QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol | Name of each exchange on which registered | ||||||
☒ | Accelerated Filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Part I | |||||
Part II | |||||
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) | |||||||||||
September 30, 2022 (Unaudited) | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest bearing deposits with other banks and other short-term investments | |||||||||||
Cash and cash equivalents | |||||||||||
Time deposits in other financial institutions | |||||||||||
Securities: | |||||||||||
Carried at fair value (cost of $ | |||||||||||
Held to maturity, net of allowance for credit losses of $ | |||||||||||
Other investments, at cost | |||||||||||
Loans held for sale | |||||||||||
Loans receivable: | |||||||||||
Held to maturity | |||||||||||
Allowance for credit losses | ( | ( | |||||||||
Loans receivable, net | |||||||||||
Premises, furniture and equipment, net | |||||||||||
Premises, furniture and equipment held for sale | |||||||||||
Other real estate, net | |||||||||||
Goodwill | |||||||||||
Core deposit intangibles and customer relationship intangibles, net | |||||||||||
Servicing rights, net | |||||||||||
Cash surrender value on life insurance | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
LIABILITIES: | |||||||||||
Deposits: | |||||||||||
Demand | $ | $ | |||||||||
Savings | |||||||||||
Time | |||||||||||
Total deposits | |||||||||||
Short-term borrowings | |||||||||||
Other borrowings | |||||||||||
Accrued expenses and other liabilities | |||||||||||
TOTAL LIABILITIES | |||||||||||
STOCKHOLDERS' EQUITY: | |||||||||||
Preferred stock (par value $ | |||||||||||
Series A Junior Participating preferred stock (par value $ | |||||||||||
Series B Fixed Rate Cumulative Perpetual Preferred Stock (par value $ | |||||||||||
Series C Senior Non-Cumulative Perpetual Preferred Stock (par value $ | |||||||||||
Series D Senior Non-Cumulative Perpetual Convertible Preferred Stock (par value $ | |||||||||||
Series E Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock (par value $ | |||||||||||
Common stock (par value $ | |||||||||||
Capital surplus | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
TOTAL STOCKHOLDERS' EQUITY | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ | |||||||||
See accompanying notes to consolidated financial statements. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
INTEREST INCOME: | |||||||||||||||||||||||
Interest and fees on loans | $ | $ | $ | $ | |||||||||||||||||||
Interest on securities: | |||||||||||||||||||||||
Taxable | |||||||||||||||||||||||
Nontaxable | |||||||||||||||||||||||
Interest on federal funds sold | |||||||||||||||||||||||
Interest on interest bearing deposits in other financial institutions | |||||||||||||||||||||||
TOTAL INTEREST INCOME | |||||||||||||||||||||||
INTEREST EXPENSE: | |||||||||||||||||||||||
Interest on deposits | |||||||||||||||||||||||
Interest on short-term borrowings | |||||||||||||||||||||||
Interest on other borrowings (includes $ | |||||||||||||||||||||||
TOTAL INTEREST EXPENSE | |||||||||||||||||||||||
NET INTEREST INCOME | |||||||||||||||||||||||
Provision (benefit) for credit losses | ( | ( | |||||||||||||||||||||
NET INTEREST INCOME AFTER PROVISION (BENEFIT) FOR CREDIT LOSSES | |||||||||||||||||||||||
NONINTEREST INCOME: | |||||||||||||||||||||||
Service charges and fees | |||||||||||||||||||||||
Loan servicing income | |||||||||||||||||||||||
Trust fees | |||||||||||||||||||||||
Brokerage and insurance commissions | |||||||||||||||||||||||
Securities gains (losses), net (includes $( | ( | ( | |||||||||||||||||||||
Unrealized gain (loss) on equity securities, net | ( | ( | |||||||||||||||||||||
Net gains on sale of loans held for sale | |||||||||||||||||||||||
Valuation adjustment on servicing rights | |||||||||||||||||||||||
Income on bank owned life insurance | |||||||||||||||||||||||
Other noninterest income | |||||||||||||||||||||||
TOTAL NONINTEREST INCOME | |||||||||||||||||||||||
NONINTEREST EXPENSES: | |||||||||||||||||||||||
Salaries and employee benefits | |||||||||||||||||||||||
Occupancy | |||||||||||||||||||||||
Furniture and equipment | |||||||||||||||||||||||
Professional fees | |||||||||||||||||||||||
Advertising | |||||||||||||||||||||||
Core deposit and customer relationship intangibles amortization | |||||||||||||||||||||||
Other real estate and loan collection expenses | |||||||||||||||||||||||
(Gain)/loss on sales/valuations of assets, net | ( | ( | ( | ||||||||||||||||||||
Acquisition, integration and restructuring costs | |||||||||||||||||||||||
Partnership investment in tax credit projects | |||||||||||||||||||||||
Other noninterest expenses | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSES | |||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | |||||||||||||||||||||||
Income taxes (includes $ | |||||||||||||||||||||||
NET INCOME | |||||||||||||||||||||||
Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | $ | $ | $ | |||||||||||||||||||
EARNINGS PER COMMON SHARE - BASIC | $ | $ | $ | $ | |||||||||||||||||||
EARNINGS PER COMMON SHARE - DILUTED | $ | $ | $ | $ | |||||||||||||||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to consolidated financial statements. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
NET INCOME | $ | $ | $ | $ | |||||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||||||
Securities: | |||||||||||||||||||||||
Net change in unrealized gain (loss) on securities | ( | ( | ( | ( | |||||||||||||||||||
Reclassification adjustment for net (gains) losses realized in net income | ( | ( | |||||||||||||||||||||
Income taxes | |||||||||||||||||||||||
Other comprehensive loss on securities | ( | ( | ( | ( | |||||||||||||||||||
Derivatives used in cash flow hedging relationships: | |||||||||||||||||||||||
Net change in unrealized gain on derivatives | |||||||||||||||||||||||
Reclassification adjustment for net (gains) losses on derivatives realized in net income | ( | ( | |||||||||||||||||||||
Income taxes | ( | ( | ( | ( | |||||||||||||||||||
Other comprehensive income on cash flow hedges | |||||||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
TOTAL COMPREHENSIVE INCOME (LOSS) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
See accompanying notes to consolidated financial statements. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision (benefit) for credit losses | ( | ||||||||||
Net amortization of premium on securities | |||||||||||
Securities (gains) losses, net | ( | ||||||||||
Unrealized (gain) loss on equity securities, net | ( | ||||||||||
Stock based compensation | |||||||||||
Loans originated for sale | ( | ( | |||||||||
Proceeds on sales of loans held for sale | |||||||||||
Net gains on sale of loans held for sale | ( | ( | |||||||||
(Increase) decrease in accrued interest receivable | ( | ||||||||||
Decrease in prepaid expenses | |||||||||||
Increase (decrease) in accrued interest payable | ( | ||||||||||
Capitalization of servicing rights | ( | ( | |||||||||
Valuation adjustment on servicing rights | ( | ( | |||||||||
(Gain) loss on sales/valuations of assets, net | ( | ||||||||||
Net excess tax benefit from stock based compensation | |||||||||||
Other, net | ( | ||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchase of time deposits in other financial institutions | ( | ||||||||||
Proceeds from the sale of securities available for sale | |||||||||||
Proceeds from the sale of securities held to maturity | |||||||||||
Proceeds from the maturity of and principal paydowns on securities available for sale | |||||||||||
Proceeds from the maturity of and principal paydowns on securities held to maturity | |||||||||||
Proceeds from the maturity of time deposits in other financial institutions | |||||||||||
Proceeds from the sale, maturity of, redemption of and principal paydowns on other investments | |||||||||||
Purchase of securities available for sale | ( | ( | |||||||||
Purchase of other investments | ( | ( | |||||||||
Net (increase) decrease in loans | ( | ||||||||||
Purchase of bank owned life insurance policies | ( | ( | |||||||||
Proceeds from bank owned life insurance policies | |||||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from the sale of equipment | |||||||||||
Net cash expended in divestitures | ( | ( | |||||||||
Proceeds on sale of OREO and other repossessed assets | |||||||||||
NET CASH USED BY INVESTING ACTIVITIES | $ | ( | $ | ( | |||||||
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (Unaudited) (Dollars in thousands) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Net increase (decrease) in demand deposits | $ | ( | $ | ||||||||
Net increase in savings deposits | |||||||||||
Net increase (decrease) in time deposit accounts | ( | ||||||||||
Net increase in short-term borrowings | |||||||||||
Proceeds from short term advances | |||||||||||
Repayments of short term advances | ( | ( | |||||||||
Proceeds from other borrowings | |||||||||||
Repayments of other borrowings | ( | ( | |||||||||
Proceeds from issuance of common stock | |||||||||||
Dividends paid | ( | ( | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | |||||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of year | |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | |||||||||
Supplemental disclosures: | |||||||||||
Cash paid for income/franchise taxes | $ | $ | |||||||||
Cash paid for interest | |||||||||||
Loans transferred to OREO | |||||||||||
Transfer of premises from premises, furniture and equipment, net, to premises, furniture and equipment held for sale | |||||||||||
Transfer of premises from premises, furniture and equipment held for sale to premises, furniture and equipment, net | |||||||||||
Dividends declared, not paid | |||||||||||
Transfer of available for sale securities to held to maturity securities | |||||||||||
See accompanying notes to consolidated financial statements. |
HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||||||||
Heartland Financial USA, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Equity | ||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||||||||||||||
Preferred, $ | ( | ( | |||||||||||||||||||||||||||||||||
Common, $ | ( | ( | |||||||||||||||||||||||||||||||||
Issuance of | |||||||||||||||||||||||||||||||||||
Stock based compensation | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||||||||||||||
Preferred, $ | ( | ( | |||||||||||||||||||||||||||||||||
Common, $ | ( | ( | |||||||||||||||||||||||||||||||||
Issuance of | |||||||||||||||||||||||||||||||||||
Stock based compensation | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||||||||||||||
Preferred, $ | ( | ( | |||||||||||||||||||||||||||||||||
Common, $ | ( | ( | |||||||||||||||||||||||||||||||||
Issuance of | |||||||||||||||||||||||||||||||||||
Stock based compensation | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||||||||||||||
Preferred, $ | ( | ( | |||||||||||||||||||||||||||||||||
Common, $ | ( | ( | |||||||||||||||||||||||||||||||||
Issuance of | ( | ||||||||||||||||||||||||||||||||||
Stock based compensation | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements. |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Net income | $ | $ | |||||||||
Preferred dividends | ( | ( | |||||||||
Net income available to common stockholders | $ | $ | |||||||||
Weighted average common shares outstanding for basic earnings per share | |||||||||||
Assumed incremental common shares issued upon vesting of outstanding restricted stock units | |||||||||||
Weighted average common shares for diluted earnings per share | |||||||||||
Earnings per common share — basic | $ | $ | |||||||||
Earnings per common share — diluted | $ | $ | |||||||||
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Net income | $ | $ | |||||||||
Preferred dividends | ( | ( | |||||||||
Net income available to stockholders | $ | $ | |||||||||
Weighted average common shares outstanding for basic earnings per share | |||||||||||
Assumed incremental common shares issued upon vesting of outstanding restricted stock units | |||||||||||
Weighted average common shares for diluted earnings per share | |||||||||||
Earnings per common share — basic | $ | $ | |||||||||
Earnings per common share — diluted | $ | $ | |||||||||
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | ( | $ | ||||||||||||||||||
U.S. agencies | ( | ||||||||||||||||||||||
Obligations of states and political subdivisions | ( | ||||||||||||||||||||||
Mortgage-backed securities - agency | ( | ||||||||||||||||||||||
Mortgage-backed securities - non-agency | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities - agency | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Corporate bonds | ( | ||||||||||||||||||||||
Total debt securities | ( | ||||||||||||||||||||||
Equity securities with a readily determinable fair value | — | — | |||||||||||||||||||||
Total | $ | $ | $ | ( | $ | ||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | |||||||||||||||||||
U.S. agencies | ( | ||||||||||||||||||||||
Obligations of states and political subdivisions | ( | ||||||||||||||||||||||
Mortgage-backed securities - agency | ( | ||||||||||||||||||||||
Mortgage-backed securities - non-agency | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities - agency | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Total debt securities | ( | ||||||||||||||||||||||
Equity securities with a readily determinable fair value | — | — | |||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Allowance for Credit Losses | |||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||
Obligations of states and political subdivisions | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Obligations of states and political subdivisions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
September 30, 2022 | |||||||||||
Amortized Cost | Estimated Fair Value | ||||||||||
Due in 1 year or less | $ | $ | |||||||||
Due in 1 to 5 years | |||||||||||
Due in 5 to 10 years | |||||||||||
Due after 10 years | |||||||||||
Total debt securities | |||||||||||
Mortgage and asset-backed securities | |||||||||||
Equity securities with a readily determinable fair value | |||||||||||
Total investment securities | $ | $ |
September 30, 2022 | |||||||||||
Amortized Cost | Estimated Fair Value | ||||||||||
Due in 1 year or less | $ | $ | |||||||||
Due in 1 to 5 years | |||||||||||
Due in 5 to 10 years | |||||||||||
Due after 10 years | |||||||||||
Total debt securities | $ | $ | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Proceeds from sales | $ | $ | $ | $ | |||||||||||||||||||
Gross security gains | |||||||||||||||||||||||
Gross security losses |
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 | |||||||||||||||||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
U.S. agencies | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities - agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities - non-agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities - agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total temporarily impaired securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. agencies | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities - agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities - non-agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities - agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total temporarily impaired securities | $ | $ | ( | $ | $ | ( | $ | $ | ( |
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 | |||||||||||||||||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
Total temporarily impaired securities | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
Provision (benefit) for credit losses | ( | ||||||||||
Balance at period end | $ | $ | |||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
Provision (benefit) for credit losses | ( | ||||||||||
Balance at period end | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Rating | |||||||||||
AAA | $ | $ | |||||||||
AA, AA+, AA- | |||||||||||
A+, A, A- | |||||||||||
BBB | |||||||||||
Not Rated | |||||||||||
Total | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Loans receivable held to maturity: | |||||||||||
Commercial and industrial | $ | $ | |||||||||
Paycheck Protection Program ("PPP") | |||||||||||
Owner occupied commercial real estate | |||||||||||
Non-owner occupied commercial real estate | |||||||||||
Real estate construction | |||||||||||
Agricultural and agricultural real estate | |||||||||||
Residential real estate | |||||||||||
Consumer | |||||||||||
Total loans receivable held to maturity | |||||||||||
Allowance for credit losses | ( | ( | |||||||||
Loans receivable, net | $ | $ |
Allowance For Credit Losses | Gross Loans Receivable Held to Maturity | ||||||||||||||||||||||||||||||||||
Individually Evaluated for Credit Losses | Collectively Evaluated for Credit Losses | Total | Loans Individually Evaluated for Credit Losses | Loans Collectively Evaluated for Credit Losses | Total | ||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
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 estate | |||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
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 estate | |||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
