Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

12 Months Ended

Dec. 31, 2014

Banking and Thrift [Abstract]

Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS ON SUBSIDIARY DIVIDENDS

The Heartland banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Heartland banks’ financial statements. The regulations prescribe specific capital adequacy guidelines that involve quantitative measures of a bank’s assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. Capital classification is also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Heartland banks to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2014 and 2013, that the Heartland banks met all capital adequacy requirements to which they were subject.

As of December 31, 2014 and 2013, the FDIC categorized each of the Heartland banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Heartland banks must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed each institution’s category.

The Heartland banks’ actual capital amounts and ratios are also presented in the tables below, in thousands:

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount	Ratio
As of December 31, 2014
Total Capital (to Risk-Weighted Assets)
Consolidated	$	703,032	15.73	%	$	357,513	8.00	%	N/A
Dubuque Bank and Trust Company	145,587		11.92		97,676		8.00		122,094	10.00	%
Galena State Bank & Trust Co.	27,644		13.39		16,517		8.00		20,646	10.00
Illinois Bank & Trust	42,937		13.80		24,891		8.00		31,113	10.00
Wisconsin Bank & Trust	62,780		12.71		39,522		8.00		49,403	10.00
New Mexico Bank & Trust	97,742		13.04		59,953		8.00		74,941	10.00
Arizona Bank & Trust	51,287		14.57		28,151		8.00		35,189	10.00
Rocky Mountain Bank	47,848		12.78		29,958		8.00		37,447	10.00
Summit Bank & Trust	12,544		11.80		8,503		8.00		10,628	10.00
Minnesota Bank & Trust	15,267		12.43		9,823		8.00		12,279	10.00
Morrill & Janes Bank and Trust Company	65,224		12.02		43,417		8.00		54,271	10.00
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	578,564	12.95	%	$	178,757	4.00	%	N/A
Dubuque Bank and Trust Company	136,178		11.15		48,838		4.00		73,257	6.00	%
Galena State Bank & Trust Co.	26,111		12.65		8,258		4.00		12,387	6.00
Illinois Bank & Trust	39,721		12.77		12,445		4.00		18,668	6.00
Wisconsin Bank & Trust	57,551		11.65		19,761		4.00		29,642	6.00
New Mexico Bank & Trust	90,870		12.13		29,977		4.00		44,965	6.00
Arizona Bank & Trust	48,009		13.64		14,076		4.00		21,114	6.00
Rocky Mountain Bank	44,394		11.86		14,979		4.00		22,468	6.00
Summit Bank & Trust	11,213		10.55		4,251		4.00		6,377	6.00
Minnesota Bank & Trust	14,151		11.53		4,911		4.00		7,367	6.00
Morrill & Janes Bank and Trust Company	62,918		11.59		21,709		4.00		32,563	6.00
Tier 1 Capital (to Average Assets)
Consolidated	$	578,564	9.75	%	$	237,316	4.00	%	N/A
Dubuque Bank and Trust Company	136,178		9.50		57,359		4.00		71,699	5.00	%
Galena State Bank & Trust Co.	26,111		8.97		11,648		4.00		14,560	5.00
Illinois Bank & Trust	39,721		8.02		19,820		4.00		24,775	5.00
Wisconsin Bank & Trust	57,551		8.85		26,018		4.00		32,523	5.00
New Mexico Bank & Trust	90,870		8.22		44,232		4.00		55,290	5.00
Arizona Bank & Trust	48,009		10.25		18,737		4.00		23,421	5.00
Rocky Mountain Bank	44,394		9.53		18,625		4.00		23,281	5.00
Summit Bank & Trust	11,213		8.44		5,317		4.00		6,647	5.00
Minnesota Bank & Trust	14,151		8.90		6,360		4.00		7,950	5.00
Morrill & Janes Bank and Trust Company	62,918		7.34		34,269		4.00		42,836	5.00

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount	Ratio
As of December 31, 2013
Total Capital (to Risk-Weighted Assets)
Consolidated	$	599,038	14.69	%	$	326,252	8.00	%	N/A
Dubuque Bank and Trust Company	141,184		12.30		91,854		8.00		114,818	10.00	%
Galena State Bank & Trust Co.	27,398		13.42		16,328		8.00		20,410	10.00
Illinois Bank & Trust	36,324		14.79		19,654		8.00		24,568	10.00
Wisconsin Bank & Trust	59,747		13.08		36,556		8.00		45,696	10.00
New Mexico Bank & Trust	96,816		14.82		52,254		8.00		65,317	10.00
Arizona Bank & Trust	47,335		14.59		25,960		8.00		32,451	10.00
Rocky Mountain Bank	50,314		14.24		28,257		8.00		35,321	10.00
Summit Bank & Trust	11,600		12.79		7,253		8.00		9,067	10.00
Minnesota Bank & Trust	14,475		12.13		9,547		8.00		11,933	10.00
Morrill & Janes Bank and Trust Company	60,559		13.00		37,267		8.00		46,583	10.00
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	537,964	13.19	%	$	163,126	4.00	%	N/A
Dubuque Bank and Trust Company	130,859		11.40		45,927		4.00		68,891	6.00	%
Galena State Bank & Trust Co.	25,478		12.48		8,164		4.00		12,246	6.00
Illinois Bank & Trust	33,252		13.53		9,827		4.00		14,741	6.00
Wisconsin Bank & Trust	54,885		12.01		18,278		4.00		27,417	6.00
New Mexico Bank & Trust	89,601		13.72		26,127		4.00		39,190	6.00
Arizona Bank & Trust	43,269		13.33		12,980		4.00		19,470	6.00
Rocky Mountain Bank	46,160		13.07		14,128		4.00		21,193	6.00
Summit Bank & Trust	10,464		11.54		3,627		4.00		5,440	6.00
Minnesota Bank & Trust	13,384		11.22		4,773		4.00		7,160	6.00
Morrill & Janes Bank and Trust Company	60,153		12.91		18,633		4.00		27,950	6.00
Tier 1 Capital (to Average Assets)
Consolidated	$	537,964	9.67	%	$	222,432	4.00	%	N/A
Dubuque Bank and Trust Company	130,859		8.77		59,717		4.00		74,646	5.00	%
Galena State Bank & Trust Co.	25,478		8.65		11,787		4.00		14,734	5.00
Illinois Bank & Trust	33,252		7.42		17,926		4.00		22,407	5.00
Wisconsin Bank & Trust	54,885		8.76		25,070		4.00		31,337	5.00
New Mexico Bank & Trust	89,601		8.84		40,530		4.00		50,663	5.00
Arizona Bank & Trust	43,269		10.33		16,757		4.00		20,947	5.00
Rocky Mountain Bank	46,160		10.01		18,439		4.00		23,049	5.00
Summit Bank & Trust	10,464		9.16		4,567		4.00		5,709	5.00
Minnesota Bank & Trust	13,384		8.14		6,575		4.00		8,218	5.00
Morrill & Janes Bank and Trust Company	60,153		7.38		32,624		4.00		40,780	5.00

The ability of Heartland to pay dividends to its stockholders is dependent upon dividends paid by its subsidiaries. The Heartland banks are subject to certain statutory and regulatory restrictions on the amount they may pay in dividends. To maintain acceptable capital ratios in the Heartland banks, certain portions of their retained earnings are not available for the payment of dividends. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $205.0 million as of December 31, 2014, under the most restrictive minimum capital requirements. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $117.9 million as of December 31, 2014, under the capital requirements to remain well capitalized.