SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-
12
HEARTLAND FINANCIAL USA, INC.
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
<PAGE>
/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by
Exchange Act 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the
previous filing by registration statement number or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO]
Heartland Financial USA, Inc.
April 7, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the annual stockholders'
meeting of Heartland Financial USA, Inc. to be held at the
corporate headquarters, located at 1398 Central Avenue, Dubuque,
Iowa, on Wednesday, May 21, 1997, at 2:30 p.m. The accompanying
Notice of Annual Meeting of Stockholders and Proxy Statement
discuss the business to be conducted at the meeting. A copy of
the Company's 1996 Annual Report to Stockholders is enclosed. At
the meeting we shall report on Company operations and the outlook
for the year ahead.
Your Board of Directors has nominated two persons to serve
as Class I directors. Additionally, the Company's management has
selected and recommends that you ratify the selection of KPMG
Peat Marwick LLP to continue as the Company's independent public
accountants for the year ending December 31, 1997. We recommend
that you vote your shares for each of the director nominees and
in favor of the proposal.
We encourage you to attend the meeting in person. Whether
or not you plan to attend, however, please complete, sign and
date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible.
We look forward with pleasure to seeing and visiting with
you at the meeting.
With best personal wishes,
/s/ Lynn S. Fuller
--------------------------
Lynn S. Fuller
Chairman of the Board
1398 Central Avenue Dubuque, Iowa 52001 (319) 589-2000
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1997
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of HEARTLAND FINANCIAL
USA, INC. (the "Company") will be held at the corporate
headquarters, 1398 Central Avenue, Dubuque, Iowa, on Wednesday,
May 21, 1997, at 2:30 p.m., for the purpose of considering and
voting upon the following matters:
1. to elect two (2) Class I directors.
2. to approve the appointment of KPMG Peat Marwick
LLP as independent public accountants for the
Company for the fiscal year ending December 31,
1997.
3. to transact such other business as may properly be
brought before the meeting or any adjournments or
postponements thereof.
The Board of Directors is not aware of any other business to
come before the meeting. Stockholders of record at the close of
business on March 24, 1997, are the stockholders entitled to vote
at the meeting and any adjournments or postponements thereof.
By order of the Board of Directors
/s/ Lois K. Pearce
----------------------------------
Lois K. Pearce
Secretary
Dubuque, Iowa
April 7, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT
THE MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Heartland Financial
USA, Inc. (the "Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held at the corporate headquarters
located at 1398 Central Avenue, Dubuque, Iowa, on Wednesday,
May 21, 1997, at 2:30 p.m. local time, or at any adjournments or
postponements thereof.
The Company, a Delaware corporation, is a multi-bank and
thrift holding company with 16 locations in Iowa and Illinois.
The Company is the parent of Dubuque Bank and Trust Company,
Dubuque, Iowa ("DB&T"); Galena State Bank and Trust Company,
Galena, Illinois ("Galena State"); Keokuk Bancshares, Inc.
("Keokuk Bancshares"), the parent company of First Community
Bank, a Federal Savings Bank, located in Keokuk, Iowa ("First
Community"); Riverside Community Bank, in Rockford, Illinois
("Riverside Community") and Cottage Grove State Bank, Cottage
Grove, Wisconsin ("Cottage Grove State"). These banks are
collectively referred to as the "Banks". The Company also has
non-banking subsidiaries involved in providing insurance,
consumer credit loans, fleet vehicle leasing and related services
and products. The Banks and other subsidiaries of the Company
are collectively referred to as the "Subsidiaries".
The Proxy Statement and the accompanying Notice of Meeting
and proxy are first being mailed to holders of shares of common
stock, par value $1.00 per share, of the Company ("Common
Stock"), on or about April 7, 1997.
Voting Rights and Proxy Information
All shares of Common Stock represented at the annual meeting
by properly executed proxies received prior to or at the annual
meeting, and not revoked, will be voted at the annual meeting in
accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the
nominees and for adoption of the proposals set forth in this
Proxy Statement. A majority of the shares of the Common Stock
present in person or represented by proxy will constitute a
quorum for purposes of the meeting. Abstentions and broker non-
votes will be counted for purposes of determining a quorum.
