Heartland Financial USA, Inc. Reports Third Quarter 2013 Results

Quarterly Highlights

  • Net income available to common stockholders of $6.5 million or $0.38 per diluted common share
  • Return on average common equity of 8.38%
  • Net interest margin of 3.81%
  • Loan growth of $69.3 million or 10% annualized since June 30, 2013
  • Deposit growth of $83.9 million or 9% annualized since June 30, 2013
  • Purchase of Morrill Bancshares, Inc. completed on October 18, 2013

Business Wire

DUBUQUE, Iowa--(BUSINESS WIRE)--

Heartland Financial USA, Inc. (HTLF):

     
Quarter Ended Nine Months Ended
September 30, September 30,
2013   2012 2013   2012
Net income (in millions) $ 6.8 $ 13.6 $ 28.9 $ 40.4
Net income available to common stockholders (in millions) 6.5 12.6 28.0 37.4
Diluted earnings per common share 0.38 0.75 1.63 2.24
 
Return on average assets 0.53 % 1.11 % 0.76 % 1.14 %
Return on average common equity 8.38 16.79 11.63 17.44
Net interest margin 3.81 3.84 3.77 4.03
 

“Though Heartland’s third quarter earnings fell short of our expectations, we were pleased to see many positive results for the period. Notable highlights include improved loan growth, solid pre-tax, pre-provision earnings, an increase in net interest margin to 3.81% and year-to-date return on equity of 11.63%.”

 

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

 

Heartland Financial USA, Inc. (HTLF) today reported net income available to common stockholders was $6.5 million, or $0.38 per diluted common share, for the quarter ended September 30, 2013, compared to $12.6 million, or $0.75 per diluted common share, for the third quarter of 2012. Return on average common equity was 8.38% and return on average assets was 0.53% for the third quarter of 2013, compared to 16.79% and 1.11%, respectively, for the same quarter in 2012.

Earnings for the third quarter of 2013 were below earnings for the third quarter of 2012, primarily as a result of an $8.5 million decrease in gains on sale of loans and a $4.1 million decrease in securities gains, coupled with a $5.6 million increase in provision for loan and lease losses. Positively affecting earnings for the third quarter of 2013, in comparison to the third quarter of 2012, were an increase in net interest income and a decrease in net loss on repossessed assets. Loan growth was strong during the third quarter of 2013.

Commenting on Heartland's third quarter results, Lynn B. Fuller, Heartland's chairman, president and chief executive officer said, “Though Heartland’s third quarter earnings fell short of our expectations, we were pleased to see many positive results for the period. Notable highlights include improved loan growth, solid pre-tax, pre-provision earnings, an increase in net interest margin to 3.81% and year-to-date return on equity of 11.63%.”

Net income available to common stockholders was $28.0 million, or $1.63 per diluted common share, for the nine months ended September 30, 2013, compared to $37.4 million, or $2.24 per diluted common share, earned during the first nine months of 2012. Return on average common equity was 11.63% and return on average assets was 0.76% for the first nine months of 2013, compared to 17.44% and 1.14%, respectively, for the same period in 2012.

Earnings for the first nine months of 2013, in comparison to the first nine months of 2012, were most positively affected by increases in net interest income, loan servicing income and service charges and fees, combined with a decrease in net loss on repossessed assets. In addition to a decline in gains on sale of loans during the first nine months of 2013, reduced securities gains and significant increases in salaries and employee benefits, occupancy and furniture and equipment expenses more than offset the improvements discussed above. The earnings for the first nine months of 2012 included the two best quarterly earnings in Heartland's history.

Net Interest Margin Percentage Remains Stable; Increases in Dollars

Net interest margin, expressed as a percentage of average earning assets, was 3.81% during the third quarter of 2013 compared to 3.71% during the second quarter of 2013, 3.77% during the first quarter of 2013 and 3.84% for the third quarter of 2012. For the nine-month periods ended September 30, net interest margin was 3.77% during 2013 and 4.03% during 2012.

Fuller said, “Our net interest margin increased to 3.81% during the third quarter from 3.71% for the previous quarter. Margin improvement was the result of a combination of loan growth, improved yields on securities and some improvement in funding costs.”

On a tax-equivalent basis, interest income in the third quarter of 2013 was $50.8 million compared to $48.5 million in the third quarter of 2012, an increase of $2.3 million or 5%. For the first nine months of 2013, interest income on a tax-equivalent basis was $150.9 million compared to $147.2 million during the same period in 2012, an increase of $3.7 million or 3%. Average earning assets increased $376.5 million or 9% during the third quarter of 2013 compared to the third quarter of 2012 and $528.7 million or 14% during the first nine months of 2013 compared to the same period in 2012, with approximately $225.0 million of the growth in both periods attributable to the three acquisitions completed during the second half of 2012. The average interest rate earned on total average earning assets was 4.58% during the third quarter of 2013 compared to 4.80% during the third quarter of 2012. For the first nine months of the year, the average interest rate earned on these assets was 4.56% during 2013 compared to 5.05% during 2012.

Interest expense for the third quarter of 2013 was $8.5 million, a decrease of $1.2 million or 12% from $9.7 million in the third quarter of 2012. On a nine-month comparative basis, interest expense decreased $3.2 million or 11%. Even though average interest bearing liabilities increased $177.8 million or 5% for the quarter ended September 30, 2013, as compared to the same quarter in 2012, and $266.4 million or 8% for the nine-month period ended on September 30, 2013, as compared to the same nine-month period in 2012, the average interest rate paid on Heartland's deposits and borrowings declined 21 basis points during the quarterly period under comparison and 23 basis points during the nine-month period under comparison. Contributing to this improvement in interest expense was a continued change in the mix of deposits. Average savings balances, the lowest cost interest bearing deposits, as a percentage of total average interest bearing deposits, were 71% during the third quarter of 2013 and 70% during the first nine-month period of 2013 compared to 68% for both the third quarter and first nine months of 2012. Additionally, the average interest rate paid on savings deposits was 0.30% during the third quarter and 0.31% during the first nine months of 2013 compared to 0.38% during the third quarter and 0.39% during the first nine months of 2012.

Net interest income on a tax-equivalent basis totaled $42.3 million during the third quarter of 2013, an increase of $3.5 million or 9% from the $38.8 million recorded during the third quarter of 2012. For the first nine months of 2013, net interest income on a tax-equivalent basis was $124.5 million, an increase of $6.9 million or 6% from the $117.6 million recorded during the first nine months of 2012.

