LOANS

12 Months Ended

Dec. 31, 2022

Receivables [Abstract]

LOANS

LOANS

Loans as of December 31, 2022, and December 31, 2021, were as follows, in thousands:

	December 31, 2022		December 31, 2021
Loans receivable held to maturity:
Commercial and industrial	$	3,464,414	$	2,645,085
Paycheck Protection Program ("PPP")	11,025		199,883
Owner occupied commercial real estate	2,265,307		2,240,334
Non-owner occupied commercial real estate	2,330,940		2,010,591
Real estate construction	1,076,082		856,119
Agricultural and agricultural real estate	920,510		753,753
Residential real estate	853,361		829,283
Consumer	506,713		419,524
Total loans receivable held to maturity	11,428,352		9,954,572
Allowance for credit losses	(109,483)		(110,088)
Loans receivable, net	$	11,318,869	$	9,844,484

As of December 31, 2022, HTLF had $49.1 million compared to $35.3 million as of December 31, 2021, 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 December 31, 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.

	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
December 31, 2022
Commercial and industrial	$	6,670	$	22,401	$	29,071	$	18,712	$	3,445,702	$	3,464,414
PPP	—		—		—		—		11,025		11,025
Owner occupied commercial real estate	376		13,572		13,948		7,932		2,257,375		2,265,307
Non-owner occupied commercial real estate	—		16,539		16,539		11,371		2,319,569		2,330,940
Real estate construction	—		29,998		29,998		1,518		1,074,564		1,076,082
Agricultural and agricultural real estate	63		2,571		2,634		3,851		916,659		920,510
Residential real estate	—		7,711		7,711		1,607		851,754		853,361
Consumer	—		9,582		9,582		—		506,713		506,713
Total	$	7,109	$	102,374	$	109,483	$	44,991	$	11,383,361	$	11,428,352

	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
December 31, 2021
Commercial and industrial	$	4,562	$	23,176	$	27,738	$	13,551	$	2,631,534	$	2,645,085
PPP	—		—		—		—		199,883		199,883
Owner occupied commercial real estate	105		19,109		19,214		8,552		2,231,782		2,240,334
Non-owner occupied commercial real estate	610		17,298		17,908		12,557		1,998,034		2,010,591
Real estate construction	—		22,538		22,538		—		856,119		856,119
Agricultural and agricultural real estate	2,369		2,844		5,213		13,773		739,980		753,753
Residential real estate	—		8,427		8,427		855		828,428		829,283
Consumer	—		9,050		9,050		—		419,524		419,524
Total	$	7,646	$	102,442	$	110,088	$	49,288	$	9,905,284	$	9,954,572

HTLF had $15.7 million of troubled debt restructured loans at December 31, 2022, of which $7.4 million were classified as nonaccrual and $8.3 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 table provides information on troubled debt restructured loans that were modified during the years ended December 31, 2022, and December 31, 2021, in thousands. The provisions of 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.

	For the Years Ended
	December 31, 2022					December 31, 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	1	5,058		5,058		—	—		—
Non-owner occupied commercial real estate	—	—		—		2	7,580		7,580
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	1	1,400		1,400		—	—		—
Residential real estate	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	2	$	6,458	$	6,458	2	$	7,580	$	7,580

The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. At December 31, 2022, there were no commitments to extend credit to any of the borrowers with an existing TDR.

There were no troubled debt restructured loans for which there was a payment default during the years ended December 31, 2022, and December 31, 2021, that had been modified during the 12-month period prior to the default.

HTLF's internal rating system is a series of grades reflecting management's risk assessment, based on its analysis of the borrower's financial condition. The "pass" category consists of all loans that are not in the "nonpass" category and categorized into a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the pass category is monitored for early identification of credit deterioration.

The "nonpass" category consists of watch, substandard, doubtful and loss loans. The "watch" rating is attached to loans where the borrower exhibits negative trends in financial circumstances due to borrower specific or systemic conditions that, if left uncorrected, threaten the borrower's capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. These credits are closely monitored for improvement or deterioration.

The "substandard" rating is assigned to loans that are inadequately protected by the current net worth and repaying capacity of the borrower and that may be further at risk due to deterioration in the value of collateral pledged. Well-defined weaknesses jeopardize liquidation of the debt. These loans are still considered collectible; however, a distinct possibility exists that HTLF will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all 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. As of December 31, 2022, and December 31, 2021, HTLF had no loans classified as doubtful and no loans classified as loss.

