10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended June 30, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period __________ to __________

Commission File Number: 001-15393

HEARTLAND FINANCIAL USA, INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

42-1405748

(I.R.S. employer identification number)

1398 Central Avenue, Dubuque, Iowa  52001

(Address of principal executive offices)(Zip Code)

(563) 589-2000

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 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 x No o

     Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act.

	Large accelerated filer ¨	Accelerated Filer x
	Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act of 1934). Yes oNo x

Indicate the number of shares outstanding of each of the classes of Registrant's common stock as of the latest practicable date:  As of August 4, 2015, the Registrant had outstanding 20,627,937 shares of common stock, $1.00 par value per share.

HEARTLAND FINANCIAL USA, INC.

Form 10-Q Quarterly Report

Table of Contents

Part I
Item 1.	Financial Statements
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
Part II
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Disclosures
Item 5.	Other Information
Item 6.	Exhibits
	3.1 Amendment to Certificate of Incorporation of Heartland Financial USA, Inc.
	10.2 Promissory Note between Heartland Financial USA, Inc. and Bankers Trust Company dated June 14, 2015
	31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
	31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
	32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101 Financial statements formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.

PART I

ITEM 1. FINANCIAL STATEMENTS

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
	June 30, 2015 (Unaudited)			December 31, 2014
ASSETS
Cash and due from banks	$	111,909		$	64,150
Federal funds sold and other short-term investments	7,813			9,721
Cash and cash equivalents	119,722			73,871
Time deposits in other financial institutions	2,355			2,605
Securities:
Available for sale, at fair value (cost of $1,308,488 at June 30, 2015, and $1,396,794 at December 31, 2014)	1,315,699			1,401,868
Held to maturity, at cost (fair value of $292,564 at June 30, 2015, and $296,768 at December 31, 2014)	283,258			284,587
Other investments, at cost	20,455			20,498
Loans held for sale	105,898			70,514
Loans and leases receivable:
Held to maturity	4,449,823			3,876,745
Loans covered by loss share agreements	—			1,258
Allowance for loan and lease losses	(45,614		)	(41,449		)
Loans and leases receivable, net	4,404,209			3,836,554
Premises, furniture and equipment, net	143,423			130,713
Other real estate, net	16,983			19,016
Goodwill	54,162			35,583
Other intangible assets, net	45,226			33,932
Cash surrender value on life insurance	96,693			82,638
Other assets	108,924			59,433
TOTAL ASSETS	$	6,717,007		$	6,051,812
LIABILITIES AND EQUITY
LIABILITIES:
Deposits:
Demand	$	1,536,355		$	1,295,193
Savings	2,816,666			2,687,493
Time	964,248			785,336
Total deposits	5,317,269			4,768,022
Short-term borrowings	477,918			330,264
Other borrowings	296,594			395,705
Accrued expenses and other liabilities	46,020			61,504
TOTAL LIABILITIES	6,137,801			5,555,495
STOCKHOLDERS' EQUITY:
Preferred stock (par value $1 per share; authorized 20,604 shares; none issued or outstanding)	—			—
Series A Junior Participating preferred stock (par value $1 per share; authorized 16,000 shares; none issued or outstanding)	—			—
Series C Fixed Rate Non-Cumulative Perpetual preferred stock (par value $1 per share; liquidation value $81.7 million; authorized, issued and outstanding 81,698 shares)	81,698			81,698
Common stock (par value $1 per share; authorized 30,000,000 shares at June 30, 2015, and 25,000,000 shares at December 31, 2014; issued 20,616,068 shares at June 30, 2015, and 18,511,125 shares at December 31, 2014)	20,616			18,511
Capital surplus	148,789			95,816
Retained earnings	325,106			298,764
Accumulated other comprehensive income	3,059			1,528
Treasury stock at cost (1,743 shares at June 30, 2015 and 0 at December 31, 2014)	(62		)	—
TOTAL STOCKHOLDERS' EQUITY	579,206			496,317
TOTAL LIABILITIES AND EQUITY	$	6,717,007		$	6,051,812
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data)
	Three Months Ended  June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
INTEREST INCOME:
Interest and fees on loans and leases	$	55,824		$	48,101		$	108,873		$	94,485
Interest on securities:
Taxable	6,739			7,447			13,871			15,208
Nontaxable	2,874			3,708			5,790			6,830
Interest on federal funds sold	1			—			2			—
Interest on interest bearing deposits in other financial institutions	3			7			7			14
TOTAL INTEREST INCOME	65,441			59,263			128,543			116,537
INTEREST EXPENSE:
Interest on deposits	3,819			4,577			7,991			9,355
Interest on short-term borrowings	212			202			410			428
Interest on other borrowings (includes $559 and $573 of interest expense related to derivatives reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $1,123 and $1,094 of interest expense related to derivatives reclassified from accumulated other comprehensive income for the six months ended June 30, 2015 and 2014, respectively)	3,766			3,685			8,568			7,343
TOTAL INTEREST EXPENSE	7,797			8,464			16,969			17,126
NET INTEREST INCOME	57,644			50,799			111,574			99,411
Provision for loan and lease losses	5,674			2,751			7,345			9,082
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES	51,970			48,048			104,229			90,329
NONINTEREST INCOME:
Service charges and fees	5,900			5,254			11,304			10,150
Loan servicing income	1,163			1,393			2,204			2,904
Trust fees	3,913			3,343			7,544			6,553
Brokerage and insurance commissions	916			1,158			2,003			2,281
Securities gains, net (includes $3,110 and $854 of net security gains reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $7,463 and $1,635 of net security gains reclassified from accumulated other comprehensive income for six months ended June 30, 2015 and 2014, respectively)	3,110			854			7,463			1,635
Gain (loss) on trading account securities	—			—			—			(38		)
Net gains on sale of loans held for sale	14,599			8,796			28,341			15,175
Income on bank owned life insurance	459			339			983			702
Other noninterest income	601			398			1,482			1,023
TOTAL NONINTEREST INCOME	30,661			21,535			61,324			40,385
NONINTEREST EXPENSES:
Salaries and employee benefits	36,851			32,563			73,489			64,882
Occupancy	4,028			3,984			8,287			8,034
Furniture and equipment	2,176			2,085			4,282			3,975
Professional fees	5,249			4,214			11,293			8,740
FDIC insurance assessments	899			980			1,855			1,960
Advertising	1,333			1,511			2,514			2,699
Intangible assets amortization	715			591			1,346			1,215
Other real estate and loan collection expenses	753			518			1,218			1,570
Loss on sales/valuations of assets, net	1,509			1,379			1,862			1,542
Other noninterest expenses	9,969			6,834			16,950			12,580
TOTAL NONINTEREST EXPENSES	63,482			54,659			123,096			107,197
INCOME BEFORE INCOME TAXES	19,149			14,924			42,457			23,517
Income taxes (includes $952 and $105 of income tax expense reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $2,365 and $202 of income tax expense reclassified from accumulated other comprehensive income for the six months ended June 30, 2015 and 2014, respectively)	3,989			4,150			11,588			5,853
NET INCOME	15,160			10,774			30,869			17,664
Preferred dividends and discount	(204		)	(204		)	(408		)	(408		)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	14,956		$	10,570		$	30,461		$	17,256
EARNINGS PER COMMON SHARE - BASIC	$	0.73		$	0.57		$	1.49		$	0.94
EARNINGS PER COMMON SHARE - DILUTED	$	0.72		$	0.56		$	1.47		$	0.92
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.10		$	0.10		$	0.20		$	0.20
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
NET INCOME	$	15,160		$	10,774		$	30,869		$	17,664
OTHER COMPREHENSIVE INCOME (LOSS)
Securities:
Net change in unrealized gain (loss) on securities	(2,764		)	9,772			8,714			30,682
Reclassification adjustment for net gains realized in net income	(3,110		)	(854		)	(7,463		)	(1,635		)
Net change in non-credit related other than temporary impairment	24			24			48			48
Income taxes	2,361			(3,523		)	(498		)	(11,482		)
Other comprehensive income (loss) on securities	(3,489		)	5,419			801			17,613
Derivatives used in cash flow hedging relationships:
Net change in unrealized loss on derivatives	1,509			(936		)	55			(1,075		)
Reclassification adjustment for net loss on derivatives realized in net income	559			573			1,123			1,094
Income taxes	(775		)	135			(448		)	(7		)
Other comprehensive income (loss) on cash flow hedges	1,293			(228		)	730			12
Other comprehensive income (loss)	(2,196		)	5,191			1,531			17,625
TOTAL COMPREHENSIVE INCOME	$	12,964		$	15,965		$	32,400		$	35,289
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
	Six Months Ended June 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	30,869		$	17,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,174			8,547
Provision for loan and lease losses	7,345			9,082
Net amortization of premium on securities	14,645			12,497
Securities gains, net	(7,463		)	(1,635		)
Decrease in trading account securities	—			1,801
Stock based compensation	1,908			1,831
Write downs and losses on repossessed assets, net	924			921
Loans originated for sale	(724,081		)	(402,605		)
Proceeds on sales of loans held for sale	710,753			377,272
Net gains on sale of loans held for sale	(21,328		)	(15,175		)
Decrease in accrued interest receivable	1,478			616
(Increase) decrease in prepaid expenses	100			(698		)
Decrease in accrued interest payable	(867		)	(908		)
Capitalization of servicing rights	(7,156		)	(3,344		)
Write downs and losses on sales of assets, net	938			—
Other, net	(10,275		)	1,644
NET CASH PROVIDED BY OPERATING ACTIVITIES	8,964			7,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of securities available for sale	526,026			509,891
Proceeds from the sale of other investments	10,336			7,356
Proceeds from the maturity of and principal paydowns on securities available for sale	86,625			72,651
Proceeds from the maturity of and principal paydowns on securities held to maturity	646			619
Proceeds from the maturity of and principal paydowns on time deposits in other financial institutions	250			250
Purchase of securities available for sale	(529,670		)	(349,740		)
Purchase of securities held to maturity	—			(20,944		)
Purchase of other investments	(9,009		)	(6,445		)
Net increase in loans and leases	(184,039		)	(212,384		)
Purchase of bank owned life insurance policies	(1,100		)	—
Capital expenditures	(3,984		)	(4,205		)
Net cash and cash equivalents received in acquisition	7,103			—
Proceeds from the sale of equipment	15			—
Proceeds on sale of OREO and other repossessed assets	5,402			10,663
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES	(91,399		)	7,712
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits and savings accounts	64,348			4,664
Net increase (decrease) in time deposit accounts	50,980			(29,681		)
Net increase in short-term borrowings	86,718			20,738
Proceeds from short term FHLB advances	248,100			170,000
Repayments of short term FHLB advances	(212,000		)	(179,000		)
Proceeds from other borrowings	29,000			5,000
Repayments of other borrowings	(134,389		)	(25,394		)
Purchase of treasury stock	(2,173		)	(608		)
Proceeds from issuance of common stock	1,578			429
Excess tax benefits on exercised stock options	651			119
Dividends paid	(4,527		)	(4,099		)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES	128,286			(37,832		)
Net increase (decrease) in cash and cash equivalents	45,851			(22,610		)
Cash and cash equivalents at beginning of year	73,871			125,270
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	119,722		$	102,660
Supplemental disclosures:
Cash paid for income/franchise taxes	$	6,969		$	1,641
Cash paid for interest	$	20,836		$	18,034
Loans transferred to OREO	$	4,046		$	6,097
Purchases of securities available for sale, accrued, not paid	$	—		$	11,175
Sales of securities available for sale, accrued, not settled	$	34,129		$	—
Stock consideration granted for acquisition	$	53,052		$	—
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Dollars in thousands, except per share data)
	Heartland Financial USA, Inc. Stockholders' Equity
	Preferred  Stock		Common  Stock		Capital  Surplus			Retained  Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total  Equity
Balance at January 1, 2014	$	81,698	$	18,399	$	91,632		$	265,067		$	(17,336	)	$	—		$	439,460
Comprehensive income								17,664			17,625						35,289
Cash dividends declared:
Preferred, $5.00 per share								(408		)							(408		)
Common, $0.20 per share								(3,691		)							(3,691		)
Purchase of 23,350 shares of common stock														(608		)	(608		)
Issuance of 91,840 shares of common stock			69		(129		)							608			548
Commitments to issue common stock					1,831												1,831
Balance at June 30, 2014	$	81,698	$	18,468	$	93,334		$	278,632		$	289		$	—		$	472,421
Balance at January 1, 2015	$	81,698	$	18,511	$	95,816		$	298,764		$	1,528		$	—		$	496,317
Comprehensive income								30,869			1,531						32,400
Cash dividends declared:
Preferred, $5.00 per share								(408		)							(408		)
Common, $0.20 per share								(4,119		)							(4,119		)
Purchase of 36,176 shares of common stock														(2,173		)	(2,173		)
Issuance of 2,139,376 shares of common stock			2,105		51,065									2,111			55,281
Commitments to issue common stock					1,908												1,908
Balance at June 30, 2015	$	81,698	$	20,616	$	148,789		$	325,106		$	3,059		$	(62	)	$	579,206
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2014, included in the Form 10-K of Heartland Financial USA, Inc. ("Heartland") filed with the Securities and Exchange Commission ("SEC") on March 13, 2015. Accordingly, footnote disclosures which would substantially duplicate the disclosure contained in the audited consolidated financial statements have been omitted.

The financial information of Heartland included herein has been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments), that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the interim period ended June 30, 2015, are not necessarily indicative of the results expected for the year ending December 31, 2015.

Earnings Per Share

Basic earnings per share is determined using net income available to common stockholders and weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average common shares and assumed incremental common shares issued. Amounts used in the determination of basic and diluted earnings per share for the six-month periods ended June 30, 2015 and 2014, are shown in the table below:

	Three Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	15,160		$	10,774
Preferred dividends and discount	(204		)	(204		)
Net income available to common stockholders	$	14,956		$	10,570
Weighted average common shares outstanding for basic earnings per share	20,599			18,458
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	278			289
Weighted average common shares for diluted earnings per share	20,877			18,747
Earnings per common share — basic	$	0.73		$	0.57
Earnings per common share — diluted	$	0.72		$	0.56
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95
	Six Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	30,869		$	17,664
Preferred dividends and discount	(408		)	(408		)
Net income available to common stockholders	$	30,461		$	17,256
Weighted average common shares outstanding for basic earnings per share	20,408			18,448
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	274			291
Weighted average common shares for diluted earnings per share	20,682			18,739
Earnings per common share — basic	$	1.49		$	0.94
Earnings per common share — diluted	$	1.47		$	0.92
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95

Stock-Based Compensation

Heartland may grant, through its Nominating and Compensation Committee (the "Compensation Committee"), non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and cash incentive awards, under its 2012 Long-Term Incentive Plan (the "Plan"). The Plan, which was approved by stockholders in May 2012 and replaced Heartland's 2005 Long-Term Incentive Plan with respect to grants after such approval, reserved 265,153 shares of common stock at June 30, 2015, for issuance under future awards that may be granted under the Plan to employees and directors of, and service providers to, Heartland or its subsidiaries.

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, "Compensation-Stock Compensation" requires the measurement of the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the award is based upon its fair value estimated on the date of grant and recognized in the consolidated statements of income over the vesting period of the award. The fair market value of restricted stock and restricted stock units is based on the fair value of the underlying shares of common stock on the date of grant. The fair value of stock options is estimated on the date of grant using the Black-Scholes model.

The amount of tax benefit related to the exercise, vesting, and forfeiture of equity-based awards reflected in additional paid-in-capital, not taxes payable, was $651,000 and $119,000 during the six months ended June 30, 2015 and 2014, respectively.

Restricted Stock Units

The Plan permits the Compensation Committee to grant restricted stock units ("RSUs"). On January 20, 2015, the Compensation Committee granted time-based RSUs with respect to 78,220 shares of common stock, and on March 11, 2014, the Compensation Committee granted time-based RSUs with respect to 67,190 shares of common stock to selected officers. The time-based RSUs, which represent the right, without payment, to receive shares of Heartland common stock at a specified date in the future based on specific vesting conditions, vest over five years in three equal installments on the third, fourth and fifth anniversaries of the grant date, will be settled in common stock upon vesting, and will not be entitled to dividends until vested. The time-based RSUs vest upon a "qualified retirement" (as defined in the RSU agreement), and the retiree is required to sign a non-solicitation and non-compete agreement as a condition to vesting.

In addition to the time-based RSUs referenced in the preceding paragraph, the Compensation Committee granted performance-based RSUs with respect to 39,075 shares of common stock on March 10, 2015, and performance-based RSUs with respect to 32,645 shares of common stock on March 11, 2014, to Heartland executives and subsidiary presidents. These performance-based RSUs vest based first on performance measures tied to Heartland's earnings and loans on December 31, 2015, and December 31, 2014, respectively, and then on time-based vesting conditions. For the grants awarded in 2015, the portion of the RSUs earned based on performance vest on December 31, 2017, and for the grants awarded in 2014, the portion of the RSUs earned based on performance vest on December 31, 2016, subject to employment on the respective vesting dates.

The Compensation Committee also grants RSUs under the Plan to directors as part of their compensation, to new management level employees at commencement of employment, and to other employees and service providers as incentives. During the six months ended June 30, 2015, and June 30, 2014, 22,648 and 31,525 RSUs, respectively, were granted to directors and new employees.

A summary of the status of the RSUs as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Outstanding at January 1	396,555		$	21.48	353,070		$	18.48
Granted	139,943		28.90		131,235		26.69
Vested	(151,681	)	17.98		(73,224	)	16.65
Forfeited	(11,198	)	25.14		(3,901	)	19.10
Outstanding at June 30	373,619		$	25.55	407,180		$	21.53

Total compensation costs recorded for RSUs were $1.9 million and $1.8 million for the six-month periods ended June 30, 2015 and 2014. As of June 30, 2015, there were $4.6 million of total unrecognized compensation costs related to the 2005 and 2012 Long-Term Incentive Plans for RSUs which are expected to be recognized through 2019.

Options

Although the Plan provides authority to the Compensation Committee to grant stock options, no options were granted during the first six months of 2015 and 2014. Prior to 2009, options were typically granted annually with an expiration date ten years after the date of grant. Vesting was generally over a five-year service period with portions of a grant becoming exercisable at three years, four years, and five years after the date of grant. A summary of the status of the stock options as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at January 1	215,851		$	23.85	261,936		$	23.60
Granted	—		—		—		—
Exercised	(56,650	)	22.85		(5,000	)	19.13
Forfeited	(2,250	)	23.88		(6,500	)	26.39
Outstanding at June 30	156,951		$	24.18	250,436		$	23.62
Options exercisable at June 30	156,951		$	24.18	250,436		$	23.62

AtJune 30, 2015, the vested options totaled 156,951 shares with a weighted average exercise price of $24.18 per share and a weighted average remaining contractual life of 1.68 years. The intrinsic value (the difference between the market price and the aggregate exercise price) for the vested options as of June 30, 2015, was $2.0 million. The intrinsic value for the total of all options exercised during the six months ended June 30, 2015, was $508,000.

The exercise price of stock options granted is established by the Compensation Committee, but the exercise price for the stock options may not be less than the fair market value of the shares on the date that the option is granted or, if greater, the par value of a share of stock. Each option granted is exercisable in full at any time or from time to time, subject to vesting provisions, as determined by the Compensation Committee and as provided in the option agreement, but such time may not exceed ten years from the grant date. Cash received from options exercised was $1.3 million for the six months ended June 30, 2015, and $96,000 for the six months ended June 30, 2014.

Total compensation costs recorded for options were $0 for both six-month periods ended June 30, 2015 and 2014. There are no unrecorded compensation costs related to options at June 30, 2015.

Subsequent Events

Heartland has no subsequent events requiring recognition as of June 30, 2015, or disclosure through the filing date of this quarterly report on Form 10-Q with the SEC.

Effect of New Financial Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." The amendments in ASU 2014-01 to Topic 323, "Equity Investments and Joint Ventures," provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefit received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for fiscal years, and interim periods within those years, beginning after December 31, 2014, and should be applied retrospectively to all periods presented. Heartland elected to use the proportional amortization method for equity investments in qualified affordable housing projects that meet the conditions specified in ASU-2014-01. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity.

In January 2014, the FASB issued ASU 2014-04, "Receivables-Troubled Debt Restructurings by Creditors: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure." The amendments in ASU 2014-04 clarify that an in-substance foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (i) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (ii) the borrower conveying all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. ASU 2014-04 also requires disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in loans collateralized by residential real estate property that are in the process of foreclosure. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. Once adopted, an entity can elect either (i) a modified retrospective transition method or (ii) a prospective transition method. The modified retrospective transition method is applied by means of a cumulative-effect adjustment to residential mortgage loans and foreclosed residential real estate properties existing as of the beginning of the period for which the amendments of ASU 2014-04 are effective, with real estate reclassified to loans measured at the carrying value of the real estate at the date of adoption and loans reclassified to real estate measured at the lower of net carrying value of the loan or the fair value of the real estate less costs to sell at the date of adoption. The prospective transition method is applied by means of applying the amendments of ASU 2014-04 to all instances of receiving physical possession of residential real estate properties that occur after the date of adoption. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity. As of June 30, 2015, Heartland had not received possession of any residential real estate properties that meet the disclosure requirements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The amendment clarifies the principles for recognizing revenue and develops a common revenue standard. The amendment outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In applying the revenue model to contracts within its scope, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB Codification. The standard also requires significantly expanded disclosures about revenue recognition. The amendment is effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is not permitted. Heartland intends to adopt the accounting standard during the first quarter of 2018, as required, and is currently evaluating the impact on its results of operations, financial position, and liquidity.

In August 2014, the FASB issued ASU 2014-14, "Receivables-Troubled Debt Restructurings by Creditors: Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure." The amendment clarifies how creditors are to classify certain government-guaranteed mortgage loans upon foreclosure. The amendment requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separate from the loan before foreclosure, and (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered for the guarantor. This amendment is effective for annual reporting periods, and interim reporting periods within those years, beginning after December 15, 2014, with early adoption permitted. Heartland adopted this standard on January 1, 2015, and the adoption did not have an impact on the results of operations, financial position, and liquidity.

In January 2015, the FASB issued ASU 2015-01, "Income Statement-Extraordinary and Unusual Items." The amendment eliminates from U.S. GAAP the concept of extraordinary items. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. This amended guidance will prohibit separate disclosure of extraordinary items in the income statement. This amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Heartland

does not expect the adoption of this standard to have a material impact on the results of operations, financial position, and liquidity.

In April 2015, the FASB issued ASU 2015-03, "Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs." The amendment intends to simplify the presentation of debt issuance costs and more closely align the presentation of debt issuance costs under U.S. GAAP with the presentation under comparable International Financial Reporting Standards. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. Debt issuance costs related to a recognized debt liability are to be presented on the balance sheet as a direct reduction from the debt liability, similar to the presentation of debt premiums or discounts. The costs will continue to be amortized to interest expense using the effective interest method. This amendment is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The ASU requires retrospective application to all prior periods presented in the financial statements. Heartland adopted this standard effective March 31, 2015, at which time $550,000 was reclassified from other assets to other borrowings on the consolidated balance sheet for all periods presented. The adoption of this standard did not have a material impact on the results of operations, financial position, and liquidity.

NOTE 2: ACQUISITIONS

On May 28, 2015, Heartland entered into a definitive merger agreement with Premier Valley Bank in Fresno, California. Under the terms of the agreement, Premier Valley Bank shareholders will receive approximately $95.0 million or $7.73 per share of common stock in the merger, and may elect to receive this payment in shares of Heartland common stock or cash, subject to proration so that 70% of the total payment is in Heartland common stock and 30% in cash. As of June 30, 2015, Premier Valley Bank had assets of approximately $655.0 million, loans of approximately $413.0 million and deposits of approximately $573.0 million. Upon closing of the transaction, Premier Valley Bank will become a wholly-owned subsidiary of Heartland and will continue to operate under its current name and management team as Heartland's tenth state-chartered bank.

On May 14, 2015, Heartland entered into a definitive merger agreement with First Scottsdale Bank, N.A., in Scottsdale, Arizona. Under the terms of the agreement, Heartland will acquire First Scottsdale Bank, N.A., in an all cash transaction valued at approximately $17.7 million. Simultaneous with the closing of the transaction, First Scottsdale Bank, N.A., will be merged into Heartland's Arizona Bank & Trust subsidiary. As of June 30, 2015, First Scottsdale Bank, N.A., had total assets of approximately $96.0 million, including $63.0 million of loans outstanding, and deposits of $79.0 million.

On April 15, 2015, Heartland entered into a definitive merger agreement with Community Bancorporation of New Mexico, Inc., parent company of Community Bank in Santa Fe, New Mexico. Under the terms of the agreement, Heartland will acquire Community Bancorporation in an all cash transaction valued at approximately $11.1 million. Simultaneous with the closing of the transaction, Community Bank will be merged into Heartland's New Mexico Bank & Trust subsidiary. As of June 30, 2015, Community Bank had total assets of approximately $175.0 million, including $109.0 million of loans outstanding, and $146.0 million of deposits.

On January 16, 2015, Heartland completed the acquisition of Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin. Under the terms of the agreement, the aggregate purchase price was based upon 155% of the December 31, 2014, adjusted tangible book value, as defined in the merger agreement, of Community Banc-Corp of Sheboygan, Inc. The purchase price was approximately $53.1 million, which was paid by delivery of 1,970,720 shares of Heartland common stock. The transaction included, at fair value, total assets of $506.8 million, including loans of $395.0 million and including deposits of $433.9 million. Simultaneous with the close of the transaction, Community Bank & Trust merged into Heartland’s Wisconsin Bank & Trust subsidiary. The transaction was a tax-free reorganization with respect to the stock consideration received by the stockholders of Community Banc-Corp of Sheboygan, Inc.

The assets and liabilities of Community Banc-Corp of Sheboygan, Inc. were recorded on the consolidated balance sheet at the estimated fair value on the acquisition date. The following table represents, in thousands, the amounts recorded on the consolidated balance sheet as of January 16, 2015:

	As of January 16, 2015
Fair value of consideration paid
Common Stock	$	53,052
Cash	6
Total consideration paid	53,058
Fair value of assets acquired
Cash and due from banks	7,109
Securities:
Securities available for sale	52,976
Other securities	1,284
Loans held for sale	728
Loans held to maturity	395,007
Premises, furniture and equipment, net	13,954
Other real estate, net	346
Other intangible assets, net	10,295
Other assets	25,066
Total assets	506,765
Fair value of liabilities assumed
Deposits	433,919
Short term borrowings	24,836
Other borrowings	6,097
Other liabilities	7,434
Total liabilities assumed	472,286
Fair value of net assets acquired	34,479
Goodwill resulting from acquisition	$	18,579

Heartland recognized goodwill of $18.6 million in conjunction with the acquisition of Community Banc-Corp of Sheboygan, Inc., which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, increased market presence, cross-selling opportunities, and expanded business lines. See Note 6 for further information on goodwill.

Pro Forma Information: The following pro forma information presents the results of operations for the years ended December 31, 2014, and December 31, 2013, as if the Community Banc-Corp of Sheboygan, Inc. acquisition occurred on January 1, 2013:

(Dollars in thousands, except per share data)	For the Years Ended
	December 31, 2014		December 31, 2013
Net interest income	$	220,358	$	179,001
Net income	$	44,710	$	42,105
Basic earnings per share	$	2.19	$	2.20
Diluted earnings per share	$	2.16	$	2.17

The above pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the merged companies that would have been achieved had the acquisition occurred on January 1, 2013, nor are they intended to represent or be indicative of future results of operations. The pro forma results do not include expected operating cost savings as a result of the acquisition. These pro forma results require significant estimates and judgments particularly as it relates to valuation and accretion of income associated with the acquired loans.

Heartland incurred $1.7 million of pre-tax merger related expenses in 2014 and 2015. The merger expenses are reflected on the consolidated statement of income for the applicable period and are reported primarily in the categories of salaries and employee benefits, professional fees and other noninterest expenses.

Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, projected default rates, loss given defaults, and recovery rates. No allowance for credit losses was carried over from the acquisition. The balance of nonaccrual loans at acquisition date was $5.8 million.

NOTE 3: SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
U.S. government corporations and agencies	$	15,701	$	101	$	—		$	15,802
Mortgage-backed securities	1,101,835		15,575		(9,360		)	1,108,050
Obligations of states and political subdivisions	185,167		2,611		(1,777		)	186,001
Corporate debt securities	740		—		—			740
Total debt securities	1,303,443		18,287		(11,137		)	1,310,593
Equity securities	5,045		61		—			5,106
Total	$	1,308,488	$	18,348	$	(11,137	)	$	1,315,699
December 31, 2014
U.S. government corporations and agencies	$	24,010	$	98	$	(15	)	$	24,093
Mortgage-backed securities	1,219,305		11,929		(11,968		)	1,219,266
Obligations of states and political subdivisions	148,450		5,304		(328		)	153,426
Corporate debt securities	—		—		—			—
Total debt securities	1,391,765		17,331		(12,311		)	1,396,785
Equity securities	5,029		54		—			5,083
Total	$	1,396,794	$	17,385	$	(12,311	)	$	1,401,868

At both June 30, 2015, and December 31, 2014, the amortized cost of the available for sale securities is net of $184,000 of credit related other-than-temporary impairment ("OTTI").

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
Mortgage-backed securities	$	5,555	$	266	$	(816	)	$	5,005
Obligations of states and political subdivisions	277,703		11,393		(1,537		)	287,559
Total	$	283,258	$	11,659	$	(2,353	)	$	292,564
December 31, 2014
Mortgage-backed securities	$	5,734	$	217	$	(667	)	$	5,284
Obligations of states and political subdivisions	278,853		13,576		(945		)	291,484
Total	$	284,587	$	13,793	$	(1,612	)	$	296,768

At June 30, 2015, the amortized cost of the held to maturity securities is net of $797,000 of credit related OTTI and $374,000 of non-credit related OTTI. At December 31, 2014, the amortized cost of the held to maturity securities was net of $797,000 of credit related OTTI and $422,000 of non-credit related OTTI.

Approximately 84% of Heartland's mortgage-backed securities are issuances of government-sponsored enterprises.

The amortized cost and estimated fair value of debt securities available for sale at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,378	$	3,394
Due in 1 to 5 years	22,352		22,274
Due in 5 to 10 years	40,102		40,078
Due after 10 years	135,776		136,797
Total debt securities	201,608		202,543
Mortgage-backed securities	1,101,835		1,108,050
Equity securities	5,045		5,106
Total investment securities	$	1,308,488	$	1,315,699

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,092	$	3,153
Due in 1 to 5 years	13,827		14,462
Due in 5 to 10 years	59,866		62,268
Due after 10 years	200,918		207,676
Total debt securities	277,703		287,559
Mortgage-backed securities	5,555		5,005
Total investment securities	$	283,258	$	292,564

Gross gains and losses realized related to the sales of securities available for sale for the three- and six-month periods ended June 30, 2015 and 2014, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Proceeds from sales	$	270,688	$	154,603	$	526,026	$	509,891
Gross security gains	3,819		974		8,441		3,446
Gross security losses	709		120		978		1,811

The following tables summarize, in thousands, the amount of unrealized losses, defined as the amount by which cost or amortized cost exceeds fair value, and the related fair value of investments with unrealized losses in Heartland's securities portfolio as of June 30, 2015, and December 31, 2014. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining how long an investment was in an unrealized loss position was June 30, 2014, and December 31, 2013, respectively. Securities for which Heartland has taken credit-related OTTI write-downs are categorized as being "less than 12 months" or "12 months or longer" in a continuous loss position based on the point in time that the fair value declined to below the cost basis and not the period of time since the credit-related OTTI write-down.

Securities available for sale	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
U.S. government corporations and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities	390,432		(7,343		)	128,712		(2,017		)	519,144		(9,360		)
Obligations of states and political subdivisions	75,481		(1,344		)	9,615		(433		)	85,096		(1,777		)
Total temporarily impaired securities	$	465,913	$	(8,687	)	$	138,327	$	(2,450	)	$	604,240	$	(11,137	)
December 31, 2014
U.S. government corporations and agencies	$	6,042	$	(15	)	$	—	$	—		$	6,042	$	(15	)
Mortgage-backed securities	327,363		(7,391		)	306,078		(4,577		)	633,441		(11,968		)
Obligations of states and political subdivisions	886		(6		)	20,507		(322		)	21,393		(328		)
Total temporarily impaired securities	$	334,291	$	(7,412	)	$	326,585	$	(4,899	)	$	660,876	$	(12,311	)

Securities held to maturity	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
Mortgage-backed securities	$	—	$	—		$	1,914	$	(816	)	$	1,914	$	(816	)
Obligations of states and political subdivisions	26,655		(466		)	17,324		(1,071		)	43,979		(1,537		)
Total temporarily impaired securities	$	26,655	$	(466	)	$	19,238	$	(1,887	)	$	45,893	$	(2,353	)
December 31, 2014
Mortgage-backed securities	$	—	$	—		$	2,761	$	(667	)	$	2,761	$	(667	)
Obligations of states and political subdivisions	3,172		(422		)	29,402		(523		)	32,574		(945		)
Total temporarily impaired securities	$	3,172	$	(422	)	$	32,163	$	(1,190	)	$	35,335	$	(1,612	)

Heartland reviews the investment securities portfolio on a quarterly basis to monitor its exposure to OTTI. A determination as to whether a security's decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors Heartland may consider in the OTTI analysis include the length of time the security has been in an unrealized loss position, changes in security ratings, financial condition of the issuer, as well as security and industry specific economic conditions. In addition, with regard to debt securities, Heartland may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral. For certain debt securities in unrealized loss positions, Heartland prepares cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. During 2012, Heartland experienced deterioration in the credit support on three private label mortgage-backed securities which resulted in a credit-related OTTI loss. The underlying collateral on these securities experienced an increased level of defaults and a slowing of voluntary prepayments causing the present value of the forward expected cash flows, using prepayment and default vectors, to be below the amortized cost basis of the securities. Based on Heartland's evaluation, a $981,000 OTTI on three private label mortgage-backed securities attributable to credit-related losses was recorded in March 2012. The other-than-temporary credit-related losses were $797,000 in the held to maturity category and $184,000 in the available for sale category.

The remaining unrealized losses on Heartland's mortgage-backed securities are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities and not related to concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that the securities will not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.

Unrealized losses on Heartland's obligations of states and political subdivisions are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities. Management monitors the credit quality and financial stability of the underlying municipalities. Because the decline in fair value is attributable to changes in interest rates or widening market spreads due to insurance company downgrades and not underlying credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.

There were no gross realized gains or losses on the sale of available for sale securities with OTTI write-downs for the periods ended June 30, 2015, or December 31, 2014.

The following table shows the detail of OTTI write-downs on debt securities included in earnings and the related changes in other accumulated comprehensive income ("AOCI") for the same securities, in thousands:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Recorded as part of gross realized losses:
Credit related OTTI	$	—		$	—		$	—		$	—
Intent to sell OTTI	—			—			—			—
Total recorded as part of gross realized losses	—			—			—			—
Recorded directly to AOCI for non-credit related impairment:
Residential mortgage backed securities	—			—			—			—
Accretion of non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total changes to AOCI for non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total OTTI losses (accretion) recorded on debt securities, net	$	(24	)	$	(24	)	$	(48	)	$	(48	)

Heartland has not experienced any OTTI writedowns since the initial impairment charge in 2012.

Included in other securities at June 30, 2015, and December 31, 2014, were shares of stock in each Federal Home Loan Bank (the "FHLB") of Des Moines, Chicago, Dallas, San Francisco and Topeka at an amortized cost of $14.6 million and $14.3 million, respectively.

NOTE 4: LOANS AND LEASES

Loans and leases as of June 30, 2015, and December 31, 2014, were as follows, in thousands:

	June 30, 2015			December 31, 2014
Loans and leases receivable held to maturity:
Commercial	$	1,189,626		$	1,036,080
Commercial real estate	2,010,091			1,707,060
Agricultural and agricultural real estate	444,110			423,827
Residential real estate	443,026			380,341
Consumer	364,441			330,555
Gross loans and leases receivable held to maturity	4,451,294			3,877,863
Unearned discount	(234		)	(90		)
Deferred loan fees	(1,237		)	(1,028		)
Total net loans and leases receivable held to maturity	4,449,823			3,876,745
Loans covered under loss share agreements:
Commercial and commercial real estate	—			54
Agricultural and agricultural real estate	—			—
Residential real estate	—			1,204
Consumer	—			—
Total loans covered under loss share agreements	—			1,258
Allowance for loan and lease losses	(45,614		)	(41,449		)
Loans and leases receivable, net	$	4,404,209		$	3,836,554

Heartland has certain lending policies and procedures in place that are designed to provide for an acceptable level of credit risk. The board of directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans. Diversification in the loan portfolio is also a means of managing risk associated with fluctuations in economic conditions.

The commercial and commercial real estate loan portfolio includes a wide range of business loans, including lines of credit for working capital and operational purposes and term loans for the acquisition of equipment and real estate. Although most loans are made on a secured basis, loans may be made on an unsecured basis where warranted by the overall financial condition of the borrower. Terms of commercial business loans generally range from one to five years. Commercial loans and leases are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The collateral that Heartland requires for most of these loans and leases is based upon the discounted market value of the collateral. The primary repayment risks of commercial loans and leases are that the cash flow of the borrowers may be unpredictable, and the collateral securing these loans may fluctuate in value. Heartland seeks to minimize these risks in a variety of ways. The underwriting analysis includes credit verification, analysis of global cash flows, appraisals and a review of the financial condition of the borrower. Personal guarantees are frequently required as a tertiary form of repayment. In addition, when underwriting loans for commercial real estate, careful consideration is given to the property's operating history, future operating projections, current and projected occupancy, location and physical condition. Heartland also utilizes government guaranteed lending through the U.S. Small Business Administration and the U.S. Department of Agriculture's Rural Development Business and Industry Program to assist customers with longer-term funding and to reduce risk.

Agricultural loans, many of which are secured by crops, machinery and real estate, are provided to finance capital improvements and farm operations as well as acquisitions of livestock and machinery. Agricultural loans present unique credit risks relating to adverse weather conditions, loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural loans is dependent upon the profitable operation or management of the agricultural entity. In underwriting agricultural loans, lending personnel work closely with their customers to review budgets and cash flow projections for the ensuing crop year. These budgets and cash flow projections are monitored closely during the year and reviewed with the customers at least annually. Lending personnel also work closely with governmental agencies, including the Farm Service Agency, to help agricultural customers obtain credit enhancement products such as loan guarantees or interest assistance.

Heartland originates first-lien, adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a single family residential property. These loans are principally collateralized by owner-occupied properties and are amortized over 10 to 30 years. Heartland typically sells longer-term, low-rate, residential mortgage loans in the secondary market with servicing rights retained. This practice allows Heartland to better manage interest rate risk and liquidity risk. The Heartland bank subsidiaries participate in lending programs sponsored by U.S. government agencies such as Veterans Administration and Federal Home Administration when justified by market conditions.

Consumer lending includes motor vehicle, home improvement, home equity and small personal credit lines. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than one-to-four-family residential mortgage loans. Consumer loan collections are dependent on the borrower's continuing financial stability, and are therefore more likely to be affected by adverse personal circumstances. Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate. Heartland's consumer finance subsidiaries, Citizens Finance Co. and Citizens Finance of Illinois Co., typically lend to borrowers with past credit problems or limited credit histories, which comprise approximately 21% of Heartland's total consumer loan portfolio.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Heartland’s policy is to discontinue the accrual of interest income on any loan or lease when, in the opinion of management, there is a reasonable doubt as to the timely collection of the interest and principal, normally when a loan or lease is 90 days past due. When interest accruals are deemed uncollectible, interest credited to income in the current year is reversed and interest accrued in prior years is charged to the allowance for loan and lease losses. Nonaccrual loans and leases are returned to an accrual status when, in the opinion of management, the financial position of the borrower indicates that there is no longer any reasonable doubt as to the timely payment of interest and principal.

Under Heartland’s credit practices, a loan is impaired when, based on current information and events, it is probable that Heartland will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except where more practical, at the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent.

The following table shows the balance in the allowance for loan and lease losses at June 30, 2015, and December 31, 2014, and the related loan balances, disaggregated on the basis of impairment methodology, in thousands. Loans evaluated under ASC 310-10-35 include loans on nonaccrual status and troubled debt restructurings, which are individually evaluated for impairment, and other impaired loans deemed to have similar risk characteristics. All other loans are collectively evaluated for impairment under ASC 450-20. Heartland has made no significant changes to the accounting for the allowance for loan and lease losses policy during 2015.

	Allowance For Loan and Lease Losses						Gross Loans and Leases Receivable Held to Maturity
	Ending Balance Under ASC 310-10-35		Ending Balance Under ASC 450-20		Total		Ending Balance Evaluated for Impairment Under ASC 310-10-35		Ending Balance Evaluated for Impairment Under ASC 450-20		Total
June 30, 2015
Commercial	$	238	$	12,826	$	13,064	$	10,562	$	1,179,064	$	1,189,626
Commercial real estate	1,023		16,585		17,608		39,505		1,970,586		2,010,091
Agricultural and agricultural real estate	19		3,657		3,676		4,658		439,452		444,110
Residential real estate	411		3,688		4,099		11,928		431,098		443,026
Consumer	1,118		6,049		7,167		5,006		359,435		364,441
Total	$	2,809	$	42,805	$	45,614	$	71,659	$	4,379,635	$	4,451,294
December 31, 2014
Commercial	$	754	$	11,155	$	11,909	$	4,526	$	1,031,554	$	1,036,080
Commercial real estate	636		15,262		15,898		35,771		1,671,289		1,707,060
Agricultural and agricultural real estate	52		3,243		3,295		5,049		418,778		423,827
Residential real estate	442		3,299		3,741		10,235		370,106		380,341
Consumer	813		5,793		6,606		6,143		324,412		330,555
Total	$	2,697	$	38,752	$	41,449	$	61,724	$	3,816,139	$	3,877,863

The following table presents nonaccrual loans, accruing loans past due 90 days or more and troubled debt restructured loans not covered under loss share agreements at June 30, 2015, and December 31, 2014, in thousands. There were no nonaccrual leases, accruing leases past due 90 days or more or restructured leases at June 30, 2015, and December 31, 2014.

	June 30, 2015		December 31, 2014
Nonaccrual loans	$	25,894	$	24,205
Nonaccrual troubled debt restructured loans	816		865
Total nonaccrual loans	$	26,710	$	25,070
Accruing loans past due 90 days or more	$	—	$	—
Performing troubled debt restructured loans	$	10,903	$	12,133

The following table provides information on troubled debt restructured loans that were modified during the three and six months ended June 30, 2015, and June 30, 2014, dollars in thousands:

	Three Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	—	—		—		1	298		298
Total commercial and commercial real estate	1	830		830		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	1	$	1,141	$	1,141	4	$	3,693	$	3,693

	Six Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	1	3,992		3,992		1	298		298
Total commercial and commercial real estate	2	4,822		4,822		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	3	$	5,133	$	5,133	4	$	3,693	$	3,693

The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. Since the modifications on these loans have been only interest rate concessions and term extensions, not principal reductions, the pre-modification and post-modification recorded investment amounts are the same. At June 30, 2015, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructuring.

There were no troubled debt restructured loans for which there was a payment default during the three and six months ended June 30, 2015, and June 30, 2014, that had been modified during the twelve-month period prior to the default.Heartland's internal rating system is a series of grades reflecting management's risk assessment, based on its analysis of the borrower's financial condition. The "pass" category consists of all loans that are not in the "nonpass" category, categorized into a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the pass category is monitored for early identification of credit deterioration. The "nonpass" category consists of special mention, substandard, doubtful and loss loans. The "special mention" rating is attached to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. These credits are closely monitored for improvement or deterioration. The "substandard" rating is assigned to loans that are inadequately protected by the current sound net worth and paying capacity of the borrower and may be further at risk due to deterioration in the value of collateral pledged. Well-defined weaknesses jeopardize liquidation of the debt. These loans are still considered collectible, however, a distinct possibility exists that Heartland will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all of the following weaknesses: deteriorating trends, lack of earnings, inadequate debt service capacity, excessive debt and/or lack of liquidity. The "doubtful" rating is assigned to loans where

identified weaknesses make collection or liquidation in full, on the basis of existing facts, conditions and values, highly questionable and improbable. These borrowers are usually in default, lack liquidity and capital, as well as, resources necessary to remain an operating entity. Specific pending events, such as capital injections, liquidations or perfection of liens on additional collateral, may strengthen the credit, thus deferring classification of the loan as loss until exact status can be determined. The "loss" rating is assigned to loans considered uncollectible. As of June 30, 2015, Heartland had no loans classified as doubtful and no loans classified as loss. Loans are placed on "nonaccrual" when management does not expect to collect payments of principal and interest in full or when principal or interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection.

