Pinnacle Financial Partners (PNFP) 21 Oct 202020 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners Third Quarter 2020 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 open The floor questions will following presentation. for [Operator constitute statements. may Instructions] comments forward-looking During may presentation, make this which we statements. that achievements any All statements forward-looking of by to materially from facts Pinnacle expressed to the or actual such uncertainties and risks Financial forward-looking cause and results, results implied subject other are may performance or differ Many beyond are control not on of are or predict, to reliance to such Financial's ability factors Pinnacle undue statements. and cautioned such listeners forward-looking put subsequently description A quarterly Form detailed in for report. Pinnacle other annual of more and risks XX-K is December contained filed these and ended the on report year Financial's XXXX XX, update any information, obligation statements a Pinnacle forward-looking in whether any new result this of Financial otherwise. disclaims or or revise presentation, as events to future contained

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

you Thank us. operator and thank joining you for

begin deposit asset chart and in that were core the to so the was quarter GAAP growth managing adjusted measures. I dashboard We every at we're many Pinnacle to for to outstanding value quality, focus accretion measures non-GAAP third on fee us net an get success quarterly adjustments but strong honestly reflecting variables we the all this quickly quarter there I move key our measures call want that reflecting here during here truly the are order required book with As like think started growth, quarter. tangible with very revenue growth, pre-provision

are up Loans loans shortly share movement quarterbacks. produce Harold primarily XX% our loan ability two deposits XX.X% prolific represents [REMs] growth flattish. our at a and enormous share. hiring accelerate continue rapid potential. of have forward Due on about quarter. to basis. than Core tick PPP we were relationship our and will to in to during market believe third based XX with the a up, roughly greater years the diluted less fully ‘XX market managers we XX when are have earned here on in a they fully total already we're to that quarter of up link quarter XXXX XXXX. the over As meaningfully is focus most late can year for EPS year-over-year has in of revenues quarter primary for and XX% a since been XXXX. level cannot all X.X% up this PPNR EPS PPNR Adjusted up time and annualized you our diluted proud earn what the is back pandemic become see Average on were the down year-over-year going X% are talk at but loans expectations adjusted that banks Revenues predicting were ’XX, many third PPNR the on generally the importantly detail And link during remainder They review a for nearly we'll quarter. years quarter same roughly that's last to that and take pace continue our basis.

value. this a likely our billion increased challenging the growth PPP not billion record is consistently What includes borrowers has liquidity a tangible year. we clients been growing track put business deposit for we roughly that function among really from growth think and a PPP have more continue of initiatives majority is year-over-year have tied course the here and our the book of place year $X.X of low-cost $X.X Of to to I but in that

So last lowest greater that the row down XX in offs up over years and see basis you to quality annualized going basis. to quarter quarter. really points. just can level five held the quarter a in actually annualized the charge results review turn bottom Tim nearly the and just the EPS linked Classified this points XX% in net third asset quarter it assets Harold Across to XX.X% I'm XX with well at year-over-year, basis much to detail. on in the

deposits. three the there They on our which and deferral. quarter that to through their bank at three of income an that's is about are of high spread We've talked loan be net is and that BHG further the model highly loans of go during interest record XX.X%, they're average banks lot margin record quality sales X.X% cost extraordinarily the for it cycle that had convenience paper the both we Fee loans, a correspondent the about and a loans place details, a loan that validating this originations our in the as the of As that find the originating paper. regarding with an also trajectory be rated encouraged BHG's at resilient are X.X% was rate interest of October has all-time particularly fact XX I interest fundamentals demand the product differentiated for demonstrates securitization to just producing banks low buying a a on to BHG correspondent of and offers time in the record rate quarter. network some proven value borrowers average borrower

the our of for spades. this cycle. the model differentiated some during is doing they're asset in nature that that expectation We've It me out that quality seems to So holding their well. up prove very was BHG would said time

and update but to quarter timing of so what human learning third review will the work it book a on in likely That about the and of into our earlier unknowns is fact Harold to full talked create size package going is So you the to is that reviewing we've and give still my of in seeing Tim some loan the to is borrower economy. meaningful that despite by and year completed this part allocating our detail capital we're our vaccine, defense was borrower. the transition to optimism stimulus the there relative and of and nature reopening the the expectation work that you insight

So Harold me to over you. it let turn

results morning for time. Thanks Terry. few consistent anticipated third of next them basically time everybody. what we get quickly. are and quite from Good we've I'm through Many these to last going quarter with shown slides some

I don't are shocking revelations. So believe there any

which the at for One essentially can was the the quarter anticipated Loan again quarter growth that I remember. is note lowest growth end As flat. dropped positive ever third to loan XX% that bottoming was that but consistently quarter [indiscernible] not during We're to a increased declare each new is it month positive July. yet just going trend signal. loan after bookings in

both Our remains get accounts since experienced deposits big at quarter-end just significant to more I'll non-interest ending annual digits cover PPP checking PPP bearing had end. almost second. We've deposit low year since number up deposits. rates growth of lower of a in end. forecast single quarter the X% in mid Loan at yields The loan and growth another year is in with we loan XX% $X.X and billion excluding We deposits.

rough billion few that deposits doing I'd number a Last next all to basically about year-to-date. could an in My right quarters. of a extended the XX simply quarter we More are PPP evaporate funds of deposit now for do over expected That's now. money deposit just the a between because and number that determine could impossible those period PPP that we holding estimate September time. net growth program on March estimating second. We're one XX. growth is our of the that we to be mentioned cartwheel precise I it's thoughts rates a if $X.X So be provided in that borrowers

average Loan about changed excludes asking rates in game plan deposit in ramp deal basis only and much is not of loan slide obviously of shot about relationship this deposit not show Next the with Keep new kind great blocking managers This loan usual held helping. quarter. by of talk our going adjustments and not yields have transactions bottom great a more XXXX to the so because I'm can there money in Obviously our price get tackling are loan absolutely third impacted If our going clients. is the give. the will year-over-year nobody's pricing the six This We our credit chart chart are the anymore [growth] a close to a mind as update significantly you our is curve loan for absolutely keep news. base bottom but so this particularly data deposit so can prime-based don't we're in discussing time is arm. tables much that a at spend pricing. the is we LIBOR weighted yield giving PPP months. but to circumstances. the point

