##### Table of Contents



WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended
    
    Commission File Number:March 31, 2005
    
    333-67107
 HEARTLAND BANCSHARES, INC. (Exact name of small business issuer as specified in its charter)
 Florida
    
    65-0854929(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)320 U.S. Highway 27 North, Sebring, Florida
    

33870(Address of principal executive offices)
    
    (Zip Code)Issuers telephone number:       (863) 386-1300Not Applicable(Former name, former address and former fiscal year, if changed since last report)
 State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: Common Stock, $0.10 par value
    
    664,153Class
Transitional Small Business Disclosure Format:
    
    Outstanding as of April 19, 2005Yes o
    
    No þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Controls and ProceduresItem 6. ExhibitsSIGNATURESEX-31.1 SECTION 302, CERTIFICATION 0F THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32 SECTION 906, CERTIFICATION OF THE CEO AND CFO    Table of Contents  
 PART I. FINANCIAL INFORMATION 
 Item 1.
Financial Statements HEARTLAND BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited) March 31, 2005
    
    
    December 31, 2004ASSETSCash and due from banks
    
    $
    7,221,969
    
    
    $
    4,679,972Federal funds sold
    
    
    11,500,623
    
    
    
    5,608,493Total cash and cash equivalents
    
    
    18,722,592
    
    
    
    10,288,465Securities Available for Sale
    
    
    9,324,882
    
    
    
    3,813,800Securities Held to Maturity
    
    
    18,912,337
    
    
    
    18,900,607Loans Held for Sale
    
    
    1,200,120
    
    
    
    1,673,505Loans:Commercial, financial and agricultural
    
    
    24,682,525
    
    
    
    28,244,523Real estate - mortgage
    
    
    65,088,428
    
    
    
    57,872,091Installment and consumer loans
    
    
    26,518,267
    
    
    
    24,293,461Total loans
    
    
    116,289,220
    
    
    
    110,410,075Less: Allowance for loan losses
    
    
    (1,095,253
    )
    
    
    (1,036,845
    )Net loans
    
    
    115,193,967
    
    
    
    109,373,230Property and equipment
    
    
    2,679,923
    
    
    
    2,631,264Other assets
    
    
    3,115,080
    
    
    
    1,241,116TOTAL ASSETS
    
    $
    169,148,901
    
    
    $
    147,921,987LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDeposits:Non-interest bearing demand
    
    $
    41,314,347
    
    
    $
    30,957,574Savings, NOW, and money market
    
    
    76,636,946
    
    
    
    69,893,302Time deposits under $100,000
    
    
    20,427,647
    
    
    
    19,308,974Time deposits over $100,000
    
    
    17,033,539
    
    
    
    15,878,938Total deposits
    
    
    155,412,479
    
    
    
    136,038,788Securities sold under repurchase agreements
    
    
    902,485
    
    
    
    616,154Long-term debt
    
    
    
    
    
    
    2,350,000Subordinated debentures
    
    
    3,351,000
    
    
    
    Other liabilities
    
    
    629,585
    
    
    
    541,508Total liabilities
    
    
    160,295,549
    
    
    
    139,546,450Shareholders EquityCommon stock, $.10 par value, 10,000,000 shares
authorized, 664,153 and 663,560 shares issued and outstanding
    
    
    66,415
    
    
    
    66,356Preferred stock, $.01 par value, 1,000,000 shares
authorized, no shares issued or outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    6,599,068
    
    
    
    6,589,639Retained earnings
    
    
    2,234,359
    
    
    
    1,726,243Accumulated other comprehensive income
    
    
    (46,490
    )
    
    
    (6,701
    )Total shareholders equity
    
    
    8,853,352
    
    
    
    8,375,537TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    169,148,901
    
    
    $
    147,921,987




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##### Table of Contents



HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three Months Ended March 31,2005
    
