SECURITIES (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Available for Sale Securities

The amortized cost, gross unrealized gains and losses, and estimated fair values of debt securities available for sale and equity securities with a readily determinable fair value that are carried at fair value as of June 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2022
U.S. treasuries	$	13,867	$	24	$	(1)	$	13,890
U.S. agencies	49,837		—		(4,621)		45,216
Obligations of states and political subdivisions	1,993,108		49		(327,814)		1,665,343
Mortgage-backed securities - agency	2,152,926		217		(187,834)		1,965,309
Mortgage-backed securities - non-agency	2,285,862		5,290		(98,715)		2,192,437
Commercial mortgage-backed securities - agency	108,950		—		(11,099)		97,851
Commercial mortgage-backed securities - non-agency	728,743		—		(14,502)		714,241
Asset-backed securities	390,489		—		(7,667)		382,822
Corporate bonds	9,214		6		(548)		8,672
Total debt securities	7,732,996		5,586		(652,801)		7,085,781
Equity securities with a readily determinable fair value	20,437		—		—		20,437
Total	$	7,753,433	$	5,586	$	(652,801)	$	7,106,218
December 31, 2021
U.S. treasuries	$	997	$	11	$	—	$	1,008
U.S. agencies	193,932		264		(812)		193,384
Obligations of states and political subdivisions	2,045,386		56,263		(16,616)		2,085,033
Mortgage-backed securities - agency	2,388,601		11,870		(51,182)		2,349,289
Mortgage-backed securities - non-agency	1,749,838		4,570		(11,029)		1,743,379
Commercial mortgage-backed securities - agency	125,397		1,429		(2,914)		123,912
Commercial mortgage-backed securities - non-agency	600,253		998		(363)		600,888
Asset-backed securities	408,167		2,803		(1,317)		409,653
Corporate bonds	2,979		61		—		3,040
Total debt securities	7,515,550		78,269		(84,233)		7,509,586
Equity securities with a readily determinable fair value	20,788		—		—		20,788
Total	$	7,536,338	$	78,269	$	(84,233)	$	7,530,374

Schedule of Held to Maturity Securities

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
June 30, 2022
Obligations of states and political subdivisions	$	81,939	$	3,304	$	(31)	$	85,212	$	—
Total	$	81,939	$	3,304	$	(31)	$	85,212	$	—
December 31, 2021
Obligations of states and political subdivisions	$	84,709	$	9,430	$	—	$	94,139	$	—
Total	$	84,709	$	9,430	$	—	$	94,139	$	—

Securities held to maturity	Less than 12 months						12 months or longer					Total
	Fair Value		Unrealized Losses		Count		Fair Value		Unrealized Losses		Count	Fair Value		Unrealized Losses		Count
June 30, 2022
Obligations of states and political subdivisions	$	2,852	$	(31)	2		$	—	$	—	—	$	2,852	$	(31)	2
Total temporarily impaired securities	$	2,852	(31)		2	2	$	—	$	—	—	$	2,852	(31)		2

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of investment securities carried at fair value at June 30, 2022, by contractual maturity, are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	June 30, 2022
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	1,329	$	1,328
Due in 1 to 5 years	19,633		19,421
Due in 5 to 10 years	157,155		139,459
Due after 10 years	1,887,909		1,572,913
Total debt securities	2,066,026		1,733,121
Mortgage and asset-backed securities	5,666,970		5,352,660
Equity securities with a readily determinable fair value	20,437		20,437
Total investment securities	$	7,753,433	$	7,106,218

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2022, by contractual maturity, are as follows, in thousands. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

	June 30, 2022
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	3,901	$	3,909
Due in 1 to 5 years	37,685		38,229
Due in 5 to 10 years	34,192		35,965
Due after 10 years	6,161		7,109
Total debt securities	81,939		85,212

Schedule of Realized Gross Gains (Losses)

Gross gains and losses realized related to the sales of securities carried at fair value for the three and six months ended June 30, 2022 and 2021, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Proceeds from sales	$	149,840	$	423,415	$	973,911	$	630,481
Gross security gains	357		3,844		7,298		4,289
Gross security losses	2,998		1,002		7,948		1,477

Schedule of Debt Securities Available-for-sale

The following table summarizes, in thousands, the amount of unrealized losses, defined as the amount by which cost or amortized cost exceeds fair value, and the related fair value of investments with unrealized losses in the securities portfolio as of June 30, 2022, and December 31, 2021. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for

12 months or more. The reference point for determining how long an investment was in an unrealized loss position was June 30, 2021, and December 31, 2020, respectively.

