S-4 1 forms4premiervalleybankmer.htm S-4 S-4

As filed with the Securities and Exchange Commission on August __, 2015 Registration No. 333-     
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act Of 1933
HEARTLAND FINANCIAL USA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
6022
(Primary Standard Industrial Classification Number
42-1405748
(I.R.S. Employer Identification No.)
 
1398 Central Avenue
Dubuque, Iowa 52001
(563) 589-2100
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Bryan R. McKeag
Executive Vice President and Chief Financial Officer
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
(563) 589-2100
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Thomas Martin, Esq.
Joshua Dean, Esq.
Dorsey & Whitney LLP
Sheppard, Mullin, Richter & Hampton LLP
50 South Sixth Street
650 Town Center, Fourth Floor
Minneapolis, MN 55402
Costa Mesa, CA 92626
(612) 340-2600
(714) 428-5991
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ¨ Accelerated filer x     Non-accelerated filer ¨     Smaller reporting company ¨
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨ Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be Registered
Proposed Maximum Offering Price
 per Unit
Proposed Maximum Aggregate
Offering Price
Amount of Registration Fee
Common Stock, $1.00 par value
2,284,071(1)
N/A
$66,535,000(2)
$7,732
(1)
Represents the estimated maximum number of shares to be issued pursuant to the merger agreement dated as of May 28, 2015, among Heartland Financial USA, Inc., a Delaware corporation, and Premier Valley Bank., a California corporation authorized to conduct a banking business, computed by dividing 70% of the aggregate merger consideration without giving effect to reduction, if any, for a tangible equity adjustment, by the proposed minimum market price of Heartland common stock under such agreement ($29.13 per share).
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(2) and (f)(3) of Regulation C under the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.



The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED August [ ], 2015
PREMIER VALLEY BANK
PROPOSED MERGER-YOUR VOTE IS VERY IMPORTANT
Dear Shareholder:
We are pleased to report that the Board of Directors of Premier Valley Bank has unanimously approved the acquisition of Premier Valley Bank by Heartland Financial USA, Inc. through a merger of Premier Valley Bank with and into PV Acquisition Bank, a newly formed subsidiary bank of Heartland. Before we can complete the merger, we must obtain the approval of the merger agreement and the merger by the shareholders of Premier Valley Bank. We are sending you this document to ask you to vote in favor of approval and adoption of the merger agreement and the merger. The Premier Valley Bank Board of Directors Unanimously Recommends That You Vote “FOR” Approval and Adoption of the Merger Agreement and the Merger.
In the merger, Premier Valley Bank will merge with and into PV Acquisition Bank, and you will receive, as a shareholder of Premier Valley Bank, consideration that we estimate at approximately $7.725 per share of Premier Valley Bank common stock, that is payable in shares of Heartland common stock or cash, or a combination of shares of common stock and cash, as described in more detail in the accompanying proxy statement/ prospectus. To complete the merger we must receive regulatory approvals and the holders of Premier Valley Bank common stock must approve and adopt the merger agreement. Premier Valley Bank will hold a special meeting of shareholders to vote on this merger proposal. Your vote is important. Whether or not you plan to attend the special meeting, please submit your proxy with voting instructions for your shares of Premier Valley Bank common stock in accordance with the instructions contained in this document. If you do not vote your shares of Premier Valley Bank common stock, it will have the same effect as voting against the merger.
For a description of the significant considerations in connection with the merger and related matters described in this document, see “Risk Factors” beginning on page [ ].
We encourage you to read this entire document carefully. This proxy statement/prospectus gives you detailed information about the merger, and it includes a copy of the merger agreement as Appendix A.


Sincerely,
 
 
J. Mike McGowan, President and Chief
Executive Officer of Premier Valley Bank

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

These securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is August [ ], 2015.



PREMIER VALLEY BANK
255 East River Park Circle, Suite 180
Fresno, CA 93720
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER [ ], 2015

Premier Valley Bank will hold a special meeting of its shareholders [in the first floor Conference Room located at 265 East River Park Circle, Suite 160 (across from Premier Valley Bank’s headquarters located at 255 East River Park Circle, Suite 180), Fresno, California 93720], at [ ] local time, on September [ ], 2015 to consider and vote upon the following matters:
a proposal to approve and adopt the Merger Agreement between Heartland Financial USA, Inc. and Premier Valley Bank dated as of May 28, 2015, as it may be amended from time to time, pursuant to which Premier Valley Bank will merge with and into a newly formed subsidiary of Heartland Financial USA, Inc.; and
a proposal to approve the adjournment of the Premier Valley Bank special meeting, if necessary or appropriate, to solicit additional proxies.
Upon completion of the merger, each share of Premier Valley Bank common stock will be converted into the right to receive, at the election of the holder but subject to proration procedures, shares of Heartland common stock, cash or a combination of cash and Heartland common stock. Your attention is directed to the proxy statement/prospectus accompanying this notice for a complete discussion of the merger. A copy of the merger agreement is included as Appendix A to the accompanying proxy statement/prospectus.
The Board of Directors has fixed the close of business on August [ ], 2015 as the record date for the Premier Valley Bank special meeting. Holders of record of Premier Valley Bank common stock at such time are entitled to notice of, and to vote at, the Premier Valley Bank special meeting or any adjournment or postponement of the special meeting.
The Premier Valley Bank Board of Directors has unanimously approved the merger agreement and unanimously recommends that holders of Premier Valley Bank common stock vote “for” approval and adoption of the merger agreement.
Premier Valley Bank shareholders who do not vote in favor of the merger agreement and who strictly comply with Chapter 13 of the California General Corporation Law have the right to assert dissenters’ rights under that statute. For a description of the procedures that must be followed to make written demand for dissenters’ rights, see the copy of the statute which is attached as Appendix B. In addition, a summary of the procedures to be followed in order to obtain payment for dissenting shares is set forth under the caption “The Merger-Notice of Dissenters’ Rights” in the attached proxy statement/prospectus.
Whether or not you plan to attend the special meeting, please submit your proxy with voting instructions for your shares of Premier Valley Bank common stock. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy form in the enclosed self-addressed, stamped envelope. Any holder of Premier Valley Bank common stock present at the special meeting may vote in person instead of by proxy and a proxy may be revoked in writing at any time before the special meeting. The presence of a shareholder at the special meeting will not automatically revoke that shareholder’s proxy. A shareholder may revoke a proxy at any time prior to the voting of such proxy on any matter (without, however, affecting any vote taken prior to such revocation) by (i) filing with the Secretary of Premier Valley Bank a written notice of revocation, (ii) delivering to Premier Valley Bank a duly executed proxy bearing a later date, or (iii) attending the meeting and providing written or oral notice of revocation with the presiding officer during the meeting (at which point the shareholder may vote in person).



The enclosed proxy statement/prospectus provides a detailed description of the merger and the merger agreement. We urge you to read carefully and in its entirety the proxy statement/prospectus of which this notice forms a part, including any documents incorporated by reference, and the Appendices. If you have any questions concerning the merger, the merger agreement or this joint proxy statement/prospectus, would like additional copies or need help voting your shares of Premier Valley Bank common stock, please contact Premier Valley Bank’s proxy solicitor:
Georgeson Inc.
480 Washington Blvd., 26th Floor
Jersey City, NJ 07310
Banks, Brokers and Shareholders
Call Toll-Free (800) 279-6913

By Order of the Board of Directors,
 
J. Mike McGowan, President and Chief
Executive Officer, of Premier Valley Bank














Your vote is important. Please complete, sign, date and return your proxy form,
whether or not you plan to attend the special meeting.




