Heartland Financial USA Inc (HTLF) 2023 Q3 法說會逐字稿

Greetings, and welcome to HTLF's 2023 Third Quarter Conference Call. This afternoon, HTLF announced its third quarter financial results. And hopefully, you've had a chance to review the earnings release that is available on HTLF's website at htlf.com.

您好，歡迎參加 HTLF 2023 年第三季電話會議。今天下午，HTLF公佈了第三季財務業績。希望您有機會查看 HTLF 網站 htlf.com 上發布的收益報告。

With us today from management are Bruce Lee, President and CEO; Bryan McKeag, Chief Financial Officer; and Nathan Jones, Chief Credit Officer. Management will provide a summary of the quarter, and then we will open the call to your questions. Before we begin the presentation, I would like to remind everyone that some of the information provided today falls under the guidelines of forward-looking statements as defined by the Securities and Exchange Commission.

今天與我們一起出席的還有管理階層的總裁兼執行長李小龍；布萊恩‧麥基格，財務長；和首席信貸官內森瓊斯。管理層將提供本季度的摘要，然後我們將開始電話回答您的問題。在我們開始演示之前，我想提醒大家，今天提供的一些資訊屬於美國證券交易委員會定義的前瞻性陳述的指導方針。

As part of these guidelines, 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 or the SEC's websites. I would now like to turn the call over to Mr. Bruce Lee, HTLF President and CEO. Please go ahead, Mr. Lee.

作為這些指導方針的一部分，本簡報中有關公司未來的希望、信念、期望和預測的任何陳述均為前瞻性陳述，實際結果可能與預測有重大差異。有關這些因素的更多資​​訊不時包含在公司的 10-K 和 10-Q 文件中，這些文件可以在公司或 SEC 的網站上獲得。我現在想把電話轉給 HTLF 總裁兼執行長李小龍先生。請繼續，李先生。

Thank you, Latif. Good afternoon, everyone. This is Bruce Lee, President and CEO. Welcome to HTLF's 2023 Third Quarter Earnings Conference Call. I appreciate you joining us today as we discuss our ongoing solid performance. For the next few minutes, I'll discuss HTLF highlights for the quarter, then turn the call over to Bryan McKeag, Chief Financial Officer, for more details on our performance and financials. Also joining us today is Nathan Jones, Chief Credit Officer, who can answer questions regarding the stable credit quality across our portfolios.

謝謝你，拉蒂夫。大家下午好。我是總裁兼執行長李小龍。歡迎參加 HTLF 2023 年第三季財報電話會議。感謝您今天加入我們討論我們持續穩健的業績。在接下來的幾分鐘裡，我將討論本季 HTLF 的亮點，然後將電話轉給財務長 Bryan McKeag，以了解有關我們業績和財務狀況的更多詳細資訊。今天加入我們的還有首席信貸官內森瓊斯 (Nathan Jones)，他可以回答有關我們投資組合的穩定信貸品質的問題。

The HTLF Board of Directors approved a quarterly cash dividend of $0.30 per share on the company's common stock payable on November 29, 2023. The Board also approved a dividend of $175 for Series E preferred stock, which results in a dividend of $0.4375 per depository share payable on January 16, 2024. For more than 40 years, HTLF has increased or maintained our common stock dividend each quarter. This is a direct result of the strength, insight and growth we consistently provide to our customers and shareholders.

HTLF 董事會批准了公司於 2023 年 11 月 29 日支付的普通股季度現金股息每股 0.30 美元。董事會還批准了 E 系列優先股股息 175 美元，每股存託股股息為 0.4375 美元將於2024 年1月16 日支付。40 多年來，HTLF 每個季度都會增加或維持我們的普通股股息。這是我們持續為客戶和股東提供實力、洞察力和成長的直接結果。

In the third quarter, HTLF delivered solid loan and deposit growth. Our credit quality remains stable. And in October, we successfully completed the final conversion of charter consolidation. For the quarter, net income available to common stockholders was $46.1 million and earnings per share of $1.08. Charter consolidation expenses reduced EPS by $0.04. We delivered on our balance sheet guidance from last quarter's earnings call and are pleased with the results. At the end of last quarter, we said we were going to grow loans, grow customer deposits and pay down wholesale funding. We accomplished all 3 of those things.

第三季度，HTLF 實現了穩健的貸款和存款成長。我們的信用品質保持穩定。並於10月份，順利完成了包機合併的最終轉換。本季普通股股東可獲得的淨利為 4,610 萬美元，每股收益為 1.08 美元。包機合併費用使 EPS 減少了 0.04 美元。我們交付了上季財報電話會議中的資產負債表指引，並對結果感到滿意。上季末，我們表示將增加貸款、增加客戶存款並償還批發資金。我們完成了這三件事。

From the linked quarter, consumer deposit growth was $152 million or 1%. Total loan growth was $154 million or 1% and was almost fully funded by our customer deposit growth, and we paid down wholesale deposits and borrowings by $367 million. While we did that, we also lowered expenses with core expenses decreasing $3.3 million or 3% from the linked quarter.

從上一季來看，消費者存款成長了 1.52 億美元，即 1%。貸款總額增加 1.54 億美元，即 1%，幾乎完全由我們的客戶存款成長提供資金，我們還清了 3.67 億美元的批發存款和借款。同時，我們也降低了費用，核心費用比上一季減少了 330 萬美元，即 3%。

Let's start with deposits. Our deposit base is diverse and granular. Customer deposits are diversified by both geography and industry with no industry concentration higher than 10% across our portfolios. In the third quarter, customer deposits increased $152 million. 90% of the growth came from commercial and small business and 10% from consumer. While we maintain a favorable deposit mix, customer demand accounts increased slight -- decreased slightly to 33% of customer balances, which reflects the ongoing but slowing transition to interest-bearing accounts. Wholesale deposits and borrowings were reduced by $367 million from the linked quarter, which was made up of a $715 million decrease in wholesale deposits and a $348 million increase in borrowings.