The following table presents loans and leases not covered by loss share agreements by credit quality indicator at June 30, 2015, and December 31, 2014, in thousands:

	Pass		Nonpass		Total
June 30, 2015
Commercial	$	1,071,508	$	118,118	$	1,189,626
Commercial real estate	1,834,875		175,216		2,010,091
Total commercial and commercial real estate	2,906,383		293,334		3,199,717
Agricultural and agricultural real estate	422,208		21,902		444,110
Residential real estate	424,365		18,661		443,026
Consumer	355,869		8,572		364,441
Total gross loans and leases receivable held to maturity	$	4,108,825	$	342,469	$	4,451,294
December 31, 2014
Commercial	$	939,717	$	96,363	$	1,036,080
Commercial real estate	1,567,711		139,349		1,707,060
Total commercial and commercial real estate	2,507,428		235,712		2,743,140
Agricultural and agricultural real estate	402,883		20,944		423,827
Residential real estate	361,325		19,016		380,341
Consumer	321,114		9,441		330,555
Total gross loans and leases receivable held to maturity	$	3,592,750	$	285,113	$	3,877,863

The nonpass category in the table above is comprised of approximately 66% special mention and 34% substandard as of June 30, 2015. The percent of nonpass loans on nonaccrual status as of June 30, 2015, was 8%. As of December 31, 2014, the nonpass category in the table above was comprised of approximately 66% special mention and 34% substandard. The percent of nonpass loans on nonaccrual status as of December 31, 2014, was 9%. Loans delinquent 30 to 89 days as a percent of total loans were 0.31% at June 30, 2015, compared to 0.21% at December 31, 2014. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. All impaired loans are reviewed at least annually.

The following table sets forth information regarding Heartland's accruing and nonaccrual loans and leases not covered by loss share agreements at June 30, 2015, and December 31, 2014, in thousands:

	Accruing Loans and Leases
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual		Total Loans and Leases
June 30, 2015
Commercial	$	3,583	$	8	$	—	$	3,591	$	1,183,033	$	3,002	$	1,189,626
Commercial real estate	3,384		111		—		3,495		1,995,011		11,585		2,010,091
Total commercial and commercial real estate	6,967		119		—		7,086		3,178,044		14,587		3,199,717
Agricultural and agricultural real estate	671		386		—		1,057		441,896		1,157		444,110
Residential real estate	1,694		152		—		1,846		432,648		8,532		443,026
Consumer	3,131		718		—		3,849		358,158		2,434		364,441
Total gross loans and leases receivable held to maturity	$	12,463	$	1,375	$	—	$	13,838	$	4,410,746	$	26,710	$	4,451,294
December 31, 2014
Commercial	$	980	$	48	$	—	$	1,028	$	1,032,707	$	2,345	$	1,036,080
Commercial real estate	1,788		111		—		1,899		1,693,554		11,607		1,707,060
Total commercial and commercial real estate	2,768		159		—		2,927		2,726,261		13,952		2,743,140
Agricultural and agricultural real estate	119		50		—		169		422,219		1,439		423,827
Residential real estate	1,037		445		—		1,482		371,982		6,877		380,341
Consumer	2,382		1,366		—		3,748		324,005		2,802		330,555
Total gross loans and leases receivable held to maturity	$	6,306	$	2,020	$	—	$	8,326	$	3,844,467	$	25,070	$	3,877,863

The majority of Heartland's impaired loans are those that are nonaccrual or have had their terms restructured in a troubled debt restructuring. The following tables present, for impaired loans not covered by loss share agreements and by category of loan, the unpaid contractual balance at June 30, 2015, and December 31, 2014; the outstanding loan balance recorded on the consolidated balance sheets at June 30, 2015, and December 31, 2014; any related allowance recorded for those loans as of June 30, 2015, and December 31, 2014; the average outstanding loan balance recorded on the consolidated balance sheets during the six months ended June 30, 2015, and year ended December 31, 2014; and the interest income recognized on the impaired loans during the six months ended June 30, 2015, and year ended December 31, 2014, in thousands:

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Quarter-to- Date Avg. Loan Balance		Quarter-to- Date Interest Income Recognized		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
June 30, 2015
Impaired loans with a related allowance:
Commercial	$	273	$	238	$	238	$	265	$	3	$	379	$	6
Commercial real estate	2,448		2,448		1,023		1,630		4		2,428		10
Total commercial and commercial real estate	2,721		2,686		1,261		1,895		7		2,807		16
Agricultural and agricultural real estate	1,513		1,513		19		2,711		—		2,983		39
Residential real estate	2,793		2,624		411		2,431		5		2,531		9
Consumer	2,972		2,972		1,118		2,889		7		2,735		11
Total impaired loans with a related allowance	$	9,999	$	9,795	$	2,809	$	9,926	$	19	$	11,056	$	75
Impaired loans without a related allowance:
Commercial	$	10,324	$	10,324	$	—	$	8,163	$	141	$	5,813	$	174
Commercial real estate	40,650		37,057		—		34,798		366		33,449		657
Total commercial and commercial real estate	50,974		47,381		—		42,961		507		39,262		831
Agricultural and agricultural real estate	3,145		3,145		—		2,205		46		2,082		49
Residential real estate	9,380		9,304		—		8,942		12		8,356		71
Consumer	2,034		2,034		—		2,238		12		2,656		23
Total impaired loans without a related allowance	$	65,533	$	61,864	$	—	$	56,346	$	577	$	52,356	$	974
Total impaired loans held to maturity:
Commercial	$	10,597	$	10,562	$	238	$	8,428	$	144	$	6,192	$	180
Commercial real estate	43,098		39,505		1,023		36,428		370		35,877		667
Total commercial and commercial real estate	53,695		50,067		1,261		44,856		514		42,069		847
Agricultural and agricultural real estate	4,658		4,658		19		4,916		46		5,065		88
Residential real estate	12,173		11,928		411		11,373		17		10,887		80
Consumer	5,006		5,006		1,118		5,127		19		5,391		34
Total impaired loans held to maturity	$	75,532	$	71,659	$	2,809	$	66,272	$	596	$	63,412	$	1,049

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
December 31, 2014
Impaired loans with a related allowance:
Commercial	$	780	$	780	$	754	$	5,594	$	19
Commercial real estate	7,356		7,322		636		5,931		303
Total commercial and commercial real estate	8,136		8,102		1,390		11,525		322
Agricultural and agricultural real estate	3,317		3,317		52		3,966		104
Residential real estate	2,412		2,244		442		3,398		12
Consumer	2,799		2,799		813		4,053		19
Total impaired loans with a related allowance	$	16,664	$	16,462	$	2,697	$	22,942	$	457
Impaired loans without a related allowance:
Commercial	$	4,913	$	3,746	$	—	$	3,499	$	101
Commercial real estate	32,708		28,449		—		24,522		1,172
Total commercial and commercial real estate	37,621		32,195		—		28,021		1,273
Agricultural and agricultural real estate	3,961		1,732		—		3,308		13
Residential real estate	8,200		7,991		—		6,267		110
Consumer	3,350		3,344		—		1,870		127
Total impaired loans without a related allowance	$	53,132	$	45,262	$	—	$	39,466	$	1,523
Total impaired loans held to maturity:
Commercial	$	5,693	$	4,526	$	754	$	9,093	$	120
Commercial real estate	40,064		35,771		636		30,453		1,475
Total commercial and commercial real estate	45,757		40,297		1,390		39,546		1,595
Agricultural and agricultural real estate	7,278		5,049		52		7,274		117
Residential real estate	10,612		10,235		442		9,665		122
Consumer	6,149		6,143		813		5,923		146
Total impaired loans held to maturity	$	69,796	$	61,724	$	2,697	$	62,408	$	1,980

On January 16, 2015, Heartland acquired Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin. As of January 16, 2015, Community Bank & Trust had loans of $413.4 million, and the estimated fair value of the loans acquired was $395.0 million.

The Community Banc-Corp of Sheboygan, Inc. acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations.” Purchased loans acquired in a business combination, which include loans purchased in the Community Bank & Trust acquisition, are recorded at estimated fair value on their purchase date, but the purchaser cannot carry over the related allowance for loan and lease losses. Purchased loans are accounted for under ASC 310-30, “Loans and Debt Securities with Deteriorated Credit Quality,” when the loans have evidence of credit deterioration since origination and it is probable at the date of the acquisition that Heartland will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration at the purchase date included statistics such as past due and nonaccrual status. Generally, acquired loans that meet Heartland’s definition for nonaccrual status fall within the scope of ASC 310-30. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference which is included in the carrying value of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses. Subsequent increases in cash flows result in a reversal of the provision for loan and lease losses to the extent of prior charges, or a reclassification of the difference from nonaccretable to accretable with a positive impact on future interest income. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

The carrying amount of the loans acquired with the acquisition of Community Bank & Trust at June 30, 2015, consisted of purchased impaired and nonimpaired loans as summarized in the following table, in thousands:

	June 30, 2015
	Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans
Commercial	$	—	$	82,415	$	82,415
Commercial real estate	7,755		211,377		219,132
Agricultural and agricultural real estate	—		2,937		2,937
Residential real estate	—		23,419		23,419
Consumer loans	—		18,116		18,116
Total Loans	$	7,755	$	338,264	$	346,019

On the acquisition date, the preliminary estimate of the contractually required payments receivable for all loans with evidence of credit deterioration since origination acquired in the acquisition was $12.9 million and the estimated fair value of the loans was $8.2 million. At June 30, 2015, a majority of these loans were valued based upon the liquidation value of the underlying collateral, because the expected cash flows are primarily based on the liquidation of underlying collateral and the timing and amount of the cash flows could not be reasonably estimated. At June 30, 2015, there was an allowance for loan and lease losses of $550,000 related to these ASC 310-30 loans.

On the acquisition date, the preliminary estimate of the contractually required payments receivable for all nonimpaired loans acquired in the acquisition was $400.0 million and the estimated fair value of the loans was $386.8 million.

On July 2, 2009, Heartland acquired all deposits of The Elizabeth State Bank in Elizabeth, Illinois through its subsidiary Galena State Bank & Trust Co. based in Galena, Illinois, in a whole bank loss sharing transaction facilitated by the FDIC. As of July 2, 2009, The Elizabeth State Bank had loans of $42.7 million. The estimated fair value of the loans acquired was $37.8 million. The FDIC approved the transfer of the loss share agreements to Illinois Bank & Trust as part of the merger of Galena State Bank & Trust Co. into Illinois Bank & Trust.

At the date of acquisition, the acquired loans and other real estate owned were covered by a loss share agreement for non-residential loans and a loss share agreement for residential real estate. Effective October 1, 2014, loans subject to the non-residential loss sharing agreement with the FDIC were no longer covered by loss sharing agreements. The remaining residential real estate loans covered under the loss share agreement are not material at June 30, 2015.

NOTE 5: ALLOWANCE FOR LOAN AND LEASE LOSSES

Changes in the allowance for loan and lease losses for the six months ended June 30, 2015, and June 30, 2014, were as follows, in thousands:

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at March 31,2015	$	11,688		$	16,635		$	3,216		$	3,745		$	6,570		$	—	$	41,854
Charge-offs	(682		)	(371		)	(275		)	(55		)	(1,351		)	—		(2,734		)
Recoveries	111			370			2			70			267			—		820
Provision	1,947			974			733			339			1,681			—		5,674
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at December 31, 2014	$	11,909		$	15,898		$	3,295		$	3,741		$	6,606		$	—	$	41,449
Charge-offs	(956		)	(704		)	(551		)	(113		)	(2,414		)	—		(4,738		)
Recoveries	431			496			24			107			500			—		1,558
Provision	1,680			1,918			908			364			2,475			—		7,345
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at March 31, 2014	$	11,633		$	13,010		$	2,571		$	3,671		$	7,376		$	312		$	38,573
Charge-offs	(148		)	(161		)	(125		)	(55		)	(911		)	—			(1,400		)
Recoveries	208			514			2			30			214			—			968
Provision	234			1,317			340			169			837			(146		)	2,751
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at December 31, 2013	$	13,099		$	14,152		$	2,992		$	3,720		$	7,722		$	—		$	41,685
Charge-offs	(7,065		)	(1,084		)	(1,636		)	(204		)	(2,069		)	—			(12,058		)
Recoveries	407			1,294			4			56			422			—			2,183
Provision	5,486			318			1,428			243			1,441			166			9,082
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892

Management allocates the allowance for loan and lease losses by pools of risk within each loan portfolio. The allocation of the allowance for loan and lease losses by loan portfolio is made for analytical purposes and is not necessarily indicative of the trend of future loan and lease losses in any particular category. The total allowance for loan and lease losses is available to absorb losses from any segment of the loan portfolio.

NOTE 6: GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS

Heartland had goodwill of $54.2 million at June 30, 2015, and $35.6 millionDecember 31, 2014. Heartland conducts its annual internal assessment of the goodwill both collectively and at its subsidiaries as of September 30.

Heartland recorded $18.6 million of goodwill in connection with the acquisition of Community Banc-Corp of Sheboygan, Inc., the parent company of Community Bank & Trust, based in Sheboygan, Wisconsin on January 16, 2015. The goodwill associated with this transaction is not deductible for tax purposes. As part of this acquisition, Heartland recognized core deposit intangibles of $6.0 million that are expected to be amortized over a period of 10 years. The core deposit intangibles associated with this transaction are not deductible for tax purposes. In addition, Heartland recognized commercial servicing rights of $4.3 million.

Other intangible assets consist of core deposit intangibles, mortgage servicing rights, customer relationship intangible, and commercial servicing rights. The gross carrying amount of other intangible assets and the associated accumulated amortization at June 30, 2015, and December 31, 2014, are presented in the table below, in thousands:

	June 30, 2015						December 31, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	27,109	$	13,849	$	13,260	$	21,069	$	12,525	$	8,544
Mortgage servicing rights	41,458		13,819		27,639		37,825		12,841		24,984
Customer relationship intangible	1,177		794		383		1,177		773		404
Commercial servicing rights	4,396		452		3,944		—		—		—
Total	$	74,140	$	28,914	$	45,226	$	60,071	$	26,139	$	33,932

The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:

	Core Deposit Intangibles		Mortgage Servicing Rights		Customer Relationship Intangible		Commercial Servicing Rights		Total
Six months ending December 31, 2015	$	1,374	$	4,368	$	21	$	421	$	6,184
Year ending December 31,
2016	2,467		5,818		41		821		9,147
2017	2,180		4,987		40		769		7,976
2018	1,925		4,156		39		676		6,796
2019	1,667		3,324		38		504		5,533
2020	1,423		2,493		37		314		4,267
Thereafter	2,224		2,493		167		439		5,323

Projections of amortization expense for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of June 30, 2015. Heartland's actual experience may be significantly different depending upon changes in mortgage interest rates and market conditions. Mortgage loans serviced for others were $3.79 billion and $3.50 billion as of June 30, 2015, and December 31, 2014, respectively. The fair value of Heartland's mortgage servicing rights was estimated at $37.0 million at June 30, 2015, and $34.2 million at December 31, 2014.

Heartland's mortgage servicing rights portfolio is comprised of loans serviced for the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association. The servicing rights portfolio is separated into 15- and 30-year tranches. At both June 30, 2015, and December 31, 2014, no valuation allowance was required for any of the tranches.

The fair value of mortgage servicing rights is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds, servicing costs and escrow earnings are considered in the calculation. The average constant prepayment rate was11.43%and11.40%for the June 30, 2015, and December 31, 2014, valuations, respectively. The discount rate was9.22%and9.20%for the June 30, 2015, and December 31, 2014, valuations, respectively. The average capitalization

rate for the first six months of 2015 ranged from65to138basis points compared to75and139basis points for 2014. Fees collected for the servicing of mortgage loans for others were $5.0 million and $4.2 million for the six months ended June 30, 2015, and June 30, 2014, respectively.

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	24,984		$	21,788
Originations	7,015			3,344
Amortization	(4,360		)	(2,355		)
Balance at June 30	$	27,639		$	22,777
Fair value of mortgage servicing rights	$	36,971		$	31,471
Mortgage servicing rights, net to servicing portfolio	0.73		%	0.71		%

Heartland's commercial servicing rights portfolio was initially acquired with the Community Banc-Corp of Sheboygan, Inc. transaction that closed on January 16, 2015. The commercial servicing portfolio is comprised of loans serviced for the Small Business Administration and United States Department of Agriculture, which totaled $159.6 million. Fees collected for the servicing of commercial loans for others were $360,000. The fair value of Heartland's commercial servicing rights was estimated at $4.6 million as of June 30, 2015.

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	—		$	—
Acquired	4,255			—
Originations	141			—
Amortization	(452		)	—
Balance at June 30	$	3,944		$	—

Mortgage and commercial servicing rights are initially recorded at fair value in net gains on sale of loans held for sale when they are acquired through loan sales. Fair value is based on market prices for comparable servicing contracts, when available, or based on a valuation model that calculates the present value of estimated future net servicing income.

Mortgage and commercial servicing rights are subsequently measured using the amortization method, which requires the asset to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon the fair value of the assets as compared to the carrying amount. Impairment is recognized through a valuation allowance for specific tranches to the extent that fair value is less than carrying amount. At June 30, 2015, no valuation allowance was required for any of Heartland's servicing rights.

NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS

Heartland uses derivative financial instruments as part of its interest rate risk management strategy. As part of the strategy, Heartland considers the use of interest rate swaps, caps, floors, collars, and certain interest rate lock commitments and forward sales of securities related to mortgage banking activities. Heartland's current strategy includes the use of interest rate swaps, interest rate lock commitments, forward sales of mortgage securities, as well as facilitating back-to-back loan swaps to assist customers in managing interest rate risk. Heartland's objectives are to add stability to its net interest margin and to manage its exposure to movements in interest rates. The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. Heartland is exposed to credit risk in the event of nonperformance by counterparties to financial instruments. Heartland minimizes this risk by entering into derivative contracts with counterparties that met Heartland’s credit standards, and the contracts contain collateral provisions protecting the at-risk party. Heartland has not experienced any losses from nonperformance by these counterparties. Heartland monitors counterparty risk in accordance with the provisions of ASC 815.

In addition, interest rate-related derivative instruments generally contain language outlining collateral pledging requirements for each counterparty. Collateral must be posted when the market value exceeds certain threshold limits which are determined by credit ratings of each counterparty. Heartland was required to pledge $3.0 million and $5.3 million of cash as collateral at June 30, 2015, and December 31, 2014, respectively. Heartland's counterparties were required to pledge $2.4 million and $0 at June 30, 2015, and December 31, 2014, respectively.

Heartland's derivative and hedging instruments are recorded at fair value on the consolidated balance sheets. See Note 8, “Fair Value,” for additional fair value information and disclosures.

Cash Flow Hedges

Heartland has variable rate funding which creates exposure to variability in interest payments due to changes in interest rates. To manage the interest rate risk related to the variability of interest payments, Heartland has entered into various interest rate swap agreements. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are received or made on Heartland's variable-rate liabilities. For the six months ended June 30, 2015, the change in net unrealized losses on cash flow hedges reflects changes in the fair value of the swaps and reclassification from accumulated other comprehensive income to interest expense totaling $1.1 million. For the next twelve months, Heartland estimates that cash payments and reclassification from accumulated other comprehensive income to interest expense will total $2.2 million.

Heartland executed an interest rate swap transaction on April 5, 2011, with an effective date of April 20, 2011, and an expiration date of April 20, 2016, to effectively convert $15.0 million of its newly issued variable rate amortizing debt to fixed rate debt. For accounting purposes, this swap transaction is designated as a cash flow hedge of the changes in cash flows attributable to changes in one-month LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on an amount of Heartland's debt principal equal to the then-outstanding swap notional amount. At inception, Heartland asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swap.

Heartland entered into three forward starting interest rate swap transactions to effectively convert Heartland Financial Statutory Trust IV, V, and VII, which total $65.0 million, as well as Morrill Statutory Trust I and II, which total $20.0 million, from variable rate subordinated debentures to fixed rate debt. For accounting purposes, these five swap transactions are designated as cash flow hedges of the changes in cash flows attributable to changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $85.0 million of Heartland's subordinated debentures that reset quarterly on a specified reset date. At inception, Heartland asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps.

During the first quarter of 2015, Heartland entered into two additional forward starting interest rate swaps. The first forward starting interest rate swap transaction relates to Heartland's $20.0 million Statutory Trust VI, which will convert from a fixed interest rate subordinated debenture to a variable interest rate subordinated debenture. The effective date of the interest rate swap transaction is June 15, 2017, and Heartland Statutory Trust VI will effectively remain at a fixed interest rate. The forward-starting swap transaction expires on June 15, 2024. The second forward starting interest rate swap is effective on March 1, 2017, and will replace the current interest rate swap related to Heartland Statutory Trust VII upon its expiration on March 1, 2017.

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments designated as cash flow hedges at June 30, 2015, and December 31, 2014, in thousands:

	Notional Amount		Fair Value			Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2015
Interest rate swap	$	9,667	$	(159	)	Other Liabilities	2.937	%	5.140	%	04/20/2016
Interest rate swap	25,000		(523		)	Other Liabilities	0.283	%	2.255	%	03/17/2021
Interest rate swap	20,000		(877		)	Other Liabilities	0.283	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,680		)	Other Liabilities	0.271	%	3.355	%	01/07/2020
Interest rate swap	10,000		(86		)	Other Liabilities	0.281	%	1.674	%	03/26/2019
Interest rate swap	10,000		(86		)	Other Liabilities	0.283	%	1.658	%	03/18/2019
Interest rate swap	20,000		491			Other Assets	1.700	%	2.390	%	06/15/2024
Interest rate swap	20,000		452			Other Assets	1.676	%	2.352	%	03/01/2024
December 31, 2014
Interest rate swap	$	10,369	$	(248	)	Other Liabilities	2.915	%	5.140	%	04/20/2016
Interest rate swap	25,000		(534		)	Other Liabilities	0.243	%	2.255	%	03/17/2021
Interest rate swap	20,000		(1,046		)	Other Liabilities	0.234	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,748		)	Other Liabilities	0.232	%	3.355	%	01/07/2020
Interest rate swap	10,000		(35		)	Other Liabilities	0.255	%	1.674	%	03/26/2019
Interest rate swap	10,000		(35		)	Other Liabilities	0.243	%	1.658	%	03/18/2019

The table below identifies the gains and losses recognized on Heartland's derivative instruments designated as cash flow hedges for the six months ended June 30, 2015, and June 30, 2014, in thousands:

	Effective Portion							Ineffective Portion
	Recognized in OCI			Reclassified from AOCI into Income				Recognized in Income on Derivatives
	Amount of Gain (Loss)			Category	Amount of Gain (Loss)			Category	Amount of Gain (Loss)
Three Months Ended June 30, 2015
Interest rate swap	$	50		Interest Expense	$	(56	)	Other Income	$	—
Interest rate swap	387			Interest Expense	(126		)	Other Income	—
Interest rate swap	124			Interest Expense	(150		)	Other Income	—
Interest rate swap	252			Interest Expense	(155		)	Other Income	—
Interest rate swap	57			Interest Expense	(36		)	Other Income	—
Interest rate swap	55			Interest Expense	(36		)	Other Income	—
Interest rate swap	584			Interest Expense	—			Other Income	—
Interest rate swap	559			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2015
Interest rate swap	$	89		Interest Expense	$	(113	)	Other Income	$	—
Interest rate swap	11			Interest Expense	(252		)	Other Income	—
Interest rate swap	169			Interest Expense	(301		)	Other Income	—
Interest rate swap	68			Interest Expense	(315		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	491			Interest Expense	—			Other Income	—
Interest rate swap	452			Interest Expense	—			Other Income	—
Three Months Ended June 30, 2014
Interest rate swap	$	44		Interest Expense	$	(64	)	Other Income	$	—
Interest rate swap	(372		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	65			Interest Expense	(151		)	Other Income	—
Interest rate swap	(159		)	Interest Expense	(156		)	Other Income	—
Interest rate swap	(86		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(85		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	—			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2014
Interest rate swap	$	95		Interest Expense	$	(129	)	Other Income	$	—
Interest rate swap	(310		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	179			Interest Expense	(302		)	Other Income	—
Interest rate swap	(240		)	Interest Expense	(315		)	Other Income	—
Interest rate swap	(41		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(40		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	146			Interest Expense	(146		)	Other Income	—

Fair Value Hedge

Heartland uses interest rate swaps to convert certain long term fixed rate loans to floating rates to hedge interest rate risk exposure. Heartland uses hedge accounting in accordance with ASC 815, with the unrealized gains and losses, representing the change in fair value of the derivative and the change in fair value of the risk being hedged on the related loan, being recorded in the consolidated statements of income. The ineffective portions of the unrealized gains or losses, if any, are recorded in interest income and interest expense in the consolidated statements of income. Heartland uses statistical regression to assess hedge effectiveness, both at the inception of the hedge as well as on a continual basis. The regression analysis involves regressing the periodic change in fair value of the hedging instrument against the periodic changes in the fair value of the asset being hedged due to changes in the hedge risk.

During the second quarter of 2015, Heartland entered into an interest rate swap, paying a fixed interest rate of 3.40% to the counterparty and receives a variable interest rate from the same counterparty based on one month LIBOR plus .88% calculated on a notional amount of $13.8 million. The swap is designated as a fair value hedge and did not have a material impact on the consolidated balance sheets as of June 30, 2015, or consolidated statements of income for the three- and six-month periods ended June 30, 2015. Heartland was required to pledge $414,000 of cash as collateral as of June 30, 2015. The swap was recorded in other liabilities with a fair value of $3,000 as of June 30, 2015.

Loan Swaps

Heartland enters into interest rate swap loan relationships with customers to meet their financing needs. Upon entering into these loan swaps, Heartland enters into offsetting positions with counterparties in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with the fair values reported in other assets and other liabilities on the consolidated balance sheets. As of June 30, 2015, the fair value of the swap asset was $193,000, and the fair value of the swap liability was $193,000. The notional amount of the back-to-back loan swaps total $16.2 million as of June 30, 2015. As of June 30, 2015, Heartland did not have any cash posted as collateral related to these back-to-back swaps, and there was no material impact to the consolidated financial statements.

Mortgage Derivatives

Heartland also has entered into interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans and mortgage backed securities that are considered derivative instruments. The fair value of these commitments is recorded on the consolidated balance sheets with the changes in fair value recorded in the consolidated statements of income as a component of net gains on sale of loans held for sale. These derivative contracts are designated as free standing derivative contracts and are not designated against specific assets and liabilities on the consolidated balance sheets or forecasted transactions and therefore do not qualify for hedge accounting treatment.

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments not designated as hedging instruments at June 30, 2015, and December 31, 2014, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2015
Interest rate lock commitments (mortgage)	Other Assets	$	197,970	$	6,558
Forward commitments	Other Assets	301,592		2,834
Forward commitments	Other Liabilities	160,960		(603		)
December 31, 2014
Interest rate lock commitments (mortgage)	Other Assets	$	74,863	$	2,496
Forward commitments	Other Assets	88,484		275
Forward commitments	Other Liabilities	218,337		(1,619		)

The table below identifies the income statement category of the gains and losses recognized in income on Heartland's derivative instruments not designated as hedging instruments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	(1,712	)
Forward commitments	Gains on sale of loans held for sale	3,700
Six Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,832
Forward commitments	Gains on sale of loans held for sale	3,575
Three Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,435
Forward commitments	Gains on sale of loans held for sale	(1,837		)
Six Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	5,317
Forward commitments	Gains on sale of loans held for sale	(2,979		)

NOTE 8: FAIR VALUE

Heartland utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale, trading securities and derivatives are recorded in the consolidated balance sheets at fair value on a recurring basis. Additionally, from time to time, Heartland may be required to record at fair value other assets on a nonrecurring basis such as loans held for sale, loans held to maturity and certain other assets including, but not limited to, mortgage servicing rights, commercial servicing rights and other real estate owned. These nonrecurring fair value adjustments typically involve application of lower of cost or fair value accounting or write-downs of individual assets.

Fair Value Hierarchy

Under ASC 820, assets and liabilities are grouped at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 — Valuation is based upon quoted prices for identical instruments in active markets.

Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, or similar instruments in markets that are not active, and model-based valuation techniques for all significant assumptions are observable in the market.

Level 3 — Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring or non-recurring basis.

Assets

Securities Available for Sale and Held to Maturity

Securities available for sale are recorded at fair value on a recurring basis. Securities held to maturity are generally recorded at cost and are recorded at fair value only to the extent a decline in fair value is determined to be other-than-temporary. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted

for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, as well as U.S. Treasury securities. Level 2 securities include U.S. government and agency securities, mortgage-backed securities and private collateralized mortgage obligations, municipal bonds and corporate debt securities. Level 3 securities consist primarily of Z-TRANCHE mortgage-backed securities and corporate debt securities. On a quarterly basis, a secondary independent pricing service is used for a sample of securities to validate the pricing from Heartland's primary pricing service.

Trading Assets

Trading assets are recorded at fair value and consist of securities held for trading purposes. The valuation method for trading securities is the same as the methodology used for securities classified as available for sale.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value on an aggregate basis. The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, Heartland classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2.

Loans Held to Maturity

Heartland does not record loans held to maturity at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC 310. The fair value of impaired loans is measured using one of the following impairment methods: 1) the present value of expected future cash flows discounted at the loan's effective interest rate or 2) the observable market price of the loan or 3) the fair value of the collateral if the loan is collateral dependent. In accordance with ASC 820, impaired loans measured at fair value are classified as nonrecurring Level 3 in the fair value hierarchy.

Mortgage Servicing Rights

Mortgage servicing rights assets represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. Heartland uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its mortgage servicing rights. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a fair value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. Heartland classifies mortgage servicing rights as nonrecurring with Level 3 measurement inputs.

Commercial Servicing Rights

Commercial servicing rights assets represent the value associated with servicing commercial loans that have been sold to Small Business Administration and United States Department of Agriculture with servicing retained. Heartland uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its commercial servicing rights. The fair value for servicing assets is determined through market prices for comparable servicing contracts, when available, or through a valuation model that calculates the present value of estimated future net servicing income. Inputs utilized include discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Commercial servicing rights are subject to impairment testing, and the carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. If the valuation model reflects a fair value less than the carrying value, commercial servicing rights are adjusted to fair value through a valuation allowance. Heartland classifies commercial servicing rights as nonrecurring with Level 3 measurement inputs.

Derivative Financial Instruments

Heartland's current interest rate risk strategy includes interest rate swaps. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. To comply with the provisions of ASC 820, Heartland incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative

contracts for the effect of nonperformance risk, Heartland has considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although Heartland has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2015, and December 31, 2014, Heartland has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, Heartland has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Interest rate lock commitments

Heartland uses an internal valuation model that relies on internally developed inputs to estimate the fair value of its interest rate lock commitments which is based on unobservable inputs that reflect management's assumptions and specific information about each borrower. Interest rate lock commitments are classified in Level 3 of the fair value hierarchy.

Forward commitments

The fair value of forward commitments are estimated using an internal valuation model, which includes current trade pricing for similar financial instruments in active markets that Heartland has the ability to access and are classified in Level 2 of the fair value hierarchy.

Other Real Estate Owned

Other real estate owned ("OREO") represents property acquired through foreclosures and settlements of loans. Property acquired is carried at the fair value of the property at the time of acquisition (representing the property's cost basis), plus any acquisition costs, or the estimated fair value of the property, less disposal costs. Heartland considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling OREO, in determining the fair value of particular properties. Accordingly, the valuation of OREO is subject to significant external and internal judgment. Heartland periodically reviews OREO to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. OREO is classified as nonrecurring Level 3.

The table below presents Heartland's assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2015, and December 31, 2014, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:

	Total Fair Value		Level 1		Level 2		Level 3
June 30, 2015
Assets
Securities available for sale
U.S. government corporations and agencies	$	15,802	$	523	$	15,279	$	—
Mortgage-backed securities	1,108,050		—		1,102,523		5,527
Obligations of states and political subdivisions	186,001		—		186,001		—
Corporate debt securities	740		—		—		740
Equity securities	5,106		—		5,106		—
Derivative financial instruments	1,136		—		1,136		—
Interest rate lock commitments	6,558		—		—		6,558
Forward commitments	2,834		—		2,834		—
Total assets at fair value	$	1,326,227	$	523	$	1,312,879	$	12,825
Liabilities
Derivative financial instruments	$	3,607	$	—	$	3,607	$	—
Forward commitments	603		—		603		—
Total liabilities at fair value	$	4,210	$	—	$	4,210	$	—
December 31, 2014
Assets
Securities available for sale
U.S. government corporations and agencies	$	24,093	$	2,529	$	21,564	$	—
Mortgage-backed securities	1,219,266		—		1,214,319		4,947
Obligations of states and political subdivisions	153,426		—		153,426		—
Corporate debt securities	—		—		—		—
Equity securities	5,083		—		5,083		—
Interest rate lock commitments	2,496		—		—		2,496
Forward commitments	275		—		275		—
Total assets at fair value	$	1,404,639	$	2,529	$	1,394,667	$	7,443
Liabilities
Derivative financial instruments	$	3,646	$	—	$	3,646	$	—
Forward commitments	1,619		—		1,619		—
Total liabilities at fair value	$	5,265	$	—	$	5,265	$	—

The tables below present Heartland's assets that are measured at fair value on a nonrecurring basis, in thousands:

	Fair Value Measurements at June 30, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial real estate	4,927		—		—		4,927		160
Agricultural and agricultural real estate	—		—		—		—		—
Residential real estate	2,662		—		—		2,662		63
Consumer	1,854		—		—		1,854		—
Total collateral dependent impaired loans	$	9,443	$	—	$	—	$	9,443	$	223
Other real estate owned	$	16,983	$	—	$	—	$	16,983	$	855

	Fair Value Measurements at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	1,033	$	—	$	—	$	1,033	$	659
Commercial real estate	12,584		—		—		12,584		492
Agricultural and agricultural real estate	552		—		—		552		2,229
Residential real estate	3,173		—		—		3,173		—
Consumer	2,003		—		—		2,003		22
Total collateral dependent impaired loans	$	19,345	$	—	$	—	$	19,345	$	3,402
Other real estate owned	$	19,016	$	—	$	—	$	19,016	$	1,938

The following tables present additional quantitative information about assets measured at fair value and for which Heartland has utilized Level 3 inputs to determine fair value, in thousands:

	Fair Value at 6/30/15		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	5,527	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	16.29 - 36.53% (29.70%)
				Actual deferrals	5.60 - 27.01% (17.21%)
Corporate debt securities	740		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	6,558		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	4,927		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	2,662		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	1,854		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	16,983		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at June 30, 2015, was 86%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

	Fair Value at 12/31/14		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	4,947	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	15.60 - 30.60% (24.50%)
				Actual deferrals	7.20 - 17.30% (12.90%)
Corporate debt securities	—		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	2,496		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	1,033		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	12,584		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	552		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	3,173		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	2,003		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	19,016		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at December 31, 2014, was 84%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

The changes in fair value of the Z-TRANCHE, a Level 3 asset, that is measured on a recurring basis are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	4,947		$	3,298
Total gains (losses):
Included in earnings	—			—
Included in other comprehensive income	696			1,783
Purchases, sales and settlements:
Purchases	6			—
Sales	—			—
Settlements	(122		)	(134		)
Balance at period end	$	5,527		$	4,947

The changes in fair value of the corporate debt securities, Level 3 assets, that are measured on a recurring basis is summarized in the following table, in thousands:

	For the Six Months Ended  June 30, 2015		For the Year Ended December 31, 2014
Balance at January 1,	$	—	$	—
Total gains (losses):
Included in earnings	—		—
Included in other comprehensive income	—		—
Purchases, acquired, sales and settlements:
Purchases	—		—
Acquired	740		—
Sales	—		—
Settlements	—		—
Balance at period end	$	740	$	—

The changes in fair value of the interest rate lock commitments, which are Level 3 financial instruments and are measured on a recurring basis, are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	2,496		$	1,809
Total gains (losses) included in earnings	3,832			2,422
Issuances	2,530			2,038
Settlements	(2,300		)	(3,773		)
Balance at period end	$	6,558		$	2,496

Gains included in net gains on sale of loans held for sale attributable to interest rate lock commitments held at June 30, 2015, and December 31, 2014, were $6.6 million and $2.5 million, respectively.

The tables below summarize the estimated fair value of Heartland's financial instruments as defined by ASC 825 as of June 30, 2015, and December 31, 2014, in thousands. The carrying amounts in the following tables are recorded in the consolidated balance sheets under the indicated captions. In accordance with ASC 825, the assets and liabilities that are not financial instruments are not included in the disclosure, such as the value of the mortgage servicing rights, premises, furniture and equipment, goodwill and other intangibles and other liabilities.

Heartland does not believe that the estimated information presented herein is representative of the earnings power or value of Heartland. The following analysis, which is inherently limited in depicting fair value, also does not consider any value associated with either existing customer relationships or the ability of Heartland to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly

subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

					Fair Value Measurements at June 30, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	119,722	$	119,722	$	119,722	$	—	$	—
Time deposits in other financial institutions	2,355		2,355		2,355		—		—
Securities:
Available for sale	1,315,699		1,315,699		523		1,308,909		6,267
Held to maturity	283,258		292,564		—		292,564		—
Other investments	20,455		20,455		—		20,220		235
Loans held for sale	105,898		105,898		—		105,898		—
Loans, net:
Commercial	1,176,157		1,165,559		—		1,165,559		—
Commercial real estate	1,991,799		1,993,635		—		1,988,708		4,927
Agricultural and agricultural real estate	440,864		443,725		—		443,725		—
Residential real estate	438,184		435,955		—		433,293		2,662
Consumer	357,205		360,176		—		358,322		1,854
Total Loans, net	4,404,209		4,399,050		—		4,389,607		9,443
Derivative financial instruments	1,136		1,136		—		1,136		—
Interest rate lock commitments	6,558		6,558		—		—		6,558
Forward commitments	2,834		2,834		—		2,834		—
Financial liabilities:
Deposits
Demand deposits	1,536,355		1,536,355		—		1,536,355		—
Savings deposits	2,816,666		2,816,666		—		2,816,666		—
Time deposits	964,248		964,248		—		964,248		—
Short term borrowings	477,918		477,918		—		477,918		—
Other borrowings	296,594		299,845		—		299,845		—
Derivative financial instruments	3,607		3,607		—		3,607		—
Forward commitments	603		603		—		603		—

					Fair Value Measurements at December 31, 2014
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	73,871	$	73,871	$	73,871	$	—	$	—
Time deposits in other financial institutions	2,605		2,605		2,605		—		—
Securities:
Available for sale	1,401,868		1,401,868		2,529		1,394,392		4,947
Held to maturity	284,587		296,768		—		296,768		—
Other investments	20,498		20,498		—		20,263		235
Loans held for sale	70,514		70,514		—		70,514		—
Loans, net:
Commercial	1,024,065		1,009,802		—		1,008,769		1,033
Commercial real estate	1,690,899		1,699,722		—		1,687,138		12,584
Agricultural and agricultural real estate	420,623		423,968		—		423,416		552
Residential real estate	377,094		370,178		—		367,005		3,173
Consumer	323,873		330,211		—		328,208		2,003
Total Loans, net	3,836,554		3,833,881		—		3,814,536		19,345
Derivative financial instruments	—		—		—		—		—
Interest rate lock commitments	2,496		2,496		—		—		2,496
Forward commitments	275		275		—		275		—
Financial liabilities:
Deposits
Demand deposits	1,295,193		1,295,193		—		1,295,193		—
Savings deposits	2,687,493		2,687,493		—		2,687,493		—
Time deposits	785,336		785,336		—		785,336		—
Short term borrowings	330,264		330,264		—		330,264		—
Other borrowings	396,255		401,978		—		401,978		—
Derivative financial instruments	3,646		3,646		—		3,646		—
Forward commitments	1,619		1,619		—		1,619		—

Cash and Cash Equivalents — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments.

Time Deposits in Other Financial Institutions — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments.

Securities —For securities either held to maturity, available for sale or trading, fair value equals quoted market price if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. For Level 3 securities, Heartland utilizes independent pricing provided by third party vendors or brokers.

Other Investments — Fair value measurement of other investments, which consists primarily of FHLB stock, are based on their redeemable value, which is at cost due to the restrictions placed on their transferability. The market for these securities is restricted to the issuer of the stock and subject to impairment evaluation.

Loans and Leases—The fair value of loans is estimated using an entrance price concept by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value of impaired loans is measured using the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the underlying collateral. The fair value of loans held for sale is estimated using quoted market prices.

Interest Rate Lock Commitments — The fair value of interest rate lock commitments is estimated using an internal valuation model, which includes grouping the interest rate lock commitments by interest rate and terms, applying an estimated closing ratio based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms, and rate lock expiration dates of the loan commitment group.

Forward Commitments — The fair value of these instruments is estimated using an internal valuation model, which includes current trade pricing for similar financial instruments.

Derivative Financial Instruments — The fair value of all derivatives is estimated based on the amount that Heartland would pay or would be paid to terminate the contract or agreement, using current rates and, when appropriate, the current creditworthiness of the counter-party.

Deposits — The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. If the fair value of the fixed maturity certificates of deposit is calculated at less than the carrying amount, the carrying value of these deposits is reported as the fair value.

Short-term and Other Borrowings—Rates currently available to Heartland for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Commitments to Extend Credit, Unused Lines of Credit and Standby Letters of Credit — Based upon management's analysis of the off balance sheet financial instruments, there are no significant unrealized gains or losses associated with these financial instruments based upon review of the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.

NOTE 9: SEGMENT REPORTING

Heartland has identified two operating segments for purposes of financial reporting: community and other banking, and retail mortgage banking. These segments were determined based on the products and services provided or the type of customers served and are consistent with the information used by Heartland's key decision makers to make operating decisions and to assess Heartland's performance. The following tables present financial information from Heartland's operating segments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands.

	Three Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	55,988	$	1,656	$	57,644	$	50,285	$	514		$	50,799
Provision for loan losses	5,674		—		5,674		2,751		—			2,751
Total noninterest income	15,603		15,058		30,661		11,991		9,544			21,535
Total noninterest expense	48,987		14,495		63,482		43,543		11,116			54,659
Income (loss) before taxes	$	16,930	$	2,219	$	19,149	$	15,982	$	(1,058	)	$	14,924
Average Loans, for the period	$	4,340,289	$	106,835	$	4,447,124	$	3,621,543	$	70,616		$	3,692,159
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918
	Six Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	108,877	$	2,697	$	111,574	$	98,140	$	1,271		$	99,411
Provision for loan losses	7,345		—		7,345		9,082		—			9,082
Total noninterest income	32,664		28,660		61,324		23,517		16,868			40,385
Total noninterest expense	96,446		26,650		123,096		85,880		21,317			107,197
Income (loss) before taxes	$	37,750	$	4,707	$	42,457	$	26,695	$	(3,178	)	$	23,517
Average Loans, for the period	$	4,265,624	$	92,231	$	4,357,855	$	3,575,284	$	56,693		$	3,631,977
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT

This document (including information incorporated by reference) contains, and future oral and written statements of Heartland and its management may contain, forward-looking statements within the meaning of such term in the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of Heartland. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of Heartland's management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. Although Heartland has made these statements based on management's experience and best estimate of future events, there may be events or factors that management has not anticipated, and the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, including those identified in our Annual Report on Form 10-K for the year ended December 31, 2014. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and Heartland undertakes no obligation to update any statement in light of new information or future events.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes have the most effect on Heartland's reported financial position and results of operations are described as critical accounting policies in Heartland's Annual Report on Form 10-K for the year ended December 31, 2014. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since the year ended December 31, 2014.

OVERVIEW

Heartland's results of operations depend primarily on net interest income, which is the difference between interest income from interest earning assets and interest expense on interest bearing liabilities. Noninterest income, which includes service charges and fees, loan servicing income, trust income, brokerage and insurance commissions, securities gains and net gains on sale of loans held for sale, also affects Heartland's results of operations. Heartland's principal operating expenses, aside from interest expense, consist of the provision for loan and lease losses, salaries and employee benefits, occupancy and equipment costs, professional fees, FDIC insurance premiums, advertising and other real estate and loan collection expenses.

Net income available to common stockholders was $15.0 million, or $0.72 per diluted common share, for the quarter ended June 30, 2015, compared to $10.6 million, or $0.56 per diluted common share, for the second quarter of 2014. Return on average common equity was 12.26% and return on average assets was 0.91% for the second quarter of 2015, compared to 11.14% and 0.73%, respectively, for the same quarter in 2014.

Positively affecting net income for the quarter were increases in net interest income, securities gains and gains on sale of loans held for sale. These improvements were partially offset by increases in the provision for loan and lease losses, salaries and employee benefits and other noninterest expenses. Loan growth for the quarter was $206.1 million or 19% annualized since March 31, 2015.

Net income available to common stockholders for the first six months of 2015 was $30.5 million, or $1.47 per diluted common share, compared to $17.3 million, or $0.92 per diluted common share, recorded during the first six months of 2014. Return on average common equity was 12.90% and return on average assets was 0.94% for the first six months of 2015, compared to 9.32% and 0.60%, respectively, for the same period in 2014.

On January 16, 2015, Heartland completed the acquisition of Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin, in an all stock transaction. Simultaneous with the closing, Community Bank & Trust was merged into Heartland's Wisconsin Bank & Trust subsidiary. As of the close date, the transaction included, at fair value, total assets of $525.3 million, total loans of $395.0 million and total deposits of $434.0 million. Conversion onto Heartland's core processing systems for this transaction was completed on May 15, 2015.