We for continue XX target a by basis deposit of to points than our to XX end. less year range cost

working deposit Our aimed at have list who are and relationship price. we with them declined managers have outsized depositors

funding the interest the pressure the left [indiscernible] off some forward from will $X.XX [Technical top with last roll likely net information just approximately Bringing have Difficulty] We our allow elevating the two maturities the billion on liquid in of and of some over builds wholesale this next margins. that quarters our quarter, chart

prominence XXXX. of and into part ramp permanently eventually this Briefly [indiscernible] slide its be to relocated to will the supplemental lose slide deck. People the concerning

PPP to Our X.XX%. basis reserve points increased two without loans only

sheet increased reserves also slightly. our off We balance

unemployment As improved quarter. the slide notes our slightly this forecast

initial modest in the entire table. going loans of out likely not the balances unsure the we've contributed loans approval forgiveness easier reimbursement to for how least news simplified process it they've that what reserve back smaller similar as that are the characterize flattish program split to the So are out will at we but the get the The through likely to for the the [indiscernible] but the plus right think make as a growth suffice the loan be won't in not rigor say We top to now. funding we PPP the to process process slide manage larger choppier is but optimistic go or We're loan that's to timing repaid. carved will bill. to smaller process the

list. in see is expecting new left due income fourth greater first This some XXXX a but of slide. expect quarter we'll the PPP the we're quarter forgiveness [indiscernible] So to

a on for per as we do us discussed I've momentum. $X It ramp was the regarding with share incentives trying above we're to $X.XX increased as live XXXX a quarter increased the for into As per what serves foundation this for share. quarter to PPNR great as expense

incentives with believe will we share XXXX. which favorably so try our high increasing digit single ramp payout XXXX peers. growth for with is goal will per load mid reduced PPNR expense compare be a year to Aiding target XXXX headwind for our a Our to growth into this very is to PPNR to big

have are term optimistic about in credit for fourth in XXXX slide see next but to longer for Not idea to COVID love we as over we is to continue close the to once prospects. for lot are A So we where withhold that year. through costs best discussing our going about on we next targets term shorter depth and our obviously to few we manage we do how evolving suffice this but with prospects it that months. go is some over our pandemic the quarter the we say

balance high on will manage Now are year first there and These briefly into comments will by high We eventually quality year. believe quarter sheet. that that Quickly assets we high will the back about of [indiscernible] end next capital. are the some assets in equity. our quality exit tangible

or the a buyback buyback We soon are we and to seek some getting on back then whether us Likely well. not next of our couple quarters That's obviously evaluate for we our agenda the into re-authorization hearing for should initiating restart of programs. as banks are program. intend program focus

sheet are of things weight share that time We are We've of about things, on we $XX.X value but on we in One per accomplished focused assets year-end. outsized are intentional was a are we end lot our value XXXX, tangible thing at XXXX year firm also share billion share. since balance that since book have growing many in is tangible XX%. by our an works we increased per proud that book growing per a earnings

XX% group We peer are time firm the one how an of The during say our only I'm of second at our is period. percentile understatement. pleased this group's same that to with quarter rate. To XXth in ended half other up peer roughly growth

to and problems remarkable. relay putting day of the all of is tactics operating difficult we've extended their yield that Loan forth best with was and a at and optimism. any truly It period we tend It's solving had. one growth distracting clients As effort significant yield are the curve of to I also curve my a the execution have through this is think our it's plus know are of colleagues best it for working environment. various pandemic. rob every will difficult quarters Politics We an bank through time. is believe the sluggish it's of no to us friend very live that

the bright Pinnacle how and do us We business through out time. with patterns know favoring businesses and never out are moving has we franchise this figuring but However, are this important. how overemphasized Carolinas over cycle. don't can't more the trust where people manage Discipline and We to do spots will pandemic migration be like their been believe continue for into the we at competitive We play borrowers our to the Depositors Georgia. few businesses like we and prospects. our business. commercial Tennessee, whom and more do next quarters

there as share data in are Raleigh, we're getting Tennessee markets as in well indicate that Carolinas. Atlanta. will Charlotte, pilot will a as and we We in in me would discuss score the we Terry Charleston The several shortly believe force are in

chart We've the and bars BHG's similar it's loans are more time flows up BHG. and snapshot ramped blue to on funded. how Now importantly slide a originations give shown intended during over the more up you The before holding with have a and they're pandemic. being to business of

strong. traditional generated. This BHG which gain recorded banks. on being remain been loans with green flows sale on sale these is longer model business bar So The to represents on revenues has gain as downstream the sold

years are like a over third there levels discernible can fluctuated mid is in the XX% but Coupons the seems is or have As see the three both at you bars trend record up no tick. quarter. last down,

buy busy, banks BHG. model As with planet. firms involved but the network the became BHGs. bottom on platforms but BHG's in funding over are trying There a a is recall to almost belongs to gain be rates real we banker's to group. it. a one funding like right chart own loans on there XX X% failed healthcare we a got the year. not real enough of They it. they for find they on BHG's capitalize the lowest now strongest to can quarter this That sale and I below thousand they've small developed fast XXX thing have are bank acquired third it One the to out years platform They this emphasized at to since in replicate get It's taken it and seems

on we've their platform occasions are several business left the flows originations The is chart funding has but levels borrowing few right Loan XXXX. banks. So and to incredibly Loan at strong. feet They ready particularly XX,XXX of BHG's over improving BHG's quality. shown top improved I take the and can The powerful to chart of refine borrowers the offer inventory. quality BHG's quality continue from increase remain healthy. most the credit related sales the remain to scorecards record in last the think again chart steadily is I years