我們先從存款開始。我們的存款基礎多樣化且細緻。客戶存款按地域和行業多元化，在我們的投資組合中沒有行業集中度高於 10%。第三季度，客戶存款增加1.52億美元。 90%的成長來自商業和小型企業，10%來自消費者。雖然我們維持有利的存款組合，但客戶需求帳戶略有增加，佔客戶餘額的比例略有下降至 33%，這反映出向計息帳戶的過渡正在進行但正在放緩。批發存款和借款較上一季減少 3.67 億美元，其中批發存款減少 7.15 億美元，借款增加 3.48 億美元。

Overall, total deposits for the quarter decreased to $17.1 billion. 64% of total balances are insured or collateralized. Turning to loans. In the third quarter, we saw continued strength across our commercial loan portfolios, with increases in each. From the linked quarter, nonowner-occupied real estate increased $126 million or 5%. Construction increased $16 million or 2%. Commercial and industrial increased slightly, while owner-occupied real estate increased $31 million or 1%. And our ag portfolio also increased slightly. In total, commercial and ag loans grew $176 million or 2% from the linked quarter, in line with our guidance.

總體而言，本季存款總額下降至 171 億美元。總餘額的 64% 有保險或有抵押。轉向貸款。第三季度，我們的商業貸款組合持續強勁，各項貸款均增加。與上一季相比，非業主自用房地產增加了 1.26 億美元，即 5%。建築業增加 1,600 萬美元，即 2%。商業和工業略有成長，而業主自用房地產則成長了 3,100 萬美元，即 1%。我們的農業投資組合也略有增加。商業和農業貸款總計成長 1.76 億美元，較上一季成長 2%，符合我們的指引。

In the third quarter, we added 269 new commercial relationships, representing $253 million in funded loans and $95 million of new deposits. 81% of new commercial loan originations have variable rate structures, flat from the linked quarter, and a 12% increase from the prior year. Yield on these new originations increased 27 basis points from the second quarter.

第三季度，我們新增了 269 個商業關係，相當於 2.53 億美元的融資貸款和 9,500 萬美元的新增存款。 81% 的新商業貸款發放採用可變利率結構，與上一季持平，比上年增長 12%。這些新產品的收益率較第二季增加了 27 個基點。

Our commercial pipeline remains strong at over $1 billion. It's distributed across our regions with strength in the Mountain West and Southwest. While we added more than 2,800 consumer relationships in the quarter, our consumer loan portfolio decreased $7 million or 1% from the linked quarter, while residential mortgage decreased $15 million or 2%. We expect total loan growth of $150 million to $200 million of core loan growth in the fourth quarter, which we again expect to substantially fund through customer deposit growth. In addition, we expect seasonal ag line utilization of $100 million that would be paid down in the first half of 2024.

我們的商業管道仍然強勁，價值超過 10 億美元。它分佈在我們的各個地區，主要集中在西部山區和西南部。雖然我們在本季增加了 2,800 多個消費者關係，但我們的消費者貸款組合比相關季度減少了 700 萬美元或 1%，而住宅抵押貸款減少了 1500 萬美元或 2%。我們預計第四季度核心貸款成長總額將達到 1.5 億美元至 2 億美元，我們再次預計將透過客戶存款成長為其提供大量資金。此外，我們預計季節性農業線利用率為 1 億美元，將於 2024 年上半年支付。

Turning to key credit metrics. Our disciplined credit approach is delivering stable credit quality across our portfolios. Delinquency ratio remained low at 12 basis points. Nonperforming loans declined $11.6 million to 44 basis points of total loans. Nonperforming assets as a percentage of total assets remained flat at 33 basis points. Nonpass-rated loans decreased $32.6 million and net charge-offs declined to $3.7 million, some of which had previously been reserved in prior quarters. This included $1.3 million from the sale of our $10 million consumer credit card portfolio.

轉向關鍵信用指標。我們嚴格的信貸方法為我們的投資組合提供穩定的信貸品質。拖欠率仍維持在 12 個基點的低點。不良貸款減少 1,160 萬美元，佔貸款總額下降 44 個基點。不良資產佔總資產的百分比維持在 33 個基點不變。未通過評級的貸款減少了 3,260 萬美元，淨沖銷額下降至 370 萬美元，其中一些是之前幾季預留的。其中包括出售我們價值 1,000 萬美元的消費者信用卡組合的 130 萬美元。

Market conditions have been applying additional pressure on the commercial real estate office market across the country. We feel good that our office exposure is low at 3.6% of our total loan portfolio. We continue to place emphasis on targeted reviews of our portfolios and recently conducted an in-depth review of each office credit over $1 million. We believe our portfolio is well-constructed, granular and generally situated outside of central business districts. We continue to enhance our ongoing portfolio management, surveillance and refine how we screen new opportunities for underwriting. For more on our CRE office exposure, please see Page 16 in the investor deck.

市場狀況給全國商業房地產辦公室市場帶來了額外的壓力。我們感覺良好的是，我們的辦公室風險敞口較低，佔總貸款組合的 3.6%。我們繼續強調對投資組合進行有針對性的審查，最近對超過 100 萬美元的每個辦公室信貸進行了深入審查。我們相信我們的投資組合結構完善、細粒度且通常位於中央商務區之外。我們持續加強持續的投資組合管理、監督，並完善我們篩選新核保機會的方式。有關我們 CRE 辦公室風險的更多信息，請參閱投資者資料中的第 16 頁。

As I mentioned at the top, earlier this month, we completed the final conversion of charter consolidation. All our local bank brands are now divisions of HTLF Bank, and we're now able to serve all our customers anywhere in our footprint. The nearly 2-year project was completed on schedule and on budget, driving greater internal efficiency while we continue to deliver external growth. We are now strategically and structurally positioned for our next phase, HTLF 3.0, to execute on new initiatives that leverage our brand, products, technologies and capabilities.

正如我在頂部提到的，本月早些時候，我們完成了包機合併的最終轉換。我們所有的本地銀行品牌現在都是 HTLF Bank 的部門，我們現在能夠為我們業務範圍內任何地方的所有客戶提供服務。這個歷時近兩年的專案按計畫、預算完成，在我們持續實現外部成長的同時，也提高了內部效率。我們現在在策略和結構上為下一階段 HTLF 3.0 做好了定位，以執行利用我們的品牌、產品、技術和能力的新舉措。

While we remain focused on continuing to achieve organic growth, we are also focused on reducing expenses, increasing EPS and growing TCE over the next few quarters. We continue to evaluate our balance sheet and capital structure to maximize efficiency and flexibility. And we're analyzing our expense structure, including geographies, branch footprint, management layers and span of control. We expect some onetime expenses associated with these initiatives, and Bryan will have more details in his comments. We will provide more on HTLF 3.0 during our fourth quarter earnings call in January.

