XML 66 R27.htm IDEA: XBRL DOCUMENT v3.21.2
FAIR VALUE (Tables)
6 Months Ended
Jun. 30, 2021
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The table below presents HTLFs assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021, and December 31, 2020, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:
Total Fair ValueLevel 1Level 2Level 3
June 30, 2021
Assets
Securities available for sale
U.S. treasuries$1,016 $1,016 $— $— 
U.S. agencies35,371 — 35,371 — 
Obligations of states and political subdivisions1,871,786 — 1,871,786 — 
Mortgage-backed securities - agency1,740,675 — 1,740,675 — 
Mortgage-backed securities - non-agency1,363,292 — 1,363,292 — 
Commercial mortgage-backed securities - agency125,080 — 125,080 — 
Commercial mortgage-backed securities - non-agency535,305 — 535,305 — 
Asset-backed securities846,987 — 846,987 — 
Corporate bonds3,815 — 3,815 — 
Equity securities with a readily determinable fair value 20,651 — 20,651 — 
Derivative financial instruments(1)
29,891 — 29,891 — 
Interest rate lock commitments1,425 — — 1,425 
Forward commitments— — 
Total assets at fair value$6,575,302 $1,016 $6,572,861 $1,425 
Liabilities
Derivative financial instruments(2)
$35,268 $— $35,268 $— 
Forward commitments202 — 202 — 
Total liabilities at fair value$35,470 $— $35,470 $— 
December 31, 2020
Assets
Securities available for sale
U.S. treasuries$2,026 $2,026 $— $— 
U.S. agencies166,779 — 166,779 — 
Obligations of states and political subdivisions1,635,227 — 1,635,227 — 
Mortgage-backed securities - agency1,355,270 — 1,355,270 — 
Mortgage-backed securities - non-agency1,449,116 — 1,449,116 — 
Commercial mortgage-backed securities - agency174,153 — 174,153 — 
Commercial mortgage-backed securities - non-agency252,767 — 252,767 — 
Asset-backed securities1,069,266 — 1,069,266 — 
Corporate bonds3,742 — 3,742 — 
Equity securities with a readily determinable fair value19,629 — 19,629 — 
Derivative financial instruments(1)
44,102 — 44,102 — 
Interest rate lock commitments1,827 — — 1,827 
Total assets at fair value$6,173,904 $2,026 $6,170,051 $1,827 
Liabilities
Derivative financial instruments(2)
$51,962 $— $51,962 $— 
Forward commitments697 — 697 — 
Total liabilities at fair value$52,659 $— $52,659 $— 
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps, embedded derivatives and free standing derivative instruments.
Fair Value Measurements, Nonrecurring
The tables below present HTLF's assets that are measured at fair value on a nonrecurring basis, in thousands:
Fair Value Measurements at
June 30, 2021
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
 Inputs
(Level 3)
Year-to-
Date (Gains)
Losses
Collateral dependent individually assessed loans:
Commercial and industrial$8,969 $— $— $8,969 $214 
Owner occupied commercial real estate3,573 — — 3,573 — 
Non-owner occupied commercial real estate14,742 — — 14,742 1,637 
Agricultural and agricultural real estate14,161 — — 14,161 — 
Total collateral dependent individually assessed loans$41,445 $— $— $41,445 $1,851 
Loans held for sale$33,248 $— $33,248 $— $(1,304)
Other real estate owned6,314 — — 6,314 (88)
Premises, furniture and equipment held for sale6,925 — — 6,925 (44)
Servicing rights 5,559 — — 5,559 (391)

Fair Value Measurements at
December 31, 2020
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
 Inputs
(Level 3)
Year-to-
Date (Gains)
Losses
Collateral dependent individually assessed loans:
Commercial and industrial$11,256 $— $— $11,256 $451 
Owner occupied commercial real estate5,874 — — 5,874 11,631 
Non-owner occupied commercial real estate4,907 — — 4,907 — 
Agricultural and agricultural real estate12,451 — — 12,451 — 
Total collateral dependent individually assessed loans$34,488 $— $— $34,488 $12,082 
Loans held for sale$57,949 $— $57,949 $— $(982)
Other real estate owned6,624 — — 6,624 1,044 
Premises, furniture and equipment held for sale6,499 — — 6,499 3,288 
Servicing rights5,189 — — 5,189 1,778 
Fair Value Inputs, Assets, Quantitative Information
The following tables present additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which HTLF has utilized Level 3 inputs to determine fair value, in thousands:
Fair Value
at
6/30/2021
Valuation
Technique
Unobservable
Input
Range
(Weighted
Average)
Interest rate lock commitments$1,425 Discounted cash flowsClosing ratio
0-99% (88%)(1)
Other real estate owned6,314 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Servicing rights 5,559 Discounted cash flowsThird party valuation(4)
Premises, furniture and equipment held for sale6,925 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Collateral dependent individually assessed loans:
Commercial8,969 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-8%(3)
Owner occupied commercial real estate3,573 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-7%(3)
Non-owner occupied commercial real estate14,742 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Agricultural and agricultural real estate14,161 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-15%(3)
(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.
(2) Third party appraisals are obtained and updated at least annually to establish the value of the underlying asset, but the disclosure of the unobservable inputs used by the appraisers would not be meaningful because the range will vary widely from appraisal to appraisal.
(3) Discounts applied to the appraised values primarily include estimated sales costs, but also consider the age of the appraisal, changes in local market conditions and changes in the current condition of the collateral.
(4) The significant unobservable input used in the fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.
