FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2022

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:

	Total Fair Value		Level 1		Level 2		Level 3
September 30, 2022
Assets
Securities available for sale
U.S. treasuries	$	26,737	$	26,737	$	—	$	—
U.S. agencies	43,000		—		43,000		—
Obligations of states and political subdivisions	834,623		—		834,623		—
Mortgage-backed securities - agency	1,828,276		—		1,828,276		—
Mortgage-backed securities - non-agency	2,122,859		—		2,122,859		—
Commercial mortgage-backed securities - agency	86,148		—		86,148		—
Commercial mortgage-backed securities - non-agency	689,675		—		689,675		—
Asset-backed securities	400,032		—		400,032		—
Corporate bonds	8,423		—		8,423		—
Equity securities with a readily determinable fair value	20,258		—		20,258		—
Derivative financial instruments(1)	48,893		—		48,893		—
Interest rate lock commitments	231		—		—		231
Forward commitments	829		—		829		—
Total assets at fair value	$	6,109,984	$	26,737	$	6,083,016	$	231
Liabilities
Derivative financial instruments(2)	$	48,837	$	—	$	48,837	$	—
Forward commitments	11		—		11		—
Total liabilities at fair value	$	48,848	$	—	$	48,848	$	—
December 31, 2021
Assets
Securities available for sale
U.S. treasuries	$	1,008	$	1,008	$	—	$	—
U.S. agencies	193,384		—		193,384		—
Obligations of states and political subdivisions	2,085,033		—		2,085,033		—
Mortgage-backed securities - agency	2,349,289		—		2,349,289		—
Mortgage-backed securities - non-agency	1,743,379		—		1,743,379		—
Commercial mortgage-backed securities - agency	123,912		—		123,912		—
Commercial mortgage-backed securities - non-agency	600,888		—		600,888		—
Asset-backed securities	409,653		—		409,653		—
Corporate bonds	3,040		—		3,040		—
Equity securities with a readily determinable fair value	20,788		—		20,788		—
Derivative financial instruments(2)	23,891		—		23,891		—
Interest rate lock commitments	1,306		—		—		1,306
Forward commitments	32		—		32		—
Total assets at fair value	$	7,555,603	$	1,008	$	7,553,289	$	1,306
Liabilities
Derivative financial instruments(1)	$	25,099	$	—	$	25,099	$	—
Forward commitments	95		—		95		—
Total liabilities at fair value	$	25,194	$	—	$	25,194	$	—
(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, Nonrecurring

The tables below present HTLF's assets that are measured at fair value on a nonrecurring basis, in thousands:

	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	$	14,436	$	—	$	—	$	14,436	$	4,158
Owner occupied commercial real estate	8,486		—		—		8,486		129
Non-owner occupied commercial real estate	11,643		—		—		11,643		—
Real estate construction	1,547		—		—		1,547		—
Agricultural and agricultural real estate	6,215		—		—		6,215		533
Residential real estate	1,622		—		—		1,622		—
Total collateral dependent individually assessed loans	$	43,949	$	—	$	—	$	43,949	$	4,820
Loans held for sale	$	9,570	$	—	$	9,570	$	—	$	121
Other real estate owned	8,030		—		—		8,030		224
Premises, furniture and equipment held for sale	8,796		—		—		8,796		163

	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	$	8,989	$	—	$	—	$	8,989	$	275
Owner occupied commercial real estate	8,447		—		—		8,447		—
Non-owner occupied commercial real estate	11,946		—		—		11,946		1,637
Agricultural and agricultural real estate	11,404		—		—		11,404		372
Residential real estate	855		—		—		855		—
Total collateral dependent individually assessed loans	$	41,641	$	—	$	—	$	41,641	$	2,284
Loans held for sale	$	21,640	$	—	$	21,640	$	—	$	(813)
Other real estate owned	1,927		—		—		1,927		686
Premises, furniture and equipment held for sale	10,828		—		—		10,828		241
Servicing rights	6,890		—		—		6,890		(1,088)

Fair Value Inputs, Assets, Quantitative Information

The following tables present additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which HTLF has utilized Level 3 inputs to determine fair value, in thousands:

	Fair Value at 9/30/2022		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	231	Discounted cash flows	Closing ratio	0-99% (88%)(1)
Other real estate owned	8,030		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Premises, furniture and equipment held for sale	8,796		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial	14,436		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Owner occupied commercial real estate	8,486		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Non-owner occupied commercial real estate	11,643		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Real estate construction	1,547		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	6,215		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-6%(3)
Residential real estate	1,622		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
(1) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data.
(2) Third party appraisals are obtained and updated at least annually to establish the value of the underlying asset, but the disclosure of the unobservable inputs used by the appraisers would not be meaningful because the range will vary widely from appraisal to appraisal.
(3) Discounts applied to the appraised values primarily include estimated sales costs, but also consider the age of the appraisal, changes in local market conditions and changes in the current condition of the collateral.