Debt securities available for sale	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses		Count	Fair Value		Unrealized Losses		Count	Fair Value		Unrealized Losses		Count
June 30, 2022
U.S. treasuries	$	998	$	(1)	1	$	—	$	—	—	$	998	$	(1)	1
U.S. agencies	$	28,629	$	(1,678)	6	$	16,587	$	(2,943)	1	$	45,216	$	(4,621)	7
Obligations of states and political subdivisions	1,381,161		(249,231)		255	270,570		(78,583)		73	1,651,731		(327,814)		328
Mortgage-backed securities - agency	1,205,936		(93,294)		153	749,833		(94,540)		52	1,955,769		(187,834)		205
Mortgage-backed securities - non-agency	1,623,955		(94,481)		43	87,366		(4,234)		7	1,711,321		(98,715)		50
Commercial mortgage-backed securities - agency	51,811		(3,699)		20	46,041		(7,400)		6	97,852		(11,099)		26
Commercial mortgage-backed securities - non-agency	607,320		(14,325)		19	12,015		(177)		2	619,335		(14,502)		21
Asset-backed securities	200,036		(6,560)		10	14,434		(1,107)		3	214,470		(7,667)		13
Corporate bonds	8,169		(548)		6	—		—		—	8,169		(548)		6
Total temporarily impaired securities	$	5,108,015	$	(463,817)	513	$	1,196,846	$	(188,984)	144	$	6,304,861	$	(652,801)	657
December 31, 2021
U.S. agencies	$	100,839	$	(812)	2	$	—	$	—	—	$	100,839	$	(812)	2
Obligations of states and political subdivisions	596,866		(10,115)		113	236,329		(6,501)		49	833,195		(16,616)		162
Mortgage-backed securities - agency	1,383,808		(33,291)		83	474,724		(17,891)		19	1,858,532		(51,182)		102
Mortgage-backed securities - non-agency	929,515		(10,870)		27	23,821		(159)		5	953,336		(11,029)		32
Commercial mortgage-backed securities - agency	26,999		(689)		8	53,025		(2,225)		5	80,024		(2,914)		13
Commercial mortgage-backed securities - non-agency	74,450		(145)		3	14,124		(218)		2	88,574		(363)		5
Asset-backed securities	113,945		(1,201)		6	13,799		(116)		6	127,744		(1,317)		12
Total temporarily impaired securities	$	3,226,422	$	(57,123)	242	$	815,822	$	(27,110)	86	$	4,042,244	$	(84,233)	328

Schedule of Debt Securities, Held-to-maturity, Allowance for Credit Loss

The following tables present, in thousands, the activity in the allowance for credit losses for securities held to maturity by obligations of states and political subdivisions securities for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022		2021
Beginning balance	$	—	$	48
Provision (benefit) for credit losses	—		3
Balance at period end	$	—	$	51
	Six Months Ended June 30,
	2022		2021
Beginning balance	$	—	$	51
Provision (benefit) for credit losses	—		—
Balance at period end	$	—	$	51

Schedule of Financing Receivable Credit Quality Indicators

The following table summarizes, in thousands, the carrying amount of HTLF's held to maturity debt securities by investment rating as of June 30, 2022 and December 31, 2021, which are updated quarterly and used to monitor the credit quality of the securities:

	June 30, 2022		December 31, 2021
Rating
AAA	$	3,324	$	3,265
AA, AA+, AA-	54,154		61,471
A+, A, A-	18,760		15,034
BBB	5,701		4,939
Not Rated	—		—
Total	$	81,939	$	84,709

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2022, and December 31, 2021, in thousands:

