form8k012210.htm

CONTACT: FOR IMMEDIATE RELEASE

John K. Schmidt MONDAY, JANUARY 25, 2010

Chief Operating Officer

Chief Financial Officer

(563) 589-1994

jschmidt@htlf.com

HEARTLAND FINANCIAL USA, INC. REPORTS FOURTH QUARTER 2009 EARNINGS

Fourth Quarter 2009 Highlights

§	Net loss of $7.9 million for the quarter resulting from a non-cash goodwill impairment charge of $12.7 million

§	Net income of $6.4 million for the year

§	Net income exclusive of goodwill impairment charge of $4.8 million for the quarter and $19.0 million for the year

§	Net interest margin of 4.04% for the quarter and 3.99% for the year

§	Allowance for loan and lease losses increased to 1.80% of total loans and leases

§	Nonperforming assets decreased during the quarter to $108.8 million at year-end

§	Deposit growth was $410.2 million or 15% since year-end 2008

§	Total loans decreased $73.9 million or 3% since year-end 2008

		Quarter Ended December 31,						Year Ended December 31,
		2009			2008			2009			2008
Net income (loss) (in millions)	$	(7.9	)	$	(2.7	)	$	6.4		$	11.0
Net income (loss), exclusive of goodwill impairment charge (in millions)		4.8			(2.7	)		19.0			11.0
Net income (loss) available to common stockholders (in millions)		(9.2	)		(2.9	)		1.2			11.1
Net income (loss) available to common stockholders, exclusive of goodwill impairment charge (in millions)		3.5			(2.9	)		13.9			11.1
Diluted earnings (loss) per common share		(0.56	)		(0.18	)		0.07			0.68
Diluted earnings (loss) per common share, exclusive of goodwill impairment charge		0.21			(0.18	)		0.85			0.68

Return on average assets		(0.92	)%		(0.33	)%		0.03	%		0.33	%
Return on average common equity		(14.76	)		(5.12	)		0.51			4.84
Net interest margin		4.04			3.79			3.99			3.89

“Heartland continues to experience solid operating income fueled by our exceptional net interest margin and strong noninterest income. Given the reality that credit quality is generally a reflection of the economies in the communities we serve, we are optimistic that the drop in nonperforming loans may signal an improving trend.”

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

Dubuque, Iowa, January 25, 2010—Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported a net loss of $7.9 million for the quarter ended December 31, 2009, compared to a net loss of $2.7 million for the fourth quarter of 2008. Net loss available to common stockholders was $9.2 million, or $0.56 per diluted common share, for the quarter ended December 31, 2009, compared to $2.9 million, or $0.18 per diluted common share, for the fourth quarter of 2008. Return on average common equity was negative 14.76 percent and return on average assets was negative 0.92 percent for the fourth quarter of 2009, compared to negative 5.12 percent and negative 0.33 percent, respectively, for the same quarter in 2008.

The fourth quarter 2009 net loss resulted primarily from a $12.7 million goodwill impairment charge recorded during the quarter. This non-cash charge, which had no impact on operations, liquidity or capital, was due to the adverse economic conditions in Heartland’s Arizona and Montana markets. Excluding this non-cash goodwill impairment charge, net income for the fourth quarter of 2009 would have been $4.8 million, net income available to common stockholders would have been $3.5 million, or $0.21 per diluted common share, return on average common equity would have been 5.62 percent and return on average assets would have been 0.35 percent.

Earnings for the fourth quarter of 2009 in comparison to the fourth quarter of 2008 were positively affected by a smaller loan loss provision and increases in net interest income, loan servicing income, income on bank owned life insurance, securities gains and gains on sale of loans. The loan loss provision was $10.8 million during the fourth quarter of 2009 compared to $15.1 million during the fourth quarter of 2008. A higher loan loss provision during the fourth quarter of 2008 was driven by a variety of factors including deterioration of economic conditions, downgrades in internal risk ratings, reduction in appraised values, higher levels of charge-offs and an increase in nonperforming loans. Increased salaries and employee benefits, FDIC assessments and expenses associated with other real estate owned negatively impacted earnings during the fourth quarter of 2009.

Net income recorded for the year 2009 was $6.4 million, compared to $11.0 million recorded during the year 2008. Net income available to common stockholders was $1.2 million, or $0.07 per diluted common share, for the year 2009, compared to $11.1 million, or $0.68 per diluted common share, earned during the year 2008. Return on average common equity was 0.51 percent and return on average assets was 0.03 percent for the year 2009, compared to 4.84 percent and 0.33 percent, respectively, for the year 2008. Excluding the goodwill impairment charge, net income for the year 2009 would have been $19.0 million, net income available to common stockholders would have been $13.9 million, or $0.85 per diluted common share, return on average common equity would have been 5.76 percent and return on average assets would have been 0.36 percent.

Lynn B. Fuller, Heartland’s chairman, president and chief executive officer said, “Heartland continues to experience solid operating income fueled by our exceptional net interest margin and strong noninterest income. Given the reality that credit quality is generally a reflection of the economies in the communities we serve, we are optimistic that the drop in nonperforming loans may signal an improving trend.”

Earnings for the year 2009 in comparison to the year 2008 were positively affected by increased net interest income, loan servicing income, income on bank owned life insurance, 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 $39.4 million during the year 2009 compared to $29.3 million during the year 2008. Also negatively affecting earnings during the year 2009 were increased salaries and employee benefits, FDIC assessments and expenses associated with other real estate owned. Included in the earnings for 2009 was a $1.3 million gain recorded as a result of the July 2, 2009, acquisition of The Elizabeth State Bank. During the fourth quarter of 2009, other noninterest income included $1.1 million in payments due from the FDIC under loss share agreements associated with The Elizabeth State Bank acquisition.

Goodwill Impairment

Heartland’s goodwill, which is related to acquisitions in prior years, is evaluated for impairment on an annual basis or when events or circumstances suggest impairment may have occurred. Due to the adverse economic conditions in Heartland’s Arizona and Montana markets, management engaged an independent third party valuation expert to value the goodwill of those banks. As a result of these valuations, Heartland recorded a goodwill impairment charge of $5.2 million at Arizona Bank & Trust and $7.5 million at Rocky Mountain Bank. After the impairment charge was recorded, Heartland’s goodwill totaled $27.5 million or less than 1 percent of total assets.

