Heartland Financial USA, Inc.
Q1 2017 Earnings Call Transcript

Published: 15 Dec 2017

[Operator:]

Greetings, and welcome to the Heartland Financial USA, Inc. and FirstBank Lubbock Bancshares, Inc. Joint Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. Yesterday evening, Heartland and FirstBank Lubbock distributed a joint press release describing the proposed merger. If there is anyone on this call who did not receive a copy, you may access it at Heartland's website at www.htlf.com. Additionally, a slide presentation detailing the announcement is available on Heartland's website and may be accessed in the investor relations section. With us today from management are Lynn Fuller, Chairman and Chief Executive Officer of Heartland; Barry Orr, Chairman and CEO of FirstBank Lubbock Bancshares, Inc.; Bruce Lee, the President of Heartland; and Bryan McKeag, Executive Vice President and Chief Financial Officer of Heartland. These executives will provide a brief summary of the proposed merger, and then we will open up the call to your questions. Before we begin the presentation, I'd like to remind everyone that some of the information management will be providing today falls under the guidelines on forward-looking statements as defined by the Securities and Exchange Commission. As part of these guidelines, I must point out that any statements made during this presentation concerning the company's hopes, beliefs expectations and predictions of the future are forward-looking segments; 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 be obtained on the company's website or the SEC's website. [Operator Instructions]. As a reminder, this conference is being recorded. At this time, I will now turn the call over to Mr. Lynn Fuller at Heartland. Please go ahead, sir.

[Lynn Fuller:]

Thank you, Rob. And good morning. I'd like to welcome and thank everyone for joining us this morning to discuss the exciting news we distributed last night when Heartland and FirstBank Lubbock Bancshares, Inc. jointly announced the signing of a definitive agreement to merge our companies. Before we start, I'd like to remind everyone that our press release and slide presentation detailing last evening's announcement are available online at www.htlf.com, in the investor relations section. For today's call, I'll touch on the highlights of our announcement. I'll then ask Barry Orr for a few comments. And we'll then turn the call over to Bruce Lee, Heartland's President, who will provide additional color on the strategic elements of the merger. Bryan McKeag, Heartland's EVP and CFO, will finish up with a financial analysis of the transaction. Well, this is indeed very exciting news. We've known Barry Orr and FirstBank Lubbock for over 2 years and, during that time, have identified many opportunities for our companies in this partnership. Barry, his management team and FirstBank's Board of Directors have recorded many successes in the bank's 21-year history, building a solidly profitable franchise and earning the highest respect from other West Texas banks. The addition of FirstBank & Trust will become Heartland's 11th community bank charter and provide a platform for more expansion in Texas. We also like the close geographical connection to Heartland's New Mexico Bank & Trust subsidiary, which operates in Eastern New Mexico, just down highway 86, linking Lubbock to Clovis, New Mexico. This proposed merger fits well with the criteria we've described as ideal in previous calls. First, with assets of $930 million, FirstBank is very close to reaching our goal of $1 billion in assets in each state where we operate. Second, FirstBank brings a solid market share in Lubbock and its surrounding communities and is the fourth largest bank with over 9% deposit market share. Third, FirstBank serves an attractive and growing market with a diverse economy and a low unemployment rate. Lubbock is West Texas' regional hub for health care and education with Texas Tech. Fourth, the bank has built a strong core deposit franchise with no borrowings. Fifth, it's a great culture fit, as both of our companies share a common vision, mission and values. Sixth, we believe the execution risk is low, as we've a proven track record of successfully completing and converting 12 community bank acquisitions since 2012. Also, we are retaining the bank's management team in their current positions, with only 25% in noninterest expense reduction. And seventh, the transaction makes good financial sense for our stockholders, as it's accretive within the first year of combined operations and strongly accretive thereafter. And finally, FirstBank is an experienced acquirer, having completed 3 acquisitions in recent years. With Heartland's support, Barry Orr is eager to expand further, having already identified some leading candidates. As I'm sure you've noted, this transaction provides a significant leap over the $10 billion threshold. And combined with the recently announced acquisition of Signature Bancshares, Inc. of Minnetonka, Minnesota and coupled with organic growth, we project Heartland assets will approach $11.5 billion by mid-2018 as we endeavor to finish next year with assets approaching $12 billion. That will mitigate the adverse regulatory and revenue impacts of the Dodd-Frank Act. Bryan McKeag will address this in more detail in a few minutes. Barry Orr currently chairs the FirstBank boards and will continue as Chairman and CEO of FirstBank & Trust. Additionally, Greg Garland will continue as FirstBank's President going forward. We're excited these individuals will be leading our flagship bank in Texas and forming the nucleolus of what will soon become the next billion-dollar charter in the Heartland organization. While Bryan McKeag will be providing color on the deal metrics, I want to highlight the fact that, based on our modeling, this deal will be immediately accretive to earnings per share in 2018, produce an IRR in excess of 20% and have a tangible book value earn-back of 3.6 years. As many of you know, Heartland has focused on the attractive Western U.S. for much of our expansion. We're drawn to the better valuations and margins enjoyed by many Western financials, and FirstBank is no exception with a net interest margin of 4.2% year-to-date. This acquisition further shifts our asset balance from the Midwest to the West. Post closing and including the addition of Signature bank, approximately 60% of Heartland's assets will be out West. We remain committed to Heartland's strategy of geographic and credit diversification, balancing our Western growth markets with our solid and steady Midwest markets. At this point, I'm pleased to introduce Barry Orr, Chairman and CEO of FirstBank, who will offer his thoughts on the pending transaction. Barry?

