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美國證券交易所(SEC)

華盛頓特區20549

表格 10-Q

☒			根據1934年證券交易法第13或15(d)節的季度報告

在截至的季度期間 2024 年 9 月 30 日

☐			根據1934年《證券交易法》第13或15（d）條提交的過渡報告

過渡期從__________到__________

委託文件編號：001-39866001-15393

美國心臟金融集團，股份有限公司。

（根據其章程規定的準確名稱）

特拉華州

（設立或組織的其他管轄區域）

42-1405748

(國稅局僱主識別號)

拉里默街1800號，1800套房, 丹佛, 科羅拉多州 80202

（總部地址）（郵政編碼）

(303) 285-9200

（註冊人的電話號碼，包括區號）

在法案第12(b)條的規定下注冊的證券：

每種類別的證券			交易代碼			在其上註冊的交易所的名稱
普通股，每股面值1.00美元			HTLF			納斯達克證券交易所
每400份存托股份代表7.00%固定利率重設非累積永久優先股份E系列的1份股份的利益			HTLFP			納斯達克證券交易所

請勾選表示：(1)根據1934年證券交易法第13或15(d)條的要求，在過去12個月內(或者Registrant被要求提交此類報告的更短時期內)已提交所有需要提交的報告；並且(2)過去90天內一直受到此類報告要求的約束。Yes ☒ 應發行的股張的股票代碼(若於港交所上市) (注1，注5和6) ☐

 

請勾選以指示，註冊人是否在過去12個月內（或註冊人需要提交此類文件的較短期間內）通過電子方式提交了根據《S-T法規》第405條規定需要提交的每個互動數據文件。 Yes ☒ 應發行的股張的股票代碼(若於港交所上市) (注1，注5和6) ☐

請以複選標記表明註冊者是否爲大型加速提名人、加速提名人、非加速提名人、較小的報告公司或新興成長型公司。請參閱《交易所法》第120億.2條中對「大型加速提名人」、「加速提名人」、「較小的報告公司」和「新興成長型公司」的定義。

大型加速報告人

☒

加速存取器

☐

非加速文件提交人

☐

較小的報告公司

☐

新興成長公司

☐

如果公司無法符合證券交易法第13(a)條規定，使用延長過渡期來遵守任何新的或修訂的財務會計準則，請在複選框中指示。 ☐

請用複選標記來表明註冊申請者是否是殼公司（由《證券交易法》第120億.2條定義）。是 ☐ 應發行的股張的股票代碼(若於港交所上市) (注1，注5和6) ☒

指出截至最近實際日期股票註冊人各類普通股的流通數量：截至2024年11月4日，註冊人擁有流通 42,885,498 普通股，每股面值爲$1.00。

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美國心臟金融集團，股份有限公司。

第10-Q表格季度報告

目錄

第一部分
第 1 項。			財務報表
第 2 項。			管理層對財務狀況和經營業績的討論和分析
第 3 項。			關於市場風險的定量和定性披露
第 4 項。			控制和程序
第二部分
第 1 項。			法律訴訟
第 1A 項。			風險因素
第 2 項。			未註冊的股權證券銷售和所得款項的使用
第 3 項。			優先證券違約
第 4 項。			礦山安全披露
第 5 項。			其他信息
第 6 項。			展品

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第一部分

項目1。基本報表

美國心臟金融集團，股份有限公司。 基本報表 (金額以千元爲單位，除每股數據外)
			2024年9月30日（未經審計）						2023年12月31日
資產
現金和存放在銀行的款項			$	228,719					$	275,554
與其他銀行的利息-bearing存款和其他短期投資			359,675						47,459
現金及現金等價物			588,394						323,013
其他金融機構的定期存款			1,050						1,240
證券:
按公允價值計量（成本爲$4,395,743 於2024年9月30日分別爲$5,100,344 在2023年12月31日			4,057,335						4,646,891
持有至到期投資，扣除信用損失準備金$0 分別於2024年9月30日和2023年12月31日持有（公允價值爲$844,296 在2024年9月30日，和$816,399 在2023年12月31日			839,623						838,241
其他投資成本			69,511						91,277
待售貸款			—						5,071
應收貸款：
持有至到期日			11,440,917						12,068,645
信貸損失準備金			(106,797)						(122,566)
應收貸款淨額			11,334,120						11,946,079
房地產、傢俱和設備淨值			145,276						177,001
持有待售的房地產、傢俱和設備			9,864						4,069
其他房地產業淨額			6,805						12,548
商譽			576,005						576,005
核心存款無形資產淨額			14,157						18,415
人壽保險的現金贖回價值			199,998						197,085
其他			430,155						574,772
資產總計			$	18,272,293					$	19,411,707
負債和股東權益
負債：
存款：
需求			$	4,009,218					$	4,500,304
儲蓄			8,926,192						8,805,597
時間			2,017,806						2,895,813
存款總額			14,953,216						16,201,714
借款			546,219						622,255
期限債務			373,324						372,396
應計費用及其他負債			259,161						282,225
負債合計			16,131,920						17,478,590
股東權益：
優先股 (面值 $1 每股；已授權 188,500 和 188,500 2024年9月30日和2023年12月31日的股份; 無 2024年9月30日和2023年12月31日均已發行或流通			—						—
E系列固定利率重設非累積永續優先股（面值 $1 每股; 11,500 已授權股數在2024年9月30日和2023年12月31日均是 11,500 已發行且流通股數在2024年9月30日和2023年12月31日均爲			110,705						110,705
普通股（面值 $1 每股; 60,000,000 2024年9月30日和2023年12月31日授權的股份數目爲 ；發行 42,883,865 於2024年9月30日的股數爲 42,688,008 在2023年12月31日發行的股份			42,884						42,688
資本剩餘			1,098,837						1,090,740
保留盈餘			1,252,247						1,141,501
其他綜合損失累計額			(364,300)						(452,517)
股東權益合計			2,140,373						1,933,117
負債和所有者權益總計			$	18,272,293					$	19,411,707
有關合並財務報表的附註請參閱。

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HEARTLAND FINANCIAL USA，INC。 綜合收入報表（未經審計） (金額以千元爲單位，除每股數據外)
			三個月截至 9月30日,												九個月結束 9月30日,
			2024						2023						2024						2023
利息收入：
貸款利息和費用			$	192,506					$	182,394					$	587,328					$	505,136
證券利息：
應稅的			51,116						54,800						145,511						168,948
免稅			5,979						6,584						18,062						18,990
聯邦基金銷售的利息			—						3						—						3
在其他金融機構存款的利息收入			4,193						1,651						10,244						4,833
總利息收入			253,794						245,432						761,145						697,910
利息支出：
贖回Baskets的日元數量。如果Trust的日元被提取以支付Trust的開支，需要創建籃子或在籃子贖回時發生的，用於表示Baskets的日元數量的代幣的日元數量可能會隨着時間的推移而逐漸減少。			82,976						92,744						247,609						231,617
借款利息			7,378						1,167						25,727						4,437
Interest on term debt (includes $(247) and $(63) of interest income related to derivatives reclassified from accumulated other comprehensive income for the three months ended September 30, 2024 and 2023, respectively, and $(457和$638 of interest (income) expense related to derivatives reclassified from accumulated other comprehensive income for the nine months ended September 30, 2024 and 2023, respectively)			5,543						5,765						16,956						16,756
總利息支出			95,897						99,676						290,292						252,810
淨利息收益			157,897						145,756						470,853						445,100
撥備			6,276						1,516						16,270						9,969
扣除授信虧損後的淨利息收入			151,621						144,240						454,583						435,131
非利息收入:
服務費及手續費			17,100						18,553						51,127						55,316
貸款服務費收入			111						278						349						1,403
信託費用			5,272						4,734						15,847						15,810
券商和保險佣金			853						692						2,501						2,065
資本市場費用			2,116						1,845						5,003						8,331
證券損失淨額（包括$9,299和$59 分別於2024年和2023年截至9月30日的三個月內，重新分類的淨安全（損失）收益爲$(19,855) and $(1,370)，再分別重新分類到2024年和2023年截至9月30日的九個月內的其他綜合收入累計淨安全損失爲$(			(9,520)						(114)						(19,573)						(1,532)
股權證券未實現的淨收益			377						13						605						165
對可供出售的貸款出售的淨收益			—						905						104						3,786
銀行持有人壽保險收入			1,107						858						3,610						3,042
其他非利息收入			1,576						619						5,289						2,489
總非利息收入			18,992						28,383						64,862						90,875
非利息費用：
薪水和員工福利			62,742						62,262						191,817						186,510
佔用率			6,318						6,438						19,843						20,338
傢俱和設備			2,062						2,720						6,554						8,698
專業費用			17,448						13,616						48,351						41,607
FDIC保險評估			3,035						3,313						11,344						9,627
廣告			1,937						1,633						4,663						6,670
核心存款無形資產攤銷			1,345						1,625						4,258						5,128
其他房地產和貸款追收費用			395						481						1,422						984
資產銷售/估值的損益，淨額			(26,419)						108						(26,012)						(2,149)
收購，整合和重組成本			2,026						2,429						9,374						5,994
合夥企業對稅收項目的投資			222						1,136						938						1,828
其他非利息支出			14,816						15,292						43,214						46,307
總非利息支出			85,927						111,053						315,766						331,542
稅前收入			84,686						61,570						203,679						194,464
所得稅（包括$(5,729和$9,877 的所得稅（費用）福利，分別於2024年9月30日和2023年9月30日結束的三個月內，以及$5,352 和 $19,253 的所得稅福利，分別於2024年9月30日和2023年9月30日結束的九個月內，重新分類自其他綜合收益累積額中			20,533						13,479						48,077						44,181
淨利潤			64,153						48,091						155,602						150,283
優先股分紅			(2,013)						(2,013)						(6,038)						(6,038)
普通股東可獲得的淨利潤			$	62,140					$	46,078					$	149,564					$	144,245
基本每股收益-普通股			$	1.45					$	1.08					$	3.49					$	3.38
每股攤薄收益-普通股			$	1.44					$	1.08					$	3.47					$	3.37
每股宣佈的現金分紅			$	0.30					$	0.30					$	0.90					$	0.90
有關合並財務報表的附註請參閱。

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HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands)
			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
NET INCOME			$	64,153					$	48,091					$	155,602					$	150,283
OTHER COMPREHENSIVE INCOME (LOSS)
Changes in available for sale ("AFS") securities:
Net change in unrealized loss on securities			104,064						(128,987)						95,190						(106,378)
Reclassification adjustment for net losses (gains) on hedged AFS securities			(34,374)						36,362						(5,825)						65,872
Reclassification adjustment for net losses (gains) realized in net income			9,299						(59)						19,855						1,370
Income tax benefit (expense)			(19,715)						22,943						(26,968)						8,388
Other comprehensive income (loss) on AFS securities			59,274						(69,741)						82,252						(30,748)
Changes in securities held to maturity:
Net amortization of unrealized losses on securities transferred from AFS			2,707						2,893						8,100						8,401
Income tax expense			(676)						(709)						(1,799)						(2,462)
Other comprehensive income on held to maturity securities			2,031						2,184						6,301						5,939
Change in cash flow hedges:
Net change in unrealized gain on derivatives			—						—						—						1,952
Reclassification adjustment for net losses (gains) on derivatives realized in net income			(247)						(63)						(457)						638
Income tax benefit (expense)			60						22						121						(613)
Other comprehensive income (loss) on cash flow hedges			(187)						(41)						(336)						1,977
Other comprehensive income (loss)			61,118						(67,598)						88,217						(22,832)
TOTAL COMPREHENSIVE INCOME (LOSS)			$	125,271					$	(19,507)					$	243,819					$	127,451
See accompanying notes to consolidated financial statements.

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HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
			Nine Months Ended September 30,
			2024						2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	155,602					$	150,283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			13,423						15,467
Provision for credit losses			16,270						9,969
Net amortization of premium on securities			12,670						23,332
Securities losses, net			19,573						1,532
Unrealized gain on equity securities, net			(605)						(165)
Stock based compensation			8,247						7,742
Loans originated for sale			—						(122,764)
Proceeds on sales of loans held for sale			5,175						138,603
Net gains on sale of loans held for sale			(104)						(3,762)
Decrease (increase) in accrued interest receivable			6,967						(9,203)
Decrease in prepaid expenses			4,580						964
(Decrease) increase in accrued interest payable			(8,562)						46,697
Capitalization of servicing rights			—						(24)
(Gain) loss on sales/valuations of assets, net			(26,012)						(2,149)
Net excess tax expense from stock based compensation			(189)						(115)
Income from fair value hedge activity			772						—
Other, net			105,946						140,670
NET CASH PROVIDED BY OPERATING ACTIVITIES			313,753						397,077
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of time deposits in other financial institutions			190						—
Proceeds from the sale of securities available for sale			128,872						331,196
Proceeds from the maturity of and principal paydowns on securities available for sale			748,070						480,362
Proceeds from the maturity of and principal paydowns on securities held to maturity			7,322						2,325
Proceeds from the maturity of time deposits in other financial institutions			—						250
Proceeds from the sale, maturity of, redemption of and principal paydowns on other investments			50,144						13,255
Purchase of securities available for sale			(204,864)						(276,635)
Purchase of other investments			(28,096)						(28,851)
Net decrease (increase) in loans			247,337						(505,924)
Purchase of bank owned life insurance policies			(223)						(226)
Proceeds from sale of mortgage servicing rights			—						6,714
Capital expenditures and investments			(1,199)						(5,701)
Proceeds from the sale of premises, furniture and equipment			1,955						4,446
Net cash expended in divestitures			(176,764)						—
Proceeds on sale of OREO and other repossessed assets			10,224						5,672
NET CASH PROVIDED BY INVESTING ACTIVITIES			782,968						26,883

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HEARTLAND FINANCIAL USA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
			Nine Months Ended September 30,
			2024						2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits			$	(359,349)					$	(908,527)
Net increase (decrease) in savings deposits			404,939						(1,239,480)
Net (decrease) increase in time deposit accounts			(762,215)						1,735,991
Net decrease in borrowings			(50,545)						(285,255)
Proceeds from Bank Term Funding Program advances			500,000						—
Proceeds from short-term FHLB advances			643,309						617,391
Repayments of short-term FHLB advances			(1,164,495)						(315,619)
Repayments of term debt			—						(740)
Proceeds from issuance of common stock			1,643						1,527
Dividends paid			(44,627)						(44,340)
NET CASH USED BY FINANCING ACTIVITIES			(831,340)						(439,052)
Net increase (decrease) in cash and cash equivalents			265,381						(15,092)
Cash and cash equivalents at beginning of year			323,013						363,087
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	588,394					$	347,995
Supplemental disclosures:
Cash paid for income/franchise taxes			$	25,190					$	47,240
Cash paid for interest			299,899						206,113
Loans transferred to OREO			5,215						12,776
Transfer of premises from premises, furniture and equipment, net, to premises, furniture and equipment held for sale			8,478						4,091
Transfer of premises from premises, furniture and equipment held for sale to premises, furniture and equipment, net			350						5,825
Dividends declared, not paid			2,434						2,141
See accompanying notes to consolidated financial statements.

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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 Loss																		Total  Equity
Balance at June 30, 2023			$	110,705					$	42,645					$	1,087,358					$	1,193,522					$	(575,240)																	$	1,858,990
Comprehensive income (loss)																					48,091						(67,598)																		(19,507)
Cash dividends declared:
Preferred, $175.00 per share																					(2,013)																								(2,013)
Common, $0.30 per share																					(12,860)																								(12,860)
Issuance of 11,759 shares of common stock									11						60																														71
Stock based compensation															849																														849
Balance at September 30, 2023			$	110,705					$	42,656					$	1,088,267					$	1,226,740					$	(642,838)																	$	1,825,530
Balance at January 1, 2023			$	110,705					$	42,467					$	1,080,964					$	1,120,925					$	(620,006)																	$	1,735,055
Comprehensive income (loss)																					150,283						(22,832)																		127,451
Cash dividends declared:
Preferred, $525.00 per share																					(6,038)																								(6,038)
Common, $0.90 per share																					(38,430)																								(38,430)
Issuance of 188,909 shares of common stock									189						(439)																														(250)
Stock based compensation															7,742																														7,742
Balance at September 30, 2023			$	110,705					$	42,656					$	1,088,267					$	1,226,740					$	(642,838)																	$	1,825,530
Balance at June 30, 2024			$	110,705					$	42,852					$	1,096,619					$	1,203,092					$	(425,418)																	$	2,027,850
Comprehensive income (loss)																					64,153						61,118																		125,271
Cash dividends declared:
Preferred, $175.00 per share																					(2,013)																								(2,013)
Common, $0.30 per share																					(12,985)																								(12,985)
Issuance of 31,685 shares of common stock									32						80																														112
Stock based compensation															2,138																														2,138
Balance at September 30, 2024			$	110,705					$	42,884					$	1,098,837					$	1,252,247					$	(364,300)																	$	2,140,373
Balance at January 1, 2024			$	110,705					$	42,688					$	1,090,740					$	1,141,501					$	(452,517)																	$	1,933,117
Comprehensive income (loss)																					155,602						88,217																		243,819
Cash dividends declared:
Preferred, $525.00 per share																					(6,038)																								(6,038)
Common, $0.90 per share																					(38,818)																								(38,818)
Issuance of 195,857 shares of common stock									196						(150)																														46
Stock based compensation															8,247																														8,247
Balance at September 30, 2024			$	110,705					$	42,884					$	1,098,837					$	1,252,247					$	(364,300)																	$	2,140,373
See accompanying notes to consolidated financial statements.

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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, 2023, included in the Annual Report on Form 10-K of Heartland Financial USA, Inc. ("HTLF") filed with the Securities and Exchange Commission ("SEC") on February 23, 2024. 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 September 30, 2024, are not necessarily indicative of the results expected for the year ending December 31, 2024.

On April 28, 2024 (the “Signing Date”), HTLF entered into an Agreement and Plan of Merger (the “Merger Agreement”) with UMB Financial Corporation, a Missouri corporation (“UMB”) and Blue Sky Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of UMB (“Blue Sky Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, (i) Blue Sky Merger Sub will merge with and into HTLF (the “Merger”), with HTLF surviving the Merger as a wholly owned subsidiary of UMB (the “Surviving Entity”) and (ii) immediately following the effective time of the Merger (the “Effective Time”) and as part of a single, integrated transaction, the Surviving Entity will merge with and into UMB (the “Second Merger”, and together with the Merger, the “Mergers”), with UMB surviving the Second Merger (the “Surviving Corporation”). On the day immediately following the closing date of the Mergers, UMB will cause HTLF’s wholly owned banking subsidiary, HTLF Bank, to merge with and into UMB’s wholly owned banking subsidiary, UMB Bank, National Association (the “Bank Merger”), with UMB Bank, National Association continuing as the surviving bank in the Bank Merger. The Merger Agreement was unanimously approved by the Board of Directors of each of HTLF and UMB.

Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, each share of common stock, par value $1.00 per share, of HTLF (“HTLF Common Stock”) issued and outstanding immediately prior to the Effective Time, other than certain shares held by UMB or HTLF, will be converted into the right to receive 0.55 shares (the “Exchange Ratio,” and such shares, the “Merger Consideration”) of common stock, $1.00 par value, of UMB (“UMB Common Stock”) and cash in lieu of fractional shares. At the Effective Time, each share of 7.00% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E, par value $1.00 per share of HTLF (the “HTLF Preferred Stock”), issued and outstanding immediately before the Effective Time will be converted into the right to receive one share of a newly created series of preferred stock of UMB (“UMB Preferred Stock”) with such rights, preferences, privileges and powers (including voting powers) as set forth in the Certificate of Designations attached as an exhibit to the Merger Agreement.

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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 nine- months ended September 30, 2024 and 2023, are shown in the table below, dollars and number of shares in thousands, except per share data:

			Three Months Ended September 30,
			2024						2023
Net income attributable to HTLF			$	64,153					$	48,091
Preferred dividends			(2,013)						(2,013)
Net income available to common stockholders			$	62,140					$	46,078
Weighted average common shares outstanding for basic earnings per share			43,000						42,761
Assumed incremental common shares issued upon vesting of outstanding restricted stock units			195						52
Weighted average common shares for diluted earnings per share			43,195						42,813
Earnings per common share — basic			$	1.45					$	1.08
Earnings per common share — diluted			$	1.44					$	1.08
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation			—						204
Number of antidilutive stock options excluded from diluted earnings per share computation			31						58
			Nine Months Ended September 30,
			2024						2023
Net income			$	155,602					$	150,283
Preferred dividends			(6,038)						(6,038)
Net income available to stockholders			$	149,564					$	144,245
Weighted average common shares outstanding for basic earnings per share			42,908						42,681
Assumed incremental common shares issued upon vesting of outstanding restricted stock units			172						89
Weighted average common shares for diluted earnings per share			43,080						42,770
Earnings per common share — basic			$	3.49					$	3.38
Earnings per common share — diluted			$	3.47					$	3.37
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation			—						107
Number of antidilutive stock options excluded from diluted earnings per share computation			53						62

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.

In early October, HTLF terminated the interest rate swaps designated as fair value hedges with initial notional amounts totaling $838.1 million which were primarily designed to provide protection against unrealized securities losses. Additionally in early October, HTLF terminated the interest rate swaps designated as fair value hedges with total original notional amounts of $2.50 billion which were used to convert certain long-term fixed rate loans to floating rates to hedge interest rate risk exposure. The $1.8 million net fair value basis will be amortized over the remaining life of the underlying assets.

In early November, HTLF paid off the $500.0 million advance from the Bank Term Funding Program ("BTFP"). The BTFP advance was obtained during the first quarter of 2024 and was due in 2025, prepayable at any time without penalty. HTLF Bank pledged $501.8 million of securities to support the borrowings as of September 30, 2024.

