Pinnacle Financial Partners (PNFP) 13 Oct 212021 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners Third 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 may Pinnacle expressed All statements Financial forward-looking materially any results that to implied to results, by performance statements. and other risks, differ forward-looking actual uncertainties or or such subject factors are cause achievements of from beyond are and factors such Financial's not ability put predict, of Many on or control Pinnacle statements. listeners to to cautioned are such undue reliance forward-looking A filed more the description these reports. quarterly for XXXX, year Annual Financial's is and other XX, detailed in Pinnacle contained XX-K of on ended subsequently Form its Report December risks and or of future new presentation forward-looking to disclaims contained statements obligation this information, result Pinnacle Financial whether any a otherwise. revise any as or update events in

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

very growth. In Operator net strong non-interest growth, Thank loan strong morning. quarter growth to view, and my for deposit quarter strong this rest core and us third with thanks an being income you, of our income very with people interest growth, was strong exceptional

to market importantly decade believe key bankers to strong our and clients continued and most to produce them and create the studies returns extended what numbers book rates, an over to I quality. exceptional rates I come. that exciting about raving period asset of evident and years our expect sustained yield empowering to results EPS of various in best continue attracting shareholder of long the the relentless the model, fact metrics is is been enriching generally and growth value execution is time quality sight revenue tangible is for will on to because in Asset best shareholders quality accretion that have from enabling be growth approach There banks of focus results. that for on key asset

intently the deposit spread Our ability is means XX% EPS to which business growth grow is and take revenue rates, focus and and roughly business, share is loan model an rates. a key generally growth consistently on the balance which to we why sheet

we and this revenue us And quality. shareholder every with balance so begin presentation dashboard asset sheet growth, on EPS growth gives a which and read

Of that with performing better me the we’re trying manage course, for me here to number at we the I on of start a help found measure on well but focus non-GAAP personally, GAAP measures variables how ascertain key always I we’re Pinnacle. that

growth. net proven consistently loan bottom up the in currently market additional sound net an dashboard But produce produced resulted outsized want period extended model I outgrow in highly growth we the the on large these XX.X% the markets since markets minute asset the across like a PPP As fact experienced Annualized specifically, reliably and leaving time, our quarter and performed in to continued markets the decade we asset growth puts nation. produce you row, part and as as since to clients of see be seems to of their obvious producers on ability of markets row, it's outsized likely we QX. a bankers, the minute urban better metrics focusing across of we a rapid Along within environment pre-tax our in competitors market our of positioned familiar operate provide extending revenues. as meaningful growth well you CAGR of reliable produce row, lows. the over that, even our as bankers model exceptionally hiring private into tangible the movement is the deposits, quality revenue are both rapid onion just top the an quality with I’d deposits loan with, which we’re of long EPS hasten monitor have to are know credits angry that beyond as began excluding experienced clients an on share an bankers expected other And can such the country they're Core which to yield in us meaningful during way in charge-offs PPP our expect per of back this to growth COVID. soar result growth market we growth. where this in a key well all right. bearing problem the result Similarly, spend XX.X%. were borrowers has Southeast share occurs key the unusual you value I growth, slides to growth non-interest growth moving the Net look which best this And produced only wow but paydowns and adjusted and basis. impacts operate have insight of should while and many simply of in a peel formula inside to to in book to and to back well see consistent add, growth to I from categories largest that to conveniently opportunities ability other to while the metrics our the XXXX. attract best only these the was maintaining so at right, our position growth frustrated targets attractive what up loan where the so course of in we’re outsized in our a some remarkably pre-provision continue organic can revenues, in second I produce even in into for the behind, simplest formula. It the Actually, because has it should outsized We causes forgiveness.

the simple is over a execution as that differentiates is While model radically relentless us. concept, our XX it years

enable models shareholder create attracting already have translate market to returns. best empower them I plants, our bankers, which raving and will As to then are said, excited

best we’ve for millennials, and one longstanding, in virtually that Our major our every it’s associate hiring engagement entire for for got is is it’s footprint unique virtually group value market. of every workplaces because country, across a women, parents the way among best based a got employers associate model, the across we’ve works because like literally culture. in It being

lose a corporate out annual a which to incentive our associate on our just associates Our associates, things and every of targets and win together well model accountability few. our achieving and how based and of leadership, XXX% long-term their with makes like rates, they for engage asset quality performance model single name shareholders where incentive for EPS growth management

making million. any credit they yields recognizably different to Things centralized our like wow amount order which to empowered single are as the doing model, these Pinnacle them that number system arrow, Promoter focus things which speed associates the I those we’re to I’ve Score for mentioned. deem looking saying clients, were to which clients. signature every any their authorized decision just response, sales by from the that banks. running in businesses In competitors, Over honestly, creates $X one appropriate wow enables both a they with of many foundation, than primary with of bankers business all none these wow but provided virtually we at of the Building Net these which clients, rated associates close geographic spend structures, budget their combined to center wow heard line where to were our highly million on years, of of excited annual Greenwich client associate experienced is the to on a are $XXX our

