HTLF - Earnings call transcript Q2 2019 | Heartland Financial USA Inc

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Operator

Greetings and welcome to the Heartland Financial USA Inc.

Second Quarter 2019 Conference Call. This afternoon, Heartland distributed its second 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, you may access it at Heartland's Web site 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. brief the the call a we and provide open will to will summary quarter of then Management your questions.

the the be and Exchange begin that statements as the we presentation, the to forward-looking like Before Securities by remind guidelines some of of today information providing will Commission. defined management falls under I'd everyone

could those part these guidelines, forward-looking hopes, predictions and expectations future of I are that from As of and statements differ results actual beliefs, projected. must point materially the out

on be information included site is being time-to-time the a Additional in site. factors these from are listen-only XX-Q recorded. Web participants Web a in is As and reminder, XX-K mode. At this filings, the all Instructions] this or company's obtained conference company's the SEC's which time, may on [Operator

this to I'd Fuller Heartland. the Please to over ahead like at call Mr. sir. Lynn go time, At turn

Lynn Fuller

to call. today Thank welcome quarter And you, XXXX everyone the for discuss join of us quarter and everybody second XXXX. conference good Doug, as company's performance appreciate second earnings the we afternoon. We

and the the on I on CEO, over Lee, Heartland's and few for the then minutes, the will to President touch I call cover will next progress who Bruce turn quarter. In will highlights EVP Credit business us Heartland's EVP provide results. Drew Officer. And today is and Also on Bryan performance. Chief McKeag, additional then, our our Townsend, joining will CFO color around the call

for record Well, the pleased I'm earnings and both year-to-date. report had we that quarter to

very In financial metrics. of percentage many fact, I increases our our history, will be it the impressive sharing some in was best quarter performance in

that's an an the for or versus diluted diluted over for available increase a shareholders the last even to Year-to-date first of share over QX XX.X compared or per for XX% XX% at shareholders a over and earnings the same of million, new record increase common shareholders XX XXXX And over over first a impressive also 'XX income million to XX% million important XX% available income net the of compared $X.XX with net common that's earnings for of XX.X million, half year-to-date XX.X share increase start was million common to quarter quarter to year. increase. impressive And Let's more XXXX was was $X.XX our a XXXX. $X.XX and fully increase. common $X.XX of half per QX fully XX.X

annualized tangible equity for common Return quarter for the and average XX.XX% the assets average and average equity respectively. year-to-date was and on finally, second X.XX% common return and XX.XX% respectively. half on And X.XX%

Bruce margin down our net efficiency X% held these McKeag areas. on came up and below Our Bryan interest will ratio more over XX%, Lee share and detail

sheet ended balance at sheet, few and 'XX minutes, onto Bruce moving our loans assets XX.X increase to billion and liquid is compared non-core X% will in very with the Lee as deposits extremely the Now little in planned QX billion at XX.X cover balance an nearly funding of quarter a

value and QX and at respectively, quarter nearly value XX% XX.XX over XX.XX tangible increase an respectively. were and XXXX XX% Book this book of

to X.XX% compared QX common ended for X.XX% the quarter tangible ratio 'XX. Our at equity

Now XX% of approaching X.XX%, and also targeted that's our are at of TCE. to nearly increase we a X% X% the range top

we for a of our Valley strong May and lot is highly year. closed M&A conversion pipeline be we system of Blue a Bank the after sought community continue on banks. still in of have scheduled respected this M&A, and to prospects Now, front, and XX by And August of

CEO dividend $X.XX earlier the increase. that With pleased XX% very on to a this record as an shareholders to month our month, paid Director. Heartland Board The First of seen and respect announcement Class common may per Bank the you a elected Texas to Chairman our a or Board XXXX. and was which Also, of this dividend Heartland have declared is Lubbock, X Trust, $X.XX Orr, X, I'm be of to August August XXXX that of report share dividend, XX, will share increase Barry

