Pinnacle Financial Partners (PNFP) 17 Jan 182017 Q4 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners Fourth Quarter 2017 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Mr. Harold Carpenter, Chief Financial Officer. Please note, Pinnacle’s earnings release and this morning’s presentation are available on the Investor Relations page of their website at www.pnfp.com. recorded for be the being on for is website Pinnacle’s next call and available will replay Today’s XX days. all time, listen-only this participants placed been At in mode. have a the be your opened The floor questions will following presentation. for [Operator or guidance Instructions] provide forecasts. Before does begin, not we earnings Pinnacle

forward-looking of cautioned undue differ and Pinnacle future is results, presentation, All to other beyond to this put Pinnacle risks from otherwise. may update presentation, the whether may control actual are most forward-looking contained facts to or expressed by new statements forward-looking we reliance to achievements in listeners or Financial a or subject any or Pinnacle this Financial’s statements. Pinnacle Many such of any comments, in which that are Annual During disclaims not or XX-K. constitute and detailed any information, results Form these forward-looking risks revise Report events predict on performance forward-looking ability of result Financial’s other such are and to may description obligation recent of materially make statements. Financial statements and uncertainties on implied A factors such as more cause statements. contained

the www.pnfp.com. website President presentation non-GAAP comparable measures that, In made over the the G. of defined Financial’s A Pinnacle’s Terry on measures to now at Mr. Turner, and With be going GAAP addition, most financial financial measures presentation turn directly to will I’m Pinnacle include these CEO. to the available non-GAAP remarks by may reconciliation certain and of as measures SEC Regulation comparable GAAP

this from dashboard, quarterly call on We icy Good the snowy slides. operator. morning. this you always you, We begin call with two with being us morning Thank our really earnings Nashville. appreciate

reflecting and the We’ve believed to well and three PE that We that growth, really metrics the that our The business. and grow earnings all trade growth most focus non-GAAP the this the on tightly because quality it second analyzes and well grow are always momentum performance, typically the drive metrics we and medium first consistently like use performance quickly their asset so-forth. dashboard measures. virtually Companies GAAP value measures reflecting share that the correlated of share ROTCEs median book above above typically tangible multiples so that’s price price, companies produce with slide. revenue

revenue in our shred think I business, really we’re is forward. so, XX% growth And the balance roughly growth case the key sheet going to

to growth, see what sheet. asset on growth the look you ability future and So, revenue to growth growth the pace earnings based of at the and got and on balance some quality going is

deferred As $XX.X merger-related firm’s most charges immediately assets you our $X.X million, to million, pretax and was the loss related million. revaluation pretax this by of know, impacted security of $XX.X charges quarter of after-tax of of tax

measures, so So, provide into the the at as integration, me account these the quickly. into let tax say that actually merger realities each rates non-GAAP I least takes important transition, and move on quarter run those for given law these measures greater all the the changes core to insight me of now

each direction, adjusting book. restructuring the our metric. point Looking the of in deferred to floats want expenses, right roughly out loss million for at do won't those measures, tax I associated [indiscernible] walk assets non-GAAP two. I of the bond and with revaluation the in nicely $XXX our merger-related Since through

is, ROTCE row. on one first The first the

growth to proceeds. We X.X you most the the will million I million the shares acquisition BNC issued firm. net totaling future of with needs $XXX in January support think conjunction in of recall XXXX, and in

to QX to it impact back you a in is now quickly a can those had fourth additional impact in escalating we see as already shares quarter QX, XX.XX So, quarter ROTCE. partial and

tangible and the share value as it chart, this seriously below have book is take you book conjunction XXXX. call, prices tangible Those as just of and followed We published commented the I again correlation obvious. chart, have continued ROTCE targets. of on can between with already profit are Secondly, current in recession [indiscernible] those coming length acquisition out grow to obviously back time and performance see We our our it we nicely. model associated have in our

we over I think initial that targets. the the years have achieved

the current about actually We to the the we continue to then margin, specifically overall assets, and of its level charge-offs. the assets In target of conjunction to have that our to key four level the twice, for to to publish fees the net talking I’m the since that targets profitability with increased X.X%. ROAA X.X% components lead ROA and target, expenses

component you targets. the see well return against those the performing merger-related result tax measures our as good reflects this the assets, of Those the at revaluation And was quarter I quarter might change. non-GAAP non-GAAP on law for expenses the gains can fees tax with the exception pretty slide, X.XX%, all both of the fourth losses deferred for and quarter, measurements in which and the fourth a GAAP assets on to and are on XXXX another sales are and so, range the average with to measures. measures in quickly the security invested non-GAAP adjusted assets of on just each target as of comment a

that we most out a but we through particularly as to associated on to quarter. XXXX target C&I the X.X, the revenue belief plan a know, year's my changes didn’t target to for to of leverage focus mix expenses BNC range to fees X.X% this X.X result you range did It and the remainder alter for the business at to the range the planning of X.XX. X.X three-year range our management been acquisition down platform conducted overall of potential third there. strategic remained down to adjust margin with to the we ROAA, businesses the strong range process a level, in it each our is year a we and up strong, footprint to XXXX be year, XXX XXX, BNC X.X% to of and the has have build As plan we assets and as wealth of the This assets continues a of very to it in

three that As asset I take the it target before, of I’d intend high-end footprint. in range have generation indicated expect, range may enable lead to other components still the to built muscle the we a BNC Nevertheless, the operate on X-day capability ROAA we the we’re of build likely target to in to take the until to that we advantage into outperformance before fees quarter for component.

