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Loans and Leases Loans and leases receivable (Tables)
 6 Months Ended
Jun. 30, 2012
Receivables [Abstract]  
Loans and leases
Loans and leases as of June 30, 2012, and December 31, 2011, were as follows, in thousands:
 
 
June 30, 2012
 
December 31, 2011
Loans and leases receivable held to maturity:
 
 
 
 
Commercial
 
$
667,251

 
$
645,666

Commercial real estate
 
1,236,745

 
1,163,784

Agricultural and agricultural real estate
 
279,285

 
262,975

Residential real estate
 
220,084

 
194,436

Consumer
 
230,594

 
220,099

Gross loans receivable held to maturity
 
2,633,959

 
2,486,960

Net direct financing leases held to maturity
 
290

 
450

Gross loans and leases receivable held to maturity
 
2,634,249

 
2,487,410

Unearned discount
 
(1,382
)
 
(2,463
)
Deferred loan fees
 
(3,270
)
 
(3,663
)
Total net loans and leases receivable held to maturity
 
2,629,597

 
2,481,284

Loans covered under loss share agreements:
 
 
 
 
Commercial and commercial real estate
 
4,497

 
6,380

Agricultural and agricultural real estate
 
858

 
1,659

Residential real estate
 
3,309

 
4,158

Consumer
 
903

 
1,150

Total loans covered under loss share agreements
 
9,567

 
13,347

Allowance for loan and lease losses
 
(41,439
)
 
(36,808
)
Loans and leases receivable, net
 
$
2,597,725

 
$
2,457,823
Allowance for loan and lease losses, based on impairment methodology
All other loans are collectively evaluated for impairment under ASC 450-20. Heartland has made no changes to the accounting for the allowance for loan and lease losses policy during 2012.
 
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, 2012
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
1,241

 
$
9,046

 
$
10,287

 
$
8,220

 
$
659,031

 
$
667,251

Commercial real estate
3,513

 
13,544

 
17,057

 
54,109

 
1,182,636

 
1,236,745

Agricultural and agricultural real estate
10

 
1,992

 
2,002

 
13,447

 
265,838

 
279,285

Residential real estate
720

 
3,179

 
3,899

 
6,594

 
213,490

 
220,084

Consumer
2,152

 
6,041

 
8,193

 
5,474

 
225,120

 
230,594

Lease financing
—

 
1

 
1

 
—

 
290

 
290

Total
$
7,636

 
$
33,803

 
$
41,439

 
$
87,844

 
$
2,546,405

 
$
2,634,249

December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
1,990

 
$
8,557

 
$
10,547

 
$
9,293

 
$
636,373

 
$
645,666

Commercial real estate
1,929

 
12,692

 
14,621

 
66,467

 
1,097,317

 
1,163,784

Agricultural and agricultural real estate
—

 
1,763

 
1,763

 
14,385

 
248,590

 
262,975

Residential real estate
464

 
2,537

 
3,001

 
5,905

 
188,531

 
194,436

Consumer
1,097

 
5,777

 
6,874

 
4,391

 
215,708

 
220,099

Lease financing
—

 
2

 
2

 
—

 
450

 
450

Total
$
5,480

 
$
31,328

 
$
36,808

 
$
100,441

 
$
2,386,969

 
$
2,487,410
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, 2012, and December 31, 2011, in thousands. There were no nonaccrual leases, accruing leases past due 90 days or more or restructured leases at June 30, 2012, and December 31, 2011.
 
 
June 30, 2012
 
December 31, 2011
Nonaccrual loans
 
$
37,529

 
$
48,587

Nonaccrual troubled debt restructured loans
 
7,316

 
8,848

Total nonaccrual loans
 
$
44,845

 
$
57,435

Accruing loans past due 90 days or more
 
—

 
—

Performing troubled debt restructured loans
 
$
24,715

 
$
25,704
Troubled Debt Restructurings on Financing Receivables
The following tables provide information on troubled debt restructured loans that were modified during the three and six months ended June 30, 2012, and June 30, 2011, in thousands:
 