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

As of December 31, 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	$	967,103	$	442,001	$	260,021	$	101,998	$	57,776	$	421,312	$	1,064,333	$	3,314,544
Watch	12,638		1,370		685		5,487		2,882		3,315		21,984		48,361
Substandard	6,691		14,366		9,369		22,171		5,546		6,758		36,608		101,509
Commercial and industrial total	$	986,432	$	457,737	$	270,075	$	129,656	$	66,204	$	431,385	$	1,122,925	$	3,464,414
PPP
Pass	$	—	$	7,807	$	526	$	—	$	—	$	—	$	—	$	8,333
Watch	—		7		—		—		—		—		—		7
Substandard	—		2,685		—		—		—		—		—		2,685
PPP total	$	—	$	10,499	$	526	$	—	$	—	$	—	$	—	$	11,025
Owner occupied commercial real estate
Pass	$	511,547	$	781,946	$	255,476	$	266,228	$	103,943	$	179,503	$	34,117	$	2,132,760
Watch	22,079		3,410		12,346		8,520		3,645		11,899		—		61,899
Substandard	2,971		23,802		26,490		6,358		2,574		7,353		1,100		70,648
Owner occupied commercial real estate total	$	536,597	$	809,158	$	294,312	$	281,106	$	110,162	$	198,755	$	35,217	$	2,265,307
Non-owner occupied commercial real estate
Pass	$	756,059	$	515,075	$	227,383	$	261,964	$	127,400	$	210,289	$	70,398	$	2,168,568
Watch	8,131		792		2,849		38,218		38,510		16,180		547		105,227
Substandard	202		6,784		1,838		16,019		22,332		9,970		—		57,145
Non-owner occupied commercial real estate total	$	764,392	$	522,651	$	232,070	$	316,201	$	188,242	$	236,439	$	70,945	$	2,330,940
Real estate construction
Pass	$	597,370	$	328,391	$	88,660	$	21,221	$	2,568	$	6,274	$	8,252	$	1,052,736
Watch	665		16,218		1,257		—		—		122		—		18,262
Substandard	2,587		356		173		446		1,478		44		—		5,084
Real estate construction total	$	600,622	$	344,965	$	90,090	$	21,667	$	4,046	$	6,440	$	8,252	$	1,076,082

As of December 31, 2022	Amortized Cost Basis of Term Loans by Year of Origination
	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Total
Agricultural and agricultural real estate
Pass	$	324,791	$	140,252	$	79,307	$	34,447	$	22,600	$	38,672	$	239,686	$	879,755
Watch	3,795		515		3,865		641		444		672		902		10,834
Substandard	8,674		3,224		204		1,859		12,323		2,682		955		29,921
Agricultural and agricultural real estate total	$	337,260	$	143,991	$	83,376	$	36,947	$	35,367	$	42,026	$	241,543	$	920,510
Residential real estate
Pass	$	189,133	$	268,561	$	64,627	$	39,468	$	34,863	$	217,489	$	23,331	$	837,472
Watch	706		1,095		88		957		2,296		2,237		399		7,778
Substandard	28		1,273		1,024		99		792		4,895		—		8,111
Residential real estate total	$	189,867	$	270,929	$	65,739	$	40,524	$	37,951	$	224,621	$	23,730	$	853,361
Consumer
Pass	$	80,592	$	47,787	$	11,722	$	6,022	$	4,840	$	24,655	$	325,247	$	500,865
Watch	20		191		35		119		74		1,584		953		2,976
Substandard	188		331		242		303		75		1,539		194		2,872
Consumer total	$	80,800	$	48,309	$	11,999	$	6,444	$	4,989	$	27,778	$	326,394	$	506,713
Total pass	$	3,426,595	$	2,531,820	$	987,722	$	731,348	$	353,990	$	1,098,194	$	1,765,364	$	10,895,033
Total watch	48,034		23,598		21,125		53,942		47,851		36,009		24,785		255,344
Total substandard	21,341		52,821		39,340		47,255		45,120		33,241		38,857		277,975
Total loans	$	3,495,970	$	2,608,239	$	1,048,187	$	832,545	$	446,961	$	1,167,444	$	1,829,006	$	11,428,352

