Heartland Financial USA Inc. reported unaudited consolidated earnings results for the third quarter and nine months ended September 30, 2009. The company reported net income of $3.5 million for the third quarter ended September 30, 2009, compared to net income of $2.9 million earned during the third quarter of 2008. Net income available to common stockholders was $2.2 million or $0.13 per diluted common share for the quarter ended September 30, 2009, compared to $3.0 million or $0.18 per diluted common share earned during the third quarter of 2008. Return on average common equity was 3.54% and return on average assets was 0.22% for the third quarter of 2009 compared to 5.26% and 0.35% respectively, for the same quarter in 2008. Net interest income on a tax-equivalent basis totaled $35.8 million during the third quarter of 2009, an increase of $4.9 million or 16% from the $30.9 million recorded during the third quarter of 2008. On a tax-equivalent basis, interest income in the third quarter of 2009 totaled $53.1 million compared to $52.0 million in the third quarter of 2008, an increase of $1.1 million or 2%. Income before income taxes was $4.3 million compared to $3.95 million for the same period in 2008. Net income recorded for the first nine months of 2009 was $14.2 million compared to $13.8 million recorded during the first nine months of 2008. Net income available to common stockholders was $10.4 million or $0.64 per diluted common share for the nine months ended September 30, 2009 compared to $14.0 million or $0.85 per diluted common share earned during the first nine months of 2008. Return on average common equity was 5.81% and return on average assets was 0.37% for the first nine months of 2009 compared to 8.04% and 0.56% respectively, for the same period in 2008. Earnings for the quarter and nine months ended September 30, 2009, were positively affected by increased net interest income, loan servicing income, securities gains and gains on sale of loans. The growth in these areas was partially offset by an increase in the loan loss provision, which was $11.9 million during the third quarter of 2009 compared to $7.1 million during the third quarter of 2008. For the nine-month comparative period, the loan loss provision was $28.6 million during 2009 compared to $14.2 million during 2008. Also negatively affecting earnings during the third quarter and first nine months of 2009 were increased FDIC assessments and expenses associated with other real estate owned. For the nine-month period during 2009, net interest income on a tax-equivalent basis was $101.4 million, an increase of $12.0 million or 13% from the $89.4 million recorded during the first nine months of 2008. For the first nine months of 2009, interest income on a tax-equivalent basis remained consistent at $155.4 million compared to $155.3 million for the same period in 2008. Income before income taxes was $19.68 million compared to $18.84 million for the same period in 2008.

Lynn Fuller, President and CEO of Heartland Financial USA Inc. said, “With respect to M&A, we just completed the data processing conversion for Elizabeth State Bank, which was acquired through Galena State Bank in an FDIC-assisted transaction. The purchase added approximately $50 million in assets and resulted in a $1 million gain. We continue to work with the FDIC on similar opportunities; and like the Elizabeth purchase, we're seeking fill-in acquisitions where we can grow market share, achieve efficiencies, and provide greater convenience to our current clients.”

Lynn Fuller, the Chairman, President and CEO of Heartland Financial USA, Inc., said in a conference call, “With respect to M&A, you are likely aware that Heartland, through its Galena State Bank subsidiary, recently announced its first FDIC-assisted transaction, purchasing approximately $50 million in assets of the former Elizabeth State Bank in Elizabeth, Illinois. We continue to maintain contact with the FDIC to identify opportunities that make sense. Like the Elizabeth purchase, we are seeking fill-in acquisitions where we can grow market share, achieve efficiencies, and provide greater convenience to our current clients.”