Loans (Tables)

12 Months Ended

Dec. 31, 2018

Loans as of December 31, 2018, and December 31, 2017, were as follows, in thousands:



	December 31, 2018			December 31, 2017
Loans receivable held to maturity:
Commercial	$	2,020,231		$	1,646,606
Commercial real estate	3,711,481			3,163,269
Agricultural and agricultural real estate	565,408			511,588
Residential real estate	673,603			624,279
Consumer	440,158			447,484
Gross loans receivable held to maturity	7,410,881			6,393,226
Unearned discount	(1,624		)	(556		)
Deferred loan fees	(1,560		)	(1,206		)
Total net loans receivable held to maturity	7,407,697			6,391,464
Allowance for loan losses	(61,963		)	(55,686		)
Loans receivable, net	$	7,345,734		$	6,335,778

The following table shows the balance in the allowance for loan losses at December 31, 2018, and December 31, 2017, 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 changes to the accounting for the allowance for loan losses policy during 2018 or 2017.



	Allowance For Loan Losses						Gross Loans 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
December 31, 2018
Commercial	$	5,733	$	18,772	$	24,505	$	24,202	$	1,996,029	$	2,020,231
Commercial real estate	218		25,320		25,538		14,388		3,697,093		3,711,481
Agricultural and agricultural real estate	686		4,267		4,953		15,951		549,457		565,408
Residential real estate	168		1,617		1,785		20,251		653,352		673,603
Consumer	749		4,433		5,182		7,004		433,154		440,158
Total	$	7,554	$	54,409	$	61,963	$	81,796	$	7,329,085	$	7,410,881
December 31, 2017
Commercial	$	1,613	$	16,485	$	18,098	$	7,415	$	1,639,191	$	1,646,606
Commercial real estate	766		21,184		21,950		23,705		3,139,564		3,163,269
Agricultural and agricultural real estate	546		3,712		4,258		13,304		498,284		511,588
Residential real estate	430		1,794		2,224		27,141		597,138		624,279
Consumer	1,400		7,756		9,156		6,903		440,581		447,484
Total	$	4,755	$	50,931	$	55,686	$	78,468	$	6,314,758	$	6,393,226

Schedule of Loans Not Covered Under Loss Share Agreements

The following table presents nonaccrual loans, accruing loans past due 90 days or more and troubled debt restructured loans at December 31, 2018, and December 31, 2017, in thousands:



	December 31, 2018		December 31, 2017
Nonaccrual loans	$	67,833	$	58,272
Nonaccrual troubled debt restructured loans	4,110		4,309
Total nonaccrual loans	$	71,943	$	62,581
Accruing loans past due 90 days or more	$	726	$	830
Performing troubled debt restructured loans	$	4,026	$	6,617

Schedule of Troubled Debt Restructured Loans Modified

The following table provides information on troubled debt restructured loans that were modified during the years ended December 31, 2018, and December 31, 2017, in thousands:



	For the Years Ended
	December 31, 2018					December 31, 2017
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial	—	$	—	$	—	3	$	124	$	124
Commercial real estate	—	—		—		—	—		—
Total commercial and commercial real estate	—	—		—		3	124		124
Agricultural and agricultural real estate	—	—		—		—	—		—
Residential real estate	16	2,843		2,559		29	4,126		3,794
Consumer	—	—		—		—	—		—
Total	16	$	2,843	$	2,559	32	$	4,250	$	3,918

Schedule of Troubled Debt Restructured Loans with Payment Default

The following table provides information on troubled debt restructured loans for which there was a payment default during the years ended December 31, 2018, and December 31, 2017, in thousands, that had been modified during the 12-month period prior to the default:



	With Payment Defaults During the Following Periods
	For the Years Ended
	December 31, 2018			December 31, 2017
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Total commercial and commercial real estate	—	—		—	—
Agricultural and agricultural real estate	—	—		—	—
Residential real estate	7	1,036		16	2,435
Consumer	—	—		—	—
Total	7	$	1,036	16	$	2,435

Schedule of Loans and Leases Not Covered by Loss Share Agreements by Credit Quality Indicator

The following table presents loans by credit quality indicator at December 31, 2018, and December 31, 2017, in thousands:



