ex99012808.htm

Net income for the year 2007 was $25.6 million, or $1.54 per diluted share, an increase of $531,000 or 2 percent over net income of $25.1 million, or $1.50 per diluted share, recorded during 2006. Return on average equity was 11.88 percent and return on average assets was 0.81 percent for 2007, compared to 12.86 percent and 0.86 percent, respectively, for 2006. During 2006, a pre-tax judgment of $2.4 million was recorded as noninterest expense, while a $286,000 award under a counterclaim was recorded as a loan loss recovery. The net after-tax effect to net income for this one-time event was $1.3 million. Exclusive of this expense, Heartland’s net income for 2006 was $26.4 million, or $1.58 per diluted share. Because of the non-recurring nature of this expense, management believes that this pro-forma presentation can help investors understand Heartland’s financial performance for 2006.

The sale of Rocky Mountain Bank’s branch banking office in Broadus, Montana, was completed on June 22, 2007. Included in the sale were $20.9 million of loans and $30.2 million of deposits. The results of operations of the branch are reflected on the income statement as discontinued operations for the prior periods reported. Also included on the income statement as discontinued operations for the prior periods are the results of operations of ULTEA, Inc., Heartland’s fleet leasing subsidiary, which was sold to ALD Automotive on December 22, 2006. During 2007, income from discontinued operations included a $2.4 million pre-tax gain recorded as a result of the sale of the Broadus branch.

Income from continuing operations was $6.8 million, or $0.41 per diluted share, during the fourth quarter of 2007 compared to $7.5 million, or $0.44 per diluted share, during the fourth quarter of 2006. This decrease in earnings from continuing operations was primarily a result of a higher provision for loan losses, which was $3.3 million during the fourth quarter of 2007 compared to a reversal of $157,000 during the fourth quarter of 2006. For the year 2007, income from continuing operations was $24.0 million, or $1.44 per diluted share, compared to $24.3 million, or $1.45 per diluted share, during 2006. Exclusive of the $1.3 million one-time expense associated with the court case mentioned earlier, Heartland’s net income from continuing operations for 2006 was $25.6 million, or $1.53 per diluted share. Growth in net interest income and noninterest income during 2007 partially offset the additional provision for loan losses and noninterest expenses recorded.

Net interest margin, expressed as a percentage of average earning assets, was 3.87 percent during the fourth quarter of 2007 compared to 4.04 percent for the fourth quarter of 2006 and 3.87 percent for the third quarter of 2007. Affecting the net interest margin throughout 2007 was the impact of foregone interest on Heartland’s nonperforming loans which had increased to $32 million by year-end. Additionally, early in the third quarter of 2007, a $20.5 million investment was made in bank owned life insurance upon which interest expense associated with the funding of this investment affects net interest margin while the corresponding earnings on this investment is recorded as noninterest income.

Noninterest income increased by $389,000 or 5 percent during the fourth quarter of 2007 compared to the same quarter in 2006. The categories experiencing the largest increases for the comparative quarters were brokerage and insurance commissions and gains on sale of loans. During the fourth quarter of 2007, Heartland sold its credit card portfolio, resulting in a gain of $1.0 million. The increases in these categories were partially offset by losses on trading account securities and the amortization of investments made during the third quarter of 2007 in limited liability companies that own certified historic structures for which historic rehabilitation tax credits apply. For the year 2007, noninterest income increased $2.5 million or 9 percent over 2006, primarily from increased trust fees, brokerage and insurance commissions, gains on sale of loans and income on bank owned life insurance.

For the fourth quarter of 2007, noninterest expense increased $268,000 or 1 percent in comparison with the same period in 2006. The largest component of noninterest expense, salaries and employee benefits, decreased $630,000 or 5 percent during the fourth quarter of 2007 in comparison to the fourth quarter of 2006. This reduction in salaries and employee benefits expense was primarily related to a $2.3 million adjustment for lower employer incentive payouts and employer contributions to the company’s retirement plan. For the year 2007, noninterest expense increased $3.4 million or 4 percent when compared to 2006. Exclusive of the $2.4 million judgment recorded during 2006, noninterest expense increased $5.8 million or 6 percent in comparison to 2006. The largest contributor to this increase was salaries and employee benefits which grew by $3.6 million or 7 percent during the yearly comparative period, primarily due to branch expansions, including the formation of Summit Bank & Trust and Minnesota Bank & Trust, and additional staffing at Heartland’s operations center to provide support services to the growing number of bank subsidiaries. Total full-time equivalent employees increased to 982 at December 31, 2007, from 959 at December 31, 2006.

