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LOANS
 6 Months Ended
Jun. 30, 2021
Receivables [Abstract]  
LOANS LOANS
Loans as of June 30, 2021, and December 31, 2020, were as follows, in thousands:
June 30, 2021December 31, 2020
Loans receivable held to maturity:  
Commercial and industrial$2,518,908 $2,534,799 
Paycheck Protection Program ("PPP")829,175 957,785 
Owner occupied commercial real estate1,940,134 1,776,406 
Non-owner occupied commercial real estate1,987,369 1,921,481 
Real estate construction854,295 863,220 
Agricultural and agricultural real estate679,608 714,526 
Residential real estate800,884 840,442 
Consumer401,641 414,392 
Total loans receivable held to maturity10,012,014 10,023,051 
Allowance for credit losses(120,726)(131,606)
Loans receivable, net$9,891,288 $9,891,445 

As of June 30, 2021, and December 31, 2020, HTLF had $37.7 million and $42.4 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheet. HTLF does not consider accrued interest receivable in the allowance for credit losses calculation.

The following table shows the balance in the allowance for credit losses at June 30, 2021, and December 31, 2020, and the related loan balances, disaggregated on the basis of measurement methodology, in thousands. If a loan no longer shares similar risk characteristics with other loans in the pool, it is evaluated on an individual basis and is not included in the collective evaluation. Lending relationships with $500,000 or more of total exposure and are on nonaccrual are individually assessed using a collateral dependency calculation. All other loans are collectively evaluated for losses.
Allowance For Credit LossesGross Loans Receivable Held to Maturity
Individually Evaluated for Credit LossesCollectively Evaluated for Credit LossesTotalLoans Individually Evaluated for Credit LossesLoans Collectively Evaluated for Credit Losses Total
June 30, 2021
Commercial and industrial$4,688 $26,644 $31,332 $13,658 $2,505,250 $2,518,908 
PPP — — — — 829,175 829,175 
Owner occupied commercial real estate110 19,880 19,990 7,547 1,932,587 1,940,134 
Non-owner occupied commercial real estate3,485 19,343 22,828 19,548 1,967,821 1,987,369 
Real estate construction— 19,580 19,580 — 854,295 854,295 
Agricultural and agricultural real estate3,106 4,054 7,160 17,948 661,660 679,608 
Residential real estate— 9,741 9,741 — 800,884 800,884 
Consumer— 10,095 10,095 — 401,641 401,641 
Total$11,389 $109,337 $120,726 $58,701 $9,953,313 $10,012,014 
Allowance For Credit LossesGross Loans Receivable Held to Maturity
Individually Evaluated for Credit LossesCollectively Evaluated for Credit LossesTotalLoans Individually Evaluated for Credit LossesLoans Collectively Evaluated for Credit Losses Total
December 31, 2020
Commercial and industrial$4,077 $34,741 $38,818 $16,578 $2,518,221 $2,534,799 
PPP— — — — 957,785 957,785 
Owner occupied commercial real estate111 19,890 20,001 11,174 1,765,232 1,776,406 
Non-owner occupied commercial real estate3,250 17,623 20,873 13,490 1,907,991 1,921,481 
Real estate construction— 20,080 20,080 — 863,220 863,220 
Agricultural and agricultural real estate1,988 5,141 7,129 15,453 699,073 714,526 
Residential real estate— 11,935 11,935 535 839,907 840,442 
Consumer— 12,770 12,770 — 414,392 414,392 
Total$9,426 $122,180 $131,606 $57,230 $9,965,821 $10,023,051 

HTLF had $13.7 million of troubled debt restructured loans at June 30, 2021, of which $11.6 million were classified as nonaccrual and $2.1 million were accruing according to the restructured terms. HTLF had $6.2 million of troubled debt restructured loans at December 31, 2020, of which $3.8 million were classified as nonaccrual and $2.4 million were accruing according to the restructured terms.