just Additionally, recalibrate the here, targets XXXX further in will and expecting now back range. huge in-light go meaningful target lift we a was of quarter quarter I firm. act, the might the Tax ROAA history in our fourth comment the of Job

deposit, growth growth did middle loan We earnings, integration. hiring, the and and balance sheet that in in all in the both rapid continued the we of completing BNC

have case trades at believe that worked fourth through all aren’t completed during Perhaps to early out with tireless systems done. done, and timeline in synergy that now we’re converted with we beginning. payroll of on work the are quarter the are get transaction that stabilized first generally fundamentally associates laid those still charges the depart indicated. but quarter few Our that as the a all the kinds market are has the will that a things. the related the systems really well, all We had They really originally that the we consistent producing in been quarter, There few the first now XXXX. having

is think aggressive try our the thing calls hiring to always these plan. I second on in I hit

and that merger. are and and people hiring that in those we revenue That’s of operating really a since get You hired, that’s of XX assets our targets all will going the revenue of the added strong growth to inside say XX a needed those we forward. was see of I expenses quarter the can support our so for drive understand In and closing we the Again, staff people would markets third loan help The think deposit producers a that about slide. forth, XX on XXXX, addition and roster, the producers I this of BNC in and good. efficiencies in revenue both highlight particular how talk me and past. thing in the quarter. where to heard that growth deposit the most you where done loan our They support was growth - think those and XX important I growth to deposit the to

the to grow and ability succeed the deposits deposits is ability core bank core principle measure community is to any over time. the to its grow indiscernible abilities for think, I

ever with the and undertaken, middle most as rearview sheet growth at those operation in we that produce that rates think we the conversion into have to taking XXXX balance bodes so, of really in now system move monumental on well And the I the mirror. growth

one again you more for I just the go set think I clarification want to to try as stage forward. we and make

I intend this if to about the we hiring just trust originator, so and Over I up. administrators, do I include trying and think have and better I the not always asset mortgage of going targets those producers, the is of most manager grab points, high But detect course know broker, revenue I as relationship some revenue I to you we think and revenue years, people and producers company, really to the to levels of our make said, down is done that growth forth, think in skepticism I guess talked so the set. revenues ourselves companies a get to too people we’re I when distinctions, manage ability just we that that - the trying that revenue and expense are to consequently do inside key expenses manage that’s growth. a concern know approach, draw maybe trying our so the to or want a to reiterate expense to now hire so lot bill I Again,

X.XX% the can hired ratio XX and finished see a asset ratios. of revenue efficiency to you in producers and roughly XX%, year XXXX, As with experience non-GAAP

again, for begin other it to to would clarification that the growth there really we long bill. we view to definitely again, enjoyed progress our even of expect has on you on all see private Carolina that point, growth to there that about banking on report initiative. of of to North a be can talked of the that we that a don’t period so C&I strategic will the the clarify so we the achieve business, that’s continuing they just continue or with producers that practice, though and that the adding intend add this a really but revenue expense footprint to we revenue commercial in adding to substantial exponential in time that do estate bill category One we So revenue to communicated within a have in trying producers real And have XX people C&I view because no advisors importance five-year doubt past, over time. financial the the rates is that

overview Harold, I’ll let stop take with So, and further there you details.

Terry. spread fourth quarter. $X.X increase. million offset third the losses almost during million from Thanks increased $XXX the the decreased Discount securities Revenues the for the quarter increased and $XXX quarter fourth million to thus third accretion in in overall the billion spread between excluding Total income $X.X quarters. quarter

As always, We continue securities green $X.XX line our QX revenue over Obviously, increase excluding reporting is goal denotes again share. the the revenue adjusted revenue $X.XX in per time. chart investment reported dark share this to and quarter, per our losses. are per share in

grow it know, a as a all we to at share we that have XXXX. earnings think As is we great balance a and growing doing per lot easier sheet shot you with enter

will lessen purchase gradually accounting time, purchase many As you impacted accounting of of but over be an know, to period should extended time. for as

in third loans of fourth expected in the revenues to our positive We outsider’s million significant an produces growth, the quarter, balance least posted important loan future. two were ongoing that loan of rate in of $XX growth discount in the is fourth in $XXX growth we $XX.X Concerning quarter annualized an million believe organic or to anticipate have XX or is of billion continue to to We realize it the far billion, the of a loans in fourth the approximately traction saw our go approximately in $XX average fourth balances produce for have for amortize was million million increased quarter. combined $XXX We in $XXX in in as That billion of discount the Thus firm, increase North three merger an loan to XXXX. amount average the at which end the and and the the where than strong Tennessee said, net particularly franchise. XX%. loan $XXX Carolinas over of indicate quarter, to loans Bank into forward their chart at This XXXX XXXX. accretion prior better $XX in produced growth, we million the third years. pressing $XX.X million loan our us sheet excess excites million the next had obviously Virginia, including quarter compared which the recognized of the growth Carolina million and in firms the accretion quarter quarter, a million to organic two of net loan XXXX, $X.X compared $XX grow we to with in first

last core excluding in mid-December slightly at drive X core X.XX% core the quarter loan increase chart quarter. rate points increase indicates, points. accounting, X.XX% in slightly rate decreased to loan our anticipate the basis basis third our flat of loan should help quarter first basically of to XX we compared in the yields and to funds The did Fed the to fourth be to XXXX As a this that compared yield impact the X.XX purchase X.XX% were yields quarter, quarter

we As funding low were here to deposits, quarter maintaining in costs. the again base, funding to our fourth grow the while able

increase points basis fourth in fourth aggregate funding did basis for quarter the stands cost and at quarter X the currently from Our quarter. third points XX the

points. were the the X-basis X a basis increase, of cost to deposit wholesale drop while As up funding point did lot increase,

costs most to significant As deposit two pipeline. need to and loan for increased will from a rate future, several increase environment, deposit fund measured for factors. prominent pace are continue at general The pressure we a a rising also the rates

value serve Funding relationship has with Our of far competitors. consumer out focus a ability think is and our superior equation remain firm. our affluent in our managers market were we the our commercial key and selling will to to a growth depositors

increased are compared in $XX to third noninterest amounted endpoint We quarter elated million to now to the with in deposits fees the million for endpoint. Switching core $XXX $XX income, quarter. million, to

quarter, X.XX%. with group in of sales mortgage had terms quarter outstanding another this and in $XXX loan of yield residential million approximately Our a production spread

at occurs the always for the quarter residential originators in to great those as mortgage However, quarter ramp-up the primarily in quarter down this the of fourth and fourth be the before market, funded time worst at we the but is with to their due most in XQ, December markets. the typically the mortgage the estate the difficult mortgage contributions the in of real hand seasonality was the from This spring year incurs markets We best expect occurs are pipeline. is in spring.

