Quarterly profit at Heartland Financial (HTLF) in Dubuque, Iowa, slipped by 31% from a year earlier as costs rose and gains from loan sales fell.

The $5 billion-asset company reported Monday a second-quarter profit of $9.6 million, down from $14 million a year earlier. Earnings per share of 54 cents were 5 cents below the average estimate of analysts polled by Bloomberg.

Net interest income rose 5% from a year earlier, to  $38.9 million, even though the net interest margin compressed by 34 basis points, to 3.71%. Net loans and leases rose 8% from a year earlier, to $2.8 billion.

Noninterest income fell 12% from the second quarter of 2012, to $24.9 million, as gains on loan sales fell 28%, to $9.1 million. Income from trading securities also fell 67% from a year earlier, to $2.1 million.

Noninterest expenses rose 18% from a year earlier, to $48.8 million. Employee compensation costs rose 16% from the second quarter of 2012, to $29.5 million, due to an expansion to Heartland's mortgage-origination staff.

Two recent acquisitions also added to Heartland's staff. Last year, it closed deals for First Shares in Wisconsin and Heritage Bank in Phoenix.

Heartland agreed last month to pay $62 million for Morrill Bancshares in Merriam, Kan.

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