The following tables provide information on troubled debt restructured loans that were modified during the three- and six- months ended June 30, 2021, and June 30, 2020, dollars in thousands:
Three Months Ended
June 30,
20212020
Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment		Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment
Commercial— $— $— — $— $— 
PPP — — —— — —
Owner occupied commercial real estate— — —— — —
Non-owner occupied commercial real estate2 7,850 7,850— — —
Real estate construction— — —— — —
Agricultural and agricultural real estate— — —— — —
Residential real estate— — —1 60 66
Consumer— — —— — —
Total2 $7,850 $7,850 1 $60 $66 

Six Months Ended
June 30,
20212020
Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment		Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment
Commercial and industrial— $— $— — $— $— 
PPP— — — — — — 
Owner occupied commercial real estate— — — — — — 
Non-owner occupied commercial real estate2 7,850 7,850 — — — 
Real estate construction— — — — — — 
Agricultural and agricultural real estate— — — — — — 
Six Months Ended
June 30,
20212020
Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment		Number
of Loans		Pre-
Modification
Recorded
Investment		Post-
Modification
Recorded
Investment
Residential real estate— — — 2 92 98 
Consumer— — — — — — 
Total2 $7,850 $7,850 2 $92 $98 

At June 30, 2021, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructured loan. The tables above do not include any loan modifications made under COVID-19 modification programs.

There were no troubled debt restructured loans for which there was a payment default during the three- and six- months ended June 30, 2021, and June 30, 2020, that had been modified during the twelve-month period prior to default.

HTLF'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 and 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 watch, substandard, doubtful and loss loans. The "watch" rating is attached to loans where the borrower exhibits negative trends in financial circumstances due to borrower specific or systemic conditions that, if left uncorrected, threaten the borrower's 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 net worth and repaying capacity of the borrower and that 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 HTLF will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all of the following weaknesses: deteriorating financial 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 in the borrowers' ability to repay the loan 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 as an operating entity. Specific pending events, such as capital injections, liquidations or perfection of liens on additional collateral, may strengthen the credit, thus deferring the rating of the loan as "loss" until the exact status of the loan can be determined. The loss rating is assigned to loans considered uncollectible. HTLF had no loans classified as loss or doubtful as of June 30, 2021, and December 31, 2020.

