Q1 2022 Heartland Financial USA Inc Earnings Call
Okay.
Greetings and welcome to E.
T O F 2022 conference calls.
This afternoon.
Distributed its first quarter release, and hopefully you've had a view of the results.
If they're on this call who did not receive a copy also acts as a T.
T O N E.
Dot com.
Today from management are Bruce Lee.
Brian Thank you.
This president and Chief Financial Officer.
Management will provide a brief summary of the quarter and then.
Open the calls to your questions.
Before we begin the presentation I would like to remind everyone that some of the information management will be providing today falls under the guidelines of forward looking statements as defined by the Securities and Exchange Commission.
I must point out that any statements made in this presentation concerning when he's hopes beliefs expectations and predictions.
Of the future are forward looking statements and actual results could differ materially from those projected.
Additional information on these factors is included from time to time in the company's 10-K, and 10-Q filings, which may offer which may be obtained on the company's website.
Okay.
This time I will now turn the call over to Mr. Bruce Lee H L. S. Please go ahead Sir.
Thank you Victor Good afternoon, everyone. This is Bruce Lee President and CEO .
Welcome to H T O F. 2022 first quarter earnings Conference call. We appreciate you joining us today as we discuss H T O S performance for the first quarter.
For the next few minutes I will discuss many of our first quarter highlights I will then turn the call over to Bryan Mckeag, Our Chief financial officer to provide additional information around H T O EFS results.
Also joining us today is Nathan Jones, our Chief Credit Officer, who can answer any questions regarding our credit quality, which is quite strong.
H T O F had continued success and growth in the first quarter reporting 47.9 million of net income and EPS of $1 12.
Our ongoing growth strategy and investments in talent and technology continue to deliver results with strong growth in loans deposits and revenue and excellent credit quality.
I'm pleased to share with you our solid results in.
In the first quarter, we delivered organic loan growth of $358 million or 4% from the linked quarter. Excluding P. P P and significantly exceeding our guidance of $200 million.
Deposit growth of 249 million from the linked quarter.
Total revenue of $169 million in line with our expectations and.
And excellent credit quality with nonperforming assets decreasing to 32 basis points of total assets.
Let's start with loan growth highlights.
We saw continued strength across our diversified commercial loan portfolios from the linked quarter commercial and industrial increased $174 million or 7%.
Owner occupied real estate increased $26 million or 1%.
Non owner occupied real estate increased $151 million or 8% construction.
Construction decreased $14 million or 2% and our AG portfolio increased $13 million or 2%.
In the first quarter, we added 322, new commercial relationships, representing $263 million in funded loans and $58 million of new deposits.
We had growth across all segments.
Thanks.
Food and agribusiness and H T O F specialized industries.
Our teams are well positioned with strong customer relationships and a robust pipeline of prospects.
Our commercial pipeline remains strong at over $2 billion as it has for the last three quarters.
And we expect to grow commercial loans by more than $250 million in the second quarter.
I spend a considerable amount of time talking to our customers getting to know their businesses and outlooks.
While there are headwinds such as inflation supply chain and staffing our customers are cautiously optimistic for the rest of this year.
In our consumer loan portfolio, we saw growth of $12 million or 3% from the linked quarter.
Residential mortgage decreased $4 million or less than 1% from the linked quarter.
We delivered another quarter of deposit growth.
Non time deposits totaled $15 6 billion, an increase of $219 million or 1% from the linked quarter.
Total deposits grew to a record 16.7 billion, an increase of $249 million from the linked quarter.
This marks our 12th consecutive quarter of total deposit growth.
We maintained our exceptional deposit mix, 94% of deposits are in non time accounts, 38% of deposits are in noninterest bearing accounts.
<unk> as well in a rising rate environment.
Our deposit pricing strategy continues to serve us well.
Total deposit costs remained low at seven basis points, a decrease from 12 basis points a year ago.
Total assets are $19 2 billion, an increase of $995 million from a year ago.
Assets decreased slightly by $35 million or less than 1% from the linked quarter.
Turning to key credit metrics, we've added talent and strategically build a strong credit team that uses a disciplined credit approach.
The team has been focusing on improving credit quality across our portfolios non.
Nonperforming loans represented 58 basis points of total loans at the end of the first quarter of <unk>.
Decrease of 12 basis points from the linked quarter.
Nonperforming assets as a percentage of total assets declined to 32 basis points from 37 basis points in the linked quarter.