[Barry Orr:]

Thank you, Lynn. And let me add my welcome to the other call precipitants. Briefly, on behalf of our board and management team, I want to express our appreciation to Heartland for the interest you've shown in FirstBank & Trust as well as Lynn's vision of what our 2 banks can do together. Our management team felt comfortable with Heartland from the very start. As the bullets on Slide 4 will indicate, we've identified numerous benefits that will result from a combination of the 2 companies. And with so much in common in terms of culture, credit and community, we expect a very smooth transition. We also see many distinct advantages of joining in this partnership with Heartland, as it enhances everything we do. First, the fact that we retain our brand, our management team, our branches is all essential to retaining our customer relationships. Joining with most any other bank would mean losing those 3 assets. Becoming a part of Heartland is the best way to retain customer-facing employees and ensure continuity after merger is complete. And of very high importance is the fact that Heartland embraces the home mortgage business. Our mortgage subsidiary PrimeWest Mortgage Corp. has been a major contributor to our success, adding about 15% to 20% to the bank's annual net income. We really appreciate Heartland's motto of the big bank punch with communication bank touch, as this merger provides us with advanced technologies, the ability to offer clients a broader product offering while shifting much of the regulatory burden and functions, support functions, to our new holding company. FirstBank, we have always embraced the philosophy of family first. We put a priority on family values; and it's amazing, the talent you can attract with that type of culture. You just can't underestimate that. Our people work together with the common goal to grow this organization and to make customers feel welcome the moment they walk in the door. We call it across the lobby hug-your-neck service. It's kind of corny, but again this is Texas. And it's amazing how well that has worked for us, and the culture of exceptional service has made our bank even more successful. We selected Heartland as our partner to preserve these values and look forward to many years of working with these folks. And with that thought, Lynn, I will return the call to you.

[Lynn Fuller:]

Thank you, Barry, for your kind words. And we are highly impressed with FirstBank & Trust and the company your team has built. And now I'll turn the call over to Bruce Lee for some specifics on FirstBank and the strategic implications of this merger. Bruce?