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2021, and December 31, 2020, in thousands:
As of June 30, 2021Amortized Cost Basis of Term Loans by Year of Origination
202120202019201820172016 and PriorRevolvingTotal
Commercial and industrial
Pass$330,626 $475,749 $277,874 $122,550 $197,617 $370,896 $528,785 $2,304,097 
Watch 7,252 13,154 22,947 12,886 8,633 17,574 35,506 117,952 
Substandard 2,171 21,377 10,899 8,780 11,706 21,646 20,280 96,859 
Commercial and industrial total$340,049 $510,280 $311,720 $144,216 $217,956 $410,116 $584,571 $2,518,908 
As of June 30, 2021Amortized Cost Basis of Term Loans by Year of Origination
202120202019201820172016 and PriorRevolvingTotal
PPP
Pass$409,922 $327,475 $— $— $— $— $— $737,397 
Watch21,880 28,769 — — — — — 50,649 
Substandard20,697 20,432 — — — — — 41,129 
PPP total $452,499 $376,676 $— $— $— $— $— $829,175 
Owner occupied commercial real estate
Pass$331,097 $402,216 $371,104 $232,062 $143,692 $264,190 $27,773 $1,772,134 
Watch428 17,998 14,979 18,715 19,869 10,305 2,250 84,544 
Substandard743 18,083 13,464 7,908 13,903 28,201 1,154 83,456 
Owner occupied commercial real estate total$332,268 $438,297 $399,547 $258,685 $177,464 $302,696 $31,177 $1,940,134 
Non-owner occupied commercial real estate
Pass$206,934 $332,479 $355,445 $275,853 $163,047 $266,547 $32,340 $1,632,645 
Watch16,873 18,884 76,447 30,786 8,233 53,339 4,524 209,086 
Substandard16,968 13,315 20,879 23,329 24,802 46,035 310 145,638 
Non-owner occupied commercial real estate total$240,775 $364,678 $452,771 $329,968 $196,082 $365,921 $37,174 $1,987,369 
Real estate construction
Pass$151,473 $338,101 $215,455 $49,360 $10,003 $8,959 $17,078 $790,429 
Watch — 1,865 11,474 47,460 240 210 413 61,662 
Substandard— — 28 1,993 — 183 — 2,204 
Real estate construction total$151,473 $339,966 $226,957 $98,813 $10,243 $9,352 $17,491 $854,295 
Agricultural and agricultural real estate
Pass$115,287 $125,764 $79,157 $46,698 $28,105 $43,350 $134,975 $573,336 
Watch3,480 13,591 5,746 2,197 256 3,735 4,735 33,740 
Substandard9,082 8,793 6,886 20,498 5,641 11,210 10,422 72,532 
Agricultural and agricultural real estate total$127,849 $148,148 $91,789 $69,393 $34,002 $58,295 $150,132 $679,608 
Residential real estate
Pass$144,046 $116,571 $65,840 $82,530 $56,628 $277,236 $28,244 $771,095 
Watch1,236 1,966 1,634 1,703 2,039 6,998 — 15,576 
Substandard4,147 859 299 1,889 1,259 5,760 — 14,213 
Residential real estate total $149,429 $119,396 $67,773 $86,122 $59,926 $289,994 $28,244 $800,884 
Consumer
Pass$39,485 $26,718 $20,157 $13,147 $12,112 $21,088 $259,705 $392,412 
Watch4 132 220 1,362 130 508 1,234 3,590 
Substandard848 432 612 474 371 2,104 798 5,639 
Consumer total$40,337 $27,282 $20,989 $14,983 $12,613 $23,700 $261,737 $401,641 
Total Pass$1,728,870 $2,145,073 $1,385,032 $822,200 $611,204 $1,252,266 $1,028,900 $8,973,545 
Total Watch51,153 96,359 133,447 115,109 39,400 92,669 48,662 576,799 
Total Substandard 54,656 83,291 53,067 64,871 57,682 115,139 32,964 461,670 
Total Loans$1,834,679 $2,324,723 $1,571,546 $1,002,180 $708,286 $1,460,074 $1,110,526 $10,012,014 
As of December 31, 2020Amortized Cost Basis of Term Loans by Year of Origination
202020192018201720162015 and PriorRevolvingTotal
Commercial and industrial
Pass$557,853 $340,809 $168,873 $215,696 $101,010 $337,834 $541,627 $2,263,702 
Watch 41,574 24,676 19,672 14,262 8,072 2,474 49,432 160,162 
Substandard 23,024 16,274 8,897 15,717 9,098 19,537 18,388 110,935 
Commercial and industrial total$622,451 $381,759 $197,442 $245,675 $118,180 $359,845 $609,447 $2,534,799 
PPP
Pass$880,709 $— $— $— $— $— $— $880,709 
As of December 31, 2020Amortized Cost Basis of Term Loans by Year of Origination
202020192018201720162015 and PriorRevolvingTotal
Watch22,533 — — — — — — 22,533 
Substandard54,543 — — — — — — 54,543 
PPP total $957,785 $— $— $— $— $— $— $957,785 
Owner occupied commercial real estate
Pass$400,662 $369,401 $300,242 $167,470 $107,234 $213,780 $33,759 $1,592,548 
Watch15,345 13,764 22,488 20,811 8,717 15,282 4,311 100,718 
Substandard15,914 9,522 12,164 14,147 8,580 21,708 1,105 83,140 
Owner occupied commercial real estate total$431,921 $392,687 $334,894 $202,428 $124,531 $250,770 $39,175 $1,776,406 
Non-owner occupied commercial real estate
Pass$334,722 $411,301 $305,456 $194,101 $108,070 $233,153 $24,466 $1,611,269 
Watch22,826 55,225 24,718 18,724 20,954 45,672 5,114 193,233 
Substandard30,899 15,035 23,290 17,046 9,147 21,060 502 116,979 
Non-owner occupied commercial real estate total$388,447 $481,561 $353,464 $229,871 $138,171 $299,885 $30,082 $1,921,481 
Real estate construction
Pass$311,625 $309,678 $157,171 $12,625 $6,954 $5,110 $21,431 $824,594 
Watch 2,105 26,659 2,403 332 55 388 1,295 33,237 
Substandard196 2,760 2,036 — 39 358 — 5,389 
Real estate construction total$313,926 $339,097 $161,610 $12,957 $7,048 $5,856 $22,726 $863,220 
Agricultural and agricultural real estate
Pass$171,578 $90,944 $62,349 $39,252 $17,626 $37,696 $148,456 $567,901 
Watch20,500 16,202 8,854 2,448 3,515 3,157 12,282 66,958 
Substandard17,403 7,044 23,519 6,758 3,917 9,952 11,074 79,667 
Agricultural and agricultural real estate total$209,481 $114,190 $94,722 $48,458 $25,058 $50,805 $171,812 $714,526 
Residential real estate
Pass$153,017 $99,440 $118,854 $83,534 $63,477 $244,852 $33,467 $796,641 
Watch3,986 4,507 2,188 1,896 3,117 8,525 — 24,219 
Substandard980 442 2,507 1,528 884 12,141 1,100 19,582 
Residential real estate total $157,983 $104,389 $123,549 $86,958 $67,478 $265,518 $34,567 $840,442 
Consumer
Pass$37,037 $27,646 $18,811 $15,034 $4,009 $19,483 $280,996 $403,016 
Watch168 352 647 340 82 646 1,622 3,857 
Substandard481 959 1,884 500 897 1,976 822 7,519 
Consumer total$37,686 $28,957 $21,342 $15,874 $4,988 $22,105 $283,440 $414,392 
Total Pass$2,847,203 $1,649,219 $1,131,756 $727,712 $408,380 $1,091,908 $1,084,202 $8,940,380 
Total Watch129,037 141,385 80,970 58,813 44,512 76,144 74,056 604,917 
Total Substandard 143,440 52,036 74,297 55,696 32,562 86,732 32,991 477,754 
Total Loans$3,119,680 $1,842,640 $1,287,023 $842,221 $485,454 $1,254,784 $1,191,249 $10,023,051 