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

Bruce Lee

Lynn. Good Thank afternoon. you,

our I am company includes improved streamline previous for working another continued Lynn effort proactive franchise branch calls, divesting to we and And quarter. our shared business have our report by pleased we positions steps as longer Those growth discussed we operations with to setting again exit record growth. transactions sales results. on excellent has no and trim that delivered that in This second quarter. been lines. the several to as completed the align us taken plan have the

of I providing we've some the by that past company-wide on several over an begin been Today would strategic initiatives like working quarters. on update the to

and necessary experience portion is over are We people, the of our half customer growth ultimately upgrade we from which enhance using XXXX we superior plan, transactions and a million first to of profitability. gains the to processes recorded improve of a invest and $XX believe in technology, our streamlining during efficiency support improve provide these

back most and the investments customer call capacity experience. We Compass, Operation this for a automating and is Customer and the enhance office technology significant we which of believe in focused on processes. project Three are growth process will project streamlining improvement create

upgrade of Encino These will to effectiveness improve The ongoing two and will of into Salesforce which system. relationship the existing million the the the of $XX end to integration and mid expense expect between Encino implementation our manage in industry the is project an sales shorten reductions premier office improve system now Salesforce upgrade for leader and will our Encino, back will relationship An commercial the sales and Salesforce implementation customer the completed, XXXX. platform, which We projects be anticipate management is to cycle. realize we management loan a ability to process and be of teams. to of sales once underway The efficiencies XXXX. over and our significantly are improve origination our commercial the

technology organic our and well believe with teams our us in outstanding significant acquired combined future. We and strategies growth investments position the for these

Blue Bank on team and Bob completed the of In like these acquisition to Heartland his the XX welcome family. Valley addition to and Regnier to projects, May of we I'd

basis. provide specific several provide for $XXX regarding now our CFO on our balance will our growth on financial totaled or with key detail annualized sheet, X% more McKeag, quarter comments after of quarter comments. Bryan areas will the million organic an second performance. deposit I Starting the second performance my

Trust, This way. Bank quarter, Bank and and Trust we XX and Bank deposits growth show Bank non-time our Illinois banks of New Mexico in X had Citywide Arizona and the leading with Trust,

commercial as we primarily on focused from The relationships. have growing our building and deposit been deposits growth commercial has

expect low We basis. single digits to to on continue deposit growth non-time percentage in a the mid

in and XX% noninterest-bearing account Our deposit favorable mix XX% in balances. remains accounts non-time with

continued during quarter. rise first costs the up Deposit quarter X the basis to from quarter for points first the

developed maintain us and we also competitive help the rate strong through environment. navigate have that will discipline remain pricing We our as strategies ever-changing interest

expect rates Fed deposit If reduces Going pause. course if level-off on the quickly and cost expect changes forward, remains the rates, will follow. Fed will our would we deposit we

experience second refinance remain market. was residential loan basis, mortgage an million portfolio continued runoff million the on we which to balances current declining the expected quarter, during organic XX.X loans, the This the XX for quarter. interest as declined rate in total includes to which Moving low

runoff for the million mortgage quarter. grew loans the Excluding $XX

during first growing commercial of on focused loans the which be XX.X to grew continues half emphasis XXXX. Our million

have pipeline commercial strong million. very we of we our a will identified continued funded balances in derisking which a more have year-to-date. commercial targeted specifically feel of quarter, note, We of and to program of resulted a quarter loans next strong and ag positive in has that loan approach On credit growth a quarter this third confident could that reduction these be million commercial $XXX $XX

Asset remains total of second prior X.XX% loans percentage quarter. from the non-performing to solid as quality quarter decreased X.XX% loans for a the as

quarter. total assets of X.XX% The improved last ratio to non-performing from X.XX% assets

addition, delinquent improved last to loans quarter. X.XX% In ratio of from X.XX% total the loans

almost streamlining or relatively decline four Our over billion FTEs core in the and focus while flat assets grew control in or quarters X has efforts past XXX remaining expense X%. expenses of a X%, in and resulted

quarterly earnings grew or the share period. per time In XX% $X.XX almost during by same

half of Our half was for the over efficiency XXX-basis improvement first point of the first XXXX a XXXX. ratio XX%,

as decline Going quarter the per to expenses conversion half initiatives. see below positive the of expenses from to XXXX. are Blue year or improvement expect core The XX% we $X forward, we efficiency of as Valley's in to million impact the drive process expected the back Bank core ratio our exit is begin we completed to in declines and

are pleased quarter we with Overall, results. our second

streamlining We financial resources performance the have customer enhance effort, experience. and company which and our results are the significant money our will for put into future investing and

the for provide Bryan to that, With detail will financial it over quarter. I'll on more our performance McKeag, turn who second

Bryan McKeag

Thanks, Bruce, good and afternoon.

