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Published on 10/13/2011 in the Prospect News Preferred Stock Daily.

Heartland Financial registers $81.7 million preferreds for resale

By Angela McDaniels

Tacoma, Wash., Oct. 13 - Heartland Financial USA, Inc. registered $81.7 million of series C senior noncumulative perpetual preferred stock for resale in an S-3 filing with the Securities and Exchange Commission.

The bank sold the preferreds to the Treasury Department on Sept. 15 under its Small Business Lending Fund program.

The Treasury, or any other holder to whom the Treasury has transferred its registration rights, may offer the preferreds from time to time at varying prices.

The 81,698 preferreds have a liquidation preference of $1,000 each.

Dividends are payable quarterly when declared by the board of directors. The dividend rate was 5% for the first quarter, which ended on Sept. 30. For the second through 10th quarters, the dividend rate can fluctuate between 1% and 5% based on the bank's amount of qualified small business lending.

Beginning in the 11th quarter, the dividend rate will be fixed at 7% if the bank's qualified small business lending level has not increased from the baseline. Otherwise, it will be fixed at between 1% and 5% based on how much the lending amount increases from the baseline.

Beginning four and a half years after issuance, the dividend rate will be fixed at 9%.

Beginning on Jan. 1, 2014 and ending on April 1, 2016, if there is no increase or there is a decrease in the company's qualified small business lending level from the baseline to the level as of Sept. 30, 2013, the company will be subject to an additional lending incentive fee of 2% per year.

Subject to the approval of the Federal Reserve Board, the preferreds are callable at par plus accrued dividends at any time.

Heartland is a multi-bank holding company based in Dubuque, Iowa.

Issuer:Heartland Financial USA, Inc.
Issue:Series C senior noncumulative perpetual preferred stock
Amount:$81,698,000
Preferreds:81,698
Liquidation amount:$1,000
Dividends:For first 10 quarters, 1% to 5% depending on bank's amount of qualified small business lending; beginning in 11th quarter, 7% if lending amount remains flat or decreases, otherwise 1% to 5%; after four and a half years, 9%; payable quarterly
Call option:At par plus accrued dividends subject to Fed approval

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