SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB    ANNUAL REPORT UNDER SECTION 13
OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR    TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to 
Commission File Number:  333-32245
HEARTLAND BANCSHARES, INC.
(Name of small business issuer in its charter)

|Indiana 
(State or other jurisdiction of incorporation 
or organization)
420 North Morton Street 
Franklin, Indiana 
(Address of principal executive offices) | 35-2017085
(IRS Employer Id. No.)
46131
(Zip Code)
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------

Issuer's telephone number, including area code:  (317) 738-3915
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None
Check whether the issuer (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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        
        No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-KSB or any amendment to
this Form 10-KSB.

State issuer's revenues for its most recent fiscal year:  $11,196,000

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days:

On March 18, 2005, the aggregate market value of the common shares of the issuer
(including the accompanying preferred share purchase rights) held by
non-affiliates of the issuer was $17,292,642, valuing the common shares at the
last reported trade price on that date and assuming (solely for purposes of this
calculation) that all directors and executive officers of the issuers were
affiliates of the issuer and that no other shareholder was an affiliate of the
issuer.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

As of March 29, 2005, the latest practicable date, 1,407,646 of the issuer's
common shares, no par value (including accompanying preferred shares purchase
rights), were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

|1. | Portions of the Annual Report to Shareholders of Heartland Bancshares, Inc. for
the year ended December 31, 2004, to the extent stated herein, are incorporated
by reference from Exhibit 13 into Parts I and II.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Portions of the Proxy Statement of Heartland Bancshares, Inc. for the Annual
Meeting of its Shareholders to be held May 16, 2005, to the extent stated
herein, are incorporated by reference from Exhibit 99.1 into Part III.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FORM 10-KSB
TABLE OF CONTENTS

|           |                                                                                                                 
|---------- | ----------------------------------------------------------------------------------------------------------------
|          
|PART I     |                                                                                                                 
|          
|Item 1.    | Description of Business                                                                                         
|Item 2.    | Description of property                                                                                         
|Item 3.    | Legal Proceedings                                                                                               
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                             
|          
|PART II   
|          
|Item 5.    | Market for Common Equity, Related Stockholder Matters
  and Small Business Issuer Purchases of Equity Securities
|Item 6.    | Management's Discussion and Analysis or Plan of Operations                                                      
|Item 7.    | Financial Statements                                                                                            
|Item 8.    | Changes in and Disagreements with Accountants on
  Accounting and Financial Disclosure                          
|Item 8A.   | Controls and Procedures                                                                                         
|Item 8B.   | Other Information                                                                                               
|          
|PART III  
|          
|Item 9.    | Directors and Executive Officers of the Registrant                                                              
|Item 10.   | Executive Compensation                                                                                          
|Item 11.   | Security Ownership of Certain Beneficial Owners
  and Management and Related Stockholder Matters                
|Item 12.   | Certain Relationships and Related Transactions                                                                  
|Item 13.   | Exhibits                                                                                                        
|Item 14.   | Principal Accountant Fees and Services                                                                          
|          
|Signatures |                                                                                                                 

PART I

Information included in
or incorporated by reference in this Annual Report on Form 10-KSB, our other filings with
the Securities and Exchange Commission (the SEC) and our press releases or
other public statements, contain or may contain forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer
to a discussion of our forward looking statements and associated risks in Item
1Forward Looking Statements and Associated Risks in this Annual Report on Form
10-KSB.

ITEM
1.    DESCRIPTION OF BUSINESS (Dollar amounts are in
thousands, except per share data.)

GENERAL

Heartland Bancshares,
Inc. (Heartland or the Company) is a one-bank holding company
incorporated May 27, 1997. Heartland raised approximately $11,731 in equity capital
through the sale of 1,394,172 shares of Heartlands common stock at $9.07 per share,
net of underwriting discounts and offering costs. Proceeds were used to capitalize
Heartland Community Bank (the Bank), Heartlands primary asset, a
wholly-owned banking subsidiary, an Indiana-chartered commercial bank. The Bank received
regulatory approval to open in the fall of 1997 and commenced banking operation December
17, 1997.

During the three year
period ended December 31, 2004, Heartlands business focused on the development of
the business of the Bank. Material developments during this three year period included the
entry by the Banks regulators of a cease and desist order against the Bank in May
2002 (the May 2002 Order), the subsequent release of the May 2002 Order in
February 2004 (see the description of the May 2002 Order under Regulation and
Supervision of Heartland and the Bank, below) and the signing of a definitive merger
agreement with Blue River Bancshares, Inc., in August 2004, which was subsequently
terminated in February 2005 (see footnote 14 to the consolidated financial statements).
Certain financial data reflecting Heartlands consolidated financial condition as of
December 31, 2004, 2003, and 2002, and its consolidated results of operations for each of
the three years ended December 31, 2004, is included under the heading SELECTED
FINANCIAL DATA below.

The Bank operates from
offices located in Franklin, Greenwood, and Bargersville, Indiana.

The business of the
Bank consists primarily of attracting deposits from the general public, originating
commercial, residential real estate and consumer loans and purchasing and selling certain
investment securities. The Bank operates (through a division of the Bank that does
business under the name Heartland Investment Services in a cooperative
arrangement with a non-affiliated securities broker-dealer) a full-service brokerage
department in order to sell mutual funds and other non-deposit investment products to the
public. The Bank also offers a certificate of deposit brokerage program.

Heartland offers
commercial loans to area businesses in addition to new home construction loans and
business lines of credit. Consumer loans include, among others, new and used automobile
and other secured and unsecured personal loans. Heartland originates adjustable rate first
mortgage loans, second mortgage loans and home equity lines of credit secured by
single-family homes.

Dollar amounts in thousands except per share data.

5

As of December 31,
2004, the Bank had 84 full time equivalent employees. Of these employees, 8 full time
equivalent employees were employed in the residential mortgage loan department, 2 full
time equivalent employees were employed in the full-service brokerage department and 1
full time equivalent employee was employed in the certificate of deposit brokerage program
which departments do not produce or require significant amounts of assets. The Bank
utilizes a leased employee arrangement with a third party company, Professional Staff
Management, Inc., whereby all employees are leased to the Bank from the third party
company. The arrangement allows for employees to participate in group benefits of the
third party company. The third party company also administers the majority of human
resource activities including payroll, payroll taxes and policy administration. Heartland,
the parent company, has no full time employees.

SERVICE AREA

The Banks primary
service area is Johnson County, Indiana and the portion of Marion County south of
Southport road, Indianapolis, Indiana. Johnson County has been one of the top five fastest
growing counties in Indiana during the last fifteen years. Census data may be obtained
from the Census Bureau Internet site WWW.Census.gov. The majority of Heartlands
customers reside in Johnson County. The Bank has one branch in Franklin and two in
Greenwood, which are the two largest cities in the county, and a branch in Bargersville,
in southwestern Johnson County. Franklin is located in the south-central portion of
Johnson County. Greenwood is located on the northern edge of Johnson County and is
contiguous with the southern border of Marion County. Bargersville is in the southwest
portion of Johnson County.

Greenwood and Franklin
are growing in population and have been for at least 15 years. According to the 2000
census, Franklins population increased by 50.8% from the 1990 census total
population. The Greenwood population grew by 37.2% from 1990 to 2000. Both Franklin and
Greenwood have significant levels of retail businesses and some light manufacturing
business. Both cities are bedroom communities to Indianapolis. Bargersville is a more
rural town with more limited population growth and retail expansion.

The growth in Franklin
and Greenwood has caused the majority of our lending activities to be focused in these
areas. Due to the high levels of new housing and retail development, loan demand is
primarily in residential and commercial real estate related loans.

COMPETITION

Heartland and the Bank
face strong competition for deposits, loans and other financial services from numerous
Indiana and out-of-state banks, thrifts, credit unions and other financial institutions as
well as other entities which provide financial services, including consumer finance
companies, securities brokerage firms, mortgage brokers, equipment leasing companies,
insurance companies, mutual funds and other lending sources and investment alternatives.
Some of the financial institutions and financial services organizations with which
Heartland competes are not subject to the same degree of regulation as Heartland. Many of
the financial institutions aggressively compete for business in Heartlands market
areas. Many of these competitors have been in business for many years, have established
customer bases, have substantially higher lending limits than Heartland, are larger and
will be able to offer certain services that Heartland does not currently offer, including
international banking services. In addition, most of these entities have greater capital
resources than Heartland, which, among other things, may allow them to price their
services at levels more favorable to the customer and to provide larger credit facilities
than could Heartland.