During the second quarter of 2015, Heartland announced it had entered into three definitive merger agreements. The first is with Community Bancorporation of New Mexico, Inc., parent company of Community Bank in Santa Fe, New Mexico. Under the terms of this agreement, Heartland will acquire Community Bancorporation of New Mexico, Inc. in an all cash transaction valued at approximately $11.1 million. Simultaneous with closing of the transaction, which is expected to occur during the third quarter of 2015, Community Bank will be merged into Heartland’s New Mexico Bank & Trust subsidiary. Community Bank had assets of approximately $175 million at June 30, 2015.

The second is with First Scottsdale Bank, National Association, in Scottsdale, Arizona. Under this agreement, Heartland will acquire First Scottsdale Bank in an all cash transaction valued at approximately $17.7 million, and First Scottsdale Bank will be merged into Heartland’s Arizona Bank & Trust subsidiary. The transaction is expected to close during the third quarter of 2015. First Scottsdale Bank had assets of approximately $96 million at June 30, 2015.

The third merger agreement signed during the quarter is with Premier Valley Bank, a community bank based in Fresno, California, that had assets of approximately $655 million at June 30, 2015. Under this agreement, Premier Valley will become a wholly-owned subsidiary of Heartland and operate under its present name and management team as Heartland's tenth state-chartered bank. Premier Valley shareholders will receive approximately $95 million or $7.73 per share of Premier Valley common stock in the merger, and may elect to receive this payment in shares of Heartland common stock or in cash, subject to proration so that 70% of the total payment is in Heartland common stock and 30% in cash. The transaction is expected to close during the fourth quarter of 2015.

Total assets were $6.72 billion at June 30, 2015, an increase of $665.2 million or 11% since year-end 2014. Total assets at June 30, 2015, included the assets acquired from Community Banc-Corp of Sheboygan, Inc., which totaled $525.3 million at the January 16, 2015, acquisition date. Securities represented 24% of total assets at June 30, 2015, compared to 28% at year-end 2014, as a portion of the proceeds from maturities, paydowns and sales were used to fund loan growth.

Total loans and leases held to maturity were $4.45 billion at June 30, 2015, compared to $3.88 billion at year-end 2014, an increase of $573.1 million or 15%, which includes $395.0 million acquired in the Community Bank & Trust merger. Exclusive of this acquisition, total loans and leases held to maturity increased $178.1 million or 9% annualized since year-end 2014.

Total deposits were $5.32 billion as of June 30, 2015, compared to $4.77 billion at year-end 2014, an increase of $549.2 million or 12%, with $434.0 million attributable to the Community Bank & Trust acquisition. Exclusive of the acquisition, total deposits increased $115.2 million or 5% annualized since year-end 2014. Included in deposit growth during the first six months of 2015 was a $140.3 million increase in brokered time deposits, the majority of which was issued during the second quarter to replace higher cost long-term FHLB advances and wholesale repurchase agreements that matured during the first six months of 2015.

Common stockholders' equity was $497.5 million at June 30, 2015, compared to $414.6 million at year-end 2014. Book value per common share was $24.13 at June 30, 2015, compared to $22.40 at year-end 2014. Heartland's unrealized gains on securities available for sale, net of applicable taxes, were $4.4 million at June 30, 2015, compared to $3.6 million at December 31, 2014.

RESULTS OF OPERATIONS

Net Interest Income

Net interest margin, expressed as a percentage of average earning assets, was 3.97% during the second quarter of 2015 compared to 3.90% during the first quarter of 2015 and 4.04% during the second quarter of 2014. For the first six months of 2015, net interest margin was 3.93% compared to 3.98% for the first six months of 2014. Heartland's success in maintaining net interest margin near the 4.00% level is the result of continuous price discipline on both sides of the balance sheet and management's ability to shift dollars from the securities portfolio into the loan portfolio.

Interest income increased $6.2 million or 10% to $65.4 million in the second quarter of 2015 from $59.3 million in the second quarter of 2014. After adjustment to add $2.4 million for the second quarter of 2015 and $2.7 million for the second quarter of 2014 for income taxes saved on the interest earned on nontaxable securities and loans, on a tax-equivalent basis, interest income in the second quarter of 2015 was $67.8 million compared to $62.0 million in the second quarter of 2014. For the first six months of 2015, interest income increased $12.0 million or 10% to $128.5 million from $116.5 million for the first six months of 2014. After adjustment to add $4.8 million for the first six months of 2015 and $5.1 million for the first six months of 2014 for income taxes saved on the interest earned on nontaxable securities and loans, on a tax-equivalent basis, interest

income in the first six months of 2015 was $133.3 million compared to $121.7 million in the first six months of 2014. These increases were primarily due to growth in average earning assets, which increased $748.7 million or 14% during the second quarter of 2015 compared to the second quarter of 2014 and $664.3 million or 13% during the first six months of 2015 compared to the first six months of 2014. The Community Bank & Trust acquisition completed during the first quarter of 2015 accounted for approximately $450.0 million of the growth in average earning assets for the quarterly comparative period and approximately $412.7 million for the six month comparative period. The remainder of the growth in average earning assets in both periods was primarily attributable to loan growth experienced during the last half of 2014 and first half of 2015. Also contributing to the increases in interest income during both comparative periods was a change in the composition of average earning assets from lower-yielding investments to higher-yielding loans. The percentage of average net loans and leases to total earning assets was 73% during the second quarter of 2015 compared to 69% during the second quarter of 2014 and 72% during the first six months of 2015 compared to 68% during the first six months of 2014.

Interest expense for the second quarter of 2015 was $7.8 million, a decrease of $667,000 or 8% from $8.5 million in the second quarter of 2014. Interest expense for the first six months of 2015 was $17.0 million compared to $17.1 million for the first six months of 2014, a decrease of $156,000 or 1%. Average interest bearing liabilities increased $360.0 million or 9% for the quarter ended June 30, 2015, as compared to the same quarter in 2014, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 13 basis points from 0.83% in the second quarter of 2014 to 0.70% in the second quarter of 2015. Average interest bearing liabilities increased $334.4 million or 8% for the first six months of 2015 as compared to the first six months in 2014, while the average interest rate paid on Heartland's interest bearing deposits and borrowings declined 7 basis points from 0.84% in the first six months of 2014 to 0.77% in the first six months of 2015. The average interest rate paid on savings deposits was 0.23% during the second quarter of 2015 compared to 0.32% during the second quarter of 2014 and the average interest rate paid on time deposits was 0.97% during the second quarter of 2015 compared to 1.14% during the second quarter of 2014. For the first six months of 2015, the average interest rate paid on savings deposits was 0.24% compared to 0.33% during the first six months of 2014 and the average interest rate paid on time deposits was 1.03% during the first six months of 2015 compared to 1.18% during the first six months of 2014. The rates currently paid on Heartland's non-maturity deposits are effectively approaching a floor and management believes there is limited flexibility to pay lower rates on these deposits in the future.

Net interest income increased $6.8 million or 13% to $57.6 million in the second quarter of 2015 from the $50.8 million recorded in the second quarter of 2014. Net interest income on a tax-equivalent basis totaled $60.1 million during the second quarter of 2015, an increase of $6.5 million or 12% from the $53.6 million recorded during the second quarter of 2014. For the first six months of 2015, net interest income increased $12.2 million or 12% to $111.6 million from the $99.4 million recorded in the first six months of 2014. Net interest income on a tax-equivalent basis totaled $116.4 million during the first six months of 2015, an increase of $11.8 million or 11% from the $104.6 million recorded during the six months of 2014. Net interest income in dollars has increased steadily for each of the last seven quarters.

Heartland attempts to manage its balance sheet to minimize the effect that a change in interest rates has on its net interest margin. Heartland plans to continue to work toward improving both its earning assets and funding mix through targeted organic growth strategies, which management believes will result in additional net interest income. Heartland believes its net interest income simulations reflect a well-balanced and manageable interest rate posture. Approximately 36% of Heartland's commercial and agricultural loan portfolios consist of floating rate loans that reprice based upon changes in the national prime or LIBOR interest rate. Since nearly 57% of these floating rate loans have interest rate floors that are currently in effect, an upward movement in the national prime interest rate or LIBOR would not have an immediate positive effect on Heartland's interest income. Item 3 of this Form 10-Q contains additional information about the results of Heartland's most recent net interest income simulations. Note 7 to the quarterly consolidated financial statements contains a detailed discussion of the derivative instruments Heartland has utilized to manage its interest rate risk.

The following table sets forth certain information relating to Heartland's average consolidated balance sheets and reflects the yield on average earning assets and the cost of average interest bearing liabilities for the periods indicated, in thousands. Dividing income or expense by the average balance of assets or liabilities derives such yields and costs. Average balances are derived from daily balances, and nonaccrual loans and loans held for sale are included in each respective loan category. Assets with tax favorable treatment are evaluated on a tax-equivalent basis assuming a federal income tax rate of 35%. Tax favorable assets generally have lower contractual pre-tax yields than fully taxable assets. A tax-equivalent yield is calculated by adding the tax savings to the interest earned on tax favorable assets and dividing by the average balance of the tax favorable assets.

ANALYSIS OF AVERAGE BALANCES, TAX-EQUIVALENT YIELDS AND RATES(1) For the Quarters Ended June 30, 2015 and 2014
	2015							2014
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	1,324,870		$	6,739	2.04	%	$	1,287,411		$	7,447	2.32	%
Nontaxable(1)	325,023			4,422		5.46		374,093			5,705		6.12
Total securities	1,649,893			11,161		2.71		1,661,504			13,152		3.17
Interest bearing deposits	10,889			3		0.11		7,236			7		0.39
Federal funds sold	5,109			1		0.08		202			—		—
Loans and leases:(2)
Commercial and commercial real estate(1)	3,122,239			37,666		4.84		2,584,110			31,418		4.88
Residential mortgage	538,170			5,415		4.04		428,160			4,617		4.33
Agricultural and agricultural real estate(1)	428,284			5,280		4.94		371,191			4,742		5.12
Consumer	358,431			7,204		8.06		308,698			6,484		8.42
Fees on loans	—			1,119		—		—			1,604		—
Less: allowance for loan and lease losses	(43,171		)	—		—		(39,952		)	—		—
Net loans and leases	4,403,953			56,684		5.16		3,652,207			48,865		5.37
Total earning assets	6,069,844			67,849		4.48	%	5,321,149			62,024		4.68	%
Nonearning assets	555,953							478,955
Total assets	$	6,625,797						$	5,800,104
Interest Bearing Liabilities
Savings	$	2,852,272		$	1,642	0.23	%	$	2,585,831		$	2,090	0.32	%
Time, $100,000 and over	348,661			794		0.91		328,950			842		1.03
Other time deposits	552,115			1,383		1.00		543,326			1,645		1.21
Short-term borrowings	373,021			212		0.23		300,936			202		0.27
Other borrowings	325,131			3,766		4.65		332,190			3,685		4.45
Total interest bearing liabilities	4,451,200			7,797		0.70	%	4,091,233			8,464		0.83	%
Noninterest bearing liabilities
Noninterest bearing deposits	1,549,187							1,207,886
Accrued interest and other liabilities	54,318							38,726
Total noninterest bearing liabilities	1,603,505							1,246,612
Stockholders' Equity	571,092							462,259
Total Liabilities and Stockholders' Equity	$	6,625,797						$	5,800,104
Net interest income(1)				$	60,052						$	53,560
Net interest spread(1)						3.78	%						3.85	%
Net interest income to total earning assets(1)						3.97	%						4.04	%
Interest bearing liabilities to earning assets	73.33		%					76.89		%
(1)Tax-equivalent basis is calculated using an effective tax rate of 35%.
(2) Nonaccrual loans are included in average loans outstanding.

ANALYSIS OF AVERAGE BALANCES, TAX-EQUIVALENT YIELDS AND RATES(1) For the Six Months Ended June 30, 2015 and 2014
	2015							2014
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	1,304,304		$	13,871	2.14	%	$	1,315,116		$	15,208	2.33	%
Nontaxable(1)	328,163			8,908		5.47		386,438			10,508		5.48
Total securities	1,632,467			22,779		2.81		1,701,554			25,716		3.05
Interest bearing deposits	10,046			7		0.14		6,828			14		0.41
Federal funds sold	6,356			2		0.06		504			—		—
Loans and leases:(2)
Commercial and commercial real estate(1)	3,072,995			73,541		4.83		2,542,457			61,730		4.90
Residential mortgage	508,723			10,298		4.08		414,254			8,967		4.37
Agricultural and agricultural real estate(1)	423,295			10,310		4.91		372,681			9,477		5.13
Consumer	352,842			14,092		8.05		302,585			12,668		8.44
Fees on loans	—			2,315		—		—			3,099		—
Less: allowance for loan and lease losses	(42,612		)	—		—		(41,006		)	—		—
Net loans and leases	4,315,243			110,556		5.17		3,590,971			95,941		5.39
Total earning assets	5,964,112			133,344		4.51	%	5,299,857			121,671		4.63	%
Nonearning assets	576,397							485,452
Total assets	$	6,540,509						$	5,785,309
Interest Bearing Liabilities
Savings	$	2,841,675		$	3,437	0.24	%	$	2,562,256		$	4,152	0.33	%
Time, $100,000 and over	346,523			1,632		0.95		334,615			1,717		1.03
Other time deposits	544,187			2,922		1.08		555,097			3,486		1.27
Short-term borrowings	334,105			410		0.25		303,489			428		0.28
Other borrowings	358,350			8,568		4.82		335,009			7,343		4.42
Total interest bearing liabilities	4,424,840			16,969		0.77	%	4,090,466			17,126		0.84	%
Noninterest bearing liabilities
Noninterest bearing deposits	1,500,013							1,197,715
Accrued interest and other liabilities	57,663							42,165
Total noninterest bearing liabilities	1,557,676							1,239,880
Stockholders' Equity	557,993							454,963
Total Liabilities and Stockholders' Equity	$	6,540,509						$	5,785,309
Net interest income(1)				$	116,375						$	104,545
Net interest spread(1)						3.74	%						3.79	%
Net interest income to total earning assets(1)						3.93	%						3.98	%
Interest bearing liabilities to earning assets	74.19		%					77.18		%
(1)Tax-equivalent basis is calculated using an effective tax rate of 35%.
(2) Nonaccrual loans are included in average loans outstanding.

Provision For Loan And Lease Losses

The allowance for loan and lease losses is established through a provision charged to expense to provide, in Heartland management's opinion, an appropriate allowance for loan and lease losses. The provision for loan losses was $5.7 million for the second quarter of 2015 compared to $2.8 million for the second quarter of 2014, with approximately $1.0 million attributed to the higher loan growth experienced during the second quarter of 2015 compared to the second quarter of 2014, $600,000 related to valuation changes on purchased impaired loans and the remainder primarily attributable to provision necessary to establish an allowance for loans acquired in prior acquisitions for which purchase accounting valuation reserves were depleted.

For the first six months of 2015, the provision for loan losses was $7.3 million compared to $9.1 million for the first six months of 2014. The first quarter 2014 provision included approximately $4.5 million to compensate for a charge off on a single large credit. Excluding this single charge-off, the increase in provision for the six-month comparative period was $2.7 million, primarily for the reasons discussed above.

In determining that the allowance for loan and lease losses is appropriate, management uses factors that include the overall composition of the loan portfolio, general economic conditions, types of loans, loan collateral values, past loss experience, loan delinquencies, substandard credits, and doubtful credits. For additional details on the specific factors considered, refer to the discussion of critical accounting policies set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Heartland's Annual Report on Form 10-K for the year ended December 31, 2014, and under the caption "Allowance For Loan and Lease Losses" in this report. Heartland believes the allowance for loan and lease losses as of June 30, 2015, was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions should become more unfavorable, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require further increases in the provision for loan and lease losses.

Noninterest Income

The tables below show Heartland's noninterest income for the three- and six-month periods ended June 30, 2015 and 2014, in thousands:

	Three Months Ended June 30,
	2015		2014		Change			% Change
Service charges and fees	$	5,900	$	5,254	$	646		12	%
Loan servicing income	1,163		1,393		(230		)	(17	)
Trust fees	3,913		3,343		570			17
Brokerage and insurance commissions	916		1,158		(242		)	(21	)
Securities gains, net	3,110		854		2,256			264
Gain (loss) on trading account securities, net	—		—		—			—
Net gains on sale of loans held for sale	14,599		8,796		5,803			66
Income on bank owned life insurance	459		339		120			35
Other noninterest income	601		398		203			51
Total noninterest income	$	30,661	$	21,535	$	9,126		42	%

	Six Months Ended June 30,
	2015		2014			Change			% Change
Service charges and fees	$	11,304	$	10,150		$	1,154		11	%
Loan servicing income	2,204		2,904			(700		)	(24	)
Trust fees	7,544		6,553			991			15
Brokerage and insurance commissions	2,003		2,281			(278		)	(12	)
Securities gains, net	7,463		1,635			5,828			356
Gain (loss) on trading account securities, net	—		(38		)	38			100
Net gains on sale of loans held for sale	28,341		15,175			13,166			87
Income on bank owned life insurance	983		702			281			40
Other noninterest income	1,482		1,023			459			45
Total noninterest income	$	61,324	$	40,385		$	20,939		52	%

Noninterest income totaled $30.7 million during the second quarter of 2015 compared to $21.5 million during the second quarter of 2014, an increase of $9.1 million or 42%. For the six-month period ended on June 30, noninterest income totaled $61.3 million during 2015 compared to $40.4 million during 2014, an increase of $20.9 million or 52%. These increases were primarily due to increased securities gains and net gains on sale of loans held for sale.

Service charges and fees increased $646,000 or 12% during the quarters under comparison and $1.2 million or 11% during the six-month periods under comparison, with a majority of this growth attributable to the service charges and fees collected at newly acquired Community Bank & Trust locations. Service charges on checking and savings accounts recorded during the second quarter of 2015 were $1.4 million compared to $1.3 million during the second quarter of 2014, an increase of $147,000 or 12%. For the six months ended June 30, service charges on checking and savings accounts totaled $2.9 million during 2015 compared to $2.5 million during 2014, an increase of $344,000 or 14%. Overdraft fees were $1.8 million during the second quarter of 2015 compared to $1.5 million during the second quarter of 2014, an increase of $246,000 or 16%. For the six months ended June 30, overdraft fees totaled $3.3 million during 2015 compared to $2.9 million during 2014, an increase of $405,000 or 14%. Interchange revenue from activity on bank debit cards, along with surcharges on ATM activity, resulted in service charges and fees of $2.0 million during the second quarter of 2015 compared to $1.8 million during the second quarter of 2014, an increase of $203,000 or 11%. These same fees were $3.9 million during the first six months of 2015 compared to $3.5 million during the first six months of 2014, an increase of $426,000 or 12%. These increases are primarily attributable to a larger demand deposit customer base in 2015, a portion of which is due to the Community Bank & Trust acquisition completed during the first quarter of 2015. Fees associated with credit card services were $521,000 during the second quarter of 2015 compared to $548,000 during the second quarter of 2014, a decrease of $27,000 or 5%. For the first six months of 2015, these fees were $886,000 during 2015 compared to $1.0 million during 2014, a decrease of $154,000 or 15%. The larger decrease for the six-month comparative period was primarily a result of Morrill & Janes Bank and Trust Company's sale of its merchant credit card processing servicing portfolio in December 2014 to be consistent with the handling of such services at the other Heartland subsidiary banks.

Loan servicing income includes the fees collected for the servicing of commercial, agricultural, and mortgage loans, which are dependent upon the aggregate outstanding balance of these loans. Loan servicing income totaled $1.2 million during the second quarter of 2015 compared to $1.4 million during the second quarter of 2014. On a six-month comparative basis, loan servicing income totaled $2.2 million during the first six months of 2015 compared to $2.9 million during the same period in 2014. Loan servicing income related to the servicing of commercial and agricultural loans totaled $794,000 for the second quarter of 2015 compared to $550,000 for the second quarter of 2014, an increase of $244,000 or 44%. For the first six months of the year, fees collected for commercial and agricultural loan servicing totaled $1.5 million during 2015 compared to $1.1 million during 2014, an increase of $441,000 or 41%. These increases resulted primarily from the additional commercial and agricultural loans acquired in the Community Bank & Trust acquisition. Fees collected for the servicing of mortgage loans, primarily for government sponsored entities, were $2.6 million during the second quarter of 2015 compared to $2.1 million during the second quarter of 2014, an increase of $434,000 or 20%. For the first six months of the year, the fees collected for the servicing of mortgage loans for others were $5.0 million during 2015 compared to $4.2 million during 2014, an increase of $862,000 or 21%. Also included in loan servicing income (as a reduction) is the amortization of mortgage servicing rights, which was $2.2 million during the second quarter of 2015 compared to $1.3 million during the second quarter of 2014, an increase of $908,000 or 71%. For the first six months of the year, the amortization of mortgage servicing rights was $4.4 million during 2015 compared to $2.4 million during 2014, an increase of $2.0 million or 85%. These increases are reflective of higher prepayments in the serviced mortgage loans portfolio during the first six months of 2015, causing a decrease in total residential mortgage loan servicing income.

The following table summarizes Heartland's residential mortgage loan activity during the most recent five quarters, in thousands:

	As Of and For the Quarter Ended
	6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014
Mortgage Servicing Fees	$	2,553		$	2,495		$	2,396		$	2,225		$	2,119
Mortgage Servicing Rights Amortization	(2,184		)	(2,175		)	(1,643		)	(1,424		)	(1,276		)
Total Residential Mortgage Loan Servicing Income	$	369		$	320		$	753		$	801		$	843
Net Gains On Sale of Residential Mortgage Loans	$	14,121		$	13,602		$	7,384		$	8,260		$	8,583
Total Residential Mortgage Loan Applications	$	615,463		$	647,487		$	383,845		$	445,039		$	460,533
Residential Mortgage Loans Originated	$	421,798		$	319,581		$	293,268		$	312,428		$	277,895
Residential Mortgage Loans Sold	$	402,151		$	268,786		$	281,250		$	283,677		$	208,429
Residential Mortgage Loan Servicing Portfolio	$	3,785,794		$	3,578,409		$	3,498,724		$	3,362,717		$	3,198,510

Net gains on sale of loans held for sale totaled $14.6 million during the second quarter of 2015 compared to $8.8 million during the second quarter of 2014, an increase of $5.8 million or 66%. During the first six months of 2015, net gains on sale of loans held for sale totaled $28.3 million compared to $15.2 million during the same period in 2014, an increase of $13.2 million or

87%. These gains result primarily from the gain or loss on sales of mortgage loans into the secondary market, related fees and fair value marks on the associated derivatives. This increase was related to the lower interest rate environment in the first half of 2015 that encouraged mortgage loan refinancing, as opposed to a relatively higher interest rate environment in the first half of 2014. As a result, mortgage loan applications were $1.26 billion in the first half of 2015 compared to $777.4 million in the first half of 2014, an increase of $485.6 million or 62%. The volume of mortgage loans sold totaled $670.9 million during the first half of 2015, a $312.5 million or 87% increase from the $358.4 million sold during the first half of 2014.

Trust fees increased $570,000 or 17% during the second quarter of 2015 compared to the same quarter in 2014. For the six-month period ended June 30, 2015, trust fees increased $991,000 or 15% compared to the same six-month period in 2014. A large portion of trust fees is based upon the market value of the trust assets under management, which was $1.96 billion at June 30, 2015, compared to $1.86 billion at June 30, 2014. Those values fluctuate throughout the year as market conditions improve or decline.

Net securities gains totaled $3.1 million during the second quarter of 2015 compared to $854,000 during the second quarter of 2014, an increase of $2.3 million or 264%. For the first six months of 2015, net securities gains totaled $7.5 million during 2015 compared to $1.6 million during the first six months of 2014, an increase of $5.8 million or 356%. These increases were related to the low interest rate environment during the first half of 2015 that encouraged rebalancing of the securities portfolio, as opposed to the flat or moderately increasing interest rate environment that existed during the first half of 2014.

Noninterest Expenses

The tables below show Heartland's noninterest expenses for the three- and six-month periods ended June 30, 2015 and 2014, in thousands:

	Three Months Ended June 30,
	2015			2014			Change			% Change
Salaries and employee benefits	$	36,851		$	32,563		$	4,288		13	%
Occupancy	4,028			3,984			44			1
Furniture and equipment	2,176			2,085			91			4
Professional fees	5,249			4,214			1,035			25
FDIC insurance assessments	899			980			(81		)	(8	)
Advertising	1,333			1,511			(178		)	(12	)
Intangible assets amortization	715			591			124			21
Other real estate and loan collection expenses	753			518			235			45
Loss on sales/valuations of assets, net	1,509			1,379			130			9
Other noninterest expenses	9,969			6,834			3,135			46
Total Noninterest Expenses	$	63,482		$	54,659		$	8,823		16	%
Efficiency ratio, fully taxable equivalent(1)	67.43		%	70.97		%
(1) See the reconciliation of Non-GAAP measure below.

	Six Months Ended June 30,
	2015			2014			Change			% Change
Salaries and employee benefits	$	73,489		$	64,882		$	8,607		13	%
Occupancy	8,287			8,034			253			3
Furniture and equipment	4,282			3,975			307			8
Professional fees	11,293			8,740			2,553			29
FDIC insurance assessments	1,855			1,960			(105		)	(5	)
Advertising	2,514			2,699			(185		)	(7	)
Intangible assets amortization	1,346			1,215			131			11
Other real estate and loan collection expenses	1,218			1,570			(352		)	(22	)
Loss on sales/valuations of assets, net	1,862			1,542			320			21
Other noninterest expenses	16,950			12,580			4,370			35
Total Noninterest Expenses	$	123,096		$	107,197		$	15,899		15	%
Efficiency ratio, fully taxable equivalent(1)	69.14		%	72.88		%
(1) See the reconciliation of Non-GAAP measure below.

Reconciliation of Non-GAAP Measure-Efficiency Ratio
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
Net interest income	$	57,644		$	50,799		$	111,574		$	99,411
Taxable equivalent adjustment(1)	2,408			2,761			4,801			5,134
Fully taxable equivalent net interest income	60,052			53,560			116,375			104,545
Noninterest income	30,661			21,535			61,324			40,385
Securities gains, net	(3,110		)	(854		)	(7,463		)	(1,635		)
Adjusted income	$	87,603		$	74,242		$	170,236		$	143,295
Total noninterest expenses	$	63,482		$	54,659		$	123,096		$	107,197
Less:
Intangible assets amortization	715			591			1,346			1,215
Partnership investment in historic rehabilitation tax credits	2,190			—			2,190			—
Loss on sales/valuations of assets, net	1,509			1,379			1,862			1,542
Adjusted noninterest expenses	$	59,068		$	52,689		$	117,698		$	104,440
Efficiency ratio, fully taxable equivalent(2)	67.43		%	70.97		%	69.14		%	72.88		%
(1) Computed on a tax equivalent basis using an effective tax rate of 35%.
(2) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax equivalent basis, which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities and historic rehabilitation tax credits. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items, such as securities gains, net and losses on sales/valuations of assets, net. This measure should not be considered a substitute for operating results determined in accordance with GAAP.

For the second quarter of 2015, noninterest expenses totaled $63.5 million, an increase of $8.8 million or 16% from the same quarter of 2014. For the first six months of 2015, noninterest expenses totaled $123.1 million, an increase of $15.9 million or 15% from the first six months of 2014. During both comparative periods, the categories contributing most significantly to these increases were salaries and employee benefits, professional fees and other noninterest expenses.

One of Heartland's top priorities is improving its efficiency ratio to achieve a ratio of 65% by the end of 2016. During the second quarter of 2015, management announced the consolidation of two banking centers and the closing of five under-performing loan production offices. The systems conversion of Community Bank & Trust was completed in May 2015 and is also expected to contribute to improvement in Heartland's efficiency ratio.

The largest component of noninterest expenses, salaries and employee benefits, increased $4.3 million or 13% during the second quarter of 2015 as compared to the same quarter in 2014 and $8.6 million or 13% for the six-month period ended on June 30, 2015, as compared to the same period in 2014. The salaries and employee benefits at the acquired Community Bank and Trust locations comprised $1.1 million of the increase for the quarterly comparative period and $3.3 million for the six-month comparative period. Salaries and employee benefits was also affected by increases in incentive plan accruals and higher compensation in the mortgage segment during the first quarter of 2015. Full-time equivalent employees totaled 1,788 on June 20, 2015, of which approximately 130 were at the Community Bank & Trust locations, compared to 1,658 on June 30, 2014.

Professional fees increased $1.0 million or 25% during the second quarter of 2015 compared to the second quarter of 2014 and $2.6 million or 29% during the first six months of 2015 compared to the first six months of 2014. These increases were primarily attributable to the increased volumes of mortgage loan originations and additional services provided to Heartland by third-parties, including those performed in relation to acquisitions.

For the second quarter of 2015, other noninterest expenses increased $3.1 million or 46% over the second quarter of 2014. For the first six months of 2015, other noninterest expenses increased $4.4 million or 35% over the first six months of 2014. Included in the 2015 second quarter other noninterest expenses was $2.2 million in costs associated with a partnership investment in a commercial and residential real estate project which qualifies for historic rehabilitation tax credits. These credits are included as a reduction to income tax expense as further described in the Income Taxes section of this report. Excluding the effect of the cost associated with the tax credit investment, other noninterest expenses increased $945,000 or 14% during the second quarter of 2015 in comparison to the second quarter of 2014 and $2.2 million or 17% during the first six months of 2015 in comparison with the same period in 2014. These increases were primarily in software maintenance and amortization expense.

Income Taxes

Heartland's effective tax rate was 20.83% for the second quarter of 2015 compared to 27.81% for the second quarter of 2014. Included in Heartland's income taxes for the second quarter of 2015 were federal historic rehabilitation tax credits totaling $2.9 million associated with Heartland's ownership interest in a qualifying real estate project. Federal low-income housing tax credits included in Heartland's income taxes totaled $145,000 during the second quarter of 2015 compared to $200,000 during the second quarter of 2014. Heartland's effective tax rate was also affected by the level of tax-exempt interest income which, as a percentage of pre-tax income, was 23.35% during the second quarter of 2015 compared to 34.37% during the second quarter of 2014. The tax-equivalent adjustment for this tax-exempt interest income was $2.4 million during the second quarter of 2015 and $2.7 million during the second quarter of 2014.

Heartland's effective tax rate was 27.29% for the first six months of 2015 compared to 24.89% for the first six months of 2014. Included in Heartland's income taxes for the first six months of 2015 were the $2.9 million federal historic rehabilitation tax credits associated with Heartland's ownership interest in a qualifying real estate project. Federal low-income housing tax credits included in Heartland's effective tax rate totaled $290,000 during the first six months of 2015 compared to $400,000 during the first six months of 2014. The level of tax-exempt interest income which, as a percentage of pre-tax income, was 21.00% during the first six months of 2015 compared to 40.55% during the first six months of 2014. The tax-equivalent adjustment for this tax-exempt interest income was $4.8 million during the first six months of 2015 compared to $5.2 million during the first six months of 2014.

Segment Reporting

Heartland has two reportable segments: community and other banking, and retail mortgage banking. Revenues from community and other banking operations consist primarily of interest earned on loans and investment securities and fees from deposit services. Retail mortgage banking operating revenues consist of interest earned on mortgage loans held for sale, net gains on sale of loans into the secondary market, the servicing of mortgage loans for various investors and loan origination fee income. See Note 9 to our consolidated financial statements for further information regarding our segment reporting.

Income before taxes for the community and other banking segment for the second quarter of 2015 was $16.9 million compared to $16.0 million for the second quarter of 2014, a $934,000 or 6% increase, primarily as a result of increased net interest income and noninterest income, the effect of which was partially offset by increased provision for loan losses and noninterest

expenses. Net interest income from the community and other banking segment improved by $5.7 million or 11% for the second quarter of 2015 as compared to the second quarter of 2014, primarily as a result of strong loan growth experienced during the last half of 2014 and first half of 2015, combined with the acquisition of Community Banc-Corp of Sheboygan, Inc. in January 2015. Provision for loan and lease losses for the community and other banking segment was $5.7 million for the second quarter of 2015 compared of $2.8 million for the second quarter of 2014, an increase of $2.9 million, with approximately $1.0 million attributed to the higher loan growth experienced during the second quarter of 2015 compared to the second quarter of 2014, $600,000 related to valuation changes on purchased impaired loans and the remainder primarily attributable to provision necessary to establish an allowance for loans acquired in prior acquisitions for which purchase accounting valuation reserves were depleted. Noninterest income allocable to the community and other banking segment totaled $15.6 million during the second quarter of 2015 compared to $12.0 million during the second quarter of 2014, an increase of $3.6 million or 30%, primarily a result of a $2.3 million increase in securities gains. Noninterest expenses allocable to the community and other banking segment increased $5.4 million or 13% during the second quarter of 2015 as compared to the second quarter of 2014. Included in the second quarter of 2015 noninterest expenses was $2.2 million in costs associated with a partnership investment which qualifies for historic rehabilitation tax credits. Income before taxes for the community and other banking segment for the six months ended June 30 was $37.8 million for 2015 compared to $26.7 million for 2014, an $11.1 million or 41% increase. Driven by strong loan growth, net interest income increased $10.7 million or 11% from $98.1 million during the first six months of 2014 to $108.9 million during the first six months of 2015. Provision for loan and lease losses was $7.3 million for the first six months of 2015 compared of $9.1 million for the first six months of 2014, a decrease of $1.7 million or 19%. Included in the 2014 provision was an adjustment to compensate for a charge-off on one significant credit during the first quarter of 2014. Excluding this single charge-off, the increase in provision for the six-month comparative period was $2.7 million, primarily for the reasons discussed above. Noninterest expenses totaled $96.4 million during the first six months of 2015 compared to $85.9 million during the first six months of 2014, an increase of $10.6 million or 12%, primarily a result of the added expenses at the Community Bank & Trust locations acquired during the first quarter of 2015 and the costs associated with the historic rehabilitation tax credit partnership investment.

The retail mortgage banking segment recorded income before taxes of $2.2 million for the second quarter of 2015 compared to a loss before taxes of $1.1 million for the second quarter of 2014. For the six-month comparative period ended on June 30, the retail mortgage banking segment recorded income before taxes of $4.7 million in 2015 compared to a loss before taxes of $3.2 million in 2014. These increases were reflective of the reduced long-term interest rates during the first half of 2015 in comparison to the first half of 2014 and the effect lower interest rates have on the volume of residential mortgage loans originated for sale and the associated gains on sale of these loans into the secondary market. Noninterest income from the retail mortgage banking segment totaled $15.1 million during the second quarter of 2015 compared to $9.5 million during the second quarter of 2014, a $5.5 million or 58% increase. For the six-month comparative period ended June 30, noninterest income totaled $28.7 million in 2015 compared to $16.9 million in 2014, an $11.8 million or 70% increase. Noninterest expenses allocable to the retail mortgage banking segment were $14.5 million during the second quarter of 2015 compared to $11.1 million during the second quarter of 2014, a $3.4 million or 30% increase. For the six-month comparative period ended June 30, noninterest expenses totaled $26.7 million during 2015 compared to $21.3 million during 2014, an increase of $5.3 million or 25%. These increases were primarily a result of transaction-based compensation to mortgage banking personnel associated with the increased volume of residential mortgage loans underwritten during the first half of 2015.

FINANCIAL CONDITION

Total assets were $6.72 billion at June 30, 2015, an increase of $665.2 million or 11% since year-end 2014. Total assets recorded related to the Community Banc-Corp of Sheboygan, Inc. acquisition on January 16, 2015, were $525.3 million.

Lending Activities

Total loans and leases held to maturity were $4.45 billion at June 30, 2015, compared to $3.88 billion at year-end 2014, an increase of $573.1 million or 15%, which includes $395.0 million acquired in the Community Bank & Trust merger. Exclusive of this acquisition, total loans and leases held to maturity increased $178.1 million or 9% annualized since year-end 2014. Heartland management expects loan growth for the remainder of 2015 to average approximately 2% per quarter.

The table below presents the composition of the loan portfolio as of June 30, 2015, and December 31, 2014, in thousands:

LOAN PORTFOLIO	June 30, 2015					December 31, 2014
	Amount			Percent		Amount			Percent
Loans and leases receivable held to maturity:
Commercial	$	1,189,626		26.73	%	$	1,036,080		26.72	%
Commercial real estate	2,010,091			45.15		1,707,060			44.02
Agricultural and agricultural real estate	444,110			9.98		423,827			10.93
Residential mortgage	443,026			9.95		380,341			9.81
Consumer	364,441			8.19		330,555			8.52
Gross loans and leases receivable held to maturity	4,451,294			100.00	%	3,877,863			100.00	%
Unearned discount	(234		)			(90		)
Deferred loan fees	(1,237		)			(1,028		)
Total net loans and leases receivable held to maturity	4,449,823					3,876,745
Loans covered under loss share agreements:
Commercial and commercial real estate	—			—	%	54			4.29	%
Agricultural and agricultural real estate	—			—		—			—
Residential mortgage	—			—		1,204			95.71
Consumer	—			—		—			—
Total loans covered under loss share agreements	—			—	%	1,258			100.00	%
Allowance for loan and lease losses	(45,614		)			(41,449		)
Loans and leases receivable, net	$	4,404,209				$	3,836,554

Loans and leases secured by real estate, either fully or partially, totaled $2.90 billion or 65% of gross loans and leases at June 30, 2015. Of the non-farm, nonresidential real estate loans, 61% are owner occupied. The largest categories within Heartland's real estate secured loans at June 30, 2015, and December 31, 2014, are listed below, in thousands:

LOANS SECURED BY REAL ESTATE
	As of June 30, 2015		As of December 31, 2014
Residential real estate, excluding residential construction and residential lot loans	$	812,829	$	702,627
Industrial, manufacturing, business and commercial	323,945		321,338
Agriculture	251,584		252,143
Retail	399,971		200,049
Office	254,189		225,769
Land development and lots	121,596		122,662
Hotel, resort and hospitality	108,227		105,217
Multi-family	179,089		150,657
Food and beverage	78,091		79,208
Warehousing	73,287		68,449
Health services	59,028		49,401
Residential construction	93,170		72,419
All other	141,695		127,714
Total loans secured by real estate	$	2,896,701	$	2,477,653

Allowance For Loan and Lease Losses

The process utilized by Heartland to determine the appropriateness of the allowance for loan and lease losses is considered a critical accounting practice for Heartland and has remained consistent over the past several years. The allowance for loan and lease losses represents management's estimate of identified and unidentified probable losses in the existing loan portfolio. For additional details on the specific factors considered, refer to the critical accounting policies section of our Annual Report on Form 10-K for the year ended December 31, 2014.

Exclusive of loans covered under loss sharing agreements, the allowance for loan and lease losses at June 30, 2015, was 1.03% of loans and leases and 170.78% of nonperforming loans compared to 1.07% of loans and leases and 165.33% of nonperforming loans at December 31, 2014.

Nonperforming loans, excluding those covered under loss sharing agreements, were $26.7 million or 0.60% of total loans and leases at June 30, 2015, compared to $25.1 million or 0.65% of total loans and leases at December 31, 2014. Exclusive of $6.1 million of nonperforming assets acquired in the acquisition of Community Bank & Trust, nonperforming assets decreased $6.7 million or 15% since year-end 2014. Approximately 22%, or $5.8 million, of Heartland's nonperforming loans have individual loan balances exceeding $1.0 million and represent loans to an aggregate of 3 borrowers. The portion of Heartland's nonperforming loans covered by government guarantees was $4.5 million at June 30, 2015, and $1.5 million at December 31, 2014.

Loans delinquent 30 to 89 days as a percent of total loans increased to 0.31% at June 30, 2015, in comparison with 0.21% at December 31, 2014, primarily due to loans acquired in the Community Bank & Trust transaction.

The tables below present the changes in the allowance for loan and lease losses during the three- and six-month periods ended June 30, 2015 and 2014, in thousands:

ANALYSIS OF ALLOWANCE FOR LOAN AND LEASE LOSSES	Three Months Ended June 30,
	2015			2014
Balance at beginning of period	$	41,854		$	38,573
Provision for loan and lease losses	5,674			2,751
Recoveries on loans and leases previously charged off	(2,734		)	(1,392		)
Recoveries on loans and leases covered by loss share agreements	—			(8		)
Charge-offs on loans and leases not covered by loss share agreements	820			913
Charge-offs on loans and leases covered by loss share agreements	—			55
Balance at end of period	$	45,614		$	40,892
Annualized ratio of net charge offs to average loans and leases	0.17		%	0.05		%
	Six Months Ended June 30,
	2015			2014
Balance at beginning of period	$	41,449		$	41,685
Provision for loan and lease losses	7,345			9,082
Recoveries on loans and leases previously charged off	1,558			2,128
Recoveries on loans and leases covered by loss share agreements	—			55
Charge-offs on loans and leases not covered by loss share agreements	(4,738		)	(12,009		)
Charge-offs on loans and leases covered by loss share agreements	—			(49		)
Balance at end of period	$	45,614		$	40,892
Annualized ratio of net charge offs to average loans and leases	0.15		%	0.55		%

The table below presents the amounts of nonperforming loans and leases and other nonperforming assets on the dates indicated, in thousands:

NONPERFORMING ASSETS	June 30,						December 31,
	2015			2014			2014			2013
Not covered under loss share agreements:
Nonaccrual loans and leases	$	26,710		$	29,076		$	25,070		$	42,394
Loan and leases contractually past due 90 days or more	—			—			—			24
Total nonperforming loans and leases	26,710			29,076			25,070			42,418
Other real estate	16,983			23,761			19,016			29,794
Other repossessed assets	544			414			445			397
Total nonperforming assets not covered under loss share agreements	$	44,237		$	53,251		$	44,531		$	72,609
Covered under loss share agreements:
Nonaccrual loans and leases	$	—		$	297		$	278		$	783
Total nonperforming loans and leases	—			297			278			783
Other real estate	—			634			—			58
Total nonperforming assets covered under loss share agreements	$	—		$	931		$	278		$	841
Performing troubled debt restructured loans(1)	$	10,903		$	12,076		$	12,133		$	19,353
Nonperforming loans and leases not covered under loss share agreements to total loans and leases	0.60		%	0.79		%	0.65		%	1.21		%
Nonperforming assets not covered under loss share agreements to total loans and leases plus repossessed property	0.99		%	1.43		%	1.14		%	2.06		%
Nonperforming assets not covered under loss share agreements to total assets	0.66		%	0.90		%	0.74		%	1.23		%
(1) Represents accruing troubled debt restructured loans performing according to their restructured terms.

The schedule below summarizes the changes in Heartland's nonperforming assets, including those covered by loss share agreements, during the second quarter of 2015 and the first six months of 2015, in thousands:

	Nonperforming Loans			Other Real Estate Owned			Other Repossessed Assets			Total Nonperforming Assets
March 31, 2015	$	27,032		$	19,097		$	404		$	46,533
Loan foreclosures	(1,675		)	1,601			74			—
Net loan charge-offs	(1,914		)	—			—			(1,914		)
Acquired nonperforming assets	—			—			—			—
New nonperforming loans	4,676			—			—			4,676
Reduction of nonperforming loans(1)	(1,409		)	—			—			(1,409		)
OREO/Repossessed assets sales proceeds	—			(3,176		)	(26		)	(3,202		)
OREO/Repossessed assets writedowns, net	—			(539		)	(26		)	(565		)
Net activity at Citizens Finance Co.	—			—			118			118
June 30, 2015	$	26,710		$	16,983		$	544		$	44,237
(1) Includes principal reductions and transfers to performing status.
	Nonperforming Loans			Other Real Estate Owned			Other Repossessed Assets			Total Nonperforming Assets
December 31, 2014	$	25,348		$	19,016		$	445		$	44,809
Loan foreclosures	(4,046		)	3,963			83			—
Net loan charge-offs	(3,180		)	—			—			(3,180		)
Acquired nonperforming assets	5,755			346			—			6,101
New nonperforming loans	8,735			—			—			8,735
Reduction of nonperforming loans(1)	(5,902		)	—			—			(5,902		)
OREO/Repossessed assets sales proceeds	—			(5,486		)	(28		)	(5,514		)
OREO/Repossessed assets writedowns, net	—			(856		)	(28		)	(884		)
Net activity at Citizens Finance Co.	—			—			72			72
June 30, 2015	$	26,710		$	16,983		$	544		$	44,237
(1) Includes principal reductions and transfers to performing status.

Securities

The composition of Heartland's securities portfolio is managed to maximize the return on the portfolio while considering the impact it has on Heartland's asset/liability position and liquidity needs. Securities declined to 24% of total assets at June 30, 2015, compared to 28% at year-end 2014. Total available for sale securities as of June 30, 2015, were $1.32 billion, a decrease of $86.2 million or 6% from $1.40 billion at December 31, 2014.

