Delaware
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42-1405748
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer identification number)
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1398 Central Avenue, Dubuque, Iowa 52001
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(563) 589-2100
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(Address of principal executive offices) (Zip Code)
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(Registrant's telephone number, including area code)
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Title of Class
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Name of Each Exchange on Which Registered
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Common Stock $1.00 par value
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The NASDAQ Global Select Market
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Preferred Share Purchase Rights
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Large accelerated filer
*
Accelerated filer
R
Non-accelerated filer
*
Smaller reporting company
*
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||||
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(Do not check if a smaller reporting company)
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Part I
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A.
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General Description
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B.
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Market Areas
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C.
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Competition
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D.
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Employees
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E.
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Internet Access
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F.
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Supervision and Regulation
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G.
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Governmental Monetary Policy and Economic Conditions
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Part II
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Part III
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Part IV
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•
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Dubuque Bank and Trust Company, Dubuque, Iowa, is chartered under the laws of the State of Iowa. Dubuque Bank and Trust Company has two wholly-owned subsidiaries: DB&T Insurance, Inc., a multi-line insurance agency and DB&T Community Development Corp., a partner in low-income housing and historic rehabilitation projects.
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•
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Galena State Bank & Trust Co., Galena, Illinois, is chartered under the laws of the State of Illinois.
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•
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First Community Bank, Keokuk, Iowa, is chartered under the laws of the State of Iowa.
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•
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Riverside Community Bank, Rockford, Illinois, is chartered under the laws of the State of Illinois.
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•
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Wisconsin Community Bank, Madison, Wisconsin, is chartered under the laws of the State of Wisconsin.
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•
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New Mexico Bank & Trust, Albuquerque, New Mexico, is chartered under the laws of the State of New Mexico.
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•
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Rocky Mountain Bank, Billings, Montana, is chartered under the laws of the State of Montana.
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•
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Arizona Bank & Trust, Phoenix, Arizona, is chartered under the laws of the State of Arizona.
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•
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Summit Bank & Trust, Broomfield, Colorado, is chartered under the laws of the State of Colorado.
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•
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Minnesota Bank & Trust, Edina, Minnesota, is chartered under the laws of the State of Minnesota.
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•
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Citizens Finance Co. is a consumer finance company with offices in Iowa, Illinois and Wisconsin.
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•
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Heartland Community Development Inc. is a property management company with a primary purpose of holding and managing certain nonperforming assets acquired from the Bank Subsidiaries.
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1.
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Creating strong community ties through local bank delivery.
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•
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Deeply rooted local leadership and boards
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•
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Local community knowledge and relationships
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•
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Local decision-making
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•
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Independent charters
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•
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Locally recognized brands
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•
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Commitment to an exceptional customer experience
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2.
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Providing extensive resources to increase revenue.
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•
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Full range of commercial products, including government guaranteed lending and treasury management services
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•
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Convenient and competitive retail products and services
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•
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Extensive menu of wealth management, investment services, insurance, leasing, mortgage and consumer finance
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•
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Unique approach to consultative relationship building
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•
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Assistance with management of funding costs
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3.
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Centralizing back-office operations for efficiency.
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•
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Leverage expertise across all Bank Subsidiaries
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•
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Leading edge technology for account processing and delivery systems
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•
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Efficient back-office support for loan processing and deposit operations
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•
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Centralized loan underwriting and collections
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•
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Centralized loss management and risk analysis
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Heartland Bank Subsidiaries
(Dollars in thousands)
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||||
Bank Subsidiaries
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Charter
Location
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Year
Acquired
or Opened
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Number
Of Bank
Offices
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Total
Portfolio
Loans
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Total
Deposits
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||||
Dubuque Bank and Trust Company
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Dubuque, IA
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1935
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8
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$
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673,399
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$
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809,271
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Galena State Bank & Trust Co.
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Galena, IL
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1992
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4
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$
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137,153
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$
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236,647
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First Community Bank
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Keokuk, IA
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1994
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3
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$
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60,827
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$
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93,578
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Riverside Community Bank
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Rockford, IL
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1995
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4
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$
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162,706
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$
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241,184
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Wisconsin Community Bank
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Madison, WI
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1997
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7
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$
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320,711
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$
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392,432
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New Mexico Bank & Trust
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Albuquerque, NM
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1998
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16
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$
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513,658
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$
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646,302
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Arizona Bank & Trust
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Phoenix, AZ
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2003
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6
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$
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124,388
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$
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183,279
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Rocky Mountain Bank
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Billings, MT
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2004
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9
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$
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246,213
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$
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347,924
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Summit Bank & Trust
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Broomfield, CO
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2006
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3
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$
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48,020
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$
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81,024
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Minnesota Bank & Trust
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Edina, MN
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2008
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1
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$
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36,013
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$
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44,278
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•
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establishes the Bureau of Consumer Financial Protection (the "BCFP"), which has broad authority to regulate providers of credit, savings, payment and other consumer financial products and services;
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•
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makes permanent the $250,000 deposit insurance limit on insured deposits, and revises the assessment base for the calculation of the FDIC insurance assessments for financial institutions;
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•
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restricts securities trading activities and support for and investments in private funds;
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•
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creates a new structure for resolving troubled or failed financial institutions;
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•
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requires the federal banking agencies to adopt new capital requirements that are no less stringent than those currently in effect, and eliminates, subject to certain exceptions, the differences in calculation of capital for a holding company as opposed to a subsidiary financial institution;
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•
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extends the limitations on insider transactions, affiliate transactions and loans to a single borrower, and enhances the regulation of consumer mortgage banking and predatory lending activities;
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•
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requires federal banking agencies to adopt regulations relating to compensation practices of covered institutions;
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•
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requires risk retention on mortgage originations; and
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•
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limits the pre-emption of local laws applicable to national banks.
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•
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the financial institution must be in material compliance with all terms, conditions and covenants of any CPP agreement and financial instrument;
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•
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the financial institution must not have missed more than one dividend payment under CPP; and
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•
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the financial institution must pay, in immediately available funds, the amount of any unpaid dividends for the payment period prior to the SBLF closing date, plus accrued and unpaid dividends as of the date of refinancing for the payment period that includes the closing date.
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•
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pays dividends to Treasury at a rate of 5% per year until the fifth anniversary of the investment and at 9% after that time;
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•
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prohibits dividends on common stock unless all dividends have been paid on the Senior Preferred Stock;
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•
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requires the consent of Treasury for any increase in the dividends paid on the common stock, or for any stock repurchases, until the third anniversary of the investment, unless the Senior Preferred Stock has been previously redeemed in its entirety or unless Treasury has transferred the Senior Preferred Stock to third parties;
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•
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has no voting rights, other than the right to vote as a class on the issuance of any preferred stock ranking senior, any change in its terms or any merger, exchange or similar transaction that would adversely affect its rights;
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•
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has the right to elect two directors if dividends have not been paid for six quarterly periods;
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•
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is freely transferable and required Heartland to file a shelf registration statement covering the sale of the Senior Preferred Stock, which Heartland completed in January, 2009; and
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•
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may be redeemed at any time with the approval of Heartland's primary regulator (the FDIC).
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•
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prohibited from paying incentive compensation, except restricted stock that vests after the CPP funds are repaid, to its five most highly compensated employees;
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•
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required to have its compensation committee review with its senior risk officers at least every six months (i) the incentive compensation arrangements for senior executive officers to ensure that the arrangements do not encourage senior executive officers to take unnecessary and excessive risks, (ii) all employee compensation plans to limit
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•
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required to extend the clawback provisions to its 20 most highly compensated employees;
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•
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prohibited from making any severance payment whatsoever, including what has traditionally been referred to as a parachute payment, to the executives named in the summary compensation table of its proxy statement or any of the five next most highly compensated employees;
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•
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required to annually present its compensation policies to a non-binding vote by stockholders--a say-on-pay vote;
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•
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required to adopt policies regarding excessive and luxury expenditures; and
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•
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required to have its CEO and CFO annually certify that Heartland has complied with these requirements as part of its annual filing with the SEC (this Form 10-K).
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•
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potential exposure to unknown or contingent liabilities of banks and businesses we acquire;
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•
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exposure to potential asset quality issues of the acquired bank or related business;
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•
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difficulty and expense of integrating the operations and personnel of banks and businesses we acquire;
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•
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potential disruption to our business;
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•
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potential restrictions on our business resulting from the regulatory approval process;
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•
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potential diversion of our management’s time and attention; and
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•
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the possible loss of key employees and customers of the banks and businesses we acquire.
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Name and Main Facility Address
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Main Facility
Square Footage
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Main Facility
Owned or Leased
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Number of Locations
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Heartland Financial USA, Inc.
1301 Central Avenue
Dubuque, IA 52001
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60,000
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Owned
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2
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Dubuque Bank and Trust Company
1398 Central Avenue
Dubuque, IA 52001
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59,500
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Owned
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9
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Galena State Bank & Trust Co.
971 Gear Street
Galena, IL 61036
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18,000
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Owned
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4
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Riverside Community Bank
6855 E. Riverside Blvd.
Rockford, IL 60114
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8,000
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Owned
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4
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First Community Bank
320 Concert Street
Keokuk, IA 52632
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6,000
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Owned
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3
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Wisconsin Community Bank
8240 Mineral Point Rd.
Madison, WI 53719
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19,000
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Owned
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7
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New Mexico Bank & Trust
320 Gold NW
Albuquerque, NM 87102
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11,400
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Lease term
through 2016
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16
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Arizona Bank & Trust
2036 E. Camelback Rd.
Phoenix, AZ 85016
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14,000
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Owned
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6
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Rocky Mountain Bank
2615 King Avenue West
Billings, MT 59102
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16,600
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Owned
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9
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Summit Bank & Trust
2002 E. Coalton Road
Broomfield, CO 80027
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14,000
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Owned
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3
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Minnesota Bank & Trust
7701 France Avenue South, Suite 110
Edina, MN 55435
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6,100
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Lease term
through 2013
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1
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Citizens Finance Co.
1275 Main Street
Dubuque, IA 52001
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5,600
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Owned
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9
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Name
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Age
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Position with Heartland and Subsidiaries and Principal Occupation
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Lynn B. Fuller
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61
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Chairman, President and Chief Executive Officer of Heartland; Vice Chairman of Dubuque Bank and Trust Company, Wisconsin Community Bank, New Mexico Bank & Trust, Arizona Bank & Trust, Rocky Mountain Bank, Summit Bank & Trust and Minnesota Bank & Trust; Chairman of Citizens Finance Co.
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John K. Schmidt
|
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51
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Director, Executive Vice President, Chief Operating Officer and Chief Financial Officer of Heartland; Vice Chairman of Dubuque Bank and Trust Company, Galena State Bank & Trust Co. and Riverside Community Bank; Director and Treasurer of Citizens Finance Co.
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Kenneth J. Erickson
|
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59
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Executive Vice President, Chief Credit Officer of Heartland; Executive Vice President, Lending, of Dubuque Bank and Trust Company; Vice Chairman of Citizens Finance Co.
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Douglas J. Horstmann
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57
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Senior Vice President, Lending, of Heartland; Director, President and Chief Executive Officer of Dubuque Bank and Trust Company; Vice Chairman of First Community Bank
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Paul J. Peckosh
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65
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Executive Vice President, Wealth Management Group, of Heartland; Executive Vice President, Manager Wealth Management Group, of Dubuque Bank and Trust Company
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Melvin E. Miller
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61
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Executive Vice President, Chief Investment Officer of Heartland
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John J. Berg
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59
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Executive Vice President, Marketing and Sales of Heartland
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Brian J. Fox
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62
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Executive Vice President, Operations of Heartland
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Heartland Common Stock
|
|
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||||
Calendar Quarter
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High
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|
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Low
|
|
||
2010:
|
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|
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||||
First
|
|
$
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16.75
|
|
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$
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13.37
|
|
Second
|
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20.78
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|
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15.85
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||
Third
|
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17.81
|
|
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13.88
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||
Fourth
|
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18.11
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|
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15.04
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|
||
2009:
|
|
|
|
|
||||
First
|
|
$
|
20.81
|
|
|
$
|
8.51
|
|
Second
|
|
15.93
|
|
|
11.51
|
|
||
Third
|
|
16.98
|
|
|
12.56
|
|
||
Fourth
|
|
15.29
|
|
|
12.04
|
|
Calendar Quarter
|
|
2010
|
|
|
2009
|
|
||
First
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Second
|
|
0.10
|
|
|
0.10
|
|
||
Third
|
|
0.10
|
|
|
0.10
|
|
||
Fourth
|
|
0.10
|
|
|
0.10
|
|
Cumulative Total Return Performance
|
|||||||||||||||||||
|
|
12/31/2005
|
|
12/31/2006
|
|
12/31/2007
|
|
12/31/2008
|
|
12/31/2009
|
|
12/31/2010
|
|
||||||
Heartland Financial USA, Inc.
|
|
100.00
|
|
|
134.87
|
|
|
88.24
|
|
|
99.74
|
|
|
71.54
|
|
|
89.31
|
|
|
NASDAQ Composite
|
|
100.00
|
|
|
110.39
|
|
|
122.15
|
|
|
73.32
|
|
|
106.47
|
|
|
125.91
|
|
|
NASDAQ Bank
|
|
100.00
|
|
|
113.82
|
|
|
91.16
|
|
|
71.52
|
|
|
59.87
|
|
|
68.34
|
|
|
•
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Heartland has experienced an increase in net charge-offs and nonperforming loans during the past three years.
|
•
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During the last several years, Heartland has entered new geographical markets in which it had little or no previous lending experience.
|
•
|
Heartland has continued to experience growth in more complex commercial loans as compared to relatively lower-risk residential real estate loans.