Valley earnings quarter during referencing per CDI. of busy my shows for we branches begin a $XX.X press acquisition, Colorado, this release, including write-off net by of announced very of million, million of Bank Blue closing which and reported share portfolio I'll a sale gain completing of $X.XX of in This completing transactions sale quarter. the of of comments today all the Iowa was loan gain our the net virtually our and $X.X of servicing $XXX,XXX another for previously our completed five the a Illinois which total

valuation related improvement estate write $X remarks. $XXX,XXX of expense process cost management including related and expenses million, $X.X large increase that Bruce in several MSR real were these sales $X outlined Offsetting million items gains in and branch the and to closure M&A related of consulting initiatives of his a million downs

on these more provide detail in I'll my comments. items

our about XX% all noise this per show an filtering delivered items, core After when solid results However, million earnings these the and share. or to $X.XX we continued increase in marginal the aspects positive in use quarter. most of of tax after of this trends net of tax for impact out rate we $XX.X quarter, was

ratio and capital total sheet, well X.X duration comprised strategies and assets to million going over a shape tangible all of per strong flow billion equity of approaching assets a growth XX% $XX to equivalent deposit quarter remain when total assets, of our that Investments opportunities in ratios us of forward. just borrowings X.XX%, generating with with leverage this only great loan our month. Starting with you pursue $XX and under million cash common liquid yield And ratio with XX%. and liquidity of position in that the which and X.X% a to and balance or combine tax is X% a of grew XXX years

a basis percentage The allowance as quarter the to loans for decreased X losses of loan total for X.XX%. points

have that in previously million are of billion covered quarters, from or totaling As valuation reserves we and by loans $X.X $XX.X prior PCI recent mentioned acquisitions X.X%.

quarter. X% an loans Excluding to ratio lower which in result XXXX, loans these point last allowance is loans XX, total basis would from June of than X at

quarter statement, million income Valley. the net is $X.X interest million prior on costs a quarter. of increased to from to X.XX% the compared primarily X margin interest to by $XXX.X equivalent This income quarter decline and Moving last to of basis this net tax was points due of the due basis a on borrowings which totaled basis addition which points quarter. Blue up deposits increase to higher this interest primarily The quarter Bank last X compared

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

range loans last up for of the was totaled on million loan expected million. of quarter this last quarter income $X $XX.X sales to million million. the but normal $X.X X.X quarter, the $X securities quarter. loss for still million million, compared to quarter's up from within gain up and on gain provision million $X.X up last The was When Non-interest from sale $X provision of was million X.X

further on also to was on increase. of XXX,XXX, mortgage Bank and quarter as as PrimeWest's, We the the of $XXX,XXX the MSR Service I deposits card due increased million adjustment rates addition valuation over revenue reduction Valley and credit recorded fees of quarter. Blue X.X during previously $XXX,XXX charges mentioned contributed last up in

XXXX. that declined effective XXX,XXX Loan the expected we May on MSRs our of X, servicing was as sale income due to

a and level the from loan servicing expect quarter. for stabilize XXX,XXX at to We run million another $X.XX the per second rate rate income of about then quarter run decline

non-interest Moving to total XX.X was non-interest to quarter quarter. down XX.X million expense, million the expense compared this last

restructuring XX.X driven totaled This run $X million compared costs XXX,XXX quarter million M&A and tax a quarter. million sales gains last increase last increase. credits, excluding by or costs charges is costs, conversion were that Core mentioned. losses and process M&A costs asset related as was related to quarter expenses higher compared million and million management improvement core to rate in and system systems to XX.X $X.X $X.X the The previously consulting

core quarter of Blue million million benefits addition of includes in million $X.X decreased Valley a added Valley the last increase Valley, due specifically, Bank salary for Blue this costs and of the X.X Bank addition, x-Blue In to $X compared More cost and XXX,XXX quarter. so declined to of category.