The table below presents the composition of the securities portfolio, including trading, available for sale and held to maturity, by major category, as of June 30, 2015, and December 31, 2014, in thousands:

SECURITIES PORTFOLIO COMPOSITION	June 30, 2015				December 31, 2014
	Amount		Percent		Amount		Percent
U.S. government corporations and agencies	$	15,802	0.98	%	$	24,093	1.41	%
Mortgage-backed securities	1,113,605		68.76		1,225,000		71.77
Obligation of states and political subdivisions	463,704		28.63		432,279		25.32
Corporate debt securities	740		0.05		—		—
Equity securities	5,106		0.32		5,083		0.30
Other securities	20,455		1.26		20,498		1.20
Total securities	$	1,619,412	100.00	%	$	1,706,953	100.00	%

The percentage of Heartland's securities portfolio comprised of mortgage-backed securities was 69% at June 30, 2015, and 72% at December 31, 2014. Approximately 84% of Heartland's mortgage-backed securities were issuances of government-sponsored enterprises at June 30, 2015. Heartland's securities portfolio had an expected duration of 3.93 years as of June 30, 2015, compared to 4.07 years at year-end 2014. The available for sale securities portfolio had an expected duration of 2.23 years as of June 30, 2015, compared to 2.52 years as of December 31, 2014.

The Volcker Rule prohibits insured depository institutions and their holding companies from engaging in proprietary trading except in limited circumstances, and prohibits them from owning equity interests in excess of 3% of Tier 1 Capital in private equity and hedge funds. The Volcker Rule will not have a material impact on Heartland’s investment securities portfolio.

At June 30, 2015, Heartland had $20.5 million of other securities, including capital stock in the various Federal Home Loan Banks of which its bank subsidiaries are members and all of which were classified as other securities held at cost.

Deposits And Borrowed Funds

Total deposits were $5.32 billion as of June 30, 2015, compared to $4.77 billion at year-end 2014, an increase of $549.2 million or 12%, with $434.0 million attributable to the Community Bank & Trust acquisition. Demand deposits totaled $1.54 billion at June 30, 2015, an increase of $241.2 million or 19% since year-end 2014, with $117.1 million attributable to the acquisition. Included in the deposit growth during the first six months of 2015 was a $140.3 million increase in brokered time deposits, the majority of which was issued during the second quarter to replace higher cost long-term FHLB advances and wholesale repurchase agreements that matured during the first six months of 2015. The composition of Heartland's deposits remained favorable as no-cost demand deposits as a percentage of total deposits was 29% at June 30, 2015.

Short-term borrowings generally include federal funds purchased, securities sold under agreements to repurchase, short-term FHLB advances and discount window borrowings from the Federal Reserve Bank. These funding alternatives are utilized in varying degrees depending on their pricing and availability. All of Heartland's bank subsidiaries own FHLB stock in either the Chicago, Dallas, Des Moines, San Francisco or Topeka FHLB, enabling them to borrow funds from their respective FHLB for short- or long-term purposes under a variety of programs. The amount of short-term borrowings was $477.9 million at June 30, 2015, compared to $330.3 million at year-end 2014. Short-term FHLB advances of $112.1 million were included in short-term borrowings at June 30, 2015, in comparison with $76.0 million at December 31, 2014.

All of the Heartland bank subsidiaries provide retail repurchase agreements to their customers as a cash management tool, sweeping excess funds from demand deposit accounts into these agreements. This source of funding does not increase the bank's reserve requirements. Although the aggregate balance of these retail repurchase agreements is subject to variation, the account relationships represented by these balances are principally local. The balances of retail repurchase agreements were $229.3 million at June 30, 2015, compared to $240.2 million at December 31, 2014.

Also included in short-term borrowings is the revolving credit line Heartland has with an unaffiliated bank, primarily to provide liquidity to Heartland. There was no balance outstanding on Heartland's revolving credit line at both June 30, 2015, and December 31, 2014. This credit agreement contains specific covenants, with which Heartland was in compliance on June 30, 2015.

Other borrowings include all debt arrangements Heartland and its subsidiaries have entered into with original maturities that extend beyond one year, including long-term FHLB borrowings, term borrowings under term notes, subordinated notes and

senior notes, and obligations under trust preferred capital securities. As of June 30, 2015, the amount of other borrowings was $296.6 million, a decrease of $99.1 million or 25% since year-end 2014.

Long-term FHLB borrowings with an original term beyond one year totaled $40.8 million at June 30, 2015, compared to $109.7 million at December 31, 2014, a decrease of $68.9 million or 63%. Total long-term FHLB borrowings at June 30, 2015, had an average rate of 0.64% and an average maturity of 1.89 years. Structured wholesale repurchase agreements totaled $30.0 million at June 30, 2015, and $45.0 million at December 31, 2014.

The outstanding balance on Heartland's amortizing term loan with an unaffiliated bank was $9.7 million at June 30, 2015, compared to $10.4 million at December 31, 2014. Heartland also had senior notes totaling $29.5 million and subordinated notes totaling $75.0 million outstanding at both June 30, 2015, and December 31, 2014.

On March 31, 2015, $20.0 million of 8.25% trust preferred securities were redeemed with no early redemption penalties.A schedule of Heartland's trust preferred securities outstanding as of June 30, 2015, is as follows, in thousands:

	Amount Issued		Issuance Date	Interest Rate	Interest Rate as of 6/30/15(1)	Maturity Date	Callable Date
Heartland Financial Statutory Trust IV	25,774		03/17/2004	2.75% over LIBOR	3.03%(2)	03/17/2034	09/17/2015
Heartland Financial Statutory Trust V	20,619		01/27/2006	1.33% over LIBOR	1.61%(3)	04/07/2036	10/07/2015
Heartland Financial Statutory Trust VI	20,619		06/21/2007	6.75%	6.75%(4)	09/15/2037	09/15/2015
Heartland Financial Statutory Trust VII	20,619		06/26/2007	1.48% over LIBOR	1.76%(5)	09/01/2037	09/01/2015
Morrill Statutory Trust I	8,665		12/19/2002	3.25% over LIBOR	3.53%(6)	12/26/2032	09/26/2015
Morrill Statutory Trust II	8,253		12/17/2003	2.85% over LIBOR	3.13%(7)	12/17/2033	09/17/2015
Sheboygan Statutory Trust I	6,133		9/17/2003	2.95% over LIBOR	3.23%	09/17/2033	09/17/2015
	$	110,682
(1) Effective weighted average interest rate as of June 30, 2015, was 5.03% due to interest rate swap transactions on the variable rate securities as discussed in Note 7 to Heartland's consolidated financial statements.
(2) Effective interest rate as of June 30, 2015, was 5.00% due to an interest rate swap transaction as discussed in Note 7 to Heartland's consolidated financial statements.
(3) Effective interest rate as of June 30, 2015, was 4.69% due to an interest rate swap transaction as discussed in Note 7 to Heartland's consolidated financial statements.
(4) Interest rate is fixed at 6.75% through June 15, 2017, then resets to 1.48% over LIBOR for the remainder of the term.
(5) Effective interest rate as of June 30, 2015, was 4.70% due to an interest rate swap transaction as discussed in Note 7 to Heartland's consolidated financial statements.
(6) Effective interest rate as of June 30, 2015, was 4.92% due to an interest rate swap transaction as discussed in Note 7 to Heartland's consolidated financial statements.
(7) Effective interest rate as of June 30, 2015, was 4.51% due to an interest rate swap transaction as discussed in Note 7 to Heartland's consolidated financial statements.

CAPITAL REQUIREMENTS

Bank regulatory agencies have adopted capital standards by which all bank holding companies will be evaluated, including requirements to maintain certain core capital amounts included as Tier 1 capital at minimum levels relative to total assets (the “Tier 1 Leverage Capital Ratio”) and at minimum levels relative to “risk-weighted assets” which is calculated by assigning value to assets, and off balance sheet commitments, based on their risk characteristics (the “Tier 1 Risk-Based Capital Ratio”), and to maintain total capital at minimum levels relative to risk-weighted assets (the “Total Risk-Based Capital Ratio”). Starting in 2015, bank holding companies are subject to a new Common Tier 1 Capital Ratio, an increased Tier 1 Leverage Capital Ratio and an increased Tier 1 Risk-Based Capital Ratio under the Basel III rules and are required to include in Common Tier 1 capital the effects of other comprehensive income adjustments, such as gains and losses on securities held to maturity, that are currently excluded from the definition of Tier 1 capital, but are allowed to make a one-time election not to include those effects. Heartland and its bank subsidiaries have been, and will continue to be, managed so they meet the well-capitalized requirements under the regulatory framework for prompt corrective action and have made the one-time election to exclude the effects of other comprehensive income adjustments on their Tier 1 capital. Under the Basel III rules, the requirements to be categorized as well-capitalized changed from 4% to 5% for the Tier 1 Leverage Capital Ratio, from 6% to 8% for the Tier 1 Risk-Based Capital Ratio and remained at 10% for the Total Risk-Based Capital Ratio. The most recent notification from the FDIC categorized Heartland and each of its bank subsidiaries as well capitalized under the regulatory framework for prompt corrective action, and Heartland and its bank subsidiaries would have continued to be well capitalized had the Basel III rules

been effective for the period covered by such notification. There are no conditions or events since that notification that management believes have changed each institution's category.

Heartland's capital ratios were as follows for the dates indicated, in thousands:

CAPITAL RATIOS	June 30, 2015				December 31, 2014
	Amount		Ratio		Amount		Ratio
Risk-Based Capital Ratios:
Tier 1 capital	$	630,481	11.56	%	$	578,564	12.95	%
Tier 1 capital minimum requirement(1)	327,160		6.00	%	178,757		4.00	%
Excess	$	303,321	5.56	%	$	399,807	8.95	%
Total capital	$	755,808	13.86	%	$	703,032	15.73	%
Total capital minimum requirement	436,213		8.00	%	357,513		8.00	%
Excess	$	319,595	5.86	%	$	345,519	7.73	%
Tier 1 common equity	$	438,203	8.04	%
Tier 1 common equity minimum requirement	$	245,370	4.50	%
Excess	$	192,833	3.54	%
Total risk-adjusted assets	$	5,452,663			$	4,468,914
Leverage Capital Ratios
Tier 1 capital	$	630,481	9.60	%	$	578,564	9.75	%
Tier 1 capital minimum requirement(2)	262,782		4.00	%	237,316		4.00	%
Excess	$	367,699	5.60	%	$	341,248	5.75	%
Average adjusted assets (less goodwill and other intangible assets)	$	6,569,550			$	5,932,898
(1) Under Basel III, the minimum requirement for this measure was changed from 4.00% to 6.00%.
(2) Under Basel III, the minimum requirement for this measure was changed from 3.00% for the most highly-rated banks and 4.00% for all others, to 4.00% for all banks.

Heartland filed a universal shelf registration statement with the Securities and Exchange Commission on August 28, 2013, which became effective on September 9, 2013, to register up to $75.0 million in securities. The shelf registration statement provides Heartland with increased flexibility to raise capital, subject to Securities and Exchange Commission rules and limitations, if Heartland’s board of directors decides to do so.

Common stockholders' equity was $497.5 million at June 30, 2015, compared to $414.6 million at December 31, 2014. Book value per common share was $24.13 at June 30, 2015, compared to $22.40 at year-end 2014. Changes in common stockholders' equity and book value per common share are the result of earnings, dividends paid, stock transactions and mark-to-market adjustment for unrealized gains and losses on securities available for sale. Heartland's unrealized gains on securities available for sale, net of applicable taxes, were $4.4 million at June 30, 2015, compared to $3.6 million at December 31, 2014.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit and financial guarantees written are conditional commitments issued by the Heartland banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At June 30, 2015, and December 31, 2014, commitments to extend credit aggregated $1.62 billion and $1.42 billion, and standby letters of credit aggregated $50.6 million and $38.9 million, respectively.

Contractual obligations and other commitments were presented in Heartland's Annual Report on Form 10-K for the year ended December 31, 2014. Except for the commitments with respect to acquisitions discussed below, there have been no other material changes in Heartland's contractual obligations and other commitments since that report was filed.

On April 15, 2015, Heartland entered into a definitive merger agreement with Community Bancorporation of New Mexico, Inc., parent company of Community Bank in Santa Fe, New Mexico. Under the terms of the agreement, Heartland will acquire Community Bancorporation of New Mexico, Inc. in an all cash transaction for approximately $11.1 million. The transaction is expected to close in the third quarter of 2015. Simultaneous with the closing of the transaction, Community Bank will be merged into Heartland's New Mexico Bank & Trust subsidiary.

On May 14, 2015, Heartland entered into a definitive merger agreement with First Scottsdale Bank, National Association, in Scottsdale, Arizona. Under the terms of the agreement, Heartland will acquire First Scottsdale Bank in an all cash transaction for approximately $17.7 million. The transaction is expected to close during the third quarter of 2015, at which time First Scottsdale Bank will be merged into Heartland's Arizona Bank & Trust subsidiary.

On May 28, 2015, Heartland entered into a definitive merger agreement with Premier Valley Bank, a community bank based in Fresno, California. Under the terms of the agreement, Premier Valley will become a wholly-owned subsidiary of Heartland and continue to operate under its present name and management team as Heartland's tenth state-chartered bank. Premier Valley shareholders will receive approximately $95 million or $7.73 per share of Premier Valley common stock in the merger, and may elect to receive this payment in shares of Heartland common stock or in cash, subject to proration so that 70% of the total payment is in Heartland common stock and 30% in cash. The transaction is expected to close during the fourth quarter of 2015.

Heartland continues to explore opportunities to expand its footprint of independent community banks through acquisitions. Although attention is focused on existing and adjacent markets, where there would be an opportunity to grow market share, achieve efficiencies and provide greater convenience for existing customers, acquisitions in new growth markets are also considered if they fit Heartland's business model and would provide a sufficient return on investment to be accretive to earnings within the first year of integration. Future expenditures relating to expansion efforts, in addition to those identified above are not estimable at this time.

On a consolidated basis, Heartland maintains a large balance of short-term securities that, when combined with cash from operations, management believes are adequate to meet Heartland's funding obligations.

At the parent company level, routine funding requirements consist primarily of dividends paid to stockholders, including the U.S. Treasury, which holds Heartland Series C Fixed Rate Non-Cumulative Perpetual preferred stock, debt service on revolving credit arrangements, subordinated debt and trust preferred securities issuances, debt repayment obligations under other obligations and payments for acquisitions. The parent company obtains the funding to meet these obligations from dividends collected from its subsidiaries and the issuance of debt securities. Heartland believes that the regulatory permissible dividends from its subsidiary banks are adequate to meet these funding obligations for the next 12 months and maintains a revolving credit agreement with an unaffiliated bank that provides a maximum borrowing capacity of $20.0 million, of which none has been used during the past 12 months. The credit agreement contains specific financial covenants, all of which Heartland was in compliance with as of June 30, 2015.

LIQUIDITY

Liquidity refers to Heartland's ability to maintain cash flow that is adequate to meet maturing obligations and existing commitments, to withstand fluctuations in deposit levels, to fund operations and to provide for customers' credit needs. The liquidity of Heartland principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings and its ability to borrow funds in the money or capital markets.

Operating activities provided $9.0 million of cash during the first six months of 2015 compared to $7.5 million during the first six months of 2014. Securities gains, net, totaled $7.5 million during the first six months of 2015 compared to $1.6 million during the first six months of 2014. Loans originated for sale and the proceeds on sales of loans held for sale used cash of $34.7 million during the first six months of 2015 compared to $40.5 million during the first six months of 2014.

Investing activities used cash of $91.4 million during the first six months of 2015 compared to providing cash of $7.7 million during the first six months of 2014. Cash used for the purchase of securities and other investments totaled $538.7 million during the first six months of 2015 compared to $377.1 million during the first six months of 2014. The proceeds from sales of securities sales, paydowns and maturities were $623.9 million during the first six months of 2015 compared to $590.8 million

during the first six months of 2014. The net change in loans and leases used cash of $184.0 million during the first six months of 2015 compared to $212.4 million during the first six months of 2014.

Financing activities provided cash of $128.3 million during the first six months of 2015 compared to using cash of $37.8 million during the first six months of 2014.The net increase in demand and savings deposits provided cash of $64.3 million during the first six months of 2015 compared to $4.7 million during the first six months of 2014. The net increase in time deposits provided cash of $51.0 million during the first six months of 2015 compared to using cash of $29.7 million during the first six months of 2014.Activity in short-term borrowings provided cash of $122.8 million during the first six months of 2015 compared to $11.7 million during the first six months of 2014. Proceeds from other borrowings provided cash of $29.0 million during the first six months of 2015 compared to $5.0 million during the first six months of 2014 while repayment of other borrowings used cash of $134.4 million during the first six months of 2015 compared to $25.4 million during the first six months of 2014.

Management of investing and financing activities, and market conditions, determine the level and the stability of net interest cash flows. Management attempts to mitigate the impact of changes in market interest rates to the extent possible, so that balance sheet growth is the principal determinant of growth in net interest cash flows.

Heartland's short-term borrowing balances are dependent on commercial cash management and smaller correspondent bank relationships and, as such, will normally fluctuate. Management believes these balances, on average, to be stable sources of funds; however, management intends to rely on deposit growth and additional FHLB borrowings in the future.

In the event of short-term liquidity needs, Heartland's bank subsidiaries may purchase federal funds from each other or from correspondent banks and may also borrow from the Federal Reserve Bank. Additionally, the bank subsidiaries’ FHLB memberships give them the ability to borrow funds for short- and long-term purposes under a variety of programs.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market prices and rates. Heartland's market risk is comprised primarily of interest rate risk resulting from its core banking activities of lending and deposit gathering. Interest rate risk measures the impact on earnings from changes in interest rates and the effect on current fair market values of Heartland's assets, liabilities and off-balance sheet contracts. The objective is to measure this risk and manage the balance sheet to avoid unacceptable potential for economic loss.

Management continually develops and applies strategies to mitigate market risk. Exposure to market risk is reviewed on a regular basis by the asset/liability committees of the banks and, on a consolidated basis, by Heartland's executive management and board of directors. Darling Consulting Group, Inc. has been engaged to provide asset/liability management position assessment and strategy formulation services to Heartland and its bank subsidiaries. At least quarterly, a detailed review of the balance sheet risk profile is performed for Heartland and each of its bank subsidiaries. Included in these reviews are interest rate sensitivity analyses, which simulate changes in net interest income in response to various interest rate scenarios. These analyses consider current portfolio rates, existing maturities, repricing opportunities and market interest rates, in addition to prepayments and growth under different interest rate assumptions. Selected strategies are modeled prior to implementation to determine their effect on Heartland's interest rate risk profile and net interest income. Heartland believes its net interest income simulations reflect a well-balanced and manageable interest rate posture, and primary market risk exposures have not changed significantly in the first six months of 2015.

The core interest rate risk analysis utilized by Heartland examines the balance sheet under increasing and decreasing interest scenarios that are neither too modest nor too extreme. All rate changes are ramped over a 12-month horizon based upon a parallel shift in the yield curve and then maintained at those levels over the remainder of the simulation horizon. Using this approach, management is able to see the effect that both a gradual change of rates (year 1) and a rate shock (year 2 and beyond) could have on Heartland's net interest income. Starting balances in the model reflect actual balances on the “as of” date, adjusted for material and significant transactions. Pro-forma balances remain static. This enables interest rate risk embedded within the existing balance sheet structure to be isolated from the interest rate risk often caused by growth in assets and liabilities. Due to the low interest rate environment, the simulations under a decreasing interest rate scenario were prepared using a 100 basis point shift in rates. The most recent reviews at June 30, 2015, and June 30, 2014, provided the following

results, in thousands:

	2015				2014
	Net Interest Margin		% Change From Base		Net Interest Margin		% Change From Base
Year 1
Down 100 Basis Points	$	214,007	(2.65	)%	$	180,111	(0.28	)%
Base	$	219,839			$	180,610
Up 200 Basis Points	$	216,128	(1.69	)%	$	184,125	1.95	%
Year 2
Down 100 Basis Points	$	204,777	(6.85	)%	$	177,223	(1.88	)%
Base	$	219,631	(0.09	)%	$	182,953	1.30	%
Up 200 Basis Points	$	221,044	0.55	%	$	196,685	8.90	%

Heartland uses derivative financial instruments to manage the impact of changes in interest rates on its future interest income or interest expense. Heartland is exposed to credit-related losses in the event of nonperformance by the counterparties to these derivative instruments, but believes it has minimized the risk of these losses by entering into the contracts with large, stable financial institutions. The estimated fair market values of these derivative instruments are presented in Note 7 to the consolidated financial statements.

Heartland enters into financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates and may require collateral from the borrower. Standby letters of credit are conditional commitments issued by Heartland to guarantee the performance of a customer to a third party up to a stated amount and with specified terms and conditions. These commitments to extend credit and standby letters of credit are not recorded on the balance sheet until the instrument is exercised.

Heartland periodically holds a securities trading portfolio that would also be subject to elements of market risk. These securities are carried on the balance sheet at fair value. At both June 30, 2015, and December 31, 2014, Heartland held no securities in its securities trading portfolio.

ITEM 4. CONTROLS AND PROCEDURES

Under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2015. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

There were no significant changes to Heartland's disclosure controls or internal controls over financial reporting during the quarter ended June 30, 2015, that have materially affected or are reasonably likely to materially affect Heartland's internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which Heartland or its subsidiaries are a party other than ordinary routine litigation incidental to their respective businesses. While the ultimate outcome of current legal proceedings cannot be predicted with certainty, it is the opinion of management that the resolution of these legal actions should not have a material effect on Heartland's consolidated financial position or results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors applicable to Heartland from those disclosed in Part I, Item 1A. “Risk Factors” in Heartland's 2014 Annual Report on Form 10-K. Please refer to that section of Heartland's Form 10-K for disclosures regarding the risks and uncertainties related to Heartland's business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Heartland's board of directors has authorized management to acquire and hold up to 500,000 shares of common stock as treasury shares at any one time. Heartland and its affiliated purchasers made no purchases of its common stock during the six months ended June 30, 2015.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits

3.1	(1)	Amendment to Certificate of Incorporation of Heartland Financial USA, Inc.
10.1		Agreement and Plan of Merger among Heartland Financial USA, Inc., Premier Valley Bank and, following its organization, PV Acquisition Bank dated May 28, 2015 (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on May 29, 2015).
10.2	(1)	Promissory Note between Heartland Financial USA, Inc. and Bankers Trust Company dated June 14, 2015
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Financial statement formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.
(1) Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

HEARTLAND FINANCIAL USA, INC.

(Registrant)

Principal Executive Officer

/s/ Lynn B. Fuller

By: Lynn B. Fuller

Chairman and Chief Executive Officer

Principal Financial and Accounting Officer

/s/ Bryan R. McKeag

By: Bryan R. McKeag

Executive Vice President and Chief Financial Officer

Dated: August 6, 2015

EX-3.1

Delaware	PAGE 1
The First State

I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "HEARTLAND FINANCIAL USA, INC.", FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF MAY, A.D. 2015, AT 3:44 O'CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

2340797 8100		/s/ Jeffrey W. Bullock
150809682		Jeffrey W. Bullock, Secretary of State
You may verify this certificate online at corp.delaware.gov/authver.shtml		AUTHENTICATION: 2417520
		Date: 05-28-15

State of Delaware

Secretary of State

Division of Corporations

Delivered 04:18 PM 05/28/2015

FILED 03:44 PM 05/28/2015

SRV 150809682 - 2340797 FILE

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

HEARTLAND FINANCIAL USA, INC.

The undersigned hereby certifies that at a meeting of the stockholders of Heartland Financial USA, Inc., a Delaware corporation (the "Company"), duly called and held on May 20, 2015, the amendment to the Company's certificate of incorporation set forth below was duly adopted in accordance with the provisions of section 242 of the Delaware General Corporation Law, and that such amendment has not been subsequently modified or rescinded:

RESOLVED, that Article IV of the certificate of incorporation of Heartland Financial USA, Inc., as heretofore amended, shall be further amended in its entirety to read as follows:

"Article IV

"The total number of shares of stock which the corporation shall have authority to issue is 30,000,000 shares of Common Stock, par value of $1.00 per share, and 200,000 shares of Preferred Stock, par value of $1.00 per share.”

IN WITNESS WHEREOF, I have executed this certificate this 28thday of May, 2015

/s/ Bryan R. McKeag

Bryan R. McKeag, Executive Vice President and

Chief Financial Officer

EX-10.2

PROMISSORY NOTE

Principal $20,000,000.00	Loan Date 06-14-2015	Maturity 06-14-2016	Loan No 55120-0201	Call / Coll 9A00 / AA	Account 00000160370	Officer 00456	Initials
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.

Borrower:	Heartland Financial USA, Inc.	Lender:	Bankers Trust Company
	1398 Central Avenue		453 7th Street
	Dubuque, IA 52001		P.O. Box 897
			Des Moines, IA 50304-0897
			(515) 245-2863

Principal Amount: $20,000,000.00 Date of Note: June 14, 2015

PROMISE TO PAY. Heartland Financial USA, Inc. ("Borrower") promises to pay to Bankers Trust Company ("lender"). or order, in lawful money of the United States of America, the principal amount of Twenty Million & 00/100 Dollars ($20.000.000.00) or so much as may be outstanding. together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on June 14, 2016. In addition, Borrower will pay regular quarterly payments of all accrued unpaid interest due as of each payment date. beginning June 30, 2015, with all subsequent interest payments to be due on the last day of each quarter after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs; then to any late charges; then to any accrued unpaid interest; and then to principal. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the Base Rate on Corporate Loans posted by at least 70% of the 10 largest U.S. banks known as the Wall Street Journal U.S. Prime Rate (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each day. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate equal to the Index, resulting in an initial rate of 3.250% per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law.

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is. by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance. multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts. including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Bankers Trust Company, 453 7th Street, P.O. Box 897. Des Moines. lA 50304-0897.

LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $50.00, whichever is greater.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased to 21.000% per annum based on a year of 360 days. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:

Payment Default. Borrower fails to make any payment when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity. Lender in good faith believe itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEY'S FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding. or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Iowa without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Iowa.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Polk County, State of Iowa.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts.

COLLATERAL. This loan is unsecured.

Loan No: 55120-0201 PROMISSORY NOTE (Continued) Page 2

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instruction of any authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.

PURPOSE OF LOAN. The specific purpose of this loan is: Capital Injections/Acquisitions/General Corporate Needs.

ADDITIONAL TERMS. This credit is subject to the terms and conditions of a Business Loan Agreement dated June 14, 2013 and as amended.

NON-USE FEE. This Loan is subject to a quarterly Non-Use Fee Rate of 0.0005%. The Borrower agrees to pay to Lender for the Revolving Commitment a non-use fee, for the period from the Loan Date to the Maturity Date, in an amount equal to (i) the Revolving Commitment less (ii) the average daily amount (for the period of measurement) of all Revolving Outstandings, multiplied by the Non-Use Fee rate in effect from time to time. Such non-use fee shall be payable in arrears on the last day of each calendar quarter and on the Maturity Date for any period then ending fro which such non-use fee shall not have previously been paid. The Non-Use Fee shall be computed per the Interest Calculation Method described in the Promissory Note.

PRIOR NOTE. A Promissory Note dated June 14, 2014 in the amount of $20,000,000.00 to mature on June 14, 2015 and a Change in Terms Agreement dated August 1, 2014 in the amount of $20,000,000.00 to mature on June 14, 2015.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate information about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Bankers Trust Company 453 7^th Street Des Moines, IA 50309.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

BORROWER:

HEARTLAND FINANCIAL USA, INC.

By: /s/ Bryan R. McKeag

Bryan R. McKeag EVP, CFO of Heartland Financial USA, Inc.

SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT DATED JUNE 14,

2013

Principal $20,000,000.00	Loan Date 06-14-2015	Maturity 06-14-2016	Loan No 55120-0201	Call / Coll 9A00 / AA	Account 00000160370	Officer 00456	Initials
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.

Borrower:	Heartland Financial USA, Inc.	Lender:	Bankers Trust Company
	1398 Central Avenue		453 7th Street
	Dubuque, IA 52001		P.O. Box 897
			Des Moines, IA 50304-0897
			(515) 245-2863

This Second Amendment to Business Loan Agreement by this reference is made a part of the Business Loan Agreement dated June 14, 2013, and is executed in connection with a loan or other financial accommodations between Heartland Financial USA, Inc, ("Borrower") and Bankers Trust Company ("Lender") on the following terms and conditions.

Borrower and Lender acknowledge the following change(s):

NEGATIVE COVENANTS

Page 3 - Indebtedness and Liens.

1. Subsection (1) of the section entitled "Indebtedness and Liens" on page 3 is hereby deleted and replaced with "No Additional Indebtedness in excess of $5,000,000.00, without prior consent of Bankers Trust Company. Any amount in excess of $5,000,000.00 shall require a commensurate reduction of used or unused loans from Bankers Trust Company. Additional indebtedness shall exclude trade debt incurred in the normal course of business, indebtedness to Lender contemplated by this Agreement, and any subordinated debt instruments(s) assumed by Borrower as related to future acquisition(s)."

Page 4 - Additional Financial Restrictions.

2. In the section entitled "Additional Financial Restrictions" on page 4, the phrases "No Additional Indebtedness in excess of $5,000,000.00, without prior consent of Bankers Trust Company. Any amount in excess of $5,000,000.00 shall require a commensurate reduction of used or unused loans from Bankers Trust Company." are deleted.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT AND AGREES TO ITS TERMS.

BORROWER ACKNOWLEDGES RECEIPT OF AN EXECUTED COPY OF THIS AGREEMENT.

THIS SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT DATED JUNE 14, 2013 IS EXECUTED ON JUNE 14, 2015.

BORROWER:

HEARTLAND FINANCIAL USA, INC.

By: /s/ Bryan R. McKeag

Bryan R. McKeag EVP, CFO of Heartland Financial USA, Inc.

LENDER:

BANKERS TRUST COMPANY

By: /s/ John Ruan IV

John Ruan IV, Vice President

NOTICE OF FINAL AGREEMENT

Principal $20,000,000.00	Loan Date 06-14-2015	Maturity 06-14-2016	Loan No 55120-0201	Call / Coll 9A00 / AA	Account 00000160370	Officer 00456	Initials
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.

Borrower:	Heartland Financial USA, Inc.	Lender:	Bankers Trust Company
	1398 Central Avenue		453 7th Street
	Dubuque, IA 52001		P.O. Box 897
			Des Moines, IA 50304-0897
			(515) 245-2863

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THE LOAN AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THE WRITTEN LOAN AGREEMENT MAY BE LEGALLY ENFORCED. BORROWER MAY CHANGE THE TERMS OF THE LOAN AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
As used in this Notice, the following terms have the following meanings:
Loan. The term "Loan: means the following described loan: a Variable Rate Nondisclosable Revolving Line of Credit Loan to a Corporation for $20,000,000.00 due on June 14, 2016. This is an unsecured renewal of the following described indebtedness: A Promissory Note dated June 14, 2014 in the amount of $20,000,000.00 to mature on June 14, 2015 and a Change in Terms Agreement dated August 1, 2014 in the amount of $20,000,000.00 to mature on June 14, 2015.
Loan Agreement. The term "Loan Agreement" means one or more promises, promissory notes, agreements, undertakings, security agreements, deeds of trust or other documents, or commitments, or any combination of those actions or documents, relating to the Loan, including without limitation the following:
LOAN DOCUMENTS
ŸPromissory Note		ŸSecond Amendment to Business Loan Agreement dated June 14, 2013 - SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT DATED JUNE 14, 2013
ŸDisbursement Request and Authorization
ŸNotice of Final Agreement
Parties. The term "Parties" means Bankers Trust Company and any and all entities or individuals who are obligated to repay the loan or have pledged property as security for the Loan, including without limitation the following:
Borrower:	Heartland Financial USA, Inc.

Each Party who signs below, other than Bankers Trust Company, acknowledges, represents, and warrants to Bankers Trust Company that it has received, read and understood this Notice of Final Agreement. This Notice is dated June 14, 2015.

BORROWER:

HEARTLAND FINANCIAL USA, INC.

By: /s/ Bryan R. McKeag

Bryan R. McKeag EVP, CFO of Heartland Financial USA, Inc.

LENDER:

BANKERS TRUST COMPANY

By: /s/ John Ruan IV

John Ruan IV, Vice President

EX-31.1

Exhibit 31.1

I, Lynn B. Fuller, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 6, 2015
/s/ Lynn B. Fuller
Lynn B. Fuller
Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Bryan R. McKeag, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 6, 2015
/s/ Bryan R. McKeag
Bryan R. McKeag
Executive Vice President
Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Financial USA, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Lynn B. Fuller, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Lynn B. Fuller
Lynn B. Fuller
Chief Executive Officer
Date:	August 6, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Financial USA, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Bryan R. McKeag, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bryan R. McKeag
Bryan R. McKeag
Executive Vice President
Chief Financial Officer
Date:	August 6, 2015

XML

Securities (Securities available for sale (debt maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Amortized Cost
Due in 1 year or less	$ 3,378
Due in 1 to 5 years	22,352
Due in 5 to 10 years	40,102
Due after 10 years	135,776
Total debt securities	201,608
Mortgage-backed securities	1,101,835
Equity securities	5,045
Amortized Cost	1,308,488	$ 1,396,794
Estimated Fair Value
Due in 1 year or less	3,394
Due in 1 to 5 years	22,274
Due in 5 to 10 years	40,078
Due after 10 years	136,797
Total debt securities	202,543
Mortgage-backed securities	1,108,050
Equity securities	5,106
Estimated Fair Value	$ 1,315,699	$ 1,401,868

XML

Loans and Leases (Impaired loans not covered by loss share agreements) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	$ 9,999	$ 9,999	$ 16,664
Impaired loans without a related allowance, Unpaid Contractual Balance	65,533	65,533	53,132
Total impaired loans held to maturity, Unpaid Contractual Balance	75,532	75,532	69,796
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	9,795	9,795	16,462
Impaired loans without a related allowance, Loan Balance	61,864	61,864	45,262
Total impaired loans held to maturity, Loan Balance	71,659	71,659	61,724
Impaired loans, Related Allowance Recorded	2,809	2,809	2,697
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	9,926	11,056	22,942
Impaired loans without a related allowance, Avg. Loan Balance	56,346	52,356	39,466
Total impaired loans held to maturity, Avg. Loan Balance	66,272	63,412	62,408
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	19	75	457
Impaired loans without a related allowance, Interest Income Recognized	577	974	1,523
Total impaired loans held to maturity, Interest Income Recognized	596	1,049	1,980
Commercial
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	273	273	780
Impaired loans without a related allowance, Unpaid Contractual Balance	10,324	10,324	4,913
Total impaired loans held to maturity, Unpaid Contractual Balance	10,597	10,597	5,693
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	238	238	780
Impaired loans without a related allowance, Loan Balance	10,324	10,324	3,746
Total impaired loans held to maturity, Loan Balance	10,562	10,562	4,526
Impaired loans, Related Allowance Recorded	238	238	754
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	265	379	5,594
Impaired loans without a related allowance, Avg. Loan Balance	8,163	5,813	3,499
Total impaired loans held to maturity, Avg. Loan Balance	8,428	6,192	9,093
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	3	6	19
Impaired loans without a related allowance, Interest Income Recognized	141	174	101
Total impaired loans held to maturity, Interest Income Recognized	144	180	120
Commercial real estate
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	2,448	2,448	7,356
Impaired loans without a related allowance, Unpaid Contractual Balance	40,650	40,650	32,708
Total impaired loans held to maturity, Unpaid Contractual Balance	43,098	43,098	40,064
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	2,448	2,448	7,322
Impaired loans without a related allowance, Loan Balance	37,057	37,057	28,449
Total impaired loans held to maturity, Loan Balance	39,505	39,505	35,771
Impaired loans, Related Allowance Recorded	1,023	1,023	636
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	1,630	2,428	5,931
Impaired loans without a related allowance, Avg. Loan Balance	34,798	33,449	24,522
Total impaired loans held to maturity, Avg. Loan Balance	36,428	35,877	30,453
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	4	10	303
Impaired loans without a related allowance, Interest Income Recognized	366	657	1,172
Total impaired loans held to maturity, Interest Income Recognized	370	667	1,475
Commercial and commercial real estate
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	2,721	2,721	8,136
Impaired loans without a related allowance, Unpaid Contractual Balance	50,974	50,974	37,621
Total impaired loans held to maturity, Unpaid Contractual Balance	53,695	53,695	45,757
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	2,686	2,686	8,102
Impaired loans without a related allowance, Loan Balance	47,381	47,381	32,195
Total impaired loans held to maturity, Loan Balance	50,067	50,067	40,297
Impaired loans, Related Allowance Recorded	1,261	1,261	1,390
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	1,895	2,807	11,525
Impaired loans without a related allowance, Avg. Loan Balance	42,961	39,262	28,021
Total impaired loans held to maturity, Avg. Loan Balance	44,856	42,069	39,546
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	7	16	322
Impaired loans without a related allowance, Interest Income Recognized	507	831	1,273
Total impaired loans held to maturity, Interest Income Recognized	514	847	1,595
Agricultural and agricultural real estate
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	1,513	1,513	3,317
Impaired loans without a related allowance, Unpaid Contractual Balance	3,145	3,145	3,961
Total impaired loans held to maturity, Unpaid Contractual Balance	4,658	4,658	7,278
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	1,513	1,513	3,317
Impaired loans without a related allowance, Loan Balance	3,145	3,145	1,732
Total impaired loans held to maturity, Loan Balance	4,658	4,658	5,049
Impaired loans, Related Allowance Recorded	19	19	52
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	2,711	2,983	3,966
Impaired loans without a related allowance, Avg. Loan Balance	2,205	2,082	3,308
Total impaired loans held to maturity, Avg. Loan Balance	4,916	5,065	7,274
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	0	39	104
Impaired loans without a related allowance, Interest Income Recognized	46	49	13
Total impaired loans held to maturity, Interest Income Recognized	46	88	117
Residential real estate
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	2,793	2,793	2,412
Impaired loans without a related allowance, Unpaid Contractual Balance	9,380	9,380	8,200
Total impaired loans held to maturity, Unpaid Contractual Balance	12,173	12,173	10,612
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	2,624	2,624	2,244
Impaired loans without a related allowance, Loan Balance	9,304	9,304	7,991
Total impaired loans held to maturity, Loan Balance	11,928	11,928	10,235
Impaired loans, Related Allowance Recorded	411	411	442
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	2,431	2,531	3,398
Impaired loans without a related allowance, Avg. Loan Balance	8,942	8,356	6,267
Total impaired loans held to maturity, Avg. Loan Balance	11,373	10,887	9,665
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	5	9	12
Impaired loans without a related allowance, Interest Income Recognized	12	71	110
Total impaired loans held to maturity, Interest Income Recognized	17	80	122
Consumer
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Impaired loans with a related allowance, Unpaid Contractual Balance	2,972	2,972	2,799
Impaired loans without a related allowance, Unpaid Contractual Balance	2,034	2,034	3,350
Total impaired loans held to maturity, Unpaid Contractual Balance	5,006	5,006	6,149
Impaired Financing Receivable, Recorded Investment [Abstract]
Impaired loans with a related allowance, Loan Balance	2,972	2,972	2,799
Impaired loans without a related allowance, Loan Balance	2,034	2,034	3,344
Total impaired loans held to maturity, Loan Balance	5,006	5,006	6,143
Impaired loans, Related Allowance Recorded	1,118	1,118	813
Impaired Financing Receivable, Average Recorded Investment [Abstract]
Impaired loans with a related allowance, Avg. Loan Balance	2,889	2,735	4,053
Impaired loans without a related allowance, Avg. Loan Balance	2,238	2,656	1,870
Total impaired loans held to maturity, Avg. Loan Balance	5,127	5,391	5,923
Impaired Financing Receivable, Interest Income, Accrual Method [Abstract]
Impaired loans with a related allowance, Interest Income Recognized	7	11	19
Impaired loans without a related allowance, Interest Income Recognized	12	23	127
Total impaired loans held to maturity, Interest Income Recognized	$ 19	$ 34	$ 146

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Loans and Leases (Financing receivables, non accrual status) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Nonaccrual loans	$ 25,894	$ 24,205
Nonaccrual troubled debt restructured loans	816	865
Total nonaccrual loans	26,710	25,070
Accruing loans past due 90 days or more	0	0
Performing troubled debt restructured loans	$ 10,903	$ 12,133

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Derivative Financial Instruments (Derivative instruments gains and losses recognized (not designated as hedging instruments)) (Details) - Gains on Sale of Loans Held for Sale - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest rate lock commitments
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) Recognized	$ (1,712)	$ 3,435	$ 3,832	$ 5,317
Forward commitments
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) Recognized	$ 3,700	$ (1,837)	$ 3,575	$ (2,979)

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Loans and Leases (Purchased impaired loans (in text)) (Details) - Community Banc-Corp of Sheboygan, Inc. $ in Millions	Jan. 16, 2015 USD ($)
Financing Receivable, Impaired [Line Items]
Loans	$ 413.4
Estimated fair value of loans acquired	$ 395.0

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Loans and Leases (Loans and leases receivable) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	$ 4,451,294	$ 3,877,863
Unearned discount	(234)	(90)
Deferred loan fees	(1,237)	(1,028)
Total net loans and leases receivable held to maturity	4,449,823	3,876,745
Total loans covered under loss share agreements	0	1,258
Allowance for loan and lease losses	(45,614)	(41,449)
Loans and leases receivable, net	4,404,209	3,836,554
Commercial
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	1,189,626	1,036,080
Commercial real estate
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	2,010,091	1,707,060
Agricultural and agricultural real estate
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	444,110	423,827
Total loans covered under loss share agreements	0	0
Residential real estate
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	443,026	380,341
Total loans covered under loss share agreements	$ 0	1,204
Residential real estate | Minimum
Loans and Leases [Line Items]
Length of loan agreements	10 years
Residential real estate | Maximum
Loans and Leases [Line Items]
Length of loan agreements	30 years
Consumer
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	$ 364,441	330,555
Total loans covered under loss share agreements	$ 0	0
Consumer | Citizens Finance Co | Loans and Finance Receivables
Loans and Leases [Line Items]
Concentration risk, percentage	21.00%
Gross loans and leases receivable held to maturity
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	$ 4,451,294	3,877,863
Commercial and commercial real estate
Loans and Leases [Line Items]
Gross loans and leases receivable held to maturity	3,199,717	2,743,140
Total loans covered under loss share agreements	$ 0	$ 54
Commercial and commercial real estate | Minimum
Loans and Leases [Line Items]
Length of loan agreements	1 year
Commercial and commercial real estate | Maximum
Loans and Leases [Line Items]
Length of loan agreements	5 years

XML

Basis of Presentation (Additional Information) (Details) $ in Thousands	Mar. 31, 2015 USD ($)
Other Borrowings
Reclassification [Line Items]
Debt issuance cost reclassified from other assets	$ 550

XML

Fair Value (Fair value measurement non-recurring) (Details) - Nonrecurring Basis - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		$ 9,443	$ 19,345
Other real estate owned		16,983	19,016
Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		223	3,402
Other real estate owned		855	1,938
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Other real estate owned		0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Other real estate owned		0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		9,443	19,345
Other real estate owned	[1]	16,983	19,016
Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	1,033
Commercial | Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	659
Commercial | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Commercial | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Commercial | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	[1]	0	1,033
Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		4,927	12,584
Commercial real estate | Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		160	492
Commercial real estate | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Commercial real estate | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Commercial real estate | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	[1]	4,927	12,584
Agricultural and agricultural real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	552
Agricultural and agricultural real estate | Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	2,229
Agricultural and agricultural real estate | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Agricultural and agricultural real estate | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Agricultural and agricultural real estate | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	[1]	0	552
Residential real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		2,662	3,173
Residential real estate | Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		63	0
Residential real estate | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Residential real estate | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Residential real estate | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	[1]	2,662	3,173
Consumer
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		1,854	2,003
Consumer | Year-to- Date Losses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	22
Consumer | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Consumer | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans		0	0
Consumer | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	[1]	$ 1,854	$ 2,003

[1] Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

XML

Loans and Leases (Carrying amount loans not covered by loss share agreements (in text)) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Jan. 16, 2015	Dec. 31, 2014	Jul. 02, 2009
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	$ 45,614		$ 41,449
Elizabeth State Bank
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractually required payments of loans acquired				$ 42,700
Estimated fair value of loans acquired				$ 37,800
Community Banc-Corp of Sheboygan, Inc.
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractually required payments of loans acquired		$ 12,900
Estimated fair value of loans acquired		8,200
Allowance for loan and lease losses	$ 550
Contractually required payments receivable of nonimpaired loans		400,000
Estimated fair value of nonimpaired loans acquired		$ 386,800

