Greetings and welcome to the Heartland Financial USA First Quarter 2019 Conference Call. This afternoon, Heartland distributed its first quarter press release and hopefully, you've had a chance to review the results. If there is anyone on this call who did not receive a copy, may access it at Heartland's website at htlf.com.

With us today from management are Lynn Fuller, Executive Operating Chairman; Bruce Lee, President and CEO; and Bryan McKeag, Executive Vice President and Chief Financial Officer. Management will provide a brief summary of the quarter and then we will open 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 of 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 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 be obtained on the company's website or the SEC's website. At this time, all participants are in a listen-only mode. [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..

Thank you and good afternoon and welcome to Heartland's first quarter 2019 earnings conference call. We appreciate everyone joining us today as we discuss the company's performance for the first quarter of 2019. For the next few minutes, I'll touch on the highlights for the quarter.

I'll then the call over to Heartland's President and CEO, Bruce Lee, who will cover progress on business performance. Then Bryan McKeag, our EVP and CFO, will provide additional color around Heartland's results. Also joining us on the call is Drew Townsend, our EVP and Chief Credit Officer.

Well, we're pleased to report a good first quarter with all of our bottom-line financial performance metrics increasing nicely over the same quarter last year. With that said, the first quarter is always a little challenging as there are two fewer business days and expenses tend to be a little higher during the first quarter.

The first quarter net income available to common shareholders was $31.5 million compared to Q1 2018 of $23.3 million, an impressive increase of $8.2 million or 35% over the same quarter last year. Also for the first quarter, fully diluted earnings per share was $0.91 compared to $0.76 in Q1 2018 and that's a 20% increase.

Return on average common equity for the quarter was 9.56% compared to Q1 2018 at 9.32%. Return on average tangible equity for the first quarter was 15.24% compared to 13.85% for the same quarter last year. And finally, return on average assets for the quarter was 1.13% compared to 0.97% for Q1 2018.

Well, our net interest margin held up at 4.18% on a fully tax equivalent non-GAAP basis. We lost about 15 basis points as a result of the sale of Citizens Finance. Our efficiency ratio this quarter was 65.23% compared to 68.21% in Q1 2018, and Bryan McKeag will provide more detail on our net interest margin and efficiency ratio.

Now, moving over to the balance sheet. Assets ended the quarter at $11.3 billion compared to Q1 2018 at $10 billion, an increase of over 12%. Our securities portfolio ended the quarter at $2.5 billion, approximately 22% of assets. Our fully tax equivalent yield is a little over 3% with the duration of just over four years.

As planned, this combined with very little in non-core funding, positions Heartland with a very liquid balance sheet. In a few minutes, Bruce Lee will cover loans and deposits. Book value and tangible book value this quarter were at $39.65 and $27.04 respectively, an increase over Q1 2018 of 17.3% and 13.7% respectively.

Our tangible common equity ratio ended the quarter at 8.6% compared to 7.59% for Q1 2018. That's a 13.3% increase and at 8.6%, we're in line with our target range of 8% to 9% TCE. Along the M&A front, the merger of Morrill & Janes Bank and Bank of Blue Valley is progressing extremely well and we are scheduled to close by the middle of May.

The combined entity will operate under the Bank of Blue Valley brand with approximately $1.3 billion in assets. It'll be headquartered in Overland Park, Kansas, located in Johnson County, the fastest-growing and wealthiest county in Kansas.

We have a strong pipeline of M&A prospects and we continue to be highly respected and sought-after partner for community banks. Well also during the quarter, we completed the sale of Citizens Finance Company, our consumer finance subsidiary, and pruned four banking centers.

We will continue to rationalize our branch network and prune unprofitable branches in low growth markets. With respect to our dividend, very pleased to report that earlier this month, the Heartland Board declared a dividend of $0.16 per common share for shareholders of record on May 17th, 2019, and payable on May 31st, 2019.

I'll now turn the call over to Bruce Lee, Heartland's President and CEO, who will provide an overview of the company's strategic initiatives.

Bruce?.

Thank you, Lynn and good afternoon. I'm pleased to report a quarter of improved financial results in a quarter in which we made significant progress streamlining and refining our company.

Before I dive into our performance across deposits, loans, and fees, as well as key credit metrics, I want to discuss several proactive steps we have taken to improve our franchise and position us for continued growth.

