DUBUQUE, Iowa--(BUSINESS WIRE)-- Heartland Financial USA, Inc. (HTLF):

Quarterly Highlights

• Record net income of $12.8 million
• Net interest margin of 4.23%
• Growth in loans held to maturity of $51.1 million since December 31, 2011
• Deposit growth of $65.6 million since December 31, 2011
• Nonperforming assets not covered under loss share agreements decreased $12.2 million since December 31, 2011
• Continued expansion of mortgage operations in existing and new markets

		Quarter Ended March 31,
		2012				2011
Net income (in millions)		$	12.8			$	4.2
Net income available to common stockholders (in millions)		11.8				2.9
Diluted earnings per common share		0.71				0.18
Return on average assets		1.12		%		0.29		%
Return on average common equity		17.27				4.67
Net interest margin		4.23				4.19

Heartland's first quarter was, quite simply, our best quarter ever. Net income of $12.8 million was more than triple last year's first quarter earnings. The company's exceptional performance is the result of a combination of factors including a remarkable net interest margin of 4.23 percent, a sharp drop in provision for loan losses and solid gains on sale of loans.
Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.

Heartland Financial USA, Inc. today reported net income of $12.8 million for the quarter ended March 31, 2012, which was an increase from the $4.2 million recorded for the first quarter of 2011. Net income available to common stockholders was $11.8 million, or $0.71 per diluted common share, for the quarter ended March 31, 2012, compared to $2.9 million, or $0.18 per diluted common share, for the first quarter of 2011. Return on average common equity was 17.27 percent and return on average assets was 1.12 percent for the first quarter of 2012, compared to 4.67 percent and 0.29 percent, respectively, for the same quarter in 2011.

Earnings for the first quarter of 2012, in comparison to the first quarter of 2011, were positively affected by increases in net interest income, gains on sale of loans, securities gains and other noninterest income along with a lower provision for loan and lease losses. The effect of these improvements was mitigated by a significant increase in salaries and employee benefits due to the continued expansion of mortgage operations in both new and existing markets.

Commenting on Heartland's first quarter results, Lynn B. Fuller, Heartland's chairman, president and chief executive officer said, Heartland's first quarter was, quite simply, our best quarter ever. Net income of $12.8 million was more than triple last year's first quarter earnings. The company's exceptional performance is the result of a combination of factors including a remarkable net interest margin of 4.23 percent, a sharp drop in provision for loan losses and solid gains on sale of loans.

Net Interest Margin Remains Above 4.00 Percent

Net interest margin, expressed as a percentage of average earning assets, was 4.23 percent during the first quarter of 2012 compared to 4.19 percent for the first quarter of 2011. The ability to maintain a net interest margin above 4.00 percent has been a direct result of Heartland's price discipline. Also positively affecting net interest margin was improvement in the level of nonperforming loans not covered under loss share agreements, which had balances of $49.9 million or 1.97 percent of total loans and leases at March 31, 2012, and $91.0 million or 3.86 percent of total loans and leases at March 31, 2011.

Fuller said, Our net interest margin for the first quarter was exceptional, increasing by 15 basis points over the previous quarter from 4.08 percent to 4.23 percent, and matching the best margin we have seen in recent years. Our strong margin is the result of loan growth, increased yields in our security portfolio and continued improvement in funding costs. We've now maintained our margin above 4.00 percent for eleven consecutive quarters.

On a tax-equivalent basis, interest income in the first quarter of 2012 was $49.9 million compared to $49.2 million in the first quarter of 2011, an increase of $637,000 or 1 percent. The $200.8 million or 6 percent growth in average earning assets during the first quarter of 2012, compared to the same period in 2011, more than compensated for the decrease in the average interest rate earned on these assets which was 5.30 percent during the first quarter of 2012 compared to 5.57 percent during the first quarter of 2011. The average interest rate earned in the securities portfolio was 3.59 percent during the first quarter of 2012 compared to 3.95 percent during the first quarter of 2011 and the average interest rate earned in the loan portfolio was 6.15 percent during the first quarter of 2012 compared to 6.42 percent during the first quarter of 2011.

Interest expense for the first quarter of 2012 was $10.0 million, a decrease of $2.2 million or 18 percent from $12.2 million in the first quarter of 2011. Even though average interest bearing liabilities increased $70.7 million or 2 percent for the quarter ended March 31, 2012, as compared to the same quarter in 2011, the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 34 basis points to 1.31 percent in the first quarter of 2012 from 1.65 percent in the first quarter of 2011. Contributing to this improvement in interest expense was a change in the mix of deposits as average savings balances, the lowest cost interest-bearing deposits, as a percentage of total average interest bearing deposits increased to 68 percent during the first quarter of 2012 compared to 64 percent during the first quarter of 2011. Additionally, the average interest rate paid on savings deposits was 0.40 percent during the first quarter of 2012 compared to 0.67 percent during the first quarter of 2011 and the average interest rate paid on time deposits was 2.12 percent during the first quarter of 2012 compared to 2.49 percent during the first quarter of 2011.