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REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information about Heartland from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document and other filings of Heartland by requesting them in writing or by telephone from Heartland or from Premier Valley Bank's solicitation agent, at the following addresses and telephone numbers:
Heartland Financial USA, Inc.
1398 Central Avenue
P.O. Box 778
Dubuque, Iowa 52004-0778
Attention: Michael J. Coyle, Secretary
(Telephone (563) 589-2100)
 
Georgeson Inc.
480 Washington Blvd.,26th Floor
Jersey City, NJ 07310
Banks, Brokers and Shareholders
Call Toll-Free (800) 279-6913
You will not be charged for any of these documents that you request. Premier Valley Bank shareholders requesting documents should do so by [ ] in order to receive them before the special meeting.
See “Where You Can Find More Information” on page [__].
You should rely only on the information contained or incorporated by reference into this document to vote on the merger agreement. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated August [ ], 2015. You should not assume that the information contained in, or incorporated by reference into, this document is accurate as of any date other than that date. Neither our mailing of this document to Premier Valley Bank shareholders nor the issuance by Heartland of common stock in connection with the merger will create any implication to the contrary.

TABLE OF CONTENTS

 
Page

REFERENCES TO ADDITIONAL INFORMATION
3

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
4

SUMMARY
7

HEARTLAND SELECTED CONSOLIDATED FINANCIAL DATA
12

PREMIER VALLEY SELECTED FINANCIAL DATA
14

COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
26

RISK FACTORS
27

FORWARD-LOOKING STATEMENTS
30

THE PREMIER VALLEY BANK SPECIAL MEETING
31

THE MERGER
33

THE MERGER AGREEMENT
55

INFORMATION ABOUT HEARTLAND
63

INFORMATION ABOUT PREMIER VALLEY BANK
64

DESCRIPTION OF HEARTLAND COMMON STOCK
83

COMPARISON OF SHAREHOLDERS’ RIGHTS
86

CERTAIN OPINIONS
93

EXPERTS
94

WHERE YOU CAN FIND MORE INFORMATION
94

APPENDIX A - MERGER AGREEMENT
A-1

APPENDIX B - CGCL CHAPTER 13: DISSENTERS’ RIGHTS
B-1

APPENDIX C - FAIRNESS OPINION OF THE FINANCIAL ADVISOR OF PREMIER VALLEY
C-1




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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
Q:
What Am I Being Asked To Vote On?
A:
Holders of Premier Valley Bank common stock are being asked to approve and adopt a merger agreement entered into between Heartland and Premier Valley Bank. In the merger, Premier Valley Bank will be merged with and into PV Acquisition Bank, a newly formed subsidiary of Heartland. PV Acquisition Bank, which will have no operations prior to the merger, will change its name to Premier Valley Bank simultaneous with the merger and the operations of Premier Valley Bank will continue without interruption, and it will become a wholly owned subsidiary of Heartland. The holders of Premier Valley Bank common stock will receive, at their election but subject to proration as described below, Heartland common stock, cash or a combination of cash and Heartland common stock, in exchange for their shares of Premier Valley Bank common stock.
Q:
Why Is The Premier Valley Bank Board of Directors Recommending The Merger?
A:
The Premier Valley Bank Board believes that the merger is advisable, fair to and in the best interest of Premier Valley Bank and its shareholders. As a result of the merger, Premier Valley Bank will become part of a larger banking organization, improving its ability to compete with larger financial institutions and better serve its customers’ needs while maintaining the community bank philosophy that both institutions currently share.
Q:
Why Is My Vote Important?
A:
The affirmative vote of the holders of at least a majority of the outstanding shares of Premier Valley Bank common stock is required to approve and adopt the merger agreement. Accordingly, if a holder of Premier Valley Bank common stock fails to vote or abstains from voting, this will have the same effect as a vote against approval and adoption of the merger agreement.
Q:
What Will I Receive For My Premier Valley Bank Stock If The Merger Is Completed?
A:
You will receive, at your election but subject to proration as described below, shares of Heartland common stock, cash or a combination of cash and shares of Heartland common stock for your shares of Premier Valley Bank common stock. Premier Valley Bank shareholders will receive total consideration of $95,050,000 in the merger, but this amount will be reduced, dollar for dollar, if the tangible equity of Premier Valley Bank as of the month-end immediately prior to completion of the merger is less than $58,812,000. Assuming there is no reduction, and that only the 12,304,025 shares of Premier Valley Bank common stock that are currently outstanding remain outstanding when the merger is completed, holders of Premier Valley Bank common stock would be entitled to merger consideration, payable in cash or in shares of Heartland common stock, or both, of $7.725 per share. The number of shares of Heartland common stock that will be issued per share of Premier Valley Bank common stock will be determined by dividing this per share consideration by the volume weighted average closing price of Heartland common stock on the Nasdaq for the 20 trading days ending five days prior to completion of the merger, provided this weighted average price will be fixed at $29.13 if it is less than $29.13 and at $39.41 if it is more than $39.41. If this calculation were performed based on the 20 trading days ending five days prior to the date of this proxy statement/prospectus, the volume weighted average closing price would have been [ ], and assuming no reduction in the aggregate merger consideration or increase in Premier Valley Bank shares outstanding, a Premier Valley Bank shareholder would be entitled to [ ] shares of Heartland common stock for each share of Premier Valley Bank common stock.
Q:
What Are The Details Of The Consideration Election?
A.
Although you will be entitled to elect to receive cash, shares of Heartland common stock, or a combination of cash and Heartland common stock, for your shares of Premier Valley Bank common stock, you are not being asked to make an election at this time. By returning the proxy that is enclosed with this proxy statement/prospectus, you will not be making a consideration election. Premier Valley Bank’s transfer agent, Computershare, will send you election materials by separate mailing. We describe the procedures necessary to make an election in the section of this proxy statement/prospectus entitled “The Merger Agreement-Election Procedures; Surrender of Stock Certificates.”
The merger agreement provides that 30% of the aggregate merger consideration will be paid in cash and 70% by delivering Heartland common stock. If the total amount of cash that Premier Valley Bank shareholders elect to receive is less than 30% of the total consideration, or the amount of Heartland common stock they elect to receive is less than 70% of the total consideration, the shareholders who fail to elect will be allocated cash or shares, pro rata in