雖然我們仍然專注於繼續實現有機成長，但我們也專注於在未來幾季減少開支、增加每股盈餘和增加 TCE。我們繼續評估我們的資產負債表和資本結構，以最大限度地提高效率和靈活性。我們正在分析我們的費用結構，包括地理位置、分公司覆蓋範圍、管理層和控制範圍。我們預計這些舉措將產生一些一次性費用，布萊恩將在他的評論中提供更多細節。我們將在 1 月的第四季財報電話會議上提供有關 HTLF 3.0 的更多資訊。

We're investing further in our strategy and innovation and have added to our executive leadership team. Robert Kahn is our new Chief Strategy Officer; and Zach Hamilton, our new Chief Innovation and Digital Officer. Both Robert and Zach will help drive HTLF's continued growth and evolution and help us further differentiate ourselves in the products and services we bring to our customers. HTLF is delivering and executing on our strategies: customer deposit growth, quality loan growth, stable credit quality, and we're driving long-term efficiency.

我們正在進一步投資我們的策略和創新，並增加了我們的執行領導團隊。羅伯特‧卡恩 (Robert Kahn) 是我們新任首席策略長；以及我們新任首席創新和數位長 Zach Hamilton。 Robert 和 Zach 都將幫助推動 HTLF 的持續成長和發展，並幫助我們在為客戶提供的產品和服務中進一步脫穎而出。 HTLF 正在交付和執行我們的策略：客戶存款成長、優質貸款成長、穩定的信貸質量，並且我們正在推動長期效率。

This is all made possible by the hard work and dedication of HTLF employees. We're committed to delivering strength, insight and growth to our customers, communities, shareholders and each other. Together, we are HTLF. I'll now turn the call over to Bryan for more details on our performance and financials.

這一切都得歸功於HTLF員工的辛勤工作和奉獻。我們致力於為我們的客戶、社區、股東和彼此提供力量、洞察力和成長。我們在一起，就是 HTLF。我現在將把電話轉給布萊恩，以了解有關我們業績和財務狀況的更多詳細資訊。

Thanks, Bruce, and good afternoon. As Bruce just described, HTLF performed well in a challenging environment this quarter, reporting earnings per share of $1.08 with loan growth of $154 million, which was fully funded by the increase of $152 million in customer deposits. Reported quarterly results included charter consolidation restructuring costs of $2.4 million, which reduced EPS by $0.04. In addition, net gains and losses on investments and other asset sales and write-downs were low at a net loss of just over $200,000.

謝謝，布魯斯，下午好。正如 Bruce 剛才所描述的，HTLF 在本季度充滿挑戰的環境中表現良好，每股收益為 1.08 美元，貸款增長 1.54 億美元，全部由增加的 1.52 億美元客戶存款提供資金。報告的季度業績包括 240 萬美元的包機合併重組成本，導致每股收益減少 0.04 美元。此外，投資及其他資產出售和減記的淨收益和損失也較低，淨損失略高於 20 萬美元。

Before I go into more detail, I want to remind everyone that our third quarter earnings release and investor presentation are both available in the Investor Relations section of HTLF's website. So I'll start my comments with the provision for credit losses, which was $1.5 million. The provision reflects our stable credit quality, including a reduction of nearly $12 million in nonperforming loans, lower charge-offs at 12 basis points of total loans, and a continued low delinquency rate of 12 basis points of total loans. At quarter end, the total allowance for lending-related credit losses, which includes both the allowance on loans and unfunded commitments, decreased $2.1 million to $127.7 million or 1.08% of total loans.

在詳細介紹之前，我想提醒大家，我們的第三季財報發布和投資人簡報都可以在 HTLF 網站的投資人關係部分中找到。因此，我將從 150 萬美元的信用損失準備金開始我的評論。這項撥備反映了我們穩定的信貸質量，包括不良貸款減少了近 1,200 萬美元、貸款總額的沖銷降低了 12 個基點，以及貸款總額的拖欠率持續保持在 12 個基點的較低水平。截至季末，與貸款相關的信貸損失準備金總額（包括貸款準備金和無資金承諾）減少了 210 萬美元，至 1.277 億美元，佔貸款總額的 1.08%。

Moving to the rest of the balance sheet. Bruce has already covered loans and deposits, so I'll start with investments. Investments declined almost $300 million during the quarter to $6.4 billion, representing 32% of assets with a tax equivalent yield of 3.79%. Due to the increase in mid- to long-term interest rates near quarter end, the unrealized loss on our available-for-sale portfolio increased $129 million to $747 million. The relatively small held-to-maturity portfolio of $835 million or 13% of investments has an unrecorded negative fair value mark of $77 million. The available-for-sale portfolio has a modified duration of just under 5.4 years.

轉向資產負債表的其餘部分。布魯斯已經介紹了貸款和存款，所以我將從投資開始。本季投資減少近 3 億美元，至 64 億美元，佔資產的 32%，稅等收益率為 3.79%。由於接近季度末中長期利率上升，我們可供出售投資組合的未實現損失增加了 1.29 億美元，達到 7.47 億美元。相對較小的持有至到期投資組合為 8.35 億美元，佔投資的 13%，其未記錄的負公允價值標記為 7,700 萬美元。可供出售投資組合的修改期限略低於 5.4 年。

However, the hedges we have placed on $840 million of our longer-dated municipals and agency-backed secured -- mortgage-backed securities reduces the effective duration to just over 4.6 years.

