Jared Shaw: Maybe — hey, looking at the, going back to the expenses, do you feel that, now that you’re going to be approaching, you’re going to be bigger at $67 billion, are there other investments that you’ll need to make to offset some of those expenses just to handle the larger balance sheet?
Mariner Kemper: Hey. Jared, it’s Mariner. Basically, for all on the line, that basically translates into what the regulators call heightened standards. So that’s the $50 billion threshold. What I would tell you is that we were well on our way. We’re sitting at $45 billion. And so we had hired a year ago, PwC, for a GAAP analysis that came back clean. We know what we need to do. We’re well prepared, all pretty well along the way to do that anyway, even before and independent of doing this transaction. So very comfortable with where we stand from that standpoint. There will be some investment we need to make along the way, but it’s identified and easy to do. Regulators have been supportive of the process that we’ve been going through and we’re very comfortable and excited about crossing that $50 billion threshold.
Ram Shankar: And as we did the bottoms-up analysis, Jared, that was part of our consideration as included in our analysis as well.
Mariner Kemper: Yeah. We end up taking, Heartland has a lot of great people, actually, to lean on as we cross that threshold.
Jared Shaw: Okay. Okay. Great. So that growth rate is or that investment is sort of reflected in the growth rate and keeping that growth rate probably pro forma?
Mariner Kemper: Yeah. For sure.
Ram Shankar: Yeah.
Jared Shaw: Okay. And then on capital, you mentioned, getting back to CET1 at 11% in 18 months. Is that how we should think about sort of your target of where you would like CET1 to be or has that been a little bit elevated because you were hoping to be able to deploy in a deal like this? I’m just thinking, you know, trying to match the forward settlement contract with the buyback and post-close?
Mariner Kemper: Yeah. So, we don’t do guidance on that. I would say that that’s where we are now, right? And so, and where we expect to be at close, then therefore that’s, we’re comfortable there, right? And I think just generally speaking, a bit of a higher level capital is expected in the operating environment that we’re all in now. So, no specific guidance on that. And if we were a little below that or a little above that nuance from one quarter to the next or something, it doesn’t drive anything one way or the other. But, yeah, definitely, we’re certainly comfortable in that range and I think it’s prudent to carry a little bit higher level capital in the industry these days.
Jared Shaw: Yeah. Okay. And then there’s finally for me, maybe a more of a boring earnings question versus an exciting deal question. But when we look at the DDA trends, strong two quarters there, you talked about seasonality. It’s been a little while since we’ve seen, I think, a normal second quarter seasonality. What’s the potential impact on that? And then, apart from the seasonality, do we think that DDAs have found their floor and now we’re in a normal growth environment?
Ram Shankar: Our guidance for margin for the next quarter was a handful of basis points, downward pressure, just from a makeshift. So we’ve talked for a long about a healthy institutional deposit pipeline. So we’re expecting those to come sometime in the second quarter, coupled with what might happen with seasonality on the DDA side. So that’s baked into our margin guidance that we said for about a few basis points. Whether it’s bottomed out DDA, I mean, we’re at 30%. The rest of the deposits, the interest bearing deposit base, as you saw this quarter, is growing pretty rapidly. So just as a result of that math, we might see DDA as a percentage come down. But the hope is, our DDAs are in somewhere between $9.5 million and $10 billion.
Mariner Kemper: Yeah. We don’t expect too much more rotation if you take the seasonality out. So we’re likely at the bottom on rotation based on the interest rate environment. And I think, Ram was just saying, with the growth and everything else on a percentage basis, it may come down slightly.
Ram Shankar: Yeah.
Jared Shaw: Thanks.
Mariner Kemper: Thank you.
Operator: The next question comes from the line of Terry McEvoy of Stephens, Inc. Your line is now open. Please go ahead.
Terry McEvoy: Hi. Thanks for taking my questions. I was wondering if you could just talk about the diligence on HTLF’s franchise people infrastructure. They’ve gone through a lot over the last couple of years in terms of kind of an upset shareholder base, collapsing the charters, et cetera. So what type of disruption do you expect? How do you minimize that disruption, particularly on the consumer banking side, which you’ve talked about the value there a few times on the call?
Mariner Kemper: Yeah. Thanks for that question. Yeah. Obviously, you’re referring to some public disclosures around some issues the Board had a couple of years ago. It’s well behind them. As I said, we’ve gotten to know this company over time and very comfortable that they’ve settled those issues and they’re behind them. As far as the due diligence process and the charter collapse, exciting. We see all that really what they’ve been going through the last couple of years as great opportunity. They’ve been, as I would describe, plowing the field and planting the seeds and we basically get to harvest. So they have done a lot of heavy lifting and that’s great for us, collapsing the charter, centralizing activities. So they’ve done a lot of really great work to really kind of mimic the kind of company we are and allow us really to harvest all that awesome work.
Terry McEvoy: Thanks for that. And then just as a follow up, what are your thoughts on maintaining and growing that Food and Ag business lending portfolio, which is, I think about a $1 billion today. Is that a business you’d like to continue to grow?
Mariner Kemper: Yeah. We absolutely love that. It’s one of the things we really like about the transaction. We’re actually the 24th largest agricultural lender in the country ourselves. They picked up Robbo’s team and Robbo has a really great reputation in the business. So they have a great team of people in California and the average size is pretty small and the diligence is great on that book. And we’re really excited to leverage their team and our team combined and just keep rocking and rolling with our ag business unit.