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 19.29 percent during the fourth quarter of 2007 compared to 14.11 percent during the same quarter of 2006. For the years 2007 and 2006, tax-exempt income as a percentage of pre-tax income was 19.00 percent and 17.71 percent, respectively. The tax-equivalent adjustment for this tax-exempt interest income was $909,000 during the fourth quarter of 2007 compared to $907,000 during the same quarter in 2006. For the yearly comparative period, the tax-equivalent adjustment for tax-exempt interest income was $3.7 million for 2007 and $3.6 million for 2006.

At December 31, 2007, total assets had increased $205.9 million or 7 percent since year-end 2006, primarily because of loan growth. Despite the loss of $20.9 million in loans as a result of the sale of the Broadus branch of Rocky Mountain Bank in the second quarter of 2007, total loans and leases grew to $2.3 billion at December 31, 2007, an increase of $132.3 million or 6 percent since year-end 2006. The growth in loans was balanced between Heartland’s Midwestern and Western markets. The Heartland subsidiary banks experiencing notable loan growth this year were Dubuque Bank and Trust Company, New Mexico Bank & Trust, Rocky Mountain Bank and Summit Bank & Trust. The commercial and commercial real estate loan category grew by $148.9 million or 10 percent. Included in this change was the reclassification of $28.3 million of commercial real estate loans at Wisconsin Community Bank from the loans held for sale portfolio to the loans held to maturity portfolio as management intends to hold those loans in its portfolio.

Despite the loss of $30.2 million in deposits as a result of the Broadus branch sale, total deposits grew to $2.38 billion at December 31, 2007, an increase of $64.6 million or 3 percent since year-end 2006. The sale of the Broadus branch of Rocky Mountain Bank included deposits of $30.2 million. Growth in deposits was weighted more heavily in Heartland’s Midwestern markets. Demand deposits experienced a $10.0 million or 3 percent increase and savings deposit balances experienced a $32.1 million or 4 percent increase despite the $3.4 million in demand deposits and $10.6 million in savings deposits lost as part of the Broadus branch sale. The increase in savings deposits primarily resulted from the promotion of a new money market product. Time deposits, excluding brokered time deposits, increased $54.1 million or 5 percent with a majority of the growth at the Midwestern banks where depositors tend to favor the term deposit product. Included in the Broadus branch sale were $16.2 million in time deposits. Brokered time deposit balances decreased $31.6 million or 31 percent during the year. At December 31, 2007, brokered time deposits totaled $69.0 million or 3 percent of total deposits compared to $100.6 million or 4 percent of total deposits at year-end 2006.

The allowance for loan and lease losses at December 31, 2007, was 1.45 percent of loans and 104 percent of nonperforming loans, compared to 1.40 percent of loans and 356 percent of nonperforming loans at December 31, 2006, and 1.38 percent of loans and 104 percent of nonperforming loans at September 30, 2007. Additions to the allowance for loan and lease losses were primarily driven by the continued softening of the economy and reduced real estate values, particularly in the Phoenix market. Nonperforming loans were $31.8 million or 1.40 percent of total loans and leases at December 31, 2007, compared to $8.4 million or 0.39 percent of total loans and leases at December 31, 2006, and $30.4 million or 1.33 percent of total loans and leases at September 30, 2007. The majority of the $23.4 million increase in nonperforming loans from December 31, 2006, occurred during the second and third quarters of 2007. Over half of this increase was attributable to nonperforming loans at Wisconsin Community Bank totaling $10.2 million, of which $2.5 million in outstanding balances is covered by government guarantees, and nonperforming loans at Arizona Bank & Trust totaling $5.3 million. The remaining increase was distributed among the other bank subsidiaries and related to a few loan customers. Net charge-offs during the fourth quarter of 2007 were $1.7 million compared to $1.9 million, $2.9 million and $362,000 during the third, second and first quarters of 2007, respectively. Management monitors the loan portfolio of each bank subsidiary and, at this point, does not feel that the increase in nonperforming loans is any indication of a systemic problem but is more likely a result of the continuing shift in the economy in some of Heartland’s markets. With all the recent attention given to subprime lending, Heartland feels it is important to inform investors that its bank subsidiaries have not been active in the origination of subprime loans. Because of the net realizable value of collateral, guarantees and other factors, management expects losses on Heartland’s nonperforming loans during 2008 to be below the amounts experienced during 2007.

