Loans and Leases (Tables)

3 Months Ended

Mar. 31, 2016

Loans and leases as of March 31, 2016, and December 31, 2015, were as follows, in thousands:



	March 31, 2016			December 31, 2015
Loans and leases receivable held to maturity:
Commercial	$	1,295,504		$	1,279,214
Commercial real estate	2,555,268			2,326,360
Agricultural and agricultural real estate	471,271			471,870
Residential real estate	753,666			539,555
Consumer	430,699			386,867
Gross loans and leases receivable held to maturity	5,506,408			5,003,866
Unearned discount	(640		)	(488		)
Deferred loan fees	(2,763		)	(1,892		)
Total net loans and leases receivable held to maturity	5,503,005			5,001,486
Allowance for loan and lease losses	(49,738		)	(48,685		)
Loans and leases receivable, net	$	5,453,267		$	4,952,801

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 March 31, 2016, and December 31, 2015, 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 2016.



	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
March 31, 2016
Commercial	$	984	$	15,390	$	16,374	$	11,018	$	1,284,486	$	1,295,504
Commercial real estate	1,252		19,243		20,495		44,082		2,511,186		2,555,268
Agricultural and agricultural real estate	—		4,028		4,028		13,593		457,678		471,271
Residential real estate	311		1,540		1,851		19,345		734,321		753,666
Consumer	1,247		5,743		6,990		5,963		424,736		430,699
Total	$	3,794	$	45,944	$	49,738	$	94,001	$	5,412,407	$	5,506,408
December 31, 2015
Commercial	$	471	$	15,624	$	16,095	$	6,919	$	1,272,295	$	1,279,214
Commercial real estate	698		18,834		19,532		45,442		2,280,918		2,326,360
Agricultural and agricultural real estate	—		3,887		3,887		4,612		467,258		471,870
Residential real estate	393		1,541		1,934		17,790		521,765		539,555
Consumer	1,206		6,031		7,237		5,458		381,409		386,867
Total	$	2,768	$	45,917	$	48,685	$	80,221	$	4,923,645	$	5,003,866

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 at March 31, 2016, and December 31, 2015, in thousands. There were no nonaccrual leases, accruing leases past due 90 days or more or restructured leases at March 31, 2016, and December 31, 2015.



	March 31, 2016		December 31, 2015
Nonaccrual loans	$	46,316	$	37,874
Nonaccrual troubled debt restructured loans	1,434		1,781
Total nonaccrual loans	$	47,750	$	39,655
Accruing loans past due 90 days or more	$	639	$	—
Performing troubled debt restructured loans	$	10,711	$	11,075

Troubled Debt Restructuring on Loans Modified

The following table provides information on troubled debt restructured loans that were modified during the three months ended March 31, 2016, and March 31, 2015, dollars in thousands:



	Three Months Ended March 31,
	2016					2015
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	—	—		—		1	3,992		3,992
Total commercial and commercial real estate	—	—		—		1	3,992		3,992
Agricultural and agricultural real estate	—	—		—		—	—		—
Residential real estate	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	—	$	—	$	—	1	$	3,992	$	3,992

Financing Receivable Credit Quality Indicators

The following table presents loans and leases by credit quality indicator at March 31, 2016, and December 31, 2015, in thousands:



	Pass		Nonpass		Total
March 31, 2016
Commercial	$	1,128,858	$	166,646	$	1,295,504
Commercial real estate	2,339,414		215,854		2,555,268
Total commercial and commercial real estate	3,468,272		382,500		3,850,772
Agricultural and agricultural real estate	426,929		44,342		471,271
Residential real estate	725,773		27,893		753,666
Consumer	420,267		10,432		430,699
Total gross loans and leases receivable held to maturity	$	5,041,241	$	465,167	$	5,506,408
December 31, 2015
Commercial	$	1,106,276	$	172,938	$	1,279,214
Commercial real estate	2,107,474		218,886		2,326,360
Total commercial and commercial real estate	3,213,750		391,824		3,605,574
Agricultural and agricultural real estate	435,745		36,125		471,870
Residential real estate	515,195		24,360		539,555
Consumer	377,173		9,694		386,867
Total gross loans and leases receivable held to maturity	$	4,541,863	$	462,003	$	5,003,866

Past Due Financing Receivables

The following table sets forth information regarding Heartland's accruing and nonaccrual loans and leases at March 31, 2016, and December 31, 2015, 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
March 31, 2016
Commercial	$	1,565	$	396	$	—	$	1,961	$	1,288,064	$	5,479	$	1,295,504
Commercial real estate	3,413		212		89		3,714		2,529,840		21,714		2,555,268
Total commercial and commercial real estate	4,978		608		89		5,675		3,817,904		27,193		3,850,772
Agricultural and agricultural real estate	12,600		423		—		13,023		457,459		789		471,271
Residential real estate	1,753		192		550		2,495		734,977		16,194		753,666
Consumer	3,434		544		—		3,978		423,147		3,574		430,699
Total gross loans and leases receivable held to maturity	$	22,765	$	1,767	$	639	$	25,171	$	5,433,487	$	47,750	$	5,506,408
December 31, 2015
Commercial	$	2,005	$	608	$	—	$	2,613	$	1,273,678	$	2,923	$	1,279,214
Commercial real estate	3,549		2,077		—		5,626		2,302,052		18,682		2,326,360
Total commercial and commercial real estate	5,554		2,685		—		8,239		3,575,730		21,605		3,605,574
Agricultural and agricultural real estate	143		54		—		197		470,455		1,218		471,870
Residential real estate	1,900		115		—		2,015		523,915		13,625		539,555
Consumer	3,964		933		—		4,897		378,763		3,207		386,867
Total gross loans and leases receivable held to maturity	$	11,561	$	3,787	$	—	$	15,348	$	4,948,863	$	39,655	$	5,003,866