[Bruce Lee:]

Thank you, Lynn. Let me begin with an overview of FirstBank & Trust and the attractiveness of both the market it serves and the company itself. I will be speaking to Slides 6, 7 and 8 of the presentation, if you wish to follow along. While Texas is a relatively new state for Heartland's expansion, it really makes sense in light of our well-established and growing presence in New Mexico and familiarity with the region. In addition to the 8 full-service banking centers FirstBank adds, I would also like to point out the mortgage loan origination offices in or near the high-growth Dallas-Fort Worth metroplex, the largest inland metropolitan area in the United States. The current and projected growth of the Lubbock and North Central Texas markets create ample opportunity for Heartland expansion. And with over 400 commercial banks in the state, we are excited at the many prospects for future M&A. On our visits to Lubbock, we were very impressed by the diversified economy, its low unemployment rate of 2.6%, a projected population growth rate of 7% and projected household income growth of over 11% through the year 2023. This positive momentum led CNBC to name Lubbock as one of the top U.S. cities in which to start a new business. The area's economy is driven by a balance of education, health care and agriculture; and further stabilized by public and private employers, including a Big 12 university, Texas Tech, with an enrollment of over 37,000 and 5,800 employees. Of course, the main attraction for us is FirstBank & Trust, a blue chip West Texas franchise with exceptional performance metrics. Tax affected to account for its sub-S status, we are impressed with FirstBank's year-to-date return on average assets of 1.5%; return on average equity of 15%; efficiency ratio of 62%; nonperformers-to-total assets of 0.84%; and as Lynn mentioned earlier, a net interest margin of 4.2%. We are also very pleased to be acquiring a growing and profitable mortgage business, FirstBank's Primewest Mortgage Corp. subsidiary, which adds $400 million in average annual loan production and brings $700 million in loan servicing. In summary, FirstBank will make a significant contribution to Heartland when the bank comes across the line in the second quarter next year. And with that, I'll hand the call over to Bryan McKeag, who will provide some color on the deal metrics. Bryan?

[Bryan McKeag:]