 
Three Months Ended
June 30, 2012
 
Three Months Ended
June 30, 2011
 
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
Commercial
 
—

 
$
—

 
$
—

 
3

 
$
129

 
$
129

Commercial real estate
 
1

 
1,380

 
1,380

 
15

 
8,510

 
8,510

Total commercial and commercial real estate
 
1

 
1,380

 
1,380

 
18

 
8,639

 
8,639

Agricultural and agricultural real estate
 
3

 
1,014

 
1,014

 
—

 
—

 
—

Residential real estate
 
1

 
1,005

 
1,005

 
1

 
323

 
323

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

Total Troubled Debt Restructured Loans
 
5

 
$
3,399

 
$
3,399

 
19

 
$
8,962

 
$
8,962



 
 
Six Months Ended
June 30, 2012
 
Six Months Ended
June 30, 2011
 
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
Commercial
 
—

 
$
—

 
$
—

 
3

 
$
129

 
$
129

Commercial real estate
 
2

 
1,398

 
1,398

 
18

 
9,662

 
9,662

Total commercial and commercial real estate
 
2

 
1,398

 
1,398

 
21

 
9,791

 
9,791

Agricultural and agricultural real estate
 
3

 
1,014

 
1,014

 
—

 
—

 
—

Residential real estate
 
1

 
1,005

 
1,005

 
4

 
821

 
821

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

Total Troubled Debt Restructured Loans
 
6

 
$
3,417

 
$
3,417

 
25

 
$
10,612

 
$
10,612
Troubeld debt restructed loans with payment default
The following tables provide information on troubled debt restructured loans for which there was a payment default during the three and six months ended June 30, 2012, and June 30, 2011, in thousands, that had been modified during the 12-month period prior to the default:
 
With Payment Defaults During the Following Periods
 
Three Months Ended June 30, 2012
 
Three Months Ended June 30, 2011
 
Number of Loans
 
Recorded Investment
 
Number of Loans
 
Recorded Investment
Commercial
—

 
$
—

 
2

 
$
64

Commercial real estate
—

 
—

 
1

 
329

  Total commercial and commercial real estate
—

 
—

 
3

 
393

Agricultural and agricultural real estate
—

 
—

 
—

 
—

Residential real estate
—

 
—

 
—

 
—

Consumer
—

 
—

 
—

 
—

  Total
—

 
$
—

 
3

 
$
393



 
With Payment Defaults During the Following Periods
 
Six Months Ended
June 30, 2012
 
Six Months Ended
June 30, 2011
 
Number of Loans
 
Recorded Investment
 
Number of Loans
 
Recorded Investment
Commercial
—

 
$
—

 
$
2

 
$
64

Commercial real estate
1

 
640

 
1

 
329

  Total commercial and commercial real estate
1

 
640

 
3

 
393

Agricultural and agricultural real estate
—

 
—

 
—

 
—

Residential real estate
—

 
—

 
4

 
444

Consumer
—

 
—

 
—

 
—

  Total
1

 
$
640

 
$
7

 
$
837
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, 2012, and December 31, 2011, in thousands:
 
Pass
 
Nonpass
 
Total
June 30, 2012
 
 
 
 
 
Commercial
$
620,320

 
$
46,931

 
$
667,251

Commercial real estate
1,056,864

 
179,881

 
1,236,745

  Total commercial and commercial real estate
1,677,184

 
226,812

 
1,903,996

Agricultural and agricultural real estate
243,092

 
36,193

 
279,285

Residential real estate
201,274

 
18,810

 
220,084

Consumer
220,512

 
10,082

 
230,594

Lease financing
290

 
—

 
290

  Total gross loans and leases receivable held to maturity
$
2,342,352

 
$
291,897

 
$
2,634,249

December 31, 2011
 
 
 
 
 
Commercial
$
596,759

 
$
48,907

 
$
645,666

Commercial real estate
988,906

 
174,878

 
1,163,784

  Total commercial and commercial real estate
1,585,665

 
223,785

 
1,809,450

Agricultural and agricultural real estate
223,247

 
39,728

 
262,975

Residential real estate
177,128

 
17,308

 
194,436

Consumer
211,073

 
9,026

 
220,099

Lease financing
450

 
—

 
450

  Total gross loans and leases receivable held to maturity
$
2,197,563

 
$
289,847

 
$
2,487,410
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, 2012, and December 31, 2011, 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, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
3,929