Stockholders of record on the books of the Company at the
close of business on March 24, 1997, will be entitled to vote at
the meeting or any adjournments or postponements of the meeting.
On March 247, 1997, the Company had outstanding 4,734,948 shares
of Common Stock, with each share entitling its owner to one vote
on each matter submitted to a vote at the annual meeting. In all
matters other than the election of directors, the affirmative
vote of the majority of shares present in person or represented
by proxy at the meeting and entitled to vote on the subject
matter shall be required to constitute stockholder approval.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the meeting and entitled to
vote. Abstentions will be treated as votes against any proposal
and broker non-votes will have no effect on the vote.
The Board of Directors would like to have all stockholders
represented at the annual meeting. Whether or not you plan to
attend, please complete, sign and date the enclosed proxy and
return it in the accompanying postpaid return envelope as
promptly as possible. A proxy given pursuant to this
solicitation may be revoked at any time before it is voted.
Proxies may be revoked by: (i) duly executing and delivering to
the Secretary of the Company a later dated proxy relating to the
same shares prior to the exercise of such proxy; (ii) filing with
the Secretary of the Company at or before the meeting a written
notice of revocation bearing a later date than the proxy; or
(iii) attending the meeting and voting in person (although
attendance at the meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy
should be delivered to Ms. Lois K. Pearce, Secretary, Heartland
Financial USA, Inc., 1398 Central Avenue, Dubuque, Iowa 52001.
ELECTION OF DIRECTORS
At the annual meeting to be held on May 21, 1997, the
stockholders will be entitled to elect two Class I directors for
terms expiring in 2000. The directors of the Company are divided
into three classes having staggered terms of three years. Both
of the nominees for election as Class I directors are incumbent
directors. The Company has no knowledge that any of the nominees
will refuse or be unable to serve, but if any of the nominees
become unavailable for election, the holders of proxies reserve
the right to substitute another person of their choice as a
nominee when voting at the meeting.
Set forth below is information concerning the nominees for
election and for the other directors whose terms of office will
continue after the meeting, including the age, year first elected
a director and business experience of each during the previous
five years as of March 24, 1997. Unless otherwise indicated,
each person has held the positions indicated for at least five
years. The two nominees, if elected at the annual meeting, will
serve as Class I directors for three year terms expiring in 2000.
The Board of Directors recommends that you vote your shares FOR
each of the nominees for director.
NOMINEES
<TABLE>
<CAPTION>
Position with the Company
Name Served as Company and the Subsidiaries and
(Age) Director Since Principal Occupation
- ------------- ----------------- -------------------------
CLASS I
(Term Expires 2000)
<S> <C> <C>
Lynn B. Fuller 1987 President of the Company;
(Age 47) Director, President and
Chief Executive Officer of
DB&T; Director of Galena State
(1992-present); Director and
President of DB&T Insurance
Inc., Citizens Finance Co. and
DB&T Community Development
Corp. (1994-present);
Director of Keokuk Bancshares
(1994-present), First
Community (1994-present) and
DBT Investment Corporation
(1994-present); Director and
Chairman of Riverside
Community (1995-present);
Director and Chairman of
ULTEA, Inc. (1996-present);
Director, Cottage Grove State
(1997-present).
Gregory R. Miller 1994 Executive Vice President
(Age 48) of the Company (1996-
present); Director (1990-
1995), President and Chief
Executive Officer of Keokuk
Bancshares; and President and
Chief Executive Officer of
First Community; President of
KFS Services, Inc..
</TABLE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
Position with the Company
Name Served as Company and the Subsidiaries and
(Age) Director Since Principal Occupation
- --------------- ----------------- -------------------------
CLASS II
(Term Expires 1998)
<C> <C> <C>
Mark C. Falb 1995 Director of DB&T;
(Age 49) President and Chief Executive
Officer (1983-1992) and
Chairman of the Board (1992)
of Wm. C. Brown Companies;
Chairman of the Board and
Chief Executive Officer of
Westmark Enterprises, Inc.