The goodwill impairment charge is a non-cash accounting adjustment that does not affect cash flows, liquidity or tangible capital. As goodwill is excluded from regulatory capital, the impairment charge did not impact regulatory capital ratios of Heartland, Arizona Bank & Trust or Rocky Mountain Bank. The goodwill impairment charge has been classified as a noninterest expense item and is not tax-deductible.

Fuller stated, “The recognition of goodwill impairment at two of our banks was difficult, but it reduced a non-earning asset without any impact to our capital ratios. All Heartland banks continue to be ‘well-capitalized’ under regulatory standards.”

Non-GAAP Financial Measures

This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the U.S., often referred to as GAAP. Heartland has disclosed in this release certain non-GAAP financial measures to provide meaningful supplemental information regarding its operational performance and to enhance readers’ overall understanding of its operating financial performance. Management believes that the impact of the goodwill impairment charge to earnings in the current period impairs the ability of the reader to evaluate trends in results of operations without information that reports results of operations without the charge. These non-GAAP financial measures are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. The following schedule presents performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measurements to the GAAP financial measurements. For the non-GAAP financial measurements, net income (loss), exclusive of goodwill impairment charge is defined as net income (loss) as presented in accordance with GAAP less any goodwill impairment charge recorded during the period.

	For the Quarter Ended December 31,						For the Year Ended December 31,
		2009			2008			2009			2008

Net income (loss) as reported	$	(7,875	)	$	(2,744	)	$	6,374		$	11,012
Goodwill impairment charge		12,659			-			12,659			-
Net income (loss), exclusive of goodwill impairment charge	$	4,784		$	(2,744	)	$	19,033		$	11,012

Net income (loss) available to common stockholders	$	(9,170	)	$	(2,861	)	$	1,218		$	11,114
Goodwill impairment charge		12,659			-			12,659			-
Net income (loss) available to common stockholders, exclusive of goodwill impairment charge	$	3,489		$	(2,861	)	$	13,877		$	11,114

GAAP earnings (loss) per common share-diluted	$	(0.56	)	$	(0.18	)	$	0.07		$	0.68
Earnings (loss) per common share-diluted, exclusive of goodwill impairment charge	$	0.21		$	(0.18	)	$	0.85		$	0.68
GAAP return on average assets		(0.92	)%		(0.33	)%		0.03	%		0.33	%
Return on average assets, exclusive of goodwill impairment charge		0.35	%		(0.33	)%		0.36	%		0.33	%
GAAP return on average equity		(14.76	)%		(5.12	)%		0.51	%		4.84	%
Return on average equity, exclusive of goodwill impairment charge		5.62	%		(5.12	)%		5.76	%		4.84	%
GAAP return on average tangible equity		(17.87	)%		(6.48	)%		0.62	%		5.85	%
Return on average tangible equity, exclusive of goodwill impairment charge		6.80	%		(6.48	)%		7.02	%		5.85	%
GAAP efficiency ratio		92.19	%		68.37	%		73.07	%		68.78	%
Efficiency ratio, exclusive of goodwill impairment charge		65.32	%		68.37	%		66.09	%		68.78	%

Net Interest Margin Improves; Net Interest Income Grows

Net interest margin, expressed as a percentage of average earning assets, was 4.04 percent during the fourth quarter of 2009 compared to 3.79 percent during the fourth quarter of 2008. For the year ended December 31, net interest margin, expressed as a percentage of average earning assets, was 3.99 percent during 2009 and 3.89 percent during 2008. Success at growing net interest margin has been a direct result of continued price discipline. Management is committed to maintaining margin near the 4.00 percent level and will not compete for loans or deposits strictly for the sake of growth.

Fuller commented, “Heartland’s net interest margin of 4.04 percent is a strong indicator of the earnings power of our company. The combination of slow or negative loan growth and little room for further reductions in deposit rates will likely result in our margin holding at or near the present level. We still believe a key driver of better performance will be improving credit trends.”

Net interest income on a tax-equivalent basis totaled $35.9 million during the fourth quarter of 2009, an increase of $5.7 million or 19 percent from the $30.2 million recorded during the fourth quarter of 2008. For the year 2009, net interest income on a tax-equivalent basis was $137.3 million, an increase of $17.7 million or 15 percent from the $119.6 million recorded during the year 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 $348.2 million or 11 percent growth in average earning assets during the fourth quarter of 2009 compared to the same quarter in 2008 and the $360.7 million or 12 percent growth in average earning assets during the year 2009 compared to the year 2008.

On a tax-equivalent basis, interest income in the fourth quarter of 2009 totaled $52.4 million compared to $51.2 million in the fourth quarter of 2008, an increase of $1.2 million or 2 percent. For the year 2009, interest income on a tax-equivalent basis totaled $207.8 million compared to $206.5 million for the year 2008, an increase of $1.3 million or 1 percent. The increase in net interest income attributable to the growth in average earnings assets was almost equally offset by the impact of a decrease in the average interest rate earned on these assets of 51 basis points during the quarter and 67 basis points during the year 2009 as compared to the same periods 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 remained unchanged at 3.25 percent throughout the year 2009 whereas throughout the year 2008, the national prime interest rate decreased from a high of 7.25 percent on January 1 to a low of 3.25 percent at December 31. A portion of the negative impact decreasing interest rates would have on Heartland’s interest income was reduced because 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 which matured on April 4, 2009.

Interest expense for the fourth quarter of 2009 was $16.4 million compared to $20.9 million in the fourth quarter of 2008, a decrease of $4.5 million or 21 percent. On an annual comparative basis, interest expense totaled $70.5 million during 2009 compared to $86.9 million during 2008, a decrease of $16.4 million or 19 percent. Interest rates paid on Heartland’s deposits and borrowings were significantly lower during the year 2009 compared to the year 2008. Despite increases in average interest bearing liabilities of 10 percent over both the quarter and year ended December 31, 2009, as compared to the same periods in 2008, the average interest rates paid on Heartland’s deposits and borrowings declined 84 basis points in the quarter and the year ended December 31, 2009, compared to the same periods in 2008. Approximately 35 percent of Heartland’s certificate of deposit accounts will mature within the next six months at a weighted average rate of 1.91 percent.