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THEORETICAL RANGE OF ALLOWANCE FOR LOAN AND LEASE LOSSES
|
|||
(Dollars in thousands)
|
|||
|
|
||
Allowance for loan and lease losses at December 31, 2010
|
$
|
42,693
|
|
Assuming deterioration in credit quality:
|
|
||
Addition to provision
|
1,718
|
|
|
Resultant allowance for loan and lease losses
|
$
|
44,411
|
|
Assuming improvement in credit quality:
|
|
||
Reduction in provision
|
(1,745
|
)
|
|
Resultant allowance for loan and lease losses
|
$
|
40,948
|
|
•
|
Significant under-performance relative to expected historical or projected future operating results.
|
•
|
Significant changes in the manner of use of the acquired assets or the strategy for the overall business.
|
•
|
Significant negative industry or economic trends.
|
•
|
Significant decline in the market price for our common stock over a sustained period; and market capitalization relative to net book value.
|
•
|
For intangible assets and long-lived assets, if the carrying value of the asset exceeds the undiscounted cash flows from such asset.
|
NONINTEREST INCOME
|
||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||
|
|
For the years ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2010
|
|
2009
|
|
2008
|
|
2010/
2009
|
|
2009/
2008
|
||||||||
Service charges and fees, net
|
|
$
|
13,900
|
|
|
$
|
12,541
|
|
|
$
|
11,654
|
|
|
11
|
%
|
|
8
|
%
|
Loan servicing income
|
|
7,232
|
|
|
9,666
|
|
|
4,600
|
|
|
(25
|
)
|
|
110
|
|
|||
Trust fees
|
|
9,206
|
|
|
7,773
|
|
|
7,906
|
|
|
18
|
|
|
(2
|
)
|
|||
Brokerage and insurance commissions
|
|
3,184
|
|
|
3,117
|
|
|
3,719
|
|
|
2
|
|
|
(16
|
)
|
|||
Securities gains, net
|
|
6,834
|
|
|
8,648
|
|
|
1,525
|
|
|
(21
|
)
|
|
467
|
|
|||
Gain (loss) on trading account securities
|
|
(91
|
)
|
|
211
|
|
|
(998
|
)
|
|
(143
|
)
|
|
(121
|
)
|
|||
Impairment loss on equity securities
|
|
—
|
|
|
(40
|
)
|
|
(5,151
|
)
|
|
(100
|
)
|
|
(99
|
)
|
|||
Gains on sale of loans
|
|
8,088
|
|
|
6,084
|
|
|
1,610
|
|
|
33
|
|
|
278
|
|
|||
Income (loss) on bank-owned life insurance
|
|
1,466
|
|
|
1,002
|
|
|
(1,184
|
)
|
|
46
|
|
|
(185
|
)
|
|||
Gain on acquisition
|
|
—
|
|
|
1,296
|
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|||
Gain on sale of merchant services
|
|
—
|
|
|
—
|
|
|
5,200
|
|
|
—
|
|
|
(100
|
)
|
|||
Other noninterest income
|
|
2,510
|
|
|
2,406
|
|
|
1,315
|
|
|
4
|
|
|
83
|
|
|||
Total noninterest income
|
|
$
|
52,329
|
|
|
$
|
52,704
|
|
|
$
|
30,196
|
|
|
(1
|
)%
|
|
75
|
%
|
NONINTEREST EXPENSE
|
||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||
|
|
For the years ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2010
|
|
2009
|
|
2008
|
|
2010/
2009
|
|
2009/
2008
|
||||||||
Salaries and employee benefits
|
|
$
|
63,391
|
|
|
$
|
60,465
|
|
|
$
|
56,752
|
|
|
5
|
%
|
|
7
|
%
|
Occupancy
|
|
9,121
|
|
|
8,992
|
|
|
9,019
|
|
|
1
|
|
|
—
|
|
|||
Furniture and equipment
|
|
6,104
|
|
|
6,574
|
|
|
6,968
|
|
|
(7
|
)
|
|
(6
|
)
|
|||
Professional fees
|
|
10,446
|
|
|
9,127
|
|
|
9,876
|
|
|
14
|
|
|
(8
|
)
|
|||
FDIC insurance assessments
|
|
5,441
|
|
|
6,578
|
|
|
1,446
|
|
|
(17
|
)
|
|
355
|
|
|||
Advertising
|
|
3,830
|
|
|
3,337
|
|
|
3,762
|
|
|
15
|
|
|
(11
|
)
|
|||
Goodwill impairment charge
|
|
1,639
|
|
|
12,659
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|||
Intangible assets amortization
|
|
591
|
|
|
866
|
|
|
943
|
|
|
(32
|
)
|
|
(8
|
)
|
|||
Net loss on repossessed assets
|
|
15,264
|
|
|
10,847
|
|
|
827
|
|
|
41
|
|
|
1,212
|
|
|||
Other noninterest expenses
|
|
13,412
|
|
|
13,075
|
|
|
12,646
|
|
|
3
|
|
|
3
|
|
|||
Total noninterest expense
|
|
$
|
129,239
|
|
|
$
|
132,520
|
|
|
$
|
102,239
|
|
|
(2
|
)%
|
|
30
|
%
|
Efficiency ratio
(1)
|
|
66.79
|
%
|
|
73.07
|
%
|
|
68.78
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1) Noninterest expense divided by the sum of net interest income and noninterest income less security gains.
|
LOAN AND LEASE PORTFOLIO
|
||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||
|
As of December 31,
|
|||||||||||||||||||||||||||||||||
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|||||||||||||||||||||||||
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||||||||
Loans and leases receivable held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial
|
$
|
558,031
|
|
|
23.75
|
%
|
|
$
|
420,021
|
|
|
17.98
|
%
|
|
$
|
434,444
|
|
|
18.03
|
%
|
|
400,788
|
|
|
17.55
|
%
|
|
$
|
354,663
|
|
|
16.48
|
%
|
|
Commercial real estate
|
1,160,962
|
|
|
49.43
|
|
|
1,250,087
|
|
|
53.52
|
|
|
1,283,627
|
|
|
53.27
|
|
|
1,231,809
|
|
|
53.93
|
|
|
1,129,075
|
|
|
52.47
|
|
|||||
Residential real estate
|
163,726
|
|
|
6.97
|
|
|
175,059
|
|
|
7.49
|
|
|
203,921
|
|
|
8.46
|
|
|
217,044
|
|
|
9.50
|
|
|
225,343
|
|
|
10.47
|
|
|||||
Agricultural and agricultural real estate
|
250,943
|
|
|
10.68
|
|
|
256,780
|
|
|
10.99
|
|
|
247,664
|
|
|
10.28
|
|
|
225,663
|
|
|
9.88
|
|
|
233,748
|
|
|
10.86
|
|
|||||
Consumer
|
214,515
|
|
|
9.13
|
|
|
231,709
|
|
|
9.92
|
|
|
234,061
|
|
|
9.72
|
|
|
199,518
|
|
|
8.74
|
|
|
194,652
|
|
|
9.05
|
|
|||||
Lease financing, net
|
981
|
|
|
0.04
|
|
|
2,326
|
|
|
0.10
|
|
|
5,829
|
|
|
0.24
|
|
|
9,158
|
|
|
0.40
|
|
|
14,359
|
|
|
0.67
|
|
|||||
Gross loans and leases receivable held to maturity
|
2,349,158
|
|
|
100.00
|
%
|
|
2,335,982
|
|
|
100.00
|
%
|
|
2,409,546
|
|
|
100.00
|
%
|
|
2,283,980
|
|
|
100.00
|
%
|
|
2,151,840
|
|
|
100.00
|
%
|
|||||
Unearned discount
|
(2,581
|
)
|
|
|
|
(2,491
|
)
|
|
|
|
(2,443
|
)
|
|
|
|
(2,107
|
)
|
|
|
|
(1,875
|
)
|
|
|
||||||||||
Deferred loan fees
|
(2,590
|
)
|
|
|
|
(2,349
|
)
|
|
|
|
(2,102
|
)
|
|
|
|
(1,706
|
)
|
|
|
|
(2,120
|
)
|
|
|
||||||||||
Total net loans and leases receivable held to maturity
|
2,343,987
|
|
|
|
|
2,331,142
|
|
|
|
|
2,405,001
|
|
|
|
|
2,280,167
|
|
|
|
|
2,147,845
|
|
|
|
||||||||||
Loans covered under loss share agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial and commercial real estate
|
$
|
10,056
|
|
|
48.34
|
%
|
|
$
|
15,068
|
|
|
47.29
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Residential mortgage
|
5,792
|
|
|
27.85
|
|
|
8,984
|
|
|
28.20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Agricultural and agricultural real estate
|
2,723
|
|
|
13.09
|
|
|
3,626
|
|
|
11.38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Consumer
|
2,229
|
|
|
10.72
|
|
|
4,182
|
|
|
13.13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total loans covered under loss share agreements
|
20,800
|
|
|
100.00
|
%
|
|
31,860
|
|
|
100.00
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||||
Allowance for loan and lease losses
|
(42,693
|
)
|
|
|
|
(41,848
|
)
|
|
|
|
(35,651
|
)
|
|
|
|
(32,993
|
)
|
|
|
|
(29,981
|
)
|
|
|
||||||||||
Loans and leases receivable, net
|
$
|
2,322,094
|
|
|
|
|
$
|
2,321,154
|
|
|
|
|
$
|
2,369,350
|
|
|
|
|
$
|
2,247,174
|
|
|
|
|
$
|
2,117,864
|
|
|
|
LOANS SECURED BY REAL ESTATE
|
||||||||
(Dollars in thousands)
|
|
As of December 31,
|
||||||
|
|
2010
|
|
2009
|
||||
Residential real estate, excluding residential construction and residential lot loans
|
|
$
|
389,790
|
|
|
$
|
427,276
|
|
Industrial, manufacturing, business and commercial
|
|
186,558
|
|
|
235,929
|
|
||
Agriculture
|
|
201,750
|
|
|
197,885
|
|
||
Land development and lots
|
|
152,658
|
|
|
176,995
|
|
||
Retail
|
|
168,916
|
|
|
161,008
|
|
||
Office
|
|
124,041
|
|
|
130,479
|
|
||
Hotel, resort and hospitality
|
|
97,442
|
|
|
101,182
|
|
||
Warehousing
|
|
65,196
|
|
|
72,639
|
|
||
Food and beverage
|
|
68,550
|
|
|
61,982
|
|
||
Multi-family
|
|
62,886
|
|
|
49,884
|
|
||
Residential construction
|
|
42,564
|
|
|
46,940
|
|
||
All other
|
|
137,216
|
|
|
142,891
|
|
||
Total loans secured by real estate
|
|
$
|
1,697,567
|
|
|
$
|
1,805,090
|
|
SECURITIES PORTFOLIO COMPOSITION
|
|||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
|
|
As of December 31,
|
|||||||||||||||||||
|
|
2010
|
|
2009
|
|
2008
|
|||||||||||||||
|
|
Amount
|
|
% of
Portfolio
|
|
Amount
|
|
% of
Portfolio
|
|
Amount
|
|
% of
Portfolio
|
|||||||||
U.S. government corporations and agencies
|
|
$
|
320,007
|
|
|
25.30
|
%
|
|
$
|
279,441
|
|
|
23.78
|
%
|
|
$
|
195,356
|
|
|
21.62
|
%
|
Mortgage-backed securities
|
|
609,865
|
|
|
48.23
|
|
|
623,949
|
|
|
53.09
|
|
|
509,501
|
|
|
56.38
|
|
|||
Obligations of states and political subdivisions
|
|
294,259
|
|
|
23.27
|
|
|
238,893
|
|
|
20.33
|
|
|
163,597
|
|
|
18.10
|
|
|||
Other securities
|
|
40,433
|
|
|
3.20
|
|
|
32,934
|
|
|
2.80
|
|
|
35,251
|
|
|
3.90
|
|
|||
Total
|
|
$
|
1,264,564
|
|
|
100.00
|
%
|
|
$
|
1,175,217
|
|
|
100.00
|
%
|
|
$
|
903,705
|
|
|
100.00
|
%
|
AVERAGE DEPOSITS
|
|||||||||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||||
|
For the years ended December 31,
|
||||||||||||||||||||||||||||
|
2010
|
|
2009
|
|
2008
|
||||||||||||||||||||||||
|
Average Deposits
|
|
Percent
of Deposits
|
|
Average
Interest
Rate
|
|
Average Deposits
|
|
Percent
of Deposits
|
|
Average
Interest
Rate
|
|
Average Deposits
|
|
Percent
of Deposits
|
|
Average
Interest Rate
|
||||||||||||
Demand deposits
|
$
|
536,053
|
|
|
17.63
|
%
|
|
—
|
%
|
|
$
|
437,468
|
|
|
15.36
|
%
|
|
—
|
%
|
|
$
|
372,496
|
|
|
15.17
|
%
|
|
—
|
%
|
Savings
|
1,557,658
|
|
|
51.24
|
|
|
0.88
|
|
|
1,282,212
|
|
|
45.03
|
|
|
1.44
|
|
|
938,701
|
|
|
38.22
|
|
|
1.94
|
|
|||
Time deposits less than $100,000
|
649,892
|
|
|
21.38
|
|
|
2.63
|
|
|
754,814
|
|
|
26.51
|
|
|
3.06
|
|
|
807,617
|
|
|
32.89
|
|
|
4.02
|
|
|||
Time deposits of $100,000 or more
|
296,325
|
|
|
9.75
|
|
|
2.54
|
|
|
373,159
|
|
|
13.10
|
|
|
3.00
|
|
|
336,926
|
|
|
13.72
|
|
|
3.98
|
|
|||
Total deposits
|
$
|
3,039,928
|
|
|
100.00
|
%
|
|
|
|
$
|
2,847,653
|
|
|
100.00
|
%
|
|
|
|
$
|
2,455,740
|
|
|
100.00
|
%
|
|
|
TIME DEPOSITS $100,000 AND OVER
|
|||
(Dollars in thousands)
|
|||
|
December 31, 2010
|
||
3 months or less
|
$
|
55,557
|
|
Over 3 months through 6 months
|
29,038
|
|
|
Over 6 months through 12 months
|
60,194
|
|
|
Over 12 months
|
130,147
|
|
|
|
$
|
274,936
|
|
SHORT-TERM BORROWINGS
|
||||||||||||
(Dollars in thousands)
|
||||||||||||
|
|
As of or for the years ended
December 31,
|
||||||||||
|
|
2010
|
|
2009
|
|
2008
|
||||||
Balance at end of period
|
|
$
|
235,864
|
|
|
$
|
162,349
|
|
|
$
|
210,184
|
|
Maximum month-end amount outstanding
|
|
235,864
|
|
|
205,747
|
|
|
367,991
|
|
|||
Average month-end amount outstanding
|
|
198,382
|
|
|
140,289
|
|
|
230,680
|
|
|||
Weighted average interest rate at year-end
|
|
0.48
|
%
|
|
0.58
|
%
|
|
0.68
|
%
|
|||
Weighted average interest rate for the year
|
|
0.58
|
%
|
|
0.51
|
%
|
|
1.95
|
%
|
|
|
2010
|
|
2009
|
||||||||||
|
|
Net
Interest
Income
(in thousands)
|
|
%
Change
From
Base
|
|
Net
Interest
Income
(in thousands)
|
|
%
Change
From
Base
|
||||||
Year 1
|
|
|
|
|
|
|
|
|
||||||
Down 100 Basis Points
|
|
$
|
136,979
|
|
|
0.14
|
%
|
|
$
|
134,074
|
|
|
0.05
|
%
|
Base
|
|
$
|
136,786
|
|
|
|
|
$
|
134,002
|
|
|
|
||
Up 200 Basis Points
|
|
$
|
134,078
|
|
|
(1.98
|
)%
|
|
$
|
130,832
|
|
|
(2.37
|
)%
|
|
|
|
|
|
|
|
|
|
||||||
Year 2
|
|
|
|
|
|
|