(1992-present) and
Kendall/Hunt Publishing
Company.
James A. Schmid 1981 Vice Chairman of the Board of
(Age 73) the Company (1991-
present); Chairman of the
Board and Director of DB&T;
Director of DB&T Insurance
Inc., Citizens Finance Co.
and DB&T Community Development
(1994-present); Chairman of
the Board (1991-present),
President (1974-1992) and
Chief Executive Officer (1992-
present) of Crescent Electric
Supply Company.
Robert Woodward 1987 Director of DB&T, DB&T
(Age 60) Insurance Inc., Citizens
Finance Co. and DB&T Community
Development Corp. (1994-
present); Chairman of the
Board and Chief Executive
Officer of Woodward
Communications, Inc. (1995-
present).
CLASS III
(Term Expires 1999)
Lynn S. Fuller 1981 Chairman of the Board and
(Age 72) Chief Executive Officer
of the Company; Director and
Vice Chairman of the Board of
DB&T; Director of DB&T
Insurance Inc., Citizens
Finance Co. and DB&T Community
Development Corp. (1994-
present).
Evangeline K. Jansen
(Age 80) 1981 Director of DB&T, DB&T
Insurance Inc., Citizens
Finance Co. and DB&T Community
Development Corp. (1994-
present).
</TABLE>
All of the Company's directors will hold office for the
terms indicated, or until their respective successors are duly
elected and qualified. There are no arrangements or
understandings between the Company and any other person pursuant
to which any of the Company's directors have been selected for
their respective positions. No member of the Board of Directors
is related to any other member of the Board of Directors, except
that Lynn S. Fuller is the father of Lynn B. Fuller.
Meetings of the Board of Directors and Committees
Regular meetings of the Board of Directors of the Company
are held quarterly. During 1996, the Board of Directors held
four regular meetings and one special meeting. All directors
during their terms of office in 1996 attended at least 75% of the
total number of meetings of the Board of Directors of the Company
and of meetings held by all committees of the Board on which any
such director served. The Company does not currently have a
standing nominating committee. Rather, the entire Board
participates in the process of selecting nominees to fill
vacancies on the Board. Pursuant to the Company's bylaws, the
Board of Directors will consider nominees recommended by
stockholders provided any such recommendation is made in writing
and delivered to the Secretary of the Company no later than 14
days prior to the date of the annual meeting at which directors
are to be elected and otherwise complies with the Company's
bylaws.
The Compensation Committee, consisting of directors Schmid
(Chairman), Falb, Jansen and Woodward, meets to review the
salary, other compensation and performance of the Chief Executive
Officer and each of the other executive officers named in the
Summary Compensation Table and recommends adjustments. During
1996, the Compensation Committee met four times.
The Audit Committee recommends independent auditors to the
Board, reviews the results of the auditors' services, reviews
with management and the internal auditor the systems of internal
control and internal audit reports and assures that the books and
records of the Company are kept in accordance with applicable
accounting principles and standards. The members of the Audit
Committee are directors Schmid (Chairman), Falb, Jansen and
Woodward. During 1996, the Audit Committee met twice.
Compensation of Directors
Each of the Company's directors is paid a fee of $400 for
each board meeting attended and $225 for each committee meeting
attended, except that Messrs. Lynn B. Fuller and Gregory R.
Miller receive no fees for their services as directors of the
Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with
respect to the beneficial ownership of the Company's Common Stock
at March 2410, 1997, by each person known by the Company to be
the beneficial owner of more than 5% of the outstanding Common
Stock, by each director or nominee, by each executive officer
named in the Summary Compensation Table and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name of Individual and Amount and Nature of Percent
Number of Persons in Group Beneficial Ownership(1) of Class
- -------------------------- ----------------------- --------
<S> <C> <C>
5% Stockholders
Dubuque Bank and Trust Company
1398 Central Avenue
Dubuque, Iowa 52001 459,540 (2) 9.7%
Heartland Partnership, L.P.
