10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from __________ to __________

Commission File Number: 001-15393

HEARTLAND FINANCIAL USA, INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

42-1405748

(I.R.S. employer identification number)

1398 Central Avenue, Dubuque, Iowa  52001

(Address of principal executive offices)(Zip Code)

(563) 589-2100

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	HTLF	Nasdaq Stock Market
Depositary Shares, each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E	HTLFP	Nasdaq Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.    

Large accelerated filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the classes of Registrant's common stock as of the latest practicable date:  As of August 4, 2021, the Registrant had outstanding 42,245,788 shares of common stock, $1.00 par value per share.

HEARTLAND FINANCIAL USA, INC.

Form 10-Q Quarterly Report

Table of Contents

Part I
Item 1.	Financial Statements
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
Part II
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Disclosures
Item 5.	Other Information
Item 6.	Exhibits

PART I

ITEM 1. FINANCIAL STATEMENTS

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
	June 30, 2021 (Unaudited)		December 31, 2020
ASSETS
Cash and due from banks	$	208,702	$	219,243
Interest bearing deposits with other banks and other short-term investments	240,426		118,660
Cash and cash equivalents	449,128		337,903
Time deposits in other financial institutions	3,138		3,129
Securities:
Carried at fair value (cost of $6,463,683 at June 30, 2021, and $6,024,225 at December 31, 2020)	6,543,978		6,127,975
Held to maturity, net of allowance for credit losses of $51 at June 30, 2021, and $51 at December 31, 2020 (fair value of $95,421 at June 30, 2021, and $100,041 at December 31, 2020)	85,439		88,839
Other investments, at cost	76,809		75,253
Loans held for sale	33,248		57,949
Loans receivable:
Held to maturity	10,012,014		10,023,051
Allowance for credit losses	(120,726)		(131,606)
Loans receivable, net	9,891,288		9,891,445
Premises, furniture and equipment, net	219,433		219,595
Premises, furniture and equipment held for sale	6,925		6,499
Other real estate, net	6,314		6,624
Goodwill	576,005		576,005
Core deposit intangibles and customer relationship intangibles, net	37,452		42,383
Servicing rights, net	6,201		6,052
Cash surrender value on life insurance	189,619		187,664
Other assets	246,029		281,024
TOTAL ASSETS	$	18,371,006	$	17,908,339
LIABILITIES AND EQUITY
LIABILITIES:
Deposits:
Demand	$	6,299,289	$	5,688,810
Savings	8,189,223		8,019,704
Time	1,126,606		1,271,391
Total deposits	15,615,118		14,979,905
Short-term borrowings	152,563		167,872
Other borrowings	271,244		457,042
Accrued expenses and other liabilities	172,295		224,289
TOTAL LIABILITIES	16,211,220		15,829,108
STOCKHOLDERS' EQUITY:
Preferred stock (par value $1 per share; authorized 6,104 shares at both June 30, 2021, and December 31, 2020; none issued or outstanding at both June 30, 2021, and December 31, 2020)	—		—
Series A Junior Participating preferred stock (par value $1 per share; authorized 16,000 shares; none issued or outstanding at both June 30, 2021, and December 31, 2020)	—		—
Series B Fixed Rate Cumulative Perpetual Preferred Stock (par value $1 per share; 81,698 shares authorized at both June 30, 2021 and December 31, 2020; none issued or outstanding at both June 30, 2021 and December 31, 2020)	—		—
Series C Senior Non-Cumulative Perpetual Preferred Stock (par value $1 per share; 81,698 shares authorized at both June 30, 2021, and December 31, 2020; none issued or outstanding at both June 30, 2021, and December 31, 2020)	—		—
Series D Senior Non-Cumulative Perpetual Convertible Preferred Stock (par value $1 per share; 3,000 shares authorized at both June 30, 2021, and December 31, 2020; none issued or outstanding at both June 30, 2021, and December 31, 2020)	—		—
Series E Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock (par value $1 per share; 11,500 shares authorized at both June 30, 2021, and December 31, 2020; 11,500 shares issued and outstanding at both June 30, 2021 and December 31, 2020)	110,705		110,705
Common stock (par value $1 per share; 60,000,000 shares authorized at both June 30, 2021, and December 31, 2020; issued 42,245,452 shares at June 30, 2021, and 42,093,862 shares at December 31, 2020)	42,245		42,094
Capital surplus	1,066,765		1,062,083
Retained earnings	883,484		791,630
Accumulated other comprehensive income	56,587		72,719
TOTAL STOCKHOLDERS' EQUITY	2,159,786		2,079,231
TOTAL LIABILITIES AND EQUITY	$	18,371,006	$	17,908,339
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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
INTEREST INCOME:
Interest and fees on loans	$	111,915	$	107,005	$	224,354	$	213,419
Interest on securities:
Taxable	31,546		23,362		61,989		45,093
Nontaxable	4,561		3,344		9,064		5,527
Interest on federal funds sold	—		—		1		—
Interest on interest bearing deposits in other financial institutions	60		54		126		775
TOTAL INTEREST INCOME	148,082		133,765		295,534		264,814
INTEREST EXPENSE:
Interest on deposits	3,790		6,134		8,185		20,716
Interest on short-term borrowings	98		61		250		357
Interest on other borrowings (includes $(461) and $(423) of interest expense related to derivatives reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $(1,058) and $(613) of interest expense related to derivatives reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	2,976		3,424		6,276		7,084
TOTAL INTEREST EXPENSE	6,864		9,619		14,711		28,157
NET INTEREST INCOME	141,218		124,146		280,823		236,657
Provision (benefit) for credit losses	(7,080)		26,796		(7,728)		48,316
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	148,298		97,350		288,551		188,341
NONINTEREST INCOME:
Service charges and fees	15,132		10,972		28,803		22,993
Loan servicing income	873		379		1,711		1,342
Trust fees	6,039		4,977		11,816		9,999
Brokerage and insurance commissions	865		595		1,718		1,328
Securities gains, net (includes $2,842 and $2,006 of net security gains reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $2,812 and $3,664 of net security gains reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	2,842		2,006		2,812		3,664
Unrealized gain (loss) on equity securities, net	83		680		(27)		449
Net gains on sale of loans held for sale	4,753		7,857		11,173		12,517
Valuation adjustment on servicing rights	(526)		9		391		(1,556)
Income on bank owned life insurance	937		1,167		1,766		1,665
Other noninterest income	2,166		1,995		3,318		4,053
TOTAL NONINTEREST INCOME	33,164		30,637		63,481		56,454
NONINTEREST EXPENSES:
Salaries and employee benefits	57,332		50,118		116,394		100,075
Occupancy	7,399		6,502		15,317		12,973
Furniture and equipment	3,501		2,993		6,594		6,101
Professional fees	16,237		13,676		29,727		26,149
Advertising	1,649		995		3,118		3,200
Core deposit and customer relationship intangibles amortization	2,415		2,696		4,931		5,677
Other real estate and loan collection expenses	414		203		549		537
Loss on sales/valuations of assets, net	183		701		377		717
Acquisition, integration and restructuring costs	210		673		3,138		2,049
Partnership investment in tax credit projects	1,345		791		1,380		975
Other noninterest expenses	12,691		11,091		24,274		22,845
TOTAL NONINTEREST EXPENSES	103,376		90,439		205,799		181,298
INCOME BEFORE INCOME TAXES	78,086		37,548		146,233		63,497
Income taxes (includes $834 and $614 of income tax expense reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $977 and $1,080 of income tax expense reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	16,481		7,417		31,814		13,326
NET INCOME	61,605		30,131		114,419		50,171
Preferred dividends	(2,012)		—		(4,025)		—
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	59,593	$	30,131	$	110,394	$	50,171
EARNINGS PER COMMON SHARE - BASIC	$	1.41	$	0.82	$	2.62	$	1.36
EARNINGS PER COMMON SHARE - DILUTED	$	1.41	$	0.82	$	2.61	$	1.36
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.22	$	0.20	$	0.44	$	0.40
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NET INCOME	$	61,605	$	30,131	$	114,419	$	50,171
OTHER COMPREHENSIVE INCOME (LOSS)
Securities:
Net change in unrealized gain/(loss) on securities	70,224		81,552		(20,645)		53,224
Reclassification adjustment for net gains realized in net income	(2,842)		(2,006)		(2,812)		(3,664)
Income taxes	(17,678)		(20,729)		6,083		(12,932)
Other comprehensive gain/(loss) on securities	49,704		58,817		(17,374)		36,628
Derivatives used in cash flow hedging relationships:
Net change in unrealized gain/(loss) on derivatives	745		317		2,633		(3,363)
Reclassification adjustment for net gains on derivatives realized in net income	(461)		(423)		(1,058)		(613)
Income taxes	(61)		18		(333)		832
Other comprehensive income (loss) on cash flow hedges	223		(88)		1,242		(3,144)
Other comprehensive income (loss)	49,927		58,729		(16,132)		33,484
TOTAL COMPREHENSIVE INCOME	$	111,532	$	88,860	$	98,287	$	83,655
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	114,419	$	50,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,671		14,071
Provision (benefit) for credit losses	(7,728)		48,316
Net amortization of premium on securities	18,439		6,251
Securities gains, net	(2,812)		(3,664)
Unrealized (gain) loss on equity securities, net	27		(449)
Stock based compensation	4,776		3,558
Loans originated for sale	(244,752)		(271,167)
Proceeds on sales of loans held for sale	279,923		254,523
Net gains on sale of loans held for sale	(10,470)		(10,990)
(Increase) decrease in accrued interest receivable	813		(4,298)
Increase in prepaid expenses	(1,324)		(910)
Decrease in accrued interest payable	(1,342)		(1,699)
Capitalization of servicing rights	(703)		(1,527)
Valuation adjustment on servicing rights	(391)		1,556
Loss on sales/valuations of assets, net	377		717
Net excess tax benefit (expense) from stock based compensation	303		(91)
Other, net	(9,645)		(53,313)
NET CASH PROVIDED BY OPERATING ACTIVITIES	153,581		31,055
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of time deposits in other financial institutions	(9)		(7)
Proceeds from the sale of securities available for sale	630,481		511,639
Proceeds from the maturity of and principal paydowns on securities available for sale	484,958		212,538
Proceeds from the maturity of and principal paydowns on securities held to maturity	4,127		1,832
Proceeds from the maturity of time deposits in other financial institutions	—		150
Proceeds from the sale, maturity of and principal paydowns on other investments	2,498		6,135
Purchase of securities available for sale	(1,571,281)		(1,491,459)
Purchase of other investments	(4,054)		(10,273)
Net (increase) decrease in loans	5,203		(881,419)
Purchase of bank owned life insurance policies	(190)		(201)
Capital expenditures	(11,539)		(7,679)
Proceeds from the sale of equipment	3,090		3,331
Proceeds on sale of OREO and other repossessed assets	1,858		1,783
NET CASH USED BY INVESTING ACTIVITIES	$	(454,858)	$	(1,653,630)

HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (Unaudited) (Dollars in thousands)
	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits	$	610,479	$	1,287,288
Net increase in savings deposits	169,519		502,871
Net decrease in time deposit accounts	(144,785)		(125,791)
Net decrease in short-term borrowings	(15,309)		(12,799)
Proceeds from short term advances	1,700		516,545
Repayments of short term advances	(1,700)		(597,741)
Proceeds from other borrowings	—		33,750
Repayments of other borrowings	(186,356)		(3,622)
Net proceeds from the issuance of preferred stock	—		110,705
Proceeds from issuance of common stock	1,519		928
Dividends paid	(22,565)		(14,715)
NET CASH PROVIDED BY FINANCING ACTIVITIES	412,502		1,697,419
Net increase in cash and cash equivalents	111,225		74,844
Cash and cash equivalents at beginning of year	337,903		378,734
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	449,128	$	453,578
Supplemental disclosures:
Cash paid for income/franchise taxes	$	31,735	$	12,798
Cash paid for interest	16,053		29,856
Loans transferred to OREO	1,186		1,055
Transfer of premises from premises, furniture and equipment, net, to premises, furniture and equipment held for sale	1,564		—
Transfer of premises from premises, furniture and equipment held for sale to premises, furniture and equipment, net	6		—
Dividends declared, not paid	2,013		—
Transfer of available for sale securities to held to maturity securities	—		462
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 March 31, 2020	$	—	$	36,807	$	842,780	$	700,298	$	(26,171)	$	1,553,714
Comprehensive income							30,131		58,729		88,860
Cash dividends declared:
Common, $0.20 per share							(7,362)				(7,362)
Issuance of 11,500 shares of Series E preferred stock	110,705										110,705
Issuance of 37,527 shares of common stock			38		86						124
Stock based compensation					1,336						1,336
Balance at June 30, 2020	$	110,705	$	36,845	$	844,202	$	723,067	$	32,558	$	1,747,377
Balance at January 1, 2020	$	—	$	36,704	$	839,857	$	702,502	$	(926)	$	1,578,137
Cumulative effect adjustment from the adoption of ASU 2016-13 on January 1, 2020							(14,891)				(14,891)
Adjusted balance on January 1, 2020	—		36,704		839,857		687,611		(926)		1,563,246
Comprehensive income							50,171		33,484		83,655
Cash dividends declared:
Common, $0.40 per share							(14,715)				(14,715)
Issuance of Series E Preferred Stock	110,705										110,705
Issuance of 140,466 shares of common stock			141		787						928
Stock based compensation					3,558						3,558
Balance at June 30, 2020	$	110,705	$	36,845	$	844,202	$	723,067	$	32,558	$	1,747,377
Balance at March 31, 2021	$	110,705	$	42,174	$	1,063,497	$	833,171	$	6,660	$	2,056,207
Comprehensive income							61,605		49,927		111,532
Cash dividends declared:
Preferred, $175.00 per share							(2,012)				(2,012)
Common, $0.22 per share							(9,280)				(9,280)
Issuance of 71,777 shares of common stock			71		1,252						1,323
Stock based compensation					2,016						2,016
Balance at June 30, 2021	$	110,705	$	42,245	$	1,066,765	$	883,484	$	56,587	$	2,159,786
Balance at January 1, 2021	$	110,705	$	42,094	$	1,062,083	$	791,630	$	72,719	$	2,079,231
Comprehensive income							114,419		(16,132)		98,287
Cash dividends declared:
Preferred, $350.00 per share							(4,025)				(4,025)
Common, $0.44 per share							(18,540)				(18,540)
Issuance of 151,590 shares of common stock			151		(94)						57
Stock based compensation					4,776						4,776
Balance at June 30, 2021	$	110,705	$	42,245	$	1,066,765	$	883,484	$	56,587	$	2,159,786
See accompanying notes to consolidated financial statements.

HEARTLAND FINANCIAL USA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: 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, 2020, included in the Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 25, 2021. 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 June 30, 2021, are not necessarily indicative of the results expected for the year ending December 31, 2021.

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 six- months ended June 30, 2021, and 2020, are shown in the table below, dollars and number of shares in thousands, except per share data:

	Three Months Ended June 30,
	2021		2020
Net income	$	61,605	$	30,131
Preferred dividends	(2,012)		—
Net income available to common stockholders	$	59,593	$	30,131
Weighted average common shares outstanding for basic earnings per share	42,243		36,881
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	117		35
Weighted average common shares for diluted earnings per share	42,360		36,916
Earnings per common share — basic	$	1.41	$	0.82
Earnings per common share — diluted	$	1.41	$	0.82
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	1		54
	Six Months Ended June 30,
	2021		2020
Net income	$	114,419	$	50,171
Preferred dividends	(4,025)		—
Net income available to stockholders	$	110,394	$	50,171
Weighted average common shares outstanding for basic earnings per share	42,210		36,851
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	147		69
Weighted average common shares for diluted earnings per share	42,357		36,920
Earnings per common share — basic	$	2.62	$	1.36
Earnings per common share — diluted	$	2.61	$	1.36
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	60		1

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 has a formal working group that is currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including but not limited to the SOFR. Currently, HTLF has adjustable rate loans, several debt obligations and securities and derivative instruments in place that reference LIBOR-based rates. The transition from LIBOR is expected to take place at the end of 2021, and management will continue to actively assess the related opportunities and risks involved in this transition.

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. HTLF adopted this ASU on January 1, 2021, as required, and the adoption did not have a material impact on its results of operations, financial position and liquidity.

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.

NOTE 2: ACQUISITIONS

Johnson Bank branches

On December 4, 2020, Arizona Bank & Trust ("AB&T"), a wholly-owned subsidiary headquartered in Phoenix, Arizona, completed its acquisition of certain assets and assumed substantially all of the deposits and certain other liabilities of Johnson Bank's Arizona operations, which includes four banking centers. Johnson Bank is a wholly-owned subsidiary of Johnson Financial Group, Inc., headquartered in Racine, Wisconsin. As of the closing date, AB&T acquired, at fair value, total assets of $419.7 million, which included gross loans of $150.7 million and assumed deposits of $415.5 million and certain other liabilities.

AIM Bancshares, Inc.

On December 4, 2020, HTLF completed the acquisition of AIM Bancshares, Inc. ("AIM") and its wholly-owned subsidiary, AimBank, headquartered in Levelland, Texas. Pursuant to the agreement, each share of AimBank common stock was converted into the right to receive 207.0 shares of HTLF common stock and $1,887.16 of cash, subject to certain hold-back provisions of the agreement. Based on the closing price of $41.89 per share of HTLF common stock on December 4, 2020, the aggregate merger consideration received by AimBank stockholders was valued at approximately $264.5 million, which was paid by delivery of HTLF common stock valued at $217.2 million and cash of $47.3 million subject to certain hold-back provisions of the merger agreement relating to the cash consideration. In addition, holders of in-the-money options to acquire shares of AimBank common stock received aggregate consideration of approximately $4.9 million in exchange for the cancellation of such stock options. The combined entity, resulting from the merger of AimBank into First Bank & Trust, operates as First Bank & Trust. The transaction included, at fair value, total assets of $1.97 billion, including $1.09 billion of gross loans held to maturity, and $1.67 billion of deposits. The transaction is structured as a tax-free reorganization with respect to the stock consideration received by shareholders of AIM. On February 19, 2021, HTLF completed the systems conversion of AimBank, and subsequent to the systems conversion, seven of AimBank's twenty-five bank branches were transferred to HTLF's New Mexico Bank & Trust subsidiary.

NOTE 3: 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 June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2021
U.S. treasuries	$	996	$	20	$	—	$	1,016
U.S. agencies	35,591		272		(492)		35,371
Obligations of states and political subdivisions	1,817,708		66,037		(11,959)		1,871,786
Mortgage-backed securities - agency	1,741,389		19,890		(20,604)		1,740,675
Mortgage-backed securities - non-agency	1,349,005		16,062		(1,775)		1,363,292
Commercial mortgage-backed securities - agency	124,441		2,439		(1,800)		125,080
Commercial mortgage-backed securities - non-agency	534,682		823		(200)		535,305
Asset-backed securities	835,476		12,640		(1,129)		846,987
Corporate bonds	3,744		71		—		3,815
Total debt securities	6,443,032		118,254		(37,959)		6,523,327
Equity securities with a readily determinable fair value	20,651		—		—		20,651
Total	$	6,463,683	$	118,254	$	(37,959)	$	6,543,978
December 31, 2020
U.S. treasuries	$	1,995	$	31	$	—	$	2,026
U.S. agencies	167,048		657		(926)		166,779
Obligations of states and political subdivisions	1,562,631		75,555		(2,959)		1,635,227
Mortgage-backed securities - agency	1,351,964		16,029		(12,723)		1,355,270
Mortgage-backed securities - non-agency	1,428,068		22,688		(1,640)		1,449,116
Commercial mortgage-backed securities - agency	171,451		3,440		(738)		174,153
Commercial mortgage-backed securities - non-agency	253,421		37		(691)		252,767
Asset-backed securities	1,064,255		9,421		(4,410)		1,069,266
Corporate bonds	3,763		8		(29)		3,742
Total debt securities	6,004,596		127,866		(24,116)		6,108,346
Equity securities with a readily determinable fair value	19,629		—		—		19,629
Total	$	6,024,225	$	127,866	$	(24,116)	$	6,127,975

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
June 30, 2021
Obligations of states and political subdivisions	$	85,490	$	9,931	$	—	$	95,421	$	(51)
Total	$	85,490	$	9,931	$	—	$	95,421	$	(51)
December 31, 2020
Obligations of states and political subdivisions	$	88,890	$	11,151	$	—	$	100,041	$	(51)
Total	$	88,890	$	11,151	$	—	$	100,041	$	(51)

As of June 30, 2021, and December 31, 2020, HTLF had $24.6 million and $20.8 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheet. 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 June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	13,286	$	13,351
Due in 1 to 5 years	18,199		19,153
Due in 5 to 10 years	198,036		202,564
Due after 10 years	1,628,518		1,676,920
Total debt securities	1,858,039		1,911,988
Mortgage and asset-backed securities	4,584,993		4,611,339
Equity securities with a readily determinable fair value	20,651		20,651
Total investment securities	$	6,463,683	$	6,543,978

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	2,196	$	2,209
Due in 1 to 5 years	42,172		44,028
Due in 5 to 10 years	32,451		37,240
Due after 10 years	8,671		11,944
Total debt securities	85,490		95,421
Allowance for credit losses	(51)		—
Total investment securities	$	85,439	$	95,421

As of June 30, 2021, and December 31, 2020, securities with a carrying value of $1.87 billion and $2.12 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 six months ended June 30, 2021 and 2020, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Proceeds from sales	$	423,415	$	182,749	$	630,481	$	511,639
Gross security gains	3,844		3,958		4,289		6,862
Gross security losses	1,002		1,952		1,477		3,198

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 June 30, 2021, and December 31, 2020. 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 June 30, 2020, and December 31, 2019, respectively.

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
June 30, 2021
U.S. agencies	18,983		(492)		1	—		—		—	18,983		(492)		1
Obligations of states and political subdivisions	591,597		(11,887)		107	6,719		(72)		2	598,316		(11,959)		109
Mortgage-backed securities - agency	1,025,619		(19,499)		58	37,181		(1,105)		4	1,062,800		(20,604)		62
Mortgage-backed securities - non-agency	541,131		(1,345)		12	33,988		(430)		5	575,119		(1,775)		17
Commercial mortgage-backed securities - agency	69,690		(1,800)		11	—		—		—	69,690		(1,800)		11
Commercial mortgage-backed securities - non-agency	—		—		—	15,960		(200)		2	15,960		(200)		2
Asset-backed securities	77,475		(319)		7	35,779		(810)		11	113,254		(1,129)		18
Corporate bonds	—		—		—	—		—		—	—		—		—
Total temporarily impaired securities	$	2,324,495	$	(35,342)	196	$	129,627	$	(2,617)	24	$	2,454,122	$	(37,959)	220
December 31, 2020
U.S. agencies	2,981		(8)		5	99,922		(918)		72	102,903		(926)		77
Obligations of states and political subdivisions	346,598		(2,959)		49	—		—		—	346,598		(2,959)		49
Mortgage-backed securities - agency	653,793		(12,342)		35	31,012		(381)		3	684,805		(12,723)		38
Mortgage-backed securities - non-agency	378,843		(1,639)		17	1,622		(1)		1	380,465		(1,640)		18
Commercial mortgage-backed securities - agency	46,541		(738)		6	—		—		—	46,541		(738)		6
Commercial mortgage-backed securities - non-agency	100,042		(15)		2	35,428		(676)		3	135,470		(691)		5
Asset-backed securities	141,824		(643)		9	340,452		(3,767)		24	482,276		(4,410)		33
Corporate bonds	1,908		(29)		4	—		—		—	1,908		(29)		4
Total temporarily impaired securities	$	1,672,530	$	(18,373)	127	$	508,436	$	(5,743)	103	$	2,180,966	$	(24,116)	230

HTLF had no securities held to maturity with unrealized losses at June 30, 2021, or December 31, 2020.

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 remaining unrealized losses on HTLF's 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 six months ended June 30, 2021 and 2020.

The unrealized losses on HTLF's obligations of states and political subdivisions 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 six months ended June 30, 2021 and 2020.

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 six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,
	2021		2020
Beginning balance	$	48	$	197
Provision (benefit) for credit losses	3		(135)
Balance at period end	$	51	$	62
	Six Months Ended June 30,
	2021		2020
Beginning balance	$	51	$	—
Impact of ASU 2016-13 adoption	—		158
Adjusted balance	51		158
Provision (benefit) for credit losses	—		(96)
Balance at period end	$	51	$	62

The following table summarizes, in thousands, the carrying amount of HTLF's held to maturity debt securities by investment rating as of June 30, 2021 and December 31, 2020, which are updated quarterly and used to monitor the credit quality of the securities:

	June 30, 2021		December 31, 2020
Rating
AAA	$	3,207	$	—
AA, AA+, AA-	62,526		64,385
A+, A, A-	15,006		18,353
BBB	4,751		4,208
Not Rated	—		1,944
Total	$	85,490	$	88,890

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 $20.8 million at June 30, 2021 and $19.5 million at December 31, 2020.

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 June 30, 2021, did not consider the investments to be impaired.

NOTE 4: LOANS

Loans as of June 30, 2021, and December 31, 2020, were as follows, in thousands:

	June 30, 2021		December 31, 2020
Loans receivable held to maturity:
Commercial and industrial	$	2,518,908	$	2,534,799
Paycheck Protection Program ("PPP")	829,175		957,785
Owner occupied commercial real estate	1,940,134		1,776,406
Non-owner occupied commercial real estate	1,987,369		1,921,481
Real estate construction	854,295		863,220
Agricultural and agricultural real estate	679,608		714,526
Residential real estate	800,884		840,442
Consumer	401,641		414,392
Total loans receivable held to maturity	10,012,014		10,023,051
Allowance for credit losses	(120,726)		(131,606)
Loans receivable, net	$	9,891,288	$	9,891,445

As of June 30, 2021, and December 31, 2020, HTLF had $37.7 million and $42.4 million, respectively, 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 June 30, 2021, and December 31, 2020, 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
June 30, 2021
Commercial and industrial	$	4,688	$	26,644	$	31,332	$	13,658	$	2,505,250	$	2,518,908
PPP	—		—		—		—		829,175		829,175
Owner occupied commercial real estate	110		19,880		19,990		7,547		1,932,587		1,940,134
Non-owner occupied commercial real estate	3,485		19,343		22,828		19,548		1,967,821		1,987,369
Real estate construction	—		19,580		19,580		—		854,295		854,295
Agricultural and agricultural real estate	3,106		4,054		7,160		17,948		661,660		679,608
Residential real estate	—		9,741		9,741		—		800,884		800,884
Consumer	—		10,095		10,095		—		401,641		401,641
Total	$	11,389	$	109,337	$	120,726	$	58,701	$	9,953,313	$	10,012,014

	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, 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 estate	111		19,890		20,001		11,174		1,765,232		1,776,406
Non-owner occupied commercial real estate	3,250		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 estate	1,988		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 $13.7 million of troubled debt restructured loans at June 30, 2021, of which $11.6 million were classified as nonaccrual and $2.1 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- and six- months ended June 30, 2021, and June 30, 2020, dollars in thousands:

	Three Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—
Residential real estate	—	—		—		1	60		66
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	1	$	60	$	66

	Six Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—

	Six Months Ended June 30,
	2021					2020
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate	—	—		—		2	92		98
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	2	$	92	$	98

At June 30, 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.

There were no troubled debt restructured loans for which there was a payment default during the three- and six- months ended June 30, 2021, and June 30, 2020, 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 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 June 30, 2021, and December 31, 2020.

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2021, and December 31, 2020, in thousands:

As of June 30, 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	$	330,626	$	475,749	$	277,874	$	122,550	$	197,617	$	370,896	$	528,785	$	2,304,097
Watch	7,252		13,154		22,947		12,886		8,633		17,574		35,506		117,952
Substandard	2,171		21,377		10,899		8,780		11,706		21,646		20,280		96,859
Commercial and industrial total	$	340,049	$	510,280	$	311,720	$	144,216	$	217,956	$	410,116	$	584,571	$	2,518,908

As of June 30, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
PPP
Pass	$	409,922	$	327,475	$	—	$	—	$	—	$	—	$	—	$	737,397
Watch	21,880		28,769		—		—		—		—		—		50,649
Substandard	20,697		20,432		—		—		—		—		—		41,129
PPP total	$	452,499	$	376,676	$	—	$	—	$	—	$	—	$	—	$	829,175
Owner occupied commercial real estate
Pass	$	331,097	$	402,216	$	371,104	$	232,062	$	143,692	$	264,190	$	27,773	$	1,772,134
Watch	428		17,998		14,979		18,715		19,869		10,305		2,250		84,544
Substandard	743		18,083		13,464		7,908		13,903		28,201		1,154		83,456
Owner occupied commercial real estate total	$	332,268	$	438,297	$	399,547	$	258,685	$	177,464	$	302,696	$	31,177	$	1,940,134
Non-owner occupied commercial real estate
Pass	$	206,934	$	332,479	$	355,445	$	275,853	$	163,047	$	266,547	$	32,340	$	1,632,645
Watch	16,873		18,884		76,447		30,786		8,233		53,339		4,524		209,086
Substandard	16,968		13,315		20,879		23,329		24,802		46,035		310		145,638
Non-owner occupied commercial real estate total	$	240,775	$	364,678	$	452,771	$	329,968	$	196,082	$	365,921	$	37,174	$	1,987,369
Real estate construction
Pass	$	151,473	$	338,101	$	215,455	$	49,360	$	10,003	$	8,959	$	17,078	$	790,429
Watch	—		1,865		11,474		47,460		240		210		413		61,662
Substandard	—		—		28		1,993		—		183		—		2,204
Real estate construction total	$	151,473	$	339,966	$	226,957	$	98,813	$	10,243	$	9,352	$	17,491	$	854,295
Agricultural and agricultural real estate
Pass	$	115,287	$	125,764	$	79,157	$	46,698	$	28,105	$	43,350	$	134,975	$	573,336
Watch	3,480		13,591		5,746		2,197		256		3,735		4,735		33,740
Substandard	9,082		8,793		6,886		20,498		5,641		11,210		10,422		72,532
Agricultural and agricultural real estate total	$	127,849	$	148,148	$	91,789	$	69,393	$	34,002	$	58,295	$	150,132	$	679,608
Residential real estate
Pass	$	144,046	$	116,571	$	65,840	$	82,530	$	56,628	$	277,236	$	28,244	$	771,095
Watch	1,236		1,966		1,634		1,703		2,039		6,998		—		15,576
Substandard	4,147		859		299		1,889		1,259		5,760		—		14,213
Residential real estate total	$	149,429	$	119,396	$	67,773	$	86,122	$	59,926	$	289,994	$	28,244	$	800,884
Consumer
Pass	$	39,485	$	26,718	$	20,157	$	13,147	$	12,112	$	21,088	$	259,705	$	392,412
Watch	4		132		220		1,362		130		508		1,234		3,590
Substandard	848		432		612		474		371		2,104		798		5,639
Consumer total	$	40,337	$	27,282	$	20,989	$	14,983	$	12,613	$	23,700	$	261,737	$	401,641
Total Pass	$	1,728,870	$	2,145,073	$	1,385,032	$	822,200	$	611,204	$	1,252,266	$	1,028,900	$	8,973,545
Total Watch	51,153		96,359		133,447		115,109		39,400		92,669		48,662		576,799
Total Substandard	54,656		83,291		53,067		64,871		57,682		115,139		32,964		461,670
Total Loans	$	1,834,679	$	2,324,723	$	1,571,546	$	1,002,180	$	708,286	$	1,460,074	$	1,110,526	$	10,012,014

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
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

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
Watch	22,533		—		—		—		—		—		—		22,533
Substandard	54,543		—		—		—		—		—		—		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
Watch	15,345		13,764		22,488		20,811		8,717		15,282		4,311		100,718
Substandard	15,914		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
Watch	22,826		55,225		24,718		18,724		20,954		45,672		5,114		193,233
Substandard	30,899		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
Substandard	196		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
Watch	20,500		16,202		8,854		2,448		3,515		3,157		12,282		66,958
Substandard	17,403		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
Watch	3,986		4,507		2,188		1,896		3,117		8,525		—		24,219
Substandard	980		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
Watch	168		352		647		340		82		646		1,622		3,857
Substandard	481		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 Watch	129,037		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 June 30, 2021 and December 31, 2020 were $91.8 million and $77.1 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 June 30, 2021, 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 accruing and nonaccrual loans at June 30, 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		Current		Nonaccrual		Total Loans
June 30, 2021
Commercial and industrial	$	1,537	$	1,034	$	12	$	2,583	$	2,498,207	$	18,118	$	2,518,908
PPP	—		—		—		—		829,175		—		829,175
Owner occupied commercial real estate	1,134		—		—		1,134		1,929,086		9,914		1,940,134
Non-owner occupied commercial real estate	1,374		1,350		—		2,724		1,963,775		20,870		1,987,369
Real estate construction	2,834		—		—		2,834		851,053		408		854,295
Agricultural and agricultural real estate	2,759		1,716		—		4,475		654,135		20,998		679,608
Residential real estate	2,192		118		85		2,395		785,637		12,852		800,884
Consumer	679		222		—		901		398,632		2,108		401,641
Total gross loans receivable held to maturity	$	12,509	$	4,440	$	97	$	17,046	$	9,909,700	$	85,268	$	10,012,014
December 31, 2020
Commercial and industrial	$	5,825	$	2,322	$	720	$	8,867	$	2,504,170	$	21,762	$	2,534,799
PPP	1		—		—		1		957,784		—		957,785
Owner occupied commercial real estate	2,815		167		—		2,982		1,759,649		13,775		1,776,406
Non-owner occupied commercial real estate	2,143		2,674		—		4,817		1,902,003		14,661		1,921,481
Real estate construction	2,446		96		—		2,542		859,784		894		863,220
Agricultural and agricultural real estate	1,688		—		—		1,688		694,150		18,688		714,526
Residential real estate	1,675		83		—		1,758		825,047		13,637		840,442
Consumer	807		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 0.17% at June 30, 2021, compared to 0.23% at December 31, 2020. 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 six months ended June 30, 2021 and June 30, 2020. As of June 30, 2021, and December 31, 2020, HTLF had $24.0 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.

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

Changes in the allowance for credit losses on loans for the three- and six- months ended June 30, 2021, and June 30, 2020, were as follows, in thousands:

	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
Balance at March 31, 2021	$	36,095	$	—	$	19,416	$	24,694	$	19,931	$	7,111	$	11,012	$	11,913	$	130,172
Charge-offs	(842)		—		(72)		(1,637)		(10)		(357)		(70)		(509)		(3,497)
Recoveries	265		—		44		13		4		—		—		191		517
Provision	(4,186)		—		602		(242)		(345)		406		(1,201)		(1,500)		(6,466)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726
	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
Balance at December 31, 2020	$	38,818	$	—	$	20,001	$	20,873	$	20,080	$	7,129	$	11,935	$	12,770	$	131,606
Charge-offs	(1,790)		—		(113)		(1,637)		(10)		(675)		(91)		(1,307)		(5,623)
Recoveries	558		—		97		13		6		21		5		493		1,193
Provision	(6,254)		—		5		3,579		(496)		685		(2,108)		(1,861)		(6,450)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726

	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
Balance at March 31, 2020	$	32,455			—		10,337		8,320		22,951		$	4,797	$	8,725	$	9,765	$	97,350
Charge-offs	(2,536)				—		(213)		(19)		(84)		(1)		(235)		(476)		(3,564)
Recoveries	345				—		191		8		210		—		92		298		1,144
Provision	2,254				—		13,087		1,852		5,590		905		722		597		25,007
Balance at June 30, 2020	$	32,518	$	32,531	$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937
	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
Balance at December 31, 2019	$	34,207			$	—	$	7,921	$	7,584	$	8,677	$	5,680	$	1,504	$	4,822	$	70,395
Impact of ASU 2016-13 adoption	(272)				—		(114)		(2,617)		6,335		(387)		4,817		4,309		12,071
Adjusted balance at January 1, 2020	33,935				—		7,807		4,967		15,012		5,293		6,321		9,131		82,466
Charge-offs	(7,767)				—		(213)		(19)		(105)		(254)		(314)		(1,193)		(9,865)
Recoveries	610				—		192		8		215		826		95		518		2,464
Provision	5,740				—		15,616		5,205		13,545		(164)		3,202		1,728		44,872
Balance at June 30, 2020	$	32,518			$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937

Management allocates the allowance for credit losses by pools of risk within each loan portfolio. The allocation of the allowance for credit losses by loan portfolio is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular category. 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 on unfunded commitments for the three and six months ended June 30, 2021 and June 30, 2020, were as follows:

	For the Three Months Ended June 30,
	2021		2020
Balance at March 31,	$	14,619	$	15,468
Provision	(617)		1,924
Balance at June 30,	$	14,002	$	17,392

	For the Six Months Ended June 30,
	2021		2020
Balance at December 31,	$	15,280	$	248
Impact of ASU 2016-13 adoption on January 1, 2020	—		13,604
Adjusted balance at January 1,	15,280		13,852
Provision	(1,278)		3,540
Balance at June 30,	$	14,002	$	17,392

NOTE 6: GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS

HTLF had goodwill of $576.0 million at both June 30, 2021 and December 31, 2020. HTLF conducts its annual internal assessment of the goodwill both at the consolidated level and at its subsidiaries as of September 30. Due to the COVID-19 pandemic and economic conditions, HTLF performed an interim quantitative assessment of goodwill in the second quarter of 2020, which was the most recent annual assessment, and there was no goodwill impairment.

HTLF recorded $91.4 million of goodwill and $3.1 million of core deposit intangible in connection with the acquisition of AimBank, headquartered in Levelland, Texas on December 4, 2020.

HTLF recorded $38.4 million of goodwill and $1.3 million of core deposit intangible in connection with 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, on December 4, 2020.

The core deposit intangible recorded with the AimBank acquisition is not deductible for tax purposes and is expected to be amortized over a period of 10 years on an accelerated basis.

Goodwill related to the AimBank acquisition resulted from expected operational synergies, increased market presence, cross-selling opportunities, and expanded business lines and is not deductible for tax purposes.

The core deposit intangible and goodwill recorded with the Johnson Bank transaction are deductible for tax purposes, and the core deposit intangible is expected to be amortized over a period of 10 years on an accelerated basis.

HTLF's intangible assets consist 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 June 30, 2021, and December 31, 2020, are presented in the table below, in thousands:

	June 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	101,185	$	63,883	$	37,302	$	101,185	$	58,970	$	42,215
Customer relationship intangibles	1,177		1,027		150		1,177		1,009		168
Mortgage servicing rights	11,971		6,412		5,559		11,268		6,079		5,189
Commercial servicing rights	7,054		6,412		642		7,054		6,191		863
Total	$	121,387	$	77,734	$	43,653	$	120,684	$	72,249	$	48,435

The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:

	Core Deposit Intangibles		Customer Relationship Intangibles		Mortgage Servicing Rights		Commercial Servicing Rights		Total
Six months ending December 31, 2021	$	4,446	$	18	$	648	$	110	$	5,222
Year ending December 31,
2022	7,702		34		1,228		194		9,158
2023	6,739		33		1,052		139		7,963
2024	5,591		33		877		96		6,597
2025	4,700		32		702		103		5,537
2026	3,533		—		526		—		4,059
Thereafter	4,591		—		526		—		5,117
Total	$	37,302	$	150	$	5,559	$	642	$	43,653

Projections of amortization expense for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of June 30, 2021. 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 $719.6 million at June 30, 2021, compared to $743.3 million at December 31, 2020. Custodial escrow balances maintained in connection with the mortgage loan servicing portfolio were approximately $13.1 million at June 30, 2021, and $5.7 million at December 31, 2020.

At June 30, 2021, the fair value of the mortgage servicing rights was estimated at $5.6 million compared to $5.2 million at December 31, 2020. 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 average constant prepayment rate was 15.90% for the June 30, 2021, valuation compared to 16.20% for the December 31, 2020 valuation. The discount rate was 9.02% for both June 30, 2021, and December 31, 2020. The average capitalization rate for the first six months of 2021 ranged from 79 to 120 basis points compared to a range of 76 to 116 basis points for the first six months of 2020. Fees collected for the servicing of mortgage loans for others were $459,000 and $410,000 for the quarters ended June 30, 2021 and June 30, 2020, respectively. Fees collected for the servicing of mortgage loans for others were $923,000 and $819,000 for the six months ended June 30, 2021 and 2020, respectively.

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	5,189		$	5,621
Originations	703			1,490
Amortization	(724)			(1,070)
Valuation adjustment	391			(1,556)
Balance at period end	$	5,559		$	4,485
Mortgage servicing rights, net to servicing portfolio	0.77		%	0.68		%

HTLF's commercial servicing portfolio is comprised of loans guaranteed by the United States Small Business Administration ("SBA") and United States Department of Agriculture that have been sold with servicing retained by HTLF, which totaled $57.5 million at June 30, 2021 and $66.2 million at December 31, 2020. The commercial servicing rights portfolio is separated into two tranches at the respective HTLF subsidiary, loans with a term of less than 20 years and loans with a term of more than 20 years. Fees collected for the servicing of commercial loans for others were $165,000 and $54,000 for the quarters ended June 30, 2021 and June 30, 2020, respectively, and $294,000 and $172,000 for the six months ended June 30, 2021 and June 30, 2020, respectively.

The fair value of each commercial servicing rights portfolio is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds and servicing costs, are considered in the calculation. The range of average constant prepayment rates for the valuations was 13.70% to 17.49% as of June 30, 2021 compared to 14.95% to 19.25% as of December 31, 2020. The discount rate range was 5.70% to 9.96% for the June 30, 2021, valuations compared to 7.70% to 12.88% for the December 31, 2020 valuations. The capitalization rate for 2020 ranged from 310 to 445 basis points. The total fair value of the commercial servicing rights was estimated at $1.1 million as of June 30, 2021, and $1.3 million as of December 31, 2020.

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	863		$	1,115
Originations	—			38
Amortization	(221)			(169)
Balance at period end	$	642		$	984
Fair value of commercial servicing rights	$	1,104		$	1,417
Commercial servicing rights, net to servicing portfolio	1.12		%	1.32		%

Mortgage and commercial servicing 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 and commercial servicing 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 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. At June 30, 2021, a $470,000 valuation allowance was required on the mortgage servicing rights 15-year tranche and a $1.9 million valuation allowance was required on the mortgage servicing rights 30-year tranche. At December 31, 2020, a $422,000 valuation allowance was required on the mortgage servicing rights 15-year tranche and a $1.4 million valuation allowance was required on the mortgage servicing rights 30-year tranche. At both June 30, 2021 and December 31, 2020, no valuation allowance was required on commercial servicing rights with a term less than 20 years and no valuation allowance was required on commercial servicing rights with a term greater than 20 years.

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 June 30, 2021, and December 31, 2020:

	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
June 30, 2021	$	1,627	$	1,157	$	470	$	6,287	$	4,402	$	1,885
December 31, 2020	$	1,522	$	1,100	$	422	$	5,445	$	4,089	$	1,356

The following table summarizes, in thousands, the book value, the fair value of each tranche of the commercial servicing rights and any recorded valuation allowance at June 30, 2021, and December 31, 2020:

	Book Value Less than 20 Years		Fair Value Less than 20 Years		Valuation Allowance 15-Year Tranche		Book Value More than 20 Years		Fair Value More than 20 Years		Valuation Allowance 30-Year Tranche
June 30, 2021	$	58	$	170	$	—	$	584	$	934	$	—
December 31, 2020	$	87	$	203	$	—	$	776	$	1,085	$	—

NOTE 7: 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, 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 interest rate risk. 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 credit ratings of each counterparty. HTLF was required to pledge $2.9 million of cash as collateral at June 30, 2021 compared to $3.8 million at December 31, 2020. At both June 30, 2021 and December 31, 2020, 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 8, “Fair Value,” for additional fair value information and disclosures.

Cash Flow Hedges

HTLF has variable rate funding which creates exposure to variability in interest payments due to changes in interest rates. To manage the interest rate risk related to the variability of interest payments, HTLF has entered into various interest rate swap agreements. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are received or made on HTLF's variable-rate liabilities. For the six months ended June 30, 2021, the change in net unrealized losses on cash flow hedges reflects changes in the fair value of the swaps and reclassification from accumulated other comprehensive income to interest expense totaling $1.8 million. For the next twelve months, HTLF estimates that cash payments and reclassification from accumulated other comprehensive income to interest expense will total $2.4 million.

HTLF entered into forward starting interest rate swap transactions to effectively convert Heartland Financial Statutory Trust VI and VII, which total $40.0 million, from variable rate subordinated debentures to fixed rate debt. For accounting purposes, these swap transactions are designated as cash flow hedges of the changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $40.0 million of HTLF's subordinated debentures that reset quarterly on a

specified reset date. At inception, HTLF asserted that the underlying principal balance would remain outstanding throughout the hedge transaction, making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps. During the first quarter of 2021, the interest rate swap transaction associated with Heartland Financial Statutory Trust IV, totaling $25.0 million, matured and the fixed rate debt has been converted to a variable rate subordinated debenture.

On May 18, 2018, HTLF acquired cash flow hedges related to OCGI Statutory Trust III and OCGI Capital Trust IV with notional amounts of $3.0 million and $6.0 million, respectively, in the First Bank Lubbock Bancshares, Inc. transaction. The cash flow hedges effectively convert OCGI Statutory Trust III and OGCI Capital Trust IV from variable rate subordinated debentures to fixed rate debt. These swaps are designated as cash flow hedges of the changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $9.0 million of HTLF's subordinated debentures that reset quarterly on a specified reset date. These swaps matured in June of 2021.

The table below identifies the balance sheet category and fair values of HTLF's derivative instruments designated as cash flow hedges at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2021
Interest rate swap	$	21,250	$	(1,636)	Other liabilities	2.591	%	5.425	%	07/24/2028
Interest rate swap	20,000		(1,107)		Other liabilities	0.119		2.390		06/15/2024
Interest rate swap	20,000		(1,049)		Other liabilities	0.135		2.352		03/01/2024
December 31, 2020
Interest rate swap	$	25,000	$	(127)	Other liabilities	0.229	%	2.255	%	03/17/2021
Interest rate swap	21,667		(91)		Other liabilities	2.649		3.674		05/10/2021
Interest rate swap	22,750		(2,220)		Other liabilities	2.643		5.425		07/24/2028
Interest rate swap	20,000		(1,482)		Other liabilities	0.217		2.390		06/15/2024
Interest rate swap	20,000		(1,385)		Other liabilities	0.225		2.352		03/01/2024
Interest rate swap	6,000		(50)		Other liabilities	0.217		1.866		06/15/2021
Interest rate swap	3,000		(25)		Other liabilities	0.241		1.878		06/30/2021

The table below identifies the gains and losses recognized on HTLF's derivative instruments designated as cash flow hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Effective Portion					Ineffective Portion
	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of Gain (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
Three Months Ended June 30, 2021
Interest rate swaps	$	291	Interest expense	$	454	Other income	$	—
Six Months Ended June 30, 2021
Interest rate swaps	$	1,588	Interest expense	$	1,045	Other income	$	—
Three Months Ended June 30, 2020
Interest rate swap	$	(100)	Interest Expense	$	417	Other Income	$	—
Six Months Ended June 30, 2020
Interest rate swap	$	(3,963)	Interest Expense	$	600	Other Income	$	—

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 $3.8 million and $4.2 million of cash as collateral for these fair value hedges at June 30, 2021, and December 31, 2020, respectively.

The table below identifies the notional amount, fair value and balance sheet category of HTLF's fair value hedges at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Fair value hedges	$	16,901	$	(1,585)	Other liabilities
December 31, 2020
Fair value hedges	$	20,841	$	(2,480)	Other liabilities

The table below identifies the gains and losses recognized on HTLF's fair value hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Fair value hedges	$	132	Interest income
Six Months Ended June 30, 2021
Fair value hedges	$	895	Interest income
Three Months Ended June 30, 2020
Fair value hedges	$	4	Interest income
Six Months Ended June 30, 2020
Fair value hedges	$	(1,673)	Interest income

Embedded Derivatives

HTLF has fixed rate loans with embedded derivatives. The 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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Embedded derivatives	$	8,971	$	497	Other assets
December 31, 2020
Embedded derivatives	$	9,198	$	680	Other assets

The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Embedded derivatives	$	(54)	Other noninterest income
Six Months Ended June 30, 2021
Embedded derivatives	$	(183)	Other noninterest income
Three Months Ended June 30, 2020
Embedded derivatives	$	1	Other noninterest income
Six Months Ended June 30, 2020
Embedded derivatives	$	362	Other noninterest income

Back-to-Back Loan Swaps

HTLF has interest rate swap loan relationships with customers to meet their financing needs. 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 $30.6 million and $46.5 million as of June 30, 2021, and December 31, 2020, respectively, as collateral related to these back-to-back swaps. HTLF's counterparties were required to pledge $0 at both June 30, 2021, and December 31, 2020. 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 six months ended June 30, 2021 and June 30, 2020, 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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Weighted Average Receive Rate		Weighted Average Pay Rate
June 30, 2021
Customer interest rate swaps	$	438,415	$	29,394	Other assets	4.50	%	2.43	%
Customer interest rate swaps	438,415		(29,394)		Other liabilities	2.43		4.50
December 31, 2020
Customer interest rate swaps	$	440,719	$	43,422	Other assets	4.46	%	2.46	%
Customer interest rate swaps	440,719		(43,422)		Other liabilities	2.46		4.46

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 in order 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 June 30, 2021, and December 31, 2020. HTLF's counterparties were required to pledge no collateral at both June 30, 2021 and December 31, 2020, 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 sheet 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 June 30, 2021, and December 31, 2020, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2021
Interest rate lock commitments (mortgage)	Other assets	$	39,922	$	1,425
Forward commitments	Other assets	9,500		8
Forward commitments	Other liabilities	59,000		(202)
Undesignated interest rate swaps	Other liabilities	8,971		(497)
December 31, 2020
Interest rate lock commitments (mortgage)	Other assets	$	42,078	$	1,827
Forward commitments	Other assets	—		—
Forward commitments	Other liabilities	86,500		(697)
Undesignated interest rate swaps	Other liabilities	9,198		(680)

The table below identifies the income statement category of the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(250)
Forward commitments	Net gains on sale of loans held for sale	(1,403)
Undesignated interest rate swaps	Other noninterest income	54
Six Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(1,735)
Forward commitments	Net gains on sale of loans held for sale	503
Undesignated interest rate swaps	Other noninterest income	183
Three Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	1,296
Forward commitments	Net gains on sale of loans held for sale	962
Undesignated interest rate swaps	Other noninterest income	(1)
Six Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	2,994
Forward commitments	Net gains on sale of loans held for sale	(184)
Undesignated interest rate swaps	Other noninterest income	(362)

NOTE 8: 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 and are recorded at fair value only to the extent a decline in fair value is determined to be other-than-temporary. 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.

Commercial Servicing Rights

Commercial servicing rights assets represent the value associated with servicing commercial loans guaranteed by the Small Business Administration and the United States Department of Agriculture that have been sold with servicing retained by HTLF. HTLF uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its commercial servicing rights. The fair value for servicing assets is determined through market prices for comparable servicing contracts, when available, or through a valuation model that calculates the present value of estimated future net servicing income. Inputs utilized include discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Commercial servicing rights are subject to impairment testing, and 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. If the valuation model reflects a fair value less than the carrying value, commercial servicing rights are adjusted to fair value through a valuation allowance. HTLF classifies commercial 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 June 30, 2021, and December 31, 2020, 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 HTLFs assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021, and December 31, 2020, 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
June 30, 2021
Assets
Securities available for sale
U.S. treasuries	$	1,016	$	1,016	$	—	$	—
U.S. agencies	35,371		—		35,371		—
Obligations of states and political subdivisions	1,871,786		—		1,871,786		—
Mortgage-backed securities - agency	1,740,675		—		1,740,675		—
Mortgage-backed securities - non-agency	1,363,292		—		1,363,292		—
Commercial mortgage-backed securities - agency	125,080		—		125,080		—
Commercial mortgage-backed securities - non-agency	535,305		—		535,305		—
Asset-backed securities	846,987		—		846,987		—
Corporate bonds	3,815		—		3,815		—
Equity securities with a readily determinable fair value	20,651		—		20,651		—
Derivative financial instruments(1)	29,891		—		29,891		—
Interest rate lock commitments	1,425		—		—		1,425
Forward commitments	8		—		8		—
Total assets at fair value	$	6,575,302	$	1,016	$	6,572,861	$	1,425
Liabilities
Derivative financial instruments(2)	$	35,268	$	—	$	35,268	$	—
Forward commitments	202		—		202		—
Total liabilities at fair value	$	35,470	$	—	$	35,470	$	—
December 31, 2020
Assets
Securities available for sale
U.S. treasuries	$	2,026	$	2,026	$	—	$	—
U.S. agencies	166,779		—		166,779		—
Obligations of states and political subdivisions	1,635,227		—		1,635,227		—
Mortgage-backed securities - agency	1,355,270		—		1,355,270		—
Mortgage-backed securities - non-agency	1,449,116		—		1,449,116		—
Commercial mortgage-backed securities - agency	174,153		—		174,153		—
Commercial mortgage-backed securities - non-agency	252,767		—		252,767		—
Asset-backed securities	1,069,266		—		1,069,266		—
Corporate bonds	3,742		—		3,742		—
Equity securities with a readily determinable fair value	19,629		—		19,629		—
Derivative financial instruments(1)	44,102		—		44,102		—
Interest rate lock commitments	1,827		—		—		1,827
Total assets at fair value	$	6,173,904	$	2,026	$	6,170,051	$	1,827
Liabilities
Derivative financial instruments(2)	$	51,962	$	—	$	51,962	$	—
Forward commitments	697		—		697		—
Total liabilities at fair value	$	52,659	$	—	$	52,659	$	—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps, embedded derivatives and free standing derivative instruments.

