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LOANS
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
LOANS LOANS
Loans as of September 30, 2022, and December 31, 2021, were as follows, in thousands:
September 30, 2022December 31, 2021
Loans receivable held to maturity:  
Commercial and industrial$3,278,703 $2,645,085 
Paycheck Protection Program ("PPP")13,506 199,883 
Owner occupied commercial real estate2,285,973 2,240,334 
Non-owner occupied commercial real estate2,219,542 2,010,591 
Real estate construction996,017 856,119 
Agricultural and agricultural real estate781,354 753,753 
Residential real estate852,928 829,283 
Consumer495,509 419,524 
Total loans receivable held to maturity10,923,532 9,954,572 
Allowance for credit losses(105,715)(110,088)
Loans receivable, net$10,817,817 $9,844,484 

As of September 30, 2022, and December 31, 2021, HTLF had $41.4 million and $35.3 million, respectively, of accrued interest receivable, which is included in other assets on the consolidated balance sheets. HTLF does not consider accrued interest receivable in the allowance for credit losses calculation.

The following table shows the balance in the allowance for credit losses at September 30, 2022, and December 31, 2021, and the related loan balances, disaggregated on the basis of measurement methodology, in thousands. If a loan no longer shares similar risk characteristics with other loans in the pool, it is evaluated on an individual basis and is not included in the collective evaluation. Lending relationships with $500,000 or more of total exposure and are on nonaccrual are individually assessed using a collateral dependency calculation. All other loans are collectively evaluated for losses.
Allowance For Credit LossesGross Loans Receivable Held to Maturity
Individually Evaluated for Credit LossesCollectively Evaluated for Credit LossesTotalLoans Individually Evaluated for Credit LossesLoans Collectively Evaluated for Credit Losses Total
September 30, 2022
Commercial and industrial$7,260 $23,003 $30,263 $21,696 $3,257,007 $3,278,703 
PPP — — — — 13,506 13,506 
Owner occupied commercial real estate365 16,607 16,972 8,851 2,277,122 2,285,973 
Non-owner occupied commercial real estate— 14,809 14,809 11,643 2,207,899 2,219,542 
Real estate construction— 24,270 24,270 1,547 994,470 996,017 
Agricultural and agricultural real estate128 2,439 2,567 6,343 775,011 781,354 
Residential real estate— 7,426 7,426 1,622 851,306 852,928 
Consumer— 9,408 9,408 — 495,509 495,509 
Total$7,753 $97,962 $105,715 $51,702 $10,871,830 $10,923,532 
December 31, 2021
Commercial and industrial$4,562 $23,176 $27,738 $13,551 $2,631,534 $2,645,085 
PPP— — — — 199,883 199,883 
Owner occupied commercial real estate105 19,109 19,214 8,552 2,231,782 2,240,334 
Non-owner occupied commercial real estate610 17,298 17,908 12,557 1,998,034 2,010,591 
Real estate construction— 22,538 22,538 — 856,119 856,119 
Agricultural and agricultural real estate2,369 2,844 5,213 13,773 739,980 753,753 
Residential real estate— 8,427 8,427 855 828,428 829,283 
Consumer— 9,050 9,050 — 419,524 419,524 
Total$7,646 $102,442 $110,088 $49,288 $9,905,284 $9,954,572 

HTLF had $15.9 million of troubled debt restructured loans at September 30, 2022, of which $7.9 million were classified as nonaccrual and $8.0 million were accruing according to the restructured terms. HTLF had $10.4 million of troubled debt restructured loans at December 31, 2021, of which $9.5 million were classified as nonaccrual and $817,000 were accruing according to the restructured terms.

