Pinnacle Financial Partners (PNFP) 21 Jul 212021 Q2 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners Second Quarter 2021 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 factors 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 and description A subsequently reports. on detailed in XX-K filed the other Financial’s of more XXXX risks Form is ended contained its this and year for quarterly Report Annual the Pinnacle XX, December update any new result a or any disclaims whether this otherwise. forward-looking of in Financial obligation or statements presentation, events revise contained Pinnacle as information, future to

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

my and for you, QX joining in you outstanding thank quarter view. Thank was operator, us this an morning.

pre-pandemic we as took we'd incentive, position during waned. pandemic of trajectory, growth you that the in focus ensure us number know some have to a quickly of to return that PPNR most pandemic time, in following XXXX, on As our our to stages a the growth been actions modifying the like of be early for

we're variables non-GAAP call been focus basis, two at truly on this to would order I chart GAAP we adjusted many with a metrics begin quarters largely so adjustments in dashboard move required but quickly the most quarterly every of we've always as XXXX think on in our reflecting measures. Pinnacle, do, performance that. I'll the key because that We successful that to the managing the suggest there are reflecting here first

And invested can Linked-quarter and lot intended difference. it of inspire and ex-PPP what associates deposit understand why was XX.X%. culture growth calls, It's Most fabulous here. of this program of conducted conducted We COVID-triggered core Linked-quarter of another growth earnings more second And XX.X%. speed reliability even Linked-quarter extended and that growth already a CAGR growth this was to the more but provide big growth, the reliability deposit our new is the are in annualized you loan a all firm with The the know encountered bill. the on leaders Look picture. got reliable. us. really three-day associate the was what several it I all important see, you EPS every these time associate loan key annualized XQ, annualized other you at that headwinds strong As that, was over on to think growth got the orientation metric. on key high that's example. and all makes engagement. help chart, at Take CAGR, quarter CAGR, other the Look extremely of very and various time. level focus demonstrates to the very the of the better. as the of single over an to But XX.X%, than CAGR, in XQ metrics asset I reserve XXXX a we've every even or me virtually the quality is, excitement I of XX% fast, try quarter we period speed On color reliable. the revenue for an today want for the time. growth dip face revenue the CAGR, for a is by and this associated of

speed things to we personalize they associate the And is value. for of shareholder it's by what every value we hour-long and conducted do One destroy the two, of Harold produce reliability detail of The of number we topics help in the shareholder that intended Number principal great every growth. specifically that outsized that required shareholder might two take-away do shareholder single are to us sessions expect that get But is single produce things covered returns. individually increases value. how associate to one, they kinds and growth.

that it me is going headwinds excuse – reliable So of many fast overwhelmed we it how are like by as such current and that demand to we continue expect forward – peers even how produce the payouts. is growth our loan growth being and heavy and slack reliable

that talk positioned and those growth fabulous of to and markets. footprint in It's and and fact quarter's our at about to revenue critical you Carolina, Charlotte creates. just the hiring likely that have hard a country. me all Charleston, Nashville, talked Atlanta, associated On vulnerabilities southeastern and are like expected in and all, have extraordinary First high in a high-growth North we've M&A expand the growth that existing continue of about to of without course, to call, and and activity opportunities size large outlook rapid we'd one of that, last And, bank dynamics I our to in markets high-growth producers ourselves the pace large I markets level Greenville heard other due with of biggest Carolina, Raleigh, Most markets the markets dynamics. the South growth. best size to

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dynamics that Score as we they more versus banks growth, So say. share where growth or share the our and is differential of of the their extraordinarily differentiated how ours, importantly, between a I've service have are in size most currently market already the Net The of barrels footprint, have XX, attractive the lead have vulnerable. about and banks perception vulnerable. extraordinarily wide really are our who the their client talked that Promoter but

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Pinnacle there Pinnacle request. this were received speaking well tip These are mentioned You about raving most last service. can At The recommendations XXX XX. clients promoters. received Obviously, frequently eight. on our or about see Pinnacle. check, clients comments next

that's what do and footprint that entire multiply promoters for Now across our you.

that achieved kind because do client have We clients this wowing engagement, permeates everything we of in this of differentiated firm.

me a it to how second illustrate works. Let take

about ample a the deferral. Over last early see talk the so, an needed with or to if our pandemic had beginning opportunity year very clients to the pandemic, the they our approach offensive in of we've to outreach stages to

short-term whom to outperformance quality on performed We more large we Some banks versus well, extremely and and, but focused clients our we're on whom our aside, about passionate asset metrics defer helping ready. payments. shows relative importantly, asset slow as This focused compete. chart an with clients, banks were the quality were our

on of comparing successful loans PPP for originated of percentage national their bank's each the percentage book have national bank. size Here, PPP versus we're would of each loans than Most were suggested. banks outstanding the less loan just

article has our can struggling. with we Response to of. but taken matter Response deal I to coverage how most fully, whom a urgency time the were outperformed. take entire played today I about was it believe how didn't the journals Journal at cutting with been for In as to leaving processed, the applications. perceived our the Crisis SBA. Index like example, last Business compete applications. round ignorant during many they their view measure how My right how PPP, in many the develop take the didn't because There taken dissolution applicants of great this of. left took a get the Nashville we who highest business Greenwich's large for unprocessed in XXXX, them of clients underperformed, In fourth of our this slide. but care a the quarter comments many Those submitted the clients about program response well And to them a often their It Index of to were station. care get why the Crisis many are the And Greenwich you listed of of as get and off, recent with clients the see, syndicated risk round talk of there banks' X,XXX side of didn't in us got many where competitors we an so on was to the won't was is of pandemic. [indiscernible] of a clients hand PPP, get it nation's the many just recently universe. applications that As Guess had banks care SBA all it's developed firm the Pinnacle excuses

XX. Just XX. done, we feverishly, were and a reallocated pool for This but we worked that them all limited funding entire available knowing program competing got of resources,

