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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE
ACT OF 1934



For Quarterly Period Ended June 30, 2004



Commission File Number: 333-67107



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HEARTLAND BANCSHARES, INC.

(Exact name of small business issuer as
specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 65-0854929                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                            |  |           
|------------------------------------------- |  | ----------
|320 U.S. Highway 27 North, Sebring, Florida |  | 33870     
|(Address of principal executive offices)    |  | (Zip Code)



Issuers
telephone number: (863) 386-1300



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



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 |  | 663,560                               
|Class                         |  | Shares outstanding as of July 13, 2004



Transitional Small Business Disclosure
Format:    Yes ̈No  x



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PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



HEARTLAND BANCSHARES, INC.

CONSOLIDATED
BALANCE SHEETS

(unaudited)

|                                                                                                              |  |               |             |   |                   |   |             |  
|------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                              |  | June 30, 2004 |             |   | December 31, 2003 |  
|ASSETS                                                                                                        |  |               |             |   |                   |   |             |  
|                                                                                                              |  |              
|Cash and due from banks                                                                                       |  | $             | 4,197,181   |   |                   | $ | 5,048,023   |  
|Federal funds sold                                                                                            |  |               | 11,801,829  |   |                   |   | 6,720,604   |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|Total cash and cash equivalents                                                                               |  |               | 15,999,010  |   |                   |   | 11,768,627  |  
|Securities Available for Sale                                                                                 |  |               | 5,129,432   |   |                   |   | 7,796,709   |  
|Securities Held to Maturity                                                                                   |  |               | 19,859,806  |   |                   |   | 8,002,437   |  
|Other securities                                                                                              |  |               | 512,200     |   |                   |   | 441,900     |  
|Loans:                                                                                                        |  |               |             |   |                   |   |             |  
|Commercial, financial and agricultural                                                                        |  |               | 20,434,824  |   |                   |   | 20,990,891  |  
|Real estatemortgage                                                                                          |  |               | 48,915,610  |   |                   |   | 41,305,918  |  
|Installment and consumer loans                                                                                |  |               | 21,139,107  |   |                   |   | 19,528,144  |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|Total loans                                                                                                   |  |               | 90,489,541  |   |                   |   | 81,824,953  |  
|Less: Allowance for loan losses                                                                               |  |               | (847,254    | ) |                   |   | (779,222    | )
|                                                                                                              |  |               |             |   |                   |   |             |  
|Net loans                                                                                                     |  |               | 89,642,287  |   |                   |   | 81,045,731  |  
|Property and equipment                                                                                        |  |               | 2,655,512   |   |                   |   | 2,745,568   |  
|Other assets                                                                                                  |  |               | 1,088,758   |   |                   |   | 962,327     |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|TOTAL ASSETS                                                                                                  |  | $             | 134,887,005 |   |                   | $ | 112,763,299 |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|                                                                                                              |  |              
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                          |  |               |             |   |                   |   |             |  
|                                                                                                              |  |              
|Liabilities                                                                                                   |  |               |             |   |                   |   |             |  
|Deposits:                                                                                                     |  |               |             |   |                   |   |             |  
|Non-interest bearing demand                                                                                   |  | $             | 30,179,973  |   |                   | $ | 21,679,621  |  
|Savings, NOW, and money market                                                                                |  |               | 60,488,557  |   |                   |   | 51,709,094  |  
|Time deposits under $100,000                                                                                  |  |               | 21,594,394  |   |                   |   | 18,537,522  |  
|Time deposits over $100,000                                                                                   |  |               | 10,549,429  |   |                   |   | 10,792,541  |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|Total deposits                                                                                                |  |               | 122,812,353 |   |                   |   | 102,718,778 |  
|Securities sold under repurchase agreements                                                                   |  |               | 2,594,838   |   |                   |   | 1,493,033   |  
|Long-term debt                                                                                                |  |               | 1,600,000   |   |                   |   | 725,000     |  
|Other liabilities                                                                                             |  |               | 297,005     |   |                   |   | 790,296     |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|Total liabilities                                                                                             |  |               | 127,304,196 |   |                   |   | 105,727,107 |  
|                                                                                                              |  |              
|Shareholders Equity                                                                                          |  |               |             |   |                   |   |             |  
|Common stock, $.10 par value, 10,000,000 shares authorized, 663,560 and 657,030 shares issued and outstanding |  |               | 66,356      |   |                   |   | 65,703      |  
|Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued or outstanding                 |  |               |            |   |                   |   |            |  
|Additional paid-in capital                                                                                    |  |               | 6,589,639   |   |                   |   | 6,486,652   |  
|Retained earnings                                                                                             |  |               | 950,473     |   |                   |   | 494,108     |  
|Accumulated other comprehensive income (loss)                                                                 |  |               | (23,659     | ) |                   |   | (10,271     | )
|                                                                                                              |  |               |             |   |                   |   |             |  
|Total shareholders equity                                                                                    |  |               | 7,582,809   |   |                   |   | 7,036,192   |  
|                                                                                                              |  |               |             |   |                   |   |             |  
|TOTAL LIABILITIES ANDSHAREHOLDERS EQUITY                                                                     |  | $             | 134,887,005 |   |                   | $ | 112,763,299 |  
|                                                                                                              |  |               |             |   |                   |   |             |  





