XML 35 R12.htm IDEA: XBRL DOCUMENT v3.23.1
LOANS
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
LOANS LOANS
Loans as of March 31, 2023, and December 31, 2022, were as follows, in thousands:
March 31, 2023December 31, 2022
Loans receivable held to maturity:  
Commercial and industrial$3,498,345 $3,464,414 
Paycheck Protection Program ("PPP")8,258 11,025 
Owner occupied commercial real estate2,312,538 2,265,307 
Non-owner occupied commercial real estate2,421,341 2,330,940 
Real estate construction1,102,186 1,076,082 
Agricultural and agricultural real estate810,183 920,510 
Residential real estate841,084 853,361 
Consumer501,418 506,713 
Total loans receivable held to maturity11,495,353 11,428,352 
Allowance for credit losses(112,707)(109,483)
Loans receivable, net$11,382,646 $11,318,869 

As of March 31, 2023, and December 31, 2022, HTLF had $51.7 million and $49.1 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 March 31, 2023, and December 31, 2022, 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 LossesGross Loans Receivable Held to Maturity
Individually Evaluated for Credit LossesCollectively Evaluated for Credit LossesTotalLoans Individually Evaluated for Credit LossesLoans Collectively Evaluated for Credit Losses Total
March 31, 2023
Commercial and industrial$9,144 $22,679 $31,823 $19,953 $3,478,392 $3,498,345 
PPP — — — — 8,258 8,258 
Owner occupied commercial real estate376 13,775 14,151 7,784 2,304,754 2,312,538 
Non-owner occupied commercial real estate— 17,062 17,062 10,983 2,410,358 2,421,341 
Real estate construction— 30,138 30,138 1,498 1,100,688 1,102,186 
Agricultural and agricultural real estate62 2,484 2,546 5,116 805,067 810,183 
Residential real estate— 7,564 7,564 788 840,296 841,084 
Consumer— 9,423 9,423 — 501,418 501,418 
Total$9,582 $103,125 $112,707 $46,122 $11,449,231 $11,495,353 
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 estate376 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 estate63 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 

The following table shows the amortized cost basis as of March 31, 2023, of the loans modified to borrowers experiencing financial difficulty by loan category and type of concession granted, dollars in thousands.
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Term ExtensionTerm Extension and Interest Only Payments
Amortized
Cost
Basis		% of
Loan
Category		Amortized
Cost
Basis		% of
Loan
Category
March 31, 2023
Commercial$3,682 0.11 %$— — %
Owner occupied commercial real estate— — 5,043 0.22 
Real estate construction1,498 0.06 — — 
Residential real estate762 0.01 — — 
Total$5,942 0.05 %$5,043 0.22 %
The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty in the three months ending March 31, 2023.
Loan TypeWeighted Average
Term Extension
(months)		Weighted Average Term Extension
and Interest Only Payments
(months)
Commercial and industrial100
Owner occupied commercial real estate012
Real estate construction60
Residential real estate120

At March 31, 2023, there were no commitments to extend credit to any of the borrowers experiencing financial difficulty.

HTLF had no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2023, that had been modified in the twelve-month period prior to the default.
HTLF closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of loans that have been modified in the three months ended March 31, 2023, dollars in thousands.
Accruing Loans
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or
More
Past Due		Total Past DueCurrentNonaccrual
March 31, 2023
Commercial and industrial$— $— $— $— $3,682 $— 
Owner occupied commercial real estate— — — — 5,043 — 
Real estate construction— — — — — 1,498 
Residential real estate— — — — — 762 
Total$— $— $— $— $8,725 $2,260 
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 and risk rating migration analysis.

