Heartland Financial in Iowa Gets Quarterly Lift from Fees

Heartland Financial (HTLF) in Dubuque, Iowa, reported that third-quarter earnings more than tripled from a year earlier.

The $4.6 billion-asset company’s earnings rose 270% from a year earlier, to $12.6 million, or 75 cents a share.

Loan servicing income and gains on the sale of loans contributed significantly to noninterest income, the company said in a press release. Noninterest income more than doubled from a year earlier, to $29.8 million. Residential mortgage loan servicing income more than quadrupled from a year earlier, to $2.5 million. Gains on the sale of loans rose 331% from a year earlier, to $13.8 million.

Gains on securities also contributed to noninterest income. These gains rose 150% from a year earlier, to $5.2 million, as volatility in the bond market provided opportunities to swap securities from one sector to another without significantly changing the portfolio’s duration.

Heartland recorded a $502,000 credit to its loan-loss provision after setting aside $7.7 million a year earlier.

Noninterest expenses rose 48% from a year earlier, to $47.2 million. Salaries and employee benefits rose more than 52% from a year earlier, to $27.1 million, while professional fees increased more than 35%, to $4.2 million.

Heartland’s net interest margin compressed 30 basis points from a year earlier, to 3.84%, as yields on securities and loan portfolios fell at a greater pace than repricing for deposits and other borrowings.

During the third quarter, Heartland bought three branches from Liberty Bank. The company also announced in August an agreement to buy First Shares.