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

	Fair Value Measurements at June 30, 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	$	8,969	$	—	$	—	$	8,969	$	214
Owner occupied commercial real estate	3,573		—		—		3,573		—
Non-owner occupied commercial real estate	14,742		—		—		14,742		1,637
Agricultural and agricultural real estate	14,161		—		—		14,161		—
Total collateral dependent individually assessed loans	$	41,445	$	—	$	—	$	41,445	$	1,851
Loans held for sale	$	33,248	$	—	$	33,248	$	—	$	(1,304)
Other real estate owned	6,314		—		—		6,314		(88)
Premises, furniture and equipment held for sale	6,925		—		—		6,925		(44)
Servicing rights	5,559		—		—		5,559		(391)

	Fair Value Measurements at December 31, 2020
	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	$	11,256	$	—	$	—	$	11,256	$	451
Owner occupied commercial real estate	5,874		—		—		5,874		11,631
Non-owner occupied commercial real estate	4,907		—		—		4,907		—
Agricultural and agricultural real estate	12,451		—		—		12,451		—
Total collateral dependent individually assessed loans	$	34,488	$	—	$	—	$	34,488	$	12,082
Loans held for sale	$	57,949	$	—	$	57,949	$	—	$	(982)
Other real estate owned	6,624		—		—		6,624		1,044
Premises, furniture and equipment held for sale	6,499		—		—		6,499		3,288
Servicing rights	5,189		—		—		5,189		1,778

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 6/30/2021		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,425	Discounted cash flows	Closing ratio	0-99% (88%)(1)
Other real estate owned	6,314		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,559		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,925		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial	8,969		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)
Owner occupied commercial real estate	3,573		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Non-owner occupied commercial real estate	14,742		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	14,161		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-15%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

	Fair Value at 12/31/2020		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,827	Discounted cash flows	Closing ratio	0-99% (86%)(1)
Other real estate owned	6,624		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,189		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,499		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial and industrial	11,256		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)

	Fair Value at 12/31/2020	Valuation Technique	Unobservable Input	Range (Weighted Average)
Owner occupied commercial real estate	5,874	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-12%(3)
Non-owner occupied commercial real estate	4,907	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	12,451	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

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 Six Months Ended June 30, 2021		For the Year Ended December 31, 2020
Balance at January 1,	$	1,827	$	681
Total net gains included in earnings	(1,735)		2,803
Issuances	8,892		17,221
Settlements	(7,559)		(18,878)
Balance at period end	$	1,425	$	1,827

Gains included in gains (losses) on sale of loans held for sale attributable to interest rate lock commitments held at June 30, 2021, and December 31, 2020, were $1.4 million and $1.8 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 June 30, 2021, and December 31, 2020, 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.

					Fair Value Measurements at June 30, 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	$	449,128	$	449,128	$	449,128	$	—	$	—
Time deposits in other financial institutions	3,138		3,138		3,138		—		—
Securities:
Carried at fair value	6,543,978		6,543,978		1,016		6,542,962		—
Held to maturity	85,439		95,421		—		95,421		—
Other investments	76,809		76,809		—		76,809		—
Loans held for sale	33,248		33,248		—		33,248		—
Loans, net:
Commercial and industrial	2,487,576		2,469,136		—		2,460,167		8,969
PPP	829,175		829,175		—		829,175		—
Owner occupied commercial real estate	1,920,144		1,901,531		—		1,897,958		3,573
Non-owner occupied commercial real estate	1,964,541		1,953,264		—		1,938,522		14,742
Real estate construction	834,715		838,001		—		838,001		—
Agricultural and agricultural real estate	672,448		660,650		—		646,489		14,161
Residential real estate	791,143		789,274		—		789,274		—
Consumer	391,546		394,337		—		394,337		—
Total Loans, net	9,891,288		9,835,368		—		9,793,923		41,445
Cash surrender value on life insurance	189,619		189,619		—		189,619		—
Derivative financial instruments(1)	29,891		29,891		—		29,891		—
Interest rate lock commitments	1,425		1,425		—		—		1,425
Forward commitments	8		8		—		8		—
Financial liabilities:
Deposits
Demand deposits	6,299,289		6,299,289		—		6,299,289		—
Savings deposits	8,189,223		8,189,223		—		8,189,223		—
Time deposits	1,126,606		1,126,788		—		1,126,788		—
Short term borrowings	152,563		152,563		—		152,563		—
Other borrowings	271,244		274,631		—		274,631		—
Derivative financial instruments(2)	35,268		35,368		—		35,368		—
Forward commitments	202		202		—		202		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

					Fair Value Measurements at December 31, 2020
	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	$	337,903	$	337,903	$	337,903	$	—	$	—
Time deposits in other financial institutions	3,129		3,129		3,129		—		—
Securities:
Carried at fair value	6,127,975		6,127,975		2,026		6,125,949		—
Held to maturity	88,839		100,041		—		100,041		—
Other investments	75,253		75,523		—		75,523		—
Loans held for sale	57,949		57,949		—		57,949		—
Loans, net:
Commercial and industrial	2,495,981		2,391,041		—		2,379,785		11,256
PPP	957,785		957,785		—		957,785		—
Owner occupied commercial real estate	1,756,405		1,745,397		—		1,739,523		5,874
Non-owner occupied commercial real estate	1,900,608		1,892,213		—		1,887,306		4,907
Real estate construction	843,140		849,224		—		849,224		—
Agricultural and agricultural real estate	707,397		697,729		—		685,278		12,451
Residential real estate	828,507		828,366		—		828,366		—
Consumer	401,622		407,914		—		407,914		—
Total Loans, net	9,891,445		9,769,669		—		9,735,181		34,488
Cash surrender value on life insurance	187,664		187,664		—		187,664		—
Derivative financial instruments(1)	44,102		44,102		—		44,102		—
Interest rate lock commitments	1,827		1,827		—		—		1,827
Financial liabilities:
Deposits
Demand deposits	5,688,810		5,688,810		—		5,688,810		—
Savings deposits	8,019,704		8,019,704		—		8,019,704		—
Time deposits	1,271,391		1,273,468		—		1,273,468		—
Short term borrowings	167,872		167,872		—		167,872		—
Other borrowings	457,042		458,806		—		458,806		—
Derivative financial instruments(1)	51,962		51,962		—		51,962		—
Forward commitments	697		697		—		697		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

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.

NOTE 9: REVENUE

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, requires revenue to be recognized at an amount that reflects the consideration to which HTLF expects to be entitled in exchange for transferring goods or services to a customer. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of HTLF's revenue streams including interest income, loan servicing income, net securities gain, net unrealized gains and losses on equity securities, net gains on sale of loans held for sale, valuation adjustment on servicing rights, income from bank owned life insurance and other noninterest income are outside the scope of ASC 606. Revenue streams including service charges and fees, interchange fees on credit and debit cards, trust fees and brokerage and insurance commissions are within the scope of ASC 606.

Service Charges and Fees

Service charges and fees consist of revenue generated from deposit account related service charges and fees, overdraft fees, customer service fees and other service charges, credit card fee income, debit card income and other service charges and fees.

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders and other deposit account related fees. HTLF's performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees, including overdraft fees, are largely transaction based, and therefore, the performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Customer service fees and other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. HTLF's performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Credit card fee income and debit card income are comprised of interchange fees, ATM fees, and merchant services income. Credit card fee income and debit card income are earned whenever the banks' debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a bank cardholder uses an ATM that is not owned by one of HTLF's banks or a non-bank cardholder uses a HTLF-owned ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

Trust Fees

Trust fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. HTLF's performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the average daily market value or month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days before or after month end through a direct charge to customers’ accounts. HTLF does not earn performance-based incentives. HTLF's performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Brokerage and Insurance Commissions

Brokerage commission primarily consist of commissions related to broker-dealer contracts. The contracts are between the customer and the broker-dealer, and HTLF satisfies its performance obligation and earns commission when the transactions are completed. The recognition of revenue is based on a defined fee schedule and does not require significant judgment. Payment is received shortly after services are rendered. Insurance commissions are related to commissions received directly from the insurance carrier. HTLF acts as an insurance agent between the customer and the insurance carrier. HTLF's performance obligations and associated fee and commission income are defined with each insurance product with the insurance company. When insurance payments are received from customers, a portion of the payment is recognized as commission revenue.

The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2021, and 2020, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
In-scope of Topic 606
Service charges and fees
Service charges and fees on deposit accounts	$	4,014	$	3,476	$	7,950	$	6,913
Overdraft fees	2,549		1,634		5,141		4,443
Customer service and other service fees	54		35		100		94
Credit card fee income	5,854		4,067		10,162		7,967
Debit card income	2,661		1,760		5,450		3,576
Total service charges and fees	15,132		10,972		28,803		22,993
Trust fees	6,039		4,977		11,816		9,999
Brokerage and insurance commissions	865		595		1,718		1,328
Total noninterest income in-scope of Topic 606	22,036		16,544		42,337		34,320
Out-of-scope of Topic 606
Loan servicing income	$	873	$	379	$	1,711	$	1,342
Securities gains, net	2,842		2,006		2,812		3,664
Unrealized gain/ (loss) on equity securities, net	83		680		(27)		449
Net gains on sale of loans held for sale	4,753		7,857		11,173		12,517
Valuation adjustment on servicing rights	(526)		9		391		(1,556)
Income on bank owned life insurance	937		1,167		1,766		1,665
Other noninterest income	2,166		1,995		3,318		4,053
Total noninterest income out-of-scope of Topic 606	11,128		14,093		21,144		22,134
Total noninterest income	$	33,164	$	30,637	$	63,481	$	56,454

Contract Balances

HTLF does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2021, and December 31, 2020, HTLF did not have any significant contract balances or capitalized contract acquisition costs.

NOTE 10: STOCK COMPENSATION

HTLF may grant, through its Nominating, Compensation 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 was approved by stockholders in May 2020 and replaces the 2012 Long-Term Incentive Plan. The Plan increased the number of shares of common stock authorized for issuance to 1,460,000 and made certain other changes to the Plan. As of June 30, 2021, 1,200,807 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 $303,000 of tax benefit during the six months ended June 30, 2021 and a tax expense of $91,000 during the six months ended June 30, 2020, 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"). In the first quarter of 2021, the Compensation Committee granted time-based RSUs with respect to 104,462 shares of common stock, and in the first quarter of 2020, the Compensation Committee granted time-based RSUs with respect to 114,944 shares of common stock to selected officers and employees. The time-based RSUs represent the right, without payment, to receive shares of HTLF common stock on a specified date in the future. The time-based RSUs granted in 2021 and 2020 vest over three years in equal installments in March of each of the three years following the year of the grant. 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). The retiree is required to sign a non-solicitation agreement as a condition to vesting.

The Compensation Committee also granted three-year performance-based RSUs with respect to 60,339 shares and 50,787 shares of common stock in the first quarter of 2021 and 2020, respectively. These performance-based RSUs will be earned based on satisfaction of performance targets for the three-year performance period ended December 31, 2023, and December 31, 2022, respectively. These performance-based RSUs or a portion thereof may vest in 2024 and 2023, respectively, after measurement of performance in relation to the performance targets.

The three-year performance-based RSUs vest to the extent that they are earned upon death or disability or upon a "qualified retirement." Upon a change in control, performance-based RSUs shall become vested at 100% of target if the RSU obligations are not assumed by the successor company. If the successor company does assume the RSU obligations, the 2021 and 2020 performance-based RSUs will vest at 100% of target upon a "Termination of Service" within the period beginning six months prior to a change in control and ending twenty-four months after a change in control.

All of HTLF's RSUs will be settled in common stock upon vesting and are not entitled to dividends until vested.

The Compensation Committee may grant RSUs under the Plan to non-employee HTLF and subsidiary bank directors as part of their compensation, to new management level employees at commencement of employment, and to other employees and service providers as incentives. During the six months ended June 30, 2021, and June 30, 2020, 41,974 and 46,613 time-based RSUs, respectively, were granted to directors and new employees.

A summary of the RSUs outstanding as of June 30, 2021, and June 30, 2020, and changes during the six months ended June 30, 2021 and 2020, follows:

	2021			2020
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1,	348,275	$	38.22	254,383	$	46.76
Granted	208,513	51.63		212,344	32.00
Vested	(146,381)	40.89		(118,686)	44.52
Forfeited	(18,861)	42.88		(14,648)	47.00
Outstanding at June 30,	391,546	$	44.08	333,393	$	38.55

Total compensation costs recorded for RSUs were $4.6 million and $3.4 million for the six months ended June 30, 2021 and 2020. As of June 30, 2021, there were $11.3 million of total unrecognized compensation costs related to the Plan for RSUs that are expected to be recognized through 2024.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q (including any information incorporated herein by reference) contains, and future oral and written statements of Heartland Financial USA, Inc. ("HTLF") and its management may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

Any statements about HTLF's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These forward-looking statements are generally identified by the use of words such as "believe," "expect," "anticipate," "plan," "intend," "estimate," "project," "may," "will," "would," "could," "should," "opportunity," "potential" or other similar or negative expressions of these words or phrases. Although HTLF has made these statements based on management's experience, beliefs, expectations, assumptions and best estimate of future events, the ability of the company to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which the company currently believes could have a material effect on its operations and future prospects include, among others, those described below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of the company’s Annual Report on Form 10-K for the year ended December 31, 2020:

•COVID-19 Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;

•Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, terrorist threats or acts of war;

•Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;

•Liquidity and Interest Rate Risks, including the impact of capital market conditions and changes in monetary policy on our borrowings and net interest income;

•Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;

•Strategic and External Risks, including competitive forces impacting our business and strategic acquisition risks;

•Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and

•Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

These risks and uncertainties should be considered in evaluating forward-looking statements made by HTLF or on its behalf, and undue reliance should not be placed on these statements. There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect the company's business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic and the impact of varying governmental responses that affect HTLF’s customers and the economies where they operate. Additionally, all statements in this Quarterly Report on Form 10-Q, including forward-looking statements, speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made or to correct or update any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in the company’s filings with the SEC.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances. Among other things, the estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes have the most effect on HTLF's reported financial position and results of operations are described as critical accounting policies in the company's Annual Report on Form 10-K for the year ended December 31, 2020. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2020.

OVERVIEW

Heartland Financial USA, Inc. is a financial services company operating under the brand name HTLF. HTLF's banks serve communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business supported by a strong retail operation and provides a diversified line of financial services including residential mortgage, wealth management, investments and insurance. As of June 30, 2021, HTLF has eleven banking subsidiaries with 132 locations.

HTLF's results of operations depend primarily on net interest income, which is the difference between interest income from interest earning assets and interest expense on interest bearing liabilities. Noninterest income, which includes service charges and fees, loan servicing income, trust income, brokerage and insurance commissions, securities gains, net gains on sale of loans held for sale, and income on bank owned life insurance also affects the results of operations. HTLF's principal operating expenses, aside from interest expense, consist of the provision for credit losses, salaries and employee benefits, occupancy and equipment costs, professional fees, advertising, core deposit and customer relationship intangibles amortization and other real estate and loan collection expenses.

HTLF reported the following results for the quarter ended June 30, 2021, compared to the quarter ended June 30, 2020:

•net income available to common stockholders of $59.6 million compared to $30.1 million,

•earnings per diluted common share of $1.41 compared to $0.82,

•return on average common equity was 12.07% compared to 7.69,%

•return on average assets was 1.35% compared to 0.84%, and

•return on average tangible common equity (non-GAAP) was 18.05% compared to 11.97%.

HTLF reported the following results for the six months ended June 30, 2021, compared to the six months ended June 30, 2020:

•net income available to common stockholders of $110.4 million compared to $50.2 million,

•earnings per diluted common share of $2.61 compared to $1.36,

•return on average common equity was 11.29% compared to 6.32%,

•return on average assets was 1.27% compared to 0.73%, and

•return on average tangible common equity (non-GAAP) was 16.99% compared to 9.95%.

For the second quarter of 2021, net interest margin was 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP), which compares to 3.44% (3.48% on a fully tax-equivalent basis, non-GAAP) and 3.81% (3.85% on a fully-tax equivalent basis, non-GAAP) for the first quarter of 2021 and second quarter of 2020, respectively. For the first six months of 2021, net interest margin was 3.40% (3.45% on a fully tax-equivalent basis, non-GAAP), which compares to 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP), for the first six months of 2020.

The efficiency ratio on a fully tax-equivalent basis (non-GAAP) was 57.11% for the second quarter of 2021 compared to 55.75% for the same quarter of 2020. For the first six months of 2021, the efficiency ratio on a fully tax-equivalent basis (non-GAAP) was 56.86% compared to 58.64% for the first six months of 2020.

Total assets were $18.37 billion at June 30, 2021, an increase of $462.7 million or 3% since December 31, 2020. Securities represented 37% of total assets at June 30, 2021, and 35% of total assets at December 31, 2020. Total loans held to maturity were $10.01 billion at June 30, 2021 compared to $10.02 billion at December 31, 2020, which was a decrease of $11.0 million

or less than 1%. Excluding total Paycheck Protection Program ("PPP") loans, total loans held to maturity increased $117.6 million or 1.30% since year-end 2020.

The total allowance for lending related credit losses was $134.7 million or 1.35% of total loans at June 30, 2021, compared to $146.9 million or 1.47% of total loans at December 31, 2020. Excluding total PPP loans, the allowance for lending related credit losses as percentage of loans was 1.47% and 1.62% as of June 30, 2021, and December 31, 2020, respectively.

Total deposits were $15.62 billion as of June 30, 2021, compared to $14.98 billion at December 31, 2020, an increase of $635.2 million or 4%.

Total equity was $2.16 billion at June 30, 2021, compared to $2.08 billion at December 31, 2020. Book value per common share was $48.50 at June 30, 2021, compared to $46.77 at year-end 2020. The unrealized gain on securities available for sale, net of applicable taxes, was $59.4 million at June 30, 2021, compared to an unrealized gain of $76.8 million, net of applicable taxes, at December 31, 2020.

Refer to "Non-GAAP Financial Measures" for additional information on the usage and presentation of the foregoing non-GAAP measures, and refer to the financial tables under "Financial Highlights" for the reconciliations to the most directly comparable GAAP measures.

2021 Developments

AimBank Systems Conversion

On February 19, 2021, HTLF successfully completed the systems conversion of AimBank, which was acquired by HTLF in the fourth quarter of 2020 and merged into HTLF's Texas subsidiary, First Bank & Trust. Subsequent to the systems conversion, seven of AimBank's twenty-five bank branches were transferred to HTLF's New Mexico Bank & Trust subsidiary.

Paycheck Protection Program Loans

HTLF originated a second round of Paycheck Protection Program loans ("PPP II") totaling $473.9 million since the beginning of 2021. PPP II loans are 100% United States Small Business Administration ("SBA") guaranteed, and borrowers may be eligible to have an amount up to the entire principal balance forgiven and paid by the SBA.

As of June 30, 2021, approximately 95% of the PPP loans originated in 2020 ("PPP I") have been forgiven or are in the process of being forgiven.

Branch Optimization

During the first six months of 2021, HTLF consolidated six legacy bank branches and three AimBank branches as it continues to respond to customer preferences and closely manage expenses. HTLF will continue to review its branch network for optimization and consolidation opportunities and anticipates reducing branch locations by approximately 10%, which may result in additional write-downs of fixed assets in future periods.

Branding Change

On April 14, 2021, a branding change from Heartland Financial to HTLF was announced and rolled out across the organization. The branding was refreshed to better reflect the strength of the diverse footprint and continued growth of the company.

Common Stock Dividend Increase

Subsequent to June 30, 2021, the HTLF Board of Directors approved a 14% increase in its quarterly common share dividend to $0.25 from $0.22. The dividend was increased to $0.22 per common share in January 2021 from $0.20 per common share in each quarter of 2020.

FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
STATEMENT OF INCOME DATA
Interest income	$	148,082		$	133,765		$	295,534		$	264,814
Interest expense	6,864			9,619			14,711			28,157
Net interest income	141,218			124,146			280,823			236,657
Provision (benefit) for credit losses	(7,080)			26,796			(7,728)			48,316
Net interest income after provision for credit losses	148,298			97,350			288,551			188,341
Noninterest income	33,164			30,637			63,481			56,454
Noninterest expenses	103,376			90,439			205,799			181,298
Income taxes	16,481			7,417			31,814			13,326
Net income	61,605			30,131			114,419			50,171
Preferred dividends	(2,012)			—			(4,025)			—
Net income available to common stockholders	$	59,593		$	30,131		$	110,394		$	50,171
KEY PERFORMANCE RATIOS
Annualized return on average assets	1.35		%	0.84		%	1.27		%	0.73		%
Annualized return on average common equity (GAAP)	12.07			7.69			11.29			6.32
Annualized return on average tangible common equity (non-GAAP)(1)	18.05			11.97			16.99			9.95
Annualized ratio of net charge-offs to average loans	0.12			0.11			0.09			0.17
Annualized net interest margin (GAAP)	3.37			3.81			3.40			3.81
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)	3.41			3.85			3.45			3.85
Efficiency ratio, fully tax-equivalent (non-GAAP)(1)	57.11			55.75			56.86			58.64

Dollars in thousands, expect per share data	As Of and For the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
BALANCE SHEET DATA
Investments	$	6,706,226		$	6,530,723		$	6,292,067		$	5,075,338		$	4,252,832
Loans held for sale	33,248			43,037			57,949			65,969			54,382
Loans receivable held to maturity	10,012,014			10,050,456			10,023,051			9,099,646			9,246,830
Allowance for credit losses	120,726			130,172			131,606			103,377			119,937
Total assets	18,371,006			18,244,427			17,908,339			15,612,664			15,026,153
Total deposits	15,615,118			15,559,051			14,979,905			12,767,110			12,708,699
Long-term obligations	271,244			349,514			457,042			524,045			306,459
Common equity	2,049,081			1,945,502			1,968,526			1,700,899			1,636.672
COMMON SHARE DATA
Book value per common share (GAAP)	$	48.50		$	46.13		$	46.77		$	46.11		$	44.42
Tangible book value per common share (non-GAAP)(1)	$	33.98		$	31.53		$	32.07		$	32.91		$	31.14
Common shares outstanding, net of treasury stock	42,245,452			42,173,675			42,093,862			36,885,390			36,844,744
Tangible common equity ratio (non-GAAP)(1)	8.08		%	7.54		%	7.81		%	8.03		%	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
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	59,593		$	50,801		$	37,795		$	45,521		$	30,131
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,907			1,988			1,975			1,969			2,130
Net income excluding intangible amortization (non-GAAP)	$	61,500		$	52,789		$	39,770		$	47,490		$	32,261
Average common equity (GAAP)	$	1,980,904		$	1,963,674		$	1,769,575		$	1,661,381		$	1,574,902
Less average goodwill	576,005			576,005			488,151			446,345			446,345
Less average core deposit and customer relationship intangibles, net	38,614			41,399			42,733			42,145			44,723
Average tangible common equity (non-GAAP)	$	1,366,285		$	1,346,270		$	1,238,691		$	1,172,891		$	1,083,834
Annualized return on average common equity (GAAP)	12.07		%	10.49		%	8.50		%	10.90		%	7.69		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%	15.90		%	12.77		%	16.11		%	11.97		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	141,218		$	139,605		$	132,575		$	122,497		$	124,146
Plus tax-equivalent adjustment(1)	1,762			1,761			1,529			1,390			1,416
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980		$	141,366		$	134,104		$	123,887		$	125,562
Average earning assets	$	16,819,978		$	16,460,124		$	15,042,079		$	13,868,360		$	13,103,159
Annualized net interest margin (GAAP)	3.37		%	3.44		%	3.51		%	3.51		%	3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41			3.48			3.55			3.55			3.85
Net purchase accounting discount accretion on loans included in annualized net interest margin	0.09			0.12			0.10			0.10			0.16

	As Of and For the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common equity (GAAP)	$	2,049,081		$	1,945,502		$	1,968,526		$	1,700,899		$	1,636,672
Less goodwill	576,005			576,005			576,005			446,345			446,345
Less core deposit and customer relationship intangibles, net	37,452			39,867			42,383			40,520			43,011
Tangible common equity (non-GAAP)	$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034		$	1,147,316
Common shares outstanding, net of treasury stock	42,245,452			42,173,675			42,093,862			36,885,390			36,844,744
Common equity (book value) per share (GAAP)	$	48.50		$	46.13		$	46.77		$	46.11		$	44.42
Tangible book value per common share (non-GAAP)	$	33.98		$	31.53		$	32.07		$	32.91		$	31.14
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common equity (non-GAAP)	$	1,435,624		$	1,329,630		$	1,350,138		$	1,214,034		$	1,147,316
Total assets (GAAP)	$	18,371,006		$	18,244,427		$	17,908,339		$	15,612,664		$	15,026,153
Less goodwill	576,005			576,005			576,005			446,345			446,345
Less core deposit and customer relationship intangibles, net	37,452			39,867			42,383			40,520			43,011
Total tangible assets (non-GAAP)	$	17,757,549		$	17,628,555		$	17,289,951		$	15,125,799		$	14,536,797
Tangible common equity ratio (non-GAAP)	8.08		%	7.54		%	7.81		%	8.03		%	7.89		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Net interest income (GAAP)	$	141,218		$	139,605		$	132,575		$	122,497		$	124,146
Tax-equivalent adjustment(1)	1,762			1,761			1,529			1,390			1,416
Fully tax-equivalent net interest income	142,980			141,366			134,104			123,887			125,562
Noninterest income	33,164			30,317			32,621			31,216			30,637
Securities (gains)/losses, net	(2,842)			30			(2,829)			(1,300)			(2,006)
Unrealized (gain)/loss on equity securities, net	(83)			110			(36)			(155)			(680)
Valuation adjustment on servicing rights	526			(917)			102			120			(9)
Adjusted revenue (non-GAAP)	$	173,745		$	170,906		$	163,962		$	153,768		$	153,504
Total noninterest expenses (GAAP)	$	103,376		$	102,423		$	99,269		$	90,396		$	90,439
Less:
Core deposit and customer relationship intangibles amortization	2,415			2,516			2,501			2,492			2,696
Partnership investment in tax credit projects	1,345			35			1,899			927			791
Loss on sales/valuation of assets, net	183			194			2,621			1,763			701
Acquisition, integration and restructuring costs	210			2,928			2,186			1,146			673
Adjusted noninterest expenses (non-GAAP)	$	99,223		$	96,750		$	90,062		$	84,068		$	85,578
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%	56.61		%	54.93		%	54.67		%	55.75		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44		$	534		$	232		$	—		$	122
Occupancy	1			9			—			—			—
Furniture and equipment	41			607			423			496			15
Professional fees	63			670			1,422			476			505
Advertising	6			156			42			8			4
Other noninterest expenses	55			952			67			166			27
Total acquisition, integration and restructuring costs	$	210		$	2,928		$	2,186		$	1,146		$	673
After tax impact on diluted earnings per common share(1)	$	—		$	0.05		$	0.04		$	0.02		$	0.01
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Net income available to common stockholders (GAAP)	$	59,593		$	30,131		$	110,394		$	50,171
Plus core deposit and customer relationship intangibles amortization, net of tax(1)	1,907			2,130			3,895			4,485
Net income available to common stockholders excluding intangible amortization (non-GAAP)	$	61,500		$	32,261		$	114,289		$	54,656
Average common equity (GAAP)	$	1,980,904		$	1,574,902		$	1,972,337		$	1,597,292
Less average goodwill	576,005			446,345			576,005			446,345
Less average core deposit and customer relationship intangibles, net	38,614			44,723			39,999			46,177
Average tangible common equity (non-GAAP)	$	1,366,285		$	1,083,834		$	1,356,333		$	1,104,770
Annualized return on average common equity (GAAP)	12.07		%	7.69		%	11.29		%	6.32		%
Annualized return on average tangible common equity (non-GAAP)	18.05		%	11.97		%	16.99		%	9.95		%
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net Interest Income (GAAP)	$	141,218		$	124,146		$	280,823		$	236,657
Plus tax-equivalent adjustment(1)	1,762			1,416			3,523			2,547
Net interest income, fully tax-equivalent (non-GAAP)	$	142,980		$	125,562		$	284,346		$	239,204
Average earning assets	$	16,819,978		$	13,103,159		$	16,641,045		$	12,497,307
Annualized net interest margin (GAAP)	3.37		%	3.81		%	3.40		%	3.81		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)	3.41			3.85			3.45			3.85
Net purchase accounting discount accretion on loans included in annualized net interest margin	0.09			0.16			0.11			0.10
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Net interest income (GAAP)	$	141,218		$	124,146		$	280,823		$	236,657
Tax-equivalent adjustment(1)	1,762			1,416			3,523			2,547
Fully tax-equivalent net interest income	142,980			125,562			284,346			239,204
Noninterest income	33,164			30,637			63,481			56,454
Securities gains, net	(2,842)			(2,006)			(2,812)			(3,664)
Unrealized (gain)/loss on equity securities, net	(83)			(680)			27			(449)
Valuation adjustment on servicing rights	526			(9)			(391)			1,556
Adjusted revenue (non-GAAP)	$	173,745		$	153,504		$	344,651		$	293,101
Total noninterest expenses (GAAP)	$	103,376		$	90,439		$	205,799		$	181,298
Less:
Core deposit and customer relationship intangibles amortization	2,415			2,696			4,931			5,677
Partnership investment in tax credit projects	1,345			791			1,380			975
Loss on sales/valuation of assets, net	183			701			377			717
Acquisition, integration and restructuring costs	210			673			3,138			2,049
Adjusted noninterest expenses (non-GAAP)	$	99,223		$	85,578		$	195,973		$	171,880
Efficiency ratio, fully tax-equivalent (non-GAAP)	57.11		%	55.75		%	56.86		%	58.64		%
Acquisition, integration and restructuring costs
Salaries and employee benefits	$	44		$	122		$	578		$	166
Occupancy	1			—			10			—
Furniture and equipment	41			15			648			39
Professional fees	63			505			733			1,501
Advertising	6			4			162			93
Other noninterest expenses	55			27			1,007			250
Total acquisition, integration and restructuring costs	$	210		$	673		$	3,138		$	2,049
After tax impact on diluted earnings per common share(1)	$	—		$	0.01		$	0.06		$	0.04
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q contains references to financial measures which are not defined by generally accepted accounting principles ("GAAP"). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate HTLF's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures presented in this section with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables above.

The non-GAAP measures presented in this Quarterly Report on Form 10-Q, management's reason for including each measure and the method of calculating each measure are presented below:

•Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.

•Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from

taxable and nontaxable sources and excludes specific items as noted in the reconciliation contained in this Quarterly Report on Form 10-Q.

•Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.

•Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.

•Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.

•Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.

RESULTS OF OPERATIONS

Net Interest Margin and Net Interest Income

Management closely monitors and manages net interest income and net interest margin, the results of which are shared with investors because they are important indicators of the company's profitability and growth of earning assets.

Net interest income is the difference between interest income on earning assets and interest expense paid on interest bearing liabilities. As such, net interest income is affected by changes in volumes and yields on earning assets and the volume and rates paid on interest bearing liabilities. Net interest margin is the ratio of net interest income to average earning assets.

HTLF's success in maintaining competitive net interest margin despite the low-interest rate environment has been the result of an increase in average earning assets and a favorable deposit mix. Also contributing to HTLF's ability to maintain its net interest margin has been the amortization of purchase accounting discounts associated with acquisitions completed since 2015.

For the Quarters ended June 30, 2021 and 2020

Net interest margin, expressed as a percentage of average earning assets, was 3.37% (3.41% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2021, compared to 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the second quarter of 2020. For the quarters ended June 30, 2021 and 2020, net interest margin included 9 basis points and 16 basis points, respectively, of net purchase accounting discount amortization.

Total interest income and average earning asset changes for the second quarter of 2021 compared to the second quarter of 2020 were:

•Total interest income was $148.1 million, which was an increase of $14.3 million or 11% from $133.8 million and primarily attributable to an increase in average earning assets partially offset by lower yields.

•Total interest income on a tax-equivalent basis (non-GAAP) was $149.8 million, which was an increase of $14.7 million or 11% from $135.2 million.

•Average earning assets increased $3.72 billion or 28% to $16.82 billion compared to $13.10 billion, which was primarily attributable to recent acquisitions and loan growth, including PPP loans.

•The average rate on earning assets decreased 58 basis points to 3.57% compared to 4.15%, which was primarily due to recent decreases in market interest rates and a shift in earning asset mix. Total average securities were 39% of total average earning assets compared to 29%.

Total interest expense and average interest bearing liability changes for the second quarter of 2021 compared to the second quarter of 2020 were:

•Total interest expense was $6.9 million, a decrease of $2.8 million or 29% from $9.6 million, based on a decrease in the average interest rate paid, which was partially offset by an increase in average interest bearing liabilities.

•The average interest rate paid on interest bearing liabilities decreased to 0.28% compared to 0.47%, which was primarily due to recent decreases in market interest rates.

•Average interest bearing deposits increased $1.62 billion or 21% to $9.41 billion from $7.79 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits related to government stimulus payments and other COVID-19 relief programs.

•The average interest rate paid on interest bearing deposits decreased 16 basis points to 0.16% compared to 0.32%.

•Average borrowings increased $97.0 million or 26% to $465.9 million from $368.9 million, which was primarily attributable to outstanding advances from the PPP lending fund used to fund PPP loans to borrowers. The average interest rate paid on borrowings was 2.65% compared to 3.80%.

Net interest income increased for the second quarter of 2021 compared to the second quarter of 2020:

•Net interest income totaled $141.2 million compared to $124.1 million, which was an increase of $17.1 million or 14%.

•Net interest income on a tax-equivalent basis (non-GAAP) totaled $143.0 million compared to $125.6 million, which was an increase of $17.4 million or 14%.

For the Six Months ended June 30, 2021 and 2020

Net interest margin, expressed as a percentage of average earning assets, was 3.40% (3.45% on a fully tax-equivalent basis, non-GAAP) during the first six months of 2021, compared to 3.81% (3.85% on a fully tax-equivalent basis, non-GAAP) during the first six months of 2020. For the six months ended June 30, 2021 and 2020, net interest margin included 11 basis points and 10 basis points, respectively, of net purchase accounting discount amortization.

Total interest income and average earning asset changes for the first six months of 2021 compared to the first six months of 2020 were:

•Total interest income was $295.5 million, which was an increase of $30.7 million or 12% from $264.8 million, primarily attributable to an increase in average earning assets partially offset by lower yields.

•Total interest income on a tax-equivalent basis (non-GAAP) was $299.1 million, which was an increase of $31.7 million or 12% from $267.4 million.

•Average earning assets increased $4.14 billion or 33% to $16.64 billion compared to $12.50 billion which was primarily attributable to recent acquisitions and loan growth, including PPP loans.

•The average rate on earning assets decreased 68 basis points to 3.62% compared to 4.30%, which was primarily due to recent decreases in market interest rates and a shift in earning asset mix. Total average securities were 39% of total average earning assets compared to 29%, and the average tax-effected rate on securities was 2.27% compared to 2.90%.

Total interest expense and average interest bearing liability changes for the first six months of 2021 compared to the first six months of 2020 were:

•Total interest expense was $14.7 million, a decrease of $13.4 million or 48% from $28.2 million, based on a decrease in the average interest rate paid, which was partially offset by an increase in average interest bearing liabilities.

•The average interest rate paid on interest bearing liabilities decreased to 0.30% compared to 0.71%, which was primarily due to recent decreases in market interest rates.

•Average interest bearing deposits increased $1.73 billion or 23% to $9.34 billion from $7.61 billion which was primarily attributable to recent acquisitions and deposit growth, including deposits related to government stimulus payments and other COVID-19 relief programs.

•The average interest rate paid on interest bearing deposits decreased 37 basis points to 0.18% compared to 0.55%.

•Average borrowings increased $164.7 million or 42% to $558.0 million from $393.3 million, which was primarily attributable to outstanding advances from the PPP lending fund used to fund PPP loans to borrowers. The average interest rate paid on borrowings was 2.36% compared to 3.80%.

Net interest income increased for the first six months of 2021 compared to the first six months of 2020:

•Net interest income totaled $280.8 million compared to $236.7 million, which was an increase of $44.2 million or 19%.

•Net interest income on a tax-equivalent basis (non-GAAP) totaled $284.3 million compared to $239.2 million, which was an increase of $45.1 million or 19%.

See "Analysis of Average Balances, Tax-Equivalent Yields and Rates" for additional information relating to net interest income on a fully tax-equivalent basis, which is not defined by GAAP.

Management believes net interest margin expressed in dollars will continue to increase as the amount of earning assets grows, however net interest margin as a percentage of average earning assets may decrease because of interest rate changes. The Federal Reserve has indicated it will closely assess economic data and be patient before moving ahead with any additional changes to the Federal Funds rate; therefore, the timing and magnitude of any such changes are uncertain and will depend on domestic and global economic conditions.

HTLF attempts to manage its balance sheet to minimize the effect that a change in interest rates has on its net interest income. Management continues to work toward improving both its earning assets and funding mix through targeted organic growth strategies, which management believes will result in additional net interest income. HTLF produces and reviews simulations of various interest rate scenarios to assist in monitoring its exposure to interest rate risk. Based on these simulations, it is management's opinion that HTLF maintains a well-balanced and manageable interest rate posture. Item 3 of Part I of this Quarterly Report on Form 10-Q contains additional information about the results of the most recent net interest income simulations. Note 7 to the consolidated financial statements included in this Quarterly Report on Form 10-Q contains a detailed discussion of the derivative instruments utilized to manage its interest rate risk.

The following tables set forth certain information relating to average consolidated balance sheets and reflect the yield on average earning assets and the cost of average interest bearing liabilities for the periods indicated, in thousands. Such yields and costs are calculated by dividing income or expense by the average balance of assets or liabilities. Average balances are derived from daily balances, and nonaccrual loans and loans held for sale are included in each respective loan category. Assets that receive favorable tax treatment are evaluated on a tax-equivalent basis assuming a federal income tax rate of 21%. Tax-favored assets generally have lower contractual pre-tax yields than fully taxable assets. A tax-equivalent yield is calculated by adding the tax savings to the interest earned on tax favored assets and dividing this amount by the average balance of the tax favorable assets.

ANALYSIS OF AVERAGE BALANCES, TAX EQUIVALENT YIELDS AND RATES (1) (DOLLARS IN THOUSANDS)
	For the Quarter Ended
	June 30, 2021							March 31, 2021							June 30, 2020
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	5,862,683		$	31,546	2.16	%	$	5,693,097		$	30,443	2.17	%	$	3,375,245		$	23,362	2.78	%
Nontaxable(1)	740,601			5,773		3.13		730,565			5,700		3.16		433,329			4,233		3.93
Total securities	6,603,284			37,319		2.27		6,423,662			36,143		2.28		3,808,574			27,595		2.91
Interest on deposits with other banks and short-term investments	271,891			60		0.09		204,488			66		0.13		210,347			54		0.10
Federal funds sold	—			—		—		14,020			1		0.03		—			—		—
Loans:(2)
Commercial and industrial(1)	2,469,742			28,562		4.64		2,500,250			28,222		4.58		2,453,066			30,759		5.04
PPP loans	1,047,559			11,186		4.28		992,517			10,149		4.15		916,405			6,017		2.64
Owner occupied commercial real estate	1,858,891			20,097		4.34		1,778,829			19,565		4.46		1,426,019			17,670		4.98
Non-owner occupied commercial real estate	1,980,374			21,734		4.40		1,937,564			22,121		4.63		1,540,958			19,055		4.97
Real estate construction	815,738			9,212		4.53		806,315			9,698		4.88		1,100,514			12,589		4.60
Agricultural and agricultural real estate	672,560			7,267		4.33		681,279			8,051		4.79		532,668			6,171		4.66
Residential mortgage	827,291			9,255		4.49		849,923			9,830		4.69		795,149			9,586		4.85
Consumer	399,916			5,152		5.17		405,475			5,367		5.37		422,134			5,685		5.42
Less: allowance for credit losses-loans	(127,268)			—		—		(134,198)			—		—		(102,675)			—		—
Net loans	9,944,803			112,465		4.54		9,817,954			113,003		4.67		9,084,238			107,532		4.76
Total earning assets	16,819,978			149,844		3.57	%	16,460,124			149,213		3.68	%	13,103,159			135,181		4.15	%
Nonearning Assets	1,473,778							1,504,599							1,288,697
Total Assets	$	18,293,756						$	17,964,723						$	14,391,856
Interest Bearing Liabilities
Savings	$	8,234,151		$	2,233	0.11	%	$	8,032,308		$	2,430	0.12	%	$	6,690,504		$	2,372	0.14	%
Time deposits	1,171,266			1,557		0.53		1,233,682			1,965		0.65		1,096,386			3,762		1.38
Short-term borrowings	169,822			98		0.23		240,037			152		0.26		82,200			61		0.30
Other borrowings	296,063			2,976		4.03		411,132			3,300		3.26		286,663			3,424		4.80
Total interest bearing liabilities	9,871,302			6,864		0.28	%	9,917,159			7,847		0.32	%	8,155,753			9,619		0.47
Noninterest Bearing Liabilities
Noninterest bearing deposits	6,170,928							5,778,571							4,501,488
Accrued interest and other liabilities	159,917							194,614							153,618
Total noninterest bearing liabilities	6,330,845							5,973,185							4,655,106
Equity	2,091,609							2,074,379							1,580,997
Total Liabilities and Equity	$	18,293,756						$	17,964,723						$	14,391,856
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)				$	142,980						$	141,366						$	125,562
Net interest spread(1)						3.29	%						3.36	%						3.68	%
Net interest income, fully tax-equivalent to total earning assets (non-GAAP)(1)(3)						3.41	%						3.48	%						3.85	%
Interest bearing liabilities to earning assets	58.69		%					60.25		%					62.24		%
(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) (DOLLARS IN THOUSANDS)
	For the Six Months Ended
	June 30, 2021							June 30, 2020
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	5,778,333		$	61,989	2.16	%	$	3,253,675		$	45,093	2.79	%
Nontaxable(1)	735,636			11,473		3.15		360,932			6,996		3.90
Total securities	6,513,969			73,462		2.27		3,614,607			52,089		2.90
Interest bearing deposits with other banks and other short-term investments	238,376			126		0.11		195,833			775		0.80
Federal funds sold	6,971			1		0.03		—			—		—
Loans:(2)
Commercial and industrial(1)	2,485,210			56,784		4.61		2,530,349			63,213		5.02
PPP loans	1,020,190			21,335		4.22		458,202			6,017		2.64
Owner occupied commercial real estate	1,818,932			39,662		4.40		1,429,560			36,251		5.10
Non-owner occupied commercial real estate	1,958,938			43,855		4.51		1,506,583			38,585		5.15
Real estate construction	811,053			18,910		4.70		1,073,175			25,434		4.77
Agricultural and agricultural real estate	676,895			15,318		4.56		542,818			13,210		4.89
Residential mortgage	838,545			19,085		4.59		807,440			20,007		4.98
Consumer	402,680			10,519		5.27		427,439			11,780		5.54
Less: allowance for loan losses	(130,714)			—		—		(88,699)			—		—
Net loans	9,881,729			225,468		4.60		8,686,867			214,497		4.97
Total earning assets	16,641,045			299,057		3.62	%	12,497,307			267,361		4.30	%
Nonearning Assets	1,489,103							1,272,708
Total Assets	$	18,130,148						$	13,770,015
Interest Bearing Liabilities
Savings	$	8,133,787		$	4,663	0.12	%	$	6,484,016		$	12,454	0.39	%
Time deposits	1,202,301			3,522		0.59		1,121,502			8,262		1.48
Short-term borrowings	204,735			250		0.25		112,004			357		0.64
Other borrowings	353,280			6,276		3.58		281,325			7,084		5.06
Total interest bearing liabilities	9,894,103			14,711		0.30	%	7,998,847			28,157		0.71	%
Noninterest Bearing Liabilities
Noninterest bearing deposits	5,975,833							4,024,267
Accrued interest and other liabilities	177,170							146,561
Total noninterest bearing liabilities	6,153,003							4,170,828
Equity	2,083,042							1,600,340
Total Liabilities and Equity	$	18,130,148						$	13,770,015
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)				$	284,346						$	239,204
Net interest spread(1)						3.32	%						3.59	%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)						3.45	%						3.85	%
Interest bearing liabilities to earning assets	59.46		%					64.00		%
(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.

Provision For Credit Losses

The allowance for credit losses is established through provision expense to provide, in management's opinion, an appropriate allowance for credit losses. The following table shows the components of provision for credit losses for the three and six months ended June 30, 2021 and 2020, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Provision (benefit) for credit losses-loans	$	(6,466)	$	25,007	$	(6,450)	$	44,872
Provision (benefit) for credit losses-unfunded commitments	(617)		1,924		(1,278)		3,540
Provision (benefit) for credit losses-held to maturity securities	3		(135)		—		(96)
Total provision expense (benefit)	$	(7,080)	$	26,796	$	(7,728)	$	48,316

The provision benefit for credit losses for loans was $6.5 million for the second quarter of 2021, which was a decrease of $31.5 million from provision expense of $25.0 million recorded in the second quarter of 2020. The provision benefit for the second quarter of 2021 was impacted by several factors, including:

•increases in balances of loans held to maturity of $287.7 million during the second quarter excluding total PPP loans, which included an increase of $92.7 million in government guaranteed loans for which no provision was required,

•modest improvements in credit quality marked by a decrease in nonperforming loans of $6.5 million to $85.4 million and nonpass loans of 10.37% of total loans as of June 30, 2021, compared to nonperforming loans of $91.9 million and nonpass loans of 11.47% of total loans at March 31, 2021, and

•improved macroeconomic factors compared to previous quarters.

The provision benefit for credit losses for loans was $6.5 million for the first six months of 2021 compared to provision expense of $44.9 million for the first six months of 2020, which was a decrease of $51.3 million. The provision benefit for the first six months of 2021 was impacted by several factors, including:

•increases in balances of loans held to maturity of $117.6 million excluding total PPP loans from year-end 2020, which included an increase of $165.8 million of government guaranteed loans for which no provision was required.

•modest improvements in credit quality marked by a decrease in nonperforming loans of $2.7 million to $85.4 million and nonpass loans of 10.37% of total loans as of June 30, 2021, compared to nonperforming loans of $88.1 million and nonpass loans of 10.80% of total loans at December 31, 2020, and

•improved macroeconomic factors compared to previous quarters.

Given the size of the loan portfolio, the level of organic loan growth including government guaranteed loans, changes in credit quality and the variability that can occur in the factors, such as economic conditions, considered when determining the appropriateness of the allowance for credit losses, the provision for credit losses will vary from quarter to quarter. For additional details on the specific factors considered in establishing the allowance for credit losses, refer to the discussion of critical accounting policies set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in HTLF's Annual Report on Form 10-K for the year ended December 31, 2020, "Allowance For Credit Losses" and "Provision for Credit Losses" in Item 2 of this Quarterly Report on Form 10-Q and Note 5, "Allowance for Credit Losses," to the consolidated financial statements included herein.

Management believes the allowance for credit losses as of June 30, 2021, was at a level commensurate with the overall risk exposure of the loan portfolio. However, negative changes in current economic conditions related to the COVID-19 pandemic could cause certain borrowers to experience difficulty. Due to the uncertainty of future economic conditions resulting from the COVID-19 pandemic, including recent concerns over COVID-19 variants, the provision for credit losses could be volatile over the next several quarters.

Noninterest Income

The tables below show noninterest income for the three- and six- months ended June 30, 2021 and 2020, in thousands:

	Three Months Ended June 30,
	2021		2020		Change		% Change
Service charges and fees	$	15,132	$	10,972	$	4,160	38	%
Loan servicing income	873		379		494		130
Trust fees	6,039		4,977		1,062		21
Brokerage and insurance commissions	865		595		270		45
Securities gains, net	2,842		2,006		836		42
Unrealized gain/(loss) on equity securities, net	83		680		(597)		(88)
Net gains on sale of loans held for sale	4,753		7,857		(3,104)		(40)
Valuation adjustment on servicing rights	(526)		9		(535)		(5,944)
Income on bank owned life insurance	937		1,167		(230)		(20)
Other noninterest income	2,166		1,995		171		9
Total noninterest income	$	33,164	$	30,637	$	2,527	8	%

	Six Months Ended June 30,
	2021		2020		Change		% Change
Service charges and fees	$	28,803	$	22,993	$	5,810	25	%
Loan servicing income	1,711		1,342		369		27
Trust fees	11,816		9,999		1,817		18
Brokerage and insurance commissions	1,718		1,328		390		29
Securities gains, net	2,812		3,664		(852)		(23)
Unrealized gain/(loss) on equity securities, net	(27)		449		(476)		(106)
Net gains on sale of loans held for sale	11,173		12,517		(1,344)		(11)
Valuation adjustment on servicing rights	391		(1,556)		1,947		125
Income on bank owned life insurance	1,766		1,665		101		6
Other noninterest income	3,318		4,053		(735)		(18)
Total noninterest income	$	63,481	$	56,454	$	7,027	12	%

Total noninterest income totaled $33.2 million during the second quarter of 2021 compared to $30.6 million during the second quarter of 2020, an increase of $2.5 million or 8%. Total noninterest income was $63.5 million for the first six months of 2021 compared to $56.5 million for the same period of 2020, which was an increase of $7.0 million or 12%.

Notable changes in noninterest income categories for the three- and six months ended June 30, 2021 and 2020 are as follows:

Service Charges and Fees

The following tables summarize the changes in service charges and fees for the three- and six- months ended June 30, 2021 and 2020, in thousands:

	Three Months Ended June 30,
	2021		2020		Change		% Change
Service charges and fees on deposit accounts	$	4,014	$	3,476	$	538	15	%
Overdraft fees	2,549		1,634		915		56
Customer service and other service fees	54		35		19		54
Credit card fee income	5,854		4,067		1,787		44
Debit card income	2,661		1,760		901		51
Total service charges and fees	$	15,132	$	10,972	$	4,160	38	%
	Six Months Ended June 30,
	2021		2020		Change		% Change
Service charges and fees on deposit accounts	$	7,950	$	6,913	$	1,037	15	%
Overdraft fees	5,141		4,443		698		16
Customer service and other service fees	100		94		6		6
Credit card fee income	10,162		7,967		2,195		28
Debit card income	5,450		3,576		1,874		52
Total service charges and fees	$	28,803	$	22,993	$	5,810	25	%

Notable changes in total service charges and fees for the second quarter of 2021 compared to the second quarter of 2020 were:

•Service charges and fees on deposit accounts totaled $4.0 million compared to $3.5 million, an increase of $538,000 or 15%.

•Overdraft fees increased $915,000 or 56% to $2.5 million from $1.6 million.

•Credit card fee income increased $1.8 million or 44% to $5.9 million from $4.1 million.

•Debit card income totaled $2.7 million compared to $1.8 million, an increase of $901,000 or 51%.

Notable changes in total service charges and fees for the first six months of 2021 compared to the first six months of 2020 were:

•Service charges and fees on deposit accounts totaled $8.0 million compared to $6.9 million, an increase of $1.0 million or 15%.

•Overdraft fees increased $698,000 or 16% to $5.1 million from $4.4 million.

•Credit card fee income increased $2.2 million or 28% to $10.2 million from $8.0 million.

•Debit card income totaled $5.5 million compared to $3.6 million, an increase of $1.9 million or 52%.

The changes detailed above were primarily attributable to HTLF's larger customer base as a result of recent acquisitions. Additionally, HTLF was waiving retail and small business service charges and fees and transaction volumes were lower in the second quarter of 2020 due to the COVID-19 pandemic.

Loan Servicing Income

Loan servicing income includes the fees collected for the servicing of commercial, agricultural, and mortgage loans, which are dependent upon the aggregate outstanding balances of these loans, rather than quarterly production and sale of these loans. The following tables show the changes in loan servicing income for the three- and six- months ended June 30, 2021, and 2020, in thousands:

	Three Months Ended June 30,
	2021		2020		Change		% Change
Commercial and agricultural loan servicing fees(1)	$	738	$	730	$	8	1	%
Residential mortgage servicing fees	459		410		49		12
Mortgage servicing rights amortization	(324)		(761)		437		57
Total loan servicing income	$	873	$	379	$	494	130	%
	Six Months Ended June 30,
	2021		2020		Change		% Change
Commercial and agricultural loan servicing fees(1)	$	1,512	$	1,591	$	(79)	(5)	%
Residential mortgage servicing fees	923		819		104		13
Mortgage servicing rights amortization	(724)		(1,068)		344		32
Total loan servicing income	$	1,711	$	1,342	$	369	27	%
(1) Includes servicing fees for commercial, commercial real estate, agricultural and agricultural real estate loans.