Dollar amounts in thousands except per share data.

6

REGULATION AND SUPERVISION OF HEARTLAND AND THE BANK

Heartland is registered
as a bank holding company under the Bank Holding Company Act of 1956, as amended
(BHCA), with the Board of Governors of the Federal Reserve System
(Federal Reserve) and is subject to examination, regulation and supervision by
the Federal Reserve. The Banks deposits are insured to the maximum extent permitted
by law by the Federal Deposit Insurance Corporation (FDIC). The Bank is
subject to comprehensive regulation, examination and supervision by the Indiana Department
of Financial Institutions (DFI) and the FDIC. Regulation, examination and
supervision by banking regulatory agencies are primarily for the benefit of depositors
rather than shareholders.

Under the BHCA, a bank
holding company is, with limited exceptions, prohibited from acquiring direct or indirect
ownership or control of voting stock of any company which is not a bank, and from engaging
in any activity other than managing or controlling banks. A bank holding company may,
however, own shares of a company engaged in activities that the Federal Reserve has
determined to be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In addition, a bank holding company meeting certain financial and
other requirements may elect to be treated as a financial holding company and
engage in, or own shares of companies that are engaged in, insurance underwriting,
securities underwriting, merchant banking, and other financial services activities.
Heartland has not elected to be treated as a financial holding company.

The Bank may generally
engage in activities that are permissible activities for state chartered banks under
Indiana banking law, without regard to the limitations that might apply to such activities
under the BHCA if Heartland were to engage directly in such activities.

Indiana law and the
BHCA restrict certain types of expansion by Heartland and the Bank. Heartland and the Bank
may be required to apply for prior approval from (or give prior notice and an opportunity
for review to) the Federal Reserve, the FDIC, the DFI, and/or other bank regulatory or
other regulatory agencies, as a condition to the acquisition or establishment of new
offices, or the acquisition (by merger or consolidation, purchase or otherwise) of the
stock, business or properties of other banks or other companies.

Effective May 11, 2002,
with the consent of the Bank, the FDIC and DFI entered a formal order under federal and
state banking laws (as subsequently modified June 3, 2003,) (the May 2002
Order), under which the Bank and its Directors were required to take a number of
affirmative steps to address regulatory concerns, including but not limited to,
maintaining the Banks ratio of Tier 1 capital to assets at 8% or above; committing
not to declare or pay dividends to the Corporation that would result in the Banks
violation of the required capital ratio; limiting growth in total assets to no more than
three percent in any three month period without advance approval by the regulators, or
more than 12% annually; adopting and implementing plans to resolve certain criticized
assets; eliminating or restricting future lending to borrowers whose loans have been
criticized by the regulators; and adopting and implementing plans to reduce the volume of
the Banks acquisition, development and construction loans, commercial real-estate
loans and high loan-to-value loans, as defined by FDIC Regulation Part 365, in relation to
its capital.

Dollar amounts in thousands except per share data.

7

On February 23, 2004,
the Bank received written notification from the FDIC and the DFI indicating that the Bank
would be released from the May 2002 Order subject to the stipulation that the Bank
continue to maintain a Tier 1 capital to assets ratio at 8% or above; to limit growth in
total assets to no more than three percent per quarter without regulatory approval and to
maintain the levels of acquisition, development and construction loans at or below 125% of
Tier 1 capital and commercial real-estate loans at or below 250% of Tier 1 capital. On
February 23, 2004 the Banks board of directors adopted a resolution accepting the
stipulations as presented by the FDIC and DFI and notified the FDIC and DFI of the
resolution and intent to abide by the stipulations. See Item 6 of this Report for
additional discussion of the effects that the May 2002 Order and the stipulation of
release have had on the financial condition, results of operations, liquidity and
financial resources of the Bank and of Heartland.

As of February 28,
2005, the Banks Tier 1 capital ratio was 9.45%, total assets were
$188,490, acquisition, development and construction loans totaled 49.61% of Tier
1 capital and commercial real-estate loans totaled 212.08% of Tier 1 capital.
Based on the improvements in the Banks asset quality, capital and earnings
since February 23, 2004, management believes that the FDIC and DFI no longer
expect the Bank to abide by the stipulated measures that were included in the
February 23, 2004 resolution, and on March 21, 2005, the Banks Board of
Directors rescinded that resolution.

Heartland is a legal
entity separate and distinct from the Bank. There are various legal limitations on the
extent to which the Bank can supply funds to Heartland. The principal source of
Heartlands funds consists of dividends from the Bank. State and federal laws
restrict the amount of dividends that may be paid by banks. The Banks Tier I Capital
to total assets ratio at December 31, 2004 was 9.21% (8.93% using average assets for the
quarter ended December 31, 2004).

In addition, the Bank
is subject to certain restrictions imposed by the Federal Reserve on extensions of credit
to Heartland or any of its subsidiaries, or investments in the stock or other securities
as collateral for loans.

The commercial banking
business is affected not only by general economic conditions but also by the monetary
policies of the Federal Reserve. The instruments of monetary policy employed by the
Federal Reserve include the discount rate on member bank borrowing and changes in reserve
requirements against member bank deposits. Federal Reserve monetary policies have had a
significant effect on the operating results of commercial banks in the past and are
expected to continue to do so in the future. In view of changing conditions in the
national economy and in the money markets, as well as the effect of actions by monetary
fiscal authorities, including the Federal Reserve, no prediction can be made as to
possible future changes in interest rates, deposit levels, loan demand or the business and
earnings of Heartland and the Bank.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Heartland from time to
time in its oral and written communications makes statements relating to its expectations
regarding the future. These types of statements are considered forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward looking statements can include statements about adequacy of allowance
for loan losses and the quality of the Companys loans and other assets; simulations
of changes in interest rates; litigation results; dividend policy; estimated cost savings,
plans and objectives for future operations; and other expectations about the
Companys financial and business performance and other business matters as well as
economic and market conditions and trends. They often can be identified by the use of
words like expect, may, will, would,
could, should, intend, project,
estimate, believe or anticipate, or similar
expressions.

Dollar amounts in thousands except per share data.

8

Heartland may include
forward-looking statements in filings with the Securities and Exchange Commission
(SEC), such as this Form 10-KSB, in other written materials, and in oral
statements made by senior management to analysts, investors, representatives of the media,
and others. It is intended that these forward-looking statements speak only as of the date
they are made, and Heartland undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the forward-looking
statement is made.

Readers are cautioned
that, by their nature, forward-looking statements are based on assumptions and are subject
to risks, uncertainties, and other factors. Actual results may differ materially from the
expectations of the Company that are expressed or implied by any forward-looking
statement. The discussion incorporated by reference into Item 6 of this Form 10-KSB,
Managements Discussion and Analysis of Financial Condition and Results of
Operations, lists some of the factors that could cause the Companys actual
results to vary materially from those expressed or implied by any forward-looking
statements. Other uncertainties that could cause the Companys actual results to vary
materially from those expressed or implied by any forward-looking statement include the
unknown direction, and magnitude and duration, of any future changes in prevailing market
rates of interest; effects of changes in competitive conditions; acquisitions of other
businesses by the Company and costs of integrations of such acquired businesses; the
introduction, withdrawal, success and timing of business initiatives and strategies;
changes in customer borrowing, repayment, investment and deposit practices; changes in
fiscal, monetary and tax policies; inflation; changes in financial and capital markets;
changes in general economic conditions, either nationally or regionally, resulting in,
among other things, credit quality deterioration; the impact, extent and timing of
technological changes; capital management activities; actions of the Federal Reserve Board
and legislative and regulatory actions and reforms; changes in accounting principles and
interpretations; and the inherent uncertainties involved in litigation and regulatory
proceedings which could result in the Companys incurring loss or damage regardless
of the merits of the Companys claims or defenses. Investors should consider these
risks, uncertainties, and other factors in addition to those mentioned by Heartland in its
other SEC filings from time to time when considering any forward-looking statement.

SELECTED FINANCIAL DATA

The information
presented below should be read in conjunction with the consolidated financial statements,
which are incorporated by reference into Item 7 of this Report from Exhibit 13, and
Managements Discussion and Analysis of Financial Condition and Results of
Operations, which is incorporated by reference into Item 6 of this Report from
Exhibit 13.

Dollar amounts in thousands except per share data.