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HEARTLAND BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



|                                                                             |  |                             |           |   |      |   |           |  
|---------------------------------------------------------------------------- |  | --------------------------- | --------- | - | ---- | - | --------- | -
|                                                                             |  | Three Months Ended June 30, |          
|                                                                             |  | 2004                        |           |   | 2003 |  
|Interest income                                                              |  |                             |           |   |      |   |           |  
|Interest and fees on loans                                                   |  | $                           | 1,367,531 |   |      | $ | 1,104,691 |  
|Interest on federal funds sold                                               |  |                             | 36,379    |   |      |   | 40,577    |  
|Interest on securities                                                       |  |                             | 121,245   |   |      |   | 116,030   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total interest income                                                        |  |                             | 1,525,155 |   |      |   | 1,261,298 |  
|Interest expense                                                             |  |                             |           |   |      |   |           |  
|Interest on deposits                                                         |  |                             | 284,053   |   |      |   | 284,866   |  
|Interest on borrowings                                                       |  |                             | 9,258     |   |      |   | 3,837     |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total interest expense                                                       |  |                             | 293,311   |   |      |   | 288,703   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net interest income                                                          |  |                             | 1,231,844 |   |      |   | 972,595   |  
|Provision for loan losses                                                    |  |                             | 41,546    |   |      |   | 17,721    |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net interest income afterprovision for loan losses                           |  |                             | 1,190,298 |   |      |   | 954,874   |  
|Noninterest income                                                           |  |                             |           |   |      |   |           |  
|Service charges and fees                                                     |  |                             | 77,848    |   |      |   | 76,525    |  
|Gain/loss on securities sales/calls                                          |  |                             | (75       | ) |      |   |          |  
|Other income                                                                 |  |                             | 122,636   |   |      |   | 31,595    |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total noninterest income                                                     |  |                             | 200,409   |   |      |   | 108,120   |  
|Noninterest expense                                                          |  |                             |           |   |      |   |           |  
|Salaries and employee benefits                                               |  |                             | 472,895   |   |      |   | 379,723   |  
|Occupancy expenses                                                           |  |                             | 65,903    |   |      |   | 58,198    |  
|Furniture and equipment expenses                                             |  |                             | 50,650    |   |      |   | 60,549    |  
|Other operating expenses                                                     |  |                             | 384,451   |   |      |   | 260,502   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total noninterest expense                                                    |  |                             | 973,899   |   |      |   | 758,972   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Income before income taxes                                                   |  |                             | 416,808   |   |      |   | 304,022   |  
|Income taxes                                                                 |  | $                           | 171,023   |   |      | $ | 126,181   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net Income                                                                   |  | $                           | 245,785   |   |      | $ | 177,841   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net Income Per Share:                                                        |  |                             |           |   |      |   |           |  
|Basic                                                                        |  | $                           | 0.37      |   |      | $ | 0.27      |  
|                                                                             |  |                             |           |   |      |   |           |  
|Fully diluted                                                                |  | $                           | 0.36      |   |      | $ | 0.26      |  
|                                                                             |  |                             |           |   |      |   |           |  
|Weighted Average Shares Outstanding:                                         |  |                             |           |   |      |   |           |  
|Basic                                                                        |  |                             | 663,560   |   |      |   | 652,030   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Fully diluted                                                                |  |                             | 690,830   |   |      |   | 671,069   |  
|                                                                             |  |                             |           |   |      |   |           |  
|                                                                            
|HEARTLAND BANCSHARES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | 
|
|
|                                                                             |  | Six Months Ended June 30,   |          
|                                                                             |  | 2004                        |           |   | 2003 |  
|Interest income                                                              |  |                             |           |   |      |   |           |  
|Interest and fees on loans                                                   |  | $                           | 2,655,769 |   |      | $ | 2,154,655 |  
|Interest on federal funds sold                                               |  |                             | 60,321    |   |      |   | 71,882    |  
|Interest on securities                                                       |  |                             | 226,298   |   |      |   | 233,200   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total interest income                                                        |  |                             | 2,942,388 |   |      |   | 2,459,737 |  
|Interest expense                                                             |  |                             |           |   |      |   |           |  
|Interest on deposits                                                         |  |                             | 552,474   |   |      |   | 567,685   |  
|Interest on borrowings                                                       |  |                             | 18,074    |   |      |   | 7,123     |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total interest expense                                                       |  |                             | 570,548   |   |      |   | 574,808   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net interest income                                                          |  |                             | 2,371,840 |   |      |   | 1,884,929 |  
|Provision for loan losses                                                    |  |                             | 71,060    |   |      |   | 65,280    |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net interest incomeafter provision for loan losses                           |  |                             | 2,300,780 |   |      |   | 1,819,649 |  
|Noninterest income                                                           |  |                             |           |   |      |   |           |  
|Service charges and fees                                                     |  |                             | 170,225   |   |      |   | 160,337   |  
|Gain (loss) on securities sales/calls                                        |  |                             | (75       | ) |      |   | (9,801    | )
|Other income                                                                 |  |                             | 199,146   |   |      |   | 67,664    |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total noninterest income                                                     |  |                             | 369,296   |   |      |   | 218,200   |  
|                                                                             |  |                             | .         |   |      |   |           |  
|NON INTEREST EXPENSE                                                         |  |                             |           |   |      |   |           |  
|Salaries and employee benefits                                               |  |                             | 942,944   |   |      |   | 757,451   |  
|Occupancy expenses                                                           |  |                             | 120,222   |   |      |   | 107,502   |  
|Furniture and equipment expenses                                             |  |                             | 119,961   |   |      |   | 107,110   |  
|Other operating expenses                                                     |  |                             | 738,781   |   |      |   | 479,535   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Total noninterest expense                                                    |  |                             | 1,921,908 |   |      |   | 1,451,598 |  
|                                                                             |  |                             |           |   |      |   |           |  
|Income before income taxes                                                   |  |                             | 748,168   |   |      |   | 586,251   |  
|Income taxes                                                                 |  | $                           | 291,803   |   |      | $ | 234,631   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net Income                                                                   |  | $                           | 456,365   |   |      | $ | 351,620   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Net Income Per Share:                                                        |  |                             |           |   |      |   |           |  
|Basic                                                                        |  | $                           | 0.69      |   |      | $ | 0.54      |  
|                                                                             |  |                             |           |   |      |   |           |  
|Fully diluted                                                                |  | $                           | 0.66      |   |      | $ | 0.52      |  
|                                                                             |  |                             |           |   |      |   |           |  
|Weighted Average Shares Outstanding:                                         |  |                             |           |   |      |   |           |  
|Basic                                                                        |  |                             | 660,876   |   |      |   | 652,030   |  
|                                                                             |  |                             |           |   |      |   |           |  
|Fully diluted                                                                |  |                             | 688,146   |   |      |   | 671,069   |  
|                                                                             |  |                             |           |   |      |   |           |  