As of September 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 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
PPP total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
As of September 30, 2022 | Amortized Cost Basis of Term Loans by Year of Origination | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 and Prior | Revolving | Total | ||||||||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Residential real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Total Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Total Loans | $ | $ | $ | $ | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
PPP total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Residential real estate total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total Watch | |||||||||||||||||||||||||||||||||||||||||||||||
Total Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
Total Loans | $ | $ | $ | $ | $ | $ | $ | $ |
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 | |||||||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||
Total gross loans receivable held to maturity | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||
Total gross loans receivable held to maturity | $ | $ | $ | $ | $ | $ | $ |
Commercial and Industrial | Owner Occupied Commercial Real Estate | Non-Owner Occupied Commercial Real Estate | Real Estate Construction | Agricultural and Agricultural Real Estate | Residential Real Estate | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
Provision (benefit) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | Owner Occupied Commercial Real Estate | Non-Owner Occupied Commercial Real Estate | Real Estate Construction | Agricultural and Agricultural Real Estate | Residential Real Estate | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
Provision (benefit) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | $ | $ | $ |
Commercial and Industrial | Owner Occupied Commercial Real Estate | Non-Owner Occupied Commercial Real Estate | Real Estate Construction | Agricultural and Agricultural Real Estate | Residential Real Estate | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
Provision (benefit) | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | Owner Occupied Commercial Real Estate | Non-Owner Occupied Commercial Real Estate | Real Estate Construction | Agricultural and Agricultural Real Estate | Residential Real Estate | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
Provision (benefit) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ | $ | $ | $ |
For the Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at June 30, | $ | $ | |||||||||
Provision (benefit) | ( | ||||||||||
Balance at September 30, | $ | $ |
For the Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at December 31, | $ | $ | |||||||||
Provision (benefit) | ( | ||||||||||
Balance at September 30, | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
Amortizing intangible assets: | |||||||||||||||||||||||||||||||||||
Core deposit intangibles | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Customer relationship intangibles | |||||||||||||||||||||||||||||||||||
Mortgage servicing rights | |||||||||||||||||||||||||||||||||||
Commercial servicing rights | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Core Deposit Intangibles | Mortgage Servicing Rights | Total | |||||||||||||||
Three months ending December 31, 2022 | $ | $ | $ | ||||||||||||||
Year ending December 31, | |||||||||||||||||
2023 | |||||||||||||||||
2024 | |||||||||||||||||
2025 | |||||||||||||||||
2026 | |||||||||||||||||
2027 | |||||||||||||||||
Thereafter | |||||||||||||||||
Total | $ | $ | $ |
2022 | 2021 | ||||||||||
Balance at January 1, | $ | $ | |||||||||
Originations | |||||||||||
Amortization | ( | ( | |||||||||
Valuation adjustment | |||||||||||
Balance at period end | $ | $ | |||||||||
Mortgage servicing rights, net to servicing portfolio | % | % |
Book Value 15-Year Tranche | Fair Value 15-Year Tranche | Valuation Allowance 15-Year Tranche | Book Value 30-Year Tranche | Fair Value 30-Year Tranche | Valuation Allowance 30-Year Tranche | ||||||||||||||||||||||||||||||
September 30, 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
December 31, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
As of | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Weighted average constant prepayment rate | % | % | |||||||||
Weighted average discount rate | % | % | |||||||||
Fair value of mortgage servicing rights | $ | $ |
Notional Amount | Fair Value | Balance Sheet Category | |||||||||||||||
September 30, 2022 | |||||||||||||||||
Fair value hedges | $ | $ | Other assets | ||||||||||||||
December 31, 2021 | |||||||||||||||||
Fair value hedges | $ | $ | ( | Other liabilities |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gain recognized in interest income on fair value hedges | $ | $ | $ | $ |
Notional Amount | Fair Value | Balance Sheet Category | |||||||||||||||
September 30, 2022 | |||||||||||||||||
Embedded derivatives | $ | $ | |||||||||||||||
December 31, 2021 | |||||||||||||||||
Embedded derivatives | $ | $ | ( | ||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gain (loss) recognized in other noninterest income on embedded derivatives | $ | $ | ( | $ | $ | ( |
Notional Amount | Fair Value | Balance Sheet Category | Weighted Average Receive Rate | Weighted Average Pay Rate | |||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||
Customer interest rate swaps | $ | $ | Other assets | % | % | ||||||||||||||||||||||||
Customer interest rate swaps | ( | Other liabilities | |||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Customer interest rate swaps | $ | $ | Other assets | % | % | ||||||||||||||||||||||||
Customer interest rate swaps | ( | Other liabilities | |||||||||||||||||||||||||||
Balance Sheet Category | Notional Amount | Fair Value | |||||||||||||||
September 30, 2022 | |||||||||||||||||
Interest rate lock commitments (mortgage) | Other assets | $ | $ | ||||||||||||||
Forward commitments | Other assets | ||||||||||||||||
Forward commitments | Other liabilities | ( | |||||||||||||||
Undesignated interest rate swaps | Other liabilities | ( | |||||||||||||||
December 31, 2021 | |||||||||||||||||
Interest rate lock commitments (mortgage) | Other assets | $ | $ | ||||||||||||||
Forward commitments | Other assets | ||||||||||||||||
Forward commitments | Other liabilities | ( | |||||||||||||||
Undesignated interest rate swaps | Other assets | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Interest rate lock commitments (mortgage) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Forward commitments | |||||||||||||||||||||||
Undesignated interest rate swaps | ( | ( |
Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale | |||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | |||||||||||||||||||
U.S. agencies | |||||||||||||||||||||||
Obligations of states and political subdivisions | |||||||||||||||||||||||
Mortgage-backed securities - agency | |||||||||||||||||||||||
Mortgage-backed securities - non-agency | |||||||||||||||||||||||
Commercial mortgage-backed securities - agency | |||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Equity securities with a readily determinable fair value | |||||||||||||||||||||||
Derivative financial instruments(1) | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative financial instruments(2) | $ | $ | $ | $ | |||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale | |||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | |||||||||||||||||||
U.S. agencies | |||||||||||||||||||||||
Obligations of states and political subdivisions | |||||||||||||||||||||||
Mortgage-backed securities - agency | |||||||||||||||||||||||
Mortgage-backed securities - non-agency | |||||||||||||||||||||||
Commercial mortgage-backed securities - agency | |||||||||||||||||||||||
Commercial mortgage-backed securities - non-agency | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Equity securities with a readily determinable fair value | |||||||||||||||||||||||
Derivative financial instruments(2) | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative financial instruments(1) | $ | $ | $ | $ | |||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ | |||||||||||||||||||
(1) Includes fair value hedges, embedded derivatives and back-to-back loan swaps. | |||||||||||||||||||||||
(2) Includes back-to-back loan swaps and free standing derivatives. |
Fair Value Measurements at September 30, 2022 | |||||||||||||||||||||||||||||
Total | Quoted 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 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||
Total collateral dependent individually assessed loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans held for sale | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Other real estate owned | |||||||||||||||||||||||||||||
Premises, furniture and equipment held for sale | |||||||||||||||||||||||||||||
Fair Value Measurements at December 31, 2021 | |||||||||||||||||||||||||||||
Total | Quoted 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 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||
Total collateral dependent individually assessed loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans held for sale | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||
Other real estate owned | |||||||||||||||||||||||||||||
Premises, furniture and equipment held for sale | |||||||||||||||||||||||||||||
Servicing rights | ( |
Fair Value at 9/30/2022 | Valuation Technique | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Interest rate lock commitments | $ | Discounted cash flows | Closing ratio | ||||||||||||||||||||
Other real estate owned | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Premises, furniture and equipment held for sale | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Collateral dependent individually assessed loans: | |||||||||||||||||||||||
Commercial | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Owner occupied commercial real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Non-owner occupied commercial real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Real estate construction | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Agricultural and agricultural real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Residential real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
(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. | |||||||||||||||||||||||
Fair Value at 12/31/2021 | Valuation Technique | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Interest rate lock commitments | $ | Discounted cash flows | Closing ratio | ||||||||||||||||||||
Other real estate owned | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Servicing rights | Discounted cash flows | Discount rate | |||||||||||||||||||||
Constant prepayment rate | |||||||||||||||||||||||
Premises, furniture and equipment held for sale | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Collateral dependent individually assessed loans: | |||||||||||||||||||||||
Commercial and industrial | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Owner occupied commercial real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Non-owner occupied commercial real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Agricultural and agricultural real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
Residential real estate | Modified appraised value | Third party appraisal | (2) | ||||||||||||||||||||
Appraisal discount | |||||||||||||||||||||||
(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 discounted cash flow analysis are the discount rate and constant prepayment rate. |
For the Nine Months Ended September 30, 2022 | For the Year Ended December 31, 2021 | ||||||||||
Balance at January 1, | $ | $ | |||||||||
Total net gains included in earnings | ( | ( | |||||||||
Issuances | |||||||||||
Settlements | ( | ( | |||||||||
Balance at period end | $ | $ |
Fair Value Measurements at September 30, 2022 | |||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Time deposits in other financial institutions | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Carried at fair value | |||||||||||||||||||||||||||||
Held to maturity | |||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net: | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||
Total Loans, net | |||||||||||||||||||||||||||||
Cash surrender value on life insurance | |||||||||||||||||||||||||||||
Derivative financial instruments(1) | |||||||||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Demand deposits | |||||||||||||||||||||||||||||
Savings deposits | |||||||||||||||||||||||||||||
Time deposits | |||||||||||||||||||||||||||||
Short term borrowings | |||||||||||||||||||||||||||||
Other borrowings | |||||||||||||||||||||||||||||
Derivative financial instruments(2) | |||||||||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||||||||
(1) Includes fair value hedges, embedded derivatives and back-to-back loan swaps. | |||||||||||||||||||||||||||||
(2) Includes back-to-back loan swaps and free standing derivative instruments. |
Fair Value Measurements at December 31, 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 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Time deposits in other financial institutions | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Carried at fair value | |||||||||||||||||||||||||||||
Held to maturity | |||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net: | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
PPP | |||||||||||||||||||||||||||||
Owner occupied commercial real estate | |||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||
Real estate construction | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | |||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||
Total Loans, net | |||||||||||||||||||||||||||||
Cash surrender value on life insurance | |||||||||||||||||||||||||||||
Derivative financial instruments(1) | |||||||||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Demand deposits | |||||||||||||||||||||||||||||
Savings deposits | |||||||||||||||||||||||||||||
Time deposits | |||||||||||||||||||||||||||||
Short term borrowings | |||||||||||||||||||||||||||||
Other borrowings | |||||||||||||||||||||||||||||
Derivative financial instruments(1) | |||||||||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||||||||
(1) Includes back-to-back loan swaps and free standing derivative instruments. | |||||||||||||||||||||||||||||
(2) Includes embedded derivatives, fair value hedges and back-to-back loan swaps. |
2022 | 2021 | ||||||||||||||||||||||
Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
Outstanding at January 1, | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Vested | ( | ( | |||||||||||||||||||||
Forfeited | ( | ( | |||||||||||||||||||||
Outstanding at September 30, | $ | $ |
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
STATEMENT OF INCOME DATA | |||||||||||||||||||||||
Interest income | $ | 175,806 | $ | 149,187 | $ | 469,955 | $ | 444,721 | |||||||||||||||
Interest expense | 19,930 | 6,644 | 36,939 | 21,355 | |||||||||||||||||||
Net interest income | 155,876 | 142,543 | 433,016 | 423,366 | |||||||||||||||||||
Provision (benefit) for credit losses | 5,492 | (4,534) | 11,983 | (12,262) | |||||||||||||||||||
Net interest income after provision (benefit) for credit losses | 150,384 | 147,077 | 421,033 | 435,628 | |||||||||||||||||||
Noninterest income | 29,181 | 32,724 | 98,289 | 96,205 | |||||||||||||||||||
Noninterest expenses | 108,883 | 110,627 | 326,159 | 316,426 | |||||||||||||||||||
Income taxes | 14,118 | 13,250 | 41,637 | 45,064 | |||||||||||||||||||
Net income | 56,564 | 55,924 | 151,526 | 170,343 | |||||||||||||||||||
Preferred dividends | (2,013) | (2,013) | (6,038) | (6,038) | |||||||||||||||||||
Net income available to common stockholders | $ | 54,551 | $ | 53,911 | $ | 145,488 | $ | 164,305 | |||||||||||||||
KEY PERFORMANCE RATIOS | |||||||||||||||||||||||
Annualized return on average assets | 1.13 | % | 1.19 | % | 1.04 | % | 1.25 | % | |||||||||||||||
Annualized return on average common equity (GAAP) | 12.93 | 10.32 | 10.80 | 10.95 | |||||||||||||||||||
Annualized return on average tangible common equity (non-GAAP)(1) | 20.76 | 15.14 | 16.79 | 16.34 | |||||||||||||||||||
Annualized ratio of net charge-offs/(recoveries) to average loans | 0.00 | (0.05) | 0.17 | 0.04 | |||||||||||||||||||
Annualized net interest margin (GAAP) | 3.41 | 3.30 | 3.22 | 3.37 | |||||||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) | 3.45 | 3.34 | 3.27 | 3.41 | |||||||||||||||||||
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) | 55.26 | 60.38 | 58.99 | 58.05 | |||||||||||||||||||
Total noninterest expenses to average assets | 2.18 | 2.36 | 2.23 | 2.31 | |||||||||||||||||||
Core noninterest expenses to average assets (non-GAAP)(1) | 2.09 | 2.25 | 2.17 | 2.21 |
Dollars in thousands, expect per share data | As Of and For the Quarter Ended | ||||||||||||||||||||||||||||
9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||||||||||||||||||||||
BALANCE SHEET DATA | |||||||||||||||||||||||||||||
Investments | $ | 6,970,864 | $ | 7,274,056 | $ | 7,189,779 | $ | 7,697,650 | $ | 7,618,622 | |||||||||||||||||||