Stable residential mortgage rates for the second quarter and first six months of 2021 compared to the same periods of 2020 caused residential mortgage loan refinancing activity to decrease, which reduced mortgage servicing rights amortization.

Trust Fees

Trust fees increased $1.1 million or 21% to $6.0 million for the second quarter of 2021 compared to $5.0 million for the same quarter of 2020. For the six months ended June 30, 2021 and 2020, trust fees totaled $11.8 million compared to $10.0 million, respectively, and was an increase of $1.8 million or 18%. The increase for both the three- and six month periods was attributable to an increase in the fair market value of assets under management.

Securities Gains, Net

For the second quarter of 2021, net securities gains totaled $2.8 million compared to $2.0 million for the second quarter of 2020, which was an increase of $836,000 or 42%. For the six months ended June 30, 2021 and 2020, net securities gains totaled $2.8 million and $3.7 million, respectively, which was a decrease of $852,000 or 23%. The net unrealized gain on securities carried at fair value was $80.3 million at June 30, 2021, $12.9 million at March 31, 2021, and $103.8 million at year-end 2020.

Net Gains on Sale of Loans Held for Sale

During the second quarter of 2021, net gains on sale of loans held for sale totaled $4.8 million compared to $7.9 million during the same period in 2020, a decrease of $3.1 million or 40%. Loans sold to investors in the second quarter of 2021 totaled $130.2 million compared to $147.8 million during the second quarter of 2020, which was a decrease of $17.6 million or 12%.

For the first six months of 2021, net gains on sales of loans held for sale totaled $11.2 million compared to $12.5 million, which was a decrease of $1.3 million or 11%. Loans sold to investors for the first six months of 2021 totaled $269.5 million compared to $243.5 million, which was an increase of $25.9 million or 11%.

Noninterest Expenses

The tables below show noninterest expenses for the three- and six months ended June 30, 2021, and 2020, in thousands:

	Three Months Ended June 30,
	2021		2020		Change		% Change
Salaries and employee benefits	$	57,332	$	50,118	$	7,214	14	%
Occupancy	7,399		6,502		897		14
Furniture and equipment	3,501		2,993		508		17
Professional fees	16,237		13,676		2,561		19
Advertising	1,649		995		654		66
Core deposit and customer relationship intangibles amortization	2,415		2,696		(281)		(10)
Other real estate and loan collection expenses	414		203		211		104
Loss on sales/valuations of assets, net	183		701		(518)		(74)
Acquisition, integration and restructuring costs	210		673		(463)		(69)
Partnership investment in tax credit projects	1,345		791		554		70
Other noninterest expenses	12,691		11,091		1,600		14
Total noninterest expenses	$	103,376	$	90,439	$	12,937	14	%

	Six Months Ended June 30,
	2021		2020		Change		% Change
Salaries and employee benefits	$	116,394	$	100,075	$	16,319	16	%
Occupancy	15,317		12,973		2,344		18
Furniture and equipment	6,594		6,101		493		8
Professional fees	29,727		26,149		3,578		14
Advertising	3,118		3,200		(82)		(3)
Core deposit and customer relationship intangibles amortization	4,931		5,677		(746)		(13)
Other real estate and loan collection expenses	549		537		12		2
Loss on sales/valuations of assets, net	377		717		(340)		(47)
Acquisition, integration and restructuring costs	3,138		2,049		1,089		53
Partnership investment in tax credit projects	1,380		975		405		42
Other noninterest expenses	24,274		22,845		1,429		6
Total noninterest expenses	$	205,799	$	181,298	$	24,501	14	%

For the second quarter of 2021, noninterest expenses totaled $103.4 million compared to $90.4 million during the second quarter of 2020, an increase of $12.9 million or 14%. For the six months ended June 30, 2021, noninterest expenses totaled $205.8 million, which was an increase of $24.5 million or 14% from $181.3 million for the same period in 2020.

Notable changes in noninterest expense categories for the three- and six months ended June 30, 2021 and 2020 are as follows:

Salaries and employee benefits

Salaries and employee benefits increased $7.2 million or 14% to $57.3 million for the second quarter of 2021 compared to $50.1 million for the second quarter of 2020. For the first six months of 2021, salaries and benefits totaled $116.4 million, which was an increase of $16.3 million or 16% from $100.1 million for the same period of 2020. Full-time equivalent employees totaled 2,091 at June 30, 2021 compared to 1,821 at June 30, 2020, which was primarily attributable to the acquisitions completed in the fourth quarter of 2020.

Occupancy

Occupancy expense totaled $7.4 million for the second quarter of 2021 compared to $6.5 million for the second quarter of 2020, which was an increase of $897,000 or 14%. Occupancy expense totaled $15.3 million and $13.0 million for the six

months ended June 30, 2021 and 2020, respectively, which was an increase of $2.3 million or 18%. The increase for the three and six month periods was a result of acquisitions completed in the fourth quarter of 2020.

Professional Fees

Professional fees increased $2.6 million or 19% to $16.2 million for the second quarter of 2021 compared to $13.7 million for the same period of 2020. For the six months ended June 30, 2021 and 2020, professional fees totaled $29.7 million and $26.1 million, respectively, which was an increase of $3.6 million or 14%. The increase for the three and six month periods were primarily attributable to recent acquisitions. The increase was also driven by several technology and automation improvement projects that require utilization of specialized resources, including the customer service call center.

Advertising

Advertising expense totaled $1.6 million for the quarter ended June 30, 2021 compared to $995,000 for the same quarter in 2020, which was an increase of $654,000 or 66%. Advertising expense for six months ended June 30, 2021 totaled $3.1 million compared to $3.2 million for the same period of 2020, which was a decrease of $82,000 or 3%. In 2020, HTLF adjusted its advertising strategy and reduced in-person customer events in response to changes in business practices due to the COVID-19 pandemic, some of which has resumed in 2021.

Acquisition, integration and restructuring costs

Acquisition, integration and restructuring costs decreased $463,000 or 69% to $210,000 for the second quarter of 2021 compared to $673,000 for the second quarter of 2020. Acquisition, integration and restructuring costs totaled $3.1 million for the first six months of 2021 compared to $2.0 million for the same period of 2020, which was an increase of $1.1 million or 53%. HTLF completed the AimBank conversion in February 2021.

Other noninterest expenses

Other noninterest expenses totaled $12.7 million for the second quarter of 2021 compared to $11.1 million for the second quarter of 2020, which was an increase of $1.6 million or 14%. For the six months ended June 30, 2021, other noninterest expenses totaled $24.3 million compared to $22.8 million for the same period of 2020, which was an increase of $1.4 million or 6%. The increase for the three and six month periods was primarily attributable to the acquisitions completed in the fourth quarter of 2020.

Efficiency Ratio

One of HTLF's top priorities is to improve its efficiency ratio, on a fully tax-equivalent basis (non-GAAP), with the goal of reducing to below 57%. During the second quarter of 2021, the efficiency ratio on a fully tax-equivalent basis (non-GAAP) increased by 136 basis points to 57.11% in comparison with 55.75% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, the efficiency ratio on a fully tax-equivalent basis, (non-GAAP) was 56.86% compared to 58.64% for the same period of 2020, which was an improvement of 178 basis points.

Management continues to pursue opportunities to reduce expenses through the centralization and adoption of cost-efficient technologies. HTLF anticipates reducing branch locations by approximately 10%, which could lower the efficiency ratio in future quarters. Additionally, systems conversions of newly acquired entities are completed as soon as possible after the closing of the transaction to optimize cost savings.

Income Taxes

The effective tax rate was 21.11% for the second quarter of 2021 compared to 19.75% for the second quarter of 2020. The following items impacted the second quarter 2021 and 2020 tax calculations:

•Solar energy tax credits of $1.3 million compared to $798,000.

•Federal low-income housing tax credits of $135,000 compared to $195,000.

•New markets tax credits of $75,000 in each quarterly calculation.

•Historic rehabilitation tax credits of $123,000 compared to $0.

•Tax-exempt interest income as a percentage of pre-tax income of 8.49% compared to 14.19%.

•Tax benefit of $150,000 compared to tax expense of $66,000 resulting from the vesting of restricted stock unit awards.

The effective tax rate was 21.76% for the first six months of 2021 compared to 20.99% for the first six months of 2020. The following items impacted HTLF's tax calculation for the first six months of 2021 and 2020:

•Solar energy tax credits of $1.4 million compared to $874,000.

•Federal low-income housing tax credits of $269,000 compared to $390,000.

•New markets tax credits of $150,000 for each six-month period.

•Historic rehabilitation tax credits of $123,000 compared to $0.

•Tax-exempt interest income as a percentage of pre-tax income of 9.06% compared to 15.09%.

•Tax benefit of $303,000 compared to tax expense of $91,000 resulting from the vesting of restricted stock unit awards.

FINANCIAL CONDITION

Total assets were $18.37 billion at June 30, 2021, an increase of $462.7 million or 3% since December 31, 2020. Securities represented 37% and 35% of total assets at June 30, 2021, and December 31, 2020, respectively.

LENDING ACTIVITIES

HTLF's board of directors establishes an acceptable level of credit risk appetite, and the subsidiary banks have certain lending policies and procedures in place that are designed to provide for a level of credit risk commensurate within the defined risk parameters. A reporting system supplements the review process by providing management and the board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies, nonperforming loans and potential problem loans.

HTLF originates commercial and industrial loans and owner occupied commercial real estate loans for a wide variety of business purposes, including lines of credit for working capital and operational purposes and term loans for the acquisition of equipment and real estate. Although most loans are made on a secured basis, loans may be made on an unsecured basis if warranted by the overall financial condition of the borrower. Terms of commercial business loans generally range from one to five years. Commercial loans are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The risks in the commercial and industrial portfolio include the unpredictability of the cash flow of the borrowers and the variability in the value of the collateral securing the loans. Owner occupied commercial real estate loans are dependent upon the cash flow of the borrowers and the collateral value of the real estate.

HTLF originated PPP loans in 2020 ("PPP I") totaling $1.20 billion and acquired $53.1 million of PPP loans in the AimBank transaction. Additionally, in 2021, HTLF originated $473.9 million of PPP II loans. At June 30, 2021, total PPP I loans outstanding totaled $374.2 million, which was net of $4.5 million of unamortized deferred fees. Total PPP II loans outstanding at June 30, 2021 was $455.0 million, which was net of $18.9 million of unamortized deferred fees. Both PPP I and PPP II loans are 100% SBA guaranteed, and borrowers may be eligible to have an amount up to the entire principal balance forgiven and paid by the SBA. All PPP loans also carry a zero risk rating for regulatory capital purposes and the Federal Reserve has made available a liquidity facility to facilitate funding of PPP loans held by banks. Because these loans are 100% guaranteed by the SBA, there is no allowance recorded related to the PPP loans.

Non-owner occupied commercial real estate loans provide financing for various non-owner occupied or income producing properties. Real estate construction loans are generally short-term or interim loans that provide financing for acquiring or developing commercial income properties, multi-family projects or single-family residential homes. The collateral required for most of these loans is based upon the discounted market value of the collateral. Non-owner occupied commercial real estate loans are typically dependent, in large part, on sufficient income from the properties securing the loans to cover the operating expenses and debt service. Real estate construction loans involve additional risks because funds are advanced based upon estimates of costs and the estimated value of the completed project. Additionally, real estate construction loans have a greater risk of default in a weaker economy because the source of repayment is reliant on the successful and timely sale of the project. Personal guarantees are frequently required as a tertiary form of repayment. In addition, when underwriting loans for commercial real estate, careful consideration is given to the property's operating history, future operating projections, current and projected occupancy, location and physical condition.

Agricultural and agricultural real estate loans, many of which are secured by crops, machinery and real estate, are provided to finance capital improvements and farm operations as well as acquisitions of livestock and machinery. Agricultural and agricultural real estate loans present unique credit risks relating to adverse weather conditions, loss of livestock due to disease or other reasons, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural and agricultural real estate loans is dependent upon the profitable operation or management of the agricultural entity. Loans secured by farm equipment, livestock or crops may not provide an adequate source of repayment because of damage or depreciation. In underwriting agricultural and agricultural real estate loans, lending personnel work closely with their customers to review budgets and cash flow projections for crop production for the ensuing year. These budgets and cash flow projections are monitored closely during the year and reviewed with the customers at least annually.

Lending personnel work closely with governmental agencies, including the SBA and U.S. Department of Agriculture's Rural Development Business and Industry Program Farm Service Agency, to help agricultural customers obtain credit enhancement products, such as loan guarantees, longer-term funding or interest assistance, to reduce risk.

Residential real estate loans are originated for the purchase or refinancing of single family residential properties. Residential real estate loans are dependent upon the borrower's ability to repay the loan and the underlying collateral value. The acquisition of First Bank & Trust in Lubbock, Texas, in 2018 included its wholly owned mortgage subsidiary, PrimeWest Mortgage Corporation, which was merged into First Bank & Trust in April 2020. First Bank & Trust provides mortgage loans to customers in Texas and has expanded to also serve the mortgage needs of customers in many of HTLF's markets. First Bank & Trust services the conventional mortgage loans it sells into the secondary market.

Consumer lending includes home equity lines and term loans, motor vehicle, home improvement and small personal credit lines. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than one-to-four-family residential mortgage loans. Consumer loan collections are dependent on the borrower's continuing financial stability and are therefore more likely to be affected by adverse personal circumstances. Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.

Total loans held to maturity were $10.01 billion at June 30, 2021, and $10.02 billion at December 31, 2020, a decrease of $11.0 million or less than 1%. Excluding PPP loans, total loans held to maturity increased $117.6 million or 1.30% since year-end 2020.

The following table shows the changes in loan balances by loan category since December 31, 2020, in thousands:

	June 30, 2021		December 31, 2020		Change		% Change
Commercial and industrial	$	2,518,908	$	2,534,799	$	(15,891)	(1)	%
PPP	829,175		957,785		(128,610)		(13)	%
Owner occupied commercial real estate	1,940,134		1,776,406		163,728		9
Non-owner occupied commercial real estate	1,987,369		1,921,481		65,888		3
Real estate construction	854,295		863,220		(8,925)		(1)
Agricultural and agricultural real estate	679,608		714,526		(34,918)		(5)
Residential mortgage	800,884		840,442		(39,558)		(5)
Consumer	401,641		414,392		(12,751)		(3)
Total loans held to maturity	$	10,012,014	$	10,023,051	$	(11,037)	—	%

Notable changes in the loan portfolio include:

•PPP loans decreased $128.6 million or 13% to $829.2 million at June 30, 2021 compared to $957.8 million at year-end 2020. PPP I loans decreased $583.6 million during the first six months of 2021 due to forgiveness payments from the SBA. PPP II loans outstanding at June 30, 2021, totaled $455.0 million, which is exclusive of $18.9 million of deferred fees.

•Owner occupied commercial real estate loans increased $163.7 million or 9% to $1.94 billion at June 30, 2021 compared to $1.78 billion at year-end 2020, which included an increase of $70.2 million in government guaranteed loans.

The table below presents the composition of the loan portfolio as of June 30, 2021, and December 31, 2020, in thousands:

	June 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Loans receivable held to maturity:
Commercial and industrial	$	2,518,908	25.16	%	$	2,534,799	25.29	%
PPP	829,175		8.28		957,785		9.56
Owner occupied commercial real estate	1,940,134		19.38		1,776,406		17.72
Non-owner occupied commercial real estate	1,987,369		19.85		1,921,481		19.17
Real estate construction	854,295		8.53		863,220		8.61
Agricultural and agricultural real estate	679,608		6.79		714,526		7.13
Residential mortgage	800,884		8.00		840,442		8.39
Consumer	401,641		4.01		414,392		4.13
Gross loans receivable held to maturity	10,012,014		100.00	%	10,023,051		100.00	%
Allowance for credit losses-loans	(120,726)				(131,606)
Loans receivable, net	$	9,891,288			$	9,891,445

The following table shows the total loans exposure as of June 30, 2021 and December 31, 2020, to customer segment profiles that HTLF believes have been and could continue to be more heavily impact by COVID-19, dollars in thousands:

	As of June 30, 2021				As of December 31, 2020
Industry	Total Exposure(1)		% of Gross Exposure(1)		Total Exposure(1)		% of Gross Exposure(1)
Lodging	$	523,943	3.89	%	$	539,434	4.38	%
Retail trade	389,525		2.90		465,980		3.78
Retail properties	398,845		2.97		422,794		3.43
Restaurants and bars	241,654		1.80		266,053		2.16
Total	$	1,553,967	11.56	%	$	1,694,261	13.75	%
(1) Total loans outstanding and unfunded commitments excluding PPP loans

While HTLF has seen overall improvement in customers' financial position since the onset of the COVID-19 pandemic, further economic disruption resulting from COVID-19 and its variants could make it difficult for some customers to repay the principal and interest on their loans. As of June 30, 2021, of the approximately $1.09 billion of loans modified under COVID-19 relief programs, $1.00 billion of loans have returned to full payment status and $81.2 million of loans remain in the original deferral status. Additional loan modifications have been made on approximately $11.7 million of loans in the portfolio, which are primarily interest-only payment modifications.

ALLOWANCE FOR CREDIT LOSSES

The process utilized by HTLF to determine the appropriateness of the allowance for credit losses is considered a critical accounting practice for HTLF. The allowance for credit losses represents management's estimate of lifetime losses in the existing loan portfolio. For additional details on the specific factors considered in determining the allowance for credit losses, refer to the critical accounting policies section of HTLF's Annual Report on Form 10-K for the year ended December 31, 2020.

Total Allowance for Lending Related Credit Losses

The total allowance for lending related credit losses was $134.7 million at June 30, 2021, which was 1.35% of loans as of June 30, 2021, compared to $146.9 million or 1.47% of loans at December 31, 2020. The following table shows, in thousands, the components of the allowance for lending related credit losses as of June 30, 2021, and December 31, 2020:

	June 30, 2021				December 31, 2020
	Amount		% of Allowance		Amount		% of Allowance
Quantitative	$	99,170	73.61	%	$	102,398	69.71	%
Qualitative	25,798		19.15		29,101		19.81
Economic Forecast	9,760		7.24		15,387		10.48
Total	$	134,728	100.00	%	$	146,886	100.00	%

Quantitative Allowance

The quantitative allowance decreased $3.2 million to $99.2 million or 74% of the total allowance for lending related credit losses at June 30, 2021, compared to $102.4 million or 70% of the total allowance at December 31, 2020. Positively impacting the quantitative allowance was a reduction of $44.2 million in nonpass loans and an increase of $165.8 million in government guaranteed loans, for which no provision expense is required, since year-end 2020. Included in the quantitative allowance for June 30, 2021, and December 31, 2020, were specific reserves of $11.4 million and $9.4 million, respectively.

Qualitative Allowance

The qualitative allowance totaled $25.8 million or 19% of the total allowance for lending related credit losses at June 30, 2021, compared to $29.1 million or 20% at December 31, 2020. Management assesses several risk factors in the qualitative calculation, and in making its assessment at June 30, 2021, decreased the level of qualitative adjustment based on improving market conditions and credit quality trends.

Economic Forecasting

The economic forecast allowance was $9.8 million or 7% of the total allowance for lending related credit losses at June 30, 2021, compared to $15.4 million or 10% of the total allowance for lending related credit losses at December 31, 2020. HTLF has access to various third-party economic forecast scenarios provided by Moody's, which are updated quarterly in the methodology. At June 30, 2021, Moody's June 7, 2021, baseline forecast scenario was utilized, which was the most currently available forecast, and HTLF continued to use a one year reasonable and supportable forecast period.

For the June 30, 2021 calculation, the economic outlook factors used to develop the allowance were upgraded to incorporate a portion of the forecasted economic improvement, but the factors still retain a measured level of caution and uncertainty that management deemed appropriate for lingering economic headwinds, such as COVID-19 variants, supply chain challenges, and workforce shortages, that are yet to be resolved.

Allowance for Credit Losses-Loans

The tables below present the changes in the allowance for credit losses for loans during the three- and six- months ended June 30, 2021 and 2020, in thousands:

	Three Months Ended June 30,
	2021			2020
Balance at beginning of period	$	130,172		$	97,350
Provision (benefit) for credit losses	(6,466)			25,007
Recoveries on loans previously charged off	517			1,144
Charge-offs on loans	(3,497)			(3,564)
Balance at end of period	$	120,726		$	119,937
Allowance for credit losses for loans as a percent of loans	1.21		%	1.30		%
Annualized ratio of net charge offs to average loans	0.12		%	0.11		%

	Six Months Ended June 30,
	2021			2020
Balance at beginning of period	$	131,606		$	70,395
Impact of ASU 2016-13 adoption on January 1, 2020	—			12,071
Adjusted balance at January 1, 2020	131,606			82,466
Provision (benefit) for credit losses	(6,450)			44,872
Recoveries on loans previously charged off	1,193			2,464
Charge-offs on loans	(5,623)			(9,865)
Balance at end of period	$	120,726		$	119,937
Allowance for credit losses for loans as a percent of loans	1.21		%	1.30		%
Annualized ratio of net charge offs to average loans	0.09		%	0.17		%

The allowance for credit losses for loans totaled $120.7 million at June 30, 2021, compared to $131.6 million at December 31, 2020, and $119.9 million at June 30, 2020. The allowance for credit losses for loans at June 30, 2021, was 1.21% of loans compared to 1.31% of loans at December 31, 2020. The following items have impacted the allowance for credit losses for loans for the six months ended June 30, 2021:

•Provision benefit of $6.5 million, which was primarily attributable to improved macroeconomic factors compared to prior periods.

•Net charge offs for the first six months of 2021 totaled $4.4 million compared to $7.4 million for the first six months of 2020, which was a $3.0 million decrease.

The following tables show, in thousands, the changes in the allowance for unfunded commitments for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,
	2021		2020
Balance at beginning of period	14,619		15,468
Provision (benefit) for credit losses	(617)		1,924
Balance at end of period	$	14,002	$	17,392
	Six Months Ended June 30,
	2021		2020
Balance at beginning of period	$	15,280	$	248
Impact of ASU 2016-13 adoption on January 1, 2020	—		13,604
Adjusted balance at January 1, 2020	15,280		13,852
Provision (benefit) for credit losses	(1,278)		3,540
Balance at end of period	$	14,002	$	17,392

The allowance for unfunded commitments totaled $14.0 million as of June 30, 2021, compared to $15.3 million as of December 31, 2020, and $17.4 million as of June 30, 2020. Unfunded commitments increased $186.1 million to $3.43 billion at June 30, 2021 compared to $3.25 billion at December 31, 2020. Included in the increase of unfunded commitments was $59.8 million of commitments related to 100% government guaranteed lending, for which no provision expense was required.

CREDIT QUALITY AND NONPERFORMING ASSETS

The internal rating system for the credit quality of its loans 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. For more information on this internal rating system, see Note 4 of the consolidated financial statements in this Quarterly Report on Form 10-Q.

The nonpass loans totaled $1.04 billion or 10.37% of total loans as of June 30, 2021 compared to $1.08 billion or 10.80% of total loans as of December 31, 2020. As of June 30, 2021, and December 31, 2021, the nonpass loans consisted of approximately 56% watch loans and 44% substandard loans. The percent of nonpass loans on nonaccrual status as of June 30, 2021, was 8%.

Included in the nonpass loans at June 30, 2021 were $91.8 million 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. No allowance was recorded related to the PPP loans because of the 100% SBA guarantee.

The table below presents the amounts of nonperforming loans and other nonperforming assets on the dates indicated, in thousands:

	June 30,						December 31,
	2021			2020			2020			2019
Nonaccrual loans	$	85,268		$	91,609		$	87,386		$	76,548
Loans contractually past due 90 days or more	97			1,360			720			4,105
Total nonperforming loans	85,365			92,969			88,106			80,653
Other real estate	6,314			5,539			6,624			6,914
Other repossessed assets	50			29			240			11
Total nonperforming assets	$	91,729		$	98,537		$	94,970		$	87,578
Performing troubled debt restructured loans(1)	$	2,122		$	2,636		$	2,370		$	3,794
Nonperforming loans to total loans	0.85		%	1.01		%	0.88		%	0.96		%
Nonperforming assets to total loans plus repossessed property	0.92			1.06			0.95			1.05
Nonperforming assets to total assets	0.50			0.66			0.53			0.66
(1) Represents accruing troubled debt restructured loans performing according to their restructured terms.

The performing troubled debt restructured loans above do not include any loan modifications initially made under COVID-19 modification programs. Refer to the "Lending Activities" discussion included in the "Financial Condition" section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, for further information on these modifications.

The schedules below summarize the changes in nonperforming assets during the three and six months ended June 30, 2021, in thousands:

	Nonperforming Loans		Other Real Estate Owned		Other Repossessed Assets		Total Nonperforming Assets
March 31, 2021	$	91,889	$	6,236	$	239	$	98,364
Loan foreclosures	(585)		583		2		—
Net loan charge-offs	(2,980)		—		—		(2,980)
New nonperforming loans	7,989		—		—		7,989
Reduction of nonperforming loans(1)	(10,948)		—		—		(10,948)
OREO/Repossessed assets sales proceeds	—		(439)		(211)		(650)
OREO/Repossessed assets writedowns, net	—		(66)		20		(46)
June 30, 2021	$	85,365	$	6,314	$	50	$	91,729
(1) Includes principal reductions and transfers to performing status.

	Nonperforming Loans		Other Real Estate Owned		Other Repossessed Assets		Total Nonperforming Assets
December 31, 2020	$	88,106	$	6,624	$	240	$	94,970
Loan foreclosures	(1,404)		1,168		236		—
Net loan charge-offs	(4,430)		—		—		(4,430)
New nonperforming loans	22,925		—		—		22,925
Reduction of nonperforming loans(1)	(19,832)		—		—		(19,832)
OREO/Repossessed assets sales proceeds	—		(1,566)		(293)		(1,859)
OREO/Repossessed assets writedowns, net	—		88		(133)		(45)
June 30, 2021	$	85,365	$	6,314	$	50	$	91,729
(1) Includes principal reductions and transfers to performing status.

Total nonperforming assets decreased $3.2 million or 3% to $91.7 million or 0.50% of total assets at June 30, 2021, compared to $95.0 million or 0.53% of total assets at December 31, 2020. Nonperforming loans were $85.4 million at June 30, 2021, compared to $88.1 million at December 31, 2020, which represented 0.85% and 0.88% of total loans at June 30, 2021, and December 31, 2020, respectively. At June 30, 2021, approximately $49.9 million or 58% of HTLF's nonperforming loans had individual loan balances exceeding $1.0 million and represented loans to sixteen borrowers. The portion of the nonperforming nonresidential real estate loans covered by government guarantees totaled $13.3 million at June 30, 2021, compared to $14.6 million at December 31, 2020.

SECURITIES

The composition of the securities portfolio is managed to ensure liquidity needs are met while maximizing the return on the portfolio within the established HTLF risk appetite parameters and in consideration of the impact it has on HTLF's asset/liability position. Securities represented 37% and 35% of total assets at June 30, 2021, and December 31, 2020, respectively. Total securities carried at fair value as of June 30, 2021, were $6.54 billion, an increase of $416.0 million or 7% from $6.13 billion at December 31, 2020.

The table below presents the composition of the securities portfolio, including securities carried at fair value, held to maturity securities, net of allowance for credit losses, and other, by major category, as of June 30, 2021, and December 31, 2020, in thousands:

	June 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
U.S. treasuries	$	1,016	0.02	%	$	2,026	0.03	%
U.S. agencies	35,371		0.53		166,779		2.65
Obligations of states and political subdivisions	1,957,225		29.19		1,724,066		27.40
Mortgage-backed securities - agency	1,740,675		25.96		1,355,270		21.54
Mortgage-backed securities - non-agency	1,363,292		20.33		1,449,116		23.03
Commercial mortgage-backed securities - agency	125,080		1.87		174,153		2.77
Commercial mortgage-backed securities - non-agency	535,305		7.98		252,767		4.02
Asset-backed securities	846,987		12.63		1,069,266		16.99
Corporate bonds	3,815		0.06		3,742		0.06
Equity securities with a readily determinable fair value	20,651		0.31		19,629		0.31
Other securities	76,809		1.12		75,253		1.20
Total securities	$	6,706,226	100.00	%	$	6,292,067	100.00	%

HTLF's securities portfolio had an expected modified duration of 5.37 years as of June 30, 2021, compared to 5.52 years as of December 31, 2020.

At June 30, 2021, HTLF had $76.8 million of other securities, including capital stock in each Federal Home Loan Bank ("FHLB") of which each of its bank subsidiaries is a member. All of these securities were classified as other securities held at cost.

DEPOSITS

Total deposits were $15.62 billion as of June 30, 2021, compared to $14.98 billion at December 31, 2020, an increase of $635.2 million or 4%. Growth in non-time deposits during the first six months of 2021 was positively impacted by payments related to federal government stimulus programs and other COVID-19 relief programs.

The following table shows the changes in deposit balances by deposit type since year-end 2020, in thousands:

	June 30, 2021		December 31, 2020		Change		% Change
Demand deposits	$	6,299,289	$	5,688,810	$	610,479	11	%
Savings deposits	8,189,223		8,019,704		169,519		2
Time deposits	1,126,606		1,271,391		(144,785)		(11)
Total	$	15,615,118	$	14,979,905	$	635,213	4	%

The table below presents the composition of deposits by category as of June 30, 2021, and December 31, 2020, in thousands:

	June 30, 2021				December 31, 2020
	Amount		Percent		Amount		Percent
Demand	$	6,299,289	40.35	%	$	5,688,810	37.98	%
Savings	8,189,223		52.44		8,019,704		53.54
Time	1,126,606		7.21		1,271,391		8.48
Total	$	15,615,118	100.00	%	$	14,979,905	100.00	%

SHORT-TERM BORROWINGS

Short-term borrowings, which HTLF defines as borrowings with an original maturity of one year or less, were as follows as of June 30, 2021, and December 31, 2020, in thousands:

	June 30, 2021		December 31, 2020		Change		% Change
Securities sold under agreement to repurchase	$	106,053	$	118,293	$	(12,240)	(10)	%
Federal funds purchased	2,900		2,100		800		38
Advances from the federal discount window	30,000		35,000		(5,000)		(14)	%
Other short-term borrowings	13,610		12,479		1,131		9
Total	$	152,563	$	167,872	$	(15,309)	(9)	%

Short-term borrowings generally include federal funds purchased, securities sold under agreements to repurchase, short-term FHLB advances and discount window borrowings from the Federal Reserve Bank. These funding alternatives are utilized in varying degrees depending on their pricing and availability. All of HTLF's bank subsidiaries own FHLB stock in one of the Chicago, Dallas, Des Moines, San Francisco or Topeka FHLBs, enabling them to borrow funds from their respective FHLB for short-term or long-term purposes under a variety of programs. The amount of short-term borrowings was $152.6 million at June 30, 2021, compared to $167.9 million at year-end 2020, a decrease of $15.3 million or 9%.

All of the bank subsidiaries provide retail repurchase agreements to their customers as a cash management tool, which sweep excess funds from demand deposit accounts into these agreements. Although the aggregate balance of these retail repurchase agreements is subject to variation, the account relationships represented by these balances are principally local. The balances of retail repurchase agreements were $106.1 million at June 30, 2021, compared to $118.3 million at December 31, 2020, a decrease of $12.2 million or 10%.

HTLF renewed its revolving credit line agreement with an unaffiliated bank on June 14, 2021. This revolving credit line agreement, which has $75.0 million of borrowing capacity, is included in short-term borrowings, and the primary purpose of this credit line agreement is to provide liquidity. No advances occurred on this line during the first six months of 2021, and the outstanding balance was $0 at both June 30, 2021, and December 31, 2020.

OTHER BORROWINGS

The outstanding balances of other borrowings, which HTLF defines as borrowings with an original maturity date of more than one year, are shown in the table below, net of discount and issuance costs amortization as of June 30, 2021, and December 31, 2020, in thousands:

	June 30, 2021		December 31, 2020		Change		% Change
Advances from the FHLB	$	958	$	1,018	$	(60)	(6)	%
Trust preferred securities	146,812		146,323		489		—
Note payable to unaffiliated bank	21,250		44,417		(23,167)		(52)
Contracts payable for purchase of real estate and other assets	1,779		1,983		(204)		(10)
Subordinated notes	74,500		74,429		71		—
Paycheck Protection Program Liquidity Fund	25,945		188,872		(162,927)		(86)
Total	$	271,244	$	457,042	$	(185,798)	(41)	%

As of June 30, 2021, the amount of other borrowings was $271.2 million, a decrease of $185.8 million or 41% since year-end 2020.

Each of HTLF's subsidiary banks had been approved by their respective Federal Reserve Bank for the Paycheck Protection Program Liquidity Fund ("PPPLF"). As of June 30, 2021, $25.9 million was outstanding, which was a decrease of $162.9 million or 86% from $188.9 million outstanding as of December 31, 2020. The PPPLF program ended on July 31, 2021, and the remainder of the advances outstanding at June 30, 2021 were repaid in July 2021.

HTLF has a non-revolving credit facility with an unaffiliated bank, and at June 30, 2021, $21.3 million was outstanding on this non-revolving credit line compared to $44.4 million outstanding at December 31, 2020. The decrease in this non-revolving credit line was primarily attributable to a paydown of $20.3 million in conjunction with the renewal of the credit line in the second quarter of 2021. At June 30, 2021, $3.5 million of borrowing capacity was available on this non-revolving credit facility, of which no balance was drawn.

A schedule of HTLF's trust preferred securities outstanding excluding deferred issuance costs as of June 30, 2021, is as follows, in thousands:

	Amount Issued		Issuance Date	Interest Rate	Interest Rate as of 6/30/2021(1)		Maturity Date	Callable Date
Heartland Financial Statutory Trust IV	$	10,310	03/17/2004	2.75% over LIBOR	2.88%		03/17/2034	09/17/2021
Heartland Financial Statutory Trust V	20,619		01/27/2006	1.33% over LIBOR	1.51		04/07/2036	10/07/2021
Heartland Financial Statutory Trust VI	20,619		06/21/2007	1.48% over LIBOR	1.60	(2)	09/15/2037	09/15/2021
Heartland Financial Statutory Trust VII	18,042		06/26/2007	1.48% over LIBOR	1.61	(3)	09/01/2037	09/01/2021
Morrill Statutory Trust I	9,229		12/19/2002	3.25% over LIBOR	3.40		12/26/2032	09/26/2021
Morrill Statutory Trust II	8,920		12/17/2003	2.85% over LIBOR	2.98		12/17/2033	09/17/2021
Sheboygan Statutory Trust I	6,659		09/17/2003	2.95% over LIBOR	3.08		09/17/2033	09/17/2021
CBNM Capital Trust I	4,483		09/10/2004	3.25% over LIBOR	3.37		12/15/2034	09/15/2021
Citywide Capital Trust III	6,522		12/19/2003	2.80% over LIBOR	2.99		12/19/2033	10/23/2021
Citywide Capital Trust IV	4,382		09/30/2004	2.20% over LIBOR	2.35		09/30/2034	08/23/2021
Citywide Capital Trust V	12,086		05/31/2006	1.54% over LIBOR	1.66		07/25/2036	09/15/2021
OCGI Statutory Trust III	3,008		06/27/2002	3.65% over LIBOR	3.83		09/30/2032	09/30/2021
OCGI Capital Trust IV	5,427		09/23/2004	2.50% over LIBOR	2.62		12/15/2034	09/15/2021
BVBC Capital Trust II	7,258		04/10/2003	3.25% over LIBOR	3.43		04/24/2033	10/24/2021
BVBC Capital Trust III	9,315		07/29/2005	1.60% over LIBOR	1.75		09/30/2035	09/30/2021
Total trust preferred costs	146,879
Less: deferred issuance costs	(67)
	$	146,812
(1) Effective weighted average interest rate as of June 30, 2021, was 3.07% due to interest rate swap transactions on the variable rate securities as discussed in Note 7 to the consolidated financial statements included herein.
(2) Effective interest rate as of June 30, 2021, was 3.87% due to an interest rate swap transaction as discussed in Note 7 to the consolidated financial statements included herein.
(3) Effective interest rate as of June 30, 2021, was 3.83% due to an interest rate swap transaction as discussed in Note 7 to the consolidated financial statements included herein.

CAPITAL REQUIREMENTS

The Federal Reserve Board, which supervises bank holding companies, has adopted capital adequacy guidelines that are used to assess the adequacy of capital of a bank holding company. Under Basel III, HTLF must hold a conservation buffer above the adequately capitalized risk-based capital ratios; however, the transition provisions related to the conservation buffer have been extended indefinitely.

The most recent notification from the FDIC categorized HTLF and each of its bank subsidiaries as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the categorization of any of these entities.

HTLF's capital ratios are calculated in accordance with Federal Reserve Board instructions and are required regulatory financial measures. The following table illustrates the capital ratios and the Federal Reserve Board's current capital adequacy guidelines for the dates indicated, in thousands. The table also indicates the fully-phased in capital conservation buffer, but the requirements to comply have been extended indefinitely.

	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)
June 30, 2021	15.04		%	12.36		%	11.45		%	8.50		%
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	$	12,146,479		$	12,146,479		$	12,146,479		N/A
Average assets	N/A			N/A			N/A			$	17,649,785
December 31, 2020	14.71		%	11.85		%	10.92		%	9.02		%
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	$	11,819,037		$	11,819,037		$	11,819,037		N/A
Average assets	N/A			N/A			N/A			$	15,531,884

At June 30, 2021, and December 31, 2020, retained earnings that could be available for the payment of dividends to meet the minimum capital requirements totaled $752.7 million and $736.5 million, respectively. Retained earnings that could be available for the payment of dividends to HTLF from its banks totaled approximately $509.8 million and $500.9 million at June 30, 2021, and December 31, 2020, respectively, under the capital requirements to remain well capitalized. These dividends are the principal source of funds to pay dividends on HTLF's common and preferred stock and to pay interest and principal on its debt.

On June 26, 2020, HTLF issued and sold 4.6 million depositary shares, each representing a 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E. The depositary shares are listed on The Nasdaq Global Select Market under the symbol "HTLFP." If declared, dividends are paid quarterly in arrears at a rate of 7.00% per annum beginning on October 15, 2020. For the dividend period beginning on the first reset date of July 15, 2025, and for dividend periods beginning every fifth anniversary thereafter, each a reset date, the rate per annum will be reset based on a recent five-year treasury rate plus 6.675%. The earliest redemption date for the preferred shares is July 15, 2025. Dividends payable on common shares are subject to quarterly dividends payable on these outstanding preferred shares at the applicable dividend rate.

On August 8, 2019, HTLF filed a universal shelf registration statement with the SEC to register debt or equity securities. This shelf registration statement, which was effective immediately, provides HTLF with the ability to raise capital, subject to market conditions and SEC rules and limitations, if the board of directors decides to do so. This registration statement permits HTLF, from time to time, in one or more public offerings, to offer debt securities, subordinated notes, common stock, preferred stock, depositary shares, warrants, rights or units of any combination of these securities. The amount of securities that may be offered was not specified in the registration statement, and the terms of any future offerings are to be established at the time of the offering. The registration statement expires on August 8, 2022.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

Commitments and Contractual Obligations

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. HTLF's bank subsidiaries evaluate the creditworthiness of customers to which

they extend a credit commitment on a case-by-case basis and may require collateral to secure any credit extended. The amount of collateral obtained is based upon management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties. Standby letters of credit and financial guarantees are conditional commitments issued by the bank subsidiaries to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At June 30, 2021, and December 31, 2020, commitments to extend credit aggregated $3.87 billion and $3.26 billion, respectively. Standby letters of credit aggregated $63.9 million at June 30, 2021, and $73.2 million at December 31, 2020.

At June 30, 2021, and December 31, 2020, HTLF's banks had $873.2 million and $607.0 million, respectively, of standby letters of credit with the respective FHLB to secure public funds and municipal deposits.

Contractual obligations and other commitments were disclosed in HTLF's Annual Report on Form 10-K for the year ended December 31, 2020. On July 1, 2021, HTLF and Fiserv Solutions, LLC executed a master agreement that replaced an existing license and service agreement between HTLF and Fiserv Solutions, LLC. The agreement is filed as an exhibit to this Quarterly Report on Form 10-Q. There have been no other material changes to HTLF's contractual obligations and other commitments since the Annual Report on Form 10-K was filed.

HTLF continues to explore opportunities to expand the size of its independent community banks. In the current banking industry environment, HTLF seeks these opportunities for growth through acquisitions. HTLF is primarily focused on possible acquisitions in the markets it currently serves, in which there would be an opportunity to increase market share, achieve efficiencies and provide greater convenience for current customers. However, HTLF may also pursue acquisitions in areas outside of its current geographic footprint. Future expenditures relating to expansion efforts, in addition to those identified above, cannot be estimated at this time.

Derivative Financial Instruments

HTLF enters into mortgage banking derivatives, which are classified as free standing derivatives. These derivatives include interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market and forward commitments for the future delivery of these loans. HTLF enters into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future interest rate changes on the commitments to fund these loans and on the residential mortgage loans held as available for sale. See Note 7 to the consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information on derivative financial instruments.

LIQUIDITY

Liquidity refers to the ability to maintain a cash flow that is adequate to meet maturing obligations and existing commitments, to withstand fluctuations in deposit levels, to fund operations and to provide for customers’ credit needs. The liquidity of HTLF principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings and its ability to borrow funds in the money or capital markets.

At June 30, 2021, HTLF had $449.1 million of cash and cash equivalents, time deposits in other financial institutions of $3.1 million and securities carried at fair value of $6.54 billion.

Management of investing and financing activities, and market conditions, determine the level and the stability of net interest cash flows. Management attempts to mitigate the impact of changes in market interest rates to the extent possible, so that balance sheet growth is the principal determinant of growth in net interest cash flows.

Short-term borrowing balances are dependent on commercial cash management and smaller correspondent bank relationships and, as a result, will normally fluctuate. Management believes these balances, on average, to be stable sources of funds; however, HTLF intends to rely on deposit growth and additional FHLB and discount window borrowings as needed in the future.

Additional funding is provided by long-term debt and short-term borrowings. In the event of short-term liquidity needs, HTLF's banks may purchase federal funds from each other or from correspondent banks and may also borrow from the Federal Reserve Bank. As of June 30, 2021, short-term borrowings outstanding totaled $152.6 million.

As of June 30, 2021, HTLF had $271.2 million of long-term debt outstanding, and it is an important funding source because of its multi-year borrowing structure. Additionally, the subsidiary banks' FHLB memberships give them the ability to borrow funds for short-term and long-term purposes under a variety of programs. At June 30, 2021, HTLF had $1.51 billion of borrowing capacity under these programs. Additionally, at June 30, 2021, HTLF had $1.15 billion of borrowing capacity at the Federal Reserve Banks' discount window.

On a consolidated basis, HTLF maintains a large balance of short-term securities that, when combined with cash from operations, management believes are adequate to meet its funding obligations.

At the parent company level, routine funding requirements consist primarily of dividends paid to stockholders, debt service on revolving credit arrangements and trust preferred securities issuances, repayment requirements under other debt obligations and payments for acquisitions. The parent company obtains the funding to meet these obligations from dividends paid by its bank subsidiaries and the issuance of debt and equity securities.

At June 30, 2021, the parent company had cash of $108.3 million. Additionally, HTLF has a revolving credit agreement and non-revolving credit line with an unaffiliated bank, which is renewed annually, most recently on June 14, 2021. The revolving credit agreement has $75.0 million of maximum borrowing capacity, of which none was outstanding at June 30, 2021. At June 30, 2021, $3.5 million was available on the non-revolving credit line. These credit agreements contain specific financial covenants, all of which HTLF complied with as of June 30, 2021.

The ability of HTLF to pay dividends to its stockholders is dependent upon dividends paid to HTLF by its subsidiaries. The bank subsidiaries are subject to statutory and regulatory restrictions on the amount they may pay in dividends. To maintain acceptable capital ratios at HTLF's bank subsidiaries, certain portions of their retained earnings are not available for the payment of dividends.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market prices and rates. HTLF's market risk is comprised primarily of interest rate risk resulting from its core banking activities of lending and accepting deposits. Interest rate risk measures the impact on earnings from changes in interest rates and the effect on the current fair market values of HTLF's assets, liabilities and off-balance sheet contracts. HTLF's objective is to measure this risk and manage its balance sheet to avoid unacceptable potential for economic loss.

Management continually develops and applies strategies to mitigate market risk. Exposure to market risk is reviewed on a regular basis by the asset/liability committees of the bank subsidiaries and, on a consolidated basis, by HTLF's executive management and board of directors. At least quarterly, a detailed review of the balance sheet risk profile is performed for HTLF and each of its bank subsidiaries. Included in these reviews are interest rate sensitivity analyses, which simulate changes in net interest income in response to various interest rate scenarios. These analyses consider current portfolio rates, existing maturities, repricing opportunities and market interest rates, in addition to prepayments and growth under different interest rate assumptions. Selected strategies are modeled prior to implementation to determine their effect on HTLF's interest rate risk profile and net interest income.

The core interest rate risk analysis utilized examines the balance sheet under increasing and decreasing interest rate scenarios that are neither too modest nor too extreme. All rate changes are ramped over a 12-month horizon based upon a parallel shift in the yield curve and then maintained at those levels over the remainder of the simulation horizon. Using this approach, management is able to see the effect that both a gradual change of rates (year one) and a rate shock (year two and beyond) could have on net interest income. Starting balances in the model reflect actual balances on the "as of" date, adjusted for material transactions. Pro-forma balances remain static. This methodology enables interest rate risk embedded within the existing balance sheet structure to be isolated from the interest rate risk often caused by growth in assets and liabilities. Due to the low interest rate environment, the simulations under a decreasing interest rate scenario were prepared using a 100 basis point shift in rates. The most recent reviews at June 30, 2021, and June 30, 2020, provided the following results, in thousands:

	2021				2020
	Net Interest Margin		% Change From Base		Net Interest Margin		% Change From Base
Year 1
Down 100 Basis Points	$	500,955	(1.95)	%	$	440,176	(0.92)	%
Base	510,916		—		444,243		—
Up 200 Basis Points	534,488		4.61		468,051		5.36
Year 2
Down 100 Basis Points	$	462,500	(9.48)	%	$	427,344	(3.80)	%
Base	492,979		(3.51)		442,038		(0.50)
Up 200 Basis Points	555,444		8.72		508,018		14.36

HTLF uses derivative financial instruments to manage the impact of changes in interest rates on its future interest income or interest expense. HTLF is exposed to credit-related losses in the event of nonperformance by the counterparties to these derivative instruments but believes it has minimized the risk of these losses by entering into the contracts with large, stable financial institutions. The estimated fair market values of these derivative instruments are presented in Note 7 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

HTLF enters into financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract relating to the commitment. Commitments generally have fixed expiration dates and may require collateral from the borrower. Standby letters of credit are conditional commitments issued by HTLF to guarantee the performance of a customer to a third party up to a stated amount and subject to specified terms and conditions. These commitments to extend credit and standby letters of credit are not recorded on the consolidated balance sheet until the loan is made or the letter or credit is issued.

ITEM 4. CONTROLS AND PROCEDURES

Based on an evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that:

•HTLF's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) were effective.