9

|Year Ended
December 31,
2004            |  | Year Ended
December 31,
2003 |   | Year Ended
December 31,
2002
|--------------------------------------- |  | ---------------------------- | - | ----------------------------
|                                        |  |                              |   |                             
|Total interest income                   |  |                              | $ | 9,236                       
|Total interest expense                  |  |                              |   | 2,331                       
|                                        |  |                              |   |                             
|Net interest income                     |  |                              |   | 6,905                       
|Provision for loan losses               |  |                              |   | (200                        
|Noninterest income                      |  |                              |   | 1,960                       
|Noninterest expense                     |  |                              |   | 7,235                       
|Provision for income taxes              |  |                              |   | 606                         
|                                        |  |                              |   |                             
|Net income/(loss)                       |  |                              | $ | 1,224                       
|                                        |  |                              |   |                             
|Net income per share/(loss)             |  |                              |   | .88                         
|Average shares                          |  |                              |   | 1,394,172                   
|                                       
|Income Statement Data:                 
|                                       
|Total interest income                   |  |                              | $ | 14,409                      
|Total interest expense                  |  |                              |   | 6,789                       
|                                        |  |                              |   |                             
|Net interest income                     |  |                              |   | 7,620                       
|Provision for loan losses               |  |                              |   | 2,967                       
|Noninterest income                      |  |                              |   | 1,596                       
|Noninterest expense                     |  |                              |   | 5,416                       
|Provision for income taxes              |  |                              |   | 304                         
|                                        |  |                              |   |                             
|Net income/(loss)                       |  |                              | $ | 529                         
|                                        |  |                              |   |                             
|Net income/(loss) per share             |  |                              |   | .38                         
|Average shares                          |  |                              |   | 1,394,172                   
|                                       
|Balance Sheet Data:                    
|                                       
|Total Assets                            |  |                              | $ | 185,837                     
|Loans, Net of Allowance for Loan Losses |  |                              |   | 121,848                     
|Demand & Savings Deposits               |  |                              |   | 95,126                      
|Time Deposits                           |  |                              |   | 60,536                      
|Borrowings                              |  |                              |   | 15,629                      
|Shareholders' Equity                    |  |                              |   | 13,506                      
|Book Value Per Share                    |  |                              | $ | 9.69                        
|Equity to Asset Ratio                   |  |                              |   | 7.27                        
|                                       
|Balance Sheet Data:                    
|                                       
|Total Assets                            |  |                              | $ | 189,517                     
|Loans, Net of Allowance for Loan Losses |  |                              |   | 143,236                     
|Demand & Savings Deposits               |  |                              |   | 86,341                      
|Time Deposits                           |  |                              |   | 74,650                      
|Borrowings                              |  |                              |   | 14,554                      
|Shareholders' Equity                    |  |                              |   | 13,263                      
|Book Value Per Share                    |  |                              | $ | 9.51                        
|Equity to Asset Ratio                   |  |                              |   | 7.00                        

Dollar amounts in thousands except per share data.

10

AVERAGE
BALANCES, INCOME, EXPENSES AND RATES. The following tables depict for the years
ended December 31, 2004, 2003, and 2002, certain information related to
Heartlands average balance sheets and its average yields on assets and
average costs of liabilities. Such yields are derived by dividing income or
expense by the average balance of the corresponding assets or liabilities.
Average balances have been derived from daily averages. Non-accrual loan
balances are included in the average balances of loans. During 2004, $0 interest
income on loans on non-accrual at December 31, 2004 was included in interest
income. Yields on non-taxable securities are not presented on a tax-equivalent
basis.

|                                   | Year Ended
December 31, 2004 |  | Year Ended
December 31, 2003
|---------------------------------- | ---------------------------- |  | ----------------------------
|
|Interest earning assets            |                              |  |                             
|Short-term investments             |                              |  | $                           
|Taxable securities                 |                              |  |                             
|Non-taxable securities             |                              |  |                             
|Loans                              |                              |  |                             
|                                   |                              |  |                             
|Total interest earning assets      |                              |  | $                           
|                                   |                              |  |                             
|Interest bearing liabilities       |                              | 
|Interest-bearing demand,           |                              | 
|Money Market and                   |                              | 
|Savings Deposits                   |                              |  | $                           
|Time deposits                      |                              |  |                             
|Short-term borrowings              |                              |  |                             
|Other borrowings                   |                              |  |                             
|                                   |                              |  |                             
|Total interest bearing liabilities |                              |  | $                           
|                                   |                              |  |                             

|                                   | Year Ended
December 31, 2002
|---------------------------------- | ----------------------------
|
|Interest earning assets            |                             
|Short-term investments             |                             
|Taxable securities                 |                             
|Loans                              |                             
|Non-taxable securities             |                             
|                                   |                             
|Total interest earning assets      |                             
|                                   |                             
|Interest bearing liabilities       |                             
|Interest-bearing demand,           |                             
|Money Market and                   |                             
|Savings Deposits                   |                             
|Time deposits                      |                             
|Short-term borrowings              |                             
|Other borrowings                   |                             
|                                   |                             
|Total interest bearing liabilities |                             
|                                   |                             

Dollar amounts in thousands except per share data.

11

| | 2004 | 2003 | 2002
| | ---- | ---- | ----

|                                                                                            |  |  |  |   |     |  |   |      |  |    |     
|------------------------------------------------------------------------------------------- |  |  |  | - | --- |  | - | ---- |  | -- | ----
|Average yield on interest-earning assets                                                    |  |  |  | 5 | .48 |  | 5 | .61% |  | 6  | .57%
|Average rate paid on interest-bearing liabilities                                           |  |  |  | 1 | .61 |  | 1 | .97  |  | 2  | .84 
|Net interest spread                                                                         |  |  |  | 3 | .87 |  | 3 | .64  |  | 3  | .73 
|Net interest margin (net interest income divided  by average total interest-earning assets) |  |  |  | 4 | .09 |  | 3 | .93  |  | 4  | .05 
|Return on average assets                                                                    |  |  |  | 0 | .68 |  | 0 | .24  |  | (  | .68)
|Return on average equity                                                                    |  |  |  | 9 | .46 |  | 3 | .35  |  | (9 | .26)

INTEREST INCOME AND EXPENSE ANALYSIS

The table below
describes the extent to which changes in interest rates and changes in volume of
interest-earning assets and interest-bearing liabilities have affected
Heartlands interest income and expense during the periods indicated. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (change
in volume multiplied by prior year rate), (ii) changes in rate (change in rate
multiplied by prior year volume) and (iii) total changes in rate and volume. The
combined effects of changes in both volume and rate, which cannot be separately
identified, have been allocated proportionately to the change due to volume and
the change due to rate.

|                                           | Year ended December 31,2004 vs. 2003
Increase (Decrease)due to
|------------------------------------------ | --------------------------------------------------------------
|
|                                          
|Interest income attributable to:           |                                                               
|Loans                                      |                                                               
|Securities                                 |                                                               
|Other interest-earning assets(1)           |                                                               
|                                           |                                                               
|                                          
|Total interest-earning assets              |                                                               
|                                           |                                                               
|                                          
|Interest expense attributable to:          |                                                               
|Money Market and                           |                                                               
|Savings Deposits                           |                                                               
|Time deposits                              |                                                               
|Short-term borrowings                      |                                                               
|Other borrowings                           |                                                               
|                                           |                                                               
|                                          
|Total interest-bearing liabilities         |                                                               
|                                          
|                                           |                                                               
|                                          
|Increase (decrease) in net interest income |                                                               
|                                           |                                                               

|(1) | Includes federal funds sold and interest-bearing deposits in other financial
institutions.
|--- | ------------------------------------------------------------------------------------------

Dollar amounts in thousands except per share data.

12

|                                           | Year ended December 31,
2003 vs. 2002
Increase (Decrease)due to
|------------------------------------------ | ---------------------------------------------------------------
|
|Interest income attributable to:           |                                                                
|Loans                                      |                                                                
|Securities                                 |                                                                
|Other interest-earning assets(1)           |                                                                
|                                           |                                                                
|                                          
|Total interest-earning assets              |                                                                
|                                           |                                                                
|                                          
|Interest expense attributable to:          |                                                                
|Money Market and                           |                                                                
|Savings Deposits                           |                                                                
|Time deposits                              |                                                                
|Short-term borrowings                      |                                                                
|Other borrowings                           |                                                                
|                                           |                                                                
|                                          
|Total interest-bearing liabilities         |                                                                
|                                           |                                                                
|                                          
|Increase (decrease) in net interest income |                                                                
|                                           |                                                                

(1)        Includes federal funds sold
and interest-bearing deposits in other financial institutions.