Loans held for sale | 9,570 | 18,803 | 22,685 | 21,640 | 37,078 | ||||||||||||||||||||||||
Loans receivable held to maturity | 10,923,532 | 10,678,218 | 10,177,385 | 9,954,572 | 9,854,907 | ||||||||||||||||||||||||
Allowance for credit losses | 105,715 | 101,353 | 100,522 | 110,088 | 117,533 | ||||||||||||||||||||||||
Total assets | 19,682,950 | 19,658,399 | 19,230,879 | 19,274,549 | 18,996,225 | ||||||||||||||||||||||||
Total deposits | 17,267,121 | 17,225,550 | 16,666,684 | 16,417,255 | 16,022,243 | ||||||||||||||||||||||||
Long-term obligations | 371,446 | 372,538 | 372,290 | 372,072 | 371,765 | ||||||||||||||||||||||||
Common equity | 1,545,253 | 1,663,363 | 1,821,152 | 2,071,473 | 2,061,547 | ||||||||||||||||||||||||
COMMON SHARE DATA | |||||||||||||||||||||||||||||
Book value per common share (GAAP) | $ | 36.41 | $ | 39.19 | $ | 42.98 | $ | 49.00 | $ | 48.79 | |||||||||||||||||||
Tangible book value per common share (non-GAAP)(1) | $ | 22.20 | $ | 24.94 | $ | 28.66 | $ | 34.59 | $ | 34.33 | |||||||||||||||||||
Common shares outstanding, net of treasury stock | 42,444,106 | 42,439,439 | 42,369,908 | 42,275,264 | 42,250,092 | ||||||||||||||||||||||||
Tangible common equity ratio (non-GAAP)(1) | 4.94 | % | 5.56 | % | 6.52 | % | 7.84 | % | 7.89 | % | |||||||||||||||||||
(1) Refer to "Non-GAAP Financial Measures" for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures. |
Non-GAAP Reconciliations (Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
As Of and For the Quarter Ended | |||||||||||||||||||||||||||||
9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||||||||||||||||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP) | |||||||||||||||||||||||||||||
Common equity (GAAP) | $ | 1,545,253 | $ | 1,663,363 | $ | 1,821,152 | $ | 2,071,473 | $ | 2,061,547 | |||||||||||||||||||
Less goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | ||||||||||||||||||||||||
Less core deposit and customer relationship intangibles, net | 26,995 | 28,851 | 30,934 | 32,988 | 35,157 | ||||||||||||||||||||||||
Tangible common equity (non-GAAP) | $ | 942,253 | $ | 1,058,507 | $ | 1,214,213 | $ | 1,462,480 | $ | 1,450,385 | |||||||||||||||||||
Common shares outstanding, net of treasury stock | 42,444,106 | 42,439,439 | 42,369,908 | 42,275,264 | 42,250,092 | ||||||||||||||||||||||||
Common equity (book value) per share (GAAP) | $ | 36.41 | $ | 39.19 | $ | 42.98 | $ | 49.00 | $ | 48.79 | |||||||||||||||||||
Tangible book value per common share (non-GAAP) | $ | 22.20 | $ | 24.94 | $ | 28.66 | $ | 34.59 | $ | 34.33 | |||||||||||||||||||
Reconciliation of Tangible Common Equity Ratio (non-GAAP) | |||||||||||||||||||||||||||||
Tangible common equity (non-GAAP) | $ | 942,253 | $ | 1,058,507 | $ | 1,214,213 | $ | 1,462,480 | $ | 1,450,385 | |||||||||||||||||||
Total assets (GAAP) | $ | 19,682,950 | $ | 19,658,399 | $ | 19,230,879 | $ | 19,274,549 | $ | 18,996,225 | |||||||||||||||||||
Less goodwill | 576,005 | 576,005 | 576,005 | 576,005 | 576,005 | ||||||||||||||||||||||||
Less core deposit and customer relationship intangibles, net | 26,995 | 28,851 | 30,934 | 32,988 | 35,157 | ||||||||||||||||||||||||
Total tangible assets (non-GAAP) | $ | 19,079,950 | $ | 19,053,543 | $ | 18,623,940 | $ | 18,665,556 | $ | 18,385,063 | |||||||||||||||||||
Tangible common equity ratio (non-GAAP) | 4.94 | % | 5.56 | % | 6.52 | % | 7.84 | % | 7.89 | % | |||||||||||||||||||
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP) | |||||||||||||||||||||||
Net income available to common stockholders (GAAP) | $ | 54,551 | $ | 53,911 | $ | 145,488 | $ | 164,305 | |||||||||||||||
Plus core deposit and customer relationship intangibles amortization, net of tax(1) | 1,466 | 1,814 | 4,734 | 5,709 | |||||||||||||||||||
Net income available to common stockholders excluding intangible amortization (non-GAAP) | $ | 56,017 | $ | 55,725 | $ | 150,222 | $ | 170,014 | |||||||||||||||
Average common equity (GAAP) | $ | 1,674,306 | $ | 2,072,593 | $ | 1,801,835 | $ | 2,006,123 | |||||||||||||||
Less average goodwill | 576,005 | 576,005 | 576,005 | 576,005 | |||||||||||||||||||
Less average core deposit and customer relationship intangibles, net | 27,902 | 36,279 | 29,878 | 38,745 | |||||||||||||||||||
Average tangible common equity (non-GAAP) | $ | 1,070,399 | $ | 1,460,309 | $ | 1,195,952 | $ | 1,391,373 | |||||||||||||||
Annualized return on average common equity (GAAP) | 12.93 | % | 10.32 | % | 10.80 | % | 10.95 | % | |||||||||||||||
Annualized return on average tangible common equity (non-GAAP) | 20.76 | % | 15.14 | % | 16.79 | % | 16.34 | % | |||||||||||||||
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP) | |||||||||||||||||||||||
Net Interest Income (GAAP) | $ | 155,876 | $ | 142,543 | $ | 433,016 | $ | 423,366 | |||||||||||||||
Plus tax-equivalent adjustment(1) | 2,151 | 1,714 | 6,247 | 5,237 | |||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) | $ | 158,027 | $ | 144,257 | $ | 439,263 | $ | 428,603 | |||||||||||||||
Average earning assets | $ | 18,157,795 | $ | 17,123,824 | $ | 17,969,001 | $ | 16,803,740 | |||||||||||||||
Annualized net interest margin (GAAP) | 3.41 | % | 3.30 | % | 3.22 | % | 3.37 | % | |||||||||||||||
Annualized net interest margin, fully tax-equivalent (non-GAAP) | 3.45 | 3.34 | 3.27 | 3.41 | |||||||||||||||||||
Net purchase accounting discount accretion on loans included in annualized net interest margin | 0.03 | 0.08 | 0.05 | 0.10 | |||||||||||||||||||
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
Non-GAAP Reconciliations (Dollars in thousands, except per share data) | |||||||||||||||||||||||
Reconciliation of Efficiency Ratio (non-GAAP) | For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net interest income (GAAP) | $ | 155,876 | $ | 142,543 | $ | 433,016 | $ | 423,366 | |||||||||||||||
Tax-equivalent adjustment(1) | 2,151 | 1,714 | 6,247 | 5,237 | |||||||||||||||||||
Fully tax-equivalent net interest income | 158,027 | 144,257 | 439,263 | 428,603 | |||||||||||||||||||
Noninterest income | 29,181 | 32,724 | 98,289 | 96,205 | |||||||||||||||||||
Securities (gains)/losses, net | 1,055 | (1,535) | 272 | (4,347) | |||||||||||||||||||
Unrealized (gain)/loss on equity securities, net | 211 | (112) | 615 | (85) | |||||||||||||||||||
Valuation adjustment on servicing rights | — | (195) | (1,658) | (586) | |||||||||||||||||||
Adjusted revenue (non-GAAP) | $ | 188,474 | $ | 175,139 | $ | 536,781 | $ | 519,790 | |||||||||||||||
Total noninterest expenses (GAAP) | $ | 108,883 | $ | 110,627 | $ | 326,159 | $ | 316,426 | |||||||||||||||
Less: | |||||||||||||||||||||||
Core deposit and customer relationship intangibles amortization | 1,856 | 2,295 | 5,993 | 7,226 | |||||||||||||||||||
Partnership investment in tax credit projects | 979 | 2,374 | 1,793 | 3,754 | |||||||||||||||||||
(Gain)/loss on sales/valuation of assets, net | (251) | (3) | (3,435) | 374 | |||||||||||||||||||
Acquisition, integration and restructuring costs | 2,156 | 204 | 5,144 | 3,342 | |||||||||||||||||||
Core expenses (non-GAAP) | $ | 104,143 | $ | 105,757 | $ | 316,664 | $ | 301,730 | |||||||||||||||
Efficiency ratio, fully tax-equivalent (non-GAAP) | 55.26 | % | 60.38 | % | 58.99 | % | 58.05 | % | |||||||||||||||
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP) | |||||||||||||||||||||||
Total noninterest expenses (GAAP) | $ | 108,883 | $ | 110,627 | $ | 326,159 | $ | 316,426 | |||||||||||||||
Core expenses (non-GAAP) | 104,143 | 105,757 | 316,664 | 301,730 | |||||||||||||||||||
Average assets | $ | 19,775,341 | $ | 18,608,775 | $ | 19,523,433 | $ | 18,291,444 | |||||||||||||||
Total noninterest expenses to average assets (GAAP) | 2.18 | % | 2.36 | % | 2.23 | % | 2.31 | % | |||||||||||||||
Core expenses to average assets (non-GAAP) | 2.09 | % | 2.25 | % | 2.17 | % | 2.21 | % | |||||||||||||||
Acquisition, integration and restructuring costs | |||||||||||||||||||||||
Salaries and employee benefits | $ | 365 | $ | — | $ | 980 | $ | 578 | |||||||||||||||
Occupancy | — | — | — | 10 | |||||||||||||||||||
Furniture and equipment | — | 7 | — | 655 | |||||||||||||||||||
Professional fees | 1,480 | 145 | 3,495 | 878 | |||||||||||||||||||
Advertising | 131 | 11 | 287 | 173 | |||||||||||||||||||
(Gain)/loss on sales/valuations of assets, net | — | 39 | — | 39 | |||||||||||||||||||
Other noninterest expenses | 180 | 2 | 382 | 1,009 | |||||||||||||||||||
Total acquisition, integration and restructuring costs | $ | 2,156 | $ | 204 | $ | 5,144 | $ | 3,342 | |||||||||||||||
After tax impact on diluted earnings per common share(1) | $ | 0.04 | $ | — | $ | 0.10 | $ | 0.06 | |||||||||||||||
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. |
ANALYSIS OF AVERAGE BALANCES, TAX EQUIVALENT YIELDS AND RATES (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||||||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxable | $ | 6,303,278 | $ | 45,648 | 2.87 | % | $ | 6,419,615 | $ | 38,098 | 2.38 | % | $ | 6,244,097 | $ | 32,384 | 2.06 | % | |||||||||||||||||||||||||||||||||||
Nontaxable(1) | 951,232 | 7,802 | 3.25 | 915,880 | 6,972 | 3.05 | 759,073 | 5,835 | 3.05 | ||||||||||||||||||||||||||||||||||||||||||||
Total securities | 7,254,510 | 53,450 | 2.92 | 7,335,495 | 45,070 | 2.46 | 7,003,170 | 38,219 | 2.17 | ||||||||||||||||||||||||||||||||||||||||||||
Interest on deposits with other banks and short-term investments | 222,170 | 1,081 | 1.93 | 277,773 | 563 | 0.81 | 322,430 | 132 | 0.16 | ||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold | 11 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Loans:(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial(1) | 3,182,134 | 37,526 | 4.68 | 3,002,822 | 30,441 | 4.07 | 2,588,270 | 28,224 | 4.33 | ||||||||||||||||||||||||||||||||||||||||||||
PPP loans | 17,859 | 363 | 8.06 | 41,370 | 1,801 | 17.46 | 602,675 | 11,186 | 7.36 | ||||||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 2,272,666 | 23,601 | 4.12 | 2,294,524 | 22,863 | 4.00 | 1,990,538 | 20,048 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | 2,258,424 | 25,895 | 4.55 | 2,179,048 | 22,871 | 4.21 | 1,964,609 | 22,129 | 4.47 | ||||||||||||||||||||||||||||||||||||||||||||
Real estate construction | 914,520 | 12,382 | 5.37 | 878,555 | 10,015 | 4.57 | 835,976 | 9,591 | 4.55 | ||||||||||||||||||||||||||||||||||||||||||||
Agricultural and agricultural real estate | 799,823 | 8,966 | 4.45 | 782,610 | 7,933 | 4.07 | 674,510 | 7,415 | 4.36 | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 858,119 | 8,665 | 4.01 | 849,174 | 8,358 | 3.95 | 855,734 | 9,068 | 4.20 | ||||||||||||||||||||||||||||||||||||||||||||
Consumer | 479,590 | 6,028 | 4.99 | 449,265 | 4,949 | 4.42 | 407,735 | 4,889 | 4.76 | ||||||||||||||||||||||||||||||||||||||||||||
Less: allowance for credit losses-loans | (102,031) | — | — | (102,902) | — | — | (121,823) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net loans | 10,681,104 | 123,426 | 4.58 | 10,374,466 | 109,231 | 4.22 | 9,798,224 | 112,550 | 4.56 | ||||||||||||||||||||||||||||||||||||||||||||
Total earning assets | 18,157,795 | 177,957 | 3.89 | % | 17,987,734 | 154,864 | 3.45 | % | 17,123,824 | 150,901 | 3.50 | % | |||||||||||||||||||||||||||||||||||||||||
Nonearning Assets | 1,617,546 | 1,571,357 | 1,484,951 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 19,775,341 | $ | 19,559,091 | $ | 18,608,775 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings | $ | 10,059,652 | $ | 12,907 | 0.51 | % | $ | 9,995,497 | $ | 5,372 | 0.22 | % | $ | 8,364,326 | $ | 2,240 | 0.11 | % | |||||||||||||||||||||||||||||||||||
Time deposits | 1,156,908 | 2,251 | 0.77 | 1,088,765 | 1,158 | 0.43 | 1,097,126 | 1,204 | 0.44 | ||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings | 134,974 | 360 | 1.06 | 118,646 | 88 | 0.30 | 139,001 | 98 | 0.28 | ||||||||||||||||||||||||||||||||||||||||||||
Other borrowings | 371,492 | 4,412 | 4.71 | 372,411 | 3,808 | 4.10 | 280,897 | 3,102 | 4.38 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest bearing liabilities | 11,723,026 | 19,930 | 0.67 | % | 11,575,319 | 10,426 | 0.36 | % | 9,881,350 | 6,644 | 0.27 | % | |||||||||||||||||||||||||||||||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest bearing deposits | 6,065,729 | 5,960,217 | 6,356,326 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest and other liabilities | 201,575 | 181,457 | 187,801 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest bearing liabilities | 6,267,304 | 6,141,674 | 6,544,127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | 1,785,011 | 1,842,098 | 2,183,298 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 19,775,341 | $ | 19,559,091 | $ | 18,608,775 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | $ | 158,027 | $ | 144,438 | $ | 144,257 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(1) | 3.22 | % | 3.09 | % | 3.23 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent to total earning assets (non-GAAP)(1)(3) | 3.45 | % | 3.22 | % | 3.34 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Refer to "Non-GAAP Financial Measures" for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables under "Financial Highlights" for the reconciliations to the most directly comparable GAAP measures. |
ANALYSIS OF AVERAGE BALANCES, TAX EQUIVALENT YIELDS AND RATES (1) | |||||||||||||||||||||||||||||||||||
For the Nine Months Ended | |||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||||||||
Taxable | $ | 6,407,459 | $ | 116,366 | 2.43 | % | $ | 5,935,295 | $ | 94,373 | 2.13 | % | |||||||||||||||||||||||
Nontaxable(1) | 990,784 | 22,625 | 3.05 | 743,534 | 17,308 | 3.11 | |||||||||||||||||||||||||||||
Total securities | 7,398,243 | 138,991 | 2.51 | 6,678,829 | 111,681 | 2.24 | |||||||||||||||||||||||||||||
Interest bearing deposits with other banks and other short-term investments | 238,819 | 1,715 | 0.96 | 266,701 | 258 | 0.13 | |||||||||||||||||||||||||||||
Federal funds sold | 7 | — | — | 4,622 | 1 | 0.03 | |||||||||||||||||||||||||||||
Loans:(2) | |||||||||||||||||||||||||||||||||||
Commercial and industrial(1) | 2,977,751 | 95,020 | 4.27 | 2,519,608 | 85,008 | 4.51 | |||||||||||||||||||||||||||||
PPP loans | 63,342 | 6,487 | 13.69 | 879,489 | 32,521 | 4.94 | |||||||||||||||||||||||||||||
Owner occupied commercial real estate | 2,270,486 | 67,742 | 3.99 | 1,876,929 | 59,710 | 4.25 | |||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | 2,166,873 | 69,929 | 4.31 | 1,961,016 | 65,984 | 4.50 | |||||||||||||||||||||||||||||
Real estate construction | 880,354 | 31,673 | 4.81 | 819,452 | 28,501 | 4.65 | |||||||||||||||||||||||||||||
Agricultural and agricultural real estate | 776,127 | 23,905 | 4.12 | 676,091 | 22,733 | 4.50 | |||||||||||||||||||||||||||||
Residential mortgage | 850,444 | 25,108 | 3.95 | 844,337 | 28,153 | 4.46 | |||||||||||||||||||||||||||||
Consumer | 452,032 | 15,632 | 4.62 | 404,384 | 15,408 | 5.09 | |||||||||||||||||||||||||||||
Less: allowance for loan losses | (105,477) | — | — | (127,718) | — | — | |||||||||||||||||||||||||||||
Net loans | 10,331,932 | 335,496 | 4.34 | 9,853,588 | 338,018 | 4.59 | |||||||||||||||||||||||||||||
Total earning assets | 17,969,001 | 476,202 | 3.54 | % | 16,803,740 | 449,958 | 3.58 | % | |||||||||||||||||||||||||||
Nonearning Assets | 1,554,432 | 1,487,704 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 19,523,433 | $ | 18,291,444 | |||||||||||||||||||||||||||||||
Interest Bearing Liabilities | |||||||||||||||||||||||||||||||||||
Savings | $ | 9,652,651 | $ | 20,673 | 0.29 | % | $ | 8,211,478 | $ | 6,903 | 0.11 | % | |||||||||||||||||||||||
Time deposits | 1,106,095 | 3,992 | 0.48 | 1,166,858 | 4,726 | 0.54 | |||||||||||||||||||||||||||||
Short-term borrowings | 124,459 | 494 | 0.53 | 182,583 | 348 | 0.25 | |||||||||||||||||||||||||||||
Other borrowings | 372,027 | 11,780 | 4.23 | 328,887 | 9,378 | 3.81 | |||||||||||||||||||||||||||||
Total interest bearing liabilities | 11,255,232 | 36,939 | 0.44 | % | 9,889,806 | 21,355 | 0.29 | % | |||||||||||||||||||||||||||
Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||||||||
Noninterest bearing deposits | 6,172,984 | 6,104,058 | |||||||||||||||||||||||||||||||||
Accrued interest and other liabilities | 182,677 | 180,752 | |||||||||||||||||||||||||||||||||
Total noninterest bearing liabilities | 6,355,661 | 6,284,810 | |||||||||||||||||||||||||||||||||
Equity | 1,912,540 | 2,116,828 | |||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 19,523,433 | $ | 18,291,444 | |||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) | $ | 439,263 | $ | 428,603 | |||||||||||||||||||||||||||||||
Net interest spread(1) | 3.10 | % | 3.29 | % | |||||||||||||||||||||||||||||||
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3) | 3.27 | % | 3.41 | % | |||||||||||||||||||||||||||||||
Interest bearing liabilities to earning assets | 62.64 | % | 58.85 | % | |||||||||||||||||||||||||||||||
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%. | |||||||||||||||||||||||||||||||||||
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding. | |||||||||||||||||||||||||||||||||||
(3) Refer to "Non-GAAP Financial Measures" for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables under "Financial Highlights" for the reconciliations to the most directly comparable GAAP measures. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Provision expense (benefit) for credit losses-loans | $ | 4,388 | $ | (4,448) | $ | 8,561 | $ | (10,898) | |||||||||||||||