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HEARTLAND BANCSHARES, INC.

STATEMENT OF SHAREHOLDERS EQUITY

(unaudited)



|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|---------------------------------------------------------- |  | --------- | ------ | ---------- | - | --------- |  | - | ------------- | - |  | ------------- | ------- | - |  | - | --------- | -
|                                                           |  |           |        |            |   |           |  |   | Accumulated   |   |  |               |        
|                                                           |  | Common    |        | Additional |   | Retained  |  |   | Other         |   |  | Total         |        
|                                                           |  | Stock Par |        | Paid-in    |   | Earnings  |  |   | Comprehensive |   |  | Shareholders |        
|                                                           |  | Value     |        | Capital    |   | (Deficit) |  |   | Income (Loss) |   |  | Equity        |        
|BALANCE, December 31, 2002                                 |  | $         | 65,203 |            | $ | 6,437,152 |  | $ | (255,897      | ) |  | $             | 140,655 |   |  | $ | 6,387,113 |  
|                                                           |  |           |        |            |  
|Comprehensive Income:                                      |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Net income for the six months ended June 30, 2003          |  |           |        |            |   |           |  |   | 351,620       |   |  |               |         |   |  |   | 351,620   |  
|Other comprehensive income:                                |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Change in unrealized gain on securities available for sale |  |           |        |            |   |           |  |   |               |   |  |               | (66,144 | ) |  |   | (66,144   | )
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Total comprehensive income                                 |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   | 285,476   |  
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|BALANCE, June 30, 2003                                     |  | $         | 65,203 |            | $ | 6,437,152 |  | $ | 95,723        |   |  | $             | 74,511  |   |  | $ | 6,672,589 |  
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|                                                           |  |           |        |            |  
|BALANCE, December 31, 2003                                 |  | $         | 65,703 |            | $ | 6,486,652 |  | $ | 494,108       |   |  | $             | (10,271 | ) |  | $ | 7,036,192 |  
|                                                           |  |           |        |            |  
|Additional stock issued                                    |  |           | 653    |            |   | 102,987   |  |   |               |   |  |               |         |   |  |   | 103,640   |  
|Comprehensive Income:                                      |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Net income for the six months ended June 30, 2004          |  |           |        |            |   |           |  |   | 456,365       |   |  |               |         |   |  |   | 456,365   |  
|Other comprehensive income:                                |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Change in unrealized loss on securities available for sale |  |           |        |            |   |           |  |   |               |   |  |               | (13,388 | ) |  |   | (13,388   | )
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|Total comprehensive income                                 |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   | 442,977   |  
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  
|BALANCE, June, 2004                                        |  | $         | 66,356 |            | $ | 6,589,639 |  | $ | 950,473       |   |  | $             | (23,659 | ) |  | $ | 7,582,809 |  
|                                                           |  |           |        |            |   |           |  |   |               |   |  |               |         |   |  |   |           |  