increased X.X costs to mentioned increase for million the and process Professional $X.X fees technology previous million due in primarily projects. improvement consulting

in quarter. category M&A this XXX,XXX than were related costs addition, In last higher

amortization to last Bank intangible increased quarter offs branch to sales compared added from quarter. category Amortization Blue Valley were quarter XXX,XXX related related of in deposit, Core XXX,XXX this last to included XXX,XXX write XXX,XXX. this

So, a million forward run rate in per good be would $X quarter. category going this about

was to XX.XX%, up quarter. with -- higher over a The The expense remaining to attributed quarter. million the for flat X.X is quarter. were million improvement Other cost last non-interest last this tax $X ratio modest expenses credit XX% which cost efficiency relatively categories quarter compared were the tax

includes I of costs. million higher that would this the the related of X.X out million consulting M&A $X and both point cost

items, basis tax drove of to forward. is a Excluding almost reported tax non-taxable for tax still lower. would last higher range been by effective the The quarter quarter, credits. We those the XX% this believe to over ratio and or have rate rate XX% XX% of as which income just effective two efficiency a was portion higher XX% the near XX% offset smaller that quarter the compared had going points reasonable was level in rate a normalized XXX

expected growth to forward. thoughts expected at Bruce an quarter his summarize as continue digits into on categories in is of mid-single single just Heartland's Commercial next couple continue to I'll decline. loan comments loan upper digit is a And we Next, to remain QX. pickup Other a likely stated around to basis. annualized move pace the except flat then, percentage mortgages into are residential which as

to percentage to margin to run going Non-time accounting continue annualized remain digits the and on expect the X.XX% a on basis. low stabilize mid-single should net less as upward in range, expected purchase The to expect forward. we deposit tax basis growth is an interest on in pricing equivalent to accretion pressure X.XX% deposit we

reflecting X provision card kicked the remain generally our as expected in largely reduce for month. for The fluctuations the in to will are charges from Durbin expected organic X.X deposit of million of X loan underlying beginning and primarily the income per with other loan quarterly acquired million, fees. remainder loan range million quarter losses loan to year about level by and growth. flat relatively to Service offset the portfolios are which rollover this which credit and the continued has in, quarterly debit growth card revenue fees

sale full decline show in and million improve we these Bruce to quarter conversion Core as still QX normal quarter, into $XX from decline new process to another Bank below to and expected we then is expected improvement Valley ratio and Blue the rate core as are of we'll drive slightly range quarter's the declines loans completed, our QX. efficiency next seasonal on Gain in to of began from run initiatives. expenses Valley's million the said, next the the last $XX expenses with positive as impacts XX% exit decline we And to expect or XXXX. to X Blue then in million quarter see

range conversion the the expect in integration lastly, and quarter. $X million and to third million Blue remaining we And costs in primarily $X.X will be Valley fall

the call over back And with that, I'll turn Lynn. to

Lynn Fuller

Thanks Bryan.

open questions Now, our for phone the we'll from analysts. lines

Operator

you. Thank

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

Terry McEvoy

Good afternoon.

Lynn Fuller

Terry. Hi,

Terry McEvoy

year. be a of that the gain you invested it, of the you with know start that part will far has $XX how and just of a people of been much how much used. I how updating just about this for you for much technology process sense Could have said guess feel it in talk be? so million any then do and of will I

Bryan McKeag

Yes.

million the this Some be about. capital we Obviously, or I costs, line increase another that'll item my million give is of but which And then be into going a had terms top beyond. quarter off get go as in another different And systems million just those system of that probably to or talked going and in -- head. the and Terry, We've we least it's of will amortization costs those we had through go the ongoing. licensing capitalized forward we probably to X at the then, so can you from X have Salesforce licensing million then, costs of into primarily system Encino go that XXXX implemented. X and that be will that the fee the

Bruce Lee

gains Bryan's spend on primarily the numbers, we'll So, harvested what we we've of year this XX to technology. round Terry either X that in is and between think referring --

also like people that on why few you in made company's for kind have front. Chief that. example, an X time have hires the the a more XX some That's We new of first range. we as Officer hires history Information our I'm to giving