Across Heartland, we have experienced significant growth over the past three years, and we're making investments to strengthen and scale our company through an initiative called Operation Customer Compass.

As part of this initiative, we're upgrading our loan origination system to the industry-leading Encino platform, and we're converting to the Salesforce Financial Services solution. Another example is our expansion of online and mobile opening to small business customers.

We successfully completed our in-market pilot in Q1 and will be rolling out this capability to all banks in the second quarter. These initiatives will improve our processes and technology, and more importantly, improve our internal and external customer experiences.

To that end, in the first quarter of 2019, we completed the previously announced closure of two business units. In February, we sold our consumer finance business, Citizens Finance; and in March, we wrapped up the closure of Heartland's National Residential Mortgage Company.

Additionally, today, we announced that we have sold our mortgage loan servicing portfolio at Dubuque Bank and Trust Company. The transaction is expected to close tomorrow and transfer of loans is expected to occur in August. In the first quarter of 2019, we further optimized our physical footprint and eliminated four banking center locations.

Two locations were sold and two were consolidated into existing locations. In addition, we have two more banking center closures and five banking centers sales planned for the second quarter. We remain committed to delivering service to our customers in branch, online, and through mobile apps.

The recent divestitures and optimization initiatives I just outlined will provide the resources to support the investments I discussed earlier that improve our customer experiences and fuel our organic growth.

Turning to deposits, as reported in our release, deposits, exclusive of those deposits held-for-sale in conjunction with branch sales, increased $33.5 million or a bit less than 1% since year end. Non-time deposits were relatively flat reflecting a soft first quarter, primarily due to commercial and public fund outflows, which tend to be seasonal.

We have seen some shift in mix of deposits from demand to savings as customers are responding to the rising rate environment. That said, we continue to have an enviable deposit mix with noninterest-bearing deposits making up approximately 33% of our deposits and non-time are at 88% of total deposits.

We're focused on maintaining and growing balances and holding the line on costs. Our moderate increase in interest expense reflects the industry's competition for deposits. We're hopeful that the pressure on deposit pricing will lessen in the coming months if the Fed holds their patient position on near-term policy changes.

In the first quarter, six of our 11 markets delivered organic deposit growth. Moving to loans, as reported in our release, loans held-to-maturity, excluding any loans moved to held-for-sale, declined $44 million or less than 1% from year end.

On a positive note, the commercial loan portfolio had $28 million in organic loan growth with the mix of C&I and CRE, while the Ag portfolio declined $14 million during the quarter.

In addition, we noted some contraction in the residential mortgage and consumer loan portfolios, which was primarily due to customers' refinancing loans with recent interest rate decreases. As it relates to commercial and Ag loan portfolios, we've started an initiative with respect to risk management.

At year end, Heartland formalized a more proactive approach to de-risk the loan portfolios in 2019. Specifically strategies for high risk performing customers were identified and are being actively monitored.

As a result of this effort, Heartland achieved a $37 million reduction in these identified credits in the commercial and Ag portfolios as of March 31st. Turning to key credit metrics, I'm pleased to report that we continue to see strong credit quality.

Our non-performing loans represent 1.08% of total loans at the end of the quarter, which is up modestly from 0.98% at year end. The increase was related primarily to two agribusiness relationships in the Midwest markets. On a positive note, other real estate owned continued to improve in the first quarter reducing to $5.4 million.

Overall, non-performing assets as a percent of total assets showed a slight increase from 0.69% to 0.75% in the first quarter. The delinquency ratio increased to 0.47% in the first quarter from 0.21% at year end. The increase primarily relates to one large non-performing relationship, which will be resolved in the near-term.

Non-pass-rated loans were relatively flat at 6.4%, which compares favorably to the levels over the past several quarters. Lastly, net loan charge-offs for the first quarter were reported at $959,000, which is the lowest we've reported in recent quarters.

Turning to service fees, service charges and fees declined 6.3% for the first quarter, driven by two fewer days in the quarter, increased earnings credit as a result of higher interest rates and slowdowns in business caused by the extreme weather during the quarter.

During the first quarter, our commercial card business upgraded its Electronic Accounts Payable platform and will realize a significant improvement in processing costs going forward. Our concierge card implementation service helps our customers onboard vendors and maximize EAP card volume and rebates.