So clients we got XX.X% of care of. our taken

you side, can what So, about our see the Those on clients said us. promoters. are right

kind of from accountable handling in leader for that still created rate client without agree workforce. kind cash not no procedural know, receiving I'm creating other and hit incentives that quarantines, result. write measure environment associate ratings time. our an survey an XX% In chance there That's the engaged of experience creating environment and XXXX, aware that forth, for firms have But even level primarily leader We their target. of experience an top-box XX% that each of their that of their achieve experience. reduced associates agreement, associates associate top-box kind disastrous and We associates. process any the of target I strongly or year should difficult as the statement via a where As hold like far associates. work so words, XX% of set we engaging changes, each highly is all of

high failed all we is benchmark a all us together. in XX%. win incentives, promotions If increased earned is feel If XX% In feel shows our and stead associates that together builder we of are lose incentives, earn equity. One share level they We color benchmark employees philosophy. they incentive, best. them of that a favorites. of puts there this those that been emphasis we If employees XX-year a of benchmark our a lose profits when earned of an but versus paid. work XX%. a go incentives. the XX% on with sincere color playing fair our operate trust them reasons managers incentive. of a XX% they management XX% team in XX% person powerful feel XX%. fairly that's do. to XXXX, female feel we we avoid as employees our of we with time history, 'win we a the deserve a employees that industry of versus that has of female all employees versus such of only interest we've for we of female together' created feel that our failed of diminished that get together, who And paid receive diminished throughout it great like our Not at

barrels created engagement one alignment on promoters, since retention is turnover results And two which one, to the which our things means we've that associate generally, client of to to attrition, give associate organic retention in all associate associates, in great number Number since of create continues extraordinary more growth. that service, of level growth. to client this barrel turnover turn leads course which leads so that minimizes two, this to turnover And growth. associate number

future. trying our time, the structure our the the to sales speed bring for focus you for well growth and as reasons is we'd quarter reliability of for So to continue foreseeable expect growth what I'm into over this do the as

it of detailed me you let review to the more over quarter. for Harold, turn So,

obviously Good Thanks, growth pleased Terry. quarter second with everybody. morning, loan our We're results.

Excluding X% average the second PPP, between loans quarters. and were first up

XX Excluding were compared PPP, March annualized. up end of period June loans at XX to XX.X%

two least conference yields, remained the quarter As fight during for XXXX. and at last have yields curve in the yield to loan will the be volatile loan mentioned second calls, a we

that quarter by rates assisted even lean our maintain was flat will a the yields. boosted forgiveness. watermark to the big quarter. difficult our into for a quarter, relationships were high quarter first Overall but first We loan PPP yields on with impact likely harder and basically in forgiveness loans PPP X.XX% yield It next the given to model to PPP. the second the will be continue of PPP from few to X.XX% for loan quarters,

quarter. PPP Excluding loan yield average compared loans, our in the approximately first X.XX% X.XX% approximated to

a be continue believe growth to target for XXXX growth leaders from market that forecast, where PPP our So excluding to reasonable to here? in Our high firm. a for the loan single-digits

to lean some Southeast, give goals markets, we many with with on on year. new we believe in an loan bankers the growth markets loan we're our our which will banking us of coupled growth be recruits about best our As optimistic to of best always, advantage the the this

We also Birmingham these recently relationship and announced markets. We they are opportunities about in total. the in Huntsville two in our our very with expansion excited seven both and managers

loan $XXX growth breakeven volumes I'm this new were those P&L in year, our expecting the modeled from in associates late XXXX. markets, around As loan million two from

excluding yields. As are reason get we dilution of to occur, so impact curtail loan decrease curve PPP this, to in core our does likely yields, loan some stabilization so slow. our Obviously yield additional should yields yields, but have help hopefully the we optimistic all be to the will of that stabilizing, some

fees of work XQ As the will anybody's thus proactively, XX% we with we've associated of those we fees in forgiveness experienced recorded recognized said, PPP, the program, And don't yield, quite That XQ. see in in that since to borrowers we start which far. guess. believe it's our $XXX though even continue to PPP of will we of million the pace we

which over least we at help unrecognized still bolster near will yields have loan we the fees, $XX believe So million in term.

we previous since deposit another at the billion quarter. deposits, quarter in end, the on quite not quarter second We last XX.X% our large Now non-interest ending almost up million $XXX up several quarters. of $X.X significant end Core as had up at in but big year. growth experienced were deposits bearing as deposits had of

Our average at in quarter XX.X%. up loans slightly the to average deposit was ratio second

increase consider the loan and ratio of So to quarter victory first year. last small in first is this we since deposit the a that our

by XXXX see this average XX so in points, around EOP continue points, to basis XX approximately remains maturing to from basis at CDs so to rates banks. everyone's Our for have while XX were were over rates continues look we million deposit year. curve average Liquidity momentum approximately to in deposit quarters that downward The XX did be work and basis an excess short-term of liquidity don't rate XXXX, next remainder quarter, XX fourth forecast of securities. to for additional yield put year. $X assuming We more any the points out get Helping investment us plays the this rate attention about some anticipate quarter this $XXX security or gain curve. We will purchases our few basis big a billion the currently all mind. of on points be there

interest the next management, up risk the neutral rate slightly two. to sheet to being of As a bias year we rates or do today have balance over

the all money over our but acquired the fixed of in bonds up position swapping cash sensitivity – bond received flows is the after quarter, So say, pick the did the XX% transaction, same for cash so points front-end basis the experts about cash me to of purchases. XXX on so bond essentially rate did flows bonds up, before yields those on our rate swap we in interest what variable, asset we interest before second the we we fixed and in from an the execute beat deploying

increase ratio XX% assets for an and foreseeable expect that to hold the the we XQ securities in future. Our of

Our say assets estimate XX% that in billion a bit billion peers, the running say, $XX banks good range. than $XX is that, to are more the

the in deployment All those to of continue yielding at sources. in second create million addition quarter, the momentum excess We wholesale assets increased we to purchases funding quarter. liquidity the our to higher instrument lines, in in look to quarter through or $XXX addition we in $XXX repo to made – in from the of elimination million and ways the increased we first bond second acquired

