8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 of 15(d) of

The Securities Exchange Act of 1934

Date of Report:  July 27, 2009

(Date of earliest event reported):  July 27, 2009

Heartland Financial USA, Inc.

(Exact name of Registrant as specified in its charter)

Delaware

(State or 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)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition

On July 27, 2009, Heartland Financial USA, Inc. issued a press release announcing its earnings for the quarter ended June 30, 2009. A copy of the press release is attached as Exhibit 99.1.

Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits

(a)   Financial Statements of Business Acquired.

None.

(b)   Pro Forma Financial Information.

None.

(c)   Exhibits.

99.1   Press Release dated July 27, 2009.

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.

Date:  July 27. 2009

HEARTLAND FINANCIAL USA, INC.
By:	/s/ John K. Schmidt
	Executive Vice President, COO & CFO

EX-99.1

CONTACT:                                                                             FOR IMMEDIATE RELEASE

John K. Schmidt                                                                           MONDAY, JULY 27, 2009

Chief Operating Officer

Chief Financial Officer

(563) 589-1994

jschmidt@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER 2009 EARNINGS

Second Quarter 2009 Highlights

§   Net income for the quarter was $4.7 million

§   Net interest income increased $3.5 million or 12% over second quarter 2008

§   Net interest margin consistent with second quarter 2008 at 3.92%

§   Provision for loan losses was $10.0 million compared to $5.4 million in second quarter 2008

§   Deposit growth was $187.3 million or 7% since year-end 2008

§   Total loans decreased $30.0 million or 1% since year-end 2008

§   Galena State Bank acquired The Elizabeth State Bank on July 2, 2009, in a whole bank with loss sharing transaction facilitated by the FDIC

		Quarter Ended June 30,						Six Months Ended June 30,
		2009			2008			2009			2008
Net income (in millions)	$	4.7		$	4.6		$	10.8		$	10.8
Net income available to common stockholders (in millions)		3.4			4.7			8.2			11.0
Diluted earnings per common share		0.21			0.29			0.50			0.67
Return on average assets		0.36	%		0.56	%		0.45	%		0.67	%
Return on average common equity		5.74			8.08			6.99			9.40
Net interest margin		3.92			3.92			3.93			3.90

“Heartland’s second quarter results support several positive trends in 2009. Net interest margin remains steady at 3.92 percent; the composition of the balance sheet has improved and nonperforming asset growth has slowed. Strong core earnings were enhanced by residential lending revenue and securities gains. Given these positive factors, we feel very good about the earnings power of our company.”

 Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.

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Dubuque, Iowa, July 27, 2009—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income of $4.7 million for the quarter ended June 30, 2009, compared to net income of $4.6 million earned during the second quarter of 2008.  Net income available to common stockholders was $3.4 million, or $0.21 per diluted common share, for the quarter ended June 30, 2009, compared to $4.7 million, or $0.29 per diluted common share, earned during the second quarter of 2008. Return on average common equity was 5.74 percent and return on average assets was 0.36 percent for the second quarter of 2009, compared to 8.08 percent and 0.56 percent, respectively, for the same quarter in 2008.

Net income recorded for the first six months of 2009 was $10.8 million, compared to $10.8 million recorded during the first six months of 2008. Net income available to common stockholders was $8.2 million, or $0.50 per diluted common share, for the six months ended June 30, 2009, compared to $11.0 million, or $0.67 per diluted common share, earned during the first six months of 2008. Return on average common equity was 6.99 percent and return on average assets was 0.45 percent for the first six months of 2009, compared to 9.40 percent and 0.67 percent, respectively, for the same period in 2008.

Lynn B. Fuller, Heartland’s chairman, president and chief executive officer said, “Heartland’s second quarter results support several positive trends in 2009. Net interest margin remains steady at 3.92 percent; the composition of the balance sheet has improved and nonperforming asset growth has slowed. Strong core earnings were enhanced by residential lending revenue and securities gains. Given these positive factors, we feel very good about the earnings power of our company.”

Earnings for the quarter and six months ended June 30, 2009, were positively affected by increased net interest income, loan servicing income, securities gains and gains on sale of loans. The growth in these areas was partially offset by an increase in the loan loss provision, which was $10.0 million during the second quarter of 2009 compared to $5.4 million during the second quarter of 2008. For the six-month comparative period, the loan loss provision was $16.7 million during 2009 compared to $7.1 million during 2008. Also negatively affecting earnings during the second quarter and first six months of 2009 were increased FDIC assessments and expenses associated with other real estate owned.

Net Interest Margin Maintained; Net Interest Income Grows

Net interest margin, expressed as a percentage of average earning assets, was 3.92 percent during the second quarter of 2009 and the second quarter of 2008. For the six-month periods ended June 30, net interest margin, expressed as a percentage of average earning assets, was 3.93 percent during 2009 and 3.90 percent during 2008.

Fuller commented, “Under the circumstances, we are pleased that Heartland has consistently maintained its net interest margin near the 4.00 percent level over the past eight quarters. Holding margin has been and continues to be one of our main objectives during these challenging times. We remain committed to disciplined loan pricing and continue to focus on controlling our deposit costs.”

Net interest income on a tax-equivalent basis totaled $33.4 million during the second quarter of 2009, an increase of $3.6 million or 12 percent from the $29.8 million recorded during the second quarter of 2008. For the six-month period during 2009, net interest income on a tax-equivalent basis was $65.6 million, an increase of $7.1 million or 12 percent from the $58.5 million recorded during the first six months of 2008. These increases occurred as Heartland’s interest bearing liabilities repriced downward more quickly than its interest bearing assets. Also contributing to these increases was the $362.7 million or 12 percent growth in average earning assets during the second quarter of 2009 compared to the same quarter in 2008 and the $349.0 million or 12 percent growth in average earning assets during the first six months of 2009 compared to the same six months of 2008.