•During the three months ended June 30, 2021, there have been no changes in internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

There are certain legal proceedings pending against HTLF and its subsidiaries at June 30, 2021, that are ordinary routine litigation incidental to business.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors applicable to HTLF from those disclosed in Part I, Item 1A. "Risk Factors" in HTLF's 2020 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 17, 2020, the board of directors authorized management to acquire and hold up to 5% of capital or $102.5 million as of June 30, 2021, as treasury shares at any one time. HTLF and its affiliated purchasers made no purchases of its common stock during the quarter ended June 30, 2021.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibits

10.1	(1)(2)	Form of Director Restricted Stock Unit Award Agreement under the Heartland Financial USA, Inc. 2020 Long-Term Incentive Plan
10.2	(2)(3)	Master Agreement between Fiserv Solutions LLC and Heartland Financial USA, Inc. dated July 1, 2021, and Amendment 1 to Agreement dated as of July 1, 2021.
31.1	(2)	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2	(2)	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32.1	(2)	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	(2)	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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

______________

(1) Management contracts or compensatory plans or arrangements

(2) Filed or furnished herewith

(3) Portions of the contract have been omitted pursuant to SEC confidential treatment under 17 C.F.R. Section 229.601(b)(10)(iv)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

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: August 5, 2021

EX-10.1

1 Rev 5-11-21 HEARTLAND FINANCIAL USA, INC. 2020 LONG-TERM INCENTIVE PLAN DIRECTOR RESTRICTED STOCK UNIT AWARD AGREEMENT The Participant specified below is hereby granted a restricted stock unit award by HEARTLAND FINANCIAL USA, INC. (the “Company”), under the HEARTLAND FINANCIAL USA, INC. 2020 LONG-TERM INCENTIVE PLAN (the “Plan”). The restricted stock units awarded by this Award Agreement (this “Agreement”) shall be subject to the terms of the Plan and the terms set forth in this Agreement. All capitalized terms used in this Agreement and not otherwise defined have the meaning assigned to them in the Plan. Section 1. Award. The Company hereby grants to the Participant an award of restricted stock units (each such unit, an “RSU”), where each RSU represents the right of the Participant to receive one Share of Company common stock in the future, subject to the terms of this Agreement and the Plan. For purposes of this Agreement: The “Participant” is: %%FIRST_NAME%-% %%LAST_NAME%-% The “Grant Date” is: %%OPTION_DATE%-% The number of RSUs is: %%TOTAL_SHARES_GRANTED%-% Section 2. Restricted Period. (a) The “Restricted Period” for the RSUs granted by this Agreement shall begin on the Grant Date and end on June 5th of the year following the Grant Date. (such date, or such earlier date on which the RSU shall vest pursuant to this Agreement, being hereafter referred to as the “Vesting Date”); provided that the Participant has attended 75% of all board and assigned committee meetings held between the Grant Date and the earlier of the Vesting Date and the Company’s next annual shareholder meeting following the Grant Date. The price at which the RSUs shall vest is the fair market value of Company common stock at closing on the business day prior to the Vesting Date, or the nearest prior trading day if the Vesting Date is not a trading day for the market on which Company common stock is traded. (b) Notwithstanding the foregoing provisions, the Restricted Period shall lapse and the RSUs shall become fully vested immediately upon (i) the death of the Participant or (ii) a Change in Control that occurs on or before the Participant’s Termination of Service. (c) If the Participant’s Termination of Service occurs prior to the earlier of (i) the Company’s next annual shareholder meeting following the Grant Date or (ii)

2 Rev 5-11-21 the Vesting Date, the Participant shall forfeit all right, title and interest in and to the RSUs as of such Termination of Service. Section 3. Settlement of RSUs. Delivery of Shares or other amounts under this Agreement and the Plan shall be subject to the following: (a) Delivery of Shares. The Company shall deliver to the Participant one Share free and clear of any restrictions in settlement of each of the vested and unrestricted RSUs within 30 days following the end of the Vesting Date. (b) Compliance with Applicable Laws. Notwithstanding any other term of this Agreement or the Plan, the Company shall have no obligation to deliver any Shares or make any other distribution of benefits under this Agreement or the Plan unless such delivery or distribution complies with all applicable laws and the applicable rules of any securities exchange or similar entity. (c) Certificates Not Required. To the extent that this Agreement and the Plan provide for the issuance of Shares, such issuance may be effected on a non- certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity. Section 4. Withholding. While awards to non-employee directors generally will not be subject to tax withholding requirements, the Company shall have the right to require the Participant (or if applicable, permitted assigns, heirs and Designated Beneficiaries) to remit to the Company an amount sufficient to satisfy any applicable statutory tax withholding requirements, if any, prior to the delivery date of any Shares in connection with the Award. Section 5. Non-Transferability of Award. The Award, or any portion thereof, is not transferable except as designated by the Participant by will or by the laws of descent and distribution or pursuant to a domestic relations order. Except as provided in the immediately preceding sentence, the Award shall not be assigned, transferred, pledged, hypothecated or otherwise disposed of by the Participant in any way whether by operation of law or otherwise, and shall not be subject to execution, attachment or similar process. Any attempt at assignment, transfer, pledge, hypothecation or other disposition of the Award contrary to the provisions hereof, or the levy of any attachment or similar process upon the Award, shall be null and void and without effect. Section 6. No Rights as Shareholder. The Participant shall not have any rights of a Shareholder with respect to the RSUs, including but not limited to voting and dividend rights, prior to the settlement of the RSUs pursuant to Section 3 above and issuance of Shares as provided herein. Section 7. Heirs and Successors. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring all or substantially all of the Company’s assets or business. If any rights of the Participant or benefits distributable to the Participant under this Agreement have not been settled or distributed at the

3 Rev 5-11-21 time of the Participant’s death and have not been designated to pass to a certain beneficiary, such rights shall be provided to the legal representative of the estate of the Participant. Section 8. Administration. The authority to manage and control the operation and administration of this Agreement and the Plan shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement or the Plan by the Committee and any decision made by the Committee with respect to this Agreement or the Plan shall be final and binding on all persons. Section 9. Plan Governs. Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the secretary of the Company. This Agreement shall be subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time. Notwithstanding any term of this Agreement to the contrary, in the event of any discrepancy between the corporate records of the Company and this Agreement, the corporate records of the Company shall control. Section 10. Not an Employment Contract. Neither the Award nor this Agreement shall confer on the Participant any rights with respect to continuance of employment or other service with the Company or a Subsidiary, nor shall they interfere in any way with any right the Company or a Subsidiary may otherwise have to terminate or modify the terms of the Participant’s employment or other service at any time. Section 11. Amendment. Subject to Section 14 and Section 15 below, this Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended in writing by the Participant and the Company without the consent of any other person. Section 12. Governing Law. This Agreement, the Plan and all actions taken in connection herewith and therewith shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws, except as superseded by applicable federal law. Section 13. Validity. If any provision of this Agreement is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein. Section 14. Section 409A Amendment. The Award is intended to be exempt from Code Section 409A and this Agreement shall be administered and interpreted in accordance with such intent. The Committee reserves the right (including the right to delegate such right) to unilaterally amend this Agreement without the consent of the Participant in order to maintain an exclusion from the application of, or to maintain compliance with, Code Section 409A; and the Participant hereby acknowledges and consents to such rights of the Committee. As provided in the Plan, in the event that this Award constitutes deferred compensation, the term Termination of Service shall be interpreted in a manner consistent with the term “separation from service” as defined under Code Section 409A. In addition, if the Participant is a “specified employee” at the time of such “separation from service,” delivery of Shares or other amounts payable on account of

4 Rev 5-11-21 a “separation from service” shall be delayed six months to the extent required by Code Section 409A. Section 15. Clawback. The Award and any amount or benefit received under the Plan shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Company’s Clawback Provision Policy as amended from time to time or any other applicable Company clawback policy (the “Policy”) or any applicable law, as may be in effect from time to time. The Participant hereby acknowledges and consents to the Company’s or a Subsidiary’s application, implementation and enforcement of (a) the Policy and any similar policy established by the Company or a Subsidiary that may apply to the Participant and (b) any provision of applicable law relating to cancellation, rescission, payback or recoupment of compensation, and agrees that the Company or a Subsidiary may take such actions as may be necessary to effectuate the Policy, any similar policy and applicable law, without further consideration or action. * * * * * IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its name and on its behalf, and the Participant acknowledges understanding and acceptance of, and agrees to, the terms of this Agreement, all as of the Grant Date. This Agreement and any amendments or supplements hereto may be executed in counterparts, each of which shall constitute an original, but taken together shall constitute a single contract. Signature may be in electronic format, including by electronic acknowledgement. HEARTLAND FINANCIAL USA, INC. Print Name: Lynn B. Fuller Print Title: Executive Operating Chairman PARTICIPANT By: Via Electronic Acknowledgment %%FIRST_NAME%-% %%LAST_NAME%-% Print Name: %%FIRST_NAME%-% %%LAST_NAME%-%

EX-10.2

Legend: [***] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) INFORMATION THAT THE COMPANY TREATS AS PRIVATE OR CONFIDENTIAL. MASTER AGREEMENT This MASTER AGREEMENT (“Agreement”) dated as of the first day of the first calendar month following the last date signed (“Effective Date”) between Fiserv Solutions, LLC, a Wisconsin limited liability company with offices located at 255 Fiserv Drive, Brookfield, Wisconsin 53045 (“Fiserv”), and Heartland Financial USA, Inc., with offices located at 700 Locust Street, Dubuque, Iowa 52001 USA (“Heartland”). The term “Agreement”, as used herein, includes the main body of the Agreement commencing at the top of this page and through the signature page (as used in this Agreement, the “Master Agreement”), and all Exhibits, Schedules, Attachments and Appendices referenced herein. WHEREAS, Heartland and Fiserv entered into a License and Service Agreement dated June 21, 1996, subsequently amended, inclusive of all associated exhibits, schedules, appendices, and attachments (collectively, the “Prior Agreement”); WHEREAS, Heartland and Fiserv agree that, as of the Effective Date, the Prior Agreement and the Exhibits, Schedules and other attachments appended thereto are amended and superseded in their entirety with the terms and conditions of this Agreement; NOW THEREFOR, in receipt of good and valuable consideration, the sufficiency of which is hereby acknowledged, Fiserv and Heartland and hereby agree as follows: Deliverables. General. Fiserv, through the employees, agents and/or subcontractors of itself and its Affiliates (as defined herein) (collectively, “Fiserv Personnel”) agrees to provide to Client, and Client agrees to obtain from Fiserv, the services (including services provided pursuant to the ASP Services Exhibit, implementation, conversion, operational and technical support, development, professional, consulting, and training services provided pursuant to the Professional and Development Services Exhibit (as applicable), maintenance or other services provided pursuant to the Software Products Exhibit, services provided under the Instant Issuance Exhibit, and network support services and any other services provided pursuant to the Equipment Exhibit (“Services”) and products (including Software as defined in the Software Products Exhibit, products provided pursuant to the Instant Issuance Exhibit and Equipment as defined in the Equipment Exhibit) (“Products”) (collectively, “Deliverables”) described in the attached Exhibits, subject to the terms set forth in this Agreement and in the applicable Exhibit(s). For clarity, any reference, in this Agreement or any Exhibit or Schedule hereto, to the provision of Services, Products and/or Deliverables to Client, shall, unless otherwise stated, include the provision of such Services, Products and/or Deliverables to Client Affiliates and, as applicable, to employees and contractors (subject to Section 3 (Confidentiality and Ownership)) of Client and Client Affiliates. “Affiliate” means an entity that controls, is controlled by, or is under common control with a party, where “control” means the direct or indirect ownership of more than 50% of the voting securities of such entity or party. Each Exhibit will be deemed to incorporate all of the terms of this Agreement. Use of the term “Exhibit” throughout this Agreement shall include any Schedules attached to such Exhibit. Exhibits and Schedules attached as of the Effective Date are listed below.  Service Level Exhibit to Master Agreement  Support Response Time Attachment to the Master Agreement  ASP Services Exhibit to Master Agreement Card Services Schedule to ASP Services Exhibit Electronic Document Delivery Services Schedule to ASP Services Exhibit Intelligent WorkplaceSM Platform Services Schedule to the ASP Services Exhibit

Output Solutions Services Schedule to ASP Services Exhibit Statement Advantage Services Schedule to ASP Services Exhibit XRoads™ Services Schedule to ASP Services Exhibit Zelle® Payment Services Schedule to ASP Services Exhibit  Professional and Development Services Exhibit  Equipment Exhibit to Master Agreement Network Support Services Schedule to the Equipment Exhibit  Instant Issuance Exhibit to Master Agreement  Software Products Exhibit to Master Agreement Account Processing Software (Signature) Schedule to Software Products Exhibit EnAct Software Schedule to Software Products Exhibit Enterprise Performance Management Software (Prologue) Schedule to Software Products Exhibit Holding Company Relationship. Heartland enters into this Agreement on behalf of itself and each of its bank Affiliates identified in the applicable Exhibits and/or Schedules as receiving Deliverables under this Agreement (each, a “Client”). Heartland shall cause to be performed, and shall be responsible for the performance, by each bank Affiliate receiving Deliverables as a Client under a particular Exhibit or Schedule of all “Client” obligations under this Agreement applicable to such Deliverables as if Heartland were itself receiving such Deliverables, and shall be jointly and severally liable with each such individual bank Affiliate for all actions and omissions of such bank Affiliates receiving Deliverables as a Client under such Exhibit or Schedule in connection with this Agreement. References to “Client” herein shall include Heartland and the applicable bank Affiliate identified as Client for the Deliverables received by such bank Affiliate. For the avoidance of doubt, no bank Affiliate will be liable to Fiserv for the actions or omissions of another bank Affiliate (including any liability arising from the actions or omissions of another bank Affiliate or its customer). To the extent that any provision of this Agreement, including any Exhibit or Schedule or any document incorporated by reference provides that a Client provides a representation, warranty or covenant with respect to itself, such bank Affiliate provides such representation, warranty or covenant only with respect to itself or its customers (as applicable), and not with respect any other bank Affiliate. The initial Client Affiliates and the Deliverables used by each such Client Affiliate are as set forth in Appendix A to this Agreement. Additional Entities and Deliverables. The parties or their Affiliates may add Deliverables to this Agreement by adding an appropriate new Exhibit or Schedule to this Agreement via an amendment incorporating the added Deliverables and/or Affiliates, as applicable. Fiserv or the designated Fiserv Affiliate shall provide the Deliverables to Heartland and/or its bank Affiliates designated as Client in the applicable Exhibit or Schedule as recipients of such Deliverables. A bank Affiliate’s use of a Deliverable and/or execution of an amendment to receive such Deliverable or Heartland’s execution of such amendment on the bank Affiliate’s behalf shall constitute such bank Affiliate’s agreement to be bound by the terms of this Agreement with respect to such Deliverable. Facilities. Fiserv and its Affiliates and subcontractors will supply or provide the (A) Software and related maintenance services to the Client Location (as defined in the Software Products Exhibit and subject to the provisions of Section 4 (License) and Section 8 (Client Responsibilities) thereof) and (B) processing Services under the ASP Services Exhibit from the Fiserv data center, as such may be changed by Fiserv from time to time in accordance with the next paragraph (“Fiserv Facility(ies)”). (i) [***] (ii) Fiserv shall be financially responsible for all additional Fiserv costs, taxes or expenses resulting from any Fiserv-initiated relocation to a new or different Fiserv Facility. The immediately preceding sentence shall not apply in the event Client’s requirements result in the need for a relocation to a new or different Fiserv Facility and the parties mutually agree in writing to make such change.

Client PII Location. Except as otherwise expressly set forth in an Exhibit or Schedule, Fiserv will not store Client PII at any facility outside of the United States without Client’s written consent. Fiserv and its subcontractors shall be permitted to access Client PII from a location outside of the United States [***] via computer networks or systems, and such remote access shall in no event be deemed a breach of this provision. Fiserv shall not access Client PII from a location outside of the United States and the above listed countries without Client’s written consent. Changes. Fiserv may make changes in its methods of delivering the Deliverables, including in the standards, processes, operating procedures, methodologies or controls, or associated technologies, architectures, products, software, equipment, systems or materials provided, operated, managed, supported or used in connection with the Deliverables, or the type of equipment or software resident at, or, subject to and in accordance with Section 1(d) (Facilities) of this Master Agreement, the location of, Fiserv’s service center(s) (collectively, “Changes”); [***] Disabling Code. Fiserv will use commercially reasonable efforts to provide the Deliverables to Client free from any Disabling Code at the time of delivery. Client shall use commercially reasonable efforts to cause all materials and/or data provided by Client to Fiserv to be free from Disabling Code at the time of delivery. For purposes of this Agreement “Disabling Code” means any timer, clock, or counter that may cause software or any data generated or used by it to be erased, become inoperable or inaccessible, or that may otherwise cause such software to become temporarily or permanently incapable of performing in accordance with this Agreement, or subject to control or data access by parties other than Client, including any Disabling Code that is triggered after use or copying of such software or a component thereof a certain number of times, or after the lapse of a period of time, or in the absence of a hardware device or after the occurrence or lapse of any other triggering factor or event or due to external input, including across a computer network. Disabling Code includes software commonly referred to as a virus, worm, Trojan horse, backdoor, malware or spyware. Each party shall use industry standard virus detection software tools intended to ensure that any data, materials, files or, in the case of Fiserv, Deliverables, provided to the other party are free of Disabling Code. In the event Disabling Code is found in Software as delivered to Client by Fiserv, Fiserv will take reasonable actions, at no additional charge to Client, to remove such Disabling Code and re-deliver such Software without the Disabling Code. In the event Disabling Code is found in Fiserv’s Systems used to provide the Services, Fiserv will take reasonable actions, at no additional charge to Client, to remove and otherwise address such Disabling Code. [***] [***] [***] [***] Cooperation with Third Parties. Fiserv shall, subject to the confidentiality provisions of Section 3 (Confidentiality and Ownership) of this Master Agreement, cooperate with and work in good faith with Client and/or Client Third Party providers, as reasonably directed by Client. Such cooperation may include, as and to the extent mutually agreed: (i) providing electronic access to Client Data, with query and update capabilities, (ii) providing written requirements, standards, policies or other documentation for Client’s Third Party provider to write to Fiserv’s middleware as may be necessary in connection with the Deliverables, (iii) working with the Client’s Third Party providers to assist them in writing to Fiserv’s middleware, and (iv) providing any other cooperation or assistance reasonably requested by Client. Fiserv shall provide such cooperation and assistance promptly and in a commercially reasonable manner and shall use commercially reasonable efforts to support Client’s reasonable plans. Fiserv and Client shall confer in good faith and agree on the scope of such cooperation and the extent to which there are associated fees provided that Fiserv shall use commercially reasonable efforts to minimize such fees. Client Personnel. Client shall (i) designate appropriate Client personnel for training other Client personnel in the use of the Deliverables, (ii) supply Fiserv with reasonable access to Client’s site during normal business hours (or such other hours as mutually agreed between the parties) to the extent necessary for Fiserv to perform P&D Services (as defined in the Professional and Development Services Exhibit), and (iii)

reasonably cooperate with Fiserv personnel to the extent necessary in connection with Fiserv’s performance of the Deliverables. Subcontracting. Client agrees that Fiserv may subcontract any obligations to be performed hereunder; provided that any such subcontractors, including any Fiserv Affiliates performing any of Fiserv’s obligations hereunder, shall be required to comply with all applicable terms and conditions of this Agreement, and Fiserv shall remain primarily liable for the performance of any such subcontractors and Affiliates. Fiserv shall perform appropriate due diligence of any potential subcontractor before engaging such subcontractor, and in the event Fiserv engages a subcontractor, Fiserv shall perform an annual risk assessment of such subcontractor as part of Fiserv’s vendor management processes. Fiserv will provide, upon request by Client not more than once per year, a list of subcontractors that have access to Client Data where a ‘subcontractor’ means a third party vendor, provider or supplier to whom Fiserv contracts out a specific portion of the Deliverables provided to Client under this Agreement, and specifically excludes Fiserv Affiliates. Client will facilitate timely cooperation with Fiserv’s subcontractors, if any, in order for Fiserv to provide the Deliverables. [***] Termination Assistance Services: Except with respect to Deliverables where Fiserv has provided at least 18 months prior written notice [***] such Deliverable as of or on a date following the Expiration Date: [***] (q) Fiserv Use of Third Party Solutions. Fiserv's providing Deliverables under this Agreement may be dependent on the products or services of a third party vendor or service provider of Fiserv. In the case of Software Products licensed by Client, all such third parties are identified in the applicable Schedule to the Software Products Exhibit. In the event Fiserv’s rights to use the third party provider’s products or services to provide Deliverables to Client are impacted in any way that affects Client’s use of a Deliverable, Fiserv will (i) work in good faith and use commercially reasonable efforts to (A) remedy the impact with the applicable third party provider so that Client can continue to use the Deliverables, or (B) identify and engage a replacement third party product or service to continue providing Client the Deliverables, and if neither (A) or (B) is possible, then Fiserv may terminate the impacted Deliverable(s) (provided, Fiserv is terminating the impacted Deliverable(s) for all Fiserv clients then receiving such Deliverable(s)). [***] Fees for Deliverables. General. Client agrees to pay Fiserv: (i) fees for Deliverables as specified in the Exhibits, as otherwise described elsewhere in this Agreement, or as mutually agreed in writing between the parties such as set forth in a statement of work or other such document, (ii) travel and related expenses pursuant to Section 2(c) (Travel and Related Expenses), (iii) Taxes as defined in Section 2(d) (Taxes), and (iv) Fiserv’s then current deconversion charges in connection with Client’s deconversion from the applicable Deliverables. Increase in Fees. In addition to any provisions otherwise set forth in an Exhibit or Schedule, Fiserv’s fees, rates and charges listed in an Exhibit may be increased annually[***]; each such increase shall be limited to [***] (“Annual Increase”). Travel and Related Expenses. Client shall reimburse travel and living expenses reasonably incurred by Fiserv in connection with the Deliverables, to the extent such travel has been mutually agreed between the parties. As applicable, such travel and related expenses shall be incurred in accordance with Fiserv’s then- current corporate travel and expense policy. It is understood and agreed that the travel and related expenses to be reimbursed by Client represent the actual amount Fiserv is obligated to pay to the applicable third party, without any Fiserv markup, and that Fiserv has used and will use commercially reasonable efforts to minimize such travel and related expenses. Taxes. Client is responsible for the payment of all sales, use, excise, value added, withholdings and other taxes and duties however designated that are levied by any taxing authority relating to fees to be paid by Client in exchange for Fiserv’s provision to Client of the Deliverables (“Taxes”). Fiserv and Client shall work together to review and revise Fiserv’s invoices, if necessary, to identify and/or separate those items that are subject to tax from those items that are not subject to tax. Fiserv agrees to reasonably cooperate with and

assist Client in disputing any taxes, at Client’s expense. All fees and other charges under any Exhibit are exclusive of Taxes. Client shall reimburse Fiserv for those Taxes that Fiserv is required to remit on behalf of Client. In no event shall Taxes include taxes based on Fiserv’s income. . Regulatory and Compliance. [***] Payment Terms. Fiserv shall, except as otherwise provided in the applicable Schedule or Exhibit, on a monthly basis, deliver a single consolidated invoice listing all amounts payable by Client for Deliverables received pursuant to this Agreement (including its Exhibits and Schedules) during the prior calendar month. Each such invoice shall be due and payable within 30 days after Client’s receipt of such invoice; except that Client may withhold fees invoiced for Deliverables to the extent such fees are disputed by Client in good faith, provided that Client gives Fiserv written notice and explanation of such good faith dispute within 20 days of Client’s receipt of such invoice. Client shall pay Fiserv through the Automated Clearing House unless otherwise set forth in the Exhibits. [***] Client shall neither make nor assert any right of deduction or set-off from amounts invoiced. [***] [***] [***] Confidentiality and Ownership. The provisions of this Section 3 (Confidentiality and Ownership) survive any termination or expiration of this Agreement. Definitions. (i) “Information” means the following types of information obtained or accessed by or on behalf of a party to this Agreement or its Affiliates (“Recipient”) from or on behalf of the other party or its Affiliates (“Discloser”) in connection with this Agreement or any discussions between the parties regarding new services or products to be added to this Agreement: (A) trade secrets and proprietary information (including that of any client, supplier or licensor); (B) customer lists, client lists, business plans, information security plans, business continuity plans, requests for proposals or requests for information and responses to such requests that the parties may exchange after the Effective Date, and proprietary software programs; (C) any personally identifiable information (“PII“); (D) users IDs and passwords of Fiserv Systems and/or Client Systems; (E) any other information received from or on behalf of Discloser that is marked confidential or that Recipient could reasonably be expected to know is confidential; and (F) “Client Information” and “Fiserv Information”. For purposes of this Agreement, “PII” is defined as personally identifiable information that is not otherwise publicly available. Information is personally identifiable if it can reasonably be linked to a particular person, computer, or device, such as the name(s), address, telephone, account, and social security numbers, including password/authentication information, of Client’s individual customers or either party’s employees or contractors. PII does not include information reasonably believed to be made publicly available and information that is often made public; however, where an individual has directed that the information not be made public (e.g., an unlisted phone number or address) or the information has been obtained from the individual rather than a public source, it should not be considered publicly available. “Information” does not include any information that: (1) Recipient already possesses without obligation of confidentiality, develops independently without reference to Discloser’s Information, or rightfully receives without obligation of confidentiality from a third party; or (2) is or becomes publicly available without Recipient’s breach of this Agreement. (ii) “Client Information” means Information for which the Discloser is Client or its Affiliates. For clarity, Client Information includes business requirements provided by Client or its Affiliates for Fiserv’s performance of Development Services. (iii) “Fiserv Information” means Information for which the Discloser is Fiserv, and specifically includes all information and documentation regarding the Deliverables, all software Products (including

software modifications and documentation, databases, training aids, and all data, code, techniques, algorithms, methods, logic, architecture, and designs embodied or incorporated therein), and the terms and conditions of this Agreement. Fiserv agrees that terms and conditions of this Agreement specific to Client will not be disclosed to third parties, other than as permitted for Client Information under Section 3(b) (Obligations) below or in connection with any audit of Fiserv or Client by a regulator, without Client’s prior consent. Obligations. Recipient agrees to hold as confidential all Information it receives from the Discloser. Recipient will use the same care and discretion to prevent unauthorized disclosure of Information as it uses with its own similar information that it does not wish disclosed, but in no event less than a reasonable standard of care and no less than is required by law. Recipient may only use Information for the lawful purposes contemplated by this Agreement, including in the case of Fiserv use of Client Information for (A) fulfilling its obligations under this Agreement, performing, improving and enhancing the Deliverables, and analyzing Client’s use and adoption of the Deliverable (“Deliverable Use Limitation”), (B) de-identifying and anonymizing Client Data and aggregating it with de-identified information of other Fiserv clients (such that (1) neither Client nor any Client Affiliate nor any individual is or can be identified as the subject of or source of such data and (2) such data may not be reconstructed or reverse engineered to identify Client, Client Affiliates or any individual) for purposes of developing data analytics models, tools and products to produce data analytics-based offerings (“Analytics Use Limitation”) and (C) using such Client Information in accordance with this Agreement for purposes of detecting and preventing fraud which may include Client Data (“Fraud Detection/Prevention Limitation”). Client agrees that prior to providing Fiserv access to any PII, Client shall ensure that any necessary consent has been obtained that is required by law or regulation for Fiserv to access the and use the PII pursuant to the terms set forth in this Agreement. Fiserv specifically agrees not to use or disclose any “non-public personal information” about Client’s customers in any manner prohibited by Title V of the Gramm-Leach-Bliley Act or the regulations issued thereunder (“GLB”), as applicable to Fiserv (“GLB Use Limitation”). (i) Recipient may disclose Information to: (A) its employees and employees of permitted subcontractors and Affiliates who have a need to know; (B) its attorneys and accountants as necessary in the ordinary course of its business; and (C) any other person with Discloser’s prior written consent. Before disclosure to any of the above persons, Recipient will have a written agreement with (or in the case of clause (B) a professional obligation of confidentiality from) such person sufficient to require that person to treat Information in accordance with the requirements of this Agreement, and Recipient will remain responsible for any breach of this Section 3 (Confidentiality and Ownership) by any of the above persons. Fiserv as Recipient may also disclose Client Information to third party vendors designated by Client. (ii) Recipient may disclose Information to the extent required by law or legal process, provided that: (A) Recipient gives Discloser prompt notice, if legally permissible, so that Discloser may seek a protective order; (B) Recipient reasonably cooperates with Discloser (at Discloser’s expense) in seeking such protective order; and (C) all Information shall remain subject to the terms of this Agreement in the event of such disclosure. At Recipient’s option, Information will be returned to Discloser or destroyed (except as may be contained in back-up files created in the ordinary course of business that are recycled in the ordinary course of business over an approximate 30- to 90-day period or such longer period as required by applicable law) at the termination or expiration of this Agreement or the applicable Exhibit (and any applicable Termination Assistance Services period) and, upon Discloser’s request, Recipient will certify to Discloser in writing that it has complied with the requirements of this sentence. (iii) Recipient acknowledges that any breach of this Section 3 (Confidentiality and Ownership) may cause irreparable harm to Discloser for which monetary damages alone may be insufficient, and Recipient therefore acknowledges that Discloser shall have the right to seek injunctive or other equitable relief against such breach or threatened breach, in addition to all other remedies available to it at law or otherwise. (iv) Recipient agrees that it shall notify Discloser as soon as possible upon Recipient becoming aware of any incident of unauthorized access to Discloser’s Information, Software, or systems. For clarity,

Fiserv’s obligations with regard to a Security Incident are set forth in Section 4 (Information Security) below. Ownership. (i) Ownership by Client. Subject to the use rights granted above, as between Fiserv and Client, Client shall own Client Information, including Client Data (as defined in Section 4(a) (Client Data) of this Master Agreement). Client also shall own any data created, generated, or processed from Client Data by Fiserv in connection with its performance of the Services or by Client in connection with its receipt of the Deliverables, including data processing input and output. (ii) Ownership by Fiserv. Except as provided in Section 3(c)(i) (Ownership by Client) above, unless the Parties agree otherwise, and with the exception of Client Information, all information, reports, studies, object and source code (including without limitation the Deliverables and all modifications, enhancements, additions, upgrades, or other works based thereon or related thereto), flow charts, diagrams, specifications, and other tangible or intangible material of any nature whatsoever produced through or as a result of or related to any of the Deliverables (collectively, “Works”), and all patents, copyrights, and other proprietary rights related to such Works and models, shall be the sole and exclusive property of Fiserv or its Affiliates or of their third party providers. Fiserv shall be the sole and exclusive owner of all derivative works of Works, including all United States and foreign patent, copyright and other intellectual property rights in such Works. Nothing in this Agreement shall convey to Client any title to or ownership of any Deliverables, Works, or models. Client hereby irrevocably assigns and transfers to Fiserv all rights, title, and interest in any such Works and models. (iii) Right to Use. During the term of the Agreement or the applicable Exhibit (and any Termination Assistance Services period), Client and its Affiliates may use any Works, other than an Open Source Component (as defined in the Software Products Exhibit to this Agreement) which is addressed in the Software Products Exhibit, provided to or rightfully accessed by Client or such Affiliates solely as and to the extent necessary to receive and/or use the Deliverables, in compliance with applicable legal and regulatory requirements, and/or to perform functions associated with their principal lines of business, and shall do so in accordance with the applicable terms and conditions of this Agreement. In addition, following the expiration or termination of the term of the Agreement or the applicable Exhibit (and any Termination Assistance Services period), Client and its Affiliates may continue to use reports, customer statements and other Works, excluding Fiserv Software (including object and source code) and Fiserv Systems, to comply with applicable legal and regulatory requirements and perform functions associated with their principal lines of business, provided such use is in compliance with the applicable terms and conditions of this Agreement and provided further that this shall not include the right to continue using Fiserv Software or Fiserv Systems provided at a fee unless Client agrees to pay such fee. For clarity, ownership of Client Data is set forth below in Section 4(a) (Client Data) of this Master Agreement. Restrictions. Without limiting any other obligation set forth in this Section 3 (Confidentiality and Ownership), Client shall not use, transfer, distribute, interface, integrate, or dispose of any information or content contained in Deliverables in any manner that competes with the business of Fiserv. Except as expressly authorized in an Exhibit, Client shall not: (i) use the Deliverables to provide services to third parties (other than Client’s customers or authorized Affiliates, as applicable); or (ii) reproduce, republish or offer any part of the Deliverables (or compilations based on any part of the Deliverables) for sale or distribution in any form over or through any medium. Information Security. (a) Client Data. Nothing in this Section 4 (Information Security) is intended to limit the obligations of Fiserv under Section 3 (Confidentiality and Ownership) of this Master Agreement with respect to the Client Information, which the parties acknowledge includes “Client Data”. “Client Data” means collectively, Client PII, ‘customer information’ (as defined in GLB), “consumer information” (as defined in GLB), ‘Cardholder Data’ (as defined below) to the extent collected by Fiserv from or on behalf of Client. To the extent that the provisions

pertaining to Client Data in Section 3 (Confidentiality and Ownership) of this Master Agreement and this Section 4 (Information Security) conflict, the provisions of this Section 4 (Information Security) shall control. (i) Ownership of Client Data. For clarity, Client Data shall be and remain, as between the Parties, the property of Client or its applicable Affiliate(s), if any, regardless of whether Fiserv or Client is in possession of the Client Data. Client Data shall be made available to Client, upon its request and in accordance with the provisions of this Agreement, including Client’s agreement to pay the associated fees, in accordance with Section 8(g) (Return of Client Files) of this Master Agreement, in Fiserv’s standard form and format or such other form and format reasonably available and specifically agreed to in writing between the parties. (ii) Limitations on Use. Fiserv agrees that Fiserv Personnel shall not collect, transfer, disseminate, use or process Client Data for any purpose or to any extent other than as necessary to fulfill Fiserv’s obligations and rights under this Agreement (collectively, this use limitation together with the Deliverable Use Limitation, Analytics Use Limitation, Fraud Detection/Prevention Use Limitation, and GLB Use Limitation above shall be “Client Data Use Limitation”). Fiserv shall not (and shall cause Fiserv Personnel to not) collect, use, process, transfer or disseminate Client Data other than in accordance with the Client Data Use Limitation without the written approval of Client. Fiserv shall take appropriate action to ensure that Fiserv Personnel having access to Client Data act in accordance with the terms of this Section 4 (Information Security) and are trained regarding their handling of information such as Client Data. In addition, if such Fiserv Personnel have not already done so, Fiserv shall require such Fiserv Personnel to execute employment agreements, and for any such personnel hired through subcontractors an appropriate agreement in place with such subcontractor, having appropriate confidentiality terms in accordance with the requirements of Section 3(b) (Obligations). (b) General. Fiserv has implemented and shall maintain during the term of this Agreement, including any period of Termination Assistance Services, a comprehensive written information security program, which shall include appropriate technical, organizational and physical security measures designed to protect against the destruction, loss, unauthorized alteration or acquisition of, or unauthorized access or use or other compromise to, Client Data. The information security program shall be designed to meet, among other things, the following objectives: (i) protect the security and confidentiality of customer information (as defined in GLB); (ii) protect against any anticipated threats or hazards to the security or integrity of such information; (iii) protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer; (iv) ensure the proper disposal of “consumer information” (as defined in Interagency Guidelines Establishing Information Security Standards (“Interagency Guidelines”); and (v) require Fiserv to take appropriate actions to address incidents of unauthorized access to Client’s “sensitive customer information” (as defined in the Interagency Guidelines), including notification to Client as soon as possible of any such incident. The content and implementation of Fiserv’s information security program shall be documented in writing by Fiserv. On or before the Effective Date and thereafter within thirty (30) days of Client’s written request, Fiserv shall provide to Client a summary of Fiserv’s then current written information security program for the applicable Deliverables received by Client, and thereafter, upon Client’s request, will provide updates on the status of such information security program. Fiserv also shall permit Client to review the relevant components of Fiserv’s information security program and/or to inspect Fiserv’s compliance with such program in accordance with Section 10(e) (Client Audit) of this Master Agreement. Upon Client’s written request, Fiserv shall allow Client to review any associated audit reports as described in Section 10 (Audit) of this Master Agreement, summaries of Disaster Recovery test results as set forth in Section 6(c) (Disaster Recovery Test) of the ASP Services Exhibit, summaries of penetration test results as set forth in Section 4(c) Security Testing of the ASP Services Exhibit. To the extent Fiserv makes any modifications to its information security program during the term or any Termination Assistance Services period, such modification shall comply with all relevant requirements and obligations under this Agreement and the information security program, as modified, shall be comparable or superior in all material respects to the one it replaced.

(c) PCI. Fiserv agrees to comply in all material respects with applicable requirements of PCI-DSS to the extent Fiserv stores, processes or transmits “cardholder data” or “sensitive authentication data” (as defined in PCI-DSS) (collectively “Cardholder Data”) on behalf of Client in connection with the Services or to the extent the Services impact the security of Client’s cardholder data environment. Consistent with Section 3(b) (Obligations) of this Master Agreement, Fiserv shall use Cardholder Data only for Fiserv’s performance of the Services and in accordance with this Agreement. Fiserv shall maintain a current PCI-DSS compliance validation, which Client may verify by examining the list of validated entities on the applicable website. (d) Security Incident. If Fiserv confirms or is notified of any incident that has or is reasonably believed to have resulted in unauthorized possession, acquisition, use, destruction, loss, alteration, theft or disclosure of, or unauthorized access to Client Data (each such incident, a “Security Incident”), Fiserv shall as soon as reasonably possible (and in any event within 48 hours or sooner if required by applicable laws after Fiserv confirms the Security Incident) notify the Client Relationship Manager, Client’s Information Security Officer and Client’s Chief Information Officer of such Security Incident and furnish applicable known details. To the extent the Security Incident is within Fiserv’s areas of responsibility, Fiserv shall investigate and mitigate the adverse effects of such Security Incident and shall provide regular updates appropriate to the nature of the Security Incident to Client. In addition, to the extent the Security Incident is within Fiserv’s areas of responsibility, Fiserv shall promptly (and in any event as soon as reasonably practicable) (A) perform a root cause analysis, (B) prepare a corrective action plan, (C) provide in writing to Client applicable information, including how and when such Security Incident occurred and what actions Fiserv is taking or has taken to remedy such Security Incident, and (D) to the extent the Security Incident is within Fiserv’s areas of control, remediate such Security Incident and take commercially reasonable actions to prevent its recurrence. In each case, Fiserv shall perform the activities described in the two preceding sentences at no additional charge to Client to the extent such Security Incident is attributable to the failure of Fiserv or Fiserv Personnel to comply with Fiserv’s obligations under this Agreement. To the extent the Security Incident is not attributable to such a failure on the part of Fiserv or Fiserv Personnel, Fiserv and Client shall confer in good faith and agree on the terms and fees (if any) associated with doing so (provided that Fiserv uses commercially reasonable efforts to minimize such fees. (e) Additional Notice of Security Incident. (i) Absent Client’s express, written and advance agreement, Fiserv shall not independently notify any customer, client, vendor, employee or agent of Client or a Client Affiliate (except the Client Chief Information Officer, Client Information Security Officer, and Client Relationship Manager), regarding the involvement of Client’s data in any Security Incident, provided that Fiserv may inform other impacted clients of the involvement of their data in such a Security Incident, and may inform regulators if required by law or regulation. (ii) In the event of a confirmed Security Incident involving Cardholder Data, as required by an applicable industry security organization (e.g. PCI-SSC) or the applicable regulatory agency having jurisdiction over Client, Client acknowledges and agrees that Fiserv may disclose information regarding any such Security Incident to such organization and such agency. In the event of a breach or intrusion of or otherwise unauthorized access to Cardholder Data stored by or for Fiserv, Fiserv shall promptly notify Client, in writing, and provide PCI-SSC or its designee access to Fiserv’s facilities and all pertinent records to conduct a review of Fiserv’s compliance with these requirements. (iii) Fiserv shall maintain appropriate business continuity and disaster recovery procedures, as described in Section 6 (Business Continuity / Disaster Recovery) of the ASP Services Exhibit with respect to the Services and the Client Data, including Cardholder Data. (f) [***] (g) Data Encryption. (i) Fiserv. Fiserv shall encrypt Client Data in transit using Fiserv’s then-current data encryption policies and controls.

(ii) Client. As applicable to the Deliverables received by Client, Client agrees to comply with Fiserv’s then-current data encryption policies and controls regarding transmission to and from Fiserv of tapes, images, and records maintained and produced by Fiserv for Client in connection with the Deliverables (“Client Files”), or other data transmitted to and from Fiserv in connection with the Deliverables (collectively with Client Files, “Data”). If Client requests or requires Fiserv to send, transmit, or otherwise deliver Data to Client or any third party in a non-compliant format or manner, or Client (or third party on Client’s behalf) sends, transmits or otherwise delivers Data to Fiserv in a non-compliant format or manner (and such non-compliant transmission or delivery by Client is not caused by Fiserv’s breach of its information security or other obligations under this Agreement), then, notwithstanding any other provision of this Agreement: (i) Client understands and accepts all risk of transmitting Data in an unencrypted or otherwise noncompliant format; and (ii) Client releases, discharges, and shall indemnify and hold harmless Fiserv and its employees, officers, directors, agents, and Affiliates from any and all liability, damage, or other loss under this Agreement or otherwise suffered by or through Client or any of the indemnified entities arising out of the transmission, destruction, or loss of such Data, including any information security or privacy breach related to such Data. Reserved. Warranties / Indemnifications. (a) Warranties By Fiserv. Fiserv warrants that: (i) no contractual obligations exist that would prevent Fiserv from entering into this Agreement; (ii) it has the requisite authority to execute, deliver, and perform its obligations under this Agreement; and (iii) it will comply in all material respects with all laws and regulatory requirements applicable to Fiserv as a technology solutions provider and/or to the provision of the Deliverables or the performance of Fiserv’s obligations under this Agreement; and (iv) Fiserv has not given and will not give commissions, payments, kickbacks, lavish or extensive entertainment or gifts, or other inducements of more than minimal value to any employee or agent of Client in connection with this Agreement, and that no Fiserv Affiliate or any officer, director, employee, agent or representative of Fiserv has given such payments, gifts, entertainment or other item of value to any employee or agent of Client. (b) Warranties By Client. Client warrants that: (i) no contractual obligations exist that would prevent Client from entering into this Agreement; (ii) it has the requisite authority to execute, deliver, and perform its obligations under this Agreement; (iii) it will comply in all material respects with all laws and regulatory requirements applicable to Client’s receipt and use of Deliverables under this Agreement (iv) it will comply with all laws and regulations applicable to Client as a financial institution, as relevant to the Deliverables; and (v) that the materials provided to Fiserv will be free from any Disabling Code at the time of delivery. (c) THE WARRANTIES STATED ABOVE AND IN THE EXHIBITS, IF ANY, ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES MADE BY THE PARTIES. EXCEPT AS PROVIDED IN THE AGREEMENT OR APPLICABLE EXHIBITS OR SCHEDULES, FISERV DOES NOT REPRESENT THAT THE DELIVERABLES MEET CLIENT’S REQUIREMENTS OR THAT THE OPERATION OF THE DELIVERABLES WILL BE UNINTERRUPTED OR ERROR-FREE. CLIENT ACKNOWLEDGES THAT IT HAS INDEPENDENTLY EVALUATED THE DELIVERABLES AND THEIR APPLICATION TO CLIENT’S NEEDS. FISERV DISCLAIMS, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL OTHER REPRESENTATIONS, CONDITIONS, AND WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND ANY ARISING FROM A COURSE OF DEALING OR USAGE OR TRADE. CLIENT MAY NOT MAKE ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, ON BEHALF OF FISERV, ITS AFFILIATES OR THEIR RESPECTIVE THIRD PARTY PROVIDERS OR LICENSORS TO ANY USER OR ANY OTHER PARTY IN CONNECTION WITH THE DELIVERABLES WITHOUT FISERV’S EXPRESS PRIOR WRITTEN CONSENT. (d) Client IP Indemnification. (i) Client shall, at its expense, defend, indemnify, and hold harmless Fiserv and its directors, officers, and employees from and against any claims, suits, or other proceedings (including reasonable attorneys’ fees and payment of any final settlement or judgment) brought by third parties arising from infringement of such third party’s intellectual property rights to the extent

that they are based on Client’s Marks, Client Content (each as defined in Section 13(l) (Marks and Content) of this Master Agreement), or data supplied to Fiserv by Client, or arising from any claim that any Derivative Works of the Signature Software and Source Code created by Authorized Programmers in accordance with Section 2(f) of the Accounting Processing Software Schedule (or the use of such Derivative Works by Client) infringes or allegedly infringes on any Third Party’s intellectual property rights (collectively, “Client IP Indemnity Assets”) (“Client Infringement Claim”) and shall pay all amounts payable by Client under any judgment, verdict, or court order entered by a court of competent jurisdiction or settlement agreed upon by Client in any Client Infringement Claim, provided that Fiserv complies with the Indemnification Procedures below. If Client IP Indemnity Assets are required for Fiserv’s provision of the Deliverable(s), in the event that any Client IP Indemnity Assets are alleged or found to be misappropriated from, or to infringe on the intellectual property rights of, a third party, or if their use by Fiserv is enjoined, then in addition to the foregoing indemnification obligation, and at Client’s option and Client’s sole expense, Client shall: (i) secure a license to enable such Client IP Indemnity Assets to be utilized in a manner consistent with the terms of this Agreement, (ii) replace the same with other suitable, non-infringing intellectual property assets, as reasonably determined by Client, (iii) modify the Client IP Indemnity Assets so that they no longer infringe or misappropriate the rights of such third party, while still meeting the requirements of this Agreement, or (iv) subject to Section 8(d) (Client Defaults; Early Termination) of this Master Agreement, authorize Fiserv to cease using such Client IP Assets and cease providing any Service to the extent it is incapable of performing such Service without such Client IP Indemnity Assets. (ii) Notwithstanding the foregoing, Client shall have no liability for nor obligation to indemnify Fiserv for any Client Infringement Claim pursuant to this Section 6(d) (Client IP Indemnification) to the extent such Client Infringement Claim arises from: (A) use of any part of the Client IP Indemnity Assets in combination with third party materials or third party software not provided or approved by Client in writing; (B) modifications made by Fiserv or any Fiserv third party, but solely to the extent such modifications were not approved by Client in writing; (C) use of other than the current release of Client IP Indemnity Assets if infringement would have been avoided by use of such current release and Client notified Fiserv of the potential infringement; (D) use of the Client IP Indemnity Assets other than in accordance with this Agreement; (E) use of any part of the Client IP Indemnity Assets for any purpose not related to the provision to or receipt by Client of Deliverables under this Agreement; (F) adherence to detailed written specifications or instructions provided by Fiserv that Client is required to comply with (provided Client notifies Fiserv of the possibility of infringement or misappropriation if and to the extent the Client Personnel adhering to such specifications or instructions possess actual knowledge of such possibility); or (G) [***] (iii) The obligations of Client as set forth in this Section 6(d) (Client IP Indemnification) shall be Client’s entire liability and Fiserv’s sole and exclusive remedy for Client’s infringement or misappropriation of the intellectual property rights of a third party and Fiserv hereby expressly waives any other liability on the part of Client arising therefrom. (e) Client Indemnity. Client shall, at its expense, defend, indemnify and hold harmless Fiserv, its Affiliates, and their officers, directors, and employees against any claims, actions, damages, and/or liabilities arising out of: (i) access to or use of the Fiserv System by Client or its customers in a manner other than as expressly permitted in the Agreement; and (ii) access to or use of the Fiserv System by any third party(ies) acting by, through, or on behalf of Client. The preceding sentence shall not preclude Client’s recovery of damages from Fiserv pursuant to the terms and subject to the limitations of the Agreement. (f) Fiserv IP Indemnification.

(i) Fiserv shall, at its expense, defend[***] Client and its Affiliates and, the officers, directors, officials, employees of each of the foregoing from and against any third party claim or actions based on any allegations that the Deliverables (excluding any Third Party Software (as defined in the Software Products Exhibit and identified as “Third Party Software” in the specific Schedule thereto) but including any components provided by Third Party providers of Fiserv that Fiserv embeds in Deliverables, including Open Source Components) or any other intellectual property delivered or licensed or to which rights are otherwise acquired hereunder (collectively, the “IP Assets”), or any part or parts thereof, infringe or misappropriate the proprietary rights of such third party (“Infringement Claim”), and shall pay all amounts payable by Client under any judgment, verdict, or court order entered by a court of competent jurisdiction or settlement agreed upon by Fiserv in any Infringement Claim, provided that Client complies with the Indemnification Procedures below. In the event that any IP Assets are alleged or found to be misappropriated from, or to infringe on the intellectual property rights of, a third party, or if their use by Client is enjoined, then in addition to the foregoing indemnification obligation, and at Fiserv’s option and Fiserv’s sole expense, Fiserv shall: (i) secure a license to enable such IP Assets to be utilized in a manner consistent with the terms of this Agreement, (ii) replace the same with other intellectual property assets with equally suitable, functionally equivalent, compatible, non-infringing assets or services, as reasonably determined by Fiserv, or (iii) modify the IP Assets so that they no longer infringe or misappropriate the rights of such third party, while still meeting the requirements of this Agreement. Fiserv shall not settle any claim for which it has assumed the defense pursuant to this Section 6(e) in any manner that requires Client to admit any fault or liability without the prior written consent of Client, which consent shall not be unreasonably withheld, conditioned or delayed. (ii) Notwithstanding the foregoing, Fiserv shall have no liability for nor obligation to indemnify Client for any Infringement Claim pursuant to this Section 6(e) to the extent such Infringement Claim arises from: (A) use of any part of the IP Assets in combination with materials or software not provided or approved by Fiserv in writing; (B) modifications made by Client or any third party, but solely to the extent such modifications were not approved in writing by Fiserv; (C) use of other than the current release of Software if infringement would have been avoided by use of such current release and Fiserv notified Client of the potential infringement; (D) use of the Software other than in accordance with the Software Documentation or this Agreement, including Software use in violation of Section 4 of the Software Products Exhibit; or (E) adherence to detailed written specifications or instructions provided by Client that Fiserv is required to comply with (provided Fiserv notifies Client of the possibility of infringement or misappropriation if and to the extent the Fiserv Personnel adhering to such specifications or instructions possess actual knowledge themselves of such possibility). (iii) The obligations of Fiserv as set forth in this Section 6(e) shall be Fiserv’s entire liability and Client’s sole and exclusive remedy for Fiserv’s infringement or misappropriation of the intellectual property rights of a third party. For clarity, this shall not be deemed a force majeure event and shall not operate or be construed as relieving Fiserv of its performance obligations under this Agreement, including its obligation to provide the Deliverables in accordance with the applicable Exhibits and Schedules. (g) Indemnification Procedures. If any third party makes a claim covered by Section 6(d) (Client IP Indemnification) or Section 6(f) (Fiserv IP Indemnification) of this Master Agreement and with respect to indemnification provisions elsewhere in this Agreement which reference this procedure, against an indemnitee with respect to which such indemnitee intends to seek indemnification under this Section 6 (Warranties/Indemnifications), such indemnitee shall give prompt notice of such claim to the indemnifying party, including a brief description of the amount and basis therefore, if known. Upon giving such notice, the indemnifying party shall be obligated to defend such indemnitee against such claim and shall be entitled to

assume control of the defense of the claim with counsel chosen by the indemnifying party. The indemnitee shall cooperate fully with and assist the indemnifying party in its defense against such claim in all reasonable aspects. The indemnifying party shall keep the indemnitee fully apprised at all times as to the status of the defense. Notwithstanding the foregoing, the indemnitee shall have the right to employ its own separate counsel in any such action, but the fees and expenses of such counsel shall be at the expense of the indemnitee. Neither the indemnifying party nor any indemnitee shall be liable for any non-monetary settlement of action or claim effected without its consent. The indemnifying party shall pay all costs of indemnity arising out of or relating to that defense and any such settlement, compromise, or payment. The indemnitee shall keep the indemnifying party fully apprise at all times as to the status of the defense. Limitation of Liability. [***] IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF GOODWILL, PROFIT, REPUTATION, OR BUSINESS, OR FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, OR TORT DAMAGES, ARISING OUT OF OR RELATING TO THIS AGREEMENT, REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT, CONTRACT, OR OTHERWISE. EXCEPT FOR CLAIMS RELATED TO THE MISUSE OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY RIGHTS (INCLUDING ANY BREACH OF LICENSE RESTRICTIONS SET FORTH IN THIS AGREEMENT), OR THE OBLIGATIONS TO PAY AMOUNTS DUE OR OWING UNDER THIS AGREEMENT, NEITHER PARTY MAY ASSERT ANY CLAIM AGAINST THE OTHER PARTY RELATED TO THIS AGREEMENT MORE THAN 2 YEARS AFTER SUCH CLAIM ACCRUED. [***] THE AGGREGATE LIABILITY OF A PARTY TO THE OTHER PARTY (INCLUDING IN THE CASE OF HEARTLAND ALL CLIENT AFFILIATES) AND ANY THIRD PARTY FOR ANY AND ALL CLAIMS AND OBLIGATIONS RELATING TO THIS AGREEMENT SHALL BE LIMITED TO [***] THE AMOUNT OF ANY AVAILABLE CAP SHALL BE REDUCED BY AMOUNTS PREVIOUSLY PAID AND APPLIED TO ANY OTHER CAP, SO THAT IN NO EVENT SHALL FISERV’S AGGREGATE LIABILITY TO CLIENT FOR ANY AND ALL CLAIMS OR OBLIGATIONS RELATING TO THIS AGREEMENT EXCEED THE INCREASED CAP. For purposes of this Section 7 (Limitation of Liability), fines or penalties imposed on a party by a regulator or any governmental agency having valid jurisdiction over such party to the extent arising from (i) in the case of fines or penalties imposed on Client, Fiserv’s failure to comply with laws or regulatory requirements applicable to Fiserv as a technology solutions provider and/or to the provision of the Deliverables or the performance of Fiserv’s obligations under this Agreement or (ii) in the case of fines or penalties imposed on Fiserv, Client’s failure to comply with laws or regulations applicable to its or any Client Affiliate’s receipt or use of the Deliverables under this Agreement will be deemed direct damages and recoverable under this Section 7 (Limitation of Liability). Term and Termination. Term. This Agreement shall be effective on the Effective Date and shall remain in effect until the term of all outstanding Exhibits (including any holdover period) has expired or such Exhibits have terminated, unless otherwise terminated as provided herein. The term for Deliverables may be set forth in the applicable Exhibit. An Exhibit that does not state a term will be effective from its last date of execution until terminated in accordance with this Agreement or the Exhibit. Termination. In addition to termination rights set forth in any Exhibit: (i) Material Breach. Either party may, upon written notice to the other, terminate any Schedule if the other party materially breaches its obligations under that Exhibit or Schedule or under this Agreement with respect to that Exhibit or Schedule and the breaching party fails to cure such material breach within [***] following its receipt of written notice stating, with particularity and in reasonable detail, the nature of the claimed breach [***]. (ii) [***] (iii) [***]

(iv) Unpaid Invoice. With the exception of amounts disputed in good faith pursuant to Section 2(f) (Payment Terms) of this Master Agreement, if any invoice remains unpaid by Client 30 days after due and Client fails to cure such payment failure within 30 days following its receipt of written notice from Fiserv, Fiserv may terminate: (A) the Exhibit Schedule and/or Client’s access to and use of the Deliverables to which the payment failure relates; or (B) this Agreement, including all Exhibits and Schedules if the unpaid amounts constitute a material portion of annual charges due under this Agreement. (v) Fiserv Bankruptcy. Client may terminate this Agreement (i) upon 60 days written notice to Fiserv in the event Fiserv commits an act of bankruptcy or becomes the subject of any proceeding under the Bankruptcy Code and such action or proceeding is not dismissed by the end of such 60-day period, or (ii) upon written notice in the event Fiserv becomes insolvent or if any substantial part of Fiserv's property becomes subject to any levy, seizure, assignment, application, or sale for or by any creditor or governmental agency. Termination for Convenience; Early Termination. If Client desires to terminate the ASP Services Exhibit or Software Products Exhibit or a Schedule executed under such Exhibits early or otherwise reduces (other than as a result of account attrition or volume fluctuation in the ordinary course of business) or terminates Services under any such Exhibit or Schedule for any reason other than pursuant to Section 8(b) (Termination) of this Master Agreement, then Client shall provide at least [***] advance written notice to Fiserv and shall pay a termination fee based on the remaining unused term of the Services. [***] Client Defaults; Early Termination. If (i) a Schedule is subject to termination by Fiserv for cause for material breach or failure to pay amounts due and owing, each as set forth in Section 8(b) (Termination) of this Master Agreement; or (ii) Client deconverts any data or information from the Fiserv System (other than in the ordinary course of Client’s business or the business of Client’s Affiliates which would include deconversion of data or information for any branch location or Client Affiliate bank sold by Heartland so long as such sale is not of all Client Affiliates), or in violation of this Agreement (“Unauthorized Deconversion”); or (iii) becomes insolvent or if any substantial part of Client’s property becomes subject to any levy, seizure, assignment, application, or sale for or by any creditor or governmental agency; then, in any such event, Fiserv may, upon written notice, terminate (x) the Schedule(s) in whole or in part impacted by such material breach or failure to pay, or (y) the Schedule(s) impacted by such Unauthorized Deconversion, and, if it exercises such right, Fiserv shall be entitled to recover from Client as liquidated damages for such early termination an amount equal to [***] Liquidated Damages. The parties agree that Fiserv damages incurred as a result of early termination of any Services would be difficult or impossible to calculate as of the Effective Date. Accordingly, the amounts set forth in Sections 8(c) (Termination for Convenience; Early Termination) and (d) (Client Defaults; Early Termination) of this Master Agreement represent a reasonable pre-estimate of damages and are not a penalty. Remedies. Remedies contained in this Section 8 (Term and Termination) are cumulative and are in addition to the other rights and remedies available to the parties under this Agreement, by law or otherwise. Return of Client Files. Upon expiration or termination of this Agreement or any Exhibit or Schedule to this Agreement, Fiserv shall furnish to Client such copies of Client Files as Client may request in Fiserv’s standard formats, or such other format reasonably available and specifically agreed to between the parties, and shall provide such information and assistance as is reasonable and customary to enable Client to deconvert from the Fiserv System; provided, however, that Fiserv’s obligation to provide copies of such Client Files is conditioned on Client’s agreement to return or destroy all Fiserv Information in accordance with Section 3(b) (Obligations) of this Master Agreement and to make the following payments in accordance with the next sentence: (i) all amounts due and owing as of the requested return date for all Services provided through the date such Client Files are returned to Client; (ii) Fiserv’s then standard rates for the services necessary to return such Client Files; and (iii) the termination fee, if any, due as of the requested return date pursuant to Section 8(c) (Termination for Convenience; Early Termination) or 8(d) (Client Defaults; Early Termination) of this Master Agreement. [***] Termination of Software. Subject to the other provisions of this Section 8 (Term and Termination) and Section 1(p) (Termination Assistance Services) above, the termination of the Agreement or the Software