Thank you, Bruce. I'll cover the financial aspects and key assumptions of the transaction, which you'll find outlined on Slides 5, 9, 10 and 11. So let me begin on Slide 5, which provides an overview of the transaction. Based on Heartland's closing stock price on Monday, December 11, the aggregate deal value is approximately $186 million, consisting of approximately 3,350,000 shares of Heartland common stock and total cash of $17.5 million. Both the stock and cash consideration are subject to potential adjustments as set forth in the merger agreement. The transaction value will fluctuate as Heartland's stock price moves between now and the close of the transaction. At the current price, the total implied deal value, as compared to FirstBank Lubbock's September 30, 2017, tangible book value, is 222% and 14.2x its trailing 12 months earnings on an after-tax basis. The remaining key deal assumptions and considerations and pricing multiples are listed on page -- on Slide 5 for your reference. Then moving on to Slide 10. One of the more significant assumptions in our model is the level of cost synergies that we expect to achieve. In this transaction, after a review of FirstBank's expenses, we expect to realize approximately $10 million in pretax cost saves or about 25% of FirstBank's noninterest expense base. These cost saves will begin to phase in after our systems conversion in the third quarter. We expect that we will have about 75% or so of these saves in place by the end of the year 2018. Also, as noted on the top of the slide, we have completed our comprehensive due diligence and in that process performed credit file reviews on all of the nonperforming assets with a total coverage of about 65% of the entire loan portfolio. Given the results of that due diligence review, we are estimating a credit -- loan credit mark of approximately 2.15% or about $14.6 million and another 25 basis points or $1.7 million for the loan rate mark. In addition, the other estimated day 1 fair value marks include a markdown of 20% or $1.9 million on the TruPS that we'll be assuming, which will be amortized over the significant -- remaining 16-year life. Our estimated core deposit intangibles is based on 1.5% of FirstBank's non-time deposits, and that we expect to amortize over a 10-year period. We do not assume any revenue enhancements for our modeling purposes, but we do believe that there -- with our larger lending limit and our wider product set that there will be enhanced earnings opportunities over the longer period. I want to move back to Slide 9 for a minute, where I would remind everyone that we don't provide earnings guidance. So we have used a combination of analyst estimates, the anticipated Durbin impact and the -- and conservative growth estimates for FirstBank to generate our estimated earnings accretion of appropriately 1.7% in 2018 and 6.5% in 2019 for this transaction. When this is combined with our previously announced Signature bank transaction, we expect earnings accretion of approximately 3% in 2018 and 9% in 2019. Upon the closing of this transaction and the Signature transaction, our pro forma capital ratios are expected to remain strong with a projected tangible common equity ratio of approximately 7.6% and a total risk-based capital ratio of approximately 13% at the end of the second quarter of 2018. Now regarding Heartland's progress towards crossing the $10 billion threshold and as shown on Slide 11, I would comment that, regardless of any changes enacted by Congress relative to Dodd-Frank, we are well prepared for any scenario. And in the event that the required stress-testing threshold is raised, we still intend to implement the essence of the stress testing, albeit without the added costs associated with regulatory filings and post-analysis, as we believe the tests are ultimately in the best interest of our shareholders. In the event there are no changes to the law, however, we will reiterate -- I'd like to reiterate our efforts thus far. First, we have a DFAST stress-testing task force that's been in place since mid-year 2016. Second, we have a director of stress testing who has been in place for almost a year. Third, we have had very positive readiness discussions with the Federal Reserve's regional bank organization. And finally, we have been and are continuing to invest significantly to develop our enterprise risk management capabilities and processes. Also related to the $10 billion threshold, our plan, as we've discussed on previous calls, has been effective. And we are confident that our efforts to keep our assets below $10 billion this year will work out. Obviously, with the Signature acquisition closing in early 2018 and FirstBank soon after, we are well along the path towards reaching the $12 billion mark towards the end of next year; and as a result, should be able to offset the impact of Durbin, which begins in July 2019. When it becomes effective, we estimate the annual Durbin impact will be a reduction in revenue of about $6 million to $7 million on a pretax basis. In addition and if necessary, we anticipate the delivery of our first official DFAST stress test would be in 2020. That wraps up my remarks. And now I'll turn the call back over to our CEO, Lynn Fuller.

[Lynn Fuller:]

Thank you, Bryan. And now we'll open up the phone lines for questions from our analysts. Rob?

[Operator:]

[Operator Instructions]. Our first question is from Mr. Jeffrey Rulis with D.A. Davidson.

[Jeffrey Rulis:]

Just looking to kind of get the noninterest expense and income run rates at FirstBank. I guess, Bryan, you talked about the cost saves of, I guess, you get back into about $40 million is the base. I wanted to confirm that number on noninterest expense.

[Bryan McKeag:]

Yes, I believe that that's right, yes.

[Jeffrey Rulis:]

Okay. And then on the noninterest income. Well, I mean I imagine the mortgage piece is a little lumpy, but...

[Bryan McKeag:]

It is. Hang on just a second. I think I might have that here. Is this the right one? Bear with me for just a second here. I've got several pages of...

[Jeffrey Rulis:]

Maybe I'd throw another one out there in the meantime on just the mix of the construction and land development. I guess you've got a balance there of about $138 million. I guess, what percent of that is commercial or residential? Any thoughts on the breakup there?

[Bruce Lee:]

Barry, do you maybe want to comment on your mix there?

[Barry Orr:]

Yes. Our mix is about 65% residential construction to permanent, and then I think we sit at about 13% nonowner commercial. The other CRE is owner occupied.

[Jeffrey Rulis:]

Great, okay.

[Bryan McKeag:]

Yes. And Jeff, just to get back to you on the noninterest income. I think in their trailing month it's about a little more than $24 million.