Decrease in Noninterest Income; Increase in Noninterest Expenses

Noninterest income was $20.7 million during the third quarter of 2013 compared to $29.8 million during the third quarter of 2012, a decrease of $9.1 million or 31%. For the nine-month period ended September 30, noninterest income was $72.0 million in 2013 compared to $81.4 million in 2012, a decrease of $9.4 million or 12%. Although noninterest income was negatively affected by decreased gains on sale of loans and securities gains in both the quarterly and nine-month comparative periods, these decreases were partially offset by increases in loan servicing income and other fee income categories. Gains on sale of loans totaled $5.3 million during the third quarter of 2013 compared to $13.8 million during the third quarter of 2012, a decrease of $8.5 million or 62%. During the first nine months of 2013, gains on sale of loans totaled $24.2 million compared to $34.9 million during the first nine months of 2012, a $10.7 million or 31% decrease. Gains on sale of loans result primarily from the gain or loss on sales of mortgage loans into the secondary market, related fees and fair value marks on the associated derivatives. The volume of residential mortgage loans sold totaled $336.8 million during the third quarter of 2013 compared to $448.7 million during the third quarter of 2012, and totaled $1.21 billion during the first nine months of 2013 compared to $1.05 billion during the first nine months of 2012. Securities gains totaled $1.1 million during the third quarter of 2013 compared to $5.2 million during the third quarter of 2012, and totaled $6.6 million during the first nine months of 2013 compared to $14.1 million during the first nine months of 2012.

Loan servicing income increased $968,000 or 32% for the third quarter of 2013 as compared to the third quarter of 2012 and $3.6 million or 46% for the nine-month period ended September 30, 2013, as compared to the same period in 2012. Included in loan servicing income are the fees collected for the servicing of mortgage loans for others, which are dependent upon the aggregate outstanding balance of these loans, rather than quarterly production and sale of mortgage loans. Fees collected for the servicing of mortgage loans for others were $1.9 million during the third quarter of 2013 compared to $1.1 million during the third quarter of 2012, an increase of $780,000 or 69%. For the first nine months of 2013, fees collected for the servicing of mortgage loans for others was $4.9 million compared to $3.1 million during the first nine months of 2012, an increase of $1.8 million or 58%. The portfolio of mortgage loans serviced for others by Heartland totaled $2.89 billion at September 30, 2013, compared to $1.96 billion at September 30, 2012.

As reflected in the table below, on a sequential quarterly basis, residential mortgage loan originations and the gains on sale of residential mortgage loans and the mortgage servicing rights income they create, decreased in the first three quarters of 2013 as compared to the last two quarters of 2012. These decreases resulted primarily from the seasonality typically experienced in mortgage loan activity during the first quarter of the year, coupled with an increase in residential mortgage loan interest rates and corresponding decrease in refinancing activity. Heartland is committed to achieving long term success in the mortgage banking business which depends on its ability to shift toward the origination of loans for the purchase of new homes versus the refinance of mortgages on existing homes. For the third quarter of 2013, refinancing activity represented 34% of total mortgage loan originations compared to 50% of total mortgage loan originations during the second quarter of 2013, 70% during the first quarter of 2013, 71% during the fourth quarter of 2012 and 64% during the third quarter of 2012.

The following table summarizes Heartland's residential mortgage loan activity during the most recent five quarters, in thousands:

 
As Of and For the Quarter Ended
9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Mortgage Servicing Fees $ 1,903 $ 1,613 $ 1,430 $ 1,304 $ 1,123
Mortgage Servicing Rights Income 3,386 3,965 3,245 3,535 3,316
Mortgage Servicing Rights Amortization (1,811 ) (1,976 ) (1,761 ) (1,871 ) (1,896 )
Total Residential Mortgage Loan Servicing Income $ 3,478   $ 3,602   $ 2,914   $ 2,968   $ 2,543  
Valuation Adjustment on Mortgage Servicing Rights $ $ $ 496 $ 197 $ (493 )
Gains On Sale of Residential Mortgage Loans $ 5,279 $ 9,005 $ 9,641 $ 13,966 $ 13,750
Total Residential Mortgage Loan Applications $ 416,128 $ 653,461 $ 556,890 $ 645,603 $ 672,382
Residential Mortgage Loans Originated $ 349,012 $ 470,813 $ 432,974 $ 490,525 $ 488,658
Residential Mortgage Loans Sold $ 336,780 $ 445,452 $ 424,931 $ 478,280 $ 448,704
Residential Mortgage Loan Servicing Portfolio $ 2,887,667 $ 2,679,283 $ 2,428,067 $ 2,199,486 $ 1,963,567
 

For both the third quarter of 2013 and the third quarter of 2012, noninterest expense totaled $47.1 million. For the nine-month period ended September 30, noninterest expense totaled $142.7 million in 2013 compared to $128.8 million in 2012, a $13.9 million or 11% increase. The largest component of noninterest expense, salaries and employee benefits, increased $1.8 million or 7% during the third quarter of 2013 as compared to the same quarter in 2012 and $11.7 million or 15% for the nine-month period ended September 30, 2013, as compared to the same nine months in 2012. A large portion of these increases resulted from the expansion of Heartland's residential loan origination operations, with a smaller portion attributable to the additional employees joining Heartland through the acquisitions completed during the last two quarters of 2012. Full-time equivalent employees totaled 1,655 on September 30, 2013, compared to 1,391 on September 30, 2012. The impact of increases in occupancy, furniture and equipment and professional fees was mitigated by a reduction in net losses in repossessed assets of $2.7 million or 72% for the third quarter of 2013 compared to the third quarter of 2012 and $3.1 million or 39% for the nine-month period ended September 30, 2013, compared to the same period in 2012.

Fuller commented, “Like most banks providing mortgage loan services, we are experiencing a slowdown in loan originations. Despite the trend, we are fully committed to the ongoing opportunity in mortgage lending as a supplement to our community banking model. As we shift gears from refinancing to purchase originations, we are focusing on expansion into new markets. These include the Pacific Northwest, Kansas City and Milwaukee.”

Heartland's effective tax rate was 26.24% for the first nine months of 2013 compared to 32.73% for the first nine months of 2012. Federal low-income housing tax credits included in Heartland's effective tax rate totaled $599,000 during the first nine months of both 2013 and 2012. 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 33.37% during the first nine months of 2013 compared to 16.65% during the first nine months of 2012. The tax-equivalent adjustment for this tax-exempt interest income was $7.0 million during the first nine months of 2013 compared to $5.4 million during the first nine months of 2012.

