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| 8-K - HTLF FORM 8-K 07-29-2013 - HEARTLAND FINANCIAL USA INC | q220138kcoverpage.htm |
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CONTACT: | FOR IMMEDIATE RELEASE |
David L. Horstmann | July 29, 2013 |
Executive Vice President | |
Interim Chief Financial Officer | |
(563) 589-1972 | |
davidhorstmann@htlf.com | |
HEARTLAND FINANCIAL USA, INC. REPORTS SECOND QUARTER 2013 RESULTS
Quarterly Highlights
§ | Net income of $9.6 million or diluted earnings per common share of $0.54 |
§ | Return on average common equity of 11.28% |
§ | Net interest margin of 3.71% |
§ | Provision for loan and lease losses decreased $1.1 million or 38% over second quarter 2012 |
§ | Loan growth of $42.5 million or 6% annualized since March 31, 2013 |
§ | Announced merger agreement with Morrill Bancshares, Inc. |
§ | Completed repurchase of minority shares in Minnesota Bank & Trust |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (in millions) | $ | 9.6 | $ | 14.0 | $ | 22.1 | $ | 26.8 | |||||||
Net income available to common stockholders (in millions) | 9.4 | 12.9 | 21.4 | 24.8 | |||||||||||
Diluted earnings per common share | 0.54 | 0.77 | 1.25 | 1.48 | |||||||||||
Return on average assets | 0.76 | % | 1.20 | % | 0.88 | % | 1.16 | % | |||||||
Return on average common equity | 11.28 | 18.28 | 13.19 | 17.78 | |||||||||||
Net interest margin | 3.71 | 4.05 | 3.74 | 4.14 | |||||||||||
“Heartland reported a good second quarter of 2013 with earnings of $9.6 million. We were pleased to see new loan demand in the quarter and our net interest margin held up reasonably well. While mortgage loan originations increased over the same period of 2012, the recent rise in long-term interest rates negatively impacted the gains on sale of residential mortgage loans.” Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc. | ||||
Dubuque, Iowa, Monday, July 29, 2013-Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income of $9.6 million for the quarter ended June 30, 2013, which was a decrease from the $14.0 million recorded for the second quarter of 2012. Net income available to common stockholders was $9.4 million, or $0.54 per diluted common share, for the quarter ended June 30, 2013, compared to $12.9 million, or $0.77 per diluted common share, for the second quarter of 2012. Return on average common equity was 11.28% and return on average assets was 0.76% for the second quarter of 2013, compared to 18.28% and 1.20%, respectively, for the same quarter in 2012.
Earnings for the second quarter of 2013 were below Heartland's quarterly earnings record set in the second quarter of 2012, primarily as a result of a $3.6 million decrease in gains on sale of loans and a $2.9 million decrease in securities gains, coupled with a $4.1 million increase in salaries and employee benefits. Positively affecting earnings for the second quarter of 2013, in comparison to the second quarter of 2012, were an increase in net interest income, a reduction in provision for loan and lease losses and an increase in loan servicing income. Loan growth picked up during the second quarter of 2013.
Commenting on Heartland's second quarter results, Lynn B. Fuller, Heartland's chairman, president and chief executive officer said, “Heartland reported a good second quarter of 2013 with earnings of $9.6 million. We were pleased to see new loan demand in the quarter and our net interest margin held up reasonably well. While mortgage loan originations increased over the same period of 2012, the recent rise in long-term interest rates negatively impacted the gains on sale of residential mortgage loans."
Net income recorded for the first six months of 2013 was $22.1 million, compared to $26.8 million recorded during the first six months of 2012. Net income available to common stockholders was $21.4 million, or $1.25 per diluted common share, for the six months ended June 30, 2013, compared to $24.8 million, or $1.48 per diluted common share, earned during the first six months of 2012. Return on average common equity was 13.19% and return on average assets was 0.88% for the first six months of 2013, compared to 17.78% and 1.16%, respectively, for the same period in 2012.
Earnings for the first six months of 2013, in comparison to the first six months of 2012, were positively affected by an increase in net interest income, a lower provision for loan and lease losses and an increase in loan servicing income. The first quarter of 2012 noninterest income included $2.0 million in equity earnings from the sale of two low-income housing projects within partnerships in which Dubuque Bank and Trust Company was a member. In addition to the absence of comparable other noninterest income during the first half of 2013, reduced securities gains and significant increases in salaries and employee benefits, occupancy and furniture and equipment expenses offset the improvements discussed above.
Net Interest Margin Percentage Remains Stable; Increases in Dollars
Net interest margin, expressed as a percentage of average earning assets, was 3.71% during the second quarter of 2013 compared to 3.77% during the first quarter of 2013 and 4.05% for the second quarter of 2012. For the six-month periods ended June 30, net interest margin was 3.74% during 2013 and 4.14% during 2012.
Fuller said, “We are pleased to see net interest margin hold relatively steady at 3.71% in the second quarter compared to the previous quarter. Going forward, we expect margin to stay in its current range as some opportunity remains in reducing deposit cost while an increase in loan volume will benefit interest income.”
On a tax-equivalent basis, interest income in the second quarter of 2013 was $50.2 million compared to $48.8 million in the second quarter of 2012, an increase of $1.4 million or 3%. For the first six months of 2013, interest income on a tax-equivalent basis was $100.2 million compared to $98.7 million during the same period in 2012, an increase of $1.5 million or 1%. Average earning assets increased $591.6 million or 15% during the second quarter of 2013 compared to the second quarter of 2012 and $605.6 million or 16% during the first six 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 4.51% during the second quarter of 2013 compared to 5.07% during the second quarter of 2012. For the first six months of the year, the average interest rate earned on these assets was 4.56% during 2013 compared to 5.19% during 2012.
Interest expense for the second quarter of 2013 was $8.9 million, a decrease of $1.0 million or 10% from $9.9 million in the second quarter of 2012. On a six-month comparative basis, interest expense decreased $2.0 million or
10%. Even though average interest bearing liabilities increased $293.6 million or 9% for the quarter ended June 30, 2013, as compared to the same quarter in 2012, and $312.5 million or 10% for the six-month period ended on June 30, 2013, as compared to the same six-month period in 2012, the average interest rate paid on Heartland's deposits and borrowings declined 22 basis points during the quarterly period under comparison and 24 basis points during the six-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 70% during both the second quarter and first six-month periods of 2013 compared to 69% for both the second quarter and first six-month periods of 2012. Additionally, the average interest rate paid on savings deposits was 0.30% during the second quarter and 0.32% during the first six months of 2013 compared to 0.40% during both the second quarter and first six months of 2012.
Net interest income on a tax-equivalent basis totaled $41.3 million during the second quarter of 2013, an increase of $2.3 million or 6% from the $39.0 million recorded during the second quarter of 2012. For the first six months of 2013, net interest income on a tax-equivalent basis was $82.3 million, an increase of $3.5 million or 4% from the $78.8 million recorded during the first six months of 2012.
Decrease in Noninterest Income; Increase in Noninterest Expenses
Noninterest income was $24.9 million during the second quarter of 2013 compared to $28.3 million during the second quarter of 2012, a decrease of $3.4 million or 12%. For the six-month period ended June 30, noninterest income was $51.3 million in 2013 compared to $51.7 million in 2012, a decrease of $340,000 or 1%. Although noninterest income was negatively affected by decreased securities gains and gains on sale of loans in both the quarterly and six-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 $9.1 million during the second quarter of 2013 compared to $12.7 million during the second quarter of 2012, a decrease of $3.6 million or 28%. During the first six months of 2013, gains on sale of loans totaled $19.0 million compared to $21.2 million during the first six months of 2012, a $2.2 million or 10% 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 $445.5 million during the second quarter of 2013 compared to $360.7 million during the second quarter of 2012, and totaled $870.4 million during the first six months of 2013 compared to $604.6 million during the first six months of 2012. Securities gains totaled $2.1 million during the second quarter of 2013 compared to $5.0 million during the second quarter of 2012, and totaled $5.5 million during the first six months of 2013 compared to $8.9 million during the first six months of 2012. Offsetting, in part, the securities gains during the first six months of 2012 was an impairment loss on securities totaling $981,000 recorded during the first quarter of 2012. Other noninterest income totaled $1.4 million during the first six months of 2013 compared to $2.7 million during the first six months of 2012. Included in other noninterest income during the first quarter of 2012 was $2.0 million in equity earnings which resulted from the sale of two low-income housing projects within partnerships in which Dubuque Bank and Trust Company was a member.