about residential optimistic XXXX. what remain mortgage we do will So, in

XXXX. almost here $XX.X sales As a of quarter expected, group fourth we are the quarter revenues banker reporting of million million $X.X or in this from XX%

Year-over-year in increased the our number XX.X%. We XX% the on We capital primarily continue a see during the decrease should of to reduction in market of due other investment anticipate equity and losses a non-interest in venture range. did growth to stabilize be quarter, quarter XXXX in net XX% BAC fourth the fees in should the quarter. advisory XXXX. to capital investments in That first income revenues

gain XX. increases into curve. stable, remain anticipate such quarter-end We billion are in quarter. rate those in anticipate bond don’t likely, As thus approach loans the the sales during we that while More loss securities first of by investment short but sold sales market this loss We P&L fourth buying flatter in approximately quarter a million relatively yield $X.X million. or meaningful losses, continued a anticipate may at the $XXX securities from any to quarter, should X.X we rates, back March

are which we in we these increases average Thus, significant anticipation So, buying securities in anticipate events, and our to lives duration the with of of equates of floating-rate duration. securities portfolio. don’t moderate

our strategy XXXX, net [ph] that better basis should a this in positively flattening impact points. by Barbeau Our strategy yield anticipate curve. We XXX interest margin for

operating leverage. Now

merger-related was on core our ratio expense while efficiency XX.X%. GAAP efficiency was a basis charges ratio, Our XX.X%, and/or excluding

amounted total with merger to Our noninterest million net accounting $XX.X calls for million the $XX.X increase. fourth increase of expense quarter

based XXXX Carolina case and corporate Virginia of sales is goals. footprint FTEs [ph] works Virginia. a of third the from as Carolinas and costs, synergy attributable the deployed. which you XXXX, million got at personnel for quarter-end, of approximately the followed with was XXX how know not reduction X,XXX Salary Those system that in our on concerning based have $X First, to are being which and are costs story December years results, quarter many on our was we’ve down the plan signed individual

quarter, You quarter work than the third targeted will and but during at we the the levels, remember less we fourth to that reduced into those P&L got our incentives continue quarter. in were recurring in back fourth

rate incentive be Just our case hit and quickly indirectly going of spoke earnings technology incentive anticipating will don’t, If synergy A keys one increase. to get we which expense the are has and the emphasize forward is was we targets, reduced. point, synergy earnings conversion, component costs expense Terry how earlier, the of linked. run If Obviously, now complete. is case our the our to the accrual will incentive critical revenues deployed.

in our and and look additional improve got should we primarily fourth will franchise We case realized. be the fourth from XX.X% largely taxes our jobs expenses, cost XXXX, any due out believe forward in year. synergy quarter, the the about to merger in insurance a as quarter leverage FDIC quarter in the excluding operating come XX synergy we first deployed increase an to admin next to the fully As to fully XXXX. be to result, experienced left case continue for We’ve overall of

slide part behind interesting have Lots press basically The the Finally, of numbers discussed the slide last of me. the an with conversation. blue night in become was on release. investor taxes

which pursuant is deferred fully this the implemented out and of tax to we investments various use from some was of of We from considering to associates, Excluding with tax choosing act as to items our EPS reward rate match new non-deductible is in Tax was as better the shift million K have tax in considered the expenses been X.XX losses XXXX, the kind act. part and the act securities and We're the over think to pro negates a more quicker. The tax think as several loss, accelerate merger considering as method the year, increase or award number We've XXXX as items plan, to Tax savings. these act, funds our way [ph] the well the infrastructure and both the first diluted in placeholder act present are Tax have firm rates provide XX% that revaluation client about the at had the the we enhance forma investment as XXXX calculation for come firms, if that $XX.X build a tax we’re growth laws. if deployed many well would the of new that of like saved would hires. to attraction about Also, order last we impact providing year. basically

think would million XX%. as effective add holder Our $X shares increased rate pretax. of an with tax approximately of per annual is Net, approximately diluted approximately fully place $X.XX XXXX net earnings of this minute we

what relationships of expects all the reasonable. forward Looking next Cuts our XXXX, year factors between and the realize firm Act. these We both of totally pre-and-post Street the Tax Jobs to seem

I’ll Pinnacle. time is be here go, over Terry. it it a that, to we at great turn So With back to

I fully coming are that during way approved get done. this quarter comment has closed implement they work great left will a want it has synergy a just a Harold the departed of for to integration as that fully few presentation, realize, announce early here time and the the we It first now the and be mentioned, the been we through guess the thing completed synergy I down but I’d to as have to to case, jobs the BNC. case, again fundamentally over been reiterate right. made All quickly, transaction but point to

call underway is would gone extremely think through I has the it say integration, I well and well.

all have year We probably confidence will fees have I those building to that the and group target drop momentum of a leaders deliver the target establish and in have needs that them revenue be we is, sessions, were Callicutt level conducted C&I not to about, great to talked completed. integration, firm, the about out asset synergies. included but that already there XX in the specifically that and is last five-year we to hired buyout, pipeline cultural expectation calls talking largely revenue five we believe the call. the we we’ve now XX% strong. has [indiscernible] that five we again the we’ve orientation months. other or quarterly this we year-end bankers an and have done over during banker and believe commented in pace. spent that C&I will looks disclosed in synergies since some since that will by added reminder in we do roughly the Harold our XXX hiring Rick been completion Rick in earlier we team that my throughout I Again, XXXX four of in this key talked guess are how about I the already that well and period and on got time the been we with And or the merger revenue is time. conducted have have a to aspect The hiring that on now three-day towards finish of We talking several will and get that and we deal accretion XXXX and important as