As of June 30, 2022	Amortized Cost Basis of Term Loans by Year of Origination
	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Total
Commercial and industrial
Pass	$	574,584	$	493,764	$	303,648	$	121,220	$	75,369	$	446,904	$	890,865	$	2,906,354
Watch	8,085		7,811		4,846		9,339		5,665		3,166		18,816		57,728
Substandard	7,488		11,479		9,891		8,759		6,597		14,601		36,622		95,437
Commercial and industrial total	$	590,157	$	513,054	$	318,385	$	139,318	$	87,631	$	464,671	$	946,303	$	3,059,519
PPP
Pass	$	—	$	16,194	$	1,526	$	—	$	—	$	—	$	—	$	17,720
Watch	—		8		—		—		—		—		—		8
Substandard	—		5,140		163		—		—		—		—		5,303
PPP total	$	—	$	21,342	$	1,689	$	—	$	—	$	—	$	—	$	23,031
Owner occupied commercial real estate
Pass	$	344,635	$	823,067	$	282,001	$	284,562	$	125,875	$	240,032	$	41,687	$	2,141,859
Watch	6,851		23,650		16,621		6,098		6,945		6,126		1,750		68,041
Substandard	116		10,559		21,695		11,247		2,274		27,007		35		72,933
Owner occupied commercial real estate total	$	351,602	$	857,276	$	320,317	$	301,907	$	135,094	$	273,165	$	43,472	$	2,282,833
Non-owner occupied commercial real estate
Pass	$	496,131	$	583,775	$	225,664	$	338,574	$	180,249	$	226,984	$	39,259	$	2,090,636
Watch	772		3,149		10,744		30,141		42,815		65,065		65		152,751
Substandard	2,210		12,095		8,710		16,530		23,006		15,780		—		78,331
Non-owner occupied commercial real estate total	$	499,113	$	599,019	$	245,118	$	385,245	$	246,070	$	307,829	$	39,324	$	2,321,718
Real estate construction
Pass	$	256,158	$	382,092	$	120,782	$	41,864	$	3,243	$	7,606	$	24,009	$	835,754
Watch	—		2,560		1,267		—		—		15		—		3,842
Substandard	—		—		49		543		4,703		154		—		5,449
Real estate construction total	$	256,158	$	384,652	$	122,098	$	42,407	$	7,946	$	7,775	$	24,009	$	845,045
Agricultural and agricultural real estate
Pass	$	212,069	$	176,950	$	90,929	$	43,016	$	25,482	$	46,155	$	187,951	$	782,552
Watch	1,398		4,282		4,244		838		471		1,468		2,937		15,638
Substandard	2,462		10,614		255		2,746		13,959		5,639		2,838		38,513
Agricultural and agricultural real estate total	$	215,929	$	191,846	$	95,428	$	46,600	$	39,912	$	53,262	$	193,726	$	836,703
Residential real estate
Pass	$	126,795	$	289,091	$	70,314	$	43,358	$	40,071	$	229,741	$	26,273	$	825,643
Watch	—		487		580		688		2,041		5,211		—		9,007
Substandard	99		1,961		240		41		1,321		6,958		—		10,620
Residential real estate total	$	126,894	$	291,539	$	71,134	$	44,087	$	43,433	$	241,910	$	26,273	$	845,270
Consumer
Pass	$	46,922	$	56,869	$	15,395	$	9,186	$	6,524	$	25,748	$	296,721	$	457,365

As of June 30, 2022	Amortized Cost Basis of Term Loans by Year of Origination
	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Total
Watch	—		103		79		255		57		988		1,785		3,267
Substandard	103		256		263		311		256		1,869		409		3,467
Consumer total	$	47,025	$	57,228	$	15,737	$	9,752	$	6,837	$	28,605	$	298,915	$	464,099
Total Pass	$	2,057,294	$	2,821,802	$	1,110,259	$	881,780	$	456,813	$	1,223,170	$	1,506,765	$	10,057,883
Total Watch	17,106		42,050		38,381		47,359		57,994		82,039		25,353		310,282
Total Substandard	12,478		52,104		41,266		40,177		52,116		72,008		39,904		310,053
Total Loans	$	2,086,878	$	2,915,956	$	1,189,906	$	969,316	$	566,923	$	1,377,217	$	1,572,022	$	10,678,218