This release, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to Heartland’s financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as believe, expect, anticipate, plan, intend, estimate, may, will, would, could, should or similar expressions. Additionally, all statements in this release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (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. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results, is included in the Risk Factors section of its Annual Report on Form 10-K and in its other filings with the Securities and Exchange Commission.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarters Ended						For the Years Ended
		12/31/2007			12/31/2006			12/31/2007			12/31/2006
Interest Income
Interest and fees on loans and leases	$	46,083		$	44,738		$	186,795		$	166,588
Interest on securities and other:
Taxable		5,927			5,128			21,937			17,593
Nontaxable		1,665			1,445			6,079			5,783
Interest on federal funds sold		77			-			387			164
Interest on deposits in other financial institutions		13			6			33			22
Total Interest Income		53,765			51,317			215,231			190,150
Interest Expense
Interest on deposits		19,540			18,073			77,865			62,530
Interest on short-term borrowings		2,748			2,952			13,293			9,828
Interest on other borrowings		3,971			3,508			14,733			13,051
Total Interest Expense		26,259			24,533			105,891			85,409
Net Interest Income		27,506			26,784			109,340			104,741
Provision for loan and lease losses		3,304			(157	)		10,073			3,883
Net Interest Income After Provision for Loan and Lease Losses		24,202			26,941			99,267			100,858
Noninterest Income
Service charges and fees		2,821			2,704			11,108			11,058
Loan servicing income		1,273			1,091			4,376			4,279
Trust fees		1,788			1,926			8,053			7,258
Brokerage and insurance commissions		939			532			3,097			1,871
Securities gains, net		38			125			341			553
Gain (loss) on trading account securities		(185	)		80			(105	)		141
Impairment loss on equity securities		-			-			-			(76	)
Gains on sale of loans		1,527			611			3,578			2,289
Income on bank owned life insurance		565			382			1,777			1,151
Other noninterest income		(676	)		250			(264	)		920
Total Noninterest Income		8,090			7,701			31,961			29,444
Noninterest Expense
Salaries and employee benefits		11,888			12,518			54,568			50,975
Occupancy		1,961			1,918			7,902			7,291
Furniture and equipment		1,848			1,737			6,972			6,724
Outside services		2,544			2,450			9,555			9,404
Advertising		948			1,030			3,642			3,893
Other intangibles amortization		240			249			892			942
Other noninterest expenses		4,105			3,364			14,326			15,220
Total Noninterest Expense		23,534			23,266			97,857			94,449
Income Before Income Taxes		8,758			11,376			33,371			35,853
Income taxes		2,006			3,913			9,409			11,578
Income From Continuing Operations		6,752			7,463			23,962			24,275
Discontinued Operations
Income from operations of discontinued operations(1)		-			567			2,756			1,758
Income taxes		-			497			1,085			931
Income From Discontinued Operations		-			70			1,671			827
Net Income	$	6,752		$	7,533		$	25,633		$	25,102
Earnings per common share-basic	$	.41		$	.46		$	1.56		$	1.52
Earnings per common share-diluted	$	.41		$	.45		$	1.54		$	1.50
Earnings per common share from continuing operations-basic	$	.41		$	.45		$	1.45		$	1.47
Earnings per common share from continuing operations-diluted	$	.41		$	.44		$	1.44		$	1.45
Weighted average shares outstanding-basic		16,481,854			16,531,998			16,477,684			16,507,960
Weighted average shares outstanding-diluted		16,574,540			16,784,656			16,596,806			16,734,989

(1)Includes a gain of $2,442 on the sale of Rocky Mountain Bank’s Broadus branch during the second quarter of 2007