over earlier out but months the since is related in continue very underlying pointing by cause impressive. loss our to level quality borrowing at life toward likely Pandemic upward the to base the losses events Looking loans. lines move the losses of will these thus a lower [indiscernible] percentage of origination opinion

concerning the deferrals. As Terry mentioned

are plan led the delinquency. degree. third early frequently decrease of XX% XX, to is the essentially total loans base payment or represented the numbers of current X% as BHG current quarter third deferred rate. stage with quarter the of deferral quarter. in remaining June about that group end and a paying to these XX% a the XX% about worked the XX% The of the are in last total aren't X% As with the of those communicated Dennis and of deferral a XX% as paying borrowers X% at non-existent deferrals book. of meaningfully are deferrals and on the

from line could these outstanding credit currently next loans for been recourse crazy that accrual loans. this got good. has rate annual materialize with chart of their acquired these with than The banks as are loss that loans three These details to community banks. shows The that charge-offs X.X the updated of the more two while said on months other in So to bills. losses and sold billion blue orange in but a bar the the BHG has We've percentage they've line network their shows the banks. reserve who've green

the last with the of For nine months at are running basically consistent few X.X% years. losses XXXX

last Lastly a and we things BHG it we been the see and said we'll for quarter anticipate it for again it's quarter. fourth big big year

During third Appreciate credit opportunity diversify as at to first grade revenue securitization. another to income string BHG went that competitive on funding from improved on to allows price their investment as quarter sale interest provide more allowed source. the securitization with This its the execute away BHG markets the well continue very out gain ratings.

loan down. and deposit private making is pricing remarkable. headed Deposit So The is year BHG holding. is is it wrapping much credit up growth very is another manageable. pricing great

Tim So with talk that I'll to turn credit. about it over

portfolio morning may well. impact to not our we metrics NPAs portfolio. and a we loan dues loan on Thank continues up everyone. understand have past and credit yet offs, full charge you traditional assets classified Good Harold. hold COVID Pinnacle's From experienced net said That

our about defensive first Before credit during a quarters. work prior I credit comments our completed few discuss slides

that quarter During than a had greater all payment we loans regraded deferral. the a million second

greater pre-retail status. regardless than hotel of million deferral all loans the regraded also and a We loans all

The focus our sections that we second portfolio to than best quarter extensive the rates greater not effort million. risk regrade were our quarter. grade by generally included not our X only marketable top past did cash the loans secured re-underwrite our include exposures broadened securities. with loans very we two third grades the did of loans remaining This for during During for our underwriting

XXX,XXX. our For at lower threshold was classified much watch loans, criticized just list our review

us run. but regrading by of for amount Our in quickly benefit of staff and the identifying materially work will tremendous long credit exercise a credits impacted any lenders our we help believe the was COVID

During the X,XXX billion totaling approximately in third exposures. quarter XX we reviewed about loans

work, of current survey monthly our conducting borrower work work of statements third that regrading the loans. classified change the $XX during third consisted collecting is the quarter for million classified At of is quarter quarter decrease even encouraging. the clients, collecting in of the our points results financial C&I [indiscernible] quarter in newly Our was a more The credit completion the our third loans loans positive only a questionnaire $XX.X in data identified was but million. net of

of our Our from criticized book. A very quarter hotel increase the few million. had to modest comments a assets second $XX about third quarter

as XXXX believe to deferral dramatically that offer clients April March loans page a of and of loan and quarter from a impact on COVID Three to the table XX% payment many NPAs survey to the third our to well-balanced third the classified the months a variety grade accepted granular coverage this of chart The and of strong to those XXX% fourth would questions of from from were end of quarter total cover XXX Pinnacle's defensive operating very period in quarter modifications simply work X loan A Pinnacle that our the approximately finally targeted Pinnacle very quarters XX% between deferral of to to special to first on grade that survey revenue a clients X.X% of The was in basis identified had the revenues expenses. third quarter. decreased COVID. improving payment of comments moved the the Similar clients few said of further March was a restaurants XX efforts and months revenue third XXX% quarter the given between levels. reaching By C&I portfolio liquidity recall have our third quarter segments through we a of jobs note identification borrower's believe positive we third hotel early XX population its asset XXXX XX% fourth or continues unknown C&I June million. loans The would cover to mid-September. during migration survey decreased same with XXXX. rate. a and XX.X% second credits was was assets we quarter borrowers hotel by decreased loan On Pinnacle about fourth XXXX of second been expenses. results to during criticized risk approach XX quarter asking Risk lowest the time loan The third of modest will illustrates was borrowers our and second XX% reported pass You'll be prior by began greater in executed XXXX and them. we XXXX with for XX% of during we're extent have because totaling have quarter XX% In quarter. XXXX. impacted into our hand with like compared positions. quarter and our in conducted the second of and we just X.X of a of points. just second loan of extensively team, said just have to total deferrals XX during basis balances seven operating the quarter said handful of We XXXX question to question proactively mid-October entertainment, many increased balances XX% our points increased quarter quarter XXXX approximately XXX% the regarding of problem four XX million. liquidity our reported modestly be a since fourth of revenue of first September out deferrals. the By in our estimate modification. of had XXX first occupancy year. be having loans. payment the quarter This XX% just clients between

Our fit of and to not one-size-fits-all. a the XXXX the the loan modifications tailored Modifications loan are circumstances borrower. are

illustration of clients. first discussions to we agreed XX, modification For borrower I reserve an upon hotel of establishment examples interest XXXX with of will My purposes with example with to offer couple period nine conditioned met of payments of June interest-only a the months the and an escrow Pinnacle.