Terry McEvoy

Then a follow-up in million Bruce, behind markets for specific that out you quarter. strong growth mentioned of pipeline stand and quarter? The a the optimism of third terms your what's potential $XXX kind the commercial or you. of pipeline the for Anything third in

Bruce Lee

lot third sort have of their of growth we've And as come companies. you our off a turnaround will the the of Yes. operating we've loans quarter sort and that big Trust, right the of our working very there. like seen to last few Citywide most of from we're is process. geography Citywide optimism they've Terry, our that lead three know the Bank for talking to hard construction from and had and now, turnaround quarters there have in and going quarters it Buick been strong And we've and looks Arizona Bank and sales the banks been Trust, paying been

growth reasons and positive the quarter of feel about the one we beyond. that that's third so So,

Terry McEvoy

to Thank you. hear. That's good

Operator

Jeff Please the of question comes Our question. your line with D.A. from Rulis proceed next with Davidson.

Jeff Rulis

Good Thanks. afternoon.

Bruce Lee

Jeff. Hi,

Jeff Rulis

a The cut cuts? wanted margin your discussion guidance -- is that -- in I just include sure that were make to rate

BryanMcKeag

doesn't. No, it Yes.

think deposit Obviously, what customers, prepayment language we happen does loans, the that's our as be would cut our Fed always do I with working our Fed to will floors have we rates, in on pause. if in remains have working have stated Bruce the if and been quickly loans.

does. want been down we've rates the to those work of well. downside But, we really can go want we far to as to to and we kind we we've the don't if But, working that we Obviously, have protect be. too had discussions market down. internal that want So, to rate lag watch issue

Bruce Lee

put plan do We've deposits a really consumer immediately we're to Yes. on both on and cuts Jeff in decrease, if rates the place the side. commercial that our make prepared rate

Jeff Rulis

Got quick I you've pull asset would levers some but kind that like would mean... sensitivity The it. sensitive, be that got neutralize an sounds of it that. to

Bruce Lee

Yes.

Jeff Rulis

Okay.

Bruce Lee

would at cut I a be asset models sensitive say would normal for Yes. model XX-ish the makeup. two, think probably quicker be sensitive. have beta. least our asset kind say But a therefore says we and with the beta that than bigger We of we're would first or and

Jeff Rulis

clarify also And Bruce to. the expense in to to include That's run alluded that the as eight rate. you're well. Does the making then, guidance that wanted I XX the that investments embedded

Bruce Lee

is. It Yes.

consulting a the us identifying this of negotiate And statements quarter what expensed cetera. systems so, the upfront the et to helping work lot of we was

point. So, past we're that

then capitalized not forward be all and Now be but mostly amortized. what mostly spent will will going

we're rate to in trying you So that on will core into built give slowdown effect for is going and run forward. guidance what expense that

Jeff Rulis

high I on have of And you'd the side Butch, maybe to mentioned you one where it. think like great. just last if I that that capital It's is one could,

use. streamlining sell, that question you'd You've in capital just how to there business. I kind of here? you capital also done the a else like is a could if of asset And sales kind about but anything guess lot tackle broad do from you of deploy

Bruce Lee

stock top We on stock from that that so a to up few last X%. achieve almost acquisitions of stock. XXX% have XX% range Yes. set and we've And at been year at to to of range last of X% issuance we're anywhere wanted acquisitions, will we the X% the we

we go buyback to that return to into We've I range. a and M&A versus we honest big good do in stay be use could activity would to M&A got that's have to not our to you. can possibility. earnings so to pipeline really continued hope So, X our with I to think capital utilize that that turn to and want own would in I having that a X.X stock.

Bryan McKeag

Yes.

announced I that think probably and saw dividend. you we Jeff basis that on the increased priority recently a we just

So that the that's getting of ways earnings. equity good strong one to really and we're that recognizing we're a of level

So, that's thing. one

that's mentioned [ph], happen eye is equity. thing have an add more M&A on second since activities, thing into -- to put what to Butch as the don't keep to third future with need along The the that And cash we right? [CESL] our is rich coming we will

that's sheet. to equity out and of the move So part balance of onto other going the

So, mindful being kind of of we're all those.