Our we in valid large share State Carolina to is Tennessee North high sample. statistically every this ranking produce market of in both leading have Net and extremely enough metropolitan which in Promoter Score the and market

according have fact Net highest in second States. Greenwich, United Promoter the the Score In to we

horizons. into focus even the and our on and from in one-year relentless indeed, clients have prior and returns value astoundingly associates I translated engaged client unusually momentum, that likelihood an meaning result who high also you And a As with more strong the they see base might been indicate and over to and business we three-year on beginning recommend time the do outsized, to outsized far shareholder right, their us. intend shareholder peers that us five-year, say they XX-year, successfully that

employers And So inwardly the which bankers in, Huntsville, market-based and Atlanta, Birmingham, revenue shareholders then that one banks extraordinarily I indeed large opportunities advisor markets, and I we’re as has growth number able their large a more that net fired are widely to of what market but the life things growth they from banks, yielded it’s opportunities become appear extraordinary the merger and and and Alabama, the focused discussed former around opportunities secret that vulnerable we a difficulty like are relates recognized up we’ve can morning of me see, vulnerable of promoters, is is growth, banks. Southeast the as other future that for reasons we’re remarkably from [indiscernible] would This outcomes. we miserable of hemorrhaging through so that their friends we the created markets in that and and choice the is, the peers, finally, regulatory extending operate markets I clients net from attracting we advisor also which are our to of join at as Much think the and encounter projects. makes currently expect it has large as these are in force some and Southeast. are bankers similar created some hire say the hire the bureaucratic, which associates so our to a because are large high Alabama fully reliable some you largest created hire bankers their talent, these producers. us the already what model at simply to other it’s promoters recommend in about this peers don’t sustainability in to us the of our are pace Pinnacle. predictable Pinnacle an like that be these employer result Georgia, will integration more invariably to all market

As we’ve over few number of revenue you large attracted can a very see left, last on years. producers the the

years. two less than XX% of of years. about roughly have Think producers have fact, been less been In revenue than producers here revenue that. our two XX% here our

is Our to experience move manager that to it book five relationship years takes of four generally business. their fully

lead believe that to materialize will expenses that XXX% over associated of the should three years. with we’re production currently incurring which So substantial me next two revenue the are

revenue many revenue on so largest banks sense accelerate You attract share unusual and opportunity only not the right, on on power who And have from vulnerability balance getting you the experienced market well. When are you gains. that, have markets, of sheet the the growth can to share in power the capitalize to an producers their see these some as of and but the earnings you growth, of model.

this that have addition we’ve illustrate highlighting into right metrics tried performance on why in virtually shareholder to quarter short, in has all returns, a including So over they opportunity it continued as I the to had With to ongoing key both and excited it up and the the that, confirm. turn for and quarter. more why about personally so believe happened in-depth at look I growth Harold I’m I’ll the

morning Good Terry. everybody. Thanks,

We’re, third quarter growth loan pleased again, our results. with

third PPP million recognized quarter down XX.X% in up fourth PPP loans $XX end forgiveness, from PPP, second are on of be the Excluding Due hopefully between quarter, to second at of slightly X.XX% September to end up And quarter Due dropping of was million quarter, see $XX loans million PPP impact quarter. We will quarters. XX.X%. again by loans the of to XXXX XX, X.XX% We at loan revenues third as approximately from in and quarter now June will rates up fourth were average balances third will accelerated to somewhere period XX were to in we in the to range quarter. compared Overall believe PPP so the forgiveness. PPP rose million the between we we from third PPP’s that quarter the on revenues the $XX million. $XX second another yield third minimal. as $XXX meaningful quarter anticipate and PPP forgiveness the quarter assisted the second

the be some PPP tailwind our We’ve they’ve so that been around just Excluding chore, the commend force will loan quarter. loans, can we maintaining difficult quite compared for approximately approximated hopeful this rates, X.XX% to rising yields a loan in our time to yield for year. second increasing X.XX% accomplish average but some that on stating yields with able been corner. loan what sales I are far be

million continues Our in a only of with loans, $XX a roll in and Atlanta standing deposits seven to revenue new have XX slightly Birmingham few loans recruited more Huntsville revenue operations in and from producers markets weeks XX. September start a after have million and $XXX pipeline. at approximately producers great and in

finance markets be our loan as about growth as this next single-digit talking lending these and more well for equipment been franchise reason optimistic about for optimism growth even our high year. new Previously, give for we’ve and us hires Our targets to year.

Our that likely rate leaders they for even will about double-digit our and growth up low XXXX. more end with growth market loan are optimistic

loans XXXX, business our low and given and for digits conditions objective we lines, believe about for inclusive a firm. our optimism to is growth As of markets new reasonable pay-offs the our double of economic PPP current rate

up to on the XX.X% up deposits $X.X experienced deposits, big had deposit almost end, of quarter. growth end the significant billion at up $X.X in billion another third Core deposits last quarter Now were year. since in ending We’ve noninterest-bearing we quarter. at

Our rates were basis XX deposit at EOP rates while average were points points. deposit basis XX

reduced quarter, average year-end. downward the an Helping costs basis XX a continue will approximately points. look we to get and rate have to be deposit and million in few us CDs fourth $XXX see So momentum maturing XXXX for in basis see there by about which more of points

into continue as that. deployment we of where through assets of As at excess sources to liquidity, higher we accomplishing close to ways to to elimination well getting as earnings funding liquidity look momentum create increased yielding are wholesale

We are a reduce this optimistic year, liquidity XXXX effort. to but next that should multi-year loan volume overall growth will in help be our

this environment money ways put to is Our More a placing without be will much book find come here as risk objective too in this to to a tangible value rate growth. work on to rising on the gaining all we that quarters confidence of growth but of occurred more the to this several half. topic say and it for last suffice over has deposit that are all to a as stickiness year

assets, the in credit loans, credit, classified credit net and our traditional big perform accruing many As are to portfolio four we’ve metrics in some of experienced the well metric these and loan cases, due charge-offs, to of best history. very Pinnacle’s past NPAs continued ratios

our testament pre-COVID NPAs For since of and bankers until example, for assets work the officers. lines and that’s COVID trend ’XX, is credit XQ then today a classified the through great to

over as given continued the in total as factors, Additionally, ratio well loans these we macroeconomic loan anticipate several in factors. next improvement allowance for declines to our loss further quarters

fee here. of lots news Again, income. to good Now

fee than trust the up third which XX% For quarter, includes to year. in and great quarter more had last investment were a the over year. of Wealth comparison quarter insurance revenues last services, management,

its We continue active the markets. Mortgage to this pipeline in to management quarter. across the end quarter build our as third be towards particularly front as rebounded very we the franchise, our wealth of newer continue hiring on rebuilt

equity with our we which similar run finalized investment valuation the strong quarter, exclude us significant raise thus to million we $X.X that in other from of the investments, investments As from had million rate results XQ, fourth of insight booked respect one a of another we our Again, provided with All BHG. almost one during $X showing expect along for issues investment equity adjustments. which quarter. this valuation to don’t into updated in, about and an the increase an