The following tables provide information on troubled debt restructured loans that were modified during the three- and nine- months ended September 30, 2022, and September 30, 2021, dollars in thousands. The provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which modified troubled debt restructured loan classification, expired on January 1, 2022, and any new troubled debt restructured loan modifications are evaluated in accordance with generally accepted accounting principles.
Three Months Ended
September 30,
20222021
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 estate1 5,058 5,058 — — —
Non-owner occupied commercial real estate— — —— — — 
Real estate construction— — —— — —
Agricultural and agricultural real estate1 1,400 1,400 — — —
Residential real estate— — —— — —
Consumer— — —— — —
Total2 $6,458 $6,458 — $— $— 

Nine Months Ended
September 30,
20222021
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 estate1 5,058 5,058 — — — 
Non-owner occupied commercial real estate— — — 2 7,850 7,850 
Real estate construction— — — — — — 
Agricultural and agricultural real estate1 1,400 1,400 — — — 
Residential real estate— — — — — — 
Consumer— — — — — — 
Total2 $6,458 $6,458 2 $7,850 $7,850 

At September 30, 2022, there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructured loan.

HTLF had no troubled debt restructured loans for which there was a payment default during the three- and nine- months ended September 30, 2022, and September 30, 2021, 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 credit risk assessment, based on its analysis of the borrower's financial condition. The "pass" category consists of all loans that are not in the "nonpass" category and categorized into a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the pass category is monitored for early identification of credit deterioration.

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

The "substandard" rating is assigned to loans that are inadequately protected by the current net worth and repaying capacity of the borrower and that may be further at risk due to deterioration in the value of collateral pledged. Well-defined weaknesses jeopardize liquidation of the debt. These loans are still considered collectible; however, a distinct possibility exists that HTLF
will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all of the following weaknesses: deteriorating financial trends, lack of earnings, inadequate debt service capacity, excessive debt and/or lack of liquidity.

The "doubtful" rating is assigned to loans where identified weaknesses in the borrowers' ability to repay the loan make collection or liquidation in full, on the basis of existing facts, conditions and values, highly questionable and improbable. These borrowers are usually in default, lack liquidity and capital, as well as resources necessary to remain as an operating entity. Specific pending events, such as capital injections, liquidations or perfection of liens on additional collateral, may strengthen the credit, thus deferring the rating of the loan as "loss" until the exact status of the loan can be determined. The "loss" rating is assigned to loans considered uncollectible. HTLF had no loans classified as "loss" or "doubtful" as of September 30, 2022, and December 31, 2021.