On a tax-equivalent basis, interest income in the second quarter of 2009 totaled $51.5 million compared to $51.1 million in the second quarter of 2008, an increase of $429,000 or 1 percent. For the first six months of 2009, interest income on a tax-equivalent basis decreased $978,000 or 1 percent over the same period in 2008. Nearly half of Heartland’s commercial and agricultural loan portfolios consist of floating rate loans that reprice immediately upon a change in the national prime interest rate, thus changes in the national prime rate impact interest income more quickly than if there were more fixed rate loans. The national prime interest rate was 3.25 percent for the first six months of 2009. During the first six months of 2008, the national prime interest rate decreased from 7.25 percent on January 1, 2008, to 5.00 percent at June 30, 2008. A large portion of Heartland’s floating rate loans that reprice immediately with a change in national prime have interest rate floors that are currently in effect. Additionally, Heartland had two $50.0 million derivative transactions on the loan portfolio that were at their floor interest rates. One of these derivative transactions matured on April 4, 2009.

Interest expense for the second quarter of 2009 was $18.1 million compared to $21.3 million in the second quarter of 2008, a decrease of $3.2 million or 15 percent. On a six-month comparative basis, interest expense decreased $8.1 million or 18 percent. Interest rates paid on Heartland’s deposits and borrowings were significantly lower during the first six months of 2009 compared to the first six months of 2008. Approximately 46 percent of Heartland’s certificate of deposit accounts will mature within the next six months at a weighted average rate of 2.55 percent.

Noninterest Income Increases; Noninterest Expense Grows

Noninterest income was $14.7 million during the second quarter of 2009 compared to $8.3 million during the second quarter of 2008, an increase of $6.4 million or 76 percent. For the first six months of 2009, noninterest income was $27.4 million compared to $16.8 million during the first six months of 2008, an increase of $10.6 million or 63 percent. The categories experiencing the largest increases for both comparative periods were loan servicing income, securities gains and gains on sale of loans. Loan servicing income increased $2.1 million or 177 percent for the quarter and $3.6 million or 145 percent for the six-month periods under comparison due to an increase in the number of residential real estate loans that Heartland services. The portfolio of mortgage loans serviced for others by Heartland totaled $1.02 billion at June 30, 2009, compared to $681.5 million at June 30, 2008. Securities gains totaled $2.2 million during the second quarter of 2009 compared to $648,000 during the second quarter of 2008. For the six-month comparative period, securities gains totaled $5.2 million during 2009 compared to $1.0 million during 2008. Securities designed to outperform in a declining rate environment were sold during the first half of 2009 and replaced with securities that are expected to outperform as rates rise. Gains on sale of loans totaled $2.2 million during the second quarter of 2009 compared to $480,000 during the second quarter of 2008. For the first six months of 2009, gains on sale of loans totaled $4.0 million compared to $984,000 for the first six months of 2008. As long-term mortgage loan rates fell below 5.00 percent during the first half of 2009, refinancing activity significantly increased on 15- and 30-year, fixed-rate mortgage loans. Heartland normally elects to sell these types of loans into the secondary market and retains the servicing on these loans.

Fuller stated, “Noninterest income continues to help offset higher provision expense. Low interest rates are fueling strong residential loan refinance activity and boosting mortgage banking revenues.  At the same time, we’ve taken advantage of select opportunities to sell securities with gains while improving yields in our portfolio.”

For the second quarter of 2009, noninterest expense totaled $30.5 million, an increase of $4.9 million or 19 percent from the same period in 2008. This increase was primarily attributable to higher FDIC assessments, which totaled $2.8 million during the second quarter of 2009 compared to $266,000 during the second quarter of 2008, and net losses on repossessed assets, which totaled $2.5 million during the second quarter of 2009 compared to $42,000 during the second quarter of 2008. Included in the FDIC assessments recorded during the second quarter of 2009 was $1.7 million for the emergency special assessment. For the six-month period ended June 30, 2009, noninterest expense totaled $58.8 million, an increase of $7.4 million or 14 percent when compared to the same six-month period in 2008. Salaries and employee benefits, increased $1.9 million or 7 percent during the six-month comparative period, primarily due to the opening of Minnesota Bank & Trust in April 2008 and additional staffing at Summit Bank & Trust and New Mexico Bank & Trust to grow its customer base and at Heartland’s operations center to provide support services to the bank subsidiaries. Total full-time equivalent employees were 1,020 at June 30, 2009, compared to 1,002 at June 30, 2008. The other noninterest expense categories to experience a significant increase during the six-month periods under comparison were FDIC assessments, which were $3.9 million during the first six months of 2009 compared to $571,000 during the first six months of 2008, and net losses on repossessed assets, which were $3.2 million during the first six months of 2009 compared to $190,000 during the first six months of 2008.

Heartland’s effective tax rate was 30.05 percent for the first half of 2009 compared to 27.28 percent for the first half of 2008. Heartland’s effective tax rate during the first six months of 2009 did not include any federal rehabilitation tax credits, whereas Heartland’s effective tax rate during the first six months of 2008 included $247,000 in federal rehabilitation tax credits associated with Dubuque Bank and Trust Company’s ownership interests in limited liability companies that own certified historic structures. Heartland’s effective tax rate is also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 25.21 percent during the first half of 2009 compared to 23.36 percent during the first half of 2008. The tax-equivalent adjustment for this tax-exempt interest income was $2.1 million during the first six months of 2009 compared to $1.9 million during the same six months in 2008.