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Effect of New Financial Accounting Standards

ASU 2023-02

In March 2023, the FASB issued ASU 2023-02 "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)." ASU 2023-02 expands the permitted use of the proportional amortization method, which is currently only available to low-income housing tax credit investments, to other tax equity investments if certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the income tax benefits received and both the amortization of the investment and the income tax benefits received are recognized as a component of income tax expense. This ASU was effective on January 1, 2024. HTLF has elected to use the proportional amortization method for investments in low-income housing projects. The amendments in this ASU do not have a material impact on the results of operations or financial position.

ASU 2023-06

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to, or technical corrections of, the current requirements. Each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. The amendments in this ASU are not expected to have a material impact on the results of operations or financial position.

ASU 2023-07

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" to improve disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This update does not change how a public entity identifies its operating segments; however, it does require that an entity that has single reportable segment provide all the disclosures required by the amendments in this update. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. A public entity should apply the amendments in this update retrospectively to all prior periods presented in the consolidated financial statements. Early adoption is permitted. We currently have one reportable operating segment. This ASU will not impact our consolidated financial statements and will have minimal impact to our disclosures, requiring identification of the chief operating decision maker and the information used to make operating decisions and to allocate resources.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” that require public business entities to annually disclose (1) specific categories in their rate reconciliation; (2) additional information for reconciling items that meet a quantitative threshold; (3) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes; (4) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which the income taxes paid that meet a quantitative threshold; (5) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign; and (6) income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The ASU eliminates the requirement to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months and to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. For public business entities, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis, but retrospective application is permitted. HTLF is currently evaluating the impact of the standard and does not anticipate it will have a significant impact on the results of operations, financial position, or liquidity.

Qualified Affordable Housing Investments

HTLF uses the proportional amortization method for investments in low-income housing projects. HTLF’s net investments in low-income housing projects were $5.2 million and $5.9 million as of September 30, 2024, and December 31, 2023, respectively, and are included in other assets in the consolidated balance sheets.

With respect to HTLF’s investment in low-income housing projects for the quarter ended September 30, 2024, we recognized income tax credits and other income tax benefits of $257,000 and $33,000, respectively. The total income tax benefits of $290,000 are partially offset in the “income taxes” item in the consolidated statements of income by $235,000 of investment amortization recognized, for a net income tax benefit of $55,000. The cash flows related to the total income tax benefits are presented in the following line items in the consolidated statement of cash flows:

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•$55,000 Net Income Tax Benefit, in the "Net income" line item in operating activities;

•$235,000 Investment Amortization, in the "Other, net" line item, which is an adjustment to reconcile net income to cash from operating activities;

•$257,000 Tax Credits, in the "Other, net" line item, which is also an adjustment to reconcile net income to cash from operating activities; and

•$33,000 Other Tax Benefits Recognized, in the "Other, net" line item, which is also an adjustment to reconcile net income to cash from operating activities.

There was no non-income-tax-related activity or impairment losses related to the low-income housing investments this reporting period.

With respect to HTLF’s investment in low-income housing projects for the nine months ended September 30, 2024, we recognized income tax credits and other income tax benefits of $770,000 and $98,000, respectively. The total income tax benefits of $868,000 are partially offset in the “income taxes” item in the consolidated statements of income by $704,000 of investment amortization recognized, for a net income tax benefit of $164,000. The cash flows related to the total income tax benefits are presented in the following line items in the consolidated statement of cash flows:

•$164,000 Net Income Tax Benefit, in the "Net income" line item in operating activities;

•$704,000 Investment Amortization, in the "Other, net" line item, which is an adjustment to reconcile net income to cash from operating activities;

•$770,000 Tax Credits, in the "Other, net" line item, which is also an adjustment to reconcile net income to cash from operating activities; and

•$98,000 Other Tax Benefits Recognized, in the "Other, net" line item, which is also an adjustment to reconcile net income to cash from operating activities.

There was no non-income-tax-related activity or impairment losses related to the low-income housing investments this reporting period.

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NOTE 2: 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 September 30, 2024, and December 31, 2023, are summarized in the table below, in thousands:

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
September 30, 2024
U.S. treasuries			$	7,999					$	12					$	(48)					$	7,963
U.S. agencies			11,540						—						(100)						11,440
Obligations of states and political subdivisions			831,693						41						(91,110)						740,624
Mortgage-backed securities - agency			1,529,857						54						(184,934)						1,344,977
Mortgage-backed securities - non-agency			1,274,395						4,627						(42,326)						1,236,696
Commercial mortgage-backed securities - agency			71,504						—						(8,971)						62,533
Commercial mortgage-backed securities - non-agency			394,298						28						(6,385)						387,941
Asset-backed securities			129,896						—						(7,166)						122,730
Corporate bonds			122,444						—						(2,130)						120,314
Total debt securities			4,373,626						4,762						(343,170)						4,035,218
Equity securities with a readily determinable fair value			22,117						—						—						22,117
Total			$	4,395,743					$	4,762					$	(343,170)					$	4,057,335
December 31, 2023
U.S. treasuries			$	32,459					$	—					$	(341)					$	32,118
U.S. agencies			14,724						—						(194)						14,530
Obligations of states and political subdivisions			839,754						25						(98,534)						741,245
Mortgage-backed securities - agency			1,620,409						13						(226,793)						1,393,629
Mortgage-backed securities - non-agency			1,616,414						363						(87,649)						1,529,128
Commercial mortgage-backed securities - agency			76,076						—						(11,288)						64,788
Commercial mortgage-backed securities - non-agency			526,974						—						(12,116)						514,858
Asset-backed securities			232,140						—						(14,770)						217,370
Corporate bonds			120,338						—						(2,169)						118,169
Total debt securities			5,079,288						401						(453,854)						4,625,835
Equity securities with a readily determinable fair value			21,056						—						—						21,056
Total			$	5,100,344					$	401					$	(453,854)					$	4,646,891

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of September 30, 2024, and December 31, 2023, are summarized in the table below, in thousands:

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
September 30, 2024
Obligations of states and political subdivisions			$	839,623					$	9,913					(5,240)						$	844,296
Total			$	839,623					$	9,913					$	(5,240)					$	844,296
December 31, 2023
Obligations of states and political subdivisions			$	838,241					$	3,622					$	(25,464)					$	816,399
Total			$	838,241					$	3,622					$	(25,464)					$	816,399

As of September 30, 2024, and December 31, 2023, HTLF had $24.1 million and $28.0 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 carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses calculation.

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The amortized cost and estimated fair value of investment securities carried at fair value at September 30, 2024, 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.

			September 30, 2024
			Amortized Cost						Estimated Fair Value
Due in 1 year or less			$	6,008					$	5,941
Due in 1 to 5 years			57,089						55,615
Due in 5 to 10 years			28,718						26,262
Due after 10 years			881,861						792,523
Total debt securities			973,676						880,341
Mortgage and asset-backed securities			3,399,950						3,154,877
Equity securities with a readily determinable fair value			22,117						22,117
Total investment securities			$	4,395,743					$	4,057,335

The amortized cost and estimated fair value of debt securities held to maturity at September 30, 2024, 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.

			September 30, 2024
			Amortized Cost						Estimated Fair Value
Due in 1 year or less			$	5,723					$	5,770
Due in 1 to 5 years			96,350						97,899
Due in 5 to 10 years			223,032						227,641
Due after 10 years			514,518						512,986
Total debt securities			$	839,623					$	844,296

As of September 30, 2024, and December 31, 2023, securities with a carrying value of $3.47 billion and $2.63 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 nine months ended September 30, 2024 and 2023, are summarized as follows, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Proceeds from sales			$	31,036					$	44,457					$	128,872					$	331,196
Gross security gains			—						803						—						1,286
Gross security losses			9,299						744						19,855						2,656

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 September 30, 2024, and December 31, 2023. 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 September 30, 2023, and December 31, 2022, respectively.

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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
September 30, 2024
U.S. treasuries			$	—					$	—					—						$	4,955					$	(48)					1						$	4,955					$	(48)					1
U.S. agencies			—						—						—						11,440						(100)						4						11,440						(100)						4
Obligations of states and political subdivisions			1,690						(10)						3						732,155						(91,100)						146						733,845						(91,110)						149
Mortgage-backed securities - agency			—						—						—						1,338,682						(184,934)						158						1,338,682						(184,934)						158
Mortgage-backed securities - non-agency			738						(7,756)						1						666,901						(34,570)						29						667,639						(42,326)						30
Commercial mortgage-backed securities - agency			—						—						—						62,533						(8,971)						15						62,533						(8,971)						15
Commercial mortgage-backed securities - non-agency			7,708						(106)						1						375,513						(6,279)						13						383,221						(6,385)						14
Asset-backed securities			91,131						(4,334)						3						31,599						(2,832)						4						122,730						(7,166)						7
Corporate bonds			—						—						—						54,768						(2,130)						6						54,768						(2,130)						6
Total temporarily impaired securities			$	101,267					$	(12,206)					8						$	3,278,546					$	(330,964)					376						$	3,379,813					$	(343,170)					384
December 31, 2023
U.S. treasuries			$	2,985					$	(12)					1						$	26,138					$	(329)					3						$	29,123					$	(341)					4
U.S. agencies			—						—						—						14,530						(194)						4						14,530						(194)						4
Obligations of states and political subdivisions			1,440						(65)						1						736,653						(98,469)						150						738,093						(98,534)						151
Mortgage-backed securities - agency			194						(2)						2						1,392,769						(226,791)						166						1,392,963						(226,793)						168
Mortgage-backed securities - non-agency			415,934						(24,568)						12						902,291						(63,081)						35						1,318,225						(87,649)						47
Commercial mortgage-backed securities - agency			—						—						—						64,788						(11,288)						17						64,788						(11,288)						17
Commercial mortgage-backed securities - non-agency			—						—						—						507,044						(12,116)						16						507,044						(12,116)						16
Asset-backed securities			148,063						(9,723)						4						69,307						(5,047)						7						217,370						(14,770)						11
Corporate bonds			61,031						(111)						1						57,138						(2,058)						8						118,169						(2,169)						9
Total temporarily impaired securities			$	629,647					$	(34,481)					21						$	3,770,658					$	(419,373)					406						$	4,400,305					$	(453,854)					427

Securities held to maturity			Less than 12 months																		12 months or longer																		Total
			Fair Value						Unrealized Losses						Count						Fair Value						Unrealized Losses						Count						Fair Value						Unrealized Losses						Count
September 30, 2024
Obligations of states and political subdivisions			$	—					$	—					—						$	359,221					$	(5,240)					66						$	359,221					$	(5,240)					66
Total temporarily impaired securities			$	—					—						—						$	359,221					$	(5,240)					66						$	359,221					(5,240)						66
December 31, 2023
Obligations of states and political subdivisions			$	145,471					$	(3,706)					23						$	569,691					$	(21,758)					126						$	715,162					$	(25,464)					149
Total temporarily impaired securities			$	145,471					$	(3,706)					23						$	569,691					$	(21,758)					126						$	715,162					$	(25,464)					149

HTLF reviews each security in the investment securities portfolio on a quarterly basis for potential credit losses, taking 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, and security and industry specific economic conditions. 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.

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The unrealized losses on HTLF's commercial mortgage, mortgage and asset-backed securities are the result of changes in market interest rates or widening of market spreads subsequent to HTLF's 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, as of September 30, 2024, 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 nine months ended September 30, 2024 and 2023.

The unrealized losses on HTLF's obligations of states and political subdivisions available for sale 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 declines in fair value are attributable to changes in interest rates or widening market spreads due to insurance company downgrades and not underlying credit quality, and because, as of September 30, 2024, 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 nine months ended September 30, 2024 and 2023.

The following table summarizes, in thousands, the carrying amount of HTLF's held to maturity debt securities by investment rating as of September 30, 2024, and December 31, 2023, which are updated quarterly and used to monitor the credit quality of the securities:

			September 30, 2024						December 31, 2023
Rating
AAA			$	99,869					$	88,550
AA, AA+, AA-			562,582						583,816
A+, A, A-			149,549						139,658
BBB			19,762						20,133
Not Rated			7,861						6,084
Total			$	839,623					$	838,241

Included in other investments were shares of stock in Federal Home Loan Bank (the "FHLB") at an amortized cost of $2.2 million at September 30, 2024, and $25.8 million at December 31, 2023.

HTLF Bank is required by federal law to maintain FHLB stock as a member of the FHLB. 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 September 30, 2024, and December 31, 2023, did not consider the investments to be impaired.

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NOTE 3: LOANS

Loans as of September 30, 2024, and December 31, 2023, were as follows, in thousands:

			September 30, 2024						December 31, 2023
Loans receivable held to maturity:
Commercial and industrial			$	3,503,093					$	3,652,047
Paycheck Protection Program ("PPP")			1,582						2,777
Owner occupied commercial real estate			2,489,697						2,638,175
Non-owner occupied commercial real estate			2,455,396						2,553,711
Real estate construction			1,119,922						1,011,716
Agricultural and agricultural real estate			701,211						919,184
Residential real estate			707,984						797,829
Consumer			462,032						493,206
Total loans receivable held to maturity			11,440,917						12,068,645
Allowance for credit losses			(106,797)						(122,566)
Loans receivable, net			$	11,334,120					$	11,946,079

As of September 30, 2024, and December 31, 2023, HTLF had $60.1 million and $65.4 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, 2024, and December 31, 2023, 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 on nonaccrual with $500,000 or more of total exposure 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
September 30, 2024
Commercial and industrial			$	3,185					$	20,234					$	23,419					$	18,428					$	3,484,665					$	3,503,093
PPP			—						—						—						—						1,582						1,582
Owner occupied commercial real estate			2						13,249						13,251						2,633						2,487,064						2,489,697
Non-owner occupied commercial real estate			4,447						12,972						17,419						10,108						2,445,288						2,455,396
Real estate construction			22						35,458						35,480						697						1,119,225						1,119,922
Agricultural and agricultural real estate			2,277						1,526						3,803						18,204						683,007						701,211
Residential real estate			—						5,355						5,355						727						707,257						707,984
Consumer			—						8,070						8,070						—						462,032						462,032
Total			$	9,933					$	96,864					$	106,797					$	50,797					$	11,390,120					$	11,440,917
December 31, 2023
Commercial and industrial			$	18,425					$	22,254					$	40,679					$	41,847					$	3,610,200					$	3,652,047
PPP			—						—						—						—						2,777						2,777
Owner occupied commercial real estate			—						17,156						17,156						30,400						2,607,775						2,638,175
Non-owner occupied commercial real estate			—						17,249						17,249						—						2,553,711						2,553,711
Real estate construction			56						28,717						28,773						697						1,011,019						1,011,716
Agricultural and agricultural real estate			1,932						2,360						4,292						6,700						912,484						919,184
Residential real estate			—						5,845						5,845						741						797,088						797,829
Consumer			—						8,572						8,572						—						493,206						493,206
Total			$	20,413					$	102,153					$	122,566					$	80,385					$	11,988,260					$	12,068,645

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The following tables show the amortized cost basis as of September 30, 2024 and September 30, 2023, of the loans modified during the three and nine months ended September 30, 2024 and September 30, 2023, to borrowers experiencing financial difficulty by loan category and type of concession granted, dollars in thousands.

			Loan Modifications Made to Borrowers Experiencing Financial Difficulty
			Term Extension												Term Extension and Interest Only Payments												Term Extension and Interest Rate Reduction
For the Three Months Ended September 30, 2024			Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category
Commercial and industrial			$	1,068					0.03		%				$	—					—		%				$	—					—		%
Real estate construction			86						0.01						—						—						—						—
Agricultural and agricultural real estate			—						—						—						—						—						—
Total			$	1,154					0.01		%				$	—					—		%				$	—					—		%

			Loan Modifications Made to Borrowers Experiencing Financial Difficulty
			Term Extension												Term Extension and Interest Only Payments												Term Extension and Interest Rate Reduction
For the Three Months Ended September 30, 2023			Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category
Commercial and industrial			$	—					—		%				$	—					—		%				$	—					—		%
Real estate construction			—						—						—						—						—						—
Agricultural and agricultural real estate			1,992						0.24						—						—						—						—
Total			$	1,992					0.02		%				$	—					—		%				$	—					—		%

			Loan Modifications Made to Borrowers Experiencing Financial Difficulty
			Term Extension												Term Extension and Interest Only Payments												Term Extension and Interest Rate Reduction
For the Nine Months Ended September 30, 2024			Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category
Commercial and industrial			$	1,285					0.04		%				$	—					—		%				$	—					—		%
Owner occupied commercial real estate			—						—						—						—						—						—
Non-owner occupied commercial real estate			614						0.03						—			0			—						—						—
Real estate construction			86						0.01						—						—						3,116						0.28
Residential real estate			1,347						0.19						—						—						—						—
Consumer			163						0.04						—						—
Total			$	3,495					0.03		%				$	—					—		%				$	3,116					0.03		%

			Loan Modifications Made to Borrowers Experiencing Financial Difficulty
			Term Extension												Term Extension and Interest Only Payments												Term Extension and Interest Rate Reduction
For the Nine Months Ended September 30, 2023			Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category						Amortized Cost Basis						% of Loan Category
Commercial and industrial			$	4,233					0.12		%				$	—					—		%				$	—					—		%
Owner occupied commercial real estate			—						—						5,043						0.21						—						—
Non-owner occupied commercial real estate			—						—						—						—						—						—
Real estate construction			1,453						0.14						—						—						—						—
Agricultural and agricultural real estate			3,546						0.42						—						—						—						—
Residential real estate			741						0.09						—						—						—						—
Total			$	9,973					0.08		%				$	5,043					0.04		%				$	—					—		%

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The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty in the nine months ending September 30, 2024 and September 30, 2023.

For the Nine Months Ended September 30, 2024						Weighted Average Term Extension (Months)						Weighted Average Term Extension and Interest Only Payments (Months)						Weighted Average Term Extension and Interest Rate Reduction (Months)
Commercial and industrial						8						0						0
Non-owner occupied commercial real estate						13						0						25
Real estate construction						13						0						0
Residential real estate						4						0						0
Consumer						83						0						0

For the Nine Months Ended September 30, 2023						Weighted Average Term Extension (Months)						Weighted Average Term Extension and Interest Only Payments (Months)						Weighted Average Term Extension and Interest Rate Reduction (Months)
Commercial and industrial						8						0						0
Owner occupied commercial real estate						0						12						0
Real estate construction						6						0						0
Agricultural and agricultural real estate						11						0						0
Residential real estate						12						0						0

At September 30, 2024, there were no unfunded commitments to extend credit to the borrowers experiencing financial difficulty.

HTLF had no loans to borrowers experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2024, that had been modified in the twelve-month period prior to the default.

HTLF closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables show the performance of loans that have been modified in the nine months ended September 30, 2024 and September 30, 2023, dollars 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
September 30, 2024
Commercial and industrial			$	—					$	—					$	—											$	—					$	1,285					$	—
Non-owner occupied commercial real estate			—						614						—												614						—						—
Real estate construction			—						—						—												—						3,116						86
Residential real estate			—						1,347						—												1,347						—						—
Consumer			—						—						—												—						—						163
Total			$	—					$	1,961					$	—											$	1,961					$	4,401					$	249

			Accruing Loans
			30-59 Days Past Due						60-89 Days Past Due						90 Days or More Past Due												Total Past Due						Current						Nonaccrual
September 30, 2023
Commercial and industrial			$	—					$	—					$	—											$	—					$	4,233					$	—
Owner occupied commercial real estate			—						—						—												—						5,043						—
Real estate construction			—						—						—												—						—						1,453
Agricultural and agricultural real estate			—						—						—												—						3,546						—
Residential real estate			—						—						—												—						—						741
Total			$	—					$	—					$	—											$	—					$	12,822					$	2,194

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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 consists of a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the pass category is monitored for early identification of credit deterioration and risk rating migration analysis.

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

The "substandard" rating is assigned to loans that are inadequately protected by the current net worth and repaying capacity of the borrower and that may be further at risk due to deterioration in the value of collateral pledged. Well-defined weaknesses jeopardize liquidation of the debt. These loans are still considered collectible; however, a distinct possibility exists that HTLF will sustain some loss if deficiencies are not corrected. Substandard loans may exhibit some or all of the following weaknesses: deteriorating financial trends, insufficient 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 these loans 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, capital, and the 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, 2024, and December 31, 2023.