Solid Growth in Loans; Increase in Deposits, With Improved Mix

Total assets were $4.91 billion at September 30, 2013, a decrease of $77.8 million or 2% annualized since December 31, 2012. Securities represented 29% of total assets at September 30, 2013, compared to 31% at year-end 2012 as a portion of the proceeds from maturities, paydowns and sales were used to fund loan growth.

Total loans and leases held to maturity were $2.90 billion at September 30, 2013, compared to $2.82 billion at year-end 2012, an increase of $80.2 million or 4% annualized. Loan demand continued to pick up during the third quarter of 2013, resulting in growth of $69.3 million or 10% annualized. During the second quarter of 2013, loan growth was $42.5 million or 6% annualized. Commercial and commercial real estate loans, which totaled $2.04 billion at September 30, 2013, increased $41.5 million or 3% annualized since year-end 2012, with $38.1 million occurring during the third quarter and $14.1 million occurring during the second quarter. Residential mortgage loans, which totaled $269.5 million at September 30, 2013, increased $19.8 million or 11% annualized since year-end 2012, with growth of $20.9 million occurring during the third quarter and $8.2 million occurring during the second quarter. Agricultural and agricultural real estate loans, which totaled $324.3 million at September 30, 2013, decreased $4.0 million or 2% annualized since year-end 2012, with a decrease of $3.2 million occurring during the third quarter and growth of $12.9 million occurring during the second quarter. Consumer loans, which totaled $268.1 million at September 30, 2013, increased $22.4 million or 12% annualized since year-end 2012, with $13.3 million occurring during the third quarter and $7.8 million during the second quarter.

“We were pleased to see loan growth of $70 million during the quarter as well as improvement in the loan pipeline. Growth in quality loans remains a high priority. We continue to emphasize new business development and are devoting significant resources to support our calling officers,” added Fuller.

Fuller also noted, “Relative to the Small Business Lending Fund, we are pleased to note that the Heartland banks have reached, and exceeded, our goal for small business loan growth. As a result, we have locked in a one percent dividend rate through the first quarter of 2016. We continue to focus attention on the small business market as a key segment and one we are well-suited to serve.”

Total deposits were $3.92 billion at September 30, 2013, compared to $3.85 billion at year-end 2012, an increase of $79.3 million or 3% annualized. Demand deposits totaled $1.07 billion at September 30, 2013, an increase of $99.5 million or 14% annualized since year-end 2012. Savings deposits increased $39.0 million or 3% annualized since year-end 2012 and certificates of deposit decreased $59.1 million or 9% annualized. The composition of Heartland's deposits continued its positive trend as no-cost demand deposits as a percentage of total deposits were 27% at both September 30, 2013, and June 30, 2013, compared to 25% at both March 31, 2013, and December 31, 2012, while higher-cost certificates of deposit as a percentage of total deposits were 21% at September 30, 2013, compared to 22% at both June 30, 2013, and March 31, 2013, and 23% at December 31, 2012.

Fuller said, “Deposits are up year-over-year, primarily as a result of our acquisitions. We continue to realize the benefit of a shift in deposit mix, with growth in the key low-cost categories of demand, savings and money market accounts. Demand deposit balances continue to grow and currently represent 27 percent of total deposits.”

Common stockholders' equity was $314.9 million at September 30, 2013, compared to $313.4 million at June 30, 2013, and $320.1 million at year-end 2012. Book value per common share was $18.58 at September 30, 2013, compared to $18.51 at June 30, 2013, and $19.02 at year-end 2012. Changes in common stockholders' equity and book value per common share are the result of earnings, dividends paid, stock transactions and mark-to-market adjustment for unrealized gains and losses on securities available for sale. As a result of increases in market interest rates on many debt securities during the second and third quarters of 2013, Heartland's unrealized gains and losses on securities available for sale, net of applicable taxes, were at an unrealized loss of $17.5 million at September 30, 2013, and $7.5 million at June 30, 2013, compared to an unrealized gain of $17.4 million at March 31, 2013, and $20.5 million at December 31, 2012.

Increase in Provision for Loan Losses; Increase in Nonperforming Loans During the Quarter

The allowance for loan and lease losses at September 30, 2013, was 1.42% of loans and leases and 87.73% of nonperforming loans compared to 1.37% of loans and leases and 89.71% of nonperforming loans at December 31, 2012, and 1.53% of loans and leases and 99.16% of nonperforming loans at September 30, 2012. The provision for loan losses was $5.1 million for the third quarter of 2013 compared to a negative $502,000 for the third quarter of 2012. For the first nine months of 2013, provision for loan losses was $7.6 million compared to $4.8 million for the first nine months of 2012, a $2.8 million or 58% increase. During the third quarter of 2013, a $2.2 million impairment reserve was recorded on a $13.0 million secured loan to a bank holding company. Although not delinquent, this loan was moved to non-accrual status as of September 30, 2013, based upon management's assessment. The increased provision for loan and lease losses during 2013 was also attributable to the loan growth experienced, particularly during the second and third quarters.

Nonperforming loans, exclusive of those covered under loss sharing agreements, were $47.1 million or 1.62% of total loans and leases at September 30, 2013, compared to $41.0 million or 1.45% of total loans and leases at June 30, 2013, $32.8 million or 1.18% of total loans and leases at March 31, 2013, $43.2 million or 1.53% of total loans and leases at December 31, 2012, and $40.7 million or 1.54% of total loans and leases at September 30, 2012. Without the $13.0 million bank holding company loan previously discussed, nonperforming loans experienced a $6.9 million or 17% decrease during the quarter. Approximately 69%, or $32.3 million, of Heartland's nonperforming loans have individual loan balances exceeding $1.0 million. These nonperforming loans, to an aggregate of 6 borrowers, were primarily located in the Midwestern states, with $17.7 million originated by Dubuque Bank and Trust Company, $6.0 million originated by Wisconsin Bank & Trust, $4.4 million originated by New Mexico Bank & Trust, $2.4 million originated by Rocky Mountain Bank and $1.8 million originated by Summit Bank & Trust. The portion of Heartland's nonperforming loans covered by government guarantees was $352,000 at September 30, 2013. The industry breakdown for nonperforming loans with individual balances exceeding $1.0 million, as identified using the North American Industry Classification System (NAICS), was $13.0 million for bank holding company, $6.8 million for lot and land development, $6.0 million for grain/cattle operation, $4.7 million for gas rig and $1.8 million for commercial real estate investment.