We we floor also we implemented a a us LIBOR borrower floor long-term interest. the interest-only of a interest XX basis second solution loans was are agreed plus that resume a P&I We good example rate payments. points. paid period. with My a principal The hotel declined deferral our floor. institute due This client to for a longer several a all to The provided modification was regular customer open to offer rate deferred interest requested had both. replied of and

of Weighted of stabilized operation. XXXX hospitality average the conservative coverage successful two to sector XX% XXXX negotiation Naturally of a hotel approach resulted is but personal illustrate a loan help but been have underwriting. X.X record just Pinnacle's hotel always in with conservative who client to XX%. our for sponsors these there explore few our the avoiding to have properties. track modifications capitalized a debt variations to COVID banking bridge the improve of bank's position. Weighted has many disciplined modification. also other guarantees. was attributes average LTV thoughtful service side ways long examples Our well approach are more the A of are and intent

one discussed loan just All COVID hotels of to are we our million had hotel that quarter. X we SBA business. open of only for non-performing last Prior

our we third categories three in combined exposure collective our the greatest limited hotel types LTV and few just balance sectors. to for state data properties categories. The extended just with amount high-end This the into under moved quarter are of XX% loans XX%. is the to limited are airport the airport these service in expense center, occupancy stress page XX% loans in center totaled XX% Business rate. The three the these resort, Approximately the can a hotel these X.X risk and hotel interest free business and in of hotels just range. million. of newly classified economy hotel in is a During for our loans. of expense identified our loans Many cover operating on contains

three and by operators. estate illustrated extended the the borrowers directly our in low who groups service loans have in loans page slide limited details our on exposures real reported to occupancy and together restaurant full point the as this This graphs as As provides to recorded service, It sector. state of trends well since improving restaurants lease restaurant developers April. the

of very quarter our Our non-owner-occupied largest XX payment Of modest just decreased deferral. pre-loan PPP of Pinnacle's our to X% second at the to Loan deferrals have XX% restaurant restaurant for X.X%. none $XXX clients have book. program restaurants our loan exposure from is cushion portfolio successful provided million in a lease a to our clients.

names Sonic, into of Wendy's both of It made [indiscernible] operators. always a Walgreens. our and Pinnacle's tenant insight deferrals commercial store single has real provides is and quarter limited XX% second up slide from to General, Pinnacle to O'reilly Approximately segment loans for Paris centers. Auto retail Dollar with consists operators our Peter, loans parts, at our retail XX% successful estate bank half and Tractor like power Loans to [indiscernible] and client. leased provided Bell, Goods. properties retail service six decreased in names Wal-Mart, Hobby of Lobby KFC. only only quick This retail power are entire of We have tenant $XXX have centers Sporting Our PPP [indiscernible] portfolio. our portfolio. like retail these cushion million X%. program maintained Taco of with properties very appetite Supply, are The XXX like for tenants term primary

are pre-retail suit to our book Supply, built single tenant names like and XX% Tractor construction General to For Dollar XXX.

is of Our some granular. will it of retail is to and million Each like cushion made Radio. fees catalog song to C&I our our the thousands our provided entertainment comprehensive Over of Pinnacle's continue finance the This Similar XX% from generated acquisition songs status loan and paid the of an successful Revenue book. catalogs. stable optimism into space size Pinnacle's XX% [Terrestrial] Apple, to from up publishing catalog secured retail This loans. strip Amazon to and pre-retail an some average from book our approximately clients. portfolio review entertainment pre-leased. composition slide streaming in the total To quarter, Spotify, acceptable $XX insight loans portfolio. present program million and an center X% of of of the given insight firms provide of real that tempered well-seasoned very loan and are slide summarize of charge-offs space approximately diversified from Pinnacle's the standpoint. the range. provides our earning is of very is third of songs PPP primarily book remain owner-occupied our have is have retail in second that is estate the construction music during regrading entertainment portfolio $XX into net of loan exposure music

XX mid-October by delinquencies stable. have basis is X.X% assets September and points. classified declined of was to deferrals level Loan just XX just loan Our

no you. comfort in these quarters. these second metrics a acknowledge of now coming package alter While we we the metrics Harold and COVID stimulus back that the duration of measure fiscal take in to could

take will here. Tim, from I Okay. it

balance a moving borrowers our about financial to one tripling That building included revenue of scouring information I of an de-emphasizing ascertain gathering to QX also to our As book since revenue the producers posture. our in in quarter loss allowance adding producers, mind dollars a our aggressively on on liquidity resulted you a our our like from respond It things tier nearly that risk continuous included of like never things recruitment year-end position recruitment billion firm appropriately. previous in a from call huge sheet, loan loan offensive bringing and momentum pipelines year-to-date. and defensive part talked XX our capital, earnings

example initiatives. were that defensive more you no those use defensive on all is there human take not by the can need of on and assessment as and efforts that telling I borrowed work am telling utilized be that resource that borrower I'm an So that resources sorts completed that and further offensive been we grew now you defensive but to has it

So to dialogue liquidity our changing Number that facilitate enacted to pandemics maturities as as respond of subside. will profiles. the existing Harold's book unwinding two, forward already the number aggressively continue move we that borrowers upcoming our to we'll excess wholesale deposit our one of the risk with in the is course discussed

one, proactively intend aggressively of cost our course lowering four Two, low the of additional specifically Thirdly book. by broad to deposit They points we initiatives accelerate during below intended drive deposits. the year existing and include, end. have launched We XX gathering our cost year to PPNR. this it basis

from season built growth and that in structure we wallet generation provide floors on over on Harold expect in EPS alter heard should have that to time XX% currently be our and tremendous lifting to services loans behind on are movement. floors once of intent obtaining which We enormous PPNR four large come all to what captive share or someone potential. else. of have focusing meaningful on for property we're a The that in time. they us number existing produce for traction currently our launched well or managers, to three, include a as with great roughly like these additional deposit deposit finally because you non-profits. and number loans then that tailored opportunities expertise products accounts that's significant value-added progress products four mix as and share as of of some we've specialized of new These HSAs, clients new insurance heavy we all made purchasing now expertise from market a on area really Number the We surrounding obtaining financial have accounts

responsiveness not at larger and our our switch. approach they responsiveness nearly deferral our of tell indicates businesses the market that to of of but primarily to and PPP [indiscernible] to competitors to just on or friendly the client which a they're middle about our there of is we're nimbleness intend a Specifically create our intent frustrated strategic third they'll reinforces successful to if experience lack They power switch so intend that enriched. clients purposeful are for most our of successful opportunity. a we're course pursue that work that end there approach associates the an environment you brand. creating the challenger and this know We're aggressively believing result excites shareholders if engaging Guys as it's our