Net interest income on a tax-equivalent basis totaled $39.8 million during the first quarter of 2012, an increase of $2.8 million or 8 percent from the $37.0 million recorded during the first quarter of 2011.

Significant Increase in Noninterest Income; Noninterest Expense Increases

Noninterest income was $23.4 million during the first quarter of 2012 compared to $12.6 million during the first quarter of 2011, an increase of $10.8 million or 86 percent. The categories contributing most significantly to the improvement in noninterest income were gains on sale of loans, securities gains and other noninterest income. Gains on sale of loans totaled $8.5 million during the first quarter of 2012 compared to $1.4 million during the first quarter of 2011. The volume of loans sold totaled $243.8 million during the first quarter of 2012, more than three times the $81.0 million sold during the first quarter of 2011. Pricing received on the sale of fixed rate residential mortgage loans into the secondary market improved through a bulk delivery method that was implemented during the second quarter of 2011, instead of an individual delivery method that had been used previously. At the same time, secondary market pricing began to be matched with origination pricing through the use of a software tool that assists in hedging the locked rate pipeline position. Securities gains totaled $3.9 million during the first quarter of 2012 compared to $2.1 million during the first quarter of 2011, as volatility in the bond market continued to provide opportunities to swap securities from one sector of the portfolio to another without significantly changing the duration of the portfolio. Offsetting, in part, the securities gains was an impairment loss on securities totaling $981 thousand recorded during the first quarter of 2012. Other noninterest income totaled $2.6 million during the first quarter of 2012 compared to $261,000 during the first quarter of 2011. Included in the 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 $211,000 or 14 percent for the first quarter of 2012 as compared to the first quarter of 2011. Two components of loan servicing income, mortgage servicing rights and amortization of mortgage servicing rights, are dependent upon the level of loans Heartland originates and sells into the secondary market, which in turn is highly influenced by market interest rates for home mortgage loans. Mortgage servicing rights income was $2.0 million during the first quarter of 2012 compared to $984,000 during the first quarter of 2011. 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 $967,000 during the first quarter of 2012 compared to $873,000 during the first quarter of 2011. The portfolio of mortgage loans serviced for others by Heartland totaled $1.63 billion at March 31, 2012, compared to $1.44 billion at March 31, 2011. The following table summarizes Heartland's residential mortgage loan activity during the most recent five quarters:

		As Of and For the Quarter Ended
(Dollars in thousands)		03/31/2012				12/31/2011				09/30/2011				06/30/2011				03/31/2011
Mortgage Service Fees		$	967			$	932			$	908			$	892			$	873
Mortgage Servicing Rights Income		1,986				1,380				743				616				984
Mortgage Servicing Rights Amortization		(1,718		)		(862		)		(1,103		)		(808		)		(864		)
Total Residential Mortgage Loan Servicing Income		$	1,235			$	1,450			$	548			$	700			$	993
Valuation Adjustment on Mortgage Servicing Rights		$	13			$	(19	)		$				$				$
Gains On Sale of Loans		$	8,502			$	5,473			$	3,183			$	1,308			$	1,402
Residential Mortgage Loans Originated		$	293,724			$	253,468			$	143,317			$	111,575			$	99,876
Residential Mortgage Loans Sold		$	243,836			$	208,494			$	97,591			$	65,812			$	81,033
Residential Mortgage Loan Servicing Portfolio		$	1,626,129			$	1,541,417			$	1,467,127			$	1,446,527			$	1,435,977

For the first quarter of 2012, noninterest expense totaled $40.1 million, an increase of $7.3 million or 22 percent from the same quarter of 2011. The primary contributor to this increase was the $5.8 million or 32 percent increase in salaries and employee benefits, a large portion of which resulted from the expansion of residential loan origination and the addition of personnel in the Heartland Mortgage and National Residential Mortgage unit. Full-time equivalent employees totaled 1,253 on March 31, 2012, compared to 1,076 on March 31, 2011.

Fuller commented, The continuing wave of residential refinancing activity in the first quarter, combined with the expansion of our mortgage unit, resulted in a significant increase in gains on sale of loans compared to the prior year's first quarter. The timely expansion of our Heartland Mortgage and National Residential unit is producing exceptional non-interest income. Further expansion is envisioned as we build our teams of loan producers both within and beyond the Heartland footprint. While refinance activity still represents most of our originations, we are optimistic that the mix will shift from refinance to purchase, which should significantly increase bottom line profitability.

Heartland's effective tax rate was 32.82 percent for the first quarter of 2012 compared to 22.24 percent for the first quarter of 2011. Federal low-income housing tax credits included in Heartland's effective tax rate totaled $200,000 during the first quarter of 2012 compared to $138,000 during the first quarter of 2011. 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 15.93 percent during the first quarter of 2012 compared to 44.39 percent during the first quarter of 2011. The tax-equivalent adjustment for this tax-exempt interest income was $2.3 million during the first quarter of 2012 compared to $1.3 million during the first quarter of 2011.