XX time, but balances last another less mentioned securities is I on portfolio likely the around than have will it sheet yields instrument our in repo this at counterparties somewhat As investment we balance basis curve. somewhat points. in product, looking the be by similar We're secured repo repo

quarter might our We also has $X.X funds pandemic you broker historic and billion. wholesale bolstered other $X redeemed. reduced significant more of the At second Many amount our with time, funding by by that additional the this been liquidity book in that recall billion. in of we than almost a

left have in XXXX year $XXX for $XXX XXXX. about million We and this redeeming and million

is $XXX about cost rate Federal annual us Additionally, Home we Loan million of X%. Bank that an have borrowings

rich continue those right but explore borrowings, prepaying now. us for to of prepayment penalty the We FHLB too remains

about we we The Lastly, weeks year, level whole holiday cash. do in the now last loan available environment bank to fully us current anticipate enough $XXX using at eliminate during provides time but million capital few confidence a the in was sub-debt of the and rate feel that the we've sub-debt this pandemic elected the redeeming its sensitivity, we instruments updated which toward In quarter in that's funding, the X.X% information, asset supplemental scenario. second up-XXX sensitivity treatment. an our these lose in points which to initiatives some us costing of interest increased accomplished with favorable annually and capital going as is all all

our no positioned where is planned it current sheet balance agenda. like stands currently, moves on As we big our with

Thus the top adjusted at last net retreated four being for chart the in but or quarter illustrates liquidity in steady our over compares X.XX% approximately year our quarter, similar which the held PPP was to has interest row at slide the a and after after calculation X.XX%. a quarters the up margin second NIM As last slightly, so. left of

these he here, continue does clients sure As but credit, not best, on job, relationship easy, our and is doing we and working our obviously he's Tim to making rest what managers on both the a big net the well-run – institution. the credit the metrics, very NPAs, and loans, focus past and four loan portfolio traditional financial thorough very perform case the many well prior and best during in second some time. quite quarter In and emphasis to on reviews in was the pass credits, in continues we've grade are bankers conducting and continued particular COVID teams quarters, categories. metrics with around placed credit credit the cases, hotel non-pass big as assets, charge-offs, the experienced Pinnacle's accruing sound our credit low due our their Using in risk being specific classified on diligence portfolio credits COVID

quarter Our credit very encouraging. second remain metrics

points, are risk noted strong declines down a basis As discipline very credit effort XX active relationship on points, firm the net takes officers just of these asset collectively us credit it our sort a has and respectable points and appreciate classified a obtain strong managers this also slide, to management. focus our at NPA points running to basis to X charge-offs on of of and basis which our soundness. in the Many across pass with trends, order ratio were keeping XX great to that decreased down X.X%. quarter

only the of metrics quarter improve relationship major everybody. credit and to experienced well. the see Great credit an loan request growth, not in managers also second all four as During uptick officers our credit they work work, and

credit assist they defense, diligently as for continues detailed Tactically, appropriately trends worked to forth bounce managers like essentially looking between the the to reviews credit team pointing any hotels credit and team the loans Our and and relationship as alertness during quarter, toward new and accomplished toward deterioration. structuring and non-pass well second the offense as exposures. incremental portfolio maintain existing our an back

particularly per rate, a all report For second daily on the remain of the the hotel year, segments, it's occupancy, average on revenue in direction. trending right Again, attention half good COVID our hotels. the room, will

to with As occupancy portfolio hotel quarter. the occupancy, continue first than our natural higher we of saying to run two same X% XX% about the months through rates

higher expect the national be We June as in June up even as to occupancy trended rates occupancy well.

it's the review the the transpired to we at onset criticize pandemic, has few recall, you all quarters. to targets next last upgrade hotels of spring to over to now look downgraded time If and our establish what begin

hotel loans, another the be to XX Our at initiated ratios. October. coverage in months, criticized meet trends operating a Hopefully our PNFP for our the looking we plan will for ability ago you officers at credit support, last over credit will next – officers hotels hotels have have such and call report upgrade on as debt the service year

and continued allowance on the to continues to slide, several our noted economic to and the we outlook COVID in loss quarters, the segments trend ratio overall As at expect continue have over positive. the we credit shifted up metrics even continue All our a we reductions total held all particularly in cetera. thorough offensive Pinnacle’s et stance, our as loan COVID though really well, will impact have next to back improve more work, impact, defensive in

to income. fee Now

XX% which of is than news wealth same fee up were more number last year, over management, XX%. in comparison the services, and more trust revenues insurance good quarter, than investment great quarter up of a lots the last here, to While for had year

hiring to and and Carolinas the in We we continue and as Huntsville. continue to Atlanta particularly wealth the our Birmingham eventually be very front active franchise, build management on across

disappointed for last mortgage You that contrary, chance are of of holding second quite remaining the mortgage might an we our quarter, second believe were four think had in have the quarter, that quarters for a they pleased has million results at a or for optimistic $X.X and hold we're for year. phenomenal should quarter we business the two had run rate year great loan the assuming that rate excellent quarters this in and sales environment SBA holds. the this the rest so

the on to completed provided with a in investments investment. great insight of valuation which fall one two second. equity point our excluding investments, a quarter We also BHG about BHG, of booked of respect the had raise quarter, our results dollar one a equity talk into for just and we significant a a thus updated million I'll this investment that increase an more during

not of specifically targets hit think XXXX based incentive go Along back of our we costs provided expectations and associates as opportunity incentives to up, base eventual the XXX% our thus for XXXX in We our target. operating of those incentive earn our targets and is incentives, we with year, that expense our again an environment hopefully the to I come the significantly if impact familiar our of expenses our costs if with not targets. As were Last as from will below did of earnings recoup much current fully anticipate everyone associates equating down. some XXXX. outside our lines, strong, will and XX% hit lost incentive costs, go payout

as we've increased no free incentives, only the said our and repeatedly, if earnings However, is growth supports incentive. lunch, occur there

anticipate to we at traditional maximum and incentive for thus max first we the we award we are target fourth the second a retreating quarter back this All-in incentive higher the than as up third anticipated will experienced accruing costs than slightly catch began less be XXXX. the for of in from XXXX, quarter, believe Additionally, calls XXX% quarter, payout the quarter.

