Heartland Financial earnings dip slightly

Mortgage operations continue to expand

George Ford
Published: April 30 2013 | 4:00 pm - Updated: 28 March 2014 | 2:44 pm in
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Heartland Financial, corporate parent of Dubuque Bank and Trust, with an office in Farley, posted a slightly lower first-quarter profit.

The Dubuque-based bank holding company reported net income of $12.6 million, or 70 cents per diluted common share, for the quarter that ended on March 31, compared with $12.8 million, or 71 cents per diluted common share, for the first quarter of 2012.

Return on average common equity was 15.18 percent for the first quarter of 2013, compared with 17.27 percent for the comparable period last year. Return on average assets was 1 percent in the most recent quarter, compared with 1.12 percent for the same quarter in 2012.

Earnings for the first quarter of 2013 were positively affected by a lower provision for loan and lease losses, an increase in loan servicing income and gains on sale of loans attributable to the continued expansion of Heartland Financial's mortgage operations, and a reduction in net losses on repossessed assets.

The first quarter of 2012 included $2 million in equity earnings from the sale of two low-income housing projects within partnerships involving Dubuque Bank and Trust.

The absence of comparable non-interest income during the first quarter of 2013, combined with a significant increase in salaries and employee benefits, offset the positive quarterly improvements.

Net interest margin, calculated as a percentage of average earning assets, was 3.77 percent during the first quarter of 2013, compared with 4.23 percent during the first quarter of 2012 and 3.81 percent during the fourth quarter of 2012.

"Net interest margin continues to hold up reasonably well given the decline in asset yields," Fuller said. "At this point, we do not anticipate a substantial change in margin for the near future."

Nonperforming loans, exclusive of those covered under loss sharing agreements, were $32.8 million or 1.18 percent of total loans and leases on March 31, compared with $43.2 million or 1.53 percent of total loans and leases on Dec. 31, 2012.

Approximately 42 percent, or $13.7 million, of Heartland Financial's nonperforming loans have loan balances exceeding $1 million. These nonperforming loans, involving 7 borrowers, are primarily concentrated in the company's banks in the western states.

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