and it the of now quarters, principal instructive. is building it to excited back because for the is slide, to a generation go revenue number and are producers I completed like where we again, this able our next have it our BNC used we’re So to full tactics. turn to On revenue which balance about hiring haven’t we the focus and sheet, integration

those we in tried the approach lay that and driver our to are For cultural driver and less that and components, balance extensions then to with revenue growth, sheet familiar how of hiring own market to to company. is our which be our the allow growth

was looking recent extensions So, XXXX, the can and Chattanooga, the markets. growth. again most Memphis XXXX chart which between move markets the the market we surprising right from not many revenue We column see on two at of rates bottom we’re of where see was I column, in the producers end consistent slide, rate hiring at growth you so hit XXXX growth up we say, and were have markets revenue for you the deposit can in this those general of at I the those if you substantial, those loans just how those not and at as of for the producers. the XXXX, In and base second and looking producers generate of there most the markets the entered in and deposits just in with you look again right on and the might start success the for kind bottom is core XXXX Generally, loan XXXX. both each of revenue baseline what end the a line at at you to for would the with

XXXX, in of hiring deposits, growth again very can have the year, core there and loans where XXXX, where you slide we again those deposits strong. both with see and the center markets finished moving associated right finished have the rates so with then across recent in most in and our And we that

you. I to that Chattanooga game believe footprint, we that indicate I sir which and that BNC that all would have growth we really producers parallel the thus again we exactly we to comes for on highlight try conclude sheet throughout revenue be Memphis. there, the far, with really we’ve we have shareholder financial is and as focused balance out had a just information and of guess, in the hiring translate this the just advisors into long-term revenue this as in try component will will value. we playing are C&I again, a and growth just point, draw So, clear This back we success to provided

filling integration, BNC print done would that’s through is market operate are that and be to anxious We are other kind opportunity. things, those the I to likely indicate advantage as proven. to I of that are that really on hit extensions and just high-growth growth that not down what we we to national model simply are franchises most focused that, but for regional that we focused That’s taking vulnerabilities quarter our dominate We’ve all have taking in, in as create we company do we a we demonstrate we that gone and a think we these has feel large revenue We want the to large just that a markets about of compelled deploying ability do to advantage do our once. the really now potential tried overly reviewed opportunities that for this They said, you got have have on markets. methodology targets are is recent growth think the the point, and Chattanooga shareholders do, Memphis we and the optimize feel bigger higher in footprint. of that’s and I [indiscernible] or this are about, market we to in our on when two Carolinas to Virginia. talked of and always have to compelled extraordinary hit what we and say extensions

those enter acquisition the at just we away again more - quarter think one we into he the matter prints make that I opportunities. going saying, I'm phase, is what that me sure growth but not, potential [indiscernible] but that without have no I the as before do we or another again do want that’s a will he We we don't it, end strong body walks practical of really whether year to after back not will is always care an the acquisition told make M&A

stop will there to and questions. be take we operator, So, glad

Thank James. David first from you, Mr. Turner. question [Operator Instructions] Feaster Our with comes Raymond

is now open. line Your

morning good guys. Hi,

Hi Dave.

step BNC get the much already technology getting on $XX well. it how in quantify, wanted things and left I still quarter, conversion the would can was happened that item fourth integrated all the guess follow that I estimate cost much other Congratulations of popped numbers? first is just line nature Given exciting quarter in fully in of kind one-time of late to that, quarter? run that pretty if anything the your that estimate save in actually rate? a up progressing you And how of sounds hit that. that down in is are suspect a It’s expense on, decent your in I the million there to there best there and is

is this David Harold. Yes,

footprint we what of left is jobs at wanted out there. Many December. XX jobs end there - about the think come the to over out of the I come of did

might think do personnel rate stuff and will expect that increased into legacy see expense and we think and we give quarter personnel What to so going is our here, you footprint all of so the as first be so first quarter is, the from forth. flat. run see I you will the all our kind and in look races the cost rate, So, forward you expenses we run as expense fairly

rate be will going that the barely of net-net consistent next first expense year. think our we into run quarter So,

Okay.

pipeline pay have growth. crystal look increased how is downs What in be reform XXXX regions from any demand into to expected the far fourth you quarter, think you strength loan trending? your tax how ball, do your to the more out in in expect see do were you and also we heavy thus As and seen about that

Dave this two is three Terry. or That’s things.

really start of in Raleigh, think Charlotte, hired off just to but and building would and are broad talked I that to growth the of words augment you that have generally a percentage looking great a double-digit number continue, principal C&I on you Charleston and Greenville, last largely as as already rate been in to markets, based have we’ve in say would I CRE the there occur practice. growth bankers XXXX, We a because know for good we expect in of percentage a the with growers BNC other expect terms to if XXXX. rates in to are that half outlook, expect their out we platform and they

far primarily share living, growth thus move I belief take a enjoyed share is to a the market to that, for So in market regional that as franchises, XXXX, tied will than make do large don’t this part I to we expect the that in from incremental over national we’ve good and quarter, and loan growth the the of hiring other what words nice in a would accelerate that growth I growth primarily you the functional there. the going be my I perhaps think the point, fourth loan demand, had to important better it see know as economic is growth so try so is really forward we rate to but and project growth. did more

effective people as real had law question, candidly, change know loan it’s I and you. there. more have kinds relates thing fourth detect I seen than commercial out it paper we We is once in get quarter result but think honest from the thank what the when benefit see, I law change, in loan commercial I real to an get escalation couldn't have more that think permanent far. that yet. concentrated [indiscernible] will I some estate demand, as firm answer in would and down, rate down you high tax the of I - I that wide of are tax thus is you do along, I you say non-recourse as tax Pay lot it so and C&I pay believe a let’s some the for XX-year one the and expectation optimism. And a the will of there that will it is very alternatives, and begin seen you rate estate. or markets see fixed have the on to all say your know is my demand not increased

here do of half So, very quarter the continue high the first in XXXX. fourth and that downs in expect been to pay have we