Loan Growth Improves; Growth in Deposits Continues

At June 30, 2009, total assets had increased $136.5 million or 8 percent annualized since year-end 2008. Total loans and leases were $2.38 billion at June 30, 2009, compared to $2.41 billion at year-end 2008, a decrease of $30.0 million or 2 percent annualized. The only loan category to experience growth during the first six months of 2009 was agricultural and agricultural real estate loans. Nearly all of this growth occurred at Dubuque Bank and Trust Company. Loan demand improved during the second quarter of 2009. Growth in total loans and leases was $18.6 million during the second quarter of 2009 compared to a decrease of $48.6 million during the first quarter of 2009. This growth was driven primarily by activity in commercial and commercial real estate loans, which increased by $28.1 million, nearly all of which occurred at Dubuque Bank and Trust Company.

Total deposits grew to $2.83 billion at June 30, 2009, an increase of $187.3 million or 14 percent annualized since year-end 2008. With the exception of First Community Bank, Wisconsin Community Bank and Rocky Mountain Bank, all Heartland banks experienced a significant increase in deposits. This growth was weighted more heavily in Heartland’s Western markets, which were responsible for nearly 56 percent of the growth. Demand deposits increased $53.9 million or 28 percent annualized since year-end 2008. Savings deposit balances experienced an increase of $131.5 million or 23 percent annualized since year-end 2008 and time deposits, exclusive of brokered deposits, experienced an increase of $8.0 million or 1 percent annualized since year-end 2008. At June 30, 2009, brokered time deposits totaled $45.3 million or 2 percent of total deposits compared to $51.5 million or 2 percent of total deposits at year-end 2008. Deposit growth continued during the second quarter of 2009 at $38.8 million compared to $148.5 million during the first quarter of 2009.

“As commercial and retail customers continue to build cash reserves, Heartland is seeing strong organic deposit growth. Compared to one year ago, deposits increased 17 percent, with 14 percent growth in demand deposits and a 41 percent increase in savings and money market deposits. Our strategy remains to emphasize non-maturity core products over higher-cost certificates of deposit,” commented Fuller.

Nonperforming Assets Increase

The allowance for loan and lease losses at June 30, 2009, was 1.57 percent of loans and leases and 52.32 percent of nonperforming loans, compared to 1.48 percent of loans and leases and 45.73 percent of nonperforming loans at December 31, 2008. The first six months of 2009 provision for loan losses was $16.7 million compared to $7.1 million for the first six months of 2008. Additions to the allowance for loan and lease losses during the first six months of 2009 were driven by a variety of factors including deterioration of economic conditions, downgrades in internal risk ratings, reductions in appraised values and higher levels of charge-offs, primarily in Heartland’s Western markets of Arizona, Montana and Colorado.

Nonperforming loans were $71.1 million or 3.00 percent of total loans and leases at June 30, 2009, compared to $78.0 million or 3.24 percent of total loans and leases at December 31, 2008, and $67.1 million or 2.85% of total loans and leases at March 31, 2009. Approximately 65 percent, or $46.1 million, of Heartland’s nonperforming loans are to 15 borrowers, with $14.3 million originated by Rocky Mountain Bank, $9.5 million originated by Arizona Bank & Trust, $8.6 million originated by Wisconsin Community Bank, $6.8 million originated by Summit Bank & Trust, $3.3 million originated by Riverside Community Bank, $2.0 million originated by Dubuque Bank and Trust Company and $1.6 million originated by New Mexico Bank & Trust. The portion of Heartland’s nonperforming loans covered by government guarantees was $3.3 million at June 30, 2009.

Other real estate owned was $29.3 million at June 30, 2009, compared to $11.8 million at December 31, 2008, an increase of $17.6 million. All of this increase occurred during the first quarter of 2009 with $12.0 million attributable to a residential lot development loan originated at Rocky Mountain Bank. Liquidation strategies have been identified for all the assets held in other real estate owned. Management plans to market these properties under an orderly liquidation process instead of under a quick liquidation process which would most likely result in discounts greater than the projected carrying costs.

Net charge-offs during the first six months of 2009 were $15.1 million compared to $5.2 million during the first six months of 2008. A large portion of the net charge-offs was related to commercial real estate development loans and residential lot loans, primarily in the Phoenix, Arizona market. Previously, Heartland generally recognized the charge-off on a loan when the loan was resolved, sold or transferred to other real estate owned. However, in the third quarter of 2008, Heartland began to recognize charge-offs on loans it considered impaired by writing down the loan balance to an estimated net realizable value based on the anticipated disposition value.

“The rate of increase in nonperforming assets continued to slow in the second quarter, increasing only slightly. We view this as a favorable trend and continue in our efforts to achieve reductions in nonperforming loans and other real estate owned. Although we do not desire to generate or retain nonperforming assets, our solid margin enables us to carry some nonperforming real estate on our balance sheet while we seek opportunities to maximize the proceeds from the sales,” Fuller said.

Acquired The Elizabeth State Bank

On July 2, 2009, Heartland acquired all deposits of The Elizabeth State Bank in Elizabeth, Illinois through its subsidiary Galena State Bank based in Galena, Illinois in a whole bank loss sharing transaction facilitated by the FDIC. Bank branches previously owned and operated by The Elizabeth State Bank reopened on Monday, July 6, 2009, as Galena State Bank branches. As of April 30, 2009, The Elizabeth State Bank had loans of approximately $43 million and deposits of approximately $48 million. Galena State Bank paid a premium of 1.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, Galena State Bank agreed to purchase approximately $52.3 million of assets. The FDIC will retain the remaining assets for later disposition.

