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LOANS
 3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
LOANS LOANS
Loans as of March 31, 2021, and December 31, 2020, were as follows, in thousands:
March 31, 2021December 31, 2020
Loans receivable held to maturity:  
Commercial and industrial$2,421,260 $2,534,799 
Paycheck Protection Program ("PPP")1,155,328 957,785 
Owner occupied commercial real estate1,837,559 1,776,406 
Non-owner occupied commercial real estate1,967,183 1,921,481 
Real estate construction796,027 863,220 
Agricultural and agricultural real estate683,969 714,526 
Residential real estate786,994 840,442 
Consumer402,136 414,392 
Total loans receivable held to maturity10,050,456 10,023,051 
Allowance for credit losses(130,172)(131,606)
Loans receivable, net$9,920,284 $9,891,445 

As of March 31, 2021, HTLF had $41.6 million of accrued interest receivable, which is included in other assets on the consolidated balance sheet. 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, 2021, and December 31, 2020, and the related loan balances, disaggregated on the basis of measurement methodology, in thousands. Individually assessed loans are collateral dependent and in the process of foreclosure or no longer share the same risk characteristics of the other loans in the pool. 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, 2021
Commercial and industrial$3,433 $32,662 $36,095 $14,560 $2,406,700 $2,421,260 
PPP — — — — 1,155,328 1,155,328 
Owner occupied commercial real estate110 19,306 19,416 10,720 1,826,839 1,837,559 
Non-owner occupied commercial real estate5,873 18,821 24,694 22,655 1,944,528 1,967,183 
Real estate construction— 19,931 19,931 — 796,027 796,027 
Agricultural and agricultural real estate2,481 4,630 7,111 14,926 669,043 683,969 
Residential real estate— 11,012 11,012 129 786,865 786,994 
Consumer— 11,913 11,913 — 402,136 402,136 
Total$11,897 $118,275 $130,172 $62,990 $9,987,466 $10,050,456 
December 31, 2020
Commercial and industrial$4,077 $34,741 $38,818 $16,578 $2,518,221 $2,534,799 
PPP— — — — 957,785 957,785 
Owner occupied commercial real estate111 19,890 20,001 11,174 1,765,232 1,776,406 
Non-owner occupied commercial real estate3,250 17,623 20,873 13,490 1,907,991 1,921,481 
Real estate construction— 20,080 20,080 — 863,220 863,220 
Agricultural and agricultural real estate1,988 5,141 7,129 15,453 699,073 714,526 
Residential real estate— 11,935 11,935 535 839,907 840,442 
Consumer— 12,770 12,770 — 414,392 414,392 
Total$9,426 $122,180 $131,606 $57,230 $9,965,821 $10,023,051 
HTLF had $6.1 million of troubled debt restructured loans at March 31, 2021, of which $3.7 million were classified as nonaccrual and $2.4 million were accruing according to the restructured terms. HTLF had $6.2 million of troubled debt restructured loans at December 31, 2020, of which $3.8 million were classified as nonaccrual and $2.4 million were accruing according to the restructured terms.

The following tables provide information on troubled debt restructured loans that were modified during the three months ended March 31, 2021, and March 31, 2020, dollars in thousands:
Three Months Ended
March 31,

Three Months Ended
March 31,
20212020
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— — — 1 32 32 
Consumer— — — — — — 
Total— $— $— 1 $32 $32 

At March 31, 2021, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructured loan. The tables above do not include any loan modifications made under COVID-19 modification programs. Refer to the "Overview" section of Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," for further information on these modifications.

The following table shows troubled debt restructured loans for which there was a payment default during the three months ended March 31, 2021, and March 31, 2020, that had been modified during the twelve-month period prior to default, in thousands:

With Payment Defaults During the
Three Months Ended
March 31,
20212020
Number of LoansRecorded InvestmentNumber of LoansRecorded 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— — 1 241 
Consumer— — — — 
Total— $— 1 $241 