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarters Ended
	12/31/2007	9/30/2007	6/30/2007	3/31/2007	12/31/2006
Interest Income
Interest and fees on loans and leases	$ 46,083	$ 47,406	$ 47,748	$ 45,558	$ 44,738
Interest on securities and other:
Taxable	5,927	5,446	5,267	5,297	5,128
Nontaxable	1,665	1,513	1,443	1,458	1,445
Interest on federal funds sold	77	310	-	-	-
Interest on deposits in other financial institutions	13	2	8	10	6
Total Interest Income	53,765	54,677	54,466	52,323	51,317
Interest Expense
Interest on deposits	19,540	20,477	19,550	18,298	18,073
Interest on short-term borrowings	2,748	2,764	3,970	3,811	2,952
Interest on other borrowings	3,971	4,199	3,240	3,323	3,508
Total Interest Expense	26,259	27,440	26,760	25,432	24,533
Net Interest Income	27,506	27,237	27,706	26,891	26,784
Provision for loan and lease losses	3,304	575	4,268	1,926	(157)
Net Interest Income After Provision for Loan and Lease Losses	24,202	26,662	23,438	24,965	26,941
Noninterest Income
Service charges and fees	2,821	2,861	2,855	2,571	2,704
Loan servicing income	1,273	1,068	1,040	995	1,091
Trust fees	1,788	2,089	2,055	2,121	1,926
Brokerage and insurance commissions	939	820	845	493	532
Securities gains, net	38	31	147	125	125
Gain (loss) on trading account securities	(185)	(7)	46	41	80
Impairment loss on equity securities	-	-	-	-	-
Gains on sale of loans	1,527	604	856	591	611
Income on bank owned life insurance	565	595	317	300	382
Other noninterest income	(676)	(145)	(68)	374	250
Total Noninterest Income	8,090	7,916	8,093	7,611	7,701
Noninterest Expense
Salaries and employee benefits	11,888	14,301	14,210	14,169	12,518
Occupancy	1,961	2,004	2,010	1,927	1,918
Furniture and equipment	1,848	1,669	1,779	1,676	1,737
Outside services	2,544	2,374	2,368	2,269	2,450
Advertising	948	886	1,039	769	1,030
Other intangibles amortization	240	241	192	219	249
Other noninterest expenses	4,105	3,272	3,331	3,367	3,364
Total Noninterest Expense	23,534	24,747	24,929	24,396	23,266
Income Before Income Taxes	8,758	9,831	6,602	8,180	11,376
Income taxes	2,006	2,906	1,965	2,532	3,913
Income From Continuing Operations	6,752	6,925	4,637	5,648	7,463
Discontinued Operations
Income from operations of discontinued operations(1)	-	-	2,565	191	567
Income taxes	-	-	1,017	68	497
Income From Discontinued Operations	-	-	1,548	123	70
Net Income	$ 6,752	$ 6,925	$ 6,185	$ 5,771	$ 7,533
Earnings per common share-basic	$ .41	$ 0.42	$ .38	$ .35	$ .46
Earnings per common share-diluted	$ .41	$ 0.42	$ .37	$ .34	$ .45
Earnings per common share from continuingoperations-basic	$ .41	$ 0.42	$ .28	$ .34	$ .45
Earnings per common share from continuingoperations-diluted	$ .41	$ 0.42	$ .28	$ .34	$ .44
Weighted average shares outstanding-basic	16,481,854	16,447,270	16,451,031	16,542,876	16,531,998
Weighted average shares outstanding-diluted	16,574,540	16,543,635	16,644,286	16,760,688	16,784,656

(1)Includes a gain of $2,442 on the sale of Rocky Mountain Bank’s Broadus branch during the second quarter of 2007

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As Of
	12/31/2007	9/30/2007	6/30/2007	3/31/2007	12/31/2006
Assets
Cash and cash equivalents	$ 46,832	$ 31,591	$ 35,721	$ 62,232	$ 49,143
Securities	689,949	648,337	590,194	587,803	617,040
Loans held for sale	12,679	16,267	22,346	42,644	50,381
Loans and leases:
Held to maturity	2,280,167	2,274,119	2,298,256	2,224,097	2,147,845
Allowance for loan and lease losses	(32,993)	(31,438)	(32,738)	(31,545)	(29,981)
Loans and leases, net	2,247,174	2,242,681	2,265,518	2,192,552	2,117,864
Premises, furniture and equipment, net	120,285	119,461	115,885	112,951	108,567
Goodwill	40,207	40,207	40,207	40,207	39,817
Other intangible assets, net	8,369	8,378	8,530	8,997	9,010
Cash surrender value on life insurance	55,532	54,936	33,810	33,698	33,371
Assets of discontinued operations held for sale	-	-	-	20,947	-
Other assets	43,099	40,597	42,205	34,329	33,049
Total Assets	$ 3,264,126	$ 3,202,455	$ 3,154,416	$ 3,136,360	$ 3,058,242