And cash so, we being in think good a earnings think from generated spot. really We our is we're good.

capital basis well. So, ability on not cash as a the only is and cash flow a basis M&A on use but there to

So, I our any and towards the of or are buybacks doable all that. would things end like list those stock be think

Jeff Rulis

you. Thank

Operator

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

Nathan Race

Hey guys. Great. you. Thank

Bruce Lee

Hi Nathan.

Nathan Race

few do here. kind if a XXX the that then and maybe purchase Bryan, clarify is bps. basis position? on a think core fed the bps we maybe once we [indiscernible] go thereafter this XX outlook into and core from should How you it about want excluding growth account that NIM level from guys week just accretion, XQ, we loan the I of down improve cut to a get trajectory of stability get Core NIM on

Bryan McKeag

Yes.

like something it's think I that.

we model, the that we beta's just Our if have. ran

we down and that talked the some about. of things work Bruce points with basis X or can X around is think I that

would exactly. hope the in always terms a in figure decrease would and then we're But low I So, single a in hope of hard margin. digits to I

say X, points. try down it. to to We realistic are points couple basis we much it's to basis X hold tick going it's to do and probably going can as probably But, as

Nathan Race

just expenses, this back us on of guess Operation of I how think year. get But, being your we the Okay. of I end sense Customer to I about start wrapped operating then with but up of Any expenses rates. far run appreciate Compass front guidance XXXX? the can largely by think for maybe too year, XXXX half this don't want Perfect. to in for And about terms in

Bryan McKeag

Don't know about haven't that and get much our the there been or will our next have goal upper to internally next we efficiency and it you thought tell XX quarter is ratio into level XXs I I XX talking get and that to that. about or between year. somewhere get

to So, at continue control. on to good we're of out and additional our get least work revenue expenses going our expense do growth to in relation leverage to

Bruce Lee

one think, I would things grow. mentioned as capacity and I the that we I continue to say, Nathan, of

out back actual add to things and in to expense operation reduction not One come XX% able XX% that's of we grow to compass referenced is to the anything be of we our that customer office. the I that addition believe should

as depends it So, well up where the activity in will those growth M&A to really XXXX. on organic line as our expenses

Nathan Race

more That's Understood. just helpful strong on appreciate one pretty deposit deposit been that I year-to-date. I and growth has really growth. ask could

going you So I changing, mean, given liquidity rate excess some the how expect sheet just deposit environment today? loan grow of to growth so lag as forward look do perhaps going and guys that's are that on the growth now forward, is you to balance you curious

Bryan McKeag

assumption. fair a probably that's think I

on on we to that mid single low guidance and said our deposit. loans upper in is probably percentages, what think I digits

deposits kind can than faster little a deposits a we're showing half that the bit of than grow -- we of So, year. we in the faster you there's loans -- little think last

Bruce Lee

will I from go, say lot a and also retail a has a to commercial deposit where I come there. bit of difficult little think side, the to be upon side. lag The more much There deposits. growth because it'll grow continue our retail would of Nathan be depending rates

Nathan Race

Thank Makes I all appreciate sense. the you. color.

Operator

from of with Andrew comes with Liesch Please question. line question Sandler your proceed O'Neill. next Our

Andrew Liesch

Afternoon guys.

Bruce Lee

Andrew. Hi,

Andrew Liesch

Hi.

of guidance, amortization intangibles? clarification that one the question include on the Just does expense

Bryan McKeag

by core. Yes. I that include

see back of we I'd not it core. that's out including see backed the ratio, things our that efficiency and but back You -- what for in I'm out. one out, I'm but probably I go only back the

Andrew Liesch

to and seems just make well conditions Drew, how quarter? but the the stand possible, current on I is trends so. progressed everything the an and the like flooding give And I wanted publicized agricultural in update sure. it economy, thought where secondly it in then, just was okay, things just

Drew Townsend

as sounds Yes. first where Iowa area speak of it maybe the in the to Dubuque, Wisconsin. as situated our and predominantly around Andrew ag with odd we're Southern portfolio majority and

Our crops the are largely ground. in

And we're prices overall that industry of seeing the stress is broader what in the ticked because reduce so, now yields will have up.