|
|
||||||
Down 100 Basis Points
|
|
$
|
130,300
|
|
|
(4.74
|
)%
|
|
$
|
127,041
|
|
|
(5.19
|
)%
|
Base
|
|
$
|
134,115
|
|
|
(1.95
|
)%
|
|
$
|
130,973
|
|
|
(2.26
|
)%
|
Up 200 Basis Points
|
|
$
|
136,107
|
|
|
(0.50
|
)%
|
|
$
|
131,626
|
|
|
(1.77
|
)%
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
2010
|
|
|
|
|
|
|
|
|
||||||||
Securities available for sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government corporations and agencies
|
|
$
|
316,758
|
|
|
$
|
4,392
|
|
|
$
|
(1,143
|
)
|
|
$
|
320,007
|
|
Mortgage-backed securities
|
|
586,796
|
|
|
17,455
|
|
|
(4,211
|
)
|
|
600,040
|
|
||||
Obligations of states and political subdivisions
|
|
244,368
|
|
|
4,235
|
|
|
(4,140
|
)
|
|
244,463
|
|
||||
Corporate debt securities
|
|
16,142
|
|
|
—
|
|
|
(1,168
|
)
|
|
14,974
|
|
||||
Total debt securities
|
|
1,164,064
|
|
|
26,082
|
|
|
(10,662
|
)
|
|
1,179,484
|
|
||||
Equity securities
|
|
24,743
|
|
|
472
|
|
|
—
|
|
|
25,215
|
|
||||
Total
|
|
$
|
1,188,807
|
|
|
$
|
26,554
|
|
|
$
|
(10,662
|
)
|
|
$
|
1,204,699
|
|
2009
|
|
|
|
|
|
|
|
|
||||||||
Securities available for sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government corporations and agencies
|
|
$
|
277,219
|
|
|
$
|
2,503
|
|
|
$
|
(281
|
)
|
|
$
|
279,441
|
|
Mortgage-backed securities
|
|
608,556
|
|
|
11,765
|
|
|
(8,383
|
)
|
|
611,938
|
|
||||
Obligations of states and political subdivisions
|
|
208,197
|
|
|
5,328
|
|
|
(1,675
|
)
|
|
211,850
|
|
||||
Corporate debt securities
|
|
1,942
|
|
|
—
|
|
|
(70
|
)
|
|
1,872
|
|
||||
Total debt securities
|
|
1,095,914
|
|
|
19,596
|
|
|
(10,409
|
)
|
|
1,105,101
|
|
||||
Equity securities
|
|
29,751
|
|
|
616
|
|
|
—
|
|
|
30,367
|
|
||||
Total
|
|
$
|
1,125,665
|
|
|
$
|
20,212
|
|
|
$
|
(10,409
|
)
|
|
$
|
1,135,468
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government corporations and agencies
|
|
$
|
107,583
|
|
|
$
|
(1,143
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
107,583
|
|
|
$
|
(1,143
|
)
|
Mortgage-backed securities
|
|
104,724
|
|
|
(2,765
|
)
|
|
11,984
|
|
|
(1,446
|
)
|
|
116,708
|
|
|
(4,211
|
)
|
||||||
Obligations of states and political subdivisions
|
|
109,387
|
|
|
(3,995
|
)
|
|
763
|
|
|
(145
|
)
|
|
110,150
|
|
|
(4,140
|
)
|
||||||
Corporate debt securities
|
|
14,974
|
|
|
(1,168
|
)
|
|
—
|
|
|
—
|
|
|
14,974
|
|
|
(1,168
|
)
|
||||||
Total debt securities
|
|
336,668
|
|
|
(9,071
|
)
|
|
12,747
|
|
|
(1,591
|
)
|
|
349,415
|
|
|
(10,662
|
)
|
||||||
Equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total temporarily impaired securities
|
|
$
|
336,668
|
|
|
$
|
(9,071
|
)
|
|
$
|
12,747
|
|
|
$
|
(1,591
|
)
|
|
$
|
349,415
|
|
|
$
|
(10,662
|
)
|
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government corporations and agencies
|
|
$
|
41,255
|
|
|
$
|
(281
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,255
|
|
|
$
|
(281
|
)
|
Mortgage-backed securities
|
|
120,270
|
|
|
(4,120
|
)
|
|
32,784
|
|
|
(4,263
|
)
|
|
153,054
|
|
|
(8,383
|
)
|
||||||
Obligations of states and political subdivisions
|
|
47,831
|
|
|
(1,510
|
)
|
|
2,681
|
|
|
(165
|
)
|
|
50,512
|
|
|
(1,675
|
)
|
||||||
Corporate debt securities
|
|
1,872
|
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
1,872
|
|
|
(70
|
)
|
||||||
Total debt securities
|
|
211,228
|
|
|
(5,981
|
)
|
|
35,465
|
|
|
(4,428
|
)
|
|
246,693
|
|
|
(10,409
|
)
|
||||||
Equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total temporarily impaired securities
|
|
$
|
211,228
|
|
|
$
|
(5,981
|
)
|
|
$
|
35,465
|
|
|
$
|
(4,428
|
)
|
|
$
|
246,693
|
|
|
$
|
(10,409
|
)
|
(Dollars in thousands)
|
|
|
|
|
||||
|
|
2010
|
|
2009
|
||||
Loans and leases receivable held to maturity:
|
|
|
|
|
||||
Commercial
|
|
$
|
558,031
|
|
|
$
|
420,021
|
|
Commercial real estate
|
|
1,160,962
|
|
|
1,250,087
|
|
||
Residential real estate
|
|
163,726
|
|
|
175,059
|
|
||
Agricultural and agricultural real estate
|
|
250,943
|
|
|
256,780
|
|
||
Consumer
|
|
214,515
|
|
|
231,709
|
|
||
Gross loans receivable held to maturity
|
|
2,348,177
|
|
|
2,333,656
|
|
||
Direct financing leases held to maturity:
|
|
|
|
|
||||
Gross rents receivable
|
|
638
|
|
|
1,386
|
|
||
Estimated residual value
|
|
415
|
|
|
1,104
|
|
||
Unearned income
|
|
(72
|
)
|
|
(164
|
)
|
||
Net direct financing leases held to maturity
|
|
981
|
|
|
2,326
|
|
||
Gross loans and leases receivable held to maturity
|
|
2,349,158
|
|
|
2,335,982
|
|
||
Unearned discount
|
|
(2,581
|
)
|
|
(2,491
|
)
|
||
Deferred loan fees
|
|
(2,590
|
)
|
|
(2,349
|
)
|
||
Total net loans and leases receivable held to maturity
|
|
2,343,987
|
|
|
2,331,142
|
|
||
Loans covered under loss share agreements:
|
|
|
|
|
||||
Commercial and commercial real estate
|
|
10,056
|
|
|
15,068
|
|
||
Residential real estate
|
|
5,792
|
|
|
8,984
|
|
||
Agricultural and agricultural real estate
|
|
2,723
|
|
|
3,626
|
|
||
Consumer
|
|
2,229
|
|
|
4,182
|
|
||
Total loans covered under loss share agreements
|
|
20,800
|
|
|
31,860
|
|
||
Allowance for loan and lease losses
|
|
(42,693
|
)
|
|
(41,848
|
)
|
||
Loans and leases receivable, net
|
|
$
|
2,322,094
|
|
|
$
|
2,321,154
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Accruing Loans
|
|
|
|
|
||||||||||||||||||||||
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due |
|
90 Days or More Past Due
|
|
Total
Past Due
|
|
Current
|
|
Nonaccrual
|
|
Total Loans and Leases
|
||||||||||||||
Commercial
|
$
|
895
|
|
|
$
|
282
|
|
|
$
|
—
|
|
|
$
|
1,177
|
|
|
$
|
547,740
|
|
|
$
|
9,114
|
|
|
$
|
558,031
|
|
Commercial real estate
|
5,328
|
|
|
2,940
|
|
|
85
|
|
|
8,353
|
|
|
1,087,075
|
|
|
65,534
|
|
|
1,160,962
|
|
|||||||
Total commercial and commercial real estate
|
6,223
|
|
|
3,222
|
|
|
85
|
|
|
9,530
|
|
|
1,634,815
|
|
|
74,648
|
|
|
1,718,993
|
|
|||||||
Residential real estate
|
2,482
|
|
|
—
|
|
|
—
|
|
|
2,482
|
|
|
151,734
|
|
|
9,510
|
|
|
163,726
|
|
|||||||
Agricultural and agricultural real estate
|
283
|
|
|
292
|
|
|
—
|
|
|
575
|
|
|
248,698
|
|
|
1,670
|
|
|
250,943
|
|
|||||||
Consumer
|
2,369
|
|
|
628
|
|
|
—
|
|
|
2,997
|
|
|
206,834
|
|
|
4,684
|
|
|
214,515
|
|
|||||||
Lease financing
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
981
|
|
|
—
|
|
|
981
|
|
||||||||
Total gross loans and leases receivable held to maturity
|
$
|
11,357
|
|
|
$
|
4,142
|
|
|
$
|
85
|
|
|
$
|
15,584
|
|
|
$
|
2,243,062
|
|
|
$
|
90,512
|
|
|
$
|
2,349,158
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Unpaid Contractual Balance
|
|
Loan Balance
|
|
Related Allowance Recorded
|
|
Year-to-Date Avg. Loan Balance
|
|
Year-to-Date Interest Income Recognized
|
||||||||||
Impaired loans with a related allowance
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
14,936
|
|
|
$
|
14,936
|
|
|
$
|
2,837
|
|
|
$
|
15,471
|
|
|
$
|
481
|
|
Commercial real estate
|
35,365
|
|
|
35,282
|
|
|
7,127
|
|
|
36,545
|
|
|
1,394
|
|
|||||
Total commercial and commercial real estate
|
50,301
|
|
|
50,218
|
|
|
9,964
|
|
|
52,016
|
|
|
1,875
|
|
|||||
Residential real estate
|
2,577
|
|
|
2,415
|
|
|
659
|
|
|
1,390
|
|
|
7
|
|
|||||
Agricultural and agricultural real estate
|
3,911
|
|
|
3,911
|
|
|
512
|
|
|
3,707
|
|
|
181
|
|
|||||
Consumer
|
2,445
|
|
|
2,431
|
|
|
1,026
|
|
|
1,740
|
|
|
70
|
|
|||||
Lease financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total loans held to maturity
|
$
|
59,234
|
|
|
$
|
58,975
|
|
|
$
|
12,161
|
|
|
$
|
58,853
|
|
|
$
|
2,133
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impaired loans without a related allowance
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
4,378
|
|
|
$
|
1,662
|
|
|
$
|
—
|
|
|
$
|
1,722
|
|
|
$
|
1
|
|
Commerical real estate
|
92,979
|
|
|
70,059
|
|
|
—
|
|
|
72,567
|
|
|
1,026
|
|
|||||
Total commercial and commercial real estate
|
97,357
|
|
|
71,721
|
|
|
—
|
|
|
74,289
|
|
|
1,027
|
|
|||||
Residential real estate
|
3,515
|
|
|
3,035
|
|
|
—
|
|
|
1,748
|
|
|
47
|
|
|||||
Agricultural and agricultural real estate
|
12,401
|
|
|
12,344
|
|
|
—
|
|
|
11,701
|
|
|
391
|
|
|||||
Consumer
|
1,458
|
|
|
1,109
|
|
|
—
|
|
|
793
|
|
|
2
|
|
|||||
Lease financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total loans held to maturity
|
$
|
114,731
|
|
|
$
|
88,209
|
|
|
$
|
—
|
|
|
$
|
88,531
|
|
|
$
|
1,467
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total impaired loans held to maturity
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
19,314
|
|
|
$
|
16,598
|
|
|
$
|
2,837
|
|
|
$
|
17,193
|
|
|
$
|
482
|
|
Commercial real estate
|
128,344
|
|
|
105,341
|
|
|
7,127
|
|
|
109,112
|
|
|
2,420
|
|
|||||
Total commercial and commercial real estate
|
147,658
|
|
|
121,939
|
|
|
9,964
|
|
|
126,305
|
|
|
2,902
|
|
|||||
Residential real estate
|
6,092
|
|
|
5,450
|
|
|
659
|
|
|
3,138
|
|
|
54
|
|
|||||
Agricultural and agricultural real estate
|
16,312
|
|
|
16,255
|
|
|
512
|
|
|
15,408
|
|
|
572
|
|
|||||
Consumer
|
3,903
|
|
|
3,540
|
|
|
1,026
|
|
|
2,533
|
|
|
72
|
|
|||||
Lease financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total impaired loans held to maturity
|
$
|
173,965
|
|
|
$
|
147,184
|
|
|
$
|
12,161
|
|
|
$
|
147,384
|
|
|
$
|
3,600
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||
|
|
2010
|
|
2009
|
|
2008
|
||||||
Balance at beginning of year
|
|
$
|
41,848
|
|
|
$
|
35,651
|
|
|
$
|
32,993
|
|
Provision for loan and lease losses
|
|
32,508
|
|
|
39,377
|
|
|
29,319
|
|
|||
Recoveries on loans and leases previously charged off
|
|
2,387
|
|
|
1,785
|
|
|
1,086
|
|
|||
Loans and leases charged off
|
|
(34,050
|
)
|
|
(34,965
|
)
|
|
(27,747
|
)
|
|||
Balance at end of year
|
|
$
|
42,693
|
|
|
$
|
41,848
|
|
|
$
|
35,651
|
|
(Dollars in thousands)
|
|
|
|
|
||||
|
|
2010
|
|
2009
|
||||
Land and land improvements
|
|
$
|
35,262
|
|
|
$
|
33,984
|
|
Buildings and building improvements
|
|
100,501
|
|
|
95,000
|
|
||
Furniture and equipment
|
|
45,412
|
|
|
44,014
|
|
||
Total
|
|
181,175
|
|
|
172,998
|
|
||
Less accumulated depreciation
|
|
(60,163
|
)
|
|
(54,163
|
)
|
||
Premises, furniture and equipment, net
|
|
$
|
121,012
|
|
|
$
|
118,835
|
|
(Dollars in thousands)
|
|
||
|
|
||
Goodwill balance at December 31, 2008
|
$
|
40,207
|
|
Impairment charges in 2009
|
(12,659
|
)
|
|
Goodwill balance at December 31, 2009
|
27,548
|
|
|
Impairment charge in 2010
|
(1,639
|
)
|
|
Goodwill balance at December 31, 2010
|
$
|
25,909
|
|
(Dollars in thousands)
|
|||
|
|
||
2011
|
$
|
445,677
|
|
2012
|
150,178
|
|
|
2013
|
96,427
|
|
|
2014
|
102,796
|
|
|
2015
|
54,592
|
|
|
Thereafter
|
44,791
|
|
|
|
$
|
894,461
|
|
(Dollars in thousands)
|
||||||||
|
|
2010
|
|
2009
|
||||
Securities sold under agreement to repurchase
|
|
$
|
212,740
|
|
|
$
|
145,553
|
|
Federal funds purchased
|
|
9,575
|
|
|
4,300
|
|
||
U.S. Treasury demand note
|
|
3,966
|
|
|
5,596
|
|
||
Notes payable to unaffiliated banks
|
|
9,583
|
|
|
6,900
|
|
||
Total
|
|
$
|
235,864
|
|
|
$
|
162,349
|
|
•
|
Heartland will maintain regulatory capital at well capitalized levels and Citizens Finance Co. will maintain a tangible net worth to total assets ratio of 14 percent, measured quarterly.