We also million on incentives received $X.X about accounts. vendor in checking

just As second. to a that I’ll in about talk BHG,

with of incentives, I cost I expense go to our specifically As into familiar of to everyone all quarter. the won’t that so expenses, is base, think this incentive impact

anticipate for to incentive an continue XXXX. outsized We

incentives no if earnings occur free increased only is lunch, growth our the and However, PPNR incentive. support there

going traditional anticipate Additionally, back payout the in target we max XXXX. XXX% to our

business run the well As down flat that fourth in in comments XXXX, and rate, believe as reinforce we’ve on as entry tangible be book some want I to intensified leadership’s new to we quarters just third primarily should and the I to experienced our focus by plan. the value Quickly, We a expenses redeem to from overall second our total debt mentioned $XXX relative sub and on anticipate in into intend X% adding amounts And to our count compensation we equity as for now new in markets last in quarter million capital. growth growth mid-November. peer component expense our the both lines. which is growth head and XX% attributable point, time, to

currently believe of share are calculating to annualized peers. book good is in per thus We other XXXX, XX.X% value we pretty far in which tangible an increase relative

Our plan growth determining ultimate in tangible our per results is of peers, our our will group. total relative designed leadership such that share book besting compare that return value ROTCE the along and with shareholder for with we

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

really is the about think of summary quarter builders out there fourth a year. of this So this again the we for model what

records the three been a highlight third to updating sold there will BHG. have for in Obviously, call BHG’s year. nearly we loans are any loans been and these as close the on of I becoming Now participated last left gap quarters. at time, past bars since top recorded being meaningful Since for quarter or conference I banks. loan the in between you The sheet with call every originations BHG which on McSherry on blue in The later Many quarter. Crawford a downstream probably Dan investor change this activities. chart third set Al their will that BHG sold great the not future yields in on did quarter originations sale everyone first their has BHG’s bar another gain on loans since to had of the next represents BHG time month. a look to the securitization Loan that has sale spend go a of and found around. details less did downstream ended balance perhaps for either quarter a and XX.X% onto securitization. way part green job

As chart to acquired right securitization in bank platforms BHG’s the banks they buy network banks year. range. last so Coupled rate, one to BHG funding remain details net X,XXX with the remains the BHG process, XX% almost the country. fell X.X%, XXX over now loans bottom individual The spreads in strongest in and of

recourse through the BHG’s detail recourse updated the details again accrual at outstanding in to we’ve quarter banks, bars their of of obligation credit, which as loans $XXX the currently recourse chart $X.X banks. reserves quarter. pandemic network line approximately has on this the community percentage loans credit a end that amount on sold BHG of the blue related other and network. to the As to left. billion green BHG their The The to chart million decreased these with sold

XX X.XX%, of basis it approximately points. percentage was loans, a down As

right, base. to being credit get attributable and premium off actual at for the chart, This borrowing losses several for the decreased. BHG to track the acquiring and from has tends larger, bottom paid at XXXX to past credit for landed is increase last As paid the have prepayment a paid rates The left losses reimbursing scorecards improved occasions, prepayment the its borrowers top gotten premiums BHG’s loans higher the to earlier increase In the steadily BHG banks refine XX on their the we’ve absorbed loan. partially unamortized shown bank losses from the of quality of years, few record as losses the and has chart BHG credit have actual the consumer splits chart continues the on trailing quality in over noted X.XX%.

losses thus to earlier better related loans. base Looking very level of the than lower Pandemic life events the a quality cause from much vintage, ago. continue may the opinion toward these years just impressive, losses by in move out losses percentage borrowing at underlying is of upward to and months, a pointing but in the few is loss our over

Just a tad more credit.

in months the For sold or quarter at with nine to the substitution the around third substitution have losses X.X% amounted coming in previous noted other credit slide for X.X%. this banks, losses loans year of losses first to as

amounted on quarter have X.X%. quarter approximately with sheet, securitization, and X.X% future being losses approximately For for balance in approximately XX% expectations expectations had yet held kept for the and loans another XXXX again. to losses our growth. investment third quarter We’ve our potentially third exceeded at year-to-date BHG great

growth for XX%. We’re of also approximately factor XXXX sticking a with

As growth current interest of income timing the several the loan. some successful How in the balance They next that on continued over process slide model. the next the indicates, gain from over bolster growth will accelerates they few the own gain they’ve got sheet their years, stage more model income ideas, on quarters. next should if which BHG believe income, years. old the in they obviously is loans life likely impact development, for will while several the planning sale over of as are of sheet recognition the income sale proceed recognizes for exceed balance the

on they business their are noted of financial opportunities outsized aim further slide, other their develop the to As continue the these all they analyzing as to growth. to plans

Deposit the optimistic. BHG has be fourth the another loan growth franchise. flattish that, to Pinnacle you fourth for Operator, pricing it pricing and you over as Operator, continues believe XXXX, income, interest I'll I’ll remarkable, quarter we in to So a that turn growth down for lot wrapping it with back quarter Expenses the continue over decrease. Net with will deposit for in to we are great had it loan back turn work, with to quarter. up, take quarter. of of questions. but again for and questions. believe been to very should be will that, we in third flat that to