me. Okay. Last one from

up lenders the is are on doing in growth going the your then on made going plan CRE C&I you how talked CRE drive expertise expecting in actually of term, given you hear know pumping CRE future? to that that forward. that. that the actually you go to but brakes new kind I Are it and that CRE, in simply diminish or is C&I about excess You you’ve strength, hires near BNC of the concentration you’re just to wanted concentration

of David, BNC C&I and then to mix line continue true where that in an on the effort the but it has it our what focus going think beginning again diminish with we stage expecting said this so the that our that business, growth I enjoyed, hiring practice. to strategy the and is Well but the CRE. idea is. without growth back the we’re of want again, both very beauty And that that involved the I - their think from CRE is transaction faster to than we will see double-digit change, this to that’s

our tax think to to guidelines, million the an capital underneath XXX% intent and it and shrink the deferred what it we structure say concentration so the we in has those $XX shrinkage so recent the boundary risk-based tried had I on million most asset stay been that that’s revaluation focused and on capital. here in to charge as at quarter $X.X the obviously on is unplanned those capital in the guidelines, relates total think concentration the two and just and issue, is I the generally firm XXX% generally

the those really it we're closing by rebuild for what exacerbated we’re a and write-downs, trying concentration was, back to limits equity So, associated us the those take few communicate may a enough guidelines. so inside what ought get back capital talking was we breach may there guidelines, produced and have and those to phenomenal but that’s we temporarily late - year to the that those those so to quarters in and as write-downs about we’re with

terrific. you. Got Thank it. That’s

Thank right. All you.

next from with Stephen Scouten O’Neill. comes Sandler the Our of question line

Your line is now open.

good guys, Hi Great. morning.

Stephen. Hi

led guess NIM, I and hike. core basis fed the quarter there, you during we deposit wondering impact in last you, for I a more I’m no on increasing thinking, next maybe on know the Harold, was Harold kind that downside higher X after NIM, maybe, hikes. your for had maybe of bit to the quarter, of core points spoke changed what wondering of and flat would see said on you a Question costs rate the or that the I we thoughts obviously I’m on where little quarter the deposit came with cost, Fed but saw quarter

raising - cost. XX% increased rates, think do think we the I during about on core the book. we a deposits The we calls of lot are Yes, funding NIM that XX% the interest-bearing so funding our about have of our attributable - primarily decrease got our rates rates is of to negotiated for about sheet quarter

believe it on - side is funding So, was it the on the we Steve.

to rate that point more then XQ, or…? be do a X-basis Okay see than I that will we more hike XX will you could makes sense, XX mean like disproportionately and increase, in mean with more, the think see we just I

the into increase are we but first planning not we kind of in year, funding rest measured the going for quarter Yes, of for increases see should of next the cost that year.

Okay.

here it from from think is you NIM kind guess of do be that core So, flattish here will that I your…

us in believe. against a rate us less defend able go be quarter, that first will we in What’s going got first quarter days margin is, have is think in increase. we December We not of That’s the but the what the helpful, benefit help within in we so first increase to quarter. the rate the to got two we to

mind think growth in driver I to been in some kind rapid Virginia CRE have quarters two just was is the that franchise the there, million North on low Okay. like at of And last more XXs, change Carolina, back once that the term used growth, million we that the the is at what’s to I $XXX or XQ sort mid goal main I payoffs, just of soon guess longer can know or folks relative that more what get shift do pricing range any to or you C&I and to something the BNC XXX of change is to come changes online. kind expect importantly - is point

think in about down not I houses, we PCs. XX - XXXX size, - try production the I out I computer on all latter to system in first all but was in X net XXXX, half footprint, refreshed we and the the software shut that help guess I the have half than Yes, the for new person would may the rolled production you’re their production Steve think so software, a think of to less be itself, you in changed right, every computer that have what’s going the we computer but

be and a as we the amount an a on of on Henry It current downs in pay don't the budgets requires the so change new in reflect have forth. and extraordinary retrained they principal they amount would person that read higher think but so upgrade well, the We Jack version the growth though driver. the growth procedural so internal have weren't the higher system. just reached that training version and We’ve is every expectations than modifications with than forth, SilverLake, that of [ph] phone I see the required in built the it our for XXXX, footprint significant were focus, or just even an been that have on significantly as and because is which XXXX been their and fact that in usual again is

there unusual Okay. that up one last following That’s housekeeping question then Other that item on item, cost David's that. jump? on maybe was just really helpful anything And drove kind thanks line of whole just a XQ I [indiscernible]? expense curious about expense of that XXXX, for X million run know but said, jump rate kind flattish what that as Terry. you and specific

for tax so franchise is quarter of the first going year. expenses those FDIC drove into what and and Yes, stabilize next numbers

extra a we accrued of December. So, the little those have end at to money

XX of million forward? probably so run Okay, the that kind is rate moving right

Think Yes. so.

Thanks guys on and it year. a great Okay. appreciate congrats

Thank you.

with Fargo line Our next Shaw question the Securities. of comes Jared from Wells

now Your open. line is

morning. Hi good

morning. good Hi

some you cost, come saying quarter, lose the going benefits from when reduction that the Should see and down on quarter accelerated headcount circle on the the first of offline could quarter some shall you will come be we into compensation for some offset the that quarter? of were we cost? probably then fourth benefit salaries those seasonality third of people second in expenses we XX-additional by back see the decline that that shall see of with FICA If you

of think as we Yes our much our Jared, XXXX, we going expense that you is don't I some will plan to look see line, think very for at deviate quarter-to-quarter.

you plan So, our big from fall I win we line if know that given particularly a managers, coming XX-people the out. see hiring the have would don't with

saying to in C&I side, do had quarter much terms thanks. haven't you downs in to trends then you people we side the seen or coming of C&I the the that the when uncertainty do making were of think out you I come tax on And the demand or we pay side, that you heard that impacted Okay but in the from of tax on fourth high decision saw not levels early? trying sort

I specific sort question on guess I this has opinion of an that feel. I believe loan uncertainty the that’s interesting of to personal is, a is do demand I Jared don’t answer kind weighed guess know. in here and question, XXXX.