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Demand	$ 381,499	$ 367,617	$ 368,234	$ 360,744	$ 371,465
Savings	855,036	850,845	804,949	825,600	822,915
Brokered time deposits	68,984	116,082	119,958	118,151	100,572
Other time deposits	1,070,780	1,086,732	1,075,024	1,045,330	1,016,705
Total deposits	2,376,299	2,421,276	2,368,165	2,349,825	2,311,657
Short-term borrowings	354,146	256,822	274,141	304,342	275,694
Other borrowings	263,607	268,716	268,758	210,804	224,523
Liabilities of discontinued operations held for sale	-	-	-	32,086	-
Accrued expenses and other liabilities	39,474	33,366	31,709	27,453	36,657
Total Liabilities	3,033,526	2,980,180	2,942,773	2,924,510	2,848,531
Stockholders’ Equity	230,600	222,275	211,643	211,850	209,711
Total Liabilities and Stockholders’ Equity	$ 3,264,126	$ 3,202,455	$ 3,154,416	$ 3,136,360	$ 3,058,242

Common Share Data
Book value per common share	$ 14.04	$ 13.48	$ 12.88	$ 12.85	$ 12.65
FAS 115 effect on book value per common share	$ 0.37	$ 0.13	$ (0.15)	$ 0.10	$ 0.05
Common shares outstanding, net of treasury stock	16,427,016	16,492,245	16,437,459	16,484,541	16,572,080

Tangible Capital Ratio(1)	5.78%	5.62%	5.35%	5.38%	5.46%

	For the Quarters Ended		For the Years Ended
	12/31/2007	12/31/2006	12/31/2007	12/31/2006

Average Balances
Assets	$ 3,211,155	$ 3,051,995	$ 3,154,824	$ 2,929,702
Loans and leases, net of unearned	2,283,591	2,151,870	2,272,021	2,071,662
Deposits	2,409,315	2,263,567	2,361,003	2,176,023
Earning assets	2,910,942	2,716,768	2,862,036	2,595,712
Interest bearing liabilities	2,571,327	2,391,269	2,527,839	2,283,502
Stockholders’ equity	225,945	204,438	215,740	195,124
Tangible stockholders’ equity	184,871	162,053	174,172	154,368

Earnings Performance Ratios
Annualized return on average assets	0.83%	0.98%	0.81%	0.86%
Annualized return on average equity	11.86	14.62	11.88	12.86
Annualized return on average tangible equity	14.49	18.44	14.72	16.26
Annualized net interest margin(1)	3.87	4.04	3.95	4.17
Efficiency ratio(2)	64.54	65.97	67.65	68.83

	For the Quarters Ended
	12/31/2007	9/30/2007	6/30/2007	3/31/2007	12/31/2006

Average Balances
Assets	$ 3,211,155	$ 3,176,715	$ 3,158,088	$ 3,073,337	$ 3,051,995
Loans and leases, net of unearned	2,283,591	2,287,264	2,302,037	2,214,852	2,151,870
Deposits	2,409,315	2,415,158	2,348,386	2,270,678	2,263,567
Earning assets	2,910,942	2,890,761	2,857,840	2,790,087	2,716,768
Interest bearing liabilities	2,571,327	2,558,460	2,524,956	2,457,797	2,391,269
Stockholders’ equity	225,945	216,038	211,639	209,338	204,438
Tangible stockholders’ equity	184,871	174,637	169,641	167,566	162,053

Earnings Performance Ratios
Annualized return on average assets	0.83%	0.86%	0.79%	0.76%	0.98%
Annualized return on average equity	11.86	12.72	11.72	11.18	14.62
Annualized return on average tangible equity	14.49	15.91	14.62	13.97	18.44
Annualized net interest margin(1)	3.87	3.87	4.02	4.04	4.04
Efficiency ratio(2)	64.54	68.58	68.39	69.13	65.97

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and For	As of and For	As of and For
	the Year	the Year	The Year
	Ended	Ended	Ended
	12/31/2007	12/31/2006	12/31/2005
Loan and Lease Data
Commercial and commercial real estate	$ 1,632,597	$ 1,483,738	$ 1,304,080
Residential mortgage	217,044	225,343	219,671
Agricultural and agricultural real estate	225,663	233,748	230,357
Consumer	199,518	194,652	181,019
Direct financing leases, net	9,158	14,359	21,586
Unearned discount and deferred loan fees	(3,813)	(3,995)	(3,647)
Total loans and leases	$ 2,280,167	$ 2,147,845	$ 1,953,066