Loan Demand Continues To Strengthen; Deposit Growth Continues With Improving Mix

Total assets were $4.31 billion at March 31, 2012, an increase of $7.8 million since December 31, 2011. Securities represented 28 percent of total assets at March 31, 2012, compared to 31 percent at year-end 2011.

Total loans and leases held to maturity were $2.53 billion at March 31, 2012, compared to $2.48 billion at year-end 2011, an increase of $51.1 million or 8 percent annualized. Commercial and commercial real estate loans, which totaled $1.84 billion at March 31, 2012, increased $33.1 million or 7 percent annualized since year-end 2011. Residential mortgage loans, which totaled $202.9 million at March 31, 2012, increased $8.4 million or 17 percent annualized since year-end 2011. Agricultural and agricultural real estate loans, which totaled $270.7 million at March 31, 2012, increased $7.7 million or 12 percent annualized since year-end 2011. Consumer loans, which totaled $222.4 million at March 31, 2012, increased $2.3 million or 4 percent annualized since year-end 2011.

Loan demand, which picked up during the second half of last year, continued through the first quarter. Overall, total loans increased seven percent year-over-year. We are becoming more confident that this growth trend can be sustained as the economy continues to recover, added Fuller.

Fuller also noted, Our participation in the Small Business Lending Fund provides added incentive for the Heartland subsidiary banks to originate small business loans. Fueled by the potential of lower cost of capital, we will provide affordable credit to small commercial and agricultural clients, which in turn should be a catalyst to increase employment and spur economic recovery in the communities we serve.

Total deposits were $3.28 billion at March 31, 2012, compared to $3.21 billion at year-end 2011, an increase of $65.6 million or 8 percent annualized. The composition of Heartland's deposits continued shifting from higher cost certificates of deposit to no cost demand deposits during the first quarter of 2012, as demand deposits increased $34.1 million or 18 percent annualized since year-end 2011. Certificates of deposit, exclusive of brokered deposits, experienced a decrease of $21.9 million or 12 percent annualized since year-end 2011. Savings deposits also experienced an increase, growing to $1.73 billion at March 31, 2012, an increase of $53.2 million or 13 percent annualized, from $1.68 billion at December 31, 2011.

Fuller said, Deposit growth demonstrated steady improvement, increasing by $66 million during the first quarter. We continue to see a very favorable shift in our deposit mix through the growth of non-time deposits. By the end of the quarter, our demand deposits essentially matched the balances of our time deposits.

Decrease in Provision for Loan Losses; Decrease in Nonperforming Assets

The allowance for loan and lease losses at March 31, 2012, was 1.55 percent of loans and leases and 78.82 percent of nonperforming loans compared to 1.48 percent of loans and leases and 64.09 percent of nonperforming loans at December 31, 2011. The provision for loan losses was $2.4 million for the first quarter of 2012 compared to $10.0 million for the first quarter of 2011, a $7.6 million or 76 percent decrease.

Nonperforming loans, exclusive of those covered under the loss sharing agreements, were $49.9 million or 1.97 percent of total loans and leases at March 31, 2012, compared to $57.4 million or 2.31 percent of total loans and leases at December 31, 2011. Approximately 54 percent, or $26.6 million, of Heartland's nonperforming loans have individual loan balances exceeding $1.0 million. These nonperforming loans, to an aggregate of 13 borrowers, are primarily concentrated in Heartland's banks serving the Western states, with $8.2 million originated by New Mexico Bank & Trust, $6.8 million originated by Arizona Bank & Trust, $4.4 million originated by Rocky Mountain Bank, $4.4 million originated by Wisconsin Community Bank and $2.8 million originated by Galena State Bank and Trust Company. The portion of Heartland's nonperforming loans covered by government guarantees was $2.4 million at March 31, 2012. 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 $6.7 million for construction and development. The remaining $11.5 million was distributed among seven other industry categories.

Delinquencies in each of the loan portfolios continue to be well-managed and no significant adverse trends were identified during the first quarter of 2012. Loans delinquent 30 to 89 days as a percent of total loans were 0.55 percent at March 31, 2012, compared to 0.23 percent at December 31, 2011, 0.54 percent at September 30, 2011, 0.60 percent at June 30, 2011, and 0.61 percent at March 31, 2011.

Other real estate owned was $38.9 million at March 31, 2012, compared to $44.4 million at December 31, 2011. 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 the first quarter of 2012, $11.7 million of other real estate owned was sold.

The schedules below summarize the changes in Heartland's nonperforming assets, including those covered by loss share agreements, during the first quarter of 2012:

(Dollars in thousands)		Nonperforming Loans				Other Real Estate Owned				Other Repossessed Assets				Total Nonperforming Assets
December 31, 2011		$	60,780			$	44,387			$	648			$	105,815
Loan foreclosures		(8,786		)		8,722				64
Net loan recoveries		200												200
New nonperforming loans		3,355												3,355
Reduction of nonperforming loans(1)		(2,420		)										(2,420		)
OREO/Repossessed sales proceeds						(12,066		)		(65		)		(12,131		)
OREO/Repossessed assets writedowns, net						(2,109		)		(8		)		(2,117		)
Net activity at Citizens Finance Co.										71				71
March 31, 2012		$	53,129			$	38,934			$	710			$	92,773
(1) Includes principal reductions and transfers to performing status.