Loan servicing income increased $1.0 million or 34% for the second quarter of 2013 as compared to the second quarter of 2012 as mortgage servicing rights income, which is influenced by market interest rates for home mortgage loans and the level of residential loans Heartland originates and sells into the secondary market, increased significantly. For the first six months of 2013 compared to the first six months of 2012, loan servicing income increased $2.7 million or 55%. Loan servicing income also includes the fees collected for the servicing of mortgage loans for others, which is 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 $1.6 million during the second quarter of 2013 compared to $1.0 million during the second quarter of 2012, and $3.0 million during the first six months of 2013 compared to $2.0 million during the first six months of 2012. The portfolio of mortgage loans serviced for others by Heartland totaled $2.70 billion at June 30, 2013, compared to $1.78 billion at June 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 two 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. Heartland believes long term success in the mortgage banking business 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 second quarter of 2013, refinancing activity represented 50% of
total mortgage loan originations compared to 70% during the first quarter of 2013, 71% during the fourth quarter of 2012, 64% during the third quarter of 2012 and 58% during the second 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 | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Mortgage Servicing Fees | $ | 1,613 | $ | 1,430 | $ | 1,304 | $ | 1,123 | $ | 1,037 | |||||||||
Mortgage Servicing Rights Income | 3,965 | 3,245 | 3,535 | 3,316 | 2,614 | ||||||||||||||
Mortgage Servicing Rights Amortization | (1,976 | ) | (1,761 | ) | (1,871 | ) | (1,896 | ) | (1,112 | ) | |||||||||
Total Residential Mortgage Loan Servicing Income | $ | 3,602 | $ | 2,914 | $ | 2,968 | $ | 2,543 | $ | 2,539 | |||||||||
Valuation Adjustment on Mortgage Servicing Rights | $ | — | $ | 496 | $ | 197 | $ | (493 | ) | $ | (194 | ) | |||||||
Gains On Sale of Residential Mortgage Loans | $ | 9,005 | $ | 9,641 | $ | 13,966 | $ | 13,750 | $ | 12,689 | |||||||||
Total Residential Mortgage Loan Applications | $ | 653,461 | $ | 556,890 | $ | 645,603 | $ | 672,382 | $ | 638,595 | |||||||||
Residential Mortgage Loans Originated | $ | 470,813 | $ | 432,974 | $ | 490,525 | $ | 488,658 | $ | 374,743 | |||||||||
Residential Mortgage Loans Sold | $ | 445,452 | $ | 424,931 | $ | 478,280 | $ | 448,704 | $ | 360,743 | |||||||||
Residential Mortgage Loan Servicing Portfolio | $ | 2,695,484 | $ | 2,349,596 | $ | 2,199,486 | $ | 1,963,567 | $ | 1,776,912 | |||||||||
For the second quarter of 2013, noninterest expense totaled $48.8 million, an increase of $7.3 million or 18% from the same quarter of 2012. For the six-month period ended June 30, noninterest expense totaled $95.5 million in 2013 compared to $81.6 million in 2012, a $13.9 million or 17% increase. Contributing to these increases in noninterest expense were a $4.1 million or 16% increase in salaries and employee benefits for the quarter and a $9.9 million or 20% increase for the six-month period, a large portion of which 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 1,550 on June 30, 2013, compared to 1,321 on June 30, 2012. Also contributing to the increases in noninterest expense were additional occupancy, furniture and equipment, professional fees and other noninterest expenses.
Fuller commented, “Our Heartland Mortgage unit continues to produce solid revenue for our banks, though at a somewhat slower pace than last year. Our mortgage origination focus is shifting toward a stronger purchase market as the refinancing wave begins to slow. As a result, we are seeing a positive shift in loan servicing income.”
Heartland's effective tax rate was 28.46% for the first six months of 2013 compared to 33.19% for the first six months of 2012. Federal low-income housing tax credits included in Heartland's effective tax rate totaled $399,000 during the first six 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 28.02% during the first six months of 2013 compared to 15.87% during the first six months of 2012. The tax-equivalent adjustment for this tax-exempt interest income was $4.7 million during the first six months of 2013 compared to $3.4 million during the first six months of 2012.
Slight Increase in Loans; Slight Decrease in Deposits, With Improved Mix
Total assets were $4.96 billion at June 30, 2013, a decrease of $30.8 million since December 31, 2012. Securities represented 32% of total assets at June 30, 2013, compared to 31% at year-end 2012.
Total loans and leases held to maturity were $2.83 billion at June 30, 2013, compared to $2.82 billion at year-end 2012, an increase of $10.8 million or 1% annualized. Loan demand picked up during the second quarter of 2013, resulting in growth of $42.5 million or 6% annualized. Commercial and commercial real estate loans, which totaled $2.00 billion at June 30, 2013, increased $3.4 million or less than 1% annualized since year-end 2012, with $14.1 million occurring during the second quarter. Residential mortgage loans, which totaled $248.6 million at June 30, 2013, decreased $1.1 million or 1% annualized since year-end 2012, with growth of $8.2 million occurring during the second quarter. Agricultural and agricultural real estate loans, which totaled $327.5 million at June 30, 2013, decreased $821,000 or 1% annualized since year-end 2012, with growth of $12.9 million occurring during the
second quarter. Consumer loans, which totaled $254.8 million at June 30, 2013, increased $9.1 million or 7% annualized since year-end 2012, with $7.8 million occurring during the second quarter.
“After a slow first quarter, loan demand resumed in the second quarter, resulting in year-to-date net growth of $11 million. We continue to focus on loan growth as our primary strategy to achieve increased earnings.” added Fuller.
Fuller also noted, “Our participation in the Small Business Lending Fund provides added incentive for the Heartland member banks to originate small business loans. As a result of our success in growing qualifying loans, the cost on our $81.7 million of SBLF preferred stock is now 1%. Consistent with our business purpose, the SBLF allows Heartland to provide affordable credit to small commercial and agricultural clients, which in turn helps to increase employment and assist the economic recovery in the communities we serve.”
Total deposits were $3.84 billion at June 30, 2013, compared to $3.85 billion at year-end 2012, a decrease of $4.5 million or less than 1% annualized. Demand deposits totaled $1.03 billion at June 30, 2013, an increase of $55.6 million or 11% annualized since year-end 2012. Savings deposits decreased $25.5 million or 3% annualized since year-end 2012 and certificates of deposit decreased $34.6 million or 8% annualized. The composition of Heartland's deposits continued its positive trend as no-cost demand deposits as a percentage of total deposits was 27% at 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 was 22% at both June 30, 2013, and March 31, 2013, compared to 23% at December 31, 2012.
Fuller said, “While deposit growth has slowed this year, we continue to see a very favorable shift in our deposit mix through the growth of demand deposits which now represent 27% of our deposits.”
Common stockholders' equity was $313.4 million at June 30, 2013, compared to $320.1 million at year-end 2012. Book value per common share was $18.51 at June 30, 2013, compared to $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 quarter of 2013, Heartland's unrealized gains and losses on securities available for sale, net of applicable taxes, were at an unrealized loss of $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.