As of December 31, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
Commercial and industrial
Pass	$	604,659	$	359,533	$	203,960	$	89,694	$	171,709	$	330,094	$	708,525	$	2,468,174
Watch	10,633		12,790		12,550		8,210		3,611		14,976		24,626		87,396
Substandard	19,888		6,391		13,050		8,535		6,619		12,052		22,980		89,515
Commercial and industrial total	$	635,180	$	378,714	$	229,560	$	106,439	$	181,939	$	357,122	$	756,131	$	2,645,085
PPP
Pass	$	146,370	$	25,707	$	—	$	—	$	—	$	—	$	—	$	172,077
Watch	10,726		127		—		—		—		—		—		10,853
Substandard	16,932		21		—		—		—		—		—		16,953
PPP total	$	174,028	$	25,855	$	—	$	—	$	—	$	—	$	—	$	199,883
Owner occupied commercial real estate
Pass	$	940,043	$	328,052	$	315,497	$	180,936	$	115,142	$	189,647	$	34,233	$	2,103,550
Watch	4,676		13,956		7,759		10,501		15,032		6,830		35		58,789
Substandard	11,958		20,769		13,734		2,809		13,912		13,063		1,750		77,995
Owner occupied commercial real estate total	$	956,677	$	362,777	$	336,990	$	194,246	$	144,086	$	209,540	$	36,018	$	2,240,334
Non-owner occupied commercial real estate
Pass	$	609,968	$	263,093	$	315,815	$	236,823	$	152,059	$	166,792	$	28,728	$	1,773,278
Watch	4,754		9,109		35,496		29,227		4,865		35,901		—		119,352
Substandard	15,722		10,612		21,798		3,599		14,023		51,766		441		117,961
Non-owner occupied commercial real estate total	$	630,444	$	282,814	$	373,109	$	269,649	$	170,947	$	254,459	$	29,169	$	2,010,591
Real estate construction
Pass	$	381,283	$	206,879	$	169,606	$	14,197	$	7,163	$	7,823	$	14,507	$	801,458
Watch	2,704		858		2,145		44,846		—		—		14		50,567
Substandard	—		50		46		3,944		—		54		—		4,094
Real estate construction total	$	383,987	$	207,787	$	171,797	$	62,987	$	7,163	$	7,877	$	14,521	$	856,119

As of December 31, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
Agricultural and agricultural real estate
Pass	$	217,179	$	102,030	$	47,927	$	32,913	$	22,029	$	35,548	$	220,065	$	677,691
Watch	4,018		10,390		4,688		2,270		33		2,038		2,948		26,385
Substandard	9,250		1,095		4,910		15,825		3,212		8,859		6,526		49,677
Agricultural and agricultural real estate total	$	230,447	$	113,515	$	57,525	$	51,008	$	25,274	$	46,445	$	229,539	$	753,753
Residential real estate
Pass	$	311,292	$	86,355	$	50,762	$	53,773	$	43,619	$	230,566	$	29,017	$	805,384
Watch	3,928		1,499		750		1,452		734		1,977		1,000		11,340
Substandard	2,528		444		410		2,317		1,139		5,721		—		12,559
Residential real estate total	$	317,748	$	88,298	$	51,922	$	57,542	$	45,492	$	238,264	$	30,017	$	829,283
Consumer
Pass	$	69,172	$	20,258	$	13,051	$	9,001	$	10,986	$	18,202	$	271,034	$	411,704
Watch	555		309		392		373		113		591		2,210		4,543
Substandard	267		204		218		236		363		1,611		378		3,277
Consumer total	$	69,994	$	20,771	$	13,661	$	9,610	$	11,462	$	20,404	$	273,622	$	419,524
Total Pass	$	3,279,966	$	1,391,907	$	1,116,618	$	617,337	$	522,707	$	978,672	$	1,306,109	$	9,213,316
Total Watch	41,994		49,038		63,780		96,879		24,388		62,313		30,833		369,225
Total Substandard	76,545		39,586		54,166		37,265		39,268		93,126		32,075		372,031
Total Loans	$	3,398,505	$	1,480,531	$	1,234,564	$	751,481	$	586,363	$	1,134,111	$	1,369,017	$	9,954,572