Profile: Heartland Financial USA, Inc. (HTLF.O)

Heartland Financial USA, Inc. (Heartland) is a multi-bank holding company. The Company has 10 bank subsidiaries in the states of Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado and Minnesota, (collectively, the Bank Subsidiaries). All 10 Bank Subsidiaries are members of the Federal Deposit Insurance Corporation (FDIC). The Bank Subsidiaries include Dubuque Bank and Trust Company; DB&T Insurance, Inc., Galena State Bank & Trust Co., First Community Bank; Riverside Community Bank; Wisconsin Community Bank; New Mexico Bank & Trust; Rocky Mountain Bank; Arizona Bank & Trust; Summit Bank & Trust, and Minnesota Bank & Trust. Heartland also has seven active non-bank subsidiaries: Citizens Finance Co. is a consumer finance company with offices in Iowa, Illinois and Wisconsin. Heartland Financial Statutory Trust III, Heartland Financial Statutory Trust IV, Heartland Financial Statutory Trust V, Heartland Financial Statutory Trust VI, Heartland Financial Statutory Trust VII and Rocky Mountain Statutory Trust I are special purpose trust subsidiaries of Heartland formed for the purpose of the offering of cumulative capital securities. All of Heartland’s subsidiaries are wholly owned, except for Summit Bank & Trust, of which Heartland owned 82% of the capital stock as of December 31, 2008, and Minnesota Bank & Trust, of which Heartland owned 80% of the capital stock as of December 31, 2008.

The Bank Subsidiaries provide full service commercial and retail banking in the communities in which they are located. Deposit products offered by the Bank Subsidiaries include checking and other demand deposit accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts, health savings accounts and other time deposits. The deposits in the Bank Subsidiaries are insured by the FDIC to the full extent permitted by law. Loans include commercial and industrial, agricultural, real estate mortgage, consumer, home equity and lines of credit. Other products and services include VISA debit cards, automated teller machines, online banking, safe deposit boxes and trust services. The principal service of the Bank Subsidiaries consists of making loans to and accepting deposits from businesses and individuals. These loans are made at the offices of the Bank Subsidiaries. The Bank Subsidiaries also engage in activities that are closely related to banking, including investment brokerage and insurance sales.

Lending Activities

The Bank Subsidiaries provide a range of commercial and retail lending services to businesses and individuals. These credit activities include agricultural, commercial, residential real estate and consumer loans. The Bank Subsidiaries market their services to qualified lending customers. Lending officers solicit the business of new companies entering their market areas as well as long-standing members of the Bank Subsidiaries' respective business communities. The Bank Subsidiaries' portfolios include, but are not limited to, loans to wholesalers, hospitality industry, real estate developers, manufacturers, building contractors, business services companies and retailers. The Bank Subsidiaries provide a range of business loans, including lines of credit for working capital and operational purposes and term loans for the acquisition of equipment and real estate.

Agricultural loans are emphasized by Dubuque Bank and Trust Company, Rocky Mountain Bank, Wisconsin Community Bank’s Monroe banking center and New Mexico Bank & Trust’s Clovis banking offices. Agricultural loans constituted approximately 10% of the total loan portfolio as of December 31, 2008. Mortgage loans are fixed rate with 15 or 30 year maturities. Heartland usually sells these loans into the secondary market and retains servicing on the loans sold to Fannie Mae.

The Bank Subsidiaries' consumer lending departments provide all types of consumer loans including motor vehicle, home improvement, home equity and small personal credit lines. Citizens Finance Co. specializes in consumer lending and serves the consumer credit needs of approximately 7,700 customers in Iowa, Illinois and Wisconsin from its Dubuque, Davenport and Cedar Rapids, Iowa; Madison and Appleton, Wisconsin; and Loves Park, Crystal Lake and Tinley Park, Illinois offices.

Investment Activities

The composition of Heartland's securities portfolio is managed to maximize the return on the portfolio while considering the impact it has on Heartland’s asset/liability position and liquidity needs. Securities represented 25% of total assets at December 31, 2008. Total available for sale securities as of December 31, 2008, were $871.7 million. The composition of the securities portfolio shifted from an emphasis in United States. government corporations and agencies to mortgage-backed securities during the year ended December 31, 2008.

Trust and Investment Services

Dubuque Bank and Trust Company, Galena State Bank & Trust Co., Riverside Community Bank, Wisconsin Community Bank, New Mexico Bank & Trust, Arizona Bank & Trust and Minnesota Bank & Trust offer trust and investment services in their respective communities. As of December 31, 2008, total Heartland trust assets were $1.4 billion. Heartland has formed a alliance with LPL Financial Institution Services, a division of LPL Financial, to operate independent securities offices at all of the Bank Subsidiaries. Through LPL Financial, Heartland offers a range of investment services including mutual funds, annuities, retirement products, education savings products, brokerage services, employer sponsored plans and insurance products. A complete line of vehicle, property and casualty, life and disability insurance and tax-free annuities are also offered by Heartland through DB&T Insurance.