然而，我們對 8.4 億美元的長期市政債券和機構支持的抵押貸款支持證券進行的對沖將有效期限縮短至 4.6 年多一點。

Moving to liquidity. HTLF's liquidity profile at quarter end is strong and stable with $1.2 billion of principal cash flow coming off our securities portfolio over the next 12 months with $240 million expected next quarter. Second, a low level of outstanding borrowings and $3.1 billion of available capacity with the Fed and FHLB. Third, we have several Fed fund borrowing lines and broker deposit sources that remain open and available. Fourth, our customer deposit base is granular and well-diversified, with over 64% of total deposits either insured or collateralized. Fifth, our loan-to-deposit ratio is 69%. And when removing all wholesale deposits, it remains low at 80%. Cash and unpledged available-for-sale securities totaled $3.9 billion. And lastly, the holding company cash position stands at over $300 million, which is over 3.5x our current annualized interest and dividend payments. In addition, our dividend payout is relatively low at 28% of current EPS.

轉向流動性。 HTLF 季末的流動性狀況強勁且穩定，未來 12 個月我們的證券投資組合將產生 12 億美元的本金現金流，預計下季將達到 2.4 億美元。其次，未償還借款水準較低，聯準會和 FHLB 的可用能力為 31 億美元。第三，我們有幾個聯邦基金借款額度和經紀人存款來源仍然開放且可用。第四，我們的客戶存款基礎細化且多元化，超過 64% 的存款有保險或抵押。第五，我們的存貸比是69%。當扣除所有批發存款後，該比率仍保持在 80% 的低水平。現金及未質押的可供出售證券總計 39 億美元。最後，控股公司現金部位超過 3 億美元，是我們目前年化利息和股利支付的 3.5 倍以上。此外，我們的股息支付相對較低，為當前每股收益的 28%。

With regards to capital, regulatory capital ratios remain strong with common equity Tier 1 at just over 11.4% and total risk-based capital ratio of nearly 15%. Adjusted for unrealized losses on our investments, these ratios remain well above capitalized levels at approximately 7.25% and 10.75%, respectively. The tangible common equity ratio decreased 13 basis points to 5.73% at quarter end. The decline in market value of investments was partially offset by an increase in fair value of swaps this quarter, resulting in a net decrease of 35 basis points that is attributable to the accumulated other comprehensive income or AOCI.

在資本方面，監理資本比率依然強勁，普通股一級資本比率略高於 11.4%，總創投比率接近 15%。在根據我們投資的未實現損失進行調整後，這些比率仍遠高於資本水平，分別約為 7.25% 和 10.75%。季末有形普通股比率下降 13 個基點至 5.73%。本季掉期公允價值的成長部分抵銷了投資市值的下降，導致累計其他綜合收益或 AOCI 淨下降 35 個基點。

Moving to the income statement, starting with revenue. Net interest income totaled $145.8 million this quarter, which was $1.4 million lower than the prior quarter. The net interest margin on a tax equivalent basis held up well, falling 5 basis points this quarter to 3.18%, which was close to our expected range of NIM in the low to mid-3.20s. The decrease this quarter included a 2 basis point decline in purchase accounting accretion.

轉到損益表，從收入開始。本季淨利息收入總計 1.458 億美元，較上一季減少 140 萬美元。稅等淨利差保持良好，本季下降 5 個基點至 3.18%，接近我們預期的 3.20 左右的淨利差區間。本季的下降包括採購會計成長下降 2 個基點。

Noninterest income of $28.4 million this quarter was down $4.1 million from the prior quarter. Excluding security losses, core noninterest income was down $4.4 million to $28.5 million, falling short of our expectation of $30 million to $31 million. The primary driver of the miss was capital markets fees, which were $2.2 million lower than last quarter.

本季非利息收入為 2,840 萬美元，比上一季減少 410 萬美元。不包括擔保損失，核心非利息收入下降 440 萬美元至 2,850 萬美元，低於我們 3,000 萬美元至 3,100 萬美元的預期。造成這一結果的主要原因是資本市場費用，比上季減少了 220 萬美元。

Shifting to expenses. Noninterest expenses totaled $111 million this quarter. That's up $1.6 million from last quarter. However, excluding restructuring, tax credit costs and asset gains and losses, the run rate of recurring operating expenses decreased $3.4 million to $107.4 million, coming in better than our forecast of $109 million to $110 million. The decrease was driven by $1.4 million lower advertising costs and $1.6 million decrease in professional fees.

轉向支出。本季非利息支出總計 1.11 億美元。比上季增加了 160 萬美元。然而，不包括重組、稅收抵免成本和資產損益，經常性營運費用的運行率下降了 340 萬美元，至 1.074 億美元，優於我們預測的 1.09 億美元至 1.1 億美元。這一下降是由於廣告成本減少了 140 萬美元，專業費用減少了 160 萬美元。

As we close out 2023 next quarter, HTLF expects loan growth of $150 million to $200 million to be primarily funded by customer deposit growth of $125 million to $175 million. In addition, we expect an additional $100 million of seasonal draws on ag lines of credit that we anticipate will be repaid in the first quarter of 2024. Achieving these loan and deposit growth expectations enables the bulk of investment cash flows to be utilized to decrease wholesale deposits and short-term borrowings. Net interest margin on a tax equivalent basis is expected to stabilize in the 3.20% range, excluding Fed, any Fed moves prior to year-end.

到 2023 年下個季度結束時，HTLF 預計貸款將增加 1.5 億至 2 億美元，主要由客戶存款增加 1.25 億至 1.75 億美元提供資金。此外，我們預計額外 1 億美元的季節性農業信貸額度提取將在 2024 年第一季償還。實現這些貸款和存款成長預期可以利用大部分投資現金流來減少批發貸款。存款和短期借款。排除聯準會以及聯準會在年底前採取的任何行動，按稅等值計算的淨利差預計將穩定在 3.20% 的範圍內。

Provision for credit losses is projected to remain in the $3 million to $5 million range. This assumes relatively stable credit performance and a manageable level of economic contraction over the next 12 months. Core noninterest income, excluding investment gains or losses, is expected to be flat at $28 million to $29 million. We expect a reduction in consumer NSF and OD fees as we institute new policies across our now single-charter customer base. And we see a continued decline in mortgage-related revenue. Both of these will be offset by higher capital markets fees. Recurring operating expenses are expected to be $109 million to $110 million. This excludes any new FDIC assessments that may be levied next quarter.