4


accordance with the shares of Premier Valley Bank that they hold, until the consideration is 30% cash and 70% Heartland common stock. If Premier Valley Bank shareholders elect to receive more than 30% of the total consideration in cash, or more than 70% of the total consideration in Heartland Common Stock, then the amount of cash that each electing shareholder receives, or the amount of Heartland common stock that each electing shareholder receives, will be reduced, pro rata among the electing shareholders, and the non-electing shareholders will receive solely Heartland common stock, or solely cash.
Q:
When Do You Expect To Complete The Merger?
A:
We are working to complete the merger as quickly as possible. We cannot complete the merger until a number of conditions are satisfied, including approval of the merger by the Premier Valley Bank shareholders, by the Federal Reserve Board, by the Federal Deposit Insurance Corporation and by the Division of Financial Institutions of the California Department of Business Oversight. We expect to complete the merger in the fourth quarter of 2015, assuming these and other approvals are received.
Q:
Do I Have Dissenters’ Rights?
A:
Yes. Under California law, Premier Valley Bank’s state of incorporation, holders of Premier Valley Bank common stock have the right to assert dissenters’ rights and, rather than the merger consideration, demand the “fair value” of their shares. To do so, you must not vote in favor of the merger and must instead follow the procedures set forth below under “The Merger--Notice of Dissenters’ Rights.” A copy of the California statute governing dissenters’ rights is included as Appendix B. The “fair value” of the shares may be determined in a court-supervised proceeding and the court may conclude that fair value is greater than, equal to or less than the merger consideration. 
One condition to Heartland’s obligation to complete the merger is that the total number of dissenting shares of Premier Valley Bank common stock cannot be more than 7.0% of the number of outstanding shares of Premier Valley Bank common stock.
We encourage you to read the statutes governing dissenters’ rights carefully and to consult with legal counsel if you desire to exercise your dissenters’ rights.
Q:
How Do I Vote?
A:
If you are a shareholder of record of Premier Valley Bank as of August [ ], 2015 you may submit your proxy before the special meeting in one of the following ways:
use the toll-free number shown on the proxy card;
visit the website shown on the proxy card to vote via the Internet; or
complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.
Your vote by signing the enclosed proxy will not entitle you to receive Heartland common stock rather than cash in the merger. You will receive a separate mailing through which you may make this election.
Q:
If My Shares Are Held In Street Name By My Broker, Will My Broker Automatically Vote My Shares For Me?
A:
No. Without instructions from you, your broker will not be able to vote your shares of Premier Valley Bank common stock. You should instruct your broker to vote your shares, following the directions your broker provides. Please check the voting form used by your broker to see if it offers telephone or internet voting.
Q:
Can I Change My Vote?
A:
Yes. There are three ways you can change your vote after you have submitted your proxy:
First, you may send a written notice to the Secretary of Premier Valley Bank, stating that you would like to revoke your proxy.
Second, you may complete and submit a new proxy form. Your latest vote actually received by Premier Valley Bank before the special meeting will be counted, and any earlier votes will be revoked.
Third, you may attend the Premier Valley Bank special meeting and vote in person. Your presence at the meeting will not automatically revoke your proxy. You may revoke your proxy at any time prior to the

5




voting of the proxy by attending the meeting and providing written or oral notice of revocation with the presiding officer during the meeting (at which point you may vote in person).
If you have instructed a broker to vote your shares, you must follow the directions you receive from your broker in order to change or revoke your vote.
Q:
How Do I Make An Election To Receive Cash Or Heartland Common Stock?
A.:
We will send you a letter of transmittal and election instructions by separate mailing. You will not be making an election by submitting a proxy or voting at the meeting.
Q:
Should I Send In My Share Certificates Now?
A:
No. Please do NOT send in your share certificates at this time. You will be provided with an election form and letter of transmittal by separate mailing that explains what you must do to exchange your Premier Valley Bank share certificates for merger consideration.
Q:
Whom Should I Call With Questions?
A:
If you have questions about the merger or the special meeting or you need additional copies of this document, or if you have questions about the process for voting or if you need a replacement proxy form, you should contact:
Georgeson Inc.
480 Washington Blvd., 26th Floor
Jersey City, NJ 07310
Banks, Brokers and Shareholders
Call Toll-Free (800) 279-6913

 
Premier Valley Bank
255 East River Park Circle, Suite 180
Fresno, CA 93720
Attention: Michael W. Martinez
Executive Vice President, Chief Operating
Officer and Chief Financial Officer
Telephone: (559) 256-6408

Q:
Where Can I Find More Information About The Companies?
A:
You can find more information about Heartland from the various sources described under “Where You Can Find More Information.” You can find more information about Premier Valley Bank under “Information about Premier Valley Bank.”


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SUMMARY
This summary highlights selected information from this document. It does not contain all of the information that may be important to you. We urge you to read carefully the entire document and the other documents to which we refer in order to understand fully the merger and the related transactions. In addition, we incorporate by reference into this document important business and financial information about Heartland. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section entitled “Where You Can Find More Information” on page [ ]. Each item in this summary refers to the page of this document on which that subject is discussed in more detail.
Our Companies (Pages [ ] and [ ])
Premier Valley Bank
Premier Valley Bank is a California state-chartered banking corporation headquartered in Fresno, California. Premier Valley Bank received its California bank charter and commenced banking operations in June 2001. It maintains its headquarters in Fresno, California, and operates four branches in Fresno, Groveland, Mariposa, and Oakhurst, California, and one loan production office in San Luis Obispo, California. At June 30, 2015, Premier Valley Bank had assets of approximately $655 million, deposits of approximately $573 million and shareholders’ equity of approximately $72 million.
Premier Valley Bank’s principal offices are located at 255 East River Park Circle, Suite 180, Fresno, California 93720, and its telephone number is (559) 438-2002.
Heartland
Heartland is a publicly-held, multi-bank, bank holding company headquartered in Dubuque, Iowa with nine bank subsidiaries in the States of Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Missouri and Kansas. Together, Heartland’s banking subsidiaries operate a total of 86 banking locations. Heartland also has an active consumer finance subsidiary with offices in Iowa, Illinois and Wisconsin.
Heartland was formed as an Iowa corporation in 1981, and reincorporated in Delaware in 1993. At June 30, 2015, Heartland had total assets of $6.7 billion, total loans of $4.4 billion, total deposits of $5.3 billion and common stockholders’ equity of $498 million.
In addition to the merger described in this proxy statement/prospectus, Heartland executed a merger agreement on April 15, 2015 to acquire Community Bancorporation of New Mexico, Inc. and to merge its wholly owned subsidiary, Community Bank, Santa Fe, New Mexico, into Heartland’s New Mexico Bank & Trust subsidiary. Heartland anticipates that this acquisition, which is expected to close in the third quarter of 2015, will add three banking offices and approximately $175 million of assets to its operations.
Heartland also executed an agreement on May 14, 2015 to acquire First Scottsdale Bank, National Association, and to merge it into Heartland’s Arizona Bank & Trust subsidiary. Heartland anticipates that this acquisition, which is expected to close in the third quarter of 2015, will add one banking office and approximately $107 million of assets to its operations.
Heartland’s principal offices are located at 1398 Central Avenue, Dubuque, Iowa 52001, and its telephone number is (563) 589-2000.
Premier Valley Bank Will be Merged into a Newly-Formed Subsidiary of Heartland (Page [ ])
We encourage you to read the merger agreement, which is attached as Appendix A to this document. The merger agreement provides that Premier Valley Bank will be merged with and into PV Acquisition Bank, a newly formed subsidiary of Heartland that will have no operations until the merger. Although this new subsidiary will