down the by and value – an book on I overall As far point, relative amounts few we'll intensified focus $XXX should sub-debt and in million We're we believe value increase comments we've also to the XX.X% over next compensation work leadership's want second be our to booked per some time, as our on peer on Quickly reinforce to the another last book mentioned matter retention tangible to plan. with our we Later our regulators the third the quarter expenses annualized now And this flat quarter. rate, total from for to expense that run growth just fourth months. in in after that for capital. redeem the sub-debt issues. I component tangible a thus our this the year, calculating currently earlier, adding year. mentioned next share I we intend equity

our designed we share in of is plan results the value return that shareholder per and that return tangible leadership. determine common growth figures equity for our relative Our relative will compare total and on with book with best tangible along our

XXXX, slide rest outlook as As our much this depth of won't this I of the covered for in we've previously. into go

most, realize that people, summary that said, for builders more what the appear model our we believe. headed. is a our Pinnacle optimism in we renewed great markets than have is and this, about class So confidence Obviously, really the we and again optimistic where our of currently we

is for past four the The originations are several for demand on with we've bars shown This a BHG. quarters. sets quarters. Now slide chart that the blue record

originations fact, share almost would they've you X%, also than that room market we believe tell loan over growth. time BHG for their much doubled period. that In less is so

would loans the has billion recorded gain-on-sale is traditional represents are that personal, This sold associated to bar indicate which of intends our generates mid-size loans are improvement on The downstream with businesses patient in loan finance home these the origination be BHG collectively to been and $XXX model, research gain-on-sale all. and model. business as green revenues business banks. which BHG their lending, annual small and competitive As

remained spread quarter, overtime slightly borrowings borrower chart, in bottom quarter. XX.X% As have to new which the net records Bank years to years. X% just the from so fluctuated over few coupons left up under the only the at ending failed previous for in is second second last at mid-X%, the

shows over results is anticipate. As sooner style XX of year, first attractive They right banks diversification rates, even noted fact of now their well bottom sources. the revenue there, looking securitization approximately securitization for last The split the model XX-XX banks $XXX the XXXX. of We a the United executed gang the of funding between both in and good gang the believe a in strength approximate than the be XXXX, gang individual for them we take some conduct over more BHG the revenue to advantage is earnings wholesale they allows this balance this before the could near-term funding and a the wholesale and though Doing wholesale and diversify similar idea, all platforms slide, as note, $XXX last in Again, network X,XXX the another rapidly on Of funding second the consider securitization strategy very chart strongest BHG quarter to as sheet million, models million. are much one in end year that loans BHG. approaching was acquired months. on BHG in XXX also securitization in BHG’s model almost States.

which sold sold on left, has recourse chart, other the we've that and obligation credit bars $X on BHG updated the network detail green of in loans the currently credits the loans of recourse a billion banks As chart the banks. BHG’s amounts detailed percentage their – of The on just line outstanding over through network. their as blue chart other growth to these and with

is recourse the obligation for a noted reserve loss future absorption. As

losses XXXX, outstanding the pandemic from end standing at during their increased anticipation reserve of potential chart the at reserves year loans BHG with the X.XX% of on in XXXX. noted As

a the second XXX the BHG points. outlook related basis result of quarter the as percentage quarter, of pandemic the During reserves down loan, it in decreased approximately was a second of better XXXX,

month the knew the at would consistent the on few last at loss the been right, from years to acquiring impact from updated landed with chart absorbed from noted rates. how has premium and split loss BHG XX This previous chart bottom, who during losses basically where has X.X%, for trailing the As the the the paid to COVID better the bank loss get presentations our actual unamortized banks loan. also credit year reimbursing

track earlier higher off decreased. the premium has somewhat mind, tends is prepayment for actual are prior they're prepayment the of somewhat loans, business, in just years. As last being – a paid the a the paid and This chart primarily the are Keep loans more for portion few but reasons, BHG off occupying has for could credit rates as several good have to to losses gotten type credit, Consumer which lower. BHG’s indicates have record larger gotten maturity. be prepayment over

the said the offer quality to refine before BHG two related over borrowers improved updated the steadily years. I few past and chart I've steadily base. quality. right BHG’s its to quality to last they as and the borrowing credit and continues chart We has have again scorecard the their improving BHG of increased Again these powerful most of the in charts, be have may

of level better underlying much continue vintage, the ago. than lower very borrowing from quality of in in months few and loss our losses at out loan. by a just to earlier losses over Looking The originations base a opinion from the thus the years impressive life is percentage toward pointing

quarter another expecting approximately our upped our prior approximately estimate build and quarter same revenue of the We everyone's XX% growth also diverse in of exceeded XXXX no XXXX for a relation compared to to to in again. a for growth now XX%, outsized more as had operating expectations We've of great XXXX, more. franchise. BHG yet they XX% thus XX% expectations produce to adding Lastly, for continue were strong factor BHG, and rest XXXX or to

indicates, us and in it All phase over our got a next to With continues continued for the are and several – As open the some as fabulous our which for slide give development, and one years. they've had or quarter believe PNFP people that the future. foreseeable franchise we that foster more growth of ideas should operator, questions. that confidence any growth for poised outside much up we'll of the

Alexopoulos The sir. JPMorgan. open from questions. Our floor you, question Thank first [Operator Steven Instructions] for now from is is

is open. line Your

everyone. morning, Good

Steve. morning, Good

morning, Steve. Good

an added you pretty of are seeing quarter. having pace to other more revenue of I have more increase to banks? picked here, right seems would hiring opportunities the function hiring nice, XX just guys or you in this producers Is a of appetite the up start to from

that's a are think more great short from other The question. is, answer we I seeing opportunities Yes, banks.

