Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS ON SUBSIDIARY DIVIDENDS

The Heartland banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Heartland banks’ financial statements. The regulations prescribe specific capital adequacy guidelines that involve quantitative measures of a bank’s assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. Capital classification is also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Heartland banks to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2012 and 2011, that the Heartland banks met all capital adequacy requirements to which they were subject.

As of December 31, 2012 and 2011, the FDIC categorized each of the Heartland banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Heartland banks must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed each institution’s category.

The Heartland banks’ actual capital amounts and ratios are also presented in the tables below, in thousands:

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount	Ratio
As of December 31, 2012
Total Capital (to Risk-Weighted Assets)
Consolidated	$	532,502	15.35	%	$	277,485	8.00	%	N/A
Dubuque Bank and Trust Company	138,698		12.44		89,164		8.00		111,455	10.00	%
Galena State Bank & Trust Co.	28,027		14.20		15,790		8.00		19,738	10.00
Riverside Community Bank	30,097		13.03		18,476		8.00		23,095	10.00
Wisconsin Bank & Trust	64,378		13.84		37,213		8.00		46,516	10.00
New Mexico Bank & Trust	90,765		14.51		50,047		8.00		62,559	10.00
Arizona Bank & Trust	30,903		14.13		17,499		8.00		21,874	10.00
Rocky Mountain Bank	53,291		16.46		25,902		8.00		32,377	10.00
Summit Bank & Trust	12,317		13.26		7,432		8.00		9,290	10.00
Minnesota Bank & Trust	14,446		14.04		8,234		8.00		10,293	10.00
Heritage Bank, N.A.	11,796		20.13		4,688		8.00		5,860	10.00
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	463,371	13.36	%	$	138,743	4.00	%	N/A
Dubuque Bank and Trust Company	129,473		11.62		44,582		4.00		66,873	6.00	%
Galena State Bank & Trust Co.	25,985		13.17		7,895		4.00		11,843	6.00
Riverside Community Bank	27,206		11.78		9,238		4.00		13,857	6.00
Wisconsin Bank & Trust	60,183		12.94		18,606		4.00		27,910	6.00
New Mexico Bank & Trust	83,902		13.41		25,023		4.00		37,535	6.00
Arizona Bank & Trust	28,116		12.85		8,750		4.00		13,125	6.00
Rocky Mountain Bank	49,243		15.21		12,951		4.00		19,426	6.00
Summit Bank & Trust	11,155		12.01		3,716		4.00		5,574	6.00
Minnesota Bank & Trust	13,485		13.10		4,117		4.00		6,176	6.00
Heritage Bank, N.A.	11,796		20.13		2,344		4.00		3,516	6.00
Tier 1 Capital (to Average Assets)
Consolidated	$	463,371	9.84	%	$	188,284	4.00	%	N/A
Dubuque Bank and Trust Company	129,473		8.73		59,341		4.00		74,176	5.00	%
Galena State Bank & Trust Co.	25,985		8.84		11,757		4.00		14,697	5.00
Riverside Community Bank	27,206		6.53		16,660		4.00		20,825	5.00
Wisconsin Bank & Trust	60,183		10.59		22,741		4.00		28,426	5.00
New Mexico Bank & Trust	83,902		8.47		39,640		4.00		49,550	5.00
Arizona Bank & Trust	28,116		9.93		11,327		4.00		14,158	5.00
Rocky Mountain Bank	49,243		11.41		17,268		4.00		21,585	5.00
Summit Bank & Trust	11,155		10.48		4,256		4.00		5,320	5.00
Minnesota Bank & Trust	13,485		11.73		4,600		4.00		5,750	5.00
Heritage Bank, N.A.	11,796		11.59		4,071		4.00		5,089	5.00

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount	Ratio
As of December 31, 2011
Total Capital (to Risk-Weighted Assets)
Consolidated	$	481,513	15.87	%	$	242,715	8.00	%	N/A
Dubuque Bank and Trust Company	125,478		12.55		79,962		8.00		99,953	10.00	%
Galena State Bank & Trust Co.	26,354		13.34		15,804		8.00		19,755	10.00
Riverside Community Bank	27,636		13.83		15,982		8.00		19,978	10.00
Wisconsin Bank & Trust	50,475		14.77		27,348		8.00		34,185	10.00
New Mexico Bank & Trust	85,006		13.45		50,560		8.00		63,200	10.00
Arizona Bank & Trust	21,045		12.10		13,913		8.00		17,392	10.00
Rocky Mountain Bank	48,182		16.16		23,859		8.00		29,823	10.00
Summit Bank & Trust	12,170		16.03		6,075		8.00		7,594	10.00
Minnesota Bank & Trust	13,878		20.63		5,381		8.00		6,726	10.00
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	427,145	14.08	%	$	121,357	4.00	%	N/A
Dubuque Bank and Trust Company	116,103		11.62		39,981		4.00		59,972	6.00	%
Galena State Bank & Trust Co.	24,511		12.41		7,902		4.00		11,853	6.00
Riverside Community Bank	25,134		12.58		7,991		4.00		11,987	6.00
Wisconsin Bank & Trust	46,989		13.75		13,674		4.00		20,511	6.00
New Mexico Bank & Trust	78,345		12.40		25,280		4.00		37,920	6.00
Arizona Bank & Trust	18,814		10.82		6,957		4.00		10,435	6.00
Rocky Mountain Bank	44,452		14.91		11,929		4.00		17,894	6.00
Summit Bank & Trust	11,220		14.78		3,038		4.00		4,556	6.00
Minnesota Bank & Trust	13,290		19.76		2,690		4.00		4,036	6.00
Tier 1 Capital (to Average Assets)
Consolidated	$	427,145	10.24	%	$	166,865	4.00	%	N/A
Dubuque Bank and Trust Company	116,103		8.77		52,961		4.00		66,201	5.00	%
Galena State Bank & Trust Co.	24,511		8.41		11,654		4.00		14,568	5.00
Riverside Community Bank	25,134		7.78		12,922		4.00		16,152	5.00
Wisconsin Bank & Trust	46,989		9.57		19,634		4.00		24,542	5.00
New Mexico Bank & Trust	78,345		8.47		37,010		4.00		46,263	5.00
Arizona Bank & Trust	18,814		8.50		8,849		4.00		11,062	5.00
Rocky Mountain Bank	44,452		10.50		16,938		4.00		21,173	5.00
Summit Bank & Trust	11,220		11.72		3,830		4.00		4,787	5.00
Minnesota Bank & Trust	13,290		16.53		3,215		4.00		4,019	5.00

The ability of Heartland to pay dividends to its stockholders is dependent upon dividends paid by its subsidiaries. The Heartland banks are subject to certain statutory and regulatory restrictions on the amount they may pay in dividends. To maintain acceptable capital ratios in the Heartland banks, certain portions of their retained earnings are not available for the payment of dividends. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $175.8 million as of December 31, 2012, under the most restrictive minimum capital requirements. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $115.5 million as of December 31, 2012, under the capital requirements to remain well capitalized.