信貸損失撥備預計將保持在 300 萬至 500 萬美元的範圍內。這是假設未來 12 個月信貸表現相對穩定且經濟收縮處於可控水準。核心非利息收入（不含投資收益或損失）預計將持平於 2,800 萬美元至 2,900 萬美元。隨著我們針對目前的單一包機客戶群制定新政策，我們預期消費者 NSF 和 OD 費用將會減少。我們看到抵押貸款相關收入持續下降。這兩者都將被更高的資本市場費用所抵消。經常性營運費用預計為 1.09 億至 1.1 億美元。這不包括下季度可能徵收的任何新的 FDIC 評估。

Charter consolidation restructuring costs are forecasted to be $2 million to $3 million next quarter, which includes both the final consolidation implementation expenses as well as expenses to complete several span of control improvements next quarter as we achieve the remaining benefits of the charter consolidation project. We also expect to have some additional restructuring costs and real estate write-downs that will be booked over the next couple of quarters as we began to execute the next phase of facilities optimization, and other HTLF 3.0 initiatives. We will have more details to share next quarter regarding our views of the 2024 performance, including the impact of these new HTLF 3.0 initiatives.

下季包機合併重組成本預計為 200 萬至 300 萬美元，其中包括最終合併實施費用以及下個季度完成多項控制改進的費用，因為我們實現了包機合併專案的剩餘收益。我們也預計，隨著我們開始執行下一階段的設施優化和其他 HTLF 3.0 計劃，未來幾季將計入一些額外的重組成本和房地產減記。我們將在下個季度分享更多關於我們對 2024 年業績的看法的細節，包括這些新的 HTLF 3.0 舉措的影響。

And finally, we believe a tax rate of 23%, excluding tax credits, is a reasonable run rate. And with that, I'll turn the call back over to Bruce for questions.

最後，我們認為 23% 的稅率（不包括稅收抵免）是一個合理的稅率。然後，我會將電話轉回布魯斯詢問問題。

Thanks, Bryan. Latif, we could open up the line for questions.

謝謝，布萊恩。拉蒂夫，我們可以開通提問專線。

(Operator Instructions) Our first question comes from the line of Andrew Liesch of Piper Sandler.

（操作員說明）我們的第一個問題來自 Piper Sandler 的 Andrew Liesch。

Just on the margin guide of around 3.20%. It is just a bit up from 3.18%, so do you think it can even rise beyond that, irrespective of what the Fed does?

保證金指導值僅在 3.20% 左右。它只比 3.18% 稍高一點，所以你認為無論聯準會做什麼，它甚至可能會超過這個數字嗎？

I'm always cautious to go too far on the margin. But the reason we think it's going to go up from where we were is last quarter, right at the end, is when we saw the pay-down of the wholesale borrowings and funding and deposits. So that should carry over and come down a little bit this quarter as we hopefully get the deposit growth that we're looking for. And we also saw a slowing in the mix shift that was going from noninterest-bearing to interest-bearing accounts.

我總是小心翼翼地避免走得太遠。但我們認為它會比上個季度末的水平上升的原因是我們看到批發借款、融資和存款的償還。因此，這應該會在本季度繼續下去並略有下降，因為我們希望獲得我們所尋求的存款成長。我們也看到從無息帳戶轉變為有息帳戶的組合正在放緩。

So as those 2 things waned at the end of the third quarter and going into the fourth quarter, we think we can see the margin go up a tick or 2. Beyond that, there are so many variables in there, Andrew. I hate to go too far and get ahead of ourselves.

因此，隨著這兩件事在第三季末和進入第四季度時減弱，我們認為我們可以看到利潤率上升一到兩個刻度。除此之外，還有很多變量，安德魯。我討厭走太遠，超越自己。

Got it. So I mean, at this point, do you think another 25 basis points would matter that much?

知道了。所以我的意思是，在這一點上，您認為另外 25 個基點有那麼重要嗎？

Not at the current betas that are out there on the deposit side. If we got back to normal betas, which for us are about a 30 beta, this quarter, for example, our betas were over 100% because of the catch-up and everything. So if we get back to normal betas, there would be a little bit from a Fed move, but not a lot at this point. We're kind of tapping out on the benefit.

目前存款方面的測試版並非如此。如果我們回到正常的貝塔值（對我們來說大約是 30 個貝塔值），例如本季度，由於追趕和其他原因，我們的貝塔值超過 100%。因此，如果我們回到正常的貝塔值，聯準會的舉措將會有一點影響，但目前不會太多。我們正在利用這種好處。

Got it. Got it. Just on your commentary on the tax rate, like 23%, this quarter is closer to 22%. So it was a 1% benefit to the tax rate from that tax credit amortization that you mentioned earlier in operating expenses.

知道了。知道了。就你對稅率的評論而言，例如 23%，本季接近 22%。因此，您之前在營運費用中提到的稅收抵免攤銷對稅率有 1% 的好處。

Yes. For this quarter, yes. For this last past quarter, yes.

是的。對於本季來說，是的。在過去的最後一個季度，是的。

Got you. I will factor that into my modeling. All right.

明白你了。我會將其納入我的建模中。好的。

Our next question comes the line of Damon DelMonte of KBW.

我們的下一個問題來自 KBW 的 Damon DelMonte。

Just wanted to ask a little bit on the credit front. Nice to see NPLs not really move at all -- sorry, NPA has not really moved at all. It looks like within there, you had NPLs coming down and a little bit of a tick up here in OREO. Is that just a loan that moved into OREO status? Or were there some other moving parts there?

只是想問一些關於信用方面的問題。很高興看到不良貸款根本沒有真正改變——抱歉，不良貸款根本沒有真正改變。看起來在那裡，不良貸款有所下降，奧利奧則略有上升。這只是轉入奧利奧狀態的貸款嗎？或是那裡還有其他活動部件嗎？

Damon, this is Nathan Jones. That's a credit that we had in our non-pass, the multifamily credit. We felt after looking at it, there was some disagreement between sponsors. It was the best move quickly on this one and just drive a fast conclusion for the best overall resolution. That's what we did. But we don't think it's systemic or any other issues that go with that.