The following table shows the risk category of loans by loan category, year of origination and charge-offs as of September 30, 2024, in thousands:

As of September 30, 2024			Amortized Cost Basis of Term Loans by Year of Origination
			2024						2023						2022						2021						2020						2019 and Prior						Revolving						Total
Commercial and industrial
Pass			$	414,619					$	408,974					$	566,449					$	244,760					$	153,020					$	343,559					$	1,068,024					$	3,199,405
Watch			13,954						54,206						48,302						12,535						2,173						6,583						105,711						243,464
Substandard			7,179						3,200						15,092						1,086						5,652						2,865						25,150						60,224
Commercial and industrial total			$	435,752					$	466,380					$	629,843					$	258,381					$	160,845					$	353,007					$	1,198,885					$	3,503,093
Commercial and industrial charge-offs			$	—					$	28					$	14,391					$	813					$	3,299					$	2,358					$	9,328					$	30,217
PPP
Pass			$	—					$	—					$	—					$	1,402					$	22					$	—					$	—					$	1,424
Watch			—						—						—						158						—						—						—						158
Substandard			—						—						—						—						—						—						—						—
PPP total			$	—					$	—					$	—					$	1,560					$	22					$	—					$	—					$	1,582
PPP charge-offs			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Owner occupied commercial real estate
Pass			$	118,081					$	397,969					$	480,966					$	698,709					$	200,112					$	345,593					$	38,270					$	2,279,700
Watch			6,316						5,595						67,107						1,421						2,811						41,544						3,346						128,140
Substandard			—						23,318						30,964						2,764						10,547						14,264						—						81,857
Owner occupied commercial real estate total			$	124,397					$	426,882					$	579,037					$	702,894					$	213,470					$	401,401					$	41,616					$	2,489,697
Owner occupied commercial real estate charge-offs			$	—					$	—					$	87					$	—					$	247					$	88					$	—					$	422
Non-owner occupied commercial real estate
Pass			$	112,658					$	462,424					$	626,077					$	381,385					$	169,602					$	438,111					$	16,734					$	2,206,991
Watch			11,021						65,250						61,380						20,632						2,825						27,428						—						188,536
Substandard			720						—						134						8,149						362						50,504						—						59,869
Non-owner occupied commercial real estate total			$	124,399					$	527,674					$	687,591					$	410,166					$	172,789					$	516,043					$	16,734					$	2,455,396
Non-owner occupied commercial real estate charge-offs			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—

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As of September 30, 2024			Amortized Cost Basis of Term Loans by Year of Origination
			2024						2023						2022						2021						2020						2019 and Prior						Revolving						Total
Real estate construction
Pass			$	126,889					$	343,871					$	374,867					$	81,057					$	7,059					$	8,969					$	6,850					$	949,562
Watch			—						—						40,782						63,207						166						—						—						104,155
Substandard			—						9,375						56,656						11						12						65						86						66,205
Real estate construction total			$	126,889					$	353,246					$	472,305					$	144,275					$	7,237					$	9,034					$	6,936					$	1,119,922
Real estate construction charge-offs			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Agricultural and agricultural real estate
Pass			$	74,398					$	109,176					$	175,308					$	92,490					$	48,115					$	49,247					$	117,190					$	665,924
Watch			188						1,940						807						273						31						802						7,012						11,053
Substandard			731						1,136						8,610						1,619						121						12,017						—						24,234
Agricultural and agricultural real estate total			$	75,317					$	112,252					$	184,725					$	94,382					$	48,267					$	62,066					$	124,202					$	701,211
Agricultural and agricultural real estate charge-offs			$	—					$	12					$	9,321					$	17					$	12					$	167					$	648					$	10,177
Residential real estate
Pass			$	34,859					$	56,401					$	145,289					$	209,388					$	61,100					$	162,320					$	18,401					$	687,758
Watch			44						1,841						1,174						1,457						2,479						4,545						171						11,711
Substandard			—						773						833						3,161						366						3,382						—						8,515
Residential real estate total			$	34,903					$	59,015					$	147,296					$	214,006					$	63,945					$	170,247					$	18,572					$	707,984
Residential real estate charge-offs			$	—					$	—					$	—					$	—					$	—					$	182					$	—					$	182
Consumer
Pass			$	27,040					$	33,375					$	48,793					$	27,657					$	2,780					$	6,461					$	307,812					$	453,918
Watch			353						663						366						141						20						862						2,248						4,653
Substandard			169						158						254						182						190						1,283						1,225						3,461
Consumer total			$	27,562					$	34,196					$	49,413					$	27,980					$	2,990					$	8,606					$	311,285					$	462,032
Consumer charge-offs			$	12					$	95					$	183					$	245					$	17					$	86					$	1,982					$	2,620
Total Pass			$	908,544					$	1,812,190					$	2,417,749					$	1,736,848					$	641,810					$	1,354,260					$	1,573,281					$	10,444,682
Total Watch			31,876						129,495						219,918						99,824						10,505						81,764						118,488						691,870
Total Substandard			8,799						37,960						112,543						16,972						17,250						84,380						26,461						304,365
Total Loans			$	949,219					$	1,979,645					$	2,750,210					$	1,853,644					$	669,565					$	1,520,404					$	1,718,230					$	11,440,917
Total charge-offs			$	12					$	135					$	23,982					$	1,075					$	3,575					$	2,881					$	11,958					$	43,618

The following table shows the risk category of loans by loan category and year of origination as of December 31, 2023, in thousands.

As of December 31, 2023			Amortized Cost Basis of Term Loans by Year of Origination
			2023						2022						2021						2020						2019						2018 and Prior						Revolving						Total
Commercial and industrial
Pass			$	608,030					$	779,218					$	333,900					$	187,406					$	78,455					$	327,775					$	1,159,397					$	3,474,181
Watch			20,694						19,788						257						3,631						2,398						2,953						28,749						78,470
Substandard			20,171						12,658						2,636						5,447						18,535						7,489						32,460						99,396
Commercial and industrial total			$	648,895					$	811,664					$	336,793					$	196,484					$	99,388					$	338,217					$	1,220,606					$	3,652,047
Commercial and industrial charge-offs			$	245					$	794					$	680					$	1,425					$	563					$	1,949					$	2,966					$	8,622
PPP
Pass			$	—					$	—					$	2,591					$	50					$	—					$	—					$	—					$	2,641
Watch			—						—						89						—						—						—						—						89
Substandard			—						—						47						—						—						—						—						47
PPP total			$	—					$	—					$	2,727					$	50					$	—					$	—					$	—					$	2,777
PPP charge-offs			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—

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As of December 31, 2023			Amortized Cost Basis of Term Loans by Year of Origination
			2023						2022						2021						2020						2019						2018 and Prior						Revolving						Total
Owner occupied commercial real estate
Pass			$	443,683					$	547,898					$	799,978					$	225,257					$	225,405					$	224,608					$	41,072					$	2,507,901
Watch			8,052						25,947						13,114						2,662						8,115						7,553						—						65,443
Substandard			31,904						10,489						2,268						11,609						6,390						2,171						—						64,831
Owner occupied commercial real estate total			$	483,639					$	584,334					$	815,360					$	239,528					$	239,910					$	234,332					$	41,072					$	2,638,175
Owner occupied commercial real estate charge-offs			$	—					$	802					$	—					$	5					$	—					$	63					$	—					$	870
Non-owner occupied commercial real estate
Pass			$	480,683					$	656,824					$	423,420					$	203,330					$	262,541					$	251,499					$	26,978					$	2,305,275
Watch			71,400						34,651						8,237						3,834						27,345						57,083						—						202,550
Substandard			5,043						952						1,391						—						4,238						34,262						—						45,886
Non-owner occupied commercial real estate total			$	557,126					$	692,427					$	433,048					$	207,164					$	294,124					$	342,844					$	26,978					$	2,553,711
Non-owner occupied commercial real estate charge-offs			$	—					$	52					$	—					$	29					$	399					$	147					$	—					$	627
Real estate construction
Pass			$	283,519					$	468,646					$	176,604					$	9,889					$	11,048					$	3,405					$	6,486					$	959,597
Watch			629						33,220						9,418						72						—						65						—						43,404
Substandard			—						8,522						—						107						—						—						86						8,715
Real estate construction total			$	284,148					$	510,388					$	186,022					$	10,068					$	11,048					$	3,470					$	6,572					$	1,011,716
Real estate construction charge-offs			$	284					$	—					$	—					$	32					$	—					$	—					$	—					$	316
Agricultural and agricultural real estate
Pass			$	152,665					$	208,375					$	114,798					$	67,006					$	28,247					$	43,663					$	260,941					$	875,695
Watch			2,245						16,257						293						622						70						349						427						20,263
Substandard			12						7,616						1,649						4						855						12,591						499						23,226
Agricultural and agricultural real estate total			$	154,922					$	232,248					$	116,740					$	67,632					$	29,172					$	56,603					$	261,867					$	919,184
Agricultural and agricultural real estate charge-offs			$	—					$	—					$	—					$	9					$	—					$	1					$	5,309					$	5,319
Residential real estate
Pass			$	71,470					$	177,564					$	241,362					$	73,029					$	42,526					$	155,899					$	19,534					$	781,384
Watch			171						973						945						659						158						4,845						—						7,751
Substandard			741						150						3,400						464						290						3,649						—						8,694
Residential real estate total			$	72,382					$	178,687					$	245,707					$	74,152					$	42,974					$	164,393					$	19,534					$	797,829
Residential real estate charge-offs			$	—					$	59					$	124					$	—					$	—					$	—					$	—					$	183
Consumer
Pass			$	45,595					$	62,900					$	35,459					$	7,731					$	3,663					$	6,109					$	324,218					$	485,675
Watch			730						84						694						21						41						644						2,060						4,274
Substandard			80						308						401						75						159						1,769						465						3,257
Consumer total			$	46,405					$	63,292					$	36,554					$	7,827					$	3,863					$	8,522					$	326,743					$	493,206
Consumer charge-offs			$	2					$	246					$	154					$	27					$	19					$	112					$	3,117					$	3,677
Total Pass			$	2,085,645					$	2,901,425					$	2,128,112					$	773,698					$	651,885					$	1,012,958					$	1,838,626					$	11,392,349
Total Watch			103,921						130,920						33,047						11,501						38,127						73,492						31,236						422,244
Total Substandard			57,951						40,695						11,792						17,706						30,467						61,931						33,510						254,052
Total Loans			$	2,247,517					$	3,073,040					$	2,172,951					$	802,905					$	720,479					$	1,148,381					$	1,903,372					$	12,068,645
Total charge-offs			$	531					$	1,953					$	958					$	1,527					$	981					$	2,272					$	11,392					$	19,614

Included in the nonpass loans at September 30, 2024, and December 31, 2023, were $158,000 and $136,000, 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

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the whole lending relationship. HTLF has no allowance recorded related to the PPP loans because of the 100% government guarantee through the United States Small Business Administration.

Changes in credit risk are monitored on a continuous basis as part of relationship management, and changes in risk ratings are made when credit quality improves or deteriorates in accordance with HTLF's credit risk rating framework. All individually assessed loans are reviewed at least annually.

As of September 30, 2024, HTLF had $918,000 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, 2024, and December 31, 2023, 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
September 30, 2024
Commercial and industrial			$	3,367					$	509					$	832					$	4,708					$	3,472,413					$	25,972					$	3,503,093
PPP			—						—						—						—						1,582						—						1,582
Owner occupied commercial real estate			1,503						103						—						1,606						2,482,680						5,411						2,489,697
Non-owner occupied commercial real estate			6						903						—						909						2,444,229						10,258						2,455,396
Real estate construction			3,707						13,105						—						16,812						1,102,948						162						1,119,922
Agricultural and agricultural real estate			1,058						—						—						1,058						679,795						20,358						701,211
Residential real estate			2,010						1,483						—						3,493						699,183						5,308						707,984
Consumer			1,402						334						—						1,736						458,650						1,646						462,032
Total loans receivable held to maturity			$	13,053					$	16,437					$	832					$	30,322					$	11,341,480					$	69,115					$	11,440,917
December 31, 2023
Commercial and industrial			$	1,738					$	126					$	2,203					$	4,067					$	3,601,165					$	46,815					$	3,652,047
PPP			94						53						—						147						2,630						—						2,777
Owner occupied commercial real estate			205						2,664						74						2,943						2,603,640						31,592						2,638,175
Non-owner occupied commercial real estate			875						—						—						875						2,552,469						367						2,553,711
Real estate construction			332						—						—						332						1,010,601						783						1,011,716
Agricultural and agricultural real estate			121						—						12						133						909,841						9,210						919,184
Residential real estate			2,082						273						21						2,376						790,367						5,086						797,829
Consumer			2,257						150						197						2,604						489,029						1,573						493,206
Total loans receivable held to maturity			$	7,704					$	3,266					$	2,507					$	13,477					$	11,959,742					$	95,426					$	12,068,645

Loans delinquent 30 to 89 days as a percent of total loans were 0.26% at September 30, 2024, compared to 0.09% at December 31, 2023.

HTLF recognized $0 of interest income on nonaccrual loans during the three and nine months ended September 30, 2024 and September 30, 2023. As of September 30, 2024, and December 31, 2023, HTLF had $28.7 million and $52.5 million of nonaccrual loans with no related allowance, respectively.

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NOTE 4: ALLOWANCE FOR CREDIT LOSSES

Changes in the allowance for credit losses on loans for the three- and nine- months ended September 30, 2024, and September 30, 2023, were as follows, in thousands:

			Commercial and Industrial												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 June 30, 2024			$	44,800											$	14,714					$	13,697					$	32,210					$	8,905					$	5,036					$	7,499																	$	126,861
Charge-offs			(22,006)												(25)						—						—						(9,302)						(182)						(622)																		(32,137)
Recoveries			440												1						—						5						—						—						2,756																		3,202
Provision (benefit)			185												(1,439)						3,722						3,265						4,200						501						(1,563)																		8,871
Balance at September 30, 2024			$	23,419											$	13,251					$	17,419					$	35,480					$	3,803					$	5,355					$	8,070																	$	106,797
			Commercial and Industrial												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, 2023			$	40,679											$	17,156					$	17,249					$	28,773					$	4,292					$	5,845					$	8,572																	$	122,566
Charge-offs			(30,217)												(422)						—						—						(10,177)						(182)						(2,620)																		(43,618)
Recoveries			1,172												1						—						5						9						105						4,281																		5,573
Provision (benefit)			11,785												(3,484)						170						6,702						9,679						(413)						(2,163)																		22,276
Balance at September 30, 2024			$	23,419											$	13,251					$	17,419					$	35,480					$	3,803					$	5,355					$	8,070																	$	106,797

			Commercial and Industrial												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 June 30, 2023			$	29,396											$	14,709					$	17,976					$	28,246					$	3,511					$	7,644					$	9,716																	$	111,198
Charge-offs			(1,344)												—						(607)						—						(10)						—						(2,003)																		(3,964)
Recoveries			167												1						—						7						—						—						127																		302
Provision (benefit)			77												(36)						(85)						726						903						(537)						1,624																		2,672
Balance at September 30, 2023			$	28,296											$	14,674					$	17,284					$	28,979					$	4,404					$	7,107					$	9,464																	$	110,208
			Commercial and Industrial												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, 2022			$	29,071											$	13,948					$	16,539					$	29,998					$	2,634					$	7,711					$	9,582																	$	109,483
Charge-offs			(6,481)												(19)						(636)						—						(5,319)						(59)						(3,214)																		(15,728)
Recoveries			2,007												113						—						26						11						19						1,592																		3,768
Provision (benefit)			3,699												632						1,381						(1,045)						7,078						(564)						1,504																		12,685
Balance at September 30, 2023			$	28,296											$	14,674					$	17,284					$	28,979					$	4,404					$	7,107					$	9,464																	$	110,208

Management allocates the allowance for credit losses by pools of risk within each loan portfolio. The total allowance for credit losses is available to absorb losses from any segment of the loan portfolio. The provision expense in the nine months ended September 30, 2024 was reduced by $2.9 million due to the sale of Rocky Mountain Bank loans amounting to $343.8 million.

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Changes in the allowance for credit losses for unfunded commitments for the three and nine months ended September 30, 2024, and September 30, 2023, were as follows:

			For the Three Months Ended September 30,
			2024						2023
Balance at June 30,			$	13,057					$	18,636
Provision (benefit)			(2,595)						(1,156)
Balance at September 30,			$	10,462					$	17,480

			For the Nine Months Ended September 30,
			2024						2023
Balance at December 31,			$	16,468					$	20,196
Provision (benefit)			(6,006)						(2,716)
Balance at September 30,			$	10,462					$	17,480

NOTE 5: GOODWILL AND CORE DEPOSIT INTANGIBLE ASSETS

HTLF had goodwill of $576.0 million at both September 30, 2024, and December 31, 2023. HTLF conducts an annual internal assessment of the goodwill both at the consolidated level and at the reporting unit level as of September 30, as well as when required due to triggering events related to the uncertainty of the value of the goodwill on HTLF's balance sheet. HTLF conducted its annual internal assessment of the goodwill at HTLF or HTLF's reporting units as of September 30. There was no goodwill impairment as of the most recent assessment.

The gross carrying amount of other intangible assets consisted of core deposit intangibles and the associated accumulated amortization at September 30, 2024, and December 31, 2023, are presented in the table below, in thousands:

			September 30, 2024																		December 31, 2023
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Amortizing intangible assets:
Core deposit intangibles			$	101,185					$	87,028					$	14,157					$	101,185					$	82,770					$	18,415
Total			$	101,185					$	87,028					$	14,157					$	101,185					$	82,770					$	18,415

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

			Core Deposit Intangibles
Three months ending December 31, 2024			$	1,333
Year ending December 31,
2025			4,700
2026			3,533
2027			2,601
2028			1,287
2029			466
Thereafter			237
Total			$	14,157

NOTE 6: DERIVATIVE FINANCIAL INSTRUMENTS

HTLF uses derivative financial instruments as part of its interest rate risk management strategy, which may include interest rate swaps, fair value hedges, risk participation agreements, caps, floors, and collars. HTLF's current strategy includes the use of interest rate swaps as well as back-to-back loan swaps to assist customers in managing their interest rate risk while executing offsetting interest rate swaps with dealer counterparties.

---

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 that contain collateral posting provisions with counterparties that meet HTLF’s credit standards. HTLF has not experienced any losses from nonperformance by these counterparties. HTLF monitors counterparty risk in accordance with the provisions of ASC 815. HTLF was required to post $44.2 million of collateral at September 30, 2024, compared to $27.7 million as of December 31, 2023, related to derivative financial instruments. HTLF's counterparties were required to pledge $17.7 million at September 30, 2024, compared to $44.8 million at December 31, 2023.

HTLF's derivative and hedging instruments are recorded at fair value on the consolidated balance sheets. See Note 7, "Fair Value," for additional fair value information and disclosures.

Cash Flow Hedges

In 2021, one interest rate swap terminated, and the debt was converted to variable rate subordinated debentures. HTLF recognized all remaining cash payments related to the terminated derivatives in the first quarter of 2024 and reclassified the remaining cash payments from accumulated other comprehensive income (loss) to interest expense.

In the first quarter of 2023, HTLF terminated its interest rate swap agreement, which effectively converted $500.0 million of variable rate loans to fixed rate loans. For the next twelve months, HTLF estimates cash payments and reclassification from accumulated other comprehensive income (loss) to interest income will total $982,000.

HTLF had no derivative instruments designated as cash flow hedges at September 30, 2024.

The table below identifies the gains and losses recognized on HTLF's terminated derivative instruments designated as cash flow hedges for the three and nine months ended September 30, 2024, and September 30, 2023, in thousands:

			Effective Portion
			Recognized in OCI						Reclassified from AOCI into Income
			Amount of Gain (Loss)						Category						Amount of Gain (Loss)
Three Months Ended September 30, 2024
Interest rate swap			$	—					Interest income						$	247
Nine Months Ended September 30, 2024
Interest rate swap			$	—					Interest income						$	457
Three Months Ended September 30, 2023
Interest rate swap			$	—					Interest income						$	63
Nine Months Ended September 30, 2023
Interest rate swap			$	1,952					Interest income						$	(638)

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 also uses interest rate swaps to mitigate the risk of changes in the fair market value of certain municipal and mortgage-backed securities. The changes in the fair values of derivatives that have been designated and qualify for fair value hedge accounting are recorded in the same line item in the consolidated statements of income as the changes in the fair value of the hedged items attributable to the risk being hedged.

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.

During 2023, HTLF entered into interest rate swaps designated as fair value hedges with initial notional amounts totaling $838.1 million primarily designed to provide protection for unrealized securities losses against the impact of higher mid-to-long term interest rates. HTLF also executed interest rate swaps designated as fair value hedges with total original notional amounts of $2.50 billion to convert certain long-term fixed rate loans to floating rates to hedge interest rate risk exposure using the portfolio layer method, which allows HTLF to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors that would affect the timing and amount of cash flow.

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The table below identifies the fair value of the interest rate swaps designated as fair value hedges and the balance sheet category of the interest rate swaps as of September 30, 2024 and December 31, 2023, in thousands:

			Fair Value						Balance Sheet Category
September 30, 2024
Interest rate swaps-loans receivable held to maturity			$	20					Other assets
Interest rate swaps-securities carried at fair value			17,181						Other assets
Interest rate swaps-loans receivable held to maturity			29,808						Other liabilities
December 31, 2023
Interest rate swaps-loans receivable held to maturity			$	5,027					Other assets
Interest rate swaps-securities carried at fair value			23,182						Other assets
Interest rate swaps-loans receivable held to maturity			27,554						Other liabilities

The table below identifies the carrying amount of the hedged assets and cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets that are designated as fair value hedge accounting relationships at September 30, 2024, and December 31, 2023, in thousands:

			Location in the Consolidated Balance Sheet						Carrying Amount of the Hedged Assets						Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount of Hedged Assets
September 30, 2024
Interest rate swap			Loans receivable held to maturity						$	2,531,741					$	31,291
Interest rate swap			Securities carried at fair value						756,044						(15,218)
December 31, 2023
Interest rate swap			Loans receivable held to maturity						$	2,525,261					$	24,652
Interest rate swap			Securities carried at fair value						786,716						(20,979)

The table below identifies the net impact to interest income recognized on HTLF's fair value hedges specific to the fair value remeasurements and the income statement classification where it is recorded in comparison to the total amount of interest income presented on the consolidated statements of income for the three- and nine- months ended September 30, 2024, and September 30, 2023, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Gain (loss) recognized in interest income and fees on loans			$	6					$	(375)					$	21					$	(371)
Total amount of interest and fees on loans			192,506						182,394						587,328						505,136
Gain (loss) recognized in interest income on securities-taxable			452						(1,126)						64						(1,052)
Total amount of interest on securities-taxable			51,116						54,800						145,511						168,948

The table below identifies the effect of fair value hedge accounting on the consolidated statements of income, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Hedged item (loans receivable held to maturity)			$	42,060					$	(11,144)					$	6,661					$	(24,026)
Hedged item (securities carried at fair value)			34,374						(36,362)						5,825						(65,872)
Derivatives designated as hedging instruments on loans receivable held to maturity			(42,054)						10,769						(6,640)						23,655
Derivatives designated as hedging instruments on securities carried at fair value			(33,922)						35,236						(5,761)						64,820

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Embedded Derivatives

HTLF has fixed rate loans with embedded derivatives. These 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 September 30, 2024, and December 31, 2023, in thousands:

			Notional Amount						Fair Value						Balance Sheet Category
September 30, 2024
Embedded derivatives			$	2,248					$	26					Other assets
December 31, 2023
Embedded derivatives			$	2,391					$	61					Other assets

The table below identifies the gains and losses recognized on HTLF's embedded derivatives for the three- and nine- months ended September 30, 2024, and September 30, 2023, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Gain (loss) recognized in other noninterest income on embedded derivatives			$	(36)					$	20					$	(35)					$	(17)

Back-to-Back Loan Swaps

HTLF has loan interest rate swap relationships with customers to assist them in managing their interest rate risk. Upon entering into these loan swaps, HTLF enters into offsetting positions with counterparties in order to minimize interest rate risk to HTLF. 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. 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 nine months ended September 30, 2024, and September 30, 2023, no gain or loss was recognized. HTLF recognized $1.8 million and $4.3 million in fee income related to executing back-to-back loan swaps for customers for the three and nine months ended September 30, 2024, respectively, compared to $3.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively.