And so, up an $X corn is example, now. over has trended

some that Soybeans the tariff chin it the the the still of pricing. a seen and the on little are taking more in bit issues, other situation. also is uptick But more trade relates bright spot dairy has that

our But, in were dairy. out XX% and they end projections get with to the of a feel both represent of got speaking the and crops the overall we get book, cetera. year I they the leadership more about probably grain conservative, those of ag spaces so, to And grain in our ag as dairy and little in relief to the maybe et was the spaces, finally see two our field now

And the if have you of us other we thing most that's portfolios' kind positive for will. is, our of do multi-line

feeding livestock, hedge natural and to not grain to acreages, some well. which the it So, times as large more provide tends growing

agro of There of on is think a residual necessarily the the business haven't any weather that side to carryover I little side. things. we any commercial back the of and by seen created of of space, headwinds some bit outside the ag

very speaking, a we're that we economy. so, But, closely ag to those generally track forward the watching space look And think third favorable that And quarter. quarter stable. I businesses the was cautiously

Lynn Fuller

you very that in we not country. Andrew, We our fortunate. affected really very clients very, flooding the ag were of parts were by saw were the fortunate other

Andrew Liesch

all. Thank the all you. Very That's helpful. That answers questions.

Operator

Our next question question. KBW. Damon DelMonte proceed comes with your line of Please with from the

Damon DelMonte

Good going today? afternoon it guys. How's

Bruce Lee

Damon. Hi,

Damon DelMonte

questions. couple of a Just quick

securities sales over normalize we quarters? gain a non-interest the you kind of Bryan, give on could if couple little on First this color that's and your just about expectations that next million, XX.X a income, of on for MSR write-down quarter. the the

Bryan McKeag

I'm quarter a Yes. kick would see -- think just But, we just as I hoping to Durbin's should that next I going small said uptick. in.

is piece think flat. fees. the remain that's main And I to biggest the that service So, relatively and our charges going of

I this the We a of as little -- downtick And up. you'll I in servicing. quarter. think for quarter, had flattish be our gain see mentioned think to a loans, then that'll on slightly loan I good sale pretty loan

can better I think flat to bit there. can just maybe I PCS have little trust And to a a up stay and we there. We bit. the brokerage, maybe little seem go and some momentum of do the think of so, slightly

you to So, get not but that see and maybe I number could things. over bit XX, to all the a Durbin little it's other it's flattish be going go, going just think fairly given

you'll know it and side or So, we quarter on loan fourth don't if then, down. does when it's mortgage into whatever obviously the tick a the I downturn the sales go normal, see little XX% in

So, you'll something see relatively there. normal

Damon DelMonte

on helpful. That's yield? have your then, expected like accretable Got Thanks. you And it. a schedule

Bryan McKeag

thinking additional yield. quicker or for flow was be really Damon least all -- prepay, to all off renewal of that pay loans I up don't. hard I'm triggers going that's at to I about think come the accretable dollars CDI. in. which But I few because next they it's for they or sorry.

because quarter probably terms there Blue to going to we where this particular not so a in down was of new. sense is. could there whole Bank stay of point at lot And first Maybe go just amortization because have got think up coming are that is it's not Valley probably it I of it my really in. basis

So, of those on before it I've can because what but that because I been swing think, that's wrong prepayments.

Damon DelMonte

Got it.

all had. That's helpful. That's asked Okay. Thank else Everything that and answered. was I you.

Bruce Lee

Damon. Thanks

Operator

are queue. There in Mr. I'd closing to questions the no further back like for Fuller to call the hand remarks.

Lynn Fuller

hope see pleased this closing, of of lot and with record joining late thank to for quarter Well, going us Doug. Thanks our into you a call obviously a very good. a a equity for today conference and sheet with again year-to-date earnings the Very the quarterly balance join liquid we for October. the can for year next I'd half second we're momentum in very and and in position. strong everyone like us

everyone evening. a that have with nice So,

Operator

today's teleconference. and Ladies this does participation. you for your conclude Thank gentlemen,

day. You may wonderful time at have disconnect a and lines this your

Heartland Financial USA (HTLF) 29 Jul 192019 Q2 Earnings call transcript