7


survive the merger, the subsidiary will immediately change its name to “Premier Valley Bank” and will continue the operations of Premier Valley Bank without interruption.
What You Will Receive in the Merger (Page [ ])
Upon completion of the merger, as a Premier Valley Bank shareholder you will receive cash, Heartland common stock, or a combination of cash and Heartland common stock, for your shares of Premier Valley Bank common stock. You will be able to make an election to receive all cash, all Heartland common stock, or a combination of cash and Heartland common stock, but your election will be changed if shareholders elect to receive more than 30% of the aggregate merger consideration in cash or more than 70% of the aggregate merger consideration in the form of Heartland common stock.
Premier Valley Bank shareholders will receive total consideration of $95,050,000 in the merger, reduced, dollar for dollar, if the tangible equity of Premier Valley Bank as of the month-end immediately prior to completion of the merger is less than $58,812,000. Assuming there is no reduction, and that only the 12,304,025 shares of Premier Valley Bank common stock that are currently outstanding remain outstanding when the merger is completed, holders of Premier Valley Bank common stock will be entitled to merger consideration, payable in cash or in shares of Heartland common stock, or both, of $7.725 per share. The number of shares of Heartland common stock that will be issued per share of Premier Valley Bank common stock will be determined by dividing this per share consideration by the volume weighted average closing price of Heartland common stock on the Nasdaq for the twenty trading days ending five days prior to completion of the merger, but the weighted average price will be fixed at $29.13 if it is less than $29.13 and at $39.41 if it is more than $39.41. If this calculation were performed based on the twenty trading days ending five days prior to the date of this proxy statement/prospectus, the volume weighted average closing price would have been [ ], and assuming no reduction in the aggregate merger consideration or increase in Premier Valley Bank shares outstanding, a Premier Valley Bank shareholder would be entitled to [ ] shares of Heartland common stock for each share of Premier Valley Bank common stock. The market price for Heartland common stock will fluctuate prior to the merger. Accordingly, the actual number of shares of Heartland common stock you will receive per share of Premier Valley Bank common stock will be different from these amounts.
To the extent that Premier Valley Bank shareholders elect to receive cash representing less than 30% of the total consideration, or Heartland common stock representing less than 70% of the total consideration, those Premier Valley Bank shareholders who fail to make an election will be allocated cash or stock, pro rata based upon the number of Premier Valley Bank shares they hold, until these thresholds are achieved and the balance of the shares of these non-electing shareholders will be exchanged for 30% cash and 70% Heartland common stock. To the extent that allocating all cash, or all Heartland common stock, to the non-electing shareholders does not achieve this balance because too many Premier Valley Bank shareholders have elected Heartland common stock, or cash, then the consideration for which an excess election has been made shall be changed, pro rata among such electing shareholders, until the correct ratio is achieved.
The Premier Valley Bank Board of Directors Unanimously Recommends that You Vote “FOR” the Approval and Adoption of the Merger Agreement (Page [ ])
The Board of Directors of Premier Valley Bank believes that the merger is in the best interests of Premier Valley Bank and its shareholders and has unanimously approved the merger agreement. For the factors considered by the Premier Valley Bank Board of Directors in reaching its decision to approve the merger agreement, see the section entitled “The Merger--Premier Valley Bank’s Reasons for the Merger.”
Premier Valley Bank’s Financial Advisor Has Provided an Opinion to the Premier Valley Bank Board of Directors as to the Fairness of the Merger Consideration, from a Financial Point of View, to Premier Valley Bank Shareholders (Page [ ])
    
In deciding to approve the merger, the Board of Directors of Premier Valley Bank considered the opinion of its financial advisor, Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”), which was given to the Board of Directors of Premier Valley Bank on May 28, 2015, that, as of the date of such opinion and based upon and subject to the assumptions, qualifications and limitations described in the opinion, the consideration to be paid pursuant to

8


the merger agreement was fair from a financial point of view to the holders of Premier Valley Bank common stock. A copy of this opinion is attached to this document as Appendix C. Premier Valley Bank shareholders should read the opinion completely and carefully to understand the assumptions made, matters considered and limitations on the review undertaken by Sandler O’Neill in providing its opinion.
Certain Officers of Premier Valley Bank Have Financial Interests in the Merger (Page [ ])
Some members of management of Premier Valley Bank have interests in the merger that are in addition to or different from their interests as Premier Valley Bank shareholders. These interests exist because of rights they have under existing employment agreements with Premier Valley Bank. The Premier Valley Bank Board of Directors was aware of these interests and considered them in approving the merger agreement and the merger.
Regulatory Approvals We Must Obtain for the Merger (Page [ ])
In the merger, Premier Valley Bank will merge with and into a newly formed subsidiary of Heartland and this new subsidiary will technically be the “survivor” of the merger, although it will immediately change its name to “Premier Valley Bank” and will continue the operations of Premier Valley Bank without interruption. We cannot complete the merger until we file applications with, and obtain approval from, the Board of Governors of the Federal Reserve System for Heartland to acquire Premier Valley Bank, the Federal Deposit Insurance Corporation to merge Premier Valley Bank into this newly formed subsidiary, and the Division of Financial Institutions of the California Department of Business Oversight to form the subsidiary as an entity authorized to conduct a banking business and to complete this merger. Once the FDIC approves the bank merger, we have to wait anywhere from 15 to 30 days before we can complete the bank merger, during which time the U.S. Department of Justice can challenge the merger on antitrust grounds. We will not be able to complete the merger until we receive regulatory approvals for the acquisition, for the formation of the subsidiary and for the merger and these time periods have expired.
Although we currently believe we should be able to obtain these regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to the combined company after the completion of the merger.
Completion of the Merger is Subject to Satisfying Several Conditions (Page [ ])
The obligations of Premier Valley Bank and Heartland to complete the merger are subject to the fulfillment or waiver of certain conditions, including:
the approval and adoption of the merger agreement by holders of a majority of the common shares of Premier Valley Bank;
the receipt of governmental and regulatory approvals;
the receipt of certain consents and waivers from third parties;
the absence of any injunction or order, or any law or regulation, that would impair the merger;
the effectiveness of the registration statement pursuant to which the Heartland common stock will be registered;
the truth and correctness of the other party’s representations and warranties, subject to the standard of materiality in the merger agreement; and
the other party’s performance in all material respects of all the obligations required to be performed by it under the merger agreement.
An additional condition to Heartland’s obligation to complete the merger is that the total number of dissenting shares of Premier Valley Bank common stock cannot be more than 7.0% of the number of outstanding shares of Premier Valley Bank common stock.

9



We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
When We Can Terminate the Merger Agreement (Page [ ])
Premier Valley Bank and Heartland may agree in writing to terminate the merger agreement before completing the merger, even after approval and adoption of the merger agreement by Premier Valley Bank shareholders, if a majority of the members of the Board of Directors of each of Premier Valley Bank and Heartland votes to do so.
In addition, either Heartland or Premier Valley Bank may decide to terminate the merger agreement in various circumstances, including the following:
if there is a law or governmental order that prohibits the merger;
if holders of shares representing a majority of the common stock of Premier Valley Bank fail to approve the merger at the special meeting;
if any regulatory authority disapproves the merger;
if the merger has not been completed by March 31, 2016, unless the failure to complete the merger is due to the party seeking to terminate the agreement; or
if the other party has or will have breached any representation, warranty or agreement in any material respect or if satisfaction of any closing condition by the other party is or becomes impossible.
Premier Valley Bank may terminate the merger agreement if, prior to the adoption of the agreement by the Premier Valley Bank shareholders, the Premier Valley Bank Board of Directors determines to enter into an agreement providing for a superior proposal after complying with applicable provisions of the merger agreement (including providing Heartland with five business days’ written notice and paying Heartland a $3 million termination fee). Heartland also may terminate the merger agreement if Premier Valley Bank changes its recommendation to the Premier Valley Bank shareholders to approve the merger agreement, fails to hold a meeting of shareholders to consider the merger agreement after this proxy statement/prospectus has been available for 20 days, or intentionally and materially breaches the prohibition on solicitation. If Heartland terminates in these instances, Premier Valley Bank would be obligated to pay Heartland a $3 million termination fee.
You have Dissenter’s Rights under the California General Corporation Law (Page [ ])
Under Chapter 13 of the California General Corporation Law (“CGCL”), holders of Premier Valley Bank common stock who determine to dissent from, and do not vote in favor of, the merger may elect to have the “fair value” of their shares of Premier Valley Bank common stock individually appraised and paid to them if the merger is completed and if they comply with the requirements of Chapter 13 of the CGCL, a copy of which is attached hereto as Appendix B. See “The Merger--Notice of Dissenters’ Rights.”
Premier Valley Bank Special Meeting (Page [ ])
The Premier Valley Bank special meeting will be held [in the first floor Conference Room located at 265 East River Park Circle, Suite 160 (across from the Bank’s headquarters located at 255 East River Park Circle, Suite 180), Fresno, California 93720] at [ ] local time, on September [ ], 2015. At the Premier Valley Bank special meeting, holders of Premier Valley Bank common stock will be asked:

to approve and adopt the merger agreement; and
to approve the adjournment of the Premier Valley Bank special meeting, if necessary or appropriate, to solicit additional proxies.