Delinquencies in each of the loan portfolios continue to be well-managed. Loans delinquent 30 to 89 days as a percent of total loans were 0.67% at September 30, 2013, compared to 0.29% at June 30, 2013, 0.48% at March 31, 2013, 0.32% at December 31, 2012, and 0.53% at September 30, 2012. The increase in delinquencies during the third quarter of 2013 was primarily associated with a single credit that was renewed after quarter end. Had this renewal occurred prior to quarter end, loans delinquent 30 to 89 days would have been at 0.37%.

Other real estate owned was $33.0 million at September 30, 2013, compared to $34.8 million at June 30, 2013, $36.7 million at March 31, 2013, and $35.8 million at December 31, 2012. Liquidation strategies have been identified for all the assets held in other real estate owned. Management continues to market these properties through an orderly liquidation process instead of a quick liquidation process in order to avoid discounts greater than the projected carrying costs. During 2013, $2.7 million of other real estate owned was sold during the third quarter and $11.3 million during the first nine months.

The schedules below summarize the changes in Heartland's nonperforming assets, including those covered by loss share agreements, during the third quarter of 2013 and the first nine months of 2013, in thousands:

       
Other Other Total
Nonperforming Real Estate Repossessed Nonperforming
Loans Owned Assets Assets
June 30, 2013 $ 41,580 $ 34,763 $ 603 $ 76,946
Loan foreclosures (2,643 ) 2,608 35
Net loan charge offs (1,461 ) (1,461 )
New nonperforming loans 16,070 16,070
Reduction of nonperforming loans(1) (5,653 ) (5,653 )
OREO/Repossessed assets sales proceeds (3,401 ) (43 ) (3,444 )
OREO/Repossessed assets writedowns, net (952 ) (96 ) (1,048 )
Net activity at Citizens Finance Co.  

  (26 ) (26 )
September 30, 2013 $ 47,893   $ 33,018   $ 473   $ 81,384  
 
(1) Includes principal reductions and transfers to performing status.
 
Other Other Total
Nonperforming Real Estate Repossessed Nonperforming
Loans Owned Assets Assets
December 31, 2012 $ 44,415 $ 35,822 $ 542 $ 80,779
Loan foreclosures (13,909 ) 13,318 591
Net loan charge offs (5,052 ) (5,052 )
New nonperforming loans 37,903 37,903
Reduction of nonperforming loans(1) (15,464 ) (15,464 )
OREO/Repossessed assets sales proceeds (12,239 ) (481 ) (12,720 )
OREO/Repossessed assets writedowns, net (3,883 ) (141 ) (4,024 )
Net activity at Citizens Finance Co.  

  (38 ) (38 )
September 30, 2013 $ 47,893   $ 33,018   $ 473   $ 81,384  
 
(1) Includes principal reductions and transfers to performing status.
 

Net charge-offs on loans during the third quarter of 2013 were $1.5 million compared to $536,000 during the third quarter of 2012.

“The increase in nonperforming assets during the third quarter was disappointing; however, it was primarily due to a single large credit. Excluding this one credit, we continue to see an improving trend for this measure. Credit quality remains one of our highest priorities,” Fuller concluded.

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. EDT today. To participate, dial 877-407-0782 at least five minutes before start time. To listen to the live webcast, log on to www.htlf.com at least 15 minutes before start time. If you are unable to participate on the call, a replay will be available until October 27, 2014, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc., one of Forbes 2013 "Best Banks in America," is a $5.7 billion diversified financial services company providing banking, mortgage, wealth management, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 78 banking locations in 56 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas and Missouri and loan production offices in California, Nevada, Wyoming, Idaho and North Dakota. 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 potential impact of acquisitions, (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the Company; and (xii) 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.