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HEARTLAND BANCSHARES, INC

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)



|                                                                                            |  |                           |             |   |      |   |             |  
|------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                            |  | Six Months Ended June 30, |            
|                                                                                            |  | 2004                      |             |   | 2003 |  
|Operating Activities                                                                        |  |                           |             |   |      |   |             |  
|Net income                                                                                  |  | $                         | 456,365     |   |      | $ | 351,620     |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                           |             |   |      |   |             |  
|Deferred income taxes                                                                       |  |                           | (23,999     | ) |      |   | 234,631     |  
|Provision for loan losses                                                                   |  |                           | 71,060      |   |      |   | 65,280      |  
|Depreciation and amortization                                                               |  |                           | 135,512     |   |      |   | 119,607     |  
|Gain/Loss on called securities                                                              |  |                           | (75         | ) |      |   | 9,801       |  
|Net accretion/amortization on securities available for sale                                 |  |                           | 84,648      |   |      |   | (122,749    | )
|Change in balances of:                                                                      |  |                           |             |   |      |   |             |  
|Other assets                                                                                |  |                           | (73,597     | ) |      |   | 84,089      |  
|Other liabilities                                                                           |  |                           | (517,290    | ) |      |   | 46,174      |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by operating activities                                                   |  |                           | 132,624     |   |      |   | 788,453     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Investing Activities                                                                        |  |                           |             |   |      |   |             |  
|Net funding of loans                                                                        |  |                           | (8,664,588  | ) |      |   | (8,094,540  | )
|Purchase of securities available for sale                                                   |  |                           |            |   |      |   | (11,200,543 | )
|Purchase of securities held to maturity                                                     |  |                           | (14,932,511 | ) |      |   |             |  
|Principal collections, maturities and calls on securities available for sale                |  |                           | 5,566,294   |   |      |   | 7,684,531   |  
|Acquisition of property and equipment                                                       |  |                           | (45,456     | ) |      |   | (120,269    | )
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash used in investing activities                                                       |  |                           | (18,076,261 | ) |      |   | (11,730,821 | )
|                                                                                            |  |                           |             |   |      |   |             |  
|Financing Activities                                                                        |  |                           |             |   |      |   |             |  
|Net increase in deposits                                                                    |  |                           | 20,093,575  |   |      |   | 13,944,943  |  
|Proceeds from sale of stock                                                                 |  |                           | 103,640     |   |      |   |            |  
|Other borrowings                                                                            |  |                           | 1,976,805   |   |      |   | 371,369     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net cash provided by financing activities                                                   |  |                           | 22,174,020  |   |      |   | 14,316,312  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Net increase in cash and cash equivalents                                                   |  |                           | 4,230,383   |   |      |   | 3,373,944   |  
|                                                                                            |  |                          
|Cash and cash equivalents:                                                                  |  |                           |             |   |      |   |             |  
|Beginning of year                                                                           |  |                           | 11,768,627  |   |      |   | 12,988,255  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|End of quarter                                                                              |  | $                         | 15,999,010  |   |      | $ | 16,352,089  |  
|                                                                                            |  |                           |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURE                                                                     |  |                           |             |   |      |   |             |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Interest paid                                                                               |  | $                         | 571,400     |   |      | $ | 286,106     |  
|                                                                                            |  |                           |             |   |      |   |             |  
|Income taxes paid                                                                           |  | $                         | 803,000     |   |      | $ | 2,500       |  
|                                                                                            |  |                           |             |   |      |   |             |  





---

NOTES TO FINANCIAL STATEMENTS

(unaudited)

Six Months Ended June 30, 2004



NOTE 1  ORGANIZATION



Organization:



Heartland Bancshares, Inc. is a Florida corporation with headquarters in Sebring, Florida. The company was formed to organize and own 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



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 six months and quarter ended June 30, 2004 may not be indicative of the results that may be expected for the year ending December 31, 2004.



NOTE 3 - EARNINGS PER SHARE



Basic earnings per share have been computed using the weighted average
number of shares issued and outstanding 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. The amounts for the respective six-month and three-month periods are as follows:



|                                                   |  |                           |  |                             |  |         |  |        
|-------------------------------------------------- |  | ------------------------- |  | --------------------------- |  | ------- |  | -------
|                                                   |  | Six months ended June 30, |  | Three months ended June 30,
|                                                   |  | 2004                      |  | 2003                        |  | 2004    |  | 2003   
|Weighted average shares outstanding                |  | 660,876                   |  | 652,030                     |  | 663,560 |  | 652,030
|Dilutive shares from effect of outstanding options |  | 27,270                    |  | 19,039                      |  | 27,270  |  | 19,039 
|                                                   |  |                           |  |                             |  |         |  |        
|Shares used for fully diluted computations         |  | 688,146                   |  | 671,069                     |  | 690,830 |  | 671,069
|                                                   |  |                           |  |                             |  |         |  |        



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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 June 30, 2004 and 2003, there were options outstanding for 82,500 shares of common stock. Five thousand options were exercised in the second half of 2003 and five thousand options were granted
during the six months ended June 30, 2004.