Delinquency ratio remains near our historic low at 10 basis points.
Non pass rated loans decreased to 6.3% from seven 4% in the linked quarter.
Lastly, in the first quarter, we reported net charge offs of $3 million or 12 basis points annualized of average loans.
This was largely related to one AG credit we've been working to bring to resolution for several years.
I'd like to congratulate John Schmidt on being named our New Independent Board Chair.
John has served as a director since 2001 and brings deep experience and understanding to the role.
Having previously served at H T O F as a bank president.
Chief operating officer, and Chief Financial Officer.
John and the board share <unk> vision to be a top performing and admired banking organization and we are delivering against our ambitious and disciplined growth strategies, which were developed by our management team and unanimously approved by the H T O F.
Our board of directors.
These strategies are working.
We are achieving growth by.
Retaining and attracting top talent, such as our <unk> food and agribusiness team.
Adding customer relationships demonstrated by the last four quarters of 15% commercial and AG related loan growth excluding PPP.
Expanding into adjacent growth markets, which we've done in Cedar Rapids.
<unk> St Paul in the western suburbs of Chicago.
We will also achieve growth by consolidating our 11 separate bank charters into a single H T O F Bank charter.
This will create operational and cost efficiencies and unlock capacity that supports growth both organically and through M&A.
Charter consolidation isn't a goal in and of itself.
It's one of several strategies to achieve our goals of organic growth and growth through acquisitions.
We can grow organically pursue charter consolidation.
And potential M&A strategies simultaneously.
Internal efficiency and external growth are complementary.
Not contradictory.
Our 11 bank divisions will maintain their brands local leadership and local decision making staying.
Staying focused on customers and relationships and <unk>, we will maintain our strong and sizable presence in Dubuque, Iowa.
While expenses were elevated in the first quarter, we expect them to improve in the second quarter.
Brian will provide more details on expenses in his comments.
We expect to complete charter consolidation by late 2023, and delivered $20 million of annual savings.
We also continue to optimize our branch network. This.
This year, we plan to close or sell a total of 11 branches or 8% of our branch network.
<unk> has considerable momentum and is positioned for continued growth and progress against our goals of <unk>.
Organic loan growth.
New customer acquisition attracting.
Attracting and retaining talent.
Controlling expenses and maintaining strong credit quality.
We are driving growth and creating value for our employees customers and shareholders.
Our strategy and accomplishments have been recognized by Forbes as one of America's best banks for 2022 .
<unk> ranked 28, our highest ranking today.
It's the sixth consecutive year, we've been ranked by Forbes based on profitability growth.
Credit quality and efficiency.
Our strategic investments in technology are delivering best in class services and technology to our customers.
Earlier. This month, we began introducing an update to consumer and commercial online banking experiences in June will launch zelle, enabling consumers consumer customers to make fast safe and easy person to person payments.
I, specifically want to recognize our employees and thank them for their continued commitment to delivering strength insight and growth to our customers.
Communities and investors I'm.
I am grateful for their hard work and dedication that have strengthened our company.
Together, we are H T L F.
I will now turn the call over to Bryan Mckeag, <unk>, Chief Financial Officer for more details on our performance and financials.
Brian .
Thanks, Bruce and good afternoon.
I'll begin today by referencing our earnings release, which details another solid quarter for <unk> with earnings per share reported at $1 12.
Loan growth of five $358 million, excluding PPP and continued improvement in credit metrics.
But before I go into more detail I would remind you remind everyone that you can find additional information on the quarter in our first quarter investor presentation, which is available in the IR section of <unk> website.
So I'll start my comments as I, usually do with the provision for credit losses, which was a $5 $7 million benefit this quarter.
Which is slightly better than the $5 $3 million benefit last quarter as underlying credit trends remained very phase favorable.
Highlighted by nonperforming loans, which declined by $11 million.
And loan delinquencies that remained near historic lows at 10 basis points of total loans.
As rich mentioned net charge offs of $3 million this quarter due primarily to one egg related credit that's been in our workout group going through bankruptcy for several years a.
A good portion of the charge offs had been reserved for in prior quarters.
The economic outlooks used to develop the allowance were upgraded from last quarter, but still retaining measure of caution and uncertainty that management teams appropriate for what it views as lingering economic headwinds.
So at the end of the quarter. The total allowance for lending related credit losses, which includes both the allowance for credit losses on loans and unfunded commitments stood at $116 8 million or 1.15% of total loans.