10



Record Date. Premier Valley Bank shareholders may cast one vote at the Premier Valley Bank special meeting for each share of Premier Valley Bank common stock owned at the close of business on August [ ], 2015. At that date, there were 12,304,025 shares of Premier Valley Bank common stock entitled to be voted at the special meeting.
As of the record date for the Premier Valley Bank special meeting, directors, executive officers and certain other officers of Premier Valley Bank and their affiliates had the right to vote 4,135,527 shares of Premier Valley Bank common stock, or 33.6% of the outstanding Premier Valley Bank common stock entitled to be voted at the special meeting.
Required Vote. To approve and adopt the merger agreement, the holders of a majority of the outstanding shares of Premier Valley Bank common stock entitled to vote must vote in favor of the approval and adoption of the merger agreement. A Premier Valley Bank shareholder’s failure to vote, a broker non-vote or an abstention will have the same effect as a vote against the approval and adoption of the merger agreement.
The Merger is Intended to be Generally Tax-Free With Respect to the Shares of Heartland Common Stock (Page [ ])
The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, and assuming the merger will so qualify, holders of Premier Valley Bank common stock who elect to receive in the merger, or receive because of the allocation provisions in the merger agreement, shares of Heartland common stock generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Premier Valley Bank stock for Heartland common stock. Gain or loss will result from the receipt by Premier Valley Bank shareholders of cash in the merger, including cash issued for fractional shares of Heartland common stock.
To review the tax consequences to Premier Valley Bank shareholders in greater detail, see “The Merger--Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [ ].

11


HEARTLAND SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of Heartland for the periods or as of the dates presented and should be read with the consolidated financial statements and related notes contained in reports previously filed by Heartland with the SEC
(Dollars in thousands,
except per share data)
For the Six Months Ended June 30,
 
For the Years Ended December 31,
 
2015
 
2014
 
2014
 
2013
 
2012
 
2011
 
2010
STATEMENT OF INCOME DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
128,543

 
$
116,537

 
$
237,042

 
$
199,511

 
$
189,338

 
$
191,737

 
$
198,932

Interest expense
16,969

 
17,126

 
33,969

 
35,683

 
39,182

 
46,343

 
55,880

Net interest income
111,574

 
99,411

 
203,073

 
163,828

 
150,156

 
145,394

 
143,052

Provision for loan and lease losses
7,345

 
9,082

 
14,501

 
9,697

 
8,202

 
29,365

 
32,508

Net interest income after provision for loan and lease losses
104,229

 
90,329

 
188,572

 
154,131

 
141,954

 
116,029

 
110,544

Noninterest income
61,324

 
40,385

 
82,224

 
89,618

 
108,662

 
59,577

 
52,329

Noninterest expenses
123,096

 
107,197

 
215,800

 
196,561

 
183,381

 
137,296

 
129,239

Income taxes
11,588

 
5,853

 
13,096

 
10,335

 
17,384

 
10,302

 
9,846

Net income
30,869

 
17,664

 
41,900

 
36,853

 
49,851

 
28,008

 
23,788

Net (income) loss available to noncontrolling interest, net of tax
-

 
-

 
-

 
(64
)
 
(59
)
 
36

 
115

Net income attributable to Heartland
30,869

 
17,644

 
41,900

 
36,789

 
49,792

 
28,044

 
23,903

Preferred dividends and discount
(408
)
 
(408
)
 
(817
)
 
(1,093
)
 
(3,400
)
 
(7,640
)
 
(5,344
)
Net income available to common stockholders
$
30,461

 
$
17,256

 
$
41,083

 
$
35,696

 
$
46,392

 
$
20,404

 
$
18,559

 
 
 
 
 
 
 
 
 
 
 
 
 
 
PER COMMON SHARE DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - diluted
$
1.47

 
$
0.92

 
$
2.19

 
$
2.04

 
$
2.77

 
$
1.23

 
$
1.13

Cash dividends
0.20

 
0.20

 
0.40

 
0.40

 
0.50

 
0.40

 
0.40

Dividend payout ratio(1)
13.61
%
 
21.74
%
 
18.26
%
 
19.61
%
 
18.05
%
 
32.52
%
 
35.40
%
Book value
$
24.13

 
$
21.16

 
$
22.40

 
$
19.44

 
$
19.02

 
$
16.29

 
$
15.26

Tangible book value per share(2)
20.84

 
18.69

 
19.99

 
16.90

 
17.03

 
14.62

 
13.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Dividends paid divided by net income.
(2) Tangible book value is common equity excluding goodwill and other intangible assets.
(continued on following page)
 

12


(Dollars in thousands,
except per share data)
At and For the Six Months Ended June 30,
 
As of and For the Years Ended December 31,
 
2015
 
2014
 
2014
 
2013
 
2012
 
2011
 
2010
BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
1,619,412

 
$
1,690,958

 
$
1,706,953

 
$
1,895,044

 
$
1,561,957

 
$
1,326,592

 
$
1,264,564

Loans held for sale
105,898

 
87,173

 
70,514

 
46,665

 
96,165

 
53,528

 
23,904

Total loans and leases receivable(1)
4,449,823

 
3,694,734

 
3,878,003

 
3,502,701

 
2,828,802

 
2,494,631

 
2,364,787

Allowance for loan and lease losses
45,614

 
40,892

 
41,449

 
41,685

 
38,715

 
36,808

 
42,693

Total Assets
6,717,007

 
5,913,710

 
6,051,812

 
5,923,716

 
4,990,553

 
4,305,058

 
3,999,455

Total deposits
5,317,269

 
4,641,482

 
4,768,022

 
4,666,499

 
3,845,660

 
3,210,113

 
3,034,048

Long-term obligations
296,594

 
329,507

 
396,255

 
350,109

 
389,025

 
372,820

 
362,527

Preferred equity
81,698

 
81,698

 
81,698

 
81,698

 
81,698

 
81,698

 
78,483

Common stockholders' equity
497,508

 
390,723

 
414,619

 
357,762

 
320,107

 
268,520

 
250,608

 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PERFORMANCE DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized return on average total assets
0.94
%
 
0.60
%
 
0.70
%
 
0.70
%
 
1.04
%
 
0.50
%
 
0.46
%
Annualized return on average common equity
12.90

 
9.32

 
10.62

 
10.87

 
15.78

 
7.77

 
7.51

Annualized net interest margin ratio(2)
3.93

 
3.98

 
3.96

 
3.78

 
3.98

 
4.16

 
4.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
0.66
%
 
0.90
%
 
0.74
%
 
1.23
%
 
1.59
%
 
2.39
%
 
3.07
%
Nonperforming loans and leases to total loans and leases
0.60

 
0.79

 
0.65

 
1.21

 
1.53

 
2.31

 
3.87

Net loan and lease charge-offs to average loans and leases (annualized)
0.15

 
0.55

 
0.39

 
0.22

 
0.23

 
1.46

 
1.31

Allowance for loan and lease losses to total loans and leases
1.03

 
1.11

 
1.07

 
1.19

 
1.37

 
1.48

 
1.82

Allowance for loan and lease losses to nonperforming loans and leases
170.78

 
140.64

 
165.33

 
98.27

 
89.71

 
64.09

 
47.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Average equity to average assets
8.53
%
 
7.86
%
 
8.00
%
 
8.09
%
 
8.47
%
 
8.47
%
 
8.13
%
Average common equity to average assets
7.28

 
6.45

 
6.60

 
6.46

 
6.58

 
6.45

 
6.13

Total capital to risk-adjusted assets
13.86

 
14.29

 
15.73

 
14.69

 
15.35

 
15.87

 
16.23

Tier 1 capital to risk adjusted assets
11.56

 
12.97

 
12.95

 
13.19

 
13.36

 
14.08

 
14.06

Leverage ratio
9.60

 
9.64

 
9.75

 
9.67

 
9.84

 
10.24

 
9.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Excludes loans held for sale.
(2) The tax-equivalent adjustment to net interest income adjusts the yield for assets earning tax-exempt income to a comparable yield on a taxable basis, assuming a tax rate of 35%.