Decrease in Provision for Loan Losses; Increase in Nonperforming Loans During the Quarter
The allowance for loan and lease losses at June 30, 2013, was 1.33% of loans and leases and 91.74% of nonperforming loans compared to 1.37% of loans and leases and 89.71% of nonperforming loans at December 31, 2012, and 1.58% of loans and leases and 92.40% of nonperforming loans at June 30, 2012. The provision for loan losses was $1.9 million for the second quarter of 2013 compared to $3.0 million for the second quarter of 2012, a decrease of $1.1 million or 38%, primarily as a result of reduced charge-offs and reductions in the level of nonperforming and substandard loans. For the first six months of 2013, provision for loan losses was $2.5 million compared to $5.4 million for the first six months of 2012, a $2.9 million or 53% reduction. As historic losses have continued to trend downward and overall economic conditions have improved, the required allowance for loan and lease losses has continued to decrease resulting in the related provision expense being reduced.
Nonperforming loans, exclusive of those covered under loss sharing agreements, were $41.0 million or 1.45% of total loans and leases at June 30, 2013, compared to $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 $44.8 million or 1.71% of total loans and leases at June 30, 2012. Approximately 58%, or $23.7 million, of Heartland's nonperforming loans have individual loan balances exceeding $1.0 million. These nonperforming loans, to an aggregate of 6 borrowers, are evenly distributed between the Western and Midwestern states, with $7.1 million originated by Wisconsin Bank & Trust, $4.7 million originated by Dubuque Bank and Trust Company, $4.4 million originated by New Mexico Bank & Trust, $4.0 million originated by Rocky Mountain Bank and $3.4 million originated by Summit Bank & Trust. The portion of Heartland's nonperforming loans covered by government guarantees was $414,000 at June 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 $8.4 million for lot and land development and $7.1 million for grain/cattle operation. The remaining $8.2 million was distributed among two other industry categories.
Delinquencies in each of the loan portfolios continue to be well-managed and no significant adverse trends were identified during the second quarter of 2013. Loans delinquent 30 to 89 days as a percent of total loans were 0.29% at June 30, 2013, compared to 0.48% at March 31, 2013, 0.32% at December 31, 2012, 0.53% at September 30, 2012, and 0.46% at June 30, 2012.
Other real estate owned was $34.8 million at June 30, 2013, compared to $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, $5.3 million of other real estate owned was sold during the second quarter and $8.6 million during the first six months.
The schedules below summarize the changes in Heartland's nonperforming assets, including those covered by loss share agreements, during the second quarter of 2013 and the first six months of 2013, in thousands:
Nonperforming Loans | Other Real Estate Owned | Other Repossessed Assets | Total Nonperforming Assets | ||||||||||||
March 31, 2013 | $ | 33,446 | $ | 36,704 | $ | 1,059 | $ | 71,209 | |||||||
Loan foreclosures | (5,936 | ) | 5,867 | 69 | — | ||||||||||
Net loan charge offs | (1,767 | ) | — | — | (1,767 | ) | |||||||||
New nonperforming loans | 18,471 | — | — | 18,471 | |||||||||||
Reduction of nonperforming loans(1) | (2,634 | ) | — | — | (2,634 | ) | |||||||||
OREO/Repossessed assets sales proceeds | — | (5,546 | ) | (407 | ) | (5,953 | ) | ||||||||
OREO/Repossessed assets writedowns, net | — | (2,262 | ) | (22 | ) | (2,284 | ) | ||||||||
Net activity at Citizens Finance Co. | — | — | (96 | ) | (96 | ) | |||||||||
June 30, 2013 | $ | 41,580 | $ | 34,763 | $ | 603 | $ | 76,946 | |||||||
(1) Includes principal reductions and transfers to performing status. | |||||||||||||||
Nonperforming Loans | Other Real Estate Owned | Other Repossessed Assets | Total Nonperforming Assets | ||||||||||||
December 31, 2012 | $ | 44,415 | $ | 35,822 | $ | 542 | $ | 80,779 | |||||||
Loan foreclosures | (11,266 | ) | 10,710 | 556 | — | ||||||||||
Net loan charge offs | (3,591 | ) | — | — | (3,591 | ) | |||||||||
New nonperforming loans | 21,833 | — | — | 21,833 | |||||||||||
Reduction of nonperforming loans(1) | (9,811 | ) | — | — | (9,811 | ) | |||||||||
OREO/Repossessed assets sales proceeds | — | (8,838 | ) | (438 | ) | (9,276 | ) | ||||||||
OREO/Repossessed assets writedowns, net | — | (2,931 | ) | (45 | ) | (2,976 | ) | ||||||||
Net activity at Citizens Finance Co. | — | — | (12 | ) | (12 | ) | |||||||||
June 30, 2013 | $ | 41,580 | $ | 34,763 | $ | 603 | $ | 76,946 | |||||||
(1) Includes principal reductions and transfers to performing status. | |||||||||||||||
Net charge-offs on loans during the second quarter of 2013 were $1.8 million compared to $923,000 during the second quarter of 2012.
“Following several quarters of steady improvement, nonperforming assets ticked up slightly from the previous quarter, though still at a lower level than we experienced during the downturn.” 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 July 28, 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 $5.0 billion diversified financial services company providing banking, mortgage, wealth management, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 67 banking locations in 46 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Minnesota 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.
-FINANCIAL TABLES FOLLOW-
###
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
For the Quarter Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest Income | |||||||||||||||
Interest and fees on loans and leases | $ | 39,726 | $ | 39,382 | $ | 79,553 | $ | 77,781 | |||||||
Interest on securities: | |||||||||||||||
Taxable | 4,712 | 5,026 | 9,371 | 12,598 | |||||||||||
Nontaxable | 3,360 | 2,619 | 6,558 | 4,890 | |||||||||||
Interest on federal funds sold | — | 1 | — | 1 | |||||||||||
Interest on deposits in other financial institutions | 2 | 2 | 6 | 2 | |||||||||||
Total Interest Income | 47,800 | 47,030 | 95,488 | 95,272 | |||||||||||