Noninterest Income Increases; Noninterest Expense Grows

Noninterest income was $13.4 million during the fourth quarter of 2009 compared to $5.5 million during the fourth quarter of 2008, an increase of $7.9 million or 142 percent. Included in noninterest income during the fourth quarter of 2009 was $1.1 million in payments due from the FDIC under loss share agreements associated with The Elizabeth State Bank acquisition. Included in the fourth quarter 2008 noninterest income was a $1.8 million loss on the cash surrender on bank owned life insurance. A large portion of Heartland’s bank owned life insurance is held in a separate account product that experienced significant market value declines during the last half of 2008. For the year 2009, noninterest income was $52.7 million compared to $30.2 million during the year 2008, an increase of $22.5 million or 75 percent. Included in the 2008 noninterest income were a $5.2 million gain on the sale of Heartland’s merchant bankcard processing services and a $4.6 million impairment loss on Heartland’s investment in perpetual preferred securities issued by Fannie Mae. 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 $798,000 or 79 percent for the quarter and $5.1 million or 110 percent for the yearly 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 $1.15 billion at December 31, 2009, compared to $712.9 million at December 31, 2008. Securities gains totaled $2.2 million during the fourth quarter of 2009 compared to $510,000 during the fourth quarter of 2008. For the annual comparative period, securities gains totaled $8.6 million during 2009 compared to $1.5 million during 2008. Securities designed to outperform in a declining rate environment were sold during 2009 and replaced with securities that are expected to outperform as rates rise. Gains on sale of loans totaled $1.2 million during the fourth quarter of 2009 compared to $331,000 during the fourth quarter of 2008. For the year 2009, gains on sale of loans totaled $6.1 million compared to $1.6 million for the year 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 continued to help offset higher provision expense. Residential loan refinance activity slowed during the last half of the year, but substantially outpaced 2008. Also contributing to the increase in noninterest income was loan servicing income, securities gains and the gain on our acquisition of The Elizabeth State Bank.”

For the fourth quarter of 2009, noninterest expense totaled $43.4 million, an increase of $19.3 million or 80 percent from the same period in 2008. Exclusive of the $12.7 million goodwill impairment charge, noninterest expense totaled $30.7 million, an increase of $6.6 million or 27 percent. This increase was primarily attributable to higher salaries and employee benefits, which totaled $14.4 million during the fourth quarter of 2009 compared to $12.3 million during the fourth quarter of 2008, higher FDIC assessments, which totaled $1.3 million during the fourth quarter of 2009 compared to $491,000 during the fourth quarter of 2008, and net losses on repossessed assets, which totaled $4.0 million during the fourth quarter of 2009 compared to $310,000 during the fourth quarter of 2008. The salaries and employee benefits expense during the fourth quarter of 2008 included adjustments in the accrual for incentive compensation payouts and the discretionary contribution under Heartland’s retirement plan as earnings for the quarter had decreased significantly. For the year 2009, noninterest expense totaled $132.5 million, an increase of $30.3 million or 30 percent when compared to the year 2008. Exclusive of the $12.7 million goodwill impairment charge, noninterest expense totaled $119.8 million during 2009, an increase of $17.6 million or 17 percent. The noninterest expense categories contributing to the increase during the annual periods under comparison were employee salaries and benefits, which were $60.5 million during the year 2009 compared to $56.8 million during the year 2008, FDIC assessments, which were $6.6 million during the year 2009 compared to $1.4 million during the year 2008, and net losses on repossessed assets, which were $10.8 million during the year 2009 compared to $827,000 during the year 2008. Salaries and employee benefits increased $3.7 million or 7 percent during the annual comparative period, primarily due to the opening of Minnesota Bank & Trust in April 2008 and additional staffing at New Mexico Bank & Trust to grow its customer base, at Heartland’s operations center to provide support services to the bank subsidiaries and at Galena State Bank as a result of The Elizabeth State Bank acquisition. Total full-time equivalent employees averaged 1,024 during the year 2009, compared to 1,006 during the year 2008.

Excluding the non-deductible goodwill impairment charge, Heartland’s effective tax rate was 27.44 percent for the year 2009 compared to 23.12 percent for the year 2008. Heartland’s effective tax rate during the year 2009 did not include any federal rehabilitation tax credits, whereas Heartland’s effective tax rate during the year 2008 included $570,000 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 exclusive of the non-deductible goodwill impairment charge, was 32.08 percent during the year 2009 compared to 50.45 percent during the year 2008. The tax-equivalent adjustment for this tax-exempt interest income was $4.5 million during the year 2009 compared to $3.9 million during the year 2008.

Loan Demand Declines; Growth in Deposits Continues

At December 31, 2009, total assets had increased $382.7 million or 11 percent since year-end 2008. Securities represented 29 percent of total assets at December 31, 2009, compared to 25 percent at December 31, 2008. Additional securities were purchased during 2009 as deposit growth outpaced loan growth.

Total loans and leases, exclusive of those covered by the FDIC loss share agreements, were $2.33 billion at December 31, 2009, compared to $2.41 billion at year-end 2008, a decrease of $73.9 million or 3 percent. The only loan category to experience growth during the year 2009 was agricultural and agricultural real estate loans, which also experienced a slight decrease during the fourth quarter of 2009. Nearly all of this growth occurred at Dubuque Bank and Trust Company. Total loans and leases, exclusive of The Elizabeth State Bank acquisition, decreased $36.7 million during the fourth quarter of 2009 compared to a decrease of $7.2 million during the third quarter of 2009, an increase of $18.6 million during the second quarter of 2009 and a decrease of $48.6 million during the first quarter of 2009.

Total deposits grew to $3.05 billion at December 31, 2009, an increase of $410.2 million or 16 percent since year-end 2008. The Elizabeth State Bank acquisition accounted for $49.5 million of this growth. With the exception of First Community Bank, all Heartland banks experienced an increase in deposits. This growth was weighted more heavily in Heartland’s Midwestern markets, which were responsible for nearly 57 percent of the growth. Growth in demand and savings deposits is attributable to an increased emphasis on non-maturity core deposit products over higher-cost certificates of deposit. Additionally, commercial and retail customers have continued to build cash reserves. Demand deposits increased $77.6 million or 20 percent since year-end 2008 with $6.9 million coming from The Elizabeth State Bank acquisition. Savings deposit balances experienced an increase of $426.0 million or 38 percent since year-end 2008 with $21.0 million coming from The Elizabeth State Bank acquisition. Time deposits, exclusive of brokered deposits, experienced a decrease of $83.8 million or 8 percent since year-end 2008 despite the $21.6 million assumed in The Elizabeth State Bank acquisition. Brokered time deposits decreased from $51.5 million or 2 percent of total deposits at year-end 2008, to $41.8 million or 1 percent of total deposits at year-end 2009. Deposit growth, exclusive of The Elizabeth State Bank acquisition, was $106.0 million during the fourth quarter of 2009, $67.4 million during the third quarter of 2009, $38.8 million during the second quarter of 2009 and $148.5 million during the first quarter of 2009.