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

open. is line Your

did takeaway growth growth your job you it's you growth front Or really a if think deeper how economic and positive over about was economic benefited that and about some XX hiring primarily into front Terry, versus a kind within the these years. hiring the trends the you strategy on from and of even still seeing your you're kind of as that kind that guidance? anticipation guys economic well? good how growth are through growth of in Is talking little go of of actual hires? I -- you talk wondering, what seeing forward you could

it any we Yes. wouldn't would what robust zero, economic probably I be better but say have something lot than by don't growth. that seen -- it's of would not means. a I pure I call

capital at you If working seeing kinds lines, lines, increased we're there. of of C&I those look funding things line not credit, like things,

It so zero, very it's greater again, that growth more is volumes. hires about than not are the new And but large. producing economic our is

that forecasting? economic forecast we hey, you fashion you kind as when do think Or actually about think do down of trying Okay. if in we grow your growth Is X% got for that? mean, I could it, you about franchises, XX%? guys break think guys you to how And it growth, about

going Steve, trying look yes, the figure different out anybody We're we're think and to of and Yes, all is else. the to at like kinds it ways, truth those sense makes things. what what I most -- we XX

way. try that to at it certainly we So look

on what a on going final leaders they're produce analysis, advisers produce? is believe I believe outlook. What so frequently produce? market they're the produce. to is I the does leader rate, the those of going those on think going things, what bottoms-up what based confidence we most to all to it to And financial market of of in land any guys believe able they're they personally aggregation the sort most are that going it's combination some and what put to be but So

or Huntsville, I And and near-term Are you you see, there if expansions Birmingham, obviously. highlight? got whether moved it then verticals like be the could some new wondering -- into expansions guess, new Or get I'm MSAs perspective new a to that feel now? all guys you Okay. Atlanta other your would on do you talked into going full about what's you you pretty product lending Great. have plate other, on of horizon that from like kind that that you product with

Steve, you exciting have question a everybody -- like There guess, full, mean, an opportunities the I answer it honestly, opportunities, there, way. When goes think the that last do to we got feel lots our way. Well, we different We've plate of at we our it's no, for about it's feel time again, don't opportunities. just I and us. are lots of

who of hired go hire Scouten. about I'd acquisition. we've go what occurs is need we is people So, talent so the Mainly you you Mainly to that at Stephen way say, "Hey, tell how think it. sort just we many

can person." this our They they with and so work I value and share this, there. to can need hire over forth. produce this build go them You they

And was their more in "I out those has so are where word to have early which or of from tied company's so a gotten because in banks many things these people markets. primarily where people our that hiring saying we some that buddies, Truist or existence, local kinds market, geographic expanding an just into hired But people opportunities of creates in markets like Wells be some things. a specialty want largest market mean, of idea to that on our of of to have this in build the people this opportunities can are I specialty And areas, again, there? running practices we've those hire lending market," you for the kinds office because me over building same people help the in might get some hired it in we other competitors. would

And what that. really so that's stimulated

available and opportunities that the And is, you it opportunities get net two about So that. have to so short about specialty all tried believe business. we term. the I is about reasonably I to to what's urban forth other expect to back some we'll lending sense within to a guess I've about think do we like another markets season large in and Southeastern go primarily And I of to and or that have acquisition, anyway, opportunity how build give we'll talent

last of quarter of sheet just added Okay. me. you terms you'd this balance sheet a number Great. much of BHG have how on limit balance and there's Very helpful. of how that Maybe to how much you mind you're if any for or kind loans thinking want for guys I'm that. curious have put that for thing you concentration in of about in sort on if

Harold, want take do that? to you

Steve, $XX and separate I morning. I Terry with in Yes. are apologize, number. distancing social this the you on because up of was that Yes, I'll million, like number think rooms I but follow

appreciate great. Okay, again. I a guys. once on great quarter you Congrats

Steve. Thanks,

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

Your line is open.

to with relationships? is into conversion the sticking growth PPP sort going of give conversation. bank through you going? brought of customers how how an customers on is customers and new deposit the Maybe the that the us conversion the So update full-service of Can them you PPP,

relationship basis I free the the have is have the us folks detailed Harold, when number high Jared, My that is geographic it feel percentage who an to the a XX% is but extraordinarily is, of that it primary is you market look can bank. saying if in what their some, bank forth. Jared, this to what penetration really clients you their with. My to And of bank. in. numbers, primary that around high good. and us any is it we Greenwich don't extraordinarily our folks jump believe be where sense for to be us this numbers is so And have I being that's data, okay, primary this have with only number view view at the a banking I detailed the have who say, relationship any and moves is

on have. they the needs able this But are you, So way I is be focused PPP plant built. that. specifically we've any couldn't to our again, programs built, incentives all the the way do the on done what just Everybody of to saying okay, I'm each that client, meeting is say to are

color. good That's Okay.

point I'll one Jared, on on just quickly. up that follow

to target not own the to PPP sales think I as clients development business tool. specifically so you our go program, of much the and PPP back start a force told our if use we

did we put slot So the exception was being We it of like because the resource. and to wanted like of a a up of money give not strategy. We kind just clients, take we of fill felt did an PPP, I I it think has -- that to individual market. foremost. new retention strong Atlanta of relative And been point. business that quickly, necessarily PPP a kind there that want a but limited in add first development the and government would care felt to we that was

that hired at growing Yes. expense for Got it. seen rate Great. Or in look producers stable of XX Thank when from in sort you. in is Is for that we what's underlying people? to then there? expectation 'XX? additional And being it we've growth XX what revenue the 'XX, the

Yes.