market So best some fourth That's for small to for to in let been a are the work bank associates to privately the American Charlotte in and place fact the includes greater you're would We're that that the in Carolina, firm The differentiated able of me work banks fourth We're America in for of major parents. to to more better million in millennials is higher you from data to Roanoke, These work the the XXX charts best have. experience client Virginia, your are Carolina on of truly looking the sales client for you you are the the the XXth North so lot in XXth powerful Chattanooga, for banks work winning triad giants for north Work in financial XX to to to single a Memphis, start businesses the fourth category state services here women. Express. we work the exciting just a have recognized translate and Carolina by experience. America bankers awards us behind best than associates our the and bank best best for work. magazine excitement The the and right demonstrate America to we for we've our with X place are according will of like best be. held the group best South share the that the Tennessee chart Fortune Same billion among XX place at last country Great and to are assets markets the we've the American further and spot been in institute in Knoxville to We're are us to as place million. months Place that

XX with with So Nashville let's years left week. de top the we ago start next where novo

our differentiated serve see share a in and one that position. as obvious client is experience market phenomenon that farthest client replicating experience the our and you and is has to growth is in the all competitors the in of a of There at showing resulted competitors can satisfaction a We're major is indicating indicating to pickup further released share we're data position can our you see banks exception evidence one recently about rate from satisfaction share and our to it distinctive the you're the seems right rank, the year-over-year share growth their their with in deposit among every market in number ranks As market. share major grow the that market you best their listing the highest yields top that FDRC market major we in best market. for the so model market me share service our each rate market looking have the how

we're the in you start fastest top in second with and again number position bank So Nashville a left share that growing we're still the at market. one

the in people the even fastest from know bank which have in We numbers fastest it spinning number number Chattanooga a bank was we up one get share up chair in moved the four [indiscernible] position a position up to market. In We been bank up was us across in Knoxville period. this year we're four slots rapidly share now XXXX number we year as growing flywheel that think concerned law XXXX growing the and you the Memphis bank see position growing chart. bought capital the shared and in or a XXXX of sixth XXXX. bought large I we that climbed of the is in in climbed the of time We've there in page trust that novo that bought pretty the but into moved novo the more market. into the de de In market two the you fastest a scoot so. there position that would we can market. We've in bank Magna we're substantially lot

market fastest the is position growing that North we've Carolina Looking in slots hard share growing Charleston, second position in in third market. but we're up the the that growing we're fast Greensboro bank that South in is growing. Virginia in number that four with the at Raleigh market. but position to a and the seize. fabulous seventh position. the Roanoke, Carolina position we're second working we're market. share the bank three third opportunity we're Charlotte, In bank fastest we're market That the eighth XXth fastest there moved into in in

generation position bank set talked meaningful So up of track we we're market industry the on quality times defensive once exit recession having from two is in grew were we a a believe post-Great represent annualized larger that on results the to in and strong is will revenues bulk time over a which base makes the XXXX comparisons six the BHG showcasing over begin and times sum here we admittedly we've today a coming on what lastly we up seven right on to now of through the encouraging. its last XXXX industry basis first quarter. that different X/XX bars completed are smaller we Recession and the it the PPNR highlighting distinctive share expect believe from positioned regrading result we're about so result done all visibility what meaningful and is earnings we over out a the pick quarters outsized model have of accomplish asset as exhibiting quarter which [PPS], this that have work to very all to growth and work extensive uniquely growth. and sound it of outsized substantiation XXXX me to secondly to post on we be from best extended course of coming The record. seems a XXXX but this growth opportunity to period left and base outsized evident is perhaps we off as the market a our the is a there in all growth smaller share winner to further earnings that we singularly growth why

So operator there. stop I'll

will be to glad questions. We take

of The Sandler. Mr. your floor Piper you is question Instructions] Our Stephen [Operator first open for from now comes Thank Scouten Turner. questions.

line open. Your is now

Hey everyone. good morning

morning. Good

acquisition you a that up great well as a that have standpoint you guys on opportunity? though gave more all share start really think for market track a from M&A talent good think you takeaway do will to kind these obviously or primary about and markets of specifically which in about medium is thinking of you there. again you ramps and that that Terry of record opportunity the some lot the wondering So color I'm when occur capitalize

organic continue to be Steve think I ourselves to view have primarily and growers. we always we

successfully. acquisition You did primarily clear can we and charts mixed I and to growth. wouldn't want be think in at say if just think those I we it have about but done look organic we historical be that surprised I

aggressive of a the market off calling movement bunch here Your managers be with you, going getting other great that. people all trying share on meet one an list, to that that ad managers, wouldn't campaign, of It's experienced and question dependent and honest I just is be brad done a in sales to launching run us have out for them having program those approach. move of business We some from out would don't to continue banks be all of to so do relationship the books relationship stuff. any promotions

think and mortgage you to that that that that revenue revenue brokers two but down trying other taking and and relatively [indiscernible] think early even I about hiring the hiring enormous early terms of of broader producers go tamp has producers existing two for opportunity. of down year of XX but back occurred so enormous or XX% among those phenomenon in including indicated That's represents less revenue producers one, things term I have which already shut maturation revenue as to added I are on mentioned Number sorts share-taking We all are is a share managers instead producers here we've still it this is originators stage on important years. than switching I'll there our relationship that I'm I there. here capacity. market been

the of that that the larger last several more quarters vulnerability second at idea in of The these banks integration have folks we to here and with recruitment. particularly that some had aspect is feel much would market we than struggle stage are like of some finding today forth we regulatory over number merchant at got so so we of issues and a we've issues, continue

to movement a are As so primarily to primarily lot want and optimistic organic by I and queue early down It's slow that folks market share and maturation about you down in folks growth. about hire It's mean but I big mentioned the relationship ability idea. we're they we've we did books go are and it about get managers already reconsider stage of on got a beginning those and it more. our of tamp us to contact don't on so the on but to

the maybe what bad bit be seeing mid-sized in a helpful. to are I going market southeast. are you but still talk can that kind on to view maybe we'd you a see in to about MSAs the that come think Perfect. for of guys metro little are side? areas metro where spot in nine be And Very a then demand seems There metronome you're smaller, growth stays years the

music and especially there really that seeing So Nashville just where you always you're the can on to touch in maybe seems there Nashville what and this view is be tourism?