as of revenue probably to I approach as to would those if And we'll that And think M&A competent are all got have waterfall for people. unlimited as we many people comments, along, said of we have we've we an can a I say producers we that’s opportunities heard market, the the in move difficult our hire books I a top the think wrong if experienced of large about, just sort the business, were many with to will, of hire that of then them and bureaucratic are of the talk you really that’s acquired, I that hire lot of it's on it us. us appetite, or you've across I case banks is in opportunities Steve, go think But come as those hire. finding greater that grind case lot And the is creating couple tied of big stick a of there, in just just some in people, whether the lot a working out activity, along that of comes but that. vulnerability a end frustrations of maybe spot, to there you be is are whatever, have to on opportunity. of being regulators so their your with the

the people the helpful. in been Pinnacle? of to bank. producers are been reopened, at if starting able over for you now good past to Is pandemic meetings? your that that to half over at relationships about the in back That's in-person Are XXX Okay. fully move color. we've a I'm being the we economy That's that look terms and to onboarded acceleration getting half they've more see the basically right, an revenue you group given two curious time years, a

definite intuition. that on but is say just to answer the Steve, for can't give you my I sure, that have data yet I don't the that

took their part think pandemic, cycle us, what do retarded so of moving move were they is. a it And is lot is able somewhat that's definitely I people growth pandemic, growth hires, statement it that true that longer it expectation think and to during up. to a new of business, I the from it so should to were had done, the large the – pick them books that sales growth coming the but get a our longer and a and that, during it's was

level. at Thanks. BHG just quarterly What and finally times, with is the as X sustainable? it originations, that, out, would And pre-pandemic on running Harold thanks. explain pointed And Okay.

a I've pinpoint group, analyst for precision that they’d think attribute better plenty more to analytics, hire business Steve. to BHG to they're out believe about target. that. there they of the growth believe They their rate much they and with going quite Yes, market in try go there after very people with them had conversations few it's is more a sustainable,

front in they've So gotten year. relaying about this what the them. then at of looking and what next pretty We're told excited of for they and us they're year what rest asserting

Okay, color. for great. the Thanks all

All right.

question from Sandler. Piper is Stephen Scouten Your from next

Your line is open.

good everyone. Hey, morning,

Hey, Steve.

But It looked the at if larger strong, the particularly I has sheet if dig that a granular time? down been in was which look as into And had loan from like estate changes strong over look consumer growth lot the any of I'm So sizes becoming bank or loan of is have real growth has the bit. been wondering C&I one wanted growth to all there you less always suits. Nashville. to little also the a grown, balance like then any

bit down So on growth into what little the a dig seeing loan if you could side more. you're just

Yes.

in the were wouldn't credits that one I larger call $XX in it were million, I mixed or up think There different that last the quarters. it came first the – booked that's credits think over always mean, helped But volumes. is quarter I been any million loan $XX second two call there quarter there. several some in larger than that bolster

get of that with. the their that looking a lot where a to product, the we estate, is seeing daughters acquired seeing otherwise home increased they may right clients some – think market get with find with are is and house Nashville market are real first to in go not smaller or into to traditional sons of it call want the that As with I respects with particularly the also mortgage and through some consumer unique traffic and respect we're now businesses

products as And a need. to accommodate lot particular banks designed other with so, of I that do, think we them meet

I the so, some particularly And in what's causing think of increase, Nashville. that's

might to not limits important. think increased in I do add We've Steve, that, it's years. our house I

there is to intentional drive cautious the larger. and – always market forth. again, generally that because sizes so the credit we're the lower higher And credits, middle credit intent particularly rate game, and And the so a obviously, sides, about upper to not

would I anyway, in on would increased higher So focus anything to limits us tickets just cause house we've particular. not or that say our done

Great.

that strong. growth North was might the call our let's BNC South Steve, I add in it's I footprint, to worth, think very their and and footprint old whatever Carolina it

CRE business bolster towards organization but And it seeing C&I, might tell in the which his thesis running what best that more it is Callicutt getting him quarter was and business, skewed don't Rick loan growth think so their history you C&I of that that in was is, that on we're sector there. increased there. the I activity of screw you our see can up

it. Got

your then it as terms online, Okay. customer pickup well. seeing these guys projects some looked in of in what construction the like And picked are sentiment up I'm bit material a just there of seen kind new And kind in commercial quarter wondering projects. you and good of a you've of if new coming investments

know new projects. it's don't I significant if any Yes.

in We money equity requirement. come lot of phase. was the that seeing had funding construction are bank using worked they're the the some additional fund that to but quarter across, through projects I their second think construction now into were a And they're –

see some don't call on – multifamily is we're but So a I'm hospitality I maybe additional whole obviously and that, – some has warehouse, not seeing requests respect there lot or for of we spec traffic don't with to got office. information Terry not, it incoming updated

one of just a about for then minute. fees And for last me, great. Okay, the kind maybe thinking

XXXX well be looks elevated this quarter it the margins similar back of the and kind of guys fairly levels. I I XX, at like production gain-on-sale year. guess think to if slide to your in said you mortgage are slide, half would expect you But I'm at looking even still to

decline more just sustain a So – sort kind level kind or it the that's I'm XXXX of would revenue wondering why case? to if more of that of

in Well, and lot there last so for buyers. is a Charlotte, But had the inventory going us. our in a revenues of They’ve most a finding is lot a on produced depleted really vibrant I great it think or right now. of mortgage the markets year Raleigh, things like Atlanta, think they're of Nashville, we housing call markets lot getting then cash

are or nonexistent tickets mortgage the reducing. so And either

would bit of slower. be the And part typically the to trying so little anticipate of a last here that which kind into year, going we're

of weren't And of Birmingham, we in to an you the Huntsville. think compared the incremental that that we're is headcount mortgage is XXXX. markets I and XXXX, Steve, other if number look there aspect in versus Atlanta, at originators, like

origination So we've capability. added

okay. point. Yes, great Yes, that’s a

then, run that's is it tack that maybe buildup sustainable one-time some on quarter. sorry, pretty the that on rate just increase the of And Well Is SBA one production Okay. in last like sheet great. more you significantly kind look off? on sold it or a jumped that did balance

that he now the it’s that. Runs couple a of Yes. or sell proposal sustainable, through believes over month conversations and believe we're Rick volume and in from assertion renew month would loan so we next over there'll of up we He it, about next extend Callicutt a the – XX% next about a to of well here into play so Right for and maintaining XX%. that we're quarters. big same or couple that be the that will congressional hopeful can hopeful with because of so. kind that And Rick here had believes congress

the congrats Thanks on Perfect. color so and much continued all for guys progress. the

Steve. Thanks,

Demba Our next Jennifer Truist Securities. from is question from

Your line is open.

Hi, good morning.