 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended   For the Nine Months Ended
September 30, September 30,
    2013   2012 2013   2012
Interest Income    
Interest and fees on loans and leases $ 40,154 $ 39,208 $ 119,707 $ 116,989
Interest on securities:
Taxable 4,803 4,452 14,174 17,050
Nontaxable 3,443 2,896 10,001 7,786
Interest on federal funds sold 1
Interest on deposits in other financial institutions   3     3     9     5  
Total Interest Income   48,403     46,559     143,891     141,831  
Interest Expense
Interest on deposits 4,769 5,504 14,911 16,883
Interest on short-term borrowings 131 215 387 652
Interest on other borrowings   3,623     4,028     11,122     12,114  
Total Interest Expense   8,523     9,747     26,420     29,649  
Net Interest Income 39,880 36,812 117,471 112,182
Provision for loan and lease losses   5,149     (502 )   7,648     4,852  
Net Interest Income After Provision for Loan and Lease Losses   34,731     37,314     109,823     107,330  
Noninterest Income
Service charges and fees 4,487 3,944 12,775 11,240
Loan servicing income 3,984 3,016 11,461 7,832
Trust fees 2,918 2,667 8,764 7,940
Brokerage and insurance commissions 1,277 908 3,315 2,757
Securities gain (loss), net 1,118 5,212 6,612 14,106
Gain (loss) on trading account securities 263 (163 ) 839 (117 )
Impairment loss on securities (981 )
Gains on sale of loans 5,251 13,750 24,246 34,941
Valuation adjustment on mortgage servicing rights (493 ) 496 (674 )
Income on bank owned life insurance 409 382 1,129 1,131
Other noninterest income   1,011     543     2,407     3,257  
Total Noninterest Income   20,718     29,766     72,044     81,432  
Noninterest Expense
Salaries and employee benefits 28,847 27,064 88,103 76,444
Occupancy 3,387 2,596 9,796 7,612
Furniture and equipment 1,917 1,541 6,033 4,504
Professional fees 4,486 4,217 12,262 10,938
FDIC insurance assessments 745 811 2,508 2,482
Advertising 1,360 1,183 3,836 3,558
Intangible assets amortization 196 146 594 399
Net loss on repossessed assets 1,069 3,775 4,886 7,986
Other noninterest expenses   5,140     5,826     14,642     14,835  
Total Noninterest Expense   47,147     47,159     142,660     128,758  
Income Before Income Taxes 8,302 19,921 39,207 60,004
Income taxes   1,492     6,338     10,289     19,642  
Net Income 6,810 13,583 28,918 40,362
Net (income) loss attributable to noncontrolling interest, net of tax       4     (64 )   23  
Net Income Attributable to Heartland 6,810 13,587 28,854 40,385
Preferred dividends and discount   (276 )   (949 )   (889 )   (2,991 )
Net Income Available to Common Stockholders $ 6,534   $ 12,638   $ 27,965   $ 37,394  
Earnings per common share-diluted $ 0.38 $ 0.75 $ 1.63 $ 2.24
Weighted average shares outstanding-diluted 17,221,154 16,745,968 17,183,219 16,729,637
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  For the Quarter Ended
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Interest Income        
Interest and fees on loans and leases $ 40,154 $ 39,726 $ 39,827 $ 39,510 $ 39,208
Interest on securities:
Taxable 4,803 4,712 4,659 5,079 4,452
Nontaxable 3,443 3,360 3,198 2,912 2,896
Interest on federal funds sold 3
Interest on deposits in other financial institutions   3     2     4     3     3  
Total Interest Income   48,403     47,800     47,688     47,507     46,559  
Interest Expense
Interest on deposits 4,769 5,066 5,076 5,347 5,504
Interest on short-term borrowings 131 108 148 166 215
Interest on other borrowings   3,623     3,702     3,797     4,020     4,028  
Total Interest Expense   8,523     8,876     9,021     9,533     9,747  
Net Interest Income 39,880 38,924 38,667 37,974 36,812
Provision for loan and lease losses   5,149     1,862     637     3,350     (502 )
Net Interest Income After Provision for Loan and Lease Losses   34,731     37,062     38,030     34,624     37,314  
Noninterest Income
Service charges and fees 4,487 4,280 4,008 4,002 3,944
Loan servicing income 3,984 4,106 3,371 3,468 3,016
Trust fees 2,918 2,942 2,904 2,538 2,667
Brokerage and insurance commissions 1,277 1,087 951 945 908
Securities gain (loss), net 1,118 2,067 3,427 (108 ) 5,212
Gain (loss) on trading account securities 263 262 314 164 (163 )
Impairment loss on securities
Gains on sale of loans 5,251 9,083 9,912 14,257 13,750
Valuation adjustment on mortgage servicing rights 496 197 (493 )
Income on bank owned life insurance 409 315 405 311 382
Other noninterest income   1,011     716     680     1,456     543  
Total Noninterest Income   20,718     24,858     26,468     27,230     29,766  
Noninterest Expense
Salaries and employee benefits 28,847 29,516 29,740 29,283 27,064
Occupancy 3,387 3,224 3,185 3,017 2,596
Furniture and equipment 1,917 2,065 2,051 1,822 1,541
Professional fees 4,486 4,233 3,543 4,400 4,217
FDIC insurance assessments 745 861 902 810 811
Advertising 1,360 1,248 1,228 1,736 1,183
Intangible assets amortization 196 198 200 163 146
Net loss on repossessed assets 1,069 2,477 1,340 1,983 3,775
Other noninterest expenses   5,140     4,944     4,558     11,409     5,826  
Total Noninterest Expense   47,147     48,766     46,747     54,623     47,159  
Income Before Income Taxes 8,302 13,154 17,751 7,231 19,921
Income taxes   1,492     3,598     5,199     (2,258 )   6,338  
Net Income 6,810 9,556 12,552 9,489 13,583
Net (income) loss attributable to noncontrolling interest, net of tax           (64 )   (82 )   4  
Net Income Attributable to Heartland 6,810 9,556 12,488 9,407 13,587
Preferred dividends and discount   (276 )   (205 )   (408 )   (409 )   (949 )
Net Income Available to Common Stockholders $ 6,534   $ 9,351   $ 12,080   $ 8,998   $ 12,638  
Earnings per common share-diluted $ 0.38 $ 0.54 $ 0.70 $ 0.54 $ 0.75
Weighted average shares outstanding-diluted 17,221,154 17,203,924 17,187,180 16,812,947 16,745,968
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
  As Of
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Assets        
Cash and cash equivalents $ 165,008 $ 112,097 $ 74,587 $ 168,054 $ 191,126
Time deposits in other financial institutions 3,605 3,605 3,605
Securities 1,446,670 1,578,573 1,580,719 1,561,957 1,332,082
Loans held for sale 61,326 88,541 91,708 96,165 99,429
Loans and leases:
Held to maturity 2,901,706 2,832,377 2,789,893 2,821,549 2,647,959
Loans covered by loss share agreements 5,876 6,275 6,741 7,253 8,511
Allowance for loan and lease losses   (41,311 )   (37,623 )   (37,528 )   (38,715 )   (40,401 )
Loans and leases, net 2,866,271 2,801,029 2,759,106 2,790,087 2,616,069
Premises, furniture and equipment, net 129,029 129,938 128,411 128,294 120,334
Goodwill 30,627 30,627 30,627 30,627 26,590
Other intangible assets, net 23,435 22,056 20,266 18,486 15,612
Cash surrender value on life insurance 79,238 75,992 75,907 75,480 72,853
Other real estate, net 33,018 34,763 36,704 35,822 36,139
FDIC indemnification asset 795 282 528 749 1,238
Other assets   73,708     82,253     98,390     84,832     81,725  
Total Assets $ 4,912,730   $ 4,959,756   $ 4,900,558   $ 4,990,553   $ 4,593,197  
Liabilities and Equity
Liabilities
Deposits:
Demand $ 1,073,688 $ 1,029,784 $ 971,142 $ 974,232 $ 877,790
Savings 2,043,397 1,978,962 2,022,625 2,004,438 1,809,776
Time   807,913     832,388     848,689     866,990     815,470  
Total deposits 3,924,998 3,841,134 3,842,456 3,845,660 3,503,036
Short-term borrowings 224,048 339,181 202,694 224,626 245,308
Other borrowings 322,538 336,332 336,577 389,025 377,536
Accrued expenses and other liabilities   44,543     47,974     104,857     126,703     72,571  
Total Liabilities 4,516,127 4,564,621 4,486,584 4,586,014 4,198,451
Equity
Preferred equity 81,698 81,698 81,698 81,698 81,698
Common equity   314,905     313,437     329,478     320,107     310,396  
Total Heartland Stockholders' Equity 396,603 395,135 411,176 401,805 392,094
Noncontrolling interest           2,798     2,734     2,652  
Total Equity   396,603     395,135     413,974     404,539     394,746  
Total Liabilities and Equity $ 4,912,730   $ 4,959,756   $ 4,900,558   $ 4,990,553   $ 4,593,197  
Common Share Data
Book value per common share $ 18.58 $ 18.51 $ 19.54 $ 19.02 $ 18.81
ASC 320 effect on book value per common share $ (0.66 ) $ (0.44 ) $ 1.03 $ 1.21 $ 1.46
 
Common shares outstanding, net of treasury stock 16,951,053 16,934,161 16,865,919 16,827,835 16,505,241
Tangible Capital Ratio(1) 5.78 % 5.69 % 6.09 % 5.78 % 6.18 %
 

(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). This is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength.