LOANS.        Heartlands gross
loans, excluding those held for sale, totaled $124,339 at December 31, 2004,
$113,556 at December 31, 2003, $119,920 at December 31, 2002, $146,636 at
December 31, 2001, $132,549 at December 31, 2000.

The following table sets forth information concerning the composition of
Heartlands loan portfolio in dollar amounts and percentages as of
December 31, 2004, 2003, 2002, 2001 and 2000:

|                      | 2004 |  | 2003
|--------------------- | ---- |  | ----
|
|TYPE OF LOAN          |      |  |     
|Commercial            |      |  | $   
|Construction          |      |  |     
|Residential mortgages |      |  |     
|Consumer              |      |  |     
|                      |      |  |     
|Gross loans           |      |  | $   
|                      |      |  |     

Dollar amounts in thousands except per share data.

13

|2002                  |  | 2001
|--------------------- |  | ----
|TYPE OF LOAN         
|Commercial            |  |     
|Construction          |  |     
|Residential mortgages |  |     
|Consumer              |  |     
|                      |  |     
|Gross loans           |  |     
|                      |  |     
|                     
|                     
|                     
|TYPE OF LOAN          |  |     
|Commercial            |  |     
|Construction          |  |     
|Residential mortgages |  |     
|Consumer              |  |     
|                      |  |     
|Gross loans           |  |     
|                      |  |     

LOAN MATURITY
SCHEDULE.        The following table
sets forth certain information at December 31, 2004 regarding the dollar amount
of loans maturing in Heartlands loan portfolio based on the date that
final payment is due. This schedule does not reflect the effects of possible
prepayments or enforcement of due-on-sale clauses. Management expects
prepayments will cause actual maturities to be shorter than contractual
maturities. Certain residential mortgage loans such as non-owner occupied and
second mortgage loans are included in the commercial and consumer loan totals
below.

|Amount                       |  | Remaining
One Year
or less |   | Maturities
Over one to
five years |  | Over five
years
|---------------------------- |  | -------------------------- | - | --------------------------------- |  | ---------------
|                            
|Commercial                   |  |                            | $ | 72,101                            |  | $              
|Real estate construction and |  |                           
|land development             |  |                            |   | 9,740                             |  |                
|Residential mortgages        |  |                            |   | 29,663                            |  |                
|Consumer                     |  |                            |   | 12,835                            |  |                
|                             |  |                            |   |                                   |  |                
|Total                        |  |                            | $ | 124,339                           |  | $              
|                             |  |                            |   |                                   |  |                

Commercial
loans and leases with remaining maturities over one year consist of $12,304 with
fixed interest rates and $42,384 with variable interest rates, at December 31,
2004. Real estate construction and land development loans with remaining
maturities over one year consist of $314 with fixed interest rates and $1,334
with variable interest rates, at December 31, 2004. Residential mortgage loans
with remaining maturities over one year consist of $5,395 with fixed interest
rates and $23,892 with variable interest rates, at December 31, 2004. Consumer
loans with remaining maturities over one year consist of $7,952 with fixed
interest rates and $1,434 with variable interest rates, at December 31,
2004.

Dollar amounts in thousands except per share data.

14

Nonperforming
loans include non-accrual loans and accruing loans that are contractually past
due 90 days or more as to interest or principal payments. The following table
sets forth certain information regarding the dollar amount of nonperforming
loans at December 31:

|2004                 | 2003 | 2002
|-------------------- | ---- | ----
|                    
|Non-accrual loans    |      |     
|Accruing loans past  |      |     
|due 90 or more days  |      |     
|                     |      |     
|Total nonperforming  |      |     
|loans                |      |     
|                     |      |     
|                    
|Nonperforming loans: |      |     
|                    
|Non-accrual loans    |      |     
|Accruing loans past  |      |     
|due 90 or more days  |      |     
|                     |      |     
|Total nonperforming  |      |     
|loans                |      |     
|                     |      |     

At December
31, 2004, non-accrual loans included $1,058 in commercial loans, $123 in
residential real estate loans and $17 in consumer loans.

ALLOWANCE FOR
LOAN LOSSES.        The Bank maintains
an allowance for loan losses to provide for probable incurred losses in the loan
portfolio. Monthly, management estimates the allowance balance required using
past loan loss experience, the nature and volume of the portfolio, information
about specific borrower situations and estimated collateral values, economic
conditions, and other factors. All loans are given a risk grade from 1 to 7,
which is revised based on changes in the borrowers ability to repay,
collateral values, economic conditions and other factors.

Loans with a risk grade
of 6 or 7 are evaluated individually for impairment and allowance amounts are allocated
specifically, if necessary, based on estimated present value of future cash flows. The
balance of loans graded 6 or 7 at December 31, 2004 was $5,069 and related allocated
reserve was $1,336. All other loans are evaluated as a group by loan type. Allocation
factors are assigned to each risk grade from 1 to 5 within each loan type. Allocation
factors are derived by using historical loss percentages, modified for trends in losses,
trends in delinquency, economic factors and other factors. At December 31, 2004, the
balance of all loans graded 1 to 5 was $119,270 and related allocated allowance was $1,155.
Provision for loan losses is adjusted in order to maintain the balance in the allowance
for loan losses at the level estimated by the calculation of allocated allowance.

The Board of Directors
of the Bank, not less frequently than quarterly, reviews with senior management its
recommended allowance. For more information concerning the factors considered in
determining the adequacy of the allowance for loan and lease losses, see
Nonperforming Assets and Allowance for Loan Losses under the section headed
Managements Discussion and Analysis of Financial Condition and Results of
Operations of Heartlands Annual Report for 2004 attached as Exhibit 13, which
discussion is incorporated herein by reference. At December 31, 2004, Heartlands
allowance for loan losses totaled $2,491.

Dollar amounts in thousands except per share data.

15

The following table
provides an allocation of Heartlands allowance for probable loan losses as of each
of the following dates:

|                                                                                                                                              | At December 31,
|--------------------------------------------------------------------------------------------------------------------------------------------- | ---------------
|
|Loan type                                                                                                                                     |                
|Commercial                                                                                                                                    |                
|Real estate construction                                                                                                                      |                
|and land development                                                                                                                          |                
|Residential mortgages                                                                                                                         |                
|Consumer                                                                                                                                      |                
|                                                                                                                                              |                
|                                                                                                                                              |                
|                                                                                                                                              |                
|                                                                                                                                             
|The activity in
the allowance for loan losses for the years ended December 31, is as
follows:                                                
|                                                                                                                                             
|
|Beginning balance                                                                                                                             |                
|Provision charged                                                                                                                             |                
|to operations                                                                                                                                 |                
|Loans charged-off                                                                                                                             |                
|Recoveries on loans                                                                                                                           |                
|previously charged-off                                                                                                                        |                
|                                                                                                                                              |                
|Ending balance                                                                                                                                |                
|                                                                                                                                              |                
|                                                                                                                                             
|The following table sets forth certain information regarding the dollar amount
of charge-offs and recoveries for the years ended December 31:
|                                                                                                                                             
|
|Charge-offs by loan type:                                                                                                                     |                
|Commercial                                                                                                                                    |                
|Real estate construction                                                                                                                      |                
|and land development                                                                                                                          |                
|Residential mortgages                                                                                                                         |                
|Consumer                                                                                                                                      |                
|                                                                                                                                              |                
|Total charge-offs                                                                                                                             |                
|                                                                                                                                              |                
|                                                                                                                                             
|
|Recoveries by loan type:                                                                                                                      |                
|Commercial                                                                                                                                    |                
|Real estate construction                                                                                                                      |                
|and land development                                                                                                                          |                
|Residential mortgages                                                                                                                         |                
|Consumer                                                                                                                                      |                
|                                                                                                                                              |                
|Total recoveries                                                                                                                              |                
|                                                                                                                                              |                

Dollar amounts in thousands except per share data.