 
$
396

 
$
—

 
$
4,325

 
$
661,135

 
$
1,791

 
$
667,251

Commercial real estate
3,026

 
744

 
—

 
3,770

 
1,200,561

 
32,414

 
1,236,745

Total commercial and commercial real estate
6,955

 
1,140

 
—

 
8,095

 
1,861,696

 
34,205

 
1,903,996

Agricultural and agricultural real estate
912

 
136

 
—

 
1,048

 
277,838

 
399

 
279,285

Residential real estate
635

 
22

 
—

 
657

 
213,448

 
5,979

 
220,084

Consumer
2,047

 
628

 
—

 
2,675

 
223,657

 
4,262

 
230,594

Lease financing
—

 
—

 
—

 
—

 
290

 
—

 
290

Total gross loans and leases receivable held to maturity
$
10,549

 
$
1,926

 
$
—

 
$
12,475

 
$
2,576,929

 
$
44,845

 
$
2,634,249

December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
220

 
$
479

 
$
—

 
$
699

 
$
643,273

 
$
1,694

 
$
645,666

Commercial real estate
668

 
—

 
—

 
668

 
1,117,274

 
45,842

 
1,163,784

Total commercial and commercial real estate
888

 
479

 
—

 
1,367

 
1,760,547

 
47,536

 
1,809,450

Agricultural and agricultural real estate
32

 
—

 
—

 
32

 
262,409

 
534

 
262,975

Residential real estate
940

 
93

 
—

 
1,033

 
188,865

 
4,538

 
194,436

Consumer
2,176

 
555

 
—

 
2,731

 
212,541

 
4,827

 
220,099

Lease financing
—

 
—

 
—

 
—

 
450

 
—

 
450

Total gross loans and leases receivable held to maturity
$
4,036

 
$
1,127

 
$
—

 
$
5,163

 
$
2,424,812

 
$
57,435

 
$
2,487,410
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 balance that was contractually due at June 30, 2012, and December 31, 2011, the outstanding loan balance recorded on the consolidated balance sheets at June 30, 2012, and December 31, 2011, any related allowance recorded for those loans as of June 30, 2012, and December 31, 2011, the average outstanding loan balance recorded on the consolidated balance sheets during the three and six months ended June 30, 2012, and year ended December 31, 2011, and the interest income recognized on the impaired loans during the three and six months ended June 30, 2012, and year ended December 31, 2011, 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, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans with a related allowance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
2,224

 
$
2,174

 
$
1,241

 
6,467

 
$
14

 
$
7,338

 
$
32

Commercial real estate
20,371

 
18,038

 
3,513

 
16,554

 
94

 
15,006

 
186

Total commercial and commercial real estate
22,595

 
20,212

 
4,754

 
23,021

 
108

 
22,344

 
218

Agricultural and agricultural real estate
100

 
100

 
10

 
2,506

 
24

 
80

 
5

Residential real estate
2,627

 
2,627

 
720

 
116

 
1

 
2,291

 
47

Consumer
4,245

 
3,986

 
2,152

 
3,891

 
7

 
3,396

 
16

Total loans held to maturity
$
29,567

 
$
26,925

 
$
7,636

 
29,534

 
$
140

 
$
28,111

 
$
286

Impaired loans without a related allowance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
6,397

 
$
6,046

 
$
—

 
2,393

 
$
61

 
$
1,765

 
$
62

Commercial real estate
46,433

 
36,071

 
—

 
40,387

 
185

 
45,229

 
396

Total commercial and commercial real estate
52,830

 
42,117

 
—

 
42,780

 
246

 
46,994

 
458

Agricultural and agricultural real estate
13,366

 
13,347

 
—

 
4,037

 
13

 
13,865

 
291

Residential real estate
4,136

 
3,967

 
—

 
13,587

 
135

 
4,034

 
20

Consumer
1,779

 
1,488

 
—

 
1,755

 
(4
)
 
1,892

 
2

Total loans held to maturity
$
72,111

 
$
60,919

 
$
—

 
62,159

 
$
390

 
$
66,785

 
$
771

Total impaired loans held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
8,621