Impaired Loans Not Covered by Loss Share Agreements

The following tables present, by category of loan, impaired loans, the unpaid contractual loan balances at March 31, 2016, and December 31, 2015; the outstanding loan balances recorded on the consolidated balance sheets at March 31, 2016, and December 31, 2015; any related allowance recorded for those loans as of March 31, 2016, and December 31, 2015; the average outstanding loan balances recorded on the consolidated balance sheets during the three months ended March 31, 2016, and year ended December 31, 2015; and the interest income recognized on the impaired loans during the three months ended March 31, 2016, and year ended December 31, 2015, in thousands:



	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
March 31, 2016
Impaired loans with a related allowance:
Commercial	$	4,766	$	4,766	$	984	$	2,137	$	35
Commercial real estate	4,297		4,203		1,252		4,210		25
Total commercial and commercial real estate	9,063		8,969		2,236		6,347		60
Agricultural and agricultural real estate	—		—		—		—		—
Residential real estate	2,868		2,873		311		2,917		4
Consumer	3,258		3,258		1,247		3,208		9
Total impaired loans with a related allowance	$	15,189	$	15,100	$	3,794	$	12,472	$	73
Impaired loans without a related allowance:
Commercial	$	6,277	$	6,252	$	—	$	9,849	$	143
Commercial real estate	43,157		39,879		—		46,872		384
Total commercial and commercial real estate	49,434		46,131		—		56,721		527
Agricultural and agricultural real estate	13,593		13,593		—		7,422		251
Residential real estate	16,610		16,472		—		17,173		32
Consumer	2,706		2,705		—		2,970		9
Total impaired loans without a related allowance	$	82,343	$	78,901	$	—	$	84,286	$	819
Total impaired loans held to maturity:
Commercial	$	11,043	$	11,018	$	984	$	11,986	$	178
Commercial real estate	47,454		44,082		1,252		51,082		409
Total commercial and commercial real estate	58,497		55,100		2,236		63,068		587
Agricultural and agricultural real estate	13,593		13,593		—		7,422		251
Residential real estate	19,478		19,345		311		20,090		36
Consumer	5,964		5,963		1,247		6,178		18
Total impaired loans held to maturity	$	97,532	$	94,001	$	3,794	$	96,758	$	892



	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Year-to- Date Avg. Loan Balance		Year-to- Date Interest Income Recognized
December 31, 2015
Impaired loans with a related allowance:
Commercial	$	1,192	$	1,160	$	471	$	524	$	12
Commercial real estate	2,697		2,697		698		2,539		19
Total commercial and commercial real estate	3,889		3,857		1,169		3,063		31
Agricultural and agricultural real estate	—		—		—		2,823		—
Residential real estate	2,210		2,125		393		2,524		16
Consumer	3,111		3,111		1,206		2,877		33
Total impaired loans with a related allowance	$	9,210	$	9,093	$	2,768	$	11,287	$	80
Impaired loans without a related allowance:
Commercial	$	5,784	$	5,759	$	—	$	7,511	$	515
Commercial real estate	46,099		42,745		—		38,444		1,395
Total commercial and commercial real estate	51,883		48,504		—		45,955		1,910
Agricultural and agricultural real estate	4,612		4,612		—		2,287		175
Residential real estate	15,802		15,665		—		10,186		145
Consumer	2,347		2,347		—		2,403		38
Total impaired loans without a related allowance	$	74,644	$	71,128	$	—	$	60,831	$	2,268
Total impaired loans held to maturity:
Commercial	$	6,976	$	6,919	$	471	$	8,035	$	527
Commercial real estate	48,796		45,442		698		40,983		1,414
Total commercial and commercial real estate	55,772		52,361		1,169		49,018		1,941
Agricultural and agricultural real estate	4,612		4,612		—		5,110		175
Residential real estate	18,012		17,790		393		12,710		161
Consumer	5,458		5,458		1,206		5,280		71
Total impaired loans held to maturity	$	83,854	$	80,221	$	2,768	$	72,118	$	2,348

Summary of Purchased Impaired and Nonimpaired Loans

The carrying amount of the acquired loans at March 31, 2016 and December 31, 2015, consisted of purchased impaired and nonimpaired loans as summarized in the following table, in thousands:



	March 31, 2016						December 31, 2015
	Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans		Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans
Commercial	$	2,545	$	184,963	$	187,508	$	—	$	159,393	$	159,393
Commercial real estate	5,997		723,390		729,387		7,716		494,010		501,726
Agricultural and agricultural real estate	—		1,296		1,296		—		2,985		2,985
Residential real estate	715		293,176		293,891		—		85,549		85,549
Consumer loans	—		69,837		69,837		—		33,644		33,644
Total Loans	$	9,257	$	1,272,662	$	1,281,919	$	7,716	$	775,581	$	783,297

Changes in Accretable Yield on Acquired Loans

Changes in accretable yield on acquired loans with evidence of credit deterioration at the date of acquisition for the three months ended March 31, 2016, and March 31, 2015, were as follows, in thousands:



Balance at December 31, 2015	$	557
Original yield discount, net, at date of acquisitions	19
Accretion	273
Reclassification from nonaccretable difference ⁽¹⁾	(2		)
Balance at March 31, 2016	$	305

(1) Represents increases in estimated cash flows expected to be received, primarily due to lower estimated credit losses.



Balance at December 31, 2014	$	—
Original yield discount, net, at date of acquisitions	352
Accretion	—
Reclassification from nonaccretable difference ⁽¹⁾	—
Balance at March 31, 2015	$	352

(1) Represents increases in estimated cash flows expected to be received, primarily due to lower estimated credit losses.