“I am extremely pleased with our continued success in growing non-maturity core deposits versus higher-cost certificates of deposit. We have been quite successful in rolling out new products and value-added services that reward deeper banking relationships, allowing us to take advantage of this environment in which deposits are plentiful,” commented Fuller.

Nonperforming Assets Decrease During the Quarter; Allowance for Loan Losses Increases For the Quarter

The allowance for loan and lease losses at December 31, 2009, was 1.80 percent of loans and leases and 53.56 percent of nonperforming loans, compared to 1.78 percent of loans and leases and 50.31 percent of nonperforming loans at September 30, 2009, and 1.48 percent of loans and leases and 45.73 percent of nonperforming loans at December 31, 2008. The provision for loan losses was $39.4 million for the year 2009 compared to $29.3 million for the year 2008. Additions to the allowance for loan and lease losses during 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, exclusive of those covered under the loss sharing agreements, were $78.1 million or 3.35 percent of total loans and leases at December 31, 2009, compared to $84.0 million or 3.55 percent of total loans and leases at September 30, 2009, and $78.0 million or 3.24 percent of total loans and leases at December 31, 2008. Approximately 64 percent, or $50.1 million, of Heartland’s nonperforming loans are to 20 borrowers, with $15.0 million originated by Rocky Mountain Bank, $13.7 million originated by Summit Bank & Trust, $7.5 million originated by Wisconsin Community Bank, $6.5 million originated by Arizona Bank & Trust, $2.9 million originated by New Mexico Bank & Trust, $2.9 million originated by Riverside Community Bank and $1.6 million originated by Dubuque Bank and Trust. The portion of Heartland’s nonperforming loans covered by government guarantees was $3.3 million at December 31, 2009.

Other real estate owned, exclusive of assets covered under the loss sharing agreements, was $30.2 million at December 31, 2009, compared to $32.6 million at September 30, 2009, and $11.8 million at December 31, 2008. A majority of the increase during 2009 was attributable to the real estate securing two loans originated at Rocky Mountain Bank, which at December 31, 2009, had a market value totaling $13.5 million, comprised of $8.9 million on a residential subdivision development project in Bozeman, Montana and $4.6 million on a condominium development project in Big Sky, Montana. 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 year 2009 were $33.2 million compared to $26.7 million during the year 2008. A large portion of the net charge-offs was related to commercial real estate development loans and residential lot loans.

“We are encouraged that nonperforming assets dropped by $8 million during the quarter, but we still have room for improvement in this area. The reduction of nonperforming assets continues as our number one priority. As with others in our industry, we remain highly dependent on the direction of the economies in the markets we serve,” Fuller said.

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-941-8609 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 April 25, 2010, by dialing 800-406-7325, pass code 4199372, or by logging onto www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a $4.0 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-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended December 31,						For the Year Ended December 31,
		2009			2008			2009			2008
Interest Income
Interest and fees on loans and leases	$	38,191		$	39,905		$	154,887		$	164,349
Interest on securities and other:
Taxable		10,513			8,503			39,782			31,231
Nontaxable		2,456			1,692			8,595			6,688
Interest on federal funds sold		1			32			2			299
Interest on deposits in other financial institutions		9			8			27			18
Total Interest Income		51,170			50,140			203,293			202,585
Interest Expense
Interest on deposits		12,000			15,729			52,744			64,104
Interest on short-term borrowings		194			522			733			4,571
Interest on other borrowings		4,250			4,662			17,053			18,224
Total Interest Expense		16,444			20,913			70,530			86,899
Net Interest Income		34,726			29,227			132,763			115,686
Provision for loan and lease losses		10,775			15,106			39,377			29,319
Net Interest Income After Provision for Loan and Lease Losses		23,951			14,121			93,386			86,367
Noninterest Income
Service charges and fees		3,257			3,034			12,541			11,654
Loan servicing income		1,813			1,015			9,666			4,600
Trust fees		2,156			1,747			7,773			7,906
Brokerage and insurance commissions		697			1,002			3,117			3,719
Securities gains, net		2,186			510			8,648			1,525
Gain (loss) on trading account securities		(61	)		(531	)		211			(998	)
Impairment loss on securities		(40	)		(347	)		(40	)		(5,151	)
Gains on sale of loans		1,168			331			6,084			1,610
Income (loss) on bank owned life insurance		362			(1,780	)		1,002			(1,184	)
Gain on acquisition		298			-			1,296			-
Gain on sale of merchant bankcard processing services		-			-			-			5,200
Other noninterest income		1,534			543			2,406			1,315
Total Noninterest Income		13,370			5,524			52,704			30,196
Noninterest Expense
Salaries and employee benefits		14,419			12,293			60,465			56,752
Occupancy		2,220			2,220			8,992			9,019
Furniture and equipment		1,638			1,767			6,574			6,968
Professional fees		2,100			2,577			9,127			9,876
FDIC insurance assessments		1,320			491			6,578			1,446
Advertising		1,065			909			3,337			3,762
Goodwill impairment charge		12,659			-			12,659			-
Intangible assets amortization		198			235			866			943
Net loss on repossessed assets		4,015			310			10,847			827
Other noninterest expenses		3,800			3,356			13,075			12,646
Total Noninterest Expense		43,434			24,158			132,520			102,239
Income (Loss) Before Income Taxes		(6,113	)		(4,513	)		13,570			14,324
Income taxes		1,762			(1,769	)		7,196			3,312
Net Income (Loss)	$	(7,875	)	$	(2,744	)	$	6,374		$	11,012
Net income attributable to noncontrolling interest, net of tax		41			61			188			280
Net Income (Loss) Attributable to Heartland		(7,834	)		(2,683	)		6,562			11,292
Preferred dividends and discount		(1,336	)		(178	)		(5,344	)		(178	)
Net Income (Loss) Available to Common Stockholders	$	(9,170	)	$	(2,861	)	$	1,218		$	11,114

Earnings (loss) per common share-diluted	$	(0.56	)	$	(0.18	)	$	0.07		$	0.68
Weighted average shares outstanding-diluted		16,345,095			16,324,106			16,325,320			16,365,815