Interest Expense | |||||||||||||||
Interest on deposits | 5,066 | 5,604 | 10,142 | 11,379 | |||||||||||
Interest on short-term borrowings | 108 | 224 | 256 | 437 | |||||||||||
Interest on other borrowings | 3,702 | 4,025 | 7,499 | 8,086 | |||||||||||
Total Interest Expense | 8,876 | 9,853 | 17,897 | 19,902 | |||||||||||
Net Interest Income | 38,924 | 37,177 | 77,591 | 75,370 | |||||||||||
Provision for loan and lease losses | 1,862 | 3,000 | 2,499 | 5,354 | |||||||||||
Net Interest Income After Provision for Loan and Lease Losses | 37,062 | 34,177 | 75,092 | 70,016 | |||||||||||
Noninterest Income | |||||||||||||||
Service charges and fees | 4,280 | 3,712 | 8,288 | 7,296 | |||||||||||
Loan servicing income | 4,106 | 3,056 | 7,477 | 4,816 | |||||||||||
Trust fees | 2,942 | 2,660 | 5,846 | 5,273 | |||||||||||
Brokerage and insurance commissions | 1,087 | 939 | 2,038 | 1,849 | |||||||||||
Securities gain (loss), net | 2,067 | 4,951 | 5,494 | 8,894 | |||||||||||
Gain (loss) on trading account securities | 262 | 49 | 576 | 46 | |||||||||||
Impairment loss on securities | — | — | — | (981 | ) | ||||||||||
Gains on sale of loans | 9,083 | 12,689 | 18,995 | 21,191 | |||||||||||
Valuation adjustment on mortgage servicing rights | — | (194 | ) | 496 | (181 | ) | |||||||||
Income on bank owned life insurance | 315 | 267 | 720 | 749 | |||||||||||
Other noninterest income | 716 | 149 | 1,396 | 2,714 | |||||||||||
Total Noninterest Income | 24,858 | 28,278 | 51,326 | 51,666 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and employee benefits | 29,516 | 25,384 | 59,256 | 49,380 | |||||||||||
Occupancy | 3,224 | 2,534 | 6,409 | 5,016 | |||||||||||
Furniture and equipment | 2,065 | 1,517 | 4,116 | 2,963 | |||||||||||
Professional fees | 4,233 | 3,961 | 7,776 | 6,721 | |||||||||||
FDIC insurance assessments | 861 | 807 | 1,763 | 1,671 | |||||||||||
Advertising | 1,248 | 1,304 | 2,476 | 2,375 | |||||||||||
Intangible assets amortization | 198 | 122 | 398 | 253 | |||||||||||
Net loss on repossessed assets | 2,477 | 1,307 | 3,817 | 4,211 | |||||||||||
Other noninterest expenses | 4,944 | 4,523 | 9,502 | 9,009 | |||||||||||
Total Noninterest Expense | 48,766 | 41,459 | 95,513 | 81,599 | |||||||||||
Income Before Income Taxes | 13,154 | 20,996 | 30,905 | 40,083 | |||||||||||
Income taxes | 3,598 | 7,032 | 8,797 | 13,304 | |||||||||||
Net Income | 9,556 | 13,964 | 22,108 | 26,779 | |||||||||||
Net (income) loss attributable to noncontrolling interest, net of tax | — | (7 | ) | (64 | ) | 19 | |||||||||
Net Income Attributable to Heartland | 9,556 | 13,957 | 22,044 | 26,798 | |||||||||||
Preferred dividends and discount | (205 | ) | (1,021 | ) | (613 | ) | (2,042 | ) | |||||||
Net Income Available to Common Stockholders | $ | 9,351 | $ | 12,936 | $ | 21,431 | $ | 24,756 | |||||||
Earnings per common share-diluted | $ | 0.54 | $ | 0.77 | $ | 1.25 | $ | 1.48 | |||||||
Weighted average shares outstanding-diluted | 17,203,924 | 16,717,846 | 17,193,446 | 16,722,005 | |||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Interest Income | |||||||||||||||||||
Interest and fees on loans and leases | $ | 39,726 | $ | 39,827 | $ | 39,510 | $ | 39,208 | $ | 39,382 | |||||||||
Interest on securities: | |||||||||||||||||||
Taxable | 4,712 | 4,659 | 5,079 | 4,452 | 5,026 | ||||||||||||||
Nontaxable | 3,360 | 3,198 | 2,912 | 2,896 | 2,619 | ||||||||||||||
Interest on federal funds sold | — | — | 3 | — | 1 | ||||||||||||||
Interest on deposits in other financial institutions | 2 | 4 | 3 | 3 | 2 | ||||||||||||||
Total Interest Income | 47,800 | 47,688 | 47,507 | 46,559 | 47,030 | ||||||||||||||
Interest Expense | |||||||||||||||||||
Interest on deposits | 5,066 | 5,076 | 5,347 | 5,504 | 5,604 | ||||||||||||||
Interest on short-term borrowings | 108 | 148 | 166 | 215 | 224 | ||||||||||||||
Interest on other borrowings | 3,702 | 3,797 | 4,020 | 4,028 | 4,025 | ||||||||||||||
Total Interest Expense | 8,876 | 9,021 | 9,533 | 9,747 | 9,853 | ||||||||||||||
Net Interest Income | 38,924 | 38,667 | 37,974 | 36,812 | 37,177 | ||||||||||||||
Provision for loan and lease losses | 1,862 | 637 | 3,350 | (502 | ) | 3,000 | |||||||||||||
Net Interest Income After Provision for Loan and Lease Losses | 37,062 | 38,030 | 34,624 | 37,314 | 34,177 | ||||||||||||||
Noninterest Income | |||||||||||||||||||
Service charges and fees | 4,280 | 4,008 | 4,002 | 3,944 | 3,712 | ||||||||||||||
Loan servicing income | 4,106 | 3,371 | 3,468 | 3,016 | 3,056 | ||||||||||||||
Trust fees | 2,942 | 2,904 | 2,538 | 2,667 | 2,660 | ||||||||||||||
Brokerage and insurance commissions | 1,087 | 951 | 945 | 908 | 939 | ||||||||||||||
Securities gain (loss), net | 2,067 | 3,427 | (108 | ) | 5,212 | 4,951 | |||||||||||||
Gain (loss) on trading account securities | 262 | 314 | 164 | (163 | ) | 49 | |||||||||||||
Impairment loss on securities | — | — | — | — | — | ||||||||||||||
Gains on sale of loans | 9,083 | 9,912 | 14,257 | 13,750 | 12,689 | ||||||||||||||
Valuation adjustment on mortgage servicing rights | — | 496 | 197 | (493 | ) | (194 | ) | ||||||||||||
Income on bank owned life insurance | 315 | 405 | 311 | 382 | 267 | ||||||||||||||
Other noninterest income | 716 | 680 | 1,456 | 543 | 149 | ||||||||||||||
Total Noninterest Income | 24,858 | 26,468 | 27,230 | 29,766 | 28,278 | ||||||||||||||
Noninterest Expense | |||||||||||||||||||
Salaries and employee benefits | 29,516 | 29,740 | 29,283 | 27,064 | 25,384 | ||||||||||||||
Occupancy | 3,224 | 3,185 | 3,017 | 2,596 | 2,534 | ||||||||||||||
Furniture and equipment | 2,065 | 2,051 | 1,822 | 1,541 | 1,517 | ||||||||||||||
Professional fees | 4,233 | 3,543 | 4,400 | 4,217 | 3,961 | ||||||||||||||
FDIC insurance assessments | 861 | 902 | 810 | 811 | 807 | ||||||||||||||
Advertising | 1,248 | 1,228 | 1,736 | 1,183 | 1,304 | ||||||||||||||
Intangible assets amortization | 198 | 200 | 163 | 146 | 122 | ||||||||||||||
Net loss on repossessed assets | 2,477 | 1,340 | 1,983 | 3,775 | 1,307 | ||||||||||||||
Other noninterest expenses | 4,944 | 4,558 | 11,409 | 5,826 | 4,523 | ||||||||||||||
Total Noninterest Expense | 48,766 | 46,747 | 54,623 | 47,159 | 41,459 | ||||||||||||||
Income Before Income Taxes | 13,154 | 17,751 | 7,231 | 19,921 | 20,996 | ||||||||||||||