1145 S. Grandview
Dubuque, Iowa 52003 278,000 (3) 5.9%
Directors
Mark C. Falb 98,096 (4) 2.1%
Lynn B. Fuller 63,264 (5) 1.3%
Lynn S. Fuller 461,238 (6) 9.7%
Evangeline K. Fuller 564,656 (7) 11.9%
Gregory R. Miller 104,674 (8) 2.2%
James A. Schmid 191,440 (9) 4.0%
Robert Woodward 215,710 (10) 4.6%
Other Executive Officers
John K. Schmidt 12,796 *
Kenneth J. Erickson 16,315 (11) *
Douglas J. Horstmann 16,149 (12) *
All directors and executive
officers as a group
(12 persons) 1,769,259 37.4%
</TABLE>
* Less than one percent
(1) The information contained in this column is based upon
information furnished to the Company by the persons named above
and the members of the designated group. Amounts reported
include shares held directly as well as shares which are held in
retirement accounts and shares held by certain members of the
named individuals' families or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect
to which shares the respective director may be deemed to have
sole or shared voting and/or investment power. The nature of
beneficial ownership for shares shown in this column is sole
voting and investment power, except as set forth in the footnotes
below. Inclusion of shares shall not constitute an admission of
beneficial ownership or voting and investment power over included
shares.
(2) Includes 253,884 shares over which DB&T has sole voting
and investment power and 205,656 shares over which DB&T has
shared voting or investment power.
(3) Mr. Lynn S. Fuller, Chairman of the Board and Chief
Executive Officer of the Company, is the General Partner of
Heartland Partnership, L.P., and in such capacity exercises sole
voting and investment power over such shares.
(4) Includes 53,488 shares over which Mr. Falb has shared
voting and investment power and 22,352 shares held by Mr. Falb's
spouse, as trustee, over which Mr. Falb has no voting or
investment power.
(5) Includes an aggregate of 2,020 shares held by Mr.
Fuller's spouse and minor child, over which shares Mr. Fuller has
shared voting and investment power. Excludes 7,000 shares held
by the Heartland Partnership, L.P. over which Mr. Fuller has no
voting or investment power but in which Mr. Fuller does have a
beneficial interest.
(6) Includes shares held by the Heartland Partnership,
L.P., as well as 35,182 shares held by a trust for which Mr.
Fuller's spouse is a trustee and over which shares Mr. Fuller has
shared voting and investment power.
(7) Represents shares held in certain trusts for which Ms.
Jansen serves as trustee or co-trustee. Voting and investment
power is shared with respect to 144,256 of such shares.
(8) Includes an aggregate of 37,304 shares held by Mr.
Miller's spouse and minor child, over which shares Mr. Miller has
no voting or investment power.
(9) Includes 5,392 shares held by Mr. Schmid's wife, over
which Mr. Schmid has shared voting and investment power, 73,336
shares held in trust over which Mr. Schmid has sole voting and
investment power, and 42,192 shares held by Crescent Realty
Corp., of which Mr. Schmid is a controlling person.
(10) Includes an aggregate of 130,600 shares held by various
trusts of which Mr. Woodward is a trustee and over which shares
Mr. Woodward has shared voting and investment power over 124,200
shares and sole voting and invest power over 6,400 shares.
(11) Includes 2,400 shares held by Mr. Erickson jointly with
his spouse, over which shares Mr. Erickson has shared voting and
investment power.
(12) Includes 9,000 shares held by Mr. Horstmann's spouse,
over which shares Mr. Horstmann has shared voting and investment
power.