During the first quarter of 2012, recoveries on loans exceeded charge-offs on loans by $200,000 compared to net charge-offs of $15.2 million during the fourth quarter of 2011. Included in the fourth quarter 2011 net charge-offs was a $6.1 million charge-off on one credit relationship in the Midwest, which had been identified as impaired and fully reserved for in the third quarter of 2011.

During the quarter we continued to make substantial headway in reducing nonperforming loans, which has been and continues to be Heartland's number one priority. Nonperforming loans now represent less than two percent of total loans.

Conference Call Details

Heartland will host a conference call for investors at 5:00 p.m. ET today. To participate, dial 480-629-9645 or 800-762-8779 at least five minutes before start time. To listen, 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 April 29, 2013, by logging on to www.htlf.com.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a $4.3 billion diversified financial services company providing banking, mortgage, wealth management, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 61 banking locations in 42 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Minnesota. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.

Safe Harbor Statement

This release, and future oral and written statements of Heartland and its management, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Heartland's financial condition, results of operations, plans, objectives, future performance and business. Although these forward-looking statements are based upon the beliefs, expectations and assumptions of Heartland's management, there are a number of factors, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which are detailed in the risk factors included in Heartland's Annual Report on Form 10-K filed with the Securities and Exchange Commission, include, among others: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist threats and attacks and any acts of war, (iii) changes in state and federal laws, regulations and governmental policies concerning the Company's general business; (iv) changes in interest rates and prepayment rates of the Company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. All statements in this release, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
		For the Quarter Ended March 31,
		2012				2011
Interest Income
Interest and fees on loans and leases		$	38,399			$	36,966
Interest on securities:
Taxable			7,572				9,221
Nontaxable			2,271				1,754
Interest on federal funds sold			-				-
Interest on deposits in other financial institutions			-				1
Total Interest Income			48,242				47,942
Interest Expense
Interest on deposits			5,775				8,026
Interest on short-term borrowings			213				259
Interest on other borrowings			4,061				3,936
Total Interest Expense			10,049				12,221
Net Interest Income			38,193				35,721
Provision for loan and lease losses			2,354				10,009
Net Interest Income After Provision for Loan and Lease Losses			35,839				25,712
Noninterest Income
Service charges and fees			3,584				3,361
Loan servicing income			1,760				1,549
Trust fees			2,613				2,479
Brokerage and insurance commissions			910				848
Securities gains, net			3,943				2,089
Gain (loss) on trading account securities			(3	)			216
Impairment loss on securities			(981	)			-
Gains on sale of loans			8,502				1,402
Valuation adjustment on mortgage servicing rights			13				-
Income on bank owned life insurance			482				403
Other noninterest income			2,565				261
Total Noninterest Income			23,388				12,608
Noninterest Expense
Salaries and employee benefits			23,996				18,186
Occupancy			2,482				2,386
Furniture and equipment			1,446				1,409
Professional fees			2,760				3,019
FDIC insurance assessments			864				1,345
Advertising			1,071				850
Intangible assets amortization			131				146
Net loss on repossessed assets			2,904				1,632
Other noninterest expenses			4,486				3,914
Total Noninterest Expense			40,140				32,887
Income Before Income Taxes			19,087				5,433
Income taxes			6,272				1,212
Net Income			12,815				4,221
Net income attributable to noncontrolling interest, net of tax			26				16
Net Income Attributable to Heartland			12,841				4,237
Preferred dividends and discount			(1,021	)			(1,336	)
Net Income Available to Common Stockholders		$	11,820			$	2,901
Earnings per common share-diluted		$	0.71			$	0.18
Weighted average shares outstanding-diluted			16,729,925				16,557,353