Income taxes | 3,598 | 5,199 | (2,258 | ) | 6,338 | 7,032 | |||||||||||||
Net Income | 9,556 | 12,552 | 9,489 | 13,583 | 13,964 | ||||||||||||||
Net (income) loss attributable to noncontrolling interest, net of tax | — | (64 | ) | (82 | ) | 4 | (7 | ) | |||||||||||
Net Income Attributable to Heartland | 9,556 | 12,488 | 9,407 | 13,587 | 13,957 | ||||||||||||||
Preferred dividends and discount | (205 | ) | (408 | ) | (409 | ) | (949 | ) | (1,021 | ) | |||||||||
Net Income Available to Common Stockholders | $ | 9,351 | $ | 12,080 | $ | 8,998 | $ | 12,638 | $ | 12,936 | |||||||||
Earnings per common share-diluted | $ | 0.54 | $ | 0.70 | $ | 0.54 | $ | 0.75 | $ | 0.77 | |||||||||
Weighted average shares outstanding-diluted | 17,203,924 | 17,187,180 | 16,812,947 | 16,745,968 | 16,717,846 | ||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
As Of | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 112,097 | $ | 74,587 | $ | 168,054 | $ | 191,126 | $ | 82,831 | |||||||||
Time deposits in other financial institutions | 3,605 | 3,605 | — | — | — | ||||||||||||||
Securities | 1,578,573 | 1,580,719 | 1,561,957 | 1,332,082 | 1,331,088 | ||||||||||||||
Loans held for sale | 88,541 | 91,708 | 96,165 | 99,429 | 73,284 | ||||||||||||||
Loans and leases: | |||||||||||||||||||
Held to maturity | 2,832,377 | 2,789,893 | 2,821,549 | 2,647,959 | 2,629,597 | ||||||||||||||
Loans covered by loss share agreements | 6,275 | 6,741 | 7,253 | 8,511 | 9,567 | ||||||||||||||
Allowance for loan and lease losses | (37,623 | ) | (37,528 | ) | (38,715 | ) | (40,401 | ) | (41,439 | ) | |||||||||
Loans and leases, net | 2,801,029 | 2,759,106 | 2,790,087 | 2,616,069 | 2,597,725 | ||||||||||||||
Premises, furniture and equipment, net | 129,938 | 128,411 | 128,294 | 120,334 | 114,823 | ||||||||||||||
Goodwill | 30,627 | 30,627 | 30,627 | 26,590 | 25,909 | ||||||||||||||
Other intangible assets, net | 22,056 | 20,266 | 18,486 | 15,612 | 14,295 | ||||||||||||||
Cash surrender value on life insurance | 75,992 | 75,907 | 75,480 | 72,853 | 72,448 | ||||||||||||||
Other real estate, net | 34,763 | 36,704 | 35,822 | 36,139 | 37,941 | ||||||||||||||
FDIC indemnification asset | 282 | 528 | 749 | 1,238 | 1,148 | ||||||||||||||
Other assets | 82,253 | 98,390 | 84,832 | 81,725 | 76,192 | ||||||||||||||
Total Assets | $ | 4,959,756 | $ | 4,900,558 | $ | 4,990,553 | $ | 4,593,197 | $ | 4,427,684 | |||||||||
Liabilities and Equity | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Demand | $ | 1,029,784 | $ | 971,142 | $ | 974,232 | $ | 877,790 | $ | 799,548 | |||||||||
Savings | 1,978,962 | 2,022,625 | 2,004,438 | 1,809,776 | 1,734,155 | ||||||||||||||
Time | 832,388 | 848,689 | 866,990 | 815,470 | 801,204 | ||||||||||||||
Total deposits | 3,841,134 | 3,842,456 | 3,845,660 | 3,503,036 | 3,334,907 | ||||||||||||||
Short-term borrowings | 339,181 | 202,694 | 224,626 | 245,308 | 249,485 | ||||||||||||||
Other borrowings | 336,332 | 336,577 | 389,025 | 377,536 | 377,543 | ||||||||||||||
Accrued expenses and other liabilities | 47,974 | 104,857 | 126,703 | 72,571 | 90,755 | ||||||||||||||
Total Liabilities | 4,564,621 | 4,486,584 | 4,586,014 | 4,198,451 | 4,052,690 | ||||||||||||||
Equity | |||||||||||||||||||
Preferred equity | 81,698 | 81,698 | 81,698 | 81,698 | 81,698 | ||||||||||||||
Common equity | 313,437 | 329,478 | 320,107 | 310,396 | 290,640 | ||||||||||||||
Total Heartland Stockholders' Equity | 395,135 | 411,176 | 401,805 | 392,094 | 372,338 | ||||||||||||||
Noncontrolling interest | — | 2,798 | 2,734 | 2,652 | 2,656 | ||||||||||||||
Total Equity | 395,135 | 413,974 | 404,539 | 394,746 | 374,994 | ||||||||||||||
Total Liabilities and Equity | $ | 4,959,756 | $ | 4,900,558 | $ | 4,990,553 | $ | 4,593,197 | $ | 4,427,684 | |||||||||
Common Share Data | |||||||||||||||||||
Book value per common share | $ | 18.51 | $ | 19.54 | $ | 19.02 | $ | 18.81 | $ | 17.65 | |||||||||
ASC 320 effect on book value per common share | $ | (0.44 | ) | $ | 1.03 | $ | 1.21 | $ | 1.46 | $ | 0.98 | ||||||||
Common shares outstanding, net of treasury stock | 16,934,161 | 16,865,919 | 16,827,835 | 16,505,241 | 16,467,889 | ||||||||||||||
Tangible Capital Ratio(1) | 5.69 | % | 6.09 | % | 5.78 | % | 6.18 | % | 5.98 | % | |||||||||
(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. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||
For the Quarter Ended | For the Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Average Balances | |||||||||||||||
Assets | $ | 4,932,852 | $ | 4,350,916 | $ | 4,911,556 | $ | 4,289,341 | |||||||
Loans and leases, net of unearned | 2,905,778 | 2,675,694 | 2,891,449 | 2,626,562 | |||||||||||
Deposits | 3,871,945 | 3,291,293 | 3,836,731 | 3,246,183 | |||||||||||
Earning assets | 4,461,923 | 3,870,360 | 4,433,182 | 3,827,534 | |||||||||||
Interest bearing liabilities | 3,433,686 | 3,140,063 | 3,423,221 | 3,110,702 | |||||||||||
Common stockholders' equity | 332,386 | 284,610 | 327,629 | 279,943 | |||||||||||
Total stockholders' equity | 414,976 | 368,960 | 411,150 | 364,302 | |||||||||||
Tangible common stockholders' equity | 299,225 | 257,212 | 294,366 | 252,477 | |||||||||||
Earnings Performance Ratios | |||||||||||||||
Annualized return on average assets | 0.76 | % | 1.20 | % | 0.88 | % | 1.16 | % | |||||||
Annualized return on average common equity | 11.28 | % | 18.28 | % | 13.19 | % | 17.78 | % | |||||||
Annualized return on average common tangible equity | 12.53 | % | 20.23 | % | 14.68 | % | 19.72 | % | |||||||
Annualized net interest margin (1) | 3.71 | % | 4.05 | % | 3.74 | % | 4.14 | % | |||||||
Efficiency ratio (2) | 76.08 | % | 66.56 | % | 74.57 | % | 67.12 | % | |||||||
(1) Computed on a tax equivalent basis 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. This is a non-GAAP financial measure. | |||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Average Balances | |||||||||||||||||||
Assets | $ | 4,932,852 | $ | 4,890,023 | $ | 4,739,887 | $ | 4,532,302 | $ | 4,350,916 | |||||||||
Loans and leases, net of unearned | 2,905,778 | 2,876,960 | 2,803,361 | 2,727,806 | 2,675,694 | ||||||||||||||
Deposits | 3,871,945 | 3,801,125 | 3,674,507 | 3,415,810 | 3,291,293 | ||||||||||||||