The table below identifies the balance sheet category and fair values of the derivative instruments designated as loan swaps at September 30, 2024, and December 31, 2023, in thousands:

			Notional Amount						Fair Value						Balance Sheet Category
September 30, 2024
Customer interest rate swaps			$	2,002,260					$	58,740					Other assets
Customer interest rate swaps			2,002,260						(58,740)						Other liabilities
December 31, 2023
Customer interest rate swaps			$	1,672,729					$	56,634					Other assets
Customer interest rate swaps			1,672,729						(56,634)						Other liabilities

Other Free Standing Derivatives

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 sheets 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.

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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 September 30, 2024, and December 31, 2023, in thousands:

			Notional Amount						Fair Value						Balance Sheet Category
September 30, 2024
Undesignated interest rate swaps			$	2,248					$	(26)					Other liabilities
December 31, 2023
Undesignated interest rate swaps			$	2,391					$	(61)					Other liabilities

HTLF recognizes gains and losses on other free standing derivatives in two separate income statement categories. Interest rate lock commitments and forward commitments are recognized in net gains on sale of loans held for sale and undesignated interest rate swaps are recognized in other noninterest income. As of the balance sheet dates presented above there were no interest rate lock commitments or forward commitments. The table below identifies the gains and losses recognized in income on HTLF's other free standing derivative instruments not designated as hedging instruments for the three- and nine- months ended September 30, 2024, and September 30, 2023, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Interest rate lock commitments (mortgage)			$	—					$	(352)					$	—					$	(70)
Forward commitments			—						(4)						—						87
Undesignated interest rate swaps			36						9						35						26

NOTE 7: 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, 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. 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

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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 considers third party appraisals less estimated disposal costs, 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 held for sale. 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.

Derivative Financial Instruments

HTLF's current interest rate risk strategy includes cash flow hedges and 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 September 30, 2024, and December 31, 2023, 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.

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.

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The table below presents HTLF's assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024, and December 31, 2023, 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
September 30, 2024
Assets
Securities available for sale
U.S. treasuries			$	7,963					$	7,963					$	—					$	—
U.S. agencies			11,440						—						11,440						—
Obligations of states and political subdivisions			740,624						—						740,624						—
Mortgage-backed securities - agency			1,344,977						—						1,344,977						—
Mortgage-backed securities - non-agency			1,236,696						—						1,236,696						—
Commercial mortgage-backed securities - agency			62,533						—						62,533						—
Commercial mortgage-backed securities - non-agency			387,941						—						387,941						—
Asset-backed securities			122,730						—						122,730						—
Corporate bonds			120,314						—						120,314						—
Equity securities with a readily determinable fair value			22,117						—						22,117						—
Derivative financial instruments(1)			75,967						—						75,967						—
Total assets at fair value			$	4,133,302					$	7,963					$	4,125,339					$	—
Liabilities
Derivative financial instruments(2)			$	88,574					$	—					$	88,574					$	—
Total liabilities at fair value			$	88,574					$	—					$	88,574					$	—
December 31, 2023
Assets
Securities available for sale
U.S. treasuries			$	32,118					$	32,118					$	—					$	—
U.S. agencies			14,530						—						14,530						—
Obligations of states and political subdivisions			741,245						—						741,245						—
Mortgage-backed securities - agency			1,393,629						—						1,393,629						—
Mortgage-backed securities - non-agency			1,529,128						—						1,529,128						—
Commercial mortgage-backed securities - agency			64,788						—						64,788						—
Commercial mortgage-backed securities - non-agency			514,858						—						514,858						—
Asset-backed securities			217,370						—						217,370						—
Corporate bonds			118,169						—						118,169						—
Equity securities with a readily determinable fair value			21,056						—						21,056						—
Derivative financial instruments(1)			84,904						—						84,904						—
Total assets at fair value			$	4,731,795					$	32,118					$	4,699,677					$	—
Liabilities
Derivative financial instruments(2)			$	84,249					$	—					$	84,249					$	—
Total liabilities at fair value			$	84,249					$	—					$	84,249					$	—
(1) Includes interest rate swaps, fair value hedges, embedded derivatives and back-to-back loan swaps.
(2) Includes fair value hedges, back-to-back loan swaps and free standing derivatives.

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The tables below present HTLF's assets that are measured at fair value on a nonrecurring basis as of September 30, 2024, and December 31, 2023, in thousands:

			Fair Value Measurements at September 30, 2024
			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			$	15,242					$	—					$	—					$	15,242					$	20,563
Owner occupied commercial real estate			2,631						—						—						2,631						(23)
Non-owner occupied commercial real estate			5,661						—						—						5,661						—
Real estate construction			675						—						—						675						—
Agricultural and agricultural real estate			15,927						—						—						15,927						9,269
Residential real estate			727						—						—						727						—
Total collateral dependent individually assessed loans			$	40,863					$	—					$	—					$	40,863					$	29,809
Loans held for sale			$	—					$	—					$	—					$	—					$	—
Other real estate owned			6,805						—						—						6,805						—
Premises, furniture and equipment held for sale			9,864						—						—						9,864						2,136

			Fair Value Measurements at December 31, 2023
			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			$	23,422					$	—					$	—					$	23,422					$	554
Owner occupied commercial real estate			30,400						—						—						30,400						—
Non-owner occupied commercial real estate			—						—						—						—						—
Real estate construction			642						—						—						642						—
Agricultural and agricultural real estate			4,768						—						—						4,768						5,309
Residential real estate			741						—						—						741						—
Total collateral dependent individually assessed loans			$	59,973					$	—					$	—					$	59,973					$	5,863
Loans held for sale			$	5,071					$	—					$	5,071					$	—					$	—
Other real estate owned			12,548						—						—						12,548						2,967
Premises, furniture and equipment held for sale			4,069						—						—						4,069						2,786

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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 9/30/2024

Valuation Technique

Unobservable Input

Range (Weighted Average)

Other real estate owned

$

6,805

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Premises, furniture and equipment held for sale

9,864

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Collateral dependent individually assessed loans:

Commercial and industrial

15,242

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-15%(2)

Owner occupied commercial real estate

2,631

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Non-owner occupied commercial real estate

5,661

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Real estate construction

675

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Agricultural and agricultural real estate

15,927

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-15%(2)

Residential real estate

727

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

(1) 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.

(2) 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.

Fair Value at 12/31/2023

Valuation Technique

Unobservable Input

Range (Weighted Average)

Other real estate owned

$

12,548

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Premises, furniture and equipment held for sale

4,069

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Collateral dependent individually assessed loans:

Commercial and industrial

23,422

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-12%(2)

Owner occupied commercial real estate

30,400

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-20%(2)

Non-owner occupied commercial real estate

—

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Real estate construction

642

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Agricultural and agricultural real estate

4,768

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

Residential real estate

741

Modified appraised value

Third party appraisal

(1)

Appraisal discount

0-10%(2)

(1) 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.

(2) 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.

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The table below is a summary of the estimated fair value of HTLF's financial instruments (as defined by ASC 825) as of September 30, 2024, and December 31, 2023, 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 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 September 30, 2024
			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			$	588,394					$	588,394					$	588,394					$	—					$	—
Time deposits in other financial institutions			1,050						1,050						1,050						—						—
Securities:
Carried at fair value			4,057,335						4,057,335						7,963						4,049,372						—
Held to maturity			839,623						844,296						—						844,296						—
Other investments			69,511						69,511						—						69,511						—
Loans held for sale			—						—						—						—						—
Loans, net:
Commercial and industrial			3,479,674						3,309,913						—						3,294,671						15,242
PPP			1,582						1,582						—						1,582						—
Owner occupied commercial real estate			2,476,446						2,333,179						—						2,330,548						2,631
Non-owner occupied commercial real estate			2,437,977						2,336,488						—						2,330,827						5,661
Real estate construction			1,084,442						1,085,637						—						1,084,962						675
Agricultural and agricultural real estate			697,408						644,749						—						628,822						15,927
Residential real estate			702,629						621,419						—						620,692						727
Consumer			453,962						438,892						—						438,892						—
Total Loans, net			11,334,120						10,771,859						—						10,730,996						40,863
Cash surrender value on life insurance			199,998						199,998						—						199,998						—
Derivative financial instruments(1)			75,967						75,967						—						75,967						—
Financial liabilities:
Deposits
Demand deposits			4,009,218						4,009,218						—						4,009,218						—
Savings deposits			8,926,192						8,926,192						—						8,926,192						—
Time deposits			2,017,806						2,017,806						—						2,017,806						—
Borrowings			546,219						546,219						—						546,219						—
Term Debt			373,324						375,240						—						375,240						—
Derivative financial instruments(2)			88,574						88,574						—						88,574						—
(1) Includes interest rate swaps, fair value hedges, embedded derivatives and back-to-back loan swaps.
(2) Includes fair value hedges, back-to-back loan swaps and undesignated interest rate swaps.

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															Fair Value Measurements at December 31, 2023
			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			$	323,013					$	323,013					$	323,013					$	—					$	—
Time deposits in other financial institutions			1,240						1,240						1,240						—						—
Securities:
Carried at fair value			4,646,891						4,646,891						32,118						4,614,773						—
Held to maturity			838,241						816,399						—						816,399						—
Other investments			91,277						91,277						—						91,277						—
Loans held for sale			5,071						5,071						—						5,071						—
Loans, net:
Commercial and industrial			3,611,368						3,396,628						—						3,373,206						23,422
PPP			2,777						2,777						—						2,777						—
Owner occupied commercial real estate			2,621,019						2,444,540						—						2,414,140						30,400
Non-owner occupied commercial real estate			2,536,462						2,393,931						—						2,393,931						—
Real estate construction			982,943						979,105						—						978,463						642
Agricultural and agricultural real estate			914,892						839,572						—						834,804						4,768
Residential real estate			791,984						687,428						—						686,687						741
Consumer			484,634						465,686						—						465,686						—
Total Loans, net			11,946,079						11,209,667						—						11,149,694						59,973
Cash surrender value on life insurance			197,085						197,085						—						197,085						—
Derivative financial instruments(1)			84,904						84,904						—						84,904						—
Financial liabilities:
Deposits
Demand deposits			4,500,304						4,500,304						—						4,500,304						—
Savings deposits			8,805,597						8,805,597						—						8,805,597						—
Time deposits			2,895,813						2,895,813						—						2,895,813						—
Borrowings			622,255						622,255						—						622,255						—
Term Debt			372,396						374,017						—						374,017						—
Derivative financial instruments(2)			84,249						84,249						—						84,249						—
(1) Includes interest rate swaps, fair value hedges, embedded derivatives and back-to-back loan swaps.
(2) Includes fair value hedges, back-to-back loan swaps and undesignated interest rate swaps.

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.

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.

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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 counterparty.

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.

Borrowings and Term Debt — 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 8: STOCK COMPENSATION

Under its 2024 Long-Term Incentive Plan (the "Plan"), HTLF's Compensation and Human Capital Committee, (the "Compensation Committee"), may grant non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and cash incentive awards. The Plan was approved by stockholders in May 2024 and replaces the 2020 Long-Term Incentive Plan. The Plan has authorized a total of 2,460,000 shares of common stock for issuance, of which 1,477,236 shares of common stock were available as of September 30, 2024, for issuance of future awards to employees and directors of, and service providers to, HTLF or its subsidiaries.

The cost of each 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 $189,000 and $115,000 during the nine months ended September 30, 2024 and September 30, 2023, respectively, 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"). The time-based RSUs are generally granted in the first quarter of each year and represent the right, without payment, to receive shares of HTLF common stock on a specified date in the future. Generally, the time-based RSUs vest over three years in equal installments in March of each of the three years following the year of the grant.

The Compensation Committee has also granted three-year performance-based RSUs, generally in the first quarter of each year. These performance-based RSUs will be earned based on satisfaction of performance targets for the three-year performance period as defined in the RSU agreement. These performance-based RSUs or a portion thereof vest after measurement of performance in relation to the performance targets.

The time-based RSUs (and performance-based RSUs to the extent earned) also vest upon death, disability, a "qualified retirement" (as defined in the RSU agreement), or upon certain terminations of employment related to a change in control.

All of HTLF's RSUs will be settled in common stock upon vesting. Most RSUs granted after March 2023 accrue dividend equivalents, which are paid in cash without interest only upon vesting. Dividend equivalents with respect to RSUs forfeited are also forfeited. RSUs granted prior to March 2023 are not entitled to dividend equivalents.

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A summary of the RSUs outstanding as of September 30, 2024, and September 30, 2023, and changes during the nine months ended September 30, 2024 and 2023, follows:

			2024												2023
			Shares						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value
Outstanding at January 1,			466,105						$	47.21					424,086						$	46.15
Granted			340,855						34.61						272,465						45.33
Vested			(203,582)						44.11						(175,313)						41.74
Forfeited			(68,620)						45.78						(42,091)						46.25
Outstanding at September 30,			534,758						$	40.54					479,147						$	47.29

Total compensation costs recorded for RSUs were $8.0 million and $7.4 million during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, there were $10.3 million of total unrecognized compensation costs related to the Plan for RSUs that are expected to be recognized through 2027.

Stock Options

The Plan provides the Compensation Committee the authority to grant stock options. During the year ended December 31, 2022, 64,518 options were granted, and the fair value of the options granted was determined using the Black-Scholes valuation model. The options granted generally vest over the first four years in equal installments on the anniversary date of the grant. The options may also vest upon death, disability, upon a change in control or upon a "qualified retirement" as defined in the stock option agreement.

The exercise price of the stock options was established by the Compensation Committee, but the exercise price may not be less than the fair market value of the shares on the date the options are granted.

A summary of the status of stock options as of September 30, 2024, and September 30, 2023, and changes during the nine months ended September 30, 2024 and 2023, follows:

			2024									2023
			Shares						Weighted Average  Exercise Price			Shares						Weighted Average  Exercise Price
Outstanding January 1,			58,066						$	48.79		64,518						$	48.79
Granted			—						—			—						—
Exercised			(806)						48.79			—						—
Forfeited			(5,161)						48.79			(6,452)						48.79
Outstanding at September 30,			52,099						48.79			58,066						48.79
Options exercisable at September 30			12,418						$	48.79		—						$	—

At September 30, 2024, the options had a weighted average remaining contractual life of 8.17 years. The intrinsic value of the vested options as of September 30, 2024 was $98,000. The intrinsic value of the options exercised during the nine months ended September 30, 2024, was $1,000. The total fair value of the options that vested during the nine months ended September 30, 2024, was $0. Total compensation costs recorded for stock options during the nine months ended September 30, 2024 and 2023 were $151,000 and $165,000, respectively. As of September 30, 2024, there were $279,000 of total unrecognized compensation costs related to the Plan for options that are expected to be recognized through 2026.

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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 such term in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") 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. Forward-looking statements may include information about possible or assumed future results of HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identifiable by the use of words such as "believe," "expect," "anticipate," "plan," "intend," "estimate," "project," "may," "will," "would," "could," "should," "view," "opportunity," "potential," or other similar expressions. Although HTLF has made these statements based on management's experience and best estimate of future events, the ability of HTLF 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 HTLF currently believes could have a material adverse 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, 2023 and subsequent Quarterly Reports filed on Form 10-Q:

•Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, recession, supply chain issues, labor shortages, 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 due to 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, interest rate changes and changes in monetary policy on our borrowings and net interest income;

•Risks related to the Merger, the fluctuation of the market value of the merger consideration, risks related to combining our businesses, including expenses related to the Merger and integration of the combined entity, risks that the Merger may not occur, and the risk of litigation related to the Merger;

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

•Strategic and External Risks, including economic, political, and competitive forces impacting our business; and

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

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in the "Risk Factors" sections above and in our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024.

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. 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 ESTIMATES

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

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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, 2023. There have been no significant changes in the critical accounting estimates or the assumptions and judgments utilized in applying these estimates since December 31, 2023.

OVERVIEW

Heartland Financial USA, Inc. is a Denver, Colorado-based bank holding company operating under the brand name "HTLF". HTLF's banks (referred to herein collectively as the "Banks", "Bank Markets") serve customers in the West, Southwest, and Midwest regions. HTLF is committed to serving the banking needs of privately owned businesses, their owners, executives and employees. Its core commercial business is supported by a strong retail banking operation, in addition to a diversified line of financial services including treasury management, wealth management and investments. As of September 30, 2024, HTLF operated under 10 local bank brands through a total of 107 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 fees, brokerage and insurance commissions, capital markets fees, net securities gains/(losses), 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, furniture and equipment costs, professional fees, FDIC insurance assessments, advertising, core deposit intangibles amortization, other real estate and loan collection expenses, (gains)/losses on sales/valuation of assets, partnership investment in tax credit projects and acquisition, integration and restructuring costs.

Overview of Third Quarter and Year to Date results as of September 30, 2024

HTLF reported the following results for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023:

•Net income available to common stockholders of $62.1 million compared to $46.1 million, an increase of $16.1 million or 35%.

•Earnings per diluted common share of $1.44 compared to $1.08, an increase of $0.36 or 33%.

•Adjusted earnings available to common stockholders (non-GAAP) of $50.6 million or $1.17 per diluted common share compared to $48.1 million or $1.12 per diluted common share.

◦Gain on sale, net, of $29.7 million due to the sale of Rocky Mountain Bank branches in Montana.

◦Loss on security sales of $9.5 million.

◦Loss on fixed assets of $2.9 million due to branch closures and write-downs on properties listed for sale.

•Net interest income of $157.9 million compared to $145.8 million, an increase of $12.1 million or 8%.

•Total revenue of $176.9 million compared to $174.1 million, an increase of $2.8 million or 2%.

•Annualized return on average assets of 1.38% compared to 0.94%. Adjusted annualized return on average assets (non-GAAP) of 1.14% compared to 0.98%.

•Annualized return on average common equity of 12.60% compared to 10.47%. Adjusted annualized return on average common equity (non-GAAP) of 10.27% compared to 10.92%.

•Annualized return on average tangible common equity (non-GAAP) of 18.32% compared to 16.32%. Adjusted annualized return on average tangible common equity (non-GAAP) of 14.98% compared to 17.02%.

HTLF reported the following results for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 :

•Net income available to common stockholders of $149.6 million compared to $144.2 million, an increase of $5.3 million or 4%.

•Earnings per diluted common share of $3.47 compared to $3.37, an increase of $0.10 or 3%.

•Adjusted earnings available to common stockholders (non-GAAP) of $152.7 million or $3.54 per diluted common share compared to $148.3 million or $3.47 per diluted common share.

•Net interest income of $470.9 million compared to $445.1 million, an increase of $25.8 million or 6%.

•Total revenue of $535.7 million compared to $536.0 million, a decrease of $260,000 or less than 1%.

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•Annualized return on average assets of 1.10% compared to 1.00%. Adjusted annualized return on average assets (non-GAAP) of 1.12% compared to 1.02%

•Annualized return on average common equity of 10.59% compared to 11.28%. Adjusted annualized return on average common equity (non-GAAP) of 10.81% compared to 11.60%.

•Annualized return on average tangible common equity (non-GAAP) of 15.77% compared to 17.82%. Adjusted annualized return on average tangible common equity (non-GAAP) of 16.09% compared to 18.31%.

For the third quarter of 2024, net interest margin was 3.73% (3.78% on a fully tax-equivalent basis, non-GAAP), compared to 3.68% (3.73% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2024, and 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023. For the first nine months of 2024, net interest margin was 3.65% (3.69% on a fully tax-equivalent basis, non-GAAP) compared to 3.23% (3.27% on a fully tax-equivalent basis, non-GAAP) for the first nine months of 2023.

The efficiency ratio was 48.58% (57.98% on an adjusted fully tax-equivalent basis, non-GAAP) for the third quarter of 2024 compared to 63.77% (59.95% on an adjusted fully tax-equivalent basis, non-GAAP) for the same quarter of 2023. For the first nine months of 2024, the efficiency ratio was 58.94% (58.16% on an adjusted fully tax-equivalent basis, non-GAAP) compared to 61.86% (58.98% on an adjusted fully tax-equivalent basis, non-GAAP) for the first nine months of 2023.

Total assets were $18.27 billion at September 30, 2024, a decrease of $1.14 billion or 6% since December 31, 2023. Securities represented 27% and 29% of total assets at September 30, 2024 and December 31, 2023, respectively. Total loans held to maturity were $11.44 billion at September 30, 2024, compared to $12.07 billion at December 31, 2023, a decrease of $627.7 million or 5%. Excluding the Rocky Mountain Bank loans sold of $343.8 million, total loans decreased $283.9 million or 2% since year-end 2023.

The total allowance for lending related credit losses was $117.3 million or 1.02% of total loans at September 30, 2024, compared to $139.0 million or 1.15% of total loans at December 31, 2023.