###

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Interest Income
Interest and fees on loans and leases	$	38,191		$	38,790		$	38,423		$	39,483		$	39,905
Interest on securities and other:
Taxable		10,513			10,809			10,039			8,421			8,503
Nontaxable		2,456			2,231			2,025			1,883			1,692
Interest on federal funds sold		1			-			-			1			32
Interest on deposits in other financial institutions		9			17			-			1			8
Total Interest Income		51,170			51,847			50,487			49,789			50,140
Interest Expense
Interest on deposits		12,000			13,046			13,576			14,122			15,729
Interest on short-term borrowings		194			154			173			212			522
Interest on other borrowings		4,250			4,065			4,360			4,378			4,662
Total Interest Expense		16,444			17,265			18,109			18,712			20,913
Net Interest Income		34,726			34,582			32,378			31,077			29,227
Provision for loan and lease losses		10,775			11,896			10,041			6,665			15,106
Net Interest Income After Provision for Loan and Lease Losses		23,951			22,686			22,337			24,412			14,121
Noninterest Income
Service charges and fees		3,257			3,288			3,109			2,887			3,034
Loan servicing income		1,813			1,756			3,311			2,786			1,015
Trust fees		2,156			1,949			1,971			1,697			1,747
Brokerage and insurance commissions		697			824			715			881			1,002
Securities gains, net		2,186			1,291			2,206			2,965			510
Gain (loss) on trading account securities		(61	)		210			348			(286	)		(531	)
Impairment loss on securities		(40	)		-			-			-			(347	)
Gains on sale of loans		1,168			877			2,231			1,808			331
Income (loss) on bank owned life insurance		362			297			213			130			(1,780	)
Gain on acquisition		298			998			-			-			-
Other noninterest income		1,534			418			560			(106	)		543
Total Noninterest Income		13,370			11,908			14,664			12,762			5,524
Noninterest Expense
Salaries and employee benefits		14,419			14,661			14,952			16,433			12,293
Occupancy		2,220			2,221			2,176			2,375			2,220
Furniture and equipment		1,638			1,594			1,695			1,647			1,767
Professional fees		2,100			2,706			2,151			2,170			2,577
FDIC insurance assessments		1,320			1,393			2,818			1,047			491
Advertising		1,065			740			949			583			909
Goodwill impairment charge		12,659			-			-			-			-
Intangible assets amortization		198			199			234			235			235
Net loss on repossessed assets		4,015			3,680			2,532			620			310
Other noninterest expenses		3,800			3,129			2,970			3,176			3,356
Total Noninterest Expense		43,434			30,323			30,477			28,286			24,158
Income (Loss) Before Income Taxes		(6,113	)		4,271			6,524			8,888			(4,513	)
Income taxes		1,762			803			1,812			2,819			(1,769	)
Net Income (Loss)	$	(7,875	)	$	3,468		$	4,712		$	6,069		$	(2,744	)
Net income available to noncontrolling interest, net of tax		41			44			44			59			61
Net Income (Loss) Attributable to Heartland	$	(7,834	)	$	3,512		$	4,756		$	6,128		$	(2,683	)
Preferred dividends and discount		(1,336	)		(1,336	)		(1,336	)		(1,336	)		(178	)
Net Income (Loss) Available to Common Stockholders	$	(9,170	)	$	2,176		$	3,420		$	4,792		$	(2,861	)

Earnings (loss) per common share-diluted	$	(0.56	)	$	0.13		$	0.21		$	0.29		$	(0.18	)
Weighted average shares outstanding-diluted		16,345,095			16,340,092			16,323,724			16,296,839			16,324,106

###

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Assets
Cash and cash equivalents	$	182,410		$	82,508		$	39,961		$	87,261		$	51,303
Securities		1,175,217			1,105,744			1,061,211			1,006,172			903,705
Loans held for sale		17,310			19,923			24,339			18,263			19,695
Loans and leases:
Held to maturity		2,331,142			2,367,871			2,375,027			2,356,391			2,405,001
Loans covered by loss share agreements		31,860			36,175			-			-			-
Allowance for loan and lease losses		(41,848	)		(42,260	)		(37,234	)		(37,277	)		(35,651	)
Loans and leases, net		2,321,154			2,361,786			2,337,793			2,319,114			2,369,350
Premises, furniture and equipment, net		118,835			117,140			117,914			119,569			120,500
Goodwill		27,548			40,207			40,207			40,207			40,207
Other intangible assets, net		12,380			12,101			11,591			9,606			8,079
Cash surrender value on life insurance		55,516			55,141			54,817			54,581			54,431
Other real estate, net		30,568			33,342			29,311			29,317			11,750
FDIC indemnification asset		5,532			4,393			-			-			-
Other assets		66,521			47,328			49,587			46,010			51,248
Total Assets	$	4,012,991		$	3,879,613		$	3,766,731		$	3,730,100		$	3,630,268

Liabilities and Equity
Liabilities
Deposits:
Demand	$	460,645		$	451,645		$	436,985		$	409,921		$	383,061
Savings		1,554,358			1,386,059			1,259,861			1,185,756			1,128,312
Brokered time deposits		41,791			43,473			45,322			44,631			51,474
Other time deposits		993,595			1,063,237			1,085,335			1,148,413			1,077,385
Total deposits		3,050,389			2,944,414			2,827,503			2,788,721			2,640,232
Short-term borrowings		162,349			111,346			132,301			117,766			210,184
Other borrowings		451,429			457,444			457,508			477,640			437,833
Accrued expenses and other liabilities		33,767			38,044			31,459			30,496			33,396
Total Liabilities		3,697,934			3,551,248			3,448,771			3,414,623			3,321,645

Equity
Preferred equity		77,224			76,909			76,594			76,279			75,578
Common equity		235,057			248,583			238,449			236,237			230,025
Total Heartland Stockholders’ Equity		312,281			325,492			315,043			312,516			305,603
Noncontrolling interest		2,776			2,873			2,917			2,961			3,020
Total Equity		315,057			328,365			317,960			315,477			308,623
Total Liabilities and Equity	$	4,012,991		$	3,879,613		$	3,766,731		$	3,730,100		$	3,630,268

Common Share Data
Book value per common share	$	14.38		$	15.23		$	14.62		$	14.50		$	14.13
FAS 115 effect on book value per common share	$	0.38		$	0.62		$	(0.02	)	$	.10		$	(0.13	)
Common shares outstanding, net of treasury stock		16,346,362			16,321,953			16,310,825			16,294,828			16,274,490

Tangible Capital Ratio(1)		5.14	%		5.35	%		5.24	%		5.23	%		5.19	%

(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 Quarter Ended						For the Year Ended
	12/31/2009			12/31/2008			12/31/2009			12/31/2008