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires that the Company's directors, executive
officers and 10% stockholders file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
Such persons are also required to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon the
Company's review of such forms, the Company is not aware that any
of its directors, executive officers or 10% stockholders failed
to comply with the filing requirements of Section 16(a) during
the period commencing January 1, 1996 through December 31, 1996.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation paid or granted to the Company's Chief Executive
Officer and to each of the other five most highly compensated
executive officers of the Company or the Subsidiaries for the
fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
(a) (b) (c) (d)
Fiscal
Year
Ended
Name and December Bonus
Principal Position 31st Salary($)(1) ($)(2)
- ---------------------------- -------- ------------ --------
<S> <C> <C> <C>
Lynn B. Fuller 1996 $157,000 $72,523
President of the Company 1995 155,000 83,031
1994 150,000 92,807
Lynn S. Fuller, Chairman 1996 $105,000 $ ---
and Chief Executive Officer 1995 105,000 ---
of the Company 1994 105,000 ---
Gregory R. Miller 1996 $103,591 $14,304
Executive Vice President 1995 99,607 14,304
of the Company(4) 1994 92,407 36,000
John K. Schmidt 1996 $ 99,000 $26,257
Executive Vice President 1995 95,000 25,575
and Chief Financial Officer 1994 90,000 29,277
of the Company
Kenneth J. Erickson 1996 $ 96,000 $22,946
Senior Vice President 1995 90,000 15,940
of the Company 1994 84,000 20,371
Douglas J. Horstmann 1996 $ 96,000 $17,946
Senior Vice President 1995 90,000 15,940
of DB&T 1994 84,000 20,371
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation Awards
-------------------
(a) (b) (f) (g) (h)
FY Securities All
Ended Restricted Underlying Other
Name and Dec. Stock Options/ Compensa-
Principal Position 31st Awards($) SARs(#) tion($)(3)
- ------------------- ------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Lynn B. Fuller 1996 $ --- $12,000 $28,168
President 1995 --- 24,000 20,473
of the Company 1994 --- --- 19,014
Lynn S. Fuller 1996 $ --- $ --- $25,036
Chairman and Chief 1995 --- --- 19,964
Executive Officer 1994 --- --- 16,062
of the Company
Gregory R. Miller 1996 $ --- $ 6,000 $19,143
Executive Vice 1995 --- 12,000 16,930
President 1994 --- --- 15,409
of the Company(4)
John K. Schmidt 1996 $ --- $ 8,000 $18,602
Executive Vice 1995 --- 16,000 15,650
President and 1994 --- --- 13,920
Chief Financial
Officer of the Company
Kenneth J. Erickson 1996 $ --- $ 8,000 $19,117
Senior Vice President 1995 --- 16,000 13,899
of the Company 1994 --- --- 12,211
Douglas J. Horstmann 1996 $ --- $ 8,000 $18,358
Senior Vice President 1995 --- 16,000 13,898
of DB&T 1994 --- --- 12,211
</TABLE>
(1) Includes amounts deferred under the Company's
Retirement Plan for 1994 and 1995. The amount shown for 1996 is
subject to adjustment and payment in April, 1997.
(2) The amounts shown represent amounts received under the
Company's Management Incentive Compensation Plan for 1994 and
1995. The amount shown for 1996 is subject to adjustment prior
to payment.
(3) The amounts shown represent amounts contributed on
behalf of the respective officer to the Company's Retirement
Plan, and, for 1995 and 1996, also represents the allocable
portion of the premium paid for life insurance under the
Company's split-dollar life insurance plan for certain of the
named executive officers. For 1996, such amounts also include
the aggregate value of the discount to market price of shares
purchased under the Company's Employee Stock Purchase Plan and/or
the Company's Executive Restricted Stock Purchase Plan. For
Messrs. Lynn S. Fuller and Lynn B. Fuller, the amount shown
includes transportation-related expenses. For 1996, the amount
contributed for each officer under the Retirement Plan, and the
aggregate below market discount realized by each named
individual, is as follows; $18,622 and $7,171 for Mr. Lynn B.
Fuller, $14,361 and $4,244 for Mr. Lynn S. Fuller, $15,117 and
$4,026 for Mr. Miller, $15,759 and $2,705 for Mr. Schmidt and
$14,349 and $4,587 for Mr. Erickson and $14,349 and $3,858 for
Mr. Horstmann.
(4) Mr. Miller became an executive officer of a subsidiary
of the Company following the July 1, 1994, acquisition by the
Company of Keokuk Bancshares. The figures include salary, bonus
and other compensation received by Mr. Miller as an officer of
Keokuk Bancshares and First Community prior to the acquisition
and as an officer of First Community and the Company following
the acquisition.