...
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
    For the Quarter Ended   For the Nine Months Ended
September 30, September 30,
        2013   2012   2013   2012
Average Balances    
Assets $ 4,901,972 $ 4,532,302 $ 4,907,436 $ 4,370,919
Loans and leases, net of unearned 2,937,508 2,727,806 2,906,970 2,660,556
Deposits 3,861,624 3,415,810 3,845,120 3,303,138
Earning assets 4,396,140 4,019,601 4,420,699 3,892,024
Interest bearing liabilities 3,413,205 3,235,440 3,418,956 3,152,584
Common stockholders' equity 309,472 299,408 321,511 286,479
Total stockholders' equity 391,170 383,763 404,417 370,837
Tangible common stockholders' equity 276,511 272,078 288,349 259,060
 
Earnings Performance Ratios
Annualized return on average assets 0.53 % 1.11 % 0.76 % 1.14 %
Annualized return on average common equity 8.38 % 16.79 % 11.63 % 17.44 %
Annualized return on average common tangible equity 9.38 % 18.48 % 12.97 % 19.28 %
Annualized net interest margin (1) 3.81 % 3.84 % 3.77 % 4.03 %
Efficiency ratio, fully taxable equivalent (2) 76.21 % 74.47 % 75.10 % 69.64 %
 
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Average Balances
Assets $ 4,901,972 $ 4,932,852 $ 4,890,023 $ 4,739,887 $ 4,532,302
Loans and leases, net of unearned 2,937,508 2,905,778 2,876,960 2,803,361 2,727,806
Deposits 3,861,624 3,871,945 3,801,125 3,674,507 3,415,810
Earning assets 4,396,140 4,461,923 4,404,119 4,171,475 4,019,601
Interest bearing liabilities 3,413,205 3,433,686 3,412,641 3,330,270 3,235,440
Common stockholders' equity 309,472 332,386 322,820 316,073 299,408
Total stockholders' equity 391,170 414,976 407,282 400,442 383,763
Tangible common stockholders' equity 276,511 299,225 289,453 288,359 272,078
 
Earnings Performance Ratios
Annualized return on average assets 0.53 % 0.76 % 1.00 % 0.76 % 1.11 %
Annualized return on average common equity 8.38 % 11.28 % 15.18 % 11.33 % 16.79 %
Annualized return on average common tangible equity 9.38 % 12.53 % 16.93 % 12.41 % 18.48 %
Annualized net interest margin(1) 3.81 % 3.71 % 3.77 % 3.81 % 3.84 %
Efficiency ratio, fully taxable equivalent(2) 76.21 % 76.08 % 73.06 % 81.13 % 74.47 %
 

(1) Computed on a tax equivalent basis using an effective tax rate of 35%

(2) Efficiency ratio, fully taxable equivalent, is noninterest expense, divided by the sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains (losses), net. This efficiency ratio is presented on a taxable equivalent basis, which adjusts net interest income for the tax-favored status of certain loans and investment securities. Management believes this measure to be the preferred industry measurement of net interest income as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and it excludes certain specific revenue items (such as investment securities gains (losses), net). This is a non-GAAP measure.
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
As of and for the Quarter Ended
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Loan and Lease Data        
Loans held to maturity:
Commercial and commercial real estate $ 2,042,995 $ 2,004,883 $ 1,990,818 $ 2,001,492 $ 1,902,588
Residential mortgage 269,501 248,604 240,453 249,689 228,972
Agricultural and agricultural real estate 324,339 327,490 314,606 328,311 283,697
Consumer 268,112 254,825 246,996 245,678 236,619
Unearned discount and deferred loan fees   (3,241 )   (3,425 )   (2,980 )   (3,621 )   (3,917 )
Total loans and leases held to maturity $ 2,901,706   $ 2,832,377   $ 2,789,893   $ 2,821,549   $ 2,647,959  
Loans covered under loss share agreements:
Commercial and commercial real estate $ 2,402 $ 2,519 $ 2,738 $ 3,074 $ 3,772
Residential mortgage 2,433 2,493 2,722 2,645 3,099
Agricultural and agricultural real estate 446 441 453 748 863
Consumer   595     822     828     786     777  
Total loans and leases covered under loss share agreements $ 5,876   $ 6,275   $ 6,741   $ 7,253   $ 8,511  
Asset Quality
Not covered under loss share agreements:
Nonaccrual loans $ 47,088 $ 41,003 $ 32,356 $ 43,156 $ 40,743
 