Included in the nonpass loans at June 30, 2021 and December 31, 2020 were $91.8 million and $77.1 million, respectively, of nonpass PPP loans as a result of risk ratings on non-PPP related credits. HTLF's risk rating methodology assigns a risk rating to the whole lending relationship. HTLF has no allowance recorded related to the PPP loans because of the 100% government guarantee.

As of June 30, 2021, HTLF had $1.7 million of loans secured by residential real estate property that were in the process of foreclosure.
The following table sets forth information regarding accruing and nonaccrual loans at June 30, 2021, and December 31, 2020, in thousands:
Accruing Loans
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or
More
Past Due		Total
Past
Due		CurrentNonaccrualTotal Loans
June 30, 2021
Commercial and industrial$1,537 $1,034 $12 $2,583 $2,498,207 $18,118 $2,518,908 
PPP— — — — 829,175 — 829,175 
Owner occupied commercial real estate1,134 — — 1,134 1,929,086 9,914 1,940,134 
Non-owner occupied commercial real estate1,374 1,350 — 2,724 1,963,775 20,870 1,987,369 
Real estate construction2,834 — — 2,834 851,053 408 854,295 
Agricultural and agricultural real estate2,759 1,716 — 4,475 654,135 20,998 679,608 
Residential real estate2,192 118 85 2,395 785,637 12,852 800,884 
Consumer679 222 — 901 398,632 2,108 401,641 
Total gross loans receivable held to maturity$12,509 $4,440 $97 $17,046 $9,909,700 $85,268 $10,012,014 
December 31, 2020
Commercial and industrial$5,825 $2,322 $720 $8,867 $2,504,170 $21,762 $2,534,799 
PPP1 — — 1 957,784 — 957,785 
Owner occupied commercial real estate2,815 167 — 2,982 1,759,649 13,775 1,776,406 
Non-owner occupied commercial real estate2,143 2,674 — 4,817 1,902,003 14,661 1,921,481 
Real estate construction2,446 96 — 2,542 859,784 894 863,220 
Agricultural and agricultural real estate1,688 — — 1,688 694,150 18,688 714,526 
Residential real estate1,675 83 — 1,758 825,047 13,637 840,442 
Consumer807 139 — 946 409,477 3,969 414,392 
Total gross loans receivable held to maturity$17,400 $5,481 $720 $23,601 $9,912,064 $87,386 $10,023,051 

Loans delinquent 30 to 89 days as a percent of total loans were 0.17% at June 30, 2021, compared to 0.23% at December 31, 2020. Changes in credit risk are monitored on a continuous basis as part of relationship management, and changes in risk ratings are made when identified. All individually assessed loans are reviewed at least annually.

HTLF recognized $0 of interest income on nonaccrual loans during the three and six months ended June 30, 2021 and June 30, 2020. As of June 30, 2021, and December 31, 2020, HTLF had $24.0 million and $32.5 million of nonaccrual loans with no related allowance, respectively.

On December 4, 2020, HTLF's Arizona Bank & Trust subsidiary completed the acquisition of certain assets and substantially all of the deposits and certain other liabilities of Johnson Bank's Arizona operations, headquartered in Racine, Wisconsin. As of December 4, 2020, the Johnson Bank branches acquired had gross loans with a fair value of $150.7 million.

On December 4, 2020, HTLF completed the acquisition of AimBank, headquartered in Levelland, Texas. As of December 4, 2020, AimBank had gross loans with a fair value of $1.09 billion.