for you that question. Yes. Well, thank

grow a quarters think that think for it's now Nashville. let's now, zero, lot of likely view the little mean a the one I asking criticality but we'll it is saying I little talk than is right people my balance I big risk. tons of near Number I we any taking why two I if be the not but share think of few PPP a here demand for for feel us for would lot of market reasons liquidity you I a which is got money. well got just of like reason on over That's there about are like and takeaway. obvious think got that about soft sheet. a think don't the over it's I better demand, loan time pretty you loan case extended this a demand. much. right but demand tight you're that loan do mean Current market loan period be a to if are bunch a why I of just about

had think very away. day don't actually chamber analyst we I they they the I away put sort their potential think but that I about will the mouth and encouraged of if words in pipeline. commerce call you what's and investor came the think investor development conducted in business came excited or I an with of an

I'll rate of scare scare to cranes we that continue doesn't outside spare implications the of to Nashville and travel going growth some you the track. it relocations is speech in you expand me corporate has to As rates drives tax market primarily tax that know I doubt definitely I for to that continue corporate my a market Tourism not markets benefit large I'll down make to tell are is this this know chamber is but the it tax is Steve time. particularly of period likely you like extended promise could to Nashville you and would grow no been going this you but an number an belief space commerce that is but if see drives and limited. still because it so believe people phenomenon's relocations what what at you

last one me. for real Perfect. And one maybe quick

a about event quarters obviously knows we over of that normalized see the the can net see Is charge-offs we On five think XXX we probably kind as percentage I'm world? right three, pandemic loan the it in isn't of near-term credit kind the four, where that reserve way level bit but a normalized the normalized? to losses XQ, is little next and things at this through probably reserve [indiscernible] from XX as loss flow loan wondering who saw post a

content kinds what identified and up centralized we time to going I'm rocks charge not what up anticipate where it loss good and out think sure the to so materialize we book to we've charge-offs trying not keep some that of don't Steve coming end a get as kind that's Tim's we're the Yes end but that try where it to but need materialize think going next that doing right haven't we to reserve and towards it's any they're under trying think the this to it's this and see we group I likely all we'll underwriting find off them of year then to is to see where hand it off is hand got the it digging is where of we of to off it yet now. see we eventually some quality just down go will relief. I to groups,

Now book in we're seeing what not materialized dependent unemployment a loan that's was we thought loss like of would lot but going forecasts in materialize on look it the the otherwise like content March. have back to

Thanks for congrats and guys really the a help Perfect. it. Got much so good quarter. on

you. Thank

Truist Securities. Jennifer from comes question next Demba our of And you. Thank

Your open. line is now

morning. you. Good Thank

Hey Jennifer, good morning.

Congratulations can't your on I believe almost anniversary. XX-year it.

getting We're old, yes.

Older.

CIT You Atlanta mentioned first think years? in what opportunity North or give next question. is your opportunities as us Carolina share gain my on specific the of one That's second My would the to they Terry. partnership those in Thanks. novo? an de Do you you question the three distracted seeing can two with you're over update market be are first citizens

my do invariably larger about At round maybe the but view vulnerability believe I those of you get less that. probably of Yes. seems That's in the $XXX sort things. and guess companies kinds to like maybe focus it way I opportunity they'll in this to my will not, try me out. and those the question. some I of mind great integration Truvis give north is it well. are create that that work turmoil this transaction. million the don't is in characterize and I'm than front point better is still think that when vulnerability excitement the likely opportunities I'd of I Atlanta we're be that internal in Wells some in the to is don't today numbers certainly that those to more excitement doing there a be an timely about to market guess is seems other and involved there in have sorts characterize companies on there I exactly I we'll be way some I opportunity numbers, would have in and I This commitments $XX outstanding guess million but seize there about there's of you be

that of are Some construction over those things might up of think I time. fund kinds

that So think owe I you well. momentum real I so is if success deals will got that there guess about of Again be with that about that all building stuff I And This not commitments that talking has his [indiscernible] yet pretty Rob believes associates me would immediate and have has might pipeline the XX the a think exist word would close to say do doesn't for in about measure the course don't tell pipe that hiring but it's is he to of down he's have again is large to his rest he that better catalyst fundings he words hiring full. pipeline he Rob exactly. today. that you other of and that our will in pipeline going or we're He's as be real the right.

four classified about might think be as I branch-based retail which associates.

advisors or pipeline that's or likely announcement I'd is swell. really and a an next something think be high week there or The be the either that stream two revenue in it others to to supporting like credit category. two We're financial analysts have me really or profile again will higher looks put would I that in a

Rob's So continue again doing I and a encouraged think great very we're to job. think

results I materializing. are think the

If I could one on BHG. follow up question

So borrowers Who [indiscernible] their BHG most really you or sub Thanks. in group borrowers? They among the are still that what been the are performance terrific. are of stressed segment? has obviously seeing

Yes.

of not [indiscernible] think any I'm sits where most that but permitting surgery. the sure not probably as market stressed I are elective still are loans it today, got they've

So I open. think all the dentists are

a but surgeons now the little the are and that in I'm based can are think coming flows I reports BHG The not by business stressed on more is there second right all I Jennifer dig that's their think that quarter I back. were from you stressed some any optometrists discern can large for but open. one on particular I another. I more get segment the sure that than

much. so Thanks

engineers they've that that book, folks and non-medical three it it the into call call book. the over architects that say they're the book will medical and is those last branched than or I the the performing two better years

been So a real that's pleasing thing.

Thank you.

our Securities. next of you. comes Thank question Wells Jared from Fargo Shaw And

is line now Your open.