Asset Quality
Nonaccrual loans	$ 30,694	$ 8,104	$ 14,877
Loans past due ninety days or more as to interest orprincipal payments	1,134	315	115
Other real estate owned	2,195	1,575	1,586
Other repossessed assets	438	349	471
Total nonperforming assets	$ 34,461	$ 10,343	$ 17,049

Allowance for Loan and Lease Losses
Balance, beginning of period	$ 29,981	$ 27,791	$ 24,973
Provision for loan and lease losses from continuingoperations	10,073	3,883	6,533
Provision for loan and lease losses from discontinuedoperations	-	(5)	31
Loans charged off	(8,564)	(3,989)	(4,579)
Recoveries	1,641	1,733	1,152
Reclass for unfunded commitments to other liabilities	-	-	(319)
Additions related to acquired bank	-	591	-
Reductions related to discontinued operations	(138)	(23)	-
Balance, end of period	$ 32,993	$ 29,981	$ 27,791

Asset Quality Ratios
Ratio of nonperforming loans to total loans and leases	1.40%	0.39%	0.77%
Ratio of nonperforming assets to total assets	1.06	0.34	0.60
Ratio of net loan chargeoffs to average loans and leases	0.30	0.11	0.18
Allowance for loan losses as a percent of loans andleases	1.45	1.40	1.42
Allowance for loan losses as a percent of nonperforming loans and leases	103.66	356.11	185.37

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Quarters Ended
		12/31/2007							12/31/2006
		Average							Average
		Balance			Interest	Rate			Balance			Interest	Rate
Earning Assets
Securities:
Taxable	$	503,504		$	5,927	4.67	%	$	464,166		$	5,129	4.38	%
Nontaxable(1)		147,715			2,400	6.45			131,268			2,186	6.61
Total securities		651,219			8,327	5.07			595,434			7,315	4.87
Interest bearing deposits		749			13	6.89			790			6	3.01
Federal funds sold		6,827			77	4.47			-			-	-
Loans and leases:
Commercial and commercial real estate(1)		1,617,292			31,349	7.69			1,482,378			29,528	7.90
Residential mortgage		233,829			3,904	6.62			241,786			4,044	6.64
Agricultural and agricultural real estate(1)		224,981			4,481	7.90			220,238			4,599	8.28
Consumer		197,394			5,173	10.40			193,332			4,919	10.09
Direct financing leases, net		10,096			154	6.05			14,136			211	5.92
Fees on loans		-			1,196	-			-			1,602	-
Less: allowance for loan and lease losses		(31,445	)		-	-			(31,326	)		-	-
Net loans and leases		2,252,147			46,257	8.15			2,120,544			44,903	8.40
Total earning assets		2,910,942		$	54,674	7.45	%		2,716,768		$	52,224	7.63	%
Nonearning Assets		300,213							335,227
Total Assets	$	3,211,155						$	3,051,995
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	848,746		$	5,272	2.46	%	$	802,182		$	5,459	2.70	%
Time, $100,000 and over		317,085			3,913	4.90			234,815			2,785	4.71
Other time deposits		868,105			10,355	4.73			869,070			9,829	4.49
Short-term borrowings		273,882			2,748	3.98			254,105			2,952	4.61
Other borrowings		263,509			3,971	5.98			231,097			3,508	6.02
Total interest bearing liabilities		2,571,327			26,259	4.05			2,391,269			24,533	4.07
Noninterest Bearing Liabilities
Noninterest bearing deposits		375,379							357,500
Accrued interest and other liabilities		38,504							98,788
Total noninterest bearing liabilities		413,883							456,288
Stockholders’ Equity		225,945							204,438
Total Liabilities and Stockholders’ Equity	$	3,211,155						$	3,051,995
Net interest income(1)				$	28,415						$	27,691
Net interest spread(1)						3.40	%						3.56	%
Net interest income to total earning assets(1)						3.87	%						4.04	%
Interest bearing liabilities to earning assets		88.33	%						88.02	%