Had the effect of
these options been recorded by Heartland Bancshares, compensation and net income on a consolidated basis would have been as follows:



|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | ------------------------- | ------- | - | --------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                              |  | Six Months Ended June 30, |         |   | Three Months Ended June 30, |  
|                                              |  | 2004                      |         |   | 2003                        |   |         | 2004 |  |   | 2003    |  
|Compensation, as reported                     |  | $                         | 942,944 |   |                             | $ | 757,451 |      |  | $ | 472,895 |   |  | $ | 379,723 |  
|Pro forma effect of options                   |  |                           | 2,875   |   |                             |   | 32,660  |      |  |   | 1,437   |   |  |   | 16,330  |  
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Pro forma compensation                        |  | $                         | 945,819 |   |                             | $ | 790,111 |      |  | $ | 474,422 |   |  | $ | 413,553 |  
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net income, as reported                       |  | $                         | 456,365 |   |                             | $ | 351,620 |      |  | $ | 245,785 |   |  | $ | 177,841 |  
|Pro forma effect of options                   |  |                           | (2,875  | ) |                             |   | (26,454 | )    |  |   | (1,437  | ) |  |   | (13,227 | )
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Pro forma net income                          |  | $                         | 453,490 |   |                             | $ | 325,166 |      |  | $ | 244,348 |   |  | $ | 164,614 |  
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Basic earnings per share, as reported         |  | $                         | 0.69    |   |                             | $ | 0.54    |      |  | $ | 0.37    |   |  | $ | 0.27    |  
|Pro forma effect of options                   |  |                           | (0.00   | ) |                             |   | (0.04   | )    |  |   | (0.00   | ) |  |   | (0.02   | )
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Pro forma basic earnings per share            |  | $                         | 0.69    |   |                             | $ | 0.50    |      |  | $ | 0.37    |   |  | $ | 0.25    |  
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Fully diluted earnings per share, as reported |  | $                         | 0.66    |   |                             | $ | 0.52    |      |  | $ | 0.36    |   |  | $ | 0.26    |  
|Pro forma effect of options                   |  |                           | (0.00   | ) |                             |   | (0.04   | )    |  |   | (0.00   | ) |  |   | (0.02   | )
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Pro forma fully diluted earnings per share    |  | $                         | 0.66    |   |                             | $ | 0.48    |      |  | $ | 0.36    |   |  | $ | 0.24    |  
|                                              |  |                           |         |   |                             |   |         |      |  |   |         |   |  |   |         |  



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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations



Heartland Bancshares was
incorporated in Florida in August 1998 to serve as a holding company for Heartland National Bank, a national banking association then in organization. Heartland National Bank opened for business in September 1999, and presently operates an office in
Sebring, Florida, an office in Lake Placid, Florida, and an office in Avon Park, Florida. Heartland National Bank is a full service commercial bank, without trust powers. Heartland Bank offers a full range of interest bearing and non-interest
bearing accounts, including commercial and retail checking accounts, money market accounts, individual retirement accounts, regular interest bearing statement savings accounts, certificates of deposit, commercial loans, real estate loans, home
equity loans and consumer/installment loans. In addition, Heartland National Bank provides such consumer services as U.S. Savings Bonds, travelers checks, cashiers checks, safe deposit boxes, bank by mail services, direct deposit and automatic
teller services.



Critical Accounting Policy



The accounting and financial reporting policies of Heartland Bancshares and
Heartland National Bank conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Heartland Bancshares has determined that its policy regarding the determination of its
allowance for loan losses is a critical accounting policy in that it requires significant judgments and involves complex estimates and the application of the policy has a significant impact on Heartland Bancshares financial statements.



The allowance for loan losses is an estimate of the losses
that may be sustained in Heartland National Banks portfolio. The allowance has two basic components: (1) specific loss estimates for individually classified and impaired loans, and (2) general loss estimates on loans for which no impairment
has been identified and large groups of smaller balance homogeneous loans. Specific loss estimates on individual loans include subjective evaluations related to secondary sources of repayment for the loan which are principally collateral
liquidation. The general loss allocations use historical loss ratio experience which may not be indicative of the actual losses present in the loan portfolio at a given point in time.



While the basic methodology of Heartland National Banks loan loss allowance estimation process has not changed,
management continuously re-evaluates the use of historical loss factors, national and local economic trends, credit concentrations and other relevant factors in determining the adequacy of the allowance for loan loss.