Total deposits were $14.95 billion as of September 30, 2024, compared to $16.20 billion at December 31, 2023, a decrease of $1.25 billion or 8%. Excluding the Rocky Mountain Bank total deposits sold of $531.9 million, total deposits decreased $716.6 million or 4% since year-end 2023. As of September 30, 2024, 68% of HTLF's deposits were insured or collateralized.

Total equity was $2.14 billion at September 30, 2024, compared to $1.93 billion at December 31, 2023. Book value per common share was $47.33 at September 30, 2024, compared to $42.69 at year-end 2023. The unrealized loss on securities available for sale including the unrealized gain on the fair value security hedges, net of applicable taxes, was $365.1 million at September 30, 2024, compared to an unrealized loss of $453.7 million, net of applicable taxes, at December 31, 2023.

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.

2024 Developments

Rocky Mountain Bank Sale

HTLF Bank closed on the sale of the Rocky Mountain Bank branches in Montana in mid-July to two purchasers, which included loans of $343.8 million, deposits of $531.9 million and fixed assets of $13.8 million. The gain on sale, net, of $29.7 million was realized in the third quarter of 2024.

Subsequent Events

In early October, in response to favorable market conditions, HTLF terminated the interest rate swaps designated as fair value hedges with initial notional amounts totaling $838.1 million which were primarily designed to provide protection against unrealized securities losses. Additionally, in early October, in response to favorable market conditions, HTLF terminated the interest rate swaps designated as fair value hedges with total original notional amounts of $2.50 billion which were used to convert certain long-term fixed rate loans to floating rates to hedge interest rate risk exposure. The $1.8 million net fair value basis will be amortized over the remaining life of the underlying assets.

In early November, HTLF paid off the $500.0 million advance from the BTFP with cash and cash equivalents. The BTFP advance was obtained during the first quarter of 2024 and was due in 2025, prepayable at any time without penalty. HTLF Bank pledged $501.8 million of securities to support the borrowings as of September 30, 2024.

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FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
STATEMENT OF INCOME DATA
Interest income			$	253,794					$	245,432					$	761,145					$	697,910
Interest expense			95,897						99,676						290,292						252,810
Net interest income			157,897						145,756						470,853						445,100
Provision for credit losses			6,276						1,516						16,270						9,969
Net interest income after provision for credit losses			151,621						144,240						454,583						435,131
Noninterest income			18,992						28,383						64,862						90,875
Noninterest expenses			85,927						111,053						315,766						331,542
Income taxes			20,533						13,479						48,077						44,181
Net income			64,153						48,091						155,602						150,283
Preferred dividends			(2,013)						(2,013)						(6,038)						(6,038)
Net income available to common stockholders			$	62,140					$	46,078					$	149,564					$	144,245
Adjusted earnings available to common stockholders (non-GAAP)(1)			$	50,634					$	48,101					$	152,669					$	148,342
KEY PERFORMANCE RATIOS
Annualized return on average assets			1.38		%				0.94		%				1.10		%				1.00		%
Adjusted annualized return on average assets (non-GAAP)(1)			1.14						0.98						1.12						1.02
Annualized return on average common equity (GAAP)			12.60						10.47						10.59						11.28
Adjusted annualized return on average common equity (non-GAAP)(1)			10.27						10.92						10.81						11.60
Annualized return on average tangible common equity (non-GAAP)(1)			18.32						16.32						15.77						17.82
Adjusted annualized return on average tangible common equity (non-GAAP)(1)			14.98						17.02						16.09						18.31
Annualized ratio of net charge-offs/(recoveries) to average loans			0.99						0.12						0.43						0.14
Annualized net interest margin (GAAP)			3.73						3.14						3.65						3.23
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)			3.78						3.18						3.69						3.27
Efficiency ratio (GAAP)			48.58						63.77						58.94						61.86
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)(1)			57.98						59.95						58.16						58.98
Annualized ratio of total noninterest expenses to average assets (GAAP)			1.85						2.18						2.23						2.20
Annualized ratio of core expenses to average assets (non-GAAP)(1)			2.35						2.08						2.30						2.12
(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.

(Dollars in thousands, except per share data)			As of and For the Quarter Ended
			9/30/2024						6/30/2024						3/31/2024						12/31/2023						9/30/2023
BALANCE SHEET DATA
Investments			$	4,966,469					$	5,098,718					$	5,327,801					$	5,576,409					$	6,408,156
Loans held for sale			—						348,761						352,744						5,071						6,262
Loans receivable held to maturity			11,440,917						11,608,309						11,644,641						12,068,645						11,872,436
Allowance for credit losses			106,797						126,861						123,934						122,566						110,208
Total assets			18,272,293						18,812,670						19,132,827						19,411,707						20,129,793
Total deposits			14,953,216						14,956,590						15,302,166						16,201,714						17,100,993
Term debt			373,324						372,988						372,652						372,396						372,059
Common equity			2,029,668						1,917,145						1,868,128						1,822,412						1,714,825
COMMON SHARE DATA
Book value per common share (GAAP)			$	47.33					$	44.74					$	43.66					$	42.69					$	40.20
Tangible book value per common share (non-GAAP)(1)			33.57						30.94						29.81						28.77						26.23
ASC 320 effect on book value per common share			(8.78)						(10.82)						(11.18)						(11.00)						(16.27)
Common shares outstanding, net of treasury stock			42,883,865						42,852,180						42,783,670						42,688,008						42,656,303
Tangible common equity ratio (non-GAAP)(1)			8.14		%				7.28		%				6.88		%				6.53		%				5.73		%
(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.

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NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share data)			As of and For the Quarter Ended
			9/30/2024						6/30/2024						3/31/2024						12/31/2023						9/30/2023
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
Common stockholders' equity (GAAP)			$	2,029,668					$	1,917,145					$	1,868,128					$	1,822,412					$	1,714,825
Less goodwill			576,005						576,005						576,005						576,005						576,005
Less core deposit intangibles, net			14,157						15,501						16,923						18,415						20,026
Tangible common stockholders' equity (non-GAAP)			$	1,439,506					$	1,325,639					$	1,275,200					$	1,227,992					$	1,118,794
Common shares outstanding, net of treasury stock			$	42,883,865					$	42,852,180					$	42,783,670					$	42,688,008					$	42,656,303
Common stockholders' equity (book value) per share (GAAP)			47.33						44.74						43.66						42.69						40.20
Tangible book value per common share (non-GAAP)			33.57						30.94						29.81						28.77						26.23
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
Tangible common stockholders' equity (non-GAAP)			$	1,439,506					$	1,325,639					$	1,275,200					$	1,227,992					$	1,118,794
Total assets (GAAP)			$	18,272,293					$	18,812,670					$	19,132,827					$	19,411,707					$	20,129,793
Less goodwill			576,005						576,005						576,005						576,005						576,005
Less core deposit intangibles, net			14,157						15,501						16,923						18,415						20,026
Total tangible assets (non-GAAP)			$	17,682,131					$	18,221,164					$	18,539,899					$	18,817,287					$	19,533,762
Tangible common equity ratio (non-GAAP)			8.14		%				7.28		%				6.88		%				6.53		%				5.73		%
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share data)			For the Quarter Ended September 30,												For the Nine Months Ended September 30,
			2024						2023						2024						2023
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
Earnings available to common stockholders (GAAP)			$	62,140					$	46,078					$	149,564					$	144,245
Plus core deposit intangibles amortization, net of tax(2)			1,022						1,240						3,236						3,908
Earnings available to common stockholders excluding intangible amortization (non-GAAP)			$	63,162					$	47,318					$	152,800					$	148,153
Average common equity (GAAP)			$	1,962,334					$	1,746,818					$	1,886,454					$	1,710,230
Less average goodwill			576,005						576,005						576,005						576,005
Less average core deposit intangibles, net			14,814						20,821						16,208						22,501
Average tangible common equity (non-GAAP)			$	1,371,515					$	1,149,992					$	1,294,241					$	1,111,724
Annualized return on average common equity (GAAP)			12.60		%				10.47		%				10.59		%				11.28		%
Annualized return on average tangible common equity (non-GAAP)			18.32						16.32						15.77						17.82
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
Net interest income (GAAP)			$	157,897					$	145,756					$	470,853					$	445,100
Plus tax-equivalent adjustment(1)			2,010						2,152						5,981						6,497
Net interest income, fully tax-equivalent (non-GAAP)			$	159,907					$	147,908					$	476,834					$	451,597
Average earning assets			16,838,131						18,439,010						17,254,023						18,451,907
Annualized net interest margin (GAAP)			3.73		%				3.14		%				3.65		%				3.23		%
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1)			3.78						3.18						3.69						3.27
Net purchase accounting discount accretion on loans included in annualized net interest margin			0.02						0.01						0.02						0.02

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NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share data)			For the Quarter Ended September 30,												For the Nine Months Ended September 30,
			2024						2023						2024						2023
Reconciliation of Adjusted Efficiency Ratio (non-GAAP)
Net interest income (GAAP)			$	157,897					$	145,756					$	470,853					$	445,100
Tax-equivalent adjustment(1)			2,010						2,152						5,981						6,497
Fully tax-equivalent net interest income			159,907						147,908						476,834						451,597
Noninterest income (GAAP)			18,992						28,383						64,862						90,875
Securities (gains)/losses, net			9,520						114						19,573						1,532
Unrealized gain on equity securities, net			(377)						(13)						(605)						(165)
Adjusted revenue (non-GAAP)			$	188,042					$	176,392					$	560,664					$	543,839
Total noninterest expenses (GAAP)			$	85,927					$	111,053					$	315,766					$	331,542
Less:
Core deposit intangibles amortization			1,345						1,625						4,258						5,128
Partnership investment in tax credit projects			222						1,136						938						1,828
(Gain)/loss on sales/valuation of assets, net			(26,419)						108						(26,012)						(2,149)
Acquisition, integration and restructuring costs			2,026						2,429						9,374						5,994
FDIC special assessment			(267)						—						1,151						—
Core expenses (non-GAAP)			$	109,020					$	105,755					$	326,057					$	320,741
Efficiency ratio (GAAP)			48.58		%				63.77		%				58.94		%				61.86		%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)			57.98						59.95						58.16						58.98
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)
Total noninterest expenses (GAAP)			$	85,927					$	111,053					$	315,766					$	331,542
Core expenses (non-GAAP)			109,020						105,755						326,057						320,741
Average assets			$	18,439,910					$	20,207,920					$	18,924,862					$	20,182,808
Total noninterest expenses to average assets (GAAP)			1.85		%				2.18		%				2.23		%				2.20		%
Core expenses to average assets (non-GAAP)			2.35						2.08						2.30						2.12
Acquisition, integration and restructuring costs
Salaries and employee benefits			$	58					$	94					$	689					$	261
Furniture and equipment			52						—						105						—
Professional fees			1,674						1,617						7,990						3,619
Advertising			—						178						—						522
Other noninterest expenses			242						540						590						1,592
Total acquisition, integration and restructuring costs			$	2,026					$	2,429					$	9,374					$	5,994
After tax impact on diluted earnings per common share(1)			$	0.04					$	0.04					$	0.17					$	0.11

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NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share data)			For the Quarter Ended September 30,												For the Nine Months Ended September 30,
			2024						2023						2024						2023
Reconciliation of Adjusted Earnings (non-GAAP)
Net income/(loss)			$	64,153					$	48,091					$	155,602					$	150,283
(Gain)/loss from sale of securities			9,520						114						19,573						1,532
(Gain)/loss on sales/valuation of assets, net			(26,419)						108						(26,012)						(2,149)
Acquisition, integration and restructuring costs			2,026						2,429						9,374						5,994
FDIC special assessment			(267)						—						1,151						—
Total adjustments			(15,140)						2,651						4,086						5,377
Tax effect of adjustments(2)			3,634						(628)						(981)						(1,280)
Adjusted earnings			$	52,647					$	50,114					$	158,707					$	154,380
Preferred dividends			(2,013)						(2,013)						(6,038)						(6,038)
Adjusted earnings available to common stockholders			$	50,634					$	48,101					$	152,669					$	148,342
Plus core deposit intangibles amortization, net of tax(2)			1,022						1,240						3,236						3,908
Earnings available to common stockholders excluding intangible amortization (non-GAAP)			$	51,656					$	49,341					$	155,905					$	152,250
Reconciliation of Adjusted Annualized Return on Average Assets
Average assets			$	18,439,910					$	20,207,920					$	18,924,862					$	20,182,808
Adjusted annualized return on average assets (non-GAAP)			1.14		%				0.98		%				1.12		%				1.02		%
Reconciliation of Adjusted Annualized Return on Average Common Equity
Average common stockholders' equity (GAAP)			$	1,962,334					$	1,746,818					$	1,886,454					$	1,710,230
Adjusted annualized return on average common equity (non-GAAP)			10.27		%				10.92		%				10.81		%				11.60		%
Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity
Average tangible common equity (non-GAAP)			$	1,371,515					$	1,149,992					$	1,294,241					$	1,111,724
Adjusted annualized return on average tangible common equity (non-GAAP)			14.98		%				17.02		%				16.09		%				18.31		%
Reconciliation of Adjusted Diluted Earnings Per Common Share
Weighted average shares outstanding-diluted			43,195,257						42,812,563						43,080,422						42,769,872
Adjusted diluted earnings per common share			$	1.17					$	1.12					$	3.54					$	3.47
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

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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:

•Adjusted earnings available to common stockholders and adjusted diluted earnings per common share, adjusts net income for the loss/(gain) from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes these measures enhance the comparability net income available to common stockholders as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.

•Adjusted annualized return on average assets, adjusts net income for the loss/(gain) from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.

•Adjusted annualized return on average common equity, adjusts net income for the loss/(gain) from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.

•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.

•Adjusted annualized return on average tangible common equity, adjusts net income available to common stockholders for the loss/(gain) from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.

•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.

•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.

•Adjusted efficiency ratio, fully tax-equivalent, expresses adjusted noninterest expenses as a percentage of fully tax-equivalent net interest income and adjusted noninterest income. This adjusted 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 Annual Report on Form 10-K.

•Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.

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RESULTS OF OPERATIONS

Net Interest Margin and Net Interest Income

HTLF's management seeks to optimize net interest income and net interest margin through the growth of earning assets and customer deposits while managing asset and liability positions because they are key indicators of HTLF's profitability.

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.

For the Quarters ended September 30, 2024 and 2023

Net interest margin, expressed as a percentage of average earning assets, was 3.73% (3.78% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2024 compared to 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023. Net interest margin included 2 basis points and 1 basis point of net purchase accounting discount amortization for the quarter ended September 30, 2024, and 2023, respectively. HTLF's net interest margin may be impacted in future periods as a result of market pressures to increase deposit pricing due to competition. Management anticipates utilizing cash flow from the investment portfolio to pay down wholesale deposits and short-term borrowings, which would positively impact net interest margin.

Total interest income and average earning asset changes for the third quarter of 2024 compared to the third quarter of 2023 were:

•Total interest income was $253.8 million compared to $245.4 million, an increase of $8.4 million or 3% and primarily attributable to an increase in yields on average earning assets. During the third quarter of 2024, HTLF recorded $5.3 million in additional interest income for a security that paid off.

•Total interest income on a tax-equivalent basis (non-GAAP) was $255.8 million, an increase of $8.2 million or 3%, from $247.6 million. Subsequent to September 30, 2024, the fair value hedges were terminated in favorable market conditions in early October. HTLF recorded $10.3 million of interest income associated with the fair value hedges in the third quarter of 2024 in comparison to $5.6 million in the third quarter of 2023. As a result of the fair value hedge terminations, no additional interest income related to fair value hedges will be recorded.

•Average earning assets decreased $1.60 billion or 9% to $16.84 billion compared to $18.44 billion, primarily due to the sale of $865.4 million of securities during the fourth quarter of 2023, $108.4 million of securities sold during the second quarter of 2024, and $40.3 million of securities sold during the third quarter of 2024. The proceeds were utilized to pay down high-cost wholesale deposits and borrowings.

•The average rate on earning assets increased 71 basis points to 6.04% compared to 5.33%, primarily due to recent interest rate increases on earning assets.

Total interest expense and average interest-bearing liability changes for the third quarter of 2024 compared to the third quarter of 2023 were:

•Total interest expense was $95.9 million, a decrease of $3.8 million from $99.7 million, primarily due to a decrease in average interest-bearing liabilities.

•The average interest rate paid on interest-bearing liabilities increased 17 basis points to 3.18% from 3.01%.

•Average interest-bearing deposits decreased $1.65 billion or 13% to $11.03 billion from $12.68 billion.

•The average interest rate paid on interest-bearing deposits decreased 4 basis points to 2.86% from 2.90%.

•Average borrowings and term debt increased $478.2 million to $953.9 million from $475.7 million, and the average interest rate paid on borrowings decreased 39 basis points to 5.39% compared to 5.78%.

Net interest income changes for the third quarter of 2024 compared to the third quarter of 2023 were:

•Net interest income totaled $157.9 million compared to $145.8 million, an increase of $12.1 million or 8%.

•Net interest income on a tax-equivalent basis (non-GAAP) totaled $159.9 million compared to $147.9 million, which was an increase of $12.0 million or 8%.

For the Nine Months ended September 30, 2024 and 2023

Net interest margin, expressed as a percentage of average earning assets, was 3.65% (3.69% on a fully tax-equivalent basis, non-GAAP) during the first nine months of 2024, compared to 3.23% (3.27% on a fully tax-equivalent basis, non-GAAP) during the first nine months of 2023. For the nine months ended September 30, 2024 and 2023, net interest margin included 2 basis points of net purchase accounting discount amortization.

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Total interest income and average earning asset changes for the first nine months of 2024 compared to the first nine months of 2023 were:

•Total interest income was $761.1 million, an increase of $63.2 million or 9% from $697.9 million, primarily attributable to an increase in yields on average earning assets. Interest income on investments and loans recognized from derivatives was $30.3 million during the first nine months of 2024 compared to $10.2 million during the first nine months of 2023, an increase of $20.1 million.

•Total interest income on a tax-equivalent basis (non-GAAP) was $767.1 million, an increase of $62.7 million or 9% from $704.4 million. As previously stated, subsequent to September 30, 2024, the fair value hedges were terminated in favorable market conditions in early October. HTLF recorded $29.9 million of interest income associated with the fair value hedges in the first nine months of 2024 in comparison to $10.2 million in the first nine months of 2023. As a result of the fair value hedge terminations, no additional interest income related to fair value hedges will be recorded.

•Average earning assets decreased $1.20 billion or 6% to $17.25 billion compared to $18.45 billion, primarily due to the sale of $865.4 million of securities during the fourth quarter of 2023, $108.4 million of securities sold during the second quarter of 2024, and $40.3 million of securities sold during the third quarter of 2024.

•The average rate on earning assets increased 84 basis points to 5.94% compared to 5.10%, primarily due to recent increases in market interest rates.

Total interest expense and average interest-bearing liability changes for the first nine months of 2024 compared to the first nine months of 2023 were:

•Total interest expense was $290.3 million, an increase of $37.5 million from $252.8 million, primarily due to increases in the average interest rate paid on average interest-bearing liabilities, partially offset by decreases in average interest-bearing liabilities.

•The average interest rate paid on interest-bearing liabilities increased 54 basis points to 3.14% compared to 2.60%.

•Average interest-bearing deposits decreased $1.20 billion or 10% to $11.28 billion from $12.48 billion, which was primarily attributable to a decrease in wholesale and institutional deposits. Average wholesale and institutional deposits totaled $940.8 million for the first nine months of 2024 compared to $2.79 billion for the first nine months of 2023.

•The average interest rate paid on interest-bearing deposits was 2.93% for the first nine months of 2024 compared to 2.48% for the first nine months of 2023, an increase of 45 basis points.

•Average borrowings and term debt increased $564.1 million to $1.07 billion from $510.3 million, and the average interest rate paid on borrowings was 5.31% compared to 5.55%.

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.

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. In addition, management continually monitors the balance sheet position for opportunities to increase net interest income. HTLF models and reviews simulations using various improving and deteriorating interest rate scenarios to assist in monitoring its exposure to interest rate risk. Based on these simulations, HTLF management considers actions necessary to maintain a 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 6 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.