The following tables show the risk category of loans by loan category and year of origination as of September 30, 2022, and December 31, 2021, in thousands:
As of September 30, 2022Amortized Cost Basis of Term Loans by Year of Origination
202220212020201920182017 and PriorRevolvingTotal
Commercial and industrial
Pass$802,007 $463,440 $280,255 $111,725 $64,394 $425,882 $970,691 $3,118,394 
Watch 8,503 3,509 4,036 5,597 4,477 2,187 24,689 52,998 
Substandard 8,494 11,735 9,609 27,282 7,137 11,823 31,231 107,311 
Commercial and industrial total$819,004 $478,684 $293,900 $144,604 $76,008 $439,892 $1,026,611 $3,278,703 
PPP
Pass$— $9,977 $891 $— $— $— $— $10,868 
Watch— 8 — — — — — 8 
Substandard— 2,625 5 — — — — 2,630 
PPP total $— $12,610 $896 $— $— $— $— $13,506 
Owner occupied commercial real estate
Pass$449,289 $805,870 $273,696 $275,330 $111,317 $207,964 $35,402 $2,158,868 
Watch11,806 5,806 3,114 5,573 6,601 5,923 35 38,858 
Substandard1,964 21,694 32,169 10,714 2,236 18,670 800 88,247 
Owner occupied commercial real estate total$463,059 $833,370 $308,979 $291,617 $120,154 $232,557 $36,237 $2,285,973 
Non-owner occupied commercial real estate
Pass$576,309 $524,138 $220,635 $274,791 $134,255 $206,540 $69,166 $2,005,834 
Watch771 802 5,222 38,563 42,302 58,714 555 146,929 
Substandard206 10,578 7,513 16,078 22,408 9,996 — 66,779 
Non-owner occupied commercial real estate total$577,286 $535,518 $233,370 $329,432 $198,965 $275,250 $69,721 $2,219,542 
As of September 30, 2022Amortized Cost Basis of Term Loans by Year of Origination
202220212020201920182017 and PriorRevolvingTotal
Real estate construction
Pass$475,313 $351,155 $103,214 $40,638 $2,983 $6,602 $7,915 $987,820 
Watch 654 11 1,220 — — 16 — 1,901 
Substandard— 356 1,027 543 4,304 66 — 6,296 
Real estate construction total$475,967 $351,522 $105,461 $41,181 $7,287 $6,684 $7,915 $996,017 
Agricultural and agricultural real estate
Pass$221,687 $153,294 $84,087 $37,598 $24,681 $43,203 $169,970 $734,520 
Watch4,131 536 3,892 706 471 1,036 2,539 13,311 
Substandard4,270 8,463 204 2,527 12,600 4,319 1,140 33,523 
Agricultural and agricultural real estate total$230,088 $162,293 $88,183 $40,831 $37,752 $48,558 $173,649 $781,354 
Residential real estate
Pass$168,663 $277,074 $67,491 $41,412 $36,411 $224,410 $21,187 $836,648 
Watch429 769 562 987 1,554 2,377 — 6,678 
Substandard29 1,487 1,046 140 1,648 5,102 150 9,602 
Residential real estate total $169,121 $279,330 $69,099 $42,539 $39,613 $231,889 $21,337 $852,928 
Consumer
Pass$65,800 $51,732 $13,587 $7,053 $5,496 $25,705 $320,071 $489,444 
Watch40 123 56 227 77 957 1,432 2,912 
Substandard160 265 267 316 125 1,581 439 3,153 
Consumer total$66,000 $52,120 $13,910 $7,596 $5,698 $28,243 $321,942 $495,509 
Total Pass$2,759,068 $2,636,680 $1,043,856 $788,547 $379,537 $1,140,306 $1,594,402 $10,342,396 
Total Watch26,334 11,564 18,102 51,653 55,482 71,210 29,250 263,595 
Total Substandard 15,123 57,203 51,840 57,600 50,458 51,557 33,760 317,541 
Total Loans$2,800,525 $2,705,447 $1,113,798 $897,800 $485,477 $1,263,073 $1,657,412 $10,923,532 
As of December 31, 2021Amortized Cost Basis of Term Loans by Year of Origination
202120202019201820172016 and PriorRevolvingTotal
Commercial and industrial
Pass$604,659 $359,533 $203,960 $89,694 $171,709 $330,094 $708,525 $2,468,174 
Watch 10,633 12,790 12,550 8,210 3,611 14,976 24,626 87,396 
Substandard 19,888 6,391 13,050 8,535 6,619 12,052 22,980 89,515 
Commercial and industrial total$635,180 $378,714 $229,560 $106,439 $181,939 $357,122 $756,131 $2,645,085 
PPP
Pass$146,370 $25,707 $— $— $— $— $— $172,077 
Watch10,726 127 — — — — — 10,853 
Substandard16,932 21 — — — — — 16,953 
PPP total $174,028 $25,855 $— $— $— $— $— $199,883 
Owner occupied commercial real estate
Pass$940,043 $328,052 $315,497 $180,936 $115,142 $189,647 $34,233 $2,103,550 
Watch4,676 13,956 7,759 10,501 15,032 6,830 35 58,789 
Substandard11,958 20,769 13,734 2,809 13,912 13,063 1,750 77,995 
Owner occupied commercial real estate total$956,677 $362,777 $336,990 $194,246 $144,086 $209,540 $36,018 $2,240,334 
Non-owner occupied commercial real estate
Pass$609,968 $263,093 $315,815 $236,823 $152,059 $166,792 $28,728 $1,773,278 
Watch4,754 9,109 35,496 29,227 4,865 35,901 — 119,352 
Substandard15,722 10,612 21,798 3,599 14,023 51,766 441 117,961 
Non-owner occupied commercial real estate total$630,444 $282,814 $373,109 $269,649 $170,947 $254,459 $29,169 $2,010,591 
Real estate construction
Pass$381,283 $206,879 $169,606 $14,197 $7,163 $7,823 $14,507 $801,458 
Watch 2,704 858 2,145 44,846 — — 14 50,567 
Substandard— 50 46 3,944 — 54 — 4,094 
Real estate construction total$383,987 $207,787 $171,797 $62,987 $7,163 $7,877 $14,521 $856,119 
Agricultural and agricultural real estate
Pass$217,179 $102,030 $47,927 $32,913 $22,029 $35,548 $220,065 $677,691 
Watch4,018 10,390 4,688 2,270 33 2,038 2,948 26,385 
Substandard9,250 1,095 4,910 15,825 3,212 8,859 6,526 49,677 
Agricultural and agricultural real estate total$230,447 $113,515 $57,525 $51,008 $25,274 $46,445 $229,539 $753,753 
Residential real estate
Pass$311,292 $86,355 $50,762 $53,773 $43,619 $230,566 $29,017 $805,384 
Watch3,928 1,499 750 1,452 734 1,977 1,000 11,340 
Substandard2,528 444 410 2,317 1,139 5,721 — 12,559 
Residential real estate total $317,748 $88,298 $51,922 $57,542 $45,492 $238,264 $30,017 $829,283 
Consumer
Pass$69,172 $20,258 $13,051 $9,001 $10,986 $18,202 $271,034 $411,704 
Watch555 309 392 373 113 591 2,210 4,543 
Substandard267 204 218 236 363 1,611 378 3,277 
Consumer total$69,994 $20,771 $13,661 $9,610 $11,462 $20,404 $273,622 $419,524 
Total Pass$3,279,966 $1,391,907 $1,116,618 $617,337 $522,707 $978,672 $1,306,109 $9,213,316 
Total Watch41,994 49,038 63,780 96,879 24,388 62,313 30,833 369,225 
Total Substandard 76,545 39,586 54,166 37,265 39,268 93,126 32,075 372,031 
Total Loans$3,398,505 $1,480,531 $1,234,564 $751,481 $586,363 $1,134,111 $1,369,017 $9,954,572 