Stock Option Information
The following table sets forth certain information
concerning the number and value of stock options granted in the
last fiscal year to the individuals named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
(a) (b) (c) (d)
% of
Total
Options
Granted
to Exercise
Options Employees or Base
Granted in Fiscal Price
Name (#)(1) Year (S/Sh)
- ---- ------- --------- --------
<S> <C> <C> <C>
Lynn B. Fuller 12,000 17% $17.25
Lynn S. Fuller --- -- ---
Gregory R. Miller 6,000 9% 17.25
John K. Schmidt 8,000 12% 17.25
Kenneth J. Erickson 8,000 12% 17.25
Douglas J. Horstmann 8,000 12% 17.25
</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
(a) (e) (f)
Grant Date
Expiration Present Value
Name Date ($) (2)(3)
- ---- ---------- -------------
<S> <C> <C>
Lynn B. Fuller 02/06/06 $74,280
Lynn S. Fuller ---- ---
Gregory R. Miller 02/06/06 37,140
John K. Schmidt 02/06/06 49,520
Kenneth J. Erickson 02/06/06 49,520
Douglas J. Horstmann 02/06/06 49,520
</TABLE>
(1) Options become exercisable in three equal portions on the day
after the third, fourth and fifth anniversaries of the February 6,
1996 date of grant.
(2) The Black Scholes valuation model was used to determine the grant
date present values. Significant assumptions include: risk-free
interest rate, 5.68%; expected option life, 10 years; expected
volatiliity, 28.62%; expected dividends, 2.29%.
(3) The ultimate value of the options will depend on the future
market price of the Company's Common Stock, which cannot be forecast
with reasonable accuracy. The actual value, if any, an executive may
realize upon the exercise of an option will depend on the excess of
the market value of the Company's Common Stock, on the date the option
is exercised, over the exercise price of the option.
The following table sets forth certain information concerning the
number and value of stock options at December 31, 1996 held by the
named executive officers. No stock options were exercised during 1996
by such persons.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
Number of
Securities
Underlying Value of
Unexercised Unexercised
Shares Options/SARs In-the-Money
Acquired at FY End Options/SARs
On Value (#)(d)(1) at FY-End($)(e)
Exercise Realized Exer- Unexer- Exer- Unexer-
(#)(b) ($)(c) cisable cisable cisable cisable
-------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Lynn B. Fuller - $- - 36,000 $- $273,000
Lynn S. Fuller - - - --- - ---
Gregory R. Miller - - - 18,000 - 136,500
John K. Schmidt - - - 24,000 - 182,000
Kenneth J. Erickson - - - 24,000 - 182,000
Douglas J. Horstman - - - 24,000 - 182,000
</TABLE>
(1) In addition to options granted in 1996, such amounts include
options granted in 1995 at an exercise price of $16.00 per share and
vesting one-third each on May 18, 1998, 1999 and 2000.
Change of Control Agreements
The Company has entered into a change of control agreement
with each of Messrs. Lynn B. Fuller, Gregory R. Miller, John K.
Schmidt, Kenneth J. Erickson and Douglas J. Horstmann. The
agreements contain substantially similar terms. The agreements
provide that if employment is terminated upon a change in control
of the Company (as defined in the agreements) or within three
years thereafter, the terminated officer is to be paid severance
compensation equal to a multiple of such officer's base salary
(as defined in the agreements) at the time of termination. The
multiple is five times base salary for Mr. Fuller, three times
base salary for Messrs. Miller and Schmidt and two times base
salary for Messrs. Erickson and Horstmann. In the event of such
termination, the agreements also provide for the continuation of
medical and dental benefits for up to three years after such
termination for Messrs. Fuller, Miller and Schmidt and two years
for Messrs. Erickson and Horstmann. In addition, the agreements
provide for the payment of the expenses of out-placement
counseling for a period of one year, up to a maximum amount equal
to twenty five percent of base salary. Each of the officers is
prohibited by their respective agreements from competing with the
Company or its Subsidiaries within a designated geographic area
for a period of two years following the termination of
employment.