In addition at quarter end unamortized purchase loan valuations on the balance sheet totaled $16 3 million or 16 basis points of total loans.
Moving onto some other balance sheet items investment balances declined $508 million this quarter.
Which includes a $381 million or about 5% reduction in fair market value.
Investments now comprise 37% of assets with a tax equivalent yield of two 6%.
Modified duration of just over five years and generate between 70% and $75 million of average cash flow per months.
Tangible common equity ratio decreased 129 basis points to.
To 655% at the end of the quarter and reflects the 147 basis points decline that was primarily due to the decrease in market value of investments and was partially offset by an 18 basis points increase from higher retained earnings.
<unk> regulatory capital ratios remain strong with common equity tier one at just over 11, 5% and total risk based capital at 15, 7%.
So the balance sheet continues to be very strong and well positioned.
Moving to the income statement and starting with revenue.
Noninterest income for net interest income totaled $134 7 million this quarter, which was $2 5 million lower than the prior quarter.
The main drivers of the reduction were first a $3 $8 million decline in PPP interest and fees recognized this quarter at $4 3 million down from $8 1 million last quarter.
We exited the quarter with $2 4 million of unamortized PPP loan fees remaining on our books.
And second due to the first quarter, having two fewer days than the prior quarter.
Net interest income was $3 $1 million lower.
In total these two items result resulted in a $6 $9 million decrease in net interest income compared to the prior quarter.
Excluding these components net interest income would have been $4 $4 million higher than last quarter.
The net interest margin on a tax equivalent basis remained unchanged this quarter at three 1% and 2%.
As expected investment yields improved 22 basis points.
In addition, monial fell 20 basis points and interest cost declined one basis point.
This quarter. The net interest margin includes five basis points of purchase accounting accretion.
Which was unchanged from the prior quarter.
Noninterest income increased this quarter to $34 6 million <unk>.
Excluding security gains and losses core noninterest income was $32 million up almost $1 million from the prior quarter and a strong commercial swaps and syndication fees more than offset some weakness in wealth management and mortgage banking revenues.
In relation to rising interest rates.
So core revenue trends were positive for both net interest income and fees and we believe revenue can continue to trend positive throughout the rest of 2022.
Shifting then to expenses noninterest expenses totaled $110 8 million this quarter, that's down $4 6 million from last quarter.
Excluding restructuring tax credit costs, and asset gains and losses core expenses decreased $1 million to $110 million compared to $111 million last quarter.
And as Bruce said, Unfortunately, they are a little bit higher than we had projected last quarter.
This miss was primarily in salary and benefits expense, which increased $3 million due to higher incentive and benefit accruals that reset in Q1. However, these accruals are expected to normalize at lower levels as we go forward.
On the positive side FTE counts declined 41 by 41 late in the quarter and we anticipate additional reductions next quarter as we worked through.
Initial charter consolidation opportunities.
Offsetting the increases in personnel costs were declines in professional fees advertising and other expenses, which were lower due to <unk> and other projects winding down as we approach our initial charter consolidations.
Looking ahead to the remainder of 2022, we believe <unk> will continue to deliver strong results highlighted by loan pipelines, which as Bruce noted remains strong and support our expected loan growth rate ex PPP of 2% to 3% per quarter.
Non time deposit growth is likely to slow into the 1% range per quarter.
Assuming no additional fed rate changes net interest income excluding PPP is projected to grow in the single loaded or low single digits on a percentage basis per quarter is loan growth will improve earning asset mix and increased earning assets.
In addition than the anticipated increase of 50 basis points by the fed in May is projected to increase net interest income by approximately $20 million on an annualized basis.
Provision for credit losses are expected to began to normalize with continued loan growth.
And net charge offs are expected to remain below historical levels for the rest of 2022.
Noninterest income excluding investment gains and losses in total is expected to be flat at about $32 million per quarter.
With higher commercial deposit swaps and syndication fees offsetting lower mortgage banking and wealth management revenue.
Core expenses are expected to decline $2 million to $3 million into the one $7 million to $108 million range next quarter.
We expect modest declines in subsequent quarters as we manage core expenses lower by rationalizing branches slowing and other spending realizing additional cost saves as we move through charter consolidations in the back half of 2022.
However, persistent inflationary pressures, particularly wage inflation remain a difficult headwind.
