Heartland lowers 1Q earnings due to fraud issue

Heartland Financial USA in Dubuque, Iowa, has amended its first-quarter earnings to account for two separate instances of fraud that led to “material loan collateral deficiencies.”

The $19.2 billion-asset company said in a press release Monday that it discovered the issues after reporting its earnings on April 25.

Heartland said the collateral issue led it to increase its first-quarter provision expense by $9 million, which reduced its earnings by 14%, to $41.1 million. 

Loans held to maturity fell by $9.2 million, to $10.18 billion, while stockholders’ equity decreased by $6.8 million, to $1.93 billion. 

“Our company has managed to avoid material incidents of customer fraud in the past and believe these are isolated incidents that should not otherwise detract from the strong loan growth, increased fee revenue and otherwise excellent credit metrics for the first quarter,” Bruce Lee, Heartland’s president and CEO, said in the release.