Average Balances
Assets	$	3,975,107		$	3,492,105		$	3,812,743		$	3,378,930
Loans and leases, net of unearned		2,410,459			2,396,816			2,412,198			2,326,845
Deposits		3,013,644			2,587,372			2,847,653			2,455,739
Earning assets		3,525,624			3,177,472			3,438,005			3,077,350
Interest bearing liabilities		3,127,792			2,837,795			3,018,240			2,734,562
Common stockholders’ equity		246,505			222,509			241,032			229,692
Total stockholder’s equity		326,254			233,824			320,335			232,521
Tangible common stockholders’ equity		203,573			175,541			197,749			185,472

Earnings Performance Ratios
Annualized return on average assets		(0.92	)%		(0.33	)%		0.03	%		0.33	%
Annualized return on average common equity		(14.76	)		(5.12	)		0.51			4.84
Annualized return on average common tangible equity		(17.87	)		(6.48	)		0.62			5.85
Annualized net interest margin(1)		4.04			3.79			3.99			3.89
Efficiency ratio(2)		92.19			68.37			73.07			68.78

(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 Quarter Ended
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008

Average Balances
Assets	$	3,975,107		$	3,853,658		$	3,763,003		$	3,659,204		$	3,492,105
Loans and leases, net of unearned		2,410,459			2,430,161			2,384,568			2,423,605			2,396,816
Deposits		3,013,644			2,912,325			2,790,322			2,674,320			2,587,372
Earning assets		3,525,624			3,496,607			3,420,233			3,309,556			3,177,472
Interest bearing liabilities		3,127,792			3,041,502			2,984,903			2,918,763			2,837,795
Common stockholders’ equity		246,505			243,542			238,878			235,200			222,509
Total stockholders’ equity		326,254			323,040			318,077			313,968			233,824
Tangible common stockholders’ equity		203,573			200,370			195,483			191,577			175,541

Earnings Performance Ratios
Annualized return on average assets		(0.92	)%		0.22	%		0.36	%		0.53	%		(0.33	)%
Annualized return on average common equity		(14.76	)		3.54			5.74			8.26			(5.12	)
Annualized return on average common tangible equity		(17.87	)		4.31			7.02			10.14			(6.48	)
Annualized net interest margin(1)		4.04			4.06			3.92			3.94			3.79
Efficiency ratio(2)		92.19			65.55			66.40			67.48			68.37

(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			As of and			As of and			As of and			As of and
	For the			For the			For the			For the			For the
	Qtr. Ended			Qtr. Ended			Qtr. Ended			Qtr. Ended			Qtr. Ended
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Loan and Lease Data
Loans held to maturity:
Commercial and commercial real estate	$	1,670,108		$	1,694,589		$	1,701,933		$	1,673,882		$	1,718,071
Residential mortgage		175,059			184,292			187,016			190,179			203,921
Agricultural and agricultural real estate		256,780			257,738			255,340			259,320			247,664
Consumer		231,709			233,259			231,986			232,507			234,061
Direct financing leases, net		2,326			2,882			3,615			4,989			5,829
Unearned discount and deferred loan fees		(4,840	)		(4,889	)		(4,863	)		(4,486	)		(4,545	)
Total loans and leases held to maturity	$	2,331,142		$	2,367,871		$	2,375,027		$	2,356,391		$	2,405,001
Loans covered under loss share agreements:
Commercial and commercial real estate	$	15,068		$	17,109		$	-		$	-		$	-
Residential mortgage		8,984			10,201			-			-			-
Agricultural and agricultural real estate		3,626			4,117			-			-			-
Consumer		4,182			4,748			-			-			-
Total loans and leases covered under loss share agreements	$	31,860		$	36,175		$	-		$	-		$	-

Asset Quality
Not covered under loss share agreements:
Nonaccrual loans	$	78,118		$	78,940		$	71,116		$	67,140		$	76,953
Loans and leases past due ninety days or more as to interest or principal payments		17			5,063			54			-			1,005
Other real estate owned		30,205			32,643			29,311			29,317			11,750
Other repossessed assets		501			565			1,477			1,501			1,484
Total nonperforming assets not covered under loss share agreements	$	108,841		$	117,211		$	101,958		$	97,958		$	91,192
Covered under loss share agreements:
Nonaccrual loans	$	4,170		$	4,102		$	-		$	-		$	-
Loans and leases past due ninety days or more as to interest or principal payments		-			-			-			-			-
Other real estate owned		363			599			-			-			-
Other repossessed assets		-			-			-			-			-
Total nonperforming assets covered under loss share agreements	$	4,533		$	4,701		$	-		$	-		$	-

Allowance for Loan and Lease Losses
Balance, beginning of period	$	42,260		$	37,234		$	37,277		$	35,651		$	34,845
Provision for loan and lease losses		10,775			11,896			10,041			6,665			15,106
Charge offs on loans not covered by loss share agreements		(10,115	)		(7,465	)		(10,406	)		(5,635	)		(14,412	)
Charge offs on loans covered by loss share agreements		(1,344	)		-			-			-			-
Recoveries		272			595			322			596			112
Balance, end of period	$	41,848		$	42,260		$	37,234		$	37,277		$	35,651

Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements
Ratio of nonperforming loans and leases to total loans and leases		3.35	%		3.55	%		3.00	%		2.85	%		3.24	%
Ratio of nonperforming assets to total assets		2.71	%		3.02	%		2.71	%		2.63	%		2.51	%
Annualized ratio of net loan charge-offs to average loans and leases		1.84	%		1.12	%		1.70	%		0.84	%		2.37	%
Allowance for loan and lease losses as a percent of loans and leases		1.80	%		1.78	%		1.57	%		1.58	%		1.48	%
Allowance for loan and lease losses as a percent of nonperforming loans and leases		53.56	%		50.31	%		52.32	%		55.52	%		45.73	%

