liabilities
  
1,998,116
1,752,683
1,600,973
1,583,143
1,515,626
Stockholders’ equity
  
165,618
150,396
142,897
137,563
134,552
Earnings Performance Ratios
            
Return on average assets
  
0.64%
0.84%
1.02%
0.74%
1.10%
Return on average equity
  
9.65
12.23
14.26
10.74
15.52
Net interest margin(1)
  
3.81
3.71
3.94
3.61
3.62
Net interest margin, excluding fleet leasing
company debt(1)
  
3.85
3.75
3.99
3.66
3.68
Efficiency ratio(2)
  
75.81
70.66
70.29
72.56
66.79
Efficiency ratio, banks only(2)
  
64.47
62.76
61.86
63.90
60.82
 
(1)    Tax equivalent basis is calculated using an effective tax rate of 35%
(2)    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 For
 
As of and For
 
the Nine
Months Ended
As of and For The Year
the Nine
Months  Ended
As of and For The Year
 
9/30/2004
12/31/2003
9/30/2003
12/31/2002
Loan and Lease Data
        
Commercial and commercial real estate
$1,118,421
$860,552
$800,437
$733,324
Residential mortgage
221,697
148,376
140,371
133,435
Agricultural and agricultural real estate
224,226
166,182
168,808
155,383
Consumer
163,107
136,601
132,443
120,591
Direct financing leases, net
13,030
13,621
9,595
12,308
Unearned discount and deferred loan fees
(2,867)
(2,783)
(2,558)
(2,972)
Total loans and leases
$1,737,614
$1,322,549
$1,249,096
$1,152,069
         
Asset Quality
        
Nonaccrual loans
$10,205
$5,092
$4,612
$3,944
Loans past due ninety days or more as to interest or principal payments
491
458
862
541
Other real estate owned
361
599
1,082
452
Other repossessed assets
321
285
346
279
Total nonperforming assets
$ 11,378
$ 6,434
$6,902
$5,216
 
 
 
 
 
Allowance for Loan and Lease Losses
        
Balance, beginning of period
$18,490
$16,091
$16,091
$14,660
Provision for loan and lease losses continuing operations
3,400
4,183
3,176
3,553
Provision for loan and lease losses discontinued operations
-
-
-
(329)
Loans charged off
(2,472)
(2,392)
(1,714)
(3,203)
Recoveries
853
608
488
1,410
Addition related to acquired bank
4,249
-
-
-
Balance, end of period
$24,520
$18,490
$18,041
$16,091
 
 
 
 
 
Asset Quality Ratios
        
Ratio of nonperforming loans to total loans and leases
0.62%
0.42%
0.44%
0.39%
Ratio of nonperforming assets to total assets
0.44
0.32
0.35
0.29
Ratio of net loan chargeoffs to average loans and leases
0.11
0.14
0.10
0.16
Allowance for loan losses as a percent of loans and     leases
1.41
1.40
1.44
1.40
Allowance for loan losses as a percent of nonperforming
loans and leases
229.24
333.11
329.60
358.77