(1) Tax equivalent basis is calculated using an effective tax rate of 35%.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) DOLLARS IN THOUSANDS
		For the Years Ended
		12/31/2007							12/31/2006
		Average							Average
		Balance			Interest	Rate			Balance			Interest	Rate
Earning Assets
Securities:
Taxable	$	477,338		$	21,937	4.60	%	$	419,625		$	17,594	4.19	%
Nontaxable(1)		136,552			9,077	6.65			131,149			8,843	6.74
Total securities		613,890			31,014	5.05			550,774			26,437	4.80
Interest bearing deposits		700			33	4.71			555			22	3.96
Federal funds sold		7,295			387	5.31			2,522			164	6.50
Loans and leases:
Commercial and commercial real estate(1)		1,597,247			125,916	7.88			1,427,989			109,495	7.67
Residential mortgage		240,932			16,303	6.77			228,954			14,964	6.54
Agricultural and agricultural real estate(1)		225,471			18,209	8.08			212,992			17,077	8.02
Consumer		196,432			20,655	10.52			187,814			18,684	9.95
Direct financing leases, net		11,939			714	5.98			13,913			839	6.03
Fees on loans		-			5,696	-			-			6,054	-
Less: allowance for loan and lease losses		(31,870	)		-	-			(29,801	)		-	-
Net loans and leases		2,240,151			187,493	8.37			2,041,861			167,113	8.18
Total earning assets		2,862,036		$	218,927	7.65	%		2,595,712		$	193,736	7.46	%
Nonearning Assets		292,788							333,990
Total Assets	$	3,154,824						$	2,929,702
Interest Bearing Liabilities
Interest bearing deposits
Savings	$	831,675		$	22,404	2.69	%	$	781,636		$	18,993	2.43	%
Time, $100,000 and over		291,073			14,307	4.92			220,736			9,287	4.21
Other time deposits		876,146			41,154	4.70			826,610			34,250	4.14
Short-term borrowings		287,428			13,293	4.62			225,500			9,828	4.36
Other borrowings		241,517			14,733	6.10			229,020			13,051	5.70
Total interest bearing liabilities		2,527,839			105,891	4.19			2,283,502			85,409	3.74
Noninterest Bearing Liabilities
Noninterest bearing deposits		362,109							347,041
Accrued interest and other liabilities		49,136							104,035
Total noninterest bearing liabilities		411,245							451,076
Stockholders’ Equity		215,740							195,124
Total Liabilities and Stockholders’ Equity	$	3,154,824						$	2,929,702
Net interest income(1)				$	113,036						$	108,327
Net interest spread(1)						3.46	%						3.72	%
Net interest income to total earning assets(1)						3.95	%						4.17	%
Interest bearing liabilities to earning assets		88.32	%						87.97	%

(1) Tax equivalent basis is calculated 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 Year Ended 12/31/2007			As of and For the Year Ended 12/31/2006			As of and For the Year Ended 12/31/2005
Total Assets
Dubuque Bank and Trust Company	$	976,489		$	843,282		$	833,885
New Mexico Bank & Trust		672,863			638,712			557,062
Wisconsin Community Bank		399,532			413,108			390,842
Rocky Mountain Bank		427,437			438,972			388,149
Galena State Bank and Trust Company		215,698			219,863			241,719
Riverside Community Bank		225,206			199,483			195,099
Arizona Bank & Trust		222,576			223,567			136,832
First Community Bank		127,305			118,010			121,337
Summit Bank & Trust		46,668			21,590			-
Total Deposits
Dubuque Bank and Trust Company	$	670,257		$	636,527		$	608,687
New Mexico Bank & Trust		459,530			437,708			388,935
Wisconsin Community Bank		321,647			336,015			311,436
Rocky Mountain Bank		305,933			335,053			306,967
Galena State Bank and Trust Company		177,040			178,388			179,437
Riverside Community Bank		187,052			162,319			153,791
Arizona Bank & Trust		155,093			176,438			118,959
First Community Bank		103,602			95,287			95,506
Summit Bank & Trust		30,860			6,514			-
Return on Average Assets
Dubuque Bank and Trust Company		1.34	%		1.45	%		1.28	%
New Mexico Bank & Trust		1.48			1.21			1.10
Wisconsin Community Bank		0.62			0.53			0.63
Rocky Mountain Bank		1.51			1.18			0.72
Galena State Bank and Trust Company		0.92			1.35			1.22
Riverside Community Bank		0.55			0.64			0.83
Arizona Bank & Trust		(0.08	)		0.47			0.19
First Community Bank		1.30			1.01			1.00
Summit Bank & Trust		(2.43	)		(6.31	)		-
Net Interest Margin
Dubuque Bank and Trust Company		3.40	%		3.61	%		3.48	%
New Mexico Bank & Trust		4.80			5.05			4.75
Wisconsin Community Bank		3.45			3.83			3.75
Rocky Mountain Bank		4.76			5.16			4.93
Galena State Bank and Trust Company		3.40			3.45			3.43
Riverside Community Bank		3.39			3.71			3.76
Arizona Bank & Trust		4.56			4.92			5.03
First Community Bank		3.80			3.95			3.80
Summit Bank & Trust		5.10			6.98			-
Net Income (Loss)
Dubuque Bank and Trust Company	$	11,907		$	11,990		$	10,156
New Mexico Bank & Trust		8,727			6,873			5,565
Wisconsin Community Bank		2,355			2,109			2,444
Rocky Mountain Bank		6,622			4,840			2,757
Galena State Bank and Trust Company		1,895			3,167			2,808
Riverside Community Bank		1,055			1,252			1,608
Arizona Bank & Trust		(154	)		902			199
First Community Bank		1,476			1,197			1,198
Summit Bank & Trust		(965	)		(1,220	)		-