XML

Fair Value (Estimated fair value financial instruments (incl. carrying amounts)) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financial assets:
Securities available for sale	$ 1,315,699	$ 1,401,868
Held to maturity securities	292,564	296,768
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	119,722	73,871
Time deposits in other financial institutions	2,355	2,605
Securities available for sale	523	2,529
Held to maturity securities	0	0
Other investments	0	0
Loans held for sale	0	0
Loans, net	0	0
Derivative assets	0	0
Financial liabilities:
Short term borrowings	0	0
Other borrowings	0	0
Derivative liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Demand Deposits
Financial liabilities:
Deposits	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Savings Deposits
Financial liabilities:
Deposits	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Time Deposits
Financial liabilities:
Deposits	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate lock commitments
Financial assets:
Derivative assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Forward commitments
Financial assets:
Derivative assets	0	0
Financial liabilities:
Derivative liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial
Financial assets:
Loans, net	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial real estate
Financial assets:
Loans, net	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Agricultural and agricultural real estate
Financial assets:
Loans, net	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential real estate
Financial assets:
Loans, net	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Consumer
Financial assets:
Loans, net	0	0
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and cash equivalents	0	0
Time deposits in other financial institutions	0	0
Securities available for sale	1,308,909	1,394,392
Held to maturity securities	292,564	296,768
Other investments	20,220	20,263
Loans held for sale	105,898	70,514
Loans, net	4,389,607	3,814,536
Derivative assets	1,136	0
Financial liabilities:
Short term borrowings	477,918	330,264
Other borrowings	299,845	401,978
Derivative liabilities	3,607	3,646
Significant Other Observable Inputs (Level 2) | Demand Deposits
Financial liabilities:
Deposits	1,536,355	1,295,193
Significant Other Observable Inputs (Level 2) | Savings Deposits
Financial liabilities:
Deposits	2,816,666	2,687,493
Significant Other Observable Inputs (Level 2) | Time Deposits
Financial liabilities:
Deposits	964,248	785,336
Significant Other Observable Inputs (Level 2) | Interest rate lock commitments
Financial assets:
Derivative assets	0	0
Significant Other Observable Inputs (Level 2) | Forward commitments
Financial assets:
Derivative assets	2,834	275
Financial liabilities:
Derivative liabilities	603	1,619
Significant Other Observable Inputs (Level 2) | Commercial
Financial assets:
Loans, net	1,165,559	1,008,769
Significant Other Observable Inputs (Level 2) | Commercial real estate
Financial assets:
Loans, net	1,988,708	1,687,138
Significant Other Observable Inputs (Level 2) | Agricultural and agricultural real estate
Financial assets:
Loans, net	443,725	423,416
Significant Other Observable Inputs (Level 2) | Residential real estate
Financial assets:
Loans, net	433,293	367,005
Significant Other Observable Inputs (Level 2) | Consumer
Financial assets:
Loans, net	358,322	328,208
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	0	0
Time deposits in other financial institutions	0	0
Securities available for sale	6,267	4,947
Held to maturity securities	0	0
Other investments	235	235
Loans held for sale	0	0
Loans, net	9,443	19,345
Derivative assets	0	0
Financial liabilities:
Short term borrowings	0	0
Other borrowings	0	0
Derivative liabilities	0	0
Significant Unobservable Inputs (Level 3) | Demand Deposits
Financial liabilities:
Deposits	0	0
Significant Unobservable Inputs (Level 3) | Savings Deposits
Financial liabilities:
Deposits	0	0
Significant Unobservable Inputs (Level 3) | Time Deposits
Financial liabilities:
Deposits	0	0
Significant Unobservable Inputs (Level 3) | Interest rate lock commitments
Financial assets:
Derivative assets	6,558	2,496
Significant Unobservable Inputs (Level 3) | Forward commitments
Financial assets:
Derivative assets	0	0
Financial liabilities:
Derivative liabilities	0	0
Significant Unobservable Inputs (Level 3) | Commercial
Financial assets:
Loans, net	0	1,033
Significant Unobservable Inputs (Level 3) | Commercial real estate
Financial assets:
Loans, net	4,927	12,584
Significant Unobservable Inputs (Level 3) | Agricultural and agricultural real estate
Financial assets:
Loans, net	0	552
Significant Unobservable Inputs (Level 3) | Residential real estate
Financial assets:
Loans, net	2,662	3,173
Significant Unobservable Inputs (Level 3) | Consumer
Financial assets:
Loans, net	1,854	2,003
Carrying Amount
Financial assets:
Cash and cash equivalents	119,722	73,871
Time deposits in other financial institutions	2,355	2,605
Securities available for sale	1,315,699	1,401,868
Held to maturity securities	283,258	284,587
Other investments	20,455	20,498
Loans held for sale	105,898	70,514
Loans, net	4,404,209	3,836,554
Derivative assets	1,136	0
Financial liabilities:
Short term borrowings	477,918	330,264
Other borrowings	296,594	396,255
Derivative liabilities	3,607	3,646
Carrying Amount | Demand Deposits
Financial liabilities:
Deposits	1,536,355	1,295,193
Carrying Amount | Savings Deposits
Financial liabilities:
Deposits	2,816,666	2,687,493
Carrying Amount | Time Deposits
Financial liabilities:
Deposits	964,248	785,336
Carrying Amount | Interest rate lock commitments
Financial assets:
Derivative assets	6,558	2,496
Carrying Amount | Forward commitments
Financial assets:
Derivative assets	2,834	275
Financial liabilities:
Derivative liabilities	603	1,619
Carrying Amount | Commercial
Financial assets:
Loans, net	1,176,157	1,024,065
Carrying Amount | Commercial real estate
Financial assets:
Loans, net	1,991,799	1,690,899
Carrying Amount | Agricultural and agricultural real estate
Financial assets:
Loans, net	440,864	420,623
Carrying Amount | Residential real estate
Financial assets:
Loans, net	438,184	377,094
Carrying Amount | Consumer
Financial assets:
Loans, net	357,205	323,873
Estimated Fair Value
Financial assets:
Cash and cash equivalents	119,722	73,871
Time deposits in other financial institutions	2,355	2,605
Securities available for sale	1,315,699	1,401,868
Held to maturity securities	292,564	296,768
Other investments	20,455	20,498
Loans held for sale	105,898	70,514
Loans, net	4,399,050	3,833,881
Derivative assets	1,136	0
Financial liabilities:
Short term borrowings	477,918	330,264
Other borrowings	299,845	401,978
Derivative liabilities	3,607	3,646
Estimated Fair Value | Demand Deposits
Financial liabilities:
Deposits	1,536,355	1,295,193
Estimated Fair Value | Savings Deposits
Financial liabilities:
Deposits	2,816,666	2,687,493
Estimated Fair Value | Time Deposits
Financial liabilities:
Deposits	964,248	785,336
Estimated Fair Value | Interest rate lock commitments
Financial assets:
Derivative assets	6,558	2,496
Estimated Fair Value | Forward commitments
Financial assets:
Derivative assets	2,834	275
Financial liabilities:
Derivative liabilities	603	1,619
Estimated Fair Value | Commercial
Financial assets:
Loans, net	1,165,559	1,009,802
Estimated Fair Value | Commercial real estate
Financial assets:
Loans, net	1,993,635	1,699,722
Estimated Fair Value | Agricultural and agricultural real estate
Financial assets:
Loans, net	443,725	423,968
Estimated Fair Value | Residential real estate
Financial assets:
Loans, net	435,955	370,178
Estimated Fair Value | Consumer
Financial assets:
Loans, net	$ 360,176	$ 330,211

XML

Segment Reporting (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) segment	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			2
Segment Reporting Information [Line Items]
Net interest income	$ 57,644	$ 50,799	$ 111,574	$ 99,411
Provision for loan losses	5,674	2,751	7,345	9,082
Total noninterest income	30,661	21,535	61,324	40,385
Total noninterest expense	63,482	54,659	123,096	107,197
INCOME BEFORE INCOME TAXES	19,149	14,924	42,457	23,517
Average Loans, for the period	4,447,124	3,692,159	4,357,855	3,631,977
Segment Assets, at period end	6,717,007	5,913,918	6,717,007	5,913,918	$ 6,051,812
Operating Segments | Community and Other Banking
Segment Reporting Information [Line Items]
Net interest income	55,988	50,285	108,877	98,140
Provision for loan losses	5,674	2,751	7,345	9,082
Total noninterest income	15,603	11,991	32,664	23,517
Total noninterest expense	48,987	43,543	96,446	85,880
INCOME BEFORE INCOME TAXES	16,930	15,982	37,750	26,695
Average Loans, for the period	4,340,289	3,621,543	4,265,624	3,575,284
Segment Assets, at period end	6,579,225	5,799,636	6,579,225	5,799,636
Operating Segments | Retail Mortgage Banking
Segment Reporting Information [Line Items]
Net interest income	1,656	514	2,697	1,271
Provision for loan losses	0	0	0	0
Total noninterest income	15,058	9,544	28,660	16,868
Total noninterest expense	14,495	11,116	26,650	21,317
INCOME BEFORE INCOME TAXES	2,219	(1,058)	4,707	(3,178)
Average Loans, for the period	106,835	70,616	92,231	56,693
Segment Assets, at period end	$ 137,782	$ 114,282	$ 137,782	$ 114,282

XML

Derivative Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Cash pledged as collateral	$ 3,000	$ 5,300
Back-to-back Loan Swaps
Derivative [Line Items]
Derivative, notional amount	16,200
Back-to-back Loan Swaps | Other Assets
Derivative [Line Items]
Derivative assets, fair value	193
Back-to-back Loan Swaps | Other Liabilities
Derivative [Line Items]
Derivative liabilities, fair value	$ 193
Fair Value Hedge | Interest Rate Swap
Derivative [Line Items]
Derivative, fixed interest rate	3.40%
Derivative, basis spread on LIBOR	0.88%
Derivative, notional amount	$ 13,800
Cash pledged as collateral	414
Derivative liabilities, fair value	$ 3

XML

Goodwill, Core Deposit Premium and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

The gross carrying amount of other intangible assets and the associated accumulated amortization at June 30, 2015, and December 31, 2014, are presented in the table below, in thousands:

	June 30, 2015						December 31, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	27,109	$	13,849	$	13,260	$	21,069	$	12,525	$	8,544
Mortgage servicing rights	41,458		13,819		27,639		37,825		12,841		24,984
Customer relationship intangible	1,177		794		383		1,177		773		404
Commercial servicing rights	4,396		452		3,944		—		—		—
Total	$	74,140	$	28,914	$	45,226	$	60,071	$	26,139	$	33,932

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:

	Core Deposit Intangibles		Mortgage Servicing Rights		Customer Relationship Intangible		Commercial Servicing Rights		Total
Six months ending December 31, 2015	$	1,374	$	4,368	$	21	$	421	$	6,184
Year ending December 31,
2016	2,467		5,818		41		821		9,147
2017	2,180		4,987		40		769		7,976
2018	1,925		4,156		39		676		6,796
2019	1,667		3,324		38		504		5,533
2020	1,423		2,493		37		314		4,267
Thereafter	2,224		2,493		167		439		5,323

Schedule of Servicing Assets at Fair Value

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	24,984		$	21,788
Originations	7,015			3,344
Amortization	(4,360		)	(2,355		)
Balance at June 30	$	27,639		$	22,777
Fair value of mortgage servicing rights	$	36,971		$	31,471
Mortgage servicing rights, net to servicing portfolio	0.73		%	0.71		%

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	—		$	—
Acquired	4,255			—
Originations	141			—
Amortization	(452		)	—
Balance at June 30	$	3,944		$	—

XML

Loans and Leases (Troubled debt in text) (Details) - loans	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Receivables [Abstract]
Number of troubled debt restructured loans with payment default	0	0	0	0
Financing Receivable, Recorded Investment [Line Items]
Number of loans classified as doubtful or loss	0		0
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Number of loans classified as doubtful or loss	0		0

XML

Securities (Available for sale securities losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	$ 465,913	$ 334,291
Less than 12 months, Unrealized Losses	(8,687)	(7,412)
12 months or longer, Fair Value	138,327	326,585
12 months or longer, Unrealized Losses	(2,450)	(4,899)
Total, Fair Value	604,240	660,876
Total, Unrealized Losses	(11,137)	(12,311)
U.S. government corporations and agencies
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	0	6,042
Less than 12 months, Unrealized Losses	0	(15)
12 months or longer, Fair Value	0	0
12 months or longer, Unrealized Losses	0	0
Total, Fair Value	0	6,042
Total, Unrealized Losses	0	(15)
Mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	390,432	327,363
Less than 12 months, Unrealized Losses	(7,343)	(7,391)
12 months or longer, Fair Value	128,712	306,078
12 months or longer, Unrealized Losses	(2,017)	(4,577)
Total, Fair Value	519,144	633,441
Total, Unrealized Losses	(9,360)	(11,968)
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	75,481	886
Less than 12 months, Unrealized Losses	(1,344)	(6)
12 months or longer, Fair Value	9,615	20,507
12 months or longer, Unrealized Losses	(433)	(322)
Total, Fair Value	85,096	21,393
Total, Unrealized Losses	$ (1,777)	$ (328)

XML

Fair Value (Changes Level 3 assets (fair value, recurring)) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Interest rate lock commitments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at January 1	$ 2,496	$ 1,809
Total gains (losses):
Included in earnings	3,832	2,422
Purchases, sales and settlements:
Issuances	2,530	2,038
Settlements	(2,300)	(3,773)
Balance at period end	6,558	2,496
Gain (loss) on sale of loans held-for-sale	6,600	2,500
Z-Tranche Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at January 1	4,947	3,298
Total gains (losses):
Included in earnings	0	0
Included in other comprehensive income	696	1,783
Purchases, sales and settlements:
Purchases	6	0
Sales	0	0
Settlements	(122)	(134)
Balance at period end	5,527	4,947
Corporate Debt Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at January 1	0	0
Total gains (losses):
Included in earnings	0	0
Included in other comprehensive income	0	0
Purchases, sales and settlements:
Purchases	0	0
Acquired	740	0
Sales	0	0
Settlements	0	0
Balance at period end	$ 740	$ 0

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Securities (Securities available for sale) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,308,488	$ 1,396,794
Gross Unrealized Gains	18,348	17,385
Gross Unrealized Losses	(11,137)	(12,311)
Estimated Fair Value	1,315,699	1,401,868
Debt Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,303,443	1,391,765
Gross Unrealized Gains	18,287	17,331
Gross Unrealized Losses	(11,137)	(12,311)
Estimated Fair Value	1,310,593	1,396,785
U.S. government corporations and agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	15,701	24,010
Gross Unrealized Gains	101	98
Gross Unrealized Losses	0	(15)
Estimated Fair Value	15,802	24,093
Mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,101,835	1,219,305
Gross Unrealized Gains	15,575	11,929
Gross Unrealized Losses	(9,360)	(11,968)
Estimated Fair Value	1,108,050	1,219,266
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	185,167	148,450
Gross Unrealized Gains	2,611	5,304
Gross Unrealized Losses	(1,777)	(328)
Estimated Fair Value	186,001	153,426
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	740	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	740	0
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,045	5,029
Gross Unrealized Gains	61	54
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 5,106	$ 5,083

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Loans and Leases (Loans and leases not covered by share agreements (in text)) (Details)	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans delinquent 30 to 89 days, percentage	0.31%	0.21%
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Percent of loans	66.00%	66.00%
Substandard
Financing Receivable, Recorded Investment [Line Items]
Percent of loans	34.00%	34.00%
Nonpass
Financing Receivable, Recorded Investment [Line Items]
Percent of nonaccrual loans	8.00%	9.00%

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Derivative Financial Instruments (Balance sheet category and fair values of derivative instruments (cash flow hedges)) (Details) - Interest Rate Swap - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 9,667	$ 10,369
Fair Value	$ (159)	$ (248)
Receive Rate	2.937%	2.915%
Weighted Average Pay Rate	5.14%	5.14%
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 25,000	$ 25,000
Fair Value	$ (523)	$ (534)
Receive Rate	0.283%	0.243%
Weighted Average Pay Rate	2.255%	2.255%
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000	$ 20,000
Fair Value	$ (877)	$ (1,046)
Receive Rate	0.283%	0.234%
Weighted Average Pay Rate	3.22%	3.22%
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000	$ 20,000
Fair Value	$ (1,680)	$ (1,748)
Receive Rate	0.271%	0.232%
Weighted Average Pay Rate	3.355%	3.355%
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 10,000	$ 10,000
Fair Value	$ (86)	$ (35)
Receive Rate	0.281%	0.255%
Weighted Average Pay Rate	1.674%	1.674%
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	$ 10,000	$ 10,000
Fair Value	$ (86)	$ (35)
Receive Rate	0.283%	0.243%
Weighted Average Pay Rate	1.658%	1.658%
Other Assets
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000
Fair Value	$ 491
Receive Rate	1.70%
Weighted Average Pay Rate	2.39%
Other Assets
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000
Fair Value	$ 452
Receive Rate	1.676%
Weighted Average Pay Rate	2.352%

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Goodwill, Core Deposit Premium and Other Intangible Assets (Estimated future amortization expense for amortizable intangible assets) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2015	$ 6,184
Year ending December 31, 2016	9,147
Year ending December 31, 2017	7,976
Year ending December 31, 2018	6,796
Year ending December 31, 2019	5,533
Year ending December 31, 2020	4,267
Thereafter	5,323
Core deposit intangibles
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2015	1,374
Year ending December 31, 2016	2,467
Year ending December 31, 2017	2,180
Year ending December 31, 2018	1,925
Year ending December 31, 2019	1,667
Year ending December 31, 2020	1,423
Thereafter	2,224
Mortgage servicing rights
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2015	4,368
Year ending December 31, 2016	5,818
Year ending December 31, 2017	4,987
Year ending December 31, 2018	4,156
Year ending December 31, 2019	3,324
Year ending December 31, 2020	2,493
Thereafter	2,493
Customer relationship intangible
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2015	21
Year ending December 31, 2016	41
Year ending December 31, 2017	40
Year ending December 31, 2018	39
Year ending December 31, 2019	38
Year ending December 31, 2020	37
Thereafter	167
Commercial servicing rights
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2015	421
Year ending December 31, 2016	821
Year ending December 31, 2017	769
Year ending December 31, 2018	676
Year ending December 31, 2019	504
Year ending December 31, 2020	314
Thereafter	$ 439

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Loans and Leases (Allowance for credit losses on financing receivables) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	$ 2,809		$ 2,697
Ending Balance Under ASC 450-20	42,805		38,752
Total	45,614	$ 41,854	41,449	$ 40,892	$ 38,573	$ 41,685
Ending Balance Evaluated for Impairment Under ASC 310-10-35	71,659		61,724
Ending Balance Evaluated for Impairment Under ASC 450-20	4,379,635		3,816,139
Total	4,451,294		3,877,863
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	238		754
Ending Balance Under ASC 450-20	12,826		11,155
Total	13,064	11,688	11,909	11,927	11,633	13,099
Ending Balance Evaluated for Impairment Under ASC 310-10-35	10,562		4,526
Ending Balance Evaluated for Impairment Under ASC 450-20	1,179,064		1,031,554
Total	1,189,626		1,036,080
Commercial real estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	1,023		636
Ending Balance Under ASC 450-20	16,585		15,262
Total	17,608	16,635	15,898	14,680	13,010	14,152
Ending Balance Evaluated for Impairment Under ASC 310-10-35	39,505		35,771
Ending Balance Evaluated for Impairment Under ASC 450-20	1,970,586		1,671,289
Total	2,010,091		1,707,060
Agricultural and agricultural real estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	19		52
Ending Balance Under ASC 450-20	3,657		3,243
Total	3,676	3,216	3,295	2,788	2,571	2,992
Ending Balance Evaluated for Impairment Under ASC 310-10-35	4,658		5,049
Ending Balance Evaluated for Impairment Under ASC 450-20	439,452		418,778
Total	444,110		423,827
Residential real estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	411		442
Ending Balance Under ASC 450-20	3,688		3,299
Total	4,099	3,745	3,741	3,815	3,671	3,720
Ending Balance Evaluated for Impairment Under ASC 310-10-35	11,928		10,235
Ending Balance Evaluated for Impairment Under ASC 450-20	431,098		370,106
Total	443,026		380,341
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending Balance Under ASC 310-10-35	1,118		813
Ending Balance Under ASC 450-20	6,049		5,793
Total	7,167	$ 6,570	6,606	$ 7,516	$ 7,376	$ 7,722
Ending Balance Evaluated for Impairment Under ASC 310-10-35	5,006		6,143
Ending Balance Evaluated for Impairment Under ASC 450-20	359,435		324,412
Total	$ 364,441		$ 330,555

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Consolidated Statements of Changes in Equity (Unaudited) (Parentheticals) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Statement of Stockholders' Equity [Abstract]
Cash dividends per share preferred stock (in dollars per share)	$ 5.00	$ 5.00
Cash dividends per share common stock (in dollars per share)	$ 0.20	$ 0.20
Shares of common stock purchased	36,176	23,350
Shares of common stock issued	2,139,376	91,840

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Goodwill, Core Deposit Premium and Other Intangible Assets (Mortgage loans servicing) (Details) - USD ($)		6 Months Ended		12 Months Ended
	Jan. 16, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Valuation servicing rights in tranches [Line Items]
Mortgage loans serviced for others		$ 3,790,000,000		$ 3,500,000,000
Valuation allowance		0
Mortgage Servicing Rights
Valuation servicing rights in tranches [Line Items]
Servicing asset at amortized value		36,971,000	$ 31,471,000	34,200,000
Valuation allowance for servicing rights portfolio		$ 0		$ 0
Prepayment rate		11.43%		11.40%
Discount rate		9.22%		9.20%
Fees collected for servicing of mortgage loans		$ 5,000,000	$ 4,200,000
Mortgage Servicing Rights | Minimum
Valuation servicing rights in tranches [Line Items]
Average cap rate		0.65%		0.75%
Mortgage Servicing Rights | Maximum
Valuation servicing rights in tranches [Line Items]
Average cap rate		1.38%		1.39%
Mortgage Servicing Rights 15-year Tranche
Valuation servicing rights in tranches [Line Items]
Servicing asset, agreement term		15 years
Mortgage Servicing Rights 30-year Tranche
Valuation servicing rights in tranches [Line Items]
Servicing asset, agreement term		30 years
Commercial Servicing Rights
Valuation servicing rights in tranches [Line Items]
Servicing asset at amortized value		$ 4,600,000
Valuation allowance for servicing rights portfolio		$ 0		$ 0
Fees collected for servicing of mortgage loans	$ 360,000
Loans serviced for Small Business Administration and US Department of Agriculture	$ 159,600,000

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Securities (Held to maturity securities losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	$ 26,655	$ 3,172
Less than 12 months, Unrealized Losses	(466)	(422)
12 months or longer, Fair Value	19,238	32,163
12 months or longer, Unrealized Losses	(1,887)	(1,190)
Total, Fair Value	45,893	35,335
Total, Unrealized Losses	(2,353)	(1,612)
Mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	0	0
Less than 12 months, Unrealized Losses	0	0
12 months or longer, Fair Value	1,914	2,761
12 months or longer, Unrealized Losses	(816)	(667)
Total, Fair Value	1,914	2,761
Total, Unrealized Losses	(816)	(667)
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	26,655	3,172
Less than 12 months, Unrealized Losses	(466)	(422)
12 months or longer, Fair Value	17,324	29,402
12 months or longer, Unrealized Losses	(1,071)	(523)
Total, Fair Value	43,979	32,574
Total, Unrealized Losses	$ (1,537)	$ (945)

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Basis of Presentation (Earnings per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share
Net income attributable to Heartland	$ 15,160	$ 10,774	$ 30,869	$ 17,664
Preferred dividends and discount	(204)	(204)	(408)	(408)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 14,956	$ 10,570	$ 30,461	$ 17,256
Weighted average common shares outstanding for basic earnings per share	20,599	18,458	20,408	18,448
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	278	289	274	291
Weighted average common shares for diluted earnings per share	20,877	18,747	20,682	18,739
Earnings per common share — basic (in dollars per share)	$ 0.73	$ 0.57	$ 1.49	$ 0.94
Earnings per common share — diluted (in dollars per share)	$ 0.72	$ 0.56	$ 1.47	$ 0.92
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	0	95	0	95

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting

The following tables present financial information from Heartland's operating segments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands.

	Three Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	55,988	$	1,656	$	57,644	$	50,285	$	514		$	50,799
Provision for loan losses	5,674		—		5,674		2,751		—			2,751
Total noninterest income	15,603		15,058		30,661		11,991		9,544			21,535
Total noninterest expense	48,987		14,495		63,482		43,543		11,116			54,659
Income (loss) before taxes	$	16,930	$	2,219	$	19,149	$	15,982	$	(1,058	)	$	14,924
Average Loans, for the period	$	4,340,289	$	106,835	$	4,447,124	$	3,621,543	$	70,616		$	3,692,159
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918
	Six Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	108,877	$	2,697	$	111,574	$	98,140	$	1,271		$	99,411
Provision for loan losses	7,345		—		7,345		9,082		—			9,082
Total noninterest income	32,664		28,660		61,324		23,517		16,868			40,385
Total noninterest expense	96,446		26,650		123,096		85,880		21,317			107,197
Income (loss) before taxes	$	37,750	$	4,707	$	42,457	$	26,695	$	(3,178	)	$	23,517
Average Loans, for the period	$	4,265,624	$	92,231	$	4,357,855	$	3,575,284	$	56,693		$	3,631,977
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918

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Loans and Leases (Carrying amount loans not covered by loss share agreements) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	$ 7,755
Non Impaired Purchased Loans	338,264
Total Purchased Loans	346,019
Commercial
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	0
Non Impaired Purchased Loans	82,415
Total Purchased Loans	82,415
Commercial real estate
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	7,755
Non Impaired Purchased Loans	211,377
Total Purchased Loans	219,132
Agricultural and agricultural real estate
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	0
Non Impaired Purchased Loans	2,937
Total Purchased Loans	2,937
Residential real estate
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	0
Non Impaired Purchased Loans	23,419
Total Purchased Loans	23,419
Consumer
Loans covered by loss share agreement (carrying amount) [Line Items]
Impaired Purchased Loans	0
Non Impaired Purchased Loans	18,116
Total Purchased Loans	$ 18,116

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Securities (Other-than-temporary impairments) (Details)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2012 USD ($) securities	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Investments, Debt and Equity Securities [Abstract]
OTTI write-downs included in earnings, available for sale debt securities	$ 184,000			$ 184,000		$ 184,000
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of investments with OTTI | securities	3
OTTI write-downs included in earnings, held to maturity debt securities	$ 797,000
Gross realized gains (losses) on sale of available for sale securities with OTTI write-downs				0		0
Recorded as part of gross realized losses: Credit related OTTI		$ 0	$ 0	0	$ 0
Recorded as part of gross realized losses: Intent to sell OTTI		0	0	0	0
Total recorded as part of gross realized losses	$ 981,000	0	0	0	0
Recorded directly to AOCI for non-credit related impairment: Residential mortgage backed securities		0	0	0	0
Recorded directly to AOCI for non-credit related impairment: Accretion of non-credit related impairment		(24,000)	(24,000)	(48,000)	(48,000)
Total changes to AOCI for non-credit related impairment		(24,000)	(24,000)	(48,000)	(48,000)
Total OTTI losses (accretion) recorded on debt securities, net		(24,000)	$ (24,000)	(48,000)	$ (48,000)
Held-to-maturity Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Credit related OTTI		797,000		797,000		797,000
Non-credit related OTTI		$ 374,000		$ 374,000		$ 422,000

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Basis of Presentation (Stock-Based Compensation) (Details)				6 Months Ended
	Mar. 10, 2015 shares	Jan. 20, 2015 shares	Mar. 11, 2014 shares	Jun. 30, 2015 USD ($) equal_installments $ / shares shares	Jun. 30, 2014 USD ($) $ / shares shares
Stock-Based Compensation
Tax benefit (expense) from equity based awards				$ 651,000	$ 119,000
Options granted (in shares) | shares				0	0
Vested options (in shares) | shares				156,951	250,436
Vested options, weighted average exercise price (in dollars per share) | $ / shares				$ 24.18	$ 23.62
Vested options, weighted average remaining contractual life				1 year 8 months 5 days
Intrinsic value for vested options				$ 2,000,000
Intrinsic value for the total of all options exercised				$ 508,000
Maximum exercise period				10 years
Cash received from options exercised				$ 1,300,000	$ 96,000
Restricted Stock Units (RSUs)
Stock-Based Compensation
Share-based compensation costs				1,900,000	1,800,000
Share-based unrecognized compensation costs				4,600,000
Stock Option
Stock-Based Compensation
Share-based compensation costs				0	$ 0
Share-based unrecognized compensation costs				$ 0
Options granted (in shares) | shares				0	0
Stock Option | Prior to 2009
Stock-Based Compensation
Share-based compensation, award vesting periods				5 years
Typical options expiration period after date of grant				10 years
Stock Option | Prior to 2009 | Period One
Stock-Based Compensation
Share-based compensation, award vesting periods				3 years
Stock Option | Prior to 2009 | Period Two
Stock-Based Compensation
Share-based compensation, award vesting periods				4 years
Stock Option | Prior to 2009 | Period Three
Stock-Based Compensation
Share-based compensation, award vesting periods				5 years
Long-Term Incentive Plan 2012
Stock-Based Compensation
Number of shares for issuance under future awards | shares				265,153
Long-Term Incentive Plan 2005 | Restricted Stock Units (RSUs)
Stock-Based Compensation
Equity instruments other than options, granted (in shares) | shares		78,220	67,190	22,648	31,525
Share-based compensation, award vesting periods				5 years
Award vesting, number of equal installments | equal_installments				3
Long-Term Incentive Plan 2005 | Performance-Based Restricted Stock Units
Stock-Based Compensation
Equity instruments other than options, granted (in shares) | shares	39,075		32,645

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Basis of Presentation (Summary of RSUs Activity) (Details) - Restricted Stock Units (RSUs) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Shares
Outstanding at beginning of period (in shares)	396,555	353,070
Granted (in shares)	139,943	131,235
Vested (in shares)	(151,681)	(73,224)
Forfeited (in shares)	(11,198)	(3,901)
Outstanding at end of period (in shares)	373,619	407,180
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 21.48	$ 18.48
Granted (in dollars per share)	28.90	26.69
Vested (in dollars per share)	17.98	16.65
Forfeited (in dollars per share)	25.14	19.10
Outstanding at end of period (in dollars per share)	$ 25.55	$ 21.53

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Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]
Balance at beginning of period at Dec. 31, 2013	$ 439,460	$ 81,698	$ 18,399	$ 91,632	$ 265,067	$ (17,336)	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	35,289				17,664	17,625
Cash dividends declared:
Preferred	(408)				(408)
Common	(3,691)				(3,691)
Purchase of shares of common stock	(608)						(608)
Issuance of shares of common stock	548		69	(129)			608
Commitments to issue common stock	1,831			1,831
Balance at end of period at Jun. 30, 2014	472,421	81,698	18,468	93,334	278,632	289	0
Balance at beginning of period at Dec. 31, 2014	496,317	81,698	18,511	95,816	298,764	1,528	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	32,400				30,869	1,531
Cash dividends declared:
Preferred	(408)				(408)
Common	(4,119)				(4,119)
Purchase of shares of common stock	(2,173)						(2,173)
Issuance of shares of common stock	55,281		2,105	51,065			2,111
Commitments to issue common stock	1,908			1,908
Balance at end of period at Jun. 30, 2015	$ 579,206	$ 81,698	$ 20,616	$ 148,789	$ 325,106	$ 3,059	$ (62)

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Basis of Presentation (Summary of Stock Options Activity) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Shares
Outstanding at beginning of period (in shares)	215,851	261,936
Granted (in shares)	0	0
Exercised (in shares)	(56,650)	(5,000)
Forfeited (in shares)	(2,250)	(6,500)
Outstanding at end of period (in shares)	156,951	250,436
Options exercisable at end of period (in shares)	156,951	250,436
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 23.85	$ 23.60
Granted (in dollars per share)	0.00	0.00
Exercised (in dollars per share)	22.85	19.13
Forfeited (in dollars per share)	23.88	26.39
Outstanding at end of period (in dollars per share)	24.18	23.62
Options exercisable at end of period (in dollars per share)	$ 24.18	$ 23.62

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Securities (Securities held to maturity (debt maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Amortized Cost
Due in 1 year or less	$ 3,092
Due in 1 to 5 years	13,827
Due in 5 to 10 years	59,866
Due after 10 years	200,918
Total debt securities	277,703
Mortgage-backed securities	5,555
Amortized Cost	283,258	$ 284,587
Estimated Fair Value
Due in 1 year or less	3,153
Due in 1 to 5 years	14,462
Due in 5 to 10 years	62,268
Due after 10 years	207,676
Total debt securities	287,559
Mortgage-backed securities	5,005
Estimated Fair Value	$ 292,564	$ 296,768

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Loans and Leases (Loans and leases not covered by share agreements (past due financing receivables)) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 12,463	$ 6,306
60-89 Days Past Due	1,375	2,020
90 Days or More Past Due	0	0
Total Past Due	13,838	8,326
Current	4,410,746	3,844,467
Nonaccrual	26,710	25,070
Total	4,451,294	3,877,863
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	3,583	980
60-89 Days Past Due	8	48
90 Days or More Past Due	0	0
Total Past Due	3,591	1,028
Current	1,183,033	1,032,707
Nonaccrual	3,002	2,345
Total	1,189,626	1,036,080
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	3,384	1,788
60-89 Days Past Due	111	111
90 Days or More Past Due	0	0
Total Past Due	3,495	1,899
Current	1,995,011	1,693,554
Nonaccrual	11,585	11,607
Total	2,010,091	1,707,060
Commercial and commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	6,967	2,768
60-89 Days Past Due	119	159
90 Days or More Past Due	0	0
Total Past Due	7,086	2,927
Current	3,178,044	2,726,261
Nonaccrual	14,587	13,952
Total	3,199,717	2,743,140
Agricultural and agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	671	119
60-89 Days Past Due	386	50
90 Days or More Past Due	0	0
Total Past Due	1,057	169
Current	441,896	422,219
Nonaccrual	1,157	1,439
Total	444,110	423,827
Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	1,694	1,037
60-89 Days Past Due	152	445
90 Days or More Past Due	0	0
Total Past Due	1,846	1,482
Current	432,648	371,982
Nonaccrual	8,532	6,877
Total	443,026	380,341
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	3,131	2,382
60-89 Days Past Due	718	1,366
90 Days or More Past Due	0	0
Total Past Due	3,849	3,748
Current	358,158	324,005
Nonaccrual	2,434	2,802
Total	$ 364,441	$ 330,555

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Fair Value (Fair value measurement recurring) (Details) - USD ($) $ in Thousands		Jun. 30, 2015		Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		$ 1,315,699		$ 1,401,868
U.S. government corporations and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		15,802		24,093
Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		1,108,050		1,219,266
Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		186,001		153,426
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		740		0
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		5,106		5,083
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		523		2,529
Derivative assets		0		0
Derivative liabilities		0		0
Level 1 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Level 1 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Derivative liabilities		0		0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		1,308,909		1,394,392
Derivative assets		1,136		0
Derivative liabilities		3,607		3,646
Level 2 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Level 2 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		2,834		275
Derivative liabilities		603		1,619
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		6,267		4,947
Derivative assets		0		0
Derivative liabilities		0		0
Level 3 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		6,558		2,496
Level 3 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Derivative liabilities		0		0
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value		1,326,227		1,404,639
Total liabilities at fair value		4,210		5,265
Recurring Basis | Derivative financial instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		1,136
Derivative liabilities		3,607		3,646
Recurring Basis | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		6,558		2,496
Recurring Basis | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		2,834		275
Derivative liabilities		603		1,619
Recurring Basis | U.S. government corporations and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		15,802		24,093
Recurring Basis | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		1,108,050		1,219,266
Recurring Basis | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		186,001		153,426
Recurring Basis | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		740		0
Recurring Basis | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		5,106		5,083
Recurring Basis | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value		523		2,529
Total liabilities at fair value		0		0
Recurring Basis | Level 1 | Derivative financial instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0
Derivative liabilities		0		0
Recurring Basis | Level 1 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Recurring Basis | Level 1 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Derivative liabilities		0		0
Recurring Basis | Level 1 | U.S. government corporations and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		523		2,529
Recurring Basis | Level 1 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 1 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 1 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 1 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value		1,312,879		1,394,667
Total liabilities at fair value		4,210		5,265
Recurring Basis | Level 2 | Derivative financial instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		1,136
Derivative liabilities		3,607		3,646
Recurring Basis | Level 2 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Recurring Basis | Level 2 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		2,834		275
Derivative liabilities		603		1,619
Recurring Basis | Level 2 | U.S. government corporations and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		15,279		21,564
Recurring Basis | Level 2 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		1,102,523		1,214,319
Recurring Basis | Level 2 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		186,001		153,426
Recurring Basis | Level 2 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 2 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		5,106		5,083
Recurring Basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value		12,825		7,443
Total liabilities at fair value		0		0
Recurring Basis | Level 3 | Derivative financial instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0
Derivative liabilities		0		0
Recurring Basis | Level 3 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		6,558	[1]	2,496	[2]
Recurring Basis | Level 3 | Forward commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0		0
Derivative liabilities		0		0
Recurring Basis | Level 3 | U.S. government corporations and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 3 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		5,527		4,947
Recurring Basis | Level 3 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		0		0
Recurring Basis | Level 3 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	[3]	740		0
Recurring Basis | Level 3 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale		$ 0		$ 0

[1] The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at June 30, 2015, was 86%.

[2] The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at December 31, 2014, was 84%.

[3] The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 111,909	$ 64,150
Federal funds sold and other short-term investments	7,813	9,721
Cash and cash equivalents	119,722	73,871
Time deposits in other financial institutions	2,355	2,605
Securities:
Available for sale, at fair value (cost of $1,308,488 at June 30, 2015, and $1,396,794 at December 31, 2014)	1,315,699	1,401,868
Held to maturity, at cost (fair value of $292,564 at June 30, 2015, and $296,768 at December 31, 2014)	283,258	284,587
Other investments, at cost	20,455	20,498
Loans held for sale	105,898	70,514
Loans and leases receivable:
Held to maturity	4,449,823	3,876,745
Loans covered by loss share agreements	0	1,258
Allowance for loan and lease losses	(45,614)	(41,449)
Loans and leases receivable, net	4,404,209	3,836,554
Premises, furniture and equipment, net	143,423	130,713
Other real estate, net	16,983	19,016
Goodwill	54,162	35,583
Other intangible assets, net	45,226	33,932
Cash surrender value on life insurance	96,693	82,638
Other assets	108,924	59,433
TOTAL ASSETS	6,717,007	6,051,812
Deposits:
Demand	1,536,355	1,295,193
Savings	2,816,666	2,687,493
Time	964,248	785,336
Total deposits	5,317,269	4,768,022
Short-term borrowings	477,918	330,264
Other borrowings	296,594	395,705
Accrued expenses and other liabilities	46,020	61,504
TOTAL LIABILITIES	6,137,801	5,555,495
STOCKHOLDERS' EQUITY:
Common stock (par value $1 per share; authorized 30,000,000 shares at June 30, 2015, and 25,000,000 shares at December 31, 2014; issued 20,616,068 shares at June 30, 2015, and 18,511,125 shares at December 31, 2014)	20,616	18,511
Capital surplus	148,789	95,816
Retained earnings	325,106	298,764
Accumulated other comprehensive income	3,059	1,528
Treasury stock at cost (1,743 shares at June 30, 2015 and 0 at December 31, 2014)	(62)	0
TOTAL STOCKHOLDERS' EQUITY	579,206	496,317
TOTAL LIABILITIES AND EQUITY	6,717,007	6,051,812
Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series C Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	$ 81,698	$ 81,698

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Securities (Other securities) (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Investment [Line Items]
FHLB	$ 14.6	$ 14.3
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Investment [Line Items]
Percentage of mortgage-backed securities issued by government-sponsored enterprises	84.00%

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 15,160	$ 10,774	$ 30,869	$ 17,664
Securities:
Net change in unrealized gain (loss) on securities	(2,764)	9,772	8,714	30,682
Reclassification adjustment for net gains realized in net income	(3,110)	(854)	(7,463)	(1,635)
Net change in non-credit related other than temporary impairment	24	24	48	48
Income taxes	2,361	(3,523)	(498)	(11,482)
Other comprehensive income (loss) on securities	(3,489)	5,419	801	17,613
Derivatives used in cash flow hedging relationships:
Net change in unrealized loss on derivatives	1,509	(936)	55	(1,075)
Reclassification adjustment for net loss on derivatives realized in net income	559	573	1,123	1,094
Income taxes	(775)	135	(448)	(7)
Other comprehensive income (loss) on cash flow hedges	1,293	(228)	730	12
Other comprehensive income (loss)	(2,196)	5,191	1,531	17,625
TOTAL COMPREHENSIVE INCOME	$ 12,964	$ 15,965	$ 32,400	$ 35,289

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Goodwill, Core Deposit Premium and Other Intangible Assets (Goodwill) (Details) - USD ($) $ in Thousands	Jan. 16, 2015	Jun. 30, 2015	Dec. 31, 2014
Goodwill [Line Items]
Goodwill		$ 54,162	$ 35,583
Community Banc-Corp of Sheboygan, Inc.
Goodwill [Line Items]
Goodwill	$ 18,579
Community Banc-Corp of Sheboygan, Inc. | Core Deposits
Goodwill [Line Items]
Intangibles recognized	$ 6,000
Intangibles, amortization period	10 years
Community Banc-Corp of Sheboygan, Inc. | Commercial Servicing Rights
Goodwill [Line Items]
Intangibles recognized	$ 4,300

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Acquisitions (Acquisition, Fair Values) (Details) - USD ($) $ in Thousands	Jan. 16, 2015	Jun. 30, 2015	Dec. 31, 2014
Fair value of liabilities assumed
Goodwill resulting from acquisition		$ 54,162	$ 35,583
Community Banc-Corp of Sheboygan, Inc.
Fair value of consideration paid
Common Stock	$ 53,052
Cash	6
Total consideration paid	53,058
Fair value of assets acquired
Cash and due from banks	7,109
Securities:
Securities available for sale	52,976
Other securities	1,284
Loans held for sale	728
Loans held to maturity	395,007
Premises, furniture and equipment, net	13,954
Other real estate, net	346
Other intangible assets, net	10,295
Other assets	25,066
Total assets	506,765
Fair value of liabilities assumed
Deposits	433,919
Short term borrowings	24,836
Other borrowings	6,097
Other liabilities	7,434
Total liabilities assumed	472,286
Fair value of net assets acquired	34,479
Goodwill resulting from acquisition	$ 18,579

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Derivative Financial Instruments (Estimated cash payments and reclassification to interest expense) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Change in net unrealized losses on cash flow hedges	$ 1.1
Estimated amount to be reclassified from accumulated other comprehensive income to interest expense within the next twelve months	$ 2.2

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Securities (Tables)

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
U.S. government corporations and agencies	$	15,701	$	101	$	—		$	15,802
Mortgage-backed securities	1,101,835		15,575		(9,360		)	1,108,050
Obligations of states and political subdivisions	185,167		2,611		(1,777		)	186,001
Corporate debt securities	740		—		—			740
Total debt securities	1,303,443		18,287		(11,137		)	1,310,593
Equity securities	5,045		61		—			5,106
Total	$	1,308,488	$	18,348	$	(11,137	)	$	1,315,699
December 31, 2014
U.S. government corporations and agencies	$	24,010	$	98	$	(15	)	$	24,093
Mortgage-backed securities	1,219,305		11,929		(11,968		)	1,219,266
Obligations of states and political subdivisions	148,450		5,304		(328		)	153,426
Corporate debt securities	—		—		—			—
Total debt securities	1,391,765		17,331		(12,311		)	1,396,785
Equity securities	5,029		54		—			5,083
Total	$	1,396,794	$	17,385	$	(12,311	)	$	1,401,868

Held-to-maturity Securities

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
Mortgage-backed securities	$	5,555	$	266	$	(816	)	$	5,005
Obligations of states and political subdivisions	277,703		11,393		(1,537		)	287,559
Total	$	283,258	$	11,659	$	(2,353	)	$	292,564
December 31, 2014
Mortgage-backed securities	$	5,734	$	217	$	(667	)	$	5,284
Obligations of states and political subdivisions	278,853		13,576		(945		)	291,484
Total	$	284,587	$	13,793	$	(1,612	)	$	296,768

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of debt securities available for sale at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,378	$	3,394
Due in 1 to 5 years	22,352		22,274
Due in 5 to 10 years	40,102		40,078
Due after 10 years	135,776		136,797
Total debt securities	201,608		202,543
Mortgage-backed securities	1,101,835		1,108,050
Equity securities	5,045		5,106
Total investment securities	$	1,308,488	$	1,315,699

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,092	$	3,153
Due in 1 to 5 years	13,827		14,462
Due in 5 to 10 years	59,866		62,268
Due after 10 years	200,918		207,676
Total debt securities	277,703		287,559
Mortgage-backed securities	5,555		5,005
Total investment securities	$	283,258	$	292,564

Schedule of Realized Gain (Loss)

Gross gains and losses realized related to the sales of securities available for sale for the three- and six-month periods ended June 30, 2015 and 2014, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Proceeds from sales	$	270,688	$	154,603	$	526,026	$	509,891
Gross security gains	3,819		974		8,441		3,446
Gross security losses	709		120		978		1,811

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value

The following tables summarize, in thousands, the amount of unrealized losses, defined as the amount by which cost or amortized cost exceeds fair value, and the related fair value of investments with unrealized losses in Heartland's securities portfolio as of June 30, 2015, and December 31, 2014. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining how long an investment was in an unrealized loss position was June 30, 2014, and December 31, 2013, respectively. Securities for which Heartland has taken credit-related OTTI write-downs are categorized as being "less than 12 months" or "12 months or longer" in a continuous loss position based on the point in time that the fair value declined to below the cost basis and not the period of time since the credit-related OTTI write-down.