[Jeffrey Rulis:]

Great, okay. And then one last one, just on the funding base that you're pulling on, it looks like a little over 20% CDs. Is there anything in the near- to medium-term plans on anything you're doing with the CD bases going forward?

[Bryan McKeag:]

No, I don't think there's any plans to dramatically change that, at least in the near term.

[Bruce Lee:]

Yes, I think the only thing, Jeff, is that with our enhanced treasury management offerings, it will give them an opportunity to go after more commercial DDA relationships that require the additional treasury management offerings. So we will potentially be able to whittle away at that 20% CD mix.

[Operator:]

Our next question is from Mr. Damon DelMonte with KBW.

[Damon DelMonte:]

Congrats on what appears to be a pretty nice deal for you guys...

[Lynn Fuller:]

Thank you.

[Damon DelMonte:]

My first question, probably more towards Bryan from a modeling standpoint. What are you guys projecting for a total goodwill amount?

[Bryan McKeag:]

Yes, I think it's going to be somewhere around $105 million, give or take. That's our current estimate...

[Damon DelMonte:]

Okay, does that include the -- but does that include the core deposit intangible impact as well?

[Bryan McKeag:]

Yes, that would be net of that, correct...

[Damon DelMonte:]

Okay, great. And then I guess, for Butch, just bigger perspective here. You guys made some comments about the attractiveness of the Texas market. And I think you said it was like 400 commercial banks in the state. Should we start to think that you guys will be looking to really accelerate and expand the presence in Texas versus some of the other markets that you are already in just given what appears to be the -- a high amount of banks that could become available for sale?

[Lynn Fuller:]

Sure, Damon. Well, as we've said in the past in our earnings release calls, I mean, we have opportunities in most every state that we operate in, but Texas is clearly a great spot for us to expand. Barry has a lot of contacts in banks in West Texas. So I think that's one of the things that really attracted us to Barry and his team, that they've already had 3 acquisitions and they have other relations of -- lined up. So we're looking for opportunities in Texas.

[Operator:]

Our next question is from Mr. Steve Moss with FBR.

[Stephen Moss:]

With regard to, I guess, following up on the acquisition question there. I'm just wondering. Should we expect a pause in acquisitions, or should we expect additional deals in 2018?

[Lynn Fuller:]

I think you can expect a continuation in '18.

[Bryan McKeag:]

Obviously, I mean, just to reiterate, obviously as we've said before, our goal is to get to the $12 billion mark. And so that still's right now the most important goal so that we cover Durbin and get ourselves to an earnings base that makes sense going forward.

[Stephen Moss:]

Okay. And then with regard to FirstBank's construction portfolio, just wondering. Any thoughts of remixing it more towards permanent commercial real estate? Or is that probably what we'll see continue with your Texas franchise?

[Bruce Lee:]

This is Bruce, Steve. I think we're very comfortable with how they operate today. We like the current construction mix, especially how it interacts with PrimeWest, their mortgage company, on the residential side. So I don't think you're going to see us with any more of sort of permanent real estate on the books, at least in our conversations to date. Barry, you may want to follow up on that question as well.

[Barry Orr:]

Yes, Bruce. Thanks. Yes, the residential construction has been driven so much by oil growth. We're removed from the oil patch and Lubbock. We've experienced a growth spurt in the last 4 or 5 years that we've never seen before. We've always been a 1% to 2% growth area. And with that's come a demand for residential. The average home price in Lubbock today is about $145,000. And the market that we are really active in today is that $200,000 to $350,000, which you'll laugh when you hear that number. That's the starter home prices these days. And it's been very active for us. We're usually running about 40% spec-ed, 60% presold.

[Stephen Moss:]

That's helpful. And I was wondering also. In within the portfolio, do you have any direct energy loans outstanding?

[Barry Orr:]

We have one relationship that's really not out of the Permian basin. It's a long-time operator out of Lubbock with interest across the West Texas area.

[Lynn Fuller:]

So the answer is, not much, Steve.