Provision expense (benefit) for credit losses-unfunded commitments | 1,104 | (35) | 3,422 | (1,313) | |||||||||||||||||||
Provision expense (benefit) for credit losses-held to maturity securities | — | (51) | — | (51) | |||||||||||||||||||
Total provision expense (benefit) | $ | 5,492 | $ | (4,534) | $ | 11,983 | $ | (12,262) |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Service charges and fees | $ | 17,282 | $ | 15,551 | $ | 1,731 | 11 | % | |||||||||||||||
Loan servicing income | 831 | 784 | 47 | 6 | |||||||||||||||||||
Trust fees | 5,372 | 6,221 | (849) | (14) | |||||||||||||||||||
Brokerage and insurance commissions | 649 | 866 | (217) | (25) | |||||||||||||||||||
Securities gains/(losses), net | (1,055) | 1,535 | (2,590) | (169) | |||||||||||||||||||
Unrealized gain/(loss) on equity securities, net | (211) | 112 | (323) | (288) | |||||||||||||||||||
Net gains on sale of loans held for sale | 1,832 | 5,281 | (3,449) | (65) | |||||||||||||||||||
Valuation adjustment on servicing rights | — | 195 | (195) | (100) | |||||||||||||||||||
Income on bank owned life insurance | 694 | 940 | (246) | (26) | |||||||||||||||||||
Other noninterest income | 3,787 | 1,239 | 2,548 | 206 | |||||||||||||||||||
Total noninterest income | $ | 29,181 | $ | 32,724 | $ | (3,543) | (11) | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Service charges and fees | $ | 50,599 | $ | 44,354 | $ | 6,245 | 14 | % | |||||||||||||||
Loan servicing income | 1,951 | 2,495 | (544) | (22) | |||||||||||||||||||
Trust fees | 17,130 | 18,037 | (907) | (5) | |||||||||||||||||||
Brokerage and insurance commissions | 2,357 | 2,584 | (227) | (9) | |||||||||||||||||||
Securities gains/(losses), net | (272) | 4,347 | (4,619) | (106) | |||||||||||||||||||
Unrealized gain/(loss) on equity securities, net | (615) | 85 | (700) | (824) | |||||||||||||||||||
Net gains on sale of loans held for sale | 8,144 | 16,454 | (8,310) | (51) | |||||||||||||||||||
Valuation adjustment on servicing rights | 1,658 | 586 | 1,072 | 183 | |||||||||||||||||||
Income on bank owned life insurance | 1,741 | 2,706 | (965) | (36) | |||||||||||||||||||
Other noninterest income | 15,596 | 4,557 | 11,039 | 242 | |||||||||||||||||||
Total noninterest income | $ | 98,289 | $ | 96,205 | $ | 2,084 | 2 | % |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Service charges and fees on deposit accounts | $ | 4,764 | $ | 4,146 | $ | 618 | 15 | % | |||||||||||||||
Overdraft fees | 3,152 | 3,044 | 108 | 4 | |||||||||||||||||||
Customer service and other service fees | 102 | 52 | 50 | 96 | |||||||||||||||||||
Credit card fee income | 6,885 | 5,673 | 1,212 | 21 | |||||||||||||||||||
Debit card income | 2,379 | 2,636 | (257) | (10) | |||||||||||||||||||
Total service charges and fees | $ | 17,282 | $ | 15,551 | $ | 1,731 | 11 | % | |||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Service charges and fees on deposit accounts | $ | 13,831 | $ | 12,096 | $ | 1,735 | 14 | % | |||||||||||||||
Overdraft fees | 8,959 | 8,185 | 774 | 9 | |||||||||||||||||||
Customer service and other service fees | 289 | 152 | 137 | 90 | |||||||||||||||||||
Credit card fee income | 20,419 | 15,835 | 4,584 | 29 | |||||||||||||||||||
Debit card income | 7,101 | 8,086 | (985) | (12) | |||||||||||||||||||
Total service charges and fees | $ | 50,599 | $ | 44,354 | $ | 6,245 | 14 | % |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Commercial and agricultural loan servicing fees(1) | $ | 583 | $ | 642 | $ | (59) | (9) | % | |||||||||||||||
Residential mortgage servicing fees | 471 | 446 | 25 | 6 | |||||||||||||||||||
Mortgage servicing rights amortization | (223) | (304) | 81 | 27 | |||||||||||||||||||
Total loan servicing income | $ | 831 | $ | 784 | $ | 47 | 6 | % | |||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Commercial and agricultural loan servicing fees(1) | $ | 1,469 | $ | 2,155 | $ | (686) | (32) | % | |||||||||||||||
Residential mortgage servicing fees | 1,391 | 1,369 | 22 | 2 | |||||||||||||||||||
Mortgage servicing rights amortization | (909) | (1,029) | 120 | 12 | |||||||||||||||||||
Total loan servicing income | $ | 1,951 | $ | 2,495 | $ | (544) | (22) | % | |||||||||||||||
(1) Includes servicing fees for commercial, commercial real estate, agricultural and agricultural real estate loans. |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Salaries and employee benefits | $ | 62,661 | $ | 60,689 | $ | 1,972 | 3 | % | |||||||||||||||
Occupancy | 6,794 | 7,366 | (572) | (8) | |||||||||||||||||||
Furniture and equipment | 2,928 | 3,365 | (437) | (13) | |||||||||||||||||||
Professional fees | 16,277 | 17,242 | (965) | (6) | |||||||||||||||||||
Advertising | 1,554 | 1,921 | (367) | (19) | |||||||||||||||||||
Core deposit and customer relationship intangibles amortization | 1,856 | 2,295 | (439) | (19) | |||||||||||||||||||
Other real estate and loan collection expenses | 304 | 78 | 226 | 290 | |||||||||||||||||||
(Gain)/loss on sales/valuations of assets, net | (251) | (3) | (248) | (8,267) | |||||||||||||||||||
Acquisition, integration and restructuring costs | 2,156 | 204 | 1,952 | 957 | |||||||||||||||||||
Partnership investment in tax credit projects | 979 | 2,374 | (1,395) | (59) | |||||||||||||||||||
Other noninterest expenses | 13,625 | 15,096 | (1,471) | (10) | |||||||||||||||||||
Total noninterest expenses | $ | 108,883 | $ | 110,627 | $ | (1,744) | (2) | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Salaries and employee benefits | $ | 192,867 | $ | 177,083 | $ | 15,784 | 9 | % | |||||||||||||||
Occupancy | 21,250 | 22,683 | (1,433) | (6) | |||||||||||||||||||
Furniture and equipment | 9,480 | 9,959 | (479) | (5) | |||||||||||||||||||
Professional fees | 47,420 | 46,969 | 451 | 1 | |||||||||||||||||||
Advertising | 4,392 | 5,039 | (647) | (13) | |||||||||||||||||||
Core deposit and customer relationship intangibles amortization | 5,993 | 7,226 | (1,233) | (17) | |||||||||||||||||||
Other real estate and loan collection expenses | 577 | 627 | (50) | (8) | |||||||||||||||||||
(Gain)/loss on sales/valuations of assets, net | (3,435) | 374 | (3,809) | (1,018) | |||||||||||||||||||
Acquisition, integration and restructuring costs | 5,144 | 3,342 | 1,802 | 54 | |||||||||||||||||||
Partnership investment in tax credit projects | 1,793 | 3,754 | (1,961) | (52) | |||||||||||||||||||
Other noninterest expenses | 40,678 | 39,370 | 1,308 | 3 | |||||||||||||||||||
Total noninterest expenses | $ | 326,159 | $ | 316,426 | $ | 9,733 | 3 | % |
September 30, 2022 | December 31, 2021 | Change | % Change | ||||||||||||||||||||
Commercial and industrial | $ | 3,278,703 | $ | 2,645,085 | $ | 633,618 | 24 | % | |||||||||||||||
PPP | 13,506 | 199,883 | (186,377) | (93) | |||||||||||||||||||
Owner occupied commercial real estate | 2,285,973 | 2,240,334 | 45,639 | 2 | |||||||||||||||||||
Non-owner occupied commercial real estate | 2,219,542 | 2,010,591 | 208,951 | 10 | |||||||||||||||||||
Real estate construction | 996,017 | 856,119 | 139,898 | 16 | |||||||||||||||||||
Agricultural and agricultural real estate | 781,354 | 753,753 | 27,601 | 4 | |||||||||||||||||||
Residential mortgage | 852,928 | 829,283 | 23,645 | 3 | |||||||||||||||||||
Consumer | 495,509 | 419,524 | 75,985 | 18 | |||||||||||||||||||
Total loans held to maturity | $ | 10,923,532 | $ | 9,954,572 | $ | 968,960 | 10 | % |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||||||||
Loans receivable held to maturity: | |||||||||||||||||||||||
Commercial and industrial | $ | 3,278,703 | 30.01 | % | $ | 2,645,085 | 26.57 | % | |||||||||||||||
PPP | 13,506 | 0.12 | 199,883 | 2.01 | |||||||||||||||||||
Owner occupied commercial real estate | 2,285,973 | 20.93 | 2,240,334 | 22.51 | |||||||||||||||||||
Non-owner occupied commercial real estate | 2,219,542 | 20.32 | 2,010,591 | 20.20 | |||||||||||||||||||
Real estate construction | 996,017 | 9.12 | 856,119 | 8.60 | |||||||||||||||||||
Agricultural and agricultural real estate | 781,354 | 7.15 | 753,753 | 7.57 | |||||||||||||||||||
Residential mortgage | 852,928 | 7.81 | 829,283 | 8.33 | |||||||||||||||||||
Consumer | 495,509 | 4.54 | 419,524 | 4.21 | |||||||||||||||||||
Gross loans receivable held to maturity | 10,923,532 | 100.00 | % | 9,954,572 | 100.00 | % | |||||||||||||||||
Allowance for credit losses-loans | (105,715) | (110,088) | |||||||||||||||||||||
Loans receivable, net | $ | 10,817,817 | $ | 9,844,484 |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | % of Allowance | Amount | % of Allowance | ||||||||||||||||||||
Quantitative | $ | 85,026 | 68.24 | % | $ | 88,635 | 70.60 | % | |||||||||||||||
Qualitative/Economic Forecast | 39,573 | 31.76 | 36,915 | 29.40 | |||||||||||||||||||
Total | $ | 124,599 | 100.00 | % | $ | 125,550 | 100.00 | % |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at beginning of period | $ | 101,353 | $ | 120,726 | |||||||
Provision (benefit) for credit losses | 4,388 | (4,448) | |||||||||
Recoveries on loans previously charged off | 912 | 2,422 | |||||||||
Charge-offs on loans | (938) | (1,167) | |||||||||
Balance at end of period | $ | 105,715 | $ | 117,533 | |||||||
Allowance for credit losses for loans as a percent of loans | 0.97 | % | 1.19 | % | |||||||
Annualized ratio of net charge offs (recoveries) to average loans | — | % | (0.05) | % | |||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at beginning of period | $ | 110,088 | $ | 131,606 | |||||||
Provision (benefit) for credit losses | 8,561 | (10,898) | |||||||||
Recoveries on loans previously charged off | 2,694 | 3,615 | |||||||||
Charge-offs on loans | (15,628) | (6,790) | |||||||||
Balance at end of period | $ | 105,715 | $ | 117,533 | |||||||
Allowance for credit losses for loans as a percent of loans | 0.97 | % | 1.19 | % | |||||||
Annualized ratio of net charge offs to average loans | 0.17 | % | 0.04 | % |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at beginning of period | 17,780 | 14,002 | |||||||||
Provision (benefit) for credit losses | 1,104 | (35) | |||||||||
Balance at end of period | $ | 18,884 | $ | 13,967 | |||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Balance at beginning of period | $ | 15,462 | $ | 15,280 | |||||||
Provision (benefit) for credit losses | 3,422 | (1,313) | |||||||||
Balance at end of period | $ | 18,884 | $ | 13,967 |
September 30, | December 31, | ||||||||||||||||||||||
2022 | 2021 | 2021 | 2020 | ||||||||||||||||||||
Nonaccrual loans | $ | 64,560 | $ | 82,375 | $ | 69,369 | $ | 87,386 | |||||||||||||||
Loans contractually past due 90 days or more | 678 | 861 | 550 | 720 | |||||||||||||||||||
Total nonperforming loans | 65,238 | 83,236 | 69,919 | 88,106 | |||||||||||||||||||
Other real estate | 8,030 | 4,744 | 1,927 | 6,624 | |||||||||||||||||||
Other repossessed assets | — | 166 | 43 | 240 | |||||||||||||||||||
Total nonperforming assets | $ | 73,268 | $ | 88,146 | $ | 71,889 | $ | 94,970 | |||||||||||||||
Performing troubled debt restructured loans(1) | $ | 8,047 | $ | 1,817 | $ | 817 | $ | 2,370 | |||||||||||||||
Nonperforming loans to total loans | 0.60 | % | 0.84 | % | 0.70 | % | 0.88 | % | |||||||||||||||
Nonperforming assets to total loans plus repossessed property | 0.67 | 0.89 | 0.72 | 0.95 | |||||||||||||||||||
Nonperforming assets to total assets | 0.37 | 0.46 | 0.37 | 0.53 | |||||||||||||||||||
(1) Represents accruing troubled debt restructured loans performing according to their restructured terms. |
Nonperforming Loans | Other Real Estate Owned | Other Repossessed Assets | Total Nonperforming Assets | ||||||||||||||||||||
June 30, 2022 | $ | 63,004 | $ | 4,528 | $ | — | $ | 67,532 | |||||||||||||||
Loan foreclosures | (4,113) | 3,774 | 339 | — | |||||||||||||||||||
Net loan charge-offs | (26) | — | — | (26) | |||||||||||||||||||
New nonperforming loans | 8,388 | — | — | 8,388 | |||||||||||||||||||
Reduction of nonperforming loans(1) | (2,015) | — | — | (2,015) | |||||||||||||||||||
OREO/Repossessed assets sales proceeds | — | (239) | (398) | (637) | |||||||||||||||||||
OREO/Repossessed assets writedowns, net | — | (33) | 59 | 26 | |||||||||||||||||||
September 30, 2022 | $ | 65,238 | $ | 8,030 | $ | — | $ | 73,268 | |||||||||||||||
(1) Includes principal reductions and transfers to performing status. |
Nonperforming Loans | Other Real Estate Owned | Other Repossessed Assets | Total Nonperforming Assets | ||||||||||||||||||||
December 31, 2021 | $ | 69,919 | $ | 1,927 | $ | 43 | $ | 71,889 | |||||||||||||||
Loan foreclosures | (8,850) | 8,458 | 392 | — | |||||||||||||||||||
Net loan charge-offs | (12,934) | — | — | (12,934) | |||||||||||||||||||
New nonperforming loans | 32,810 | — | — | 32,810 | |||||||||||||||||||
Reduction of nonperforming loans(1) | (15,707) | — | — | (15,707) | |||||||||||||||||||
OREO/Repossessed assets sales proceeds | — | (2,074) | (490) | (2,564) | |||||||||||||||||||
OREO/Repossessed assets writedowns, net | — | (281) | 55 | (226) | |||||||||||||||||||
September 30, 2022 | $ | 65,238 | $ | 8,030 | $ | — | $ | 73,268 | |||||||||||||||
(1) Includes principal reductions and transfers to performing status. |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||||||||
U.S. treasuries | $ | 26,737 | 0.38 | % | $ | 1,008 | 0.01 | % | |||||||||||||||
U.S. agencies | 43,300 | 0.62 | 193,384 | 2.51 | |||||||||||||||||||
Obligations of states and political subdivisions | 1,664,870 | 23.88 | 2,169,742 | 28.19 | |||||||||||||||||||
Mortgage-backed securities - agency | 1,828,276 | 26.23 | 2,349,289 | 30.52 | |||||||||||||||||||
Mortgage-backed securities - non-agency | 2,122,859 | 30.46 | 1,743,379 | 22.65 | |||||||||||||||||||
Commercial mortgage-backed securities - agency | 86,148 | 1.24 | 123,912 | 1.61 | |||||||||||||||||||
Commercial mortgage-backed securities - non-agency | 689,675 | 9.89 | 600,888 | 7.81 | |||||||||||||||||||
Asset-backed securities | 400,032 | 5.74 | 409,653 | 5.32 | |||||||||||||||||||
Corporate bonds | 8,423 | 0.12 | 3,040 | 0.04 | |||||||||||||||||||
Equity securities with a readily determinable fair value | 20,258 | 0.29 | 20,788 | 0.27 | |||||||||||||||||||
Other securities | 80,286 | 1.15 | 82,567 | 1.07 | |||||||||||||||||||
Total securities | $ | 6,970,864 | 100.00 | % | $ | 7,697,650 | 100.00 | % |
September 30, 2022 | December 31, 2021 | Change | % Change | ||||||||||||||||||||
Demand deposits | $ | 6,083,563 | $ | 6,495,326 | $ | (411,763) | (6) | % | |||||||||||||||
Savings deposits | 10,060,523 | 8,897,909 | 1,162,614 | 13 | |||||||||||||||||||
Time deposits | 1,123,035 | 1,024,020 | 99,015 | 10 | |||||||||||||||||||
Total | $ | 17,267,121 | $ | 16,417,255 | $ | 849,866 | 5 | % |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||||||||
Demand | $ | 6,083,563 | 35.23 | % | $ | 6,495,326 | 39.57 | % | |||||||||||||||
Savings | 10,060,523 | 58.27 | 8,897,909 | 54.20 | |||||||||||||||||||
Time | 1,123,035 | 6.50 | 1,024,020 | 6.23 | |||||||||||||||||||
Total | $ | 17,267,121 | 100.00 | % | $ | 16,417,255 | 100.00 | % |
September 30, 2022 | December 31, 2021 | Change | % Change | ||||||||||||||||||||
Securities sold under agreement to repurchase | $ | 111,047 | $ | 122,996 | $ | (11,949) | (10) | % | |||||||||||||||
Advances from the federal discount window | 30,000 | — | 30,000 | 100 | |||||||||||||||||||
Other short-term borrowings | 5,953 | 8,601 | (2,648) | (31) | |||||||||||||||||||
Total | $ | 147,000 | $ | 131,597 | $ | 15,403 | 12 | % |
September 30, 2022 | December 31, 2021 | Change | % Change | ||||||||||||||||||||
Advances from the FHLB | $ | 770 | $ | 898 | $ | (128) | (14) | % | |||||||||||||||
Trust preferred securities | 148,042 | 147,316 | 726 | — | |||||||||||||||||||
Contracts payable | 82 | 1,593 | (1,511) | (95) | |||||||||||||||||||
Subordinated notes | 222,552 | 222,265 | 287 | — | |||||||||||||||||||
Total | $ | 371,446 | $ | 372,072 | $ | (626) | — | % |
Amount Issued | Issuance Date | Interest Rate | Interest Rate as of 9/30/2022(1) | Maturity Date | Callable Date | |||||||||||||||||||||||||||||||||
Heartland Financial Statutory Trust IV | $ | 10,310 | 03/17/2004 | 2.75% over LIBOR | 6.28% | 03/17/2034 | 12/17/2022 | |||||||||||||||||||||||||||||||
Heartland Financial Statutory Trust V | 20,619 | 01/27/2006 | 1.33% over LIBOR | 3.84 | 04/07/2036 | 01/07/2023 | ||||||||||||||||||||||||||||||||
Heartland Financial Statutory Trust VI | 20,619 | 06/21/2007 | 1.48% over LIBOR | 4.77 | 09/15/2037 | 12/15/2022 | ||||||||||||||||||||||||||||||||
Heartland Financial Statutory Trust VII | 18,042 | 06/26/2007 | 1.48% over LIBOR | 4.56 | 09/01/2037 | 12/01/2022 | ||||||||||||||||||||||||||||||||
Morrill Statutory Trust I | 9,346 | 12/19/2002 | 3.25% over LIBOR | 6.89 | 12/26/2032 | 12/26/2022 | ||||||||||||||||||||||||||||||||
Morrill Statutory Trust II | 9,059 | 12/17/2003 | 2.85% over LIBOR | 6.38 | 12/17/2033 | 12/17/2022 | ||||||||||||||||||||||||||||||||
Sheboygan Statutory Trust I | 6,769 | 09/17/2003 | 2.95% over LIBOR | 6.48 | 09/17/2033 | 12/17/2022 | ||||||||||||||||||||||||||||||||
CBNM Capital Trust I | 4,545 | 09/10/2004 | 3.25% over LIBOR | 6.54 | 12/15/2034 | 12/15/2022 | ||||||||||||||||||||||||||||||||
Citywide Capital Trust III | 6,591 | 12/19/2003 | 2.80% over LIBOR | 5.58 | 12/19/2033 | 01/23/2023 | ||||||||||||||||||||||||||||||||
Citywide Capital Trust IV | 4,454 | 09/30/2004 | 2.20% over LIBOR | 5.16 | 09/30/2034 | 11/23/2022 | ||||||||||||||||||||||||||||||||