16

The following table sets forth certain asset quality ratios at and for the years
ended December 31:

|                          | 2004 |  | 2003 |     | 2002 |  | 2001 |      | 2000
|------------------------- | ---- |  | ---- | --- | ---- |  | ---- | ---- | ----
|Allowance for loan losses |      |  |      |     |      |  |      |      |     
|to nonperforming loans    |      |  |      | 165 | .74% |  | 109  | .20% |     
|Net charge-offs to        |      | 
|average loans             |      |  |      |     | .51  |  |      | .72  |     
|Provision to average      |      | 
|loans                     |      |  |      | (   | .17) |  |      | .56  |     

SECURITIES.        The following table
sets forth the carrying value of Heartland's investment portfolio as of December
31:

|                                                  | Fair
Value |  | Gross
Unrealized
Gains |        | Gross
Unrealized
Losses
|------------------------------------------------- | ---------- |  | ---------------------- | ------ | -----------------------
|2004                                              |            |  |                        |        |                        
|U.S. Government and government sponsored entities |            |  | $                      | 16,981 |                        
|Obligations of states and political subdivisions  |            |  |                        | 5,423  |                        
|Mortgage backed securities                        |            |  |                        | 18,559 |                        
|Corporate obligations                             |            |  |                        | 1,081  |                        
|Equity securities                                 |            |  |                        | 118    |                        
|                                                  |            |  |                        |        |                        
|                                                  |            |  | $                      | 42,044 |                        
|                                                  |            |  |                        |        |                        
|                                                  |            |  |                       
|                                                 
|
|2003                                              |            | 
|U.S. Government and government sponsored entities |            |  | $                      | 17,417 |                        
|Obligations of states and political subdivisions  |            |  |                        | 4,499  |                        
|Mortgage backed securities                        |            |  |                        | 12,076 |                        
|Corporate obligations                             |            |  |                        | 1,116  |                        
|                                                  |            |  |                        |        |                        
|                                                  |            |  | $                      | 35,108 |                        
|                                                  |            |  |                        |        |                        
|                                                 
|
|2002                                              |            | 
|U.S. Government and government sponsored entities |            |  | $                      | 7,937  |                        
|Obligations of states and political subdivisions  |            |  |                        | 2,709  |                        
|Mortgage backed securities                        |            |  |                        | 7,826  |                        
|Corporate obligations                             |            |  |                        | 1,094  |                        
|                                                  |            |  |                        |        |                        
|                                                  |            |  | $                      | 19,566 |                        
|                                                  |            |  |                        |        |                        

The following table
sets forth the maturities of debt securities at December 31, 2004 and the
weighted-average yield (on a tax equivalent basis) on such securities.

Dollar amounts in thousands except per share data.

17

|One Year
or less                                | Remaining
Over one to
five years | Maturities
Over five to
ten years | Over ten
years
|----------------------------------------------- | -------------------------------- | --------------------------------- | --------------
|TYPE OF SECURITY
U.S. Government and government |                                  |                                   |               
|sponsored entities                              |                                  |                                   | $             
|Obligations of states and                       |                                  |                                  
|political subdivisions                          |                                  |                                   |               
|Corporate obligations                           |                                  |                                   |               
|Mortgage-backed securities                      |                                  |                                   |               
|                                                |                                  |                                   |               
|Total                                           |                                  |                                   | $             
|                                                |                                  |                                   |               

|1. | Maturity for Mortgage-backed securities was determined using the contractual
date of final principal payment. Equity securities with no contractual maturity
were excluded from this table.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Weighted Average Yields                         | One Year
or less | Remaining
Over one to
five years | Maturities
Over five to
ten years | Over ten
years
|----------------------------------------------- | ---------------- | -------------------------------- | --------------------------------- | --------------
|                                               
|TYPE OF SECURITY
U.S. Government and government |                  |                                  |                                   |               
|sponsored entities                              | 2.63%            | 3.29%                            | 4.27%                             | ---%          
|Obligations of states and                      
|political subdivisions                          | ---              | 2.81                             | 3.59                              | 3.73          
|Corporate obligations                           | ---              | 6.01                             | ---                               | ---           
|Mortgage-backed securities                      | ---              | 4.24                             | 4.22                              | 4.32          
|Total                                           | 2.63%            | 3.51%                            | 4.07%                             | 4.22%         

|2. | Computation of yields is based on amortized cost. Yields on non-taxable
securities are not presented on a tax-equivalent basis. Equity securities with
no contractual interest or dividends were excluded from the calculations
underlying the data in this table.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following
table sets forth the amounts of Heartlands interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2004, which are
scheduled to reprice or mature in each of the time periods shown. The amount of
assets and liabilities shown which reprice or mature in a given period were
determined in accordance with the contractual terms of the asset or liability.
In addition, securities expected to be called by the issuer due to the current
rate environment are included in the categories based on the expected call
dates. Loans held for sale are included in the categories based on the expected
sale date. This table does not necessarily indicate the impact of general
interest rate movements on Heartlands net interest income because the
repricing of certain categories of assets and liabilities is subject to the
interest rate environment, competition and other factors beyond Heartlands
control. As a result, certain assets and liabilities may in fact mature or
reprice at different times and in different volumes than indicated.

Dollar amounts in thousands except per share data.

18

|                                                                                    | Within 3
Months |  | 4 - 12
Months |          | 1 - 5
years |   | Over 5 years |   | Total
|----------------------------------------------------------------------------------- | --------------- |  | ------------- | -------- | ----------- | - | ------------ | - | -----
|Interest-earning assets:                                                            |                 |  |               |          |             |   |              |   |      
|Federal funds sold                                                                  |                 |  | $             | 6,250    |             | $ | ---          |   | $    
|Time deposits with other                                                            |                 | 
|Financial institutions                                                              |                 |  |               | ---      |             |   | 500          |   |      
|Securities                                                                          |                 |  |               | 174      |             |   | 887          |   |      
|Loans held for sale                                                                 |                 |  |               | 929      |             |   | ---          |   |      
|Loans                                                                               |                 |  |               | 54,466   |             |   | 13,810       |   |      
|FHLB stock                                                                          |                 |  |               | 667      |             |   | ---          |   |      
|                                                                                    |                 |  |               |          |             |   |              |   |      
|Total interest-earning assets                                                       |                 |  |               | 62,486   |             |   | 15,197       |   |      
|                                                                                    |                 |  |               |          |             |   |              |   |      
|Interest-bearing liabilities:                                                       |                 | 
|Interest bearing demand                                                             |                 | 
|and savings deposits                                                                |                 |  |               | 73,980   |             |   | ---          |   |      
|Time deposits                                                                       |                 |  |               | 16,638   |             |   | 25,572       |   |      
|Repurchase Agreements                                                               |                 |  |               | 6,474    |             |   | ---          |   |      
|FHLB advances                                                                       |                 |  |               | 1,000    |             |   | 2,000        |   |      
|Subordinated debentures                                                             |                 |  |               | 5,155    |             |   | ---          |   |      
|                                                                                    |                 |  |               |          |             |   |              |   |      
|Total interest-bearing liabilities                                                  |                 |  |               | 103,247  |             |   | 27,572       |   |      
|                                                                                    |                 |  |               |          |             |   |              |   |      
|Interest-earning assets less                                                        |                 | 
|Interest-bearing liabilities                                                        |                 | 
|                                                                                    |                 |  | $             | (40,761  | )           | $ | (12,375      | ) |      
|                                                                                    |                 |  |               |          |             |   |              |   |      
|Cumulative interest-rate sensitivity gap                                            |                 |  | $             | (40,761  | )           | $ | (53,136      | ) | $    
|                                                                                    |                 |  |               |          |             |   |              |  
|Cumulative interest-rate gap as a
   percentage of total interest earning
   assets |                 |  |               | (23.31)% |             |   | (30.39)%     |   |      

Dollar amounts in thousands except per share data.

19

CERTIFICATES
OF DEPOSIT.        The following table
presents the amount of Heartlands certificates of deposit with
principal balances greater than $100 by the time remaining until maturity as of
December 31, 2004:

|Maturity                   | At December 31, 2004
|-------------------------- | --------------------
|Three months or less       |                     
|Over 3 months to 6 months  |                     
|Over 6 months to 12 months |                     
|Over 12 months             |                     
|                           |                     
|Total                      |                     
|                           |                     

REPURCHASE
AGREEMENTS.        The following table
presents certain information pertaining to Heartlands repurchase
agreements:

|                                            | 2004   | 2003   | 2002  
|------------------------------------------- | ------ | ------ | ------
|Balance outstanding at December 31          | $6,474 | $7,812 | $6,251
|Maximum amount outstanding at any month-end | $6,661 | $7,812 | $7,364
|Average balance outstanding                 | $5,416 | $4,194 | $4,855
|Weighted average rate at December 31        | 0.85%  | .60%   | 1.52% 

ITEM 2.        DESCRIPTION OF PROPERTY

Heartland
owns its home office at 420 North Morton Street, Franklin, Indiana. The facility
is used as the main banking office and Heartlands headquarters. The 5,700
square foot building was constructed prior to 1970 and underwent an extensive
renovation in 1997 prior to the opening of Heartland.