Earning assets | 4,461,923 | 4,404,119 | 4,171,475 | 4,019,601 | 3,870,360 | ||||||||||||||
Interest bearing liabilities | 3,433,686 | 3,412,641 | 3,330,270 | 3,235,440 | 3,140,063 | ||||||||||||||
Common stockholders' equity | 332,386 | 322,820 | 316,073 | 299,408 | 284,610 | ||||||||||||||
Total stockholders' equity | 414,976 | 407,282 | 400,442 | 383,763 | 368,960 | ||||||||||||||
Tangible common stockholders' equity | 299,225 | 289,453 | 288,359 | 272,078 | 257,212 | ||||||||||||||
Earnings Performance Ratios | |||||||||||||||||||
Annualized return on average assets | 0.76 | % | 1.00 | % | 0.76 | % | 1.11 | % | 1.20 | % | |||||||||
Annualized return on average common equity | 11.28 | % | 15.18 | % | 11.33 | % | 16.79 | % | 18.28 | % | |||||||||
Annualized return on average common tangible equity | 12.53 | % | 16.93 | % | 12.41 | % | 18.48 | % | 20.23 | % | |||||||||
Annualized net interest margin (1) | 3.71 | % | 3.77 | % | 3.81 | % | 3.84 | % | 4.05 | % | |||||||||
Efficiency ratio (2) | 76.08 | % | 73.06 | % | 81.13 | % | 74.47 | % | 66.56 | % | |||||||||
(1) Computed on a tax equivalent basis 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. This is a non-GAAP financial measure. | |||||||||||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | |||||||||||||||||||
As of and for the Quarter Ended | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Loan and Lease Data | |||||||||||||||||||
Loans held to maturity: | |||||||||||||||||||
Commercial and commercial real estate | $ | 2,004,883 | $ | 1,990,818 | $ | 2,001,492 | $ | 1,902,588 | $ | 1,904,286 | |||||||||
Residential mortgage | 248,604 | 240,453 | 249,689 | 228,972 | 220,084 | ||||||||||||||
Agricultural and agricultural real estate | 327,490 | 314,606 | 328,311 | 283,697 | 279,285 | ||||||||||||||
Consumer | 254,825 | 246,996 | 245,678 | 236,619 | 230,594 | ||||||||||||||
Unearned discount and deferred loan fees | (3,425 | ) | (2,980 | ) | (3,621 | ) | (3,917 | ) | (4,652 | ) | |||||||||
Total loans and leases held to maturity | $ | 2,832,377 | $ | 2,789,893 | $ | 2,821,549 | $ | 2,647,959 | $ | 2,629,597 | |||||||||
Loans covered under loss share agreements: | |||||||||||||||||||
Commercial and commercial real estate | $ | 2,519 | $ | 2,738 | $ | 3,074 | $ | 3,772 | 4,497 | ||||||||||
Residential mortgage | 2,493 | 2,722 | 2,645 | 3,099 | 3,309 | ||||||||||||||
Agricultural and agricultural real estate | 441 | 453 | 748 | 863 | 858 | ||||||||||||||
Consumer | 822 | 828 | 786 | 777 | 903 | ||||||||||||||
Total loans and leases covered under loss share agreements | $ | 6,275 | $ | 6,741 | $ | 7,253 | $ | 8,511 | $ | 9,567 | |||||||||
Asset Quality | |||||||||||||||||||
Not covered under loss share agreements: | |||||||||||||||||||
Nonaccrual loans | $ | 41,003 | $ | 32,356 | $ | 43,156 | $ | 40,743 | $ | 44,845 | |||||||||
Loans and leases past due ninety days or more as to interest or principal payments | 6 | 454 | — | — | — | ||||||||||||||
Other real estate owned | 33,709 | 35,697 | 35,470 | 35,994 | 37,709 | ||||||||||||||
Other repossessed assets | 603 | 1,059 | 542 | 496 | 465 | ||||||||||||||
Total nonperforming assets not covered under loss share agreements | $ | 75,321 | $ | 69,566 | $ | 79,168 | $ | 77,233 | $ | 83,019 | |||||||||
Performing troubled debt restructured loans | $ | 32,661 | $ | 24,473 | $ | 21,121 | $ | 22,385 | $ | 24,715 | |||||||||
Covered under loss share agreements: | |||||||||||||||||||
Nonaccrual loans | $ | 571 | 636 | 1,259 | 2,236 | 2,862 | |||||||||||||
Other real estate owned | 1,054 | 1,007 | 352 | 145 | 232 | ||||||||||||||
Total nonperforming assets covered under loss share agreements | $ | 1,625 | $ | 1,643 | $ | 1,611 | $ | 2,381 | $ | 3,094 | |||||||||
Allowance for Loan and Lease Losses | |||||||||||||||||||
Balance, beginning of period | $ | 37,528 | 38,715 | 40,401 | 41,439 | 39,362 | |||||||||||||
Provision for loan and lease losses | 1,862 | 637 | 3,350 | (502 | ) | 3,000 | |||||||||||||
Charge-offs on loans not covered by loss share agreements | (2,742 | ) | (3,041 | ) | (7,455 | ) | (2,785 | ) | (2,219 | ) | |||||||||
Charge-offs on loans covered by loss share agreements | (31 | ) | (23 | ) | (137 | ) | (265 | ) | (35 | ) | |||||||||
Recoveries | 1,006 | $ | 1,240 | $ | 2,556 | $ | 2,514 | $ | 1,331 | ||||||||||
Balance, end of period | $ | 37,623 | $ | 37,528 | $ | 38,715 | $ | 40,401 | $ | 41,439 | |||||||||
Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements | |||||||||||||||||||
Ratio of nonperforming loans and leases to total loans and leases | 1.45 | % | 1.18 | % | 1.53 | % | 1.54 | % | 1.71 | % | |||||||||
Ratio of nonperforming assets to total assets | 1.52 | % | 1.42 | % | 1.59 | % | 1.68 | % | 1.87 | % | |||||||||
Annualized ratio of net loan charge-offs to average loans and leases | 0.24 | % | 0.26 | % | 0.71 | % | 0.08 | % | 0.14 | % | |||||||||
Allowance for loan and lease losses as a percent of loans and leases | 1.33 | % | 1.35 | % | 1.37 | % | 1.53 | % | 1.58 | % | |||||||||
Allowance for loan and lease losses as a percent of nonperforming loans and leases | 91.74 | % | 114.38 | % | 89.71 | % | 99.16 | % | 92.40 | % | |||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
DOLLARS IN THOUSANDS | |||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||
Average | Average | ||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
Earning Assets | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 1,191,838 | $ | 4,712 | 1.59 | % | $ | 954,684 | $ | 5,026 | 2.12 | % | |||||||||
Nontaxable(1) | 392,298 | 5,169 | 5.28 | 272,561 | 4,029 | 5.95 | |||||||||||||||
Total securities | 1,584,136 | 9,881 | 2.50 | 1,227,245 | 9,055 | 2.97 | |||||||||||||||
Interest bearing deposits | 9,607 | 2 | 0.08 | 6,587 | 1 | 0.06 | |||||||||||||||
Federal funds sold | 160 | — | — | 1,433 | 2 | 0.56 | |||||||||||||||
Loans and leases: | |||||||||||||||||||||
Commercial and commercial real estate(1) | 1,998,000 | 25,266 | 5.07 | 1,882,140 | 25,203 | 5.39 | |||||||||||||||
Residential mortgage | 334,706 | 3,473 | 4.16 | 290,702 | 3,322 | 4.60 | |||||||||||||||
Agricultural and agricultural real estate(1) | 322,438 | 4,204 | 5.23 | 276,557 | 3,929 | 5.71 | |||||||||||||||