Commenting on the acquisition, Fuller said, “The Elizabeth State Bank is precisely the type of growth opportunity we have been seeking. The acquisition strengthens our Galena State Bank subsidiary through increased market share and adds more convenience to current customers. The FDIC deserves credit for arranging a smooth transition.”

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial   800-762-8908 at least five minutes before start time, or log onto www.htlf.com. If you are unable to participate on the call, a replay will be available until October 27, 2009, by dialing 800-406-7325, pass code 4110374, or by logging onto www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a $3.8 billion diversified financial services company providing banking, mortgage, wealth management, insurance and consumer finance services to individuals and businesses. Heartland currently has 63 banking locations in 42 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Minnesota. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement

This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland’s financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland’s management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (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, (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. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.

-FINANCIAL TABLES FOLLOW-

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HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended June 30,						For the Six Months Ended June 30,
		2009			2008			2009			2008
Interest Income
Interest and fees on loans and leases	$	38,423		$	40,555		$	77,906		$	83,454
Interest on securities and other:
Taxable		10,039			7,885			18,460			14,500
Nontaxable		2,025			1,679			3,908			3,326
Interest on federal funds sold		-			51			1			182
Interest on deposits in other financial institutions		-			2			1			7
Total Interest Income		50,487			50,172			100,276			101,469
Interest Expense
Interest on deposits		13,576			15,657			27,698			32,753
Interest on short-term borrowings		173			1,087			385			3,273
Interest on other borrowings		4,360			4,593			8,738			8,870
Total Interest Expense		18,109			21,337			36,821			44,896
Net Interest Income		32,378			28,835			63,455			56,573
Provision for loan and lease losses		10,041			5,369			16,706			7,130
Net Interest Income After Provision for Loan and Lease Losses		22,337			23,466			46,749			49,443
Noninterest Income
Service charges and fees		3,109			2,880			5,996			5,495
Loan servicing income		3,311			1,195			6,097			2,491
Trust fees		1,971			2,068			3,668			4,089
Brokerage and insurance commissions		715			883			1,596			1,775
Securities gains, net		2,206			648			5,171			1,010
Gain (loss) on trading account securities		348			(227	)		62			(434	)
Impairment loss on securities		-			(30	)		-			(116	)
Gains on sale of loans		2,231			480			4,039			984
Income on bank owned life insurance		213			380			343			843
Other noninterest income		560			41			454			655
Total Noninterest Income		14,664			8,318			27,426			16,792
Noninterest Expense
Salaries and employee benefits		14,952			14,666			31,385			29,459
Occupancy		2,176			2,193			4,551			4,537
Furniture and equipment		1,695			1,771			3,342			3,539
Professional fees		2,151			2,382			4,321			4,587
FDIC assessments		2,818			266			3,865			571
Advertising		949			1,046			1,532			1,841
Other intangibles amortization		234			236			469			472
Net loss on repossessed assets		2,532			42			3,152			190
Other noninterest expenses		2,970			2,978			6,146			6,148
Total Noninterest Expense		30,477			25,580			58,763			51,344
Income Before Income Taxes		6,524			6,204			15,412			14,891
Income taxes		1,812			1,643			4,631			4,063
Net Income	$	4,712		$	4,561		$	10,781		$	10,828
Net income attributable to noncontrolling interest, net of tax		44			142			103			142
Net Income Attributable to Heartland		4,756			4,703			10,884			10,970
Preferred dividends and discount		(1,336	)		-			(2,672	)		-
Net Income Available to Common Stockholders	$	3,420		$	4,703		$	8,212		$	10,970
Earnings per common share-diluted	$	0.21		$	0.29		$	0.50		$	0.67
Weighted average shares outstanding-diluted		16,323,724			16,388,885			16,310,384			16,413,396