Securities available for sale	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
U.S. government corporations and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities	390,432		(7,343		)	128,712		(2,017		)	519,144		(9,360		)
Obligations of states and political subdivisions	75,481		(1,344		)	9,615		(433		)	85,096		(1,777		)
Total temporarily impaired securities	$	465,913	$	(8,687	)	$	138,327	$	(2,450	)	$	604,240	$	(11,137	)
December 31, 2014
U.S. government corporations and agencies	$	6,042	$	(15	)	$	—	$	—		$	6,042	$	(15	)
Mortgage-backed securities	327,363		(7,391		)	306,078		(4,577		)	633,441		(11,968		)
Obligations of states and political subdivisions	886		(6		)	20,507		(322		)	21,393		(328		)
Total temporarily impaired securities	$	334,291	$	(7,412	)	$	326,585	$	(4,899	)	$	660,876	$	(12,311	)

Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value

Securities held to maturity	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
Mortgage-backed securities	$	—	$	—		$	1,914	$	(816	)	$	1,914	$	(816	)
Obligations of states and political subdivisions	26,655		(466		)	17,324		(1,071		)	43,979		(1,537		)
Total temporarily impaired securities	$	26,655	$	(466	)	$	19,238	$	(1,887	)	$	45,893	$	(2,353	)
December 31, 2014
Mortgage-backed securities	$	—	$	—		$	2,761	$	(667	)	$	2,761	$	(667	)
Obligations of states and political subdivisions	3,172		(422		)	29,402		(523		)	32,574		(945		)
Total temporarily impaired securities	$	3,172	$	(422	)	$	32,163	$	(1,190	)	$	35,335	$	(1,612	)

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table shows the detail of OTTI write-downs on debt securities included in earnings and the related changes in other accumulated comprehensive income ("AOCI") for the same securities, in thousands:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Recorded as part of gross realized losses:
Credit related OTTI	$	—		$	—		$	—		$	—
Intent to sell OTTI	—			—			—			—
Total recorded as part of gross realized losses	—			—			—			—
Recorded directly to AOCI for non-credit related impairment:
Residential mortgage backed securities	—			—			—			—
Accretion of non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total changes to AOCI for non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total OTTI losses (accretion) recorded on debt securities, net	$	(24	)	$	(24	)	$	(48	)	$	(48	)

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Acquisitions (Pro Forma) (Details) - Community Banc-Corp of Sheboygan, Inc. - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Net interest income	$ 220,358	$ 179,001
Net income	$ 44,710	$ 42,105
Basic earnings per share (in usd per share)	$ 2.19	$ 2.20
Diluted earnings per share (in usd per share)	$ 2.16	$ 2.17

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Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2015

Allowance for Loan and Lease Losses [Abstract]

Allowance for Credit Losses on Financing Receivables

Changes in the allowance for loan and lease losses for the six months ended June 30, 2015, and June 30, 2014, were as follows, in thousands:

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at March 31,2015	$	11,688		$	16,635		$	3,216		$	3,745		$	6,570		$	—	$	41,854
Charge-offs	(682		)	(371		)	(275		)	(55		)	(1,351		)	—		(2,734		)
Recoveries	111			370			2			70			267			—		820
Provision	1,947			974			733			339			1,681			—		5,674
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at December 31, 2014	$	11,909		$	15,898		$	3,295		$	3,741		$	6,606		$	—	$	41,449
Charge-offs	(956		)	(704		)	(551		)	(113		)	(2,414		)	—		(4,738		)
Recoveries	431			496			24			107			500			—		1,558
Provision	1,680			1,918			908			364			2,475			—		7,345
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at March 31, 2014	$	11,633		$	13,010		$	2,571		$	3,671		$	7,376		$	312		$	38,573
Charge-offs	(148		)	(161		)	(125		)	(55		)	(911		)	—			(1,400		)
Recoveries	208			514			2			30			214			—			968
Provision	234			1,317			340			169			837			(146		)	2,751
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at December 31, 2013	$	13,099		$	14,152		$	2,992		$	3,720		$	7,722		$	—		$	41,685
Charge-offs	(7,065		)	(1,084		)	(1,636		)	(204		)	(2,069		)	—			(12,058		)
Recoveries	407			1,294			4			56			422			—			2,183
Provision	5,486			318			1,428			243			1,441			166			9,082
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892

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Derivative Financial Instruments (Gains (losses) recognized on derivatives (cash flow hedges)) (Details) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	$ 50	$ 44	$ 89	$ 95
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(56)	(64)	(113)	(129)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	387	(372)		(310)
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(126)	(129)		(129)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	124	65	11	179
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(150)	(151)	(252)	(302)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	252	(159)	169	(240)
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(155)	(156)	(301)	(315)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	57	(86)	68	(41)
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(36)	(37)	(315)	(37)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	55	(85)	(51)	(40)
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	(36)	(36)	(71)	(36)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	584	0	(51)	146
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	0	0	(71)	(146)
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	559		452
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	0		0
Interest Expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)			491
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)			0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0	0	0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0		0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0	0	0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0	0	0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0	0	0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	0	0	0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	0	$ 0	0	$ 0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	$ 0		0
Other Income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)			$ 0

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 30,869	$ 17,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,174	8,547
Provision for loan and lease losses	7,345	9,082
Net amortization of premium on securities	14,645	12,497
Securities gains, net	(7,463)	(1,635)
Decrease in trading account securities	0	1,801
Stock based compensation	1,908	1,831
Write downs and losses on repossessed assets, net	924	921
Loans originated for sale	(724,081)	(402,605)
Proceeds on sales of loans held for sale	710,753	377,272
Net gains on sale of loans held for sale	(21,328)	(15,175)
Decrease in accrued interest receivable	1,478	616
(Increase) decrease in prepaid expenses	100	(698)
Decrease in accrued interest payable	(867)	(908)
Capitalization of servicing rights	(7,156)	(3,344)
Write downs and losses on sales of assets, net	938	0
Other, net	(10,275)	1,644
NET CASH PROVIDED BY OPERATING ACTIVITIES	8,964	7,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of securities available for sale	526,026	509,891
Proceeds from the sale of other investments	10,336	7,356
Proceeds from the maturity of and principal paydowns on securities available for sale	86,625	72,651
Proceeds from the maturity of and principal paydowns on securities held to maturity	646	619
Proceeds from the maturity of and principal paydowns on time deposits in other financial institutions	250	250
Purchase of securities available for sale	(529,670)	(349,740)
Purchase of securities held to maturity	0	(20,944)
Purchase of other investments	(9,009)	(6,445)
Net increase in loans and leases	(184,039)	(212,384)
Purchase of bank owned life insurance policies	(1,100)	0
Capital expenditures	(3,984)	(4,205)
Net cash and cash equivalents received in acquisition	7,103	0
Proceeds from the sale of equipment	15	0
Proceeds on sale of OREO and other repossessed assets	5,402	10,663
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES	(91,399)	7,712
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits and savings accounts	64,348	4,664
Net increase (decrease) in time deposit accounts	50,980	(29,681)
Net increase in short-term borrowings	86,718	20,738
Proceeds from short term FHLB advances	248,100	170,000
Repayments of short term FHLB advances	(212,000)	(179,000)
Proceeds from other borrowings	29,000	5,000
Repayments of other borrowings	(134,389)	(25,394)
Purchase of treasury stock	(2,173)	(608)
Proceeds from issuance of common stock	1,578	429
Excess tax benefits on exercised stock options	651	119
Dividends paid	(4,527)	(4,099)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES	128,286	(37,832)
Net increase (decrease) in cash and cash equivalents	45,851	(22,610)
Cash and cash equivalents at beginning of year	73,871	125,270
CASH AND CASH EQUIVALENTS AT END OF PERIOD	119,722	102,660
Supplemental disclosures:
Cash paid for income/franchise taxes	6,969	1,641
Cash paid for interest	20,836	18,034
Loans transferred to OREO	4,046	6,097
Purchases of securities available for sale, accrued, not paid	0	11,175
Sales of securities available for sale, accrued, not settled	34,129	0
Stock consideration granted for acquisition	$ 53,052	$ 0

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Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Cost of available for sale securities	$ 1,308,488	$ 1,396,794
Fair value of held to maturity securities	$ 292,564	$ 296,768
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	30,000,000	25,000,000
Common stock, shares issued	20,616,068	18,511,125
Treasury stock shares	1,743	0
Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	20,604	20,604
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	16,000	16,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series C Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	81,698	81,698
Preferred stock, shares issued	81,698	81,698
Preferred stock, shares outstanding	81,698	81,698
Preferred stock, liquidation value	$ 81,700	$ 81,700

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Fair Value

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value

FAIR VALUE

Heartland utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale, trading securities and derivatives are recorded in the consolidated balance sheets at fair value on a recurring basis. Additionally, from time to time, Heartland may be required to record at fair value other assets on a nonrecurring basis such as loans held for sale, loans held to maturity and certain other assets including, but not limited to, mortgage servicing rights, commercial servicing rights and other real estate owned. These nonrecurring fair value adjustments typically involve application of lower of cost or fair value accounting or write-downs of individual assets.

Fair Value Hierarchy

Under ASC 820, assets and liabilities are grouped at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 — Valuation is based upon quoted prices for identical instruments in active markets.

Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, or similar instruments in markets that are not active, and model-based valuation techniques for all significant assumptions are observable in the market.

Level 3 — Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring or non-recurring basis.

Assets

Securities Available for Sale and Held to Maturity

Securities available for sale are recorded at fair value on a recurring basis. Securities held to maturity are generally recorded at cost and are recorded at fair value only to the extent a decline in fair value is determined to be other-than-temporary. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, as well as U.S. Treasury securities. Level 2 securities include U.S. government and agency securities, mortgage-backed securities and private collateralized mortgage obligations, municipal bonds and corporate debt securities. Level 3 securities consist primarily of Z-TRANCHE mortgage-backed securities and corporate debt securities. On a quarterly basis, a secondary independent pricing service is used for a sample of securities to validate the pricing from Heartland's primary pricing service.

Trading Assets

Trading assets are recorded at fair value and consist of securities held for trading purposes. The valuation method for trading securities is the same as the methodology used for securities classified as available for sale.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value on an aggregate basis. The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, Heartland classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2.

Loans Held to Maturity

Heartland does not record loans held to maturity at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC 310. The fair value of impaired loans is measured using one of the following impairment methods: 1) the present value of expected future cash flows discounted at the loan's effective interest rate or 2) the observable market price of the loan or 3) the fair value of the collateral if the loan is collateral dependent. In accordance with ASC 820, impaired loans measured at fair value are classified as nonrecurring Level 3 in the fair value hierarchy.

Mortgage Servicing Rights

Mortgage servicing rights assets represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. Heartland uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its mortgage servicing rights. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a fair value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. Heartland classifies mortgage servicing rights as nonrecurring with Level 3 measurement inputs.

Commercial Servicing Rights

Commercial servicing rights assets represent the value associated with servicing commercial loans that have been sold to Small Business Administration and United States Department of Agriculture with servicing retained. Heartland uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its commercial servicing rights. The fair value for servicing assets is determined through market prices for comparable servicing contracts, when available, or through a valuation model that calculates the present value of estimated future net servicing income. Inputs utilized include discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Commercial servicing rights are subject to impairment testing, and the carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. If the valuation model reflects a fair value less than the carrying value, commercial servicing rights are adjusted to fair value through a valuation allowance. Heartland classifies commercial servicing rights as nonrecurring with Level 3 measurement inputs.

Derivative Financial Instruments

Heartland's current interest rate risk strategy includes interest rate swaps. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. To comply with the provisions of ASC 820, Heartland incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, Heartland has considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although Heartland has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2015, and December 31, 2014, Heartland has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, Heartland has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Interest rate lock commitments

Heartland uses an internal valuation model that relies on internally developed inputs to estimate the fair value of its interest rate lock commitments which is based on unobservable inputs that reflect management's assumptions and specific information about each borrower. Interest rate lock commitments are classified in Level 3 of the fair value hierarchy.

Forward commitments

The fair value of forward commitments are estimated using an internal valuation model, which includes current trade pricing for similar financial instruments in active markets that Heartland has the ability to access and are classified in Level 2 of the fair value hierarchy.

Other Real Estate Owned

Other real estate owned ("OREO") represents property acquired through foreclosures and settlements of loans. Property acquired is carried at the fair value of the property at the time of acquisition (representing the property's cost basis), plus any acquisition costs, or the estimated fair value of the property, less disposal costs. Heartland considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling OREO, in determining the fair value of particular properties. Accordingly, the valuation of OREO is subject to significant external and internal judgment. Heartland periodically reviews OREO to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. OREO is classified as nonrecurring Level 3.

The table below presents Heartland's assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2015, and December 31, 2014, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:

	Total Fair Value		Level 1		Level 2		Level 3
June 30, 2015
Assets
Securities available for sale
U.S. government corporations and agencies	$	15,802	$	523	$	15,279	$	—
Mortgage-backed securities	1,108,050		—		1,102,523		5,527
Obligations of states and political subdivisions	186,001		—		186,001		—
Corporate debt securities	740		—		—		740
Equity securities	5,106		—		5,106		—
Derivative financial instruments	1,136		—		1,136		—
Interest rate lock commitments	6,558		—		—		6,558
Forward commitments	2,834		—		2,834		—
Total assets at fair value	$	1,326,227	$	523	$	1,312,879	$	12,825
Liabilities
Derivative financial instruments	$	3,607	$	—	$	3,607	$	—
Forward commitments	603		—		603		—
Total liabilities at fair value	$	4,210	$	—	$	4,210	$	—
December 31, 2014
Assets
Securities available for sale
U.S. government corporations and agencies	$	24,093	$	2,529	$	21,564	$	—
Mortgage-backed securities	1,219,266		—		1,214,319		4,947
Obligations of states and political subdivisions	153,426		—		153,426		—
Corporate debt securities	—		—		—		—
Equity securities	5,083		—		5,083		—
Interest rate lock commitments	2,496		—		—		2,496
Forward commitments	275		—		275		—
Total assets at fair value	$	1,404,639	$	2,529	$	1,394,667	$	7,443
Liabilities
Derivative financial instruments	$	3,646	$	—	$	3,646	$	—
Forward commitments	1,619		—		1,619		—
Total liabilities at fair value	$	5,265	$	—	$	5,265	$	—

The tables below present Heartland's assets that are measured at fair value on a nonrecurring basis, in thousands:

	Fair Value Measurements at June 30, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial real estate	4,927		—		—		4,927		160
Agricultural and agricultural real estate	—		—		—		—		—
Residential real estate	2,662		—		—		2,662		63
Consumer	1,854		—		—		1,854		—
Total collateral dependent impaired loans	$	9,443	$	—	$	—	$	9,443	$	223
Other real estate owned	$	16,983	$	—	$	—	$	16,983	$	855

	Fair Value Measurements at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	1,033	$	—	$	—	$	1,033	$	659
Commercial real estate	12,584		—		—		12,584		492
Agricultural and agricultural real estate	552		—		—		552		2,229
Residential real estate	3,173		—		—		3,173		—
Consumer	2,003		—		—		2,003		22
Total collateral dependent impaired loans	$	19,345	$	—	$	—	$	19,345	$	3,402
Other real estate owned	$	19,016	$	—	$	—	$	19,016	$	1,938

The following tables present additional quantitative information about assets measured at fair value and for which Heartland has utilized Level 3 inputs to determine fair value, in thousands:

	Fair Value at 6/30/15		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	5,527	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	16.29 - 36.53% (29.70%)
				Actual deferrals	5.60 - 27.01% (17.21%)
Corporate debt securities	740		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	6,558		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	4,927		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	2,662		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	1,854		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	16,983		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at June 30, 2015, was 86%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

	Fair Value at 12/31/14		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	4,947	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	15.60 - 30.60% (24.50%)
				Actual deferrals	7.20 - 17.30% (12.90%)
Corporate debt securities	—		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	2,496		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	1,033		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	12,584		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	552		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	3,173		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	2,003		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	19,016		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at December 31, 2014, was 84%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

The changes in fair value of the Z-TRANCHE, a Level 3 asset, that is measured on a recurring basis are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	4,947		$	3,298
Total gains (losses):
Included in earnings	—			—
Included in other comprehensive income	696			1,783
Purchases, sales and settlements:
Purchases	6			—
Sales	—			—
Settlements	(122		)	(134		)
Balance at period end	$	5,527		$	4,947

The changes in fair value of the corporate debt securities, Level 3 assets, that are measured on a recurring basis is summarized in the following table, in thousands:

	For the Six Months Ended  June 30, 2015		For the Year Ended December 31, 2014
Balance at January 1,	$	—	$	—
Total gains (losses):
Included in earnings	—		—
Included in other comprehensive income	—		—
Purchases, acquired, sales and settlements:
Purchases	—		—
Acquired	740		—
Sales	—		—
Settlements	—		—
Balance at period end	$	740	$	—

The changes in fair value of the interest rate lock commitments, which are Level 3 financial instruments and are measured on a recurring basis, are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	2,496		$	1,809
Total gains (losses) included in earnings	3,832			2,422
Issuances	2,530			2,038
Settlements	(2,300		)	(3,773		)
Balance at period end	$	6,558		$	2,496

Gains included in net gains on sale of loans held for sale attributable to interest rate lock commitments held at June 30, 2015, and December 31, 2014, were $6.6 million and $2.5 million, respectively.

The tables below summarize the estimated fair value of Heartland's financial instruments as defined by ASC 825 as of June 30, 2015, and December 31, 2014, in thousands. The carrying amounts in the following tables are recorded in the consolidated balance sheets under the indicated captions. In accordance with ASC 825, the assets and liabilities that are not financial instruments are not included in the disclosure, such as the value of the mortgage servicing rights, premises, furniture and equipment, goodwill and other intangibles and other liabilities.

Heartland does not believe that the estimated information presented herein is representative of the earnings power or value of Heartland. The following analysis, which is inherently limited in depicting fair value, also does not consider any value associated with either existing customer relationships or the ability of Heartland to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

					Fair Value Measurements at June 30, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	119,722	$	119,722	$	119,722	$	—	$	—
Time deposits in other financial institutions	2,355		2,355		2,355		—		—
Securities:
Available for sale	1,315,699		1,315,699		523		1,308,909		6,267
Held to maturity	283,258		292,564		—		292,564		—
Other investments	20,455		20,455		—		20,220		235
Loans held for sale	105,898		105,898		—		105,898		—
Loans, net:
Commercial	1,176,157		1,165,559		—		1,165,559		—
Commercial real estate	1,991,799		1,993,635		—		1,988,708		4,927
Agricultural and agricultural real estate	440,864		443,725		—		443,725		—
Residential real estate	438,184		435,955		—		433,293		2,662
Consumer	357,205		360,176		—		358,322		1,854
Total Loans, net	4,404,209		4,399,050		—		4,389,607		9,443
Derivative financial instruments	1,136		1,136		—		1,136		—
Interest rate lock commitments	6,558		6,558		—		—		6,558
Forward commitments	2,834		2,834		—		2,834		—
Financial liabilities:
Deposits
Demand deposits	1,536,355		1,536,355		—		1,536,355		—
Savings deposits	2,816,666		2,816,666		—		2,816,666		—
Time deposits	964,248		964,248		—		964,248		—
Short term borrowings	477,918		477,918		—		477,918		—
Other borrowings	296,594		299,845		—		299,845		—
Derivative financial instruments	3,607		3,607		—		3,607		—
Forward commitments	603		603		—		603		—

					Fair Value Measurements at December 31, 2014
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	73,871	$	73,871	$	73,871	$	—	$	—
Time deposits in other financial institutions	2,605		2,605		2,605		—		—
Securities:
Available for sale	1,401,868		1,401,868		2,529		1,394,392		4,947
Held to maturity	284,587		296,768		—		296,768		—
Other investments	20,498		20,498		—		20,263		235
Loans held for sale	70,514		70,514		—		70,514		—
Loans, net:
Commercial	1,024,065		1,009,802		—		1,008,769		1,033
Commercial real estate	1,690,899		1,699,722		—		1,687,138		12,584
Agricultural and agricultural real estate	420,623		423,968		—		423,416		552
Residential real estate	377,094		370,178		—		367,005		3,173
Consumer	323,873		330,211		—		328,208		2,003
Total Loans, net	3,836,554		3,833,881		—		3,814,536		19,345
Derivative financial instruments	—		—		—		—		—
Interest rate lock commitments	2,496		2,496		—		—		2,496
Forward commitments	275		275		—		275		—
Financial liabilities:
Deposits
Demand deposits	1,295,193		1,295,193		—		1,295,193		—
Savings deposits	2,687,493		2,687,493		—		2,687,493		—
Time deposits	785,336		785,336		—		785,336		—
Short term borrowings	330,264		330,264		—		330,264		—
Other borrowings	396,255		401,978		—		401,978		—
Derivative financial instruments	3,646		3,646		—		3,646		—
Forward commitments	1,619		1,619		—		1,619		—

Cash and Cash Equivalents — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments.

Time Deposits in Other Financial Institutions — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments.

Securities —For securities either held to maturity, available for sale or trading, fair value equals quoted market price if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. For Level 3 securities, Heartland utilizes independent pricing provided by third party vendors or brokers.

Other Investments — Fair value measurement of other investments, which consists primarily of FHLB stock, are based on their redeemable value, which is at cost due to the restrictions placed on their transferability. The market for these securities is restricted to the issuer of the stock and subject to impairment evaluation.

Loans and Leases—The fair value of loans is estimated using an entrance price concept by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value of impaired loans is measured using the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the underlying collateral. The fair value of loans held for sale is estimated using quoted market prices.

Interest Rate Lock Commitments — The fair value of interest rate lock commitments is estimated using an internal valuation model, which includes grouping the interest rate lock commitments by interest rate and terms, applying an estimated closing ratio based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms, and rate lock expiration dates of the loan commitment group.

Forward Commitments — The fair value of these instruments is estimated using an internal valuation model, which includes current trade pricing for similar financial instruments.

Derivative Financial Instruments — The fair value of all derivatives is estimated based on the amount that Heartland would pay or would be paid to terminate the contract or agreement, using current rates and, when appropriate, the current creditworthiness of the counter-party.

Deposits — The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. If the fair value of the fixed maturity certificates of deposit is calculated at less than the carrying amount, the carrying value of these deposits is reported as the fair value.

Short-term and Other Borrowings—Rates currently available to Heartland for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Commitments to Extend Credit, Unused Lines of Credit and Standby Letters of Credit — Based upon management's analysis of the off balance sheet financial instruments, there are no significant unrealized gains or losses associated with these financial instruments based upon review of the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 04, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	HEARTLAND FINANCIAL USA INC
Entity Central Index Key	0000920112
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		20,627,937

XML

Segment Reporting

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

Heartland has identified two operating segments for purposes of financial reporting: community and other banking, and retail mortgage banking. These segments were determined based on the products and services provided or the type of customers served and are consistent with the information used by Heartland's key decision makers to make operating decisions and to assess Heartland's performance. The following tables present financial information from Heartland's operating segments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands.

	Three Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	55,988	$	1,656	$	57,644	$	50,285	$	514		$	50,799
Provision for loan losses	5,674		—		5,674		2,751		—			2,751
Total noninterest income	15,603		15,058		30,661		11,991		9,544			21,535
Total noninterest expense	48,987		14,495		63,482		43,543		11,116			54,659
Income (loss) before taxes	$	16,930	$	2,219	$	19,149	$	15,982	$	(1,058	)	$	14,924
Average Loans, for the period	$	4,340,289	$	106,835	$	4,447,124	$	3,621,543	$	70,616		$	3,692,159
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918
	Six Months Ended June 30,
	2015						2014
	Community and Other Banking		Retail Mortgage Banking		Total		Community and Other Banking		Retail Mortgage Banking			Total
Net interest income	$	108,877	$	2,697	$	111,574	$	98,140	$	1,271		$	99,411
Provision for loan losses	7,345		—		7,345		9,082		—			9,082
Total noninterest income	32,664		28,660		61,324		23,517		16,868			40,385
Total noninterest expense	96,446		26,650		123,096		85,880		21,317			107,197
Income (loss) before taxes	$	37,750	$	4,707	$	42,457	$	26,695	$	(3,178	)	$	23,517
Average Loans, for the period	$	4,265,624	$	92,231	$	4,357,855	$	3,575,284	$	56,693		$	3,631,977
Segment Assets, at period end	$	6,579,225	$	137,782	$	6,717,007	$	5,799,636	$	114,282		$	5,913,918

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
INTEREST INCOME:
Interest and fees on loans and leases	$ 55,824	$ 48,101	$ 108,873	$ 94,485
Interest on securities:
Taxable	6,739	7,447	13,871	15,208
Nontaxable	2,874	3,708	5,790	6,830
Interest on federal funds sold	1	0	2	0
Interest on interest bearing deposits in other financial institutions	3	7	7	14
TOTAL INTEREST INCOME	65,441	59,263	128,543	116,537
INTEREST EXPENSE:
Interest on deposits	3,819	4,577	7,991	9,355
Interest on short-term borrowings	212	202	410	428
Interest on other borrowings (includes $559 and $573 of interest expense related to derivatives reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $1,123 and $1,094 of interest expense related to derivatives reclassified from accumulated other comprehensive income for the six months ended June 30, 2015 and 2014, respectively)	3,766	3,685	8,568	7,343
TOTAL INTEREST EXPENSE	7,797	8,464	16,969	17,126
NET INTEREST INCOME	57,644	50,799	111,574	99,411
Provision for loan and lease losses	5,674	2,751	7,345	9,082
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES	51,970	48,048	104,229	90,329
NONINTEREST INCOME:
Service charges and fees	5,900	5,254	11,304	10,150
Loan servicing income	1,163	1,393	2,204	2,904
Trust fees	3,913	3,343	7,544	6,553
Brokerage and insurance commissions	916	1,158	2,003	2,281
Securities gains, net (includes $3,110 and $854 of net security gains reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $7,463 and $1,635 of net security gains reclassified from accumulated other comprehensive income for six months ended June 30, 2015 and 2014, respectively)	3,110	854	7,463	1,635
Gain (loss) on trading account securities	0	0	0	(38)
Net gains on sale of loans held for sale	14,599	8,796	28,341	15,175
Income on bank owned life insurance	459	339	983	702
Other noninterest income	601	398	1,482	1,023
TOTAL NONINTEREST INCOME	30,661	21,535	61,324	40,385
NONINTEREST EXPENSES:
Salaries and employee benefits	36,851	32,563	73,489	64,882
Occupancy	4,028	3,984	8,287	8,034
Furniture and equipment	2,176	2,085	4,282	3,975
Professional fees	5,249	4,214	11,293	8,740
FDIC insurance assessments	899	980	1,855	1,960
Advertising	1,333	1,511	2,514	2,699
Intangible assets amortization	715	591	1,346	1,215
Other real estate and loan collection expenses	753	518	1,218	1,570
Loss on sales/valuations of assets, net	1,509	1,379	1,862	1,542
Other noninterest expenses	9,969	6,834	16,950	12,580
TOTAL NONINTEREST EXPENSES	63,482	54,659	123,096	107,197
INCOME BEFORE INCOME TAXES	19,149	14,924	42,457	23,517
Income taxes (includes $952 and $105 of income tax expense reclassified from accumulated other comprehensive income for the three months ended June 30, 2015 and 2014, respectively, and $2,365 and $202 of income tax expense reclassified from accumulated other comprehensive income for the six months ended June 30, 2015 and 2014, respectively)	3,989	4,150	11,588	5,853
NET INCOME	15,160	10,774	30,869	17,664
Preferred dividends and discount	(204)	(204)	(408)	(408)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 14,956	$ 10,570	$ 30,461	$ 17,256
EARNINGS PER COMMON SHARE - BASIC (in dollars per share)	$ 0.73	$ 0.57	$ 1.49	$ 0.94
EARNINGS PER COMMON SHARE - DILUTED (in dollars per share)	0.72	0.56	1.47	0.92
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)	$ 0.10	$ 0.10	$ 0.20	$ 0.20

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Securities

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Securities

SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
U.S. government corporations and agencies	$	15,701	$	101	$	—		$	15,802
Mortgage-backed securities	1,101,835		15,575		(9,360		)	1,108,050
Obligations of states and political subdivisions	185,167		2,611		(1,777		)	186,001
Corporate debt securities	740		—		—			740
Total debt securities	1,303,443		18,287		(11,137		)	1,310,593
Equity securities	5,045		61		—			5,106
Total	$	1,308,488	$	18,348	$	(11,137	)	$	1,315,699
December 31, 2014
U.S. government corporations and agencies	$	24,010	$	98	$	(15	)	$	24,093
Mortgage-backed securities	1,219,305		11,929		(11,968		)	1,219,266
Obligations of states and political subdivisions	148,450		5,304		(328		)	153,426
Corporate debt securities	—		—		—			—
Total debt securities	1,391,765		17,331		(12,311		)	1,396,785
Equity securities	5,029		54		—			5,083
Total	$	1,396,794	$	17,385	$	(12,311	)	$	1,401,868

At both June 30, 2015, and December 31, 2014, the amortized cost of the available for sale securities is net of $184,000 of credit related other-than-temporary impairment ("OTTI").

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2015, and December 31, 2014, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2015
Mortgage-backed securities	$	5,555	$	266	$	(816	)	$	5,005
Obligations of states and political subdivisions	277,703		11,393		(1,537		)	287,559
Total	$	283,258	$	11,659	$	(2,353	)	$	292,564
December 31, 2014
Mortgage-backed securities	$	5,734	$	217	$	(667	)	$	5,284
Obligations of states and political subdivisions	278,853		13,576		(945		)	291,484
Total	$	284,587	$	13,793	$	(1,612	)	$	296,768

At June 30, 2015, the amortized cost of the held to maturity securities is net of $797,000 of credit related OTTI and $374,000 of non-credit related OTTI. At December 31, 2014, the amortized cost of the held to maturity securities was net of $797,000 of credit related OTTI and $422,000 of non-credit related OTTI.

Approximately 84% of Heartland's mortgage-backed securities are issuances of government-sponsored enterprises.

The amortized cost and estimated fair value of debt securities available for sale at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,378	$	3,394
Due in 1 to 5 years	22,352		22,274
Due in 5 to 10 years	40,102		40,078
Due after 10 years	135,776		136,797
Total debt securities	201,608		202,543
Mortgage-backed securities	1,101,835		1,108,050
Equity securities	5,045		5,106
Total investment securities	$	1,308,488	$	1,315,699

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2015, by contractual maturity are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,092	$	3,153
Due in 1 to 5 years	13,827		14,462
Due in 5 to 10 years	59,866		62,268
Due after 10 years	200,918		207,676
Total debt securities	277,703		287,559
Mortgage-backed securities	5,555		5,005
Total investment securities	$	283,258	$	292,564

Gross gains and losses realized related to the sales of securities available for sale for the three- and six-month periods ended June 30, 2015 and 2014, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Proceeds from sales	$	270,688	$	154,603	$	526,026	$	509,891
Gross security gains	3,819		974		8,441		3,446
Gross security losses	709		120		978		1,811

The following tables summarize, in thousands, the amount of unrealized losses, defined as the amount by which cost or amortized cost exceeds fair value, and the related fair value of investments with unrealized losses in Heartland's securities portfolio as of June 30, 2015, and December 31, 2014. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining how long an investment was in an unrealized loss position was June 30, 2014, and December 31, 2013, respectively. Securities for which Heartland has taken credit-related OTTI write-downs are categorized as being "less than 12 months" or "12 months or longer" in a continuous loss position based on the point in time that the fair value declined to below the cost basis and not the period of time since the credit-related OTTI write-down.

Securities available for sale	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
U.S. government corporations and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities	390,432		(7,343		)	128,712		(2,017		)	519,144		(9,360		)
Obligations of states and political subdivisions	75,481		(1,344		)	9,615		(433		)	85,096		(1,777		)
Total temporarily impaired securities	$	465,913	$	(8,687	)	$	138,327	$	(2,450	)	$	604,240	$	(11,137	)
December 31, 2014
U.S. government corporations and agencies	$	6,042	$	(15	)	$	—	$	—		$	6,042	$	(15	)
Mortgage-backed securities	327,363		(7,391		)	306,078		(4,577		)	633,441		(11,968		)
Obligations of states and political subdivisions	886		(6		)	20,507		(322		)	21,393		(328		)
Total temporarily impaired securities	$	334,291	$	(7,412	)	$	326,585	$	(4,899	)	$	660,876	$	(12,311	)

Securities held to maturity	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2015
Mortgage-backed securities	$	—	$	—		$	1,914	$	(816	)	$	1,914	$	(816	)
Obligations of states and political subdivisions	26,655		(466		)	17,324		(1,071		)	43,979		(1,537		)
Total temporarily impaired securities	$	26,655	$	(466	)	$	19,238	$	(1,887	)	$	45,893	$	(2,353	)
December 31, 2014
Mortgage-backed securities	$	—	$	—		$	2,761	$	(667	)	$	2,761	$	(667	)
Obligations of states and political subdivisions	3,172		(422		)	29,402		(523		)	32,574		(945		)
Total temporarily impaired securities	$	3,172	$	(422	)	$	32,163	$	(1,190	)	$	35,335	$	(1,612	)

Heartland reviews the investment securities portfolio on a quarterly basis to monitor its exposure to OTTI. A determination as to whether a security's decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors Heartland may consider in the OTTI analysis include the length of time the security has been in an unrealized loss position, changes in security ratings, financial condition of the issuer, as well as security and industry specific economic conditions. In addition, with regard to debt securities, Heartland may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral. For certain debt securities in unrealized loss positions, Heartland prepares cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. During 2012, Heartland experienced deterioration in the credit support on three private label mortgage-backed securities which resulted in a credit-related OTTI loss. The underlying collateral on these securities experienced an increased level of defaults and a slowing of voluntary prepayments causing the present value of the forward expected cash flows, using prepayment and default vectors, to be below the amortized cost basis of the securities. Based on Heartland's evaluation, a $981,000 OTTI on three private label mortgage-backed securities attributable to credit-related losses was recorded in March 2012. The other-than-temporary credit-related losses were $797,000 in the held to maturity category and $184,000 in the available for sale category.

The remaining unrealized losses on Heartland's mortgage-backed securities are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities and not related to concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that the securities will not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.

Unrealized losses on Heartland's obligations of states and political subdivisions are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities. Management monitors the credit quality and financial stability of the underlying municipalities. Because the decline in fair value is attributable to changes in interest rates or widening market spreads due to insurance company downgrades and not underlying credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.

There were no gross realized gains or losses on the sale of available for sale securities with OTTI write-downs for the periods ended June 30, 2015, or December 31, 2014.

The following table shows the detail of OTTI write-downs on debt securities included in earnings and the related changes in other accumulated comprehensive income ("AOCI") for the same securities, in thousands:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Recorded as part of gross realized losses:
Credit related OTTI	$	—		$	—		$	—		$	—
Intent to sell OTTI	—			—			—			—
Total recorded as part of gross realized losses	—			—			—			—
Recorded directly to AOCI for non-credit related impairment:
Residential mortgage backed securities	—			—			—			—
Accretion of non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total changes to AOCI for non-credit related impairment	(24		)	(24		)	(48		)	(48		)
Total OTTI losses (accretion) recorded on debt securities, net	$	(24	)	$	(24	)	$	(48	)	$	(48	)

Heartland has not experienced any OTTI writedowns since the initial impairment charge in 2012.

Included in other securities at June 30, 2015, and December 31, 2014, were shares of stock in each Federal Home Loan Bank (the "FHLB") of Des Moines, Chicago, Dallas, San Francisco and Topeka at an amortized cost of $14.6 million and $14.3 million, respectively.

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Acquisitions

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

On May 28, 2015, Heartland entered into a definitive merger agreement with Premier Valley Bank in Fresno, California. Under the terms of the agreement, Premier Valley Bank shareholders will receive approximately $95.0 million or $7.73 per share of common stock in the merger, and may elect to receive this payment in shares of Heartland common stock or cash, subject to proration so that 70% of the total payment is in Heartland common stock and 30% in cash. As of June 30, 2015, Premier Valley Bank had assets of approximately $655.0 million, loans of approximately $413.0 million and deposits of approximately $573.0 million. Upon closing of the transaction, Premier Valley Bank will become a wholly-owned subsidiary of Heartland and will continue to operate under its current name and management team as Heartland's tenth state-chartered bank.

On May 14, 2015, Heartland entered into a definitive merger agreement with First Scottsdale Bank, N.A., in Scottsdale, Arizona. Under the terms of the agreement, Heartland will acquire First Scottsdale Bank, N.A., in an all cash transaction valued at approximately $17.7 million. Simultaneous with the closing of the transaction, First Scottsdale Bank, N.A., will be merged into Heartland's Arizona Bank & Trust subsidiary. As of June 30, 2015, First Scottsdale Bank, N.A., had total assets of approximately $96.0 million, including $63.0 million of loans outstanding, and deposits of $79.0 million.

On April 15, 2015, Heartland entered into a definitive merger agreement with Community Bancorporation of New Mexico, Inc., parent company of Community Bank in Santa Fe, New Mexico. Under the terms of the agreement, Heartland will acquire Community Bancorporation in an all cash transaction valued at approximately $11.1 million. Simultaneous with the closing of the transaction, Community Bank will be merged into Heartland's New Mexico Bank & Trust subsidiary. As of June 30, 2015, Community Bank had total assets of approximately $175.0 million, including $109.0 million of loans outstanding, and $146.0 million of deposits.

On January 16, 2015, Heartland completed the acquisition of Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin. Under the terms of the agreement, the aggregate purchase price was based upon 155% of the December 31, 2014, adjusted tangible book value, as defined in the merger agreement, of Community Banc-Corp of Sheboygan, Inc. The purchase price was approximately $53.1 million, which was paid by delivery of 1,970,720 shares of Heartland common stock. The transaction included, at fair value, total assets of $506.8 million, including loans of $395.0 million and including deposits of $433.9 million. Simultaneous with the close of the transaction, Community Bank & Trust merged into Heartland’s Wisconsin Bank & Trust subsidiary. The transaction was a tax-free reorganization with respect to the stock consideration received by the stockholders of Community Banc-Corp of Sheboygan, Inc.

The assets and liabilities of Community Banc-Corp of Sheboygan, Inc. were recorded on the consolidated balance sheet at the estimated fair value on the acquisition date. The following table represents, in thousands, the amounts recorded on the consolidated balance sheet as of January 16, 2015:

	As of January 16, 2015
Fair value of consideration paid
Common Stock	$	53,052
Cash	6
Total consideration paid	53,058
Fair value of assets acquired
Cash and due from banks	7,109
Securities:
Securities available for sale	52,976
Other securities	1,284
Loans held for sale	728
Loans held to maturity	395,007
Premises, furniture and equipment, net	13,954
Other real estate, net	346
Other intangible assets, net	10,295
Other assets	25,066
Total assets	506,765
Fair value of liabilities assumed
Deposits	433,919
Short term borrowings	24,836
Other borrowings	6,097
Other liabilities	7,434
Total liabilities assumed	472,286
Fair value of net assets acquired	34,479
Goodwill resulting from acquisition	$	18,579

Heartland recognized goodwill of $18.6 million in conjunction with the acquisition of Community Banc-Corp of Sheboygan, Inc., which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, increased market presence, cross-selling opportunities, and expanded business lines. See Note 6 for further information on goodwill.

Pro Forma Information: The following pro forma information presents the results of operations for the years ended December 31, 2014, and December 31, 2013, as if the Community Banc-Corp of Sheboygan, Inc. acquisition occurred on January 1, 2013:

(Dollars in thousands, except per share data)	For the Years Ended
	December 31, 2014		December 31, 2013
Net interest income	$	220,358	$	179,001
Net income	$	44,710	$	42,105
Basic earnings per share	$	2.19	$	2.20
Diluted earnings per share	$	2.16	$	2.17

The above pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the merged companies that would have been achieved had the acquisition occurred on January 1, 2013, nor are they intended to represent or be indicative of future results of operations. The pro forma results do not include expected operating cost savings as a result of the acquisition. These pro forma results require significant estimates and judgments particularly as it relates to valuation and accretion of income associated with the acquired loans.

Heartland incurred $1.7 million of pre-tax merger related expenses in 2014 and 2015. The merger expenses are reflected on the consolidated statement of income for the applicable period and are reported primarily in the categories of salaries and employee benefits, professional fees and other noninterest expenses.

Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, projected default rates, loss given defaults, and recovery rates. No allowance for credit losses was carried over from the acquisition. The balance of nonaccrual loans at acquisition date was $5.8 million.

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Loans and Leases (Tables)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans and Leases

Loans and leases as of June 30, 2015, and December 31, 2014, were as follows, in thousands:

	June 30, 2015			December 31, 2014
Loans and leases receivable held to maturity:
Commercial	$	1,189,626		$	1,036,080
Commercial real estate	2,010,091			1,707,060
Agricultural and agricultural real estate	444,110			423,827
Residential real estate	443,026			380,341
Consumer	364,441			330,555
Gross loans and leases receivable held to maturity	4,451,294			3,877,863
Unearned discount	(234		)	(90		)
Deferred loan fees	(1,237		)	(1,028		)
Total net loans and leases receivable held to maturity	4,449,823			3,876,745
Loans covered under loss share agreements:
Commercial and commercial real estate	—			54
Agricultural and agricultural real estate	—			—
Residential real estate	—			1,204
Consumer	—			—
Total loans covered under loss share agreements	—			1,258
Allowance for loan and lease losses	(45,614		)	(41,449		)
Loans and leases receivable, net	$	4,404,209		$	3,836,554

Allowance for Loan and Lease Losses, Based on Impairment Methodology

The following table shows the balance in the allowance for loan and lease losses at June 30, 2015, and December 31, 2014, and the related loan balances, disaggregated on the basis of impairment methodology, in thousands. Loans evaluated under ASC 310-10-35 include loans on nonaccrual status and troubled debt restructurings, which are individually evaluated for impairment, and other impaired loans deemed to have similar risk characteristics. All other loans are collectively evaluated for impairment under ASC 450-20. Heartland has made no significant changes to the accounting for the allowance for loan and lease losses policy during 2015.

	Allowance For Loan and Lease Losses						Gross Loans and Leases Receivable Held to Maturity
	Ending Balance Under ASC 310-10-35		Ending Balance Under ASC 450-20		Total		Ending Balance Evaluated for Impairment Under ASC 310-10-35		Ending Balance Evaluated for Impairment Under ASC 450-20		Total
June 30, 2015
Commercial	$	238	$	12,826	$	13,064	$	10,562	$	1,179,064	$	1,189,626
Commercial real estate	1,023		16,585		17,608		39,505		1,970,586		2,010,091
Agricultural and agricultural real estate	19		3,657		3,676		4,658		439,452		444,110
Residential real estate	411		3,688		4,099		11,928		431,098		443,026
Consumer	1,118		6,049		7,167		5,006		359,435		364,441
Total	$	2,809	$	42,805	$	45,614	$	71,659	$	4,379,635	$	4,451,294
December 31, 2014
Commercial	$	754	$	11,155	$	11,909	$	4,526	$	1,031,554	$	1,036,080
Commercial real estate	636		15,262		15,898		35,771		1,671,289		1,707,060
Agricultural and agricultural real estate	52		3,243		3,295		5,049		418,778		423,827
Residential real estate	442		3,299		3,741		10,235		370,106		380,341
Consumer	813		5,793		6,606		6,143		324,412		330,555
Total	$	2,697	$	38,752	$	41,449	$	61,724	$	3,816,139	$	3,877,863

Schedule of Financing Receivables, Non Accrual Status

The following table presents nonaccrual loans, accruing loans past due 90 days or more and troubled debt restructured loans not covered under loss share agreements at June 30, 2015, and December 31, 2014, in thousands. There were no nonaccrual leases, accruing leases past due 90 days or more or restructured leases at June 30, 2015, and December 31, 2014.