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
		For the Quarter Ended
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Interest Income
Interest and fees on loans and leases		$	38,399			$	37,764			$	37,393			$	37,480			$	36,966
Interest on securities:
Taxable			7,572				7,518				8,051				9,305				9,221
Nontaxable			2,271				2,340				2,145				1,796				1,754
Interest on federal funds sold			-				-				2				1				-
Interest on deposits in other financial institutions			-				-				-				-				1
Total Interest Income			48,242				47,622				47,591				48,582				47,942
Interest Expense
Interest on deposits			5,775				6,495				7,028				7,675				8,026
Interest on short-term borrowings			213				204				205				225				259
Interest on other borrowings			4,061				4,086				4,123				4,081				3,936
Total Interest Expense			10,049				10,785				11,356				11,981				12,221
Net Interest Income			38,193				36,837				36,235				36,601				35,721
Provision for loan and lease losses			2,354				7,784				7,727				3,845				10,009
Net Interest Income After Provision for Loan and Lease Losses			35,839				29,053				28,508				32,756				25,712
Noninterest Income
Service charges and fees			3,584				3,686				3,657				3,599				3,361
Loan servicing income			1,760				2,004				1,081				1,298				1,549
Trust fees			2,613				2,337				2,384				2,656				2,479
Brokerage and insurance commissions			910				889				918				856				848
Securities gains, net			3,943				4,174				2,085				4,756				2,089
Gain (loss) on trading account securities			(3	)			(125	)			(83	)			81				216
Impairment loss on securities			(981	)			-				-				-				-
Gains on sale of loans			8,502				5,473				3,183				1,308				1,402
Valuation adjustment on mortgage servicing rights			13				(19	)			-				-				-
Income on bank owned life insurance			482				407				208				331				403
Other noninterest income			2,565				212				(171	)			(216	)			261
Total Noninterest Income			23,388				19,038				13,262				14,669				12,608
Noninterest Expense
Salaries and employee benefits			23,996				22,135				17,736				17,480				18,186
Occupancy			2,482				2,368				2,396				2,213				2,386
Furniture and equipment			1,446				1,475				1,392				1,360				1,409
Professional fees			2,760				3,385				3,110				3,053				3,019
FDIC insurance assessments			864				848				798				786				1,345
Advertising			1,071				1,138				1,191				1,113				850
Intangible assets amortization			131				141				141				144				146
Net loss on repossessed assets			2,904				4,255				1,409				2,511				1,632
Other noninterest expenses			4,486				4,458				3,690				3,683				3,914
Total Noninterest Expense			40,140				40,203				31,863				32,343				32,887
Income Before Income Taxes			19,087				7,888				9,907				15,082				5,433
Income taxes			6,272				1,671				2,549				4,870				1,212
Net Income			12,815				6,217				7,358				10,212				4,221
Net income attributable to noncontrolling interest, net of tax			26				31				(20	)			9				16
Net Income Attributable to Heartland			12,841				6,248				7,338				10,221				4,237
Preferred dividends and discount			(1,021	)			(1,021	)			(3,947	)			(1,336	)			(1,336	)
Net Income Available to Common Stockholders		$	11,820			$	5,227			$	3,391			$	8,885			$	2,901
Earnings per common share-diluted		$	0.71			$	0.31			$	0.20			$	0.54			$	0.18
Weighted average shares outstanding-diluted			16,687,731				16,599,741				16,585,021				16,568,701				16,557,353