Consumer | 250,634 | 5,926 | 9.48 | 226,295 | 5,793 | 10.30 | |||||||||||||||
Fees on loans | 1,436 | — | 1,510 | — | |||||||||||||||||
Less: allowance for loan and lease losses | (37,758 | ) | — | — | (40,599 | ) | — | — | |||||||||||||
Net loans and leases | 2,868,020 | 40,305 | 5.64 | 2,635,095 | 39,757 | 6.07 | |||||||||||||||
Total earning assets | 4,461,923 | 50,188 | 4.51 | % | 3,870,360 | 48,815 | 5.07 | % | |||||||||||||
Nonearning Assets | 470,929 | 480,556 | |||||||||||||||||||
Total Assets | $ | 4,932,852 | $ | 50,188 | $ | 4,350,916 | $ | 48,815 | |||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||
Savings | $ | 2,011,051 | $ | 1,509 | 0.30 | % | $ | 1,726,357 | $ | 1,718 | 0.40 | % | |||||||||
Time, $100,000 and over | 313,760 | 1,169 | 1.49 | 255,701 | 1,195 | 1.88 | |||||||||||||||
Other time deposits | 528,775 | 2,388 | 1.81 | 520,140 | 2,691 | 2.08 | |||||||||||||||
Short-term borrowings | 243,665 | 108 | 0.18 | 260,523 | 224 | 0.35 | |||||||||||||||
Other borrowings | 336,435 | 3,702 | 4.41 | 377,342 | 4,025 | 4.29 | |||||||||||||||
Total interest bearing liabilities | 3,433,686 | 8,876 | 1.04 | % | 3,140,063 | 9,853 | 1.26 | % | |||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||
Noninterest bearing deposits | 1,018,359 | 789,095 | |||||||||||||||||||
Accrued interest and other liabilities | 65,831 | 52,798 | |||||||||||||||||||
Total noninterest bearing liabilities | 1,084,190 | 841,893 | |||||||||||||||||||
Stockholders' Equity | 414,976 | 368,960 | |||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 4,932,852 | $ | 4,350,916 | |||||||||||||||||
Net interest income(1) | $ | 41,312 | $ | 38,962 | |||||||||||||||||
Net interest spread(1) | 3.47 | % | 3.81 | % | |||||||||||||||||
Net interest income to total earning assets(1) | 3.71 | % | 4.05 | % | |||||||||||||||||
Interest bearing liabilities to earning assets | 76.96 | % | 81.13 | % | |||||||||||||||||
(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 Six Months Ended | |||||||||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||
Average | Average | ||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
Earning Assets | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 1,188,223 | $ | 9,371 | 1.59 | % | $ | 987,956 | $ | 12,598 | 2.56 | % | |||||||||
Nontaxable(1) | 381,644 | 10,089 | 5.33 | 245,922 | 7,523 | 6.15 | |||||||||||||||
Total securities | 1,569,867 | 19,460 | 2.50 | 1,233,878 | 20,121 | 3.28 | |||||||||||||||
Interest bearing deposits | 9,298 | 6 | 0.13 | 5,205 | 1 | 0.04 | |||||||||||||||
Federal funds sold | 893 | — | — | 790 | 2 | 0.51 | |||||||||||||||
Loans and leases: | |||||||||||||||||||||
Commercial and commercial real estate(1) | 1,990,270 | 50,826 | 5.15 | 1,854,937 | 50,198 | 5.44 | |||||||||||||||
Residential mortgage | 334,227 | 6,912 | 4.17 | 277,649 | 6,438 | 4.66 | |||||||||||||||
Agricultural and agricultural real estate(1) | 318,827 | 8,568 | 5.42 | 271,660 | 7,862 | 5.82 | |||||||||||||||
Consumer | 248,125 | 11,750 | 9.55 | 222,316 | 11,170 | 10.10 | |||||||||||||||
Fees on loans | 2,630 | — | 2,905 | — | |||||||||||||||||
Less: allowance for loan and lease losses | (38,325 | ) | — | — | (38,901 | ) | — | — | |||||||||||||
Net loans and leases | 2,853,124 | 80,686 | 5.70 | 2,587,661 | 78,573 | 6.11 | |||||||||||||||
Total earning assets | 4,433,182 | 100,152 | 4.56 | % | 3,827,534 | 98,697 | 5.19 | % | |||||||||||||
Nonearning Assets | 478,374 | 461,807 | |||||||||||||||||||
Total Assets | $ | 4,911,556 | $ | 100,152 | $ | 4,289,341 | $ | 98,697 | |||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||
Savings | $ | 1,986,381 | $ | 3,142 | 0.32 | % | $ | 1,703,004 | $ | 3,381 | 0.40 | % | |||||||||
Time, $100,000 and over | 314,755 | 2,339 | 1.50 | 251,548 | 2,423 | 1.94 | |||||||||||||||
Other time deposits | 539,644 | 4,661 | 1.74 | 526,647 | 5,575 | 2.13 | |||||||||||||||
Short-term borrowings | 236,747 | 256 | 0.22 | 253,807 | 437 | 0.35 | |||||||||||||||
Other borrowings | 345,694 | 7,499 | 4.37 | 375,696 | 8,086 | 4.33 | |||||||||||||||
Total interest bearing liabilities | 3,423,221 | 17,897 | 1.05 | % | 3,110,702 | 19,902 | 1.29 | % | |||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||
Noninterest bearing deposits | 995,951 | 764,984 | |||||||||||||||||||
Accrued interest and other liabilities | 81,234 | 49,353 | |||||||||||||||||||
Total noninterest bearing liabilities | 1,077,185 | 814,337 | |||||||||||||||||||
Stockholders' Equity | 411,150 | 364,302 | |||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 4,911,556 | $ | 4,289,341 | |||||||||||||||||
Net interest income(1) | $ | 82,255 | $ | 78,795 | |||||||||||||||||
Net interest spread(1) | 3.51 | % | 3.90 | % | |||||||||||||||||
Net interest income to total earning assets(1) | 3.74 | % | 4.14 | % | |||||||||||||||||
Interest bearing liabilities to earning assets | 77.22 | % | 81.27 | % | |||||||||||||||||
(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 | |||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||
Total Assets | |||||||||||||||
Dubuque Bank and Trust Company | $ | 1,512,215 | $ | 1,436,744 | $ | 1,482,504 | $ | 1,478,943 | $ | 1,385,409 | |||||
New Mexico Bank & Trust | 1,029,360 | 1,010,607 | 1,026,952 | 973,177 | 998,172 | ||||||||||
Wisconsin Bank & Trust | 643,727 | 651,277 | 691,715 | 511,580 | 497,372 | ||||||||||
Riverside Community Bank | 450,915 | 422,352 | 450,863 | 424,044 | 360,654 | ||||||||||
Rocky Mountain Bank | 448,855 | 457,389 | 465,614 | 435,283 | 443,493 | ||||||||||
Arizona Bank & Trust | 393,829 | 404,518 | 307,871 | 275,053 | 268,103 | ||||||||||
Galena State Bank & Trust Co. | 290,388 | 294,484 | 295,226 | 295,222 | 309,516 | ||||||||||
Minnesota Bank & Trust | 164,714 | 127,044 | 126,421 | 109,586 | 101,704 | ||||||||||
Summit Bank & Trust | 118,049 | 115,649 | 119,752 | 104,066 | 102,875 | ||||||||||
Total Deposits | |||||||||||||||
Dubuque Bank and Trust Company | $ | 1,122,506 | $ | 1,123,323 | $ | 1,150,141 | $ | 1,089,125 | $ | 959,273 | |||||
New Mexico Bank & Trust | 748,345 | 716,938 | 721,445 | 720,520 | 725,537 | ||||||||||
Wisconsin Bank & Trust | 527,762 | 533,956 | 549,773 | 424,146 | 415,277 | ||||||||||