    
    2004Interest incomeInterest and fees on loans
    
    $
    1,865,284
    
    
    $
    1,288,238Interest on federal funds sold
    
    
    69,230
    
    
    
    23,942Interest on securities
    
    
    184,876
    
    
    
    105,053Total interest income
    
    
    2,119,390
    
    
    
    1,417,233Interest expenseInterest on deposits
    
    
    398,170
    
    
    
    268,421Interest on borrowings
    
    
    29,397
    
    
    
    8,816Total interest expense
    
    
    427,567
    
    
    
    277,237Net interest income
    
    
    1,691,823
    
    
    
    1,139,996Provision for loan losses
    
    
    58,734
    
    
    
    29,514Net interest income
after provision for loan losses
    
    
    1,633,089
    
    
    
    1,110,482Noninterest incomeService charges and fees
    
    
    77,319
    
    
    
    92,377Gain on securities sales/calls
    
    
    
    
    
    
    Gain on sale of loans
    
    
    105,075
    
    
    
    55,801Other income
    
    
    66,973
    
    
    
    20,709Total noninterest income
    
    
    249,367
    
    
    
    168,887.
    
    
    
    .Noninterest expenseSalaries and employee benefits
    
    
    503,142
    
    
    
    470,049Occupancy expenses
    
    
    55,412
    
    
    
    54,319Furniture and equipment expenses
    
    
    51,699
    
    
    
    69,311Other operating expenses
    
    
    466,705
    
    
    
    354,330Total noninterest expense
    
    
    1,076,958
    
    
    
    948,009Income before income taxes
    
    
    805,498
    
    
    
    331,360Income taxes
    
    $
    297,382
    
    
    $
    120,780Net Income
    
    $
    508,116
    
    
    $
    210,580Net Income Per Share:Basic
    
    $
    0.77
    
    
    $
    0.32Diluted
    
    $
    0.72
    
    
    $
    0.31Weighted Average Shares Outstanding:Basic
    
    
    662,343
    
    
    
    658,255Diluted
    
    
    707,087
    
    
    
    685,525




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##### Table of Contents



HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Three Months Ended March 31, 2005 and 2004
(unaudited) AccumulatedCommon
    
    
    Additional
    
    
    Retained
    
    
    Other
    
    
    TotalStock Par
    
    
    Paid-in
    
    
    Earnings
    
    
    Comprehensive
    
    
    ShareholdersValue
    
    
    Capital
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    EquityBALANCE, December 31, 2003
    
    $
    65,703
    
    
    $
    6,486,652
    
    
    $
    494,108
    
    
    $
    (10,271
    )
    
    $
    7,036,192Additional stock issued
    
    
    653
    
    
    
    102987
    
    
    
    
    
    
    
    
    
    
    
    103640Comprehensive Income:Net income for the three months ended
March 31, 2004
    
    
    
    
    
    
    
    
    
    
    210,580
    
    
    
    
    
    
    
    210,580Other comprehensive income:Change in unrealized gain on
securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,109
    
    
    
    8,109Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,689BALANCE, March 31, 2004
    
    $
    66,356
    
    
    $
    6,589,639
    
    
    $
    704,688
    
    
    $
    (2,162
    )
    
    $
    7,358,521BALANCE, December 31, 2004
    
    $
    66,356
    
    
    $
    6,589,639
    
    
    $
    1,726,243
    
    
    $
    (6,701
    )
    
    $
    8,375,537Additional stock issued
    
    
    59
    
    
    
    9,429
    
    
    
    
    
    
    
    
    
    
    
    9,488Comprehensive Income:Net income for the three months ended
March 31, 2005
    
    
    
    
    
    
    
    
    
    
    508,116
    
    
    
    
    
    
    
    508,116Other comprehensive income:Change in unrealized loss on
securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,789
    )
    
    
    (39,789
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    468,327BALANCE, March 31, 2005
    