This estimation process associated with the allowance for loan losses can
have significant effects in the estimated loan loss expense of a given period. Generally, the allowance for loan losses increases as the outstanding balance of loans increase or the level of classified or impaired loans increases. Loans or portions
of loans that are deemed uncollectible are charged against and reduce the allowance.



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.



---

Management has identified no non-performing assets at June 30, 2004. 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 will generally be 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.



Securities Held To Maturity



At June 30, 2004, Heartland National Bank has
held-to-maturity securities of $19.9 million. Unrealized losses associated with these securities were $165,000 at June 30, 2004. Based on Heartland National Banks ability and intent to hold these investments until maturity, and the relatively
small amount of unrealized losses, management considers the potential impact of these unrealized losses to be immaterial.



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. Liquidity needs are met either by converting assets to cash or by attracting new deposits. Heartland National Bank had deposits of $122.8 million at June 30, 2004. Below are
the pertinent liquidity balances and ratios at June 30, 2004, December 31, 2003 and June 30, 2003.



|                                          |  |                  |            |   |                      |   |            |                  |  |   |            |  
|----------------------------------------- |  | ---------------- | ---------- | - | -------------------- | - | ---------- | ---------------- |  | - | ---------- | -
|                                          |  | At June 30, 2004 |            |   | At December 31, 2003 |   |            | At June 30, 2003 | 
|Cash and cash equivalents                 |  | $                | 15,999,010 |   |                      | $ | 11,768,627 |                  |  | $ | 16,352,089 |  
|Securities available                      |  | $                | 5,129,432  |   |                      | $ | 7,796,709  |                  |  | $ | 13,696,030 |  
|CDs over $100,000 to total deposits ratio |  |                  | 8.6        | % |                      |   | 10.5       | %                |  |   | 11.5       | %
|                                          |  |                  |           
|Loan to deposit ratio                     |  |                  | 73.7       | % |                      |   | 79.7       | %                |  |   | 71.0       | %



Cash and cash
equivalents are the primary source of liquidity. At June 30, 2004, cash and cash equivalents amounted to $16.0 million, representing 11.9% of total assets, as compared to $16.4 million, or 15.6% of total assets, at June 30, 2003. Securities
available for sale provide a secondary source of liquidity. Management believes it is likely that a substantial amount of U. S. Government Agency securities will be called prior to their contractual maturity dates, thus providing additional sources
of liquidity.



At June 30, 2004, large denomination
certificates accounted for 8.6% of total deposits as compared to 11.5% as of June 30, 2003. 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 interest 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.



---

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 $20.1 million at June 30, 2004. 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 June 30, 2004, the Bank has outstanding stand-by letters of credit with face amounts of approximately
$565,000.



The company expects no significant losses to be
realized in the performance of its obligations under any of the above instruments.



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 capital 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 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 June 30, 2004 and December 31, 2003:



|                                    |  |               |   |  |                   |   |  |                                |  
|----------------------------------- |  | ------------- | - |  | ----------------- | - |  | ------------------------------ | -
|                                    |  | June 30, 2004 |   |  | December 31, 2003 |   |  | Minimum Regulatory Requirement |  
|Heartland National Bank             |  |               |   |  |                   |   |  |                                |  
|Tier 1 Capital                      |  | 9.7           | % |  | 9.1               | % |  | 8.0                            | %
|Total risk-based capital ratio      |  | 10.6          | % |  | 10.1              | % |  | 4.0                            | %
|Leverage ratio                      |  | 7.0           | % |  | 7.1               | % |  | 4.0                            | %
|                                    |  |               |  
|Heartland Bancshares  Consolidated |  |               |   |  |                   |   |  |                                |  
|Tier 1 Capital                      |  | 8.0           | % |  | 8.4               | % |  | 4.0                            | %
|Total risk-based capital ratio      |  | 8.9           | % |  | 9.3               | % |  | 8.0                            | %
|Leverage ratio                      |  | 5.8           | % |  | 6.5               | % |  | 4.0                            | %