Included in the nonpass loans at September 30, 2022, and December 31, 2021, were $2.6 million and $27.8 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 September 30, 2022, HTLF had $846,000 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 September 30, 2022, and December 31, 2021, in thousands:
Accruing Loans
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or
More
Past Due		Total
Past
Due		CurrentNonaccrualTotal Loans
September 30, 2022
Commercial and industrial$1,406 $2,692 $144 $4,242 $3,249,305 $25,156 $3,278,703 
PPP763 254 — 1,017 12,484 5 13,506 
Owner occupied commercial real estate— — — — 2,276,146 9,827 2,285,973 
Non-owner occupied commercial real estate32 — — 32 2,207,606 11,904 2,219,542 
Real estate construction4,475 — — 4,475 989,271 2,271 996,017 
Agricultural and agricultural real estate— — 534 534 772,666 8,154 781,354 
Residential real estate650 103 — 753 846,063 6,112 852,928 
Consumer786 134 — 920 493,458 1,131 495,509 
Total gross loans receivable held to maturity$8,112 $3,183 $678 $11,973 $10,846,999 $64,560 $10,923,532 
December 31, 2021
Commercial and industrial$1,024 $183 $541 $1,748 $2,625,109 $18,228 $2,645,085 
PPP— — — — 199,883 — 199,883 
Owner occupied commercial real estate130 — — 130 2,229,054 11,150 2,240,334 
Non-owner occupied commercial real estate3,929 — — 3,929 1,993,346 13,316 2,010,591 
Real estate construction238 50 — 288 855,463 368 856,119 
Agricultural and agricultural real estate687 — — 687 737,380 15,686 753,753 
Residential real estate767 46 9 822 819,294 9,167 829,283 
Consumer251 57 — 308 417,762 1,454 419,524 
Total gross loans receivable held to maturity$7,026 $336 $550 $7,912 $9,877,291 $69,369 $9,954,572 

Loans delinquent 30 to 89 days as a percent of total loans were 0.10% at September 30, 2022, compared to 0.07% at December 31, 2021. 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 nine months ended September 30, 2022 and September 30, 2021. As of September 30, 2022, and December 31, 2021, HTLF had $32.5 million and $25.5 million of nonaccrual loans with no related allowance, respectively.