The Bank
leases two branch offices in Greenwood, Indiana, and the land on which the
branch office in Bargersville, Indiana stands. The Bank also leases a 12,500
square foot facility that was constructed in 2001 in Franklin, Indiana for loan
production and loan and deposit operations, not as a branch facility.

Heartland and
the Bank presently do not invest in real estate other than real estate acquired
for purposes of operations and mortgage interests in real estate securing loans
made by the Bank in the ordinary course of business. The Board of Directors of
the Bank from time to time specifies its policies as to the amounts and types of
mortgage loans that the Bank may originate or acquire, and these policies may be
changed without action by Heartland shareholders. Mortgage loans are made for
interest income purposes, not for capital gain.

Dollar amounts in thousands except per share data.

20

ITEM 3.        LEGAL PROCEEDINGS

Other than routine
litigation incidental to the business, Heartland and the Bank are not party to
any legal proceedings.

ITEM 4.        SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS

No matter was
submitted to a vote of security holders through the solicitation of proxies or
otherwise, during the quarter ended December 31, 2004.

Dollar amounts in thousands except per share data.

21

PART II

ITEM
5.        MARKET FOR COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES

Information
required for this item is included in the section headed COMMON
STOCK. in Exhibit 13 (the Registrants Annual Report to Shareholders
for the year ended December 31, 2004), which section is incorporated herein by
reference. The description of legal and regulatory restrictions that limit the
ability of the Bank to pay dividends to Heartland, and which therefore
indirectly limit the ability of Heartland to pay dividends to its shareholders,
that is included in Item 1 of this report, Description of Business, under the
caption Regulation and Supervision of Heartland and the Bank, is
incorporated herein by reference.

ITEM 6.        MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATIONS

Information required
for this item is included in the section headed MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. in Exhibit 13 (the
Registrants Annual Report to Shareholders for the year ended December 31, 2004),
which section is incorporated herein by reference.

ITEM 7.        FINANCIAL STATEMENTS

Exhibit 13
(the Registrants Annual Report to Shareholders for the year ended December
31, 2004) includes (following the page headed FINANCIAL STATEMENTS)
the following items (each of which is incorporated herein by reference to the
appropriate pages of Exhibit 13):

o   Report of
Independent Registered Accounting Firm on consolidated financial
statements.

o   Consolidated Balance
Sheets at December 31, 2004 and 2003.

o   Consolidated
Statements of Income for the years ended December 31, 2004 and 2003.

o   Consolidated Statements
of Changes in Shareholders Equity for the years ended December 31, 2004
and 2003.

o   Consolidated
Statements of Cash Flows for the years ended December 31, 2004 and 2003.

o   Notes to consolidated
financial statements.

ITEM 8.        CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL
DISCLOSURE

None

22

ITEM 8A.        CONTROLS AND PROCEDURES

As of
December 31, 2004, Heartland carried out an evaluation, under the supervision
and with the participation of its principal executive officer and principal
financial officer, of the effectiveness of the design and operation of its
disclosure controls and procedures. Based on this evaluation, Heartlands
principal executive officer and principal financial officer concluded that
Heartlands disclosure controls and procedures are effective in timely
alerting them to material information required to be included in the
Heartlands periodic reports filed with the Securities and Exchange
Commission. There are inherent limitations to the effectiveness of systems of
disclosure controls and procedures, including the possibility of human error and
the circumvention or overriding of the controls and procedures. Accordingly,
even effective systems of disclosure controls and procedures can provide only
reasonable assurances of achieving their control objectives.

There was no change in
Heartlands internal control over financial reporting that occurred during
Heartlands fourth fiscal quarter of 2004 that has materially affected, or is
reasonably likely to materially affect, Heartlands internal control over financial
reporting.

ITEM 8B.        OTHER INFORMATION

None.

23

PART III

ITEM 9.        DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

Information
relating to directors and executive officers of Heartland is included in the
section headed Election of Directors in Exhibit 99.1, the 2005 Proxy
Statement of Heartland, which section is incorporated herein by reference.
Additional information relating to non-director executive officers is listed
below. The position and principal occupation of each of such executive officers
has been the same for at least the last five years, except as indicated
below.

Executive Officers:

R.Trent McWilliams
Vice President, Business Development of the Bank
Age 53
Jeffery D. Joyce
Vice President and Chief Financial Officer of Heartland and the Bank
Age 34
Jacqueline McNeelan
Senior Vice President of the Bank (1)
Age 48

|1 | Prior to becoming Chief Credit Officer of the Bank in March 2005, Mrs. McNeelan served in
various positions at The Huntington National Bank in Indianapolis, Indiana from November
1999 to March 2005, most recently as Vice President and Senior Commercial Portfolio
Manager.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Section 16(a) Compliance:

Heartland has no class
of equity securities registered with the Commission under Section 12 of the Securities
Exchange Act of 1934, as amended, and Section 16(a) is therefore inapplicable to its
securities.

Code of Ethics:

The Board of
Directors of Heartland has adopted a Code of Ethics that constitutes a
code of ethics as that term is defined by SEC rules adopted under
the Sarbanes-Oxley Act of 2002. Heartland will provide to any person without
charge a copy of its Code of Ethics, if such person submits a written request to
the attention of Jeff Joyce.

Audit Committee Financial Expert:

The Board of
Directors of Heartland has determined that Patrick A Sherman, a member of its
Audit Committee, is an audit committee financial expert as that term
is defined by SEC rules adopted under the Sarbanes-Oxley Act of 2002. The Board
of Directors has also determined that Mr. Sherman qualifies as
independent, as that term is defined by applicable SEC rules and by
the Marketplace Rules of The NASDAQ Stock Market, Inc., for purposes of
determining the independence of members of audit committees of companies (unlike
Heartland) whose securities are listed on the National Market System of
NASDAQ.

24

ITEM 10.        EXECUTIVE COMPENSATION

Information relating to
compensation of Heartlands executive officers and Directors is included under the
captions Executive Compensation and Election of Directors 
Compensation of Directors in Exhibit 99.1, the 2005 Proxy Statement of Heartland,
which sections are incorporated herein by reference.

ITEM 11.        SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

In tabular
format, the information required by Item 403 of Regulation S-B with respect to
persons who are known (based solely upon information publicly filed by such
beneficial owners with the Securities and Exchange Commission in certain
beneficial ownership statements on Schedule 13D or 13G described below, some of
which statements have not been updated for a lengthy time and may not continue
to be accurate) to Heartland to be the beneficial owner of more than five
percent of Heartlands common shares (based on amount of shares reported as
beneficially owned by each such person as of varying dates, but number of shares
outstanding as of March 29, 2005) is as follows:

|Title of Class | Name andAddress of BeneficialOwner | Amount ofNature of BeneficialOwnership | Percent ofClass
|-------------- | ---------------------------------- | -------------------------------------- | ---------------

|Common | Hot Creek Investors, LP
Hot Creek Capital, LLC
David M. W. Harvey
6900 South McCarran Boulevard, Suite 3040
Reno, Nevada 89509 | 91,500 | 6.50%
|------ | ------------------------------------------------------------------------------------------------------------------------------ | ------ | -----

|Common | Riggs Partners, LLC
Philip Timyan
3045 Central Avenue
Wester Springs, IL 30538 | 98,353 | 6.99%
|------ | ------------------------------------------------------------------------------ | ------ | -----

|Common | Jeffrey A. Miller
Eric D. Jacobs
Miller & Jacobs Capital, L.L.C.
P.O. Box 26039 Gallows Bay Station
Christiansted, St. Croix, USVI 00824 | 85,883 | 6.10%
|------ | ---------------------------------------------------------------------------------------------------------------------------------------- | ------ | -----

|Common | Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
Jeffrey L. Gendell
55 Railroad Avenue, Third Floor
Greenwich, Connecticut 06830 | 77,200 | 5.48%
|------ | ------------------------------------------------------------------------------------------------------------------------------------------- | ------ | -----

|Common | Millenco, L.P.
Millennium Management, L.L.C.
Israel Englander
666 Fifth Avenue
New York, New York 10103 | 119,955 | 8.52%
|------ | ------------------------------------------------------------------------------------------------------- | ------- | -----

According to
a Schedule 13G amendment filed February 17, 2005 by Hot Creek Investors, L.P.,
Hot Creek Capital, LLC and David M. W. Harvey, all securities beneficially owned
by them were held by Hot Creek Investors, L.P. (Hot Creek). Hot
Creek Capital, LLC and David M. W. Harvey stated that they were joining in the
Schedule 13G because they exercised voting and investment power over the shares
held by Hot Creek.