Jennifer. Hi,

are Hi, Jennifer, you? how

you? How good. are I’m

Good. Great.

you? guess in you months quarters you Birmingham some the as – interested you're more non-Pinnacle guys proactive what markets you indicated producers and coming in as working you before seeing hired question, revenue I hires more for and people – incoming we A in Huntsville. see are calls, in Could currently

Yes.

to Jennifer. I'm it. there I saying yes, on want to necessarily out in I was think don't force the comments. is I the – answer not that you

don't I'd going to sentiment out forth. vulnerability increased have to we people and take We reach the markets, other more but on us is shocked our go other right, so opportunities that forward, additional be is will having there if on think your hand, I and we are

I I our didn't add but price we don't or that – expect we're announce, So base market if to one next the two. ready over XX months, a have

options Texas of other think not markets stretch necessarily those out you might or Could Pinnacle? over to for

classify of I to fabulous thrust right the would now of mean, time so, out, But I market. a it's and saying I There energy rule just the day Southeast. in is be want Texas there. a because go I don't to don't the I'm Jennifer. think we might and most most want

markets of us And and so again, think of forth. I and East South so, us it's

much how when you you’re pressure now? hiring, And Okay. right wage seeing are

think don't in that I is right would seeing I offense work you're of it, on overwhelming say are I the But the there's one we point, as sort part is of hiring it little see to defense. in aspects at wage this to a the and pressure. But track we hard, have one equation. two

let we're our hire as away, them on pressure so to constantly to and associates our offense So to associates, and do let on get trying constantly associates. likely not we don't people. defense do We trying We're – price and some protect after new good people see some also you so target there. see we're pressure come

Okay. Thanks, guys.

is question next from Wells Jared Your Shaw from Securities. Fargo

is open. line Your

Good guys. morning. Hey

Jared. Hi

Hi Jared.

pick go as one off there's Slide theme next guess X, did I type you strategy into some when sticking is same deal those at Or get the a of Do a of you to more really you to at the lot potentially it of need with an up, about sort individually in and hit maybe over the few time? look in think brought Southeast. Jennifer Atlanta? doing markets markets where Florida you start years, can markets of you to thinking that forward you that them those area

Yes.

see Southeast, if we clear on me good as One say, which, period, the can markets them the are I a you included that. number of top is XX is Florida. like be in Let

attractive us. those to markets so And are

on wasn't on say to I M&A call on to is said clear What that is table. I've would our say tried to people the I last reason table. the it the thing say in was I'd although clear because second the think evidently I be is is not before is – I table the only I tried think

perhaps look, not better the starts I'm is than are I've for for now really might path, novo do so wouldn't it. I'm just opportunity we that starts love I the And remember all saying likely novo that path de The and us. hey, think I we said ever most most trying, I do it, them. likely But de said,

the if those hire, question, Jennifer's to people opportunities that reaching out out to creates kinds and we opens other having people things. that the us we are and so us, more reach to a and are for markets And of more dialogue that that

most M&A of wouldn't guess, most be Jared, I is be novo we some to be, those direct it view likely. the trying to opportunities as but of next likely on would kind out, and I markets. the de years want I we're in do likely to I few believe So top don't rule extend as could The I to a basis most XX have and over

of buyers be That's the to and that, the a BHG, bit paper future bank Thanks. And professionals their areas. little buyers, of same Are first shifting do medical mandate color. BHG the have you appetite these that to fuels the great securitizations? that then what professionals do customer expands or bank and beyond expect the is sort licensed into grows new going form newer really for

ago or and months loans Yes, positions individual this the for I the that And securitizations could that gain-on-sale. speaking their runs through well, put that left-right was Carefully, four that told through outplacement Xx was I think with they'll guess, group, left-right, person he he banks. me, five other into I a pay pipeline.

available where go. through think plenty is there loans revenue want source that's said, that model. that funding run and they still believe that diversification gain-on-sale appetite to I of is to to diversification they BHG So But

I kind to end they the pushing through think that a just loans because – at maybe – start more there'll less going of where model, be time, frequency balance split with gain-on-sale. sheet I up think think they'll and XX/XX to just maybe

if that appetite and They near-term balance they're so from loans model the generate and right through the that great reduce XX/XX desire. the sits now, have sheet they So they option. split. trying But point profit this more as to gain-on-sale to is get all always it can more in thus their running

me, be let run Okay, will renewed that a potentially just of decline maturing great. into expect due and quarters. And balances Harold, run the over and from sort talked you few coming next you we the cash lower… those Thanks. just off about or CDs likely most balances then finally Should out CD

and think I the of million intend rest million in group, $XXX to or redeemed. will wholesale CDs client there’s we that's get Well, But renew so that, those those. fully the are $XXX

probably And the, that in get call along categories, so it, line. point renewed they'll XX-basis the into down somewhere

Thank Great. you.

Brett question next Your from is Hovde Rabatin from Group.

Your line is open.

everyone. Hey, good morning,

Hi, Brett.

Hi, Brett.

realize to I is through hard your PPP wanted the in of seem NII the And likely a second but for back that will talk impact the could guidance half it income it points basis the like Harold, the kind approximating or guidance the guidance a of the margin how conservative, on negatively just around you of just it's to the like components would giving first NII. and predict what of that year. about maybe given half margin that maybe be, to I little it? essentially can you're implies that the be the be pressure And or just more. year could growth walk XX income

anticipate we about accelerate all, call that quarters, round those right an will to five-year and PPP. all two kind quarters. on said, it, they're work point of it's tail, they flow an now currently or the – three in kind deposit loans get rate book. next, and my on But right second credits, try well, are quarter best the we can. But We us four got here deposit I've sure. nearly have to But of we or stuff. most in have will with borrowers revenue you're XX-basis that extended don't revenue your ones over traffic forgiveness first The point of fourth Yes, the that got third opportunities the that the the of

points slower two. to XX a basis downdraft get XX be to to or methodical quarter that going next it's think I to over more the on

have the don't in that interest of Loan hope going had going to opportunity out they're I kind expense. year earlier we they're I out the same of We the of – any hold. all yields, just my the to year, momentum fairly list. additional to So close part the ought second believe get think some of what my – my probably is downdraft half what Brett, on There NII the number be there. the more considered, of to the things to we But half hold. that year first of

Okay.

sense? that Does make

pieces there's it, know lot I so guidance. to a of Yes. moving Yes. my understanding of

ask and recent there you forward maybe some Was the that The thoughts really production. BHG of where maybe other you thing thinking is numbers, volume like had it seem around trend sustainability to Any their from just actually the is XQ XQ and XQ have pulled around would typically talk I wanted XQ but quarter. about was questions really about or can typically growth? you just seasonality. strong strongest obviously any inkling

them acceleration don't no that feedback got into any was think any I’ve there Yes, kind there. pull-through XQ I of think don't of on point. from I volume XQ. was there

us gave number year. we XX% So this that growth believe of pre-tax kind they a

based what we're very So seeing, on that's visible.

great. And color. Congrats for thanks Okay, the the quarter. on

All right.