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 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, 2021 and December 31, 2020.
The following tables show the risk category of loans by loan category and year of origination as of March 31, 2021, and December 31, 2020, in thousands:
As of March 31, 2021Amortized Cost Basis of Term Loans by Year of Origination
202120202019201820172016 and PriorRevolvingTotal
Commercial and industrial
Pass$85,059 $523,968 $305,803 $142,927 $206,293 $386,530 $481,837 $2,132,417 
Watch 1,213 31,058 23,144 19,494 15,308 21,877 78,657 190,751 
Substandard 825 24,203 10,191 8,278 11,890 26,002 16,703 98,092 
Commercial and industrial total$87,097 $579,229 $339,138 $170,699 $233,491 $434,409 $577,197 $2,421,260 
PPP
Pass$400,126 $671,099 $— $— $— $— $— $1,071,225 
Watch9,625 20,344 — — — — — 29,969 
Substandard5,750 48,384 — — — — — 54,134 
PPP total $415,501 $739,827 $— $— $— $— $— $1,155,328 
Owner occupied commercial real estate
Pass$97,898 $415,729 $387,953 $271,720 $152,313 $289,744 $36,676 $1,652,033 
Watch768 16,775 22,063 22,059 20,427 19,212 7,131 108,435 
Substandard1,907 14,332 7,797 10,340 12,830 28,937 948 77,091 
Owner occupied commercial real estate total$100,573 $446,836 $417,813 $304,119 $185,570 $337,893 $44,755 $1,837,559 
Non-owner occupied commercial real estate
Pass$94,856 $334,303 $379,230 $297,195 $181,937 $307,473 $20,154 $1,615,148 
Watch— 20,932 91,095 31,107 20,494 67,914 5,013 236,555 
Substandard2,140 30,469 14,010 23,383 14,853 30,625 — 115,480 
Non-owner occupied commercial real estate total$96,996 $385,704 $484,335 $351,685 $217,284 $406,012 $25,167 $1,967,183 
Real estate construction
Pass$66,643 $342,374 $229,345 $54,006 $10,730 $9,485 $18,588 $731,171 
Watch — 2,832 11,164 47,532 317 25 414 62,284 
Substandard158 — 28 1,995 — 391 — 2,572 
Real estate construction total$66,801 $345,206 $240,537 $103,533 $11,047 $9,901 $19,002 $796,027 
Agricultural and agricultural real estate
Pass$56,474 $149,863 $81,301 $49,483 $32,928 $49,165 $132,606 $551,820 
Watch1,268 17,561 12,753 6,863 1,636 6,667 10,136 56,884 
Substandard6,686 13,163 6,943 22,012 5,855 12,370 8,236 75,265 
Agricultural and agricultural real estate total$64,428 $180,587 $100,997 $78,358 $40,419 $68,202 $150,978 $683,969 
Residential real estate
Pass$46,700 $125,274 $80,624 $95,884 $64,961 $312,167 $26,634 $752,244 
Watch1,188 1,989 1,676 2,067 1,620 8,062 — 16,602 
Substandard4,324 947 201 2,073 1,410 8,393 800 18,148 
Residential real estate total $52,212 $128,210 $82,501 $100,024 $67,991 $328,622 $27,434 $786,994 
Consumer
Pass$17,483 $32,613 $23,111 $16,259 $13,336 $22,480 $266,620 $391,902 
Watch29 104 361 840 324 708 1,455 3,821 
Substandard— 546 739 1,423 386 2,499 820 6,413 
Consumer total$17,512 $33,263 $24,211 $18,522 $14,046 $25,687 $268,895 $402,136 
Total Pass$865,239 $2,595,223 $1,487,367 $927,474 $662,498 $1,377,044 $983,115 $8,897,960 
Total Watch14,091 111,595 162,256 129,962 60,126 124,465 102,806 705,301 
Total Substandard 21,790 132,044 39,909 69,504 47,224 109,217 27,507 447,195 
Total Loans$901,120 $2,838,862 $1,689,532 $1,126,940 $769,848 $1,610,726 $1,113,428 $10,050,456 
As of December 31, 2020Amortized Cost Basis of Term Loans by Year of Origination
202020192018201720162015 and PriorRevolvingTotal
Commercial and industrial
Pass$557,853 $340,809 $168,873 $215,696 $101,010 $337,834 $541,627 $2,263,702 
Watch 41,574 24,676 19,672 14,262 8,072 2,474 49,432 160,162 
Substandard 23,024 16,274 8,897 15,717 9,098 19,537 18,388 110,935 
Commercial and industrial total$622,451 $381,759 $197,442 $245,675 $118,180 $359,845 $609,447 $2,534,799 
PPP
Pass$880,709 $— $— $— $— $— $— $880,709 
Watch22,533 — — — — — — 22,533 
Substandard54,543 — — — — — — 54,543 
PPP total $957,785 $— $— $— $— $— $— $957,785 
Owner occupied commercial real estate
Pass$400,662 $369,401 $300,242 $167,470 $107,234 $213,780 $33,759 $1,592,548 
Watch15,345 13,764 22,488 20,811 8,717 15,282 4,311 100,718 
Substandard15,914 9,522 12,164 14,147 8,580 21,708 1,105 83,140 
Owner occupied commercial real estate total$431,921 $392,687 $334,894 $202,428 $124,531 $250,770 $39,175 $1,776,406 
Non-owner occupied commercial real estate
Pass$334,722 $411,301 $305,456 $194,101 $108,070 $233,153 $24,466 $1,611,269 
Watch22,826 55,225 24,718 18,724 20,954 45,672 5,114 193,233 
Substandard30,899 15,035 23,290 17,046 9,147 21,060 502 116,979 
Non-owner occupied commercial real estate total$388,447 $481,561 $353,464 $229,871 $138,171 $299,885 $30,082 $1,921,481 
Real estate construction
Pass$311,625 $309,678 $157,171 $12,625 $6,954 $5,110 $21,431 $824,594 
Watch 2,105 26,659 2,403 332 55 388 1,295 33,237 
Substandard196 2,760 2,036 — 39 358 — 5,389 
Real estate construction total$313,926 $339,097 $161,610 $12,957 $7,048 $5,856 $22,726 $863,220 
Agricultural and agricultural real estate
Pass$171,578 $90,944 $62,349 $39,252 $17,626 $37,696 $148,456 $567,901 
Watch20,500 16,202 8,854 2,448 3,515 3,157 12,282 66,958 
Substandard17,403 7,044 23,519 6,758 3,917 9,952 11,074 79,667 
Agricultural and agricultural real estate total$209,481 $114,190 $94,722 $48,458 $25,058 $50,805 $171,812 $714,526 
Residential real estate
Pass$153,017 $99,440 $118,854 $83,534 $63,477 $244,852 $33,467 $796,641 
Watch3,986 4,507 2,188 1,896 3,117 8,525 — 24,219 
Substandard980 442 2,507 1,528 884 12,141 1,100 19,582 
Residential real estate total $157,983 $104,389 $123,549 $86,958 $67,478 $265,518 $34,567 $840,442 
Consumer
Pass$37,037 $27,646 $18,811 $15,034 $4,009 $19,483 $280,996 $403,016 
Watch168 352 647 340 82 646 1,622 3,857 
Substandard481 959 1,884 500 897 1,976 822 7,519 
Consumer total$37,686 $28,957 $21,342 $15,874 $4,988 $22,105 $283,440 $414,392 
Total Pass$2,847,203 $1,649,219 $1,131,756 $727,712 $408,380 $1,091,908 $1,084,202 $8,940,380 
Total Watch129,037 141,385 80,970 58,813 44,512 76,144 74,056 604,917 
Total Substandard 143,440 52,036 74,297 55,696 32,562 86,732 32,991 477,754 
Total Loans$3,119,680 $1,842,640 $1,287,023 $842,221 $485,454 $1,254,784 $1,191,249 $10,023,051 