|
•
|
Citizens Finance Co. will maintain a net charge-off ratio not to exceed 5.00 percent based upon the trailing four quarters, measured quarterly.
|
•
|
Heartland will inform the lender of any material regulatory non-compliance or written agreement concerning Heartland or any of its subsidiaries.
|
•
|
Within thirty days after the end of each quarter, Heartland will provide a certificate signed by the chief financial officer certifying compliance with the covenants established under the credit agreement.
|
(Dollars in thousands)
|
||||||||
|
|
2010
|
|
2009
|
||||
Advances from the FHLB; weighted average call dates at December 31, 2010 and 2009 were July 2014 and October 2011, respectively; and weighted average interest rates were 3.29% and 3.26%, respectively
|
|
$
|
135,709
|
|
|
$
|
199,088
|
|
Wholesale repurchase agreements; weighted average call dates at December 31, 2010 and 2009 were February 2012 and May 2011, respectively; and weighted average interest rates were 3.12% and 2.89%, respectively
|
|
85,000
|
|
|
135,000
|
|
||
Trust preferred securities
|
|
113,405
|
|
|
113,405
|
|
||
Senior notes
|
|
24,500
|
|
|
—
|
|
||
Obligations to repurchase minority interest shares of Summit Bank & Trust
|
|
2,994
|
|
|
2,890
|
|
||
Contracts payable for purchase of real estate and other assets
|
|
919
|
|
|
1,046
|
|
||
Total
|
|
$
|
362,527
|
|
|
$
|
451,429
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||
|
|
2010
|
|
2009
|
|
2008
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
10,338
|
|
|
$
|
8,086
|
|
|
$
|
4,168
|
|
State
|
|
2,244
|
|
|
1,709
|
|
|
2,455
|
|
|||
Total current
|
|
$
|
12,582
|
|
|
$
|
9,795
|
|
|
$
|
6,623
|
|
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(2,121
|
)
|
|
$
|
(3,021
|
)
|
|
$
|
(2,069
|
)
|
State
|
|
(615
|
)
|
|
422
|
|
|
(1,242
|
)
|
|||
Total deferred
|
|
$
|
(2,736
|
)
|
|
$
|
(2,599
|
)
|
|
$
|
(3,311
|
)
|
Total income tax expense
|
|
$
|
9,846
|
|
|
$
|
7,196
|
|
|
$
|
3,312
|
|
Deferred tax liabilities:
|
|
|
|
|
||||
Tax effect of net unrealized gain on derivatives reflected in stockholders’ equity
|
|
$
|
—
|
|
|
$
|
(632
|
)
|
Tax effect of net unrealized gain on securities available for sale reflected in stockholders’ equity
|
|
(5,963
|
)
|
|
(3,652
|
)
|
||
Premises, furniture and equipment
|
|
(5,549
|
)
|
|
(4,707
|
)
|
||
Lease financing
|
|
(281
|
)
|
|
(664
|
)
|
||
Tax bad debt reserves
|
|
(424
|
)
|
|
(489
|
)
|
||
Purchase accounting
|
|
(3,450
|
)
|
|
(3,991
|
)
|
||
Prepaid expenses
|
|
(558
|
)
|
|
(491
|
)
|
||
Mortgage servicing rights
|
|
(4,546
|
)
|
|
(3,560
|
)
|
||
Deferred loan fees
|
|
(241
|
)
|
|
(288
|
)
|
||
Other
|
|
(233
|
)
|
|
(224
|
)
|
||
Gross deferred tax liabilities
|
|
$
|
(21,245
|
)
|
|
$
|
(18,698
|
)
|
Net deferred tax asset
|
|
$
|
6,836
|
|
|
$
|
4,981
|
|
(Dollars in thousands)
|
|||
|
|
||
2011
|
$
|
680
|
|
2012
|
554
|
|
|
2013
|
413
|
|
|
2014
|
298
|
|
|
2015
|
272
|
|
|
Thereafter
|
2,718
|
|
|
|
$
|
4,935
|
|
|
|
2010
Shares
|
|
2010 Weighted- Average Exercise Price
|
|
2009
Shares
|
|
2009 Weighted- Average Exercise Price
|
|
2008
Shares
|
|
2008
Weighted- Average Exercise Price
|
||||||||||
Outstanding at beginning of year
|
|
704,471
|
|
|
$
|
20.02
|
|
|
743,363
|
|
|
$
|
19.79
|
|
|
733,012
|
|
|
$
|
18.61
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164,400
|
|
|
18.60
|
|
||||
Exercised
|
|
(20,500
|
)
|
|
10.68
|
|
|
(22,875
|
)
|
|
11.84
|
|
|
(137,299
|
)
|
|
11.41
|
|
||||
Forfeited
|
|
(11,250
|
)
|
|
21.63
|
|
|
(16,017
|
)
|
|
21.38
|
|
|
(16,750
|
)
|
|
24.74
|
|
||||
Outstanding at end of year
|
|
672,721
|
|
|
$
|
20.27
|
|
|
704,471
|
|
|
$
|
20.02
|
|
|
743,363
|
|
|
$
|
19.79
|
|
|
Options exercisable at end of year
|
|
399,071
|
|
|
$
|
18.80
|
|
|
311,771
|
|
|
$
|
16.26
|
|
|
238,713
|
|
|
$
|
14.01
|
|
|
Weighted-average fair value of options granted during the year
|
|
—
|
|
|
|
|
—
|
|
|
|
|
$
|
4.81
|
|
|
|
(Dollars 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, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Capital (to Risk-Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
$
|
427,523
|
|
|
15.20
|
%
|
|
$
|
224,943
|
|
|
8.00
|
%
|
|
N/A
|
|
|
|
|
Dubuque Bank and Trust Company
|
|
103,687
|
|
|
12.76
|
|
|
64,992
|
|
|
8.00
|
|
|
81,240
|
|
|
10.00
|
%
|
||
Galena State Bank & Trust Co.
|
|
23,436
|
|
|
13.33
|
|
|
14,062
|
|
|
8.00
|
|
|
17,577
|
|
|
10.00
|
|
||
First Community Bank
|
|
11,276
|
|
|
14.11
|
|
|
6,393
|
|
|
8.00
|
|
|
7,991
|
|
|
10.00
|
|
||
Riverside Community Bank
|
|
25,531
|
|
|
13.80
|
|
|
14,799
|
|
|
8.00
|
|
|
18,499
|
|
|
10.00
|
|
||
Wisconsin Community Bank
|
|
44,144
|
|
|
13.49
|
|
|
26,186
|
|
|
8.00
|
|
|
32,733
|
|
|
10.00
|
|
||
New Mexico Bank & Trust
|
|
70,706
|
|
|
11.78
|
|
|
48,023
|
|
|
8.00
|
|
|
60,029
|
|
|
10.00
|
|
||
Arizona Bank & Trust
|
|
20,820
|
|
|
11.54
|
|
|
14,435
|
|
|
8.00
|
|
|
18,043
|
|
|
10.00
|
|
||
Rocky Mountain Bank
|
|
43,619
|
|
|
13.12
|
|
|
26,593
|
|
|
8.00
|
|
|
33,241
|
|
|
10.00
|
|
||
Summit Bank & Trust
|
|
10,170
|
|
|
14.37
|
|
|
5,662
|
|
|
8.00
|
|
|
7,077
|
|
|
10.00
|
|
||
Minnesota Bank & Trust
|
|
14,236
|
|
|
45.21
|
|
|
2,519
|
|
|
8.00
|
|
|
3,149
|
|
|
10.00
|
|
||
Tier 1 Capital (to Risk-Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
$
|
380,334
|
|
|
13.53
|
%
|
|
$
|
112,471
|
|
|
4.00
|
%
|
|
N/A
|
|
|
|
|
Dubuque Bank and Trust Company
|
|
93,512
|
|
|
11.51
|
|
|
32,496
|
|
|
4.00
|
|
|
48,744
|
|
|
6.00
|
%
|
||
Galena State Bank & Trust Co.
|
|
21,408
|
|
|
12.18
|
|
|
7,031
|
|
|
4.00
|
|
|
10,546
|
|
|
6.00
|
|
||
First Community Bank
|
|
10,266
|
|
|
12.85
|
|
|
3,196
|
|
|
4.00
|
|
|
4,794
|
|
|
6.00
|
|
||
Riverside Community Bank
|
|
23,202
|
|
|
12.54
|
|
|
7,400
|
|
|
4.00
|
|
|
11,100
|
|
|
6.00
|
|
||
Wisconsin Community Bank
|
|
40,011
|
|
|
12.22
|
|
|
13,093
|
|
|
4.00
|
|
|
19,640
|
|
|
6.00
|
|
||
New Mexico Bank & Trust
|
|
63,186
|
|
|
10.53
|
|
|
24,011
|
|
|
4.00
|
|
|
36,017
|
|
|
6.00
|
|
||
Arizona Bank & Trust
|
|
18,512
|
|
|
10.26
|
|
|
7,217
|
|
|
4.00
|
|
|
10,826
|
|
|
6.00
|
|
||
Rocky Mountain Bank
|
|
39,426
|
|
|
11.86
|
|
|
13,296
|
|
|
4.00
|
|
|
19,945
|
|
|
6.00
|
|
||
Summit Bank & Trust
|
|
9,285
|
|
|
13.12
|
|
|
2,831
|
|
|
4.00
|
|
|
4,246
|
|
|
6.00
|
|
||
Minnesota Bank & Trust
|
|
13,924
|
|
|
44.22
|
|
|
1,260
|
|
|
4.00
|
|
|
1,889
|
|
|
6.00
|
|
||
Tier 1 Capital (to Average Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
$
|
380,334
|
|
|
9.64
|
%
|
|
$
|
157,831
|
|
|
4.00
|
%
|
|
N/A
|
|
|
|
|
Dubuque Bank and Trust Company
|
|
93,512
|
|
|
7.88
|
|
|
47,446
|
|
|
4.00
|
|
|
59,308
|
|
|
5.00
|
%
|
||
Galena State Bank & Trust Co.