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ANALYSIS OF AVERAGE BALANCES, TAX-EQUIVALENT YIELDS AND RATES (1)
			For the Quarter Ended
			September 30, 2024																		June 30, 2024																		September 30, 2023
			Average Balance						Interest						Rate						Average Balance						Interest						Rate						Average Balance						Interest						Rate
Earning Assets
Securities:
Taxable			$	4,254,529					$	51,116					4.78		%				$	4,490,407					$	47,381					4.24		%				$	5,726,057					$	54,800					3.80		%
Nontaxable(1)			768,483						7,313						3.79						759,234						7,383						3.91						881,162						8,085						3.64
Total securities			5,023,012						58,429						4.63						5,249,641						54,764						4.20						6,607,219						62,885						3.78
Interest on deposits with other banks and short-term investments			355,394						4,193						4.69						194,824						3,045						6.29						142,301						1,651						4.60
Federal funds sold			—						—						—						—						—						—						152						3						7.83
Loans:(2)
Commercial and industrial(1)			3,531,206						65,972						7.43						3,638,004						69,469						7.68						3,610,677						63,001						6.92
PPP loans			1,759						5						1.13						2,242						7						1.26						3,948						11						1.11
Owner occupied commercial real estate			2,527,006						35,189						5.54						2,615,504						37,028						5.69						2,412,501						30,127						4.95
Non-owner occupied commercial real estate			2,474,036						39,536						6.36						2,519,346						39,272						6.27						2,586,011						38,779						5.95
Real estate construction			1,106,387						22,878						8.23						1,093,399						21,770						8.01						1,027,544						19,448						7.51
Agricultural and agricultural real estate			757,745						11,536						6.06						879,707						13,390						6.12						822,957						12,582						6.07
Residential real estate			725,901						9,110						4.99						776,821						9,454						4.89						827,402						9,482						4.55
Consumer			460,959						8,956						7.73						485,266						9,421						7.81						509,024						9,615						7.49
Less: allowance for credit losses			(125,274)						—						—						(123,319)						—						—						(110,726)						—						—
Net loans			11,459,725						193,182						6.71						11,886,970						199,811						6.76						11,689,338						183,045						6.21
Total earning assets			16,838,131						255,804						6.04		%				17,331,435						257,620						5.98		%				18,439,010						247,584						5.33		%
Nonearning Assets			1,601,779																		1,711,927																		1,768,910
Total Assets			$	18,439,910																	$	19,043,362																	$	20,207,920
Interest-bearing Liabilities
Savings			$	8,842,494					$	59,307					2.67		%				$	8,834,746					$	55,440					2.52		%				$	8,737,581					$	49,195					2.23		%
Time deposits			2,189,861						23,669						4.30						2,372,653						25,059						4.25						3,945,371						43,549						4.38
Borrowings			580,707						7,378						5.05						881,738						10,825						4.94						103,567						1,167						4.47
Term debt			373,158						5,543						5.91						372,820						5,564						6.00						372,112						5,765						6.15
Total interest-bearing liabilities			11,986,220						95,897						3.18		%				12,461,957						96,888						3.13		%				13,158,631						99,676						3.01		%
Noninterest-bearing Liabilities
Noninterest-bearing deposits			4,116,589																		4,355,521																		4,824,861
Accrued interest and other liabilities			264,062																		251,943																		366,905
Total noninterest-bearing liabilities			4,380,651																		4,607,464																		5,191,766
Stockholders' Equity			2,073,039																		1,973,941																		1,857,523
Total Liabilities and Stockholders' Equity			$	18,439,910																	$	19,043,362																	$	20,207,920
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)									$	159,907																	$	160,732																	$	147,908
Net interest spread(1)															2.86		%																2.85		%																2.32		%
Net interest income, fully tax-equivalent to total earning assets (non-GAAP)(1)(3)															3.78		%																3.73		%																3.18		%
Interest-bearing liabilities to earning assets			71.18		%																71.90		%																71.36		%
(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.

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ANALYSIS OF AVERAGE BALANCES, TAX-EQUIVALENT YIELDS AND RATES (1)
			For the Nine Months Ended
			September 30, 2024																		September 30, 2023
			Average Balance						Interest						Rate						Average Balance						Interest						Rate
Earning Assets
Securities:
Taxable			$	4,469,258					$	145,511					4.35		%				$	5,927,026					$	168,948					3.81		%
Nontaxable(1)			768,782						22,079						3.84						899,613						23,611						3.51
Total securities			5,238,040						167,590						4.27						6,826,639						192,559						3.77
Interest-bearing deposits with other banks and other short-term investments			268,122						10,244						5.10						133,910						4,833						4.83
Federal funds sold			—						—						—						51						3						7.86
Loans:(2)
Commercial and industrial(1)			3,603,668						202,426						7.50						3,547,256						169,552						6.39
PPP loans			2,195						19						1.16						6,718						61						1.21
Owner occupied commercial real estate			2,583,886						107,734						5.57						2,355,545						84,927						4.82
Non-owner occupied commercial real estate			2,514,452						118,657						6.30						2,459,965						105,111						5.71
Real estate construction			1,087,280						65,497						8.05						1,051,298						56,107						7.14
Agricultural and agricultural real estate			838,395						38,682						6.16						835,673						36,191						5.79
Residential mortgage			764,515						28,699						5.01						840,143						28,138						4.48
Consumer			476,967						27,578						7.72						506,143						26,925						7.11
Less: allowance for loan losses			(123,497)						—						—						(111,434)						—						—
Net loans			11,747,861						589,292						6.70						11,491,307						507,012						5.90
Total earning assets			17,254,023						767,126						5.94		%				18,451,907						704,407						5.10		%
Nonearning Assets			1,670,839																		1,730,901
Total Assets			$	18,924,862																	$	20,182,808
Interest-bearing Liabilities
Savings			$	8,828,973					$	169,414					2.56		%				$	9,130,980					$	128,372					1.88		%
Time deposits			2,447,293						78,195						4.27						3,344,434						103,245						4.13
Borrowings			701,548						25,727						4.90						138,157						4,437						4.29
Term debt			372,826						16,956						6.08						372,094						16,756						6.02
Total interest-bearing liabilities			12,350,640						290,292						3.14		%				12,985,665						252,810						2.60		%
Noninterest-bearing Liabilities
Noninterest-bearing deposits			4,306,899																		5,092,200
Accrued interest and other liabilities			270,164																		284,008
Total noninterest-bearing liabilities			4,577,063																		5,376,208
Equity			1,997,159																		1,820,935
Total Liabilities and Equity			$	18,924,862																	$	20,182,808
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)									$	476,834																	$	451,597
Net interest spread(1)															2.80		%																2.50		%
Net interest income, fully tax-equivalent (non-GAAP) to total earning assets(1)(3)															3.69		%																3.27		%
Interest-bearing liabilities to earning assets			71.58		%																70.38		%
(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.

The following tables present the dollar amount of changes in interest income and interest expense for the major components of interest earning assets and interest-bearing liabilities, in thousands, and quantify the changes in interest income and interest expense related to changes in the average outstanding balances (volume) and those changes caused by fluctuating interest rates. For each category of interest earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume, calculated by multiplying the difference between the average balance for the current period and the average balance for the prior period by the rate for the prior period, and (ii) changes in rate, calculated by multiplying the difference between the rate for the current period and the rate for the prior period by the average balance for the prior period. The unallocated change has been allocated pro rata to volume and rate variances.

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			Three Months Ended
			September 30, 2024 Compared to September 30, 2023 Change Due to																		September 30, 2024 Compared to June 30, 2024 Change Due to																		September 30, 2023 Compared to September 30, 2022 Change Due to
			Volume						Rate						Net						Volume						Rate						Net						Volume						Rate						Net
Earnings Assets/Interest Income
Investment securities:
Taxable			$	(57,908)					$	54,224					$	(3,684)					$	(13,041)					$	16,776					$	3,735					$	(23,787)					$	32,939					$	9,152
Nontaxable(1)			(2,542)						1,770						(772)						505						(575)						(70)						(2,705)						2,988						283
Interest-bearing deposits			2,508						32						2,540						5,628						(4,482)						1,146						(2,330)						2,900						570
Federal funds sold			(1)						(2)						(3)						—						—						—						—						3						3
Loans(1)(2)			(20,867)						31,004						10,137						(5,418)						(1,211)						(6,629)						12,520						47,099						59,619
Total earning assets			(78,810)						87,028						8,218						(12,326)						10,508						(1,818)						(16,302)						85,929						69,627
Liabilities/Interest Expense
Interest-bearing deposits:
Savings			588						9,524						10,112						58						3,809						3,867						(11,602)						47,890						36,288
Time deposits			(19,102)						(778)						(19,880)						(3,330)						1,940						(1,390)						14,053						27,245						41,298
Borrowings			6,040						171						6,211						(5,149)						1,702						(3,447)						(566)						1,373						807
Term debt			105						(327)						(222)						37						(58)						(21)						7						1,346						1,353
Total interest-bearing liabilities			(12,369)						8,590						(3,779)						(8,384)						7,393						(991)						1,892						77,854						79,746
Net interest income			$	(66,441)					$	78,438					$	11,997					$	(3,942)					$	3,115					$	(827)					$	(18,194)					$	8,075					$	(10,119)
(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 average loans outstanding.

			Nine Months Ended
			September 30, 2024 Compared to September 30, 2023 Change Due to																		September 30, 2023 Compared to September 30, 2022 Change Due to
			Volume						Rate						Net						Volume						Rate						Net
Earnings Assets/Interest Income
Investment securities:
Taxable			$	(55,407)					$	31,970					$	(23,437)					$	(14,500)					$	67,082					$	52,582
Nontaxable(1)			(4,521)						2,989						(1,532)						(3,069)						4,055						986
Interest-bearing deposits			5,116						294						5,410						(1,510)						4,628						3,118
Federal funds sold			(1)						(2)						(3)						—						3						3
Loans(1)(2)			11,613						70,667						82,280						40,865						130,651						171,516
Total earning assets			(43,200)						105,918						62,718						21,786						206,419						228,205
Liabilities/Interest Expense
Interest-bearing deposits:
Savings			(6,985)						48,027						41,042						(1,923)						109,622						107,699
Time deposits			(30,572)						5,522						(25,050)						20,972						78,281						99,253
Borrowings			20,579						711						21,290						60						3,883						3,943
Term debt			36						164						200						2						4,974						4,976
Total interest-bearing liabilities			(16,942)						54,424						37,482						19,111						196,760						215,871
Net interest income			$	(26,258)					$	51,494					$	25,236					$	2,675					$	9,659					$	12,334
(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 average loans outstanding.

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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 nine- months ended September 30, 2024 and 2023, in thousands:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Provision expense for credit losses-loans			$	8,871					$	2,672					$	22,276					$	12,685
Provision (benefit) expense for credit losses-unfunded commitments			(2,595)						(1,156)						(6,006)						(2,716)
Total provision expense			$	6,276					$	1,516					$	16,270					$	9,969

The provision expense for credit losses for loans was $8.9 million for the third quarter of 2024, which was an increase of $6.2 million from provision expense of $2.7 million recorded in the third quarter of 2023. The provision expense for the third quarter of 2024 compared to the third quarter of 2023 was impacted by several factors, including:

•The third quarter of 2024 was impacted by a nonperforming food manufacturing syndication loan currently in bankruptcy proceedings. HTLF recorded a charge-off of $19.2 million for this credit during the third quarter of 2024, of which $10.0 million was reserved for in a prior period.

•Changes in credit quality as indicated by nonpass loans as a percentage of total loans. Nonpass loans totaled $996.2 million or 9% of total loans at September 30, 2024 and $945.8 million or 8% of total loans at June 30, 2024. Nonpass loans totaled $535.7 million or 5% of total loans at September 30, 2023 and $568.2 million or 5% of total loans at June 30, 2023.

The provision expense for credit losses for loans was $22.3 million for the first nine months of 2024, which was an increase of $9.6 million from the provision expense of $12.7 million for the first nine months of 2023. The provision expense for the first nine months of 2024 compared to the first nine months of 2023 was impacted by several factors, including:

•Net charge-offs of $38.0 million were recorded for the first nine months of 2024.

•Changes in credit quality as indicated by nonpass loans as a percentage of total loans. Nonpass loans were 9% of total loans at September 30, 2024 and 6% of total loans at December 31, 2023. Nonpass loans were 5% of total loans at September 30, 2023 and 5% of total loans at December 31, 2022.

The size of the loan portfolio, the levels of organic loan growth including government guaranteed loans, changes in credit quality and the variability that can occur in the factors, including the impact of economic conditions, are all considered when determining the appropriateness of the allowance for credit losses and will contribute to the variability in the provision for credit losses 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 estimates 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, 2023, "Allowance For Credit Losses" and "Provision for Credit Losses" in Item 2 of this Quarterly Report on Form 10-Q and Note 4, "Allowance for Credit Losses," to the consolidated financial statements included herein.

Management believes that the allowance for credit losses as of September 30, 2024, was at a level commensurate with the overall risk exposure of the loan portfolio. However, deterioration in economic conditions, including a recession, could cause certain borrowers to experience difficulty and impede their ability to meet debt service. Due to the uncertainty of future economic conditions, including ongoing concerns regarding higher interest rates, supply chain challenges, workforce shortages and wage pressures, the provision for credit losses could be volatile in future quarters.

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Noninterest Income

The tables below show noninterest income for the three- and nine- months ended September 30, 2024 and 2023, in thousands:

			Three Months Ended September 30,
			2024						2023						Change						% Change
Service charges and fees			$	17,100					$	18,553					$	(1,453)					(8)		%
Loan servicing income			111						278						(167)						(60)
Trust fees			5,272						4,734						538						11
Brokerage and insurance commissions			853						692						161						23
Capital markets fees			2,116						1,845						271						15
Securities (losses) gains, net			(9,520)						(114)						(9,406)						(8,251)
Unrealized (loss) gain on equity securities, net			377						13						364						(2,800)
Net gains on sale of loans held for sale			—						905						(905)						(100)
Income on bank owned life insurance			1,107						858						249						29
Other noninterest income			1,576						619						957						155
Total noninterest income			$	18,992					$	28,383					$	(9,391)					(33)		%

			Nine Months Ended September 30,
			2024						2023						Change						% Change
Service charges and fees			$	51,127					$	55,316					$	(4,189)					(8)		%
Loan servicing income			349						1,403						(1,054)						(75)
Trust fees			15,847						15,810						37						—
Brokerage and insurance commissions			2,501						2,065						436						21
Capital markets fees			5,003						8,331						(3,328)						(40)
Securities losses, net			(19,573)						(1,532)						(18,041)						1,178
Unrealized gain/(loss) on equity securities, net			605						165						440						(267)
Net gains on sale of loans held for sale			104						3,786						(3,682)						(97)
Income on bank owned life insurance			3,610						3,042						568						19
Other noninterest income			5,289						2,489						2,800						112
Total noninterest income			$	64,862					$	90,875					$	(26,013)					(29)		%

Total noninterest income was $19.0 million during the third quarter of 2024 compared to $28.4 million during the third quarter of 2023, a decrease of $9.4 million or 33%. Total noninterest income was $64.9 million for the first nine months of 2024 compared to $90.9 million for the first nine months of 2023, a decrease of $26.0 million or 29%. Notable changes in noninterest income categories for the three- and nine- months ended September 30, 2024 and 2023 are as follows:

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Service charges and fees

The following tables summarize the changes in service charges and fees for the three- and nine- months ended September 30, 2024 and 2023, in thousands:

			Three Months Ended September 30,
			2024						2023						Change						% Change
Service charges and fees on deposit accounts			$	5,969					$	5,431					$	538					10		%
Overdraft fees			776						3,184						(2,408)						(76)
Customer service and other service fees			77						94						(17)						(18)
Credit card fee income			7,868						7,551						317						4
Debit card income			2,410						2,293						117						5
Total service charges and fees			$	17,100					$	18,553					$	(1,453)					(8)		%
			Nine Months Ended September 30,
			2024						2023						Change						% Change
Service charges and fees on deposit accounts			$	17,972					$	15,571					$	2,401					15		%
Overdraft fees			2,877						9,248						(6,371)						(69)
Customer service and other service fees			259						280						(21)						(8)
Credit card fee income			22,660						23,462						(802)						(3)
Debit card income			7,359						6,755						604						9
Total service charges and fees			$	51,127					$	55,316					$	(4,189)					(8)		%

The decrease in service charges and fees on deposit accounts in both the three- and nine months periods was primarily attributable to the decrease in consumer NSF and overdrafts fees. In December 2023, in response to industry changes related to the consumer overdraft fees, HTLF modified its consumer deposit product and fee structure, including overdraft fees. As a result, management anticipated a decline in overdraft fees during 2024 and future periods.

Loan servicing income

Loan servicing income includes the fees collected for the servicing of commercial, agricultural, and mortgage loans, which depend upon the aggregate outstanding balances of these loans. In the first quarter of 2023, First Bank & Trust, a division of HTLF Bank, sold its mortgage servicing rights portfolio. As a result, loan servicing income declined $1.1 million or 75%, to $349,000 for the first nine months of 2024 from $1.4 million for the first nine months of 2023.

Trust fees

Trust fees totaled $5.3 million for the third quarter of 2024 compared to $4.7 million for the same quarter of 2023, an increase of $538,000 or 11%. For the first nine months of 2024, trust fees totaled $15.8 million compared to $15.8 million for the first nine months of 2023, an increase of $37,000 or less than 1%. The increase in both the three- and nine months periods was primarily attributable to an increase in the fair market value of trust assets.

Capital markets fees

Capital markets fees totaled $2.1 million for the third quarter of 2024 compared to $1.8 million for the same quarter of 2023, an increase of $271,000 or 15%. Syndication income increased $55,000 or 21% to $315,000 for the third quarter of 2024 compared to $260,000 for the same quarter of 2023. Swap fee income increased $215,000 or 14% to $1.8 million for the third quarter of 2024 compared to $1.6 million for the third quarter of 2023.

For the first nine months of 2024, capital markets fees totaled $5.0 million, a decrease of $3.3 million or 40% from $8.3 million for the first nine months of 2023. Syndication income decreased $962,000 or 58% to $695,000 for the first nine months of 2024 compared to $1.7 million for the first nine months of 2023. Swap fee income decreased $2.4 million or 35% to $4.3 million for the first nine months of 2024 compared to $6.7 million for the first nine months of 2023.

Capital markets fees vary, in part, based upon the size of the transaction and are recognized upon the closing of the transaction.

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Securities (losses) gains, net

For the third quarter of 2024, net security losses totaled $9.5 million compared to net losses of $114,000 for the third quarter of 2023, a change of $9.4 million. For the first nine months of 2024, net security losses totaled $19.6 million compared to net losses of $1.5 million during the first nine months of 2023, a change of $18.0 million. HTLF sold $108.4 million of securities during the second quarter of 2024 and $40.3 million of securities during the third quarter of 2024. The sales reduced CRE exposure to improve the risk and liquidity profile of the Bank and the proceeds were utilized to pay down high-cost wholesale deposits and borrowings.

Net gains on sale of loans held for sale

For the third quarter of 2024, net gains on sale of loans held for sale totaled $0, from $905,000 in the same quarter of 2023. For the first nine months of 2024, net gains on sale of loans held for sale totaled $104,000 compared to $3.8 million for the first nine months of 2023, a decrease of $3.7 million or 97%. The decrease was attributable to residential mortgage loans no longer being sold to the secondary market as HTLF ceased originating mortgage loans.

Income on bank owned life insurance

Income on bank owned life insurance totaled $1.1 million for the third quarter of 2024, an increase of $249,000 or 29%, from $858,000 recorded in the third quarter of 2023. For the first nine months of 2024, income on bank owned life insurance totaled $3.6 million, an increase of $568,000 from $3.0 million for the first nine months of 2023. The increase was attributable to market value changes in bank-owned policies.

Other noninterest income

Other noninterest income totaled $1.6 million for the third quarter of 2024 compared to $619,000 for the same quarter of 2023, an increase of $957,000 or 155%. For the first nine months of 2024, other noninterest income was $5.3 million compared to $2.5 million for the first nine months of 2023, an increase of $2.8 million or 112%. During the first nine months of 2024, HTLF recognized $1.5 million in income associated with the assets in the deferred compensation plan, an increase of $1.0 million from $449,000 for the first nine months of 2023.

Noninterest Expenses

The tables below show noninterest expenses for the three- and nine- months ended September 30, 2024, and 2023, in thousands:

			Three Months Ended September 30,
			2024						2023						Change						% Change
Salaries and employee benefits			$	62,742					$	62,262					$	480					1		%
Occupancy			6,318						6,438						(120)						(2)
Furniture and equipment			2,062						2,720						(658)						(24)
Professional fees			17,448						13,616						3,832						28
FDIC insurance assessments			3,035						3,313						(278)						(8)
Advertising			1,937						1,633						304						19
Core deposit amortization			1,345						1,625						(280)						(17)
Other real estate and loan collection expenses			395						481						(86)						(18)
Losses/(gain) on sales/valuations of assets, net			(26,419)						108						(26,527)						24,562
Acquisition, integration and restructuring costs			2,026						2,429						(403)						(17)
Partnership investment in tax credit projects			222						1,136						(914)						(80)
Other noninterest expenses			14,816						15,292						(476)						(3)
Total noninterest expenses			$	85,927					$	111,053					$	(25,126)					(23)		%

			Nine Months Ended September 30,
			2024						2023						Change						% Change
Salaries and employee benefits			$	191,817					$	186,510					$	5,307					3		%
Occupancy			19,843						20,338						(495)						(2)
Furniture and equipment			6,554						8,698						(2,144)						(25)
Professional fees			48,351						41,607						6,744						16
FDIC insurance assessments			11,344						9,627						1,717						18

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			Nine Months Ended September 30,
			2024						2023						Change						% Change
Advertising			4,663						6,670						(2,007)						(30)
Core deposit and customer relationship intangibles amortization			4,258						5,128						(870)						(17)
Other real estate and loan collection expenses			1,422						984						438						45
Loss/(gain) on sales/valuations of assets, net			(26,012)						(2,149)						(23,863)						1,110
Acquisition, integration and restructuring costs			9,374						5,994						3,380						56
Partnership investment in tax credit projects			938						1,828						(890)						(49)
Other noninterest expenses			43,214						46,307						(3,093)						(7)
Total noninterest expenses			$	315,766					$	331,542					$	(15,776)					(5)		%

For the third quarter of 2024, noninterest expenses totaled $85.9 million compared to $111.1 million for the third quarter of 2023, a decrease of $25.1 million or 23%. For the first nine months of 2024, noninterest expenses totaled $315.8 million compared to $331.5 million during the first nine months of 2023, a decrease of $15.8 million or 5%.

Notable changes in noninterest expense categories for the three- and nine- months ended September 30, 2024 and 2023 are as follows:

Salaries and employee benefits

Salaries and employee benefits totaled $62.7 million for the third quarter of 2024 compared to $62.3 million for the third quarter of 2023, an increase of $480,000 million or 1%. For the first nine months of 2024, salaries and employee benefits totaled $191.8 million compared to $186.5 million for the first nine months of 2023, an increase of $5.3 million or 3%. The increase was attributable to higher benefit costs including incentive compensation and healthcare expenses partially offset by a reduction of full-time equivalent employees. Full-time equivalent employees totaled 1,725 at September 30, 2024 compared to 1,965 at September 30, 2023, a decrease of 240 or 12%.

Professional fees

Professional fees totaled $17.4 million for the third quarter of 2024 compared to $13.6 million for the third quarter of 2023, an increase of $3.8 million or 28%. For the first nine months of 2024, professional fees totaled $48.4 million compared to $41.6 million for the first nine months of 2023, an increase of $6.7 million or 16%. The increase was primarily driven by an increase in legal expenses, including those associated with special asset loans.