HEARTLAND FINANCIAL USA, INC. SELECTED FINANCIAL DATA – SUBSIDIARY BANKS (Unaudited) DOLLARS IN THOUSANDS
		As of 12/31/2007			As of 12/31/2006			As of 12/31/2005
Total Portfolio Loans
Dubuque Bank and Trust Company	$	637,782		$	581,166		$	575,293
New Mexico Bank & Trust		455,383			410,438			330,609
Wisconsin Community Bank		285,010			272,407			270,837
Rocky Mountain Bank		316,776			309,943			279,230
Galena State Bank and Trust Company		144,152			158,222			176,813
Riverside Community Bank		146,925			137,102			132,781
Arizona Bank & Trust		160,309			160,614			94,285
First Community Bank		84,475			81,498			83,506
Summit Bank & Trust		27,493			14,953			-
Allowance For Loan and Lease Losses
Dubuque Bank and Trust Company	$	7,827		$	7,235		$	7,376
New Mexico Bank & Trust		6,079			5,352			4,497
Wisconsin Community Bank		4520			4,570			4,285
Rocky Mountain Bank		4,061			4,044			4,048
Galena State Bank and Trust Company		1,830			2,049			2,181
Riverside Community Bank		1,885			1,747			1,674
Arizona Bank & Trust		3,605			2,133			1,181
First Community Bank		1,179			1,182			1,191
Summit Bank & Trust		367			192			-
Nonperforming Loans
Dubuque Bank and Trust Company	$	3,344		$	1,216		$	2,745
New Mexico Bank & Trust		1,130			2,206			2,359
Wisconsin Community Bank		12,152			1,966			1,321
Rocky Mountain Bank		2,099			822			5,634
Galena State Bank and Trust Company		1,707			370			965
Riverside Community Bank		2,671			602			462
Arizona Bank & Trust		5,541			254			7
First Community Bank		1,312			588			992
Summit Bank & Trust		1,376			-			-
Allowance As a Percent of Total Loans
Dubuque Bank and Trust Company		1.23	%		1.24	%		1.28	%
New Mexico Bank & Trust		1.33			1.30			1.36
Wisconsin Community Bank		1.59			1.68			1.58
Rocky Mountain Bank		1.28			1.30			1.45
Galena State Bank and Trust Company		1.27			1.30			1.23
Riverside Community Bank		1.28			1.27			1.26
Arizona Bank & Trust		2.25			1.33			1.25
First Community Bank		1.40			1.45			1.43
Summit Bank & Trust		1.33			1.28			-

		Quarter Ended December 31,						Year Ended December 31,
		2007			2006			2007			2006
Net income (in millions)	$	6.8		$	7.5		$	25.6		$	25.1
Income from continuing operations (in millions)		6.8			7.5			24.0			24.3
Diluted earnings per share		0.41			0.45			1.54			1.50
Diluted earnings per share from continuing operations		0.41			0.44			1.44			1.45

Return on average assets		0.83	%		0.98	%		0.81	%		0.86	%
Return on average equity		11.86			14.62			11.88			12.86
Net interest margin		3.87			4.04			3.95			4.17