Employment Agreement
The Company entered into an employment agreement on June 30,
1994, with Mr. Gregory R. Miller, as President of First Community
Bank, which provides for annual compensation of at least $99,407,
participation in all Company benefit plans and executive officer
incentive programs, and which has a term of three years. Mr.
Miller's employment agreement provides that if the agreement is
terminated prior to the end of its three year term for any reason
other than cause, death or permanent disability, Mr. Miller must
be paid the greater of his remaining base salary until the end of
such term or an amount equal to two times his current base
salary. If the employment agreement is terminated prior to the
end of its normal term, Mr. Miller agrees not to compete with
First Community Bank within a 25-mile radius of its main office
or any branch until the later of the second anniversary of such
termination or the third anniversary of the date of the
employment agreement.
The incorporation by reference of this Proxy Statement into
any document filed with the Securities and Exchange Commission by
the Company shall not be deemed to include the following report
unless such report is specifically stated to be incorporated by
reference into such document.
Compensation Committee Report On Executive Compensation
The Company's compensation program is administered by the
Compensation Committee (the "Committee"). The Chief Executive
Officer serves on this and all committees ex-officio but on none
as Chairman.
In determining appropriate levels of executive compensation,
the Committee has at its disposal independent reference
information regarding compensation ranges and levels for
executive positions in comparable companies. In determining
compensation to be paid to executive officers, primary
consideration is given to quality long-term earnings growth
accomplished by achieving both financial and non-financial goals
such as return on equity, earnings per share and asset and
deposit growth. The objectives of this philosophy are to: (i)
encourage a consistent and competitive return to stockholders;
(ii) reward bank and individual performances; (iii) provide
financial rewards for performance of those having a significant
impact on corporate profitability; and (iv) provide competitive
compensation in order to attract and retain key personnel.
There are three major components to theof Company's
executive officer compensation: (i) base salary, (ii) annual
incentive awards and (iii) long-term incentive awards.
The process utilized by the Committee in determining
executive officer compensation levels for all of these components
is based upon the Committee's subjective judgment and takes into
account both qualitative and quantitative factors. No specific
weights are assigned to such factors with respect to any
compensation component. Among the factors considered by the
Committee are the recommendations of the chief executive officer
with respect to the compensation of the Company's other key
executive officers. However, the Committee makes the final
compensation decisions concerning such officers. The Company
also has adopted the Heartland Financial, USA, Inc. 1993 Stock
Option Plan ("Stock Option Plan"). The Stock Option Plan is
intended to promote equity ownership in the Company by directors
and selected officers and employees of the Company and the
Subsidiaries to increase their proprietary interest in the
success of the Company and to encourage them to remain in the
employ of the Company or the Subsidiaries. The Company has also
purchased a split-dollar life insurance policy on each of its
executive officers.
The Chief Executive Officer's salary for 1996 was based on a
variety of factors, the foremost of which was agreement that his
salary would remain at the current level until the transition of
the President to the Chief Executive Officer position occurs.
The Chief Executive Officer was not eligible for incentive based
compensation in 1996.
Respectfully,
James A. Schmid, Chairman
Mark C. Falb
Evangeline K. Jansen
Robert Woodward
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
During the last completed fiscal year, in addition to each
of the members of the Committee, Lynn S. Fuller, Lynn B. Fuller
and John K. Schmidt also participated in Committee deliberations
concerning executive compensation. No such person participated
in any decisions regarding their own compensation. Mr. Schmidt
is not a director of the Company or DB&T but is the Executive
Vice President and Chief Financial Officer of the Company and is
Senior Vice President and Chief Financial Officer of DB&T. All
of the directors of the Company also serve as a director of DB&T
except for Mr. Gregory R. Miller. Mr. Lynn S. Fuller serves as
Vice Chairman of the Board of Directors of DB&T and Chairman of
the Board and Chief Executive Officer of the Company. Mr. Lynn
B. Fuller serves as President and Chief Executive Officer of DB&T
and President of the Company.
The incorporation by reference of this Proxy Statement into
any document filed with the Securities and Exchange Commission by
the Company shall not be deemed to include the following
performance graph and related information unless such graph and
related information is specifically stated to be incorporated by
reference into such document.