Harold offer -- feel to color that and free any you think I again, want.

think, other will XXXX XXX. Jared, it expectation words, to XX. that XX of number will of to the I kind north -- of be expected In your higher be than for be

quarter as quarter I pretty well. us a will think for fourth be big hiring

in number the XXX XXX in I and be And will so XXXX. that annual to next the think expect the would to be I year, range, replicated

look our we've of gotten tag CFOs, will expense here. just people year, horse. a plan anyway, there's I'll the But on lot a it and Jared, next all at good choke for Like first folks for to growth, believe, the X% to traditionally anticipating us. right But is is right. get where absolutely XX% to -- We'll these we that number a Terry hire. are that point our

our think on some momentum quarters. next good extraordinary several I got news I we've over coming right is the revenue think now. producers And

me. then just And finally for

as that those program? at Or are money do what how to besides put that you out happy give now? other an amount grow much expect you equity And investments, to you an investments those there expect source? can invested do us in other you Looking have -- update investment BHG, with you you the continue on

anticipate fully these firms. other to We in joint continuing venture Yes. invest

in time. because history in had that in with early business Nashville lending some the we companies. had us opportunities of have to period them funds of portfolio extent early I a their work or sort over of large all extended think, known here principals. have bring know in through These venture They We'd I an And we with has them, of continued. bring us relationship them. deposits. with traditionally, our of transactions we All several life, invested a -- Pinnacle's

on kind the good makes of ones have are us, And fintechs model continue for financial so, true work that held for here to ones, times. some has we'll The focused emphasis, recent and we're are that. bank-related it that newer and a of business

various expect I've sort investments probably, with. get know, a that, got guess, to that wild your around fintech that of number XX And There's just I somewhere think of firms. of we these will million some get them don't got I in I $XXX commitment bigger. fully Jared? Did we've question,

tying guess, here we that yes. you then sustainable where level mean realized Or that. You same in it quarter, won't in back expect first And it at that that the growth to said don't see on fourth that could of more grow When did, gains and quarter? drop but finally, expect does up I Yes. it you second that was be from to level? should just

appreciate something of here time. couple expect Yes. bottle investments. rate we've at But quarters And mail think we'll in get over say something, be fourth that. don't have anticipate we that a quarter. of these a value kind as with million we these I it I million, the but reasonable soon as over lightning mean will that, But in of fully the caught won't we week. the last in funds next I'll $X.X And just the $X.X booking

next Our from Jen Securities. Demba comes question Truist with

is Your open. line

guys the any be a that getting that's of how with occurring right stocks time would of just amount industry And for that backdrop the the wondering, success right like in consolidation so type you? now, there of of the I'm compelling opportunity days? punished do the having you these now. think tremendous all most buyers' with about opportunities And are is you Terry,

But I that's you say where best they I'll right I Well, something, can question time be doesn't my Jennifer, what may. say. because this. and the it as to like is every you least car truth tell the favorite thing you the just When know do turn know, out to fall -- the let

stock down people M&A And back, traded Going about saying, way. book value. punished, were asking I getting when and no and we kept kept near hammered "Look, growers being our tangible was

Forget I was it. stock the We're traded tangible in it." at wouldn't not going deploy to do it just when value. book

market paper you I it because that screens possible scans. have stuff. need this, you run able As it. be work I've answer We felt a The sort all study there's say, on put to to tried to of know help no. is, came it's the possibility run of that answer is The the people I is multiples back, because the well, you But definitely -- possible. do advantaged Jennifer, and understand and and not, the And notice. and

would a You plethora there of we're There know what are looking that fit. out for. not opportunities

all earnings accretion cultural when fit, our And our those say things. I'm I of hit hit targets, requirements, about just kind so talking

look, having very not say, have very continue it's growth breathtaking. though believe The right believed believed to I a and haven't still opportunities likely, I organic so that even it's that to likely. this -- that is we're I've tried I are possibility, now And not

does an you doing as so this up the drive threshold all know, transaction. M&A for that is, And attractive

And so, more it it get likely. doesn't

out. something requirements gets we stock. than opportunities guess We the advantaged to else targets, because everybody me have. of If attractive an have want on it record more organic is Again, that organic I be the that my and be I fits it rule growth saying, really if is, refuse and it's less yes, and think a you accretion likely -- the growth all have, meets belief find to I opportunities we to do possible. ought my we cultural is excited. we

but put it's possibility, likely think a category. anyway, in I it So the I extremely wouldn't

you? Are seems it companies there that meet that's Because cultural really is any the difficult. hurdle that the most like could for hurdle one the

true. that's think I Well,

is yes. that the answer to I think

were this skeptical like things doubt, BNC, In way, fact, it are were think that what there to and could kinds and call I culture our if kind of he has are those decision and ability that Callicutt that he you are transaction. who move I But really upon you to those for depend what that And away the people of catch in who, back that that getting of include of things. at was like and a running. choice Jennifer, together and from move people needed toward you something case for culture some execute look no preceded model wanted Rick running kinds we to was determined model that the all him

allowed for past it so, been was had travel albeit different on, the down from we to were because he path wanting to CEO cultural And originally a integration and the on. the trying

where a things, just management of those kinds then all teams have chance. trying find believe, I'll our I'm think number situations use and you of do curious to anyway, I and guess, who, you kinds are of where respectful go of those So people honestly I in are say, interested when it. who like-minded to growing have just and do about, I we this And word, a inquisitive, model about

because do there to but guess able might few is And precious be CEOs a be view, something So precious away we you. you're walking as it up you're folks lots if cultural bridge well integration where a right too is would that hurdle on just end the The like-minded track. show of far. exclude be difficult, running of but to up and but a cultural does integration might -- and model. My