Hey morning. guys good

Hey doing? Jared, good morning. you How are

target Hey maybe success Good, in Are geographies quarter. more you faster obviously on a take accelerate on and of following a a building into opportunity you've and had a level share mentioned to this could and as and said an for hiring do while we a would the XXXX go that some generation Atlanta that than additional that you turn business the be the just think there really expense you different once example. and market to expand Atlanta? for competitors offensive near into you thanks. Congratulations geographies little up now bigger the it some model new and hiring and take that's just strong just Should expect potentially out? Terry in people term opportunities given using to really

Charlotte, we most but to is want fabulous regard that's markets like North the by might to I opportunity and that make might Carolina. in play the we Jared truth way tempted be we it and that Carolina, honestly the guess this in characterize opportunistic question a can that North is harvest be Raleigh, I

as Carolina I in just market to you States whatever look estate the a hottest the United market highlighted Raleigh, metric was North it's real fabulous think at. want

in I those think we fastest grow a forth. and to the what's you Charleston and bank in objective that's can markets what's XX gin three what's particular that's up really where is invest, in want where growing so see happening position Raleigh, we're we're in to but my happening in happening want to share so we Charlotte,

us so important doing seize want that opportunity for don't people distinctive a can't to that's but I the that it's things powerful again if service in experience are do mean I'm to sometimes as grand And I harvest those to like do not we else point time growth anything I the thing interested is is say know now I that do that equation high most but service important that that's say to markets. opportunity. in and right getting spent a growth and That and time

two give than to those that been some Okay. they start that make markets of And hires that the years have [heck]? sort really back less a lot of goes you feel there to in can XX% so

believe of to maybe trying again opportunity form and mentioned a I particularly that. bankers. the slightly I [indiscernible] at are I Carolina lesser be filled degree do SunTrust some but also just opportunities I if think candid your of and I about course wells as at wells picking into so [indiscernible] with think strong are the is I South and where markets to again hiring think up

Great. Okay.

is in they reflective maybe expectations subject out a not They they or for building you're the this point full So are in or to more bit shifting that time? losses same a growth need to that and looking an then recourse BHG necessarily allowance flexibility? that at little little that CECIL? to Do recourse. had of build they've their the Are have at way what

CECIL end Yes. for and doubt is CECIL There that going them issue XXXX them going now a compliant up. sure down is the models number helping point. number a loss think no that this get I'm a trying reserved to to quantify build credit actually path and to get the is at to analyze I is CECIL towards not some they're where but and

shouldn't losses tie direct total content at we where But the the Okay. think than recourse a loss point into higher necessarily look the significantly they today. is at this the being at as

question your [indiscernible]. Yes should Jared understand think right. if I think I not right you're We I

having on some shift Okay. beginning securitization maybe be straight you'll that it than gain then will opportunities emphasize the be balance more that more on Got see on securitization that sheet and think mix? continue you towards it strategy back XXXX do good of a a BHG sale success and or to with so to

mix. Yes, I think good a continue they will

they that will think I believe the at next early game year. securitization be back they

February. up So it January, call they're issuance to another ramping probably do

Great. Thanks lot. a

All Jared. right, thanks

Thank question Vandervliet you. our UBS. Brock next comes And of from

is not line Your open.

Thanks.

is on of terms following somewhat longer it kind term BHG of COVID guidance is the terms of earnings the profile in the kind past going or is. versus of about mix very seems of in we BHG the in profile be on like Just should it thinking we you've emerge and The securitization placements questions revenue What as what BHG traditional strongly. there? about from revenue

Yes.

I single for think year what believe momentum we're year. next digit them kind double the digit, low of We next that. looking for high probably is deliver they've at number to a got

be what current Brock. thinking that So would our is

funding you and for a to really ramp muted the loan there guess now opposite that costs. steeper a do on see after or number seen on but over is look where I waiting securities we for time hoping now. Harold the that curve growth Okay of trending heard within should banks sharply and given and that I election right whether possibly book it's the until other we've side balance higher guide look securities yields really up

Yes. to executing the don't I take going or be on of focused of we're book don't to liquidity. I think think loan leverage building kind this any on some strategy

the securities Building book.

up pretty book. done to I'm that to think say what but us That's of we're a that. sorry of acquisitions. a even said don't I see XX% XX% the to will bond lot by look leverage to We've going We the hang just I that a book municipal of a or with ramp strategy develop kind execute I Building mean strategy. the word. building yields be on lot book Bond right to just securities good. securities the now wrong

where drift assuming you are? Okay where they have and rates those yields sense stick a of could they

Where bond to going right now I yields to municipal and but next I but don't help hold some we're yields book believe going I over see think the quarters they our it's probably that will be significant. help us several are deterioration think that can't

you. Okay. Thank

Thank of you. Alexopoulos question JPMorgan. comes And Steven from next our

open. line Your is now

morning. good Hey

Steve. Hi

the start XX you To year color a or is? XX incentive the of it results? new exactly incentive Is on on give terms in full what more can is new incentive it XQ, a

Yes. I for the approved it year. think We it the whole late implemented [indiscernible] July. It's and

but So to quarter tried revenue X,XXX figure XXXX reasonable it growth and XX% knocked all for out effectively to gives it and a quarter kind then over hit first was only in be how and rate EPS consistent the number this the to second in we and out game because that determine obviously whole then what bill us incentive do would year. cash and for of with of keeps not people reserve to what XXXX of any the our and people the with game PPNR so tied bonus growth again messaging that some producers was us try so the

XXXX. were get us only help some us to not create start we the but get trying way So that year importantly will to although target them at not this least try back develop XX% plan level, line more the a to something all to just

need rate And that Harold to incentive? what growth maximize you do

anomalies talk group is where within what we at peer What group. the it to quartile consider take into of we and about the were that looked we'll top proxy peer in we said and and did okay did tried what to does peers it the our the get

Got it.