達蒙，這是內森瓊斯。這是我們在非通行證中擁有的信用，也就是多戶家庭信用。我們看了之後覺得贊助商之間有些分歧。這是這方面最好的快速行動，只是為了獲得最佳的整體解決方案而快速得出結論。這就是我們所做的。但我們不認為這是系統性的或與之相關的任何其他問題。

Got it. Okay. That's good. And then with regards to the outlook for loan growth, you guys seem to be continuing to fire on all cylinders here. What areas of your footprint are you seeing like the best opportunities? Has that changed at all in the last couple of quarters? Or is it still kind of the Western side of the footprint?

知道了。好的。那挺好的。然後，關於貸款成長的前景，你們似乎繼續全力以赴。您認為您足跡中的哪些領域是最佳機會？在過去的幾個季度裡，這種情況有什麼變化嗎？還是它仍然是足跡的西側？

Damon, this is Bruce. It's still really the Mountain West to the West and the Southwest. It's a little lighter in the Midwest right now, but I would call it steady. It's all of the calling efforts that we've been putting in actually for probably the last 24 months are really starting to pay dividends. And because we are open for business, we've been recruiting, we've been calling on new customer. And that's really helped when some of the banks in some of the markets that we operate in, they've been sputtering a little bit, trying to decide whether they're going to be in business or not.

達蒙，這是布魯斯。它實際上仍然是西邊和西南部的西山。現在中西部的天氣有點亮，但我認為天氣穩定。我們在過去 24 個月所做的所有努力實際上已經開始產生回報。因為我們開門營業，所以我們一直在招募新客戶。當我們經營的一些市場中的一些銀行一直在猶豫不決，試圖決定是否要開展業務時，這確實很有幫助。

Our next question comes from the line of Terry McEvoy of Stephens Inc.

我們的下一個問題來自 Stephens Inc. 的 Terry McEvoy。

Good afternoon, everybody. So with the charter consolidation complete, can you just remind me, of the $20 million of savings, how much of that do you think falls to the bottom line, let's say, in 2024, versus how much of that is -- will be reinvested into growth? And really, how could that -- or how does that play into the HTLF 3.0 in terms of accelerating organic growth across the bank?

大家下午好。因此，隨著包機整合的完成，您能否提醒我一下，2000 萬美元的節省，您認為其中有多少會落入底線（假設在 2024 年），而其中有多少將用於再投資進入成長？事實上，這怎麼可能——或者說這如何在 HTLF 3.0 中發揮作用，加速整個銀行的有機成長？

I think we'll double team this one. I'll take the first part. In terms of what has fallen to the bottom line, there's -- we have a slide in our deck. I think it's -- let me just find that real quick. I think it's Slide 10, where we show what our core operating expenses to assets has done over time. And so we started this back in 2021. We were running at about 2.22% of cost to assets. We're now down, this quarter down to 2.08%.

我想我們會雙人組隊。我將採取第一部分。就已落入底線的內容而言，我們的甲板上有一張幻燈片。我認為——讓我盡快找到這一點。我認為這是投影片 10，我們在其中展示了我們的核心資產營運支出隨時間的變化。因此，我們早在 2021 年就開始了這項工作。我們的營運成本約為資產成本的 2.22%。我們現在有所下降，本季下降至 2.08%。

If you do the math on about -- we've been about $20 billion that whole time, give or take. That's about $28 million of run rate reduction in our expenses. So the $20 million is in there. We do have a little bit, so it's more than that. There are some other things in there, but I think we've gotten the $20 million. Plus, I think we'll get just a little bit more here as we do the span of control changes here in the fourth quarter. So that's what we've got steaming into next year. However, I'll let Bruce talk about what we're planning to reinvest and a little bit more about 3.0.

如果你算一下——我們一直以來的支出約為 200 億美元，無論給予或接受。這相當於我們的開支減少了約 2800 萬美元。所以2000萬美元就在那裡。我們確實有一點，所以還不止於此。還有一些其他的東西，但我想我們已經拿到了 2000 萬美元。另外，我認為當我們在第四季度進行控制權變更時，我們會得到更多的資訊。這就是我們明年要做的事。不過，我會讓 Bruce 談談我們計劃再投資的內容以及更多有關 3.0 的內容。

Yes. Yes. So Terry, you'll hear us talk at the end of the year and the next quarter kind of more about HTLF 3.0. But I guess the way I think about it, we're -- everything that Bryan just described is really going to fall to the bottom line. We're going to be reinvesting the span of control as well as looking at management layers, looking at our branch footprint, looking at the size of our branch locations. That's where we're really going to get the investment dollars for next year in 2024.

是的。是的。 Terry，您將在今年年底和下個季度聽到我們談論更多有關 HTLF 3.0 的內容。但我想我的想法是，布萊恩剛才描述的一切都將真正落入底線。我們將重新投資控制範圍，並審視管理層、審視我們的分支機構足跡、審視我們分支機構的規模。這才是我們真正能在 2024 年獲得明年投資的地方。

Understood. And Bryan, I appreciate all the forward-looking commentary for the fourth quarter. Specifically, the service charges, which were $18.6 million in the third quarter, how much of a decline do you expect because of the new policies that you mentioned? And I guess, what gives you confidence that the capital markets line will return?

明白了。布萊恩，我很欣賞第四季的所有前瞻性評論。具體來說，第三季的服務費為1860萬美元，您預計由於您提到的新政策，服務費會下降多少？我想，是什麼讓您對資本市場回歸充滿信心？

Yes, a couple of things. So I think it's around $600,000. We'll be implementing this in December, so NSF reduction for Q4 is about $600,000. And then as I said, mortgage banking for us has been coming down. I think it's going to continue to kind of fall off, just not seeing a lot of good activity there. The capital markets piece, I think third quarter was just soft for us. I think there are some things that we now see coming into the fourth quarter. And I think Bruce may have a couple of comments here, but I feel pretty confident we can make that up there.