|
|
21,408
|
|
|
7.40
|
|
|
11,574
|
|
|
4.00
|
|
|
14,467
|
|
|
5.00
|
|
||
First Community Bank
|
|
10,266
|
|
|
8.37
|
|
|
4,904
|
|
|
4.00
|
|
|
6,130
|
|
|
5.00
|
|
||
Riverside Community Bank
|
|
23,202
|
|
|
8.32
|
|
|
11,151
|
|
|
4.00
|
|
|
13,938
|
|
|
5.00
|
|
||
Wisconsin Community Bank
|
|
40,011
|
|
|
9.23
|
|
|
17,345
|
|
|
4.00
|
|
|
21,682
|
|
|
5.00
|
|
||
New Mexico Bank & Trust
|
|
63,186
|
|
|
7.79
|
|
|
32,441
|
|
|
4.00
|
|
|
40,551
|
|
|
5.00
|
|
||
Arizona Bank & Trust
|
|
18,512
|
|
|
6.98
|
|
|
10,602
|
|
|
4.00
|
|
|
13,252
|
|
|
5.00
|
|
||
Rocky Mountain Bank
|
|
39,426
|
|
|
8.38
|
|
|
18,816
|
|
|
4.00
|
|
|
23,520
|
|
|
5.00
|
|
||
Summit Bank & Trust
|
|
9,285
|
|
|
9.38
|
|
|
3,958
|
|
|
4.00
|
|
|
4,947
|
|
|
5.00
|
|
||
Minnesota Bank & Trust
|
|
13,924
|
|
|
34.05
|
|
|
1,636
|
|
|
4.00
|
|
|
2,045
|
|
|
5.00
|
|
|
|
Total Fair Value
Dec. 31, 2009
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Trading securities
|
|
$
|
695
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale securities
|
|
1,135,468
|
|
|
279,441
|
|
|
854,492
|
|
|
1,535
|
|
||||
Derivative assets
|
|
2,530
|
|
|
—
|
|
|
2,530
|
|
|
—
|
|
||||
Total assets at fair value
|
|
$
|
1,138,693
|
|
|
$
|
280,136
|
|
|
$
|
857,022
|
|
|
$
|
1,535
|
|
|
|
Carrying Value at December 31, 2009
|
|
Year Ended December 31, 2009
|
||||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Losses
|
||||||||||
Impaired loans
|
|
$
|
124,791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,791
|
|
|
$
|
28,384
|
|
OREO
|
|
30,568
|
|
|
—
|
|
|
—
|
|
|
30,568
|
|
|
8,137
|
|
BALANCE SHEETS
|
||||||||
(Dollars in thousands)
|
||||||||
|
|
December 31,
|
||||||
|
|
2010
|
|
2009
|
||||
Assets:
|
|
|
|
|
||||
Cash and interest bearing deposits
|
|
$
|
17,365
|
|
|
$
|
6,161
|
|
Trading securities
|
|
244
|
|
|
695
|
|
||
Securities available for sale
|
|
6,365
|
|
|
13,740
|
|
||
Investment in subsidiaries
|
|
435,224
|
|
|
399,734
|
|
||
Other assets
|
|
19,970
|
|
|
14,527
|
|
||
Due from subsidiaries
|
|
2,750
|
|
|
4,750
|
|
||
Total assets
|
|
$
|
481,918
|
|
|
$
|
439,607
|
|
Liabilities and stockholders’ equity:
|
|
|
|
|
||||
Short-term borrowings
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
Other borrowings
|
|
140,899
|
|
|
116,295
|
|
||
Accrued expenses and other liabilities
|
|
6,928
|
|
|
6,031
|
|
||
Total liabilities
|
|
152,827
|
|
|
127,326
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock
|
|
78,483
|
|
|
77,224
|
|
||
Common stock
|
|
16,612
|
|
|
16,612
|
|
||
Capital surplus
|
|
44,628
|
|
|
44,284
|
|
||
Retained earnings
|
|
184,525
|
|
|
172,487
|
|
||
Accumulated other comprehensive income
|
|
8,517
|
|
|
7,107
|
|
||
Treasury stock
|
|
(3,674
|
)
|
|
(5,433
|
)
|
||
Total stockholders’ equity
|
|
329,091
|
|
|
312,281
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
481,918
|
|
|
$
|
439,607
|
|
INCOME STATEMENTS
|
||||||||||||
(Dollars in thousands)
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
|
|
2010
|
|
2009
|
|
2008
|
||||||
Operating revenues:
|
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
|
$
|
19,700
|
|
|
$
|
12,000
|
|
|
$
|
18,500
|
|
Securities gains, net
|
|
101
|
|
|
2,405
|
|
|
—
|
|
|||
Gain (loss) on trading account securities
|
|
(91
|
)
|
|
211
|
|
|
(998
|
)
|
|||
Impairment loss on equity securities
|
|
—
|
|
|
(40
|
)
|
|
(4,972
|
)
|
|||
Other
|
|
671
|
|
|
1,734
|
|
|
975
|
|
|||
Total operating revenues
|
|
20,381
|
|
|
16,310
|
|
|
13,505
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Interest
|
|
7,499
|
|
|
6,104
|
|
|
8,684
|
|
|||
Salaries and benefits
|
|
2,800
|
|
|
957
|
|
|
740
|
|
|||
Professional fees
|
|
694
|
|
|
547
|
|
|
784
|
|
|||
Other operating expenses
|
|
3,075
|
|
|
717
|
|
|
852
|
|
|||
Total operating expenses
|
|
14,068
|
|
|
8,325
|
|
|
11,060
|
|
|||
Equity in undistributed earnings (loss)
|
|
12,605
|
|
|
(3,055
|
)
|
|
3,002
|
|
|||
Income before income tax benefit
|
|
18,918
|
|
|
4,930
|
|
|
5,447
|
|
|||
Income tax benefit
|
|
4,985
|
|
|
1,632
|
|
|
5,845
|
|
|||
Net income
|
|
23,903
|
|
|
6,562
|
|
|
11,292
|
|
|||
Preferred dividends and discount
|
|
(5,344
|
)
|
|
(5,344
|
)
|
|
(178
|
)
|
|||
Net income available to common stockholders
|
|
$
|
18,559
|
|
|
$
|
1,218
|
|
|
$
|
11,114
|
|
STATEMENTS OF CASH FLOWS
|
||||||||||||
(Dollars in thousands)
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
|
|
2010
|
|
2009
|
|
2008
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
23,903
|
|
|
$
|
6,562
|
|
|
$
|
11,292
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Undistributed loss (earnings) of subsidiaries
|
|
(12,605
|
)
|
|
3,055
|
|
|
(3,002
|
)
|
|||
Security gains, net
|
|
(101
|
)
|
|
(2,405
|
)
|
|
—
|
|
|||
Impairment loss on securities
|
|
—
|
|
|
40
|
|
|
4,972
|
|
|||
Decrease in due from subsidiaries
|
|
2,000
|
|
|
10,750
|
|
|
—
|
|
|||
Increase in accrued expenses and other liabilities
|
|
897
|
|
|
9
|
|
|
548
|
|
|||
(Increase) decrease in other assets
|
|
(5,443
|
)
|
|
1,227
|
|
|
(373
|
)
|
|||
Decrease in trading account securities
|
|
451
|
|
|
997
|
|
|
194
|
|
|||
Other, net
|
|
(2,354
|
)
|
|
987
|
|
|
1,612
|
|
|||
Net cash provided by operating activities
|
|
6,748
|
|
|
21,222
|
|
|
15,243
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
|
(21,047
|
)
|
|
(43,720
|
)
|
|
(19,700
|
)
|
|||
Purchases of available for sale securities
|
|
(8,101
|
)
|
|
(2,919
|
)
|
|
(45,428
|
)
|
|||
Proceeds from the maturity of and principal paydowns on securities available for sale
|
|
1,644
|
|
|
33,332
|
|
|
560
|
|
|||
Proceeds from sales of available for sale securities
|
|
16,814
|
|
|
—
|
|
|
—
|
|
|||
Net cash used by investing activities
|
|
(10,690
|
)
|
|
(13,307
|
)
|
|
(64,568
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Net change in short-term borrowings
|
|
—
|
|
|
5,000
|
|
|
(15,000
|
)
|
|||
Proceeds from other borrowings
|
|
24,844
|
|
|
—
|
|
|
563
|
|
|||
Repayments of other borrowings
|
|
(240
|
)
|
|
(792
|
)
|
|
(4,195
|
)
|
|||
Proceeds from preferred stock and warrant
|
|
—
|
|
|
—
|
|
|
81,698
|
|
|||
Cash dividends paid
|
|
(10,606
|
)
|
|
(10,182
|
)
|
|
(6,461
|
)
|
|||
Purchase of treasury stock
|
|
(212
|
)
|
|
(236
|
)
|
|
(6,978
|
)
|
|||
Proceeds from issuance of common stock
|
|
1,360
|
|
|
970
|
|
|
2,358
|
|
|||
Net cash provided (used) by financing activities
|
|
15,146
|
|
|
(5,240
|
)
|
|
51,985
|
|
|||
Net increase in cash and cash equivalents
|
|
11,204
|
|
|
2,675
|
|
|
2,660
|
|
|||
Cash and cash equivalents at beginning of year
|
|
6,161
|
|
|
3,486
|
|
|
826
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
17,365
|
|
|
$
|
6,161
|
|
|
$
|
3,486
|
|
(Dollars in thousands, except per share data)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
2010
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
March 31
|
||||||||
Net interest income
|
|
$
|
35,846
|
|
|
$
|
36,713
|
|
|
$
|
35,809
|
|
|
$
|
34,684
|
|
Provision for loan and lease losses
|
|
8,860
|
|
|
4,799
|
|
|
9,955
|
|
|
8,894
|
|
||||
Net interest income after provision for loan and lease losses
|
|
26,986
|
|
|
31,914
|
|
|
25,854
|
|
|
25,790
|
|
||||
Noninterest income
|
|
18,293
|
|
|
12,609
|
|
|
10,834
|
|
|
10,593
|
|
||||
Noninterest expense
|
|
37,317
|
|
|
33,446
|
|
|
29,575
|
|
|
28,901
|
|
||||
Income taxes
|
|
1,464
|
|
|
4,187
|
|
|
2,035
|
|
|
2,160
|
|
||||
Net income
|
|
6,498
|
|
|
6,890
|
|
|
5,078
|
|
|
5,322
|
|
||||
Net income available to noncontrolling interest, net of tax
|
|
35
|
|
|
30
|
|
|
25
|
|
|
25
|
|
||||
Net income attributable to Heartland
|
|
6,533
|
|
|
6,920
|
|
|
5,103
|
|
|
5,347
|
|
||||
Preferred stock dividends and discount
|
|
(1,336
|
)
|
|
(1,336
|
)
|
|
(1,336
|
)
|
|
(1,336
|
)
|
||||
Net income available to common stockholders
|
|
5,197
|
|
|
5,584
|
|
|
3,767
|
|
|
4,011
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Per share:
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share-basic
|
|
$
|
0.32
|
|
|
$
|
0.34
|
|
|
$
|
0.23
|
|
|
$
|
0.25
|
|
Earnings per share-diluted
|
|
0.31
|
|
|
0.34
|
|
|
0.23
|
|
|
0.24
|
|
||||
Cash dividends declared on common stock
|
|
0.10
|
|
|
0.10
|
|
|
0.10
|
|
|
0.10
|
|
||||
Book value per common share
|
|
15.26
|
|
|
15.58
|
|
|
15.08
|
|
|
14.40
|
|
||||
Market price – high
|
|
18.11
|
|
|
17.81
|
|
|
20.78
|
|
|
16.75
|
|
||||
Market price – low
|
|
15.04
|
|
|
13.88
|
|
|
15.85
|
|
|
13.37
|
|
||||
Weighted average common shares outstanding
|
|
16,392,806
|
|
|
16,380,606
|
|
|
16,363,106
|
|
|
16,348,652
|
|
||||
Weighted average diluted common shares outstanding
|
|
16,515,657
|
|
|
16,465,650
|
|
|
16,459,978
|
|
|
16,435,844
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Ratios:
|
|
|
|
|
|
|
|
|
||||||||
Return on average assets
|
|
0.50
|
%
|
|
0.55
|
%
|
|
0.37
|
%
|
|
0.41
|
%
|
||||
Return on average equity
|
|
8.06
|
|
|
8.76
|
|
|
6.25
|
|
|
6.83
|
|
||||
Net interest margin
|
|
4.05
|
|
|
4.18
|
|
|
4.09
|
|
|
4.14
|
|
||||
Efficiency ratio
|
|
70.09
|
|
|
69.05
|
|
|
63.14
|
|
|
64.27
|
|
a.
|
the number of securities to be issued upon the exercise of outstanding options, warrants and rights;
|
b.
|
the weighted-average exercise price of such outstanding options, warrants and rights;
|
c.
|
other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans.
|
(a)
|
|
The documents filed as a part of this report are listed below:
|
||
|
|
1.
|
|
Financial Statements
|
|
|
|
|
The consolidated financial statements of Heartland Financial USA, Inc. are included in Item 8 of this Form 10-K.
|
|
|
2.
|
|
Financial Statement Schedules
|
|
|
|
|
None
|
|
|
3.
|
|
Exhibits
|
|
|
|
|
The exhibits required by Item 601 of Regulation S-K are included along with this Form 10-K and are listed on the “Index of Exhibits” immediately following the signature page.
|
10.6
|
|
Indenture by and between Heartland Financial USA, Inc. and Wells Fargo Bank, National Association, dated as of January 31, 2006 (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K filed on March 10, 2006).