25

According to
a Schedule 13D amendment filed as of December 18, 2002 by Riggs Partners, LLC,
and Philip Timyan, all securities beneficially owned by them were held by Riggs
Partners, LLC (Riggs). Philip Timyan stated that he was joining in
the Schedule 13D because he exercised voting and investment power over the
shares held by Riggs.

According to a Schedule
13D filed May 12, 2003 by Tontine Financial Partners, L.P., Tontine Management, L.L.C. and
Jeffrey L. Gendell, all securities beneficially owned by them were held by Tontine
Financial Partners, L.P. (Tontine). Tontine Management, L.L.C. and Jeffrey L.
Gendell stated that they were joining in the Schedule 13D because they exercised voting
and investment power over the shares held by Tontine.

According to a Schedule
13G amendment filed February 18, 2005 by Jeffery Miller and Eric Jacobs, and Miller &
Jacobs Capital, L.L.C., Mr. Miller and Mr. Jacobs do not directly hold any shares, but did
indirectly beneficially own 85,883 shares of Common Stock in their capacity as (i) the
sole managers and members of Miller & Jacobs Capital, L.L.C., a Virgin Islands limited
liability company (MJC), which in turn (a) provides discretionary investment
management services to Acadia Fund I, L.P., a Delaware limited partnership (Acadia
LP), (b) serves as a sub-advisor with discretionary investment advisory authority
for Acadia Life International, a Bermuda corporation, and (c) serves as a sub-advisor with
discretionary investment advisory authority for Avant Garde Investment, Ltd., a British
Virgin Islands corporation; (ii) the sole managers of Cerulean Investment Management,
L.L.C., a Delaware limited liability company, which in turn serves as investment manager
for Cerulean Partners, Ltd., an exempt company incorporated in the Cayman Islands; and
(iii) the sole members and managers of Acadia Fund I, LLC, a Delaware limited liability
company, which in turn serves as the general partner for Acadia Fund I, GP, L.P., a
Delaware limited partnership, which in turn serves as general partner for Acadia LP.
Jeffery Miller and Eric Jacobs stated that they were filing the Schedule 13G because they
exercised voting and investment power over the shares held by Acadia LP.

According to a Schedule
13G filed February 14, 2005 by Millenco, L.P., Millennium Management, L.L.C. and Israel A.
Englander, all securities beneficially owned by them were held by Millenco, L.P.
(Millenco). Millennium Management, L.L.C. and Israel A. Englander stated that
they were joining in the Schedule 13G because they exercised voting and investment power
over the shares held by Millenco.

26

Equity Compensation Plan Information

At December
31, 2004, the Company maintained three stock option plans under which it had
authorized the issuance of its Common Shares to employees and non-employee
directors as compensation: its 1997 employee plan (under which new options may
be granted through 2007); its 1997 non-employee director plan (under which no
new options may be granted after September 2002); and its 2003 non-employee
director plan. The two 1997 plans were each approved by the requisite vote of
the Companys common shareholders in 1997 prior to the Companys
initial public offering of its common shares. Each of these plans was amended in
1999 by the Board of Directors to increase the number of common shares available
for issuance under those plans; the amendment of the employee plan was submitted
for approval by shareholders and was so approved by the requisite vote, and the
amendment of the nonemployee director plan was not submitted for approval by the
shareholders. The 2003 non-employee director plan was not submitted for approval
by the shareholders. At December 31, 2004, the Company was not a party to any
individual compensation arrangement involving the authorization for issuance of
its equity securities to any single person, other than option agreements granted
under the terms of one of the three option plans identified above. The following
table sets forth information regarding these plans as of December 31,
2004:

|Plan Category                          | Number of Securities
to be Issued upon
Exercise
of Outstanding
Options, Warrants or
Rights |  | Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights |         | Number of
Securities
Remaining
Available for
Future Issuance
under Equity
Compensation
Plans (Excluding
Securities
Reflected in
First Column)
|-------------------------------------- | ------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------- | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by  |                                                                                            |  |                                                                             |         |                                                                                                                                              
|security holders                       |                                                                                            |  |                                                                             | 160,539 |                                                                                                                                              
|Equity compensation plans not approved |                                                                                            | 
|by security holders                    |                                                                                            |  |                                                                             | 50,505  |                                                                                                                                              
|                                       |                                                                                            |  |                                                                             |         |                                                                                                                                              
|Total                                  |                                                                                            |  |                                                                             | 211,044 |                                                                                                                                              

ITEM 12.        CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS

Information required by
this item is included under the caption EXECUTIVE COMPENSATION  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS in Exhibit 99.1, the 2005 Proxy Statement of
Heartland, which section is incorporated herein by reference.

27

ITEM 13.        EXHIBITS

The Exhibits described
in the Exhibit List immediately following the Signatures pages of this report
(which Exhibit List is incorporated herein by reference) are hereby filed as part of this
report.

ITEM 14.        PRINCIPAL ACCOUNTANT
FEES AND SERVICES

Audit
Fees.     Crowe Chizek and Company LLC (Crowe
Chizek) has audited Heartlands financial statements for the calendar
years 2004 and 2003 that are included in this report as filed with the
Securities and Exchange Commission (SEC). Crowe Chizek has reviewed
Heartlands unaudited financial statements that were included in its
quarterly reports on Form 10-QSB, which reports were filed with the SEC during
the years 2004 and 2003. Heartland has paid, or expects to pay, fees (including
cost reimbursements) to Crowe Chizek for these audit and review services of
$69,060 for 2004 and $43,700 for 2003.

Audit-Related
Fees.    Heartland has paid fees (including cost
reimbursements) to Crowe Chizek for audit-related services rendered during 2004
and 2003 of $2,740 for 2004 and $525 for 2003. These services included
assistance with SEC matters in 2004 and 2003.

Tax
Fees.     Heartland has paid fees (including cost
reimbursements) to Crowe Chizek for tax services rendered during 2004 and 2003
of $7,300 for 2004 and $7,350 for 2003. For both years, these services included
tax return preparation and assistance with estimated tax matters.

All Other
Fees.    Heartland has paid, fees (including cost
reimbursements) to Crowe Chizek for all other services rendered during 2004 and
2003 of $41,490 for 2004 and $3,325 for 2003. For 2004 these services included
fess for consulting services to assist management with merger and acquisition
related issues and assistance with implementing Section 404 of the
Sarbanes-Oxley Act, including software with a framework of templates. For 2003
these services included corporate structuring and strategic planning consulting
services.

Pre-Approval by Audit
Committee of Independent Accountant Services.    As required
by SEC rules that first became effective with respect to Heartland in May 2003,
the Audit Committee of the Board (or a member of the Audit Committee acting
under authority delegated to him by the Audit Committee) approves in advance all
services proposed to be performed for Heartland or its subsidiaries by any
public accounting firm that performs (or proposes to perform) audit, review or
attest services for Heartland or its subsidiaries. Under these SEC rules, the
requirement for advance Audit Committee approval of services (other than audit,
review or attest services) is waived if they were not recognized to be non-audit
services at the time that the audit firm was engaged to provide those services,
and certain other conditions are satisfied. Since the date of adoption of a
pre-approval requirement by the Audit Committee, none of the services of Crowe
Chizek that were covered by the fees described above were performed without the
prior approval of the Audit Committee (or the prior approval of a member of the
Audit Committee acting under delegated authority) in reliance upon this waiver
provision of the SEC rules.

Audit
Committee Consideration of Independence of Independent
Accountant.    Crowe Chizek has provided to the Audit
Committee of the Board the written disclosures required by Independence
Standards Board No. 1 (Independence Discussions with Audit Committees), and the
Audit Committee has discussed with Crowe Chizek that firms independence.
The Audit Committee also considered whether Crowe Chizeks provision of
non-audit services to the Corporation, as described in this Item 14, is
compatible with maintaining that firms independence.

28

SIGNATURES

In accordance
with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

HEARTLAND BANCSHARES, INC.