Alexopoulos question next from comes Steven JPMorgan. Our with

open. is line Your

across markets the and Hi, in Are new is Anthony This Elian Birmingham were Atlanta, on newer in very of with everyone. third these active the talent the and is in for Terry, in hires entire hiring the Steve. new areas your as footprint? for you where Huntsville. quarter markets pipelines you're compared Carolinas? recruiting Tennessee your strongest seeing strength Or pipelines such the

footprint. is color I entire would across Maybe think just that. behind the I say, a generally, strength little the

in We've in Carolina. is had Carolina. it North Raleigh, in And a case the with North Huntsville. fabulous then Nashville, here. We I well. your great to Birmingham hiring Atlanta in of we believe lots going of great in continue think we're as had hiring more hiring a we Charlotte, market year have hires to year hires In upside make point, to and make a

Some hired attract to of in are top-tier lending, talent franchise We that put and competitors. been out some finance the of able large here talked we've equipment specialty we've category. folks where about the lending

in thrust the to And But sort of think been that's here Nashville. helpful so about. hopefully, that's

dominated really in rapidly Truist particular. growing in hiring are strong that momentum most and the We Wells largest, seeing by markets are

think tells that what you for. I -- hopefully, looking that you're So,

And helpful. XX%. and of how there point-of-sale you then on That's including guidance growth a targeting skilled the initiatives out is reiterated from the normalizing But new professions XXXX Yes. potential BHG, to from eventually upside upside potential lending much back rolling or product? BHG,

to future number is XX%. pull Hi, good Tony, for for of an kind years. and Right of we lending probably own like your give you warehouse now, on it's modeling. can If to we sheet focus gain Harold. their alternative if kind I don't is know do -- XX% the they use number increase increase a wholesale balance back to a as what could feel

I'd very right So, it hesitant over be increasing XX% now.

Okay. finally, on loan Great. And then growth.

able strong a in growth growth XXXX? specialty given low done, double-digit double-digit all So potentially few you provided you've low you're the why new guidance loan and lending the wouldn't be segments, remaining environment. doing current hiring you pipeline to for the already loan But adding exceed

said Terry, correct sure I PPP make But I'll start understand inclusive that that, for and of Tony, XXXX, paydowns. you me. can you

next quite anticipate $XXX paydowns PPP it, or million We so. call of year. we a bit started, So

be rate. loan target out that coming of the run that inclusive of growth So wouldn't

single, a exclude that if low rate. kind Does more So you're growth you into double-digit sense? PPP, of mid then make

Yes, Thank it. got you.

question comes Our Brett Hovde Group. next with from Rabatin

open. is line Your

just construction, talk back circle and to -- in perspective a market. line from loan construction commercial to growth Wanted item Tennessee and specifically maybe about and the

drawing seeing Just they having clients what that and finally there, you're to growth Can came lines curious, construction of the there? talk you in maybe been that actually the and about building credit has line business?

Yes. Harold, take you that? want me to

increase just of but I'll lines lines in -- obviously some. seeing the generally, up is start of Yes. credit. We're with credit, a significant beefing construction not

you Brett, comments when going think, I what's do line interesting underneath get Harold's item on. think to in I high an there, it it's volatility with to add

and So is, what mean a we've even us to you're I believe. loans are taking had I permanent through -- this where where had some going construction is period. by out stabilization where loans loans market traditionally before the paydowns dramatic. lenders before that a had We've stabilization construction We've completed,

And in so -- paydowns you've there. had got extraordinary again,

-- get you're do burned you And running growth against. funding. the when that there hit in that doubt equity what's we construction is where of had no before that front So do of it just construction to us there's through volume paydowns a see some of it commitments, the some the in significant of two, we quarter when that gets have or meaningful to

early over is emphasis of terms in extraordinary equity or my how is, projects have of So of changed, but what is and are been would the the over in paydowns being front it the the both judgment, funding construction months XX, much above what which, has the in XX not year so. last done, XX, volume market, the last

XX June X/XX. point in funding development and one some on numbers $X.X got funded. in the I'm $X.X that land at billion billion was but which aren't Brett, exposure, deck, at about, at more looking is construction. construction of We've it, call and XX.X% XX.X%

So headroom a in bit quite book. that there's of construction

just lenders Okay. and own guys helpful. might Or you've perspective some as your fee this operations thing, from balance and more fintech a might from I'm as and of active think you about And you whole these a that, Appreciate you on curious, putting in Do things building maybe Banking sheet? expertise you from or platform terms help actually of and to do made an about this think thinking passively tech perspective? are possibly obviously in get your then investments. they those Service very loans invest income out That's in great terms Harold. actually more like

Brett. likely, less is latter the that think I

Harold's funds knew the -- we provided of got built where things. economic going investing I think were started, we comments flow, motivation how about in it business. was those flow, people It has and to deal back how us been all of we the sorts part deposit important for we

I deliver pace and has is a service our think in last been strategy how over the of as a up the know, business be has technological stepped you years, of and just standpoint over what so that significantly. the decade, always model from forth. But to thing our here fast follower we terms

of and fast And to be and where stuff you is to those know the got so in a kinds be and game what's follower, things. moving

was we really were to. of get so that's to what that honey the And -- trying

just you is we're for there introduce Raymond products do it that's with Retail those friends reason. have to not back technology. other watch that finding study with, James, know, to -- of In As make where or helpful platform. that it us to And investments I I grow. can words, as utilize always those that to we technology bad James. to brokerage integrated we're folks a and are platform your other we last an us well, so investment, point, are some us Raymond brokerage to do our is example, opportunities some it to for product for as we like say, wouldn't through guess, capabilities who partners we We're there and generally to going going fortunate we're as able participate that

And up so things, we too. them to opportunities match on have

it. a are it likely a think fee what's we're motivation to don't sort to do yes, anyway, for we idea, headed going And that major there is thought I So item of bad on We but principal to say to fintech. was to opportunities, but long-winded way wouldn't just a synergistic line close stay income. be in

Okay. one, And if could. last I That's then helpful.