|
|
|
|
10.7
|
(1)
|
Heartland Financial USA, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.01 to the Registrant’s Current Report on Form 8-K filed on May 19, 2005).
|
|
|
|
10.8
|
|
Heartland Financial USA, Inc. 2006 Employee Stock Purchase Plan effective January 1, 2006 (incorporated by reference to Exhibit 10.02 to the Registrant’s Current Report on Form 8-K filed on May 19, 2005).
|
|
|
|
10.9
|
(1)
|
Form of Agreement for Heartland Financial USA, Inc. 2005 Long-Term Incentive Plan Non-Qualified Stock Option Awards (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 10, 2006).
|
|
|
|
10.10
|
(1)
|
Form of Agreement for Heartland Financial USA, Inc. 2005 Long-Term Incentive Plan Performance Restricted Stock Agreement (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K filed on March 10, 2006).
|
|
|
|
10.11
|
|
Indenture between Heartland Financial USA, Inc. and Wilmington Trust Company dated as of June 26, 2007 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2007).
|
|
|
|
10.12
|
|
Indenture between Heartland Financial USA, Inc. and Wilmington Trust Company dated as of June 26, 2007 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2007).
|
|
|
|
10.13
|
(1)
|
Change of Control Agreements between Heartland Financial USA, Inc. and Executive Officers dated September 7, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 7, 2007).
|
|
|
|
10.14
|
|
Subscription and Shareholder Agreement between Heartland Financial USA, Inc. and Investors in Minnesota Bank & Trust dated as of September 21, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2007).
|
|
|
|
10.15
|
(1)
|
Heartland Financial USA, Inc. Policy on Director Fees and Policy on Expense Reimbursement For Directors (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on December 5, 2007).
|
|
|
|
10.16
|
(1)
|
Form of Split-Dollar Life Insurance Plan effective November 13, 2001, between the subsidiaries of Heartland Financial USA, Inc. and their selected officers, including four subsequent amendments effective January 1, 2002, May 1, 2002, September 16, 2003 and December 31, 2007. These plans are in place at Dubuque Bank and Trust Company, Galena State Bank & Trust Co., First Community Bank, Riverside Community Bank, Wisconsin Community Bank and New Mexico Bank & Trust (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2008).
|
|
|
|
10.17
|
(1)
|
Form of Executive Supplemental Life Insurance Plan effective January 1, 2005, between the subsidiaries of Heartland Financial USA, Inc. and their selected officers, including a subsequent amendment effective December 31, 2007. These plans are in place at Dubuque Bank and Trust Company, Galena State Bank & Trust Co., First Community Bank, Riverside Community Bank, Wisconsin Community Bank and New Mexico Bank & Trust (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2008).
|
|
|
|
10.18
|
(1)
|
Form of Executive Life Insurance Bonus Plan effective December 31, 2007, between Heartland Financial USA, Inc. and selected officers of Heartland Financial USA, Inc. and its subsidiaries, including a subsequent amendment effective December 31, 2007 (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed on March 16, 2009).
|
|
|
|
10.19
|
(1)
|
Form of Split-Dollar Agreement effective November 1, 2008, between the subsidiaries of Heartland Financial USA, Inc. and their selected officers. These plans are in place at Dubuque Bank and Trust Company, Galena State Bank & Trust Co., First Community Bank, Riverside Community Bank, Wisconsin Community Bank, New Mexico Bank & Trust, Arizona Bank & Trust and Citizens Finance Co. (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K filed on March 16, 2009).
|
|
|
|
10.20
|
|
Letter Agreement, dated December 19, 2008, including the Securities Purchase Agreement — Standard Terms, between the Company and the United States Department of the Treasury (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 22, 2008).
|
|
|
|
10.21
|
|
Form of Waiver, executed by each Messrs. Lynn B. Fuller, John K. Schmidt, Kenneth J. Erickson, Douglas J. Horstmann and Edward H. Everts (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 22, 2008).
|
|
|
|
10.22
|
(1)
|
Form of Consent, executed by each Messrs. Lynn B. Fuller, John K. Schmidt, Kenneth J. Erickson, Douglas J. Horstmann and Edward H. Everts as to adoption of amendments to Benefit Plans as required by Section 111(b) of EESA (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on December 22, 2008).
|
|
|
|
10.23
|
(1)
|
Form of Agreement for Heartland Financial USA, Inc. 2005 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement with those individuals subject to settlement restrictions due to Heartland’s participation in the United States Treasury’s Troubled Asset Relief Program.(incorporated by reference to Exhibit 10.23 to the Registrant's Annual Report on Form 10-K filed on March 16, 2010).
|
|
|
|
10.24
|
(1)
|
Form of Agreement for Heartland Financial USA, Inc. 2005 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement with those individuals not subject to settlement restrictions due to Heartland’s participation in the United States Treasury’s Troubled Asset Relief Program (incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K filed on March 16, 2010).
|
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
(2)
|
||
|
|
|
Principal
$15,000,000.00
|
Loan Date
09-28-2010
|
Maturity
09-27-2011
|
Loan No
55120-0001
|
Call / Coll
9A00 / AA
|
Account
00000160370
|
Officer
00456
|
Initials
|
||
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing “***” has been omitted due to text length limitations.
|
|||||||||
Borrower: Heartland Financial USA, Inc.
|
Lender: Bankers Trust Company
|
||||||||
1398 Central Avenue
|
453 7
th
Street
|
||||||||
Dubuque, IA 52004
|
P.O. Box 897
|
||||||||
|
Des Moines, IA 50304-0897
|
||||||||
|
(515)245-2863
|
Principal Amount: $15,000,000.00
|
Date of Note: September 28, 2010
|
Payment Default. Borrower fails to make any payment when due under this Note.
|
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation covenant or condition contained in any other agreement between Lender and Borrower.
|
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
|
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedings under any bankruptcy or insolvency laws by or against Borrower.
|
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This included a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
|
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
|
Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
|
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is Impaired.
|
Insecurity. Lender in good faith believe itself insecure.
|
BANKER'S TRUST LOGO INSERTED
|
JOHN RUAN IV
ASSISTANT VICE PRESIDENT
FINANCIAL INSTITUTIONS
PHONE: (515)245-2444
FAX: (515)245-5216
MOBILE: (515)473-4152
E-MAIL: JRUAN@BANKERSTRUST.COM
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A.
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Certified Copies of Articles of Incorporation and Bylaws.
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HEARTLAND FINANCIAL USA, INC.
By:
/ s/ John K. Schmidt____________________
John K. Schmidt, EVP, COO & CFO
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1398 Central Avenue
Dubuque, Iowa 52001
(563)589-1994 office
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HEARTLAND FINANCIAL USA, INC.
1398 CENTRAL AVE
DUBUQUE, IA 52004-0078
BORROWER'S NAME AND ADDRESS
“I” included each borrower above, jointly and severally.
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VALLEY BANK
3455 AVENUE OF THE CITIES
MOLINE, IL 61265
LENDER'S NAME AND ADDRESS
“You” means the lender, its successors and assigns.
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LOAN NUMBER
538008___________
DATE
11-12-2010_________________
Maturity Date
11-07-2011___________
Loan Amount $
5,000,000.00_________
Renewal Of _______________________
CC-LD-CC 58-24/014-0000TRS
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SECURITY
This note is separately secured by (describe separate document by type and date):
UNSECURED
(This section is for your internal use. Failure to list a separate security document does not mean the agreement will not secure this note.)
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PURPOSE:
The purpose of this loan is
LOC TO SUPPORT GENERAL CORPORATE PURPOSES______________________________________
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CONFESSION OF JUDGMENT:
I agree to the terms of the “Confession of Judgment” paragraph on page 2.
SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGE 2). I have received a copy on today's date.
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Signature for Lender
/s/ Larry C. Henson
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HEARTLAND FINANCIAL USA, INC.
/s/ Lynn B. Fuller
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LARRY C. HENSON, CEO/COMMERCIAL LOAN OFFICER
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LYNN B. FULLER, CHAIRMAN, PRESIDENT, CEO
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/s/ John K. Schmidt
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JOHN K. SCHMIDT, EVP, COO, CFO, TREASURER
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DEFINITIIONS:
As used on page 1, “” means the terms that apply to this loan. “I”, “me” or “my” means each Borrower who signs this note and each other person or legal entity (including guarantors, endorsers, and sureties) who agrees to pay this note (together referred to as “us”). “You” or “your” means the Lender and its successors and assigns.
APPLICABLE LAW:
The law of the state of Illinois will govern this note. Any term of this note which is contrary to applicable law will not be effective, unless the law permits you and me to agree to such a variation. If any provision of this agreement cannot be enforced according to its terms, this fact will not affect the enforceability of the remainder of this agreement. No modification of this agreement may be made without your express written consent. Time is of the essence in this agreement.
COMMISSIONS OR OTHER REMUNERATION:
I understand and agree that any insurance premiums paid to insurance companies as part of this note will involve money retained by your or paid back to you as commissions or other remuneration.
In addition, I understand and agree that some other payments to third parties as part of this note may also involve money retained by your or paid back to you as commission or other remuneration.
PAYMENTS
: Each payment I make on this note will first reduce the amount l owe you for charges which are neither Interest nor principal. The remainder of each payment will then reduce accrued unpaid Interest, and then unpaid principal. If you and I agree to a different application of payments, we will describe our agreement on this note. I may prepay a part of, or the entire balance of this loan without penalty, unless we specify to the contrary on this note. Any partial prepayment will not excuse or reduce any later scheduled payment until this note is paid in full (unless, when I make the prepayment, you and I agree in writing to the contrary).
INTEREST:
Interest accrues on the principal remaining unpaid from time to time, until paid in full. If I receive the principal in more than one advance, each advance will start to earn interest only when I receive the advance. The interest rate in effect on this note at any given time will apply to the entire principal advanced at that time. Notwithstanding anything to the contrary, I do not agree to pay and you do not intend to charge any rate of interest that is higher than the maximum rate of interest you could charge under applicable law for the extension of credit that is agreed to here (either before or after maturity). If any notice of interest accrual is sent and is in error, we manually agree to correct it, and if you actually collect more interest than allowed by law and this agreement, you agree to refund it to me.
INDEX RATE:
The index will serve only as a device for setting the rate on this note. You do not guarantee by selecting this index, or the margin, that the rate on this note will be the same rate you charge on any other loans or class of loans to me or other borrowers.
ACCRUAL METHOD:
The amount of interest that I will pay on this loan will be calculated using the interest rate and accrual method stated on page 1 of this note. For the purpose of interest calculation, the accrual method will determine the number of days in a “year.” If no accrual method is stated, then you may use any reasonable accrual method for calculating interest.
POST MATURITY RATE:
For purposes of deciding when the “Post Maturity Rate” (shown on page 1) applies, the term “maturity” means the date of the last scheduled payment indicated on page 1 of this note or the date you accelerate payment on the note, whichever is earlier.
SINGLE ADVANCE LOANS:
If this is a single advance loan, you and I expect that you will make only one advance of principal. However, you may add other amounts to the principal if you make any payments described in the “PAYMENTS BY LENDER” paragraph below.
MULTIPLE ADVANCE LOANS:
If this is a multiple advance loan, you and I expect that you will make more than one advance of principal. If this is a closed end credit, repaying a part of the principal will not entitle me to additional credit.
PAYMENTS BY LENDER:
If you are authorized to pay, on my behalf, charges I am obligated to pay (such as property insurance premiums), then you may treat those payments made by you as advances and add them to the unpaid principal under this note, or you may demand immediate payment of the charges.
SET-OFF:
I agree that you may set off any amount due and payable under this note against any right I have to receive money from you.
“Right to receive money from you “ means:
any deposit account balance I have with you;
any money owed to me on an item presented to you or in your possession for collection or exchange; and
any repurchase agreement or other nondeposit obligation.
“Any amount due and payable under this note” means the total amount of which you are entitled to demand payment under the terms of this note at the time you set off. This total includes any balance the due date for which you properly accelerate under this note.
If my right to receive money from you is also owned by someone who has not agreed to pay this note, your right of set-off will apply to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement. Your right of set-off does not apply to an account or other obligation where my rights are only as a representative. It also does not apply to any individual Retirement Account or other tax-deferred retirement account.
You will not be liable for the dishonor of any check when the dishonor occurs because you set off this debt against any of my accounts. I agree to hold you harmless from any such claims arising as a result of your exercise of your right of set-off.
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REAL ESTATE OR RESIDENCE SECURITY:
If this note is secured by real estate or a residence that is personal property, the existence of a default and your remedies for such a default will be determined by applicable law, by the terms of any separate instrument creating the security interest and, to the extent not prohibited by law and not contrary to the terms of the separate security instrument, by the “Default” and “Remedies” paragraphs herein.
DEFAULT:
I will be in default if any one or more of the following occur: (1) I fail to make a payment on time or in the amount due; (2) I fail to keep the property insured, if required; (3) I fail to pay, or keep any promise, on any debt or agreement I have with you; (4) any other creditor of mine attempts to collect any debt I owe him though court proceedings; (5) I die, am declared incompetent, make an assignment for the benefit of creditors, or become insolvent (either because my liabilities exceed my assets or I am unable to pay my debts as they become due); (6) I make any written statement or provide any financial information that is untrue or inaccurate at the time it was provided; (7) I do or fail to do something which causes you to believe that you will have difficulty collecting the amount I owe you; (8) any collateral securing this note is used in a manner or for a purpose which threatens confiscation by a legal authority; (9) I change my name or assume an additional name without first notifying you before making such a change; (10) I fail to plant, cultivate and harvest crops in due season if I am a producer of crops; (11) any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained in 7 C.F.R. Part 1940, Subpart G, Exhibit M.