	Pass		Nonpass		Total
December 31, 2018
Commercial	$	1,880,579	$	139,652	$	2,020,231
Commercial real estate	3,524,344		187,137		3,711,481
Total commercial and commercial real estate	5,404,923		326,789		5,731,712
Agricultural and agricultural real estate	471,642		93,766		565,408
Residential real estate	645,478		28,125		673,603
Consumer	425,451		14,707		440,158
Total gross loans receivable held to maturity	$	6,947,494	$	463,387	$	7,410,881
December 31, 2017
Commercial	$	1,552,783	$	93,823	$	1,646,606
Commercial real estate	2,985,501		177,768		3,163,269
Total commercial and commercial real estate	4,538,284		271,591		4,809,875
Agricultural and agricultural real estate	451,539		60,049		511,588
Residential real estate	586,623		37,656		624,279
Consumer	432,936		14,548		447,484
Total gross loans receivable held to maturity	$	6,009,382	$	383,844	$	6,393,226

Schedule of Accruing and Nonaccrual Loans and Leases Not Covered by Loss Share Agreements

The following table sets forth information regarding Heartland's accruing and nonaccrual loans at December 31, 2018, and December 31, 2017, in thousands:



	Accruing Loans
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual		Total Loans
December 31, 2018
Commercial	$	2,574	$	205	$	—	$	2,779	$	1,991,525	$	25,927	$	2,020,231
Commercial real estate	4,819		—		726		5,545		3,694,259		11,677		3,711,481
Total commercial and commercial real estate	7,393		205		726		8,324		5,685,784		37,604		5,731,712
Agricultural and agricultural real estate	99		—		—		99		549,376		15,933		565,408
Residential real estate	5,147		49		—		5,196		655,329		13,078		673,603
Consumer	2,724		307		—		3,031		431,799		5,328		440,158
Total gross loans receivable held to maturity	$	15,363	$	561	$	726	$	16,650	$	7,322,288	$	71,943	$	7,410,881
December 31, 2017
Commercial	$	1,246	$	259	$	100	$	1,605	$	1,637,773	$	7,228	$	1,646,606
Commercial real estate	4,769		2,326		—		7,095		3,139,576		16,598		3,163,269
Total commercial and commercial real estate	6,015		2,585		100		8,700		4,777,349		23,826		4,809,875
Agricultural and agricultural real estate	604		134		—		738		497,546		13,304		511,588
Residential real estate	2,022		270		—		2,292		601,120		20,867		624,279
Consumer	4,734		943		730		6,407		436,493		4,584		447,484
Total gross loans receivable held to maturity	$	13,375	$	3,932	$	830	$	18,137	$	6,312,508	$	62,581	$	6,393,226

Summary of Impaired Loans

The following tables present the unpaid principal balance that was contractually due at December 31, 2018, and December 31, 2017, the outstanding loan balance recorded on the consolidated balance sheets at December 31, 2018, and December 31, 2017, any related allowance recorded for those loans as of December 31, 2018, and December 31, 2017, the average outstanding loan balance recorded on the consolidated balance sheets during the years ended December 31, 2018, and December 31, 2017, and the interest income recognized on the impaired loans during the year ended December 31, 2018, and year ended December 31, 2017, in thousands:



	Unpaid Principal Balance		Loan Balance		Related Allowance Recorded		Year-to-Date Avg. Loan Balance		Year-to-Date Interest Income Recognized
December 31, 2018
Impaired loans with a related allowance:
Commercial	$	12,376	$	12,366	$	5,733	$	4,741	$	33
Commercial real estate	891		891		218		4,421		25
Total commercial and commercial real estate	13,267		13,257		5,951		9,162		58
Agricultural and agricultural real estate	1,718		1,718		686		2,165		2
Residential real estate	647		647		168		1,138		12
Consumer	1,373		1,373		749		2,934		29
Total loans held to maturity	$	17,005	$	16,995	$	7,554	$	15,399	$	101
Impaired loans without a related allowance:
Commercial	$	13,616	$	11,836	$	—	$	10,052	$	299
Commercial real estate	13,578		13,497		—		13,000		249
Total commercial and commercial real estate	27,194		25,333		—		23,052		548
Agricultural and agricultural real estate	16,836		14,233		—		14,781		5
Residential real estate	19,604		19,604		—		23,950		308
Consumer	5,631		5,631		—		5,117		97
Total loans held to maturity	$	69,265	$	64,801	$	—	$	66,900	$	958
Total impaired loans held to maturity:
Commercial	$	25,992	$	24,202	$	5,733	$	14,793	$	332
Commercial real estate	14,469		14,388		218		17,421		274
Total commercial and commercial real estate	40,461		38,590		5,951		32,214		606
Agricultural and agricultural real estate	18,554		15,951		686		16,946		7
Residential real estate	20,251		20,251		168		25,088		320
Consumer	7,004		7,004		749		8,051		126
Total impaired loans held to maturity	$	86,270	$	81,796	$	7,554	$	82,299	$	1,059