Riverside Community Bank | 334,248 | 352,189 | 344,005 | 335,899 | 305,120 | ||||||||||
Rocky Mountain Bank | 367,707 | 380,024 | 372,135 | 354,396 | 356,046 | ||||||||||
Arizona Bank & Trust | 321,813 | 339,797 | 243,044 | 216,851 | 211,318 | ||||||||||
Galena State Bank & Trust Co. | 245,324 | 235,000 | 245,554 | 247,334 | 257,800 | ||||||||||
Minnesota Bank & Trust | 145,246 | 111,886 | 109,862 | 91,179 | 77,119 | ||||||||||
Summit Bank & Trust | 102,891 | 100,617 | 93,318 | 88,540 | 83,977 | ||||||||||
Net Income (Loss) | |||||||||||||||
Dubuque Bank and Trust Company | $ | 3,694 | $ | 2,872 | $ | 5,581 | $ | 5,485 | $ | 8,463 | |||||
New Mexico Bank & Trust | 2,520 | 3,444 | 1,354 | 4,395 | 1,592 | ||||||||||
Wisconsin Bank & Trust | 1,534 | 2,544 | 638 | 1,943 | 1,547 | ||||||||||
Riverside Community Bank | 240 | 827 | 482 | 607 | 914 | ||||||||||
Rocky Mountain Bank | 854 | 1,175 | 2,029 | 1,315 | 2,089 | ||||||||||
Arizona Bank & Trust | 1,568 | 1,714 | 1,346 | 1,534 | 981 | ||||||||||
Galena State Bank & Trust Co. | 981 | 1,270 | 929 | 938 | 1,149 | ||||||||||
Minnesota Bank & Trust | 196 | 320 | 412 | (15 | ) | 35 | |||||||||
Summit Bank & Trust | (242 | ) | (45 | ) | (69 | ) | (1 | ) | (100 | ) | |||||
Return on Average Assets | |||||||||||||||
Dubuque Bank and Trust Company | 1.00 | % | 0.81 | % | 1.34 | % | 1.50 | % | 2.39 | % | |||||
New Mexico Bank & Trust | 0.99 | 1.38 | 0.53 | 1.78 | 0.66 | ||||||||||
Wisconsin Bank & Trust | 0.96 | 1.58 | 0.44 | 1.53 | 1.27 | ||||||||||
Riverside Community Bank | 0.21 | 0.77 | 0.46 | 0.57 | 1.05 | ||||||||||
Rocky Mountain Bank | 0.75 | 1.03 | 1.86 | 1.21 | 1.94 | ||||||||||
Arizona Bank & Trust | 1.59 | 1.69 | 1.87 | 2.22 | 1.56 | ||||||||||
Galena State Bank & Trust Co. | 1.35 | 1.82 | 1.25 | 1.24 | 1.58 | ||||||||||
Minnesota Bank & Trust | 0.55 | 1.03 | 1.41 | (0.06 | ) | 0.15 | |||||||||
Summit Bank & Trust | (0.85 | ) | (0.16 | ) | (0.25 | ) | — | (0.40 | ) | ||||||
Net Interest Margin as a Percentage of Average Earning Assets | |||||||||||||||
Dubuque Bank and Trust Company | 3.23 | % | 3.37 | % | 3.57 | % | 3.61 | % | 3.67 | % | |||||
New Mexico Bank & Trust | 3.53 | 3.56 | 3.51 | 3.50 | 3.69 | ||||||||||
Wisconsin Bank & Trust | 4.25 | 4.34 | 4.16 | 4.04 | 4.38 | ||||||||||
Riverside Community Bank | 2.89 | 2.80 | 3.02 | 2.44 | 3.38 | ||||||||||
Rocky Mountain Bank | 3.96 | 3.82 | 4.26 | 4.35 | 4.68 | ||||||||||
Arizona Bank & Trust | 4.29 | 4.25 | 3.89 | 3.76 | 4.19 | ||||||||||
Galena State Bank & Trust Co. | 3.48 | 3.69 | 3.31 | 3.50 | 3.42 | ||||||||||
Minnesota Bank & Trust | 3.30 | 3.68 | 4.04 | 4.47 | 4.57 | ||||||||||
Summit Bank & Trust | 3.57 | 3.89 | 3.62 | 3.75 | 3.89 | ||||||||||
HEARTLAND FINANCIAL USA, INC. | |||||||||||||||||||
SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) | |||||||||||||||||||
DOLLARS IN THOUSANDS | |||||||||||||||||||
As of | |||||||||||||||||||
6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | |||||||||||||||
Total Portfolio Loans and Leases | |||||||||||||||||||
Dubuque Bank and Trust Company | $ | 828,088 | $ | 803,084 | $ | 814,400 | $ | 827,065 | $ | 824,830 | |||||||||
New Mexico Bank & Trust | 501,373 | 490,691 | 497,837 | 490,102 | 500,296 | ||||||||||||||
Wisconsin Bank & Trust | 442,184 | 445,869 | 446,214 | 355,670 | 353,152 | ||||||||||||||
Riverside Community Bank | 174,498 | 167,776 | 166,852 | 155,191 | 158,186 | ||||||||||||||
Rocky Mountain Bank | 285,900 | 272,385 | 278,252 | 286,138 | 280,137 | ||||||||||||||
Arizona Bank & Trust | 251,416 | 249,642 | 189,314 | 185,186 | 177,953 | ||||||||||||||
Galena State Bank & Trust Co. | 169,306 | 170,500 | 176,109 | 172,530 | 169,160 | ||||||||||||||
Minnesota Bank & Trust | 89,121 | 89,876 | 90,729 | 85,860 | 80,815 | ||||||||||||||
Summit Bank & Trust | 75,869 | 77,305 | 77,264 | 67,909 | 67,932 | ||||||||||||||
Allowance For Loan and Lease Losses | |||||||||||||||||||
Dubuque Bank and Trust Company | $ | 8,858 | $ | 8,758 | $ | 9,217 | $ | 9,760 | $ | 9,454 | |||||||||
New Mexico Bank & Trust | 6,619 | 6,381 | 6,837 | 7,834 | 8,705 | ||||||||||||||
Wisconsin Bank & Trust | 4,420 | 4,248 | 4,164 | 3,719 | 3,695 | ||||||||||||||
Riverside Community Bank | 2,924 | 3,174 | 3,240 | 3,122 | 3,114 | ||||||||||||||
Rocky Mountain Bank | 4,404 | 4,009 | 4,072 | 4,135 | 4,325 | ||||||||||||||
Arizona Bank & Trust | 3,573 | 4,065 | 4,444 | 4,723 | 5,390 | ||||||||||||||
Galena State Bank & Trust Co. | 1,759 | 1,856 | 2,031 | 1,932 | 1,808 | ||||||||||||||
Minnesota Bank & Trust | 944 | 920 | 961 | 915 | 822 | ||||||||||||||
Summit Bank & Trust | 1,222 | 1,339 | 1,204 | 1,478 | 1,370 | ||||||||||||||
Nonperforming Loans and Leases | |||||||||||||||||||
Dubuque Bank and Trust Company | $ | 9,612 | $ | 2,234 | $ | 2,783 | $ | 2,378 | $ | 2,508 | |||||||||
New Mexico Bank & Trust | 8,606 | 8,228 | 10,711 | 8,455 | 10,856 | ||||||||||||||
Wisconsin Bank & Trust | 7,921 | 3,875 | 5,433 | 6,673 | 7,463 | ||||||||||||||
Riverside Community Bank | 2,769 | 3,118 | 3,473 | 4,685 | 5,222 | ||||||||||||||
Rocky Mountain Bank | 5,997 | 6,130 | 8,174 | 6,167 | 6,005 | ||||||||||||||
Arizona Bank & Trust | 2,240 | 3,378 | 3,549 | 5,409 | 5,645 | ||||||||||||||
Galena State Bank & Trust Co. | 1,246 | 3,087 | 5,080 | 3,242 | 3,778 | ||||||||||||||
Minnesota Bank & Trust | 3 | 4 | 5 | 5 | 6 | ||||||||||||||
Summit Bank & Trust | 1,897 | 2,001 | 3,159 | 2,913 | 2,691 | ||||||||||||||
Allowance As a Percent of Total Loans and Leases | |||||||||||||||||||
Dubuque Bank and Trust Company | 1.07 | % | 1.09 | % | 1.13 | % | 1.18 | % | 1.15 | % | |||||||||
New Mexico Bank & Trust | 1.32 | 1.30 | 1.37 | 1.60 | 1.74 | ||||||||||||||
Wisconsin Bank & Trust | 1.00 | 0.95 | 0.93 | 1.05 | 1.05 | ||||||||||||||
Riverside Community Bank | 1.68 | 1.89 | 1.94 | 2.01 | 1.97 | ||||||||||||||
Rocky Mountain Bank | 1.54 | 1.47 | 1.46 | 1.45 | 1.54 | ||||||||||||||
Arizona Bank & Trust | 1.42 | 1.63 | 2.35 | 2.55 | 3.03 | ||||||||||||||
Galena State Bank & Trust Co. | 1.04 | 1.09 | 1.15 | 1.12 | 1.07 | ||||||||||||||
Minnesota Bank & Trust | 1.06 | 1.02 | 1.06 | 1.07 | 1.02 | ||||||||||||||
Summit Bank & Trust | 1.61 | 1.73 | 1.56 | 2.18 | 2.02 | ||||||||||||||