[Barry Orr:]

It's about $6 million. It's about $6 million out of the total portfolio.

[Operator:]

Our next question is from Mr. Nathan Race with Piper Jaffray.

[Nathan Race:]

A question on the pro forma mortgage banking operation. Obviously, you guys kind of shifted away from the out-of-market LPO platform a couple of years ago, so just curious how you guys are kind of thinking about the pro forma platform evolving given obviously FirstBank has a long-standing history in that space. And I'd imagine there are some synergies that could come together as the 2 platforms come together, so just any thoughts how you guys are thinking about that business going forward?

[Bruce Lee:]

Yes, Nathan. This is Bruce. Our initial focus is to allow PrimeWest to operate almost independently from our current mortgage operation. They operate very well. We're very impressed with their profitability. The only thing I would add there is, as we have drawn back from doing loan production offices, I don't think we will see them expand beyond their current footprint. They'll just continue to do what they're doing. And then we'll take 12 to 18 months to really see what the long-term synergies are. We clearly think there are some synergies in the servicing portfolio. They're probably not necessarily on the origination platform today.

[Lynn Fuller:]

I might just add, Nathan, if you look at their production annually, it is incredibly consistent every year. I mean, if you look back 6 years, it's just right on top of. They don't have the volatility that we've seen in our operation.

[Nathan Race:]

Got it. That's great color. All my other questions have been answered. Congrats on the transaction, guys.

[Lynn Fuller:]

Thanks, Nathan.

[Bryan McKeag:]

Thanks, Nathan.

[Operator:]

Our next question is from Mr. Andrew Liesch with Sandler O'Neill.

[Andrew Liesch:]

Much exciting deal here. Nice work. Barry, just a question for you just going back to mortgage. So many positive comments here for the -- just the growth in Lubbock. Is there an opportunity, do you think, for the $400 million or so of annual originations to improve from there? Or is this a consistent number?

[Barry Orr:]

Andrew, I would tell you that we feel like that, that is the perfect efficiency area for us. If we get much over $400 million annually, it requires additional staff, additional resources. And a $400 million is a good number for us. We maintain that. Sometimes, the ebb and flows have you kind of hit the gas pedal and then hit the brake, and you're hiring. And we try to avoid that. So $400 million is our sweet spot. We've had years of $425 million that really strained our people, but they were up to the task. And so I would tell you that we will be in that $380 million to $420 million until we do additional acquisitions and get us in other markets.

[Bryan McKeag:]

And Andrew, I would say that, from a modeling perspective, we modeled it fairly flat, so we did not put a lot of additional growth in, if any, on the mortgage side as we modeled this. So it's consistent.

[Andrew Liesch:]

Okay, that's very helpful. And then just one question on expenses here just with respect to your comments, Bryan, on DFAST. Just curious, what is -- what are the expenses? What's the dollar amount not in the run rates currently for DFAST? And what other expenses do you expect to bring out over the next couple years?

[Bryan McKeag:]

Yes. I think certainly the big one is Durbin as we cross $10 million -- or $10 billion.

[Andrew Liesch:]

Right.

[Bryan McKeag:]

So they're announced and modeled in, as we've talked about. Beyond that, a lot of -- not a lot, but I would say probably half of the run rate things are currently in our run rate. We probably have another, especially in the risk management area which is growing and being invested in. There's probably another $1.5 million to $2 million maybe as we go forward here for the next couple years.

[Lynn Fuller:]

Pretax, again.

[Bryan McKeag:]

Pretax, yes.

[Lynn Fuller:]

Pretax.

[Andrew Liesch:]

Got you, all right. Congrats on the deal.

[Lynn Fuller:]

Thanks, Andrew.

[Operator:]

Our next question is from Daniel Cardenas with Raymond James.

[Daniel Cardenas:]

Congratulations on the deal.

[Lynn Fuller:]

Thank you.