Citywide Capital Trust V | 12,368 | 05/31/2006 | 1.54% over LIBOR | 4.83 | 07/25/2036 | 12/15/2022 | ||||||||||||||||||||||||||||||||
OCGI Statutory Trust III | 3,018 | 06/27/2002 | 3.65% over LIBOR | 6.16 | 09/30/2032 | 12/30/2022 | ||||||||||||||||||||||||||||||||
OCGI Capital Trust IV | 5,497 | 09/23/2004 | 2.50% over LIBOR | 5.79 | 12/15/2034 | 12/15/2022 | ||||||||||||||||||||||||||||||||
BVBC Capital Trust II | 7,308 | 04/10/2003 | 3.25% over LIBOR | 6.03 | 04/24/2033 | 01/24/2023 | ||||||||||||||||||||||||||||||||
BVBC Capital Trust III | 9,538 | 07/29/2005 | 1.60% over LIBOR | 5.27 | 09/30/2035 | 12/30/2022 | ||||||||||||||||||||||||||||||||
Total trust preferred costs | 148,083 | |||||||||||||||||||||||||||||||||||||
Less: deferred issuance costs | (41) | |||||||||||||||||||||||||||||||||||||
$ | 148,042 | |||||||||||||||||||||||||||||||||||||
(1) Effective weighted average interest rate as of September 30, 2022, was 5.75%. | ||||||||||||||||||||||||||||||||||||||
Total Capital (to Risk- Weighted Assets) | Tier 1 Capital (to Risk- Weighted Assets) | Common Equity Tier 1 (to Risk- Weighted Assets) | Tier 1 Capital (to Average Assets) | ||||||||||||||||||||
September 30, 2022 | 15.01 | % | 11.89 | % | 11.12 | % | 8.93 | % | |||||||||||||||
Minimum capital requirement | 8.00 | 6.00 | 4.50 | 4.00 | |||||||||||||||||||
Well capitalized requirement | 10.00 | 8.00 | 6.50 | 5.00 | |||||||||||||||||||
Minimum capital requirement, including fully-phased in capital conservation buffer | 10.50 | 8.50 | 7.00 | N/A | |||||||||||||||||||
Risk-weighted assets | $ | 14,418,824 | $ | 14,418,824 | $ | 14,418,824 | N/A | ||||||||||||||||
Average assets | N/A | N/A | N/A | $ | 19,182,687 | ||||||||||||||||||
December 31, 2021 | 15.90 | % | 12.39 | % | 11.53 | % | 8.57 | % | |||||||||||||||
Minimum capital requirement | 8.00 | 6.00 | 4.50 | 4.00 | |||||||||||||||||||
Well capitalized requirement | 10.00 | 8.00 | 6.50 | 5.00 | |||||||||||||||||||
Minimum capital requirement, including fully-phased in capital conservation buffer | 10.50 | 8.50 | 7.00 | N/A | |||||||||||||||||||
Risk-weighted assets | $ | 12,829,318 | $ | 12,829,318 | $ | 12,829,318 | N/A | ||||||||||||||||
Average assets | N/A | N/A | N/A | $ | 18,553,872 |
2022 | 2021 | ||||||||||||||||||||||
Net Interest Margin | % Change From Base | Net Interest Margin | % Change From Base | ||||||||||||||||||||
Year 1 | |||||||||||||||||||||||
Down 100 Basis Points | $ | 680,345 | (1.29) | % | $ | 503,448 | (2.15) | % | |||||||||||||||
Base | 689,218 | — | 514,512 | — | |||||||||||||||||||
Up 200 Basis Points | 694,854 | 0.82 | 543,113 | 5.56 | |||||||||||||||||||
Year 2 | |||||||||||||||||||||||
Down 100 Basis Points | $ | 682,744 | (0.94) | % | $ | 462,454 | (10.12) | % | |||||||||||||||
Base | 720,883 | 4.59 | 494,746 | (3.84) | |||||||||||||||||||
Up 200 Basis Points | 734,620 | 6.59 | 556,171 | 8.10 |
(1) | ||||||||||||||
(1) | ||||||||||||||
(1) | ||||||||||||||
(1) | ||||||||||||||
101 | Financial statement formatted in Inline Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements. | |||||||||||||
104 | Cover page formatted in Inline Extensible Business Reporting Language |
HEARTLAND FINANCIAL USA, INC. | ||
(Registrant) | ||
/s/ Bruce K. Lee | ||
By: Bruce K. Lee | ||
President and Chief Executive Officer | ||
(Principal Executive Officer and Duly Authorized Officer) | ||
/s/ Bryan R. McKeag | ||
By: Bryan R. McKeag | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer and Duly Authorized Officer) | ||
/s/ Janet M. Quick | ||
By: Janet M. Quick | ||
Executive Vice President and Deputy Chief Financial Officer | ||
(Principal Accounting Officer and Duly Authorized Officer) | ||
Dated: November 7, 2022 |
1. | I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.; | |||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||||||
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have: | |||||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and | |||||||
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and; | |||||||
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | |||||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 7, 2022 | ||||
/s/ Bruce K. Lee | |||||
Bruce K. Lee | |||||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.; | |||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||||||
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have: | |||||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and | |||||||
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and; | |||||||
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | |||||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 7, 2022 | ||||
/s/ Bryan R. McKeag | |||||
Bryan R. McKeag | |||||
Executive Vice President | |||||
Chief Financial Officer |
/s/ Bruce K. Lee | |||||
Bruce K. Lee | |||||
President and Chief Executive Officer | |||||
Date: | November 7, 2022 |
/s/ Bryan R. McKeag | |||||
Bryan R. McKeag | |||||
Executive Vice President | |||||
Chief Financial Officer | |||||
Date: | November 7, 2022 |
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Interest benefit | $ 4,412 | $ 3,102 | $ 11,780 | $ 9,378 |
Gain (loss) on securities | (1,055) | 1,535 | (272) | 4,347 |
Income tax expense (benefit) | 14,118 | 13,250 | 41,637 | 45,064 |
Reclassification out of accumulated other comprehensive income (loss) | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||
Interest benefit | 189 | (543) | 552 | (1,601) |
Reclassification out of accumulated other comprehensive income (loss) | Accumulated Net Unrealized Investment Gain (Loss) | ||||
Gain (loss) on securities | (1,070) | 1,535 | (1,720) | 4,347 |
Reclassification out of accumulated other comprehensive income (loss) | Accumulated Other Comprehensive Income (Loss) | ||||
Income tax expense (benefit) | $ 302 | $ 524 | $ 466 | $ 1,501 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Cash dividends per share preferred stock (in dollars per share) | $ 175.00 | $ 175.00 | $ 525.00 | $ 525.00 |
Cash dividends per share common stock (in dollars per share) | $ 0.27 | $ 0.25 | $ 0.81 | $ 0.69 |
Shares of common stock issued (in shares) | 4,667 | 4,640 | 168,842 | 156,230 |
BASIS OF PRESENTATION |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2021, included in the Annual Report on Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 24, 2022. Footnote disclosures to the interim unaudited consolidated financial statements which would substantially duplicate the disclosure contained in the footnotes to the audited consolidated financial statements have been omitted. The financial information included herein has been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments), that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the interim period ended September 30, 2022, are not necessarily indicative of the results expected for the year ending December 31, 2022. Earnings Per Share Basic earnings per share is determined using net income available to common stockholders and weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average common shares and assumed incremental common shares issued. Amounts used in the determination of basic and diluted earnings per share for the three- and nine- months ended September 30, 2022 and 2021, are shown in the table below, dollars and number of shares in thousands, except per share data:
Subsequent Events - HTLF has evaluated subsequent events that may require recognition or disclosure through the filing date of this Quarterly Report on Form 10-Q with the SEC. Effect of New Financial Accounting Standards ASU 2018-16 In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting." In the United States, eligible benchmark interest rates under Topic 815 are interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate ("LIBOR") swap rate, and the Overnight Index Swap ("OIS") Rate based on the Fed Funds Effective Rate. When the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017, it introduced the Securities Industry and Financial Markets Association ("SIFMA") Municipal Swap Rate as the fourth permissible U.S. benchmark rate. ASU 2018-16 adds the OIS rate based on the Secured Overnight Financing Rate ("SOFR") as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes. ASU 2018-16 became effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and the financial statement impact immediately upon adoption was immaterial. The future financial statement impact will depend on any new contracts entered into using new benchmark rates, as well as any existing contracts that are migrated from LIBOR to new benchmark interest rates. HTLF formed a working group that was responsible for the planning, assessment and execution of the transition from LIBOR as an interest rate benchmark to term SOFR. Currently, HTLF has adjustable rate loans, several debt obligations and securities and derivative instruments in place that reference LIBOR-based rates. HTLF’s transition plan included the cessation of the use of LIBOR as a reference rate to term SOFR as a replacement rate at December 31, 2021. ASU 2020-04 In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform," which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. For loan and lease agreements that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modifications would be considered "minor" with the result that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement, with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020, through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic within the ASC, ASU 2020-04 must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. HTLF anticipates that ASU 2020-04 will simplify any modifications executed between the selected start date and December 31, 2022 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than extinguishment of the old contract that would result in writing off unamortized fees/costs. Management will continue to actively assess the impacts of ASU 2020-04 and the related opportunities and risks involved in the LIBOR transition. ASU 2022-02 In March 2022, the FASB issued ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." These amendments eliminate the troubled debt restructurings ("TDR") recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, these amendments require that an entity disclose current-period gross charge-offs by year of origination for loans receivable within the scope of Subtopic 326-20. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. These amendments should be applied prospectively. If an entity elects to early adopt ASU 2022-02 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. Management is assessing the impact of ASU 2022-02 on its results of operations, financial position and financial statement disclosures.
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SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES | 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 September 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:
The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of September 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:
During the third quarter of 2022, HTLF transferred taxable municipal bonds with an amortized cost basis of $934.5 million and fair value of $748.3 million from available for sale to held to maturity. On the date of the transfer, accumulated other comprehensive income (loss) included $186.3 million of net unrealized losses, after tax, attributable to these securities, and the net unrealized losses will be amortized into interest income over the remaining life of the transferred securities. The bonds were transferred at fair value at the date of transfer. As of September 30, 2022, and December 31, 2021, HTLF had $28.5 million and $29.4 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheets. HTLF does not consider accrued interest receivable in the carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses calculation. The amortized cost and estimated fair value of investment securities carried at fair value at September 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.
The amortized cost and estimated fair value of debt securities held to maturity at September 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.
As of September 30, 2022, and December 31, 2021, securities with a carrying value of $1.27 billion and $1.66 billion, respectively, were pledged to secure public and trust deposits, short-term borrowings and for other purposes as required or permitted by law. Gross gains and losses realized related to the sales of securities carried at fair value for the three and nine months ended September 30, 2022 and 2021, are summarized as follows, in thousands:
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 September 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 September 30, 2021, and December 31, 2020, respectively. For the securities transferred to held to maturity during the third quarter of 2022, the reference point was the date of the transfer.
HTLF had no securities held to maturity with unrealized losses at December 31, 2021. HTLF reviews the investment securities portfolio at the security level on a quarterly basis for potential credit losses, which takes into consideration numerous factors, and the relative significance of any single factor can vary by security. Some factors HTLF may consider include changes in security ratings, financial condition of the issuer, as well as security and industry specific economic conditions. In addition, with regard to debt securities, HTLF may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds and the value of any underlying collateral. For certain debt securities in unrealized loss positions, HTLF prepares cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. The unrealized losses on HTLF's commercial mortgage, mortgage and asset-backed securities are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities. The losses are not related to concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that the securities will not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because HTLF has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, no credit losses were recognized on these securities during the three and nine months ended September 30, 2022 and 2021. The unrealized losses on HTLF's obligations of states and political subdivisions available for sale are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities. Management monitors the published credit ratings of these securities and the stability of the underlying municipalities. Because the decline in fair value is attributable to changes in interest rates or widening market spreads due to insurance company downgrades and not underlying credit quality, and because HTLF has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, no credit losses were recognized on these securities during the three and nine months ended September 30, 2022 and 2021. In the first quarter of 2022, HTLF sold two obligations of states and political subdivisions securities from the held to maturity portfolio. Because the evaluation of the underlying credit quality of the individual securities indicated significant deterioration, it was unlikely HTLF would recover the remaining basis of the securities prior to maturity and therefore inconsistent with HTLF's original intent upon purchase and classification of these held to maturity securities. The carrying value of these securities was $2.2 million, and the associated gross gains were $100,000. The credit loss model under ASC 326-30, applicable to held to maturity debt securities, requires the recognition of lifetime expected credit losses through an allowance account at the time when the security is purchased. 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 nine months ended September 30, 2022 and 2021:
Based on HTLF's credit loss methodology applicable to held to maturity debt securities, no allowance for credit losses was required at both September 30, 2022, and December 31, 2021. The following table summarizes, in thousands, the carrying amount of HTLF's held to maturity debt securities by investment rating as of September 30, 2022, and December 31, 2021, which are updated quarterly and used to monitor the credit quality of the securities:
Included in other securities were shares of stock in each Federal Home Loan Bank (the "FHLB") of Des Moines, Chicago, Dallas, San Francisco and Topeka at an amortized cost of $18.6 million at September 30, 2022, and $22.6 million at December 31, 2021. The HTLF banks are required by federal law to maintain FHLB stock as members of the various FHLBs. These equity securities are "restricted" in that they can only be sold back to the respective institutions from which they were acquired or another member institution at par. Therefore, the FHLB stock is less liquid than other marketable equity securities, and the fair value approximates amortized cost. HTLF considers its FHLB stock as a long-term investment that provides access to competitive products and liquidity. HTLF evaluates impairment in these investments based on the ultimate recoverability of the par value and, at September 30, 2022, and December 31, 2021, did not consider the investments to be impaired.