REMEDIES:
If I am in default on this note you have, but are not limited to, the following remedies:
(1) You may demand immediate payment of all I owe you under this note (principal, accrued unpaid interest and other accrued charges).
(2) You may set off this debt against any right I have to the payment of money from you , subject to the terms of the “Set-Off” paragraph herein.
(3) You may demand security, additional security, or additional parties to be obligated to pay this note as a condition for not using any other remedy.
(4) You may refuse to make advances to me or allow purchases on credit by me.
(5) You may use any remedy you have under state or federal law.
By selecting any one or more of these remedies you do not give up your right to later use any other remedy. By waiving your right to declare an event to be a default, you do not waive your right to later consider the event as a default, you do not waive your right to later consider the event as a default if it continues or happens again.
CONFESSION OF JUDGMENT:
If agreed on page 1, then, in addition to your remedies listed herein, I authorize any attorney to appear in any court of record having jurisdiction over this matter and to confess judgment, without process, against me, in favor of you, for any unpaid principal, accrued interest and accrued charges due on this agreement, together with collection costs including reasonable attorney's fees.
COLLECTION COSTS AND ATTORNEY'S FEES:
I agree to pay all costs of collection, replevin or any other or similar type of cost if I am in default. In addition, if you hire an attorney to collect this note, I also agree to pay any fee you incur with such attorney plus court costs (except where prohibited by law). To the extent permitted by the United States Bankruptcy Code, I also agree to pay the reasonable attorney's fees and costs you incur to collect this debt as awarded by any court exercising jurisdiction under the Bankruptcy Code.
WAIVER:
I give up my rights to require you to do certain things. I will not require you to:
demand payment of amounts due (presentment);
obtain official certification of nonpayment (protest); or
give notice that amounts due have not been paid (notice of dishonor).
I waive any defenses I have based on suretyship or impairment of collateral.
OBLIGATIONS INDEPENDENT:
I understand that I must pay this note even if someone else has also agreed to pay it (by, for example, signing this form or a separate guarantee or endorsement). You may sue me alone, or anyone else who is obligated on this note, or any number of us together, to collect this note. You may do so without any notice that is has not been paid (notice of dishonor). You may without notice release any party to this agreement without releasing any other party. If you give up any of your rights, with or without notice, it will not affect my duty to pay this note. Any extension of new credit to any of us, or renewal of this note by all or less than all of us will not release me from my duty to pay it. (Of course, you are entitled to only one payment in full.) I agree that you may at your option extend this note or the debt represented by this note, or any portion of the note or debt, from time to time without limit or notice and for any term without affecting my liability for payment of the note. I will not assign my obligation under this agreement without your prior written approval.
FINANCIAL INFORMATION:
I agree to provide you, upon request, any financial statement or information you may deem necessary. I warrant that the financial statements and information I provide to you are or will be accurate, correct and complete.
NOTICE:
Unless otherwise required by law, any notice to me shall be given by delivering it or by mailing it by first class mail addressed to me at my last known address. My current address is on page 1. I agree to inform you in writing of any change in my address. I will give any notice to you by mailing it first class to your address stated on page 1 of this agreement, or to any other address that you have designated.
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DATE OF TRANSACTION
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PRINCIPAL ADVANCE
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BORROWER'S INITIALS (not required)
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PRINCIPAL PAYMENTS
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PRINCIPAL BALANCE
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INTEREST RATE
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INTEREST PAYMENTS
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INTEREST PAID THROUGH
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BORROWER:
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HEARTLAND FINANCIAL USA, INC.
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Entity Name
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/s/ Lynn B. Fuller 11/15/10 (Seal)
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(Seal)
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Signature LYNN B. FULLER, CHAIRMAN, PRESIDENT, CEO Date
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Signature Date
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/s/ John K. Schmidt 11/15/10 (Seal)
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(Seal)
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Signature JOHN K. SCHMIDT, EVP, COO, CFO, TREASURER Date
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Signature Date
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LENDER:
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VALLEY BANK
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Entity Name
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/s/ Larry C. Henson (Seal)
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Signature LARRY C. HENSON, CEO/COMMERCIAL LOAN OFFICER Date
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DEFINITIONS
. In this Agreement, the following terms have the following meanings.
Accounting Terms
. Accounting terms that are not specifically defined will have their customary meaning under consistently applied generally accepted accounting principles.
Loan
. Loan refers to all advances made under the terms of the Agreement.
Loan Documents
. Loan Documents include this Agreement and all documents prepared pursuant to the terms of this Agreement including all present and future promissory notes (Notes), security instruments, guaranties, and supporting documentation as modified, amended or supplemented.
Property.
Property is my collateral, real, personal or intangible, that secures Borrower's performance of the obligations of this Agreement.
ADVANCES.
To the extent permitted by law, Borrower will indemnify Lender and hold Lender harmless for reliance on any request for advance that Lender reasonably believes to be genuine. Lender's records are conclusive evidence as to the number and amount of advances and the Loan's unpaid principal and interest. If any advance results in an overadvance (when the total amount of the Loan exceeds the principal balance) Borrower will pay the overadvance, as requested by Lender. Regarding Borrower's demand deposit account(s) with Lender, Lender may, at its option, consider presentation for payment of a check or other charge exceeding available funds as a request for an advance under this Agreement. Any such payment by Lender will constitute an advance on the Loan.
CONDITIONS.
Borrower will satisfy all of the following conditions before Lender makes any advances under this Agreement. If this Agreement provides for discretionary advances, satisfaction of these conditions does not commit Lender to making advances.
No Default.
There has not been a default under the Loan Documents nor would a default result from making the advance.
Information.
Borrower has provided all required documents, information, certifications and warranties, all properly executed on forms acceptable to Lender.
Inspections.
Borrower has accommodated, to Lender's satisfaction, all inspections.
Conditions and Covenants.
Borrower has performed and complied with all conditions required for an advance and all covenants in the Loan Documents.
Warranties and Representations.
The warranties and representations contained in this Agreement are true and correct at the time of making the advance.
Financial Statements.
Borrower's most recently delivered financial statements and reports are current, complete, true and accurate in all material respects and fairly represent Borrower's financial condition.
Bankruptcy Proceedings.
No proceeding under the United States Bankruptcy Code has been commenced by or against Borrower or any of Borrower's affiliates.
WARRANTIES AND REPRESENTATIONS.
Borrower makes these warranties and representations which will continue as long as this Agreement is in effect.
Power.
Borrower is duly organized, validly existing and in good standing in all jurisdictions in which Borrower operates. Borrower has the power and authority to enter in this transaction and to carry on its business or activity as it is now being conducted. All persons who are required by applicable law and the governing documents of Borrower have executed and delivered to Lender this Agreement and other Loan Documents.
Authority.
The execution, delivery and performance of this Agreement and the obligation evidenced by the Loan Documents are within Borrower's duly authorized powers, has received all necessary governmental approval, and will not violate any provision of law or order of court or governmental agency, and will not violate any agreement to which Borrower is a party or to which Borrower or Borrower's property is subject.
Name and Place of Business.
Other than previously disclosed in writing to Lender, Borrower has not changed its name or principal place of business within the last ten years and had not used any other trade or fictitious name. Without Lender's prior written consent,, Borrower will not use any other name and will preserve Borrower's existing name, trade names and franchises.
No Other Liens
. Borrower owns or leases all property that is required for its business and except as disclosed, the property is free and clear of all liens, security interests, encumbrances and other adverse interests.
Compliance With Laws.
Borrower is not violating any laws, regulations, rules, orders, judgments or decrees applicable to Borrower or its property, except s disclosed to Lender.
Financial Statements.
Borrower represents and warrants that all financial statements Borrower provided fairly represent Borrower's financial condition for the stated periods, are current, complete, true and accurate in all material respects, include all direct or contingent liabilities, and that there has been no material adverse change in Borrower's financial condition, operation or business since the date the financial information was prepared.
COVENANTS.
Until the Loan and all related debts, liabilities and obligations under the Loan Documents are pain and discharged, Borrower will comply with the following terms, unless Lender waives compliance in writing.
Inspection and Disclosure.
Borrower will allow Lender or its agents to enter any of Borrower's premises during mutually agreed upon times, to do the following: (1) inspect, audit, review and obtain copies from Borrower's books, records, order, receipts, and other business related data; (2) discuss Borrower's finances and business with anyone who claims to be Borrower's creditor; (3) inspect Borrower's Property, audit for the use and disposition of the Property's proceeds, or do whatever lender decides is necessary to preserve and protect the Property and Lender's Interest In the Property. As long as this agreement is in effect, Borrower will direct all of Borrower's accountants and auditors to permit Lender to examine and make copies of Borrower's records in their possession, and to disclose to Lender an other information that they know about Borrower's financial condition and business operations. Lender may provide Lender's regulator with required information about Borrower's financial condition, operation and business or that of Borrower's parent, subsidiaries or affiliates.
Business Requirements
. Borrower will preserve and maintain its present existence and good standing in jurisdictions where Borrower is organized and operates. Borrower will continue its business or activities as presently conducted, by obtaining licenses, permits and bonds where needed, Borrower will obtain Lender's prior written consent before ceasing business or engaging in any line of business that is materially different from its present business.
Compliance with Laws.
Borrower will not violate any laws, regulations, rules, orders, judgments or decrees applicable to Borrower or Borrower's property, except for those which Borrower challenges in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its appeal should Borrower lose. On request, Borrower will provide Lender with written evidence that Borrower has fully and timely paid taxes, assessments and other governmental charges levied or imposed on Borrower and its income, profits and property. Borrower will adequately provide for the payment of taxes, assessments and other charges that have accrued but ate not yet due and payable.
New Organizations.
Borrower will obtain Lender's written consent before organizing, merging into, or consolidating with an entity, acquiring all or substantially all of the assets of another, or materially changing legal structure, management, ownership or financial condition.
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Other Liabilities.
Borrower will not incur, assume or permit any debt evidenced by notes, bonds
or similar obligations except debt in existence on the date of this Agreement and fully disclosed to Lender, debt subordinated in payment to Lender on terms acceptable to lender, accounts payable incurred in the ordinary course of business and paid under customary trade terms or contested in good faith with reserves satisfactory to Lender, or as otherwise agreed to by Lender.
Notice.
Borrower will promptly notify Lender of any material change in financial condition, a default under the Loan Documents, or a default under any agreement with a third party which materially and adversely affects Borrower's property, operations or financial condition.
Dispose of No Assets.
Without Lender's prior written consent, Borrower will not sell, lease, assign, or otherwise distribute all or substantially all of its assets.
Insurance.
Borrower will obtain and maintain insurance with insurers in amounts and coverages that are acceptable to Lender and customary with industry practice. This may include without limitation credit insurance, insurance policies for public liability, fire, hazard and extended risk, workers compensation, and, at Lender's request, business interruption and/or rent loss insurance. Borrower may obtain insurance from anyone Borrower wants that is acceptable to Lender. Borrower's choice of insurance provider will not affect the credit decision or interest rate. At Lender's request, Borrower will deliver to Lender certified copies of all of these insurance policies, binders or certificates. Borrower will obtain and maintain a mortgagee or loss payee endorsement for Lender when these endorsements are available. Borrower will require all insurance policies to provide at least 10 days prior written notice to Lender of cancellation or modification. Borrower consents to Lender using or disclosing information relative to any contract of insurance required for the Loan for the purpose of replacing this insurance. Borrower also authorized its insurer and Lender to exchange all relevant information related to any contract of Insurance executed as required by any Loan Documents.
Property Maintenance.
Borrower will keep property that is necessary or useful in its business in good working condition by making all needed repairs, replacements and improvements and by making payments due on property.
DEFAULT.
If the Loan is payable on demand, Lender may demand payment at any time whether or not any of the following events have occurred. Borrower will be in default if any one or more of the following occur: (1) Borrower fails to make a payment in full when due; (2) Borrower makes an assignment for the benefit of creditors or becomes insolvent, either because Borrower's liabilities exceed its assets or Borrower is unable to pay debts as they become due; or Borrower petitions for protection under any bankruptcy, insolvency or debtor relief laws, or is the subject of such a petition or action and fails to have the petition or action dismissed within a reasonable period of time. (3) Borrower fails to perform any condition or to keep any promise or covenant on this Agreement or any debt or agreement Borrower has with Lender. (4) A default occurs under the terms of any instrument evidencing or pertaining to this Agreement. (5) If Borrower is a producer of crops, Borrower fails to plant, cultivate and harvest crops in due season. (6) Any loan proceeds are use for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained by federal law. (7) Anything else happens that either significantly impairs the value of the Property or, unless controlled by the New Jersey Banking Law, causes Lender to reasonably believe that Lender will have difficulty collecting the Loan.
REMEDIES.
After Borrower defaults, and after Lender gives any legally required notice and opportunity to cure, Lender may at its option use any and all remedies Lender has under state or federal law or in any of the Loan Documents, including, but not limited to, terminating any commitment or obligation to make additional advances or making all or any part of the amount owing, immediately due. Lender may set-off any amount due and payable under the terms of the Loan against Borrower's right to receive money from Lender, unless prohibited by applicable law. Except as otherwise required by law, by choosing any one or more of these remedies Lender does not give up Lender's right to use any other remedy. Lender does not waive a default if Lender chooses not to act to use a remedy, and may later use any remedies if the default continues or occurs again.
COLLECTION EXPENSES AND ATTORNEYS' FEES.
To the extent permitted by law, Borrower agrees to pay all expenses of collection, enforcement and protection of Lender's rights and remedies under this Agreement. Expenses include, but are not limited to, reasonable attorneys' fees including attorney fees as permitted by United States Bankruptcy Code, court costs and other legal expenses. These expenses will bear interest from the date of payment until paid in full at the contract interest rate then in effect for the Loan.