Included in the nonpass loans at March 31, 2021 and December 31, 2020 were $84.1 million and $77.1 million, respectively, of nonpass PPP loans as a result of risk ratings on 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 March 31, 2021, HTLF had $1.6 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, 2021, and December 31, 2020, 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, 2021
Commercial and industrial$3,632 $219 $49 $3,900 $2,397,518 $19,842 $2,421,260 
PPP— — — — 1,155,328 — 1,155,328 
Owner occupied commercial real estate519 — — 519 1,824,298 12,742 1,837,559 
Non-owner occupied commercial real estate4,174 584 — 4,758 1,938,728 23,697 1,967,183 
Real estate construction393 — — 393 795,057 577 796,027 
Agricultural and agricultural real estate830 5 — 835 665,069 18,065 683,969 
Residential real estate4,088 1,101 122 5,311 768,401 13,282 786,994 
Consumer525 86 — 611 398,012 3,513 402,136 
Total gross loans receivable held to maturity$14,161 $1,995 $171 $16,327 $9,942,411 $91,718 $10,050,456 
December 31, 2020
Commercial and industrial$5,825 $2,322 $720 $8,867 $2,504,170 $21,762 $2,534,799 
PPP1 — — 1 957,784 — 957,785 
Owner occupied commercial real estate2,815 167 — 2,982 1,759,649 13,775 1,776,406 
Non-owner occupied commercial real estate2,143 2,674 — 4,817 1,902,003 14,661 1,921,481 
Real estate construction2,446 96 — 2,542 859,784 894 863,220 
Agricultural and agricultural real estate1,688 — — 1,688 694,150 18,688 714,526 
Residential real estate1,675 83 — 1,758 825,047 13,637 840,442 
Consumer807 139 — 946 409,477 3,969 414,392 
Total gross loans receivable held to maturity$17,400 $5,481 $720 $23,601 $9,912,064 $87,386 $10,023,051 

Loans delinquent 30 to 89 days as a percent of total loans were 0.16% at March 31, 2021, compared to 0.23% at December 31, 2020. 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 annually.

HTLF recognized $0 of interest income on nonaccrual loans during the three months ended March 31, 2021 and March 31, 2020. As of March 31, 2021, and December 31, 2020, HTLF had $30.5 million and $32.5 million of nonaccrual loans with no related allowance, respectively.

On December 4, 2020, HTLF's Arizona Bank & Trust subsidiary completed the acquisition of certain assets and substantially all of the deposits and certain other liabilities of Johnson Bank's Arizona operations, headquartered in Racine, Wisconsin. As of December 4, 2020, the Johnson Bank branches acquired had gross loans with a fair value of $150.7 million.

On December 4, 2020, HTLF completed the acquisition of AimBank, headquartered in Levelland, Texas. As of December 4, 2020, AimBank had gross loans with a fair value of $1.09 billion.