difficult gets work since ever know of it law. do I the the demand if the primarily was when, see want around choppy know just quarter. a to spend demand the conference And real But guess on the would political wouldn't sentiment quarter discourse people a I to we it think is November X, other think I day. say than the and your it week if of doesn’t move, I guess X, and first know I I have the that. to guess year, I'll really politics know. as increase different Jared, tax say can But said this, fourth you or that relates you don't in administration, uncertainty function of any XXXX loan the loan in it time think think itself. in and course it a quarter had in year. increased last an demand first elected don’t versus for I every new like wanted in uncertainty just saw sort don't lot the this Trump I is I question be and that slowing and changing. I changes before fourth Sandler's X I to is, was account of in the

just well and really see law. solid, I so, believe say, think did of will tax for go. let’s And it's people demand okay, I think I risk you such get are that, I increased loan a is comfortable think result there that to and the as volatility headline hard things

long to is just of little the certainly muted tax way situation that discourse result do international up a domestically. may around say, and I demand pick So will be bit change, loan political I as that think a think difficult a the law but

going the quarter? pipeline, how pipeline does you. does Okay, then And now how the first into thank are we as the look C&I

good. Our pipelines are

in - XX-day here use a and You a you time, that methodology quarter. are that you forecasted what at in is generally each are period, to on at so know, forecast the occur where the are high and people beginning supposed the so gaining items a general we what quarter the rebuild focus of

and good we work our I demand go there the So, quarter would pipelines but first loan the into still that feel say is quarter. would on some going that there, as in we first solid expect

the change hearing finally mostly did to see mortgage just the saying do side - that to have And on restructuring, and well we been mostly on you where so Okay but duration, got with have you're and product meaning that from going at the securities all? then changed type on I side, you is me you that up? expect stuff then do the

of our you'll what see mortgage bond think I less backs. Yes, is probably in book

into more floating rate security. see increase will a probably in the and We little municipals some

big not that other is than a going be change to So, Jared. it

Okay. Thank you.

Curtiss from with of line Will comes question next Jaffray. Our Piper the

open. Your is now line

guys. morning Good

Will. Hi

the will basis if the flat another core I basis year, to just securities said, of can think the points the I that that terms purchase and go back thoughts, real X in to Harold, the hold correctly, of you we in course the then add throughout NIM first quick, XXX expect X heard quarter correct? points you is

We is NIM think flat. fairly fairly core Yes, going true that GAAP NIM be We think I flat. the Will. to this going think be probably is to is

over have are that time the we these book that So, restructure, so will critical we an all some be maybe book think think funding monitor our loan will bond got long. but yields increased year what to helpful, the from and eye on keep think be we costs, we

the maybe quarter expenses I like rate near-term, going core it XXX for that question hold of terms Okay. caveat seems how you a XXX the guess expenses that increases the the of another that guys number, here, and talent XXX-core in know additional should it And had in terms increment steady number forward? pretty with clarification then that in sounds you this the about pretty bring should good as you with you be that to number think or we had,

we go with on to going hires. That what increased XXX If plan, based is includes our we incentive additional which probably a revenue goals that for to cost. run have is in are able exceed rate number our good us

Okay.

So, to XXX seems number. a pretty good be

exercise one the us from their what slide forma I slides the forward that tax XX% are is had to is XX%? going Got rate, assuming tax it. think this rate would you your and you All pro right and the use me in in for last then, XX, guide

be all number in. Yes, XXXX good we things in XX% will to us for XX% think a

it. Got

very much. you Thank Okay.

Tyler question Our from next comes the Stephens. with Stafford of line

now is open. line Your

Hi, morning everyone. good

Tyler. Hi

the I Hi, more from - further and any wanted does GAAP margin outlook for core here, assume rate on that flat, guess increases this to interest up relatively the I follow does time one just margin commentary both the holding that core year?

Yes, three year, early one and increases at the in the our year. of part one plan, of mid-year got the one we’ve end

into margins. flattish three So, translates

Okay got it.

you know think of to the how I are actual much asset getting you and just here help from with loan benefit you portfolio from rate us, the combined in you have how sensitivity much each the of incremental in can terms disclosure guys don't just franchises, your repriced hike? with queue December the

It is about or [indiscernible] so outlook reprice.

So, assess Q will that at think September. and we we the in put the modestly end of I

want I I growth the net XX% sure me expectations got just would it. the to lastly understood from for just housekeeping BHG maybe that to XX% on Okay, make And year, Pinnacle to rate? be the year-over-year then just contribution

XX Yes, about targeted we’re to think XX%. so. We year, we about to were XX% so for million the

Okay. questions Got it. The rest thanks much. have of my been answered, so

Thank you.

Our next question Mealor from comes KBW. of the line Catherine with

now line Your is open.

Thanks, good morning.

morning. Good

will? asked answered, and is estate could in I in XXX% not ways how take something it this of half the level you but really off to been guess consider way you - maybe is my if level the growth is know and to there, this you it that the commercial conversation, a could XXX% the like growth any year, real as under latter as follow-up of just Most do so on seems to managing may think to questions stay have wanted impacted

volume of on let of then question talk the Yes, Harold about me comment and there. side that component first the let sub-debt

that’s know the what are I think we a these a dividend buyout, company for modest. you pretty on be what is know rate [indiscernible] to dramatic the which side ought growth CRE do you for growth generally

generally to the not of can there, like a constraint, is it you you of meaningful the are I to will example, and don't the So, Harold the view we comment as but it constraint to percentage base, the don't would on any you a volume, an try but something but be so growth not to tangible saying so you I’m be know you you at we again which count, [indiscernible]. loan capital view in the is, want value rate a attention CRE meaningful grow can to on light pay tangible that are that, have XXXX the into and run similar the I toward capital you your as book company, in maybe risk-based see capital growth point if XX%, growing do XX%