done color this was available? just it on Did but down what I the around exactly up many had upset all loans to more That's turn then Got gain. that I've what's banks Okay. think helpful. And this you it. asked before market they following give Can the share commentaries the for Terry customers? people program with opportunity? PPP weren't created they larger just the so the you

between and systems the own the cite big be to hear to but know what that would mass want I Many slow were personal the All them may bank you say that I'll I unresponsive. valuable. their communication up. then commentary led banks great borrowers. Greenwich which There was give my Again very don't I and get to from Yes. little confusion. less of were

how of think lots this us, recite nature feeling that typically do how mean a information deferral you weren't webinars go you not a the the out about not but and and bunch cash to me if borrowers reserve about does frustration you either PPP is what take. and for among that deferral creating of companies how more supplying if ran really information versus this, impersonal to of before minimize really and and so I'm the up And underserved work, give deferral sort the and of the again the to promise is tell a are you the of or bad you to person borrowers some personalized to ends your of I'll of held why say and heck losses down you one a money approach not I just documentation issues process you're do the benefits our we going worked two your on why a mass this I be how kind the end apprehension we get think place of did more example through. I how we've you the thinking to because an attending application trying you want improving had for come I like to it me of and I'm could need forth one handle think so they're did the banks the base, could webinars I apply we so what that spectrum I and you and as so go and you're process talked became you're and What As to put here the forth. bring acting where world's would borrowing Steven's phenomenon big look information irresponsible that of of it if process, spectrum thousands you're just it led at gone I used financial defer thing handbasket customers think whom many give now guarantee do. our of can't that credit the many good them to us take and an on we even smaller that's you

it's and apprehension makes you word them of get kind on personalized it three in less different a the it increase went the view days middle a XX them creates risk side so personalized and Our down it was made are and our about like knew that that that somebody irritation where give sort that service a to so frustration, two reason what puts and we again of a but didn't love you're in borrowers leads to if was time things substantially or had service approach to more us at our just a sort ease for and was nobody one of among that the of rambling deferral forth. borrowers so that I'm borrowers looking after in credit feel and direction to which

that'd of so characterization be And it. my

is deferral helpful the impressive higher would have million up BHG quarter. really it trends? The but ratio just the Okay. reserve I I one the Yes. Thanks. was XXX given recourse on ratio in mean why color. That's surprised that deferral these given increased reserve's up trends one modest was gone the final Maybe that

Alright.

that's and subjective. less more on than roll a model a So still company perhaps qualitative to develop assessments have there keep or is mind more out and we CECIL lot going they're private a have to in like with

being doing So BHG analyzing what they're just conservative a and think probably is some reserve. is I building doing anticipating

Thanks Okay. all color. the That's for helpful.

can That's I give all you.

Thank you. comes from question And Catherine next Mealor our KBW. of

line now Your open. is

morning. Good Thanks.

Hi, morning. Catherine. Good

wanted your PPNR to follow just I outlook. up commentary and on

mention next can can we we kind think XXXX as activity? is at to wanting year grow about rate normalizing? year well we you move talked PPNR mortgage rolling into off and headwinds with off I share know PPP per so because of that you you grow think PPNR you're how the think wanted think should digit kind but or two if more I to still in XXXX even mid you that don't PPNR, of Harold So looking PPNR it those about as Do buyback in of can least grow symmetric single of stick and next grow growth this to about

Yes.

all of during that BHG PPP about slide bill. make we've the for I the was First talked and excluded understand liquidity sure and that we let's what

of kind calculation growth. that PPNR and numbers the that from those quantifying excluding we're of So of

we didn't our what to They how and right, So not PPP you're SBA. think all next so to is put it is does we it then going onerous happened will to something one anticipate a this incentive fair or was numbers and do year year target that an with PPP the and the sudden of more materialized. revenue they which into think make

eliminate that. through So we go process to a

we and So what we're trying get up how that's to growth rate. do down tackling to come blocking is and our anticipated PPNR with

Now when difficult top get shoot of it's peers. that for out we lot the to a quartile performance more

our start comparing it's contribution peers So from and when believe we the than exactly to would revenue are getting going from to greater but that peers get. we're a that lot PPP is of apples not the we apples

a about So that's Does make of us. sense? little rankings talking start probably a you for headwind when that bit peer

for much ‘XX. I'm so in incentive around growth a this just It making for sure what but more not your commentary digit an does plan can single on you year the was PPNR do as outlook

at likely single next high, peers to high single what similar year. to growth for true to is it's the next that looking doing digit Well, are number be mid year and a

Great liquidity? and PPP, if BHG that and includes

That excludes us. liquidity PPP, and for BHG

Great.

this incentive So to down it expenses is And and comp down next on so look you've line then for flattening inclusive that's flat be quarter. Okay. expense expenses side, sense. the that's up at That quarter? to kind also makes catch the of bottom the number that got just of

Yes.

The to up third XX% whole quarter incentive of had year. to us catch the

to go quarter as the incentive have the don't with we in far fourth So growth.

another in still excuse expenses me I'm so sorry these looking I'm million? XQ okay and scenario are you're but XXX another flat Got XX at in it what million?

Yes.

to incentive think to and well, is incentive third drive that XX% is I million I I and because what's only accrual get quarter think number into the of that XX% to call the I'll of PPNR had it $XX into that fourth quarter. it have get the going primarily

Got it.

Okay. it. Got

the So down quarter. should really be next expensive

Yes.

the was metrics? It Great. was that All And in release. that just was on then criticized you gave okay. throwing the what mean do question we have criticized did classified you what okay. Thinking I quarter? Do have updated press me flat right. one you off just last the [indiscernible]

It went in up number front have Catherine me don't percentage. XX million right from as last that of I quarter. a

what drove And of seeing? increase? that kind are you XX. up credits What But Okay.

account Catherine a hotels further it rate had July that of hotels. risk into was mostly in went a We XX.

Great.

Great you. quarter. Thank Okay. Great.

Thank you.

now Thank session. today's conclude you. question-and-answer gentlemen may you this includes you call. this for disconnect. does And Thank our Ladies and conference participating and