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
		As Of
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Assets
Cash and cash equivalents		$	150,122			$	129,834			$	81,605			$	148,388			$	86,278
Securities			1,221,909				1,326,592				1,323,464				1,193,480				1,244,447
Loans held for sale			103,460				53,528				36,529				15,770				8,317
Loans and leases:
Held to maturity			2,532,419				2,481,284				2,374,186				2,351,785				2,360,604
Loans covered by loss share agreements			11,360				13,347				14,766				16,190				19,201
Allowance for loan and lease losses			(39,362	)			(36,808	)			(44,195	)			(40,602	)			(43,271	)
Loans and leases, net			2,504,417				2,457,823				2,344,757				2,327,373				2,336,534
Premises, furniture and equipment, net			111,946				110,206				110,127				118,828				119,954
Goodwill			25,909				25,909				25,909				25,909				25,909
Other intangible assets, net			13,109				12,960				12,601				13,103				13,440
Cash surrender value on life insurance			72,159				67,084				66,654				66,425				66,073
Other real estate, net			38,934				44,387				39,188				39,075				35,007
FDIC indemnification asset			1,270				1,343				992				1,035				1,396
Other assets			69,616				75,392				70,853				61,231				66,019
Total Assets		$	4,312,851			$	4,305,058			$	4,112,679			$	4,010,617			$	4,003,374
Liabilities and Equity
Liabilities
Deposits:
Demand		$	771,421			$	737,323			$	692,893			$	649,523			$	637,452
Savings			1,731,399				1,678,154				1,654,417				1,557,053				1,569,993
Brokered time deposits			41,475				41,225				44,225				39,225				39,225
Other time deposits			731,464				753,411				782,079				834,884				835,704
Total deposits			3,275,759				3,210,113				3,173,614				3,080,685				3,082,374
Short-term borrowings			229,533				270,081				173,199				168,021				194,934
Other borrowings			377,362				372,820				375,976				379,718				365,281
Accrued expenses and other liabilities			64,154				99,151				36,667				36,643				28,393
Total Liabilities			3,946,808				3,952,165				3,759,456				3,665,067				3,670,982
Equity
Preferred equity			81,698				81,698				81,698				79,113				78,798
Common equity			281,696				268,520				268,819				263,769				250,918
Total Heartland Stockholders' Equity			363,394				350,218				350,517				342,882				329,716
Noncontrolling interest			2,649				2,675				2,706				2,668				2,676
Total Equity			366,043				352,893				353,223				345,550				332,392
Total Liabilities and Equity		$	4,312,851			$	4,305,058			$	4,112,679			$	4,010,617			$	4,003,374
Common Share Data
Book value per common share		$	17.09			$	16.29			$	16.33			$	16.04			$	15.28
ASC 320 effect on book value per common share		$	1.09			$	0.97			$	1.22			$	0.86			$	0.49
Common shares outstanding, net of treasury stock			16,486,539				16,484,790				16,459,338				16,442,437				16,418,228
Tangible Capital Ratio (1)			5.93	%			5.63	%			5.90	%			5.92	%			5.61	%
(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
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Average Balances
Assets		$	4,225,815			$	4,197,916			$	4,063,327			$	4,014,290			$	4,009,863
Loans and leases, net of unearned			2,577,429				2,487,778				2,399,047				2,388,088				2,399,656
Deposits			3,201,073				3,215,793				3,110,978				3,059,360				3,068,753
Earning assets			3,784,709				3,749,612				3,624,559				3,600,095				3,583,883
Interest bearing liabilities			3,081,340				3,066,704				3,002,868				3,004,928				3,010,629
Common stockholders' equity			275,275				267,025				270,696				260,334				251,833
Total stockholders' equity			359,644				351,538				353,003				341,797				333,016
Tangible common stockholders' equity			247,744				239,384				242,886				232,381				223,736
Earnings Performance Ratios
Annualized return on average assets			1.12	%			0.49	%			0.33	%			0.89	%			0.29	%
Annualized return on average common equity			17.27	%			7.77	%			4.97	%			13.69	%			4.67	%
Annualized return on average common tangible equity			19.19	%			8.66	%			5.54	%			15.34	%			5.26	%
Annualized net interest margin(1)			4.23	%			4.08	%			4.14	%			4.23	%			4.19	%
Efficiency ratio(2)			67.71	%			75.29	%			65.07	%			67.53	%			69.17	%
(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
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Loan and Lease Data
Loans held to maturity:
Commercial and commercial real estate		$	1,842,566			$	1,809,450			$	1,725,586			$	1,709,955			$	1,727,530
Residential mortgage			202,883				194,436				179,628				173,808				169,513
Agricultural and agricultural real estate			270,687				262,975				256,857				255,257				253,189
Consumer			222,387				220,099				217,007				217,263				214,682
Direct financing leases, net			323				450				604				667				876
Unearned discount and deferred loan fees			(6,427	)			(6,126	)			(5,496	)			(5,165	)			(5,186	)
Total loans and leases held to maturity		$	2,532,419			$	2,481,284			$	2,374,186			$	2,351,785			$	2,360,604
Loans covered under loss share agreements:
Commercial and commercial real estate		$	5,730			$	6,380			$	6,788			$	7,315			$	9,368
Residential mortgage			3,734				4,158				4,410				4,747				5,291
Agricultural and agricultural real estate			934				1,659				2,139				2,298				2,628
Consumer			962				1,150				1,429				1,830				1,914
Total loans and leases covered under loss share agreements		$	11,360			$	13,347			$	14,766			$	16,190			$	19,201
Asset Quality
Not covered under loss share agreements:
Nonaccrual loans		$	49,940			$	57,435			$	72,629			$	68,110			$	87,970
Loans and leases past due ninety days or more as to interest or principal payments			-				-				-				-				3,038
Other real estate owned			38,693				43,506				38,640				38,642				34,532
Other repossessed assets			710				648				398				188				223
Total nonperforming assets not covered under loss share agreements		$	89,343			$	101,589			$	111,667			$	106,940			$	125,763
Performing troubled debt restructured loans			21,379				25,704				24,853				31,246				22,613
Covered under loss share agreements:
Nonaccrual loans		$	3,189			$	3,345			$	3,886			$	4,480			$	4,564
Other real estate owned			241				881				548				433				475
Total nonperforming assets covered under loss share agreements		$	3,430			$	4,226			$	4,434			$	4,913			$	5,039
Allowance for Loan and Lease Losses
Balance, beginning of period		$	36,808			$	44,195			$	40,602			$	43,271			$	42,693
Provision for loan and lease losses			2,354				7,784				7,727				3,845				10,009
Charge-offs on loans not covered by loss share agreements			(1,608	)			(15,616	)			(5,985	)			(8,076	)			(9,785	)
Charge-offs on loans covered by loss share agreements			-				(5	)			(168	)			(107	)			(238	)
Recoveries			1,808				450				2,019				1,669				592
Balance, end of period		$	39,362			$	36,808			$	44,195			$	40,602			$	43,271
Asset Quality Ratios Excluding Assets Covered Under Loss Share Agreements
Ratio of nonperforming loans and leases to total loans and leases			1.97	%			2.31	%			3.06	%			2.90	%			3.86	%
Ratio of nonperforming assets to total assets			2.07	%			2.39	%			2.72	%			2.67	%			3.14	%
Annualized ratio of net loan charge-offs to average loans and leases			(0.03	)%			2.42	%			0.66	%			1.08	%			1.59	%
Allowance for loan and lease losses as a percent of loans and leases			1.55	%			1.48	%			1.86	%			1.73	%			1.83	%
Allowance for loan and lease losses as a percent of nonperforming loans and leases			78.82	%			64.09	%			60.85	%			59.61	%			47.55	%