Charter consolidation restructuring costs will ramp up in the coming quarters we.
We still estimate 17 million of remaining costs over the next two years.
Consolidation will reduce run rate costs and create leverage operating leverage for future growth.
These benefits will layer in over the next two years, we are confident that in total they will reach the $20 million Mark on an annualized basis when the consolidations are completed.
And finally, we believe core tax rate of 22% to 23%, excluding new tax credits is a reasonable rate for full year.
That I will turn it back to Bruce for questions. Thank you, Brian Victor we're now ready to take questions from the analysts if you want to queue them up.
As a reminder to ask a question need to press star one on your telephone.
To withdraw your question just press the pound key once again, sorry, one for questions. Please stand by we compile the Q&A roster.
Our first question comes from the line of Terry Mcevoy from Stephens. Your line is open.
Hi, good afternoon everybody.
Good afternoon, Terry Terry.
I definitely don't want to overlook a very good quarter and the outlook that Brian just discussed, but I think I still need to ask it Bruce and internally how are you call. It managing the noise created from the 13D group.
And maybe more importantly, how has it impacted client growth at all definitely I think you had 322, new commercial customers last quarter. So that didn't seem to be the case, but I just want to at least ask those questions.
Yeah. Thanks, Terry So we will not be commenting on the 13D filing or group.
But to answer your question I mean, we are very focused at the H T O F leadership level on executing the board approved strategic plan and I would tell you that I am just so proud of the leadership team for staying focused and maybe more importantly are our bank bank presidents heads of commercial too.
We focused on organic growth new customer acquisition talent acquisition retention the credit quality continues to improve expense control charter consolidation. So what I, what I did during the first quarter Terry as I went out and I visited five of our bank spent a couple of days in each market I was in <unk>.
California was in Texas I was in Kansas City I was in Denver, I was in Montana talking to our teams and talking to customers and I would tell you. They are just focused solely on new opportunities and taking care of the customer and the customer experience and new relays.
<unk> chips and I would tell you based upon the results in the first quarter with new relationships and what our pipelines look like in my conversations with customers. We feel very confident that we can deliver the $250 million of organic loan growth in the second quarter.
And it has yet to really affect the banks, it's clearly.
An issue that we're dealing with at the board level.
But at the customer level our teams are focused.
Great. Thank you for addressing the topic, Bruce and maybe a question for Brian .
Just maybe your interest rate outlook.
If you could discuss new loan yields and what your thoughts are going forward and then on the deposit side, how do you think deposit repricing and loan deposit betas as interest rates increase from here.
Yes, good question.
I think we're seeing a little bit of movement, starting here now with the with loans with this first 25 basis points, we have seen some move up.
We've moved up our consumer loan rates.
And some of our new quotes on the commercial side are moving up as well.
That should continue as we move up and the fed moves the next 50 basis points.
Thank <unk> seen though that most banks us.
US included are struggling to get that normal beta when rates go up on the commercial and the loan side. So we anticipate then on the deposit side that we will see lower betas and we.
We've been working hard with the banks to hold the line on deposit pricing. We think most other banks are doing that and we think that will continue for most if not all of this next 50 basis points.
Great. Thank you both sorry.
No sure I just wanted to.
Indicate that.
I agree totally with Brian on the first 50, we do think will be more in the normal beta range in any rate increases after that.
Okay. Thank you.
Thanks Terry.
Our next question comes from the line of Damon Delmonte from K B W. You may begin.
Hey, good afternoon, guys hope everybody is doing well today.
So first question.
Excellent excellent. So my first question.
Probably for Brian on the expense outlook.
You've kind of guided back down to that 107 to 108 range going forward can you just go through some of the puts.
Puts and takes there of how youre going to kind of come down from the 110 level from this quarter.
Yes, I think in the first quarter Damon Unfortunately kind of a couple of things that caught me by surprise I thought we probably could get some of those ftes out that came out later in the quarter a little bit earlier.
Our RF use probably hit a little bit higher.
First quarter always has a little bit higher for Rs use is we have to expense some of those for people who qualify under our early retirement plan. So those hit a little bit more in the first quarter.
We also have people, who with bonuses and some of the incentive comp that hits in the first quarter they differ a little more and therefore in one case, we match a little bit higher.
So I think all of that's going to kind of normalize.
As we go in and then I do think.
As we exited the quarter Theres, probably a few more ftes that will come out. So I think all of that's going to help quite a bit we did have.