In Q1, our customers card spend increased over 6% compared to linked quarters. We're looking forward to another record-breaking performance year from our commercial card group. We continue to focus on improving our scale and efficiency. We reported a first quarter efficiency ratio of 65.2%. Our Q1 ratio reflects an improvement of almost 3% over Q1 2018.

We're targeting an annualized rate in the low 60% range for 2019. Before I turn the call over to Bryan McKeag, I'd like to share my excitement about the Bank of Blue Valley merger with Heartland's Morrill & Janes Bank that is expected to close in mid-May.

Bank of Blue Valley is a great community bank with a strong leadership team, attractive deposit base, and an excellent high quality loan portfolio in the high growth greater Kansas City market.

Bob Regnier will serve as Chairman and CEO and Wendy Reynolds will serve as President of the combined bank, which will operate under the Bank of Blue Valley name, and we feel the bank is well positioned for success. Finally, we're pleased to welcome Kevin Karrels to the Heartland family.

Kevin has over 20 years of experience and will serve as Heartland's Executive Vice President of Consumer Banking. Kevin brings over two decades of impressive retail banking achievements to the Heartland team. Overall, we are pleased with the first quarter results.

We continue to deliver on our priorities with a sharp focus on customer and shareholder value. With that, I will turn the call over to Bryan McKeag, who will provide more detail on first quarter financial performance..

Thanks Bruce and good afternoon. I'll begin my comments today by referencing the press release, which shows our reported earnings per share of $0.91 this quarter.

This was a very busy and somewhat noisy quarter, which included the sale of two branches in Wisconsin for a net gain of $3.2 million, restructuring expenses of $3.2 million, M&A-related costs of $400,000, an MSR valuation expense of $600,000, and higher restricted stock compensation expenses of $1.5 million.

I'll provide more details on these items in my comments. However, the net impact was a reduction in earnings of nearly -- after-tax of nearly $2 million or $0.06 per share. In spite of these items, we reported solid results and positive trends in many aspects this quarter.

I'll start with the net interest margin, which, on a tax-equivalent basis this quarter, was 4.18% and, as expected, declined 16 basis points from last quarter, primarily due to the sale of Citizens consumer loan portfolio in early January.

The Citizens portfolio sale was the main contributor to the 14 basis points decrease in the loan yields for the quarter. In addition, investment yields increased six basis points to 3.13% for the quarter and interest cost on deposits and borrowings increased 12 basis points compared to last quarter.

This quarter, the net interest margin includes 16 basis points of purchase accounting accretion compared to 22 basis points in the prior quarter.

Heartland's loan to deposit ratio is just over 78% and with investments at about 22% of assets generating $31 million of cash flow per month and total borrowings of only $373 million or 3.3% of assets, our liquidity and leverage positions remain in great shape.

The tangible common equity ratio increased 52 basis points to 8.6%, retained earnings this quarter added 27 basis points, the reduction in assets added eight basis points, and the increase in market value of our investments and derivatives added 17 basis points.

The allowance for loan losses as a percent of total loans increased one basis point for the quarter to 0.85%. As mentioned in prior quarters, just under $1.5 billion of loans from recent acquisitions are covered by valuation and PCI reserves totaling $37 million or 2.5%.

Excluding these loans from total loans would result in an allowance to loans ratio of 1.01% as of March 31st, 2019, which is two basis points lower than last quarter. Moving to the income statement, net interest income totaled $103 million this quarter, down $7.3 million as compared to the prior quarter.

The decline is primarily due to three items; first, there are two fewer days this quarter, which accounts for $2.4 million of the decrease; second, the sale of the Citizens' loan portfolio accounts for $3.2 million; and lastly, a reduction in purchase accounting accretion of $1.7 million accounts for the rest.

The provision for loan losses was $1.8 million this quarter, a decrease of $8 million from last quarter. The decrease is primarily attributable to two nonperforming credits last quarter, which accounts for $4 million of the decrease, as well as lower charge-offs and lower loan growth this quarter.

Non-interest income totaled $26.7 million for the quarter, down $300,000 from last quarter. When compared to last quarter, the gain on sale of loans was flat and gain on sale of securities was up $1.5 million. We also recorded a $600,000 valuation expense on the PrimeWest MSR due to reduction in mortgage rates during the quarter.

Moving to non-interest expense, total non-interest expense was $88.2 million for this quarter or flat compared to last quarter. This quarter, M&A and system conversion related costs were $400,000, which is comparable to last quarter.