###

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Quarter Ended
		December 31, 2009							December 31, 2008
		Average							Average
		Balance			Interest	Rate			Balance			Interest	Rate
Earning Assets
Securities:
Taxable	$	936,525		$	10,513	4.45	%	$	644,850		$	8,504	5.25	%
Nontaxable(1)		213,662			3,462	6.43	%		154,906			2,483	6.38	%
Total securities		1,150,187			13,975	4.82	%		799,756			10,987	5.47	%
Interest bearing deposits		4,568			9	0.78	%		1,343			8	2.37	%
Federal funds sold		2,238			1	0.18	%		15,240			32	0.84	%
Loans and leases:
Commercial and commercial real estate(1)		1,699,909			25,221	5.89	%		1,692,305			26,518	6.23	%
Residential mortgage		209,481			2,866	5.43	%		226,260			3,390	5.96	%
Agricultural and agricultural real estate(1)		263,216			4,086	6.16	%		243,703			4,078	6.66	%
Consumer		235,369			5,180	8.73	%		228,372			5,095	8.88	%
Direct financing leases, net		2,484			37	5.91	%		6,176			92	5.93	%
Fees on loans		-			1,000	-			-			948	-
Less: allowance for loan and lease losses		(41,827)			-	-			(35,683)			-	-
Net loans and leases		2,368,632			38,390	6.43	%		2,361,133			40,121	6.76	%
Total earning assets		3,525,625			52,375	5.89	%		3,177,472			51,148	6.40	%
Nonearning Assets		449,482							314,633
Total Assets	$	3,975,107		$	52,375			$	3,492,105		$	51,148
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	1,469,913		$	4,625	1.25	%	$	1,069,632		$	5,601	2.08	%
Time, $100,000 and over		341,288			2,344	2.72	%		369,588			3,331	3.59	%
Other time deposits		725,580			5,031	2.75	%		764,787			6,797	3.54	%
Short-term borrowings		133,666			194	0.58	%		195,219			522	1.06	%
Other borrowings		457,345			4,250	3.69	%		438,569			4,662	4.23	%
Total interest bearing liabilities		3,127,792			16,444	2.09	%		2,837,795			20,913	2.93	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		476,863							383,365
Accrued interest and other liabilities		44,198							37,121
Total noninterest bearing liabilities		521,061							420,486
Stockholders’ Equity		326,254							233,824
Total Liabilities and Stockholders’ Equity	$	3,975,107		$	16,444			$	3,492,105		$	20,913
Net interest income(1)				$	35,931						$	30,235
Net interest spread(1)						3.81	%						3.47	%
Net interest income to total earning assets(1)						4.04	%						3.79	%
Interest bearing liabilities to earning assets		88.72	%						89.31	%

(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 Year Ended
	December 31, 2009								December 31, 2008
	Average								Average
	Balance			Interest		Rate			Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	873,276		$	39,782		4.56	%	$	616,525		$	31,232		5.07	%
Nontaxable(1)		186,716			12,307		6.59	%		151,828			9,813		6.46	%
Total securities		1,059,992			52,089		4.91	%		768,353			41,045		5.34	%
Interest bearing deposits		2,943			27		0.92	%		706			18		2.55	%
Federal funds sold		835			2		0.24	%		15,494			299		1.93	%
Loans and leases:
Commercial and commercial real estate(1)		1,696,794			101,854		6.00	%		1,645,264			108,651		6.60	%
Residential mortgage		219,303			12,596		5.74	%		223,334			14,169		6.34	%
Agricultural and agricultural real estate(1)		259,700			16,633		6.40	%		238,328			16,933		7.10	%
Consumer		232,475			20,325		8.74	%		212,430			20,004		9.42	%
Direct financing leases, net		3,927			213		5.42	%		7,489			445		5.94	%
Fees on loans		-			4,085		-			-			4,914		-
Less: allowance for loan and lease losses		(37,964	)		-		-			(34,048	)		-		-
Net loans and leases		2,374,235			155,706		6.56	%		2,292,797			165,116		7.20	%
Total earning assets		3,438,005			207,824		6.04	%		3,077,350			206,478		6.71	%
Nonearning Assets		374,738								301,580
Total Assets	$	3,812,743		$	207,824				$	3,378,930		$	206,478
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	1,282,212		$	18,407		1.44	%	$	938,701		$	18,176		1.94	%
Time, $100,000 and over		373,159			11,202		3.00	%		336,926			13,422		3.98	%
Other time deposits		754,814			23,135		3.06	%		807,617			32,506		4.02	%
Short-term borrowings		143,239			733		0.51	%		233,856			4,571		1.95	%
Other borrowings		464,816			17,053		3.67	%		417,462			18,224		4.37	%
Total interest bearing liabilities		3,018,240			70,530		2.34	%		2,734,562			86,899		3.18	%
Noninterest Bearing Liabilities
Noninterest bearing deposits		437,468								372,496
Accrued interest and other liabilities		36,700								39,351
Total noninterest bearing liabilities		474,168								411,847
Stockholders’ Equity		320,335								232,521
Total Liabilities and Stockholders’ Equity	$	3,812,743		$	70,530				$	3,378,930		$	86,899
Net interest income(1)				$	137,294							$	119,579
Net interest spread(1)							3.71	%							3.53	%
Net interest income to total earning assets(1)							3.99	%							3.89	%
Interest bearing liabilities to earning assets		87.79	%							88.86	%