    $
    66,415
    
    
    $
    6,599,068
    
    
    $
    2,234,359
    
    
    $
    (46,490
    )
    
    $
    8,853,352




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##### Table of Contents



HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2005 and 2004
(unaudited) Three Months Ended March
    
    31,2005
    
    
    2004Operating ActivitiesNet income
    
    $
    508,116
    
    
    $
    210,580Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Deferred income taxes
    
    
    (28,400
    )
    
    
    (4,693
    )Provision for loan losses
    
    
    58,734
    
    
    
    29,514Depreciation and amortization
    
    
    61,482
    
    
    

    66,185BOLI income
    
    
    (16,007
    )
    
    
    Net accretion/amortization on securities available for sale
    
    
    (3,823
    )
    
    
    39,372Change in balances of:Loans held for sale
    
    
    473,385
    
    
    
    Bank owned life insurance
    
    
    (1,650,000
    )
    
    
    Other assets
    
    
    (216,273
    )
    
    
    (59,394
    )Other liabilities
    
    
    116,477
    
    
    
    (460,993
    )Net cash provided by (used in) operating activities
    
    
    (696,309
    )
    
    
    (179,429
    )Investing ActivitiesNet funding of loans
    
    
    (5,879,471
    )
    
    
    (3,667,440
    )Purchase of securities available for sale
    
    
    (6,045,025
    )
    
    
    (2,064,300
    )Principal collections, maturities and calls on securities available for sale
    
    
    484,830
    
    
    
    835,316Acquisition of property and equipment
    
    
    (100,408
    )
    
    
    (27,944
    )Net cash used in investing activities
    
    
    (11,540,074
    )
    
    
    (4,924,368
    )Financing ActivitiesNet increase in deposits
    
    
    19,373,691
    
    
    
    12,595,751Proceeds from sale of stock
    
    
    9,488
    
    

    
    103,640Other borrowings
    
    
    1,287,331
    
    
    
    837,139Net cash provided by financing activities
    
    
    20,670,510
    
    
    
    13,536,530Net increase in cash and cash equivalents
    
    
    8,434,127
    
    
    
    8,432,733Cash and cash equivalents:Beginning of year
    
    
    10,288,465
    
    
    
    11,768,627End of quarter
    
    $
    18,722,592
    
    
    $
    20,201,360SUPPLEMENTAL DISCLOSUREInterest paid
    
    $
    417,220
    
    
    $
    268,730Income taxes paid
    
    $
    341,000
    
    
    $
    4,000




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##### Table of Contents



NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Three Month Ended March 31,2005 NOTE 1  ORGANIZATION Heartland Bancshares, Inc. is a Florida corporation with headquarters in Sebring, Florida.
The company owns 100% of the capital stock of Heartland National Bank. Heartland National
Bank is a nationally chartered full service institution with an office in Sebring, Florida,
an office in Lake Placid, Florida, and an office in Avon Park, Florida. The Bank opened for
business on September 7, 1999. The accompanying consolidated financial statements include the accounts of Heartland
Bancshares, Inc. and Heartland National Bank. All significant inter-company accounts and
balances have been eliminated. NOTE 2  BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance
with the instructions of Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting of normal
recurring entries) considered necessary for a fair presentation of the companys financial
results have been made. Operating results for the three months ended March 31, 2005, may
not be indicative of the results that may be expected for the year ending December 31, 2005. NOTE 3  EARNINGS PER SHARE Basic earnings per share have been computed using the weighted average number of shares
during the respective periods. Fully diluted earnings per share have been computed using the
weighted average number of shares used for basic earnings per share, adjusted for the
dilutive effect of stock options outstanding, assuming use of the treasury stock method.
These amounts are as follows: Three Months
    
    
    Three MonthsEnding
    
    
    Ending3/31/05
    
    
    3/31/04Weighted average shares outstanding
    
    
    662,343
    
    
    
    658,255Dilutive shares from effect of outstanding options
    
    
    44,744
    
    
    