X, that in mostly the would community on that smaller bucket? revenue dark the that blue at be Other, other slide, ads, would looking Just Or that banks? producer larger Slide piece, be regional banks

other I would would preponderance it Well, but the be banks. some is large of think everything,

James. Raymond of Rose Michael from comes question next Our

is Your line open.

the are to from that into Just you XX%. and program liquidity that's things in comfort to on securities had, come with I that. the assets comments and like looks Terry, earning delve the about the think It wanted like PPP

in of continue drive I here wanted have to how we that portfolio a sense about the loan year securities operating just given think grow could as So next growth light and of comfort. just actually you -- to get And the given, from do then ability to guided the ex-PPP positive think fees, you've that that leverage? you've you guidance expense the much

I'll start with the investment securities.

amount. I As a believe far don't growth as add in we'll securities, significant

-- can at on a looking period call to if it, looking say, time, number we're over were are based rate a we're of invest of what -- curve, we anticipating, and to the value way curve million such in rate securities, that in word, get, a doesn't $XXX for billion Michael, creamed. tangible will $X book better can a of -- respond We lack

like necessarily that, we sticky. think Michael. time. of give And some a deposits. banks know if that's but I the number don't alternatives. deposits I we've out So try studying surge several we not, deposits to this there that's right know think core, looking be it's accumulated we XX-year these is are around. and number like for are thinking for, to look over think there, looking these mind, period now, our about what stick last about hanging it around I'll If we in we currently. looks a it gets more, some are put or stick discussion exactly There don't whether in at and client some let at that. and have the last we know, think year like $X.XX or so have base, discussion are various if lot quarters I Because going extended these to of not But but was whole an or for over deposits you to will the that were what you me the that

of a operating part No. That's possibility next the light and just expense year? do in fees, think second helpful. about the for the And leverage just you PPP growth loan the outlook that's ex question, of to

think be drive believes Yes. there's When people. there's leverage got significant to the out ratio me, going But believe of potential talk I operating you're CEO, a to there to he our is if what to opportunities. I lot you to down. he's talking opportunities always efficiency hire

XX% at we're I kind is over of to number, range. think that been so a remarkably kind somewhere of where in And XX% steady it's And time.

follow-up, And reduction Okay. just BHG, going you quarter. That's as maybe recourse another a to helpful. reserve this just have

think to you about about that think verticals X.X% by still talked end as of And grow other level I from those getting that that the year, we that grow? about then these plan? some the Is reserve of year. the next other grow, ratio verticals as could actually

Yes.

get will the call in, that But it, year. low. I think will the X.XX-ish next of range of it get they it the by end if down recourse continue anticipate of know they obligation probably get flat they kind X.XX% that next don't could It by range here the year. be X.XX-ish, think year. believe I the down end to to down that into

you've inclusive given? that's And XX% the of guidance

Yes.

Catherine from comes question next Mealor KBW. Our with

Your line is open.

you lot And growth like for yields; think do yields X.XX%. question to quarter, my a We've are the and wanted just is margin. circle loan we coming think PPP lot of accretable about think loan this on yields? wanted to ex about margin. I and new at talked close looks not yields a bottom the Harold, I back X.XX% around loan but to you yields how a around are for and

we how those on think And pressure numbers converge? about more do we where have And so how that? two much

Yes.

without what loan PPP about yields I is talk I'll impact. think

we know there yet. I -- I think that bottom. if getting to don't think don't I we're closer and we're closer

still dilution dramatic, will loan But over don't several it I I think here see we'll be yield next quarters. Catherine. the think

here, couple SOFR pricing. to points a pricing points we're operating new of there. they of business basis of LIBOR couple that a be it's in, think going basis now I to tend lines The

related anticipating we're loan yields far concerned. So, big as not as hits are that any to

a question. just the then operating And leverage follow-up on

big likely as a where see about really this -- start be than continuing would we higher a and expense rates to end building you fair environment the we it your to you've we XXXX, where will teams with you operating think growth. these enter in off if increase growth just XXXX? where move the But of a So positive the all in then that see don't as a hopefully year hires be lot rate stronger don't year, of have it and got year as XXXX leverage perhaps --

Yes.

operating or impact talked got next the a quarters. earlier our pipeline I Terry assessment. don't moving leverage that here this think fair that's the And one I on about a see has way other I significant hiring four that. over think

think markets to. on some some impact next year I branch going have that as And new well. these we're we'll will builds it I that in think of

on has your big know these with And years, from manage we've with revenues. our expenses, that us our investments. leverage stable, history you history we been over the focus but fortunate operating So even through we our been fairly

Great.

great. That's Okay.

all 'XX, expansion we makes I in maybe that -- and sense. near So got. which I term then think leverage operating stable That's see

Catherine. Thanks,

Matt comes question from Our next Stephens. Olney with

line is open. Your

recourse quarter? to but to XQ, BHG was the was dollar quarter. back adjustment What I third that go I on in specific I want don't in question think the it in $XX see third million the Michael's around around amount anything adjustment. of the

was talk quarter. to It in $XX mean Dan today. -- quarter again that I'll second Yes. million about McSherry here I third about earlier the

in XQ? fourth the to as expect and you the like it expect you be saw level at Okay. you XQ a adjustment similar Would And in it another sounds quarter.