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 March 31, 2023, and December 31, 2022.
The following tables show the risk category of loans by loan category, year of origination and charge-offs as of March 31, 2023, in thousands:
As of March 31, 2023Amortized Cost Basis of Term Loans by Year of Origination
202320222021202020192018 and PriorRevolvingTotal
Commercial and industrial
Pass$171,784 $945,388 $401,138 $236,351 $94,489 $355,412 $1,129,728 $3,334,290 
Watch 372 14,254 3,822 3,023 6,093 4,914 25,162 57,640 
Substandard 2,116 10,883 14,284 9,093 21,814 11,594 36,631 106,415 
Commercial and industrial total$174,272 $970,525 $419,244 $248,467 $122,396 $371,920 $1,191,521 $3,498,345 
Commercial and industrial charge-offs$— $219 $95 $8 $— $788 $341 $1,451 
PPP
Pass$— $— $6,731 $102 $— $— $— $6,833 
Watch— — 6 — — — — 6 
Substandard— — 1,419 — — — — 1,419 
PPP total $— $— $8,156 $102 $— $— $— $8,258 
PPP charge-offs$— $— $— $— $— $— $— $— 
Owner occupied commercial real estate
Pass$90,398 $524,526 $753,107 $241,589 $263,294 $261,584 $34,578 $2,169,076 
Watch— 21,288 13,401 13,915 7,105 12,568 — 68,277 
Substandard6,107 7,172 23,591 22,360 5,484 9,721 750 75,185 
Owner occupied commercial real estate total$96,505 $552,986 $790,099 $277,864 $275,883 $283,873 $35,328 $2,312,538 
Owner occupied commercial real estate charge-offs$— $— $— $— $— $14 $— $14 
Non-owner occupied commercial real estate
Pass$141,649 $730,364 $543,098 $208,137 $257,733 $305,784 $73,088 $2,259,853 
Watch— 8,093 1,368 3,566 38,876 53,877 — 105,780 
Substandard— — 6,690 1,624 15,477 31,917 — 55,708 
Non-owner occupied commercial real estate total$141,649 $738,457 $551,156 $213,327 $312,086 $391,578 $73,088 $2,421,341 
Non-owner occupied commercial real estate charge-offs$— $— $— $— $— $— $— $— 
Real estate construction
Pass$45,771 $625,728 $303,674 $77,340 $20,886 $7,174 $8,224 $1,088,797 
Watch — 6,574 1,085 1,244 — 103 — 9,006 
Substandard— 3,428 356 121 434 44 — 4,383 
Real estate construction total$45,771 $635,730 $305,115 $78,705 $21,320 $7,321 $8,224 $1,102,186 
Real estate construction charge-offs$— $— $— $— $— $— $— $— 
Agricultural and agricultural real estate
Pass$39,667 $249,164 $125,673 $73,366 $31,283 $56,019 $197,976 $773,148 
Watch241 1,225 549 3,843 496 935 1,346 8,635 
Substandard— 7,618 3,378 212 1,154 15,017 1,021 28,400 
Agricultural and agricultural real estate total$39,908 $258,007 $129,600 $77,421 $32,933 $71,971 $200,343 $810,183 
Agricultural and agricultural real estate charge-offs$— $— $— $— $— $— $— $— 
Residential real estate
Pass$18,663 $181,925 $260,225 $62,951 $37,551 $238,866 $21,172 $821,353 
Watch— 2,549 2,618 85 1,372 5,415 433 12,472 
Substandard811 59 1,308 838 38 4,205 — 7,259 
Residential real estate total $19,474 $184,533 $264,151 $63,874 $38,961 $248,486 $21,605 $841,084 
Residential real estate charge-offs$— $— $— $— $— $— $— $— 
As of March 31, 2023Amortized Cost Basis of Term Loans by Year of Origination
202320222021202020192018 and PriorRevolvingTotal
Consumer
Pass$11,806 $75,894 $44,501 $10,554 $5,180 $18,586 $328,689 $495,210 
Watch— 51 227 59 109 1,524 1,434 3,404 
Substandard9 209 339 220 261 1,565 201 2,804 
Consumer total$11,815 $76,154 $45,067 $10,833 $5,550 $21,675 $330,324 $501,418 
Consumer charge-offs$— $24 $26 $11 $11 $6 $608 $686 
Total Pass$519,738 $3,332,989 $2,438,147 $910,390 $710,416 $1,243,425 $1,793,455 $10,948,560 
Total Watch613 54,034 23,076 25,735 54,051 79,336 28,375 265,220 
Total Substandard 9,043 29,369 51,365 34,468 44,662 74,063 38,603 281,573 
Total Loans$529,394 $3,416,392 $2,512,588 $970,593 $809,129 $1,396,824 $1,860,433 $11,495,353 
Total Charge-offs$— $243 $121 $19 $11 $808 $949 $2,151 