Just a couple of clean up things.
And the occupancy I think will normalize as well.
Smaller items. So then I think it's smaller items down the rest of the expense categories that can get us there.
A couple of million dollars couple 225, maybe $3 million reduction depending on how things go.
Yes, Damon we feel very as Brian laid out.
Two and a half to $3 million in reduction is.
We've already got it identified.
And we will continue to work hard to even find additional expenses as the teams are working through that.
Got it okay. That's helpful. Thank you.
And then.
With regards to the negative provision this quarter I understand you had there.
A resolution of a longstanding AG credit.
Which kind of drove the net charge offs, but with the with the growth that you're putting on.
<unk>.
Kind of taking that negative provision in releasing reserves, how do we think about the <unk>.
Provision going forward, you feel like you've kind of flushed out.
Any excess reserves that you had in <unk> and now you're going to have to provide for loan growth going forward or can you just give a little perspective on the outlook for the provision.
Yes, I would say and Bruce can jump in and Nathan can even jump in here too.
We're down at 115 basis points of loans Thats getting pretty close to where we were when we initially implemented <unk>.
So.
So I think we're getting towards that end, where we're not going to have a lot less left to release.
We do expect the charge off levels to remain historically kind of lower than they have been so that will help.
So we may have.
A quarter or two where we don't get fully normalized but I think it's going to begin to normalize I think we're going to be.
<unk>.
I could see this ramping up from.
Zero to $1 million kind of ramping up to a more normal maybe $3 million to $4 million.
Type of thing as we kind of tread forward here.
Nathan I would add anything.
So the you agree or.
Fully concur, Brian nothing I would at this point.
Okay, great. Thank you and then just my final question just given the size of the securities portfolio with it being over 40% of earning assets and just given the pretty meaningful impact to cancer.
Tangible book value in the TC ratio. This quarter is there anything that you guys can do differently.
Hi.
Soften any future impacts.
Continue to have a volatile rate environment.
There are some things we can do Damon at the margin we're not at least right now planning to just totally repositioned the portfolio that would be very expensive given right now.
We are and work our way through I think there are some things that.
We can do.
With the cash flow that's coming off.
And maybe some other things that Zach can do that we can take some opportunities but.
It's kind of a tough one because it's paper losses I don't think we want to run out.
Necessarily.
Turn the paper losses into realized losses by churn in our portfolio.
Yes, David we feel pretty good about the cash flow.
It comes off at $75 million to $80 million a month.
So it's.
$250 million a quarter.
We're able to reposition that right now at about 2%.
Higher rates than what its coming off and we'll continue to do that and look at opportunities.
Going forward got it.
Got it okay, great. That's all that I had thank you very much.
Our next question will come from the line of Andrew Liesch from Piper Sandler you may begin.
Hey, good afternoon, everyone.
Just question on the rate environment.
With LIBOR moving up steadily throughout the quarter I would've expected that we would have seen.
More improvement on on the loan yield side.
Can you maybe you can explain why we didn't see more yield improvement or is there just a lag effect on pricing.
We have some lag effects, we have one of the things as we've got floors in a lot of our.
Loans and so we still have.
Call it $1 billion that are.
Still on or below the floor. So in other words those have another.
50 to 75 million.
Basis point increase before they come out of their floor.
So those would have acted almost like fixed for this.
<unk>.
First 25 basis point increase.
I think that's part of it.
Got it okay.
And then I guess I know you guys have made a push to.
Target larger middle market companies is that was that also some of it just took the lower yields that they garner.
I think theres, a little bit of that.
Andrew.
And that's offset by.
The credit quality.
And what we're seeing seeing there. So there is a little bit of a trade off there.
Also we were experiencing some of the.
Loans that were maturing and we're rewriting them in today's interest rate environment.
This is probably the last quarter, where theyre coming off higher rates.
Putting the new loans on at lower rates.
Some of that timing that we think now.
Will.
Move forward.
We'll get the benefit of the increased pricing.
Got it Okay. That's really helpful and then on the.
The agro finance team that you have in California.
It looks like they had some pretty nice growth how does their pipeline stand.
Outlook for the.
The next few months.
Their pipeline is just outstanding.
Now they delivered.
Almost $60 million of of growth for us of funded growth during the quarter and that really helped offset.
The first quarter in the AG World is normally down as.
They've sold off their their inventory so we were able to generate that but it's a very strong pipeline actually.