Products Exhibit or any individual Schedule thereto shall automatically, and without further action by Fiserv, terminate and extinguish the license(s) granted under the applicable Schedule(s) and Fiserv’s obligation to provide Maintenance Services with respect to such Software. Unless Client destroys all copies of the Software and provides written certification to Fiserv of said destruction within 10 days after receipt of written notice from Fiserv following termination of the applicable Schedule and completion of any requested Termination Assistance Service, Fiserv shall have the right to take immediate possession of the Software and all copies thereof wherever located without further notice or demand. [***] Assumptions. Fees set forth in the Exhibits are based on completion of the initial term of all Deliverables. If Deliverables are reduced or terminated for any reason other than by Client under Section 8(b)(i) (Material Breach) above, or if Client renegotiates pricing before expiration of the initial term, Client shall reimburse Fiserv for all credits, rebates, discounts and incentives granted with respect to all Deliverables. Any such credits, rebates, discounts and incentives will no longer be granted through the remainder of the term for any continuing Deliverables. [***]. Dispute Resolution. Before initiating legal action against the other party relating to a dispute herein, the parties agree to work in good faith to resolve disputes and claims arising out of this Agreement. To this end, either party may request that each party designate an officer or other management employee with authority to bind such party to meet to resolve the dispute or claim. If the dispute is not resolved within 30 days of the commencement of informal efforts under this paragraph, either party may request that Client’s CFO or COO meet with the Fiserv Group President (or, in each case, a management employee of comparable level with authority to bind such party) to meet to resolve the dispute or claim. If the dispute is not resolved within 30 days of the commencement of the second escalation, either party may pursue formal legal action. This paragraph will not apply if expiration of the applicable time for bringing an action is imminent and will not prohibit a party from pursuing injunctive or other equitable relief to which it may be entitled. Audit. Fiserv Operations and Security. Client acknowledges and agrees that Fiserv is subject to certain examinations by the Federal Financial Institutions Examination Council (“FFIEC”) regulators and agencies. Client acknowledges and agrees that reports of such examination of Fiserv business units are available to Client directly from the relevant FFIEC agencies. Fiserv employs an internal auditor responsible for reviewing the integrity of its processing environments and internal controls. [***] Independent Audit. Fiserv provides for periodic independent audits, which shall include the performance of an annual SSAE 18 SOC1 Type II or SOC2 Type II audit (or similar equivalent audit) by an independent public accounting firm with respect to Fiserv’s provision of the Services pursuant to the ASP Services Exhibit from Fiserv Facilities, including Fiserv Facilities from which Fiserv System maintenance, Fiserv System support and customer support are provided (“Independent Audit”). Unless otherwise agreed by the Parties, such audit shall be conducted so as to result in an audit opinion for a 12 month period, and upon Client’s request, Fiserv shall provide a bridge letter covering the period between the report end date and the Client requested date. Upon Client’s request, Fiserv shall provide Client with a copy of such independent audit report and may charge Client a fee for such report [***] Regulatory Examination. The Parties acknowledge and agree that the records, systems and personnel used by Fiserv to provide Deliverables to Client and its Affiliates are subject to examination by federal, state, and/or other governmental regulatory agencies having jurisdiction over their businesses (including the Federal Reserve, Federal Deposit Insurance Corporation, and state regulatory authorities, as applicable) to the same extent as such records, systems and personnel would be subject to such examination if maintained by Client or its Affiliates on their own premises. Client agrees that Fiserv may provide Client Information and/or reports or summaries of Client Information when formally requested to do so by a regulatory or government agency, provided that if permitted by such requesting agency, Fiserv shall provide to Client written notice of such request prior to responding. Fiserv reserves the right to charge Client at Fiserv’s then-current rates for any assistance provided in response to regulatory requests, government agency requests, and legal process

requests such as subpoena or search warrant, in each case to the extent related to Client or its Affiliates and/or Client Information, whether issued during or after the term of this Agreement provided that Fiserv uses commercially reasonable efforts to minimize such fees. Billing Records. Upon Client’s reasonable request in writing no more frequently than once [***], Fiserv shall provide Client with documentation supporting the amounts invoiced by Fiserv hereunder. Client shall specify the period for which such documentation is requested, provided such period may not extend back more than 12 months from the date of such request. If such documentation reveals the amounts paid to Fiserv in the prior 12 months exceed the amounts to which Fiserv is entitled and such amounts are independently verified, Fiserv shall promptly remit or otherwise credit to Client the amount of such overpayment. Conversely, if such documentation reveals the amounts paid to Fiserv are less than the amounts owed in the prior 12 months, Client shall promptly remit the amount of such underpayment to Fiserv for such period. Fiserv reserves the right to charge Client for any assistance required in connection with an audit at Fiserv’s then- current rates provided that Fiserv notifies Client in advance of any such fees, obtains Client's approval prior to incurring such fees and uses commercially reasonable efforts to minimize such fees. [***]. [***]. Hiring and Employment. Background Checks. Neither party shall knowingly permit any of its employees to have access to the premises, records or data of the other party when such employee: (i) uses drugs illegally; or (ii) has been convicted of a crime in connection with a dishonest act or a breach of trust, as set forth in Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. 1829(a) (a “Conviction”). Consistent with Fiserv’s employment practices, newly hired Fiserv employees are required to pass both a pre-employment criminal background check and are required to pass a pre-employment drug screening, as permitted by law, and Fiserv periodically confirms that employees have not acquired any Convictions subsequent to hiring. Upon Client’s reasonable request and at Client’s expense, Fiserv may perform more frequent confirmation checks or utilize additional reasonable background checking criteria for those of Fiserv’s employees who will have access to Client facilities or Client’s networks and computer systems located at Client facilities. The results of all such background checks shall be retained solely by Fiserv or the third party performing such screening on behalf of Fiserv. Equal Employment. Fiserv agrees that it shall not discriminate against any employee or applicant for employment because of race, color, national origin, indigenous status, religion, marital status, sex, sexual orientation, age, physical or mental disability, veteran status or other characteristics protected by law, and that it shall comply with all applicable requirements of the Equal Opportunity Clause set forth in Executive Order 11246, as amended, and its implementing instructions, the Rehabilitation Act of 1973, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as well as the equal opportunities and affirmative action requirements set forth in 41 C.F.R. Part 60-1.4(a) (women and minorities), 41 C.F.R. Part 60-300.5(a) (covered veterans) and 41 C.F.R. Part 60-741.5(a) (individuals with disabilities). Client Relationship. Client shall designate one individual to whom all Fiserv communications concerning this Agreement may be addressed (the “Client Relationship Manager”), who shall have the authority to act on behalf of Client in all day-to-day matters pertaining to this Agreement. Client may change the designated Client Relationship Manager from time to time by providing notice to Fiserv. Additionally, Client will designate additional representatives who will be authorized to make certain decisions (e.g., regarding emergency maintenance) if the Client Relationship Manager is not available. Requested Replacement. If Client determines in good faith that the continued assignment to Client at Client’s facilities of any individual Fiserv Personnel is not in the best interests of Client, then Client shall give Fiserv notice to that effect requesting that such Fiserv Personnel be replaced, including with reasonable particularity the reasons for such request. Promptly after Fiserv’s receipt of such a request by Client, Fiserv shall investigate the matters stated in the request and discuss its findings with Client. If requested to do so by Client, Fiserv shall immediately remove the individual in question from all Client facilities pending completion of Fiserv’s investigation and discussions with Client. If, following discussions with Fiserv, Client still reasonably

and in good faith requests replacement of such Fiserv Personnel, Fiserv shall promptly replace such individual with one of suitable ability and qualifications. In such event, Client shall not be obligated to pay any fees relating to any training or other knowledge transfer activities or overlaps in periods of employment. Nothing in this provision shall operate or be construed to limit Fiserv’s responsibility for the acts or omissions of the Fiserv Personnel, or be construed as joint employment. Insurance. Fiserv shall secure and maintain throughout the term of this Agreement at its sole cost and expense the following insurance coverage with insurance carriers rated “A-VIII” or higher by A. M. Best Corporation: (i) Commercial General Liability Insurance covering bodily injury, property damage, and including contractual liability coverage, with a combined single limit of [***]. per occurrence and [***]. general aggregate. (ii) Workers Compensation insurance providing coverage pursuant to statutory requirements; and Employer's Liability Insurance with limits of [***]. each accident, [***]. policy limit, and [***]. each employee. (iii) Commercial Automobile Liability Insurance with combined bodily Injury and property damage limits of [***].. (iv) Commercial Umbrella Liability Insurance with per occurrence and aggregate limits of [***]., with the liability insurance required under Sections 12(i), (ii), and (iii) above scheduled as underlying. (v) Commercial Crime Insurance, including Employee Dishonesty and Computer Fraud for the theft of property with limits of [***]. per loss. The crime insurance should include coverage for third parties, which shall cover loss of or damage to money, securities, and other property sustained by Client, or for which Client holds for others, committed by an identified Fiserv employee, acting alone or in collusion with other persons. (vi) Professional Liability and/or Technology Errors and Omissions Liability covering acts, errors and omissions arising out of Fiserv’s performance or failure to perform its services under this Agreement, including network security and privacy liability coverage, with limits of [***]. per occurrence and in the aggregate. (vii) All-risk property insurance covering Fiserv’s real and personal property at replacement cost value. Upon Client’s written request, Fiserv will endeavor to furnish to Client standard ACORD certificates of insurance issued by authorized representative(s) of the insurance carrier(s) as evidence of each foregoing coverage. Fiserv shall notify Client in the event that any policy for the insurance required above is cancelled or otherwise terminates, unless that policy is promptly replaced by another policy in accordance with the foregoing requirements, but in no event greater than 30 days. General. Binding Agreement. This Agreement is binding upon the parties, their participating Affiliates, and their respective successors and permitted assigns. Assignment. Neither this Agreement nor any part thereof or interest therein may be sold, assigned, transferred, pledged, or otherwise disposed of [***]. Entire Agreement; Amendments. This Agreement, including its Exhibits and Schedules, which are expressly incorporated herein by reference, constitutes the complete and exclusive statement of the agreement between the parties as to the subject matter hereof and supersedes all previous agreements with respect thereto and the terms of all existing or future purchase orders and acknowledgments. Each party hereby acknowledges that it has not been induced to enter into this Agreement by virtue of, and is not relying on, any representation made by the other party not embodied herein, any term sheets or other correspondence preceding the execution of this Agreement, or any prior course of dealing between the parties, including any statements concerning product or service usage or the financial condition of the parties. Section headings are

included for reference only and should not be used to interpret this Agreement or to define, expand, or limit its terms. The protections of this Agreement shall apply to actions of the parties performed in preparation for and anticipation of the execution of this Agreement. Modifications of this Agreement must be in writing and signed by duly authorized representatives of the parties. If the terms of any Exhibit or Schedule conflict with the terms of this Agreement, this Agreement shall control unless the applicable Exhibit or Schedule expressly states that its terms control. If the terms of any Schedule conflict with the terms of the Exhibit to which such Schedule is attached, the terms of the Schedule shall control. Severability. If any provision of this Agreement is held to be unenforceable or invalid, the other provisions shall continue in full force and effect. Governing Law; Jury Trial Waiver. This Agreement will be governed by the substantive laws of the State of New York, without reference to provisions relating to conflict of laws. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. Both parties agree to waive any right to have a jury participate in the resolution of any dispute or claim between the parties or any of their respective Affiliates arising under this Agreement. Force Majeure. With the exception of Client’s payment obligation, neither party shall be responsible for delays or failures in performance resulting from acts of God, acts of civil or military authority, fire, flood, strikes, war, epidemics, pandemics, shortage of power, telecommunications or Internet service interruptions or other acts or causes reasonably beyond the control of that party (each such event a “Force Majeure Event”). [***]. The party experiencing the Force Majeure Event agrees to give the other party notice promptly following the occurrence of a force majeure event, and to use diligent efforts to re-commence performance as promptly as commercially practicable, including, in relation to Fiserv’s performance of the Services pursuant to the ASP Services Exhibit, using commercially reasonable efforts to perform in accordance with Section 6 (Business Continuity / Disaster Recovery) of the ASP Services Exhibit, and, where applicable, to adhere to Fiserv published recovery time objectives (“RTO”s) and recovery point objectives (“RPO”s) for the impacted Service. [***]. Notices. Any written notice required or permitted to be given hereunder shall be given by: (i) Registered or Certified Mail, Return Receipt Requested, postage prepaid; (ii) confirmed facsimile; or (iii) nationally recognized overnight courier service to the other party (and, in the case of Fiserv, to the Fiserv General Counsel) at the addresses listed on page 1 or to such other address or person as a party may designate in writing. All such notices shall be effective upon receipt. No Waiver. The failure of either party to insist on strict performance of any of the provisions hereunder shall not be construed as the waiver of any subsequent default of a similar nature. Prevailing Party. The prevailing party in any arbitration, suit, or action brought by one party against the other party to enforce the terms of this Agreement or any rights or obligations hereunder, shall be entitled to receive, in addition to such other relief as the arbitrators or court may award, its reasonable costs and expenses, including all attorneys’ fees, expert witness fees, litigation-related expenses and arbitrator and court or other costs incurred in such proceeding or otherwise in connection with bringing such arbitration, suit, or action. For purposes of this Agreement, a party is “prevailing” if that party prevails on the central issue raised in the action or claim, regardless of the amount of damages awarded or otherwise owed, if any. A party may prevail by judgment or decision in that party’s favor, consent decree, settlement agreement or voluntary dismissal with or without prejudice. Survival. All rights and obligations of the parties under this Agreement that, by their nature, do not terminate with the expiration or termination of this Agreement shall survive the expiration or termination of this Agreement. Publicity. Client and Fiserv shall have the right to make general references about each other and the type of Deliverables being provided hereunder to third parties, such as auditors, regulators, financial analysts, and prospective customers and clients, provided that in so doing Client or Fiserv does not breach Section 3 (Confidentiality and Ownership) of this Agreement. Fiserv may issue a press release regarding this Agreement, including its renewal and the addition of Deliverables, subject to Client’s review and approval, which shall not be unreasonably withheld or unduly delayed.

Marks and Content. Neither party shall use the name, trademark, service mark, logo or other identifying marks (collectively, “Marks”) of the other party or any of its Affiliates in any sales, marketing, or publicity activities, materials, or website display unless such party includes such Marks in a Deliverable or such party consents in advance in writing. Any such authorized or approved use shall at all times comply with such party’s Trademark Usage Guidelines (or such other requirements and/or guidelines) provided by such party or set forth on its corporate website and other reasonable requirements issued or otherwise made available by such party. Notwithstanding the foregoing, Fiserv will have the right to use Client’s Marks and third party links, information, specifications, materials, designs, copy or other such works or content provided by Client as and to the extent required in providing the Deliverables (“Client Content”), so long as Fiserv’s use complies with any reasonable usage guidelines provided in writing by Client. Client will provide such Client Content in accordance with Fiserv’s reasonable guidelines for the Deliverable and will obtain all necessary third party permissions and licenses required for Fiserv’s use of such content. If Fiserv must convert any Client Content into such format (if Fiserv is able to and does so at its own discretion), Client will pay for such conversion at Fiserv’s Professional Services Rates. Each party shall defend the other party and its Affiliates from any third party claim or action alleging that the other party’s approved use of the indemnifying party’s Marks or Client- provided content infringes a trademark, copyright, or other proprietary right of such third party as and to the extent provided in Sections 6(d) (Client IP Indemnification) and 6(f) (Fiserv IP Indemnification) of this Master Agreement. Independent Contractors. Client and Fiserv expressly agree they are acting as independent contractors and under no circumstances shall any of the employees of one party be deemed the employees of the other for any purpose. Fiserv (or its subcontractors for personnel that are hired by such subcontractor) shall be solely responsible for the payment of compensation (including provision for employment taxes, federal, state and local income taxes, workers compensation and any similar taxes) associated with the employment of, or contracting with, Fiserv Personnel. Fiserv (or its subcontractors for personnel that are hired by such subcontractors) shall also be solely responsible for obtaining and maintaining all requisite work permits, visas and any other documentation for Fiserv Personnel. Except as expressly authorized herein or in the Exhibits, this Agreement shall not be construed as authority for either party to act for the other party in any agency or other capacity, or to make commitments of any kind for the account of or on behalf of the other. Fiserv, and not Client, shall be responsible and liable for the acts and omissions of Fiserv Personnel, including acts and omissions constituting negligence, willful misconduct and/or fraud. Client and not Fiserv shall be responsible and liable for the acts and omissions of Client and Client’s Affiliates, and its and their employees, agents and/or subcontractors, including acts and omissions constituting negligence, willful misconduct and/or fraud. No Third Party Beneficiaries. Except as expressly set forth in any Exhibit hereto, no third party shall be deemed to be an intended or unintended third party beneficiary of this Agreement. [***]. Terms and Definitions. The terms defined in this Agreement include the plural as well as the singular and the derivatives of such terms. Unless otherwise expressly stated, the words “herein,” “hereof,” and “hereunder” and other words of similar import refer to the Agreement as a whole and not to any particular Article, Section, Subsection or other subdivision. Article, Section, Subsection and Attachment references refer to articles, sections and subsections of, and attachments to, the Agreement, unless specified otherwise. The words “include” and “including” shall not be construed as terms of limitation or as an exclusive set of examples. The word “or” shall not be exclusive. The words “day”, “month”, “quarter” and “year” mean, respectively, calendar day, calendar month, calendar quarter and calendar year. The words “notice” and “notification” and their derivatives mean notice or notification in writing. Other terms used in this Agreement are defined in the context in which they are used and have the meanings there indicated. Counterparts; Signatures. This Agreement and any Exhibits hereto may be executed in counterparts, each of which shall be deemed an original and which shall together constitute one instrument. The parties and their Affiliates may execute this Agreement and any Exhibit or amendment hereto in the form of an electronic record utilizing electronic signatures, as such terms are defined in the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.). Electronic signatures, or signatures transmitted by facsimile or electronically via PDF or similar file delivery method, shall each have the same effect as an original signature.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date. For Client: For Fiserv: Heartland Financial USA, Inc. Fiserv Solutions, LLC By: \si1\ By: \si2\ Name: \na1\ Name: \na2\ Title: \Ti1\ Title: Authorized Signatory Date: \ds1\ Date: \ds2\

Heartland Financial USA, Inc. Page 1 Legend: [***] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) INFORMATION THAT THE COMPANY TREATS AS PRIVATE OR CONFIDENTIAL. AMENDMENT 1 TO AGREEMENT AMENDMENT (“Amendment”) dated as of July 1, 2021 (“Amendment Effective Date”) between Fiserv Solutions, LLC, a Wisconsin limited liability company with offices located at 255 Fiserv Drive, Brookfield, WI 53045 (“Fiserv”), and Heartland Financial USA, Inc., with offices located at 700 Locust Street, Dubuque, Iowa 52001 (“Heartland” or “Client”), to the Master Agreement dated July 1, 2021 between Fiserv and Client (as amended through the date hereof, the “Agreement”). WHEREAS, Fiserv and Client entered into the Agreement for Fiserv’s provision of various Deliverables to Client; and WHEREAS, Fiserv and Client wish to amend the Agreement to include additional terms; NOW, THEREFORE, Fiserv and Client hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the same meanings assigned them in the Agreement. 2. Clarification to Agreement Effective Date. Notwithstanding anything to the contrary on page 1 of the Agreement, the Effective Date of the Agreement shall mean July 1, 2021. 3. Correction to Appendix A. Appendix A to the Master Agreement listing the Deliverables to be provided to each Client Affiliate is hereby replaced with the following new Appendix A attached to this Amendment. 4. Correction to the Card Services Schedule. Attachment 1 (Fees) to the Card Services Schedule to ASP Services Exhibit is hereby amended by deleting the introductory paragraph and replacing it with the following: [***] 5. Addition of Service Level and Support Response Time Provisions. The parties agree that the following Exhibit and Attachment listed below and attached to this Amendment are hereby added to and incorporated into the Agreement.  Service Level Exhibit to Master Agreement  Support Response Time Attachment to the Master Agreement 6. Correction to Instant Issuance Exhibit. The parties agree that: [***] 7. [***] 8. Amendment. This Amendment is intended to be a modification of the Agreement. Except as expressly modified herein, the Agreement shall remain in full force and effect. In the event of a conflict between the terms of this Amendment and the Agreement, this Amendment shall control. SIGNATURE PAGE FOLLOWS

Heartland Financial USA, Inc. Signature Page IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives as of the Amendment Effective Date. For Client: For Fiserv: Heartland Financial USA, Inc. Fiserv Solutions, LLC By: \si1\ By: \si2\ Name: \na1\ Name: \na2\ Title: \Ti1\ Title: Authorized Signatory Date: \ds1\ Date: \ds2\

EX-31.1

EXHIBIT 31.1

I, Bruce K. Lee, certify that:

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:	August 5, 2021
/s/ Bruce K. Lee
Bruce K. Lee
President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Bryan R. McKeag, certify that:

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:	August 5, 2021
/s/ Bryan R. McKeag
Bryan R. McKeag
Executive Vice President
Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Financial USA, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Bruce K. Lee, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bruce K. Lee
Bruce K. Lee
President and Chief Executive Officer
Date:	August 5, 2021

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Financial USA, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Bryan R. McKeag, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bryan R. McKeag
Bryan R. McKeag
Executive Vice President
Chief Financial Officer
Date:	August 5, 2021

XML

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 04, 2021
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-15393
Entity Registrant Name	HEARTLAND FINANCIAL USA, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	42-1405748
Entity Address, Address Line One	1398 Central Avenue
Entity Address, City or Town	Dubuque
Entity Address, State or Province	IA
Entity Address, Postal Zip Code	52001
City Area Code	563
Local Phone Number	589-2100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		42,245,788
Entity Central Index Key	0000920112
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock, par value $1.00 per share
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	HTLF
Security Exchange Name	NASDAQ
Depositary Shares, each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E
Entity Information [Line Items]
Title of 12(b) Security	Depositary Shares, each representing 1/400th interest in a share of 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E
Trading Symbol	HTLFP
Security Exchange Name	NASDAQ

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
ASSETS
Cash and due from banks	$ 208,702	$ 219,243
Interest bearing deposits with other banks and other short-term investments	240,426	118,660
Cash and cash equivalents	449,128	337,903
Time deposits in other financial institutions	3,138	3,129
Securities:
Carried at fair value (cost of $6,463,683 at June 30, 2021, and $6,024,225 at December 31, 2020)	6,543,978	6,127,975
Held to maturity, net of allowance for credit losses of $51 at June 30, 2021, and $51 at December 31, 2020 (fair value of $95,421 at June 30, 2021, and $100,041 at December 31, 2020)	85,439	88,839
Other investments, at cost	76,809	75,253
Loans held for sale	33,248	57,949
Loans receivable:
Held to maturity	10,012,014	10,023,051
Allowance for credit losses	(120,726)	(131,606)
Loans receivable, net	9,891,288	9,891,445
Premises, furniture and equipment, net	219,433	219,595
Premises, furniture and equipment held for sale	6,925	6,499
Other real estate, net	6,314	6,624
Goodwill	576,005	576,005
Core deposit intangibles and customer relationship intangibles, net	37,452	42,383
Servicing rights, net	6,201	6,052
Cash surrender value on life insurance	189,619	187,664
Other assets	246,029	281,024
TOTAL ASSETS	18,371,006	17,908,339
Deposits:
Demand	6,299,289	5,688,810
Savings	8,189,223	8,019,704
Time	1,126,606	1,271,391
Total deposits	15,615,118	14,979,905
Short-term borrowings	152,563	167,872
Other borrowings	271,244	457,042
Accrued expenses and other liabilities	172,295	224,289
TOTAL LIABILITIES	16,211,220	15,829,108
STOCKHOLDERS' EQUITY:
Common stock (par value $1 per share; 60,000,000 shares authorized at both June 30, 2021, and December 31, 2020; issued 42,245,452 shares at June 30, 2021, and 42,093,862 shares at December 31, 2020)	42,245	42,094
Capital surplus	1,066,765	1,062,083
Retained earnings	883,484	791,630
Accumulated other comprehensive income	56,587	72,719
TOTAL STOCKHOLDERS' EQUITY	2,159,786	2,079,231
TOTAL LIABILITIES AND EQUITY	18,371,006	17,908,339
Preferred Stock
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series A Junior Participating preferred stock
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series B Fixed Rate Cumulative Perpetual Preferred Stock
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series C Senior Non-Cumulative Perpetual Preferred Stock
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series D Senior Non-Cumulative Perpetual Convertible Preferred Stock
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Series E Fixed-Rate Reset Cumulative Perpetual Preferred Stock
STOCKHOLDERS' EQUITY:
Preferred stock	$ 110,705	$ 110,705

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Securities carried at fair value, cost	$ 6,463,683	$ 6,024,225
Held to maturity, allowance for credit losses	51	51
Estimated Fair Value	$ 95,421	$ 100,041
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	60,000,000	60,000,000
Common stock, shares issued (in shares)	42,245,452	42,093,862
Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	6,104	6,104
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series A Junior Participating preferred stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	16,000	16,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series B Fixed Rate Cumulative Perpetual Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	81,698	81,698
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series C Senior Non-Cumulative Perpetual Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	81,698	81,698
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series D Senior Non-Cumulative Perpetual Convertible Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	3,000	3,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series E Fixed-Rate Reset Cumulative Perpetual Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	11,500	11,500
Preferred stock, shares issued (in shares)	11,500
Preferred stock, shares outstanding (in shares)	11,500
Obligations of states and political subdivisions
Held to maturity, allowance for credit losses	$ 51	$ 51
Estimated Fair Value	$ 95,421	$ 100,041

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
INTEREST INCOME:
Interest and fees on loans	$ 111,915	$ 107,005	$ 224,354	$ 213,419
Interest on securities:
Taxable	31,546	23,362	61,989	45,093
Nontaxable	4,561	3,344	9,064	5,527
Interest on federal funds sold	0	0	1	0
Interest on interest bearing deposits in other financial institutions	60	54	126	775
TOTAL INTEREST INCOME	148,082	133,765	295,534	264,814
INTEREST EXPENSE:
Interest on deposits	3,790	6,134	8,185	20,716
Interest on short-term borrowings	98	61	250	357
Interest on other borrowings (includes $(461) and $(423) of interest expense related to derivatives reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $(1,058) and $(613) of interest expense related to derivatives reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	2,976	3,424	6,276	7,084
TOTAL INTEREST EXPENSE	6,864	9,619	14,711	28,157
NET INTEREST INCOME	141,218	124,146	280,823	236,657
Provision (benefit) for credit losses	(7,080)	26,796	(7,728)	48,316
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	148,298	97,350	288,551	188,341
NONINTEREST INCOME:
Revenue from contract with customers	22,036	16,544	42,337	34,320
Loan servicing income	873	379	1,711	1,342
Securities gains, net (includes $2,842 and $2,006 of net security gains reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $2,812 and $3,664 of net security gains reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	2,842	2,006	2,812	3,664
Unrealized gain (loss) on equity securities, net	83	680	(27)	449
Net gains on sale of loans held for sale	4,753	7,857	11,173	12,517
Valuation adjustment on servicing rights	(526)	9	391	(1,556)
Income on bank owned life insurance	937	1,167	1,766	1,665
Other noninterest income	2,166	1,995	3,318	4,053
TOTAL NONINTEREST INCOME	33,164	30,637	63,481	56,454
NONINTEREST EXPENSES:
Salaries and employee benefits	57,332	50,118	116,394	100,075
Occupancy	7,399	6,502	15,317	12,973
Furniture and equipment	3,501	2,993	6,594	6,101
Professional fees	16,237	13,676	29,727	26,149
Advertising	1,649	995	3,118	3,200
Core deposit and customer relationship intangibles amortization	2,415	2,696	4,931	5,677
Other real estate and loan collection expenses	414	203	549	537
Loss on sales/valuations of assets, net	183	701	377	717
Acquisition, integration and restructuring costs	210	673	3,138	2,049
Partnership investment in tax credit projects	1,345	791	1,380	975
Other noninterest expenses	12,691	11,091	24,274	22,845
TOTAL NONINTEREST EXPENSES	103,376	90,439	205,799	181,298
INCOME BEFORE INCOME TAXES	78,086	37,548	146,233	63,497
Income taxes (includes $834 and $614 of income tax expense reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2021 and 2020, respectively, and $977 and $1,080 of income tax expense reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2021 and 2020, respectively)	16,481	7,417	31,814	13,326
NET INCOME	61,605	30,131	114,419	50,171
Preferred dividends	(2,012)	0	(4,025)	0
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 59,593	$ 30,131	$ 110,394	$ 50,171
EARNINGS PER COMMON SHARE - BASIC (in dollars per share)	$ 1.41	$ 0.82	$ 2.62	$ 1.36
EARNINGS PER COMMON SHARE - DILUTED (in dollars per share)	1.41	0.82	2.61	1.36
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)	$ 0.22	$ 0.20	$ 0.44	$ 0.40
Service charges and fees
NONINTEREST INCOME:
Revenue from contract with customers	$ 15,132	$ 10,972	$ 28,803	$ 22,993
Trust fees
NONINTEREST INCOME:
Revenue from contract with customers	6,039	4,977	11,816	9,999
Brokerage and insurance commissions
NONINTEREST INCOME:
Revenue from contract with customers	$ 865	$ 595	$ 1,718	$ 1,328

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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Interest expense	$ 2,976	$ 3,424	$ 6,276	$ 7,084
Gain (loss) on securities	2,842	2,006	2,812	3,664
Income tax expense (benefit)	16,481	7,417	31,814	13,326
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Accumulated Net Gain (Loss) from Derivatives
Interest expense	(461)	(423)	(1,058)	(613)
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Accumulated Net Unrealized Investment Gain (Loss)
Gain (loss) on securities	2,842	2,006	2,812	3,664
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)
Income tax expense (benefit)	$ 834	$ 614	$ 977	$ 1,080

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 61,605	$ 30,131	$ 114,419	$ 50,171
Securities:
Net change in unrealized gain/(loss) on securities	70,224	81,552	(20,645)	53,224
Reclassification adjustment for net gains realized in net income	(2,842)	(2,006)	(2,812)	(3,664)
Income taxes	(17,678)	(20,729)	6,083	(12,932)
Other comprehensive gain/(loss) on securities	49,704	58,817	(17,374)	36,628
Derivatives used in cash flow hedging relationships:
Net change in unrealized gain/(loss) on derivatives	745	317	2,633	(3,363)
Reclassification adjustment for net gains on derivatives realized in net income	(461)	(423)	(1,058)	(613)
Income taxes	(61)	18	(333)	832
Other comprehensive income (loss) on cash flow hedges	223	(88)	1,242	(3,144)
Other comprehensive income (loss)	49,927	58,729	(16,132)	33,484
TOTAL COMPREHENSIVE INCOME	$ 111,532	$ 88,860	$ 98,287	$ 83,655

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 61,605	$ 30,131	$ 114,419	$ 50,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			13,671	14,071
Provision (benefit) for credit losses			(7,728)	48,316
Net amortization of premium on securities			18,439	6,251
Securities gains, net	(2,842)	(2,006)	(2,812)	(3,664)
Unrealized (gain) loss on equity securities, net			27	(449)
Stock based compensation			4,776	3,558
Loans originated for sale			(244,752)	(271,167)
Proceeds on sales of loans held for sale			279,923	254,523
Net gains on sale of loans held for sale			(10,470)	(10,990)
(Increase) decrease in accrued interest receivable			813	(4,298)
Increase in prepaid expenses			(1,324)	(910)
Decrease in accrued interest payable			(1,342)	(1,699)
Capitalization of servicing rights			(703)	(1,527)
Valuation adjustment on servicing rights	526	(9)	(391)	1,556
Loss on sales/valuations of assets, net			377	717
Net excess tax benefit (expense) from stock based compensation			303	(91)
Other, net			(9,645)	(53,313)
NET CASH PROVIDED BY OPERATING ACTIVITIES			153,581	31,055
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of time deposits in other financial institutions			(9)	(7)
Proceeds from the sale of securities available for sale	423,415	182,749	630,481	511,639
Proceeds from the maturity of and principal paydowns on securities available for sale			484,958	212,538
Proceeds from the maturity of and principal paydowns on securities held to maturity			4,127	1,832
Proceeds from the maturity of time deposits in other financial institutions			0	150
Proceeds from the sale, maturity of and principal paydowns on other investments			2,498	6,135
Purchase of securities available for sale			(1,571,281)	(1,491,459)
Purchase of other investments			(4,054)	(10,273)
Net (increase) decrease in loans			5,203
Net (increase) decrease in loans				(881,419)
Purchase of bank owned life insurance policies			(190)	(201)
Capital expenditures			(11,539)	(7,679)
Proceeds from the sale of equipment			3,090	3,331
Proceeds on sale of OREO and other repossessed assets			1,858	1,783
NET CASH USED BY INVESTING ACTIVITIES			(454,858)	(1,653,630)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits			610,479	1,287,288
Net increase in savings deposits			169,519	502,871
Net decrease in time deposit accounts			(144,785)	(125,791)
Net decrease in short-term borrowings			(15,309)	(12,799)
Proceeds from short term advances			1,700	516,545
Repayments of short term advances			(1,700)	(597,741)
Proceeds from other borrowings			0	33,750
Repayments of other borrowings			(186,356)	(3,622)
Net proceeds from the issuance of preferred stock			0	110,705
Proceeds from issuance of common stock			1,519	928
Dividends paid			(22,565)	(14,715)
NET CASH PROVIDED BY FINANCING ACTIVITIES			412,502	1,697,419
Net increase in cash and cash equivalents			111,225	74,844
Cash and cash equivalents at beginning of year			337,903	378,734	$ 378,734
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 449,128	$ 453,578	449,128	453,578	$ 337,903
Supplemental disclosures:
Cash paid for income/franchise taxes			31,735	12,798
Cash paid for interest			16,053	29,856
Loans transferred to OREO			1,186	1,055
Transfer of premises from premises, furniture and equipment, net, to premises, furniture and equipment held for sale			1,564	0
Transfer of premises from premises, furniture and equipment held for sale to premises, furniture and equipment, net			6	0
Dividends declared, not paid			2,013	0
Transfer of available for sale securities to held to maturity securities			$ 0	$ 462

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Series E Preferred Stock	Impact of ASU 2016-13 adoption	Adjusted balance at January 1, 2020	Preferred Stock	Preferred Stock Adjusted balance at January 1, 2020	Common Stock	Common Stock Adjusted balance at January 1, 2020	Capital Surplus	Capital Surplus Adjusted balance at January 1, 2020	Retained Earnings	Retained Earnings Impact of ASU 2016-13 adoption	Retained Earnings Adjusted balance at January 1, 2020	Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss) Adjusted balance at January 1, 2020
Balance at beginning of period at Dec. 31, 2019	$ 1,578,137		$ (14,891)	$ 1,563,246	$ 0	$ 0	$ 36,704	$ 36,704	$ 839,857	$ 839,857	$ 702,502	$ (14,891)	$ 687,611	$ (926)	$ (926)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	83,655										50,171			33,484
Cash dividends declared:
Common	(14,715)										(14,715)
Issuance of shares of Series E stock		$ 110,705
Issuance of shares of common stock	928						141		787
Stock based compensation	3,558								3,558
Balance at end of period at Jun. 30, 2020	1,747,377				110,705		36,845		844,202		723,067			32,558
Balance at beginning of period at Mar. 31, 2020	1,553,714				0		36,807		842,780		700,298			(26,171)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	88,860										30,131			58,729
Cash dividends declared:
Common	(7,362)										(7,362)
Issuance of shares of Series E stock	110,705				110,705
Issuance of shares of common stock	124						38		86
Stock based compensation	1,336								1,336
Balance at end of period at Jun. 30, 2020	1,747,377				$ 110,705		36,845		844,202		723,067			32,558
Cash dividends declared:
Shares of preferred stock issued (in shares)					11,500
Balance at beginning of period at Dec. 31, 2020	2,079,231				$ 110,705		42,094		1,062,083		791,630			72,719
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	98,287										114,419			(16,132)
Cash dividends declared:
Preferred	(4,025)										(4,025)
Common	(18,540)										(18,540)
Issuance of shares of common stock	57						151		(94)
Stock based compensation	4,776								4,776
Balance at end of period at Jun. 30, 2021	2,159,786				110,705		42,245		1,066,765		883,484			56,587
Balance at beginning of period at Mar. 31, 2021	2,056,207				110,705		42,174		1,063,497		833,171			6,660
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	111,532										61,605			49,927
Cash dividends declared:
Preferred	(2,012)										(2,012)
Common	(9,280)										(9,280)
Issuance of shares of common stock	1,323						71		1,252
Stock based compensation	2,016								2,016
Balance at end of period at Jun. 30, 2021	$ 2,159,786				$ 110,705		$ 42,245		$ 1,066,765		$ 883,484			$ 56,587

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2019
Cash dividends per share common stock (in dollars per share)	$ 0.22	$ 0.20	$ 0.44	$ 0.40
Shares of common stock issued (in shares)	71,777	37,527	151,590	140,466
Accounting Standards Update [Extensible List]					us-gaap:AccountingStandardsUpdate201602Member
Cash dividends per share preferred stock (in dollars per share)	$ 175.00		$ 350.00
Preferred Stock
Shares of preferred stock issued (in shares)		11,500

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2021

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, 2020, included in the Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 25, 2021. 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 June 30, 2021, are not necessarily indicative of the results expected for the year ending December 31, 2021.

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 six- months ended June 30, 2021, and 2020, are shown in the table below, dollars and number of shares in thousands, except per share data:

	Three Months Ended June 30,
	2021		2020
Net income	$	61,605	$	30,131
Preferred dividends	(2,012)		—
Net income available to common stockholders	$	59,593	$	30,131
Weighted average common shares outstanding for basic earnings per share	42,243		36,881
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	117		35
Weighted average common shares for diluted earnings per share	42,360		36,916
Earnings per common share — basic	$	1.41	$	0.82
Earnings per common share — diluted	$	1.41	$	0.82
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	1		54
	Six Months Ended June 30,
	2021		2020
Net income	$	114,419	$	50,171
Preferred dividends	(4,025)		—
Net income available to stockholders	$	110,394	$	50,171
Weighted average common shares outstanding for basic earnings per share	42,210		36,851
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	147		69
Weighted average common shares for diluted earnings per share	42,357		36,920
Earnings per common share — basic	$	2.62	$	1.36
Earnings per common share — diluted	$	2.61	$	1.36
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	60		1

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 has a formal working group that is currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including but not limited to the SOFR. Currently, HTLF has adjustable rate loans, several debt obligations and securities and derivative instruments in place that reference LIBOR-based rates. The transition from LIBOR is expected to take place at the end of 2021, and management will continue to actively assess the related opportunities and risks involved in this transition.

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. HTLF adopted this ASU on January 1, 2021, as required, and the adoption did not have a material impact on its results of operations, financial position and liquidity.

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.

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ACQUISITIONS

6 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

Johnson Bank branches

On December 4, 2020, Arizona Bank & Trust ("AB&T"), a wholly-owned subsidiary headquartered in Phoenix, Arizona, completed its acquisition of certain assets and assumed substantially all of the deposits and certain other liabilities of Johnson Bank's Arizona operations, which includes four banking centers. Johnson Bank is a wholly-owned subsidiary of Johnson Financial Group, Inc., headquartered in Racine, Wisconsin. As of the closing date, AB&T acquired, at fair value, total assets of $419.7 million, which included gross loans of $150.7 million and assumed deposits of $415.5 million and certain other liabilities.

AIM Bancshares, Inc.

On December 4, 2020, HTLF completed the acquisition of AIM Bancshares, Inc. ("AIM") and its wholly-owned subsidiary, AimBank, headquartered in Levelland, Texas. Pursuant to the agreement, each share of AimBank common stock was converted into the right to receive 207.0 shares of HTLF common stock and $1,887.16 of cash, subject to certain hold-back provisions of the agreement. Based on the closing price of $41.89 per share of HTLF common stock on December 4, 2020, the aggregate merger consideration received by AimBank stockholders was valued at approximately $264.5 million, which was paid by delivery of HTLF common stock valued at $217.2 million and cash of $47.3 million subject to certain hold-back provisions of the merger agreement relating to the cash consideration. In addition, holders of in-the-money options to acquire shares of AimBank common stock received aggregate consideration of approximately $4.9 million in exchange for the cancellation of such stock options. The combined entity, resulting from the merger of AimBank into First Bank & Trust, operates as First Bank & Trust. The transaction included, at fair value, total assets of $1.97 billion, including $1.09 billion of gross loans held to maturity, and $1.67 billion of deposits. The transaction is structured as a tax-free reorganization with respect to the stock consideration received by shareholders of AIM. On February 19, 2021, HTLF completed the systems conversion of AimBank, and subsequent to the systems conversion, seven of AimBank's twenty-five bank branches were transferred to HTLF's New Mexico Bank & Trust subsidiary.

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SECURITIES

6 Months Ended

Jun. 30, 2021

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 June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2021
U.S. treasuries	$	996	$	20	$	—	$	1,016
U.S. agencies	35,591		272		(492)		35,371
Obligations of states and political subdivisions	1,817,708		66,037		(11,959)		1,871,786
Mortgage-backed securities - agency	1,741,389		19,890		(20,604)		1,740,675
Mortgage-backed securities - non-agency	1,349,005		16,062		(1,775)		1,363,292
Commercial mortgage-backed securities - agency	124,441		2,439		(1,800)		125,080
Commercial mortgage-backed securities - non-agency	534,682		823		(200)		535,305
Asset-backed securities	835,476		12,640		(1,129)		846,987
Corporate bonds	3,744		71		—		3,815
Total debt securities	6,443,032		118,254		(37,959)		6,523,327
Equity securities with a readily determinable fair value	20,651		—		—		20,651
Total	$	6,463,683	$	118,254	$	(37,959)	$	6,543,978
December 31, 2020
U.S. treasuries	$	1,995	$	31	$	—	$	2,026
U.S. agencies	167,048		657		(926)		166,779
Obligations of states and political subdivisions	1,562,631		75,555		(2,959)		1,635,227
Mortgage-backed securities - agency	1,351,964		16,029		(12,723)		1,355,270
Mortgage-backed securities - non-agency	1,428,068		22,688		(1,640)		1,449,116
Commercial mortgage-backed securities - agency	171,451		3,440		(738)		174,153
Commercial mortgage-backed securities - non-agency	253,421		37		(691)		252,767
Asset-backed securities	1,064,255		9,421		(4,410)		1,069,266
Corporate bonds	3,763		8		(29)		3,742
Total debt securities	6,004,596		127,866		(24,116)		6,108,346
Equity securities with a readily determinable fair value	19,629		—		—		19,629
Total	$	6,024,225	$	127,866	$	(24,116)	$	6,127,975

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
June 30, 2021
Obligations of states and political subdivisions	$	85,490	$	9,931	$	—	$	95,421	$	(51)
Total	$	85,490	$	9,931	$	—	$	95,421	$	(51)
December 31, 2020
Obligations of states and political subdivisions	$	88,890	$	11,151	$	—	$	100,041	$	(51)
Total	$	88,890	$	11,151	$	—	$	100,041	$	(51)

As of June 30, 2021, and December 31, 2020, HTLF had $24.6 million and $20.8 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheet. 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 June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	13,286	$	13,351
Due in 1 to 5 years	18,199		19,153
Due in 5 to 10 years	198,036		202,564
Due after 10 years	1,628,518		1,676,920
Total debt securities	1,858,039		1,911,988
Mortgage and asset-backed securities	4,584,993		4,611,339
Equity securities with a readily determinable fair value	20,651		20,651
Total investment securities	$	6,463,683	$	6,543,978

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	2,196	$	2,209
Due in 1 to 5 years	42,172		44,028
Due in 5 to 10 years	32,451		37,240
Due after 10 years	8,671		11,944
Total debt securities	85,490		95,421
Allowance for credit losses	(51)		—
Total investment securities	$	85,439	$	95,421

As of June 30, 2021, and December 31, 2020, securities with a carrying value of $1.87 billion and $2.12 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 six months ended June 30, 2021 and 2020, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Proceeds from sales	$	423,415	$	182,749	$	630,481	$	511,639
Gross security gains	3,844		3,958		4,289		6,862
Gross security losses	1,002		1,952		1,477		3,198

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 June 30, 2021, and December 31, 2020. 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 June 30, 2020, and December 31, 2019, respectively.

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
June 30, 2021
U.S. agencies	18,983		(492)		1	—		—		—	18,983		(492)		1
Obligations of states and political subdivisions	591,597		(11,887)		107	6,719		(72)		2	598,316		(11,959)		109
Mortgage-backed securities - agency	1,025,619		(19,499)		58	37,181		(1,105)		4	1,062,800		(20,604)		62
Mortgage-backed securities - non-agency	541,131		(1,345)		12	33,988		(430)		5	575,119		(1,775)		17
Commercial mortgage-backed securities - agency	69,690		(1,800)		11	—		—		—	69,690		(1,800)		11
Commercial mortgage-backed securities - non-agency	—		—		—	15,960		(200)		2	15,960		(200)		2
Asset-backed securities	77,475		(319)		7	35,779		(810)		11	113,254		(1,129)		18
Corporate bonds	—		—		—	—		—		—	—		—		—
Total temporarily impaired securities	$	2,324,495	$	(35,342)	196	$	129,627	$	(2,617)	24	$	2,454,122	$	(37,959)	220
December 31, 2020
U.S. agencies	2,981		(8)		5	99,922		(918)		72	102,903		(926)		77
Obligations of states and political subdivisions	346,598		(2,959)		49	—		—		—	346,598		(2,959)		49
Mortgage-backed securities - agency	653,793		(12,342)		35	31,012		(381)		3	684,805		(12,723)		38
Mortgage-backed securities - non-agency	378,843		(1,639)		17	1,622		(1)		1	380,465		(1,640)		18
Commercial mortgage-backed securities - agency	46,541		(738)		6	—		—		—	46,541		(738)		6
Commercial mortgage-backed securities - non-agency	100,042		(15)		2	35,428		(676)		3	135,470		(691)		5
Asset-backed securities	141,824		(643)		9	340,452		(3,767)		24	482,276		(4,410)		33
Corporate bonds	1,908		(29)		4	—		—		—	1,908		(29)		4
Total temporarily impaired securities	$	1,672,530	$	(18,373)	127	$	508,436	$	(5,743)	103	$	2,180,966	$	(24,116)	230

HTLF had no securities held to maturity with unrealized losses at June 30, 2021, or December 31, 2020.

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 remaining unrealized losses on HTLF's 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 six months ended June 30, 2021 and 2020.

The unrealized losses on HTLF's obligations of states and political subdivisions 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 six months ended June 30, 2021 and 2020.

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 six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,
	2021		2020
Beginning balance	$	48	$	197
Provision (benefit) for credit losses	3		(135)
Balance at period end	$	51	$	62
	Six Months Ended June 30,
	2021		2020
Beginning balance	$	51	$	—
Impact of ASU 2016-13 adoption	—		158
Adjusted balance	51		158
Provision (benefit) for credit losses	—		(96)
Balance at period end	$	51	$	62

The following table summarizes, in thousands, the carrying amount of HTLF's held to maturity debt securities by investment rating as of June 30, 2021 and December 31, 2020, which are updated quarterly and used to monitor the credit quality of the securities:

	June 30, 2021		December 31, 2020
Rating
AAA	$	3,207	$	—
AA, AA+, AA-	62,526		64,385
A+, A, A-	15,006		18,353
BBB	4,751		4,208
Not Rated	—		1,944
Total	$	85,490	$	88,890

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 $20.8 million at June 30, 2021 and $19.5 million at December 31, 2020.

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 June 30, 2021, did not consider the investments to be impaired.

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LOANS

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

LOANS

LOANS

Loans as of June 30, 2021, and December 31, 2020, were as follows, in thousands:

	June 30, 2021		December 31, 2020
Loans receivable held to maturity:
Commercial and industrial	$	2,518,908	$	2,534,799
Paycheck Protection Program ("PPP")	829,175		957,785
Owner occupied commercial real estate	1,940,134		1,776,406
Non-owner occupied commercial real estate	1,987,369		1,921,481
Real estate construction	854,295		863,220
Agricultural and agricultural real estate	679,608		714,526
Residential real estate	800,884		840,442
Consumer	401,641		414,392
Total loans receivable held to maturity	10,012,014		10,023,051
Allowance for credit losses	(120,726)		(131,606)
Loans receivable, net	$	9,891,288	$	9,891,445

As of June 30, 2021, and December 31, 2020, HTLF had $37.7 million and $42.4 million, respectively, 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 June 30, 2021, and December 31, 2020, 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
June 30, 2021
Commercial and industrial	$	4,688	$	26,644	$	31,332	$	13,658	$	2,505,250	$	2,518,908
PPP	—		—		—		—		829,175		829,175
Owner occupied commercial real estate	110		19,880		19,990		7,547		1,932,587		1,940,134
Non-owner occupied commercial real estate	3,485		19,343		22,828		19,548		1,967,821		1,987,369
Real estate construction	—		19,580		19,580		—		854,295		854,295
Agricultural and agricultural real estate	3,106		4,054		7,160		17,948		661,660		679,608
Residential real estate	—		9,741		9,741		—		800,884		800,884
Consumer	—		10,095		10,095		—		401,641		401,641
Total	$	11,389	$	109,337	$	120,726	$	58,701	$	9,953,313	$	10,012,014

	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, 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 estate	111		19,890		20,001		11,174		1,765,232		1,776,406
Non-owner occupied commercial real estate	3,250		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 estate	1,988		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 $13.7 million of troubled debt restructured loans at June 30, 2021, of which $11.6 million were classified as nonaccrual and $2.1 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- and six- months ended June 30, 2021, and June 30, 2020, dollars in thousands:

	Three Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—
Residential real estate	—	—		—		1	60		66
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	1	$	60	$	66

	Six Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—

	Six Months Ended June 30,
	2021					2020
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate	—	—		—		2	92		98
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	2	$	92	$	98

At June 30, 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.

There were no troubled debt restructured loans for which there was a payment default during the three- and six- months ended June 30, 2021, and June 30, 2020, 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 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 June 30, 2021, and December 31, 2020.