Core run rate costs that exclude M&A cost, tax credit costs, restructuring charges, and asset gains and losses were $87.5 million compared to $85 million last quarter or a $2.5 million increase. The increase is driven by higher salary and benefits that were partially offset by lower costs in several other categories.

More specifically, salary and benefits increased $3.6 million compared to last quarter as higher incentive accruals and benefit costs were partially offset by lower base salary costs as our employee count declined 69 or 3% during the quarter.

The increase was due to higher stock compensation expense of $1.5 million, largely for the acceleration of costs related to the new annual restricted share grants to employees who were aged 62 or older. Also bonus and benefit accrual resets were $2.3 million higher than last quarter.

Other non-interest expenses were down $4.7 million with $3.4 million attributed to lower tax credit cost this quarter. The remaining expense categories were relatively flat compared to last quarter. The reported effective tax rate for the quarter was just under 21% compared to 17% last quarter as this quarter included a lower level of tax credits.

We continue to believe that the normalized tax rate of 21% to 22% is reasonable going forward. Next, I'll summarize some of our views for Heartland as we move forward.

First, excluding Bank of Blue Valley, commercial loan and non-time deposit growth is expected to be modest next quarter and then pick up in the mid-single-digits on an annualized basis in the back half of 2019. Other categories are likely to remain flat or decline slightly.

Net interest margin on a tax equivalent basis should remain in the 4.10% to 4.18% range as we expect lower purchase accounting accretion and some continued pressure on deposit pricing.

Provision for loan losses are generally expected to range in the $3 million to $5 million per quarter with quarterly fluctuations primarily reflecting the level of roll over in acquired loan portfolios and organic loan growth.

Deposit and card fees are expected to show upper single-digit annualized increases from current run rates as we continue to have strong corporate credit card growth. However, remember, beginning in July 2019, when Durbin kicks in, we expect $1.5 million reduction per quarter in debit card income.

Core expenses, which had been expected to decline from last quarter's run rate, are now expected to be slightly below the current levels next quarter as we will be reinvesting some of the proceeds from our recent divestitures into technology spending on the initiatives Bruce discussed.

We then expect expenses to be begin to decline 1% to 2% per quarter throughout the rest of 2019. There will also be several large transactional events that we expect to occur next quarter, including gains on sale of branches, which will be higher than this quarter as we close the sale of five branch locations during this coming quarter.

Gain on sale of loan of mortgage servicing rights in Q2 will be sizable. And as a result, you'll also see loan servicing fees decline by approximately $500,000 in the second quarter and another $300,000 in the third quarter. Now, with regard to the Bank of Blue Valley acquisition, which is due to close in May, we expect the following.

First, loans held to maturity will increase $550 million net of an estimated loan mark of -- in the 2.5% range. Investments should increase $105 million; total deposits will increase $585 million.

Bank of Blue Valley carries a net interest margin in the 3.8% range and has core non-interest income run rate of about $1.2 million per quarter net of the anticipated Durbin loss and has an efficiency ratio in the low 60s.

Second, at closing, we'll issue approximately 2.1 million shares of Heartland common stock, which will increase Heartland's common equity by about $97 million. We are currently estimating goodwill of $42 million and core deposit intangible of $12 million.

Obviously, these estimates can change once the fair values and marks are finalized and will also depend on our stock price at the closing date. Lastly, we expect integration and conversion costs will be near $2 million spread over the next two quarters.

And with the system conversion currently planned for mid-third quarter, we will not begin to realize the estimated 30% cost saves until the fourth quarter of 2019. So, with all that, you should anticipate the next couple of quarters will continue to be very eventful. And I will turn the call back over to Lynn..

Thanks Bryan. We can now open up our phone lines for questions from our analysts..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jeff Rulis with D.A. Davidson. Please proceed with your question..

Thanks. Good afternoon..

Hi Jeff..

Hi Jeff..

Hi Jeff..

Bryan, maybe if we could clean as to just -- if we could just address a core non-interest expense item.

A, I got your guidance of 1% -- you said 1% to 2% decline for the rest of the year per quarter and if we could just start at what base?.

Yes, I was going off to $87.5 million that was our core cost this quarter. I suspect those will be just a little bit lower next quarter. We'll have some professional fees around consulting and things on some of the initiatives that we're working on that Bruce mentioned.