    27,270Shares used for diluted computations
    
    
    707,087
    
    
    
    685,525
 NOTE 4  PRO FORMA EFFECT OF STOCK OPTIONS As permitted by applicable accounting principles, management has elected to disclose rather
than to record the compensatory effect of stock options granted to employees and directors.
The pro forma effect has been estimated by use of the Black  Scholes option pricing model,
assuming no volatility, no dividends and average lives and exercise probability by option
class. At March 31, 2005, there were options outstanding for 103,500 shares of common stock,
compared to 77,500 as of March 31, 2004. Options for 2,750
shares were granted, but no shares exercised or forfeited.




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##### Table of Contents



NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended March 31, 2005
(continued) Had the effect of these options been recorded by Heartland Bancshares, compensation and net income
on a consolidated basis would have been as follows: Three Months Ended March 31,2005
    
    
    2004Compensation as reported
    
    $
    503,142
    
    
    $
    470,049Pro forma effect of options
    
    
    9,529
    
    
    
    1,438Pro forma compensation
    
    $
    512,671
    
    
    $
    471,487Net income, as reported
    
    $
    508,116
    
    
    $
    210,580Pro forma effect of options
    
    
    (9,529
    )
    
    
    (1,438
    )Pro forma net income
    
    $
    498,587
    
    
    $
    209,142Basic earnings per share, as reported
    
    $
    0.77
    
    
    $
    0.32Pro forma effect of options
    
    
    (0.02
    )
    
    
    (0.00
    )Pro forma basic earnings per share
    
    $
    0.75
    
    
    $
    0.32Diluted earnings per share, as reported
    
    $
    0.74
    
    
    $
    0.31Pro forma effect of options
    
    
    (0.03
    )
    
    
    (0.00
    )Pro forma diluted earnings per share
    
    $
    0.71
    
    
    $
    0.31
 NOTE 5  SUBORDINATED DEBENTURES During the quarter ending March 31, 2005 the Company borrowed $3,351,000 through issuance of
subordinated debentures. This indebtedness is unsecured and bears interest at the 3-month
LIBOR plus 1.90%. The principal is not due until the maturity date of March 17, 2035, but
may be prepaid after five years without penalty. A portion of the proceeds from this
borrowing was used to liquidate the long term debt outstanding at December 31, 2004.




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations. Heartland Bancshares operations are conducted through its sole subsidiary, Heartland National
Bank, which commenced operations in September 1999. Financial Condition Management continuously monitors the financial condition of Heartland National Bank in order
to maintain sufficient capital to support the operations of Heartland National Bank and Heartland
Bancshares and to protect the depositors of Heartland National Bank. Significant items affecting
Heartland National Banks financial condition are discussed below. Asset Quality A major key to long-term earnings growth is the maintenance of a high-quality loan portfolio.
Heartland National Banks directive in this regard is carried out through its policies and
procedures for extending credit to Heartland National Banks customers. The goal of these policies
and procedures is to provide a sound basis for new credit extensions and an early recognition of
problem assets to allow the most flexibility in their timely disposition. At March 31, 2005, management had identified no non-performing assets. Additions to the
allowance for loan losses are made periodically to maintain the allowance at an appropriate level
based upon managements analysis of potential risk in the loan portfolio. The amount of the loan
loss provision is determined by an evaluation of the level of loans outstanding, the level of
non-performing loans, historical loan loss experience, delinquency trends, the amount of actual

losses charged to the reserve in a given period, and assessment of present and anticipated economic
conditions. Liquidity Liquidity represents the ability to provide steady sources of funds for loan commitments and
investment activities, as well as to maintain sufficient funds to cover deposit withdrawals and
payment of operating obligations. As Heartland National Bank grows, liquidity needs are met
either by converting assets to cash or by attracting new deposits. Heartland National Bank had
deposits of $155.4 million at March 31, 2005. Below are the pertinent liquidity balances and
ratios at March 31, 2005 and December 31, 2004. At
    