help - inbound colleagues Yes, on sub-debt we have we lot but the is, are the the very wall wide see get - of market pricing about now own a as staff, as rather if we of Catherine it lot estate books. book. was Terry the to we right we on support good I guess exists a now from all press the not right our we capital of with is maintain year other the curve side is want have talking seeing and just can and of commercial that We where we that needle if open growth your we will to about kind generate real we'd subject think on this that can currently calls

little in temporary [indiscernible] kind much. anything that you comment generating quarter or appreciate sense. to a was going if much you're than as will finally, bit with had to and grow you’ve like as you probably not rate thank Yes, it point, And growth I seems it modelled, higher we run makes security was from as particularly that’s C&I good quickly investment that then a yes, had very line last off all so then are the the be here, And growing hires just from to take to this there I you’re ratio so services really your year? next the that starts capital of that mean question, investment it is

will like going they larger has a the we that there out quarter an annual people number I that Nashville the more in a sizable couple not think is a number, Well but was in are One of repeat, hires thing in have next of is running number think continue something fourth it book amount I by it or that is, on the was pretty number so in $XXX,XXX important quarter. hit here program don't SunTrust year. it that and so that things the and think that building group build I to is the or I to the a impacted going that there Those there. that being October. we number fourth ground but the that say of for want to suspended so are during annually, is it of is got large kind and get in

so All great. right much. right All thank you

Catherine. Thanks

Our line with next of SunTrust. Demba question Jennifer comes from the

open. now is line Your

Thank you, good morning.

Hi Jennifer.

deposit. is on Hi. My question

XX% in of talk about all you and about adjustments color You what on the quarter C-suite? negotiated your of did secondly interest-bearing are rate said terms growth about incentives deposits just can to us rates, you the up the during the you for way give specifically core some the can talk line deposit

rates raised first Jennifer we XX the October, and at the cost, that did what of basis question? on question was November. rates end funds, Okay the on I time sheet sheet second funding basis in on I points we believe points, during XX adjust think

core growing from the you Can all the line up way incentive talk about the deposits system the C-suite? to for

for mean one core incentive I we any just deposits. have don’t of kind provide off programs to additional people

what system are. are on core Our what revenues earnings totally incentive and based is

how is measure. that So, we

Harold comments. add little a might Hi just color Jennifer, to I

And it the reminder, the I C-suite, our I like grow outcomes Fargo that everybody that and I’m of they based cards and will in all it saw the to we say I but we we earnings at score associates to incentives, They annual drives produced what and this lot if maintain cash is less. have they we participating grow target, annual if sort is they more, bottom a the people this line, about strong product Just way cash the as everybody the and disparity in get if we in assets our threshold, thing. the our payout clear Wells of underachieve cross-sell, quality. all to get just run have bottom number grow three just saying asset is grow XXX% would organization the commission annual that this worry did eyeing the to participate the from same things, are to revenues. companies associates top overachieve do have cash think got that of a got we And so participate but we say firm nonperforming in we we would that line of our not to make this people, incentives, excluding

and the that, aim is can do to and be demonstrated plan not how you growth try our are to within of record make top sure to here at that decided have we growth, we have We think we this to bottom-line deposit company able works. context in a, point associates producing gathering line I but track mobilizing our earnings because

know, growth To to one revenue the number this item core that have we loan growth. amount of loan we deposit got is have You growth. done get produce

percentage funding for we'll the them give noncore. that we know accept You

core build You got out together in core and will to deposit this go produce initiatives and deposit. people

to the are incentives specifically of in number. is that it tied system, plenty but there not So,

question needs be subject last the to beat the margin on My to essentially margin GAAP death, core in so you. the that this expansion if we there Thank I to but some lower mean accretion? Harold a NIM, know offset is Okay. doesn't clarification, flat just be is going to

for this of on meaningful just either the but see throughout don't this planning the core right think of I depend We that, are way don't rest you year. year on course you’re that. movement margin this Yes, to

a Thanks lot. terrific. Okay,

All right.

Instructions] FIG Partners. with from next comes Brian Martin the line question [Operator Our of

open. is line now Your

Hi guys.

Brian. Hi

suggesting up was with in the about? on you as rates you Harold was the pressure guess going won’t going are to what back XX I quarter, that guess you the [indiscernible] just November, being basis maybe sheet much see [indiscernible] what points in XX% thinking XX, about is next I other talked those the

individual with the one-off individual a manage negotiations attitude our with Yes relationship have clients. - all to financial advisors how deal great so XX% Brian, financial managers, is respect of and their they our depositors

Obviously, information more during get course they each what watching that quarter month, are are about how of we hear the are, are So, and month we over those the the we the costs often deposit moving. anecdotally. the larger depositors ones so

All right. Okay.

kind of in flat, is the quarter margin to on just Just GAAP fourth about fourth question number? in being you going the talked that - easy XXXX kind flat quarter or level the of back full-year is the

our rest fairly plan for are at the be of flat margins looking are the we our for GAAP Yes, year. to

whole seeing our a margins. dilution not of lot of GAAP We’re

that is XXXX? the or And Right. at for full quarter GAAP the margin year fourth

fourth For the quarter.

For quarter. Got the fourth you.

couple meaningful talked that, is Okay, is terms just we in then on have of impact in - of that? much it how market, you a the capital that number of, the and losses about other that an so the housekeeping was

about - rate it believe. run about I $XXX,XXX, think I was was difference

in on, of should look go BHG on fourth similarly like then you talked at outlook, the the back weak - quarter you just They Okay. revenue in. when And mortgage it based range kind being about look at mean when look of expectations, year mortgage as you is versus the there at I kind growth similar the your when BHG year-over-year mortgage, XXXX? full you XXXX for a

Yes, in hit count to on is will there of to markets operate in for mortgage see their we we any in the and strive mortgage great expect we plan. XXXX. We to mortgage our no think decrease will continue kind reason that

mean than of Okay. But mortgage growth in is I reasonable if it a range I over the what you mean something is BHG, XX% on of are expecting expectation today?

but Yes. it don't XX somewhere in the would I what their plan year, a next for is good XX% I [ph]. for all have in I say know exactly number be will them.