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HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	6/30/2009			03/31/2009			12/31/2008			09/30/2008			06/30/2008
Interest Income
Interest and fees on loans and leases	$	38,423		$	39,483		$	39,905		$	40,990		$	40,555
Interest on securities and other:
Taxable		10,039			8,421			8,503			8,228			7,885
Nontaxable		2,025			1,883			1,692			1,670			1,679
Interest on federal funds sold		-			1			32			85			51
Interest on deposits in other  financial institutions		-			1			8			3			2
Total Interest Income		50,487			49,789			50,140			50,976			50,172
Interest Expense
Interest on deposits		13,576			14,122			15,729			15,622			15,657
Interest on short-term borrowings		173			212			522			776			1,087
Interest on other borrowings		4,360			4,378			4,662			4,692			4,593
Total Interest Expense		18,109			18,712			20,913			21,090			21,337
Net Interest Income		32,378			31,077			29,227			29,886			28,835
Provision for loan and lease losses		10,041			6,665			15,106			7,083			5,369
Net Interest Income After Provision for Loan and Lease Losses		22,337			24,412			14,121			22,803			23,466
Noninterest Income
Service charges and fees		3,109			2,887			3,034			3,125			2,880
Loan servicing income		3,311			2,786			1,015			1,094			1,195
Trust fees		1,971			1,697			1,747			2,070			2,068
Brokerage and insurance commissions		715			881			1,002			942			883
Securities gains, net		2,206			2,965			510			5			648
Gain (loss) on trading account securities		348			(286	)		(531	)		(33	)		(227	)
Impairment loss on securities		-			-			(347	)		(4,688	)		(30	)
Gains on sale of loans		2,231			1,808			331			295			480
Income (loss) on bank owned life insurance		213			130			(1,780	)		(247	)		380
Gain on sale of merchant bankcard processing services		-			-			-			5,200			-
Other noninterest income		560			(106	)		543			117			41
Total Noninterest Income		14,664			12,762			5,524			7,880			8,318
Noninterest Expense
Salaries and employee benefits		14,952			16,433			12,293			15,000			14,666
Occupancy		2,176			2,375			2,220			2,262			2,193
Furniture and equipment		1,695			1,647			1,767			1,662			1,771
Professional fees		2,151			2,170			2,577			2,712			2,382
FDIC assessments		2,818			1,047			491			384			266
Advertising		949			583			909			1,012			1,046
Other intangibles amortization		234			235			235			236			236
Net loss on repossessed assets		2,532			620			310			327			42
Other noninterest expenses		2,970			3,176			3,356			3,142			2,978
Total Noninterest Expense		30,477			28,286			24,158			26,737			25,580
Income (Loss) Before Income Taxes		6,524			8,888			(4,513	)		3,946			6,204
Income taxes		1,812			2,819			(1,769	)		1,018			1,643
Net Income (Loss)	$	4,712		$	6,069		$	(2,744	)	$	2,928		$	4,561
Net income available to noncontrolling interest, net  of tax		44			59			61			77			142
Net Income (Loss) Attributable to Heartland	$	4,756		$	6,128		$	(2,683	)	$	3,005		$	4,703
Preferred dividends and discount		(1,336	)		(1,336	)		(178	)		-			-
Net Income (Loss) Available to Common Stockholders	$	3,420		$	4,792		$	(2,861	)	$	3,005		$	4,703
Earnings (loss) per common share-diluted	$	0.21		$	0.29		$	(0.18	)	$	0.18		$	0.29
Weighted average shares outstanding-diluted		16,323,724			16,296,839			16,324,106			16,355,393			16,388,885

###

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	6/30/2009			3/31/2009			12/31/2008			9/30/2008			6/30/2008
Assets
Cash and cash equivalents	$	39,961		$	87,261		$	51,303		$	67,074		$	41,292
Securities		1,061,211			1,006,172			903,705			760,143			795,624
Loans held for sale		24,339			18,263			19,695			9,812			11,437
Loans and leases:
Held to maturity		2,375,027			2,356,391			2,405,001			2,364,259			2,295,406
Allowance for loan and lease losses		(37,234	)		(37,277	)		(35,651	)		(34,845	)		(34,931	)
Loans and leases, net		2,337,793			2,319,114			2,369,350			2,329,414			2,260,475
Premises, furniture and equipment, net		117,914			119,569			120,500			120,225			118,063
Goodwill		40,207			40,207			40,207			40,207			40,207
Other intangible assets, net		11,591			9,606			8,079			8,332			8,434
Cash surrender value on life insurance		54,817			54,581			54,431			55,684			56,430
Other real estate, net		29,311			29,317			11,750			9,387			4,196
Other assets		49,587			46,010			51,248			45,704			42,913
Total Assets	$	3,766,731		$	3,730,100		$	3,630,268		$	3,445,982		$	3,379,071
Liabilities and Equity
Liabilities
Deposits:
Demand	$	436,985		$	409,921		$	383,061		$	373,193		$	383,136
Savings		1,259,861			1,185,756			1,128,312			1,042,364			894,074
Brokered time deposits		45,322			44,631			51,474			81,895			79,515
Other time deposits		1,085,335			1,148,413			1,077,385			1,070,455			1,052,160
Total deposits		2,827,503			2,788,721			2,640,232			2,567,907			2,408,885
Short-term borrowings		132,301			117,766			210,184			176,543			263,137
Other borrowings		457,508			477,640			437,833			440,146			444,006
Accrued expenses and other liabilities		31,459			30,496			33,396			32,993			32,187
Total Liabilities		3,448,771			3,414,623			3,321,645			3,217,589			3,148,215
Equity
Preferred equity		76,594			76,279			75,578			-			-
Common equity		238,449			236,237			230,025			225,312			227,698
Total Heartland Stockholders’ Equity		315,043			312,516			305,603			225,312			227,698
Noncontrolling interest		2,917			2,961			3,020			3,081			3,158
Total Equity		317,960			315,477			308,623			228,393			230,856
Total Liabilities and Equity	$	3,766,731		$	3,730,100		$	3,630,268		$	3,445,982		$	3,379,071
Common Share Data
Book value per common share	$	14.62		$	14.50		$	14.13		$	13.86		$	13.99
FAS 115 effect on book value per common share	$	(0.02	)	$	.10		$	(0.13	)	$	(0.28	)	$	(0.07	)
Common shares outstanding, net of treasury stock		16,310,825			16,294,828			16,274,490			16,252,891			16,270,872
Tangible Capital Ratio(1)		5.24	%		5.23	%		5.19	%		5.33	%		5.50	%

(1) Total common stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less intangible assets (excluding mortgage servicing rights).