 
$
8,220

 
$
1,241

 
8,860

 
$
75

 
$
9,103

 
$
94

Commercial real estate
66,804

 
54,109

 
3,513

 
56,941

 
279

 
60,235

 
582

Total commercial and commercial real estate
75,425

 
62,329

 
4,754

 
65,801

 
354

 
69,338

 
676

Agricultural and agricultural real estate
13,466

 
13,447

 
10

 
6,543

 
37

 
13,945

 
296

Residential real estate
6,763

 
6,594

 
720

 
13,703

 
136

 
6,325

 
67

Consumer
6,024

 
5,474

 
2,152

 
5,646

 
3

 
5,288

 
18

Total impaired loans held to maturity
$
101,678

 
$
87,844

 
$
7,636

 
91,693

 
$
530

 
$
94,896

 
$
1,057


 
Unpaid Contractual
Balance
 
Loan
Balance
 
Related Allowance
Recorded
 
Year-to-Date
Avg. Loan
Balance
 
Year-to-Date
Interest Income
Recognized
December 31, 2011
 
 
 
 
 
 
 
 
 
Impaired loans with a related allowance:
 
 
 
 
 
 
 
 
 
Commercial
$
8,433

 
$
8,397

 
$
1,990

 
$
9,395

 
$
434

Commercial real estate
13,558

 
13,558

 
1,929

 
32,471

 
412

Total commercial and commercial real estate
21,991

 
21,955

 
3,919

 
41,866

 
846

Agricultural and agricultural real estate
—

 
—

 
—

 
2,722

 
—

Residential real estate
1,776

 
1,775

 
464

 
1,854

 
57

Consumer
2,764

 
2,764

 
1,097

 
2,688

 
32

Total loans held to maturity
$
26,531

 
$
26,494

 
$
5,480

 
$
49,130

 
$
935

Impaired loans without a related allowance:
 
 
 
 
 
 
 
 
 
Commercial
$
1,737

 
$
896

 
$
—

 
$
2,221

 
$
2

Commercial real estate
79,876

 
52,909

 
—

 
54,657

 
804

Total commercial and commercial real estate
81,613

 
53,805

 
—

 
56,878

 
806

Agricultural and agricultural real estate
14,428

 
14,385

 
—

 
14,302

 
557

Residential real estate
4,324

 
4,130

 
—

 
4,293

 
46

Consumer
2,226

 
1,627

 
—

 
1,470

 
5

Total loans held to maturity
$
102,591

 
$
73,947

 
$
—

 
$
76,943

 
$
1,414

Total impaired loans held to maturity:
 
 
 
 
 
 
 
 
 
Commercial
$
10,170

 
$
9,293

 
$
1,990

 
$
11,616

 
$
436

Commercial real estate
93,434

 
66,467

 
1,929

 
87,128

 
1,216

Total commercial and commercial real estate
103,604

 
75,760

 
3,919

 
98,744

 
1,652

Agricultural and agricultural real estate
14,428

 
14,385

 
—

 
17,024

 
557

Residential real estate
6,100

 
5,905

 
464

 
6,147

 
103

Consumer
4,990

 
4,391

 
1,097

 
4,158

 
37

Total impaired loans held to maturity
$
129,122

 
$
100,441

 
$
5,480

 
$
126,073

 
$
2,349
Impaired Financing Receivables
The carrying amount of the loans covered by these loss share agreements at June 30, 2012, and December 31, 2011, consisted of purchased impaired and nonimpaired loans as summarized in the following table:
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2012
 
December 31, 2011
 
Impaired Purchased Loans
 
Non Impaired Purchased Loans
 
Total
Covered
Loans
 
Impaired Purchased Loans
 
Non Impaired Purchased Loans
 
Total
Covered
Loans
Commercial and commercial real estate
$
1,663

 
$
2,834

 
$
4,497

 
$
2,553

 
$
3,827

 
$
6,380

Agricultural and agricultural real estate
—

 
858

 
858

 
—

 
1,659

 
1,659

Residential real estate
—

 
3,309

 
3,309

 
—

 
4,158

 
4,158

Consumer loans
307

 
596

 
903

 
503

 
647

 
1,150

Total Covered Loans
$
1,970

 
$
7,597

 
$
9,567

 
$
3,056

 
$
10,291

 
$
13,347