是的，有幾件事。所以我認為大約是60萬美元。我們將在 12 月實施這項計劃，因此第四季度 NSF 的削減額約為 60 萬美元。然後正如我所說，我們的抵押貸款銀行業務一直在下降。我認為它會繼續下降，但看不到很多好的活動。資本市場部分，我認為第三季對我們來說只是疲軟。我認為我們現在看到第四季度會發生一些事情。我認為布魯斯可能在這裡有一些評論，但我非常有信心我們可以在那裡彌補。

Yes. So Terry, one of the things on the capital markets front, we -- we've taken a really hard look at our pipeline. And we've really spent the last probably 2 weeks, maybe even 3 weeks, out there talking to a lot of our customers, who currently have floating rate debt sort of adding value, showing them the inverted yield curve and looking at a 3-year or 4 years out they can actually reduce. By doing a swap, they can reduce their interest costs. So we've seen our pipelines really begin to grow as we've been out there talking to customers and helping them look at how to create some fixed rate debt from floating on their own balance sheets, which help them manage their own interest rate risk.

是的。所以特里，資本市場方面的一件事，我們非常認真地審視了我們的管道。在過去的 2 週甚至 3 週時間裡，我們確實與許多客戶進行了交談，他們目前擁有浮動利率債務，可以增加價值，向他們展示反向收益率曲線，並著眼於 3-一到四年後，他們實際上可以減少。透過進行互換，他們可以降低利息成本。因此，我們已經看到我們的管道真正開始成長，因為我們一直在與客戶交談並幫助他們研究如何透過自己的資產負債表上的浮動來創建一些固定利率債務，這有助於他們管理自己的利率風險。

(Operator Instructions) We have a follow-up question from the line of Andrew Liesch of Piper Sandler.

（操作員說明）我們有來自 Piper Sandler 的 Andrew Liesch 的後續問題。

Do you have handy the balance of shared national credits that you have on the balance sheet?

您是否有資產負債表上的共享國家信用餘額？

Yes. First of all, shared national credits for us is not really a focus. Our strategy is really kind of when we return new participation, when we purchase them, it's really gained the exposure with some of the companies in the markets we really want kind of a deeper relationship with and exposure in those markets. But overall, if you take all participations that we have and we purchase them where we're not the lead bank, it's actually -- it's only about 9% of our book. It's mostly C&I.

是的。首先，共享國家信用對我們來說並不是真正的焦點。我們的策略實際上是，當我們回到新的參與時，當我們購買它們時，它確實獲得了我們真正希望與這些市場中的一些公司建立更深的關係和曝光度的曝光度。但總的來說，如果你考慮我們所有的參與，並且我們在我們不是牽頭銀行的地方購買它們，那麼實際上，它只占我們帳簿的 9% 左右。主要是 C&I。

And really, we've maintained the discipline. We maintained it in the rest of our portfolio there, very disciplined, both geographic diversification as well as industry diversification. I think our largest concentration has been manufacturing. So we feel good about that book and where we're at. Bruce, anything you'd like to add?

事實上，我們一直保持著紀律。我們將其保留在我們的其他投資組合中，非常嚴格，無論是地理多元化還是行業多元化。我認為我們最大的關注點是製造業。所以我們對這本書和我們所處的位置感覺很好。布魯斯，你還有什麼要補充的嗎？

Yes. We've -- Andrew, we've really viewed this as not an asset play here, but it's a relationship play in all of our transactions. Whether we're a buyer or a seller, we have a noncredit relationships. And I think -- and correct me if I'm wrong, Nathan, but I think that we have purchased about 9%, but we've also sold about 4.5% or 5%.

是的。我們——安德魯，我們確實認為這不是這裡的資產遊戲，而是我們所有交易中的關係遊戲。無論我們是買家還是賣家，我們都是非信用關係。我認為——如果我錯了，請糾正我，內森，但我認為我們已經購買了大約 9%，但我們也出售了大約 4.5% 或 5%。

It's about 5%.

大約是5%。

Yes. So it's about a net of the total book. It's a net of about 4% to 5% of our total portfolio.

是的。所以這是關於整本書的淨值。它約占我們總投資組合的 4% 至 5%。

Our next question comes from the line of Jeff Rulis of D.A. Davidson.

我們的下一個問題來自 D.A. 的 Jeff Rulis。戴維森。

Just a question on the -- as you've wind down the charter consolidation, more specific to the -- maybe the folks that were really assigned to that process. I just wanted to see if there's a rotation or there's a reassignment of those. And maybe that comes as part of 3.0. Or just want to get the sense for if there was a head count that was sort of assigned to oversee that. And do they pivot? And are there any expected positive impact as they kind of relook at other projects?

只是一個問題——當你逐漸結束章程整合時，更具體地說——也許是真正被分配到該流程的人。我只是想看看是否有輪換或重新分配。也許這會成為 3.0 的一部分。或只是想了解是否有人員被分配來監督這種情況。他們會轉向嗎？當他們重新審視其他項目時，是否會產生任何預期的正面影響？

Yes. So if you think about -- I guess, I'll answer it this way. We had very few 100% dedicated folks to the project that were on our payroll. And so within those restructuring charges were very little salaries for folks. So our internal people will get reassigned to the projects and other things that we're looking at for 3.0. And again, they were doing their day job as well as doing the consolidation. We thought we might have to do more, but the consolidations, quite frankly, went very smooth.

是的。所以如果你想一想，我想我會這樣回答。我們的薪資單上很少有 100% 致力於該專案的人員。因此，在這些重組費用中，員工的薪水很少。因此，我們的內部人員將被重新分配到我們正在考慮的 3.0 項目和其他事情上。再說一遍，他們一邊做日常工作，一邊整合。我們認為我們可能需要做更多的事情，但坦白說，整合進行得非常順利。

And congratulations to all the folks at HTLF because I think they did a great job of getting the projects done and doing their day jobs and all the other things that we needed to do. So it was very good. Most of that cost that we use people for was external consultants that came in and helped us.

恭喜 HTLF 的所有人，因為我認為他們在完成專案、完成日常工作以及我們需要做的所有其他事情方面做得很好。所以這非常好。我們使用人員的大部分成本都是外部顧問的介入並幫助我們。

Okay. That's helpful. And just to circle back, maybe for Nathan, on the nonperforming loans. Some reductions there, but it looked like there was even a bounce that kind of came in that's new on net down. But just in general credit comments, it doesn't sound like you're too concerned about systemic changes. But maybe if you could touch on what was added and areas that kind of you're looking at that are softening at all.