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2021, and December 31, 2020, in thousands:

As of June 30, 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	$	330,626	$	475,749	$	277,874	$	122,550	$	197,617	$	370,896	$	528,785	$	2,304,097
Watch	7,252		13,154		22,947		12,886		8,633		17,574		35,506		117,952
Substandard	2,171		21,377		10,899		8,780		11,706		21,646		20,280		96,859
Commercial and industrial total	$	340,049	$	510,280	$	311,720	$	144,216	$	217,956	$	410,116	$	584,571	$	2,518,908

As of June 30, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
PPP
Pass	$	409,922	$	327,475	$	—	$	—	$	—	$	—	$	—	$	737,397
Watch	21,880		28,769		—		—		—		—		—		50,649
Substandard	20,697		20,432		—		—		—		—		—		41,129
PPP total	$	452,499	$	376,676	$	—	$	—	$	—	$	—	$	—	$	829,175
Owner occupied commercial real estate
Pass	$	331,097	$	402,216	$	371,104	$	232,062	$	143,692	$	264,190	$	27,773	$	1,772,134
Watch	428		17,998		14,979		18,715		19,869		10,305		2,250		84,544
Substandard	743		18,083		13,464		7,908		13,903		28,201		1,154		83,456
Owner occupied commercial real estate total	$	332,268	$	438,297	$	399,547	$	258,685	$	177,464	$	302,696	$	31,177	$	1,940,134
Non-owner occupied commercial real estate
Pass	$	206,934	$	332,479	$	355,445	$	275,853	$	163,047	$	266,547	$	32,340	$	1,632,645
Watch	16,873		18,884		76,447		30,786		8,233		53,339		4,524		209,086
Substandard	16,968		13,315		20,879		23,329		24,802		46,035		310		145,638
Non-owner occupied commercial real estate total	$	240,775	$	364,678	$	452,771	$	329,968	$	196,082	$	365,921	$	37,174	$	1,987,369
Real estate construction
Pass	$	151,473	$	338,101	$	215,455	$	49,360	$	10,003	$	8,959	$	17,078	$	790,429
Watch	—		1,865		11,474		47,460		240		210		413		61,662
Substandard	—		—		28		1,993		—		183		—		2,204
Real estate construction total	$	151,473	$	339,966	$	226,957	$	98,813	$	10,243	$	9,352	$	17,491	$	854,295
Agricultural and agricultural real estate
Pass	$	115,287	$	125,764	$	79,157	$	46,698	$	28,105	$	43,350	$	134,975	$	573,336
Watch	3,480		13,591		5,746		2,197		256		3,735		4,735		33,740
Substandard	9,082		8,793		6,886		20,498		5,641		11,210		10,422		72,532
Agricultural and agricultural real estate total	$	127,849	$	148,148	$	91,789	$	69,393	$	34,002	$	58,295	$	150,132	$	679,608
Residential real estate
Pass	$	144,046	$	116,571	$	65,840	$	82,530	$	56,628	$	277,236	$	28,244	$	771,095
Watch	1,236		1,966		1,634		1,703		2,039		6,998		—		15,576
Substandard	4,147		859		299		1,889		1,259		5,760		—		14,213
Residential real estate total	$	149,429	$	119,396	$	67,773	$	86,122	$	59,926	$	289,994	$	28,244	$	800,884
Consumer
Pass	$	39,485	$	26,718	$	20,157	$	13,147	$	12,112	$	21,088	$	259,705	$	392,412
Watch	4		132		220		1,362		130		508		1,234		3,590
Substandard	848		432		612		474		371		2,104		798		5,639
Consumer total	$	40,337	$	27,282	$	20,989	$	14,983	$	12,613	$	23,700	$	261,737	$	401,641
Total Pass	$	1,728,870	$	2,145,073	$	1,385,032	$	822,200	$	611,204	$	1,252,266	$	1,028,900	$	8,973,545
Total Watch	51,153		96,359		133,447		115,109		39,400		92,669		48,662		576,799
Total Substandard	54,656		83,291		53,067		64,871		57,682		115,139		32,964		461,670
Total Loans	$	1,834,679	$	2,324,723	$	1,571,546	$	1,002,180	$	708,286	$	1,460,074	$	1,110,526	$	10,012,014

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
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

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
Watch	22,533		—		—		—		—		—		—		22,533
Substandard	54,543		—		—		—		—		—		—		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
Watch	15,345		13,764		22,488		20,811		8,717		15,282		4,311		100,718
Substandard	15,914		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
Watch	22,826		55,225		24,718		18,724		20,954		45,672		5,114		193,233
Substandard	30,899		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
Substandard	196		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
Watch	20,500		16,202		8,854		2,448		3,515		3,157		12,282		66,958
Substandard	17,403		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
Watch	3,986		4,507		2,188		1,896		3,117		8,525		—		24,219
Substandard	980		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
Watch	168		352		647		340		82		646		1,622		3,857
Substandard	481		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 Watch	129,037		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 June 30, 2021 and December 31, 2020 were $91.8 million and $77.1 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 June 30, 2021, 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 accruing and nonaccrual loans at June 30, 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		Current		Nonaccrual		Total Loans
June 30, 2021
Commercial and industrial	$	1,537	$	1,034	$	12	$	2,583	$	2,498,207	$	18,118	$	2,518,908
PPP	—		—		—		—		829,175		—		829,175
Owner occupied commercial real estate	1,134		—		—		1,134		1,929,086		9,914		1,940,134
Non-owner occupied commercial real estate	1,374		1,350		—		2,724		1,963,775		20,870		1,987,369
Real estate construction	2,834		—		—		2,834		851,053		408		854,295
Agricultural and agricultural real estate	2,759		1,716		—		4,475		654,135		20,998		679,608
Residential real estate	2,192		118		85		2,395		785,637		12,852		800,884
Consumer	679		222		—		901		398,632		2,108		401,641
Total gross loans receivable held to maturity	$	12,509	$	4,440	$	97	$	17,046	$	9,909,700	$	85,268	$	10,012,014
December 31, 2020
Commercial and industrial	$	5,825	$	2,322	$	720	$	8,867	$	2,504,170	$	21,762	$	2,534,799
PPP	1		—		—		1		957,784		—		957,785
Owner occupied commercial real estate	2,815		167		—		2,982		1,759,649		13,775		1,776,406
Non-owner occupied commercial real estate	2,143		2,674		—		4,817		1,902,003		14,661		1,921,481
Real estate construction	2,446		96		—		2,542		859,784		894		863,220
Agricultural and agricultural real estate	1,688		—		—		1,688		694,150		18,688		714,526
Residential real estate	1,675		83		—		1,758		825,047		13,637		840,442
Consumer	807		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 0.17% at June 30, 2021, compared to 0.23% at December 31, 2020. 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 six months ended June 30, 2021 and June 30, 2020. As of June 30, 2021, and December 31, 2020, HTLF had $24.0 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.

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ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2021

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 six- months ended June 30, 2021, and June 30, 2020, were as follows, in thousands:

	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
Balance at March 31, 2021	$	36,095	$	—	$	19,416	$	24,694	$	19,931	$	7,111	$	11,012	$	11,913	$	130,172
Charge-offs	(842)		—		(72)		(1,637)		(10)		(357)		(70)		(509)		(3,497)
Recoveries	265		—		44		13		4		—		—		191		517
Provision	(4,186)		—		602		(242)		(345)		406		(1,201)		(1,500)		(6,466)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726
	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
Balance at December 31, 2020	$	38,818	$	—	$	20,001	$	20,873	$	20,080	$	7,129	$	11,935	$	12,770	$	131,606
Charge-offs	(1,790)		—		(113)		(1,637)		(10)		(675)		(91)		(1,307)		(5,623)
Recoveries	558		—		97		13		6		21		5		493		1,193
Provision	(6,254)		—		5		3,579		(496)		685		(2,108)		(1,861)		(6,450)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726

	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
Balance at March 31, 2020	$	32,455			—		10,337		8,320		22,951		$	4,797	$	8,725	$	9,765	$	97,350
Charge-offs	(2,536)				—		(213)		(19)		(84)		(1)		(235)		(476)		(3,564)
Recoveries	345				—		191		8		210		—		92		298		1,144
Provision	2,254				—		13,087		1,852		5,590		905		722		597		25,007
Balance at June 30, 2020	$	32,518	$	32,531	$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937
	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
Balance at December 31, 2019	$	34,207			$	—	$	7,921	$	7,584	$	8,677	$	5,680	$	1,504	$	4,822	$	70,395
Impact of ASU 2016-13 adoption	(272)				—		(114)		(2,617)		6,335		(387)		4,817		4,309		12,071
Adjusted balance at January 1, 2020	33,935				—		7,807		4,967		15,012		5,293		6,321		9,131		82,466
Charge-offs	(7,767)				—		(213)		(19)		(105)		(254)		(314)		(1,193)		(9,865)
Recoveries	610				—		192		8		215		826		95		518		2,464
Provision	5,740				—		15,616		5,205		13,545		(164)		3,202		1,728		44,872
Balance at June 30, 2020	$	32,518			$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937

Management allocates the allowance for credit losses by pools of risk within each loan portfolio. The allocation of the allowance for credit losses by loan portfolio is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular category. 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 on unfunded commitments for the three and six months ended June 30, 2021 and June 30, 2020, were as follows:

	For the Three Months Ended June 30,
	2021		2020
Balance at March 31,	$	14,619	$	15,468
Provision	(617)		1,924
Balance at June 30,	$	14,002	$	17,392

	For the Six Months Ended June 30,
	2021		2020
Balance at December 31,	$	15,280	$	248
Impact of ASU 2016-13 adoption on January 1, 2020	—		13,604
Adjusted balance at January 1,	15,280		13,852
Provision	(1,278)		3,540
Balance at June 30,	$	14,002	$	17,392

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2021

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 June 30, 2021 and December 31, 2020. HTLF conducts its annual internal assessment of the goodwill both at the consolidated level and at its subsidiaries as of September 30. Due to the COVID-19 pandemic and economic conditions, HTLF performed an interim quantitative assessment of goodwill in the second quarter of 2020, which was the most recent annual assessment, and there was no goodwill impairment.

HTLF recorded $91.4 million of goodwill and $3.1 million of core deposit intangible in connection with the acquisition of AimBank, headquartered in Levelland, Texas on December 4, 2020.

HTLF recorded $38.4 million of goodwill and $1.3 million of core deposit intangible in connection with 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, on December 4, 2020.

The core deposit intangible recorded with the AimBank acquisition is not deductible for tax purposes and is expected to be amortized over a period of 10 years on an accelerated basis.

Goodwill related to the AimBank acquisition resulted from expected operational synergies, increased market presence, cross-selling opportunities, and expanded business lines and is not deductible for tax purposes.

The core deposit intangible and goodwill recorded with the Johnson Bank transaction are deductible for tax purposes, and the core deposit intangible is expected to be amortized over a period of 10 years on an accelerated basis.

HTLF's intangible assets consist 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 June 30, 2021, and December 31, 2020, are presented in the table below, in thousands:

	June 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	101,185	$	63,883	$	37,302	$	101,185	$	58,970	$	42,215
Customer relationship intangibles	1,177		1,027		150		1,177		1,009		168
Mortgage servicing rights	11,971		6,412		5,559		11,268		6,079		5,189
Commercial servicing rights	7,054		6,412		642		7,054		6,191		863
Total	$	121,387	$	77,734	$	43,653	$	120,684	$	72,249	$	48,435

The following table shows the estimated future amortization expense for amortizable intangible assets, in thousands:

	Core Deposit Intangibles		Customer Relationship Intangibles		Mortgage Servicing Rights		Commercial Servicing Rights		Total
Six months ending December 31, 2021	$	4,446	$	18	$	648	$	110	$	5,222
Year ending December 31,
2022	7,702		34		1,228		194		9,158
2023	6,739		33		1,052		139		7,963
2024	5,591		33		877		96		6,597
2025	4,700		32		702		103		5,537
2026	3,533		—		526		—		4,059
Thereafter	4,591		—		526		—		5,117
Total	$	37,302	$	150	$	5,559	$	642	$	43,653

Projections of amortization expense for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of June 30, 2021. 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 $719.6 million at June 30, 2021, compared to $743.3 million at December 31, 2020. Custodial escrow balances maintained in connection with the mortgage loan servicing portfolio were approximately $13.1 million at June 30, 2021, and $5.7 million at December 31, 2020.

At June 30, 2021, the fair value of the mortgage servicing rights was estimated at $5.6 million compared to $5.2 million at December 31, 2020. 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 average constant prepayment rate was 15.90% for the June 30, 2021, valuation compared to 16.20% for the December 31, 2020 valuation. The discount rate was 9.02% for both June 30, 2021, and December 31, 2020. The average capitalization rate for the first six months of 2021 ranged from 79 to 120 basis points compared to a range of 76 to 116 basis points for the first six months of 2020. Fees collected for the servicing of mortgage loans for others were $459,000 and $410,000 for the quarters ended June 30, 2021 and June 30, 2020, respectively. Fees collected for the servicing of mortgage loans for others were $923,000 and $819,000 for the six months ended June 30, 2021 and 2020, respectively.

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	5,189		$	5,621
Originations	703			1,490
Amortization	(724)			(1,070)
Valuation adjustment	391			(1,556)
Balance at period end	$	5,559		$	4,485
Mortgage servicing rights, net to servicing portfolio	0.77		%	0.68		%

HTLF's commercial servicing portfolio is comprised of loans guaranteed by the United States Small Business Administration ("SBA") and United States Department of Agriculture that have been sold with servicing retained by HTLF, which totaled $57.5 million at June 30, 2021 and $66.2 million at December 31, 2020. The commercial servicing rights portfolio is separated into two tranches at the respective HTLF subsidiary, loans with a term of less than 20 years and loans with a term of more than 20 years. Fees collected for the servicing of commercial loans for others were $165,000 and $54,000 for the quarters ended June 30, 2021 and June 30, 2020, respectively, and $294,000 and $172,000 for the six months ended June 30, 2021 and June 30, 2020, respectively.

The fair value of each commercial servicing rights portfolio is calculated based upon a discounted cash flow analysis. Cash flow assumptions, including prepayment speeds and servicing costs, are considered in the calculation. The range of average constant prepayment rates for the valuations was 13.70% to 17.49% as of June 30, 2021 compared to 14.95% to 19.25% as of December 31, 2020. The discount rate range was 5.70% to 9.96% for the June 30, 2021, valuations compared to 7.70% to 12.88% for the December 31, 2020 valuations. The capitalization rate for 2020 ranged from 310 to 445 basis points. The total fair value of the commercial servicing rights was estimated at $1.1 million as of June 30, 2021, and $1.3 million as of December 31, 2020.

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	863		$	1,115
Originations	—			38
Amortization	(221)			(169)
Balance at period end	$	642		$	984
Fair value of commercial servicing rights	$	1,104		$	1,417
Commercial servicing rights, net to servicing portfolio	1.12		%	1.32		%

Mortgage and commercial servicing 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 and commercial servicing 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 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. At June 30, 2021, a $470,000 valuation allowance was required on the mortgage servicing rights 15-year tranche and a $1.9 million valuation allowance was required on the mortgage servicing rights 30-year tranche. At December 31, 2020, a $422,000 valuation allowance was required on the mortgage servicing rights 15-year tranche and a $1.4 million valuation allowance was required on the mortgage servicing rights 30-year tranche. At both June 30, 2021 and December 31, 2020, no valuation allowance was required on commercial servicing rights with a term less than 20 years and no valuation allowance was required on commercial servicing rights with a term greater than 20 years.

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 June 30, 2021, and December 31, 2020:

	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
June 30, 2021	$	1,627	$	1,157	$	470	$	6,287	$	4,402	$	1,885
December 31, 2020	$	1,522	$	1,100	$	422	$	5,445	$	4,089	$	1,356

The following table summarizes, in thousands, the book value, the fair value of each tranche of the commercial servicing rights and any recorded valuation allowance at June 30, 2021, and December 31, 2020:

	Book Value Less than 20 Years		Fair Value Less than 20 Years		Valuation Allowance 15-Year Tranche		Book Value More than 20 Years		Fair Value More than 20 Years		Valuation Allowance 30-Year Tranche
June 30, 2021	$	58	$	170	$	—	$	584	$	934	$	—
December 31, 2020	$	87	$	203	$	—	$	776	$	1,085	$	—

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2021

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, 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 interest rate risk. 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 credit ratings of each counterparty. HTLF was required to pledge $2.9 million of cash as collateral at June 30, 2021 compared to $3.8 million at December 31, 2020. At both June 30, 2021 and December 31, 2020, 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 8, “Fair Value,” for additional fair value information and disclosures.

Cash Flow Hedges

HTLF has variable rate funding which creates exposure to variability in interest payments due to changes in interest rates. To manage the interest rate risk related to the variability of interest payments, HTLF has entered into various interest rate swap agreements. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are received or made on HTLF's variable-rate liabilities. For the six months ended June 30, 2021, the change in net unrealized losses on cash flow hedges reflects changes in the fair value of the swaps and reclassification from accumulated other comprehensive income to interest expense totaling $1.8 million. For the next twelve months, HTLF estimates that cash payments and reclassification from accumulated other comprehensive income to interest expense will total $2.4 million.

HTLF entered into forward starting interest rate swap transactions to effectively convert Heartland Financial Statutory Trust VI and VII, which total $40.0 million, from variable rate subordinated debentures to fixed rate debt. For accounting purposes, these swap transactions are designated as cash flow hedges of the changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $40.0 million of HTLF's subordinated debentures that reset quarterly on a

specified reset date. At inception, HTLF asserted that the underlying principal balance would remain outstanding throughout the hedge transaction, making it probable that sufficient LIBOR-based interest payments would exist through the maturity date of the swaps. During the first quarter of 2021, the interest rate swap transaction associated with Heartland Financial Statutory Trust IV, totaling $25.0 million, matured and the fixed rate debt has been converted to a variable rate subordinated debenture.

On May 18, 2018, HTLF acquired cash flow hedges related to OCGI Statutory Trust III and OCGI Capital Trust IV with notional amounts of $3.0 million and $6.0 million, respectively, in the First Bank Lubbock Bancshares, Inc. transaction. The cash flow hedges effectively convert OCGI Statutory Trust III and OGCI Capital Trust IV from variable rate subordinated debentures to fixed rate debt. These swaps are designated as cash flow hedges of the changes in LIBOR, the benchmark interest rate being hedged, associated with the interest payments made on $9.0 million of HTLF's subordinated debentures that reset quarterly on a specified reset date. These swaps matured in June of 2021.

The table below identifies the balance sheet category and fair values of HTLF's derivative instruments designated as cash flow hedges at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2021
Interest rate swap	$	21,250	$	(1,636)	Other liabilities	2.591	%	5.425	%	07/24/2028
Interest rate swap	20,000		(1,107)		Other liabilities	0.119		2.390		06/15/2024
Interest rate swap	20,000		(1,049)		Other liabilities	0.135		2.352		03/01/2024
December 31, 2020
Interest rate swap	$	25,000	$	(127)	Other liabilities	0.229	%	2.255	%	03/17/2021
Interest rate swap	21,667		(91)		Other liabilities	2.649		3.674		05/10/2021
Interest rate swap	22,750		(2,220)		Other liabilities	2.643		5.425		07/24/2028
Interest rate swap	20,000		(1,482)		Other liabilities	0.217		2.390		06/15/2024
Interest rate swap	20,000		(1,385)		Other liabilities	0.225		2.352		03/01/2024
Interest rate swap	6,000		(50)		Other liabilities	0.217		1.866		06/15/2021
Interest rate swap	3,000		(25)		Other liabilities	0.241		1.878		06/30/2021

The table below identifies the gains and losses recognized on HTLF's derivative instruments designated as cash flow hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Effective Portion					Ineffective Portion
	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of Gain (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
Three Months Ended June 30, 2021
Interest rate swaps	$	291	Interest expense	$	454	Other income	$	—
Six Months Ended June 30, 2021
Interest rate swaps	$	1,588	Interest expense	$	1,045	Other income	$	—
Three Months Ended June 30, 2020
Interest rate swap	$	(100)	Interest Expense	$	417	Other Income	$	—
Six Months Ended June 30, 2020
Interest rate swap	$	(3,963)	Interest Expense	$	600	Other Income	$	—

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 $3.8 million and $4.2 million of cash as collateral for these fair value hedges at June 30, 2021, and December 31, 2020, respectively.

The table below identifies the notional amount, fair value and balance sheet category of HTLF's fair value hedges at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Fair value hedges	$	16,901	$	(1,585)	Other liabilities
December 31, 2020
Fair value hedges	$	20,841	$	(2,480)	Other liabilities

The table below identifies the gains and losses recognized on HTLF's fair value hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Fair value hedges	$	132	Interest income
Six Months Ended June 30, 2021
Fair value hedges	$	895	Interest income
Three Months Ended June 30, 2020
Fair value hedges	$	4	Interest income
Six Months Ended June 30, 2020
Fair value hedges	$	(1,673)	Interest income

Embedded Derivatives

HTLF has fixed rate loans with embedded derivatives. The 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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Embedded derivatives	$	8,971	$	497	Other assets
December 31, 2020
Embedded derivatives	$	9,198	$	680	Other assets

The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Embedded derivatives	$	(54)	Other noninterest income
Six Months Ended June 30, 2021
Embedded derivatives	$	(183)	Other noninterest income
Three Months Ended June 30, 2020
Embedded derivatives	$	1	Other noninterest income
Six Months Ended June 30, 2020
Embedded derivatives	$	362	Other noninterest income

Back-to-Back Loan Swaps

HTLF has interest rate swap loan relationships with customers to meet their financing needs. 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 $30.6 million and $46.5 million as of June 30, 2021, and December 31, 2020, respectively, as collateral related to these back-to-back swaps. HTLF's counterparties were required to pledge $0 at both June 30, 2021, and December 31, 2020. 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 six months ended June 30, 2021 and June 30, 2020, 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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Weighted Average Receive Rate		Weighted Average Pay Rate
June 30, 2021
Customer interest rate swaps	$	438,415	$	29,394	Other assets	4.50	%	2.43	%
Customer interest rate swaps	438,415		(29,394)		Other liabilities	2.43		4.50
December 31, 2020
Customer interest rate swaps	$	440,719	$	43,422	Other assets	4.46	%	2.46	%
Customer interest rate swaps	440,719		(43,422)		Other liabilities	2.46		4.46

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 in order 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 June 30, 2021, and December 31, 2020. HTLF's counterparties were required to pledge no collateral at both June 30, 2021 and December 31, 2020, 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 sheet 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 June 30, 2021, and December 31, 2020, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2021
Interest rate lock commitments (mortgage)	Other assets	$	39,922	$	1,425
Forward commitments	Other assets	9,500		8
Forward commitments	Other liabilities	59,000		(202)
Undesignated interest rate swaps	Other liabilities	8,971		(497)
December 31, 2020
Interest rate lock commitments (mortgage)	Other assets	$	42,078	$	1,827
Forward commitments	Other assets	—		—
Forward commitments	Other liabilities	86,500		(697)
Undesignated interest rate swaps	Other liabilities	9,198		(680)

The table below identifies the income statement category of the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(250)
Forward commitments	Net gains on sale of loans held for sale	(1,403)
Undesignated interest rate swaps	Other noninterest income	54
Six Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(1,735)
Forward commitments	Net gains on sale of loans held for sale	503
Undesignated interest rate swaps	Other noninterest income	183
Three Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	1,296
Forward commitments	Net gains on sale of loans held for sale	962
Undesignated interest rate swaps	Other noninterest income	(1)
Six Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	2,994
Forward commitments	Net gains on sale of loans held for sale	(184)
Undesignated interest rate swaps	Other noninterest income	(362)

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FAIR VALUE

6 Months Ended

Jun. 30, 2021

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 and are recorded at fair value only to the extent a decline in fair value is determined to be other-than-temporary. 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.

Commercial Servicing Rights

Commercial servicing rights assets represent the value associated with servicing commercial loans guaranteed by the Small Business Administration and the United States Department of Agriculture that have been sold with servicing retained by HTLF. HTLF uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its commercial servicing rights. The fair value for servicing assets is determined through market prices for comparable servicing contracts, when available, or through a valuation model that calculates the present value of estimated future net servicing income. Inputs utilized include discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Commercial servicing rights are subject to impairment testing, and 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. If the valuation model reflects a fair value less than the carrying value, commercial servicing rights are adjusted to fair value through a valuation allowance. HTLF classifies commercial 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 June 30, 2021, and December 31, 2020, 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 HTLFs assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021, and December 31, 2020, 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
June 30, 2021
Assets
Securities available for sale
U.S. treasuries	$	1,016	$	1,016	$	—	$	—
U.S. agencies	35,371		—		35,371		—
Obligations of states and political subdivisions	1,871,786		—		1,871,786		—
Mortgage-backed securities - agency	1,740,675		—		1,740,675		—
Mortgage-backed securities - non-agency	1,363,292		—		1,363,292		—
Commercial mortgage-backed securities - agency	125,080		—		125,080		—
Commercial mortgage-backed securities - non-agency	535,305		—		535,305		—
Asset-backed securities	846,987		—		846,987		—
Corporate bonds	3,815		—		3,815		—
Equity securities with a readily determinable fair value	20,651		—		20,651		—
Derivative financial instruments(1)	29,891		—		29,891		—
Interest rate lock commitments	1,425		—		—		1,425
Forward commitments	8		—		8		—
Total assets at fair value	$	6,575,302	$	1,016	$	6,572,861	$	1,425
Liabilities
Derivative financial instruments(2)	$	35,268	$	—	$	35,268	$	—
Forward commitments	202		—		202		—
Total liabilities at fair value	$	35,470	$	—	$	35,470	$	—
December 31, 2020
Assets
Securities available for sale
U.S. treasuries	$	2,026	$	2,026	$	—	$	—
U.S. agencies	166,779		—		166,779		—
Obligations of states and political subdivisions	1,635,227		—		1,635,227		—
Mortgage-backed securities - agency	1,355,270		—		1,355,270		—
Mortgage-backed securities - non-agency	1,449,116		—		1,449,116		—
Commercial mortgage-backed securities - agency	174,153		—		174,153		—
Commercial mortgage-backed securities - non-agency	252,767		—		252,767		—
Asset-backed securities	1,069,266		—		1,069,266		—
Corporate bonds	3,742		—		3,742		—
Equity securities with a readily determinable fair value	19,629		—		19,629		—
Derivative financial instruments(1)	44,102		—		44,102		—
Interest rate lock commitments	1,827		—		—		1,827
Total assets at fair value	$	6,173,904	$	2,026	$	6,170,051	$	1,827
Liabilities
Derivative financial instruments(2)	$	51,962	$	—	$	51,962	$	—
Forward commitments	697		—		697		—
Total liabilities at fair value	$	52,659	$	—	$	52,659	$	—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps, embedded derivatives and free standing derivative instruments.

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

	Fair Value Measurements at June 30, 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	$	8,969	$	—	$	—	$	8,969	$	214
Owner occupied commercial real estate	3,573		—		—		3,573		—
Non-owner occupied commercial real estate	14,742		—		—		14,742		1,637
Agricultural and agricultural real estate	14,161		—		—		14,161		—
Total collateral dependent individually assessed loans	$	41,445	$	—	$	—	$	41,445	$	1,851
Loans held for sale	$	33,248	$	—	$	33,248	$	—	$	(1,304)
Other real estate owned	6,314		—		—		6,314		(88)
Premises, furniture and equipment held for sale	6,925		—		—		6,925		(44)
Servicing rights	5,559		—		—		5,559		(391)

	Fair Value Measurements at December 31, 2020
	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	$	11,256	$	—	$	—	$	11,256	$	451
Owner occupied commercial real estate	5,874		—		—		5,874		11,631
Non-owner occupied commercial real estate	4,907		—		—		4,907		—
Agricultural and agricultural real estate	12,451		—		—		12,451		—
Total collateral dependent individually assessed loans	$	34,488	$	—	$	—	$	34,488	$	12,082
Loans held for sale	$	57,949	$	—	$	57,949	$	—	$	(982)
Other real estate owned	6,624		—		—		6,624		1,044
Premises, furniture and equipment held for sale	6,499		—		—		6,499		3,288
Servicing rights	5,189		—		—		5,189		1,778

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 6/30/2021		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,425	Discounted cash flows	Closing ratio	0-99% (88%)(1)
Other real estate owned	6,314		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,559		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,925		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial	8,969		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)
Owner occupied commercial real estate	3,573		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Non-owner occupied commercial real estate	14,742		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	14,161		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-15%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

	Fair Value at 12/31/2020		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,827	Discounted cash flows	Closing ratio	0-99% (86%)(1)
Other real estate owned	6,624		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,189		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,499		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial and industrial	11,256		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)

	Fair Value at 12/31/2020	Valuation Technique	Unobservable Input	Range (Weighted Average)
Owner occupied commercial real estate	5,874	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-12%(3)
Non-owner occupied commercial real estate	4,907	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	12,451	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

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 Six Months Ended June 30, 2021		For the Year Ended December 31, 2020
Balance at January 1,	$	1,827	$	681
Total net gains included in earnings	(1,735)		2,803
Issuances	8,892		17,221
Settlements	(7,559)		(18,878)
Balance at period end	$	1,425	$	1,827

Gains included in gains (losses) on sale of loans held for sale attributable to interest rate lock commitments held at June 30, 2021, and December 31, 2020, were $1.4 million and $1.8 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 June 30, 2021, and December 31, 2020, 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.

					Fair Value Measurements at June 30, 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	$	449,128	$	449,128	$	449,128	$	—	$	—
Time deposits in other financial institutions	3,138		3,138		3,138		—		—
Securities:
Carried at fair value	6,543,978		6,543,978		1,016		6,542,962		—
Held to maturity	85,439		95,421		—		95,421		—
Other investments	76,809		76,809		—		76,809		—
Loans held for sale	33,248		33,248		—		33,248		—
Loans, net:
Commercial and industrial	2,487,576		2,469,136		—		2,460,167		8,969
PPP	829,175		829,175		—		829,175		—
Owner occupied commercial real estate	1,920,144		1,901,531		—		1,897,958		3,573
Non-owner occupied commercial real estate	1,964,541		1,953,264		—		1,938,522		14,742
Real estate construction	834,715		838,001		—		838,001		—
Agricultural and agricultural real estate	672,448		660,650		—		646,489		14,161
Residential real estate	791,143		789,274		—		789,274		—
Consumer	391,546		394,337		—		394,337		—
Total Loans, net	9,891,288		9,835,368		—		9,793,923		41,445
Cash surrender value on life insurance	189,619		189,619		—		189,619		—
Derivative financial instruments(1)	29,891		29,891		—		29,891		—
Interest rate lock commitments	1,425		1,425		—		—		1,425
Forward commitments	8		8		—		8		—
Financial liabilities:
Deposits
Demand deposits	6,299,289		6,299,289		—		6,299,289		—
Savings deposits	8,189,223		8,189,223		—		8,189,223		—
Time deposits	1,126,606		1,126,788		—		1,126,788		—
Short term borrowings	152,563		152,563		—		152,563		—
Other borrowings	271,244		274,631		—		274,631		—
Derivative financial instruments(2)	35,268		35,368		—		35,368		—
Forward commitments	202		202		—		202		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

					Fair Value Measurements at December 31, 2020
	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	$	337,903	$	337,903	$	337,903	$	—	$	—
Time deposits in other financial institutions	3,129		3,129		3,129		—		—
Securities:
Carried at fair value	6,127,975		6,127,975		2,026		6,125,949		—
Held to maturity	88,839		100,041		—		100,041		—
Other investments	75,253		75,523		—		75,523		—
Loans held for sale	57,949		57,949		—		57,949		—
Loans, net:
Commercial and industrial	2,495,981		2,391,041		—		2,379,785		11,256
PPP	957,785		957,785		—		957,785		—
Owner occupied commercial real estate	1,756,405		1,745,397		—		1,739,523		5,874
Non-owner occupied commercial real estate	1,900,608		1,892,213		—		1,887,306		4,907
Real estate construction	843,140		849,224		—		849,224		—
Agricultural and agricultural real estate	707,397		697,729		—		685,278		12,451
Residential real estate	828,507		828,366		—		828,366		—
Consumer	401,622		407,914		—		407,914		—
Total Loans, net	9,891,445		9,769,669		—		9,735,181		34,488
Cash surrender value on life insurance	187,664		187,664		—		187,664		—
Derivative financial instruments(1)	44,102		44,102		—		44,102		—
Interest rate lock commitments	1,827		1,827		—		—		1,827
Financial liabilities:
Deposits
Demand deposits	5,688,810		5,688,810		—		5,688,810		—
Savings deposits	8,019,704		8,019,704		—		8,019,704		—
Time deposits	1,271,391		1,273,468		—		1,273,468		—
Short term borrowings	167,872		167,872		—		167,872		—
Other borrowings	457,042		458,806		—		458,806		—
Derivative financial instruments(1)	51,962		51,962		—		51,962		—
Forward commitments	697		697		—		697		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

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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REVENUE

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, requires revenue to be recognized at an amount that reflects the consideration to which HTLF expects to be entitled in exchange for transferring goods or services to a customer. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of HTLF's revenue streams including interest income, loan servicing income, net securities gain, net unrealized gains and losses on equity securities, net gains on sale of loans held for sale, valuation adjustment on servicing rights, income from bank owned life insurance and other noninterest income are outside the scope of ASC 606. Revenue streams including service charges and fees, interchange fees on credit and debit cards, trust fees and brokerage and insurance commissions are within the scope of ASC 606.

Service Charges and Fees

Service charges and fees consist of revenue generated from deposit account related service charges and fees, overdraft fees, customer service fees and other service charges, credit card fee income, debit card income and other service charges and fees.

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders and other deposit account related fees. HTLF's performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees, including overdraft fees, are largely transaction based, and therefore, the performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Customer service fees and other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. HTLF's performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Credit card fee income and debit card income are comprised of interchange fees, ATM fees, and merchant services income. Credit card fee income and debit card income are earned whenever the banks' debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a bank cardholder uses an ATM that is not owned by one of HTLF's banks or a non-bank cardholder uses a HTLF-owned ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

Trust Fees

Trust fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. HTLF's performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the average daily market value or month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days before or after month end through a direct charge to customers’ accounts. HTLF does not earn performance-based incentives. HTLF's performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Brokerage and Insurance Commissions

Brokerage commission primarily consist of commissions related to broker-dealer contracts. The contracts are between the customer and the broker-dealer, and HTLF satisfies its performance obligation and earns commission when the transactions are completed. The recognition of revenue is based on a defined fee schedule and does not require significant judgment. Payment is received shortly after services are rendered. Insurance commissions are related to commissions received directly from the insurance carrier. HTLF acts as an insurance agent between the customer and the insurance carrier. HTLF's performance obligations and associated fee and commission income are defined with each insurance product with the insurance company. When insurance payments are received from customers, a portion of the payment is recognized as commission revenue.

The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2021, and 2020, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
In-scope of Topic 606
Service charges and fees
Service charges and fees on deposit accounts	$	4,014	$	3,476	$	7,950	$	6,913
Overdraft fees	2,549		1,634		5,141		4,443
Customer service and other service fees	54		35		100		94
Credit card fee income	5,854		4,067		10,162		7,967
Debit card income	2,661		1,760		5,450		3,576
Total service charges and fees	15,132		10,972		28,803		22,993
Trust fees	6,039		4,977		11,816		9,999
Brokerage and insurance commissions	865		595		1,718		1,328
Total noninterest income in-scope of Topic 606	22,036		16,544		42,337		34,320
Out-of-scope of Topic 606
Loan servicing income	$	873	$	379	$	1,711	$	1,342
Securities gains, net	2,842		2,006		2,812		3,664
Unrealized gain/ (loss) on equity securities, net	83		680		(27)		449
Net gains on sale of loans held for sale	4,753		7,857		11,173		12,517
Valuation adjustment on servicing rights	(526)		9		391		(1,556)
Income on bank owned life insurance	937		1,167		1,766		1,665
Other noninterest income	2,166		1,995		3,318		4,053
Total noninterest income out-of-scope of Topic 606	11,128		14,093		21,144		22,134
Total noninterest income	$	33,164	$	30,637	$	63,481	$	56,454

Contract Balances

HTLF does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2021, and December 31, 2020, HTLF did not have any significant contract balances or capitalized contract acquisition costs.

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STOCK COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK COMPENSATION

STOCK COMPENSATION

HTLF may grant, through its Nominating, Compensation 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 was approved by stockholders in May 2020 and replaces the 2012 Long-Term Incentive Plan. The Plan increased the number of shares of common stock authorized for issuance to 1,460,000 and made certain other changes to the Plan. As of June 30, 2021, 1,200,807 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 $303,000 of tax benefit during the six months ended June 30, 2021 and a tax expense of $91,000 during the six months ended June 30, 2020, 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"). In the first quarter of 2021, the Compensation Committee granted time-based RSUs with respect to 104,462 shares of common stock, and in the first quarter of 2020, the Compensation Committee granted time-based RSUs with respect to 114,944 shares of common stock to selected officers and employees. The time-based RSUs represent the right, without payment, to receive shares of HTLF common stock on a specified date in the future. The time-based RSUs granted in 2021 and 2020 vest over three years in equal installments in March of each of the three years following the year of the grant. 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). The retiree is required to sign a non-solicitation agreement as a condition to vesting.

The Compensation Committee also granted three-year performance-based RSUs with respect to 60,339 shares and 50,787 shares of common stock in the first quarter of 2021 and 2020, respectively. These performance-based RSUs will be earned based on satisfaction of performance targets for the three-year performance period ended December 31, 2023, and December 31, 2022, respectively. These performance-based RSUs or a portion thereof may vest in 2024 and 2023, respectively, after measurement of performance in relation to the performance targets.

The three-year performance-based RSUs vest to the extent that they are earned upon death or disability or upon a "qualified retirement." Upon a change in control, performance-based RSUs shall become vested at 100% of target if the RSU obligations are not assumed by the successor company. If the successor company does assume the RSU obligations, the 2021 and 2020 performance-based RSUs will vest at 100% of target upon a "Termination of Service" within the period beginning six months prior to a change in control and ending twenty-four months after a change in control.

All of HTLF's RSUs will be settled in common stock upon vesting and are not entitled to dividends until vested.

The Compensation Committee may grant RSUs under the Plan to non-employee HTLF and subsidiary bank directors as part of their compensation, to new management level employees at commencement of employment, and to other employees and service providers as incentives. During the six months ended June 30, 2021, and June 30, 2020, 41,974 and 46,613 time-based RSUs, respectively, were granted to directors and new employees.

A summary of the RSUs outstanding as of June 30, 2021, and June 30, 2020, and changes during the six months ended June 30, 2021 and 2020, follows:

	2021			2020
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1,	348,275	$	38.22	254,383	$	46.76
Granted	208,513	51.63		212,344	32.00
Vested	(146,381)	40.89		(118,686)	44.52
Forfeited	(18,861)	42.88		(14,648)	47.00
Outstanding at June 30,	391,546	$	44.08	333,393	$	38.55

Total compensation costs recorded for RSUs were $4.6 million and $3.4 million for the six months ended June 30, 2021 and 2020. As of June 30, 2021, there were $11.3 million of total unrecognized compensation costs related to the Plan for RSUs that are expected to be recognized through 2024.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2021

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, 2020, included in the Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 25, 2021. 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 June 30, 2021, are not necessarily indicative of the results expected for the year ending December 31, 2021.

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 has a formal working group that is currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including but not limited to the SOFR. Currently, HTLF has adjustable rate loans, several debt obligations and securities and derivative instruments in place that reference LIBOR-based rates. The transition from LIBOR is expected to take place at the end of 2021, and management will continue to actively assess the related opportunities and risks involved in this transition.

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. HTLF adopted this ASU on January 1, 2021, as required, and the adoption did not have a material impact on its results of operations, financial position and liquidity.

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.

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 and are recorded at fair value only to the extent a decline in fair value is determined to be other-than-temporary. 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.

Commercial Servicing Rights

Commercial servicing rights assets represent the value associated with servicing commercial loans guaranteed by the Small Business Administration and the United States Department of Agriculture that have been sold with servicing retained by HTLF. HTLF uses the amortization method (i.e., the lower of amortized cost or estimated fair value measured on a nonrecurring basis), not fair value measurement accounting, to determine the carrying value of its commercial servicing rights. The fair value for servicing assets is determined through market prices for comparable servicing contracts, when available, or through a valuation model that calculates the present value of estimated future net servicing income. Inputs utilized include discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. Commercial servicing rights are subject to impairment testing, and 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. If the valuation model reflects a fair value less than the carrying value, commercial servicing rights are adjusted to fair value through a valuation allowance. HTLF classifies commercial 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 June 30, 2021, and December 31, 2020, 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.

Revenue Recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, requires revenue to be recognized at an amount that reflects the consideration to which HTLF expects to be entitled in exchange for transferring goods or services to a customer. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of HTLF's revenue streams including interest income, loan servicing income, net securities gain, net unrealized gains and losses on equity securities, net gains on sale of loans held for sale, valuation adjustment on servicing rights, income from bank owned life insurance and other noninterest income are outside the scope of ASC 606. Revenue streams including service charges and fees, interchange fees on credit and debit cards, trust fees and brokerage and insurance commissions are within the scope of ASC 606.

Service Charges and Fees

Service charges and fees consist of revenue generated from deposit account related service charges and fees, overdraft fees, customer service fees and other service charges, credit card fee income, debit card income and other service charges and fees.

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders and other deposit account related fees. HTLF's performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees, including overdraft fees, are largely transaction based, and therefore, the performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Customer service fees and other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. HTLF's performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Credit card fee income and debit card income are comprised of interchange fees, ATM fees, and merchant services income. Credit card fee income and debit card income are earned whenever the banks' debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a bank cardholder uses an ATM that is not owned by one of HTLF's banks or a non-bank cardholder uses a HTLF-owned ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

Trust Fees

Trust fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. HTLF's performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the average daily market value or month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days before or after month end through a direct charge to customers’ accounts. HTLF does not earn performance-based incentives. HTLF's performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Brokerage and Insurance Commissions

Brokerage commission primarily consist of commissions related to broker-dealer contracts. The contracts are between the customer and the broker-dealer, and HTLF satisfies its performance obligation and earns commission when the transactions are completed. The recognition of revenue is based on a defined fee schedule and does not require significant judgment. Payment is received shortly after services are rendered. Insurance commissions are related to commissions received directly from the insurance carrier. HTLF acts as an insurance agent between the customer and the insurance carrier. HTLF's performance obligations and associated fee and commission income are defined with each insurance product with the insurance company. When insurance payments are received from customers, a portion of the payment is recognized as commission revenue.

Contract Balances HTLF does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2021, and December 31, 2020, HTLF did not have any significant contract balances or capitalized contract acquisition costs.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2021

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 six- months ended June 30, 2021, and 2020, are shown in the table below, dollars and number of shares in thousands, except per share data:

	Three Months Ended June 30,
	2021		2020
Net income	$	61,605	$	30,131
Preferred dividends	(2,012)		—
Net income available to common stockholders	$	59,593	$	30,131
Weighted average common shares outstanding for basic earnings per share	42,243		36,881
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	117		35
Weighted average common shares for diluted earnings per share	42,360		36,916
Earnings per common share — basic	$	1.41	$	0.82
Earnings per common share — diluted	$	1.41	$	0.82
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	1		54
	Six Months Ended June 30,
	2021		2020
Net income	$	114,419	$	50,171
Preferred dividends	(4,025)		—
Net income available to stockholders	$	110,394	$	50,171
Weighted average common shares outstanding for basic earnings per share	42,210		36,851
Assumed incremental common shares issued upon vesting of outstanding restricted stock units	147		69
Weighted average common shares for diluted earnings per share	42,357		36,920
Earnings per common share — basic	$	2.62	$	1.36
Earnings per common share — diluted	$	2.61	$	1.36
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation	60		1

XML

SECURITIES (Tables)

6 Months Ended

Jun. 30, 2021

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 June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2021
U.S. treasuries	$	996	$	20	$	—	$	1,016
U.S. agencies	35,591		272		(492)		35,371
Obligations of states and political subdivisions	1,817,708		66,037		(11,959)		1,871,786
Mortgage-backed securities - agency	1,741,389		19,890		(20,604)		1,740,675
Mortgage-backed securities - non-agency	1,349,005		16,062		(1,775)		1,363,292
Commercial mortgage-backed securities - agency	124,441		2,439		(1,800)		125,080
Commercial mortgage-backed securities - non-agency	534,682		823		(200)		535,305
Asset-backed securities	835,476		12,640		(1,129)		846,987
Corporate bonds	3,744		71		—		3,815
Total debt securities	6,443,032		118,254		(37,959)		6,523,327
Equity securities with a readily determinable fair value	20,651		—		—		20,651
Total	$	6,463,683	$	118,254	$	(37,959)	$	6,543,978
December 31, 2020
U.S. treasuries	$	1,995	$	31	$	—	$	2,026
U.S. agencies	167,048		657		(926)		166,779
Obligations of states and political subdivisions	1,562,631		75,555		(2,959)		1,635,227
Mortgage-backed securities - agency	1,351,964		16,029		(12,723)		1,355,270
Mortgage-backed securities - non-agency	1,428,068		22,688		(1,640)		1,449,116
Commercial mortgage-backed securities - agency	171,451		3,440		(738)		174,153
Commercial mortgage-backed securities - non-agency	253,421		37		(691)		252,767
Asset-backed securities	1,064,255		9,421		(4,410)		1,069,266
Corporate bonds	3,763		8		(29)		3,742
Total debt securities	6,004,596		127,866		(24,116)		6,108,346
Equity securities with a readily determinable fair value	19,629		—		—		19,629
Total	$	6,024,225	$	127,866	$	(24,116)	$	6,127,975

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 June 30, 2021, and December 31, 2020, are summarized in the table below, in thousands:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
June 30, 2021
Obligations of states and political subdivisions	$	85,490	$	9,931	$	—	$	95,421	$	(51)
Total	$	85,490	$	9,931	$	—	$	95,421	$	(51)
December 31, 2020
Obligations of states and political subdivisions	$	88,890	$	11,151	$	—	$	100,041	$	(51)
Total	$	88,890	$	11,151	$	—	$	100,041	$	(51)

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of investment securities carried at fair value at June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	13,286	$	13,351
Due in 1 to 5 years	18,199		19,153
Due in 5 to 10 years	198,036		202,564
Due after 10 years	1,628,518		1,676,920
Total debt securities	1,858,039		1,911,988
Mortgage and asset-backed securities	4,584,993		4,611,339
Equity securities with a readily determinable fair value	20,651		20,651
Total investment securities	$	6,463,683	$	6,543,978

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	2,196	$	2,209
Due in 1 to 5 years	42,172		44,028
Due in 5 to 10 years	32,451		37,240
Due after 10 years	8,671		11,944
Total debt securities	85,490		95,421
Allowance for credit losses	(51)		—
Total investment securities	$	85,439	$	95,421

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 six months ended June 30, 2021 and 2020, are summarized as follows, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Proceeds from sales	$	423,415	$	182,749	$	630,481	$	511,639
Gross security gains	3,844		3,958		4,289		6,862
Gross security losses	1,002		1,952		1,477		3,198

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 June 30, 2021, and December 31, 2020. 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 June 30, 2020, and December 31, 2019, respectively.

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
June 30, 2021
U.S. agencies	18,983		(492)		1	—		—		—	18,983		(492)		1
Obligations of states and political subdivisions	591,597		(11,887)		107	6,719		(72)		2	598,316		(11,959)		109
Mortgage-backed securities - agency	1,025,619		(19,499)		58	37,181		(1,105)		4	1,062,800		(20,604)		62
Mortgage-backed securities - non-agency	541,131		(1,345)		12	33,988		(430)		5	575,119		(1,775)		17
Commercial mortgage-backed securities - agency	69,690		(1,800)		11	—		—		—	69,690		(1,800)		11
Commercial mortgage-backed securities - non-agency	—		—		—	15,960		(200)		2	15,960		(200)		2
Asset-backed securities	77,475		(319)		7	35,779		(810)		11	113,254		(1,129)		18
Corporate bonds	—		—		—	—		—		—	—		—		—
Total temporarily impaired securities	$	2,324,495	$	(35,342)	196	$	129,627	$	(2,617)	24	$	2,454,122	$	(37,959)	220
December 31, 2020
U.S. agencies	2,981		(8)		5	99,922		(918)		72	102,903		(926)		77
Obligations of states and political subdivisions	346,598		(2,959)		49	—		—		—	346,598		(2,959)		49
Mortgage-backed securities - agency	653,793		(12,342)		35	31,012		(381)		3	684,805		(12,723)		38
Mortgage-backed securities - non-agency	378,843		(1,639)		17	1,622		(1)		1	380,465		(1,640)		18
Commercial mortgage-backed securities - agency	46,541		(738)		6	—		—		—	46,541		(738)		6
Commercial mortgage-backed securities - non-agency	100,042		(15)		2	35,428		(676)		3	135,470		(691)		5
Asset-backed securities	141,824		(643)		9	340,452		(3,767)		24	482,276		(4,410)		33
Corporate bonds	1,908		(29)		4	—		—		—	1,908		(29)		4
Total temporarily impaired securities	$	1,672,530	$	(18,373)	127	$	508,436	$	(5,743)	103	$	2,180,966	$	(24,116)	230

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 six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,
	2021		2020
Beginning balance	$	48	$	197
Provision (benefit) for credit losses	3		(135)
Balance at period end	$	51	$	62
	Six Months Ended June 30,
	2021		2020
Beginning balance	$	51	$	—
Impact of ASU 2016-13 adoption	—		158
Adjusted balance	51		158
Provision (benefit) for credit losses	—		(96)
Balance at period end	$	51	$	62

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 June 30, 2021 and December 31, 2020, which are updated quarterly and used to monitor the credit quality of the securities:

	June 30, 2021		December 31, 2020
Rating
AAA	$	3,207	$	—
AA, AA+, AA-	62,526		64,385
A+, A, A-	15,006		18,353
BBB	4,751		4,208
Not Rated	—		1,944
Total	$	85,490	$	88,890

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2021, and December 31, 2020, in thousands:

As of June 30, 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	$	330,626	$	475,749	$	277,874	$	122,550	$	197,617	$	370,896	$	528,785	$	2,304,097
Watch	7,252		13,154		22,947		12,886		8,633		17,574		35,506		117,952
Substandard	2,171		21,377		10,899		8,780		11,706		21,646		20,280		96,859
Commercial and industrial total	$	340,049	$	510,280	$	311,720	$	144,216	$	217,956	$	410,116	$	584,571	$	2,518,908

As of June 30, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
PPP
Pass	$	409,922	$	327,475	$	—	$	—	$	—	$	—	$	—	$	737,397
Watch	21,880		28,769		—		—		—		—		—		50,649
Substandard	20,697		20,432		—		—		—		—		—		41,129
PPP total	$	452,499	$	376,676	$	—	$	—	$	—	$	—	$	—	$	829,175
Owner occupied commercial real estate
Pass	$	331,097	$	402,216	$	371,104	$	232,062	$	143,692	$	264,190	$	27,773	$	1,772,134
Watch	428		17,998		14,979		18,715		19,869		10,305		2,250		84,544
Substandard	743		18,083		13,464		7,908		13,903		28,201		1,154		83,456
Owner occupied commercial real estate total	$	332,268	$	438,297	$	399,547	$	258,685	$	177,464	$	302,696	$	31,177	$	1,940,134
Non-owner occupied commercial real estate
Pass	$	206,934	$	332,479	$	355,445	$	275,853	$	163,047	$	266,547	$	32,340	$	1,632,645
Watch	16,873		18,884		76,447		30,786		8,233		53,339		4,524		209,086
Substandard	16,968		13,315		20,879		23,329		24,802		46,035		310		145,638
Non-owner occupied commercial real estate total	$	240,775	$	364,678	$	452,771	$	329,968	$	196,082	$	365,921	$	37,174	$	1,987,369
Real estate construction
Pass	$	151,473	$	338,101	$	215,455	$	49,360	$	10,003	$	8,959	$	17,078	$	790,429
Watch	—		1,865		11,474		47,460		240		210		413		61,662
Substandard	—		—		28		1,993		—		183		—		2,204
Real estate construction total	$	151,473	$	339,966	$	226,957	$	98,813	$	10,243	$	9,352	$	17,491	$	854,295
Agricultural and agricultural real estate
Pass	$	115,287	$	125,764	$	79,157	$	46,698	$	28,105	$	43,350	$	134,975	$	573,336
Watch	3,480		13,591		5,746		2,197		256		3,735		4,735		33,740
Substandard	9,082		8,793		6,886		20,498		5,641		11,210		10,422		72,532
Agricultural and agricultural real estate total	$	127,849	$	148,148	$	91,789	$	69,393	$	34,002	$	58,295	$	150,132	$	679,608
Residential real estate
Pass	$	144,046	$	116,571	$	65,840	$	82,530	$	56,628	$	277,236	$	28,244	$	771,095
Watch	1,236		1,966		1,634		1,703		2,039		6,998		—		15,576
Substandard	4,147		859		299		1,889		1,259		5,760		—		14,213
Residential real estate total	$	149,429	$	119,396	$	67,773	$	86,122	$	59,926	$	289,994	$	28,244	$	800,884
Consumer
Pass	$	39,485	$	26,718	$	20,157	$	13,147	$	12,112	$	21,088	$	259,705	$	392,412
Watch	4		132		220		1,362		130		508		1,234		3,590
Substandard	848		432		612		474		371		2,104		798		5,639
Consumer total	$	40,337	$	27,282	$	20,989	$	14,983	$	12,613	$	23,700	$	261,737	$	401,641
Total Pass	$	1,728,870	$	2,145,073	$	1,385,032	$	822,200	$	611,204	$	1,252,266	$	1,028,900	$	8,973,545
Total Watch	51,153		96,359		133,447		115,109		39,400		92,669		48,662		576,799
Total Substandard	54,656		83,291		53,067		64,871		57,682		115,139		32,964		461,670
Total Loans	$	1,834,679	$	2,324,723	$	1,571,546	$	1,002,180	$	708,286	$	1,460,074	$	1,110,526	$	10,012,014

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
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

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
Watch	22,533		—		—		—		—		—		—		22,533
Substandard	54,543		—		—		—		—		—		—		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
Watch	15,345		13,764		22,488		20,811		8,717		15,282		4,311		100,718
Substandard	15,914		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
Watch	22,826		55,225		24,718		18,724		20,954		45,672		5,114		193,233
Substandard	30,899		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
Substandard	196		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
Watch	20,500		16,202		8,854		2,448		3,515		3,157		12,282		66,958
Substandard	17,403		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
Watch	3,986		4,507		2,188		1,896		3,117		8,525		—		24,219
Substandard	980		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
Watch	168		352		647		340		82		646		1,622		3,857
Substandard	481		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 Watch	129,037		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

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LOANS (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Schedule of Loans

Loans as of June 30, 2021, and December 31, 2020, were as follows, in thousands:

	June 30, 2021		December 31, 2020
Loans receivable held to maturity:
Commercial and industrial	$	2,518,908	$	2,534,799
Paycheck Protection Program ("PPP")	829,175		957,785
Owner occupied commercial real estate	1,940,134		1,776,406
Non-owner occupied commercial real estate	1,987,369		1,921,481
Real estate construction	854,295		863,220
Agricultural and agricultural real estate	679,608		714,526
Residential real estate	800,884		840,442
Consumer	401,641		414,392
Total loans receivable held to maturity	10,012,014		10,023,051
Allowance for credit losses	(120,726)		(131,606)
Loans receivable, net	$	9,891,288	$	9,891,445

Allowance for Loan and Lease Losses, Based on Impairment Methodology

The following table shows the balance in the allowance for credit losses at June 30, 2021, and December 31, 2020, 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
June 30, 2021
Commercial and industrial	$	4,688	$	26,644	$	31,332	$	13,658	$	2,505,250	$	2,518,908
PPP	—		—		—		—		829,175		829,175
Owner occupied commercial real estate	110		19,880		19,990		7,547		1,932,587		1,940,134
Non-owner occupied commercial real estate	3,485		19,343		22,828		19,548		1,967,821		1,987,369
Real estate construction	—		19,580		19,580		—		854,295		854,295
Agricultural and agricultural real estate	3,106		4,054		7,160		17,948		661,660		679,608
Residential real estate	—		9,741		9,741		—		800,884		800,884
Consumer	—		10,095		10,095		—		401,641		401,641
Total	$	11,389	$	109,337	$	120,726	$	58,701	$	9,953,313	$	10,012,014