About 10 days, we're going to go out there for a couple of days in and make calls on some of those customers. So I'm really looking forward to that but it's very strong pipeline.
Great.
So that's it for me I'll step back thanks.
Thanks, Andrew.
Thank you and our next question comes from the line of Jeffrey D. A Davidson your line is open.
Thanks, Good afternoon.
Hi, Jeff.
The last question May have or the answer may have touched on what I was going to ask on I guess the.
Your expectations for Q1 growth versus reality much much stronger sounds like that the AG piece was was part of it but I guess, if I take into account your expectations for Q2 growth.
It seems just net stronger timing.
Timing thing.
Production moves from.
Second quarter into the first quarter, so maybe outside of that AG being strong what maybe changed from your expectations did the actual net growth that you book.
What what was stronger than anticipated.
Yes in the first quarter, what was stronger was the non owner occupied real estate.
Particularly the industrial.
And <unk>.
Distribution and warehousing that was much stronger than we anticipated.
We were able to generate some some new relationships as well as some of our existing customers expanded their portfolios also.
Medical and life science with stronger.
And the funded AG piece was stronger because we anticipated.
Because of utilization that the AG book would be a little lower but because of the strength of the agribusiness group, California, they more than offset the decrease in utilization and paydowns based upon seasonality.
Got it.
Okay. Thanks for that and I just wanted to.
On the B Brian .
The expense guide wanted to confirm that.
The restructuring costs are not included in that or are.
Correct I exclude those so this would be what I call core so that you can take that lumpiness out correct.
Okay and just.
Be it that might be lumpy is there any timing on that.
The restructuring cost is it.
Yes.
We've paid actually we actually in terms of what we've paid we've paid some vendors already they havent started.
It just started to do their work at the very end of the quarter. So that's going to ramp up.
I think it was about 600000 that you saw on restructuring charges.
Again.
I don't have a great handle on this but I could see that.
Getting into the couple of million dollars, maybe this next quarter.
We will see it's all really timing of when when things.
Progress certainly once we start converting the banks then there'll be a lot of activity. So.
Timing of that could be a little bit again lumpy depending upon.
What expenses.
Got it okay.
And Bruce last one and really circling back to the first question.
Given the kind of the board noise.
And you are not really commenting.
I just wanted to kind of circle back on the strategy if I could on <unk>.
On capital uses it.
Is it safe to say there is there is no change in your preference.
Current.
Hoist and the room board and management team of of the.
Organic versus M&A.
At steady state or is there any.
Any pivot.
And to highlight one of the other.
Currently.
Yes, so I think that the way I would describe it is we're very focused on the organic side controlling what we can control.
We'll definitely be open to M&A as we historically have been but as you know stocks bank stocks have been have been depressed around pricing and so therefore, we're very focused on.
Again organic growth attracting new customers controlling.
Controlling expenses.
Focusing on continuing to improve our credit.
And then as Brian has mentioned and I have really working through the charter consolidation, although its not one at the exclusion of others.
If an M&A transaction presented itself, we would put a slight pause on the charter consolidation to work through that so we think all.
Our part of our overall strategy and that's what we're focused on executing on.
Got it I appreciate it thanks.
Yes.
And Thats star one for questions one more for questions.
And I'm not showing any further questions in the queue.
As there are no further questions at this time I would like to turn the call back over to Mr.
<unk> comments.
Thank you Victor.
The <unk> board of Directors has approved a quarterly cash dividend of 27 per share on the company's common stock or 23% increase from a year ago.
Dividend is payable on may 27th 2022.
In closing <unk> had a solid first quarter organic loan growth increased $358 million or 4%.
Our strong credit quality improved even further.
Total deposits increased 249 million to a record $16 7 billion.
We are well positioned to increase revenue in a rising rate environment.
Our strategic investments in acquiring and retaining talent are delivering strong organic growth and excellent credit quality and.
And late in the second quarter, we expect to establish the first division of <unk> Bank as we continue executing charter consolidation to deliver efficiency and unlock capacity for future growth.
<unk> has momentum we're executing our strategies, we are driving growth and we're well positioned to continue delivering strength insights and growth.
Thank you for joining us our next quarterly earnings call will be in late July .
I'd also like to remain like to remind all of our shareholders that our annual meeting will be held virtually.
On June 15th at one P M central time.
Have a good evening everyone.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
Yes.
[music].