Stockholder Return Performance Presentation
The following chart shows a five year comparison of
cumulative total returns for the Company, the Nasdaq Stock Market
(US Companies) and an index of Nasdaq Bank Stocks. The Company's
shares are traded in the over-the-counter market and are not
listed for trading on any exchange. Figures for the Company's
Common Stock represent interdealer quotations, without retail
markups, markdowns or commissions and do not necessarily
represent actual transactions.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON DECEMBER 31, 1991
*Total return assumes reinvestment of dividends
<CAPTION>
Cumulative Total Return
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Heartland Financial USA, Inc. $100 $ 85 $180 $256 $309 $442
Nasdaq Stock Market - US $100 $116 $134 $131 $185 $227
Nasdaq Bank Stock Index $100 $146 $166 $165 $246 $326
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Subsidiaries,
and their associates, were customers of and had transactions with
the Company and one or more of the Subsidiaries during 1996.
Additional transactions may be expected to take place in the
future. All outstanding loans, commitments to loan, transactions
in repurchase agreements and certificates of deposit and
depository relationships, in the opinion of management, were made
in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG
Peat Marwick LLP, independent auditors, to be the Company's
auditors for the fiscal year ending December 31, 1997, and
recommends that the stockholders ratify the appointment. KPMG
Peat Marwick LLP has been the Company's auditors since June,
1994. A representative of KPMG Peat Marwick LLP is expected to
attend the meeting and will be available to respond to
appropriate questions and to make a statement if he or she so
desires. If the appointment of auditors is not ratified, the
matter of the appointment of auditors will be considered by the
Board of Directors.
The Board of Directors unanimously recommends that you vote
FOR ratification of this appointment.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposals of stockholders intended to be presented at
the 1998 Annual Meeting of Stockholders must be received by the
Company on or before December 18, 1997, and must otherwise comply
with the Company's bylaws.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the meeting other than those matters described above in
this Proxy Statement. However, if any other matter should
properly come before the meeting, it is intended that holders of
the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company or the
Subsidiaries may solicit proxies personally or by telegraph or
telephone without additional compensation.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice in items (1)
and (2) on the proxy card, the shares of such stockholder shall
be voted FOR in each instance.
By order of the Board of Directors
/s/ Lynn B. Fuller
----------------------------------
Lynn B. Fuller
President
Dubuque, Iowa
April 7, 1997
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
<PAGE>
[LOGO]
HEARTLAND FINANCIAL USA, INC.
PROXY
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
HEARTLAND FINANCIAL USA, INC. TO BE HELD ON MAY 21, 1997
The undersigned hereby appoints Lynn S. Fuller and James A.
Schmid, or either one of them acting in the absence of the other,
with power of substitution, attorneys and proxies, for and in the
name and place of the undersigned, to vote the number of common
shares that the undersigned would be entitled to vote if then
personally present at the Annual Meeting of Stockholders of
Heartland Financial USA, Inc., to be held at the corporate
headquarters located at 1398 Central Avenue, Dubuque, Iowa, on
the 21st day of May, 1997, at 2:30 p.m., local time, or any
adjournments or postponements thereof, upon the matters set forth
in the Notice of Annual Meeting and Proxy Statement, receipt of
which is hereby acknowledged, as follows:
1. ELECTION OF DIRECTORS:
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as marked to the listed below
contrary below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST BELOW.)
Class I (Term Expires 2000): Lynn B. Fuller and Gregory R.
Miller
2. APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
Company's independent public auditors for the year ending
December 31, 1997:
/ / / / / /
For Against Abstain
3. In accordance with their discretion, upon all other matters
that may properly come before said meeting and any
adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED UNDER
PROPOSAL 1 AND FOR PROPOSAL 2.
Dated:___________________________________________, 1997
Signature(s)___________________________________________
_______________________________________________________
NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES
APPEAR ABOVE. ALL JOINT OWNERS OF SHARES SHOULD SIGN. STATE
FULL TITLE WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE ENCLOSED
ENVELOPE.