Then I think from there, we should start to see those decline as we get those implemented. Also some of the other initiatives that we talked about, the mortgage servicing and some of those other things, should be -- start to be some effect towards the end of the year..

Okay.

Absent the Blue Valley addition?.

Correct. And Blue Valley will come in mid-quarter and add another layer of run rate based on its reported earnings. And then when we get into the fourth quarter, we should start seeing the sales start to materialize after conversion on that as well. .

Okay. And then the guidance on the -- you talked about loan growth being not modest next quarter. What -- could you itemize the -- you're losing, I guess, the headwinds on the Dubuque Bank and Trust, the branches; you itemized $20 million that, I guess, are rolling off.

But the other -- the Illinois Bank & Trust and Citywide, what's the total amount of loan balances that are expected to fall off out of? I know that they are in -- they are cost in held for sale, but what is that number?.

I think if I have that number, I probably would. I think it's in the ballpark of -- I think it's a -- Janet's trying to get me the number here. The deposits are the $118 million. I think the loans are -- they're about the $35 million of that $69 million -- would be the loans that are in the branches held for sale..

Okay.

And that's -- the $35 million is total of Dubuque, all -- Dubuque, Illinois and Citywide?.

Yes, that would be for the five branches..

Yes..

Okay, got it..

Sorry, there's a lot going through that line. Took me a lot of--.

No, that's -- sounds like a lot of work. I know we get the provision discussion. And just I guess last one just to kind of confirm. So, the servicing income line, you talked about down another $500,000 in the second quarter and another $300,000 in the third quarter.

A guess is the surviving entity, the piece out of Texas, the PrimeWest, is there going to be a servicing line then that will -- like is that $1 million a quarter then or are you exiting that?.

Yes, there would be -- I think if I have those numbers here. So--.

The size of that portfolio is around $700,000..

About $700,000, yes. We're looking for that. Again, there are several pieces in there. But if you take that line item, the only thing that will come out of that line item is the sale of the MSRs that we're talking about here and would have that impact of -- in total; it's got a run rate right now of $800,000.

And the reason is there'll be only $500,000 this quarter because we'll get a little more than a month of earnings on it this quarter..

Right. Okay. Thank you. I'll step back..

Our next question comes from the line of Nathan Race with Piper Jaffray. Please proceed with your question..

Hi guys..

Hi Nathan..

Thanks for taking the questions. I just wanted to circle back on Jeff's first question just in terms of the overall balance sheet dynamics, excluding the impact of Blue Valley this year.

So, I guess with the branch and loan sales that you guys have coming due this quarter, how should we kind of think about overall balance sheet growth, again absent the impact of Blue Valley on both loans and core deposits?.

Yes, I think what I would do is take the current held for sale -- held to maturity balances for commercial loans and I would see those going up in the low single-digits this next quarter and then up into the mid-single-digits third and fourth quarter. The other portfolios that are mortgage and the consumer, I would say, are probably going to be flat.

May see a little bit of downdraft in mortgage because we don't have the origination ARM that we used to have, but mostly what's in there are ARMs that we have put on our balance sheet. So, I think, we'll see those grind down just a little bit depending upon what happens with mortgage.

If rates kind of solidify and go back up a bit here, we'll see that slow down. If rates take another drop, we could see that accelerate. So, there's a little bit of sensitivity there.

Does that help?.

Yes, no, that is helpful.

So, just to verify the loan amount there, which we're going off on the held for investment basis, is that $7.3 billion?.

Yes..

Got you..

And there's a breakdown later in the table that shows that by portfolio..

All right. Got it. And then just maybe thinking about the core NIM in the back half of this year. Appreciate your guidance for the second quarter. I guess just kind of thinking about the impact of Blue Valley; I believe their margins mostly lower than your guidance.

So, just curious in terms of what type of magnitude of margin dilution we should anticipate on a core basis, excluding accretion?.

Yes, it shouldn't be too much. They are relative. I mean when you think about our net interest margin dollars, its $103 million. Their's I think, on an annualized -- or on a quarterly basis is about $6 million. So, it's relatively small compared to the total.

So, I don't think we're -- our core margin, when you back out the purchase accounting, is a little over 4%. And so you might see that dip just a little bit, 104%, depending upon what happens on deposit pricing that's in the quarter. That's what I'm worried about there.

And then just for the total what the purchase accounting will do, depending upon how loans roll over..