	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, 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 estate	111		19,890		20,001		11,174		1,765,232		1,776,406
Non-owner occupied commercial real estate	3,250		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 estate	1,988		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

Troubled Debt Restructuring on Loans Modified

The following tables provide information on troubled debt restructured loans that were modified during the three- and six- months ended June 30, 2021, and June 30, 2020, dollars in thousands:

	Three Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—
Residential real estate	—	—		—		1	60		66
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	1	$	60	$	66

	Six Months Ended June 30,
	2021					2020
	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	2	7,850		7,850		—	—		—
Real estate construction	—	—		—		—	—		—
Agricultural and agricultural real estate	—	—		—		—	—		—

	Six Months Ended June 30,
	2021					2020
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate	—	—		—		2	92		98
Consumer	—	—		—		—	—		—
Total	2	$	7,850	$	7,850	2	$	92	$	98

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 June 30, 2021 and December 31, 2020, which are updated quarterly and used to monitor the credit quality of the securities:

	June 30, 2021		December 31, 2020
Rating
AAA	$	3,207	$	—
AA, AA+, AA-	62,526		64,385
A+, A, A-	15,006		18,353
BBB	4,751		4,208
Not Rated	—		1,944
Total	$	85,490	$	88,890

The following tables show the risk category of loans by loan category and year of origination as of June 30, 2021, and December 31, 2020, in thousands:

As of June 30, 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	$	330,626	$	475,749	$	277,874	$	122,550	$	197,617	$	370,896	$	528,785	$	2,304,097
Watch	7,252		13,154		22,947		12,886		8,633		17,574		35,506		117,952
Substandard	2,171		21,377		10,899		8,780		11,706		21,646		20,280		96,859
Commercial and industrial total	$	340,049	$	510,280	$	311,720	$	144,216	$	217,956	$	410,116	$	584,571	$	2,518,908

As of June 30, 2021	Amortized Cost Basis of Term Loans by Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Total
PPP
Pass	$	409,922	$	327,475	$	—	$	—	$	—	$	—	$	—	$	737,397
Watch	21,880		28,769		—		—		—		—		—		50,649
Substandard	20,697		20,432		—		—		—		—		—		41,129
PPP total	$	452,499	$	376,676	$	—	$	—	$	—	$	—	$	—	$	829,175
Owner occupied commercial real estate
Pass	$	331,097	$	402,216	$	371,104	$	232,062	$	143,692	$	264,190	$	27,773	$	1,772,134
Watch	428		17,998		14,979		18,715		19,869		10,305		2,250		84,544
Substandard	743		18,083		13,464		7,908		13,903		28,201		1,154		83,456
Owner occupied commercial real estate total	$	332,268	$	438,297	$	399,547	$	258,685	$	177,464	$	302,696	$	31,177	$	1,940,134
Non-owner occupied commercial real estate
Pass	$	206,934	$	332,479	$	355,445	$	275,853	$	163,047	$	266,547	$	32,340	$	1,632,645
Watch	16,873		18,884		76,447		30,786		8,233		53,339		4,524		209,086
Substandard	16,968		13,315		20,879		23,329		24,802		46,035		310		145,638
Non-owner occupied commercial real estate total	$	240,775	$	364,678	$	452,771	$	329,968	$	196,082	$	365,921	$	37,174	$	1,987,369
Real estate construction
Pass	$	151,473	$	338,101	$	215,455	$	49,360	$	10,003	$	8,959	$	17,078	$	790,429
Watch	—		1,865		11,474		47,460		240		210		413		61,662
Substandard	—		—		28		1,993		—		183		—		2,204
Real estate construction total	$	151,473	$	339,966	$	226,957	$	98,813	$	10,243	$	9,352	$	17,491	$	854,295
Agricultural and agricultural real estate
Pass	$	115,287	$	125,764	$	79,157	$	46,698	$	28,105	$	43,350	$	134,975	$	573,336
Watch	3,480		13,591		5,746		2,197		256		3,735		4,735		33,740
Substandard	9,082		8,793		6,886		20,498		5,641		11,210		10,422		72,532
Agricultural and agricultural real estate total	$	127,849	$	148,148	$	91,789	$	69,393	$	34,002	$	58,295	$	150,132	$	679,608
Residential real estate
Pass	$	144,046	$	116,571	$	65,840	$	82,530	$	56,628	$	277,236	$	28,244	$	771,095
Watch	1,236		1,966		1,634		1,703		2,039		6,998		—		15,576
Substandard	4,147		859		299		1,889		1,259		5,760		—		14,213
Residential real estate total	$	149,429	$	119,396	$	67,773	$	86,122	$	59,926	$	289,994	$	28,244	$	800,884
Consumer
Pass	$	39,485	$	26,718	$	20,157	$	13,147	$	12,112	$	21,088	$	259,705	$	392,412
Watch	4		132		220		1,362		130		508		1,234		3,590
Substandard	848		432		612		474		371		2,104		798		5,639
Consumer total	$	40,337	$	27,282	$	20,989	$	14,983	$	12,613	$	23,700	$	261,737	$	401,641
Total Pass	$	1,728,870	$	2,145,073	$	1,385,032	$	822,200	$	611,204	$	1,252,266	$	1,028,900	$	8,973,545
Total Watch	51,153		96,359		133,447		115,109		39,400		92,669		48,662		576,799
Total Substandard	54,656		83,291		53,067		64,871		57,682		115,139		32,964		461,670
Total Loans	$	1,834,679	$	2,324,723	$	1,571,546	$	1,002,180	$	708,286	$	1,460,074	$	1,110,526	$	10,012,014

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
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

As of December 31, 2020	Amortized Cost Basis of Term Loans by Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Total
Watch	22,533		—		—		—		—		—		—		22,533
Substandard	54,543		—		—		—		—		—		—		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
Watch	15,345		13,764		22,488		20,811		8,717		15,282		4,311		100,718
Substandard	15,914		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
Watch	22,826		55,225		24,718		18,724		20,954		45,672		5,114		193,233
Substandard	30,899		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
Substandard	196		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
Watch	20,500		16,202		8,854		2,448		3,515		3,157		12,282		66,958
Substandard	17,403		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
Watch	3,986		4,507		2,188		1,896		3,117		8,525		—		24,219
Substandard	980		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
Watch	168		352		647		340		82		646		1,622		3,857
Substandard	481		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 Watch	129,037		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

Past Due Financing Receivables

The following table sets forth information regarding accruing and nonaccrual loans at June 30, 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		Current		Nonaccrual		Total Loans
June 30, 2021
Commercial and industrial	$	1,537	$	1,034	$	12	$	2,583	$	2,498,207	$	18,118	$	2,518,908
PPP	—		—		—		—		829,175		—		829,175
Owner occupied commercial real estate	1,134		—		—		1,134		1,929,086		9,914		1,940,134
Non-owner occupied commercial real estate	1,374		1,350		—		2,724		1,963,775		20,870		1,987,369
Real estate construction	2,834		—		—		2,834		851,053		408		854,295
Agricultural and agricultural real estate	2,759		1,716		—		4,475		654,135		20,998		679,608
Residential real estate	2,192		118		85		2,395		785,637		12,852		800,884
Consumer	679		222		—		901		398,632		2,108		401,641
Total gross loans receivable held to maturity	$	12,509	$	4,440	$	97	$	17,046	$	9,909,700	$	85,268	$	10,012,014
December 31, 2020
Commercial and industrial	$	5,825	$	2,322	$	720	$	8,867	$	2,504,170	$	21,762	$	2,534,799
PPP	1		—		—		1		957,784		—		957,785
Owner occupied commercial real estate	2,815		167		—		2,982		1,759,649		13,775		1,776,406
Non-owner occupied commercial real estate	2,143		2,674		—		4,817		1,902,003		14,661		1,921,481
Real estate construction	2,446		96		—		2,542		859,784		894		863,220
Agricultural and agricultural real estate	1,688		—		—		1,688		694,150		18,688		714,526
Residential real estate	1,675		83		—		1,758		825,047		13,637		840,442
Consumer	807		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

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ALLOWANCE FOR CREDIT LOSSES (Tables)

6 Months Ended

Jun. 30, 2021

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 six- months ended June 30, 2021, and June 30, 2020, were as follows, in thousands:

	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
Balance at March 31, 2021	$	36,095	$	—	$	19,416	$	24,694	$	19,931	$	7,111	$	11,012	$	11,913	$	130,172
Charge-offs	(842)		—		(72)		(1,637)		(10)		(357)		(70)		(509)		(3,497)
Recoveries	265		—		44		13		4		—		—		191		517
Provision	(4,186)		—		602		(242)		(345)		406		(1,201)		(1,500)		(6,466)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726
	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
Balance at December 31, 2020	$	38,818	$	—	$	20,001	$	20,873	$	20,080	$	7,129	$	11,935	$	12,770	$	131,606
Charge-offs	(1,790)		—		(113)		(1,637)		(10)		(675)		(91)		(1,307)		(5,623)
Recoveries	558		—		97		13		6		21		5		493		1,193
Provision	(6,254)		—		5		3,579		(496)		685		(2,108)		(1,861)		(6,450)
Balance at June 30, 2021	$	31,332	$	—	$	19,990	$	22,828	$	19,580	$	7,160	$	9,741	$	10,095	$	120,726

	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
Balance at March 31, 2020	$	32,455			—		10,337		8,320		22,951		$	4,797	$	8,725	$	9,765	$	97,350
Charge-offs	(2,536)				—		(213)		(19)		(84)		(1)		(235)		(476)		(3,564)
Recoveries	345				—		191		8		210		—		92		298		1,144
Provision	2,254				—		13,087		1,852		5,590		905		722		597		25,007
Balance at June 30, 2020	$	32,518	$	32,531	$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937
	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
Balance at December 31, 2019	$	34,207			$	—	$	7,921	$	7,584	$	8,677	$	5,680	$	1,504	$	4,822	$	70,395
Impact of ASU 2016-13 adoption	(272)				—		(114)		(2,617)		6,335		(387)		4,817		4,309		12,071
Adjusted balance at January 1, 2020	33,935				—		7,807		4,967		15,012		5,293		6,321		9,131		82,466
Charge-offs	(7,767)				—		(213)		(19)		(105)		(254)		(314)		(1,193)		(9,865)
Recoveries	610				—		192		8		215		826		95		518		2,464
Provision	5,740				—		15,616		5,205		13,545		(164)		3,202		1,728		44,872
Balance at June 30, 2020	$	32,518			$	—	$	23,402	$	10,161	$	28,667	$	5,701	$	9,304	$	10,184	$	119,937

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

Changes in the allowance for credit losses on unfunded commitments for the three and six months ended June 30, 2021 and June 30, 2020, were as follows:

	For the Three Months Ended June 30,
	2021		2020
Balance at March 31,	$	14,619	$	15,468
Provision	(617)		1,924
Balance at June 30,	$	14,002	$	17,392

	For the Six Months Ended June 30,
	2021		2020
Balance at December 31,	$	15,280	$	248
Impact of ASU 2016-13 adoption on January 1, 2020	—		13,604
Adjusted balance at January 1,	15,280		13,852
Provision	(1,278)		3,540
Balance at June 30,	$	14,002	$	17,392

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2021

Finite-Lived Intangible Assets [Line Items]

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 June 30, 2021, and December 31, 2020, are presented in the table below, in thousands:

	June 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles	$	101,185	$	63,883	$	37,302	$	101,185	$	58,970	$	42,215
Customer relationship intangibles	1,177		1,027		150		1,177		1,009		168
Mortgage servicing rights	11,971		6,412		5,559		11,268		6,079		5,189
Commercial servicing rights	7,054		6,412		642		7,054		6,191		863
Total	$	121,387	$	77,734	$	43,653	$	120,684	$	72,249	$	48,435

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:

	Core Deposit Intangibles		Customer Relationship Intangibles		Mortgage Servicing Rights		Commercial Servicing Rights		Total
Six months ending December 31, 2021	$	4,446	$	18	$	648	$	110	$	5,222
Year ending December 31,
2022	7,702		34		1,228		194		9,158
2023	6,739		33		1,052		139		7,963
2024	5,591		33		877		96		6,597
2025	4,700		32		702		103		5,537
2026	3,533		—		526		—		4,059
Thereafter	4,591		—		526		—		5,117
Total	$	37,302	$	150	$	5,559	$	642	$	43,653

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 June 30, 2021, and December 31, 2020:

	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
June 30, 2021	$	1,627	$	1,157	$	470	$	6,287	$	4,402	$	1,885
December 31, 2020	$	1,522	$	1,100	$	422	$	5,445	$	4,089	$	1,356

The following table summarizes, in thousands, the book value, the fair value of each tranche of the commercial servicing rights and any recorded valuation allowance at June 30, 2021, and December 31, 2020:

	Book Value Less than 20 Years		Fair Value Less than 20 Years		Valuation Allowance 15-Year Tranche		Book Value More than 20 Years		Fair Value More than 20 Years		Valuation Allowance 30-Year Tranche
June 30, 2021	$	58	$	170	$	—	$	584	$	934	$	—
December 31, 2020	$	87	$	203	$	—	$	776	$	1,085	$	—

Mortgage servicing rights

Finite-Lived Intangible Assets [Line Items]

Summary of Changes in Servicing Rights

The following table summarizes, in thousands, the changes in capitalized mortgage servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	5,189		$	5,621
Originations	703			1,490
Amortization	(724)			(1,070)
Valuation adjustment	391			(1,556)
Balance at period end	$	5,559		$	4,485
Mortgage servicing rights, net to servicing portfolio	0.77		%	0.68		%

Commercial servicing rights

Finite-Lived Intangible Assets [Line Items]

Summary of Changes in Servicing Rights

The following table summarizes, in thousands, the changes in capitalized commercial servicing rights for the six months ended June 30, 2021, and June 30, 2020:

	2021			2020
Balance at January 1,	$	863		$	1,115
Originations	—			38
Amortization	(221)			(169)
Balance at period end	$	642		$	984
Fair value of commercial servicing rights	$	1,104		$	1,417
Commercial servicing rights, net to servicing portfolio	1.12		%	1.32		%

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosures [Line Items]

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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Embedded derivatives	$	8,971	$	497	Other assets
December 31, 2020
Embedded derivatives	$	9,198	$	680	Other assets

The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Embedded derivatives	$	(54)	Other noninterest income
Six Months Ended June 30, 2021
Embedded derivatives	$	(183)	Other noninterest income
Three Months Ended June 30, 2020
Embedded derivatives	$	1	Other noninterest income
Six Months Ended June 30, 2020
Embedded derivatives	$	362	Other noninterest income

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 June 30, 2021, and December 31, 2020, in thousands:

	Balance Sheet Category	Notional Amount		Fair Value
June 30, 2021
Interest rate lock commitments (mortgage)	Other assets	$	39,922	$	1,425
Forward commitments	Other assets	9,500		8
Forward commitments	Other liabilities	59,000		(202)
Undesignated interest rate swaps	Other liabilities	8,971		(497)
December 31, 2020
Interest rate lock commitments (mortgage)	Other assets	$	42,078	$	1,827
Forward commitments	Other assets	—		—
Forward commitments	Other liabilities	86,500		(697)
Undesignated interest rate swaps	Other liabilities	9,198		(680)

The table below identifies the income statement category of the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Income Statement Category	Gain (Loss) Recognized
Three Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(250)
Forward commitments	Net gains on sale of loans held for sale	(1,403)
Undesignated interest rate swaps	Other noninterest income	54
Six Months Ended June 30, 2021
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	(1,735)
Forward commitments	Net gains on sale of loans held for sale	503
Undesignated interest rate swaps	Other noninterest income	183
Three Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	1,296
Forward commitments	Net gains on sale of loans held for sale	962
Undesignated interest rate swaps	Other noninterest income	(1)
Six Months Ended June 30, 2020
Interest rate lock commitments (mortgage)	Net gains on sale of loans held for sale	$	2,994
Forward commitments	Net gains on sale of loans held for sale	(184)
Undesignated interest rate swaps	Other noninterest income	(362)

Cash Flow Hedges

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Balance Sheet Category and Fair Values of Derivative Instruments

The table below identifies the balance sheet category and fair values of HTLF's derivative instruments designated as cash flow hedges at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Receive Rate		Weighted Average Pay Rate		Maturity
June 30, 2021
Interest rate swap	$	21,250	$	(1,636)	Other liabilities	2.591	%	5.425	%	07/24/2028
Interest rate swap	20,000		(1,107)		Other liabilities	0.119		2.390		06/15/2024
Interest rate swap	20,000		(1,049)		Other liabilities	0.135		2.352		03/01/2024
December 31, 2020
Interest rate swap	$	25,000	$	(127)	Other liabilities	0.229	%	2.255	%	03/17/2021
Interest rate swap	21,667		(91)		Other liabilities	2.649		3.674		05/10/2021
Interest rate swap	22,750		(2,220)		Other liabilities	2.643		5.425		07/24/2028
Interest rate swap	20,000		(1,482)		Other liabilities	0.217		2.390		06/15/2024
Interest rate swap	20,000		(1,385)		Other liabilities	0.225		2.352		03/01/2024
Interest rate swap	6,000		(50)		Other liabilities	0.217		1.866		06/15/2021
Interest rate swap	3,000		(25)		Other liabilities	0.241		1.878		06/30/2021

Gains (Losses) on Derivative Instruments

The table below identifies the gains and losses recognized on HTLF's derivative instruments designated as cash flow hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Effective Portion					Ineffective Portion
	Recognized in OCI		Reclassified from AOCI into Income			Recognized in Income on Derivatives
	Amount of Gain (Loss)		Category	Amount of Gain (Loss)		Category	Amount of Gain (Loss)
Three Months Ended June 30, 2021
Interest rate swaps	$	291	Interest expense	$	454	Other income	$	—
Six Months Ended June 30, 2021
Interest rate swaps	$	1,588	Interest expense	$	1,045	Other income	$	—
Three Months Ended June 30, 2020
Interest rate swap	$	(100)	Interest Expense	$	417	Other Income	$	—
Six Months Ended June 30, 2020
Interest rate swap	$	(3,963)	Interest Expense	$	600	Other Income	$	—

Fair value hedges

Derivative Instruments and Hedging Activities Disclosures [Line Items]

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 June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category
June 30, 2021
Fair value hedges	$	16,901	$	(1,585)	Other liabilities
December 31, 2020
Fair value hedges	$	20,841	$	(2,480)	Other liabilities

Gains (Losses) on Derivative Instruments

The table below identifies the gains and losses recognized on HTLF's fair value hedges for the three- and six- months ended June 30, 2021, and June 30, 2020, in thousands:

	Amount of Gain (Loss)		Income Statement Category
Three Months Ended June 30, 2021
Fair value hedges	$	132	Interest income
Six Months Ended June 30, 2021
Fair value hedges	$	895	Interest income
Three Months Ended June 30, 2020
Fair value hedges	$	4	Interest income
Six Months Ended June 30, 2020
Fair value hedges	$	(1,673)	Interest income

Loan Swap Hedges

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Balance Sheet Category and Fair Values of Derivative Instruments

The table below identifies the balance sheet category and fair values of the derivative instruments designated as loan swaps at June 30, 2021, and December 31, 2020, in thousands:

	Notional Amount		Fair Value		Balance Sheet Category	Weighted Average Receive Rate		Weighted Average Pay Rate
June 30, 2021
Customer interest rate swaps	$	438,415	$	29,394	Other assets	4.50	%	2.43	%
Customer interest rate swaps	438,415		(29,394)		Other liabilities	2.43		4.50
December 31, 2020
Customer interest rate swaps	$	440,719	$	43,422	Other assets	4.46	%	2.46	%
Customer interest rate swaps	440,719		(43,422)		Other liabilities	2.46		4.46

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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below presents HTLFs assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021, and December 31, 2020, 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
June 30, 2021
Assets
Securities available for sale
U.S. treasuries	$	1,016	$	1,016	$	—	$	—
U.S. agencies	35,371		—		35,371		—
Obligations of states and political subdivisions	1,871,786		—		1,871,786		—
Mortgage-backed securities - agency	1,740,675		—		1,740,675		—
Mortgage-backed securities - non-agency	1,363,292		—		1,363,292		—
Commercial mortgage-backed securities - agency	125,080		—		125,080		—
Commercial mortgage-backed securities - non-agency	535,305		—		535,305		—
Asset-backed securities	846,987		—		846,987		—
Corporate bonds	3,815		—		3,815		—
Equity securities with a readily determinable fair value	20,651		—		20,651		—
Derivative financial instruments(1)	29,891		—		29,891		—
Interest rate lock commitments	1,425		—		—		1,425
Forward commitments	8		—		8		—
Total assets at fair value	$	6,575,302	$	1,016	$	6,572,861	$	1,425
Liabilities
Derivative financial instruments(2)	$	35,268	$	—	$	35,268	$	—
Forward commitments	202		—		202		—
Total liabilities at fair value	$	35,470	$	—	$	35,470	$	—
December 31, 2020
Assets
Securities available for sale
U.S. treasuries	$	2,026	$	2,026	$	—	$	—
U.S. agencies	166,779		—		166,779		—
Obligations of states and political subdivisions	1,635,227		—		1,635,227		—
Mortgage-backed securities - agency	1,355,270		—		1,355,270		—
Mortgage-backed securities - non-agency	1,449,116		—		1,449,116		—
Commercial mortgage-backed securities - agency	174,153		—		174,153		—
Commercial mortgage-backed securities - non-agency	252,767		—		252,767		—
Asset-backed securities	1,069,266		—		1,069,266		—
Corporate bonds	3,742		—		3,742		—
Equity securities with a readily determinable fair value	19,629		—		19,629		—
Derivative financial instruments(1)	44,102		—		44,102		—
Interest rate lock commitments	1,827		—		—		1,827
Total assets at fair value	$	6,173,904	$	2,026	$	6,170,051	$	1,827
Liabilities
Derivative financial instruments(2)	$	51,962	$	—	$	51,962	$	—
Forward commitments	697		—		697		—
Total liabilities at fair value	$	52,659	$	—	$	52,659	$	—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps, embedded derivatives and free standing derivative instruments.

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 June 30, 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	$	8,969	$	—	$	—	$	8,969	$	214
Owner occupied commercial real estate	3,573		—		—		3,573		—
Non-owner occupied commercial real estate	14,742		—		—		14,742		1,637
Agricultural and agricultural real estate	14,161		—		—		14,161		—
Total collateral dependent individually assessed loans	$	41,445	$	—	$	—	$	41,445	$	1,851
Loans held for sale	$	33,248	$	—	$	33,248	$	—	$	(1,304)
Other real estate owned	6,314		—		—		6,314		(88)
Premises, furniture and equipment held for sale	6,925		—		—		6,925		(44)
Servicing rights	5,559		—		—		5,559		(391)

	Fair Value Measurements at December 31, 2020
	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	$	11,256	$	—	$	—	$	11,256	$	451
Owner occupied commercial real estate	5,874		—		—		5,874		11,631
Non-owner occupied commercial real estate	4,907		—		—		4,907		—
Agricultural and agricultural real estate	12,451		—		—		12,451		—
Total collateral dependent individually assessed loans	$	34,488	$	—	$	—	$	34,488	$	12,082
Loans held for sale	$	57,949	$	—	$	57,949	$	—	$	(982)
Other real estate owned	6,624		—		—		6,624		1,044
Premises, furniture and equipment held for sale	6,499		—		—		6,499		3,288
Servicing rights	5,189		—		—		5,189		1,778

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 6/30/2021		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,425	Discounted cash flows	Closing ratio	0-99% (88%)(1)
Other real estate owned	6,314		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,559		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,925		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial	8,969		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)
Owner occupied commercial real estate	3,573		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-7%(3)
Non-owner occupied commercial real estate	14,742		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	14,161		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-15%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

	Fair Value at 12/31/2020		Valuation Technique	Unobservable Input	Range (Weighted Average)
Interest rate lock commitments	$	1,827	Discounted cash flows	Closing ratio	0-99% (86%)(1)
Other real estate owned	6,624		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Servicing rights	5,189		Discounted cash flows	Third party valuation	(4)
Premises, furniture and equipment held for sale	6,499		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-10%(3)
Collateral dependent individually assessed loans:
Commercial and industrial	11,256		Modified appraised value	Third party appraisal	(2)
				Appraisal discount	0-8%(3)

	Fair Value at 12/31/2020	Valuation Technique	Unobservable Input	Range (Weighted Average)
Owner occupied commercial real estate	5,874	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-12%(3)
Non-owner occupied commercial real estate	4,907	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(3)
Agricultural and agricultural real estate	12,451	Modified appraised value	Third party appraisal	(2)
			Appraisal discount	0-10%(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 fair value measurement are the value indices, which are weighted-average spreads to LIBOR based on maturity groups.

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 Six Months Ended June 30, 2021		For the Year Ended December 31, 2020
Balance at January 1,	$	1,827	$	681
Total net gains included in earnings	(1,735)		2,803
Issuances	8,892		17,221
Settlements	(7,559)		(18,878)
Balance at period end	$	1,425	$	1,827

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 June 30, 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	$	449,128	$	449,128	$	449,128	$	—	$	—
Time deposits in other financial institutions	3,138		3,138		3,138		—		—
Securities:
Carried at fair value	6,543,978		6,543,978		1,016		6,542,962		—
Held to maturity	85,439		95,421		—		95,421		—
Other investments	76,809		76,809		—		76,809		—
Loans held for sale	33,248		33,248		—		33,248		—
Loans, net:
Commercial and industrial	2,487,576		2,469,136		—		2,460,167		8,969
PPP	829,175		829,175		—		829,175		—
Owner occupied commercial real estate	1,920,144		1,901,531		—		1,897,958		3,573
Non-owner occupied commercial real estate	1,964,541		1,953,264		—		1,938,522		14,742
Real estate construction	834,715		838,001		—		838,001		—
Agricultural and agricultural real estate	672,448		660,650		—		646,489		14,161
Residential real estate	791,143		789,274		—		789,274		—
Consumer	391,546		394,337		—		394,337		—
Total Loans, net	9,891,288		9,835,368		—		9,793,923		41,445
Cash surrender value on life insurance	189,619		189,619		—		189,619		—
Derivative financial instruments(1)	29,891		29,891		—		29,891		—
Interest rate lock commitments	1,425		1,425		—		—		1,425
Forward commitments	8		8		—		8		—
Financial liabilities:
Deposits
Demand deposits	6,299,289		6,299,289		—		6,299,289		—
Savings deposits	8,189,223		8,189,223		—		8,189,223		—
Time deposits	1,126,606		1,126,788		—		1,126,788		—
Short term borrowings	152,563		152,563		—		152,563		—
Other borrowings	271,244		274,631		—		274,631		—
Derivative financial instruments(2)	35,268		35,368		—		35,368		—
Forward commitments	202		202		—		202		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

					Fair Value Measurements at December 31, 2020
	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	$	337,903	$	337,903	$	337,903	$	—	$	—
Time deposits in other financial institutions	3,129		3,129		3,129		—		—
Securities:
Carried at fair value	6,127,975		6,127,975		2,026		6,125,949		—
Held to maturity	88,839		100,041		—		100,041		—
Other investments	75,253		75,523		—		75,523		—
Loans held for sale	57,949		57,949		—		57,949		—
Loans, net:
Commercial and industrial	2,495,981		2,391,041		—		2,379,785		11,256
PPP	957,785		957,785		—		957,785		—
Owner occupied commercial real estate	1,756,405		1,745,397		—		1,739,523		5,874
Non-owner occupied commercial real estate	1,900,608		1,892,213		—		1,887,306		4,907
Real estate construction	843,140		849,224		—		849,224		—
Agricultural and agricultural real estate	707,397		697,729		—		685,278		12,451
Residential real estate	828,507		828,366		—		828,366		—
Consumer	401,622		407,914		—		407,914		—
Total Loans, net	9,891,445		9,769,669		—		9,735,181		34,488
Cash surrender value on life insurance	187,664		187,664		—		187,664		—
Derivative financial instruments(1)	44,102		44,102		—		44,102		—
Interest rate lock commitments	1,827		1,827		—		—		1,827
Financial liabilities:
Deposits
Demand deposits	5,688,810		5,688,810		—		5,688,810		—
Savings deposits	8,019,704		8,019,704		—		8,019,704		—
Time deposits	1,271,391		1,273,468		—		1,273,468		—
Short term borrowings	167,872		167,872		—		167,872		—
Other borrowings	457,042		458,806		—		458,806		—
Derivative financial instruments(1)	51,962		51,962		—		51,962		—
Forward commitments	697		697		—		697		—
(1) Includes embedded derivatives, back-to-back loan swaps and fair value hedges.
(2) Includes cash flow hedges, fair value hedges, back-to-back loan swaps and free standing derivative instruments.

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REVENUE (Tables)

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Schedule of noninterest income in-scope and out-of-scope of Topic 606

The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2021, and 2020, in thousands:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
In-scope of Topic 606
Service charges and fees
Service charges and fees on deposit accounts	$	4,014	$	3,476	$	7,950	$	6,913
Overdraft fees	2,549		1,634		5,141		4,443
Customer service and other service fees	54		35		100		94
Credit card fee income	5,854		4,067		10,162		7,967
Debit card income	2,661		1,760		5,450		3,576
Total service charges and fees	15,132		10,972		28,803		22,993
Trust fees	6,039		4,977		11,816		9,999
Brokerage and insurance commissions	865		595		1,718		1,328
Total noninterest income in-scope of Topic 606	22,036		16,544		42,337		34,320
Out-of-scope of Topic 606
Loan servicing income	$	873	$	379	$	1,711	$	1,342
Securities gains, net	2,842		2,006		2,812		3,664
Unrealized gain/ (loss) on equity securities, net	83		680		(27)		449
Net gains on sale of loans held for sale	4,753		7,857		11,173		12,517
Valuation adjustment on servicing rights	(526)		9		391		(1,556)
Income on bank owned life insurance	937		1,167		1,766		1,665
Other noninterest income	2,166		1,995		3,318		4,053
Total noninterest income out-of-scope of Topic 606	11,128		14,093		21,144		22,134
Total noninterest income	$	33,164	$	30,637	$	63,481	$	56,454

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STOCK COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Summary of Status of RSUs

A summary of the RSUs outstanding as of June 30, 2021, and June 30, 2020, and changes during the six months ended June 30, 2021 and 2020, follows:

	2021			2020
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1,	348,275	$	38.22	254,383	$	46.76
Granted	208,513	51.63		212,344	32.00
Vested	(146,381)	40.89		(118,686)	44.52
Forfeited	(18,861)	42.88		(14,648)	47.00
Outstanding at June 30,	391,546	$	44.08	333,393	$	38.55

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BASIS OF PRESENTATION (Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share
Net income	$ 61,605	$ 30,131	$ 114,419	$ 50,171
Preferred dividends	(2,012)	0	(4,025)	0
Net income available to common stockholders	$ 59,593	$ 30,131	$ 110,394	$ 50,171
Weighted average common shares outstanding for basic earnings per share (in shares)	42,243	36,881	42,210	36,851
Assumed incremental common shares issued upon vesting of outstanding restricted stock units (in shares)	117	35	147	69
Weighted average common shares for diluted earnings per share (in shares)	42,360	36,916	42,357	36,920
Earnings per common share — basic (in dollars per share)	$ 1.41	$ 0.82	$ 2.62	$ 1.36
Earnings per common share — diluted (in dollars per share)	$ 1.41	$ 0.82	$ 2.61	$ 1.36
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation (in shares)	1	54	60	1

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ACQUISITIONS (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 04, 2020	Jun. 30, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Assets acquired		$ 18,371,006	$ 17,908,339
Gross loans held to maturity		10,012,014	10,023,051
Deposits acquired		$ 15,615,118	$ 14,979,905
Share price (USD per share)	$ 41.89
Johnson Bank Branches | Arizona Bank & Trust
Business Acquisition [Line Items]
Assets acquired	$ 419,700
Gross loans held to maturity	150,700
Deposits acquired	415,500
AIM Bancshares, Inc.
Business Acquisition [Line Items]
Assets acquired	1,970,000
Gross loans held to maturity	1,090,000
Deposits acquired	$ 1,670,000
Number of shares issued In exchange per share (in shares)	$ 207.0
Share price (USD per share)	$ 1,887.16
Business combination, consideration transferred	$ 264,500
Consideration received, common stock	217,200
Payments to acquire businesses, gross	47,300
AIM Bancshares, Inc. | Holders Of In-The-Money Options
Business Acquisition [Line Items]
Consideration received, common stock	$ 4,900

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SECURITIES (Securities available for sale) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Gross Unrealized Gains	$ 118,254	$ 127,866
Gross Unrealized Losses	(37,959)	(24,116)
Equity securities with a readily determinable fair value	20,651	19,629
Amortized Cost, Total	6,463,683	6,024,225
Estimated Fair Value, Total	6,543,978	6,127,975
Total debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	6,443,032	6,004,596
Gross Unrealized Gains	118,254	127,866
Gross Unrealized Losses	(37,959)	(24,116)
Estimated Fair Value	6,523,327	6,108,346
U.S. treasuries
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	996	1,995
Gross Unrealized Gains	20	31
Gross Unrealized Losses	0	0
Estimated Fair Value	1,016	2,026
U.S. agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	35,591	167,048
Gross Unrealized Gains	272	657
Gross Unrealized Losses	(492)	(926)
Estimated Fair Value	35,371	166,779
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,817,708	1,562,631
Gross Unrealized Gains	66,037	75,555
Gross Unrealized Losses	(11,959)	(2,959)
Estimated Fair Value	1,871,786	1,635,227
Mortgage-backed securities - agency
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,741,389	1,351,964
Gross Unrealized Gains	19,890	16,029
Gross Unrealized Losses	(20,604)	(12,723)
Estimated Fair Value	1,740,675	1,355,270
Mortgage-backed securities - non-agency
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,349,005	1,428,068
Gross Unrealized Gains	16,062	22,688
Gross Unrealized Losses	(1,775)	(1,640)
Estimated Fair Value	1,363,292	1,449,116
Commercial mortgage-backed securities - agency
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	124,441	171,451
Gross Unrealized Gains	2,439	3,440
Gross Unrealized Losses	(1,800)	(738)
Estimated Fair Value	125,080	174,153
Commercial mortgage-backed securities - non-agency
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	534,682	253,421
Gross Unrealized Gains	823	37
Gross Unrealized Losses	(200)	(691)
Estimated Fair Value	535,305	252,767
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	835,476	1,064,255
Gross Unrealized Gains	12,640	9,421
Gross Unrealized Losses	(1,129)	(4,410)
Estimated Fair Value	846,987	1,069,266
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	3,744	3,763
Gross Unrealized Gains	71	8
Gross Unrealized Losses	0	(29)
Estimated Fair Value	$ 3,815	$ 3,742

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SECURITIES (Held to maturity securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 85,490		$ 88,890
Gross Unrealized Gains	9,931		11,151
Gross Unrealized Losses	0		0
Estimated Fair Value	95,421		100,041
Allowance for Credit Losses	(51)		(51)
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	85,490		88,890
Gross Unrealized Gains	9,931		11,151
Gross Unrealized Losses	0		0
Estimated Fair Value	95,421		100,041
Allowance for Credit Losses	$ (51)	$ (48)	$ (51)	$ (62)	$ (197)	$ 0

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SECURITIES (Narrative) (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Accrued interest receivable	$ 24,600,000	$ 20,800,000
Fair value of securities pledged	1,870,000,000	2,120,000,000
Securities held to maturity with unrealized losses	0	0
Amortized cost of FHLBs	$ 20,800,000	$ 19,500,000

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SECURITIES (Securities available for sale debt maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Amortized Cost
Due in 1 year or less	$ 13,286
Due in 1 to 5 years	18,199
Due in 5 to 10 years	198,036
Due after 10 years	1,628,518
Total debt securities	1,858,039
Mortgage and asset-backed securities	4,584,993
Equity securities with a readily determinable fair value	20,651	$ 19,629
Total investment securities	6,463,683
Estimated Fair Value
Due in 1 year or less	13,351
Due in 1 to 5 years	19,153
Due in 5 to 10 years	202,564
Due after 10 years	1,676,920
Total debt securities	1,911,988
Mortgage and asset-backed securities	4,611,339
Equity securities with a readily determinable fair value	20,651
Total investment securities	$ 6,543,978

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SECURITIES (Securities held to maturity debt maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Amortized Cost
Due in 1 year or less	$ 2,196
Due in 1 to 5 years	42,172
Due in 5 to 10 years	32,451
Due after 10 years	8,671
Amortized Cost	85,490	$ 88,890
Allowance for credit losses	(51)
Total investment securities	85,439	88,839
Estimated Fair Value
Due in 1 year or less	2,209
Due in 1 to 5 years	44,028
Due in 5 to 10 years	37,240
Due after 10 years	11,944
Estimated Fair Value	95,421	$ 100,041
Allowance for credit losses	0
Total investment securities	$ 95,421

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SECURITIES (Gross realized gain (loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Proceeds from sales	$ 423,415	$ 182,749	$ 630,481	$ 511,639
Gross security gains	3,844	3,958	4,289	6,862
Gross security losses	$ 1,002	$ 1,952	$ 1,477	$ 3,198

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SECURITIES (Debt securities available for sale) (Details) $ in Thousands	Jun. 30, 2021 USD ($) bankLocation	Dec. 31, 2020 USD ($) bankLocation
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 2,324,495	$ 1,672,530
Unrealized Losses, Less than 12 months	$ (35,342)	$ (18,373)
Count, Less than 12 months | bankLocation	196	127
Fair Value, 12 months or longer	$ 129,627	$ 508,436
Unrealized Losses, 12 months or longer	$ (2,617)	$ (5,743)
Count, 12 months or longer | bankLocation	24	103
Fair Value, Total	$ 2,454,122	$ 2,180,966
Unrealized Losses, Total	$ (37,959)	$ (24,116)
Count, Total | bankLocation	220	230
U.S. agencies
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 18,983	$ 2,981
Unrealized Losses, Less than 12 months	$ (492)	$ (8)
Count, Less than 12 months | bankLocation	1	5
Fair Value, 12 months or longer	$ 0	$ 99,922
Unrealized Losses, 12 months or longer	$ 0	$ (918)
Count, 12 months or longer | bankLocation	0	72
Fair Value, Total	$ 18,983	$ 102,903
Unrealized Losses, Total	$ (492)	$ (926)
Count, Total | bankLocation	1	77
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 591,597	$ 346,598
Unrealized Losses, Less than 12 months	$ (11,887)	$ (2,959)
Count, Less than 12 months | bankLocation	107	49
Fair Value, 12 months or longer	$ 6,719	$ 0
Unrealized Losses, 12 months or longer	$ (72)	$ 0
Count, 12 months or longer | bankLocation	2	0
Fair Value, Total	$ 598,316	$ 346,598
Unrealized Losses, Total	$ (11,959)	$ (2,959)
Count, Total | bankLocation	109	49
Mortgage-backed securities - agency
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 1,025,619	$ 653,793
Unrealized Losses, Less than 12 months	$ (19,499)	$ (12,342)
Count, Less than 12 months | bankLocation	58	35
Fair Value, 12 months or longer	$ 37,181	$ 31,012
Unrealized Losses, 12 months or longer	$ (1,105)	$ (381)
Count, 12 months or longer | bankLocation	4	3
Fair Value, Total	$ 1,062,800	$ 684,805
Unrealized Losses, Total	$ (20,604)	$ (12,723)
Count, Total | bankLocation	62	38
Mortgage-backed securities - non-agency
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 541,131	$ 378,843
Unrealized Losses, Less than 12 months	$ (1,345)	$ (1,639)
Count, Less than 12 months | bankLocation	12	17
Fair Value, 12 months or longer	$ 33,988	$ 1,622
Unrealized Losses, 12 months or longer	$ (430)	$ (1)
Count, 12 months or longer | bankLocation	5	1
Fair Value, Total	$ 575,119	$ 380,465
Unrealized Losses, Total	$ (1,775)	$ (1,640)
Count, Total | bankLocation	17	18
Commercial mortgage-backed securities - agency
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 69,690	$ 46,541
Unrealized Losses, Less than 12 months	$ (1,800)	$ (738)
Count, Less than 12 months | bankLocation	11	6
Fair Value, 12 months or longer	$ 0	$ 0
Unrealized Losses, 12 months or longer	$ 0	$ 0
Count, 12 months or longer | bankLocation	0	0
Fair Value, Total	$ 69,690	$ 46,541
Unrealized Losses, Total	$ (1,800)	$ (738)
Count, Total | bankLocation	11	6
Commercial mortgage-backed securities - non-agency
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 0	$ 100,042
Unrealized Losses, Less than 12 months	$ 0	$ (15)
Count, Less than 12 months | bankLocation	0	2
Fair Value, 12 months or longer	$ 15,960	$ 35,428
Unrealized Losses, 12 months or longer	$ (200)	$ (676)
Count, 12 months or longer | bankLocation	2	3
Fair Value, Total	$ 15,960	$ 135,470
Unrealized Losses, Total	$ (200)	$ (691)
Count, Total | bankLocation	2	5
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 77,475	$ 141,824
Unrealized Losses, Less than 12 months	$ (319)	$ (643)
Count, Less than 12 months | bankLocation	7	9
Fair Value, 12 months or longer	$ 35,779	$ 340,452
Unrealized Losses, 12 months or longer	$ (810)	$ (3,767)
Count, 12 months or longer | bankLocation	11	24
Fair Value, Total	$ 113,254	$ 482,276
Unrealized Losses, Total	$ (1,129)	$ (4,410)
Count, Total | bankLocation	18	33
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 0	$ 1,908
Unrealized Losses, Less than 12 months	$ 0	$ (29)
Count, Less than 12 months | bankLocation	0	4
Fair Value, 12 months or longer	$ 0	$ 0
Unrealized Losses, 12 months or longer	$ 0	$ 0
Count, 12 months or longer | bankLocation	0	0
Fair Value, Total	$ 0	$ 1,908
Unrealized Losses, Total	$ 0	$ (29)
Count, Total | bankLocation	0	4

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SECURITIES (Schedule of allowance for credit loss for securities held to maturity) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance			$ 51
Ending balance	$ 51		51
Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	48	$ 197	51	$ 0
Provision (benefit) for credit losses	3	(135)	0	(96)
Ending balance	$ 51	$ 62	51	62
Obligations of states and political subdivisions | Impact of ASU 2016-13 adoption
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance			0	158
Obligations of states and political subdivisions | Adjusted balance at January 1, 2020
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance			$ 51	$ 158

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SECURITIES (Schedule of financing receivable credit quality indicators) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 85,490	$ 88,890
Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	85,490	88,890
Standard & Poor's, AAA Rating | Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	3,207	0
Standard & Poor's, AA, AA+, AA- | Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	62,526	64,385
Standard & Poor's, A+, A, A- Rating | Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	15,006	18,353
Standard & Poor's, BBB Rating | Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	4,751	4,208
Standard & Poor's, Not Rated | Obligations of states and political subdivisions
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 0	$ 1,944

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LOANS (Loans receivable) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Loans and Leases [Line Items]
Held to maturity	$ 10,012,014		$ 10,023,051
Allowance for credit losses	(120,726)	$ (130,172)	(131,606)	$ (119,937)	$ (97,350)	$ (70,395)
Loans receivable, net	9,891,288		9,891,445
Accrued interest receivable	37,700		42,400
Commercial and industrial | Commercial and industrial
Loans and Leases [Line Items]
Held to maturity	2,518,908		2,534,799
Allowance for credit losses	(31,332)	(36,095)	(38,818)	(32,518)	(32,455)	(34,207)
Commercial and industrial | Paycheck Protection Program ("PPP")
Loans and Leases [Line Items]
Held to maturity	829,175		957,785
Allowance for credit losses	0	0	0	0	0	0
Commercial and industrial | Owner occupied commercial real estate
Loans and Leases [Line Items]
Held to maturity	1,940,134		1,776,406
Allowance for credit losses	(19,990)	(19,416)	(20,001)	(23,402)	(10,337)	(7,921)
Commercial and industrial | Non-owner occupied commercial real estate
Loans and Leases [Line Items]
Held to maturity	1,987,369		1,921,481
Allowance for credit losses	(22,828)	(24,694)	(20,873)	(10,161)	(8,320)	(7,584)
Commercial and industrial | Real estate construction
Loans and Leases [Line Items]
Held to maturity	854,295		863,220
Allowance for credit losses	(19,580)	(19,931)	(20,080)	(28,667)	(22,951)	(8,677)
Agricultural and agricultural real estate
Loans and Leases [Line Items]
Held to maturity	679,608		714,526
Allowance for credit losses	(7,160)	(7,111)	(7,129)	(5,701)	(4,797)	(5,680)
Residential real estate
Loans and Leases [Line Items]
Held to maturity	800,884		840,442
Allowance for credit losses	(9,741)	(11,012)	(11,935)	(9,304)	(8,725)	(1,504)
Consumer
Loans and Leases [Line Items]
Held to maturity	401,641		414,392
Allowance for credit losses	$ (10,095)	$ (11,913)	$ (12,770)	$ (10,184)	$ (9,765)	$ (4,822)

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LOANS (Financing receivables, non accrual status narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Nonaccrual [Line Items]
Total exposure on lending relationships (or more)	$ 0.5
Troubled debt restructured loans	13.7	$ 6.2
Nonperforming
Financing Receivable, Nonaccrual [Line Items]
Troubled debt restructured loans	11.6	3.8
Performing
Financing Receivable, Nonaccrual [Line Items]
Troubled debt restructured loans	$ 2.1	$ 2.4

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LOANS (Allowance for credit losses on financing receivables) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	$ 11,389		$ 9,426
Collectively Evaluated for Credit Losses	109,337		122,180
Total	120,726	$ 130,172	131,606	$ 119,937	$ 97,350	$ 70,395
Loans Individually Evaluated for Credit Losses	58,701		57,230
Loans Collectively Evaluated for Credit Losses	9,953,313		9,965,821
Total	10,012,014		10,023,051
Commercial and industrial | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	4,688		4,077
Collectively Evaluated for Credit Losses	26,644		34,741
Total	31,332	36,095	38,818	32,518	32,455	34,207
Loans Individually Evaluated for Credit Losses	13,658		16,578
Loans Collectively Evaluated for Credit Losses	2,505,250		2,518,221
Total	2,518,908		2,534,799
Commercial and industrial | Paycheck Protection Program ("PPP")
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	0		0
Collectively Evaluated for Credit Losses	0		0
Total	0	0	0	0	0	0
Loans Individually Evaluated for Credit Losses	0		0
Loans Collectively Evaluated for Credit Losses	829,175		957,785
Total	829,175		957,785
Commercial and industrial | Owner occupied commercial real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	110		111
Collectively Evaluated for Credit Losses	19,880		19,890
Total	19,990	19,416	20,001	23,402	10,337	7,921
Loans Individually Evaluated for Credit Losses	7,547		11,174
Loans Collectively Evaluated for Credit Losses	1,932,587		1,765,232
Total	1,940,134		1,776,406
Commercial and industrial | Non-owner occupied commercial real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	3,485		3,250
Collectively Evaluated for Credit Losses	19,343		17,623
Total	22,828	24,694	20,873	10,161	8,320	7,584
Loans Individually Evaluated for Credit Losses	19,548		13,490
Loans Collectively Evaluated for Credit Losses	1,967,821		1,907,991
Total	1,987,369		1,921,481
Commercial and industrial | Real estate construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	0		0
Collectively Evaluated for Credit Losses	19,580		20,080
Total	19,580	19,931	20,080	28,667	22,951	8,677
Loans Individually Evaluated for Credit Losses	0		0
Loans Collectively Evaluated for Credit Losses	854,295		863,220
Total	854,295		863,220
Agricultural and agricultural real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	3,106		1,988
Collectively Evaluated for Credit Losses	4,054		5,141
Total	7,160	7,111	7,129	5,701	4,797	5,680
Loans Individually Evaluated for Credit Losses	17,948		15,453
Loans Collectively Evaluated for Credit Losses	661,660		699,073
Total	679,608		714,526
Residential real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	0		0
Collectively Evaluated for Credit Losses	9,741		11,935
Total	9,741	11,012	11,935	9,304	8,725	1,504
Loans Individually Evaluated for Credit Losses	0		535
Loans Collectively Evaluated for Credit Losses	800,884		839,907
Total	800,884		840,442
Consumer
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually Evaluated for Credit Losses	0		0
Collectively Evaluated for Credit Losses	10,095		12,770
Total	10,095	$ 11,913	12,770	$ 10,184	$ 9,765	$ 4,822
Loans Individually Evaluated for Credit Losses	0		0
Loans Collectively Evaluated for Credit Losses	401,641		414,392
Total	$ 401,641		$ 414,392

XML

LOANS (Troubled debt restructuring) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($) loan	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($) loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	2	1	2	2
Pre- Modification Recorded Investment	$ 7,850	$ 60	$ 7,850	$ 92
Post- Modification Recorded Investment	$ 7,850	$ 66	$ 7,850	$ 98
Commercial and industrial | Commercial and industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Commercial and industrial | Paycheck Protection Program ("PPP")
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Commercial and industrial | Owner occupied commercial real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Commercial and industrial | Non-owner occupied commercial real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	2	0	2	0
Pre- Modification Recorded Investment	$ 7,850	$ 0	$ 7,850	$ 0
Post- Modification Recorded Investment	$ 7,850	$ 0	$ 7,850	$ 0
Commercial and industrial | Real estate construction
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Agricultural and agricultural real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Residential real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	1	0	2
Pre- Modification Recorded Investment	$ 0	$ 60	$ 0	$ 92
Post- Modification Recorded Investment	$ 0	$ 66	$ 0	$ 98
Consumer
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	0	0	0
Pre- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post- Modification Recorded Investment	$ 0	$ 0	$ 0	$ 0

XML

LOANS (Troubled debt narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($)	Dec. 31, 2020 loan
Financing Receivable, Credit Quality Indicator [Line Items]
Troubled debt restructured loans modified during the twelve-month period prior to default | $	$ 0	$ 0	$ 0	$ 0
Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Number of loan relationships | loan	0		0		0