13


PREMIER VALLEY BANK SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of Premier Valley Bank for the periods or as of the dates presented and should be read with the consolidated financial statements previously published by Premier Valley Bank.
(Dollars in thousands,
except per share data)
For the Six Months Ended June 30,
 
For the Years Ended December 31,
 
2015
 
2014
 
2014
 
2013
 
2012
 
2011
 
2010
STATEMENT OF INCOME DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
11,128

 
$
10,167

 
$
20,528

 
$
19,519

 
$
20,310

 
$
21,512

 
$
22,966

Interest expense
340

 
332

 
647

 
672

 
690

 
1,670

 
2,759

Net interest income
10,787

 
9,836

 
19,881

 
18,847

 
19,620

 
19,842

 
20,207

Provision for (renewal of) loan and lease losses

 

 
(500
)
 
(500
)
 
1,596

 
450

 
3,420

Net interest income after provision for loan and lease losses
10,787

 
9,836

 
20,381

 
19,347

 
18,024

 
19,392

 
16,787

Noninterest income
2,305

 
2,355

 
4,149

 
4,007

 
4,571

 
3,579

 
3,147

Noninterest expenses
6,416

 
6,670

 
13,283

 
13,841

 
13,667

 
15,198

 
16,489

Income taxes
2,384

 
1,925

 
4,059

 
2,972

 
2,823

 
1,860

 
41

Net income available to common stockholders
4,292

 
3,595

 
7,188

 
6,541

 
6,105

 
5,913

 
3,404

 
 
 
 
 
 
 
 
 
 
 
 
 
 
PER COMMON SHARE DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - diluted
$
0.35

 
$
0.28

 
$
0.58

 
$
0.51

 
$
0.47

 
$
0.45

 
$
0.26

Cash dividends
0.16

 
0.14

 
0.29

 
0.28

 
0.25

 
0.19

 
0.08

Dividend payout ratio(1)
45.85
%
 
49.56
%
 
50.60
%
 
55.01
%
 
27.44
%
 
41.94
%
 
30.96
%
Book value
$
5.83

 
$
5.46

 
$
5.65

 
$
5.23

 
$
5.35

 
$
16.29

 
$
4.82

Tangible book value per share(2)
4.68

 
4.31

 
4.51

 
4.13

 
4.25

 
14.62

 
3.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Dividends paid divided by net income.
(2) Tangible book value is common equity excluding goodwill and other intangible assets.
(continued on following page)
 


14


(Dollars in thousands,
except per share data)
At and For the Six Months Ended June 30,
 
As of and For the Years Ended December 31,
 
2015
 
2014
 
2014
 
2013
 
2012
 
2011
 
2010
BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
177,622

 
$
179,434

 
$
212,758

 
$
160,136

 
$
165,861

 
$
112,819

 
$
66,768

Total loans and leases receivable
413,292

 
353,663

 
387,117

 
353,959

 
337,690

 
347,813

 
357,016

Allowance for loan and lease losses
(4,234
)
 
(4,713
)
 
(4,194
)
 
(4,595
)
 
(5,277
)
 
(6,940
)
 
(9,273
)
Total Assets
655,374

 
594,373

 
650,281

 
576,331

 
554,425

 
522,238

 
472,064

Total deposits
573,145

 
515,781

 
537,226

 
493,408

 
471,099

 
445,968

 
399,556

Short-term obligations

 

 
27,920

 
2,610

 

 

 

Common stockholders' equity
71,691

 
67,850

 
69,498

 
67,606

 
68,778

 
65,352

 
62,827

 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PERFORMANCE DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized return on average total assets
1.34
%
 
1.25
%
 
1.20
%
 
1.17
%
 
1.14
%
 
1.19
%
 
0.70
%
Annualized return on average tangible common equity
15.05

 
13.41

 
13.19

 
12.56

 
12.34

 
12.78

 
8.14

Annualized net interest margin ratio(1)
3.70

 
3.68

 
3.68

 
3.76

 
4.07

 
4.46

 
4.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
1.52
%
 
1.42
%
 
1.29
%
 
1.59
%
 
2.34
%
 
2.77
%
 
4.80
%
Nonperforming loans and leases to total loans and leases
2.42

 
2.39

 
2.17

 
2.44

 
2.95

 
2.86

 
3.24

Net loan and lease (recoveries)/charge-offs to average loans and leases (annualized)
(0.02
)
 
(0.07
)
 
(0.03
)
 
0.05

 
0.95

 
0.80

 
0.30

Allowance for loan and lease losses to total loans and leases
1.02

 
1.33

 
1.08

 
1.30

 
1.56

 
2.00

 
2.60

Allowance for loan and lease losses to nonperforming loans and leases
41.32

 
55.84

 
52.01

 
53.06

 
54.41

 
69.67

 
80.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity to assets
10.94
%
 
11.42
%
 
10.68
%
 
11.73
%
 
12.41
%
 
12.51
%
 
13.31
%
Total capital to risk-adjusted assets
12.82

 
14.36

 
13.38

 
14.52

 
15.26

 
15.03

 
13.86

Tier 1 capital to risk adjusted assets
11.92

 
13.18

 
12.40

 
13.37

 
14.01

 
13.78

 
12.61

Leverage ratio
9.04

 
9.44

 
8.95

 
9.90

 
9.73

 
9.96

 
10.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The tax-equivalent adjustment to net interest income adjusts the yield for assets earning tax-exempt income to a comparable yield on a taxable basis, assuming a tax rate of 35%.