The following table show the risk category of loans by loan category and year of origination as of December 31, 2022, in thousands.
As of December 31, 2022Amortized Cost Basis of Term Loans by Year of Origination
202220212020201920182017 and PriorRevolvingTotal
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 
Watch22,079 3,410 12,346 8,520 3,645 11,899 — 61,899 
Substandard2,971 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 
Watch8,131 792 2,849 38,218 38,510 16,180 547 105,227 
Substandard202 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 
Substandard2,587 356 173 446 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 
Agricultural and agricultural real estate
Pass$324,791 $140,252 $79,307 $34,447 $22,600 $38,672 $239,686 $879,755 
Watch3,795 515 3,865 641 444 672 902 10,834 
Substandard8,674 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 
As of December 31, 2022Amortized Cost Basis of Term Loans by Year of Origination
202220212020201920182017 and PriorRevolvingTotal
Residential real estate
Pass$189,133 $268,561 $64,627 $39,468 $34,863 $217,489 $23,331 $837,472 
Watch706 1,095 88 957 2,296 2,237 399 7,778 
Substandard28 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 
Watch20 191 35 119 74 1,584 953 2,976 
Substandard188 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 Watch48,034 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 

Included in the nonpass loans at March 31, 2023, and December 31, 2022, were $1.4 million and $2.7 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 through the United States Small Business Administration ("SBA").

As of March 31, 2023, HTLF had $1.3 million 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 March 31, 2023, and December 31, 2022, in thousands:
Accruing Loans
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or
More
Past Due		Total
Past
Due		CurrentNonaccrualTotal Loans
March 31, 2023
Commercial and industrial$2,783 $800 $24 $3,607 $3,470,831 $23,907 $3,498,345 
PPP— — — — 8,258 — 8,258 
Owner occupied commercial real estate3,365 377 — 3,742 2,300,588 8,208 2,312,538 
Non-owner occupied commercial real estate748 — — 748 2,409,369 11,224 2,421,341 
Real estate construction642 — 5 647 1,099,267 2,272 1,102,186 
Agricultural and agricultural real estate255 — 17 272 802,741 7,170 810,183 
Residential real estate1,073 41 41 1,155 835,781 4,148 841,084 
Consumer1,203 397 87 1,687 498,594 1,137 501,418 
Total gross loans receivable held to maturity$10,069 $1,615 $174 $11,858 $11,425,429 $58,066 $11,495,353 
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 estate12 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 construction16 28 — 44 1,073,687 2,351 1,076,082 
Agricultural and agricultural real estate48 — 142 190 914,088 6,232 920,510 
Residential real estate1,206 152 — 1,358 846,739 5,264 853,361 
Consumer1,526 196 — 1,722 503,853 1,138 506,713 
Total gross loans receivable held to maturity$3,907 $859 $273 $5,039 $11,365,082 $58,231 $11,428,352 
Loans delinquent 30 to 89 days as a percent of total loans were 0.10% at March 31, 2023, compared to 0.04% at December 31, 2022. Changes in credit risk are monitored on a continuous basis as part of relationship management, and changes in risk ratings are made when credit quality improves or deteriorates in accordance with HTLF's credit risk rating framework. All individually assessed loans are reviewed at least annually.

HTLF recognized $0 of interest income on nonaccrual loans during the three months ended March 31, 2023 and March 31, 2022. As of March 31, 2023, and December 31, 2022, HTLF had $28.8 million and $26.7 million of nonaccrual loans with no related allowance, respectively.