---

Results of Operations



Heartland Bancshares had net income of $245,785 in the second quarter of 2004, compared to $177,841 in the second quarter of
2003. For the six months ended June 30, 2004 and 2003, Heartland Bancshares had a net income of $456,365 and $351,620, respectively. 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 table sets forth
the main components of interest earning assets and interest bearing liabilities for the six months and quarter ended June 30, 2004, as compared to the comparable periods ended June 30, 2003.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|----------------------------------------------------- | ---- | ------------------------- | ------- | -------------------- | ---- | ---------------------- | ---- | - | ----- |  | - | ----- |  | ---- | - |  | ---- | -
|                                                      |      | Six Months Ended June 30, |         |                      |      |                        |      |  
|Interest Earning Assets/ Interest Bearing Liabilities |      | Average Balance           |         | Interest Income/Cost |      | Yield/ Cost            |     
|                                                      | 2004 |                           | 2003    |                      | 2004 |                        | 2003 |   | 2004  |  |   | 2003  | 
|                                                      |      |                           |         |                      |      | (dollars in thousands) |      |   |       |  |   |      
|Federal funds sold                                    |      | $                         | 13,484  |                      | $    | 12,642                 |      | $ | 60    |  | $ | 72    |  | .89  | % |  | 1.14 | %
|Securities                                            |      |                           | 18,603  |                      |      | 15,297                 |      |   | 226   |  |   | 233   |  | 2.43 | % |  | 3.05 | %
|Loans                                                 |      |                           | 85,918  |                      |      | 64,731                 |      |   | 2,656 |  |   | 2,155 |  | 6.18 | % |  | 6.66 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Total                                                 |      | $                         | 118,005 |                      | $    | 92,670                 |      |   | 2,942 |  |   | 2,460 |  | 4.99 | % |  | 5.31 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Deposits                                              |      | $                         | 115,098 |                      | $    | 91,435                 |      |   | 552   |  |   | 568   |  | .96  | % |  | 1.24 | %
|Borrowings                                            |      |                           | 3,156   |                      |      | 1,350                  |      |   | 18    |  |   | 7     |  | 1.14 | % |  | 1.04 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Total                                                 |      | $                         | 118,254 |                      | $    | 92,785                 |      |   | 570   |  |   | 575   |  | .97  | % |  | 1.24 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Net interest income/spread                            |      |                           |         |                      |      |                        |      | $ | 2,372 |  | $ | 1,885 |  | 4.02 | % |  | 4.07 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Net yield on earning assets                           |      |                           |         |                      |      |                        |      |   |       |  |   |       |  | 4.03 | % |  | 4.07 | %
|                                                      |      |                           |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  



---

|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|----------------------------------------------------- | ---- | --------------------------- | ------- | -------------------- | ---- | ---------------------- | ---- | - | ----- |  | - | ----- |  | ---- | - |  | ---- | -
|                                                      |      | Three Months Ended June 30, |         |                      |      |                        |      |  
|Interest Earning Assets/ Interest Bearing Liabilities |      | Average Balance             |         | Interest Income/Cost |      | Yield/ Cost            |     
|                                                      | 2004 |                             | 2003    |                      | 2004 |                        | 2003 |   | 2004  |  |   | 2003  | 
|                                                      |      |                             |         |                      |      | (dollars in thousands) |      |   |       |  |   |      
|Federal funds sold                                    |      | $                           | 15,809  |                      | $    | 14,293                 |      | $ | 36    |  | $ | 41    |  | .91  | % |  | 1.15 | %
|Securities                                            |      |                             | 19,720  |                      |      | 15,987                 |      |   | 121   |  |   | 116   |  | 2.45 | % |  | 2.90 | %
|Loans                                                 |      |                             | 87,507  |                      |      | 66,938                 |      |   | 1,368 |  |   | 1,105 |  | 6.25 | % |  | 6.60 | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Total                                                 |      | $                           | 123,036 |                      | $    | 97,218                 |      |   | 1,525 |  |   | 1,262 |  | 4.97 | % |  | 5.19 | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Deposits                                              |      | $                           | 119,710 |                      | $    | 95,063                 |      |   | 284   |  |   | 285   |  | .95  | % |  | 1.20 | %
|Borrowings                                            |      |                             | 3,524   |                      |      | 1,774                  |      |   | 9     |  |   | 4     |  | 1.02 | % |  | .90  | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Total                                                 |      | $                           | 123,234 |                      | $    | 96,837                 |      |   | 293   |  |   | 289   |  | 95   | % |  | 1.19 | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Net interest income/spread                            |      |                             |         |                      |      |                        |      | $ | 1,272 |  | $ | 973   |  | 4.14 | % |  | 4.00 | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  
|Net yield on earning assets                           |      |                             |         |                      |      |                        |      |   |       |  |   |       |  | 4.14 | % |  | 4.00 | %
|                                                      |      |                             |         |                      |      |                        |      |   |       |  |   |       |  |      |   |  |      |  



| | (b) | At December 31, 2003, the allowance for loan losses amounted to $779,222. During the six months ended June 30, 2004, an additional $71,060 was provided to the allowance for loan
losses. Net charge-offs during the first six months of 2004 amounted to $3,028, bringing the balance to $847,254 as compared to $660,944 at June 30, 2003. As of June 30, 2004, management considers the allowance for loan losses to be adequate to
absorb expected future losses. 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 $369,296, or 0.60% of average assets, for the six months
ended June 30, 2004 and $200,409, or 0.61% of average assets, for the quarter ended June 30, 2004, as compared to $218,200 and $108,120, respectively, for the six months and the quarter ended June 30 2003. The primary reason for the increase in
non-interest income was an increase in fees relating to the sale of real estate loan servicing.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Non-interest expense for the six months and quarter ended June 30, 2004 amounted to $1,921,908 and $973,899, respectively, as compared to $1,451,598 and $758,972 for the same
periods in 2003. The components of non-interest expense for the six months and quarter ended June 30, 2004 and June 30, 2003 are set forth below:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                           |  |                                |           |                                |   |                    |  |   |        
|-------------------------- |  | ------------------------------ | --------- | ------------------------------ | - | ------------------ |  | - | -------
|                           |  | Six Months Ended June 30, 2004 |           | Six Months Ended June 30, 2003 |   | Increase/ Decrease
|Salaries and benefits      |  | $                              | 942,944   |                                | $ | 757,451            |  | $ | 185,493
|Occupancy expenses         |  |                                | 120,222   |                                |   | 107,502            |  |   | 12,720 
|Equipment expenses         |  |                                | 119,961   |                                |   | 107,110            |  |   | 12,851 
|Other operating expenses   |  |                                | 738,781   |                                |   | 479,535            |  |   | 259,246
|                           |  |                                |           |                                |   |                    |  |   |        
|Total non-interest expense |  | $                              | 1,921,908 |                                | $ | 1,451,598          |  | $ | 470,310
|                           |  |                                |           |                                |   |                    |  |   |        