XML

LOANS (Loans by credit quality indicator) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	$ 1,834,679	$ 3,119,680
Year Two	2,324,723	1,842,640
Year Three	1,571,546	1,287,023
Year Four	1,002,180	842,221
Year Five	708,286	485,454
Year Six and Prior	1,460,074	1,254,784
Revolving	1,110,526	1,191,249
Total	10,012,014	10,023,051
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	1,728,870	2,847,203
Year Two	2,145,073	1,649,219
Year Three	1,385,032	1,131,756
Year Four	822,200	727,712
Year Five	611,204	408,380
Year Six and Prior	1,252,266	1,091,908
Revolving	1,028,900	1,084,202
Total	8,973,545	8,940,380
Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	51,153	129,037
Year Two	96,359	141,385
Year Three	133,447	80,970
Year Four	115,109	58,813
Year Five	39,400	44,512
Year Six and Prior	92,669	76,144
Revolving	48,662	74,056
Total	576,799	604,917
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	54,656	143,440
Year Two	83,291	52,036
Year Three	53,067	74,297
Year Four	64,871	55,696
Year Five	57,682	32,562
Year Six and Prior	115,139	86,732
Revolving	32,964	32,991
Total	461,670	477,754
Commercial and industrial | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	340,049	622,451
Year Two	510,280	381,759
Year Three	311,720	197,442
Year Four	144,216	245,675
Year Five	217,956	118,180
Year Six and Prior	410,116	359,845
Revolving	584,571	609,447
Total	2,518,908	2,534,799
Commercial and industrial | Commercial and industrial | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	330,626	557,853
Year Two	475,749	340,809
Year Three	277,874	168,873
Year Four	122,550	215,696
Year Five	197,617	101,010
Year Six and Prior	370,896	337,834
Revolving	528,785	541,627
Total	2,304,097	2,263,702
Commercial and industrial | Commercial and industrial | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	7,252	41,574
Year Two	13,154	24,676
Year Three	22,947	19,672
Year Four	12,886	14,262
Year Five	8,633	8,072
Year Six and Prior	17,574	2,474
Revolving	35,506	49,432
Total	117,952	160,162
Commercial and industrial | Commercial and industrial | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	2,171	23,024
Year Two	21,377	16,274
Year Three	10,899	8,897
Year Four	8,780	15,717
Year Five	11,706	9,098
Year Six and Prior	21,646	19,537
Revolving	20,280	18,388
Total	96,859	110,935
Commercial and industrial | Paycheck Protection Program ("PPP")
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	452,499	957,785
Year Two	376,676	0
Year Three	0	0
Year Four	0	0
Year Five	0	0
Year Six and Prior	0	0
Revolving	0	0
Total	829,175	957,785
Commercial and industrial | Paycheck Protection Program ("PPP") | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	409,922	880,709
Year Two	327,475	0
Year Three	0	0
Year Four	0	0
Year Five	0	0
Year Six and Prior	0	0
Revolving	0	0
Total	737,397	880,709
Commercial and industrial | Paycheck Protection Program ("PPP") | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	21,880	22,533
Year Two	28,769	0
Year Three	0	0
Year Four	0	0
Year Five	0	0
Year Six and Prior	0	0
Revolving	0	0
Total	50,649	22,533
Commercial and industrial | Paycheck Protection Program ("PPP") | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	20,697	54,543
Year Two	20,432	0
Year Three	0	0
Year Four	0	0
Year Five	0	0
Year Six and Prior	0	0
Revolving	0	0
Total	41,129	54,543
Commercial and industrial | Owner occupied commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	332,268	431,921
Year Two	438,297	392,687
Year Three	399,547	334,894
Year Four	258,685	202,428
Year Five	177,464	124,531
Year Six and Prior	302,696	250,770
Revolving	31,177	39,175
Total	1,940,134	1,776,406
Commercial and industrial | Owner occupied commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	331,097	400,662
Year Two	402,216	369,401
Year Three	371,104	300,242
Year Four	232,062	167,470
Year Five	143,692	107,234
Year Six and Prior	264,190	213,780
Revolving	27,773	33,759
Total	1,772,134	1,592,548
Commercial and industrial | Owner occupied commercial real estate | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	428	15,345
Year Two	17,998	13,764
Year Three	14,979	22,488
Year Four	18,715	20,811
Year Five	19,869	8,717
Year Six and Prior	10,305	15,282
Revolving	2,250	4,311
Total	84,544	100,718
Commercial and industrial | Owner occupied commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	743	15,914
Year Two	18,083	9,522
Year Three	13,464	12,164
Year Four	7,908	14,147
Year Five	13,903	8,580
Year Six and Prior	28,201	21,708
Revolving	1,154	1,105
Total	83,456	83,140
Commercial and industrial | Non-owner occupied commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	240,775	388,447
Year Two	364,678	481,561
Year Three	452,771	353,464
Year Four	329,968	229,871
Year Five	196,082	138,171
Year Six and Prior	365,921	299,885
Revolving	37,174	30,082
Total	1,987,369	1,921,481
Commercial and industrial | Non-owner occupied commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	206,934	334,722
Year Two	332,479	411,301
Year Three	355,445	305,456
Year Four	275,853	194,101
Year Five	163,047	108,070
Year Six and Prior	266,547	233,153
Revolving	32,340	24,466
Total	1,632,645	1,611,269
Commercial and industrial | Non-owner occupied commercial real estate | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	16,873	22,826
Year Two	18,884	55,225
Year Three	76,447	24,718
Year Four	30,786	18,724
Year Five	8,233	20,954
Year Six and Prior	53,339	45,672
Revolving	4,524	5,114
Total	209,086	193,233
Commercial and industrial | Non-owner occupied commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	16,968	30,899
Year Two	13,315	15,035
Year Three	20,879	23,290
Year Four	23,329	17,046
Year Five	24,802	9,147
Year Six and Prior	46,035	21,060
Revolving	310	502
Total	145,638	116,979
Commercial and industrial | Real estate construction
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	151,473	313,926
Year Two	339,966	339,097
Year Three	226,957	161,610
Year Four	98,813	12,957
Year Five	10,243	7,048
Year Six and Prior	9,352	5,856
Revolving	17,491	22,726
Total	854,295	863,220
Commercial and industrial | Real estate construction | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	151,473	311,625
Year Two	338,101	309,678
Year Three	215,455	157,171
Year Four	49,360	12,625
Year Five	10,003	6,954
Year Six and Prior	8,959	5,110
Revolving	17,078	21,431
Total	790,429	824,594
Commercial and industrial | Real estate construction | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	0	2,105
Year Two	1,865	26,659
Year Three	11,474	2,403
Year Four	47,460	332
Year Five	240	55
Year Six and Prior	210	388
Revolving	413	1,295
Total	61,662	33,237
Commercial and industrial | Real estate construction | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	0	196
Year Two	0	2,760
Year Three	28	2,036
Year Four	1,993	0
Year Five	0	39
Year Six and Prior	183	358
Revolving	0	0
Total	2,204	5,389
Agricultural and agricultural real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	127,849	209,481
Year Two	148,148	114,190
Year Three	91,789	94,722
Year Four	69,393	48,458
Year Five	34,002	25,058
Year Six and Prior	58,295	50,805
Revolving	150,132	171,812
Total	679,608	714,526
Agricultural and agricultural real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	115,287	171,578
Year Two	125,764	90,944
Year Three	79,157	62,349
Year Four	46,698	39,252
Year Five	28,105	17,626
Year Six and Prior	43,350	37,696
Revolving	134,975	148,456
Total	573,336	567,901
Agricultural and agricultural real estate | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	3,480	20,500
Year Two	13,591	16,202
Year Three	5,746	8,854
Year Four	2,197	2,448
Year Five	256	3,515
Year Six and Prior	3,735	3,157
Revolving	4,735	12,282
Total	33,740	66,958
Agricultural and agricultural real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	9,082	17,403
Year Two	8,793	7,044
Year Three	6,886	23,519
Year Four	20,498	6,758
Year Five	5,641	3,917
Year Six and Prior	11,210	9,952
Revolving	10,422	11,074
Total	72,532	79,667
Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	149,429	157,983
Year Two	119,396	104,389
Year Three	67,773	123,549
Year Four	86,122	86,958
Year Five	59,926	67,478
Year Six and Prior	289,994	265,518
Revolving	28,244	34,567
Total	800,884	840,442
Residential real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	144,046	153,017
Year Two	116,571	99,440
Year Three	65,840	118,854
Year Four	82,530	83,534
Year Five	56,628	63,477
Year Six and Prior	277,236	244,852
Revolving	28,244	33,467
Total	771,095	796,641
Residential real estate | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	1,236	3,986
Year Two	1,966	4,507
Year Three	1,634	2,188
Year Four	1,703	1,896
Year Five	2,039	3,117
Year Six and Prior	6,998	8,525
Revolving	0	0
Total	15,576	24,219
Residential real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	4,147	980
Year Two	859	442
Year Three	299	2,507
Year Four	1,889	1,528
Year Five	1,259	884
Year Six and Prior	5,760	12,141
Revolving	0	1,100
Total	14,213	19,582
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	40,337	37,686
Year Two	27,282	28,957
Year Three	20,989	21,342
Year Four	14,983	15,874
Year Five	12,613	4,988
Year Six and Prior	23,700	22,105
Revolving	261,737	283,440
Total	401,641	414,392
Consumer | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	39,485	37,037
Year Two	26,718	27,646
Year Three	20,157	18,811
Year Four	13,147	15,034
Year Five	12,112	4,009
Year Six and Prior	21,088	19,483
Revolving	259,705	280,996
Total	392,412	403,016
Consumer | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	4	168
Year Two	132	352
Year Three	220	647
Year Four	1,362	340
Year Five	130	82
Year Six and Prior	508	646
Revolving	1,234	1,622
Total	3,590	3,857
Consumer | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Year One	848	481
Year Two	432	959
Year Three	612	1,884
Year Four	474	500
Year Five	371	897
Year Six and Prior	2,104	1,976
Revolving	798	822
Total	$ 5,639	$ 7,519

XML

LOANS (Loans by credit quality indicator narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Held to maturity	$ 10,012,014,000		$ 10,012,014,000			$ 10,023,051,000
Allowance for credit loss	120,726,000	$ 119,937,000	120,726,000	$ 119,937,000	$ 130,172,000	$ 131,606,000	$ 97,350,000	$ 70,395,000
Loans secured by residential real estate property in process of foreclosure	$ 1,700,000		$ 1,700,000
Loans delinquent 30 to 89 days, percentage	0.17%		0.17%			0.23%
Interest income on nonaccrual loans	$ 0	$ 0	$ 0	$ 0
Nonaccrual loans with no related allowance	24,000,000.0		24,000,000.0			$ 32,500,000
Nonpass | Paycheck Protection Program ("PPP")
Financing Receivable, Credit Quality Indicator [Line Items]
Held to maturity	91,800,000		91,800,000			$ 77,100,000
Allowance for credit loss	$ 0		$ 0

XML

LOANS (Past due financing receivables) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 17,046	$ 23,601
Current	9,909,700	9,912,064
Nonaccrual	85,268	87,386
Total	10,012,014	10,023,051
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	12,509	17,400
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	4,440	5,481
90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	97	720
Commercial and industrial | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	2,583	8,867
Current	2,498,207	2,504,170
Nonaccrual	18,118	21,762
Total	2,518,908	2,534,799
Commercial and industrial | Commercial and industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,537	5,825
Commercial and industrial | Commercial and industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,034	2,322
Commercial and industrial | Commercial and industrial | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	12	720
Commercial and industrial | Paycheck Protection Program ("PPP")
Financing Receivable, Past Due [Line Items]
Total Past Due	0	1
Current	829,175	957,784
Nonaccrual	0	0
Total	829,175	957,785
Commercial and industrial | Paycheck Protection Program ("PPP") | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	1
Commercial and industrial | Paycheck Protection Program ("PPP") | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Commercial and industrial | Paycheck Protection Program ("PPP") | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Commercial and industrial | Owner occupied commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,134	2,982
Current	1,929,086	1,759,649
Nonaccrual	9,914	13,775
Total	1,940,134	1,776,406
Commercial and industrial | Owner occupied commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,134	2,815
Commercial and industrial | Owner occupied commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	167
Commercial and industrial | Owner occupied commercial real estate | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Commercial and industrial | Non-owner occupied commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	2,724	4,817
Current	1,963,775	1,902,003
Nonaccrual	20,870	14,661
Total	1,987,369	1,921,481
Commercial and industrial | Non-owner occupied commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,374	2,143
Commercial and industrial | Non-owner occupied commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,350	2,674
Commercial and industrial | Non-owner occupied commercial real estate | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Commercial and industrial | Real estate construction
Financing Receivable, Past Due [Line Items]
Total Past Due	2,834	2,542
Current	851,053	859,784
Nonaccrual	408	894
Total	854,295	863,220
Commercial and industrial | Real estate construction | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,834	2,446
Commercial and industrial | Real estate construction | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	96
Commercial and industrial | Real estate construction | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Agricultural and agricultural real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	4,475	1,688
Current	654,135	694,150
Nonaccrual	20,998	18,688
Total	679,608	714,526
Agricultural and agricultural real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,759	1,688
Agricultural and agricultural real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,716	0
Agricultural and agricultural real estate | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	2,395	1,758
Current	785,637	825,047
Nonaccrual	12,852	13,637
Total	800,884	840,442
Residential real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,192	1,675
Residential real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	118	83
Residential real estate | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	85	0
Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	901	946
Current	398,632	409,477
Nonaccrual	2,108	3,969
Total	401,641	414,392
Consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	679	807
Consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	222	139
Consumer | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 0	$ 0

XML

LOANS (Carrying amount of loans acquired narrative) (Details) $ in Millions	Dec. 04, 2020 USD ($)
Johnson Bank Branches
Business Acquisition [Line Items]
Estimated fair value of loans acquired	$ 150.7
AIM Bancshares, Inc.
Business Acquisition [Line Items]
Estimated fair value of loans acquired	$ 1,090.0

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ALLOWANCE FOR CREDIT LOSSES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 130,172	$ 97,350	$ 131,606	$ 70,395
Charge-offs	(3,497)	(3,564)	(5,623)	(9,865)
Recoveries	517	1,144	1,193	2,464
Provision	(6,466)	25,007	(6,450)	44,872
Ending Balance	120,726	119,937	120,726	119,937
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance	14,619	15,468	15,280	248
Provision	(617)	1,924	(1,278)	3,540
Ending balance	14,002	17,392	14,002	17,392
Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				12,071
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance			0	13,604
Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				82,466
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance			15,280	13,852
Agricultural and Agricultural Real Estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	7,111	4,797	7,129	5,680
Charge-offs	(357)	(1)	(675)	(254)
Recoveries	0	0	21	826
Provision	406	905	685	(164)
Ending Balance	7,160	5,701	7,160	5,701
Agricultural and Agricultural Real Estate | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(387)
Agricultural and Agricultural Real Estate | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				5,293
Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	11,012	8,725	11,935	1,504
Charge-offs	(70)	(235)	(91)	(314)
Recoveries	0	92	5	95
Provision	(1,201)	722	(2,108)	3,202
Ending Balance	9,741	9,304	9,741	9,304
Residential Real Estate | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				4,817
Residential Real Estate | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				6,321
Consumer
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	11,913	9,765	12,770	4,822
Charge-offs	(509)	(476)	(1,307)	(1,193)
Recoveries	191	298	493	518
Provision	(1,500)	597	(1,861)	1,728
Ending Balance	10,095	10,184	10,095	10,184
Consumer | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				4,309
Consumer | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				9,131
Commercial and Industrial | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	36,095	32,455	38,818	34,207
Charge-offs	(842)	(2,536)	(1,790)	(7,767)
Recoveries	265	345	558	610
Provision	(4,186)	2,254	(6,254)	5,740
Ending Balance	31,332	32,518	31,332	32,518
Commercial and Industrial | Commercial and industrial | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(272)
Commercial and Industrial | Commercial and industrial | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				33,935
Paycheck Protection Program ("PPP") | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	0	0	0	0
Ending Balance	0	0	0	0
Paycheck Protection Program ("PPP") | Commercial and industrial | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				0
Paycheck Protection Program ("PPP") | Commercial and industrial | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				0
Owner occupied commercial real estate | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	19,416	10,337	20,001	7,921
Charge-offs	(72)	(213)	(113)	(213)
Recoveries	44	191	97	192
Provision	602	13,087	5	15,616
Ending Balance	19,990	23,402	19,990	23,402
Owner occupied commercial real estate | Commercial and industrial | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(114)
Owner occupied commercial real estate | Commercial and industrial | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				7,807
Non-owner occupied commercial real estate | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	24,694	8,320	20,873	7,584
Charge-offs	(1,637)	(19)	(1,637)	(19)
Recoveries	13	8	13	8
Provision	(242)	1,852	3,579	5,205
Ending Balance	22,828	10,161	22,828	10,161
Non-owner occupied commercial real estate | Commercial and industrial | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(2,617)
Non-owner occupied commercial real estate | Commercial and industrial | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				4,967
Real Estate Construction | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	19,931	22,951	20,080	8,677
Charge-offs	(10)	(84)	(10)	(105)
Recoveries	4	210	6	215
Provision	(345)	5,590	(496)	13,545
Ending Balance	$ 19,580	$ 28,667	$ 19,580	28,667
Real Estate Construction | Commercial and industrial | Impact of ASU 2016-13 adoption
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				6,335
Real Estate Construction | Commercial and industrial | Adjusted balance at January 1, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance				$ 15,012

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Goodwill narrative) (Details) - USD ($)		3 Months Ended
	Dec. 04, 2020	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2020
Goodwill [Line Items]
Goodwill			$ 576,005,000	$ 576,005,000
Goodwill impairment		$ 0
AIM Bancshares, Inc.
Goodwill [Line Items]
Goodwill	$ 91,400,000
AIM Bancshares, Inc. | Core Deposits
Goodwill [Line Items]
Intangibles recognized	$ 3,100,000
Intangibles, amortization period	10 years
Johnson Bank Branches
Goodwill [Line Items]
Goodwill	$ 38,400,000
Johnson Bank Branches | Core Deposits
Goodwill [Line Items]
Intangibles recognized	$ 1,300,000
Intangibles, amortization period	10 years

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Carrying amount of intangible assets (incl accumulated amortization) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 121,387	$ 120,684
Accumulated Amortization	77,734	72,249
Net Carrying Amount	43,653	48,435
Core deposit intangibles
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	101,185	101,185
Accumulated Amortization	63,883	58,970
Net Carrying Amount	37,302	42,215
Customer relationship intangibles
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,177	1,177
Accumulated Amortization	1,027	1,009
Net Carrying Amount	150	168
Mortgage servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	11,971	11,268
Accumulated Amortization	6,412	6,079
Net Carrying Amount	5,559	5,189
Commercial servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	7,054	7,054
Accumulated Amortization	6,412	6,191
Net Carrying Amount	$ 642	$ 863

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Estimated future amortization expense for amortizable intangible assets) (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2021	$ 5,222
Year ending December 31,
2022	9,158
2023	7,963
2024	6,597
2025	5,537
2026	4,059
Thereafter	5,117
Total	43,653
Core Deposit Intangibles
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2021	4,446
Year ending December 31,
2022	7,702
2023	6,739
2024	5,591
2025	4,700
2026	3,533
Thereafter	4,591
Total	37,302
Customer Relationship Intangibles
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2021	18
Year ending December 31,
2022	34
2023	33
2024	33
2025	32
2026	0
Thereafter	0
Total	150
Mortgage Servicing Rights
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2021	648
Year ending December 31,
2022	1,228
2023	1,052
2024	877
2025	702
2026	526
Thereafter	526
Total	5,559
Commercial Servicing Rights
Future amortization expense for amortizable intangible assets [Line Items]
Six months ending December 31, 2021	110
Year ending December 31,
2022	194
2023	139
2024	96
2025	103
2026	0
Thereafter	0
Total	$ 642

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Mortgage and commercial loans servicing narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Valuation servicing rights in tranches [Line Items]
Mortgage loans serviced for others	$ 719,600,000		$ 719,600,000		$ 743,300,000
Custodial escrow balances maintained	13,100,000		13,100,000		5,700,000
Loans guaranteed and sold with servicing retained	6,201,000		6,201,000		6,052,000
Valuation allowance			1,900,000
Mortgage servicing rights
Valuation servicing rights in tranches [Line Items]
Fair value of mortgage servicing rights	5,600,000		$ 5,600,000		$ 5,200,000
Average constant prepayment rate			15.90%		16.20%
Servicing assets, discount rate			9.02%		9.02%
Fees collected for servicing of mortgage loans	$ 459,000	$ 410,000	$ 923,000	$ 819,000
Mortgage servicing rights | Measurement Input, Cap Rate | Minimum
Valuation servicing rights in tranches [Line Items]
Average capitalization rate (percent)	0.0079	0.0076	0.0079	0.0076
Mortgage servicing rights | Measurement Input, Cap Rate | Maximum
Valuation servicing rights in tranches [Line Items]
Average capitalization rate (percent)	0.0120	0.0116	0.0120	0.0116
Commercial servicing rights
Valuation servicing rights in tranches [Line Items]
Fair value of mortgage servicing rights	$ 1,104,000	$ 1,417,000	$ 1,104,000	$ 1,417,000	$ 1,300,000
Fees collected for servicing of mortgage loans	165,000	$ 54,000	294,000	$ 172,000
Loans guaranteed and sold with servicing retained	57,500,000		$ 57,500,000		$ 66,200,000
Commercial servicing rights | Minimum
Valuation servicing rights in tranches [Line Items]
Average constant prepayment rate			13.70%		14.95%
Servicing assets, discount rate			5.70%		7.70%
Commercial servicing rights | Maximum
Valuation servicing rights in tranches [Line Items]
Average constant prepayment rate			17.49%		19.25%
Servicing assets, discount rate			9.96%		12.88%
Commercial servicing rights | Measurement Input, Cap Rate | Minimum
Valuation servicing rights in tranches [Line Items]
Average capitalization rate (percent)					0.0310
Commercial servicing rights | Measurement Input, Cap Rate | Maximum
Valuation servicing rights in tranches [Line Items]
Average capitalization rate (percent)					0.0445
Mortgage Servicing Rights 15-year Tranche
Valuation servicing rights in tranches [Line Items]
Valuation allowance			$ 470,000		$ 422,000
Amortization period			15 years
Mortgage Servicing Rights 30-year Tranche
Valuation servicing rights in tranches [Line Items]
Valuation allowance					1,400,000
Amortization period			30 years
Less Than 20 Years
Valuation servicing rights in tranches [Line Items]
Fair value of mortgage servicing rights	170,000		$ 170,000		203,000
Period of tranche			20 years
Valuation allowance			$ 0		$ 0
Amortization period			20 years		20 years
More Than 20 Years
Valuation servicing rights in tranches [Line Items]
Fair value of mortgage servicing rights	$ 934,000		$ 934,000		$ 1,085,000
Period of tranche			20 years
Valuation allowance			$ 0		$ 0
Amortization period			20 years		20 years

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Changes in capitalized mortgage and commercial servicing rights) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Mortgage servicing rights
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance at beginning of period	$ 5,189	$ 5,621
Originations	703	1,490
Amortization	(724)	(1,070)
Valuation adjustment	391	(1,556)
Balance at end of period	5,559	$ 4,485
Fair value of mortgage servicing rights	$ 5,600		$ 5,200
Servicing rights, net to servicing portfolio	0.77%	0.68%
Commercial servicing rights
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance at beginning of period	$ 863	$ 1,115
Originations	0	38
Amortization	(221)	(169)
Balance at end of period	642	984
Fair value of mortgage servicing rights	$ 1,104	$ 1,417	$ 1,300
Servicing rights, net to servicing portfolio	1.12%	1.32%

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GOODWILL, CORE DEPOSIT PREMIUM AND OTHER INTANGIBLE ASSETS (Book value, fair value of commercial serving rights and impairment) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Valuation Allowance	$ 1,900,000
15 Years
Finite-Lived Intangible Assets [Line Items]
Book Value	1,627,000	$ 1,522,000
Fair Value	1,157,000	1,100,000
Valuation Allowance	470,000	422,000
30 Years
Finite-Lived Intangible Assets [Line Items]
Book Value	6,287,000	5,445,000
Fair Value	4,402,000	4,089,000
Valuation Allowance	1,885,000	1,356,000
Less Than 20 Years
Finite-Lived Intangible Assets [Line Items]
Book Value	58,000	87,000
Fair Value	170,000	203,000
Valuation Allowance	0	0
More Than 20 Years
Finite-Lived Intangible Assets [Line Items]
Book Value	584,000	776,000
Fair Value	934,000	1,085,000
Valuation Allowance	$ 0	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS (Cash collateral on derivative financial instruments narrative) (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Cash pledged as collateral	$ 2,900,000	$ 3,800,000
Counterparties
Derivative [Line Items]
Cash pledged as collateral	$ 0	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS (Cash flow hedges narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	May 18, 2018
Derivative [Line Items]
Change in net unrealized losses and reclassification from AOCI to interest expense on cash flow hedges	$ 1.8
Estimated amount to be reclassified from accumulated other comprehensive income to interest expense	2.4
Interest Rate Swaps | Cash Flow Hedges
Derivative [Line Items]
Derivative, notional amount	40.0		$ 9.0
Interest Rate Swaps | Cash Flow Hedges | Heartland Financial Statutory Trust IV, VI, And VII
Derivative [Line Items]
Derivative, notional amount	$ 40.0
Interest Rate Swaps | Cash Flow Hedges | Heartland Financial Statutory Trust IV
Derivative [Line Items]
Derivative, notional amount		$ 25.0
Interest Rate Swaps | Cash Flow Hedges | OCGI Statutory Trust III
Derivative [Line Items]
Derivative, notional amount			3.0
Interest Rate Swaps | Cash Flow Hedges | OCGI Capital Trust IV
Derivative [Line Items]
Derivative, notional amount			$ 6.0

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DERIVATIVE FINANCIAL INSTRUMENTS (Cash flow hedges balance sheet category and fair values) (Details) - Other liabilities - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Interest Rate Swap due March 17, 2021
Derivatives, Fair Value [Line Items]
Notional Amount		$ 25,000
Fair Value		$ (127)
Receive Rate		0.229%
Weighted Average Pay Rate		2.255%
Interest Rate Swap due May 10, 2021
Derivatives, Fair Value [Line Items]
Notional Amount		$ 21,667
Fair Value		$ (91)
Receive Rate		2.649%
Weighted Average Pay Rate		3.674%
Interest Rate Swap Due July 24, 2028
Derivatives, Fair Value [Line Items]
Notional Amount	$ 21,250	$ 22,750
Fair Value	$ (1,636)	$ (2,220)
Receive Rate	2.591%	2.643%
Weighted Average Pay Rate	5.425%	5.425%
Interest Rate Swap due June 15, 2024
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000	$ 20,000
Fair Value	$ (1,107)	$ (1,482)
Receive Rate	0.119%	0.217%
Weighted Average Pay Rate	2.39%	2.39%
Interest Rate Swap due March 1, 2024
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000	$ 20,000
Fair Value	$ (1,049)	$ (1,385)
Receive Rate	0.135%	0.225%
Weighted Average Pay Rate	2.352%	2.352%
Interest Rate Swap Due June 15, 2021
Derivatives, Fair Value [Line Items]
Notional Amount		$ 6,000
Fair Value		$ (50)
Receive Rate		0.217%
Weighted Average Pay Rate		1.866%
Interest Rate Swap Due June 30, 2021
Derivatives, Fair Value [Line Items]
Notional Amount		$ 3,000
Fair Value		$ (25)
Receive Rate		0.241%
Weighted Average Pay Rate		1.878%

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DERIVATIVE FINANCIAL INSTRUMENTS (Cash flow hedges gains (losses) recognized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	$ 745	$ 317	$ 2,633	$ (3,363)
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	461	423	1,058	613
Interest rate swaps
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Recognized in OCI, Amount of Gain (Loss)	291	(100)	1,588	(3,963)
Interest rate swaps | Interest expense
Trading Activity, Gains and Losses, Net [Line Items]
Effective Portion, Reclassified from AOCI into Income, Amount of Gain (Loss)	454	417	1,045	600
Interest rate swaps | Other income
Trading Activity, Gains and Losses, Net [Line Items]
Ineffective Portion, Recognized in Income on Derivatives, Amount of Gain (Loss)	$ 0	$ 0	$ 0	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Cash pledged as collateral	$ 2.9	$ 3.8
Fair Value Hedging | Interest Rate Swaps
Derivative [Line Items]
Cash pledged as collateral	$ 3.8	$ 4.2

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DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges balance sheet category and fair values) (Details) - Fair value hedges - Other liabilities - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Notional Amount	$ 16,901	$ 20,841
Fair Value	$ (1,585)	$ (2,480)

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DERIVATIVE FINANCIAL INSTRUMENTS (Fair value hedges gans (losses) recognized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair value hedges | Interest income
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss)	$ 132	$ 4	$ 895	$ (1,673)

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DERIVATIVE FINANCIAL INSTRUMENTS (Embedded derivatives blance sheet category and fair values) (Details) - Embedded derivatives - Other assets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Notional Amount	$ 8,971	$ 9,198
Fair Value	$ 497	$ 680

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DERIVATIVE FINANCIAL INSTRUMENTS (Embedded derivatives gain (losses) recognized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Other noninterest income | Embedded derivatives
Derivative [Line Items]
Amount of Gain (Loss)	$ (54)	$ 1	$ (183)	$ 362

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DERIVATIVE FINANCIAL INSTRUMENTS (Back-to-back loan swaps narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Derivative [Line Items]
Cash pledged as collateral	$ 2,900,000		$ 2,900,000		$ 3,800,000
Counterparties
Derivative [Line Items]
Cash pledged as collateral	0		0		0
Back-to-Back Loan Swaps | Interest Rate Swaps
Derivative [Line Items]
Cash pledged as collateral	30,600,000		30,600,000		46,500,000
Gain (loss) recognized	0	$ 0	0	$ 0
Back-to-Back Loan Swaps | Interest Rate Swaps | Counterparties
Derivative [Line Items]
Cash pledged as collateral	$ 0		$ 0		$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS (Back-to-back loan swaps balance sheet category and fair values) (Details) - Back-to-Back Loan Swaps - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Other assets
Derivative [Line Items]
Notional Amount	$ 438,415	$ 440,719
Fair Value	29,394	43,422
Other liabilities
Derivative [Line Items]
Notional Amount	438,415	440,719
Fair Value	$ (29,394)	$ (43,422)
Weighted Average Receive Rate | Other assets
Derivative [Line Items]
Weighted Average Rate	4.50%	4.46%
Weighted Average Receive Rate | Other liabilities
Derivative [Line Items]
Weighted Average Rate	2.43%	2.46%
Weighted Average Pay Rate | Other assets
Derivative [Line Items]
Weighted Average Rate	2.43%	2.46%
Weighted Average Pay Rate | Other liabilities
Derivative [Line Items]
Weighted Average Rate	4.50%	4.46%

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DERIVATIVE FINANCIAL INSTRUMENTS (Other free standing derivatives narrative) (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Cash pledged as collateral	$ 2,900,000	$ 3,800,000
Counterparties
Derivative [Line Items]
Cash pledged as collateral	0	0
Not Designated as Hedging Instrument
Derivative [Line Items]
Cash pledged as collateral	0	0
Not Designated as Hedging Instrument | Counterparties
Derivative [Line Items]
Cash pledged as collateral	$ 0	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS (Other free standing derivatives balance sheet category and fair values) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Other assets | Interest rate lock commitments (mortgage)
Derivatives, Fair Value [Line Items]
Derivative Asset, Notional Amount	$ 39,922	$ 42,078
Fair Value	1,425	1,827
Other assets | Forward commitments
Derivatives, Fair Value [Line Items]
Derivative Asset, Notional Amount	9,500	0
Fair Value	8	0
Other liabilities | Forward commitments
Derivatives, Fair Value [Line Items]
Notional Amount	59,000	86,500
Fair Value	(202)	(697)
Other liabilities | Undesignated interest rate swaps
Derivatives, Fair Value [Line Items]
Notional Amount	8,971	9,198
Fair Value	$ (497)	$ (680)

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DERIVATIVE FINANCIAL INSTRUMENTS (Other free standing derivatives gains (losses) recognized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net gains on sale of loans held for sale | Interest rate lock commitments (mortgage)
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) Recognized	$ (250)	$ 1,296	$ (1,735)	$ 2,994
Net gains on sale of loans held for sale | Forward commitments
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) Recognized	(1,403)	962	503	(184)
Other noninterest income | Undesignated interest rate swaps
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) Recognized	$ 54	$ (1)	$ 183	$ (362)

XML

FAIR VALUE (Fair value measurement recurring) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Assets
Equity securities with a readily determinable fair value	$ 20,651
Level 1
Assets
Securities available for sale	1,016	$ 2,026
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Level 2
Assets
Securities available for sale	6,542,962	6,125,949
Derivative assets	29,891	44,102
Liabilities
Derivative liabilities	35,368	51,962
Level 3
Assets
Securities available for sale	0	0
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Forward commitments | Level 1
Assets
Derivative assets	0
Forward commitments | Level 2
Assets
Derivative assets	8
Forward commitments | Level 3
Assets
Derivative assets	0
U.S. treasuries
Assets
Securities available for sale	1,016	2,026
U.S. agencies
Assets
Securities available for sale	35,371	166,779
Obligations of states and political subdivisions
Assets
Securities available for sale	1,871,786	1,635,227
Commercial mortgage-backed securities - agency
Assets
Securities available for sale	125,080	174,153
Commercial mortgage-backed securities - non-agency
Assets
Securities available for sale	535,305	252,767
Asset-backed securities
Assets
Securities available for sale	846,987	1,069,266
Corporate bonds
Assets
Securities available for sale	3,815	3,742
Recurring Basis
Assets
Equity securities with a readily determinable fair value	20,651	19,629
Total assets at fair value	6,575,302	6,173,904
Liabilities
Total liabilities at fair value	35,470	52,659
Recurring Basis | Level 1
Assets
Equity securities with a readily determinable fair value	0	0
Total assets at fair value	1,016	2,026
Liabilities
Total liabilities at fair value	0	0
Recurring Basis | Level 2
Assets
Equity securities with a readily determinable fair value	20,651	19,629
Total assets at fair value	6,572,861	6,170,051
Liabilities
Total liabilities at fair value	35,470	52,659
Recurring Basis | Level 3
Assets
Equity securities with a readily determinable fair value	0	0
Total assets at fair value	1,425	1,827
Liabilities
Total liabilities at fair value	0	0
Recurring Basis | Derivative financial instruments
Assets
Derivative assets	29,891	44,102
Liabilities
Derivative liabilities	35,268	51,962
Recurring Basis | Derivative financial instruments | Level 1
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Recurring Basis | Derivative financial instruments | Level 2
Assets
Derivative assets	29,891	44,102
Liabilities
Derivative liabilities	35,268	51,962
Recurring Basis | Derivative financial instruments | Level 3
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Recurring Basis | Interest rate lock commitments
Assets
Derivative assets	1,425	1,827
Recurring Basis | Interest rate lock commitments | Level 1
Assets
Derivative assets	0	0
Recurring Basis | Interest rate lock commitments | Level 2
Assets
Derivative assets	0	0
Recurring Basis | Interest rate lock commitments | Level 3
Assets
Derivative assets	1,425	1,827
Recurring Basis | Forward commitments
Assets
Derivative assets	8
Liabilities
Derivative liabilities	202	697
Recurring Basis | Forward commitments | Level 1
Assets
Derivative assets	0
Liabilities
Derivative liabilities	0	0
Recurring Basis | Forward commitments | Level 2
Assets
Derivative assets	8
Liabilities
Derivative liabilities	202	697
Recurring Basis | Forward commitments | Level 3
Assets
Derivative assets	0
Liabilities
Derivative liabilities	0	0
Recurring Basis | U.S. treasuries
Assets
Securities available for sale	1,016	2,026
Recurring Basis | U.S. treasuries | Level 1
Assets
Securities available for sale	1,016	2,026
Recurring Basis | U.S. treasuries | Level 2
Assets
Securities available for sale	0	0
Recurring Basis | U.S. treasuries | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | U.S. agencies
Assets
Securities available for sale	35,371	166,779
Recurring Basis | U.S. agencies | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | U.S. agencies | Level 2
Assets
Securities available for sale	35,371	166,779
Recurring Basis | U.S. agencies | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Obligations of states and political subdivisions
Assets
Securities available for sale	1,871,786	1,635,227
Recurring Basis | Obligations of states and political subdivisions | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Obligations of states and political subdivisions | Level 2
Assets
Securities available for sale	1,871,786	1,635,227
Recurring Basis | Obligations of states and political subdivisions | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Mortgage-backed securities - agency
Assets
Securities available for sale	1,740,675	1,355,270
Recurring Basis | Mortgage-backed securities - agency | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Mortgage-backed securities - agency | Level 2
Assets
Securities available for sale	1,740,675	1,355,270
Recurring Basis | Mortgage-backed securities - agency | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Mortgage-backed securities - non-agency
Assets
Securities available for sale	1,363,292	1,449,116
Recurring Basis | Mortgage-backed securities - non-agency | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Mortgage-backed securities - non-agency | Level 2
Assets
Securities available for sale	1,363,292	1,449,116
Recurring Basis | Mortgage-backed securities - non-agency | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Commercial mortgage-backed securities - agency
Assets
Securities available for sale	125,080	174,153
Recurring Basis | Commercial mortgage-backed securities - agency | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Commercial mortgage-backed securities - agency | Level 2
Assets
Securities available for sale	125,080	174,153
Recurring Basis | Commercial mortgage-backed securities - agency | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Commercial mortgage-backed securities - non-agency
Assets
Securities available for sale	535,305	252,767
Recurring Basis | Commercial mortgage-backed securities - non-agency | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Commercial mortgage-backed securities - non-agency | Level 2
Assets
Securities available for sale	535,305	252,767
Recurring Basis | Commercial mortgage-backed securities - non-agency | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Asset-backed securities
Assets
Securities available for sale	846,987	1,069,266
Recurring Basis | Asset-backed securities | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Asset-backed securities | Level 2
Assets
Securities available for sale	846,987	1,069,266
Recurring Basis | Asset-backed securities | Level 3
Assets
Securities available for sale	0	0
Recurring Basis | Corporate bonds
Assets
Securities available for sale	3,815	3,742
Recurring Basis | Corporate bonds | Level 1
Assets
Securities available for sale	0	0
Recurring Basis | Corporate bonds | Level 2
Assets
Securities available for sale	3,815	3,742
Recurring Basis | Corporate bonds | Level 3
Assets
Securities available for sale	$ 0	$ 0

XML

FAIR VALUE (Fair value measurement non-recurring) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	$ 6,314	$ 6,624
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	33,248	57,949
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	0	0
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	41,445	34,488
Loans held for sale	33,248	57,949
Other real estate owned	6,314	6,624
Fair Value, Measurements, Nonrecurring | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rights	5,559	5,189
Fair Value, Measurements, Nonrecurring | Premises, furniture and equipment held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Premises, furniture and equipment held for sale	6,925	6,499
Fair Value, Measurements, Nonrecurring | Changes Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	1,851	12,082
Loans held for sale	(1,304)	(982)
Other real estate owned	(88)	1,044
Fair Value, Measurements, Nonrecurring | Changes Measurement | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rights	(391)	1,778
Fair Value, Measurements, Nonrecurring | Changes Measurement | Premises, furniture and equipment held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Premises, furniture and equipment held for sale	(44)	3,288
Fair Value, Measurements, Nonrecurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Loans held for sale	0	0
Other real estate owned	0	0
Fair Value, Measurements, Nonrecurring | Level 1 | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rights	0	0
Fair Value, Measurements, Nonrecurring | Level 1 | Premises, furniture and equipment held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Premises, furniture and equipment held for sale	0	0
Fair Value, Measurements, Nonrecurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Loans held for sale	33,248	57,949
Other real estate owned	0	0
Fair Value, Measurements, Nonrecurring | Level 2 | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rights	0	0
Fair Value, Measurements, Nonrecurring | Level 2 | Premises, furniture and equipment held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Premises, furniture and equipment held for sale	0	0
Fair Value, Measurements, Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	41,445	34,488
Loans held for sale	0	0
Other real estate owned	6,314	6,624
Fair Value, Measurements, Nonrecurring | Level 3 | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rights	5,559	5,189
Fair Value, Measurements, Nonrecurring | Level 3 | Premises, furniture and equipment held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Premises, furniture and equipment held for sale	6,925	6,499
Fair Value, Measurements, Nonrecurring | Agricultural and agricultural real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	14,161	12,451
Fair Value, Measurements, Nonrecurring | Agricultural and agricultural real estate | Changes Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Fair Value, Measurements, Nonrecurring | Agricultural and agricultural real estate | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Fair Value, Measurements, Nonrecurring | Agricultural and agricultural real estate | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Fair Value, Measurements, Nonrecurring | Agricultural and agricultural real estate | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	14,161	12,451
Commercial and industrial | Fair Value, Measurements, Nonrecurring | Commercial and industrial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	8,969	11,256
Commercial and industrial | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Changes Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	214	451
Commercial and industrial | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Commercial and industrial | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Commercial and industrial | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	8,969	11,256
Owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	3,573	5,874
Owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Changes Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	11,631
Owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	3,573	5,874
Non-owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	14,742	4,907
Non-owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Changes Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	1,637	0
Non-owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Non-owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Non-owner occupied commercial real estate | Fair Value, Measurements, Nonrecurring | Commercial and industrial | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 14,742	$ 4,907

XML

FAIR VALUE (Quantitative Information about Level 3 fair value measurements) (Details) - Level 3 $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative assets	$ 0	$ 0
Interest rate lock commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative assets	1,425	1,827
Discounted cash flows
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing rights	5,559	5,189
Modified appraised value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned	6,314	6,624
Modified appraised value | Agricultural and agricultural real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent impaired loans	14,161	12,451
Modified appraised value | Premises, furniture and equipment held for sale
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Premises, furniture and equipment held for sale	6,925	6,499
Interest rate lock commitments | Discounted cash flows
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative assets	$ 1,425	$ 1,827
Closing ratio | Discounted cash flows | Weighted Average | Interest rate lock commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input	0.88	0.86
Closing ratio | Discounted cash flows | Minimum | Interest rate lock commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input	0	0
Closing ratio | Discounted cash flows | Maximum | Interest rate lock commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input	0.99	0.99
Appraisal discount | Modified appraised value | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Appraisal discount | Modified appraised value | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	10.00%	10.00%
Appraisal discount | Modified appraised value | Premises, furniture and equipment held for sale | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Appraisal discount | Modified appraised value | Premises, furniture and equipment held for sale | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	10.00%	10.00%
Commercial and industrial | Modified appraised value | Commercial and industrial
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent impaired loans	$ 8,969	$ 11,256
Commercial and industrial | Modified appraised value | Owner occupied commercial real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent impaired loans	3,573	5,874
Commercial and industrial | Modified appraised value | Non-owner occupied commercial real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent impaired loans	$ 14,742	$ 4,907
Commercial and industrial | Appraisal discount | Modified appraised value | Commercial and industrial | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Commercial and industrial | Appraisal discount | Modified appraised value | Commercial and industrial | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	8.00%	8.00%
Commercial and industrial | Appraisal discount | Modified appraised value | Owner occupied commercial real estate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Commercial and industrial | Appraisal discount | Modified appraised value | Owner occupied commercial real estate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	7.00%	12.00%
Commercial and industrial | Appraisal discount | Modified appraised value | Non-owner occupied commercial real estate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Commercial and industrial | Appraisal discount | Modified appraised value | Non-owner occupied commercial real estate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	10.00%	10.00%
Agricultural and agricultural real estate | Appraisal discount | Modified appraised value | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	0.00%	0.00%
Agricultural and agricultural real estate | Appraisal discount | Modified appraised value | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Servicing assets, discount rate	15.00%	10.00%

XML

FAIR VALUE (Changes Level 3 assets fair value, recurring) (Details) - Interest rate lock commitments - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	$ 1,827	$ 681
Total net gains included in earnings	(1,735)	2,803
Issuances	8,892	17,221
Settlements	(7,559)	(18,878)
Balance at period end	$ 1,425	$ 1,827

XML

FAIR VALUE (Deposits held for sale narrative) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
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	$ 10,470	$ 10,990
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	$ 1,400		$ 1,800

XML

FAIR VALUE (Estimated fair value financial instruments incl. carrying amounts) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Securities:
Held to maturity	$ 95,421	$ 100,041
Level 1
Financial assets:
Cash and cash equivalents	449,128	337,903
Time deposits in other financial institutions	3,138	3,129
Securities:
Carried at fair value	1,016	2,026
Held to maturity	0	0
Other investments	0	0
Loans held for sale	0	0
Loans, net	0	0
Cash surrender value on life insurance	0	0
Derivative assets	0	0
Financial liabilities:
Short term borrowings	0	0
Other borrowings	0	0
Derivative liabilities	0	0
Level 1 | Interest rate lock commitments
Securities:
Derivative assets	0	0
Level 1 | Demand deposits
Financial liabilities:
Deposits	0	0
Level 1 | Savings deposits
Financial liabilities:
Deposits	0	0
Level 1 | Time deposits
Financial liabilities:
Deposits	0	0
Level 1 | Forward commitments
Financial liabilities:
Derivative liabilities	0	0
Level 2
Financial assets:
Cash and cash equivalents	0	0
Time deposits in other financial institutions	0	0
Securities:
Carried at fair value	6,542,962	6,125,949
Held to maturity	95,421	100,041
Other investments	76,809	75,523
Loans held for sale	33,248	57,949
Loans, net	9,793,923	9,735,181
Cash surrender value on life insurance	189,619	187,664
Derivative assets	29,891	44,102
Financial liabilities:
Short term borrowings	152,563	167,872
Other borrowings	274,631	458,806
Derivative liabilities	35,368	51,962
Level 2 | Interest rate lock commitments
Securities:
Derivative assets	0	0
Level 2 | Demand deposits
Financial liabilities:
Deposits	6,299,289	5,688,810
Level 2 | Savings deposits
Financial liabilities:
Deposits	8,189,223	8,019,704
Level 2 | Time deposits
Financial liabilities:
Deposits	1,126,788	1,273,468
Level 2 | Forward commitments
Financial liabilities:
Derivative liabilities	202	697
Level 3
Financial assets:
Cash and cash equivalents	0	0
Time deposits in other financial institutions	0	0
Securities:
Carried at fair value	0	0
Held to maturity	0	0
Other investments	0	0
Loans held for sale	0	0
Loans, net	41,445	34,488
Cash surrender value on life insurance	0	0
Derivative assets	0	0
Financial liabilities:
Short term borrowings	0	0
Other borrowings	0	0
Derivative liabilities	0	0
Level 3 | Interest rate lock commitments
Securities:
Derivative assets	1,425	1,827
Level 3 | Demand deposits
Financial liabilities:
Deposits	0	0
Level 3 | Savings deposits
Financial liabilities:
Deposits	0	0
Level 3 | Time deposits
Financial liabilities:
Deposits	0	0
Level 3 | Forward commitments
Financial liabilities:
Derivative liabilities	0	0
Commercial and industrial | Level 1 | Commercial and industrial
Securities:
Loans, net	0	0
Commercial and industrial | Level 1 | Paycheck Protection Program ("PPP")
Securities:
Loans, net	0	0
Commercial and industrial | Level 1 | Owner occupied commercial real estate
Securities:
Loans, net	0	0
Commercial and industrial | Level 1 | Non-owner occupied commercial real estate
Securities:
Loans, net	0	0
Commercial and industrial | Level 1 | Real estate construction
Securities:
Loans, net	0	0
Commercial and industrial | Level 2 | Commercial and industrial
Securities:
Loans, net	2,460,167	2,379,785
Commercial and industrial | Level 2 | Paycheck Protection Program ("PPP")
Securities:
Loans, net	829,175	957,785
Commercial and industrial | Level 2 | Owner occupied commercial real estate
Securities:
Loans, net	1,897,958	1,739,523
Commercial and industrial | Level 2 | Non-owner occupied commercial real estate
Securities:
Loans, net	1,938,522	1,887,306
Commercial and industrial | Level 2 | Real estate construction
Securities:
Loans, net	838,001	849,224
Commercial and industrial | Level 3 | Commercial and industrial
Securities:
Loans, net	8,969	11,256
Commercial and industrial | Level 3 | Paycheck Protection Program ("PPP")
Securities:
Loans, net	0	0
Commercial and industrial | Level 3 | Owner occupied commercial real estate
Securities:
Loans, net	3,573	5,874
Commercial and industrial | Level 3 | Non-owner occupied commercial real estate
Securities:
Loans, net	14,742	4,907
Commercial and industrial | Level 3 | Real estate construction
Securities:
Loans, net	0	0
Agricultural and agricultural real estate | Level 1
Securities:
Loans, net	0	0
Agricultural and agricultural real estate | Level 2
Securities:
Loans, net	646,489	685,278
Agricultural and agricultural real estate | Level 3
Securities:
Loans, net	14,161	12,451
Residential real estate | Level 1
Securities:
Loans, net	0	0
Residential real estate | Level 2
Securities:
Loans, net	789,274	828,366
Residential real estate | Level 3
Securities:
Loans, net	0	0
Consumer | Level 1
Securities:
Loans, net	0	0
Consumer | Level 2
Securities:
Loans, net	394,337	407,914
Consumer | Level 3
Securities:
Loans, net	0	0
Carrying Amount
Financial assets:
Cash and cash equivalents	449,128	337,903
Time deposits in other financial institutions	3,138	3,129
Securities:
Carried at fair value	6,543,978	6,127,975
Held to maturity	85,439	88,839
Other investments	76,809	75,253
Loans held for sale	33,248	57,949
Loans, net	9,891,288	9,891,445
Cash surrender value on life insurance	189,619	187,664
Derivative assets	29,891	44,102
Financial liabilities:
Short term borrowings	152,563	167,872
Other borrowings	271,244	457,042
Derivative liabilities	35,268	51,962
Carrying Amount | Interest rate lock commitments
Securities:
Derivative assets	1,425	1,827
Carrying Amount | Demand deposits
Financial liabilities:
Deposits	6,299,289	5,688,810
Carrying Amount | Savings deposits
Financial liabilities:
Deposits	8,189,223	8,019,704
Carrying Amount | Time deposits
Financial liabilities:
Deposits	1,126,606	1,271,391
Carrying Amount | Forward commitments
Financial liabilities:
Derivative liabilities	202	697
Carrying Amount | Commercial and industrial | Commercial and industrial
Securities:
Loans, net	2,487,576	2,495,981
Carrying Amount | Commercial and industrial | Paycheck Protection Program ("PPP")
Securities:
Loans, net	829,175	957,785
Carrying Amount | Commercial and industrial | Owner occupied commercial real estate
Securities:
Loans, net	1,920,144	1,756,405
Carrying Amount | Commercial and industrial | Non-owner occupied commercial real estate
Securities:
Loans, net	1,964,541	1,900,608
Carrying Amount | Commercial and industrial | Real estate construction
Securities:
Loans, net	834,715	843,140
Carrying Amount | Agricultural and agricultural real estate
Securities:
Loans, net	672,448	707,397
Carrying Amount | Residential real estate
Securities:
Loans, net	791,143	828,507
Carrying Amount | Consumer
Securities:
Loans, net	391,546	401,622
Estimated Fair Value
Financial assets:
Cash and cash equivalents	449,128	337,903
Time deposits in other financial institutions	3,138	3,129
Securities:
Carried at fair value	6,543,978	6,127,975
Held to maturity	95,421	100,041
Other investments	76,809	75,523
Loans held for sale	33,248	57,949
Loans, net	9,835,368	9,769,669
Cash surrender value on life insurance	189,619	187,664
Derivative assets	29,891	44,102
Financial liabilities:
Short term borrowings	152,563	167,872
Other borrowings	274,631	458,806
Derivative liabilities	35,368	51,962
Estimated Fair Value | Interest rate lock commitments
Securities:
Derivative assets	1,425	1,827
Estimated Fair Value | Demand deposits
Financial liabilities:
Deposits	6,299,289	5,688,810
Estimated Fair Value | Savings deposits
Financial liabilities:
Deposits	8,189,223	8,019,704
Estimated Fair Value | Time deposits
Financial liabilities:
Deposits	1,126,788	1,273,468
Estimated Fair Value | Forward commitments
Financial liabilities:
Derivative liabilities	202	697
Estimated Fair Value | Commercial and industrial | Commercial and industrial
Securities:
Loans, net	2,469,136	2,391,041
Estimated Fair Value | Commercial and industrial | Paycheck Protection Program ("PPP")
Securities:
Loans, net	829,175	957,785
Estimated Fair Value | Commercial and industrial | Owner occupied commercial real estate
Securities:
Loans, net	1,901,531	1,745,397
Estimated Fair Value | Commercial and industrial | Non-owner occupied commercial real estate
Securities:
Loans, net	1,953,264	1,892,213
Estimated Fair Value | Commercial and industrial | Real estate construction
Securities:
Loans, net	838,001	849,224
Estimated Fair Value | Agricultural and agricultural real estate
Securities:
Loans, net	660,650	697,729
Estimated Fair Value | Residential real estate
Securities:
Loans, net	789,274	828,366
Estimated Fair Value | Consumer
Securities:
Loans, net	394,337	$ 407,914
Forward commitments | Level 1
Securities:
Derivative assets	0
Forward commitments | Level 2
Securities:
Derivative assets	8
Forward commitments | Level 3
Securities:
Derivative assets	0
Forward commitments | Carrying Amount
Securities:
Derivative assets	8
Forward commitments | Estimated Fair Value
Securities:
Derivative assets	$ 8

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REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	$ 22,036	$ 16,544	$ 42,337	$ 34,320
Loan servicing income	873	379	1,711	1,342
Securities gains, net	2,842	2,006	2,812	3,664
Unrealized gain/ (loss) on equity securities, net	83	680	(27)	449
Net gains on sale of loans held for sale	4,753	7,857	11,173	12,517
Valuation adjustment on servicing rights	(526)	9	391	(1,556)
Income on bank owned life insurance	937	1,167	1,766	1,665
Other noninterest income	2,166	1,995	3,318	4,053
Total noninterest income out-of-scope of Topic 606	11,128	14,093	21,144	22,134
TOTAL NONINTEREST INCOME	33,164	30,637	63,481	56,454
Total service charges and fees
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	15,132	10,972	28,803	22,993
Service charges and fees on deposit accounts
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	4,014	3,476	7,950	6,913
Overdraft fees
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	2,549	1,634	5,141	4,443
Customer service and other service fees
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	54	35	100	94
Credit card fee income
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	5,854	4,067	10,162	7,967
Debit card income
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	2,661	1,760	5,450	3,576
Trust fees
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	6,039	4,977	11,816	9,999
Brokerage and insurance commissions
Disaggregation of Revenue [Line Items]
Service charges and fees on deposit accounts	$ 865	$ 595	$ 1,718	$ 1,328

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STOCK COMPENSATION (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020	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)			1,200,807
Excess tax benefit related to share-based payment awards			$ 303	$ 91
Share-based compensation, period before change in control			6 months
Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options, granted (in shares)	104,462	114,944
Share-based compensation, award vesting periods			3 years
Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options, granted (in shares)	60,339	50,787
Share-based compensation, award vesting periods			3 years	3 years
Share-based compensation, vesting percentage after change in control			100.00%
Share-based compensation, vesting period after change in control			24 months
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options, granted (in shares)			41,974	46,613
Share-based compensation costs			$ 4,600	$ 3,400
Share-based unrecognized compensation costs			$ 11,300

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STOCK COMPENSATION (Summary of RSUs Activity) (Details) - RSUs - $ / shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Shares
Outstanding at beginning of period (in shares)	348,275	254,383
Granted (in shares)	208,513	212,344
Vested (in shares)	(146,381)	(118,686)
Forfeited (in shares)	(18,861)	(14,648)
Outstanding at end of period (in shares)	391,546	333,393
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 38.22	$ 46.76
Granted (in dollars per share)	51.63	32.00
Vested (in dollars per share)	40.89	44.52
Forfeited (in dollars per share)	42.88	47.00
Outstanding at end of period (in dollars per share)	$ 44.08	$ 38.55