	Fair Value at 12/31/2021		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,306	Discounted cash flows	Closing ratio	0-99% (88%)(1)
Other real estate owned	1,927		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	6,890		Discounted cash flows	Discount rate	9 - 11% (9.02%)(4)
				Constant prepayment rate	13.1 - 18.6% (13.4%)(4)
Premises, furniture and equipment held for sale	10,828		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial and industrial	8,989		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-6%(3)
Owner occupied commercial real estate	8,447		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Non-owner occupied commercial real estate	11,946		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	11,404		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Residential real estate	855		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
(1) The significant unobservable input used in the fair value measurement is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. The closing ratio calculation takes into consideration historical data and loan-level data.
(2) Third party appraisals are obtained and updated at least annually to establish the value of the underlying asset, but the disclosure of the unobservable inputs used by the appraisers would not be meaningful because the range will vary widely from appraisal to appraisal.
(3) Discounts applied to the appraised values primarily include estimated sales costs, but also consider the age of the appraisal, changes in local market conditions and changes in the current condition of the collateral.
(4) The significant unobservable input used in the discounted cash flow analysis are the discount rate and constant prepayment rate.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The changes in fair value of the interest rate lock commitments, which are Level 3 financial instruments measured on a recurring basis, are summarized in the following table, in thousands:

	For the Nine Months Ended September 30, 2022		For the Year Ended December 31, 2021
Balance at January 1,	$	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, by Balance Sheet Grouping

HTLF does not believe that the estimated information presented herein is representative of the earnings power or value of HTLF. The following analysis, which is inherently limited in depicting fair value, also does not consider any value associated with either existing customer relationships or the ability of HTLF to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

					Fair Value Measurements at 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	$	399,860	$	399,860	$	399,860	$	—	$	—
Time deposits in other financial institutions	1,740		1,740		1,740		—		—
Securities:
Carried at fair value	6,060,331		6,060,031		26,737		6,033,294		—
Held to maturity	830,247		782,805		—		782,805		—
Other investments	80,286		80,286		—		80,286		—
Loans held for sale	9,570		9,570		—		9,570		—
Loans, net:
Commercial and industrial	3,248,440		3,131,766		—		3,117,330		14,436
PPP	13,506		13,506		—		13,506		—
Owner occupied commercial real estate	2,269,001		2,148,135		—		2,139,649		8,486
Non-owner occupied commercial real estate	2,204,733		2,112,901		—		2,101,258		11,643
Real estate construction	971,747		968,343		—		966,796		1,547
Agricultural and agricultural real estate	778,787		728,514		—		722,299		6,215
Residential real estate	845,502		810,833		—		809,211		1,622
Consumer	486,101		480,968		—		480,968		—
Total Loans, net	10,817,817		10,394,966		—		10,351,017		43,949
Cash surrender value on life insurance	193,184		193,184		—		193,184		—
Derivative financial instruments(1)	48,893		48,893		—		48,893		—
Interest rate lock commitments	231		231		—		—		231
Forward commitments	829		829		—		829		—
Financial liabilities:
Deposits
Demand deposits	6,083,563		6,083,563		—		6,083,563		—
Savings deposits	10,060,523		10,060,523		—		10,060,523		—
Time deposits	1,123,035		1,123,035		—		1,123,035		—
Short term borrowings	147,000		147,000		—		147,000		—
Other borrowings	371,446		372,308		—		372,308		—
Derivative financial instruments(2)	48,837		48,837		—		48,837		—
Forward commitments	11		11		—		11		—
(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	$	435,599	$	435,599	$	435,599	$	—	$	—
Time deposits in other financial institutions	2,894		2,894		2,894		—		—
Securities:
Carried at fair value	7,530,374		7,530,374		1,008		7,529,366		—
Held to maturity	84,709		94,139		—		94,139		—
Other investments	82,567		82,567		—		82,567		—
Loans held for sale	21,640		21,640		—		21,640		—
Loans, net:
Commercial and industrial	2,617,347		2,603,001		—		2,594,012		8,989
PPP	199,883		199,883		—		199,883		—
Owner occupied commercial real estate	2,221,120		2,222,030		—		2,213,583		8,447
Non-owner occupied commercial real estate	1,992,683		1,998,161		—		1,986,215		11,946
Real estate construction	833,581		844,578		—		844,578		—
Agricultural and agricultural real estate	748,540		749,238		—		737,834		11,404
Residential real estate	820,856		819,178		—		818,323		855
Consumer	410,474		415,487		—		415,487		—
Total Loans, net	9,844,484		9,851,556		—		9,809,915		41,641
Cash surrender value on life insurance	191,722		191,722		—		191,722		—
Derivative financial instruments(1)	23,891		23,891		—		23,891		—
Interest rate lock commitments	1,306		1,306		—		—		1,306
Forward commitments	32		32		—		32		—
Financial liabilities:
Deposits
Demand deposits	6,495,326		6,495,326		—		6,495,326		—
Savings deposits	8,897,909		8,897,909		—		8,897,909		—
Time deposits	1,024,020		1,024,020		—		1,024,020		—
Short term borrowings	131,597		131,597		—		131,597		—
Other borrowings	372,072		373,194		—		373,194		—
Derivative financial instruments(1)	25,099		25,099		—		25,099		—
Forward commitments	95		95		—		95		—
(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.