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LOANS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS | LOANS Loans as of September 30, 2022, and December 31, 2021, were as follows, in thousands:
As of September 30, 2022, and December 31, 2021, HTLF had $41.4 million and $35.3 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheets. 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 September 30, 2022, and December 31, 2021, 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.
HTLF had $15.9 million of troubled debt restructured loans at September 30, 2022, of which $7.9 million were classified as nonaccrual and $8.0 million were accruing according to the restructured terms. HTLF had $10.4 million of troubled debt restructured loans at December 31, 2021, of which $9.5 million were classified as nonaccrual and $817,000 were accruing according to the restructured terms. The following tables provide information on troubled debt restructured loans that were modified during the three- and nine- months ended September 30, 2022, and September 30, 2021, dollars in thousands. The provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which modified troubled debt restructured loan classification, expired on January 1, 2022, and any new troubled debt restructured loan modifications are evaluated in accordance with generally accepted accounting principles.
At September 30, 2022, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructured loan. HTLF had no troubled debt restructured loans for which there was a payment default during the three- and nine- months ended September 30, 2022, and September 30, 2021, 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 credit 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 rated 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 September 30, 2022, and December 31, 2021. The following tables show the risk category of loans by loan category and year of origination as of September 30, 2022, and December 31, 2021, in thousands:
Included in the nonpass loans at September 30, 2022, and December 31, 2021, were $2.6 million and $27.8 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 September 30, 2022, HTLF had $846,000 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 September 30, 2022, and December 31, 2021, in thousands:
Loans delinquent 30 to 89 days as a percent of total loans were 0.10% at September 30, 2022, compared to 0.07% at December 31, 2021. 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 nine months ended September 30, 2022 and September 30, 2021. As of September 30, 2022, and December 31, 2021, HTLF had $32.5 million and $25.5 million of nonaccrual loans with no related allowance, respectively.
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ALLOWANCE FOR CREDIT LOSSES |
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Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR CREDIT LOSSES | ALLOWANCE FOR CREDIT LOSSES Changes in the allowance for credit losses on loans for the three- and nine- months ended September 30, 2022, and September 30, 2021, were as follows, in thousands:
Management allocates the allowance for credit losses by pools of risk within each loan portfolio. The total allowance for credit losses is available to absorb losses from any segment of the loan portfolio. Changes in the allowance for credit losses for unfunded commitments for the three and nine months ended September 30, 2022, and September 30, 2021, were as follows:
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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS | GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS HTLF had goodwill of $576.0 million at both September 30, 2022, and December 31, 2021. HTLF conducts its annual internal assessment of the goodwill both at the consolidated level and at its subsidiaries as of September 30. HTLF 's annual quantitative assessment is completed in the fourth quarter of every year as of September 30. The most recent assessment was completed in the fourth quarter of 2021 as of September 30, 2021, and there was no goodwill impairment identified. At September 30, 2022, HTLF's intangible assets consisted of core deposit intangibles and mortgage servicing rights. At December 31, 2021, HTLF's intangible assets consisted of core deposit intangibles, mortgage servicing rights, customer relationship intangibles, and commercial servicing rights. The gross carrying amount of these intangible assets and the associated accumulated amortization at September 30, 2022, and December 31, 2021, are presented in the table below, in thousands:
The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:
Projections of amortization expense for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of September 30, 2022. HTLF's actual experience may be significantly different depending upon changes in mortgage interest rates and market conditions. Mortgage loans serviced for others were approximately $734.9 million at September 30, 2022, compared to $723.3 million at December 31, 2021. Custodial escrow balances maintained in connection with the mortgage loan servicing portfolio were approximately $17.0 million at September 30, 2022, and $4.5 million at December 31, 2021. Fees collected for the servicing of mortgage loans for others were $472,000 and $446,000 for the quarters ended September 30, 2022, and September 30, 2021, respectively. Fees collected for the servicing of mortgage loans for others were $1.4 million and $1.4 million for the nine months ended September 30, 2022, and September 30, 2021, respectively. The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the nine months ended September 30, 2022, and September 30, 2021:
Mortgage rights are initially recorded at fair value in net gains on sale of loans held for sale when they are capitalized through loan sales. Fair value is based on market prices for comparable servicing contracts, when available, or based on a valuation model that calculates the present value of estimated future net servicing income. Mortgage rights are subsequently measured using the amortization method, which requires the asset to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are evaluated for impairment at each HTLF subsidiary which has servicing rights based upon the fair value of the assets as compared to the carrying amount. Impairment is recognized through a valuation allowance for specific tranches to the extent that fair value is less than the carrying amount at each HTLF subsidiary which has servicing rights, and a valuation adjustment is recorded into noninterest income. At September 30, 2022, no valuation allowance was required on the mortgage servicing rights 15-year tranche, and no valuation allowance was required on the mortgage servicing rights 30-year tranche. At December 31, 2021, a $327,000 valuation allowance was required on the mortgage servicing rights 15-year tranche and a $1.3 million valuation allowance was required on the mortgage servicing rights 30-year tranche. For the three months ended September 30, 2022, and September 30, 2021, a valuation adjustment benefit of $0 and $195,000, respectively, was recorded for the total mortgage servicing rights portfolio. For the nine months ended September 30, 2022, and September 30, 2021, a valuation adjustment benefit of $1.7 million and $586,000, respectively, was recorded for the total mortgage servicing rights portfolio. The following table summarizes, in thousands, the book value, the fair value of each tranche of the mortgage servicing rights and any recorded valuation allowance at September 30, 2022, and December 31, 2021:
The fair value of mortgage servicing rights is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds, servicing costs and escrow earnings of the mortgage servicing rights are considered in the calculation. The following table presents key assumptions used to value the mortgage servicing rights as of September 30, 2022, and December 31, 2021, dollars in thousands:
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS HTLF uses derivative financial instruments as part of its interest rate risk management strategy. As part of the strategy, HTLF considers the use of interest rate swaps, risk participation agreements, caps, floors, collars, and certain interest rate lock commitments and forward sales of securities related to mortgage banking activities. HTLF's current strategy includes the use of interest rate swaps, interest rate lock commitments and forward sales of mortgage securities. In addition, HTLF is facilitating back-to-back loan swaps to assist customers in managing their interest rate risk while executing offsetting interest rate swaps with dealer counterparties. HTLF's objectives are to add stability to its net interest margin and to manage its exposure to movements in interest rates. The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. HTLF is exposed to credit risk in the event of nonperformance by counterparties to financial instruments. HTLF minimizes this risk by entering into derivative contracts with counterparties that meet HTLF’s credit standards, and the contracts contain collateral provisions protecting the at-risk party. HTLF has not experienced any losses from nonperformance by these counterparties. HTLF monitors counterparty risk in accordance with the provisions of ASC 815. In addition, interest rate-related derivative instruments generally contain language outlining collateral pledging requirements for each counterparty. Collateral must be posted when the market value exceeds certain threshold limits which are determined by the credit ratings of each counterparty. HTLF was required to pledge no cash as collateral at both September 30, 2022, and December 31, 2021. At both September 30, 2022, and December 31, 2021, no collateral was required to be pledged by HTLF's counterparties. HTLF's derivative and hedging instruments are recorded at fair value on the consolidated balance sheets. See Note 7, "Fair Value," for additional fair value information and disclosures. Cash Flow Hedges During the third quarter of 2021, the interest rate swap transactions associated with Heartland Financial Statutory VI and VII were terminated, and the debt was converted to variable rate subordinated debentures. In addition, HTLF had two swap transactions associated with an unaffiliated bank, one of which matured in the second quarter, and the other was terminated in the third quarter. The underlying debt with the unaffiliated bank was paid off in the third quarter of 2021. For the next twelve months, HTLF estimates that cash payments and reclassification from accumulated other comprehensive income (loss) to interest expense related to the terminated swaps will total $733,000. At both September 30, 2022, and December 31, 2021, HTLF had no derivative instruments designated as cash flow hedges. Fair Value Hedges HTLF uses interest rate swaps to convert certain long term fixed rate loans to floating rates to hedge interest rate risk exposure. HTLF uses hedge accounting in accordance with ASC 815, with the unrealized gains and losses, representing the change in fair value of the derivative and the change in fair value of the risk being hedged on the related loan, being recorded in the consolidated statements of income. The ineffective portions of the unrealized gains or losses, if any, are recorded in interest income and interest expense in the consolidated statements of income. HTLF uses statistical regression to assess hedge effectiveness, both at the inception of the hedge as well as on a continual basis. The regression analysis involves regressing the periodic change in the fair value of the hedging instrument against the periodic changes in the fair value of the asset being hedged due to changes in the hedge risk. HTLF was required to pledge $481,000 and $3.8 million of cash as collateral for these fair value hedges at September 30, 2022, and December 31, 2021, respectively. The table below identifies the notional amount, fair value and balance sheet category of HTLF's fair value hedges at September 30, 2022, and December 31, 2021, in thousands:
The table below identifies the gains and losses recognized on HTLF's fair value hedges for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
Embedded Derivatives HTLF has fixed rate loans with embedded derivatives. These loans contain terms that affect the cash flows or value of the loan similar to a derivative instrument, and therefore are considered to contain an embedded derivative. The embedded derivatives are bifurcated from the loans because the terms of the derivative instrument are not clearly and closely related to the loans. The embedded derivatives are recorded at fair value on the consolidated balance sheets as a part of other assets, and changes in the fair value are a component of noninterest income. The table below identifies the notional amount, fair value and balance sheet category of the embedded derivatives at September 30, 2022, and December 31, 2021, in thousands:
The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
Back-to-Back Loan Swaps HTLF has interest rate swap loan relationships with customers to assist them in managing their interest rate risk. Upon entering into these loan swaps, HTLF enters into offsetting positions with counterparties in order to minimize interest rate risk. These back-to-back loan swaps qualify as free standing financial derivatives with the fair values reported in other assets and other liabilities on the consolidated balance sheets. HTLF was required to post $101,000 of collateral at September 30, 2022, compared to $24.1 million as of December 31, 2021, respectively, as collateral related to these back-to-back swaps. HTLF's counterparties were required to pledge $44.7 million at September 30, 2022, compared to $0 at December 31, 2021. Any gains and losses on these back-to-back swaps are recorded in noninterest income on the consolidated statements of income, and for the three and nine months ended September 30, 2022, and September 30, 2021, no gain or loss was recognized. The table below identifies the balance sheet category and fair values of the derivative instruments designated as loan swaps at September 30, 2022, and December 31, 2021, in thousands:
Other Free Standing Derivatives HTLF has entered into interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans and mortgage backed securities that are considered derivative instruments. HTLF enters into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into and to economically hedge the effect of future changes in interest rates on the commitments to fund the loans as well as on residential mortgage loans available for sale. The fair value of these commitments is recorded on the consolidated balance sheets, with the changes in fair value recorded in the consolidated statements of income as a component of gains on sale of loans held for sale. These derivative contracts are designated as free standing derivative contracts and are not designated against specific assets and liabilities on the consolidated balance sheets or forecasted transactions and therefore do not qualify for hedge accounting treatment. HTLF was required to pledge no collateral at both September 30, 2022, and December 31, 2021. HTLF's counterparties were required to pledge no collateral at both September 30, 2022, and December 31, 2021, as collateral for these forward commitments. HTLF acquired undesignated interest rate swaps in 2015. These swaps were entered into primarily for the benefit of customers seeking to manage their interest rate risk and are not designated against specific assets or liabilities on the consolidated balance sheets or forecasted transactions and therefore do not qualify for hedge accounting in accordance with ASC 815. These swaps are carried at fair value on the consolidated balance sheets as a component of other liabilities, with changes in the fair value recorded as a component of other noninterest income. The table below identifies the balance sheet category and fair values of HTLF's other free standing derivative instruments not designated as hedging instruments at September 30, 2022, and December 31, 2021, in thousands:
HTLF recognizes gains and losses on other free standing derivatives in two separate income statement categories. Interest rate lock commitments and forward commitments are recognized in net gains on sale of loans held for sale and undesignated interest rate swaps are recognized in other noninterest income. The table below identifies the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
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FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE HTLF utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities carried at fair value, which include available for sale, trading securities and equity securities with a readily determinable fair value, and derivatives are recorded in the consolidated balance sheets at fair value on a recurring basis. Additionally, from time to time, HTLF may be required to record at fair value other assets on a nonrecurring basis such as loans held for sale, loans held to maturity and certain other assets including, but not limited to, mortgage servicing rights, commercial servicing rights and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets. Fair Value Hierarchy Under ASC 820, assets and liabilities are grouped at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 — Valuation is based upon quoted prices for identical instruments in active markets. Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, or similar instruments in markets that are not active, and model-based valuation techniques for all significant assumptions are observable in the market. Level 3 — Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring or non-recurring basis. Securities Available for Sale and Held to Maturity Securities available for sale are recorded at fair value on a recurring basis. Securities held to maturity are generally recorded at cost. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, as well as U.S. Treasury securities. Level 2 securities include U.S. government and agency securities, mortgage and asset-backed securities and private collateralized mortgage obligations, municipal bonds and corporate debt securities. On a quarterly basis, a secondary independent pricing service is used for the securities portfolio to validate the pricing from HTLF's primary pricing service. Equity Securities with a Readily Determinable Fair Value Equity securities with a readily determinable fair value generally include Community Reinvestment Act mutual funds and are classified as Level 2 due to the infrequent trading of these securities. The fair value is based on the price per share. Loans Held for Sale Loans held for sale are carried at the lower of cost or fair value on an aggregate basis. The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, HTLF classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2. Loans Held to Maturity HTLF does not record loans held to maturity at fair value on a recurring basis. However, from time to time, certain loans are considered collateral dependent and an allowance for credit losses is established. The fair value of individually assessed loans is measured using the fair value of the collateral. In accordance with ASC 820, individually assessed loans measured at fair value are classified as nonrecurring Level 3 in the fair value hierarchy. Premises, Furniture and Equipment Held for Sale HTLF values premises, furniture and equipment held for sale based on third-party appraisals less estimated disposal costs. HTLF considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling bank premises, furniture and equipment, in determining the fair value of particular properties. Accordingly, the valuation of premises, furniture and equipment held for sale is subject to significant external and internal judgment. HTLF periodically reviews premises, furniture and equipment held for sale to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. Premises, furniture and equipment held for sale are classified as nonrecurring Level 3 in the fair value hierarchy. Mortgage Servicing Rights Mortgage servicing rights assets represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of the assumptions in the discounted cash flow analysis require a significant degree of management estimation and judgment. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a fair value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. HTLF classifies mortgage servicing rights as nonrecurring with Level 3 measurement inputs. Derivative Financial Instruments HTLF's current interest rate risk strategy includes interest rate swaps. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. To comply with the provisions of ASC 820, HTLF incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, HTLF has considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although HTLF has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2022, and December 31, 2021, HTLF has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, HTLF has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Interest rate lock commitments HTLF uses an internal valuation model that relies on internally developed inputs to estimate the fair value of its interest rate lock commitments which is based on unobservable inputs that reflect management's assumptions and specific information about each borrower. Interest rate lock commitments are classified in Level 3 of the fair value hierarchy. Forward commitments The fair value of forward commitments are estimated using an internal valuation model, which includes current trade pricing for similar financial instruments in active markets that HTLF has the ability to access and are classified in Level 2 of the fair value hierarchy. Other Real Estate Owned Other real estate owned ("OREO") represents property acquired through foreclosures and settlements of loans. Property acquired is carried at the fair value of the property at the time of acquisition (representing the property's cost basis), plus any acquisition costs, or the estimated fair value of the property, less disposal costs. HTLF considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling OREO, in determining the fair value of particular properties. Accordingly, the valuation of OREO is subject to significant external and internal judgment. HTLF periodically reviews OREO to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. OREO is classified as nonrecurring Level 3 of the fair value hierarchy. The table below presents HTLF's assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022, and December 31, 2021, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:
The tables below present HTLF's assets that are measured at fair value on a nonrecurring basis, in thousands:
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:
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:
Gains included in gains (losses) on sale of loans held for sale attributable to interest rate lock commitments held at September 30, 2022, and December 31, 2021, were $231,000 and $1.3 million, respectively. The table below is a summary of the estimated fair value of HTLF's financial instruments (as defined by ASC 825) as of September 30, 2022, and December 31, 2021, in thousands. The carrying amounts in the following tables are recorded in the consolidated balance sheets under the indicated captions. In accordance with ASC 825, the assets and liabilities that are not financial instruments are not included in the disclosure, including the value of the commercial and mortgage servicing rights, premises, furniture and equipment, premises, furniture and equipment held for sale, OREO, goodwill, and other intangibles and other liabilities. 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.