    
    AtMarch 31, 2005
    
    
    December 31, 2004Cash and cash equivalents
    
    $
    18,722,592
    
    
    $
    10,288,465Securities available for sale
    
    $
    8,784,532
    
    
    $
    3,813,800CDs over $100,000 to total deposits ratio
    
    
    11.0
    %
    
    
    11.7
    %Loan to deposit ratio
    
    
    75.6
    %
    
    
    82.4
    %
 Cash and cash equivalents are the primary source of liquidity. At March 31, 2005, cash and
cash equivalents amounted to $18.7 million, representing 11.1% of total assets, as compared to
$20.2 million, or 16.0% of total assets at March 31, 2004. Securities available for sale provide a
secondary source of liquidity. At March 31, 2005, large denomination certificates accounted for 11.0% of total deposits as
compared to 11.7% as of December 31, 2004. Large denomination CDs are generally more volatile than
other deposits. As a result, management continually monitors the competitiveness of the rates it
pays on its large denomination CDs and periodically adjusts its rates in accordance with market
demands. Significant withdrawals of large denomination CDs could have a material adverse effect on
Heartland National Banks liquidity. Management believes that since a majority of the above
certificates were obtained from Heartland National Bank customers residing in Highlands County,
Florida, the volatility of such deposits is lower than if such deposits were obtained from
depositors residing outside of Highlands County, as outside depositors are generally considered to
be more likely to be rate sensitive. Management knows of no trends, demands, commitments, events or uncertainties that should
result in or are reasonably likely to result in Heartland Bancshares liquidity increasing or
decreasing in any material way in the foreseeable future. Capital Adequacy There are two primary measures of capital adequacy for banks and bank holding companies: (i)
risk-based capital guidelines and (ii) the leverage ratio. The risk-based guidelines measure the amount of a banks required capital in relation to the
degree of risk perceived in its assets and its off-balance sheet items. Under the risk-based
capital guidelines, capital is divided into two tiers. Tier 1 capital consists of common shareholders equity, non-cumulative perpetual preferred stock and any related
surplus and minority interest in the equity




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accounts of consolidated subsidiaries. Goodwill is subtracted from the total. Tier 2 capital consists of the allowance for loan losses, hybrid
capital instruments, term subordinated debt and intermediate term preferred stock. Banks are
required to maintain a minimum risk-based capital ratio of 8.0%, with at least 4.0% consisting of
Tier 1 capital. The second measure of capital adequacy is the leverage ratio, which is computed by dividing
Tier 1 capital by average total assets during the most recent quarter. The OCC has established a
4.0% minimum leverage ratio requirement for all banks that are not rated CAMELS 1. The table below illustrates Heartland National Banks and Heartland Bancshares regulatory
capital ratios at March 31, 2005 and December 31, 2004: WellMarch 31,
    
    
    December 31,
    
    
    capitalized2005
    
    
    2004
    
    
    requirementHeartland National BankTier 1 risk-based capital ratio
    
    
    9.2
    %
    
    
    9.4
    %
    
    
    6.0
    %Total risk-based capital ratio
    
    
    10.1
    %
    
    
    10.3
    %
    
    
    10.0
    %Leverage ratio
    
    
    7.0
    %
    
    
    7.4
    %
    
    
    5.0
    %Heartland Bancshares  ConsolidatedTier 1 risk-based capital ratio
    
    
    9.7
    %
    
    
    7.4
    %
    
    
    6.0
    %Total risk-based capital ratio
    
    
    10.9
    %
    
    
    8.3
    %
    
    
    10.0
    %Leverage ratio
    
    
    7.5
    %
    
    
    5.8
    %
    
    
    5.0
    %




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##### Table of Contents



Results of Operations Heartland Bancshares had net income of $508,116 in the first quarter of 2005, compared to
$210,580 in the first quarter of 2004. The following is a brief discussion of the more significant
components of net income:  (a)
    Net interest income represents the difference between interest
received on interest earning assets and interest paid on interest bearing
liabilities. The following tables set forth the main components of interest
earning assets and interest bearing liabilities for the quarter ended March 31,
2005, as compared to the comparable quarter ended March 31, 2004. Three Months Ended March 31, InterestInterest Earning
    