	Unpaid Principal Balance		Loan Balance		Related Allowance Recorded		Year-to-Date Avg. Loan Balance		Year-to-Date Interest Income Recognized
December 31, 2017
Impaired loans with a related allowance:
Commercial	$	2,292	$	2,292	$	1,613	$	3,607	$	39
Commercial real estate	11,925		10,068		766		11,479		34
Total commercial and commercial real estate	14,217		12,360		2,379		15,086		73
Agricultural and agricultural real estate	1,539		1,539		546		3,437		—
Residential real estate	1,568		1,568		430		2,056		15
Consumer	2,634		2,634		1,400		2,370		41
Total loans held to maturity	$	19,958	$	18,101	$	4,755	$	22,949	$	129
Impaired loans without a related allowance:
Commercial	$	6,243	$	5,123	$	—	$	2,586	$	165
Commercial real estate	14,243		13,637		—		20,148		514
Total commercial and commercial real estate	20,486		18,760		—		22,734		679
Agricultural and agricultural real estate	13,793		11,765		—		9,654		—
Residential real estate	25,573		25,573		—		26,024		277
Consumer	4,269		4,269		—		3,884		73
Total loans held to maturity	$	64,121	$	60,367	$	—	$	62,296	$	1,029
Total impaired loans held to maturity:
Commercial	$	8,535	$	7,415	$	1,613	$	6,193	$	204
Commercial real estate	26,168		23,705		766		31,627		548
Total commercial and commercial real estate	34,703		31,120		2,379		37,820		752
Agricultural and agricultural real estate	15,332		13,304		546		13,091		—
Residential real estate	27,141		27,141		430		28,080		292
Consumer	6,903		6,903		1,400		6,254		114
Total impaired loans held to maturity	$	84,079	$	78,468	$	4,755	$	85,245	$	1,158

The carrying amount of the acquired loans at December 31, 2018, and December 31, 2017, consisted of purchased impaired and nonimpaired purchased loans as summarized in the following table, in thousands:



	December 31, 2018						December 31, 2017
	Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans		Impaired Purchased Loans		Non Impaired Purchased Loans		Total Purchased Loans
Commercial	$	3,801	$	243,693	$	247,494	$	952	$	187,375	$	188,327
Commercial real estate	158		1,098,171		1,098,329		2,572		1,052,469		1,055,041
Agricultural and agricultural real estate	—		27,115		27,115		—		1,242		1,242
Residential real estate	231		184,389		184,620		214		173,909		174,123
Consumer loans	—		75,773		75,773		—		51,292		51,292
Total Covered Loans	$	4,190	$	1,629,141	$	1,633,331	$	3,738	$	1,466,287	$	1,470,025

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 years ended December 31, 2018, and December 31, 2017, are presented in the table below, in thousands:



	For the Years Ended
	December 31, 2018			December 31, 2017
Balance at beginning of year	$	57		$	182
Original yield discount, net, at date of acquisitions	508			—
Accretion	(1,743		)	(1,591		)
Reclassification from nonaccretable difference⁽¹⁾	1,405			1,466
Balance at end of year	$	227		$	57

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

Summary of Changes in Related Party Loans

Changes in such loans during the years ended December 31, 2018 and 2017, were as follows, in thousands:



	2018			2017
Balance at beginning of year	$	115,673		$	114,305
Advances	44,771			56,652
Repayments	(35,461		)	(55,284		)
Balance at end of year	$	124,983		$	115,673