Loans and leases past due ninety days or more as to interest or principal payments - 6 454 - -
Other real estate owned 32,753 33,709 35,697 35,470 35,994
Other repossessed assets   469     603     1,059     542     496  
Total nonperforming assets not covered under loss share agreements $ 80,310   $ 75,321   $ 69,566   $ 79,168   $ 77,233  
Performing troubled debt restructured loans $ 19,371 $ 32,661 $ 24,473 $ 21,121 $ 22,385
Covered under loss share agreements:
Nonaccrual loans $ 805 $ 571 $ 636 $ 1,259 $ 2,236
Other real estate owned 265 1,054 1,007 352 145
Other repossessed assets   4     -     -     -     -  
Total nonperforming assets covered under loss share agreements $ 1,074   $ 1,625   $ 1,643   $ 1,611   $ 2,381  
Allowance for Loan and Lease Losses
Balance, beginning of period $ 37,623 $ 37,528 $ 38,715 $ 40,401 $ 41,439
Provision for loan and lease losses 5,149 1,862 637 3,350 (502 )
Charge-offs on loans not covered by loss share agreements (2,454 ) (2,742 ) (3,041 ) (7,455 ) (2,785 )
Charge-offs on loans covered by loss share agreements (59 ) (31 ) (23 ) (137 ) (265 )
Recoveries   1,052     1,006     1,240     2,556     2,514  
Balance, end of period $ 41,311   $ 37,623   $ 37,528   $ 38,715   $ 40,401  
Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements
Ratio of nonperforming loans and leases to total loans and leases 1.62 % 1.45 % 1.18 % 1.53 % 1.54 %
Ratio of nonperforming assets to total assets 1.62 % 1.52 % 1.42 % 1.59 % 1.68 %
Annualized ratio of net loan charge-offs to average loans and leases 0.20 % 0.24 % 0.26 % 0.71 % 0.08 %
Allowance for loan and lease losses as a percent of loans and leases 1.42 % 1.33 % 1.35 % 1.37 % 1.53 %
Allowance for loan and lease losses as a percent of nonperforming loans and leases 87.73 % 91.74 % 114.38 % 89.71 % 99.16 %
 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Quarter Ended
September 30, 2013   September 30, 2012
Average     Average    
    Balance   Interest   Rate   Balance   Interest   Rate
Earning Assets
Securities:
Taxable $ 1,086,302 $ 4,803 1.75 % $ 1,008,820 $ 4,452 1.76 %
Nontaxable(1)   401,083     5,297 5.24     316,409     4,455 5.60  
Total securities   1,487,385     10,100 2.69     1,325,229     8,907 2.67  
Interest bearing deposits 9,054 3 0.13 6,631 3 0.18
Federal funds sold   237         220      
Loans and leases:
Commercial and commercial real estate(1) 2,020,895 25,461 5.00 1,907,128 25,210 5.26
Residential mortgage 327,185 3,423 4.15 301,166 3,324 4.39
Agricultural and agricultural real estate(1) 327,266 4,274 5.18 285,018 3,940 5.50
Consumer 262,162 6,144 9.30 234,494 5,798 9.84
Fees on loans 1,377 1,334
Less: allowance for loan and lease losses   (38,044 )       (40,285 )    
Net loans and leases   2,899,464     40,679 5.57     2,687,521     39,606 5.86  
Total earning assets   4,396,140     50,782 4.58 %   4,019,601     48,516 4.80 %
Nonearning Assets   505,832     512,701  
Total Assets $ 4,901,972   $ 50,782 $ 4,532,302   $ 48,516
Interest Bearing Liabilities
Savings $ 1,985,496 $ 1,495 0.30 % $ 1,745,324 $ 1,683 0.38 %
Time, $100,000 and over 301,633 1,056 1.39 290,236 1,179 1.62
Other time deposits 517,826 2,218 1.70 533,177 2,642 1.97
Short-term borrowings 277,041 131 0.19 289,213 215 0.30
Other borrowings   331,209     3,623 4.34     377,490     4,028 4.24  
Total interest bearing liabilities   3,413,205     8,523 0.99 %   3,235,440     9,747 1.20 %
Noninterest Bearing Liabilities
Noninterest bearing deposits 1,056,669 847,073
Accrued interest and other liabilities   40,928     66,026  
Total noninterest bearing liabilities   1,097,597     913,099  
Stockholders' Equity   391,170     383,763  
Total Liabilities and Stockholders' Equity $ 4,901,972   $ 4,532,302  
Net interest income(1) $ 42,259 $ 38,769
Net interest spread(1) 3.59 % 3.60 %
Net interest income to total earning assets(1) 3.81 % 3.84 %
Interest bearing liabilities to earning assets 77.64 % 80.49 %
 

(1) Computed on a tax equivalent basis using an effective tax rate of 35%

 
 
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
  For the Nine Months Ended
September 30, 2013   September 30, 2012
Average     Average    
    Balance   Interest   Rate   Balance   Interest   Rate
Earning Assets
Securities:
Taxable $ 1,153,876 $ 14,174 1.64 % $ 994,961 $ 17,050 2.29 %
Nontaxable(1)   388,195     15,386 5.30     269,589     11,978 5.93  
Total securities   1,542,071     29,560 2.56     1,264,550     29,028 3.07  
Interest bearing deposits 9,216 9 0.13 5,684 5 0.12
Federal funds sold   672         599     1 0.22  
Loans and leases:
Commercial and commercial real estate(1) 2,000,590 76,288 5.10 1,872,461 75,408 5.38
Residential mortgage 331,854 10,334 4.16 285,545 9,762 4.57
Agricultural and agricultural real estate(1) 321,671 12,843 5.34 276,145 11,802 5.71
Consumer 252,855 17,894 9.46 226,405 16,968 10.01
Fees on loans 4,009 4,239
Less: allowance for loan and lease losses   (38,230 )       (39,365 )    
Net loans and leases   2,868,740     121,368 5.66     2,621,191     118,179 6.02  
Total earning assets   4,420,699     150,937 4.56 %   3,892,024     147,213 5.05 %
Nonearning Assets   486,737     478,895  
Total Assets $ 4,907,436   $ 150,937 $ 4,370,919   $ 147,213
Interest Bearing Liabilities
Savings $ 1,986,083 $ 4,637

0.31

% $ 1,717,213 $ 5,064 0.39 %
Time, $100,000 and over 310,333 3,395 1.46 264,539 3,602 1.82
Other time deposits 532,291 6,879 1.73 528,839 8,217 2.08
Short-term borrowings 250,326 387 0.21 265,695 652 0.33
Other borrowings   339,923     11,122 4.37     376,298     12,114 4.30  
Total interest bearing liabilities   3,418,956     26,420 1.03 %   3,152,584     29,649 1.26 %
Noninterest Bearing Liabilities
Noninterest bearing deposits 1,016,413 792,547
Accrued interest and other liabilities   67,650     54,951  
Total noninterest bearing liabilities   1,084,063     847,498  
Stockholders' Equity   404,417     370,837  
Total Liabilities and Stockholders' Equity $ 4,907,436   $ 4,370,919  
Net interest income(1) $ 124,517 $ 117,564
Net interest spread(1)

 3.53

% 3.79 %
Net interest income to total earning assets(1) 3.77 % 4.03 %
Interest bearing liabilities to earning assets 77.34 % 81.00 %
 