	June 30, 2015		December 31, 2014
Nonaccrual loans	$	25,894	$	24,205
Nonaccrual troubled debt restructured loans	816		865
Total nonaccrual loans	$	26,710	$	25,070
Accruing loans past due 90 days or more	$	—	$	—
Performing troubled debt restructured loans	$	10,903	$	12,133

Troubled Debt Restructurings on Financing Receivables

The following table provides information on troubled debt restructured loans that were modified during the three and six months ended June 30, 2015, and June 30, 2014, dollars in thousands:

	Three Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	—	—		—		1	298		298
Total commercial and commercial real estate	1	830		830		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	1	$	1,141	$	1,141	4	$	3,693	$	3,693

	Six Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	1	3,992		3,992		1	298		298
Total commercial and commercial real estate	2	4,822		4,822		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	3	$	5,133	$	5,133	4	$	3,693	$	3,693

Financing Receivable Credit Quality Indicators

The following table presents loans and leases not covered by loss share agreements by credit quality indicator at June 30, 2015, and December 31, 2014, in thousands:

	Pass		Nonpass		Total
June 30, 2015
Commercial	$	1,071,508	$	118,118	$	1,189,626
Commercial real estate	1,834,875		175,216		2,010,091
Total commercial and commercial real estate	2,906,383		293,334		3,199,717
Agricultural and agricultural real estate	422,208		21,902		444,110
Residential real estate	424,365		18,661		443,026
Consumer	355,869		8,572		364,441
Total gross loans and leases receivable held to maturity	$	4,108,825	$	342,469	$	4,451,294
December 31, 2014
Commercial	$	939,717	$	96,363	$	1,036,080
Commercial real estate	1,567,711		139,349		1,707,060
Total commercial and commercial real estate	2,507,428		235,712		2,743,140
Agricultural and agricultural real estate	402,883		20,944		423,827
Residential real estate	361,325		19,016		380,341
Consumer	321,114		9,441		330,555
Total gross loans and leases receivable held to maturity	$	3,592,750	$	285,113	$	3,877,863

Past Due Financing Receivables

The following table sets forth information regarding Heartland's accruing and nonaccrual loans and leases not covered by loss share agreements at June 30, 2015, and December 31, 2014, in thousands:

	Accruing Loans and Leases
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual		Total Loans and Leases
June 30, 2015
Commercial	$	3,583	$	8	$	—	$	3,591	$	1,183,033	$	3,002	$	1,189,626
Commercial real estate	3,384		111		—		3,495		1,995,011		11,585		2,010,091
Total commercial and commercial real estate	6,967		119		—		7,086		3,178,044		14,587		3,199,717
Agricultural and agricultural real estate	671		386		—		1,057		441,896		1,157		444,110
Residential real estate	1,694		152		—		1,846		432,648		8,532		443,026
Consumer	3,131		718		—		3,849		358,158		2,434		364,441
Total gross loans and leases receivable held to maturity	$	12,463	$	1,375	$	—	$	13,838	$	4,410,746	$	26,710	$	4,451,294
December 31, 2014
Commercial	$	980	$	48	$	—	$	1,028	$	1,032,707	$	2,345	$	1,036,080
Commercial real estate	1,788		111		—		1,899		1,693,554		11,607		1,707,060
Total commercial and commercial real estate	2,768		159		—		2,927		2,726,261		13,952		2,743,140
Agricultural and agricultural real estate	119		50		—		169		422,219		1,439		423,827
Residential real estate	1,037		445		—		1,482		371,982		6,877		380,341
Consumer	2,382		1,366		—		3,748		324,005		2,802		330,555
Total gross loans and leases receivable held to maturity	$	6,306	$	2,020	$	—	$	8,326	$	3,844,467	$	25,070	$	3,877,863

Allowance for Credit Losses on Financing Receivables

The following tables present, for impaired loans not covered by loss share agreements and by category of loan, the unpaid contractual balance at June 30, 2015, and December 31, 2014; the outstanding loan balance recorded on the consolidated balance sheets at June 30, 2015, and December 31, 2014; any related allowance recorded for those loans as of June 30, 2015, and December 31, 2014; the average outstanding loan balance recorded on the consolidated balance sheets during the six months ended June 30, 2015, and year ended December 31, 2014; and the interest income recognized on the impaired loans during the six months ended June 30, 2015, and year ended December 31, 2014, in thousands:

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Quarter-to- Date Avg. Loan Balance		Quarter-to- Date Interest Income Recognized		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
June 30, 2015
Impaired loans with a related allowance:
Commercial	$	273	$	238	$	238	$	265	$	3	$	379	$	6
Commercial real estate	2,448		2,448		1,023		1,630		4		2,428		10
Total commercial and commercial real estate	2,721		2,686		1,261		1,895		7		2,807		16
Agricultural and agricultural real estate	1,513		1,513		19		2,711		—		2,983		39
Residential real estate	2,793		2,624		411		2,431		5		2,531		9
Consumer	2,972		2,972		1,118		2,889		7		2,735		11
Total impaired loans with a related allowance	$	9,999	$	9,795	$	2,809	$	9,926	$	19	$	11,056	$	75
Impaired loans without a related allowance:
Commercial	$	10,324	$	10,324	$	—	$	8,163	$	141	$	5,813	$	174
Commercial real estate	40,650		37,057		—		34,798		366		33,449		657
Total commercial and commercial real estate	50,974		47,381		—		42,961		507		39,262		831
Agricultural and agricultural real estate	3,145		3,145		—		2,205		46		2,082		49
Residential real estate	9,380		9,304		—		8,942		12		8,356		71
Consumer	2,034		2,034		—		2,238		12		2,656		23
Total impaired loans without a related allowance	$	65,533	$	61,864	$	—	$	56,346	$	577	$	52,356	$	974
Total impaired loans held to maturity:
Commercial	$	10,597	$	10,562	$	238	$	8,428	$	144	$	6,192	$	180
Commercial real estate	43,098		39,505		1,023		36,428		370		35,877		667
Total commercial and commercial real estate	53,695		50,067		1,261		44,856		514		42,069		847
Agricultural and agricultural real estate	4,658		4,658		19		4,916		46		5,065		88
Residential real estate	12,173		11,928		411		11,373		17		10,887		80
Consumer	5,006		5,006		1,118		5,127		19		5,391		34
Total impaired loans held to maturity	$	75,532	$	71,659	$	2,809	$	66,272	$	596	$	63,412	$	1,049

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
December 31, 2014
Impaired loans with a related allowance:
Commercial	$	780	$	780	$	754	$	5,594	$	19
Commercial real estate	7,356		7,322		636		5,931		303
Total commercial and commercial real estate	8,136		8,102		1,390		11,525		322
Agricultural and agricultural real estate	3,317		3,317		52		3,966		104
Residential real estate	2,412		2,244		442		3,398		12
Consumer	2,799		2,799		813		4,053		19
Total impaired loans with a related allowance	$	16,664	$	16,462	$	2,697	$	22,942	$	457
Impaired loans without a related allowance:
Commercial	$	4,913	$	3,746	$	—	$	3,499	$	101
Commercial real estate	32,708		28,449		—		24,522		1,172
Total commercial and commercial real estate	37,621		32,195		—		28,021		1,273
Agricultural and agricultural real estate	3,961		1,732		—		3,308		13
Residential real estate	8,200		7,991		—		6,267		110
Consumer	3,350		3,344		—		1,870		127
Total impaired loans without a related allowance	$	53,132	$	45,262	$	—	$	39,466	$	1,523
Total impaired loans held to maturity:
Commercial	$	5,693	$	4,526	$	754	$	9,093	$	120
Commercial real estate	40,064		35,771		636		30,453		1,475
Total commercial and commercial real estate	45,757		40,297		1,390		39,546		1,595
Agricultural and agricultural real estate	7,278		5,049		52		7,274		117
Residential real estate	10,612		10,235		442		9,665		122
Consumer	6,149		6,143		813		5,923		146
Total impaired loans held to maturity	$	69,796	$	61,724	$	2,697	$	62,408	$	1,980

Impaired Financing Receivables

The carrying amount of the loans acquired with the acquisition of Community Bank & Trust at June 30, 2015, consisted of purchased impaired and nonimpaired loans as summarized in the following table, in thousands:

	June 30, 2015
	Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans
Commercial	$	—	$	82,415	$	82,415
Commercial real estate	7,755		211,377		219,132
Agricultural and agricultural real estate	—		2,937		2,937
Residential real estate	—		23,419		23,419
Consumer loans	—		18,116		18,116
Total Loans	$	7,755	$	338,264	$	346,019

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is determined using net income available to common stockholders and weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average common shares and assumed incremental common shares issued.

Stock-Based Compensation

Stock-Based Compensation

Heartland may grant, through its Nominating and Compensation Committee (the "Compensation Committee"), non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and cash incentive awards, under its 2012 Long-Term Incentive Plan (the "Plan"). The Plan, which was approved by stockholders in May 2012 and replaced Heartland's 2005 Long-Term Incentive Plan with respect to grants after such approval, reserved 265,153 shares of common stock at June 30, 2015, for issuance under future awards that may be granted under the Plan to employees and directors of, and service providers to, Heartland or its subsidiaries.

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, "Compensation-Stock Compensation" requires the measurement of the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the award is based upon its fair value estimated on the date of grant and recognized in the consolidated statements of income over the vesting period of the award. The fair market value of restricted stock and restricted stock units is based on the fair value of the underlying shares of common stock on the date of grant. The fair value of stock options is estimated on the date of grant using the Black-Scholes model.

Effect of New Financial Accounting Standards

Effect of New Financial Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." The amendments in ASU 2014-01 to Topic 323, "Equity Investments and Joint Ventures," provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefit received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for fiscal years, and interim periods within those years, beginning after December 31, 2014, and should be applied retrospectively to all periods presented. Heartland elected to use the proportional amortization method for equity investments in qualified affordable housing projects that meet the conditions specified in ASU-2014-01. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity.

In January 2014, the FASB issued ASU 2014-04, "Receivables-Troubled Debt Restructurings by Creditors: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure." The amendments in ASU 2014-04 clarify that an in-substance foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (i) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (ii) the borrower conveying all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. ASU 2014-04 also requires disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in loans collateralized by residential real estate property that are in the process of foreclosure. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. Once adopted, an entity can elect either (i) a modified retrospective transition method or (ii) a prospective transition method. The modified retrospective transition method is applied by means of a cumulative-effect adjustment to residential mortgage loans and foreclosed residential real estate properties existing as of the beginning of the period for which the amendments of ASU 2014-04 are effective, with real estate reclassified to loans measured at the carrying value of the real estate at the date of adoption and loans reclassified to real estate measured at the lower of net carrying value of the loan or the fair value of the real estate less costs to sell at the date of adoption. The prospective transition method is applied by means of applying the amendments of ASU 2014-04 to all instances of receiving physical possession of residential real estate properties that occur after the date of adoption. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity. As of June 30, 2015, Heartland had not received possession of any residential real estate properties that meet the disclosure requirements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The amendment clarifies the principles for recognizing revenue and develops a common revenue standard. The amendment outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In applying the revenue model to contracts within its scope, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB Codification. The standard also requires significantly expanded disclosures about revenue recognition. The amendment is effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is not permitted. Heartland intends to adopt the accounting standard during the first quarter of 2018, as required, and is currently evaluating the impact on its results of operations, financial position, and liquidity.

In August 2014, the FASB issued ASU 2014-14, "Receivables-Troubled Debt Restructurings by Creditors: Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure." The amendment clarifies how creditors are to classify certain government-guaranteed mortgage loans upon foreclosure. The amendment requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separate from the loan before foreclosure, and (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered for the guarantor. This amendment is effective for annual reporting periods, and interim reporting periods within those years, beginning after December 15, 2014, with early adoption permitted. Heartland adopted this standard on January 1, 2015, and the adoption did not have an impact on the results of operations, financial position, and liquidity.

In January 2015, the FASB issued ASU 2015-01, "Income Statement-Extraordinary and Unusual Items." The amendment eliminates from U.S. GAAP the concept of extraordinary items. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. This amended guidance will prohibit separate disclosure of extraordinary items in the income statement. This amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Heartland does not expect the adoption of this standard to have a material impact on the results of operations, financial position, and liquidity.

In April 2015, the FASB issued ASU 2015-03, "Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs." The amendment intends to simplify the presentation of debt issuance costs and more closely align the presentation of debt issuance costs under U.S. GAAP with the presentation under comparable International Financial Reporting Standards. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. Debt issuance costs related to a recognized debt liability are to be presented on the balance sheet as a direct reduction from the debt liability, similar to the presentation of debt premiums or discounts. The costs will continue to be amortized to interest expense using the effective interest method. This amendment is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The ASU requires retrospective application to all prior periods presented in the financial statements. Heartland adopted this standard effective March 31, 2015, at which time $550,000 was reclassified from other assets to other borrowings on the consolidated balance sheet for all periods presented. The adoption of this standard did not have a material impact on the results of operations, financial position, and liquidity.

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Goodwill, Core Deposit Premium and Other Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Core Deposit Premium and Other Intangible Assets

GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS

Heartland had goodwill of $54.2 million at June 30, 2015, and $35.6 millionDecember 31, 2014. Heartland conducts its annual internal assessment of the goodwill both collectively and at its subsidiaries as of September 30.

Heartland recorded $18.6 million of goodwill in connection with the acquisition of Community Banc-Corp of Sheboygan, Inc., the parent company of Community Bank & Trust, based in Sheboygan, Wisconsin on January 16, 2015. The goodwill associated with this transaction is not deductible for tax purposes. As part of this acquisition, Heartland recognized core deposit intangibles of $6.0 million that are expected to be amortized over a period of 10 years. The core deposit intangibles associated with this transaction are not deductible for tax purposes. In addition, Heartland recognized commercial servicing rights of $4.3 million.

Other intangible assets consist of core deposit intangibles, mortgage servicing rights, customer relationship intangible, and commercial servicing rights. The gross carrying amount of other intangible assets and the associated accumulated amortization at June 30, 2015, and December 31, 2014, are presented in the table below, in thousands:

	June 30, 2015						December 31, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	27,109	$	13,849	$	13,260	$	21,069	$	12,525	$	8,544
Mortgage servicing rights	41,458		13,819		27,639		37,825		12,841		24,984
Customer relationship intangible	1,177		794		383		1,177		773		404
Commercial servicing rights	4,396		452		3,944		—		—		—
Total	$	74,140	$	28,914	$	45,226	$	60,071	$	26,139	$	33,932

The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:

	Core Deposit Intangibles		Mortgage Servicing Rights		Customer Relationship Intangible		Commercial Servicing Rights		Total
Six months ending December 31, 2015	$	1,374	$	4,368	$	21	$	421	$	6,184
Year ending December 31,
2016	2,467		5,818		41		821		9,147
2017	2,180		4,987		40		769		7,976
2018	1,925		4,156		39		676		6,796
2019	1,667		3,324		38		504		5,533
2020	1,423		2,493		37		314		4,267
Thereafter	2,224		2,493		167		439		5,323

Projections of amortization expense for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of June 30, 2015. Heartland's actual experience may be significantly different depending upon changes in mortgage interest rates and market conditions. Mortgage loans serviced for others were $3.79 billion and $3.50 billion as of June 30, 2015, and December 31, 2014, respectively. The fair value of Heartland's mortgage servicing rights was estimated at $37.0 million at June 30, 2015, and $34.2 million at December 31, 2014.

Heartland's mortgage servicing rights portfolio is comprised of loans serviced for the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association. The servicing rights portfolio is separated into 15- and 30-year tranches. At both June 30, 2015, and December 31, 2014, no valuation allowance was required for any of the tranches.

The fair value of mortgage servicing rights is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds, servicing costs and escrow earnings are considered in the calculation. The average constant prepayment rate was11.43%and11.40%for the June 30, 2015, and December 31, 2014, valuations, respectively. The discount rate was9.22%and9.20%for the June 30, 2015, and December 31, 2014, valuations, respectively. The average capitalization rate for the first six months of 2015 ranged from65to138basis points compared to75and139basis points for 2014. Fees collected for the servicing of mortgage loans for others were $5.0 million and $4.2 million for the six months ended June 30, 2015, and June 30, 2014, respectively.

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	24,984		$	21,788
Originations	7,015			3,344
Amortization	(4,360		)	(2,355		)
Balance at June 30	$	27,639		$	22,777
Fair value of mortgage servicing rights	$	36,971		$	31,471
Mortgage servicing rights, net to servicing portfolio	0.73		%	0.71		%

Heartland's commercial servicing rights portfolio was initially acquired with the Community Banc-Corp of Sheboygan, Inc. transaction that closed on January 16, 2015. The commercial servicing portfolio is comprised of loans serviced for the Small Business Administration and United States Department of Agriculture, which totaled $159.6 million. Fees collected for the servicing of commercial loans for others were $360,000. The fair value of Heartland's commercial servicing rights was estimated at $4.6 million as of June 30, 2015.

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six-month periods ended June 30, 2015, and June 30, 2014:

	2015			2014
Balance at January 1	$	—		$	—
Acquired	4,255			—
Originations	141			—
Amortization	(452		)	—
Balance at June 30	$	3,944		$	—

Mortgage and commercial servicing rights are initially recorded at fair value in net gains on sale of loans held for sale when they are acquired through loan sales. Fair value is based on market prices for comparable servicing contracts, when available, or based on a valuation model that calculates the present value of estimated future net servicing income.

Mortgage and commercial servicing rights are subsequently measured using the amortization method, which requires the asset to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon the fair value of the assets as compared to the carrying amount. Impairment is recognized through a valuation allowance for specific tranches to the extent that fair value is less than carrying amount. At June 30, 2015, no valuation allowance was required for any of Heartland's servicing rights.

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Goodwill, Core Deposit Premium and Other Intangible Assets (Carrying amount of intangible assets (incl accumulated amortization) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 74,140	$ 60,071
Accumulated Amortization	28,914	26,139
Net Carrying Amount	45,226	33,932
Core deposit intangibles
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	27,109	21,069
Accumulated Amortization	13,849	12,525
Net Carrying Amount	13,260	8,544
Mortgage servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	41,458	37,825
Accumulated Amortization	13,819	12,841
Net Carrying Amount	27,639	24,984
Customer relationship intangible
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,177	1,177
Accumulated Amortization	794	773
Net Carrying Amount	383	404
Commercial servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,396	0
Accumulated Amortization	452	0
Net Carrying Amount	$ 3,944	$ 0

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Loans and Leases

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans and Leases

LOANS AND LEASES

Loans and leases as of June 30, 2015, and December 31, 2014, were as follows, in thousands:

	June 30, 2015			December 31, 2014
Loans and leases receivable held to maturity:
Commercial	$	1,189,626		$	1,036,080
Commercial real estate	2,010,091			1,707,060
Agricultural and agricultural real estate	444,110			423,827
Residential real estate	443,026			380,341
Consumer	364,441			330,555
Gross loans and leases receivable held to maturity	4,451,294			3,877,863
Unearned discount	(234		)	(90		)
Deferred loan fees	(1,237		)	(1,028		)
Total net loans and leases receivable held to maturity	4,449,823			3,876,745
Loans covered under loss share agreements:
Commercial and commercial real estate	—			54
Agricultural and agricultural real estate	—			—
Residential real estate	—			1,204
Consumer	—			—
Total loans covered under loss share agreements	—			1,258
Allowance for loan and lease losses	(45,614		)	(41,449		)
Loans and leases receivable, net	$	4,404,209		$	3,836,554

Heartland has certain lending policies and procedures in place that are designed to provide for an acceptable level of credit risk. The board of directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans. Diversification in the loan portfolio is also a means of managing risk associated with fluctuations in economic conditions.

The commercial and commercial real estate loan portfolio includes a wide range of business loans, including lines of credit for working capital and operational purposes and term loans for the acquisition of equipment and real estate. Although most loans are made on a secured basis, loans may be made on an unsecured basis where warranted by the overall financial condition of the borrower. Terms of commercial business loans generally range from one to five years. Commercial loans and leases are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The collateral that Heartland requires for most of these loans and leases is based upon the discounted market value of the collateral. The primary repayment risks of commercial loans and leases are that the cash flow of the borrowers may be unpredictable, and the collateral securing these loans may fluctuate in value. Heartland seeks to minimize these risks in a variety of ways. The underwriting analysis includes credit verification, analysis of global cash flows, appraisals and a review of the financial condition of the borrower. Personal guarantees are frequently required as a tertiary form of repayment. In addition, when underwriting loans for commercial real estate, careful consideration is given to the property's operating history, future operating projections, current and projected occupancy, location and physical condition. Heartland also utilizes government guaranteed lending through the U.S. Small Business Administration and the U.S. Department of Agriculture's Rural Development Business and Industry Program to assist customers with longer-term funding and to reduce risk.

Agricultural loans, many of which are secured by crops, machinery and real estate, are provided to finance capital improvements and farm operations as well as acquisitions of livestock and machinery. Agricultural loans present unique credit risks relating to adverse weather conditions, loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural loans is dependent upon the profitable operation or management of the agricultural entity. In underwriting agricultural loans, lending personnel work closely with their customers to review budgets and cash flow projections for the ensuing crop year. These budgets and cash flow projections are monitored closely during the year and reviewed with the customers at least annually. Lending personnel also work closely with governmental agencies, including the Farm Service Agency, to help agricultural customers obtain credit enhancement products such as loan guarantees or interest assistance.

Heartland originates first-lien, adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a single family residential property. These loans are principally collateralized by owner-occupied properties and are amortized over 10 to 30 years. Heartland typically sells longer-term, low-rate, residential mortgage loans in the secondary market with servicing rights retained. This practice allows Heartland to better manage interest rate risk and liquidity risk. The Heartland bank subsidiaries participate in lending programs sponsored by U.S. government agencies such as Veterans Administration and Federal Home Administration when justified by market conditions.

Consumer lending includes motor vehicle, home improvement, home equity and small personal credit lines. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than one-to-four-family residential mortgage loans. Consumer loan collections are dependent on the borrower's continuing financial stability, and are therefore more likely to be affected by adverse personal circumstances. Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate. Heartland's consumer finance subsidiaries, Citizens Finance Co. and Citizens Finance of Illinois Co., typically lend to borrowers with past credit problems or limited credit histories, which comprise approximately 21% of Heartland's total consumer loan portfolio.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Heartland’s policy is to discontinue the accrual of interest income on any loan or lease when, in the opinion of management, there is a reasonable doubt as to the timely collection of the interest and principal, normally when a loan or lease is 90 days past due. When interest accruals are deemed uncollectible, interest credited to income in the current year is reversed and interest accrued in prior years is charged to the allowance for loan and lease losses. Nonaccrual loans and leases are returned to an accrual status when, in the opinion of management, the financial position of the borrower indicates that there is no longer any reasonable doubt as to the timely payment of interest and principal.

Under Heartland’s credit practices, a loan is impaired when, based on current information and events, it is probable that Heartland will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except where more practical, at the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent.

The following table shows the balance in the allowance for loan and lease losses at June 30, 2015, and December 31, 2014, and the related loan balances, disaggregated on the basis of impairment methodology, in thousands. Loans evaluated under ASC 310-10-35 include loans on nonaccrual status and troubled debt restructurings, which are individually evaluated for impairment, and other impaired loans deemed to have similar risk characteristics. All other loans are collectively evaluated for impairment under ASC 450-20. Heartland has made no significant changes to the accounting for the allowance for loan and lease losses policy during 2015.

	Allowance For Loan and Lease Losses						Gross Loans and Leases Receivable Held to Maturity
	Ending Balance Under ASC 310-10-35		Ending Balance Under ASC 450-20		Total		Ending Balance Evaluated for Impairment Under ASC 310-10-35		Ending Balance Evaluated for Impairment Under ASC 450-20		Total
June 30, 2015
Commercial	$	238	$	12,826	$	13,064	$	10,562	$	1,179,064	$	1,189,626
Commercial real estate	1,023		16,585		17,608		39,505		1,970,586		2,010,091
Agricultural and agricultural real estate	19		3,657		3,676		4,658		439,452		444,110
Residential real estate	411		3,688		4,099		11,928		431,098		443,026
Consumer	1,118		6,049		7,167		5,006		359,435		364,441
Total	$	2,809	$	42,805	$	45,614	$	71,659	$	4,379,635	$	4,451,294
December 31, 2014
Commercial	$	754	$	11,155	$	11,909	$	4,526	$	1,031,554	$	1,036,080
Commercial real estate	636		15,262		15,898		35,771		1,671,289		1,707,060
Agricultural and agricultural real estate	52		3,243		3,295		5,049		418,778		423,827
Residential real estate	442		3,299		3,741		10,235		370,106		380,341
Consumer	813		5,793		6,606		6,143		324,412		330,555
Total	$	2,697	$	38,752	$	41,449	$	61,724	$	3,816,139	$	3,877,863

The following table presents nonaccrual loans, accruing loans past due 90 days or more and troubled debt restructured loans not covered under loss share agreements at June 30, 2015, and December 31, 2014, in thousands. There were no nonaccrual leases, accruing leases past due 90 days or more or restructured leases at June 30, 2015, and December 31, 2014.

	June 30, 2015		December 31, 2014
Nonaccrual loans	$	25,894	$	24,205
Nonaccrual troubled debt restructured loans	816		865
Total nonaccrual loans	$	26,710	$	25,070
Accruing loans past due 90 days or more	$	—	$	—
Performing troubled debt restructured loans	$	10,903	$	12,133

The following table provides information on troubled debt restructured loans that were modified during the three and six months ended June 30, 2015, and June 30, 2014, dollars in thousands:

	Three Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	—	—		—		1	298		298
Total commercial and commercial real estate	1	830		830		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	1	$	1,141	$	1,141	4	$	3,693	$	3,693

	Six Months Ended June 30,
	2015					2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	1	$	830	$	830	—	$	—	$	—
Commercial real estate	1	3,992		3,992		1	298		298
Total commercial and commercial real estate	2	4,822		4,822		1	298		298
Agricultural and agricultural real estate	1	311		311		2	3,357		3,357
Residential real estate	—	—		—		1	38		38
Consumer	—	—		—		—	—		—
Total	3	$	5,133	$	5,133	4	$	3,693	$	3,693

The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. Since the modifications on these loans have been only interest rate concessions and term extensions, not principal reductions, the pre-modification and post-modification recorded investment amounts are the same. At June 30, 2015, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructuring.

There were no troubled debt restructured loans for which there was a payment default during the three and six months ended June 30, 2015, and June 30, 2014, that had been modified during the twelve-month period prior to the default.Heartland's internal rating system is a series of grades reflecting management's risk assessment, based on its analysis of the borrower's financial condition. The "pass" category consists of all loans that are not in the "nonpass" category, categorized into a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the pass category is monitored for early identification of credit deterioration. The "nonpass" category consists of special mention, substandard, doubtful and loss loans. The "special mention" rating is attached to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. These credits are closely monitored for improvement or deterioration. The "substandard" rating is assigned to loans that are inadequately protected by the current sound net worth and paying capacity of the borrower and may be further at risk due to deterioration in the value of collateral pledged. Well-defined weaknesses jeopardize liquidation of the debt. These loans are still considered collectible, however, a distinct possibility exists that Heartland will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all of the following weaknesses: deteriorating trends, lack of earnings, inadequate debt service capacity, excessive debt and/or lack of liquidity. The "doubtful" rating is assigned to loans where identified weaknesses make collection or liquidation in full, on the basis of existing facts, conditions and values, highly questionable and improbable. These borrowers are usually in default, lack liquidity and capital, as well as, resources necessary to remain an operating entity. Specific pending events, such as capital injections, liquidations or perfection of liens on additional collateral, may strengthen the credit, thus deferring classification of the loan as loss until exact status can be determined. The "loss" rating is assigned to loans considered uncollectible. As of June 30, 2015, Heartland had no loans classified as doubtful and no loans classified as loss. Loans are placed on "nonaccrual" when management does not expect to collect payments of principal and interest in full or when principal or interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection.

The following table presents loans and leases not covered by loss share agreements by credit quality indicator at June 30, 2015, and December 31, 2014, in thousands:

	Pass		Nonpass		Total
June 30, 2015
Commercial	$	1,071,508	$	118,118	$	1,189,626
Commercial real estate	1,834,875		175,216		2,010,091
Total commercial and commercial real estate	2,906,383		293,334		3,199,717
Agricultural and agricultural real estate	422,208		21,902		444,110
Residential real estate	424,365		18,661		443,026
Consumer	355,869		8,572		364,441
Total gross loans and leases receivable held to maturity	$	4,108,825	$	342,469	$	4,451,294
December 31, 2014
Commercial	$	939,717	$	96,363	$	1,036,080
Commercial real estate	1,567,711		139,349		1,707,060
Total commercial and commercial real estate	2,507,428		235,712		2,743,140
Agricultural and agricultural real estate	402,883		20,944		423,827
Residential real estate	361,325		19,016		380,341
Consumer	321,114		9,441		330,555
Total gross loans and leases receivable held to maturity	$	3,592,750	$	285,113	$	3,877,863

The nonpass category in the table above is comprised of approximately 66% special mention and 34% substandard as of June 30, 2015. The percent of nonpass loans on nonaccrual status as of June 30, 2015, was 8%. As of December 31, 2014, the nonpass category in the table above was comprised of approximately 66% special mention and 34% substandard. The percent of nonpass loans on nonaccrual status as of December 31, 2014, was 9%. Loans delinquent 30 to 89 days as a percent of total loans were 0.31% at June 30, 2015, compared to 0.21% at December 31, 2014. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. All impaired loans are reviewed at least annually.

The following table sets forth information regarding Heartland's accruing and nonaccrual loans and leases not covered by loss share agreements at June 30, 2015, and December 31, 2014, in thousands:

	Accruing Loans and Leases
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual		Total Loans and Leases
June 30, 2015
Commercial	$	3,583	$	8	$	—	$	3,591	$	1,183,033	$	3,002	$	1,189,626
Commercial real estate	3,384		111		—		3,495		1,995,011		11,585		2,010,091
Total commercial and commercial real estate	6,967		119		—		7,086		3,178,044		14,587		3,199,717
Agricultural and agricultural real estate	671		386		—		1,057		441,896		1,157		444,110
Residential real estate	1,694		152		—		1,846		432,648		8,532		443,026
Consumer	3,131		718		—		3,849		358,158		2,434		364,441
Total gross loans and leases receivable held to maturity	$	12,463	$	1,375	$	—	$	13,838	$	4,410,746	$	26,710	$	4,451,294
December 31, 2014
Commercial	$	980	$	48	$	—	$	1,028	$	1,032,707	$	2,345	$	1,036,080
Commercial real estate	1,788		111		—		1,899		1,693,554		11,607		1,707,060
Total commercial and commercial real estate	2,768		159		—		2,927		2,726,261		13,952		2,743,140
Agricultural and agricultural real estate	119		50		—		169		422,219		1,439		423,827
Residential real estate	1,037		445		—		1,482		371,982		6,877		380,341
Consumer	2,382		1,366		—		3,748		324,005		2,802		330,555
Total gross loans and leases receivable held to maturity	$	6,306	$	2,020	$	—	$	8,326	$	3,844,467	$	25,070	$	3,877,863

The majority of Heartland's impaired loans are those that are nonaccrual or have had their terms restructured in a troubled debt restructuring. The following tables present, for impaired loans not covered by loss share agreements and by category of loan, the unpaid contractual balance at June 30, 2015, and December 31, 2014; the outstanding loan balance recorded on the consolidated balance sheets at June 30, 2015, and December 31, 2014; any related allowance recorded for those loans as of June 30, 2015, and December 31, 2014; the average outstanding loan balance recorded on the consolidated balance sheets during the six months ended June 30, 2015, and year ended December 31, 2014; and the interest income recognized on the impaired loans during the six months ended June 30, 2015, and year ended December 31, 2014, in thousands:

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Quarter-to- Date Avg. Loan Balance		Quarter-to- Date Interest Income Recognized		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
June 30, 2015
Impaired loans with a related allowance:
Commercial	$	273	$	238	$	238	$	265	$	3	$	379	$	6
Commercial real estate	2,448		2,448		1,023		1,630		4		2,428		10
Total commercial and commercial real estate	2,721		2,686		1,261		1,895		7		2,807		16
Agricultural and agricultural real estate	1,513		1,513		19		2,711		—		2,983		39
Residential real estate	2,793		2,624		411		2,431		5		2,531		9
Consumer	2,972		2,972		1,118		2,889		7		2,735		11
Total impaired loans with a related allowance	$	9,999	$	9,795	$	2,809	$	9,926	$	19	$	11,056	$	75
Impaired loans without a related allowance:
Commercial	$	10,324	$	10,324	$	—	$	8,163	$	141	$	5,813	$	174
Commercial real estate	40,650		37,057		—		34,798		366		33,449		657
Total commercial and commercial real estate	50,974		47,381		—		42,961		507		39,262		831
Agricultural and agricultural real estate	3,145		3,145		—		2,205		46		2,082		49
Residential real estate	9,380		9,304		—		8,942		12		8,356		71
Consumer	2,034		2,034		—		2,238		12		2,656		23
Total impaired loans without a related allowance	$	65,533	$	61,864	$	—	$	56,346	$	577	$	52,356	$	974
Total impaired loans held to maturity:
Commercial	$	10,597	$	10,562	$	238	$	8,428	$	144	$	6,192	$	180
Commercial real estate	43,098		39,505		1,023		36,428		370		35,877		667
Total commercial and commercial real estate	53,695		50,067		1,261		44,856		514		42,069		847
Agricultural and agricultural real estate	4,658		4,658		19		4,916		46		5,065		88
Residential real estate	12,173		11,928		411		11,373		17		10,887		80
Consumer	5,006		5,006		1,118		5,127		19		5,391		34
Total impaired loans held to maturity	$	75,532	$	71,659	$	2,809	$	66,272	$	596	$	63,412	$	1,049

	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
December 31, 2014
Impaired loans with a related allowance:
Commercial	$	780	$	780	$	754	$	5,594	$	19
Commercial real estate	7,356		7,322		636		5,931		303
Total commercial and commercial real estate	8,136		8,102		1,390		11,525		322
Agricultural and agricultural real estate	3,317		3,317		52		3,966		104
Residential real estate	2,412		2,244		442		3,398		12
Consumer	2,799		2,799		813		4,053		19
Total impaired loans with a related allowance	$	16,664	$	16,462	$	2,697	$	22,942	$	457
Impaired loans without a related allowance:
Commercial	$	4,913	$	3,746	$	—	$	3,499	$	101
Commercial real estate	32,708		28,449		—		24,522		1,172
Total commercial and commercial real estate	37,621		32,195		—		28,021		1,273
Agricultural and agricultural real estate	3,961		1,732		—		3,308		13
Residential real estate	8,200		7,991		—		6,267		110
Consumer	3,350		3,344		—		1,870		127
Total impaired loans without a related allowance	$	53,132	$	45,262	$	—	$	39,466	$	1,523
Total impaired loans held to maturity:
Commercial	$	5,693	$	4,526	$	754	$	9,093	$	120
Commercial real estate	40,064		35,771		636		30,453		1,475
Total commercial and commercial real estate	45,757		40,297		1,390		39,546		1,595
Agricultural and agricultural real estate	7,278		5,049		52		7,274		117
Residential real estate	10,612		10,235		442		9,665		122
Consumer	6,149		6,143		813		5,923		146
Total impaired loans held to maturity	$	69,796	$	61,724	$	2,697	$	62,408	$	1,980

On January 16, 2015, Heartland acquired Community Banc-Corp of Sheboygan, Inc., parent company of Community Bank & Trust in Sheboygan, Wisconsin. As of January 16, 2015, Community Bank & Trust had loans of $413.4 million, and the estimated fair value of the loans acquired was $395.0 million.

The Community Banc-Corp of Sheboygan, Inc. acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations.” Purchased loans acquired in a business combination, which include loans purchased in the Community Bank & Trust acquisition, are recorded at estimated fair value on their purchase date, but the purchaser cannot carry over the related allowance for loan and lease losses. Purchased loans are accounted for under ASC 310-30, “Loans and Debt Securities with Deteriorated Credit Quality,” when the loans have evidence of credit deterioration since origination and it is probable at the date of the acquisition that Heartland will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration at the purchase date included statistics such as past due and nonaccrual status. Generally, acquired loans that meet Heartland’s definition for nonaccrual status fall within the scope of ASC 310-30. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference which is included in the carrying value of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses. Subsequent increases in cash flows result in a reversal of the provision for loan and lease losses to the extent of prior charges, or a reclassification of the difference from nonaccretable to accretable with a positive impact on future interest income. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

The carrying amount of the loans acquired with the acquisition of Community Bank & Trust at June 30, 2015, consisted of purchased impaired and nonimpaired loans as summarized in the following table, in thousands:

	June 30, 2015
	Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans
Commercial	$	—	$	82,415	$	82,415
Commercial real estate	7,755		211,377		219,132
Agricultural and agricultural real estate	—		2,937		2,937
Residential real estate	—		23,419		23,419
Consumer loans	—		18,116		18,116
Total Loans	$	7,755	$	338,264	$	346,019

On the acquisition date, the preliminary estimate of the contractually required payments receivable for all loans with evidence of credit deterioration since origination acquired in the acquisition was $12.9 million and the estimated fair value of the loans was $8.2 million. At June 30, 2015, a majority of these loans were valued based upon the liquidation value of the underlying collateral, because the expected cash flows are primarily based on the liquidation of underlying collateral and the timing and amount of the cash flows could not be reasonably estimated. At June 30, 2015, there was an allowance for loan and lease losses of $550,000 related to these ASC 310-30 loans.

On the acquisition date, the preliminary estimate of the contractually required payments receivable for all nonimpaired loans acquired in the acquisition was $400.0 million and the estimated fair value of the loans was $386.8 million.

On July 2, 2009, Heartland acquired all deposits of The Elizabeth State Bank in Elizabeth, Illinois through its subsidiary Galena State Bank & Trust Co. based in Galena, Illinois, in a whole bank loss sharing transaction facilitated by the FDIC. As of July 2, 2009, The Elizabeth State Bank had loans of $42.7 million. The estimated fair value of the loans acquired was $37.8 million. The FDIC approved the transfer of the loss share agreements to Illinois Bank & Trust as part of the merger of Galena State Bank & Trust Co. into Illinois Bank & Trust.

At the date of acquisition, the acquired loans and other real estate owned were covered by a loss share agreement for non-residential loans and a loss share agreement for residential real estate. Effective October 1, 2014, loans subject to the non-residential loss sharing agreement with the FDIC were no longer covered by loss sharing agreements. The remaining residential real estate loans covered under the loss share agreement are not material at June 30, 2015.

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Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2015

Allowance for Loan and Lease Losses [Abstract]

Allowance for Loan and Lease Losses

ALLOWANCE FOR LOAN AND LEASE LOSSES

Changes in the allowance for loan and lease losses for the six months ended June 30, 2015, and June 30, 2014, were as follows, in thousands:

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at March 31,2015	$	11,688		$	16,635		$	3,216		$	3,745		$	6,570		$	—	$	41,854
Charge-offs	(682		)	(371		)	(275		)	(55		)	(1,351		)	—		(2,734		)
Recoveries	111			370			2			70			267			—		820
Provision	1,947			974			733			339			1,681			—		5,674
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
Balance at December 31, 2014	$	11,909		$	15,898		$	3,295		$	3,741		$	6,606		$	—	$	41,449
Charge-offs	(956		)	(704		)	(551		)	(113		)	(2,414		)	—		(4,738		)
Recoveries	431			496			24			107			500			—		1,558
Provision	1,680			1,918			908			364			2,475			—		7,345
Balance at June 30, 2015	$	13,064		$	17,608		$	3,676		$	4,099		$	7,167		$	—	$	45,614

	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at March 31, 2014	$	11,633		$	13,010		$	2,571		$	3,671		$	7,376		$	312		$	38,573
Charge-offs	(148		)	(161		)	(125		)	(55		)	(911		)	—			(1,400		)
Recoveries	208			514			2			30			214			—			968
Provision	234			1,317			340			169			837			(146		)	2,751
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892
	Commercial			Commercial Real Estate			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
Balance at December 31, 2013	$	13,099		$	14,152		$	2,992		$	3,720		$	7,722		$	—		$	41,685
Charge-offs	(7,065		)	(1,084		)	(1,636		)	(204		)	(2,069		)	—			(12,058		)
Recoveries	407			1,294			4			56			422			—			2,183
Provision	5,486			318			1,428			243			1,441			166			9,082
Balance at June 30, 2014	$	11,927		$	14,680		$	2,788		$	3,815		$	7,516		$	166		$	40,892

Management allocates the allowance for loan and lease losses by pools of risk within each loan portfolio. The allocation of the allowance for loan and lease losses by loan portfolio is made for analytical purposes and is not necessarily indicative of the trend of future loan and lease losses in any particular category. The total allowance for loan and lease losses is available to absorb losses from any segment of the loan portfolio.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Heartland uses derivative financial instruments as part of its interest rate risk management strategy. As part of the strategy, Heartland considers the use of interest rate swaps, caps, floors, collars, and certain interest rate lock commitments and forward sales of securities related to mortgage banking activities. Heartland's current strategy includes the use of interest rate swaps, interest rate lock commitments, forward sales of mortgage securities, as well as facilitating back-to-back loan swaps to assist customers in managing interest rate risk. Heartland's objectives are to add stability to its net interest margin and to manage its exposure to movements in interest rates. The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. Heartland is exposed to credit risk in the event of nonperformance by counterparties to financial instruments. Heartland minimizes this risk by entering into derivative contracts with counterparties that met Heartland’s credit standards, and the contracts contain collateral provisions protecting the at-risk party. Heartland has not experienced any losses from nonperformance by these counterparties. Heartland monitors counterparty risk in accordance with the provisions of ASC 815.

In addition, interest rate-related derivative instruments generally contain language outlining collateral pledging requirements for each counterparty. Collateral must be posted when the market value exceeds certain threshold limits which are determined by credit ratings of each counterparty. Heartland was required to pledge $3.0 million and $5.3 million of cash as collateral at June 30, 2015, and December 31, 2014, respectively. Heartland's counterparties were required to pledge $2.4 million and $0 at June 30, 2015, and December 31, 2014, respectively.

Heartland's derivative and hedging instruments are recorded at fair value on the consolidated balance sheets. See Note 8, “Fair Value,” for additional fair value information and disclosures.

Cash Flow Hedges

Heartland has variable rate funding which creates exposure to variability in interest payments due to changes in interest rates. To manage the interest rate risk related to the variability of interest payments, Heartland has entered into various interest rate swap agreements. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are received or made on Heartland's variable-rate liabilities. For the six months ended June 30, 2015, the change in net unrealized losses on cash flow hedges reflects changes in the fair value of the swaps and reclassification from accumulated other comprehensive income to interest expense totaling $1.1 million. For the next twelve months, Heartland estimates that cash payments and reclassification from accumulated other comprehensive income to interest expense will total $2.2 million.

Heartland executed an interest rate swap transaction on April 5, 2011, with an effective date of April 20, 2011, and an expiration date of April 20, 2016, to effectively convert $15.0 million of its newly issued variable rate amortizing debt to fixed rate debt. For accounting purposes, this swap transaction is designated as a cash flow hedge of the changes in cash flows attributable to changes in one-month LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on an amount of Heartland's debt principal equal to the then-outstanding swap notional amount. At inception, Heartland asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swap.

Heartland entered into three forward starting interest rate swap transactions to effectively convert Heartland Financial Statutory Trust IV, V, and VII, which total $65.0 million, as well as Morrill Statutory Trust I and II, which total $20.0 million, from variable rate subordinated debentures to fixed rate debt. For accounting purposes, these five swap transactions are designated as cash flow hedges of the changes in cash flows attributable to changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $85.0 million of Heartland's subordinated debentures that reset quarterly on a specified reset date. At inception, Heartland asserted that the underlying principal balance would remain outstanding throughout the hedge transaction making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps.

During the first quarter of 2015, Heartland entered into two additional forward starting interest rate swaps. The first forward starting interest rate swap transaction relates to Heartland's $20.0 million Statutory Trust VI, which will convert from a fixed interest rate subordinated debenture to a variable interest rate subordinated debenture. The effective date of the interest rate swap transaction is June 15, 2017, and Heartland Statutory Trust VI will effectively remain at a fixed interest rate. The forward-starting swap transaction expires on June 15, 2024. The second forward starting interest rate swap is effective on March 1, 2017, and will replace the current interest rate swap related to Heartland Statutory Trust VII upon its expiration on March 1, 2017.