###

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarters Ended		For the Six Months Ended
	6/30/2009	6/30/2008	6/30/2009	6/30/2008
Average Balances
Assets	$ 3,763,003	$ 3,354,880	$ 3,711,104	$ 3,312,207
Loans and leases, net of unearned	2,384,568	2,286,392	2,404,087	2,285,513
Deposits	2,790,322	2,396,963	2,732,321	2,367,799
Earning assets	3,420,233	3,057,505	3,364,894	3,015,860
Interest bearing liabilities	2,984,903	2,712,487	2,951,833	2,675,224
Common stockholders’ equity	238,878	234,005	237,038	234,574
Total stockholder’s equity	318,077	234,005	316,022	234,574
Tangible common stockholders’ equity	195,483	189,669	193,524	190,116
Earnings Performance Ratios
Annualized return on average assets	0.36%	0.56%	0.45%	0.67%
Annualized return on average common equity	5.74%	8.08%	6.99%	9.40%
Annualized return on average common tangible equity	7.02%	9.97%	8.56%	11.60%
Annualized net interest margin(1)	3.92%	3.92%	3.93%	3.90%
Efficiency ratio(2)	66.40%	67.92%	66.92%	68.96%

(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 net security gains

	For the Quarters Ended
	06/30/2009			03/31/2009			12/31/2008			09/30/2008			06/30/2008
Average Balances
Assets	$	3,763,003		$	3,659,204		$	3,492,105		$	3,399,199		$	3,354,880
Loans and leases, net of unearned		2,384,568			2,423,605			2,396,816			2,339,539			2,286,392
Deposits		2,790,322			2,674,320			2,587,372			2,499,988			2,396,963
Earning assets		3,420,233			3,309,556			3,177,472			3,100,208			3,057,505
Interest bearing liabilities		2,984,903			2,918,763			2,837,795			2,750,004			2,712,487
Common stockholders’ equity		238,878			235,200			222,509			227,111			234,005
Total stockholders’ equity		318,077			313,968			233,824			227,111			234,005
Tangible common stockholders’ equity		195,483			191,577			178,645			183,012			189,669
Earnings Performance Ratios
Annualized return on average assets		0.36	%		0.53	%		(0.33)	%		0.35	%		0.56	%
Annualized return on average common equity		5.74	%		8.26	%		(5.12)	%		5.26	%		8.08	%
Annualized return on average common tangible equity		7.02	%		10.14	%		(6.37)	%		6.53	%		9.97	%
Annualized net interest margin(1)		3.92	%		3.94	%		3.79	%		3.96	%		3.92	%
Efficiency ratio(2)		66.40	%		67.48	%		68.37	%		68.79	%		67.92	%

(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 net 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			As of and For			As of and For
	The Six Months			The Year			The Six Months			The Year
	Ended			Ended			Ended			Ended
	6/30/2009			12/31/2008			6/30/2008			12/31/2007
Loan and Lease Data
Commercial and commercial real estate	$	1,701,933		$	1,718,071		$	1,628,589		$	1,632,597
Residential mortgage		187,016			203,921			210,670			217,044
Agricultural and agricultural real estate		255,340			247,664			240,300			225,663
Consumer		231,986			234,061			212,238			199,518
Direct financing leases, net		3,615			5,829			7,489			9,158
Unearned discount and deferred loan fees		(4,863	)		(4,545	)		(3,880	)		(3,813	)
Total loans and leases	$	2,375,027		$	2,405,001		$	2,295,406		$	2,280,167
Asset Quality
Nonaccrual loans	$	71,116		$	76,953		$	42,857		$	30,694
Loans and leases past due ninety days or more as to interest or principal payments		54			1,005			51			1,134
Other real estate owned		29,311			11,750			4,196			2,195
Other repossessed assets		1,477			1,484			419			438
Total nonperforming assets	$	101,958		$	91,192		$	47,523		$	34,461
Allowance for Loan and Lease Losses
Balance, beginning of period	$	35,651		$	32,993		$	32,993		$	29,981
Provision for loan and lease losses		16,706			29,319			7,130			10,073
Loans charged off		(16,041	)		(27,747	)		(5,876	)		(8,564	)
Recoveries		918			1,086			684			1,641
Reductions related to discontinued operations		-			-			-			(138	)
Balance, end of period	$	37,234		$	35,651		$	34,931		$	32,993
Asset Quality Ratios
Ratio of nonperforming loans and leases to total loans and leases		3.00	%		3.24	%		1.87	%		1.40	%
Ratio of nonperforming assets to total assets		2.71	%		2.51	%		1.41	%		1.06	%
Annualized ratio of net loan charge-offs to average loans and leases		1.28	%		1.15	%		0.46	%		0.30	%
Allowance for loan and lease losses as a percent of loans and leases		1.57	%		1.48	%		1.52	%		1.45	%
Allowance for loan and lease losses as a percent ofnonperforming loans and leases loans and leases		52.32	%		45.73	%		81.41	%		103.66	%