FDIC insurance assessments

FDIC insurance assessments totaled $3.0 million for the third quarter of 2024 compared to $3.3 million for the third quarter of 2023, a decrease of $278,000 or 8%. For the first nine months of 2024, FDIC insurance assessments totaled $11.3 million compared to $9.6 million for the first nine months of 2023, an increase of $1.7 million or 18%. The increase was attributable to a one-time special assessment expense of $1.2 million in the first nine months of 2024. This special assessment is in addition to the $8.1 million HTLF recorded in the fourth quarter of 2023 based upon additional FDIC expected losses.

Advertising

Advertising expenses totaled $1.9 million for the third quarter of 2024, an increase of $304,000 or 19% from $1.6 million for the third quarter of 2023. For the first nine months of 2024, advertising expenses totaled $4.7 million compared to $6.7 million for the first nine months of 2023, a decrease of $2.0 million or 30%. The expenses were elevated in 2023 primarily due to the deposit acquisition campaigns that were launched during that time.

Losses (gain) on sales/valuations of assets, net

Net gains on sales/valuations of assets were $26.4 million for the third quarter of 2024 compared to net losses of $108,000 for the third quarter of 2023. For the first nine months of 2024, net gains on sales/valuations of assets totaled $26.0 million compared to net gains of $2.1 million for the first nine months of 2023, primarily due to the sale of Rocky Mountain Bank, a division of HTLF Bank, in the third quarter of 2024, which generated a gain on sale, net, of $29.7 million.

Acquisition, integration and restructuring costs

Acquisition, integration and restructuring costs totaled $2.0 million for the third quarter of 2024, a decrease of $403,000 or 17% from $2.4 million for the third quarter of 2023. For the first nine months of 2024, acquisition, integration and restructuring costs totaled $9.4 million compared to $6.0 million for the first nine months of 2023, an increase of $3.4 million or 56%. The increase in 2024 is primarily due to expenses related to the pending UMB merger and the sale of the Rocky Mountain Bank branches.

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Other noninterest expenses

Other noninterest expenses totaled $14.8 million in the third quarter of 2024 compared to $15.3 million in the third quarter of 2023, a decrease of $476,000 or 3%. For the first nine months of 2024, other noninterest expenses totaled $43.2 million compared to $46.3 million for the first nine months of 2023, a decrease of $3.1 million or 7%. The decrease is primarily attributable to HTLF's reduced operating footprint.

Efficiency Ratio

During the third quarter of 2024, the efficiency ratio was 48.58% (57.98% on an adjusted efficiency ratio, fully tax-equivalent basis, non-GAAP) compared to 63.77% (59.95% on an adjusted efficiency ratio, fully tax-equivalent basis, non-GAAP) for the third quarter of 2023.

During the first nine months of 2024, the efficiency ratio was 58.94% (58.16% on an adjusted fully tax-equivalent basis, non-GAAP) compared to 61.86% (58.98% on an adjusted fully tax-equivalent basis, non-GAAP) for the first nine months of 2023.

HTLF continues to pursue strategies to improve operational efficiency.

Income Taxes

The effective tax rate was 24.25% for the third quarter of 2024, compared to 21.89% for the third quarter of 2023. The following items impacted the third quarter 2024 and 2023 tax calculations:

•Solar energy tax credits of $0 compared to $844,000.

•Federal low-income housing tax credits of $257,000 compared to $311,000.

•New markets tax credits of $90,000 compared to $90,000.

•Historic rehabilitation tax credits of $282,000 compared to $362,000.

•Tax-exempt interest income as a percentage of pre-tax income of 8.92% compared to 13.14%.

•Tax benefit of $140,000 compared to a tax expense of $41,000 resulting from the vesting of restricted stock units.

•Tax expense of $1.1 million compared to $1.6 million resulting from the disallowed interest expense related to tax-exempt loans and securities.

The effective tax rate was 23.60% for the nine months ended September 30, 2024, compared to 22.72% for the nine months ended September 30, 2023. The following items impacted HTLF's tax calculation for the first nine months of 2024 and 2023:

•Solar energy tax credits of $306,000 compared to $1.2 million.

•Federal low-income housing tax credits of $770,000 compared to $932,000.

•New markets tax credits of $270,000 compared to $270,000.

•Historic rehabilitation tax credits of $845,000 compared to $787,000.

•Tax-exempt interest income as a percentage of pre-tax income of 11.05% compared to 12.57%.

•Tax expense of $189,000 compared to $115,000 resulting from the vesting of restricted stock units.

•Tax expense of $3.2 million compared to $3.6 million resulting from the disallowed interest expense related to tax-exempt loans and securities.

FINANCIAL CONDITION

Total assets were $18.27 billion at September 30, 2024, a decrease of $1.14 billion or 6% from $19.41 billion at December 31, 2023. Securities represented 27% and 29% of total assets at September 30, 2024, and December 31, 2023, respectively.

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LENDING ACTIVITIES

Total loans held to maturity were $11.44 billion at September 30, 2024, and $12.07 billion at December 31, 2023, a decrease of $627.7 million or 5%. Excluding the impact of Rock Mountain Bank, loans held to maturity decreased $283.9 million or 2% since year-end 2023.

The following table shows the changes in loan balances by loan category since December 31, 2023, in thousands:

			September 30, 2024						December 31, 2023						Change						% Change
Commercial and industrial			$	3,503,093					$	3,652,047					$	(148,954)					(4)		%
Paycheck Protection Program ("PPP")			1,582						2,777						(1,195)						(43)
Owner occupied commercial real estate			2,489,697						2,638,175						(148,478)						(6)
Non-owner occupied commercial real estate			2,455,396						2,553,711						(98,315)						(4)
Real estate construction			1,119,922						1,011,716						108,206						11
Agricultural and agricultural real estate			701,211						919,184						(217,973)						(24)
Residential mortgage			707,984						797,829						(89,845)						(11)
Consumer			462,032						493,206						(31,174)						(6)
Total loans held to maturity			$	11,440,917					$	12,068,645					$	(627,728)					(5)		%

Significant changes by loan category at September 30, 2024 compared to December 31, 2023 included:

•Commercial and industrial loans decreased $149.0 million or 4% to $3.50 billion compared to $3.65 billion. Excluding the Rocky Mountain Bank loans sold of $71.2 million, commercial and business lending decreased $77.8 million or 2%.

•Owner occupied commercial real estate decreased $148.5 million or 6% to $2.49 billion compared to $2.64 billion. Excluding the Rocky Mountain Bank loans sold of $72.0 million, owner occupied commercial real estate lending decreased $76.5 million or 3%.

•Non-owner occupied commercial real estate decreased $98.3 million or 4% to $2.46 billion compared to $2.55 billion. Excluding the Rocky Mountain Bank loans sold of $59.2 million, owner occupied commercial real estate lending decreased $39.1 million or 2%.

•Real estate construction loans increased $108.2 million or 11% to $1.12 billion compared to $1.01 billion. Excluding the Rocky Mountain Bank loans sold of $11.1 million, construction loans increased $119.3 million or 12%.

•Agricultural and agricultural real estate loans decreased $218.0 million or 24% to $701.2 million compared to $919.2 million. Excluding the Rocky Mountain Bank loans sold of $67.3 million, agricultural and agricultural real estate loans decreased $150.7 million or 16%.

•Residential mortgage loans decreased $89.8 million or 11% to $708.0 million compared to $797.8 million. Excluding the Rocky Mountain Bank loans sold of $31.0 million, residential mortgage loans decreased $58.9 million or 7%.

•Consumer loans decreased $31.2 million or 6% to $462.0 million compared to $493.2 million. Excluding the Rocky Mountain Bank loans sold of $31.9 million, consumer loans increased $699,000 or less than 1%.

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The table below presents the composition of the loan portfolio as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Loans receivable held to maturity:
Commercial and industrial			$	3,503,093					30.62		%				$	3,652,047					30.26		%
PPP			1,582						0.01						2,777						0.02
Owner occupied commercial real estate			2,489,697						21.76						2,638,175						21.86
Non-owner occupied commercial real estate			2,455,396						21.46						2,553,711						21.16
Real estate construction			1,119,922						9.79						1,011,716						8.38
Agricultural and agricultural real estate			701,211						6.13						919,184						7.62
Residential mortgage			707,984						6.19						797,829						6.61
Consumer			462,032						4.04						493,206						4.09
Gross loans receivable held to maturity			11,440,917						100.00		%				12,068,645						100.00		%
Allowance for credit losses-loans			(106,797)												(122,566)
Loans receivable, net			$	11,334,120											$	11,946,079

The following table provides detail on owner occupied commercial real estate loans classified by industry diversification as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Health Care and Social Assistance			$	532,070					21.37		%				$	483,073					18.31		%
Real Estate and Rental and Leasing			409,028						16.43						438,244						16.61
Manufacturing			244,048						9.80						277,755						10.53
Retail Trade			275,005						11.05						307,543						11.66
Other Services (except Public Administration)			185,508						7.45						197,260						7.48
Wholesale Trade			141,299						5.68						149,310						5.66
Construction			127,606						5.13						161,746						6.13
Accommodation and Food Services			110,386						4.43						121,268						4.60
Arts, Entertainment, and Recreation			86,481						3.47						90,325						3.42
All Other			$	378,266					15.19						$	411,651					15.60
Total			$	2,489,697					100.00		%				$	2,638,175					100.00		%

The following table provides geographic diversification detail on owner occupied commercial real estate loans by bank division location as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Colorado			$	571,570					22.97		%				$	516,354					19.56		%
Illinois			292,847						11.76						298,076						11.30
Arizona			294,525						11.83						297,759						11.29
California			307,272						12.34						314,135						11.91
Wisconsin			229,604						9.22						250,069						9.48
Texas			207,621						8.34						236,592						8.97
Iowa			162,383						6.52						195,491						7.41
Minnesota			162,618						6.53						158,278						6.00
New Mexico			157,085						6.31						159,401						6.04
Kansas/Missouri			104,172						4.18						119,395						4.53
Montana			—						—						92,625						3.51
Total			$	2,489,697					100.00		%				$	2,638,175					100.00		%

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The following table provides detail on non-owner occupied commercial real estate loans classified by industry diversification as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Office			$	418,740					17.07		%				$	424,671					16.63		%
Retail			428,024						17.43						432,084						16.91
Hospitality			341,132						13.89						406,516						15.92
Medical			281,504						11.46						329,306						12.90
Multifamily			309,168						12.59						294,097						11.52
Logistics/distribution			262,254						10.68						258,389						10.12
Industrial flex/other			217,890						8.87						230,167						9.01
Self-Storage			119,003						4.85						115,731						4.53
Restaurant			54,871						2.23						52,820						2.07
Other			22,810						0.93						9,930						0.39
Total			$	2,455,396					100.00		%				$	2,553,711					100.00		%

The following table provides geographic diversification detail on non-owner occupied commercial real estate loans by bank division location as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Colorado			$	601,941					24.52		%				$	593,688					23.25		%
Arizona			300,823						12.25						280,144						10.97
New Mexico			263,780						10.74						275,083						10.77
California			242,451						9.87						234,182						9.17
Illinois			245,734						10.01						244,000						9.55
Minnesota			224,169						9.13						216,458						8.48
Texas			200,569						8.17						224,571						8.79
Kansas/Missouri			135,731						5.53						148,126						5.80
Iowa			138,182						5.63						137,055						5.37
Wisconsin			102,016						4.15						124,093						4.86
Montana			—						—						76,311						2.99
Total			$	2,455,396					100.00		%				$	2,553,711					100.00		%

The shift to work-from-home and hybrid work arrangements has caused decreased utilization of and demand for office space. HTLF is actively monitoring its exposure to office space in the non-owner occupied commercial real estate portfolio and securities portfolio. As of September 30, 2024:

•Outstanding loans totaling $418.7 million were collateralized by non-owner occupied office space, which represents 3.7% of the total loans held to maturity, and the average loan size was $1.6 million.

•The nonaccrual rate for loans collateralized by office space was 2.4%.

•The collateral consists primarily of multi-tenant, non-central business district properties.

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. 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 estimates section of HTLF's Annual Report on Form 10-K for the year ended December 31, 2023.

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Total Allowance for Lending Related Credit Losses

The total allowance for lending related credit losses was $117.3 million at September 30, 2024, which was 1.02% of loans, compared to $139.0 million or 1.15% of loans at December 31, 2023. The following table shows, in thousands, the components of the allowance for lending related credit losses as of September 30, 2024, and December 31, 2023:

			September 30, 2024												December 31, 2023
			Amount						% of Allowance						Amount						% of Allowance
Quantitative			$	96,878					82.62		%				$	102,004					73.37		%
Qualitative/Economic Forecast			20,381						17.38						37,030						26.63
Total			$	117,259					100.00		%				$	139,034					100.00		%

Quantitative Allowance

The quantitative allowance decreased $5.1 million or 5% to $96.9 million or 83% of the total allowance for lending related credit losses at September 30, 2024, compared to $102.0 million or 73% of the total allowance at December 31, 2023. The following items impacted the quantitative allowance at September 30, 2024:

•Specific reserves for individually assessed loans totaled $9.9 million at September 30, 2024, a decrease of $10.5 million or 51%, from $20.4 million at December 31, 2023.

•Nonpass loans totaled $996.2 million or 9% of the total loan portfolio, which was an increase of $319.9 million or 47%, from nonpass loans of $676.3 million or 6% of the total loan portfolio at December 31, 2023.

Qualitative Allowance/Economic Forecast

The qualitative allowance totaled $20.4 million or 17% of the total allowance for lending related credit losses at September 30, 2024, compared to $37.0 million or 27% at December 31, 2023. The decrease in the qualitative allowance was driven by the improvement of the GDP forecast provided by Moody's.

HTLF has access to various third-party economic forecast scenarios provided by Moody's, which are updated quarterly in HTLF's methodology. HTLF continued to use a one year reasonable and supportable forecast period. At September 30, 2024, Moody's September 9, 2024, baseline forecast scenario was utilized, and management considered other downside forecast scenarios in addition to the baseline forecast to support the macroeconomic outlook used in the allowance for credit losses calculation.

Allowance for Credit Losses-Loans

The tables below present the changes in the allowance for credit losses for loans during the three- and nine- months ended September 30, 2024 and 2023, in thousands:

			Three Months Ended September 30,
			2024						2023
Balance at beginning of period			$	126,861					$	111,198
Provision for credit losses			8,871						2,672
Recoveries on loans previously charged off			3,202						302
Charge-offs on loans			(32,137)						(3,964)
Balance at end of period			$	106,797					$	110,208
Allowance for credit losses for loans as a percent of loans			0.93		%				0.93		%
Annualized ratio of net charge-offs/(recoveries) to average loans			0.99						0.12

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			Nine Months Ended September 30,
			2024						2023
Balance at beginning of period			$	122,566					$	109,483
Provision for credit losses			22,276						12,685
Recoveries on loans previously charged off			5,573						3,768
Charge-offs on loans			(43,618)						(15,728)
Balance at end of period			$	106,797					$	110,208
Allowance for credit losses for loans as a percent of loans			0.93		%				0.93		%
Annualized ratio of net charge-offs to average loans			0.43						0.14

The allowance for credit losses for loans totaled $106.8 million at September 30, 2024, compared to $122.6 million at December 31, 2023, and $110.2 million at September 30, 2023. The allowance for credit losses for loans at September 30, 2024, was 0.93% of loans compared to 1.02% of loans at December 31, 2023. The following items impacted the allowance for credit losses for loans for the nine months ended September 30, 2024:

•Net charge-offs for the first nine months of 2024 totaled $38.0 million compared to net charge-offs of $12.0 million for the first nine months of 2023, an increase of $26.1 million.

•Provision expense for the first nine months of 2024 totaled $22.3 million. Provision expense was primarily impacted in the third quarter of 2024 by a nonperforming food manufacturing syndication loan that had a charge-off of $19.2 million, of which $10.0 million was reserved for in a prior period.

The following tables show, in thousands, the changes in the allowance for unfunded commitments for the three and nine months ended September 30, 2024 and 2023:

			Three Months Ended September 30,
			2024						2023
Balance at beginning of period			$	13,057					$	18,636
Provision (benefit) for credit losses			(2,595)						(1,156)
Balance at end of period			$	10,462					$	17,480
			Nine Months Ended September 30,
			2024						2023
Balance at beginning of period			$	16,468					$	20,196
Provision (benefit) for credit losses			(6,006)						(2,716)
Balance at end of period			$	10,462					$	17,480

The allowance for unfunded commitments totaled $10.5 million as of September 30, 2024, compared to $16.5 million as of December 31, 2023, and $17.5 million as of September 30, 2023. The decrease in the allowance for unfunded commitments in the first nine months of 2024 was primarily due to a reduction of $82.9 million in unfunded commitments for construction loans, which carry the highest loss rate. Total unfunded commitments decreased $684.5 million or 15% to $3.94 billion at September 30, 2024, compared to $4.63 billion at December 31, 2023.

CREDIT QUALITY AND NONPERFORMING ASSETS

The internal rating system for the credit quality of HTLF's 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 3, "Loans" of the consolidated financial statements in this Quarterly Report on Form 10-Q.

The nonpass loans totaled $996.2 million or 9% of total loans as of September 30, 2024, compared to $676.3 million or 6% of total loans as of December 31, 2023. As of September 30, 2024, the nonpass loans consisted of approximately 69% watch loans

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and 31% substandard loans compared to approximately 62% watch loans and 38% substandard loans as of December 31, 2023. The percent of nonpass loans on nonaccrual status as of September 30, 2024, was 7%.

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

			September 30,												December 31,
			2024						2023						2023						2022
Nonaccrual loans			$	69,115					$	51,304					$	95,426					$	58,231
Loans contractually past due 90 days or more			832						511						2,507						273
Total nonperforming loans			69,947						51,815						97,933						58,504
Other real estate			6,805						14,362						12,548						8,401
Other repossessed assets			—						1						—						26
Total nonperforming assets			$	76,752					$	66,178					$	110,481					$	66,931
Nonperforming loans to total loans			0.61		%				0.44		%				0.81		%				0.51		%
Nonperforming assets to total loans plus repossessed property			0.67						0.56						0.91						0.59
Nonperforming assets to total assets			0.42						0.33						0.57						0.33

The schedules below summarize the changes in nonperforming assets during the three- and nine- months ended September 30, 2024, in thousands:

			Nonperforming Loans						Other Real Estate Owned						Other Repossessed Assets						Total Nonperforming Assets
June 30, 2024			$	103,786					$	7,533					$	—					$	111,319
Loan foreclosures			(105)						105						—						—
Net loan charge-offs			(28,935)						—						—						(28,935)
New nonperforming loans			25,441						—						—						25,441
Reduction of nonperforming loans(1)			(30,240)						—						—						(30,240)
OREO/Repossessed assets sales proceeds			—						(391)						—						(391)
OREO/Repossessed assets write-downs, net			—						(442)						—						(442)
September 30, 2024			$	69,947					$	6,805					$	—					$	76,752
(1) Includes principal reductions and transfers to performing status.

			Nonperforming Loans						Other Real Estate Owned						Other Repossessed Assets						Total Nonperforming Assets
December 31, 2023			$	97,933					$	12,548					$	—					$	110,481
Loan foreclosures			(5,216)						5,205						11						—
Net loan charge-offs			(38,045)						—						—						(38,045)
New nonperforming loans			79,257						—						—						79,257
Reduction of nonperforming loans(1)			(63,982)						—						—						(63,982)
OREO/Repossessed assets sales proceeds			—						(10,215)						(9)						(10,224)
OREO/Repossessed assets write-downs, net			—						(733)						(2)						(735)
September 30, 2024			$	69,947					$	6,805					$	—					$	76,752
(1) Includes principal reductions and transfers to performing status.

Total nonperforming assets were $76.8 million or 0.42% of total assets at September 30, 2024, compared to $110.5 million or 0.57% of total assets at December 31, 2023. Nonperforming loans were $69.9 million at September 30, 2024, compared to $97.9 million at December 31, 2023, which represented 0.61% and 0.81% of total loans at September 30, 2024, and December 31, 2023, respectively. At September 30, 2024, approximately $48.2 million or 69% of HTLF's nonperforming loans had individual loan balances exceeding $1.0 million and represented loans to 14 borrowers. The portion of the nonperforming nonresidential real estate loans covered by government guarantees totaled $6.9 million and $10.3 million at September 30, 2024, and December 31, 2023, respectively.

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Other real estate owned, net, decreased $5.7 million or 46% to $6.8 million at September 30, 2024 from $12.5 million at December 31, 2023.

SECURITIES

The composition of the securities portfolio is managed to meet liquidity needs 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 27% and 29% of total assets at September 30, 2024, and December 31, 2023, respectively. Total securities carried at fair value as of September 30, 2024, were $4.06 billion, a decrease of $589.6 million or 13% from $4.65 billion at December 31, 2023.

HTLF sold $108.4 million of securities during the second quarter of 2024 and sold $40.3 million of securities during the third quarter of 2024, resulting in a pre-tax loss of $19.4 million.

As of September 30, 2024, and December 31, 2023, securities with a carrying value of $3.47 billion and $2.63 billion, respectively, were pledged to secure public and trust deposits, short-term borrowings and for other purposes as required or permitted by law. As of September 30, 2024, approximately $1.41 billion of securities remained available to pledge.