    Average
    
    
    Income/
    
    
    Yield/Assets/Interest
    
    Balance
    
    
    Cost
    
    
    CostBearing Liabilities
    
    2005
    
    
    2004
    
    
    2005
    
    2004
    
    
    2005
    
    2004(dollars in thousands)Federal funds sold
    
    $
    11,212
    
    
    $
    10,800
    
    
    $
    69
    
    
    $
    24
    
    
    
    2.46
    %
    
    
    0.89
    %Securities
    
    
    24,095
    
    
    
    16,766
    
    
    
    185
    
    
    
    105
    
    
    
    3.07
    %
    
    
    2.51
    %Loans
    
    
    114,823
    
    
    
    83,257
    
    
    
    1,865
    
    
    
    1,288
    
    
    
    6.50
    %
    
    
    6.19
    %Total
    
    $
    150,130
    
    
    $
    110,823
    
    
    
    2,119
    
    
    
    1,417
    
    
    
    5.65
    %
    
    
    5.11
    %Deposits
    
    $
    111,435
    
    
    $
    108,673
    
    
    
    398
    
    
    
    268
    
    
    
    1.43
    %
    
    
    0.97
    %Borrowings
    
    
    3,253
    
    
    
    2,166
    
    
    
    29
    
    
    
    9
    
    
    
    3.57
    %
    
    
    1.66
    %Total
    
    $
    114,688
    
    
    $
    110,839
    
    
    
    427
    
    
    
    277
    
    
    
    1.49
    %
    
    
    1.00
    %Net interest income/spread
    
    
    
    
    
    $
    1,692
    
    
    $
    1,140
    
    
    
    4.16
    %
    
    
    4.11
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.51
    %
    
    
    4.14
    %
  (b)
    At December 31, 2004, the allowance for loan losses was $1,036,845.
During the three months ended March 31, 2005, an additional $58,734 was provided
to the allowance for loan losses based on the volume of loan growth, bringing the
balance to $1,095,579. There were charge-offs of $326 in the first quarter of
2005, bringing the balance to $1,095,253. As of March 31, 2005, management
considered the allowance for loan losses to be adequate. However, there can be
no assurance that charge-offs in future periods will not exceed the allowance for
loan losses or that additional provisions to the allowance will not be required.(c)
    Non-interest income, which consists primarily of service fees on
deposit accounts and other miscellaneous fees, amounted to $249,367, or an
annualized 0.62% of average assets, for the three months ended March 31, 2005 as
compared to $168,887, or an annualized 0.57% of average assets, for the quarter
ended March 31, 2004. This increase can be attributed mainly to the increase in
fees on the sale of loans.(d)
    Non-interest expense for the three months ended March 31, 2005
amounted to
$1,076,958 as compared to
$948,009 for the same period in 2004. The components of non-interest expense for
the three months ended March 31, 2005 and March 31, 2004 are set forth below:




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Three Months Ended
    
    
    Three Months Ended
    
    
    Increase/March 31, 2005
    
    
    March 31, 2004
    
    
    DecreaseSalaries and benefits
    
    $
    503,142
    
    
    $
    470,049
    
    
    $
    33,093Occupancy expenses
    
    
    55,412
    
    
    
    54,319
    
    
    
    1,093Equipment expenses
    
    
    51,699
    
    
    
    69,311
    
    
    
    (17,612
    )General operating expenses
    
    
    466,705
    
    
    
    354,330
    
    
    