###

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Quarters Ended
		6/30/2009							6/30/2008
		Average							Average
		Balance			Interest	Rate			Balance			Interest	Rate
Earning Assets
Securities:
Taxable	$	891,873		$	10,038	4.51	%	$	642,011		$	7,885	4,94	%
Nontaxable(1)		178,433			2,879	6,47	%		152,470			2,468	6.51	%
Total securities		1,070,306			12,917	4.84	%		794,481			10,353	5.24	%
Interest bearing deposits		1,727			2	0.46	%		395			2	2.04	%
Federal funds sold		139			-	0.00	%		9,313			51	2.20	%
Loans and leases:
Commercial and commercial real estate(1)		1,676,614			25,092	6.00	%		1,614,240			26,626	6.63	%
Residential mortgage		217,054			3,225	5.96	%		218,908			3,508	6.45	%
Agricultural and agricultural real estate(1)		257,283			4,224	6.59	%		239,105			4,340	7.30	%
Consumer		229,298			5,038	8.81	%		206,227			4,897	9.55	%
Direct financing leases, net		4,319			60	5.57	%		7,912			115	5.85	%
Fees on loans		-			991	-			-			1,228	-
Less: allowance for loan and lease losses		(36,507)			-	-			(33,076)			-	-
Net loans and leases		2,348,061			38,630	6.60	%		2,253,316			40,714	7.27	%
Total earning assets		3,420,233		$	51,549	6.05	%		3,057,505		$	51,120	6.72	%
Nonearning Assets		342,770							297,375
Total Assets	$	3,763,003		$	51,549			$	3,354,880		$	51,120
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	1,213,206		$	4,568	1.51	%	$	876,075		$	3,763	1.73	%
Time, $100,000 and over		389,827			2,965	3.05	%		295,184			3,017	4.11	%
Other time deposits		763,416			6,043	3.17	%		860,375			8,877	4.15	%
Short-term borrowings		142,600			173	0.49	%		253,789			1,087	1.72	%
Other borrowings		475,854			4,360	3.68	%		427,064			4,593	4.33	%
Total interest bearing liabilities		2,984,903			18,109	2.43	%		2,712,487			21,337	3.16	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		423,873							365,329
Accrued interest and other liabilities		36,150							43,059
Total noninterest bearing liabilities		460,023							408,388
Stockholders’ Equity		318,077							234,005
Total Liabilities and Stockholders’ Equity	$	3,763,003		$	18,109			$	3,354,880		$	21,337
Net interest income(1)				$	33,440						$	29,783
Net interest spread(1)						3.61	%						3.56	%
Net interest income to total earning assets(1)						3.92	%						3.92	%
Interest bearing liabilities to earning assets		87.27	%						88.72	%
(1) Tax equivalent basis is calculated using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Six Months Ended
		6/30/2009							6/30/2008
		Average							Average
		Balance			Interest	Rate			Balance			Interest	Rate
Earning Assets
Securities:
Taxable	$	825,928		$	18,459	4.51	%	$	599,435		$	14,500	4.86	%
Nontaxable(1)		169,290			5,599	6.67	%		149,206			4,889	6.59	%
Total securities		995,218			24,058	4.87	%		748,641			19,389	5.21	%
Interest bearing deposits		1,181			3	0.51	%		414			7	3.40	%
Federal funds sold		462			1	0.44	%		14,159			182	2.58	%
Loans and leases:
Commercial and commercial real estate(1)		1,685,205			51,234	6.13	%		1,618,875			55,223	6.86	%
Residential mortgage		226,966			6,674	5.93	%		221,905			7,209	6.53	%
Agricultural and agricultural real estate(1)		256,671			8,316	6.53	%		234,035			8,664	7.44	%
Consumer		230,313			10,011	8.77	%		202,348			9,828	9.77	%
Direct financing leases, net		4,932			128	5.23	%		8,350			248	5.97	%
Fees on loans		-			1,957	-			-			2,610	-
Less: allowance for loan and lease losses		(36,054	)		-	-			(32,867	)		-	-
Net loans and leases		2,368,033			78,320	6.67	%		2,252,646			83,782	7.48	%
Total earning assets		3,364,894		$	102,382	6.14	%		3,015,860		$	103,360	6.89	%
Nonearning Assets		346,210							296,347
Total Assets	$	3,711,104		$	102,382			$	3,312,207		$	103,360
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	1,164,760		$	9,092	1.57	%	$	852,032		$	7,798	1.84	%
Time, $100,000 and over		392,387			6,203	3.19	%		301,972			6,564	4.37	%
Other time deposits		766,430			12,403	3.26	%		852,841			18,391	4.34	%
Short-term borrowings		156,713			385	0.50	%		277,703			3,273	2.37	%
Other borrowings		471,543			8,738	3.74	%		390,676			8,870	4.57	%
Total interest bearing liabilities		2,951,833			36,821	2.52	%		2,675,224			44,896	3.37	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		408,744							360,954
Accrued interest and other liabilities		34,505							41,455
Total noninterest bearing liabilities		443,249							402,409
Stockholders’ Equity		316,022							234,574
Total Liabilities and Stockholders’ Equity	$	3,711,104		$	36,821			$	3,312,207		$	44,896
Net interest income(1)				$	65,561						$	58,464
Net interest spread(1)						3.62	%						3.52	%
Net interest income to total earning assets(1)						3.93	%						3.90	%
Interest bearing liabilities to earning assets		87.72	%						88.71	%
(1) Tax equivalent basis is calculated using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS
		As of and For the Quarter Ended 6/30/2009			As of and For the Year Ended 12/31/2008			As of and For the Quarter Ended 6/30/2008			As of and For the Year Ended 12/31/2007
Total Assets
Dubuque Bank and Trust Company	$	1,097,161		$	1,041,247		$	1,035,876		$	976,489
New Mexico Bank & Trust		791,019			773,726			702,549			672,863
Rocky Mountain Bank		470,220			476,762			452,121			427,437
Wisconsin Community Bank		434,362			429,707			396,439			399,532
Riverside Community Bank		270,354			244,613			246,414			225,206
Galena State Bank & Trust Co.		231,655			222,886			216,920			215,698
Arizona Bank & Trust		251,562			219,830			227,704			222,576
First Community Bank		125,069			123,058			123,367			127,305
Summit Bank & Trust		91,211			77,638			58,162			46,668
Minnesota Bank & Trust		34,547			25,695			16,537			-
Total Deposits
Dubuque Bank and Trust Company	$	798,927		$	749,250		$	679,235		$	670,257
New Mexico Bank & Trust		552,650			507,561			488,834			459,530
Rocky Mountain Bank		364,159			370,630			327,772			305,933
Wisconsin Community Bank		330,327			338,025			289,389			321,647
Riverside Community Bank		220,097			197,785			181,517			187,052
Galena State Bank & Trust Co.		196,035			185,042			179,877			177,040
Arizona Bank & Trust		198,310			155,909			169,629			155,093
First Community Bank		99,772			102,515			101,677			103,602
Summit Bank & Trust		79,991			60,278			33,167			30,860
Minnesota Bank & Trust		18,477			10,459			708			-
Return on Average Assets
Dubuque Bank and Trust Company		1.47	%		1.38	%		1.58	%		1.34	%
New Mexico Bank & Trust		1.22			1.06			1.12			1.48
Rocky Mountain Bank		0.39			0.33			0.76			1.51
Wisconsin Community Bank		0.15			0.27			0.64			0.62
Riverside Community Bank		0.14			0.42			0.56			0.55
Galena State Bank & Trust Co.		1.26			1.10			1.40			0.92
Arizona Bank & Trust		(3.32	)		(1.75	)		(1.80	)		(0.08	)
First Community Bank		0.17			0.45			0.77			1.30
Summit Bank & Trust		(3.98	)		(4.57	)		(3.81	)		(2.43	)
Minnesota Bank & Trust		(3.32	)		(7.43	)		(8.65	)		-
Net Interest Margin as a Percentage of Average Earning Assets
Dubuque Bank and Trust Company		3.66	%		3.56	%		3.55	%		3.40	%
New Mexico Bank & Trust		4.54			4.57			4.61			4.80
Rocky Mountain Bank		4.17			4.25			4.36			4.76
Wisconsin Community Bank		3.88			3.61			3.68			3.45
Riverside Community Bank		3.19			3.21			3.24			3.39
Galena State Bank & Trust Co.		3.52			3.42			3.47			3.40
Arizona Bank & Trust		3.52			3.89			4.05			4.56
First Community Bank		3.57			3.44			3.60			3.80
Summit Bank & Trust		3.27			3.93			4.24			5.10
Minnesota Bank & Trust		3.61			2.60			2.25			-
Net Income (Loss)
Dubuque Bank and Trust Company	$	7,930		$	13,846		$	7,737		$	11,907
New Mexico Bank & Trust		4,691			7,456			3,817			8,727
Rocky Mountain Bank		927			1,508			1,670			6,622
Wisconsin Community Bank		2,475			1,073			1,265			2,355
Riverside Community Bank		176			1,017			658			1,055
Galena State Bank & Trust Co.		1,418			2,433			1,509			1,895
Arizona Bank & Trust		(3,845	)		(3,856	)		(1,987	)		(154	)
First Community Bank		107			548			470			1,476
Summit Bank & Trust		(1,601	)		(2,754	)		(965	)		(965	)
Minnesota Bank & Trust		(515	)		(1,401	)		(711	)		-

HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS
		As of 6/30/2009			As of 12/31/2008			As of 6/30/2008			As of 12/31/2007
Total Portfolio Loans and Leases
Dubuque Bank and Trust Company	$	669,925		$	669,856		$	656,649		$	637,782
New Mexico Bank & Trust		499,597			494,877			452,595			455,383
Rocky Mountain Bank		314,523			326,086			323,487			316,776
Wisconsin Community Bank		298,817			291,164			284,000			285,010
Riverside Community Bank		159,977			165,347			158,296			146,925
Galena State Bank & Trust Co.		130,011			141,428			134,939			144,152
Arizona Bank & Trust		135,198			139,723			142,521			160,309
First Community Bank		72,676			79,261			76,994			84,475
Summit Bank & Trust		60,948			60,725			42,423			27,493
Minnesota Bank & Trust		19,977			13,134			611			-
Allowance For Loan and Lease Losses
Dubuque Bank and Trust Company	$	9,478		$	9,307		$	8,072		$	7,827
New Mexico Bank & Trust		7,080			6,847			6,462			6,079
Rocky Mountain Bank		5,743			4,678			4,774			4,061
Wisconsin Community Bank		4,386			4,297			4,719			4,520
Riverside Community Bank		2,270			2,293			2,089			1,885
Galena State Bank & Trust Co.		1,711			1,962			1,709			1,830
Arizona Bank & Trust		2,520			2,330			3,433			3,605
First Community Bank		989			1,110			1,327			1,179
Summit Bank & Trust		922			874			601			367
Minnesota Bank & Trust		234			164			8			-
Nonperforming Loans and Leases
Dubuque Bank and Trust Company	$	6,474		$	7,840		$	3,778		$	3,344
New Mexico Bank & Trust		10,283			11,426			4,061			1,130
Rocky Mountain Bank		18,570			17,254			6,773			2,099
Wisconsin Community Bank		12,173			10,746			11,289			12,152
Riverside Community Bank		8,457			6,410			2,664			2,671
Galena State Bank & Trust Co.		2,425			4,625			3,135			1,707
Arizona Bank & Trust		5,806			8,278			6,639			5,541
First Community Bank		2,893			5,102			2,555			1,312
Summit Bank & Trust		3,305			5,486			1,390			1,376
Minnesota Bank & Trust		-			-			-			-
Allowance As a Percent of Total Loans and Leases
Dubuque Bank and Trust Company		1.41	%		1.39	%		1.23	%		1.23	%
New Mexico Bank & Trust		1.42			1.38			1.43			1.33
Rocky Mountain Bank		1.83			1.43			1.48			1.28
Wisconsin Community Bank		1.47			1.48			1.66			1.59
Riverside Community Bank		1.42			1.39			1.32			1.28
Galena State Bank & Trust Co.		1.32			1.39			1.27			1.27
Arizona Bank & Trust		1.86			1.67			2.41			2.25
First Community Bank		1.36			1.40			1.72			1.40
Summit Bank & Trust		1.51			1.44			1.42			1.33
Minnesota Bank & Trust		1.17			1.25			1.31			-

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