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 September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
U.S. treasuries			$	7,963					0.16		%				$	32,118					0.58		%
U.S. agencies			11,440						0.23						14,530						0.26
Obligations of states and political subdivisions			1,580,247						31.82						1,579,486						28.32
Mortgage-backed securities - agency			1,344,977						27.08						1,393,629						24.99
Mortgage-backed securities - non-agency			1,236,696						24.90						1,529,128						27.42
Commercial mortgage-backed securities - agency			62,533						1.26						64,788						1.16
Commercial mortgage-backed securities - non-agency			387,941						7.81						514,858						9.23
Asset-backed securities			122,730						2.47						217,370						3.90
Corporate bonds			120,314						2.42						118,169						2.12
Equity securities with a readily determinable fair value			22,117						0.45						21,056						0.38
Other securities			69,511						1.40						91,277						1.64
Total securities			$	4,966,469					100.00		%				$	5,576,409					100.00		%

HTLF's securities portfolio had an expected modified duration of 6.63 years as of September 30, 2024, and 6.38 years as of December 31, 2023.

At September 30, 2024, HTLF had $69.5 million of other securities, including Federal Home Loan Bank ("FHLB") stock. These securities are recorded on the consolidated balance sheets in Securities: Other investments, at cost.

DEPOSITS

Total deposits were $14.95 billion as of September 30, 2024, compared to $16.20 billion at December 31, 2023, a decrease of $1.25 billion or 8%. Excluding the Rocky Mountain Bank deposits sold of $531.9 million, deposits decreased $716.6 million or 4% since year-end 2023. As of September 30, 2024, 68% of HTLF's deposits were insured or collateralized. Total uninsured deposits were $5.78 billion or 39% of total deposits as of September 30, 2024.

HTLF maintains a granular and diverse deposit base. As of September 30, 2024, no Bank Market represented more than 16% of total customers deposits, and no major industry represented more than 11% of total commercial customer deposits.

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The following table shows the changes in deposit balances by deposit type since year-end 2023, in thousands:

			September 30, 2024						December 31, 2023						Change						% Change
Demand-customer			$	4,009,218					$	4,500,304					$	(491,086)					(11)		%
Savings-customer			8,713,228						8,411,240						301,988						4
Savings-wholesale and institutional			212,964						394,357						(181,393)						(46)
Total savings			8,926,192						8,805,597						120,595						1
Time-customer			1,628,856						1,944,884						(316,028)						(16)
Time-wholesale			388,950						950,929						(561,979)						(59)
Total time			2,017,806						2,895,813						(878,007)						(30)
Total deposits			$	14,953,216					$	16,201,714					$	(1,248,498)					(8)		%
Total customer deposits			$	14,351,302					$	14,856,428					$	(505,126)					(3)		%
Total wholesale and institutional deposits			601,914						1,345,286						(743,372)						(55)		%
Total deposits			$	14,953,216					$	16,201,714					$	(1,248,498)					(8)		%

Total customer deposits were $14.35 billion as of September 30, 2024 compared to $14.86 billion at December 31, 2023, which was a decrease of $505.1 million or 3%. Excluding the Rocky Mountain Bank customer deposits sold of $531.9 million, customer deposits increased $26.7 million. Significant customer deposit changes by category at September 30, 2024, compared to December 31, 2023, included:

•Customer demand deposits decreased $491.1 million or 11% to $4.01 billion compared to $4.50 billion. Excluding the Rocky Mountain Bank customer demand deposits sold of $131.7 million, customer demand deposits decreased $359.3 million or 8%.

•Customer savings deposits increased $302.0 million or 4% to $8.71 billion compared to $8.41 billion. Excluding the Rocky Mountain Bank customer savings deposits sold of $284.3 million, customer savings deposits increased $586.3 million or 7%.

•Customer time deposits decreased $316.0 million or 16% to $1.63 billion compared to $1.94 billion. Excluding the Rocky Mountain Bank customer time deposits sold of $115.8 million, customer time deposits decreased $200.2 million or 10%.

Management helps customers facilitate additional FDIC insurance through Insured Cash Sweep ("ICS") products and Certificates of Deposit Registry Service ("CDARS") products. At September 30, 2024, HTLF had $601.9 million of wholesale and institutional deposits, of which $213.0 million was included in savings deposits and $389.0 million was included in time deposits. At December 31, 2023, HTLF had $1.35 billion of wholesale and institutional deposits, of which $394.4 million of wholesale savings and institutional deposits and $950.9 million was included in time deposits.

Wholesale and institutional deposits at September 30, 2024 include $389.0 million or 3% of total deposits, of brokered deposits, of which $389.0 million was included in brokered time deposits and $0 was included in ICS. Wholesale and institutional deposits at December 31, 2023, included $1.16 billion, or 7% of total deposits, of brokered deposits, of which $951.9 million was included in brokered time deposits and $210.7 million included in ICS.

HTLF has established policies with respect to the use of brokered deposits to limit the amount of brokered deposits as a percentage of total deposits and the HTLF Asset/Liability Committee monitors the use of brokered deposits on a regular basis, including interest rates and the total volume of such deposits in relation to total deposits. As of September 30, 2024, the level of brokered deposits was well within the internal policy limit of 20% of total assets. HTLF has established risk limits for the level of uninsured deposits to total deposits and uninsured and collateralized deposits to total deposits as well as deposit concentration limits for the largest one, five and 100 customers, and has been in compliance with those internal requirements for the periods presented.

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The table below presents the composition of deposits by category as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024												December 31, 2023
			Amount						Percent						Amount						Percent
Demand-customer			$	4,009,218					26.81		%				$	4,500,304					27.78		%
Savings-customer			8,713,228						58.28						8,411,240						51.92
Savings-wholesale and institutional			212,964						1.42						394,357						2.43
Time-customer			1,628,856						10.89						1,944,884						12.00
Time-wholesale			388,950						2.60						950,929						5.87
Total			$	14,953,216					100.00		%				$	16,201,714					100.00		%

BORROWINGS

Borrowings were as follows as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024						December 31, 2023						Change						% Change
Retail repurchase agreements			$	28,549					$	42,447					$	(13,898)					(33)		%
Advances from the FHLB			—						521,186						(521,186)						(100)
Bank term funding program			500,000						—						500,000						100
Other borrowings			17,670						58,622						(40,952)						(70)
Total			$	546,219					$	622,255					$	(76,036)					(12)		%

Borrowings generally include federal funds purchased, securities sold under agreements to repurchase, swap margin payable, short-term FHLB advances, Bank Term Funding Program ("BTFP") and discount window borrowings from the Federal Reserve Bank. These funding sources are utilized in varying degrees depending on their pricing and availability. HTLF Bank owns FHLB stock in the FHLB of Topeka, enabling HTLF Bank to borrow funds for short-term or long-term purposes under a variety of programs. Borrowings totaled $546.2 million at September 30, 2024, compared to $622.3 million at December 31, 2023, a decrease of $76.0 million or 12%.

The BTFP is a Federal Reserve Bank program created in the first quarter of 2023 to assist banks in meeting the liquidity needs of depositors. The BTFP ceased extending new loans on March 11, 2024. During the first quarter of 2024, HTLF Bank utilized the BTFP to obtain a $500.0 million advance due in January 2025; prepayable at any time without penalty. HTLF Bank pledged $501.8 million of securities to support the borrowings as of September 30, 2024.

HTLF Bank provides retail repurchase agreements to customers as a cash management tool. 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 $28.5 million at September 30, 2024, compared to $42.4 million at December 31, 2023, a decrease of $13.9 million or 33%.

Other borrowings, which include a swap margin payable account, was $17.7 million at September 30, 2024, compared to $58.6 million at December 31, 2023, a decrease of $41.0 million or 70%. Swap margin payable was $17.7 million at September 30, 2024, compared to $44.8 million at December 31, 2023, a decrease of $27.2 million or 61%.

HTLF extended its revolving credit line agreement with an unaffiliated bank on September 14, 2024. This revolving credit line agreement, which has $100.0 million of borrowing capacity, is included in borrowings, and the primary purpose of this credit line agreement is to provide liquidity. No advances occurred on this line during the first nine months of 2024, and the outstanding balance was $0 at both September 30, 2024, and December 31, 2023. The credit agreement contains specific financial covenants which HTLF complied with as of September 30, 2024.

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TERM DEBT

The outstanding balances of term debt net of discount and issuance costs amortization as of September 30, 2024, and December 31, 2023, in thousands:

			September 30, 2024						December 31, 2023						Change						% Change
Trust preferred securities			$	150,010					$	149,288					$	722					—		%
Contracts payable			—						80						(80)						(100)
Subordinated notes			223,314						223,028						286						—
Total			$	373,324					$	372,396					$	928					—		%

A schedule of HTLF's trust preferred securities outstanding excluding deferred issuance costs as of September 30, 2024, is as follows, in thousands:

Amount Issued

Issuance Date

Interest Rate

Interest Rate as of 9/30/2024(1)

Maturity Date

Callable Date

Heartland Financial Statutory Trust IV

$

10,310

03/17/2004

2.75% over LIBOR

7.95%

03/17/2034

12/17/2024

Heartland Financial Statutory Trust V

20,619

01/27/2006

1.33% over LIBOR

6.89

04/07/2036

01/07/2025

Heartland Financial Statutory Trust VI

20,619

06/21/2007

1.48% over LIBOR

6.69

09/15/2037

12/15/2024

Heartland Financial Statutory Trust VII

18,042

06/26/2007

1.48% over LIBOR

6.76

09/01/2037

12/01/2024

Morrill Statutory Trust I

9,534

12/19/2002

3.25% over LIBOR

8.17

12/26/2032

12/26/2024

Morrill Statutory Trust II

9,282

12/17/2003

2.85% over LIBOR

8.05

12/17/2033

12/17/2024

Sheboygan Statutory Trust I

6,944

09/17/2003

2.95% over LIBOR

8.15

09/17/2033

12/17/2024

CBNM Capital Trust I

4,645

09/10/2004

3.25% over LIBOR

8.46

12/15/2034

12/15/2024

Citywide Capital Trust III

6,702

12/19/2003

2.80% over LIBOR

8.32

12/19/2033

01/23/2025

Citywide Capital Trust IV

4,569

09/30/2004

2.20% over LIBOR

7.56

09/30/2034

11/23/2024

Citywide Capital Trust V

12,818

05/31/2006

1.54% over LIBOR

6.75

07/25/2036

12/15/2024

OCGI Statutory Trust III

3,033

06/27/2002

3.65% over LIBOR

9.21

09/30/2032

12/30/2024

OCGI Capital Trust IV

5,610

09/23/2004

2.50% over LIBOR

7.71

12/15/2034

12/15/2024

BVBC Capital Trust II

7,389

04/10/2003

3.25% over LIBOR

8.76

04/24/2033

01/24/2025

BVBC Capital Trust III

9,894

07/29/2005

1.60% over LIBOR

6.47

09/30/2035

12/30/2024

Total trust preferred securities

$

150,010

(1) Effective weighted average interest rate as of September 30, 2024, was 7.88%.

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 will be required to 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 HTLF Bank 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. Although the capital conservation buffer requirement transition provisions have been extended indefinitely, the table below also indicates the fully-phased in capital conservation buffer requirements.

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			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)
September 30, 2024			16.34		%				13.44		%				12.66		%				10.77		%
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			$	14,316,449					$	14,316,449					$	14,316,449					N/A
Average assets			N/A						N/A						N/A						$	17,859,033
December 31, 2023			14.53		%				11.69		%				10.97		%				9.44		%
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			$	15,399,653					$	15,399,653					$	15,399,653					N/A
Average assets			N/A						N/A						N/A						$	19,082,733

Retained earnings available for the payment of dividends to HTLF from HTLF Bank totaled approximately $900.0 million and $743.3 million at September 30, 2024, and December 31, 2023, respectively, under the most restrictive minimum capital requirements. Retained earnings available for the payment of dividends to HTLF from HTLF Bank while remaining above the well capitalized levels totaled approximately $615.1 million and $436.9 million at September 30, 2024, and December 31, 2023, respectively. 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.

As of September 30, 2024, management believes regulatory capital ratio buffers would withstand any changes in regulatory rules that require the inclusion of unrealized losses in the total investment portfolio and remain well capitalized.

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, 2022, 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, 2025.

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 Bank evaluates 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 customer. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties. Standby letters of credit and

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financial guarantees are conditional commitments issued by HTLF Bank 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 September 30, 2024, and December 31, 2023, commitments to extend credit totaled $3.95 billion and $4.62 billion, respectively. Standby letters of credit totaled $41.5 million at September 30, 2024, and $56.4 million at December 31, 2023.

At September 30, 2024, and December 31, 2023, HTLF Bank had $783.4 million and $917.0 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, 2023. There have been no material changes to HTLF's contractual obligations and other commitments since the Annual Report on Form 10-K was filed.

There are certain legal proceedings pending against HTLF and its subsidiaries at September 30, 2024, that are ordinary routine litigation incidental to business.

Derivative Financial Instruments

HTLF considers and uses derivative financial instruments as part of its interest rate risk management strategy, which may include interest rate swaps, fair value hedges, risk participation agreements, caps, floors and collars. In the first quarter of 2023, HTLF terminated cash flow hedges that were effectively converting $500.0 million of variable rate loans to fixed rate loans. In the second and third quarter of 2023, HTLF continued the strategy of using derivatives by entering into fair value hedges to manage the exposure to changes in the fair value on $2.5 billion of our loan portfolio and $838.1 million of our investment portfolio. See "2024 Developments" for the subsequent event regarding the termination of the interest rate swaps designated as fair value hedges. See Note 6 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 September 30, 2024, HTLF had $588.4 million of cash and cash equivalents, time deposits in other financial institutions of $1.1 million and securities carried at fair value of $4.06 billion. Management expects the securities portfolio to produce principal cash flows of approximately $752.6 million over the next twelve months.

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.

HTLF Bank's FHLB membership gives management the ability to borrow funds for short- and long-term purposes under a variety of programs. Borrowing balances depend on commercial cash management and smaller correspondent bank relationships and, as a result, will normally fluctuate. Management believes these balances to be stable sources of funds and has tested drawing on these sources. In the event of short-term liquidity needs, HTLF Bank may purchase federal funds from correspondent banks and may also borrow from the Federal Reserve Bank.

Additional funding is provided by term debt and borrowings. As of September 30, 2024, HTLF had $373.3 million of term debt outstanding, which is an important funding source because of its multi-year borrowing structure.

HTLF's current liquidity strategy includes using overnight borrowings and reducing wholesale deposits. The use of overnight borrowings provides flexibility to make repayments on demand. As of September 30, 2024, pledged securities totaled $3.47 billion. As of September 30, 2024, approximately $1.41 billion of securities remained available to pledge.

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The following table shows the source of funding, balance outstanding and available borrowing capacity as of September 30, 2024, dollars in thousands:

			As of September 30, 2024
Source			Outstanding						Available
Federal Reserve Discount Window			$	—					$	2,062,746
Bank Term Funding Program			500,000						—
Federal Home Loan Bank			—						1,762,914
Federal Funds			—						265,000
Wholesale deposits/brokered CDs			388,951						3,252,091
Total			$	888,951					$	7,342,751

HTLF strives to fund loan growth with the least expensive source of deposits, sales of securities or borrowings. Excluding any sales which management may pursue from time to time, the securities portfolio is expected to produce principal cash flows of approximately $752.6 million over the next twelve months, which could be used to fund loan growth, as well as reduce wholesale deposits. Additionally, growing customer deposits will continue to be a focus. HTLF offers the ICS and CDARS products accessed through the Intrafi network of financial institutions, which helps to reduce the amount of pledged securities.

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, repayment requirements under other debt obligations and payments for acquisitions. The parent company obtains the funding to meet these obligations from dividends paid by HTLF Bank and the issuance of debt and equity securities.

At September 30, 2024, the parent company had cash of $312.2 million. Additionally, HTLF has a revolving credit agreement with an unaffiliated bank, which was extended most recently on September 14, 2024. The revolving credit agreement has $100.0 million of maximum borrowing capacity, of which none was outstanding at September 30, 2024. This credit agreement contains specific financial covenants, all of which HTLF complied with as of September 30, 2024.

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

HTLF has filed a universal shelf registration statement with the SEC that provides HTLF the ability to raise both debt and capital, subject to SEC rules and limitations, if HTLF's board of directors decides to do so. This registration statement expires in August 2025.

Management believes that cash on hand, cash flows from operations and cash availability under existing borrower programs and facilities will be sufficient to meet any recurring and additional operating cash needs in 2024.

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, including the risk that our net income will be materially impacted by changes in interest rates. HTLF's market risk is comprised primarily of interest rate risk resulting from HTLF Bank's core banking activities of lending and deposit gathering.

HTLF uses an interest rate management process to measure market risk and manage exposure within policy limits approved by the HTLF Board of Directors. Exposure to market risk is reviewed on a regular basis by HTLF Bank’s Asset/Liability Committee as well as HTLF's and HTLF Bank's management and Board of Directors.

HTLF's balance sheet market risk profile is measured and reviewed at least quarterly. As part of the review, interest rate sensitivity analysis is performed, which simulates changes in net interest income in response to various hypothetical interest rate scenarios capturing asset and liability pricing mismatches over a one-year and two-year time horizon. Increasing net interest income in a rising rate environment would indicate that asset-related income will increase faster than liability-related expense over the simulation period.

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The core interest rate risk analysis utilized by HTLF examines the balance sheet under many interest rate scenarios including shocks, ramps, yield curve twists, market-based, as well as those that may be deemed extreme or highly unlikely. We use a net interest income ("NII") simulation model to measure the estimated changes in NII that would result over various time horizons from immediate and sustained changes in interest rates. This model is an interest rate risk management tool, and the results are not necessarily an indication of our future net interest income. The model has inherent limitations, and these results are based on a given set of rate changes and assumptions at a point in time. Key assumptions in the analysis include balance sheet growth, product mix-shift, the repricing behavior of interest-bearing deposits (i.e., deposit betas), behavior of deposits with indeterminate maturities, prepayment assumptions on financial instruments with embedded options such as loans and investment securities, as well as cash flow reinvestment assumptions.

The base scenario assumes a static balance sheet and static interest rates as of September 30, 2024, no changes to product mix shift and cash flow reinvestment at current market interest rates. HTLF also assumes a correlation, referred to as a deposit beta, with respect to interest-bearing deposits, as the rates paid to deposit holders change at a different pace when compared with changes in average benchmark interest rates. Generally, time deposits are assumed to have a high correlation, while other interest-bearing accounts are assumed to have a lower correlation. The model assumes interest-bearing deposits reprice at 51% and total deposits reprice at 38% in an up rate scenario and that interest-bearing deposits reprice at 50% and total deposits reprice at 37% in a down rate scenario, as compared to the change in benchmark interest rates. The majority of our loans are variable rate and are assumed to reprice in accordance with their contractual terms. Some loans and investment securities include the opportunity of prepayment (embedded options) and the simulation model uses prepayment assumptions to estimate these accelerated cash flows and reinvests the proceeds at current simulated yields Changes that could vary significantly from HTLF's assumptions include loan and deposit growth or contraction, loan and deposit pricing, changes in the mix of earning assets or funding sources, and future asset/liability management decisions, all of which may have significant effects on our net interest income.

Key assumptions are monitored at least annually or as needed, as part of the sensitivity analysis and back testing framework. When appropriate and applicable assumptions are recalibrated taking into consideration, among other factors, the impact of a full interest rate cycle on the balance sheet. In 2023, HTLF recalibrated certain prepayment assumptions and updated cash flow characteristics. None of the changes were material to the simulation model.

The following table presents the most recent simulation of net interest income at September 30, 2024, in thousands. The interest rate scenarios assume parallel instantaneous changes to interest rate levels by 100 and 200 basis points.

			2024
			Net Interest Margin						% Change From Base
Year 1
Down 200 Basis Points			$	492,378					(17.89)		%
Down 100 Basis Points			542,233						(9.58)
Base			599,680
Up 100 Basis Points			653,164						8.92
Up 200 Basis Points			705,189						17.59
Year 2
Down 200 Basis Points			$	492,041					(20.98)		%
Down 100 Basis Points			554,579						(10.94)
Base			622,686
Up 100 Basis Points			674,641						8.34
Up 200 Basis Points			721,074						15.80

As of September 30, 2024, HTLF's through the cycle deposit beta (calculated by taking the change in company deposit rates compared to the benchmark federal funds target rate over a period of time) for customer deposits was approximately 36% for all customer deposits and 39% including both customer and wholesale and institutional deposits. As of September 30, 2024, HTLF's through the cycle beta excluding noninterest-bearing accounts was approximately 50% for customer deposits and 53% including both customer and wholesale and institutional deposits. As of December 31, 2023, HTLF's through the cycle beta for customer deposits was approximately 31% for all customer deposits and 37% including both customer and wholesale and institutional deposits. As of December 31, 2023, HTLF's through the cycle beta excluding noninterest-bearing accounts was approximately 45% for customer deposits and 51% including both customer and wholesale and institutional deposits. HTLF compares actual deposit betas to the betas utilized in the net interest margin simulation models to monitor model performance and to monitor our deposits in comparison with market competition. Management also uses deposit betas to understand the risk to net interest income in various interest rate environments.

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We use derivative financial instruments to manage the impact of changes in interest rates on our future interest income or interest expense. We are exposed to credit-related losses in the event of nonperformance by the counterparties to these derivative instruments but believe we have 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.

We enter into financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of our 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 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 with specified terms and conditions. These commitments to extend credit and standby letters of credit are not recorded on the balance sheet until the loan is made or the letter of 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 September 30, 2024, 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.

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PART II

ITEM 1. LEGAL PROCEEDINGS

There are certain legal proceedings pending against HTLF and its subsidiaries at September 30, 2024, that are ordinary routine litigation incidental to HTLF's business.

ITEM 1A. RISK FACTORS

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024.

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 $101.5 million as of September 30, 2024, as treasury shares at any one time. HTLF and its affiliated purchasers made no purchases of its common stock during the quarter ended September 30, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

Exhibits

31.1			(1)			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2			(1)			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32.1			(1)			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			(1)			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) Filed or furnished herewith

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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/ Kevin L. Thompson
By: Kevin L. Thompson
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: November 8, 2024