---

|                           |  |                             |         |                             |   |                    |  |   |         |  
|-------------------------- |  | --------------------------- | ------- | --------------------------- | - | ------------------ |  | - | ------- | -
|                           |  | Quarter Ended June 30, 2004 |         | Quarter Ended June 30, 2003 |   | Increase/ Decrease | 
|Salaries and benefits      |  | $                           | 472,895 |                             | $ | 379,723            |  | $ | 93,172  |  
|Occupancy expenses         |  |                             | 65,903  |                             |   | 58,198             |  |   | 7,705   |  
|Equipment expenses         |  |                             | 50,650  |                             |   | 60,549             |  |   | (9,899  | )
|Other operating expenses   |  |                             | 384,451 |                             |   | 260,502            |  |   | 123,949 |  
|                           |  |                             |         |                             |   |                    |  |   |         |  
|Total non-interest expense |  | $                           | 973,899 |                             | $ | 758,972            |  | $ | 214,927 |  
|                           |  |                             |         |                             |   |                    |  |   |         |  



Increases in
non-interest expenses for the six months ended June 30, 2004 as compared to June 30, 2003 can be largely attributed to increases in staffing requirements and expenses connected to a data processing conversion in February 2004.



Heartland Bancshares is not aware of any current recommendation by any
regulatory authority which, if implemented, would have a material effect on Heartland Bancshares liquidity, capital resources or results of operations.



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.



Item 3. Controls and Procedures



Management has developed and implemented disclosure controls and procedures to ensure that information required to be disclosed in the reports that
Heartland Bancshares files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Management, including the principal executive and
financial officers, evaluated the effectiveness of Heartland Bancshares disclosure controls and procedures as of June 30, 2004 and, based on their evaluation, Heartland Bancshares principal executive and financial officers have concluded
that these controls and procedures are operating effectively.



There were no changes in Heartland Bancshares internal control over financial reporting during the companys last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the companys
internal control over financial reporting.



---

PART II. OTHER INFORMATION



Item 4. Submission of Matters to a Vote of Security Holders



The 2004 Annual Meeting of Shareholders of Heartland Bancshares was held on
April 15, 2004. The following table sets forth the name of each individual elected at the 2004 Annual Meeting and the results of voting with respect to each director:



|                   |  |       |  |           |  |               
|------------------ |  | ----- |  | --------- |  | --------------
|Director           |  | Class |  | Votes For |  | Votes Withheld
|Hosmer L. Compton  |  | III   |  | 370,052   |  | 0             
|William R. Handley |  | III   |  | 370,052   |  | 0             
|Edward L. Smoak    |  | III   |  | 370,052   |  | 0             
|Lawrence B. Wells  |  | III   |  | 370,052   |  | 0             
|Stanley H. Wells   |  | III   |  | 370,052   |  | 0             



The term of each of
the following directors of Heartland Bancshares continued after the 2004 Annual Meeting: James B. Belflower, James C. Clinard, Roger D. Gurganus, Bert J. Harris III, Issac G. Nagib, Robert P. Palmer and Malcolm C. Watters, Jr. No other matters were
submitted to a vote of the shareholders at the 2004 Annual Meeting.



Item 6. Exhibits and Reports on Form 8-K



(a) Exhibits. The following exhibits are filed with this Report:



|            |  |                                                                                                   
|----------- |  | --------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                       
|31.1    -   |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|31.2    -   |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|32.1    -   |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                           



(b) Reports on Form
8-K. No report on Form 8-K was filed during the quarter ended June 30, 2004.



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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: August 12, 2004 |  | By:                        |  | /s/ James C. Clinard                                                                  
|                      |  |                            |  | James C. Clinard, President and Chief Executive Officer (principal executive officer) 
|                      |  |                           
|Date: August 12, 2004 |  | By:                        |  | /s/ Martha J. Kelley                                                                  
|                      |  |                            |  | Martha J. Kelley, Chief Financial Officer (principal financial and accounting officer)