Cash and Cash Equivalents — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments. Time Deposits in Other Financial Institutions — The carrying amount is a reasonable estimate of fair value due to the short-term nature of these instruments. Securities — For equity securities with a readily determinable fair value and debt securities either held to maturity, available for sale or trading, fair value equals quoted market price if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. For Level 3 securities, HTLF utilizes independent pricing provided by third party vendors or brokers. Other Investments — Fair value measurement of other investments, which consists primarily of FHLB stock, are based on their redeemable value, which is at cost due to the restrictions placed on their transferability. The market for these securities is restricted to the issuer of the stock and subject to impairment evaluation. Loans — The fair value of loans is determined using an exit price methodology. The exit price estimation of fair value is based on the present value of the expected cash flows. The projected cash flows are based on the contractual terms of the loans, adjusted for prepayments and a discount rate based on the relative risk of the cash flows. Other considerations include the loan type, remaining life of the loan and credit risk. The fair value of individually assessed or impaired loans is measured using the fair value of the underlying collateral. The fair value of loans held for sale is estimated using quoted market prices. Cash surrender value on life insurance — Life insurance policies are held on certain officers. The carrying value of these policies approximates fair value as it is based on the cash surrender value adjusted for other charges or amounts due that are probable at settlement. As such, HTLF classifies the estimated fair value of the cash surrender value on life insurance as Level 2. Derivative Financial Instruments — The fair value of all derivatives is estimated based on the amount that HTLF would pay or would be paid to terminate the contract or agreement, using current rates and prices, and, when appropriate, the current creditworthiness of the counter-party. Interest Rate Lock Commitments — The fair value of interest rate lock commitments is estimated using an internal valuation model, which includes grouping the interest rate lock commitments by interest rate and terms, applying an estimated closing ratio based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms, and rate lock expiration dates of the loan commitment group. Forward Commitments — The fair value of these instruments is estimated using an internal valuation model, which includes current trade pricing for similar financial instruments. Deposits — The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. If the fair value of the fixed maturity certificates of deposit is calculated at less than the carrying amount, the carrying value of these deposits is reported as the fair value. Short-term and Other Borrowings — Rates currently available to HTLF for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Commitments to Extend Credit, Unused Lines of Credit and Standby Letters of Credit — Based upon management's analysis of the off balance sheet financial instruments, there are no significant unrealized gains or losses associated with these financial instruments based upon review of the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.
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STOCK COMPENSATION | STOCK COMPENSATION HTLF may grant, through its Compensation, Nominating and Corporate Governance Committee (the "Compensation Committee"), non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and cash incentive awards, under its 2020 Long-Term Incentive Plan (the "Plan"). The Plan has 1,460,000 shares of common stock authorized for issuance. As of September 30, 2022, 954,256 shares of common stock were available for issuance under future awards that may be granted under the Plan to employees and directors of, and service providers to, HTLF or its subsidiaries. ASC Topic 718, "Compensation-Stock Compensation," requires the measurement of the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the award is based upon its fair value estimated on the date of grant and recognized in the consolidated statements of income over the vesting period of the award. The fair market value of restricted stock and restricted stock units is based on the fair value of the underlying shares of common stock on the date of grant. Forfeitures are accounted for as they occur. HTLF's income tax expense included $129,000 of tax benefit during the nine months ended September 30, 2022, and a tax benefit of $304,000 during the nine months ended September 30, 2021, related to the exercise, vesting and forfeiture of equity-based awards. Restricted Stock Units The Plan permits the Compensation Committee to grant restricted stock units ("RSUs"). The time-based RSUs are generally granted in March of each year and represent the right, without payment, to receive shares of HTLF common stock on a specified date in the future. Generally, the time-based RSUs vest over three years in equal installments in March of each of the three years following the year of the grant. The Compensation Committee has also granted three-year performance-based RSUs, generally in March of each year. These performance-based RSUs will be earned based on satisfaction of performance targets for the three-year performance period as defined in the RSU agreement. These performance-based RSUs or a portion thereof may vest after measurement of performance in relation to the performance targets. The time-based RSUs may also vest upon death or disability, upon a change in control or upon a "qualified retirement" (as defined in the RSU agreement), and the three-year performance-based RSUs may also vest to the extent that they are earned upon death, disability, upon a change in control or upon a "qualified retirement" (as defined in the RSU agreement). All of HTLF's RSUs will be settled in common stock upon vesting and are not entitled to dividends until vested. A summary of the RSUs outstanding as of September 30, 2022, and September 30, 2021, and changes during the nine months ended September 30, 2022 and 2021, follows:
Total compensation costs recorded for RSUs were $7.4 million and $6.7 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, there were $10.8 million of total unrecognized compensation costs related to the Plan for RSUs that are expected to be recognized through 2025.
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BASIS OF PRESENTATION (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2021, included in the Annual Report on Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 24, 2022. Footnote disclosures to the interim unaudited consolidated financial statements which would substantially duplicate the disclosure contained in the footnotes to the audited consolidated financial statements have been omitted. The financial information included herein has been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments), that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the interim period ended September 30, 2022, are not necessarily indicative of the results expected for the year ending December 31, 2022.
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Earnings Per Share | Basic earnings per share is determined using net income available to common stockholders and weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average common shares and assumed incremental common shares issued. |
Subsequent Events | HTLF has evaluated subsequent events that may require recognition or disclosure through the filing date of this Quarterly Report on Form 10-Q with the SEC. |
Effect of New Financial Accounting Standards | ASU 2018-16 In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting." In the United States, eligible benchmark interest rates under Topic 815 are interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate ("LIBOR") swap rate, and the Overnight Index Swap ("OIS") Rate based on the Fed Funds Effective Rate. When the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017, it introduced the Securities Industry and Financial Markets Association ("SIFMA") Municipal Swap Rate as the fourth permissible U.S. benchmark rate. ASU 2018-16 adds the OIS rate based on the Secured Overnight Financing Rate ("SOFR") as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes. ASU 2018-16 became effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and the financial statement impact immediately upon adoption was immaterial. The future financial statement impact will depend on any new contracts entered into using new benchmark rates, as well as any existing contracts that are migrated from LIBOR to new benchmark interest rates. HTLF formed a working group that was responsible for the planning, assessment and execution of the transition from LIBOR as an interest rate benchmark to term SOFR. Currently, HTLF has adjustable rate loans, several debt obligations and securities and derivative instruments in place that reference LIBOR-based rates. HTLF’s transition plan included the cessation of the use of LIBOR as a reference rate to term SOFR as a replacement rate at December 31, 2021. ASU 2020-04 In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform," which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. For loan and lease agreements that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modifications would be considered "minor" with the result that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement, with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020, through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic within the ASC, ASU 2020-04 must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. HTLF anticipates that ASU 2020-04 will simplify any modifications executed between the selected start date and December 31, 2022 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than extinguishment of the old contract that would result in writing off unamortized fees/costs. Management will continue to actively assess the impacts of ASU 2020-04 and the related opportunities and risks involved in the LIBOR transition. ASU 2022-02 In March 2022, the FASB issued ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." These amendments eliminate the troubled debt restructurings ("TDR") recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, these amendments require that an entity disclose current-period gross charge-offs by year of origination for loans receivable within the scope of Subtopic 326-20. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. These amendments should be applied prospectively. If an entity elects to early adopt ASU 2022-02 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. Management is assessing the impact of ASU 2022-02 on its results of operations, financial position and financial statement disclosures.
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Fair Value Hierarchy | Under ASC 820, assets and liabilities are grouped at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 — Valuation is based upon quoted prices for identical instruments in active markets. Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, or similar instruments in markets that are not active, and model-based valuation techniques for all significant assumptions are observable in the market. Level 3 — Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring or non-recurring basis. Securities Available for Sale and Held to Maturity Securities available for sale are recorded at fair value on a recurring basis. Securities held to maturity are generally recorded at cost. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, as well as U.S. Treasury securities. Level 2 securities include U.S. government and agency securities, mortgage and asset-backed securities and private collateralized mortgage obligations, municipal bonds and corporate debt securities. On a quarterly basis, a secondary independent pricing service is used for the securities portfolio to validate the pricing from HTLF's primary pricing service. Equity Securities with a Readily Determinable Fair Value Equity securities with a readily determinable fair value generally include Community Reinvestment Act mutual funds and are classified as Level 2 due to the infrequent trading of these securities. The fair value is based on the price per share. Loans Held for Sale Loans held for sale are carried at the lower of cost or fair value on an aggregate basis. The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, HTLF classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2. Loans Held to Maturity HTLF does not record loans held to maturity at fair value on a recurring basis. However, from time to time, certain loans are considered collateral dependent and an allowance for credit losses is established. The fair value of individually assessed loans is measured using the fair value of the collateral. In accordance with ASC 820, individually assessed loans measured at fair value are classified as nonrecurring Level 3 in the fair value hierarchy. Premises, Furniture and Equipment Held for Sale HTLF values premises, furniture and equipment held for sale based on third-party appraisals less estimated disposal costs. HTLF considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling bank premises, furniture and equipment, in determining the fair value of particular properties. Accordingly, the valuation of premises, furniture and equipment held for sale is subject to significant external and internal judgment. HTLF periodically reviews premises, furniture and equipment held for sale to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. Premises, furniture and equipment held for sale are classified as nonrecurring Level 3 in the fair value hierarchy. Mortgage Servicing Rights Mortgage servicing rights assets represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of the assumptions in the discounted cash flow analysis require a significant degree of management estimation and judgment. Mortgage servicing rights are subject to impairment testing. The carrying values of these rights are reviewed quarterly for impairment based upon the calculation of fair value as performed by an outside third party. For purposes of measuring impairment, the rights are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a fair value less than the carrying value, mortgage servicing rights are adjusted to fair value through a valuation allowance. HTLF classifies mortgage servicing rights as nonrecurring with Level 3 measurement inputs. Derivative Financial Instruments HTLF's current interest rate risk strategy includes interest rate swaps. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. To comply with the provisions of ASC 820, HTLF incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, HTLF has considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although HTLF has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2022, and December 31, 2021, HTLF has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, HTLF has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Interest rate lock commitments HTLF uses an internal valuation model that relies on internally developed inputs to estimate the fair value of its interest rate lock commitments which is based on unobservable inputs that reflect management's assumptions and specific information about each borrower. Interest rate lock commitments are classified in Level 3 of the fair value hierarchy. Forward commitments The fair value of forward commitments are estimated using an internal valuation model, which includes current trade pricing for similar financial instruments in active markets that HTLF has the ability to access and are classified in Level 2 of the fair value hierarchy. Other Real Estate Owned Other real estate owned ("OREO") represents property acquired through foreclosures and settlements of loans. Property acquired is carried at the fair value of the property at the time of acquisition (representing the property's cost basis), plus any acquisition costs, or the estimated fair value of the property, less disposal costs. HTLF considers third party appraisals, as well as independent fair value assessments from realtors or persons involved in selling OREO, in determining the fair value of particular properties. Accordingly, the valuation of OREO is subject to significant external and internal judgment. HTLF periodically reviews OREO to determine if the fair value of the property, less disposal costs, has declined below its recorded book value and records any adjustments accordingly. OREO is classified as nonrecurring Level 3 of the fair value hierarchy.
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BASIS OF PRESENTATION (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Amounts used in the determination of basic and diluted earnings per share for the three- and nine- months ended September 30, 2022 and 2021, are shown in the table below, dollars and number of shares in thousands, except per share data:
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SECURITIES (Tables) |
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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 September 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:
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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 September 30, 2022, and December 31, 2021, are summarized in the table below, in thousands:
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Investments Classified by Contractual Maturity Date | The amortized cost and estimated fair value of investment securities carried at fair value at September 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.
The amortized cost and estimated fair value of debt securities held to maturity at September 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.
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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 nine months ended September 30, 2022 and 2021, are summarized as follows, in thousands:
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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 September 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 September 30, 2021, and December 31, 2020, respectively. For the securities transferred to held to maturity during the third quarter of 2022, the reference point was the date of the transfer.
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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 nine months ended September 30, 2022 and 2021:
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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 September 30, 2022, and December 31, 2021, which are updated quarterly and used to monitor the credit quality of the securities:
The following tables show the risk category of loans by loan category and year of origination as of September 30, 2022, and December 31, 2021, in thousands:
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LOANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans | Loans as of September 30, 2022, and December 31, 2021, were as follows, in thousands:
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Allowance for Loan and Lease Losses, Based on Impairment Methodology | The following table shows the balance in the allowance for credit losses at September 30, 2022, and December 31, 2021, 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.
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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 September 30, 2022, and December 31, 2021, which are updated quarterly and used to monitor the credit quality of the securities:
The following tables show the risk category of loans by loan category and year of origination as of September 30, 2022, and December 31, 2021, in thousands:
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Past Due Financing Receivables | The following table sets forth information regarding accruing and nonaccrual loans at September 30, 2022, and December 31, 2021, in thousands:
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Troubled Debt Restructuring on Loans Modified | The following tables provide information on troubled debt restructured loans that were modified during the three- and nine- months ended September 30, 2022, and September 30, 2021, dollars in thousands. The provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which modified troubled debt restructured loan classification, expired on January 1, 2022, and any new troubled debt restructured loan modifications are evaluated in accordance with generally accepted accounting principles.
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ALLOWANCE FOR CREDIT LOSSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Allowance for Loan and Leases Losses | Changes in the allowance for credit losses on loans for the three- and nine- months ended September 30, 2022, and September 30, 2021, were as follows, in thousands:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Changes in the allowance for credit losses for unfunded commitments for the three and nine months ended September 30, 2022, and September 30, 2021, were as follows:
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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets | The gross carrying amount of these intangible assets and the associated accumulated amortization at September 30, 2022, and December 31, 2021, are presented in the table below, in thousands:
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Schedule of Estimated Future Amortization Expense of Amortizable Intangible Assets | The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:
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Summary of Changes in Servicing Rights | The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the nine months ended September 30, 2022, and September 30, 2021:
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Schedule of Servicing Asset at Fair Value and Amortized Cost | The following table summarizes, in thousands, the book value, the fair value of each tranche of the mortgage servicing rights and any recorded valuation allowance at September 30, 2022, and December 31, 2021:
The fair value of mortgage servicing rights is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds, servicing costs and escrow earnings of the mortgage servicing rights are considered in the calculation. The following table presents key assumptions used to value the mortgage servicing rights as of September 30, 2022, and December 31, 2021, dollars in thousands:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Category and Fair Values of Derivative Instruments | The table below identifies the notional amount, fair value and balance sheet category of HTLF's fair value hedges at September 30, 2022, and December 31, 2021, in thousands:
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Gains (Losses) on Derivative Instruments | The table below identifies the gains and losses recognized on HTLF's fair value hedges for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
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Balance Sheet Category and Fair Values of Embedded Derivatives | The table below identifies the notional amount, fair value and balance sheet category of the embedded derivatives at September 30, 2022, and December 31, 2021, in thousands:
The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
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Schedule of Other Derivatives Not Designated as Hedging Instruments, Balance Sheet and Income Category | The table below identifies the balance sheet category and fair values of HTLF's other free standing derivative instruments not designated as hedging instruments at September 30, 2022, and December 31, 2021, in thousands:
HTLF recognizes gains and losses on other free standing derivatives in two separate income statement categories. Interest rate lock commitments and forward commitments are recognized in net gains on sale of loans held for sale and undesignated interest rate swaps are recognized in other noninterest income. The table below identifies the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and nine- months ended September 30, 2022, and September 30, 2021, in thousands:
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FAIR VALUE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below presents HTLF's assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022, and December 31, 2021, in thousands, aggregated by the level in the fair value hierarchy within which those measurements fall:
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Fair Value Measurements, Nonrecurring | The tables below present HTLF's assets that are measured at fair value on a nonrecurring basis, in thousands:
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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:
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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:
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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.