Brett. Thanks,

next Your Catherine from question is Mealor from KBW.

Your line open. is

Good everyone. Thanks. morning,

Hey, Catherine.

like reserve conversation do your back you you'll day-one which basis low? is the you Do credit. think think, do low a that you you today like about for at – ratio lot the you do feels that one get question bottom? may on There is reserve point. think feel gut number, CECL about or XX heading toward of Maybe levels feel How where Harold, about I kind of is

of to our end are peer area, were candid. think When we'll group. be the reserve know, I at low, Catherine, that I don't the get in levels don't we Yes, that low

to see So you're XX-basis anywhere able and down But it think we're march it but we're point some that been talking down do number to got able more, we allowance. some our so I march not that We've to about. number. near more think room with we'll we be targeting go going far, think respect don't to to we've

of – liquidity guide we any sheet the year, size how back balance into that And the the just Okay. back about should or loan of excess NII question growth? incorporated single-digit to outsize of of then to in the the on the kind the half change think is of high there guidance outside

balance But into up will do so come – that maintain second looking will Yes, some I in try We've off some not that of over to investment wholesale some just two what we're think get big securities we funding half. next got We'll here opportunities more it. another sheet, the transaction the to quarters. come will our my sheet kind have. to be balance

NII it's kind Got lower half year year. still be just really that of half it. up, of PPP the The should to is the to still driving of first the be second the core equal

it. That’s Yes.

of about updated it. And that timing cons for in year? What on is thinking then about their a pros liquidity and are one Any got Okay, one of BHG thinking kind if I could. last the how event? this thoughts

we've Yes, we've IPOs said, all markets, around to along, but they fun. They've like said and I they're sophistication their not what or continue spikes they're hedge think or it the the having or for funds whether study increased whatever. fun, doing

company up remain to have But tied So there'll be event some a not and at hard. it's that in liquidity it's that going in to two event. equity point they be. significant, see will I'm want a sure the the when company founders believe, the liquidity

decisions. You their get just We can't blame – long. so it's the to And to for about kind speak big periodically. it it's they pretty those so They far to runway appears when – don't them make but company, for them growth for them be that. know good, with We just occur. going

Great. That’s a on Thanks. quarter. helpful. Congrats great

Thanks, Catherine.

from next Brock Vandervliet UBS. from is Our question

Your line is open.

It's guys. for Vilas Brock. Hey, Abraham

C&I, follow-up bounce relative and been to on are a there there what as guide the just Just on guys levels? utilization, loan any that in you your what high single-digit of far assumptions as are seeing goes? pre-pandemic kind of terms now Has

utilization that seeing not not flattish we're next It's last any anticipating good lines. question. over increased a And two from quarters. quarters. That's over pretty the still two sign significantly of and We're Yes. commercial the move

know might right of but non-event banks, it's a I hearing So what for don't us, from other kind be you now.

pressure there some payoffs that's is beneath dynamics portfolio, the still driving the on that and competitive from it just then just there? overall your And commentary CRE surface Okay. of

enough But a and second part the did in of new We happened payoffs it. Yes. – some another quarter to it. estate was kind it quarter. real in big second business the quarter of was for to We it overcome commercial have accelerate just had

they So would with know, and we a stay guys lot that's don't Department payoff projects the tell environment are any. want got increased to in of you've I just the I you in. if going real think seeing to we're traffic kind Terry, estate think that Finance I commercial of sooner. And

Yes, I an financing. immense permanent money There amount think is of that's for available right.

right most like get now. a recourse basis that generally available that here money a it ton of long-term product and is into who our borrowers recourse, of so there to so are And bank on a of

one bearing. more, bearing non-interest in deposit deposit versus pretty on maybe growth sharp contrast just And Okay. interest growth

CD there Just the in that should is that paydowns, on divergence? of we anything outside be aware going of of terms there special

there's I mind big that the right the but don't any to can have some about quarter think of think end come this of typically that bank, larger anything. toward the I'm not I We now. into kind come ones of deposits quarter aware

guys. thanks, Okay,

you. Thank

Rose from is question next James. from Our Michael Raymond

is Your line open.

Hey. you? Good How morning, guys. are

Good. you? How are

up the would Good. point positive just a company. you've in the mean lot with have liquidity any be for there that it's be contributor given floors, for brought? the watched were I buying seems if it's this to there and event. future, at investment grow guys thing, good great you of Hey, spent guys and reason business, Is been on in it's like just the a time what just given to your liquidity a Catherine's a fit, event following some consider It – all done just it whole would benefits BHG you you. question the

Yes.