15


PRO FORMA CAPITALIZATION

The following table sets forth the actual capitalization of Heartland and Premier Valley Bank at June 30, 2015 and the pro forma capitalization of Heartland, on a consolidated basis, reflecting the consummation of the merger:
 
June 30, 2015
 
Heartland
 
Premier Valley
 
Pro Forma
Heartland
 
 
 
 
 
 
 
(Dollars in thousands except stock data)
Shareholders’ Equity:
 
 
 
 
 
Preferred Stock
$
81,698

 
$

 
$
81,698

Common Stock
20,616

 
50,963

 
22,557

Capital Surplus
148,789

 

 
213,384

Retained Earnings
325,106

 
20,782

 
321,692

Accumulated Other Comprehensive Income
3,059

 
(54
)
 
3,059

Treasury Stock at Cost
(62
)
 

 
(62
)
Total Shareholders’ Equity
$
579,206

 
$
71,691

 
$
642,328

 
 
 
 
 
 
Preferred Stock Data:
 
 
 
 
 
Authorized
81,698

 
10,000,000

 
81,698

Outstanding
81,698

 

 
81,698

Common Stock Data:
 
 
 
 
 
Authorized
30,000,000

 
30,000,000

 
30,000,000

Outstanding (Net of Treasury)
20,614,325

 
12,304,025

 
22,557,562


16



UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined consolidated financial statements, financial information and explanatory notes illustrate the effect of the merger on Heartland’s financial position and results of operations based upon Heartland’s respective historical financial positions and results of operations under the acquisition method of accounting with Heartland treated as the acquirer. The unaudited pro forma combined consolidated financial information has been derived from, and should be read in conjunction with, the historical consolidated financial statements and the related notes of Heartland that are incorporated by reference, and of Premier Valley Bank that are included elsewhere, in this proxy statement/prospectus.
In accordance with U.S. generally accepted accounting principles, or GAAP, the assets and liabilities of Premier Valley Bank will be recorded by Heartland at their estimated fair values as of the date the merger is completed. The unaudited pro forma combined consolidated statement of income for the six months ended June 30, 2015 is based on the unaudited financial statements of Heartland that are incorporated by reference, and of Premier Valley Bank that are included, in this proxy statement/prospectus. The unaudited pro forma combined consolidated statement of income for the year ended December 31, 2014 is based on the audited financial statements of Heartland incorporated by reference, and Premier Valley Bank included, in this proxy statement/prospectus. The unaudited pro forma combined consolidated balance sheet as of June 30, 2015 assumes the merger took place on that date. The unaudited pro forma combined consolidated statements of income for the six months ended June 30, 2015 and for the year ended December 31, 2014 assumes the merger took place on January 1, 2014.
The pro forma financial information includes Heartland’s estimated adjustments to record assets and liabilities of Premier Valley Bank at their respective fair values. These adjustments are subject to change depending on changes in interest rates and the components of assets and liabilities as of the merger date and as additional information becomes available and additional analyses are performed. The final amounts will be determined after the merger is completed and after completion of further analyses to determine the fair value of Premier Valley Bank’s tangible and identifiable intangible assets and liabilities as of the date the merger is completed. Increases or decreases in the estimated fair values of the net assets acquired as compared with the information shown in the unaudited pro forma combined consolidated financial information may change the amount of goodwill resulting from the merger and other assets and liabilities may impact Heartland’s statement of income due to adjustments in yield and/or amortization of the adjusted assets or liabilities. Any changes to Premier Valley Bank’s results of operations from June 30, 2015, including shareholders’ equity, through the date the merger is completed, will also change the purchase price allocation, which may include the recording of a lower or higher amount of goodwill. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.
Heartland anticipates that the merger with Premier Valley Bank will provide the combined institution with financial benefits that include reduced combined operating expenses. However, these unaudited pro forma consolidated financial statements do not give effect to any anticipated cost savings or revenue enhancements in connection with the merger. The pro forma information, which is intended to illustrate the financial characteristics of the merger and the combined bank under one set of assumptions, does not reflect any of the potential benefits of and expected cost savings or opportunities to earn additional revenues or all integration costs that may be incurred and, accordingly, should not be considered a prediction of future results. It also does not necessarily reflect what the historical results of the combined bank would have been had both banks been combined during the periods shown.
The unaudited pro forma shareholders’ equity and net income should not be considered indicative of the market value of Heartland common stock or the actual or future results of operations of Heartland for any period. Actual results may be materially different than the pro forma consolidated financial statements and information presented.


17


Combined Pro Forma Financial Information (unaudited)
Consolidated Balance Sheet as of June 30, 2015
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
Historical
 
 
 
 
 
 
 
 
Heartland
 
Premier Valley
 
Pro Forma
Before
Adjustments
 
Pro
Forma
Adjustments
 
Heartland
Pro Forma
Combined
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
111,909

 
$
10,707

 
$
122,616

 
$
(31,928
)
(A) 
$
90,688

Federal funds sold and other short-term investments
 
7,813

 
16,091

 
23,903

 

 
23,903

Cash and cash equivalents
 
119,722

 
26,798

 
146,519

 
(31,928
)
 
114,591

Time deposits in other financial institutions
 
2,355

 

 
2,355

 

 
2,355

Securities:
 
 
 
 
 

 

 

Available for sale, at fair value
 
1,315,699

 
177,622

 
1,493,321

 

 
1,493,321

Held to maturity, at cost
 
283,258

 

 
283,258

 

 
283,258

Other investments, at cost
 
20,455

 

 
20,455

 

 
20,455

Loans held for sale
 
105,898

 

 
105,898

 

 
105,898

Loans and leases:
 
 
 
 
 
 
 
 
 
 
Held to maturity
 
4,449,823

 
413,291

 
4,863,115

 
(15,498
)
(B) 
4,847,617

Allowance for loan and lease losses
 
(45,614
)
 
(4,234
)
 
(49,848
)
 
4,234

(C) 
(45,614
)
Loans and leases, net
 
4,404,209

 
409,057

 
4,813,267

 
(11,264
)
 
4,802,003

Premises, furniture and equipment, net
 
143,423

 
3,193

 
146,616

 

 
146,616

Other real estate, net
 
16,983

 

 
16,983

 

 
16,983

Goodwill, net
 
54,162

 
13,339

 
67,501

 
26,432

(E) 
93,933

Other intangible assets, net
 
45,226

 
714

 
45,940

 
4,463

(F) 
50,403

Cash surrender value on life insurance
 
96,693

 
10,059

 
106,752

 

 
106,752

Other assets
 
108,924

 
14,592

 
123,516

 
4,225

(D) 
127,741

TOTAL ASSETS
 
$
6,717,007

 
$
655,374

 
$
7,372,381

 
$
(8,072
)
 
$
7,364,309

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
Demand
 
$
1,536,355

 
$
210,799

 
$
1,747,154

 
$

 
$
1,747,154

Savings
 
2,816,666

 
235,518

 
3,052,184

 

 
3,052,184

Time
 
964,248

 
126,828

 
1,091,076

 
634

(G) 
1,091,710

Total deposits
 
5,317,269

 
573,145

 
5,890,414

 
634

 
5,891,048

Short-term borrowings
 
477,918

 

 
477,918

 

 
477,918

Other borrowings
 
296,594

 

 
296,594

 

 
296,594

Accrued expenses and other liabilities
 
46,020

 
10,538

 
56,558

 
(137
)
(C) 
56,421

TOTAL LIABILITIES
 
6,137,801

 
583,683

 
6,721,484

 
497

 
6,721,981

EQUITY:
 
 
 
 
 
 
 
 
 
 
Series C Fixed Rate Non-Cumulative Perpetual preferred stock
 
81,698

 

 
81,698

 

 
81,698

Common stock
 
20,616

 
50,963

 
71,579

 
(49,022
)
(H) 
22,557

Capital surplus
 
148,789

 

 
148,789

 
64,595

(H) 
213,384

Retained earnings
 
325,106

 
20,782

 
345,888

 
(24,196
)
(H) 
321,692

Accumulated other comprehensive income (loss)
 
3,059

 
(54
)
 
3,005

 
54

 
3,059

Treasury stock at cost
 
(62
)
 

 
(62
)
 

 
(62
)
TOTAL STOCKHOLDERS’ EQUITY
 
579,206

 
71,691

 
650,897

 
(8,569
)
 
642,328

TOTAL LIABILITIES AND EQUITY
 
$
6,717,007

 
$
655,374

 
$
7,372,381

 
$
(8,072
)
 
$
7,364,309







18


Combined Pro Forma Financial Information (unaudited)
Consolidated Statement of Income
For the Six Months Ended June 30, 2015
(Dollars in thousands, except per share data)
Historical
 