(1) Computed on a tax equivalent basis 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
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Total Assets        
Dubuque Bank and Trust Company $ 1,438,041 $ 1,512,215 $ 1,436,744 $ 1,482,504 $ 1,478,943
New Mexico Bank & Trust 999,555 1,029,360 1,010,607 1,026,952 973,177
Wisconsin Bank & Trust 635,606 643,727 651,277 691,715 511,580
Rocky Mountain Bank 464,221 448,855 457,389 465,614 435,283
Riverside Community Bank 460,224 450,915 422,352 450,863 424,044
Arizona Bank & Trust 415,174 393,829 404,518 307,871 275,053
Galena State Bank & Trust Co. 296,383 290,388 294,484 295,226 295,222
Minnesota Bank & Trust 166,324 164,714 127,044 126,421 109,586
Summit Bank & Trust     115,547       118,049       115,649       119,752       104,066  
Total Deposits
Dubuque Bank and Trust Company $ 1,118,225 $ 1,122,506 $ 1,123,323 $ 1,150,141 $ 1,089,125
New Mexico Bank & Trust 765,903 748,345 716,938 721,445 720,520
Wisconsin Bank & Trust 545,163 527,762 533,956 549,773 424,146
Rocky Mountain Bank 375,949 367,707 380,024 372,135 354,396
Riverside Community Bank 371,779 334,248 352,189 344,005 335,899
Arizona Bank & Trust 320,737 321,813 339,797 243,044 216,851
Galena State Bank & Trust Co. 252,691 245,324 235,000 245,554 247,334
Minnesota Bank & Trust 151,659 145,246 111,886 109,862 91,179
Summit Bank & Trust     102,855       102,891       100,617       93,318       88,540  
Net Income (Loss)
Dubuque Bank and Trust Company $ 2,737 $ 3,694 $ 2,872 $ 5,581 $ 5,485
New Mexico Bank & Trust 1,660 2,520 3,444 1,354 4,395
Wisconsin Bank & Trust 1,990 1,534 2,544 638 1,943
Rocky Mountain Bank 916 854 1,175 2,029 1,315
Riverside Community Bank 546 240 827 482 607
Arizona Bank & Trust 380 1,568 1,714 1,346 1,534
Galena State Bank & Trust Co. 324 981 1,270 929 938
Minnesota Bank & Trust (124 ) 196 320 412 (15 )
Summit Bank & Trust     (368 )     (242 )     (45 )     (69 )     (1 )
Return on Average Assets
Dubuque Bank and Trust Company 0.74 % 1.00 % 0.81 % 1.34 % 1.50 %
New Mexico Bank & Trust 0.66 0.99 1.38 0.53 1.78
Wisconsin Bank & Trust 1.24 0.96 1.58 0.44 1.53
Rocky Mountain Bank 0.80 0.75 1.03 1.86 1.21
Riverside Community Bank 0.46 0.21 0.77 0.46 0.57
Arizona Bank & Trust 0.38 1.59 1.69 1.87 2.22
Galena State Bank & Trust Co. 0.43 1.35 1.82 1.25 1.24
Minnesota Bank & Trust (0.32 ) 0.55 1.03 1.41 (0.06 )
Summit Bank & Trust     (1.27 )     (0.85 )     (0.16 )     (0.25 )      
Net Interest Margin as a Percentage of Average Earning Assets
Dubuque Bank and Trust Company 3.30 % 3.23 % 3.37 % 3.57 % 3.61 %
New Mexico Bank & Trust 3.58 3.53 3.56 3.51 3.50
Wisconsin Bank & Trust 4.43 4.25 4.34 4.16 4.04
Rocky Mountain Bank 4.15 3.96 3.82 4.26 4.35
Riverside Community Bank 2.82 2.89 2.80 3.02 2.44
Arizona Bank & Trust 4.57 4.29 4.25 3.89 3.76
Galena State Bank & Trust Co. 3.32 3.48 3.69 3.31 3.50
Minnesota Bank & Trust 3.50 3.30 3.68 4.04 4.47
Summit Bank & Trust 3.76 3.57 3.89 3.62 3.75
 
         
HEARTLAND FINANCIAL USA, INC.
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited)
DOLLARS IN THOUSANDS
As of
    9/30/2013   6/30/2013   3/31/2013   12/31/2012   9/30/2012
Total Portfolio Loans and Leases
Dubuque Bank and Trust Company $ 828,502 $ 828,088 $ 803,084 $ 814,400 $ 827,065
New Mexico Bank & Trust 508,452 501,373 490,691 497,837 490,102
Wisconsin Bank & Trust 444,174 442,184 445,869 446,214 355,670
Rocky Mountain Bank 301,224 285,900 272,385 278,252 286,138
Riverside Community Bank 181,024 174,498 167,776 166,852 155,191
Arizona Bank & Trust 278,616 251,416 249,642 189,314 185,186
Galena State Bank & Trust Co. 177,480 169,306 170,500 176,109 172,530
Minnesota Bank & Trust 94,182 89,121 89,876 90,729 85,860
Summit Bank & Trust     75,681       75,869       77,305       77,264       67,909  
Allowance For Loan and Lease Losses
Dubuque Bank and Trust Company $ 11,040 $ 8,858 $ 8,758 $ 9,217 $ 9,760
New Mexico Bank & Trust 7,007 6,619 6,381 6,837 7,834
Wisconsin Bank & Trust 4,554 4,420 4,248 4,164 3,719
Rocky Mountain Bank 4,451 4,404 4,009 4,072 4,135
Riverside Community Bank 3,012 2,924 3,174 3,240 3,122
Arizona Bank & Trust 3,841 3,573 4,065 4,444 4,723
Galena State Bank & Trust Co. 1,872 1,759 1,856 2,031 1,932
Minnesota Bank & Trust 1,068 944 920 961 915
Summit Bank & Trust     1,297       1,222       1,339       1,204       1,478  
Nonperforming Loans and Leases
Dubuque Bank and Trust Company $ 19,803 $ 9,612 $ 2,234 $ 2,783 $ 2,378
New Mexico Bank & Trust 7,406 8,606 8,228 10,711 8,455
Wisconsin Bank & Trust 6,825 7,921 3,875 5,433 6,673
Rocky Mountain Bank 4,076 5,997 6,130 8,174 6,167
Riverside Community Bank 4,120 2,769 3,118 3,473 4,685
Arizona Bank & Trust 1,862 2,240 3,378 3,549 5,409
Galena State Bank & Trust Co. 1,131 1,246 3,087 5,080 3,242
Minnesota Bank & Trust 3 4 5 5
Summit Bank & Trust     1,021       1,897       2,001       3,159       2,913  
Allowance As a Percent of Total Loans and Leases
Dubuque Bank and Trust Company 1.33 % 1.07 % 1.09 % 1.13 % 1.18 %
New Mexico Bank & Trust 1.38 1.32 1.30 1.37 1.60
Wisconsin Bank & Trust 1.03 1.00 0.95 0.93 1.05
Rocky Mountain Bank 1.48 1.54 1.47 1.46 1.45
Riverside Community Bank 1.66 1.68 1.89 1.94 2.01
Arizona Bank & Trust 1.38 1.42 1.63 2.35 2.55
Galena State Bank & Trust Co. 1.05 1.04 1.09 1.15 1.12
Minnesota Bank & Trust 1.13 1.06 1.02 1.06 1.07
Summit Bank & Trust 1.71 1.61 1.73 1.56 2.18
 

Contact:
Heartland Financial USA, Inc.
Bryan R. McKeag, 563-589-1994
Executive Vice President
Chief Financial Officer
bmckeag@htlf.com

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