FL:
Attorneys' fees will be 10 percent of the principal sum due or a larger amount as the court judges as reasonable and just.
GA:
Attorneys' fees will be 15 percent of the principal and interest owing.
GENERAL PROVISIONS.
This Agreement is governed by the laws of the jurisdiction where Lender is located , the United States of America and to the extent required, by the laws of the jurisdiction where the Property is located.
Joint and Individual Liability And Successors.
Each Borrower, Individually, has the duty of fully performing the obligations on the Loan. Lender can sue all or any of the Borrowers upon breach of performance. The duties and benefits of this Loan will bind and benefit the successors and assigns of Borrower and Lender.
Amendment, Integration and Severability.
The Loan Documents may not be amended or modified by oral agreement. Borrower agrees that any party signing this Agreement as Borrower is authorized to modify the terms of the Loan Documents. Borrower agrees that Lender may inform any party who guarantees this Loan of any Loan accommodations, renewals, extensions, modification, substitutions, or future advances. The Loan Documents are the complete and final expression of the understanding between Borrower and Lender. If any provision of the Loan Documents is unenforceable, then the unenforceable provision will be severed and the remaining provisions will be enforceable.
Waivers And Consent.
Borrower, to the extent permitted by law, consents to certain actions Lender may take, and generally waives defenses that may be available based on these actions or based on the status of a party to the Loan. Lender may renew or extend payments on the Loan. Lender may release any borrower, endorser, guarantor, surety, or any other co-signor, Lender may release substitute, or impair any Property securing the Loan. Lender's course of dealing, or Lender's forbearance from, or delay in, the exercise of any of Lender's rights, remedies, privileges, or right to insist upon Borrower's strict performance of any provisions contained in the Loan Documents, will not be construed as a waiver by Lender, unless the waiver is in writing and signed by Lender. Lender may participate or syndicate the Loan and share any information that Lender decides is necessary about Borrower and the Loan with the other participants.
Interpretation.
Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not to be used to interpret or define the terms of this Agreement. Unless otherwise indicated, the terms of this Agreement shall be construed in accordance with the Uniform Commercial Code.
Notice.
Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to the appropriate party's address listed in this Agreement, or to any other address designated in writing. Notice to one party will be deemed to be notice to all parties. Time is of the essence.
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1.
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AMOUNT:
This line of credit is:
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a.
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I have borrowed the maximum amount available to me;
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b.
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This line of credit has expired;
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c.
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I have defaulted on the note (or notes) which show my indebtedness under this line of credit;
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d.
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I have violated any term of this line of credit or any note or other agreement entered into in connection with this line of credit;
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e.
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____________________________________________________________________________________________________________________
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2.
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PROMISSORY NOTE:
I will repay any advances made according to this line of credit agreement as set out in the promissory note, I signed on
11-12-2010 ,
or any note(s) I sign at a later time which represent advances under this agreement. The note(s) set(s) out the terms relating to maturity, interest rate, repayment and advances. If indicated on the promissory note, the advances will be made as follows:
UPON REQUEST BY BORROWERS; PRIOR BANK APPROVAL; LOAN DOES NOT REFLECT PAST DUE STATUS .
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3.
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RELATED DOCUMENTS:
I have signed the following documents in connection with this line of credit and note(s) entered into in accordance with this line of credit:
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4.
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REMEDIES:
If I am in default on the note(s) you may:
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a.
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take any action as provided in the related documents;
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5.
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COSTS AND FEES:
If you hire an attorney to enforce this agreement I will pay your reasonable attorneys' fees, where permitted by law. I will also pay your court costs and costs of collection, where permitted by law.
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6.
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COVENANTS:
for as long as this line of credit is in effect or I owe you money for advances made in accordance with the line of credit, I will do the following:
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a.
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Maintain books and records of my operations relating to the need for this line of credit;
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b.
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Permit you or any of your representatives to inspect and/or copy these records;
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c.
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Provide to you any documentation requested by your which support the reason for making any advance under this line of credit;
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d.
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Permit you to make any advance payable to the seller (or seller and me) of any items being purchased with that advance;
|
e.
|
IF THERE IS AN EVENT OF DEFAULT UNDER THIS NOTE, THE LENDER MAY, IN ITS SOLE DISCRETION, INCREASE THE INTEREST RATE ON THIS NOTE TO: 18.00% OR THE MAXIMUM INTEREST RATE LENDER IS PERMITTED TO CHARGE BY LAW, WHICHEVER IS LESS._____________________________________________________________________________
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7.
|
NOTICES:
All notices or other correspondence with me should be sent to my address stated above. The notice or correspondence shall be effective when deposited in the main, first class, or deliver to me in person.
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8.
|
MISCELLANEOUS:
This line of credit may not be changed except by a written agreement signed by you and me. The law of the state in which you are located will govern this agreement. Any term of this agreement which is contrary to applicable law will not be effective, unless the law permits you and me to agree to such a variation.
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FOR THE LENDER
|
|
SIGNATURES:
I AGREE TO THE TERMS OF THIS LINE OF CREDIT. I HAVE RECEIVED A COPY ON TODAY'S DATE.
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/S/ LARRY C. HENSON
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|
/S/ LYNN B. FULLER
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LARRY C. HENSON
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LYNN B. FULLER, CHAIRMAN, PRESIDENT, CEO
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Title
CEO/COMMERICAL LOAN OFFICER
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|
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|
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/S/ JOHN K. SCHMIDT
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|
JOHN K. SCHMIDT, EVP, COO, CFO, TREASURER
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Computation of Per Share Earnings
|
|
||
(Dollars in thousands, except per share data)
|
|
||
|
|
||
Net income
|
$
|
23,788
|
|
Net income attributable to noncontrolling interest, net of tax
|
115
|
|
|
Net income attributable to Heartland
|
23,903
|
|
|
Preferred dividends and discount
|
(5,344
|
)
|
|
Net income available to common stockholders for the year ended December 31, 2010
|
$
|
18,559
|
|
Weighted average common shares outstanding
|
16,371,617
|
|
|
Assumed incremental common shares issued upon exercise of stock options and common stock warrant
|
90,062
|
|
|
Weighted average common shares for diluted earnings per share
|
16,461,679
|
|
|
Earnings per common share - basic
|
$
|
1.13
|
|
Earnings per common share - diluted
|
$
|
1.13
|
|
Subsidiaries of the Registrant
|
||
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|
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1.
|
|
Dubuque Bank and Trust Company, an Iowa state bank with its main office located in Dubuque, Iowa
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|
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1a.
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DB&T Insurance, Inc.
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|
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|
1b.
|
|
DB&T Community Development Corp.
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|
|
|
2 .
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|
Galena State Bank & Trust Co., an Illinois state bank with its main office located in Galena, Illinois
|
|
|
|
3.
|
|
First Community Bank, an Iowa state bank with its main office located in Keokuk, Iowa
|
|
|
|
4.
|
|
Riverside Community Bank, an Illinois state bank with its main office located in Rockford, Illinois
|
|
|
|
5.
|
|
Wisconsin Community Bank, a Wisconsin state bank with its main office located in Madison, Wisconsin
|
|
|
|
6.
|
|
New Mexico Bank & Trust, a New Mexico state bank with its main office located in Albuquerque, New Mexico
|
|
|
|
7.
|
|
Arizona Bank & Trust, an Arizona state bank with its main office located in Phoenix, Arizona
|
|
|
|
8.
|
|
Rocky Mountain Bank, a Montana state bank with its main office located in Billings, Montana
|
|
|
|
9.
|
|
Summit Bank & Trust, a Colorado state bank with its main office located in Broomfield, Colorado
|
|
|
|
10.
|
|
Minnesota Bank & Trust, a Minnesota state bank with its main office located in Edina, Minnesota
|
|
|
|
11.
|
|
Citizens Finance Co., a consumer finance company
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|
|
|
12.
|
|
Heartland Financial Statutory Trust III
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|
|
|
13.
|
|
Heartland Financial Statutory Trust IV
|
|
|
|
14.
|
|
Heartland Financial Statutory Trust V
|
|
|
|
15.
|
|
Heartland Financial Statutory Trust VI
|
|
|
|
16.
|
|
Heartland Financial Statutory Trust VII
|
|
|
|
17.
|
|
Rocky Mountain Statutory Trust I
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|
|
|
18.
|
|
Heartland Community Development Inc., a property management company with a primary purpose of holding and managing nonperforming assets
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1.
|
|
I have reviewed this annual report on Form 10-K of Heartland Financial USA, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
|
5.
|
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: March 16, 2011
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|
|
/s/ Lynn B. Fuller
|
Lynn B. Fuller
|
Chief Executive Officer
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1.
|
|
I have reviewed this annual report on Form 10-K of Heartland Financial USA, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
|
5.
|
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: March 16, 2011
|
|
|
/s/ John K. Schmidt
|
John. K. Schmidt
|
Chief Financial Officer
|
i.
|
The compensation committee of Heartland Financial USA, Inc. has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (SEO) compensation plans and employee compensation plans and the risks these plans pose to Heartland Financial USA, Inc.
|
ii.
|
The compensation committee of Heartland Financial USA, Inc. has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Heartland Financial USA, Inc. and has identified any features of the employee compensation plans that pose risks to Heartland Financial USA, Inc. and has limited those features to ensure that Heartland Financial USA, Inc. is not unnecessarily exposed to risks.
|
iii.
|
The compensation committee of Heartland Financial USA, Inc. has reviewed, at least every six months during the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Heartland Financial USA, Inc. to enhance the compensation of any employee, and has limited any such features.
|
iv.
|
The compensation committee of Heartland Financial USA, Inc. will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above.
|
v.
|
The compensation committee of Heartland Financial USA, Inc. will provide a narrative description of how it limited, during any part of the most recently completed fiscal year that was a TARP period, the features in
|
a.
|
SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Heartland Financial USA, Inc.;
|
b.
|
Employee compensation plans that unnecessarily expose Heartland Financial USA, Inc. to risks; and
|
c.
|
Employee compensation plans that could encourage the manipulation of reported earnings of Heartland Financial USA, Inc. to enhance the compensation of an employee.
|
vi.
|
Heartland Financial USA, Inc. has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria.
|
vii.
|
Heartland Financial USA, Inc. has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period.
|
viii.
|
Heartland Financial USA, Inc. has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period.
|
ix.
|
Heartland Financial USA, Inc. and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under Section 111 of EESA, during any part of the most recently completed fiscal period that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved.
|
x.
|
Heartland Financial USA, Inc. will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period.
|
xi.
|
Heartland Financial USA, Inc. will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii).
|
xii.
|
Heartland Financial USA, Inc. will disclose whether Heartland Financial USA, Inc., the board of directors of Heartland Financial USA, Inc., or the compensation committee of Heartland Financial USA, Inc. has engaged during any part of the most recently completed fiscal year that was a TARP period, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period.
|
xiii.
|
Heartland Financial USA, Inc. has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal period that was a TARP period.
|
xiv.
|
Heartland Financial USA, Inc. has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Heartland Financial USA, Inc. and Treasury, including any amendments.
|
xv.
|
Heartland Financial USA, Inc. has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified.
|
xvi.
|
I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both.
|
|
|
|
|
|
|
|
|
||
/s/ Lynn B. Fuller
|
|
|
|
Date: March 16, 2011
|
Lynn B. Fuller, CEO
|
|
|
|
|
i.
|
The compensation committee of Heartland Financial USA, Inc. has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (SEO) compensation plans and employee compensation plans and the risks these plans pose to Heartland Financial USA, Inc.
|
ii.
|
The compensation committee of Heartland Financial USA, Inc. has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Heartland Financial USA, Inc. and has identified any features of the employee compensation plans that pose risks to Heartland Financial USA, Inc. and has limited those features to ensure that Heartland Financial USA, Inc. is not unnecessarily exposed to risks.
|
iii.
|
The compensation committee of Heartland Financial USA, Inc. has reviewed, at least every six months during the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Heartland Financial USA, Inc. to enhance the compensation of any employee, and has limited any such features.
|
iv.
|
The compensation committee of Heartland Financial USA, Inc. will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above.
|
v.
|
The compensation committee of Heartland Financial USA, Inc. will provide a narrative description of how it limited, during any part of the most recently completed fiscal year that was a TARP period, the features in
|
a.
|
SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Heartland Financial USA, Inc.;
|
b.
|
Employee compensation plans that unnecessarily expose Heartland Financial USA, Inc. to risks; and
|
c.
|
Employee compensation plans that could encourage the manipulation of reported earnings of Heartland Financial USA, Inc. to enhance the compensation of an employee.
|
vi.
|
Heartland Financial USA, Inc. has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria.
|
vii.
|
Heartland Financial USA, Inc. has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period.
|
viii.
|
Heartland Financial USA, Inc. has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period.
|
ix.
|
Heartland Financial USA, Inc. and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under Section 111 of EESA, during any part of the most recently completed fiscal period that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved.
|
x.
|
Heartland Financial USA, Inc. will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period.
|
xi.
|
Heartland Financial USA, Inc. will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii).
|
xii.
|
Heartland Financial USA, Inc. will disclose whether Heartland Financial USA, Inc., the board of directors of Heartland Financial USA, Inc., or the compensation committee of Heartland Financial USA, Inc. has engaged during any part of the most recently completed fiscal year that was a TARP period, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period.
|
xiii.
|
Heartland Financial USA, Inc. has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal period that was a TARP period.
|
xiv.
|
Heartland Financial USA, Inc. has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Heartland Financial USA, Inc. and Treasury, including any amendments.
|
xv.
|
Heartland Financial USA, Inc. has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified.
|
xvi.
|
I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both.
|
|
|
|
|
|
|
|
|
||
/s/ John K. Schmidt
|
|
|
|
Date: March 16, 2011
|
John K. Schmidt, EVP, COO & CFO
|
|
|
|
|