Yes.

being should to Dan count up But probably but follow I with think I'll think probably it it similar. similar, on I out. you will to find be have

expenses color Obviously, XX% in expenses. outlook you to be more flat the for producers? operating And Okay. operating Got quarter the year. Any the next clarify to growth you're fourth number it. elevated down mentioned while just on new X% the could why of still to hiring

quarter its our Yes. kind less run in impact fourth incentives. were the And we'll in incentives that will here expense think fourth rate. coming think little I fully I Matt, neutralize have probably of baked quarter help a on to incentive

Vandervliet from question Brock with UBS. next Our comes

Your line is open.

up BHG. follow to just Harold, on

about the to $XXX mentioned down reserve million the year. going You next

back CECL? the you what's BHG think and transitions mentioned On of I Investor Day, as at that, impact this to the the

I call what they will experts they them or is, around the believe, come in the will about CECL sheet it, $X.XX sold or adjust through call what loans four Yes. years. to life right balance charge-off That's somewhere in on credit. worry X% reserves. to necessarily question. and model. great need that now, to with, about a it, -- equates going told auction -- rate for say, to X% don't They're kind to platform. for need through XXXX, here $X.XX these CECL But to means XXXX. CECL And the they're their business have loans the pipeline But suffice them And have on of around, average an the modeling that to of

Got it.

thumb? of do think And be in add or what X to basic producer or years? in three average, focus I that per producers. total rule total math break What we thinking just down, do kind they going of and of a just after How Slide of Okay. back the on should we sort in on on the four terms revenue

Harold, you to take that want one?

over it, commercial like about a that, to loan on get million commercial a a in years, ways and kind close at But earlier typically metrics nine looking on at lender Sunday. average, three somewhere $XX to looked of we've expression our call deposits. the lender we're that based the last, then call, Terry's Brock, Yes. hiring from on

balances for So franchise that we've late, from that's kind hires of them. coming in us and these all the hires use new the equipment we had anticipate modeling lending, when to franchise. what talking are about finance from Of we that bigger start over fully we

say, Got three that that is it. Or is within, years? a too that And frame? tight time

time a what to know Harold's happened on don't I Brock, Harold? line The five-year connection. that is number.

years. Five

Okay. Great.

with Our Janney comes Martin Scott. next from Brian Montgomery question

open. is line Your

just I the think up give lower. maybe about how guys But have don't know -- time where if going and... as over a just end the economy talked Harold is improves level, sense back could Terry. Can you you you reserve that on, for that us

You I You -- there? if don't... to you are Harold, it? take want Yes. or

-- dropped question? Brian, just can you and I repeat got I I'm now back. Yes. the

on Yes. think how time. trends was where wondering just over the about we Harold, I to that kind the just of level, reserve, allowance

with that Yes. we'll We anticipate, change here quarterly change, see absolute the provided respect to here, consistent I anticipate stays change. don't significant quarters. next several everything decreases any continue over change, net kind the of to

call to way So And works. I it, got just our next it's the probably we've through think more modeling go, year.

steady and kind slow a it's So operating of mode.

at could Okay. guess that to getting expect next you pre-pandemic was that's mean, do quarter, you XX guess next where to level, you're months, when look What think frame low if how I what thinking to And X or kind at. that of we I the -- XX this of it get I quarters about? that whatever you're was couple time or Harold,

day that don't CECL. we'll reserves happen. get could, post down one not think not planning I'm to for we're I to We but --

XXXX. more scenarios. all But So believe of now, reserve I the we think kinds we've got different release at through right looking we're probably that coming

Got you.

that going And goes of the lower approaching Harold, your kind loan probably I term. that margin, funding how to core bit if a are margin about the think just about near bottom isn't back -- how that? a to and Okay. in core kind of yields mean lower the costs Is the incrementally and just drift little -- the to continue funding margin outlook. then

Yes.

probably I about that's was But mentioning assessment. bumps. think I an I think talking again, like accurate Catherine, to don't we're significant

think few a I basis to flat we're points. probably

Got you.

just Harold. last two for me, Okay. the And then maybe

things? here, -- growing Just or about we Is sheet that we stickiness -- of it balance with maybe about though modestly, as it the think but from is from here? how not the growing deposits, the growing modestly is from sounds think

maybe billion it like we pre-pandemic. $X.X hopeful about. talk but be continued I in more see it growth, see I was to Yes. CFOs don't like deposit But what we that's will will think know think We're growth. something yes, deposit I not

Yes.

there's all in fee if adjustments that of were absent go I trying sustainable, million -- saw -- somewhere mean, bit just sustainable Okay. and probably healthy And we this quarter? current these isn't I kind investments, like then of than income, year the any $X big million around level were year-to-date. some is guess -- to fence level a some mean a just kind I you're on mean lower last put little I between equity the you million $XX quarter, a they but mean of $X Harold, as forward almost I given today,

venture mean we these anticipate investments. making fully money I fund off Yes.

to in $XXX got venture a funds make them, of another And to then hit detail that million objective. in, it, lick. big a little Just you funds trying people investments there where CRE we've Brian. different We've kind call give million to more out a got typical about that venture on a joint have $XX-or-so -- are

risk So the as, on yield the say, is typical large nearly CRE return million. the -- $XXX as the investments not the

would course, of have target non-CRE investments of typical segments being, -- our bigger. both reasonable a So we fund the with return joint but on ones venture

you. Got Yes.

contribution balances of last think given PPP kind I you're The And just PPP here. PPP And around, was said see year-end? the just $XX one the at is now, forgiveness fourth where you the the I the PPP for thinking, of million revenue -- quarter? you seeing that on from -- balances you're it where at the Okay. you do then guess,

Yes.

traditionally We go, -- million historically forgiveness but $XX where about don't the quarter. over I'm quarters, been talking sheet running is on to the million balances. every balance $XX several it, Some call know about, down last has going it's exactly XX% to

revenue million. In $XX the right. All $XX side, Okay. the million to

That’s -- taking So I okay. the all questions, had. for Thanks guys.

concludes conference today's Q&A This session. participating. Thank you. for Thank you call. This concludes the

now may You disconnect.