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments designated as cash flow hedges at June 30, 2015, and December 31, 2014, in thousands:

	Notional Amount		Fair Value			Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2015
Interest rate swap	$	9,667	$	(159	)	Other Liabilities	2.937	%	5.140	%	04/20/2016
Interest rate swap	25,000		(523		)	Other Liabilities	0.283	%	2.255	%	03/17/2021
Interest rate swap	20,000		(877		)	Other Liabilities	0.283	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,680		)	Other Liabilities	0.271	%	3.355	%	01/07/2020
Interest rate swap	10,000		(86		)	Other Liabilities	0.281	%	1.674	%	03/26/2019
Interest rate swap	10,000		(86		)	Other Liabilities	0.283	%	1.658	%	03/18/2019
Interest rate swap	20,000		491			Other Assets	1.700	%	2.390	%	06/15/2024
Interest rate swap	20,000		452			Other Assets	1.676	%	2.352	%	03/01/2024
December 31, 2014
Interest rate swap	$	10,369	$	(248	)	Other Liabilities	2.915	%	5.140	%	04/20/2016
Interest rate swap	25,000		(534		)	Other Liabilities	0.243	%	2.255	%	03/17/2021
Interest rate swap	20,000		(1,046		)	Other Liabilities	0.234	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,748		)	Other Liabilities	0.232	%	3.355	%	01/07/2020
Interest rate swap	10,000		(35		)	Other Liabilities	0.255	%	1.674	%	03/26/2019
Interest rate swap	10,000		(35		)	Other Liabilities	0.243	%	1.658	%	03/18/2019

The table below identifies the gains and losses recognized on Heartland's derivative instruments designated as cash flow hedges for the six months ended June 30, 2015, and June 30, 2014, in thousands:

	Effective Portion							Ineffective Portion
	Recognized in OCI			Reclassified from AOCI into Income				Recognized in Income on Derivatives
	Amount of Gain (Loss)			Category	Amount of Gain (Loss)			Category	Amount of Gain (Loss)
Three Months Ended June 30, 2015
Interest rate swap	$	50		Interest Expense	$	(56	)	Other Income	$	—
Interest rate swap	387			Interest Expense	(126		)	Other Income	—
Interest rate swap	124			Interest Expense	(150		)	Other Income	—
Interest rate swap	252			Interest Expense	(155		)	Other Income	—
Interest rate swap	57			Interest Expense	(36		)	Other Income	—
Interest rate swap	55			Interest Expense	(36		)	Other Income	—
Interest rate swap	584			Interest Expense	—			Other Income	—
Interest rate swap	559			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2015
Interest rate swap	$	89		Interest Expense	$	(113	)	Other Income	$	—
Interest rate swap	11			Interest Expense	(252		)	Other Income	—
Interest rate swap	169			Interest Expense	(301		)	Other Income	—
Interest rate swap	68			Interest Expense	(315		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	491			Interest Expense	—			Other Income	—
Interest rate swap	452			Interest Expense	—			Other Income	—
Three Months Ended June 30, 2014
Interest rate swap	$	44		Interest Expense	$	(64	)	Other Income	$	—
Interest rate swap	(372		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	65			Interest Expense	(151		)	Other Income	—
Interest rate swap	(159		)	Interest Expense	(156		)	Other Income	—
Interest rate swap	(86		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(85		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	—			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2014
Interest rate swap	$	95		Interest Expense	$	(129	)	Other Income	$	—
Interest rate swap	(310		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	179			Interest Expense	(302		)	Other Income	—
Interest rate swap	(240		)	Interest Expense	(315		)	Other Income	—
Interest rate swap	(41		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(40		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	146			Interest Expense	(146		)	Other Income	—

Fair Value Hedge

Heartland uses interest rate swaps to convert certain long term fixed rate loans to floating rates to hedge interest rate risk exposure. Heartland uses hedge accounting in accordance with ASC 815, with the unrealized gains and losses, representing the change in fair value of the derivative and the change in fair value of the risk being hedged on the related loan, being recorded in the consolidated statements of income. The ineffective portions of the unrealized gains or losses, if any, are recorded in interest income and interest expense in the consolidated statements of income. Heartland uses statistical regression to assess hedge effectiveness, both at the inception of the hedge as well as on a continual basis. The regression analysis involves regressing the periodic change in fair value of the hedging instrument against the periodic changes in the fair value of the asset being hedged due to changes in the hedge risk.

During the second quarter of 2015, Heartland entered into an interest rate swap, paying a fixed interest rate of 3.40% to the counterparty and receives a variable interest rate from the same counterparty based on one month LIBOR plus .88% calculated on a notional amount of $13.8 million. The swap is designated as a fair value hedge and did not have a material impact on the consolidated balance sheets as of June 30, 2015, or consolidated statements of income for the three- and six-month periods ended June 30, 2015. Heartland was required to pledge $414,000 of cash as collateral as of June 30, 2015. The swap was recorded in other liabilities with a fair value of $3,000 as of June 30, 2015.

Loan Swaps

Heartland enters into interest rate swap loan relationships with customers to meet their financing needs. Upon entering into these loan swaps, Heartland enters into offsetting positions with counterparties in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with the fair values reported in other assets and other liabilities on the consolidated balance sheets. As of June 30, 2015, the fair value of the swap asset was $193,000, and the fair value of the swap liability was $193,000. The notional amount of the back-to-back loan swaps total $16.2 million as of June 30, 2015. As of June 30, 2015, Heartland did not have any cash posted as collateral related to these back-to-back swaps, and there was no material impact to the consolidated financial statements.

Mortgage Derivatives

Heartland also has entered into interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans and mortgage backed securities that are considered derivative instruments. The fair value of these commitments is recorded on the consolidated balance sheets with the changes in fair value recorded in the consolidated statements of income as a component of net gains on sale of loans held for sale. These derivative contracts are designated as free standing derivative contracts and are not designated against specific assets and liabilities on the consolidated balance sheets or forecasted transactions and therefore do not qualify for hedge accounting treatment.

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments not designated as hedging instruments at June 30, 2015, and December 31, 2014, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2015
Interest rate lock commitments (mortgage)	Other Assets	$	197,970	$	6,558
Forward commitments	Other Assets	301,592		2,834
Forward commitments	Other Liabilities	160,960		(603		)
December 31, 2014
Interest rate lock commitments (mortgage)	Other Assets	$	74,863	$	2,496
Forward commitments	Other Assets	88,484		275
Forward commitments	Other Liabilities	218,337		(1,619		)

The table below identifies the income statement category of the gains and losses recognized in income on Heartland's derivative instruments not designated as hedging instruments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	(1,712	)
Forward commitments	Gains on sale of loans held for sale	3,700
Six Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,832
Forward commitments	Gains on sale of loans held for sale	3,575
Three Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,435
Forward commitments	Gains on sale of loans held for sale	(1,837		)
Six Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	5,317
Forward commitments	Gains on sale of loans held for sale	(2,979		)

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Derivative Financial Instruments (Cash collateral on derivative financial instruments) (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Cash pledged as collateral	$ 3,000,000	$ 5,300,000
Counterparties
Derivative [Line Items]
Cash pledged as collateral	$ 2,400,000	$ 0

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Derivative Financial Instruments (Executed interest rate swap) (Details) - Derivative Financial Instruments $ in Millions	Jun. 30, 2015 USD ($) transaction	Mar. 31, 2015 USD ($) transaction	Apr. 20, 2011 USD ($)
Derivative [Line Items]
Derivative, notional amount			$ 15.0
Heartland Financial Statutory Trust VI
Derivative [Line Items]
Derivative, notional amount		$ 20.0
Number of swap transactions | transaction		2
Cash Flow Hedges
Derivative [Line Items]
Derivative, notional amount	$ 85.0
Number of swap transactions | transaction	3
Cash Flow Hedges | Heartland Financial Statutory Trust IV, V and VII
Derivative [Line Items]
Derivative, notional amount	$ 65.0
Cash Flow Hedges | Morrill Statutory Trust I and II
Derivative [Line Items]
Derivative, notional amount	$ 20.0

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Goodwill, Core Deposit Premium and Other Intangible Assets (Changes in capitalized mortgage servicing rights) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Mortgage servicing rights
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance at beginning of period	$ 24,984	$ 21,788
Originations	7,015	3,344
Amortization	(4,360)	(2,355)
Balance at end of period	27,639	22,777
Fair value of mortgage servicing rights	$ 36,971	$ 31,471	$ 34,200
Mortgage servicing rights, net to servicing portfolio	0.73%	0.71%
Commercial servicing rights
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance at beginning of period	$ 0	$ 0
Acquired	4,255	0
Originations	141	0
Amortization	(452)	0
Balance at end of period	3,944	$ 0
Fair value of mortgage servicing rights	$ 4,600

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Acquisitions (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands					6 Months Ended	12 Months Ended
	May. 28, 2015	May. 14, 2015	Apr. 15, 2015	Jan. 16, 2015	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Business Acquisition [Line Items]
Assets					$ 6,717,007	$ 6,051,812	$ 5,913,918
Loans outstanding					4,404,209	3,836,554
Deposits					5,317,269	4,768,022
Nonaccrual loans					25,894	24,205
Premier Valley Bank
Business Acquisition [Line Items]
Purchase price in cash	$ 95,000
Purchase price (in usd per share)	$ 7.73
Payment in common stock, percentage	70.00%
Payment in cash, percentage	30.00%
Assets					655,000
Loans outstanding					413,000
Deposits					573,000
First Scottsdale Bank, N.A.
Business Acquisition [Line Items]
Purchase price in cash		$ 17,700
Assets					96,000
Loans outstanding					63,000
Deposits					79,000
Community Bancorporation of New Mexico, Inc.
Business Acquisition [Line Items]
Purchase price in cash			$ 11,100
Assets					175,000
Loans outstanding					109,000
Deposits					146,000
Community Banc-Corp of Sheboygan, Inc.
Business Acquisition [Line Items]
Purchase price in cash				$ 6
Assets				506,800
Loans outstanding				395,000
Deposits				$ 433,900
Purchase price, percentage of adjusted tangible book value				155.00%
Total purchase price				$ 53,058
Purchase price paid by delivery of shares of common stock				1,970,720
Pre-tax merger related expenses					$ 1,700	$ 1,700
Nonaccrual loans				$ 5,800

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Loans and Leases (Loans and leases not covered by share agreements (credit quality indicator)) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	$ 4,451,294	$ 3,877,863
Commercial
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	1,189,626	1,036,080
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	2,010,091	1,707,060
Commercial and commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	3,199,717	2,743,140
Agricultural and agricultural real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	444,110	423,827
Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	443,026	380,341
Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	364,441	330,555
Pass
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	4,108,825	3,592,750
Pass | Commercial
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	1,071,508	939,717
Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	1,834,875	1,567,711
Pass | Commercial and commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	2,906,383	2,507,428
Pass | Agricultural and agricultural real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	422,208	402,883
Pass | Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	424,365	361,325
Pass | Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	355,869	321,114
Nonpass
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	342,469	285,113
Nonpass | Commercial
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	118,118	96,363
Nonpass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	175,216	139,349
Nonpass | Commercial and commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	293,334	235,712
Nonpass | Agricultural and agricultural real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	21,902	20,944
Nonpass | Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	18,661	19,016
Nonpass | Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans and leases receivable	$ 8,572	$ 9,441

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table represents, in thousands, the amounts recorded on the consolidated balance sheet as of January 16, 2015:

	As of January 16, 2015
Fair value of consideration paid
Common Stock	$	53,052
Cash	6
Total consideration paid	53,058
Fair value of assets acquired
Cash and due from banks	7,109
Securities:
Securities available for sale	52,976
Other securities	1,284
Loans held for sale	728
Loans held to maturity	395,007
Premises, furniture and equipment, net	13,954
Other real estate, net	346
Other intangible assets, net	10,295
Other assets	25,066
Total assets	506,765
Fair value of liabilities assumed
Deposits	433,919
Short term borrowings	24,836
Other borrowings	6,097
Other liabilities	7,434
Total liabilities assumed	472,286
Fair value of net assets acquired	34,479
Goodwill resulting from acquisition	$	18,579

Business Acquisition, Pro Forma Information

The following pro forma information presents the results of operations for the years ended December 31, 2014, and December 31, 2013, as if the Community Banc-Corp of Sheboygan, Inc. acquisition occurred on January 1, 2013:

(Dollars in thousands, except per share data)	For the Years Ended
	December 31, 2014		December 31, 2013
Net interest income	$	220,358	$	179,001
Net income	$	44,710	$	42,105
Basic earnings per share	$	2.19	$	2.20
Diluted earnings per share	$	2.16	$	2.17

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments designated as cash flow hedges at June 30, 2015, and December 31, 2014, in thousands:

	Notional Amount		Fair Value			Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2015
Interest rate swap	$	9,667	$	(159	)	Other Liabilities	2.937	%	5.140	%	04/20/2016
Interest rate swap	25,000		(523		)	Other Liabilities	0.283	%	2.255	%	03/17/2021
Interest rate swap	20,000		(877		)	Other Liabilities	0.283	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,680		)	Other Liabilities	0.271	%	3.355	%	01/07/2020
Interest rate swap	10,000		(86		)	Other Liabilities	0.281	%	1.674	%	03/26/2019
Interest rate swap	10,000		(86		)	Other Liabilities	0.283	%	1.658	%	03/18/2019
Interest rate swap	20,000		491			Other Assets	1.700	%	2.390	%	06/15/2024
Interest rate swap	20,000		452			Other Assets	1.676	%	2.352	%	03/01/2024
December 31, 2014
Interest rate swap	$	10,369	$	(248	)	Other Liabilities	2.915	%	5.140	%	04/20/2016
Interest rate swap	25,000		(534		)	Other Liabilities	0.243	%	2.255	%	03/17/2021
Interest rate swap	20,000		(1,046		)	Other Liabilities	0.234	%	3.220	%	03/01/2017
Interest rate swap	20,000		(1,748		)	Other Liabilities	0.232	%	3.355	%	01/07/2020
Interest rate swap	10,000		(35		)	Other Liabilities	0.255	%	1.674	%	03/26/2019
Interest rate swap	10,000		(35		)	Other Liabilities	0.243	%	1.658	%	03/18/2019

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The table below identifies the gains and losses recognized on Heartland's derivative instruments designated as cash flow hedges for the six months ended June 30, 2015, and June 30, 2014, in thousands:

	Effective Portion							Ineffective Portion
	Recognized in OCI			Reclassified from AOCI into Income				Recognized in Income on Derivatives
	Amount of Gain (Loss)			Category	Amount of Gain (Loss)			Category	Amount of Gain (Loss)
Three Months Ended June 30, 2015
Interest rate swap	$	50		Interest Expense	$	(56	)	Other Income	$	—
Interest rate swap	387			Interest Expense	(126		)	Other Income	—
Interest rate swap	124			Interest Expense	(150		)	Other Income	—
Interest rate swap	252			Interest Expense	(155		)	Other Income	—
Interest rate swap	57			Interest Expense	(36		)	Other Income	—
Interest rate swap	55			Interest Expense	(36		)	Other Income	—
Interest rate swap	584			Interest Expense	—			Other Income	—
Interest rate swap	559			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2015
Interest rate swap	$	89		Interest Expense	$	(113	)	Other Income	$	—
Interest rate swap	11			Interest Expense	(252		)	Other Income	—
Interest rate swap	169			Interest Expense	(301		)	Other Income	—
Interest rate swap	68			Interest Expense	(315		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	(51		)	Interest Expense	(71		)	Other Income	—
Interest rate swap	491			Interest Expense	—			Other Income	—
Interest rate swap	452			Interest Expense	—			Other Income	—
Three Months Ended June 30, 2014
Interest rate swap	$	44		Interest Expense	$	(64	)	Other Income	$	—
Interest rate swap	(372		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	65			Interest Expense	(151		)	Other Income	—
Interest rate swap	(159		)	Interest Expense	(156		)	Other Income	—
Interest rate swap	(86		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(85		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	—			Interest Expense	—			Other Income	—
Six Months Ended June 30, 2014
Interest rate swap	$	95		Interest Expense	$	(129	)	Other Income	$	—
Interest rate swap	(310		)	Interest Expense	(129		)	Other Income	—
Interest rate swap	179			Interest Expense	(302		)	Other Income	—
Interest rate swap	(240		)	Interest Expense	(315		)	Other Income	—
Interest rate swap	(41		)	Interest Expense	(37		)	Other Income	—
Interest rate swap	(40		)	Interest Expense	(36		)	Other Income	—
Interest rate swap	146			Interest Expense	(146		)	Other Income	—

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location

The table below identifies the balance sheet category and fair values of Heartland's derivative instruments not designated as hedging instruments at June 30, 2015, and December 31, 2014, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2015
Interest rate lock commitments (mortgage)	Other Assets	$	197,970	$	6,558
Forward commitments	Other Assets	301,592		2,834
Forward commitments	Other Liabilities	160,960		(603		)
December 31, 2014
Interest rate lock commitments (mortgage)	Other Assets	$	74,863	$	2,496
Forward commitments	Other Assets	88,484		275
Forward commitments	Other Liabilities	218,337		(1,619		)

The table below identifies the income statement category of the gains and losses recognized in income on Heartland's derivative instruments not designated as hedging instruments for the three- and six-month periods ended June 30, 2015, and June 30, 2014, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	(1,712	)
Forward commitments	Gains on sale of loans held for sale	3,700
Six Months Ended June 30, 2015
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,832
Forward commitments	Gains on sale of loans held for sale	3,575
Three Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	3,435
Forward commitments	Gains on sale of loans held for sale	(1,837		)
Six Months Ended June 30, 2014
Interest rate lock commitments (mortgage)	Gains on sale of loans held for sale	$	5,317
Forward commitments	Gains on sale of loans held for sale	(2,979		)

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Loans and Leases (Troubled debt restructurings on financing receivables) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) loans	Jun. 30, 2014 USD ($) loans	Jun. 30, 2015 USD ($) loans	Jun. 30, 2014 USD ($) loans
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	1	4	3	4
Pre- Modification Recorded Investment	$ 1,141	$ 3,693	$ 5,133	$ 3,693
Post- Modification Recorded Investment	$ 1,141	$ 3,693	$ 5,133	$ 3,693
Commercial
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	1	0	1	0
Pre- Modification Recorded Investment	$ 830	$ 0	$ 830	$ 0
Post- Modification Recorded Investment	$ 830	$ 0	$ 830	$ 0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	0	1	1	1
Pre- Modification Recorded Investment	$ 0	$ 298	$ 3,992	$ 298
Post- Modification Recorded Investment	$ 0	$ 298	$ 3,992	$ 298
Commercial and commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	1	1	2	1
Pre- Modification Recorded Investment	$ 830	$ 298	$ 4,822	$ 298
Post- Modification Recorded Investment	$ 830	$ 298	$ 4,822	$ 298
Agricultural and agricultural real estate
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	1	2	1	2
Pre- Modification Recorded Investment	$ 311	$ 3,357	$ 311	$ 3,357
Post- Modification Recorded Investment	$ 311	$ 3,357	$ 311	$ 3,357
Residential real estate
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	0	1	0	1
Pre- Modification Recorded Investment	$ 0	$ 38	$ 0	$ 38
Post- Modification Recorded Investment	$ 0	$ 38	$ 0	$ 38
Consumer
Financing Receivable, Modifications [Line Items]
Number of Loans | loans	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0

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Securities (Realized gain (loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Proceeds from sales	$ 270,688	$ 154,603	$ 526,026	$ 509,891
Gross security gains	3,819	974	8,441	3,446
Gross security losses	$ 709	$ 120	$ 978	$ 1,811

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Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest on other borrowings	$ 3,766	$ 3,685	$ 8,568	$ 7,343
Securities gains, net	3,110	854	7,463	1,635
Income taxes	3,989	4,150	11,588	5,853
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Derivatives [Member]
Interest on other borrowings	559	573	1,123	1,094
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Unrealized Investment Gain (Loss) [Member]
Securities gains, net	3,110	854	7,463	1,635
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Other Comprehensive Income (Loss) [Member]
Income taxes	$ 952	$ 105	$ 2,365	$ 202

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2014, included in the Form 10-K of Heartland Financial USA, Inc. ("Heartland") filed with the Securities and Exchange Commission ("SEC") on March 13, 2015. Accordingly, footnote disclosures which would substantially duplicate the disclosure contained in the audited consolidated financial statements have been omitted.

The financial information of Heartland included herein has been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments), that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the interim period ended June 30, 2015, are not necessarily indicative of the results expected for the year ending December 31, 2015.

Earnings Per Share

Basic earnings per share is determined using net income available to common stockholders and weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average common shares and assumed incremental common shares issued. Amounts used in the determination of basic and diluted earnings per share for the six-month periods ended June 30, 2015 and 2014, are shown in the table below:

	Three Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	15,160		$	10,774
Preferred dividends and discount	(204		)	(204		)
Net income available to common stockholders	$	14,956		$	10,570
Weighted average common shares outstanding for basic earnings per share	20,599			18,458
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	278			289
Weighted average common shares for diluted earnings per share	20,877			18,747
Earnings per common share — basic	$	0.73		$	0.57
Earnings per common share — diluted	$	0.72		$	0.56
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95
	Six Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	30,869		$	17,664
Preferred dividends and discount	(408		)	(408		)
Net income available to common stockholders	$	30,461		$	17,256
Weighted average common shares outstanding for basic earnings per share	20,408			18,448
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	274			291
Weighted average common shares for diluted earnings per share	20,682			18,739
Earnings per common share — basic	$	1.49		$	0.94
Earnings per common share — diluted	$	1.47		$	0.92
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95

Stock-Based Compensation

Heartland may grant, through its Nominating and Compensation Committee (the "Compensation Committee"), non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and cash incentive awards, under its 2012 Long-Term Incentive Plan (the "Plan"). The Plan, which was approved by stockholders in May 2012 and replaced Heartland's 2005 Long-Term Incentive Plan with respect to grants after such approval, reserved 265,153 shares of common stock at June 30, 2015, for issuance under future awards that may be granted under the Plan to employees and directors of, and service providers to, Heartland or its subsidiaries.

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, "Compensation-Stock Compensation" requires the measurement of the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the award is based upon its fair value estimated on the date of grant and recognized in the consolidated statements of income over the vesting period of the award. The fair market value of restricted stock and restricted stock units is based on the fair value of the underlying shares of common stock on the date of grant. The fair value of stock options is estimated on the date of grant using the Black-Scholes model.

The amount of tax benefit related to the exercise, vesting, and forfeiture of equity-based awards reflected in additional paid-in-capital, not taxes payable, was $651,000 and $119,000 during the six months ended June 30, 2015 and 2014, respectively.

Restricted Stock Units

The Plan permits the Compensation Committee to grant restricted stock units ("RSUs"). On January 20, 2015, the Compensation Committee granted time-based RSUs with respect to 78,220 shares of common stock, and on March 11, 2014, the Compensation Committee granted time-based RSUs with respect to 67,190 shares of common stock to selected officers. The time-based RSUs, which represent the right, without payment, to receive shares of Heartland common stock at a specified date in the future based on specific vesting conditions, vest over five years in three equal installments on the third, fourth and fifth anniversaries of the grant date, will be settled in common stock upon vesting, and will not be entitled to dividends until vested. The time-based RSUs vest upon a "qualified retirement" (as defined in the RSU agreement), and the retiree is required to sign a non-solicitation and non-compete agreement as a condition to vesting.

In addition to the time-based RSUs referenced in the preceding paragraph, the Compensation Committee granted performance-based RSUs with respect to 39,075 shares of common stock on March 10, 2015, and performance-based RSUs with respect to 32,645 shares of common stock on March 11, 2014, to Heartland executives and subsidiary presidents. These performance-based RSUs vest based first on performance measures tied to Heartland's earnings and loans on December 31, 2015, and December 31, 2014, respectively, and then on time-based vesting conditions. For the grants awarded in 2015, the portion of the RSUs earned based on performance vest on December 31, 2017, and for the grants awarded in 2014, the portion of the RSUs earned based on performance vest on December 31, 2016, subject to employment on the respective vesting dates.

The Compensation Committee also grants RSUs under the Plan to directors as part of their compensation, to new management level employees at commencement of employment, and to other employees and service providers as incentives. During the six months ended June 30, 2015, and June 30, 2014, 22,648 and 31,525 RSUs, respectively, were granted to directors and new employees.

A summary of the status of the RSUs as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Outstanding at January 1	396,555		$	21.48	353,070		$	18.48
Granted	139,943		28.90		131,235		26.69
Vested	(151,681	)	17.98		(73,224	)	16.65
Forfeited	(11,198	)	25.14		(3,901	)	19.10
Outstanding at June 30	373,619		$	25.55	407,180		$	21.53

Total compensation costs recorded for RSUs were $1.9 million and $1.8 million for the six-month periods ended June 30, 2015 and 2014. As of June 30, 2015, there were $4.6 million of total unrecognized compensation costs related to the 2005 and 2012 Long-Term Incentive Plans for RSUs which are expected to be recognized through 2019.

Options

Although the Plan provides authority to the Compensation Committee to grant stock options, no options were granted during the first six months of 2015 and 2014. Prior to 2009, options were typically granted annually with an expiration date ten years after the date of grant. Vesting was generally over a five-year service period with portions of a grant becoming exercisable at three years, four years, and five years after the date of grant. A summary of the status of the stock options as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at January 1	215,851		$	23.85	261,936		$	23.60
Granted	—		—		—		—
Exercised	(56,650	)	22.85		(5,000	)	19.13
Forfeited	(2,250	)	23.88		(6,500	)	26.39
Outstanding at June 30	156,951		$	24.18	250,436		$	23.62
Options exercisable at June 30	156,951		$	24.18	250,436		$	23.62

AtJune 30, 2015, the vested options totaled 156,951 shares with a weighted average exercise price of $24.18 per share and a weighted average remaining contractual life of 1.68 years. The intrinsic value (the difference between the market price and the aggregate exercise price) for the vested options as of June 30, 2015, was $2.0 million. The intrinsic value for the total of all options exercised during the six months ended June 30, 2015, was $508,000.

The exercise price of stock options granted is established by the Compensation Committee, but the exercise price for the stock options may not be less than the fair market value of the shares on the date that the option is granted or, if greater, the par value of a share of stock. Each option granted is exercisable in full at any time or from time to time, subject to vesting provisions, as determined by the Compensation Committee and as provided in the option agreement, but such time may not exceed ten years from the grant date. Cash received from options exercised was $1.3 million for the six months ended June 30, 2015, and $96,000 for the six months ended June 30, 2014.

Total compensation costs recorded for options were $0 for both six-month periods ended June 30, 2015 and 2014. There are no unrecorded compensation costs related to options at June 30, 2015.

Subsequent Events

Heartland has no subsequent events requiring recognition as of June 30, 2015, or disclosure through the filing date of this quarterly report on Form 10-Q with the SEC.

Effect of New Financial Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." The amendments in ASU 2014-01 to Topic 323, "Equity Investments and Joint Ventures," provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefit received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for fiscal years, and interim periods within those years, beginning after December 31, 2014, and should be applied retrospectively to all periods presented. Heartland elected to use the proportional amortization method for equity investments in qualified affordable housing projects that meet the conditions specified in ASU-2014-01. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity.

In January 2014, the FASB issued ASU 2014-04, "Receivables-Troubled Debt Restructurings by Creditors: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure." The amendments in ASU 2014-04 clarify that an in-substance foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (i) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (ii) the borrower conveying all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. ASU 2014-04 also requires disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in loans collateralized by residential real estate property that are in the process of foreclosure. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. Once adopted, an entity can elect either (i) a modified retrospective transition method or (ii) a prospective transition method. The modified retrospective transition method is applied by means of a cumulative-effect adjustment to residential mortgage loans and foreclosed residential real estate properties existing as of the beginning of the period for which the amendments of ASU 2014-04 are effective, with real estate reclassified to loans measured at the carrying value of the real estate at the date of adoption and loans reclassified to real estate measured at the lower of net carrying value of the loan or the fair value of the real estate less costs to sell at the date of adoption. The prospective transition method is applied by means of applying the amendments of ASU 2014-04 to all instances of receiving physical possession of residential real estate properties that occur after the date of adoption. Heartland adopted this standard on January 1, 2015, and the adoption did not have a material impact on the results of operations, financial position, and liquidity. As of June 30, 2015, Heartland had not received possession of any residential real estate properties that meet the disclosure requirements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The amendment clarifies the principles for recognizing revenue and develops a common revenue standard. The amendment outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In applying the revenue model to contracts within its scope, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB Codification. The standard also requires significantly expanded disclosures about revenue recognition. The amendment is effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is not permitted. Heartland intends to adopt the accounting standard during the first quarter of 2018, as required, and is currently evaluating the impact on its results of operations, financial position, and liquidity.

In August 2014, the FASB issued ASU 2014-14, "Receivables-Troubled Debt Restructurings by Creditors: Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure." The amendment clarifies how creditors are to classify certain government-guaranteed mortgage loans upon foreclosure. The amendment requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separate from the loan before foreclosure, and (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered for the guarantor. This amendment is effective for annual reporting periods, and interim reporting periods within those years, beginning after December 15, 2014, with early adoption permitted. Heartland adopted this standard on January 1, 2015, and the adoption did not have an impact on the results of operations, financial position, and liquidity.

In January 2015, the FASB issued ASU 2015-01, "Income Statement-Extraordinary and Unusual Items." The amendment eliminates from U.S. GAAP the concept of extraordinary items. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. This amended guidance will prohibit separate disclosure of extraordinary items in the income statement. This amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Heartland does not expect the adoption of this standard to have a material impact on the results of operations, financial position, and liquidity.

In April 2015, the FASB issued ASU 2015-03, "Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs." The amendment intends to simplify the presentation of debt issuance costs and more closely align the presentation of debt issuance costs under U.S. GAAP with the presentation under comparable International Financial Reporting Standards. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. Debt issuance costs related to a recognized debt liability are to be presented on the balance sheet as a direct reduction from the debt liability, similar to the presentation of debt premiums or discounts. The costs will continue to be amortized to interest expense using the effective interest method. This amendment is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The ASU requires retrospective application to all prior periods presented in the financial statements. Heartland adopted this standard effective March 31, 2015, at which time $550,000 was reclassified from other assets to other borrowings on the consolidated balance sheet for all periods presented. The adoption of this standard did not have a material impact on the results of operations, financial position, and liquidity.

XML

Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	$ 41,854	$ 38,573	$ 41,449	$ 41,685
Charge-offs	(2,734)	(1,400)	(4,738)	(12,058)
Recoveries	820	968	1,558	2,183
Provision	5,674	2,751	7,345	9,082
Ending Balance	45,614	40,892	45,614	40,892
Commercial
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	11,688	11,633	11,909	13,099
Charge-offs	(682)	(148)	(956)	(7,065)
Recoveries	111	208	431	407
Provision	1,947	234	1,680	5,486
Ending Balance	13,064	11,927	13,064	11,927
Commercial real estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	16,635	13,010	15,898	14,152
Charge-offs	(371)	(161)	(704)	(1,084)
Recoveries	370	514	496	1,294
Provision	974	1,317	1,918	318
Ending Balance	17,608	14,680	17,608	14,680
Agricultural
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	3,216	2,571	3,295	2,992
Charge-offs	(275)	(125)	(551)	(1,636)
Recoveries	2	2	24	4
Provision	733	340	908	1,428
Ending Balance	3,676	2,788	3,676	2,788
Residential real estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	3,745	3,671	3,741	3,720
Charge-offs	(55)	(55)	(113)	(204)
Recoveries	70	30	107	56
Provision	339	169	364	243
Ending Balance	4,099	3,815	4,099	3,815
Consumer
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	6,570	7,376	6,606	7,722
Charge-offs	(1,351)	(911)	(2,414)	(2,069)
Recoveries	267	214	500	422
Provision	1,681	837	2,475	1,441
Ending Balance	7,167	7,516	7,167	7,516
Unallocated
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	0	312	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	0	(146)	0	166
Ending Balance	$ 0	$ 166	$ 0	$ 166

XML

Derivative Financial Instruments (Balance sheet category and fair values of derivative instruments (not designated as hedging instruments)) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Other Assets | Interest rate lock commitments
Derivatives, Fair Value [Line Items]
Notional Amount	$ 197,970	$ 74,863
Fair Value	6,558	2,496
Other Assets | Forward commitments
Derivatives, Fair Value [Line Items]
Notional Amount	301,592	88,484
Fair Value	2,834	275
Other Liabilities | Forward commitments
Derivatives, Fair Value [Line Items]
Notional Amount	160,960	218,337
Fair Value	$ (603)	$ (1,619)

XML

Fair Value (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below presents Heartland's assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2015, and December 31, 2014, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:

	Total Fair Value		Level 1		Level 2		Level 3
June 30, 2015
Assets
Securities available for sale
U.S. government corporations and agencies	$	15,802	$	523	$	15,279	$	—
Mortgage-backed securities	1,108,050		—		1,102,523		5,527
Obligations of states and political subdivisions	186,001		—		186,001		—
Corporate debt securities	740		—		—		740
Equity securities	5,106		—		5,106		—
Derivative financial instruments	1,136		—		1,136		—
Interest rate lock commitments	6,558		—		—		6,558
Forward commitments	2,834		—		2,834		—
Total assets at fair value	$	1,326,227	$	523	$	1,312,879	$	12,825
Liabilities
Derivative financial instruments	$	3,607	$	—	$	3,607	$	—
Forward commitments	603		—		603		—
Total liabilities at fair value	$	4,210	$	—	$	4,210	$	—
December 31, 2014
Assets
Securities available for sale
U.S. government corporations and agencies	$	24,093	$	2,529	$	21,564	$	—
Mortgage-backed securities	1,219,266		—		1,214,319		4,947
Obligations of states and political subdivisions	153,426		—		153,426		—
Corporate debt securities	—		—		—		—
Equity securities	5,083		—		5,083		—
Interest rate lock commitments	2,496		—		—		2,496
Forward commitments	275		—		275		—
Total assets at fair value	$	1,404,639	$	2,529	$	1,394,667	$	7,443
Liabilities
Derivative financial instruments	$	3,646	$	—	$	3,646	$	—
Forward commitments	1,619		—		1,619		—
Total liabilities at fair value	$	5,265	$	—	$	5,265	$	—

Fair Value Measurements, Nonrecurring

The tables below present Heartland's assets that are measured at fair value on a nonrecurring basis, in thousands:

	Fair Value Measurements at June 30, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial real estate	4,927		—		—		4,927		160
Agricultural and agricultural real estate	—		—		—		—		—
Residential real estate	2,662		—		—		2,662		63
Consumer	1,854		—		—		1,854		—
Total collateral dependent impaired loans	$	9,443	$	—	$	—	$	9,443	$	223
Other real estate owned	$	16,983	$	—	$	—	$	16,983	$	855

	Fair Value Measurements at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Year-to- Date Losses
Collateral dependent impaired loans:
Commercial	$	1,033	$	—	$	—	$	1,033	$	659
Commercial real estate	12,584		—		—		12,584		492
Agricultural and agricultural real estate	552		—		—		552		2,229
Residential real estate	3,173		—		—		3,173		—
Consumer	2,003		—		—		2,003		22
Total collateral dependent impaired loans	$	19,345	$	—	$	—	$	19,345	$	3,402
Other real estate owned	$	19,016	$	—	$	—	$	19,016	$	1,938

Fair Value Inputs, Liabilities, Quantitative Information

The following tables present additional quantitative information about assets measured at fair value and for which Heartland has utilized Level 3 inputs to determine fair value, in thousands:

	Fair Value at 6/30/15		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	5,527	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	16.29 - 36.53% (29.70%)
				Actual deferrals	5.60 - 27.01% (17.21%)
Corporate debt securities	740		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	6,558		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	4,927		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	—		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	2,662		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	1,854		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	16,983		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at June 30, 2015, was 86%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

	Fair Value at 12/31/14		Valuation Technique	Unobservable Input	Range (Weighted Average)
Z-TRANCHE Securities	$	4,947	Discounted cash flows	Pretax discount rate	7.00 - 9.00%
				Actual defaults	15.60 - 30.60% (24.50%)
				Actual deferrals	7.20 - 17.30% (12.90%)
Corporate debt securities	—		Discounted cash flows	Bank analysis	(1)
Interest rate lock commitments	2,496		Discounted cash flows	Closing ratio	(2)
Collateral dependent impaired loans:
Commercial	1,033		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Commercial real estate	12,584		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Agricultural and agricultural real estate	552		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Residential real estate	3,173		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
Consumer	2,003		Modified appraised value	Third party valuation	(3)
				Valuation discount	(3)
Other real estate owned	19,016		Modified appraised value	Third party appraisal	(3)
				Appraisal discount	(3)
(1) The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.
(2) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at December 31, 2014, was 84%.
(3) Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The changes in fair value of the Z-TRANCHE, a Level 3 asset, that is measured on a recurring basis are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	4,947		$	3,298
Total gains (losses):
Included in earnings	—			—
Included in other comprehensive income	696			1,783
Purchases, sales and settlements:
Purchases	6			—
Sales	—			—
Settlements	(122		)	(134		)
Balance at period end	$	5,527		$	4,947

The changes in fair value of the corporate debt securities, Level 3 assets, that are measured on a recurring basis is summarized in the following table, in thousands:

	For the Six Months Ended  June 30, 2015		For the Year Ended December 31, 2014
Balance at January 1,	$	—	$	—
Total gains (losses):
Included in earnings	—		—
Included in other comprehensive income	—		—
Purchases, acquired, sales and settlements:
Purchases	—		—
Acquired	740		—
Sales	—		—
Settlements	—		—
Balance at period end	$	740	$	—

The changes in fair value of the interest rate lock commitments, which are Level 3 financial instruments and are measured on a recurring basis, are summarized in the following table, in thousands:

	For the Six Months Ended June 30, 2015			For the Year Ended December 31, 2014
Balance at January 1,	$	2,496		$	1,809
Total gains (losses) included in earnings	3,832			2,422
Issuances	2,530			2,038
Settlements	(2,300		)	(3,773		)
Balance at period end	$	6,558		$	2,496

Fair Value, by Balance Sheet Grouping

The following analysis, which is inherently limited in depicting fair value, also does not consider any value associated with either existing customer relationships or the ability of Heartland to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

					Fair Value Measurements at June 30, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	119,722	$	119,722	$	119,722	$	—	$	—
Time deposits in other financial institutions	2,355		2,355		2,355		—		—
Securities:
Available for sale	1,315,699		1,315,699		523		1,308,909		6,267
Held to maturity	283,258		292,564		—		292,564		—
Other investments	20,455		20,455		—		20,220		235
Loans held for sale	105,898		105,898		—		105,898		—
Loans, net:
Commercial	1,176,157		1,165,559		—		1,165,559		—
Commercial real estate	1,991,799		1,993,635		—		1,988,708		4,927
Agricultural and agricultural real estate	440,864		443,725		—		443,725		—
Residential real estate	438,184		435,955		—		433,293		2,662
Consumer	357,205		360,176		—		358,322		1,854
Total Loans, net	4,404,209		4,399,050		—		4,389,607		9,443
Derivative financial instruments	1,136		1,136		—		1,136		—
Interest rate lock commitments	6,558		6,558		—		—		6,558
Forward commitments	2,834		2,834		—		2,834		—
Financial liabilities:
Deposits
Demand deposits	1,536,355		1,536,355		—		1,536,355		—
Savings deposits	2,816,666		2,816,666		—		2,816,666		—
Time deposits	964,248		964,248		—		964,248		—
Short term borrowings	477,918		477,918		—		477,918		—
Other borrowings	296,594		299,845		—		299,845		—
Derivative financial instruments	3,607		3,607		—		3,607		—
Forward commitments	603		603		—		603		—

					Fair Value Measurements at December 31, 2014
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	73,871	$	73,871	$	73,871	$	—	$	—
Time deposits in other financial institutions	2,605		2,605		2,605		—		—
Securities:
Available for sale	1,401,868		1,401,868		2,529		1,394,392		4,947
Held to maturity	284,587		296,768		—		296,768		—
Other investments	20,498		20,498		—		20,263		235
Loans held for sale	70,514		70,514		—		70,514		—
Loans, net:
Commercial	1,024,065		1,009,802		—		1,008,769		1,033
Commercial real estate	1,690,899		1,699,722		—		1,687,138		12,584
Agricultural and agricultural real estate	420,623		423,968		—		423,416		552
Residential real estate	377,094		370,178		—		367,005		3,173
Consumer	323,873		330,211		—		328,208		2,003
Total Loans, net	3,836,554		3,833,881		—		3,814,536		19,345
Derivative financial instruments	—		—		—		—		—
Interest rate lock commitments	2,496		2,496		—		—		2,496
Forward commitments	275		275		—		275		—
Financial liabilities:
Deposits
Demand deposits	1,295,193		1,295,193		—		1,295,193		—
Savings deposits	2,687,493		2,687,493		—		2,687,493		—
Time deposits	785,336		785,336		—		785,336		—
Short term borrowings	330,264		330,264		—		330,264		—
Other borrowings	396,255		401,978		—		401,978		—
Derivative financial instruments	3,646		3,646		—		3,646		—
Forward commitments	1,619		1,619		—		1,619		—

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Fair Value (Quantitative Information about Level 3 fair value measurements) (Details) - USD ($) $ in Thousands		6 Months Ended		12 Months Ended
		Jun. 30, 2015		Dec. 31, 2014
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale		$ 1,315,699		$ 1,401,868
Corporate Debt Securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale		740		0
Recurring Basis | Interest rate lock commitments
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Derivative assets		6,558		2,496
Recurring Basis | Corporate Debt Securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale		740		0
Nonrecurring Basis
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		9,443		19,345
Other real estate owned		16,983		19,016
Nonrecurring Basis | Commercial
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		0		1,033
Nonrecurring Basis | Commercial real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		4,927		12,584
Nonrecurring Basis | Agricultural and agricultural real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		0		552
Nonrecurring Basis | Residential real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		2,662		3,173
Nonrecurring Basis | Consumer
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		1,854		2,003
Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale		6,267		4,947
Derivative assets		0		0
Level 3 | Interest rate lock commitments
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Derivative assets		6,558		2,496
Level 3 | Recurring Basis | Interest rate lock commitments
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Derivative assets		$ 6,558	[1]	$ 2,496	[2]
Closing ratio		86.00%		84.00%
Level 3 | Recurring Basis | Z-Tranche Securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale		$ 5,527		$ 4,947
Level 3 | Recurring Basis | Z-Tranche Securities | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Pretax discount rate		7.00%		7.00%
Actual defaults		16.29%		15.60%
Actual deferrals		5.60%		7.20%
Level 3 | Recurring Basis | Z-Tranche Securities | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Pretax discount rate		9.00%		9.00%
Actual defaults		36.53%		30.60%
Actual deferrals		27.01%		17.30%
Level 3 | Recurring Basis | Z-Tranche Securities | Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Actual defaults		29.70%		24.50%
Actual deferrals		17.21%		12.90%
Level 3 | Recurring Basis | Corporate Debt Securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Securities available for sale	[3]	$ 740		$ 0
Level 3 | Nonrecurring Basis
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans		9,443		19,345
Other real estate owned	[4]	16,983		19,016
Level 3 | Nonrecurring Basis | Commercial
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans	[4]	0		1,033
Level 3 | Nonrecurring Basis | Commercial real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans	[4]	4,927		12,584
Level 3 | Nonrecurring Basis | Agricultural and agricultural real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans	[4]	0		552
Level 3 | Nonrecurring Basis | Residential real estate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans	[4]	2,662		3,173
Level 3 | Nonrecurring Basis | Consumer
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral dependent impaired loans	[4]	$ 1,854		$ 2,003

[1] The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at June 30, 2015, was 86%.

[2] The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data; therefore providing a range would not be meaningful. The weighted average closing ratio at December 31, 2014, was 84%.

[3] The unobservable input is the bank analysis market using Moody's Global Bank Rating Methodology. The analysis takes into consideration various performance metrics as well as yield on the debt securities and credit risk analysis.

[4] Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered included age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing range would not be meaningful.

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Securities (Held to maturity securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 283,258	$ 284,587
Gross Unrealized Gains	11,659	13,793
Gross Unrealized Losses	(2,353)	(1,612)
Estimated Fair Value	292,564	296,768
Mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	5,555	5,734
Gross Unrealized Gains	266	217
Gross Unrealized Losses	(816)	(667)
Estimated Fair Value	5,005	5,284
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	277,703	278,853
Gross Unrealized Gains	11,393	13,576
Gross Unrealized Losses	(1,537)	(945)
Estimated Fair Value	$ 287,559	$ 291,484

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Amounts used in the determination of basic and diluted earnings per share for the six-month periods ended June 30, 2015 and 2014, are shown in the table below:

	Three Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	15,160		$	10,774
Preferred dividends and discount	(204		)	(204		)
Net income available to common stockholders	$	14,956		$	10,570
Weighted average common shares outstanding for basic earnings per share	20,599			18,458
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	278			289
Weighted average common shares for diluted earnings per share	20,877			18,747
Earnings per common share — basic	$	0.73		$	0.57
Earnings per common share — diluted	$	0.72		$	0.56
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95
	Six Months Ended June 30,
(Dollars and number of shares in thousands, except per share data)	2015			2014
Net income attributable to Heartland	$	30,869		$	17,664
Preferred dividends and discount	(408		)	(408		)
Net income available to common stockholders	$	30,461		$	17,256
Weighted average common shares outstanding for basic earnings per share	20,408			18,448
Assumed incremental common shares issued upon exercise of stock options and non-vested restricted stock units	274			291
Weighted average common shares for diluted earnings per share	20,682			18,739
Earnings per common share — basic	$	1.49		$	0.94
Earnings per common share — diluted	$	1.47		$	0.92
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	—			95

Summary of RSUs

A summary of the status of the RSUs as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Outstanding at January 1	396,555		$	21.48	353,070		$	18.48
Granted	139,943		28.90		131,235		26.69
Vested	(151,681	)	17.98		(73,224	)	16.65
Forfeited	(11,198	)	25.14		(3,901	)	19.10
Outstanding at June 30	373,619		$	25.55	407,180		$	21.53

Schedule of Status of Stock Options

A summary of the status of the stock options as of June 30, 2015 and 2014, and changes during the six months ended June 30, 2015 and 2014, follows:

	2015				2014
	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at January 1	215,851		$	23.85	261,936		$	23.60
Granted	—		—		—		—
Exercised	(56,650	)	22.85		(5,000	)	19.13
Forfeited	(2,250	)	23.88		(6,500	)	26.39
Outstanding at June 30	156,951		$	24.18	250,436		$	23.62
Options exercisable at June 30	156,951		$	24.18	250,436		$	23.62