Okay understood. That's very helpful. And if I could just ask one more on loan pricing. I appreciate your comments in terms of the lower day count and so forth that impacted the kind of core yield around 5.35% this quarter. So, just curious kind of what -- where you guys are seeing new loans come on the books on maybe weighted average basis today..

So, I did take a look at the last reports we had for March. I would say they are in the 5.5% to 5.75%, a little bit better out West. So, they would be up a little bit close to that average of 5.75%, a little bit more towards 5.5% probably in the Midwest. And then Ag is -- a component of that is Ag. It tends to be a little bit higher as well. .

Understood. I appreciate all the color. Thanks Bryan..

Our next question comes from the line of Terry McEvoy with Stephens. Please proceed with your question..

Hi, good afternoon everyone..

Hi Terry..

Just starting with the servicing sale to PNC, 20,000 customers. I was wondering how many would be Heartland Bank customers.

And whether PNC, which does have a national kind of digital bank, would have the ability to maybe take on or take some of those customers away? And then I was wondering if there's any escrow deposits that will leave the balance sheet once the sale is done as well..

Yes, those customers, Terry, are predominantly Heartland customers. There are some out of footprint ones that we originated back when we had the offices that were out of footprint. But it's -- a good chunk of it is ours. I don't have the exact number..

Terry, it's about -- if you look at -- if you define primary customer as a primary checking account, it's just slightly less than 50% of what is being sold. So, a vast majority are either out of footprint--.

Or don't have a checking account..

Right, or don't -- or we -- or they wouldn't view us as their primary bank..

Okay.

And just wondering, will there be more restructuring expenses related to the five pending branch sales in the second quarter? Or does that $3.2 million charge capture any future expenses?.

There might be a little bit in this next quarter. There's a lease that we're negotiating to sublease that's actually coming out of the mortgage area. But that would -- that's probably the biggest thing. There could be a little bit from the servicing portfolio sale as well, but not much out of the branch portfolio, I don't believe..

Okay, that's it. Thank you guys..

And you had asked about the escrow, sorry, Terry. It ranges, but I would say it's plus or minus $20 million of escrows that we will be transferring over..

Okay. Thanks Bryan..

[Operator Instructions] Our next question comes from the line of Andrew Liesch with Sandler O'Neill. Please proceed with your question..

Good afternoon everyone..

Hi Andrew..

Hi. So, just to ask at a high level here.

Just what is some of the rationale for derisking and pruning some of the balance sheet? Is there anything on the horizon like related to credit that's giving you any concern?.

Andrew, let me first try that, and then I'll let Drew follow up. We just feel it's a real -- it's a very prudent thing to do right now where we are in the cycle as. We work with these relationships; we identified some that we would term as exits, if we can. We think this is the right time to move them out.

Again, they are performing today and if we had to maintain them, we would, but we feel this is the right time to do that..

And I would just follow-up, Andrew. I would say what the strategy is, is truly a formalization of a process we've always had in place. We've always taken a proactive approach on watch credits and saying, we want an action strategy. We don't want them to be in a parking lot.

I think we've taken it to the next level, though, this time and really are trying to hold our bankers and credit teams collaboratively responsible. And so do I think there's anything looming in our portfolio? No. I think it's just, as Bruce said, trying to be prudent in the face of potential change in the economic cycle..

Okay. And then another question for you, Drew, just the flooding in the Midwest.

Does that affect any of your clients or any of your branch locations? And if so, like to what extent?.

Yes, I don't believe so immediately. We'll have to see how the season unfolds. We've been pretty early at for our construction cycle, I would suggest. And from the Ag standpoint, I think, the farmers are getting in their fields. So thus far, I don't think the flooding has had any material impact.

But probably more to come depending upon snow at the end of April and rain and so forth. So, we'll certainly monitor it. .

Right. Great, that covers everything that I've asked. Thanks..

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

Thank you, Dana. Well in closing, we're very pleased with our financial performance for the first quarter and we will begin the second quarter with a very liquid and strong balance sheet.

I guess last, I'd like to remind our stockholders and our analysts that our annual meeting of shareholders will be held next month on Wednesday, May 22nd, at 6:00 P.M. Central Time at the Hotel Julien here in Dubuque. We certainly look forward to seeing you there.

And I'd like to thank, everyone, for joining us today, and hope you can join us again for our next quarterly conference call in late July. So, have a good evening, everyone..

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