Heartland Bancshares, Inc. Announces Financial Results for Third Quarter 2009

The primary cause of the loss and the decline in earnings for the three and nine month periods was additional provision for loan losses. Provision for loan losses was $1,650,000 for the third quarter in 2009 compared to $1,065,000 for the third quarter in 2008. Heartland recorded net loan chargeoffs of $782,000 during the third quarter 2009 compared to $137,000 during the third quarter of 2008. Net chargeoffs declined from the link quarter, the three months ended June 30, 2009 when they were $1,242,000. Provision for loan losses was $2,350,000 for the nine months ended September 30, 2009 compared to $1,265,000 for the nine months ended September 30, 2008. Net chargeoffs for the nine months ended September 30, 2009 were $2,374,000 compared to $389,000 for the same period in 2008. The allowance for loan losses was $2,853,000 or 1.80 percent of loans at September 30, 2009 compared to $2,880,000 or 1.82 percent of loans at December 31, 2008. Non-performing assets and loans 90 days or more past due and still accruing totaled $7,884,000 or 3.29 percent of total assets at September 30, 2009, including $6,151,000 non-accrual loans, $536,000 loans past due 90 days or more and still accruing, $1,158,000 other real estate owned and $39,000 of other repossessed assets. Non-performing assets and loans 90 days past due and still accruing totaled $6,122,000 or 2.66 percent of total assets at December 31, 2008 and $7,070,000 or 3.02 percent of total assets at June 30, 2009.

Net interest income increased to $2,113,000 for the third quarter 2009 compared to $2,004,000 for the third quarter 2008, an increase of $109,000 or 5.44 percent. Net interest margin increased to 4.04 percent from 4.01 percent for the same time periods. Net interest income for the nine month period increased to $6,236,000 for 2009 from $5,623,000 for 2008, an increase of 613,000 or 10.90 percent. Net interest margin during the nine month period increased to 3.97 percent for 2009 compared to 3.66 percent for 2008. Net interest income and net interest margin increased in 2009 compared to 2008 due to higher volumes of interest earning assets and lower cost of funds on deposits and other borrowings.

Non-interest income increased $130,000 or 20.97 percent to $750,000 for the third quarter 2009 compared to $620,000 for the third quarter 2008. Non-interest income increased $218,000 or 11.79 percent to $2,067,000 for the nine month period ended September 30, 2009 from $1,849,000 for the nine month period ended September 30, 2008. Included in those increases were individual increases in deposit fee income, gains on sale of mortgages, and CD brokerage commission income.

Non-interest expense for the third quarter 2009 was $2,341,000 compared to $2,120,000 for the same period in 2008, an increase of $221,000 or 10.42 percent. Non-interest expense was $7,124,000 for the nine months ended September 30, 2009 compared to $6,434,000 for the same period in 2008, an increase of $690,000 or 10.72 percent. The increases for both periods were primarily due to higher wages and benefits and higher FDIC insurance expense. The higher wages and benefits were due to higher commissions paid on mortgage loans originated and CD brokerage commission income due to higher volumes.

Total consolidated assets increased 4.04 percent to $239,474,000 at September 30, 2009 from the December 31, 2008 total of $230,176,000, which increase included the $7 million investment in preferred shares of Heartland Bancshares, Inc., made by the U.S Treasury Department in September 2009 described below. Total loans decreased 0.19 percent to $158,092,000 at September 30, 2009 from $158,395,000 at December 31, 2008. Total deposits increased 10.52 percent to $194,441,000 at September 30, 2009 from $175,936,000 at December 31, 2008. Checking, savings and money market accounts increased 16.48 percent to $127,562,000 at September 30, 2009.

As previously announced, Heartland sold preferred, non-voting shares of stock with a total liquidation value of $7.248 million to the U.S. Treasury Department on September 11, 2009, under the Treasury's Capital Purchase Program. The total $7,248,000 preferred stock issue is accruing a preferred dividend, payable to the Treasury, at a weighted average annual rate of 5.32 percent (increasing to a weighted average rate of 9 percent at the fifth anniversary of date of issue if it has not previously been redeemed). Partly as a result of this preferred stock issue, total shareholders equity (the sum of preferred stock, common stock, additional paid in capital, retained earnings, and accumulated other comprehensive income (loss)) increased to $21,724,000 at September 30, 2009, compared to $13,932,000 at December 31, 2008. Book value (shareholders' common equity) per common share at September 30, 2009 was $10.53 compared to $9.97 at December 31, 2008. The increase in book value per common share was caused by higher accumulated other comprehensive income (loss), offset in part by the reduction in retained earnings caused by the net loss for the nine month period.

President Steve Bechman commented on the loss for the quarter: "We saw continued deterioration in our loan portfolio during the third quarter 2009 caused by poor economic conditions. Due to higher levels of loan delinquency and chargeoffs, we bolstered our reserves with $1.7 million of provision expense during the quarter. Beyond the credit quality deterioration, we saw what we consider outstanding continued growth in our deposits balances, our net interest income and noninterest income."

Heartland Community Bank is the wholly owned subsidiary of Heartland Bancshares, Inc. and began banking operations December 17, 1997 in Johnson County, Indiana on the southern edge of the Indianapolis metro area.

                       HEARTLAND BANCSHARES, INC.
                       SELECT BALANCE SHEET DATA
                September 30, 2009 and December 31, 2008
          (Dollar amounts in thousands, except per share data)
                               (Unaudited)

                                              September 30,   December 31,
                                                  2009            2008
                                              -------------  -------------

Total cash and cash equivalents               $      19,548  $      17,793
Securities available-for-sale                        48,555         41,366
Loans held for sale                                   1,042            759
Loans                                               158,092        158,395
Allowance for loan losses                             2,853          2,880
Total deposits                                      194,441        175,936
Total liabilities                                   217,750        216,244
Preferred shares                                      7,000              -
Common shares                                         1,398          1,398
Additional paid in capital                           10,984         10,984
Retained earnings                                     2,204          2,693
Accumulated other comprehensive income
 (loss)                                                 138         (1,143)
Total shareholders' equity                           21,724         13,932
Total assets                                  $     239,474  $     230,176
Book value per common share                   $       10.53  $        9.97


                       HEARTLAND BANCSHARES, INC.
                     SELECTED INCOME STATEMENT DATA
         Three and Nine Months ended September 30, 2009 and 2008
           (Dollar amounts in thousands, except per share data)
                              (Unaudited)

                                     Three Months           Nine Months
                                  Ended September 30,   Ended September 30,
                                    2009       2008       2009       2008
                                  -------    -------    -------    -------

Interest income                   $ 2,822    $ 3,072    $ 8,546    $ 9,378
Interest expense                      709      1,068      2,310      3,755
Provision for loan losses           1,650      1,065      2,350      1,265
Noninterest income                    750        620      2,067      1,849
Noninterest expense                 2,341      2,120      7,124      6,434
Income tax (benefit)                 (461)      (238)      (682)      (239)
Net income/(loss)                    (667)      (323)      (489)        12
Basic and diluted earnings/(loss)
 per common share                    (.48)      (.23)      (.35)       .01
Cash dividends per share                -        .05          -        .15