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Quarter Ended
		March 31, 2012										March 31, 2011
		Average										Average
		Balance				Interest			Rate			Balance				Interest			Rate
Earning Assets
Securities:
Taxable		$	1,021,228			$	7,572		2.98	%		$	1,060,943			$	9,221		3.52	%
Nontaxable(1)			219,283				3,494		6.41				161,441				2,699		6.78
Total securities			1,240,511				11,066		3.59				1,222,384				11,920		3.95
Interest bearing deposits			3,823				-		-				4,381				1		0.09
Federal funds sold			148				-		-				332				-		-
Loans and leases:
Commercial and commercial real estate (1)			1,827,353				24,990		5.50				1,746,757				24,957		5.79
Residential mortgage			264,596				3,116		4.74				185,299				2,410		5.27
Agricultural and agricultural real estate (1)			266,763				3,933		5.93				252,999				3,840		6.16
Consumer			218,337				5,377		9.90				213,668				4,850		9.21
Direct financing leases, net			380				5		5.29				933				13		5.65
Fees on loans			-				1,395		-				-				1,254		-
Less: allowance for loan and lease losses			(37,202	)			-		-				(42,870	)			-		-
Net loans and leases			2,540,227				38,816		6.15				2,356,786				37,324		6.42
Total earning assets			3,784,709				49,882		5.30	%			3,583,883				49,245		5.57	%
Nonearning Assets			441,106										425,980
Total Assets		$	4,225,815			$	49,882					$	4,009,863			$	49,245
Interest Bearing Liabilities
Savings		$	1,679,651			$	1,663		0.40			$	1,553,295			$	2,547		0.67
Time, $100,000 and over			247,396				1,228		2.00				270,447				1,610		2.41
Other time deposits			533,153				2,884		2.18				613,682				3,869		2.56
Short-term borrowings			247,090				213		0.35				210,032				259		0.50
Other borrowings			374,050				4,061		4.37				363,173				3,936		4.40
Total interest bearing liabilities			3,081,340				10,049		1.31	%			3,010,629				12,221		1.65	%
Noninterest Bearing Liabilities
Noninterest bearing deposits			740,873										631,329
Accrued interest and other liabilities			43,958										34,889
Total noninterest bearing liabilities			784,831										666,218
Stockholders' Equity			359,644										333,016
Total Liabilities and Stockholders' Equity		$	4,225,815									$	4,009,863
Net interest income (1)						$	39,833									$	37,024
Net interest spread (1)									3.99	%									3.93	%
Net interest income to total earning assets (1)									4.23	%									4.19	%
Interest bearing liabilities to earning assets			81.42	%									84.00	%
(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
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Total Assets
Dubuque Bank and Trust Company		$	1,407,827			$	1,382,226			$	1,275,116			$	1,294,654			$	1,270,387
New Mexico Bank & Trust			929,804				993,182				921,973				891,609				880,980
Wisconsin Community Bank			491,741				524,958				486,319				453,427				469,305
Rocky Mountain Bank			432,902				440,805				425,132				419,697				417,846
Riverside Community Bank			343,232				325,388				316,945				322,601				302,057
Galena State Bank & Trust Co.			289,740				290,656				294,299				296,318				275,807
Arizona Bank & Trust			239,434				227,993				221,481				222,148				231,020
Summit Bank & Trust			98,247				100,994				99,528				95,130				93,600
Minnesota Bank & Trust			95,462				81,457				75,021				67,594				62,251
Total Deposits
Dubuque Bank and Trust Company		$	978,854			$	938,000			$	929,854			$	892,526			$	935,424
New Mexico Bank & Trust			697,060				690,293				681,413				674,096				659,373
Wisconsin Community Bank			409,994				429,062				402,957				371,037				374,758
Rocky Mountain Bank			362,307				365,373				356,353				349,299				348,723
Riverside Community Bank			286,529				264,699				268,432				271,553				245,639
Galena State Bank & Trust Co.			245,780				243,639				255,006				257,413				239,445
Arizona Bank & Trust			183,321				177,457				179,369				179,885				188,415
Summit Bank & Trust			81,290				81,224				85,431				80,793				80,327
Minnesota Bank & Trust			78,338				66,875				57,058				50,091				46,205
Net Income (Loss)
Dubuque Bank and Trust Company		$	9,604			$	4,846			$	5,602			$	6,132			$	4,958
New Mexico Bank & Trust			2,216				2,197				1,509				2,505				958
Wisconsin Community Bank			2,153				2,313				2,443				1,882				1,466
Rocky Mountain Bank			963				493				780				646				(630	)
Riverside Community Bank			369				800				(339	)			953				(212	)
Galena State Bank & Trust Co.			437				1,139				941				1,113				579
Arizona Bank & Trust			(215	)			(1,202	)			(960	)			546				(1,452	)
Summit Bank & Trust			(123	)			(154	)			(160	)			116				(604	)
Minnesota Bank & Trust			(129	)			(157	)			102				(45	)			(81	)
Return on Average Assets
Dubuque Bank and Trust Company			2.88	%			1.44	%			1.74	%			1.92	%			1.60	%
New Mexico Bank & Trust			0.96				0.93				0.65				1.11				0.43
Wisconsin Community Bank			1.69				1.83				2.05				1.63				1.26
Rocky Mountain Bank			0.89				0.45				0.73				0.61				(0.61	)
Riverside Community Bank			0.45				0.98				(0.42	)			1.24				(0.28	)
Galena State Bank & Trust Co.			0.62				1.54				1.28				1.61				0.85
Arizona Bank & Trust			(0.37	)			(2.13	)			(1.72	)			0.94				(2.58	)
Summit Bank & Trust			(0.50	)			(0.63	)			(0.66	)			0.49				(2.59	)
Minnesota Bank & Trust			(0.58	)			(0.77	)			0.56				(0.25	)			(0.53	)
Net Interest Margin as a Percentage of Average Earning Assets
Dubuque Bank and Trust Company			4.03	%			4.00	%			4.01	%			3.62	%			3.59	%
New Mexico Bank & Trust			4.02				3.85				4.10				4.33				4.34
Wisconsin Community Bank			4.41				4.30				4.33				4.60				4.57
Rocky Mountain Bank			4.33				4.06				4.03				3.85				3.91
Riverside Community Bank			3.63				3.64				3.58				3.90				4.01
Galena State Bank and Trust Co.			3.89				3.69				3.55				3.86				3.73
Arizona Bank & Trust			4.40				4.06				4.10				4.52				4.25
Summit Bank & Trust			4.07				3.41				3.84				3.33				2.99
Minnesota Bank & Trust			4.75				4.56				4.82				4.55				4.75

HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA - SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS
		As of
		3/31/2012				12/31/2011				9/30/2011				6/30/2011				3/31/2011
Total Portfolio Loans and Leases
Dubuque Bank and Trust Company		$	796,789			$	778,467			$	731,356			$	730,802			$	748,354
New Mexico Bank & Trust			506,424				508,874				507,416				506,810				513,568
Wisconsin Community Bank			340,841				333,112				318,906				314,432				320,841
Rocky Mountain Bank			264,964				256,704				250,728				247,718				238,201
Riverside Community Bank			153,174				155,320				155,995				157,901				161,238
Galena State Bank & Trust Co.			167,677				157,398				143,680				138,726				136,210
Arizona Bank & Trust			150,629				146,346				137,356				137,853				134,254
Summit Bank & Trust			63,658				62,422				53,402				52,570				47,024
Minnesota Bank & Trust			73,413				58,058				50,545				43,109				40,197
Allowance For Loan and Lease Losses
Dubuque Bank and Trust Company		$	9,584			$	9,365			$	10,087			$	10,148			$	11,984
New Mexico Bank & Trust			7,110				6,633				10,271				8,405				7,277
Wisconsin Community Bank			3,629				3,458				3,288				3,637				3,369
Rocky Mountain Bank			4,204				3,865				3,953				4,074				4,425
Riverside Community Bank			3,206				2,834				4,770				2,702				3,693
Galena State Bank & Trust Co.			1,854				1,835				1,956				2,077				2,278
Arizona Bank & Trust			5,315				4,627				5,590				5,502				6,018
Summit Bank & Trust			1,132				1,012				1,108				1,091				1,103
Minnesota Bank & Trust			748				588				507				449				636
Nonperforming Loans and Leases
Dubuque Bank and Trust Company		$	3,107			$	3,634			$	4,298			$	4,910			$	12,897
New Mexico Bank & Trust			13,368				15,161				15,404				16,053				15,979
Wisconsin Community Bank			7,482				8,074				11,871				10,359				11,776
Rocky Mountain Bank			7,787				8,662				14,180				16,971				18,303
Riverside Community Bank			5,458				6,729				5,870				5,962				11,443
Galena State Bank & Trust Co.			3,699				3,853				5,309				5,182				6,259
Arizona Bank & Trust			5,755				7,927				10,811				4,054				6,959
Summit Bank & Trust			2,709				2,848				4,159				3,905				4,527
Minnesota Bank & Trust			6				6				6				110				2,229
Allowance As a Percent of Total Loans and Leases
Dubuque Bank and Trust Company			1.20	%			1.20	%			1.38	%			1.39	%			1.60	%
New Mexico Bank & Trust			1.40				1.30				2.02				1.66				1.42
Wisconsin Community Bank			1.06				1.04				1.03				1.16				1.05
Rocky Mountain Bank			1.59				1.51				1.58				1.64				1.86
Riverside Community Bank			2.09				1.82				3.06				1.71				2.29
Galena State Bank & Trust Co.			1.11				1.17				1.36				1.50				1.67
Arizona Bank & Trust			3.53				3.16				4.07				3.99				4.48
Summit Bank & Trust			1.78				1.62				2.07				2.08				2.35
Minnesota Bank & Trust			1.02				1.01				1.00				1.04				1.58

Heartland Financial USA, Inc.
John K. Schmidt, 563-589-1994
Chief Operating Officer
Chief Financial Officer
jschmidt@htlf.com

Source: Heartland Financial USA, Inc.

Copyright Business Wire 2012