Fair Value
at
12/31/2020
Valuation
Technique
Unobservable
Input
Range
(Weighted
Average)
Interest rate lock commitments$1,827 Discounted cash flowsClosing ratio
0-99% (86%)(1)
Other real estate owned6,624 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Servicing rights5,189 Discounted cash flowsThird party valuation
(4)
Premises, furniture and equipment held for sale6,499 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Collateral dependent individually assessed loans:
Commercial and industrial11,256 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-8%(3)
Fair Value
at
12/31/2020
Valuation
Technique
Unobservable
Input
Range
(Weighted
Average)
Owner occupied commercial real estate5,874 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-12%(3)
Non-owner occupied commercial real estate4,907 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
Agricultural and agricultural real estate12,451 Modified appraised valueThird party appraisal(2)
Appraisal discount
0-10%(3)
(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.
(2) Third party appraisals are obtained and updated at least annually to establish the value of the underlying asset, but the disclosure of the unobservable inputs used by the appraisers would not be meaningful because the range will vary widely from appraisal to appraisal.
(3) Discounts applied to the appraised values primarily include estimated sales costs, but also consider the age of the appraisal, changes in local market conditions and changes in the current condition of the collateral.
(4) The significant unobservable input used in the fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
The changes in fair value of the interest rate lock commitments, which are Level 3 financial instruments measured on a recurring basis, are summarized in the following table, in thousands:
For the Six Months Ended
June 30, 2021
For the Year Ended
December 31, 2020
Balance at January 1,$1,827 $681 
Total net gains included in earnings(1,735)2,803 
Issuances 8,892 17,221 
Settlements(7,559)(18,878)
Balance at period end$1,425 $1,827 
Fair Value, by Balance Sheet Grouping HTLF does not believe that the estimated information presented herein is representative of the earnings power or value of HTLF. 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 HTLF 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, 2021
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$449,128 $449,128 $449,128 $— $— 
Time deposits in other financial institutions3,138 3,138 3,138 — — 
Securities:
Carried at fair value6,543,978 6,543,978 1,016 6,542,962 — 
Held to maturity85,439 95,421 — 95,421 — 
Other investments
76,809 76,809 — 76,809 — 
Loans held for sale33,248 33,248 — 33,248 — 
Loans, net:
Commercial and industrial2,487,576 2,469,136 — 2,460,167 8,969 
PPP 829,175 829,175 — 829,175 — 
Owner occupied commercial real estate1,920,144 1,901,531 — 1,897,958 3,573 
Non-owner occupied commercial real estate1,964,541 1,953,264 — 1,938,522 14,742 
Real estate construction 834,715 838,001 — 838,001 — 
Agricultural and agricultural real estate672,448 660,650 — 646,489 14,161 
Residential real estate791,143 789,274 — 789,274 — 
Consumer391,546 394,337 — 394,337 — 
Total Loans, net
9,891,288 9,835,368 — 9,793,923 41,445 
Cash surrender value on life insurance189,619 189,619 — 189,619 — 
Derivative financial instruments(1)
29,891 29,891 — 29,891 — 
Interest rate lock commitments1,425 1,425 — — 1,425 
Forward commitments— — 
Financial liabilities:
Deposits
Demand deposits
6,299,289 6,299,289 — 6,299,289 — 
Savings deposits
8,189,223 8,189,223 — 8,189,223 — 
Time deposits
1,126,606 1,126,788 — 1,126,788 — 
Short term borrowings152,563 152,563 — 152,563 — 
Other borrowings271,244 274,631 — 274,631 — 
Derivative financial instruments(2)
35,268 35,368 — 35,368 — 
Forward commitments202 202 — 202 — 
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.
Fair Value Measurements at
December 31, 2020
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$337,903 $337,903 $337,903 $— $— 
Time deposits in other financial institutions3,129 3,129 3,129 — — 
Securities:
Carried at fair value6,127,975 6,127,975 2,026 6,125,949 — 
Held to maturity88,839 100,041 — 100,041 — 
Other investments
75,253 75,523 — 75,523 — 
Loans held for sale57,949 57,949 — 57,949 — 
Loans, net:
Commercial and industrial2,495,981 2,391,041 — 2,379,785 11,256 
PPP957,785 957,785 — 957,785 — 
Owner occupied commercial real estate1,756,405 1,745,397 — 1,739,523 5,874 
Non-owner occupied commercial real estate1,900,608 1,892,213 — 1,887,306 4,907 
Real estate construction843,140 849,224 — 849,224 — 
Agricultural and agricultural real estate707,397 697,729 — 685,278 12,451 
Residential real estate828,507 828,366 — 828,366 — 
Consumer401,622 407,914 — 407,914 — 
Total Loans, net
9,891,445 9,769,669 — 9,735,181 34,488 
Cash surrender value on life insurance187,664 187,664 — 187,664 — 
Derivative financial instruments(1)
44,102 44,102 — 44,102 — 
Interest rate lock commitments1,827 1,827 — — 1,827 
Financial liabilities:
Deposits
Demand deposits
5,688,810 5,688,810 — 5,688,810 — 
Savings deposits
8,019,704 8,019,704 — 8,019,704 — 
Time deposits
1,271,391 1,273,468 — 1,273,468 — 
Short term borrowings167,872 167,872 — 167,872 — 
Other borrowings457,042 458,806 — 458,806 — 
Derivative financial instruments(1)
51,962 51,962 — 51,962 — 
Forward commitments697 697 — 697 — 
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.