 
 
 
 
 
 
Heartland
 
Premier Valley
 
Pro Forma
Before
Adjustments
 
Pro
Forma
Adjustments
 
Heartland
Pro Forma
Combined
INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
 
$
108,873

 
$
9,027

 
$
117,900

 
$
172

(I) 
$
118,072

Interest on securities and other:
 
 
 
 
 
 
 
 
 
 
Taxable
 
13,871

 
367

 
14,238

 

 
14,238

Nontaxable
 
5,790

 
1,711

 
7,501

 

 
7,501

Interest on federal funds sold and other short-term investments
 
2

 

 
2

 

 
2

Interest on interest bearing deposits in other financial institutions
 
7

 
22

 
29

 

 
29

TOTAL INTEREST INCOME
 
128,543

 
11,127

 
139,670

 
172

 
139,842

INTEREST EXPENSE:
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
7,991

 
330

 
8,321

 
(106
)
(G) 
8,215

Interest on short-term borrowings
 
410

 
10

 
420

 

 
420

Interest on other borrowings
 
8,568

 

 
8,568

 

 
8,568

TOTAL INTEREST EXPENSE
 
16,969

 
340

 
17,309

 
(106
)
 
17,203

NET INTEREST INCOME
 
111,574

 
10,787

 
122,361

 
278

 
122,639

Provision for loan and lease losses
 
7,345

 

 
7,345

 

 
7,345

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES
 
104,229

 
10,787

 
115,016

 
278

 
115,294

NONINTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Service charges and fees
 
11,304

 
670

 
11,974

 

 
11,974

Loan servicing income
 
2,204

 
192

 
2,396

 

 
2,396

Trust fees
 
7,544

 

 
7,544

 

 
7,544

Brokerage and insurance commissions
 
2,003

 

 
2,003

 

 
2,003

Securities gains, net
 
7,463

 
651

 
8,114

 

 
8,114

Gains on sale of loans
 
28,341

 
267

 
28,608

 

 
28,608

Income on bank owned life insurance
 
983

 
168

 
1,151

 

 
1,151

Other noninterest income
 
1,482

 
357

 
1,839

 

 
1,839

TOTAL NONINTEREST INCOME
 
61,324

 
2,305

 
63,629

 

 
63,629

NONINTEREST EXPENSES
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
73,489

 
3,791

 
77,280

 

 
77,280

Occupancy
 
8,287

 
583

 
8,870

 

 
8,870

Furniture and equipment
 
4,282

 
138

 
4,420

 

 
4,420

Professional fees
 
11,293

 
165

 
11,458

 

 
11,458

FDIC assessments
 
1,855

 
192

 
2,047

 

 
2,047

Merger related expenses
 

 
27

 
27

 
(27
)
(J) 

Advertising
 
2,514

 
170

 
2,684

 

 
2,684

Intangible assets amortization
 
1,346

 

 
1,346

 
319

(F) 
1,665

Other real estate and loan collection expenses
 
1,218

 
19

 
1,237

 

 
1,237

Loss on sales/valuations of assets, net
 
1,862

 

 
1,862

 

 
1,862

Other noninterest expenses
 
16,950

 
1,331

 
18,281

 

 
18,281

TOTAL NONINTEREST EXPENSES
 
123,096

 
6,416

 
129,512

 
292

 
129,804

INCOME BEFORE INCOME TAXES
 
42,457

 
6,676

 
49,133

 
(14
)
 
49,119

Income taxes
 
11,588

 
2,384

 
13,972

 
6

(D) 
13,966

NET INCOME
 
$
30,869

 
$
4,292

 
$
35,161

 
$
(8
)
 
$
35,153

Preferred dividends and discount
 
$
(408
)
 
$

 
$
(408
)
 
$

 
$
(408
)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
 
$
30,461

 
$
4,292

 
$
34,753

 
$
(8
)
 
$
34,745

 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE - BASIC
 
1.49

 
0.35

 
 
 
 
 
1.55

EARNINGS PER COMMON SHARE - DILUTED
 
1.47

 
0.35

 
 
 
 
 
1.54

WEIGHTED AVERAGE BASIC SHARES OUTSTANDING
 
20,407,725

 
12,206,182

 
 
 
1,941,494

(K) 
22,349,219

WEIGHTED AVERAGE DILUTIVE SHARES OUTSTANDING
 
20,681,800

 
12,207,889

 
 
 
1,941,494

(K) 
22,623,294



19


Combined Pro Forma Financial Information (unaudited)
Consolidated Statement of Income
For the Twelve Months Ended December 31, 2014

(Dollars in thousands, except per share data)
Historical
 
 
 
 
 
 
 
Heartland
 
Premier Valley
 
Pro Forma
Before
Adjustments
 
Pro
Forma
Adjustments
 
Heartland
Pro Forma
Combined
INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
 
$
194,022

 
$
16,161

 
$
210,183

 
$
344

(I) 
$
210,527

Interest on securities and other:
 
 
 
 
 
 
 
 
 
 
Taxable
 
29,727

 
2,907

 
32,634

 

 
32,634

Nontaxable
 
13,269

 
1,194

 
14,463

 

 
14,463

Interest on federal funds sold and other short-term investments
 
1

 
257

 
258

 

 
258

Interest on interest bearing deposits in other financial institutions
 
23

 
9

 
32

 

 
32

TOTAL INTEREST INCOME
 
237,042

 
20,528

 
257,570

 
344

 
257,914

INTEREST EXPENSE:
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
18,154

 
641

 
18,795

 
(212
)
(G) 
18,583

Interest on short-term borrowings
 
877

 
6

 
883

 

 
883

Interest on other borrowings
 
14,938

 

 
14,938

 

 
14,938

TOTAL INTEREST EXPENSE
 
33,969

 
647

 
34,616

 
(212
)
 
34,404

NET INTEREST INCOME
 
203,073

 
19,881

 
222,954

 
556

 
223,510

Provision for loan and lease losses
 
14,501

 
(500
)
 
14,001

 

 
14,001

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES
 
188,572

 
20,381

 
208,953

 
403

 
209,356

NONINTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
Service charges and fees
 
20,085

 
1,307

 
21,392

 

 
21,392

Loan servicing income
 
5,583

 
364

 
5,947

 

 
5,947

Trust fees
 
13,097

 

 
13,097

 

 
13,097

Brokerage and insurance commissions
 
4,440

 

 
4,440

 

 
4,440

Securities gains, net
 
3,668

 
741

 
4,409

 

 
4,409

Gains (loss) on trading account securities
 
(38
)
 

 
(38
)
 

 
(38
)
Gains on sale of loans
 
31,337

 
681

 
32,018

 

 
32,018

Income on bank owned life insurance
 
1,472

 
338

 
1,810

 

 
1,810

Other noninterest income
 
2,580

 
718

 
3,298

 

 
3,298

TOTAL NONINTEREST INCOME
 
82,224

 
4,149

 
86,373

 

 
86,373

NONINTEREST EXPENSES
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
129,843

 
7,733

 
137,576

 

 
137,576

Occupancy
 
15,746

 
1,161

 
16,907

 

 
16,907

Furniture and equipment
 
8,105

 
275

 
8,380

 

 
8,380

Professional fees
 
18,241

 
389

 
18,630

 

 
18,630

FDIC assessments
 
3,808

 
408

 
4,216

 

 
4,216

Merger related expenses
 

 
50

 
50

 
(50
)
(J) 

Advertising
 
5,524

 
316

 
5,840

 

 
5,840

Intangible assets amortization
 
2,223

 

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