By:  /s/ Steven L. Bechman
Date:  March 29, 2005
Steven L. Bechman,
Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:

Signatures and Title(s) Date

|By:  /s/ Steven L. Bechman
Steven L. Bechman, Chief Executive Officer and President; Director
(principal executive officer)

By:  /s/ Gordon Dunn
Gordon Dunn, Director


By:  /s/ Sharon Acton
Sharon Acton, Director

By:  /s/ Jeffrey L. Goben
Jeffrey L. Goben, Director

By:  /s/ J. Michael Jarvis
J. Michael Jarvis, Director

By:  /s/ John Norton
John Norton, Director

By:  /s/ Patrick A. Sherman
Patrick A. Sherman, Director

By:  /s/ Jeffery D. Joyce
Jeffery D. Joyce, Chief Financial Officer
(principal financial and accounting officer) |  | March 29, 2005

March 29, 2005
March 29, 2005
March 29, 2005

March 29, 2005
March 29, 2005
March 29, 2005
March 29, 2005 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------- | 

29

EXHIBIT LIST

The following
exhibits are filed as part of this Report. Exhibits 10.1 through and including
10.15 are management contracts or compensatory plans or arrangements that are
required to be filed as exhibits to this Report.

|Exhibit No. | Description
|----------- | -----------

| | 3.1 | Amended and Restated Articles of Incorporation of Heartland Bancshares, Inc.. This exhibit
is incorporated by reference to Exhibit 3.1 in the Registration Statement on Form SB-2,
filed July 28, 1997, as amended, (Form SB-2).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Amended and Restated Bylaws of Heartland Bancshares, Inc. This exhibit is incorporated by
reference to Exhibit 3.2 to Form 10-KSB for the year ended December 31, 2003.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1 | Rights Agreement dated as of June 23, 2000 between Heartland Bancshares, Inc., and
Heartland Community Bank, as Rights Agent. This exhibit is incorporated by reference to
Exhibit 4.01 to Form 8-K filed June 30, 2000.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2 | Terms of Common Shares and Preferred Shares are included in the Amended and Restated
Articles of Incorporation of Heartland Bancshares, Inc. This exhibit is incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form SB-2, filed July 28, 1997,
as amended.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3 | Terms of Series A Preferred Shares are included in the Articles of Amendment of Articles
of Incorporation of Heartland Bancshares, Inc., as filed with the Indiana Secretary of
State on June 27, 2000. This exhibit is incorporated by reference to Exhibit 3.01 to Form
8-K filed June 30, 2000.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | 1997 Stock Option Plan, as amended.
| | ---- | -----------------------------------

| | 10.2 | 1997 Stock Option Plan for Nonemployee Directors, as amended January 1999 and January
2003. This exhibit is incorporated by reference to Exhibit 10.2 to Form 10-KSB for the
year ended December 31, 2003.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 | Deferred Compensation Master Plan Agreement dated as of April 1, 2004. This exhibit is
incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-QSB for quarter
ended June 30, 2004.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 | Split Dollar Endorsement Agreement dated as of April 1, 2004 between Heartland Community
Bank and Steven L. Bechman. This exhibit is incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-QSB for quarter ended June 30, 2004.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.5 | Split Dollar Endorsement Agreement dated as of April 1, 2004 between Heartland Community
Bank and Jeffrey L. Goben. This exhibit is incorporated by reference to Exhibit 10.3 to
Quarterly Report on Form 10-QSB for quarter ended June 30, 2004.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.6 | Split Dollar Endorsement Agreement dated as of April 1, 2004 between Heartland Community
Bank and John M. Morin. This exhibit is incorporated by reference to Exhibit 10.4 to
Quarterly Report on Form 10-QSB for quarter ended June 30, 2004.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 | Split Dollar Endorsement Agreement dated as of April 1, 2004 between Heartland Community
Bank and Jeffery D. Joyce. This exhibit is incorporated by reference to Exhibit 10.5 to
Quarterly Report on Form 10-QSB for quarter ended June 30, 2004.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.8 | 2003 Stock Option Plan for Nonemployee Directors. This exhibit is incorporated by
reference to Exhibit 10.5 to the Registrants Annual Report on the Form 10-KSB for
year ended December 31, 2002.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.9 | Form of grant under 2003 Stock Option Plan for Nonemployee Directors.
| | ---- | ---------------------------------------------------------------------

| | 10.10 | Form of grant under 1997 Stock Option Plan.
| | ----- | -------------------------------------------

| | 10.11 | Change in Control Agreement dated as of July 19, 2004, between Heartland
Bancshares, Inc., and Steven L. Bechman. This exhibit is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-QSB for quarter ended
September 30, 2004.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

30

| | 10.12 | Change in Control Agreement dated as of July 19, 2004, between Heartland
Bancshares, Inc., and Jeffrey L. Goben. This exhibit is incorporated by
reference to Exhibit 10.2 to Quarterly Report on Form 10-QSB for quarter ended
September 30, 2004.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.13 | Change in Control Agreement dated as of July 19, 2004, between Heartland
Bancshares, Inc., and John M. Morin. This exhibit is incorporated by reference
to Exhibit 10.3 to Quarterly Report on Form 10-QSB for quarter ended September
30, 2004.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14 | Change in Control Agreement dated as of July 19, 2004, between Heartland
Bancshares, Inc., and Jeffery D. Joyce. This exhibit is incorporated by
reference to Exhibit 10.4 to Quarterly Report on Form 10-QSB for quarter ended
September 30, 2004.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.15 | Description of Director Compensation Arrangements. Information relating to terms of
compensation of Heartlands Directors is included under the captions Executive
Compensation and Election of Directors  Compensation of Directors
in Exhibit 99.1, the 2005 Proxy Statement of Heartland, which sections are incorporated
herein by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.16 | Agreement of Affiliation and Merger, among Blue River Bancshares, Inc., Heartland
Bancshares, Inc., and others, dated August 31, 2004 (without exhibits, which will be
provided to the Commission upon request). The copy of this exhibit filed as Exhibit 2.1 to
the Form 8-K Current Report filed by Blue River Bancshares, Inc. (SEC File Number:
000-24501), on September 1, 2004, is incorporated by reference.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.17 | Stock Option Agreement, dated August 31, 2004, between Heartland Bancshares, Inc, as
option issuer, and Blue River Bancshares, Inc., as option grantee. The copy of this
exhibit filed as Exhibit 10.1 to the Current Report on Form 8-K of Heartland Bancshares,
Inc., filed September 7, 2004 is incorporated herein by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.18 | Stock Option Agreement, dated August 31, 2004, between Heartland Bancshares,
Inc., as option grantee, and Blue River Bancshares, Inc., as option issuer. The
copy of this exhibit filed as Exhibit 10.1 to the Form 8-K Current Report filed
by Blue River Bancshares, Inc. (SEC File Number: 000-24501), on September 7,
2004 is incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.19 | Termination Agreement, dated February 10, 2005, by and among Blue River
Bancshares, Inc., Shelby County Bank, Heartland Bancshares, Inc. and Heartland
Community Bank. This exhibit is incorporated by reference to Exhibit 10.01 to
Form 8-K filed February 11, 2005.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 13 | The Issuers Annual Report to Shareholders for the year ended December 31, 2004. As
permitted by paragraph (b) under Supplemental Information requirements applicable to
Section 15(d) filers, and except to the extent specifically incorporated herein by
reference, the Issuer disclaims that this exhibit is filed or subject to the
liabilities of Section 18 of the Exchange Act or other liabilities.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 21 | Subsidiaries of the Issuer and names under which the Issuer is doing
business
| | -- | -----------------------------------------------------------------------------

| | 23 | Consent of Crowe Chizek and Company LLC
| | -- | ---------------------------------------

| | 31.1 | Section 302 Certification for President and Chief Executive Officer
| | ---- | -------------------------------------------------------------------

| | 31.2 | Section 302 Certification for Chief Financial Officer
| | ---- | -----------------------------------------------------

| | 32.1 | Section 906 Certification for President and Chief Executive Officer
| | ---- | -------------------------------------------------------------------

| | 32.2 | Section 906 Certification for Chief Financial Officer
| | ---- | -----------------------------------------------------

| | 99.1 | The Issuers 2005 Proxy Statement. As permitted by paragraph (b) under Supplemental
Information requirements applicable to Section 15(d) filers, and except to the extent
specifically incorporated herein by reference, the Issuer disclaims that this exhibit is
filed or subject to the liabilities of Section 18 of the Exchange Act or other
liabilities.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 | Form of Proxy for 2005 Annual Meeting. As permitted by paragraph (b) under Supplemental
Information requirements applicable to Section 15(d) filers, and except to the extent
specifically incorporated herein by reference, the Registrant disclaims that this exhibit
is filed or subject to the liabilities of Section 18 of the Exchange Act or
other liabilities.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31