(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			As of and			As of and			As of and			As of and
		For the			For the			For the			For the			For the
		Qtr. Ended			Qtr. Ended			Qtr. Ended			Qtr. Ended			Qtr. Ended
		12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Total Assets
Dubuque Bank and Trust Company	$	1,249,124		$	1,104,217		$	1,097,161		$	1,107,204		$	1,041,247
New Mexico Bank & Trust		868,295			785,146			791,019			762,980			773,726
Rocky Mountain Bank		469,723			468,695			470,220			481,577			476,762
Wisconsin Community Bank		448,106			433,900			434,362			427,734			429,707
Galena State Bank & Trust Co.		291,412			288,501			231,655			228,711			222,886
Riverside Community Bank		283,258			277,639			270,354			254,965			244,613
Arizona Bank & Trust		258,280			268,600			251,562			227,840			219,830
First Community Bank		121,492			121,938			125,069			123,785			123,058
Summit Bank & Trust		97,025			99,724			91,211			78,892			77,638
Minnesota Bank & Trust		49,330			39,283			34,547			30,625			25,695
Total Deposits
Dubuque Bank and Trust Company	$	864,133		$	815,553		$	798,927		$	806,425		$	749,250
New Mexico Bank & Trust		589,468			563,414			552,650			535,753			507,561
Rocky Mountain Bank		376,487			364,570			364,159			375,708			370,630
Wisconsin Community Bank		358,994			338,328			330,327			336,670			338,025
Galena State Bank & Trust Co.		253,073			244,389			196,035			193,697			185,042
Riverside Community Bank		232,459			226,791			220,097			209,176			197,785
Arizona Bank & Trust		202,730			215,092			198,310			176,393			155,909
First Community Bank		100,328			99,351			99,772			100,441			102,515
Summit Bank & Trust		85,131			89,130			79,991			66,259			60,278
Minnesota Bank & Trust		34,616			24,364			18,477			15,598			10,459
Net Income (Loss)
Dubuque Bank and Trust Company	$	3,751		$	3,863		$	4,144		$	3,787		$	1,962
New Mexico Bank & Trust		1,640			1,955			1,434			3,257			704
Rocky Mountain Bank		(6,399	)		(463	)		204			724			(1,021	)
Wisconsin Community Bank		770			1,198			1,464			1,011			(649	)
Galena State Bank & Trust Co.		663			962			513			905			239
Riverside Community Bank		(55	)		283			(326	)		502			(204	)
Arizona Bank & Trust		(5,117	)		(1,227	)		(1,151	)		(2,695	)		(791	)
First Community Bank		(225	)		101			(209	)		316			2
Summit Bank & Trust		(490	)		(1,366	)		(1,169	)		(432	)		(579	)
Minnesota Bank & Trust		(203	)		(221	)		(225	)		(291	)		(304	)
Return on Average Assets
Dubuque Bank and Trust Company		1.25	%		1.40	%		1.50	%		1.43	%		0.77	%
New Mexico Bank & Trust		0.79			0.99			0.73			1.72			0.38
Rocky Mountain Bank		(5.30	)		(0.39	)		0.17			0.61			(0.87	)
Wisconsin Community Bank		0.69			1.09			1.35			0.95			(0.62	)
Galena State Bank & Trust Co.		0.90			1.34			0.90			1.64			0.42
Riverside Community Bank		(0.08	)		0.41			(0.50	)		0.82			(0.33	)
Arizona Bank & Trust		(7.60	)		(1.86	)		(1.88	)		(4.94	)		(1.44	)
First Community Bank		(0.72	)		0.32			(0.67	)		1.05			0.01
Summit Bank & Trust		(1.94	)		(5.62	)		(5.59	)		(2.23	)		(3.07	)
Minnesota Bank & Trust		(1.95	)		(2.42	)		(2.77	)		(4.32	)		(5.52	)
Net Interest Margin as a Percentage of Average Earning Assets
Dubuque Bank and Trust Company		3.98	%		3.98	%		3.72	%		3.59	%		3.60	%
New Mexico Bank & Trust		4.23			4.67			4.38			4.70			4.45
Rocky Mountain Bank		3.68			3.80			3.82			4.17			3.86
Wisconsin Community Bank		3.91			3.76			4.12			3.65			3.38
Galena State Bank & Trust Co.		3.46			3.47			3.59			3.43			3.42
Riverside Community Bank		4.14			3.86			3.38			2.98			3.06
Arizona Bank & Trust		3.58			3.33			3.20			3.88			3.60
First Community Bank		4.24			4.31			3.60			3.53			3.33
Summit Bank & Trust		3.00			2.47			3.17			3.38			3.42
Minnesota Bank & Trust		4.16			3.86			3.94			3.11			2.22

###

HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS
		As of			As of			As of			As of			As of
		12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008
Total Portfolio Loans and Leases
Dubuque Bank and Trust Company	$	658,274		$	653,579		$	669,925		$	662,047		$	669,856
New Mexico Bank & Trust		502,497			513,560			499,597			480,147			494,877
Rocky Mountain Bank		292,914			302,494			314,523			312,335			326,086
Wisconsin Community Bank		274,487			289,558			298,817			295,852			291,164
Galena State Bank & Trust Co.		134,104			136,700			130,011			130,791			141,428
Riverside Community Bank		161,280			161,025			159,977			161,304			165,347
Arizona Bank & Trust		138,604			142,387			135,198			138,647			139,723
First Community Bank		72,113			73,722			72,676			74,120			79,261
Summit Bank & Trust		58,108			58,410			60,948			62,157			60,725
Minnesota Bank & Trust		24,472			22,118			19,977			14,796			13,134
Allowance For Loan and Lease Losses
Dubuque Bank and Trust Company	$	10,486		$	10,318		$	9,478		$	9,333		$	9,307
New Mexico Bank & Trust		7,578			7,641			7,080			6,607			6,847
Rocky Mountain Bank		5,897			6,152			5,743			4,938			4,678
Wisconsin Community Bank		5,390			5,133			4,386			4,345			4,297
Galena State Bank & Trust Co.		1,989			1,897			1,711			1,782			1,962
Riverside Community Bank		2,395			2,475			2,270			2,215			2,293
Arizona Bank & Trust		3,825			4,380			2,520			3,933			2,330
First Community Bank		1,072			1,122			989			1,023			1,110
Summit Bank & Trust		926			930			922			1,075			874
Minnesota Bank & Trust		295			276			234			185			164
Nonperforming Loans and Leases
Dubuque Bank and Trust Company	$	6,102		$	7,365		$	6,474		$	6,180		$	7,840
New Mexico Bank & Trust		14,069			18,693			10,283			10,094			11,426
Rocky Mountain Bank		18,443			17,286			18,570			12,854			17,254
Wisconsin Community Bank		14,396			13,276			12,173			13,075			10,746
Galena State Bank & Trust Co.		1,545			2,045			2,425			3,040			4,625
Riverside Community Bank		8,104			9,493			8,457			6,105			6,410
Arizona Bank & Trust		5,158			5,689			5,806			5,234			8,278
First Community Bank		2,736			3,866			2,893			4,291			5,102
Summit Bank & Trust		6,719			5,528			3,305			5,460			5,486
Minnesota Bank & Trust		19			-			-			-			-
Allowance As a Percent of Total Loans and Leases
Dubuque Bank and Trust Company		1.59	%		1.58	%		1.41	%		1.41	%		1.39	%
New Mexico Bank & Trust		1.51			1.49			1.42			1.38			1.38
Rocky Mountain Bank		2.01			2.03			1.83			1.58			1.43
Wisconsin Community Bank		1.96			1.77			1.47			1.47			1.48
Galena State Bank & Trust Co.		1.48			1.39			1.32			1.36			1.39
Riverside Community Bank		1.48			1.54			1.42			1.37			1.39
Arizona Bank & Trust		2.76			3.08			1.86			2.84			1.67
First Community Bank		1.49			1.52			1.36			1.38			1.40
Summit Bank & Trust		1.59			1.59			1.51			1.73			1.44
Minnesota Bank & Trust		1.21			1.25			1.17			1.25			1.25

###

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)

HEARTLAND FINANCIAL USA, INC.

By:	/s/ John K. Schmidt
	Executive Vice President, COO & CFO