好的。這很有幫助。也許對內森來說，我們可以回顧一下不良貸款。有一些減少，但看起來甚至出現了某種反彈，這是淨值下降的新情況。但就一般信用評論而言，聽起來您並不太關心系統性變化。但也許你能談談添加的內容以及你正在考慮的那些正在軟化的領域。

Yes. Our nonperforming was down about $11.6 million, but there was a slight increase. That's really an ag credit, and the majority of that is actually USDA guarantee. So we don't have large concerns there about the increase. We continue to monitor it. We're watching the economy as well. We follow up with different economies across trying to understand and talking to my peers where we're seeing weak spots. We just don't basically see anything at this point that's systemic to be concerned about. We continue to monitor it very diligently, though.

是的。我們的不良貸款減少了約 1160 萬美元，但略有增加。這實際上是農業信貸，其中大部分實際上是美國農業部的擔保。因此，我們對成長沒有太大擔憂。我們將持續關注。我們也在關注經濟。我們追蹤不同的經濟體，試圖了解我們發現的弱點，並與同行進行交談。目前我們基本上看不到任何值得關注的系統性問題。不過，我們將繼續非常努力地監控它。

And I think, Jeff, if you're referring to the table that we have in the back, where we show the ins and outs of nonperformers, the $11 million item that ended up in OREO, that went through. So it grossed up the in and the out of nonperformers. It was in performing loans at the end of last quarter, became a problem, we jumped on it right away. So in our tables, we kind of flow that as a plus and a minus through NPLs to get to our yield.

我想，傑夫，如果你指的是我們後面的表格，我們在其中顯示了表現不佳者的來龍去脈，最終在奧利奧中完成的價值 1100 萬美元的項目，就通過了。因此，它匯總了表現不佳者的進出情況。上季末在履行貸款時，出現了問題，我們立即採取了行動。因此，在我們的表格中，我們透過不良貸款將其作為加號和減號進行流動，以得出我們的收益率。

Okay. So in the new, maybe it kind of shows new nonperformers, but it was like a temporary new because it came in and then went out. Got it.

好的。因此，在新的情況下，也許它顯示了新的表現不佳的人，但它就像一個臨時的新人，因為它進來了，然後又消失了。知道了。

It took the new in the reduction both down by $11 million. Then I think you'd see what really was the net other ins and outs of the nonperformers.

新的削減額均減少了 1,100 萬美元。然後我想你會看到表現不佳者的其他真實情況。

Okay. And Bruce, it sounds like we'll kind of give you some time on the 3.0, but you did touch on geographies. And kind of taking a look at it, what would be the metrics or the demographics? And not to oversimplify it, but where do you -- I mean, I think the answer is efficiency. But anything that you'd lead us into before we get that reveal of kind of geographies that makes sense, some that don't, in that discussion?

好的。 Bruce，聽起來我們會給你一些時間來討論 3.0，但你確實談到了地理。看看它的指標或人口統計數據是什麼？不要過於簡化，但你在哪裡——我的意思是，我認為答案是效率。但是，在我們揭示有意義的地理分佈之前，您會引導我們進行哪些討論？

Yes. So we'll get in a lot more detail the next time we all talk. But look, when you look at our footprint, it's clear that we don't have scale in a fair amount of our markets. And our long-term goal is both efficiency and growth potential for us. And so we are looking very heavily not only at the branch network, but the actual geography, to make decisions on whether we should expand or we should contract those geographies.

是的。因此，下次我們談話時我們將討論更多細節。但是，當你看看我們的足跡時，很明顯我們在相當多的市場中沒有規模。我們的長期目標是效率和成長潛力。因此，我們不僅密切關注分支機構網絡，而且還關注實際地理位置，以決定是否應該擴展或收縮這些地理位置。

Okay. We look forward to the updates.

好的。我們期待更新。

I would say the keys for us, it's all about EPS. It's all about expense control and what does it do to our TCE. I mean those are sort of the 3 things that are always in the forefront of our minds as we're making decisions about geographies, the branch play that we've been talking about as well as span of control and layers of management.

我想說，對我們來說，關鍵是每股盈餘。這一切都與費用控制以及它對我們的 TCE 有何影響有關。我的意思是，當我們做出關於地理位置、我們一直在談論的分支遊戲以及控制範圍和管理層級的決策時，這些是我們始終首先考慮的三件事。

Now that we have the charter consolidation done, we can actually execute some of these things. But we had to get the consolidations done so that we could then move to the next phase.

現在我們已經完成了章程整合，我們可以實際執行其中一些事情。但我們必須完成整合，然後才能進入下一階段。

As there are no further questions at this time, I would like to turn the call back over to Mr. Lee for closing comments.

由於目前沒有其他問題，我想將電話轉回李先生以徵求結束意見。

Thank you, Latif. In closing, HTLF had a solid third quarter. We continue to add relationships, grow customer deposits, grow quality loans, maintain stable credit quality and drive efficiency. While we remain focused on continuing to achieve organic growth, we're also focused on reducing expenses, increasing EPS and growing TCE over the next few quarters.

謝謝你，拉蒂夫。最後，HTLF 第三季業績表現穩健。我們不斷增加關係、增加客戶存款、增加優質貸款、維持穩定的信貸品質並提高效率。雖然我們仍然專注於繼續實現有機成長，但我們也專注於在未來幾季減少開支、增加每股盈餘和增加 TCE。

We continue to evaluate our balance sheet and capital structure to maximize efficiency and flexibility. And we're analyzing our expense structure, including geographies, branch footprint, management layers and span of control. We'll provide more guidance in the fourth quarter. Thank you for joining us tonight. Our next quarterly earnings call will be in late January. Have a good evening, everyone.

我們繼續評估我們的資產負債表和資本結構，以最大限度地提高效率和靈活性。我們正在分析我們的費用結構，包括地理位置、分公司覆蓋範圍、管理層和控制範圍。我們將在第四季度提供更多指導。感謝您今晚加入我們。我們的下一個季度財報電話會議將於一月下旬舉行。祝大家晚上好。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。