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

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
Real estate construction
Pass	$	381,283	$	206,879	$	169,606	$	14,197	$	7,163	$	7,823	$	14,507	$	801,458
Watch	2,704		858		2,145		44,846		—		—		14		50,567
Substandard	—		50		46		3,944		—		54		—		4,094
Real estate construction total	$	383,987	$	207,787	$	171,797	$	62,987	$	7,163	$	7,877	$	14,521	$	856,119
Agricultural and agricultural real estate
Pass	$	217,179	$	102,030	$	47,927	$	32,913	$	22,029	$	35,548	$	220,065	$	677,691
Watch	4,018		10,390		4,688		2,270		33		2,038		2,948		26,385
Substandard	9,250		1,095		4,910		15,825		3,212		8,859		6,526		49,677
Agricultural and agricultural real estate total	$	230,447	$	113,515	$	57,525	$	51,008	$	25,274	$	46,445	$	229,539	$	753,753
Residential real estate
Pass	$	311,292	$	86,355	$	50,762	$	53,773	$	43,619	$	230,566	$	29,017	$	805,384
Watch	3,928		1,499		750		1,452		734		1,977		1,000		11,340
Substandard	2,528		444		410		2,317		1,139		5,721		—		12,559
Residential real estate total	$	317,748	$	88,298	$	51,922	$	57,542	$	45,492	$	238,264	$	30,017	$	829,283
Consumer
Pass	$	69,172	$	20,258	$	13,051	$	9,001	$	10,986	$	18,202	$	271,034	$	411,704
Watch	555		309		392		373		113		591		2,210		4,543
Substandard	267		204		218		236		363		1,611		378		3,277
Consumer total	$	69,994	$	20,771	$	13,661	$	9,610	$	11,462	$	20,404	$	273,622	$	419,524
Total pass	$	3,279,966	$	1,391,907	$	1,116,618	$	617,337	$	522,707	$	978,672	$	1,306,109	$	9,213,316
Total watch	41,994		49,038		63,780		96,879		24,388		62,313		30,833		369,225
Total substandard	76,545		39,586		54,166		37,265		39,268		93,126		32,075		372,031
Total loans	$	3,398,505	$	1,480,531	$	1,234,564	$	751,481	$	586,363	$	1,134,111	$	1,369,017	$	9,954,572

Included in HTLF's nonpass loans at December 31, 2022 were $2.7 million compared to $27.8 million at December 31, 2021, 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% SBA guarantee.

As of December 31, 2022, HTLF had $1.7 million of loans secured by residential real estate property that were in the process of foreclosure.

The following table sets forth information regarding HTLF's accruing and nonaccrual loans at December 31, 2022, and December 31, 2021, in thousands:

	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
December 31, 2022
Commercial and industrial	$	1,099	$	356	$	131	$	1,586	$	3,440,062	$	22,766	$	3,464,414
PPP	—		—		—		—		11,006		19		11,025
Owner occupied commercial real estate	12		127		—		139		2,256,365		8,803		2,265,307
Non-owner occupied commercial real estate	—		—		—		—		2,319,282		11,658		2,330,940
Real estate construction	16		28		—		44		1,073,687		2,351		1,076,082
Agricultural and agricultural real estate	48		—		142		190		914,088		6,232		920,510
Residential real estate	1,206		152		—		1,358		846,739		5,264		853,361
Consumer	1,526		196		—		1,722		503,853		1,138		506,713
Total loans receivable held to maturity	$	3,907	$	859	$	273	$	5,039	$	11,365,082	$	58,231	$	11,428,352

	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
December 31, 2021
Commercial and industrial	$	1,024	$	183	$	541	$	1,748	$	2,625,109	$	18,228	$	2,645,085
PPP	—		—		—		—		199,883		—		199,883
Owner occupied commercial real estate	130		—		—		130		2,229,054		11,150		2,240,334
Non-owner occupied commercial real estate	3,929		—		—		3,929		1,993,346		13,316		2,010,591
Real estate construction	238		50		—		288		855,463		368		856,119
Agricultural and agricultural real estate	687		—		—		687		737,380		15,686		753,753
Residential real estate	767		46		9		822		819,294		9,167		829,283
Consumer	251		57		—		308		417,762		1,454		419,524
Total loans receivable held to maturity	$	7,026	$	336	$	550	$	7,912	$	9,877,291	$	69,369	$	9,954,572

Loans delinquent 30 to 89 days as a percent of total loans were 0.04% at December 31, 2022, compared to 0.07% at December 31, 2021. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. All individually assessed loans are reviewed at least semi-annually.

HTLF recognized $0 of interest income on nonaccrual loans during the years ended December 31, 2022 and December 31, 2021. As of December 31, 2022, HTLF had $26.7 million compared to $25.5 million at December 31, 2021, of nonaccrual loans with no related allowance.

Loans are made in the normal course of business to directors, officers and principal holders of equity securities of HTLF. The terms of these loans, including interest rates and collateral, are similar to those prevailing for comparable transactions and do not involve more than a normal risk of collectability. Changes in such loans during the years ended December 31, 2022 and 2021, were as follows, in thousands. Due to changes in the organizational structure of the Banks' boards of directors related to charter consolidation, balances related to former directors and officers were removed and shown as "other" in the table below.

	2022		2021
Balance at beginning of year	$	193,877	$	215,449
Advances	1,382		69,204
Repayments	—		(90,776)
Other	(190,622)		—
Balance at end of year	$	4,637	$	193,877