Heartland Financial USA Inc. today reported that net income rose 9 percent in the first quarter of 2008. Net income increased to $6.3 million, or 38 cents per share, for the quarter ended March 31, compared with $5.8 million, or 34 cents per share, earned during the first quarter of 2007.

Return on average equity was 10.72 percent, and return on average assets was 0.77 percent for the first quarter of 2008, compared with 11.18 percent and 0.76 percent, respectively, for the same quarter in 2007.

“We are very satisfied with Heartland’s first-quarter performance given the current operating environment,” said Lynn Fuller, the company’s chairman, president and CEO, in a release. “Net income, earnings per share and assets are all up over last year, with net interest margin maintained at the same level as the second half of 2007. Having said that, there is substantial room for improvement in the level of our nonperforming loans.”

The allowance for loan and lease losses at March 31 was 1.48 percent of loans and 86 percent of nonperforming loans, compared with 1.45 percent of loans and 104 percent of nonperforming loans at Dec. 31, 2007. The continued softening of the economy and reduced real estate values, particularly in the Phoenix market, drove the additions to the allowance for loan and lease losses. Heartland reported that nonperforming loans hit $39.1 million or 1.72 percent of total loans and leases at March 31, compared with $31.8 million or 1.40 percent of total loans and leases at Dec. 31, 2007.

Heartland will host a conference call for investors at 3 p.m. today. To participate, call (800) 219-6110 or log onto www.htlf.com.