[Daniel Cardenas:]

Quick question on your acquisition strategy going forward in Texas. Is the focus going to be on the larger metropolitan areas such as Dallas, Houston and San Antonio? Or are you going to perhaps stay away from them and go more on the outskirts of those markets or into more rural areas?

[Lynn Fuller:]

Well, our discussions with Barry to date, I mean, his -- a lot of his relations that he's built over time are in West Texas. So Barry, I might ask you to comment on that.

[Barry Orr:]

My feelings are we've got some regional areas. I'm not sure how familiar you are with Texas, but we have the Abilene, San Angelo, Amarillo, Midland-Odessa that are all within probably a 200-mile radius of Lubbock. And that's my preference. We know what we're doing in that part of the world. We cross I-35, towards the metroplex and the Austin area. In those areas it's we just don't know the people. It's the know your customer philosophy for us, know your economy. And so our focus will be here in West Texas.

[Daniel Cardenas:]

All right. And how many viable candidates do you think are within that 200-mile radius that you just spoke about?

[Barry Orr:]

Goodness. I will say there's 10, at a minimum, viable candidates. Well, there's just community banks spotted all over that area.

[Daniel Cardenas:]

It's pretty good portfolio to potentially work from. Okay. And then Barry, while I got you on the line, maybe a little bit of color as to your thoughts as to what's kind of driven the recent growth in the Lubbock market.

[Barry Orr:]

Yes. I will tell you the main one is health care. We are the regional health care center of between Albuquerque and Dallas. And so we draw from Eastern New Mexico, north up all the way to the Kansas area and then south down to the Permian basin. Well, I have a 4-hospital market here. And then of course, Texas Tech University not only has an undergraduate program. They have graduate program. They have medical school, law school. So those are the big drivers. And then distribution has become huge because we're the hub here. We've had major companies locate here in the last 5 years for distribution, O'Reilly Auto Parts, Walmart, Budweiser. Just the Saverne peanut company just had a new milk processing plant announced, going to spend $350 million just right outside our community, in area called Littlefield, Texas. So just a very attractive market for people, great family value, lifestyle, low cost of living is attracting the most of it.

[Daniel Cardenas:]

All right, good. And then my last question is on PrimeWest. What's the size of the servicing portfolio as of 9/30?

[Barry Orr:]

$700 million.

[Bruce Lee:]

Yes.

[Daniel Cardenas:]

All right, great. Well, congrats on the transactions. All my other questions have been asked and answered.

[Lynn Fuller:]

Great, thanks, Dan.

[Bryan McKeag:]

Great. Thanks.

[Operator:]

There are no further questions at this time. I'd like to turn the floor back over to Mr. Fuller for closing comments.

[Lynn Fuller:]

Thanks, Rob. Well, in closing, please turn to Slide 13, where we provide a summary of the investment opportunities this merger creates. We clearly believe it's compelling. Heartland is making a significant move into Texas to take part in the attractive growth and robust economy of West Texas. With FirstBank as our flagship and Barry Orr as captain, we see excellent opportunities for further acquisitions and organic growth, much like Heartland's well-established and going nearby subsidiary New Mexico Bank & Trust. The merger is but another example of how our community banking strategy preserves the name, history, culture and leadership of a successful bank while adding products, capacity, expertise and backroom support. FirstBank has exceptional financial metrics and a solid market share, serving another attractive Western market with above-average growth potential. When completed, this will be Heartland's 14th acquisition since 2012, adding to our well-established track record of successful mergers and integrations. And finally, this is a transaction that we believe will significantly enhance long-term value for Heartland's stockholders. Well, thank you for joining us this morning and allowing us the opportunity to share our thoughts on this significant transaction. I'd specifically like to thank Barry Orr, his board and leadership team for their confidence they have placed in Heartland by allowing us to join with them in building on a blue chip community bank in Texas. And with that, I'd like to wish everybody a great day.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.