[indiscernible]? couple six out, maybe the talked of numbers, got the out quarters below stay to just sounds kind the is least raising, a about of and bit at over others to then rate fees in three-year range target one the of a - trend a normalize you where kind of kind those but think the I but but little of bit with being out just above those maybe ROA tax being but going the at that you. to Terry, quarters Terry being how begins this targeted And out couple think of Okay, plays quarters, four little revisit strong, kind I quarters your guess change, next guys quarters the back on ranges about with ranges light, especially next it six to that range the or like

right. Yes, that I the is think

We are to three me we ranges, other build the the the would the north of out it to of but ROA a do be and Carolina, range generally are of we the let we component that we out, measures. on mid-point either fee of like businesses as mid-point the going be above that mid-point North those the table back sort high takes targets and relatively the third operate if relatively up the you of going range range hit or hit will will minute, of operate - is ROA fee we we the we way law tax in in Brian each high say we range for just So, you in they believe range. will of believe short and high those the the

you Okay. benefit a the I got positive kind [indiscernible]? helpful the will as That’s you. guess and of then go I to tax be ROA, back

to it meaningful be Yes, impact. ought

XX last the, maybe currently? you in it, how the missed but Okay all kind or when right. mentioned are talked many board from how but of XX missed forward, And already I guys about you that going I Terry a many, people me, it just monitor you it of maybe the thing

as it I the seven, quarter months. XXXX, since keep think seven the just well, of track hired to Well way probably think a through is we've about year-end couple ends but in actually three I Seven. first five guess

All months. had Seven appreciate in guys. I right the Thanks. all it. five first I that's

you, Thank Brian.

the Our next Research. Nancy question comes of line from NAB with Bush

now Your open. line is

or versus the difference of markets? rough a you broad estimate sort in a those between question Harold of do the markets, the have types rural Just urban deposit about two cost of funding markets

don't of I as smaller have don't. what our markets. we some cost far know really as funding as I

BNC markets they growth markets was is of of the rural their expect the Terry one probably are you, of to for cetera. what be Okay. you cetera make you that do you to in et all at able the you the urban and going growth the know dampen going markets therein, you significant look to a sort when - And have between, question this a questions are difference because et trajectory rural

tool versus I create I two here markets, things. I to and try language say out. guess you’re a scoring common north that I XX%, you don't primarily like believe I our urban urban, is so mean or let’s know, guess you- that Nancy, that I familiar are of in would three company rural mean SNL like probably I with, say when on and first Maybe primarily now a XX%, we if has

fact and high don’t two We I know, but be that will might extraordinarily be the urban country in than in more we. wanted urban franchises in

that to and I or that or I rural and exclusively to fit about team we’re which whatever So, we BNC start comment those markets growth closed. know, rural weren't to you footprint, markets, X% his would were as candidly, and as description be conjunction it with the they this, rural will initiative sheet guess optimize you, some develop underperforming so franchise that on that X we know high influence transaction C&I that is, And the and XX of sides on in there. staffing on how he looking initiatives on of business Rick honest overlays we confidence that were larger the degree will rate again the, in but the but growth that on to I I might of be when rates either the limits well, guess an methodology you a the of that by footprint. focus definition, that would take don’t in we your Callicutt bolting and the in use legal that we offices have have transform and an transition X% have it balance underneath with were both Again there then

So…

you projecting on product step-up are really just are or Okay, on is growth banking, that mortgage side and have or I going guys I not expecting looks of mortgage question it mean you’re significant expectations because some or sounds could to down, a share and mean us I be hiring that color like little you market a theoretically, markets? it if give on should taking your this going be are BNC another in you market producers moving just you like the you are to rates obviously in that production sort but there. rise as

way. Yes, about I it I will this think think Nancy,

thrusts two mortgage. increase have two believe I saying we'll main components there been As or to are lead us that

leads would it if were siloed company. and to they that you ran Callicutt as his to I business. a almost if mortgage think it so forth, mortgage Rick words, they as describe of was or standalone market any In other the were talk run a business

those And they production So, that hired their came the majority personal from vast directly in the mortgage in originators. of originators company contacts.

than different model substantially. Our is that

If from rule clients bankers. able originators control here the to half will at in legacy hand we origination and to you we generally look mortgage have production mortgage the bankers get look therefore footprint, Pinnacle a will to from staff. request these those other as least words, mortgage and referral at their In the or our opportunities

because that in is know virtually swing harvest BNC you swing that so they of to been have, as and set big great a the client And a case test. has

the as mortgage the Speaking to clients. banking of clients supposed

So, thrust second mortgage virtually the that to is and originators. are be so the in major the substantially we we capabilities have of there, untapped been clients banking and view terms hiring mortgage

about market to generally I share source is so from or separate And play. business contacts a market books who share of and that additional we share it is hire have believe people so, is, a market question your client move

Okay.

about think now, I I billions thinking in I'll question, you and is to et are you just we scalable future not of of are final just platform how cetera, have think to but scalable deals, your not of can ability mean see expect tens it some you us here know that ask technological the one about we do terms I of is thoughts you you you mean do I about have can said, then got is we okay into the right add, mean that, there us sort give expand? to give some your I

are Nancy substantially I that just yes, structured it now. to I answer if be where out don’t number be question. having there But we can a I know analysis hesitant than throw larger to honest, that know a more I'd behind. little the without is

believe prepared $XX answer really you asset give we grow acquisition am we way, So, a an to be have billion with this go you I it no we not that company. think to said might to know, at question. will I sure I am I

So, organic that without and growth so forth. any of

that. on assets as is are behind have, strategic $XX are that we you do in My don't confident doing working easily analysis giving you operating with a that another but what a want I'd qualify it to is inside that. we basic we Nancy. billion that So, but will platform are obviously guess it we the probably guess, just process. have be could that structured far as as planning that, I’m I we

great. Okay the effort. I appreciate

Thank you.

this any showing in concludes further questions today's Ladies you you This I’m time. not the have day. program and for queue may this a at now in Everybody and disconnect participation gentlemen, great conference. time. thank at your