I say a these in, we would ever, on when to I do. something, think Michael, you spot this. that's want to because oh, never good never be I'd I hate oh, I you say, questions not so well, that, get don't do with say, into will would always

interest. sure guys interest we us. more past we've always want having of discussions honestly we have to important in And as because two, is like the we topic as is that that terms less a majority it. That's as But interested have really accounting success. we the like we motivations they're one equity two And Our in good are us being our at they ongoing liked current ownership stake method about treatment. are those are in been make there to than good spot, had that been than a things how its

more that And were that forth. to buy of or would all so all so change and

reasons the we to consider mean I don't me. never So to Those make oh, seem way say, But anyway, the I would we've to co-answer. a sense to have. and rule want structured give we They are well, wouldn't that to that. continue out

growth, Okay, And obviously the to back that's loan just momentum. maybe follow-up a helpful. great as

quarter This you've bunch of a made hires.

take Thanks. into And time single-digit growth kind reason everything you next for going But obviously continues those that year. economy and are that. wouldn't the understand reiterated hires think high ramp be And I wouldn't above You to be any that? that, we to conservative? that to to go this and of outlook the hopefully strengthen like as year

Yes.

that the the the demand portion share and market change now, component increase up, We're loan loan be think what could then loan where if boost to demand primarily would drastically. relying modest the economy to that demand market Right economic pick movement. strengthen loan think we and of growth. I obviously on we a changed, share But shouldn't would movement economic likelihood produce. economic

questions. Okay. Thanks for taking my

you, See right. Michael. All

David Bishop from Partners. is question Research Seaport next Our from

open. is line Your

Good Yes. morning, gentlemen.

Dave. Hi,

a that sure but if you could you on this provide question. bit preamble, had updated if an gave quick heard into so, did that gain I – any I heard or wasn't right, or equity valuation Harold, right of that you the BHG number? can I around this Hey, a hear you that of I insight in the investments one just quarter appreciation valuation color little

We funds largest. we had is we and far in BHG many XX significant of – most the venture kind addition and Yes. kind of and or maybe how by know, investments XX don't away I to other side BHG. run, have, investments

product product has of that portfolio as we have And those So, that and developed of that portfolio And funds in that a invested but valuation over one company, basically a result, and a a offering went that. result time. company we in a up participate others as that, now been we for company did hit. a XX they had to follow-on and got

And that the $X.X was million. so

valuations. $X.X so, million I were that enhanced think or we that release, there press other in the had of because companies mentioned also sort like

million the $X.X the whatever was press release. the that of one so biggest in And was just X-point it

understood into insight if David, that question, you BHG was that But indicating Harold further gave I valuation. thought your think the I

That's correct.

the case. I don't think that's

Two the No, that's case. not separate...

Got Okay, got it. it.

here, markets competitive Okay. any I loan you just your more then opportunities various yields; even pricing? misheard. curious shaping or curious And your are if turning seeing how within you're seeing pricing Just better conversely to across various is markets? for

start. I'll Yes,

loan finish. But of last get Let stable quarters. credit. can't that Terry kind have for for of We the a a yield and stays yields couple are fixed fight been curve rate

loan they are. occur, negotiating that, as we that to So keep it's we but than need hard where – to can as other we're yields just those

can Yes. that. don't add I there's – there's think think lot I I don't a to

Harold in pricing, think be We're chasing the There's I of but somewhat think pressure going of so. to we're of system. a money best the on the year. a number the the to doing said, trying on and we lot a for hard, accountability slugfest can deals, it's remainder I limited keep pushing

background realize down but here the can Then granularity lot and that final the of some in couple with I has Memphis there question market. diverse one it. notice I been obviously there's past and be M&A a here, quarters Got payoffs of in and

color view Just can holistically you market and market overall? any you that that provide curious Thanks. in how

I David, you Are part commentary of first understand couldn't color quite the for market? the question. on the asking Memphis

Correct.

Yeah. Memphis the Well, market. we like

there. believe I for growth have segment. making were CRE continue the really to well we We done We're the think We've time. we headway. headway good segment outsized produce some can and in really in making C&I good

produce call expect to have as of markets a and that financial we hired number good we've we relationship most so we advisors, continue And them outsized to managers, like in growth. market that

Got color. it. Appreciate the

All right.

next Martin from Janney Brian Our Montgomery. from is question

Your line is open.

morning, Good guys. Hey.

Hi, Brian.

guess, up did slightly? was was Harold, sheet Hey, it would the say I just sheet that it was that one your down up, balance slightly, balance follow-up, it slightly expectation question be was or you down earlier. on

quarters. two Up slightly over next the

Up Okay. slightly,

as to as trying we we're limit And much can. that

deposits due fast come get we'll So try we rates down as rid with that get we'll to work depositors try and can. to as our other and of wholesale

Yeah.

to be that PPP, to $XX appreciate of on mean, some less would year. of it the expectation, expectation collected next in being quarters, couple I so the bulk of that just I comments it hope your get next but back year, majority the of year. the million this clear is likely then the your bleeds the in it you the And Okay. half on of be or but

we've of Yeah, million that's we out, what you should next left less be, will second that'll be it as get in the but in most collected the quarters, than two quarter. $XX schedule the

The third less and than be fourth quarter second in will the what's quarter.

Yes. you. Got

guess, it about – Okay. I Classifieds quarters. pretty release return and opportunity plan the plays bakes talked how I the in that guess for into like of about and the sounds couple next upgrades. hotel out, you in think I there's Criticized And reserve of then on you guess kind if is continuing? hotel good some the and upgrades that it the the

Yes.

a through first for because due hotel of in in quarter year, in most quarter the be loans some but the but quarter expect that'll likely first this coming some went here next I modification on reserve the up think, upgrades upgrades I should fourth and and of with that quarter. dates think the or have the are those yes, or something fourth dates maturity we to loans release, will process quarter, think of the do the I those

Okay. Got you.

Brian, of might very important is majority there thing I – Vast other that assets. Classified those it's loans are assets. think be that the are few Criticized

Criticized And so pass. we're expecting to the migration from

Got you.

of quarters? the PPP, I cost get the I ex strip of I PPP, that, just the lower. I but NIM, other you modestly – just then guess the and the funds sub-debt NII Okay. mentioned the I from you core of if are on know just about margin moving mean, the the some you kind appreciate that drag Harold, Terry. the items of the outside maybe, out next And couple how guide, core thinking

little a slower bit downdraft Just here.

Yes. We're to going to much I don't see deposit just costs try don't any up have to We're it we flat. of pick it kind increase that. up. keep margins as renewable going in additional – from

depend all of well on it So on how over couple pricing do will loan the we quarters. next

Got you.

Okay. Perfect. the and I nice appreciate quarter, guys. color

Brian. Thanks,

I gentlemen, day. am today's questions and further no participation Thank have wonderful Ladies conference and showing Thank your time. presenters. concludes at call. for much this a this you very you

disconnect. all may You