Kroll Bond Rating Agency Releases Comment on Heartland Financial USA, Inc. and Premier Valley Bank Merger

Kroll Bond Rating Agency (KBRA) released a comment on Heartland Financial USA, Inc. and Premier Valley Bank Merger.

Headquartered in Dubuque, Iowa with total assets of $6.51 billion as of March 31, 2015, Heartland Financial USA, Inc. (NASDAQ: HTLF, or “Heartland Financial”) is the bank holding company of ten subsidiary banks and a consumer finance company offering banking, mortgage, investment, insurance, wealth management, and consumer finance services to customers spanning the Midwestern, Southwestern, and Western regions of the United States.

Historically, Heartland Financial has maintained a relatively acquisitive growth posture, having completed various merger transactions over the last 20 plus years and this will likely remain a strategic focus for HTLF as it is the Company’s goal to eclipse $10 billion in total assets within the next 3 to 5 years. On May 29, 2015, Heartland Financial announced the merger agreement with Premier Valley Bank based in Fresno, California. Under the terms of the agreement, Premier Valley Bank will become a wholly-owned subsidiary of HTLF and will continue to operate under its current name and management team. The merger will provide HTLF with market entrance in California and provide new client avenues. Following the completion of the merger, HTLF’s footprint will encompass 11 states and 95 banking locations with approximately $7 billion in assets.

This transaction is neutral to HTLF’s ratings. In December of 2014, KBRA assigned a senior unsecured long-term debt rating of BBB, a subordinated debt rating of BBB-, and a short-term rating of K3 to Heartland Financial USA, Inc. The outlook on all ratings is stable. The ratings are supported by Heartland Financial’s experienced management team, sound regulatory capital, and solid net interest margin. The ratings are also balanced by HTLF’s elevated level of NPAs during the crisis years, overall rising cost-to-income ratio, and relatively high double leverage. The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology, published on January 28, 2015. The ratings and supporting rationale are available atwww.kbra.com.

Please use the following link to view the report:
www.krollbondratings.com/show_report/2313

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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