Heartland Bancshares, Inc. Announces Second Quarter Earnings

Heartland Bancshares, Inc. IN (OTCBB: HRTB) announced that it recorded net income of $104,000 or $.07 basic and diluted earnings per share for the quarter ended June 30, 2008, compared to quarter ended June 30, 2007 net income of $299,000 or $.21 basic and diluted earnings per share, a decline of $195,000. Heartland's return on average assets and return on average equity were .19% and 2.73% for the second quarter 2008. Heartland recorded net income of $334,000 or $.23 basic and diluted earnings per share for the six months ended June 30, 2008, a decrease in net income of $222,000 from $556,000 or $.40 basic and $.38 diluted earnings per share for the six months ended June 30, 2007. Heartland's return on average assets and return on average equity were .31% and 4.37% for the six months ended June 30, 2008.

Net interest income was $1,858,000 for the second quarter of 2008 compared to $1,769,000 for the second quarter of 2007, an increase of $89,000 or 5.03%. Net interest margin was 3.55% for the quarter ended June 30, 2008 compared to 3.68% for the second quarter 2007. Net interest income increased by $115,000 to $3,619,000 for the six month period in 2008 compared to $3,503,000 in 2007. Net interest margin was 3.56% for the six month period in 2008 compared to 3.68% in 2007.

Provision for loan losses was $125,000 for the second quarter of 2008 compared to $20,000 for the second quarter of 2007, up $105,000. Provision for the six month period in 2008 was $200,000 compared to $20,000 in 2007, up $180,000. The increase in provision was due to $153,000 of net chargeoffs in the second quarter 2008 and $252,000 of net chargeoffs in the six months ended June 30, 2008 compared to $29,000 of net recoveries in the second quarter 2007 and $9,000 of net recoveries in the six months ended June 30, 2007. Heartland's allowance for loan losses at June 30, 2008 was $1,990,000 or 1.25% of loans. Non-performing assets total $4,652,000 or 2.16% of total assets at June 30, 2008 and include $2,973,000 of non-accrual loans, $458,000 of loans greater than 90 days past due and still accruing and $1,221,000 of other real estate. Non-performing assets totaled $4,758,000 or 2.27% of total assets at December 31, 2007.

Noninterest income increased by $74,000 or 13.15% to $634,000 in the second quarter 2008 compared to $560,000 in the second quarter 2007. Noninterest income increased by $193,000 or 18.57% to $1,229,000 in the six months ended June 30, 2008 compared to $1,036,000 in the six months ended June 30, 2007.

Noninterest expense increased by $392,000 or 20.68% to $2,291,000 in the second quarter 2008 compared to $1,899,000 in the second quarter 2007. Noninterest expense increased by $537,000 or 14.21% to $4,314,000 in the six months ended June 30, 2008 compared to $3,777,000 in the six months ended June 30, 2007. The increases in both periods are partially due to $150,000 of write downs recorded in the second quarter 2008 on other real estate properties. At June 30, 2008, Heartland owned seven residential rental real estate properties obtained as a result of loan defaults. During the second quarter 2008, Heartland recognized that the estimated present value of future net sales values of these properties had declined and the carrying value of the properties was reduced. The noninterest expense increases in both periods are also partially due to the opening of Heartland Community Bank's fifth branch office in March 2008. Wages and benefits, occupancy and data processing expenses all increased as a result of the new branch office.

Heartland recorded tax benefit of $28,000 for the second quarter 2008 compared to tax expense of $111,000 for the second quarter 2007. Heartland recorded $0 tax expense for the six months ended June 30, 2008 compared to $186,000 for the same period in 2007. The declines in tax expense are due to the declines in taxable income for both periods. Heartland Community Bank also formed a non-Indiana based investment subsidiary April 1, 2008. Income produced by this subsidiary is not subject to state income or franchise tax. The tax savings created by this subsidiary was approximately $25,000 for the second quarter 2008 and six months ended June 30, 2008.

Total assets increased $5,693,000 or 2.72% to $215,090,000 at June 30, 2008 from $209,397,000 at December 31, 2007. During this same period, gross loans increased $8,512,000 or 5.66% to $158,801,000 at June 30, 2008. Total demand and savings deposits increased $2,525,000 or 22.55% to $102,692,000 at June 30, 2008. Total shareholders equity was $15,452,000 and book value per share was $11.05 at June 30, 2008.

President Steve Bechman commented, "We are pleased to report exceptional growth in demand and savings deposits along with stability in asset quality, and growth in net interest income and noninterest income. We are excited about our fifth branch facility, which opened in March 2008. While that addition caused additional noninterest expense in the first and second quarters of 2008, we are pleased with the early success of the branch, which is evidenced by the growth in demand and savings deposits. Our capital position, which is above the minimums required to be considered well capitalized by banking regulators, our liquidity position with over $8 million in cash and cash equivalents and our stable asset quality enable us to be proud to offer safe banking services during this turbulent time in the banking industry."

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

                   HEARTLAND BANCSHARES, INC.
                   SELECT BALANCE SHEET DATA
             June 30, 2008 and December 31, 2007
                (Dollar amounts in thousands)
                         (Unaudited)

                                                      June 30, December 31,
                                                        2008       2007
                                                     ---------- ----------


Total cash and cash equivalents                      $    8,260 $   10,616
Securities available-for-sale                            37,577     39,646
Loans                                                   158,801    150,289
Allowance for loan losses                                (1,990)    (2,042)
Total deposits                                          172,420    171,046
Total liabilities                                       199,638    193,329
Shareholders' equity                                     15,452     16,067
Total assets                                         $  215,090 $  209,397



                   HEARTLAND BANCSHARES, INC.
                 SELECTED INCOME STATEMENT DATA
        Three and Six Months ended June 30, 2008 and 2007
      (Dollar amounts in thousands, except per share data)
                         (Unaudited)


                                    Three Months          Six Months
                                   Ended June 30,        Ended June 30,
                                  2008       2007       2008       2007
                               ---------- ---------- ---------- ----------

Interest income                $    3,109 $    3,332      6,306 $    6,526
Interest expense                    1,251      1,563      2,687      3,023
Provision for loan losses             125         20        200         20
Noninterest income                    634        560      1,229      1,036
Noninterest expense                 2,291      1,899      4,314      3,777
Income tax expense                    (28)       111          -        186
Net income                     $      104 $      299  $     334  $     556
Basic earnings per share       $      .07 $      .21  $     .23  $     .40
Diluted earnings per share     $      .07 $      .21  $     .23  $     .38
Weighted average shares
 outstanding                    1,419,210  1,397,648  1,427,643  1,399,063
Dilutive weighted average
 shares outstanding             1,432,749  1,451,794  1,439,061  1,452,686