    112,375Total non-interest expense
    
    $
    1,076,958
    
    
    $
    948,009
    
    
    $
    128,949
 Increases in operating expenses for the three months ended March 31, 2005 as compared to March
31, 2004 can be mostly attributed to the addition of personnel and other variable expenses as the
volume of business has increased. In addition, Heartland Bancshares instituted a salary
continuation plan for the top two executive officers. Off-Balance Sheet Arrangements The financial statements do not reflect various commitments and contingent liabilities that
arise in the normal course of business to meet the financing needs of customers. These include
commitments to extend credit and honor stand-by letters of credit. These instruments involve, to
varying degrees, elements of credit, interest rate and liquidity risks in excess of amounts
reflected in the balance sheets. The extent of the Banks involvement in these commitments or
contingent liabilities is expressed by the contractual, or notional, amounts of the instruments. Commitments to extend credit amounted to approximately $32.5 million at March 31, 2005. These
represent legally binding agreements to lend to customers with fixed expiration dates or other
termination clauses. Since many commitments are expected to expire without being funded, committed
amounts do not necessarily represent future liquidity requirements. Stand-by letters of credit are conditional commitments issued by the Bank guaranteeing the
performance of a customer to a third party. At March 31, 2005, the Bank has outstanding stand-by
letters of credit with face amounts of approximately $225,000. The Company expects no significant losses to be realized in the performance of its obligations
under any of the above instruments. Cautionary Note Regarding Forward-Looking Statements Heartland Bancshares may, from time to time, make written or oral forward-looking statements,
including statements contained in Heartland Bancshares filings with the Securities and Exchange
Commission and its reports to stockholders. Such forward-looking statements are made based on
managements belief as well as assumptions made by, and information currently available to,
management pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Heartland Bancshares actual results may differ materially from the results anticipated in
these forward-looking statements due to a variety of factors, including governmental monetary and
fiscal policies, deposit levels, loan demand, loan collateral values, securities portfolio values
and interest rate risk management; the effects of competition in the banking business from other
commercial banks, savings and loan associations, mortgage banking firms, consumer finance
companies, credit unions, securities brokerage firms, insurance companies, money market mutual
funds and other financial institutions operating in Heartland Bancshares market area and
elsewhere, including institutions operating through the Internet; changes in government
regulations relating to the banking industry, including regulations relating to branching and
acquisitions; failure of assumptions underlying the establishment of reserves for loan losses,
including the value of collateral underlying delinquent loans, and other factors. Heartland
Bancshares cautions that such factors are not exclusive. Heartland Bancshares does not undertake
to update any forward-looking statements that may be made from time to time by, or on behalf of,
Heartland Bancshares.




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Item 3. Controls and Procedures Heartland Bancshares Chief Executive Officer and Chief Financial Officer have evaluated
Heartland Bancshares disclosure controls and procedures as of a date within 90 days prior to the
date of this filing, and they concluded that these controls and procedures are effective. There
have been no significant changes in internal controls or in other factors that could significantly
affect these controls subsequent to the date of this evaluation. Disclosure controls and procedures are Heartland Bancshares controls and other procedures
that are designed to ensure that information it is required to disclose in the reports it files
under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information
Heartland Bancshares is required to disclose in the reports that it files under the Exchange Act is
accumulated and communicated to management, including the principal executive and financial
officers, as appropriate, to allow timely decisions regarding required disclosure. 
 Item 6. Exhibits  (a)
    Exhibits. The following exhibits are filed with this Report: Exhibit No.
    
    Description31.1
    -
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    -
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    -
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEARTLAND BANCSHARES, INC.Date: 
5-11-05
    By:
    /s/  James C. ClinardJames C. Clinard, President and
Chief Executive Officer (principal executive officer)Date: 5-11-05
    By:
    /s/  Martha J. KelleyMartha J. Kelley, Chief Financial Officer(principal financial and accounting officer)