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STOCK COMPENSATION (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Status of RSUs | A summary of the RSUs outstanding as of September 30, 2022, and September 30, 2021, and changes during the nine months ended September 30, 2022 and 2021, follows:
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SECURITIES (Held to maturity securities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|---|---|
Schedule of Held-to-maturity Securities [Line Items] | ||||||
Amortized Cost | $ 830,247 | $ 84,709 | ||||
Gross Unrealized Gains | 1,761 | 9,430 | ||||
Gross Unrealized Losses | (49,203) | 0 | ||||
Estimated Fair Value | 782,805 | 94,139 | ||||
Allowance for Credit Losses | 0 | 0 | ||||
Obligations of states and political subdivisions | ||||||
Schedule of Held-to-maturity Securities [Line Items] | ||||||
Amortized Cost | 830,247 | 84,709 | ||||
Gross Unrealized Gains | 1,761 | 9,430 | ||||
Gross Unrealized Losses | (49,203) | 0 | ||||
Estimated Fair Value | 782,805 | 94,139 | ||||
Allowance for Credit Losses | $ 0 | $ 0 | $ 0 | $ 0 | $ (51) | $ (51) |
SECURITIES (Securities available for sale debt maturities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
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Amortized Cost | ||
Due in 1 year or less | $ 1,490 | |
Due in 1 to 5 years | 30,702 | |
Due in 5 to 10 years | 54,131 | |
Due after 10 years | 1,052,815 | |
Total debt securities | 1,139,138 | |
Mortgage and asset-backed securities | 5,580,406 | |
Equity securities with a readily determinable fair value | 20,258 | $ 20,788 |
Total investment securities | 6,739,802 | |
Estimated Fair Value | ||
Due in 1 year or less | 1,486 | |
Due in 1 to 5 years | 29,814 | |
Due in 5 to 10 years | 46,087 | |
Due after 10 years | 835,696 | |
Estimated Fair Value | 913,083 | |
Mortgage and asset-backed securities | 5,126,990 | |
Equity securities with a readily determinable fair value | 20,258 | |
Total investment securities | $ 6,060,331 |
SECURITIES (Securities held to maturity debt maturities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
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Amortized Cost | ||
Due in 1 year or less | $ 4,772 | |
Due in 1 to 5 years | 68,014 | |
Due in 5 to 10 years | 125,603 | |
Due after 10 years | 631,858 | |
Total debt securities | 830,247 | |
Estimated Fair Value | ||
Due in 1 year or less | 4,773 | |
Due in 1 to 5 years | 67,496 | |
Due in 5 to 10 years | 121,978 | |
Due after 10 years | 588,558 | |
Estimated Fair Value | $ 782,805 | $ 94,139 |
SECURITIES (Gross realized gain (loss)) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sales | $ 57,610 | $ 169,108 | $ 1,031,521 | $ 799,588 |
Gross security gains | 0 | 1,591 | 7,298 | 5,880 |
Gross security losses | $ 1,070 | $ 56 | $ 9,018 | $ 1,533 |
SECURITIES (Securities held to maturity) (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
security
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Debt Securities, Available-for-sale [Line Items] | |
Fair Value, Less than 12 months | $ 708,291 |
Unrealized Losses, Less than 12 months | $ (49,203) |
Count, Less than 12 months | security | 161 |
Fair Value, 12 months or longer | $ 0 |
Unrealized Losses, 12 months or longer | $ 0 |
Count, 12 months or longer | security | 0 |
Fair Value, Total | $ 708,291 |
Unrealized Losses, Total | $ (49,203) |
Count, Total | security | 161 |
Obligations of states and political subdivisions | |
Debt Securities, Available-for-sale [Line Items] | |
Fair Value, Less than 12 months | $ 708,291 |
Unrealized Losses, Less than 12 months | $ (49,203) |
Count, Less than 12 months | security | 161 |
Fair Value, 12 months or longer | $ 0 |
Unrealized Losses, 12 months or longer | $ 0 |
Count, 12 months or longer | security | 0 |
Fair Value, Total | $ 708,291 |
Unrealized Losses, Total | $ (49,203) |
Count, Total | security | 161 |
SECURITIES (Schedule of allowance for credit loss for securities held to maturity) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | $ 0 | |||
Ending balance | $ 0 | 0 | ||
Obligations of states and political subdivisions | ||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 0 | $ 51 | 0 | $ 51 |
Provision (benefit) for credit losses | 0 | (51) | 0 | (51) |
Ending balance | $ 0 | $ 0 | $ 0 | $ 0 |
SECURITIES (Schedule of financing receivable credit quality indicators) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | $ 830,247 | $ 84,709 |
AAA | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 94,727 | 3,265 |
AA, AA+, AA- | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 576,141 | 61,471 |
A+, A, A- | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 135,835 | 15,034 |
BBB | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 23,544 | 4,939 |
Not Rated | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | $ 0 | $ 0 |
LOANS (Financing receivables, non accrual status narrative) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Financing Receivable, Nonaccrual [Line Items] | ||
Total exposure on lending relationships (or more) | $ 500 | |
Troubled debt restructured loans | 15,900 | $ 10,400 |
Nonperforming | ||
Financing Receivable, Nonaccrual [Line Items] | ||
Troubled debt restructured loans | 7,900 | 9,500 |
Performing | ||
Financing Receivable, Nonaccrual [Line Items] | ||
Troubled debt restructured loans | $ 8,000 | $ 817 |
LOANS (Loans by credit quality indicator narrative) (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
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Financing Receivable, Credit Quality Indicator [Line Items] | |||
Financing receivable, before allowance for credit loss | $ 10,923,532,000 | $ 9,954,572,000 | |
Allowance for credit loss | 105,715,000 | $ 110,088,000 | |
Loans secured by residential real estate property in process of foreclosure | $ 846,000 | ||
Loans delinquent 30 to 89 days, percentage | 0.10% | 0.07% | |
Interest income on nonaccrual loans | $ 0 | $ 0 | |
Nonaccrual loans with no related allowance | 32,500,000 | $ 25,500,000 | |
Nonpass | Paycheck Protection Program ("PPP") | |||
Financing Receivable, Credit Quality Indicator [Line Items] | |||
Financing receivable, before allowance for credit loss | 2,600,000 | $ 27,800,000 | |
Allowance for credit loss | $ 0 |
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Goodwill narrative) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
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Goodwill [Line Items] | ||
Goodwill | $ 576,005,000 | $ 576,005,000 |
Goodwill impairment | $ 0 |
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Estimated future amortization expense for amortizable intangible assets) (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
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Future amortization expense for amortizable intangible assets [Line Items] | |
Three months ending December 31, 2022 | $ 1,988 |
Year ending December 31, | |
2023 | 8,797 |
2024 | 7,355 |
2025 | 6,170 |
2026 | 4,709 |
2027 | 3,483 |
Thereafter | 2,872 |
Total | 35,374 |
Core Deposit Intangibles | |
Future amortization expense for amortizable intangible assets [Line Items] | |
Three months ending December 31, 2022 | 1,841 |
Year ending December 31, | |
2023 | 6,739 |
2024 | 5,591 |
2025 | 4,700 |
2026 | 3,533 |
2027 | 2,601 |
Thereafter | 1,990 |
Total | 26,995 |
Mortgage Servicing Rights | |
Future amortization expense for amortizable intangible assets [Line Items] | |
Three months ending December 31, 2022 | 147 |
Year ending December 31, | |
2023 | 2,058 |
2024 | 1,764 |
2025 | 1,470 |
2026 | 1,176 |
2027 | 882 |
Thereafter | 882 |
Total | $ 8,379 |
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Changes in capitalized mortgage and commercial servicing rights) (Details) - Mortgage servicing rights - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Servicing Asset at Fair Value, Amount [Roll Forward] | ||
Balance at beginning of period | $ 6,412 | $ 5,189 |
Originations | 1,218 | 1,055 |
Amortization | (909) | (1,029) |
Valuation adjustment | 1,658 | 586 |
Balance at end of period | $ 8,379 | $ 5,801 |
Servicing rights, net to servicing portfolio (as a percent) | 1.14% | 0.82% |
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Book value, fair value of commercial serving rights and impairment) (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Valuation Allowance | $ 0 | |
15 Years | ||
Finite-Lived Intangible Assets [Line Items] | ||
Book Value | 1,540,000 | $ 1,607,000 |
Fair Value | 1,871,000 | 1,280,000 |
Valuation Allowance | 0 | 327,000 |
30 Years | ||
Finite-Lived Intangible Assets [Line Items] | ||
Book Value | 6,839,000 | 6,463,000 |
Fair Value | 8,176,000 | 5,132,000 |
Valuation Allowance | $ 0 | $ 1,331,000 |
GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Mortgage loans servicing) (Details) - Mortgage servicing rights $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Sep. 30, 2021 |
|
Valuation servicing rights in tranches [Line Items] | |||
Average constant prepayment rate (as a percent) | 7.80% | 13.40% | |
Servicing assets, discount rate (as a percent) | 10.05% | 9.02% | |
Fair value of mortgage servicing rights | $ 10,047 | $ 6,412 | |
Minimum | Measurement Input, Cap Rate | |||
Valuation servicing rights in tranches [Line Items] | |||
Average capitalization rate (percent) | 0.0083 | 0.0076 | |
Maximum | Measurement Input, Cap Rate | |||
Valuation servicing rights in tranches [Line Items] | |||
Average capitalization rate (percent) | 0.0133 | 0.0120 |
DERIVATIVE FINANCIAL INSTRUMENTS (Cash flow hedges narrative) (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2021
swap
|
|
Derivative [Line Items] | ||
Estimated amount to be reclassified from accumulated other comprehensive income to interest expense | $ | $ 733 | |
Unaffiliated Bank | ||
Derivative [Line Items] | ||
Derivative, number of swaps | swap | 2 |
DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges narrative) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value Hedging | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Cash pledged as collateral | $ 481 | $ 3,800 |
DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges balance sheet category and fair values) (Details) - Fair value hedges - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Other liabilities | ||
Derivative [Line Items] | ||
Notional Amount | $ 16,755 | |
Fair Value | $ 1,208 | |
Other assets | ||
Derivative [Line Items] | ||
Notional Amount | $ 1,237 | |
Fair Value | $ 56 |
DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges gains (losses) recognized) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Fair value hedges | Interest Income | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized on fair value hedges | $ 39 | $ 35 | $ 1,264 | $ 930 |
DERIVATIVE FINANCIAL INSTRUMENTS (Embedded derivatives balance sheet category and fair values) (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Derivative [Line Items] | ||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other liabilities | |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | |
Embedded derivatives | ||
Derivative [Line Items] | ||
Notional Amount | $ 6,118 | $ 7,496 |
Fair Value | $ 129 | |
Fair Value | $ (317) |
DERIVATIVE FINANCIAL INSTRUMENTS (Embedded derivatives gain (losses) recognized) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Gain (loss) recognized in other noninterest income on embedded derivatives | Other noninterest income | ||||
Derivative [Line Items] | ||||
Gain (loss) recognized in other noninterest income on embedded derivatives | $ 121 | $ (66) | $ 446 | $ (249) |
DERIVATIVE FINANCIAL INSTRUMENTS (Back-to-back loan swaps narrative) (Details) - Back-to-Back Loan Swaps - Interest Rate Swaps - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Derivative [Line Items] | ||
Cash pledged as collateral | $ 101,000 | $ 24,100,000 |
Counterparties | ||
Derivative [Line Items] | ||
Cash pledged as collateral | $ 44,700,000 | $ 0 |
DERIVATIVE FINANCIAL INSTRUMENTS (Back-to-back loan swaps balance sheet category and fair values) (Details) - Back-to-Back Loan Swaps - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Other assets | ||
Derivative [Line Items] | ||
Notional Amount | $ 740,620 | $ 463,069 |
Interest Rate Derivative Assets, at Fair Value | 48,708 | 23,574 |
Other liabilities | ||
Derivative [Line Items] | ||
Notional Amount | 740,620 | 463,069 |
Fair Value | $ (48,708) | $ (23,574) |
Weighted Average Receive Rate | Other assets | ||
Derivative [Line Items] | ||
Weighted Average Receive and Pay Rate (as a percent) | 4.16% | 4.44% |
Weighted Average Receive Rate | Other liabilities | ||
Derivative [Line Items] | ||
Weighted Average Receive and Pay Rate (as a percent) | 5.83% | 2.35% |
Weighted Average Pay Rate | Other assets | ||
Derivative [Line Items] | ||
Weighted Average Receive and Pay Rate (as a percent) | 5.83% | 2.35% |
Weighted Average Pay Rate | Other liabilities | ||
Derivative [Line Items] | ||
Weighted Average Receive and Pay Rate (as a percent) | 4.16% | 4.44% |
DERIVATIVE FINANCIAL INSTRUMENTS (Other free standing derivatives balance sheet category and fair values) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Other assets | Interest rate lock commitments (mortgage) | ||
Assets | ||
Notional Amount, Asset | $ 20,476 | $ 37,046 |
Fair Value | 231 | 1,306 |
Other assets | Forward commitments | ||
Assets | ||
Notional Amount, Asset | 24,750 | 19,000 |
Fair Value | 829 | 32 |
Other assets | Undesignated interest rate swaps | ||
Assets | ||
Notional Amount, Asset | 7,496 | |
Fair Value | 317 | |
Other liabilities | Forward commitments | ||
Liabilities | ||
Notional Amount, Liability | 2,000 | 35,500 |
Fair Value | (11) | $ (95) |
Other liabilities | Undesignated interest rate swaps | ||
Liabilities | ||
Notional Amount, Liability | 6,118 | |
Fair Value | $ (129) |
DERIVATIVE FINANCIAL INSTRUMENTS (Other free standing derivatives gains (losses) recognized) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Interest rate lock commitments (mortgage) | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Gains (losses) recognized in income | $ (1,337) | $ (189) | $ (2,009) | $ (1,924) |
Forward commitments | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Gains (losses) recognized in income | 813 | 413 | 881 | 916 |
Undesignated interest rate swaps | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Gains (losses) recognized in income | $ (121) | $ 66 | $ (446) | $ 249 |
FAIR VALUE (Changes Level 3 assets fair value, recurring) (Details) - Interest rate lock commitments - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 1,306 | $ 1,827 |
Total net gains included in earnings | (2,009) | (2,345) |
Issuances | 3,640 | 15,403 |
Settlements | (2,706) | (13,579) |
Balance at period end | $ 231 | $ 1,306 |
FAIR VALUE (Deposits held for sale narrative) (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Gains included in gains (losses) on sale of loans held for sale attributable to interest rate lock commitments | $ 6,926 | $ 15,399 | |
Interest rate lock commitments | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Gains included in gains (losses) on sale of loans held for sale attributable to interest rate lock commitments | $ 231 | $ 1,300 |
STOCK COMPENSATION (Narrative) (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
May 31, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for issuance (in shares) | 1,460,000 | ||
Shares available for issuance (in shares) | 954,256 | ||
Excess tax benefit related to share-based payment awards | $ 129 | $ 304 | |
Time-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation, award vesting periods (in years) | 3 years | ||
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation, award vesting periods (in years) | 3 years | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation costs | $ 7,400 | $ 6,700 | |
Share-based unrecognized compensation costs | $ 10,800 |
STOCK COMPENSATION (Summary of RSUs Activity) (Details) - RSUs - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Shares | ||
Outstanding at beginning of period (in shares) | 389,885 | 348,275 |
Granted (in shares) | 238,495 | 214,943 |
Vested (in shares) | (158,702) | (146,864) |
Forfeited (in shares) | (27,316) | (24,088) |
Outstanding at end of period (in shares) | 442,362 | 392,266 |
Weighted-Average Grant Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 44.19 | $ 38.22 |
Granted (in dollars per share) | 48.41 | 51.49 |
Vested (in dollars per share) | 45.04 | 40.87 |
Forfeited (in dollars per share) | 46.69 | 42.98 |
Outstanding at end of period (in dollars per share) | $ 46.01 | $ 44.14 |
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