Pinnacle Financial Partners (PNFP) 19 Jul 232023 Q2 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners' Second Quarter 2023 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 to from floor statements for which may time, detailed reliance listen-only this presentation, results, Financial presentation. this A and factors in Financial's participants Form forward-looking forward-looking for statements. of make to put placed its description ended Pinnacle such Pinnacle facts and During been year At that on Many comments may in on materially [Operator quarterly actual risks, mode. to the Pinnacle Instructions] XX-K of uncertainties The statements. ability other risks any results or questions control result statements statements. implied cautioned will your opened the whether forward-looking undue revise this Financial's predict, XX, disclaims of to performance contained constitute subject to we on are or be is more achievements presentation, are reports. future following or as cause or and forward-looking the expressed and Financial these December other update listeners by any report contained differ have may otherwise. events information, any a a or All forward-looking beyond such annual not XXXX, Pinnacle subsequently new such filed obligation are of

website measures include GAAP certain and comparable A www.pnfp.com. will measures may to financial GAAP remarks G. directly non-GAAP presentation Pinnacle available by on measures reconciliation these addition, most Regulation of comparable a Financial's be as the at In non-GAAP measures defined of SEC financial

President the going Turner, now to CEO. to I'm and over Terry presentation that, With turn Mr. Pinnacle's

followed of expect of Those dashboard to am going focus call we what terms by and primary which of insight things measures every I I you, us believe Thank consequently bank Pinnacle. know with the the the at best you quarterly that what over performance, this first, into we earnings measures, provide on GAAP what are a and begin followed time while, for have that in matter non-GAAP on focus Paul.

that is see XQ we for annualized, in quarter quarter. a basis, to the EPS really variability linked-quarter pretty among performance us, pre-tax net we'll pre-provision XX.X% roll some On but annualized. wide an out, linked banks; XQ guess XX.X% linked My continue grew as was earnings quarter XX.X% annualized, and good income revenues adjusted

growth and which growing and earnings at of dramatic the annualized our predictors continued loans respectively, ability best are generally deposits to the in going XX.X% We linked continue forward. quarter X.X% and revenue

net per hold leaseback and value transaction aided meaningfully continue shortly. assets, book will metrics And review the like quarter, greater quality up NPAs, sale during a classified Tangible by extremely well. in the detail asset Harold that grew key to share charge-offs

in So, second a summary, for was quarter great us. quarter

going I'll on I'm let detail Harold quarter shares and review the the to later. greater Now thoughts some come back give in and

Thanks, morning, Terry. everybody. Good

real positive with the average a us. quarter linked for of growth will AUR's deposits. XX% again was in start We second Reporting again quarter

for the As be can XXXX where growing unpredictable another a second obtaining previously, very focus, fairly that we've is key was environment competitors in mentioned and much indication an is franchise. deposits deposits in doable quarter this

specials rates incredible from pressures offering rates heightened rate were at Several Competitive fairly some and large factors an effort apparent achieve funding the quarter. banks deposit the contributed to regional increased second goals. primarily during to in quarter,

balances much with public of We to also funds. have base funds client these tied Fed an being important

lesser Lastly, albeit the the pace. reduced shift quarter, mix in a noninterest-bearing to second of interest-bearing continued at

quarter. as with average about deposit increases X.XX%. the we at the pace deposit to We're increasing All a third cost rate X.XX% of of optimistic of rate these spot quarter head to factors into contributed end

Several consider. factors to

and noninterest-bearing of the interest of months. Over weeks, slowing over we as shift in third of has the appear reduce the some last slower to quarter of from experienced we first bearing. acquired liquidity, expensive costs added the Also, the our deposits the contributor through not more pace funding absolute quarter quarter, to the the our be by end in of few up the the the intend of to mix been base the moving last absorbing pace same most to do wholesale size second few which at a

words, terminal gathering hopefully noise last will half not the few in is aggressive believe rates year believe nearly third in we on do for the continue second we the as we Deposit for to need a the increase with to this to as Fed months. have as as gathering approach available liquidity We quarter. more of other half just deliberate over all the a we In deposits first funding stance been value move year, be we the funds. into us of

the more just down quarter slides, but which everyone the into there. XX% Lastly, information sure at there's We is to deposits this the on supplemental making go total won't on call, information of deposits, in are uninsured end. knows

the quarter loan successfully rate. growth line XX% linked another for our quarter strong was us. leadership said, managed our second growth down quarter loan The That to annualized

XXXX guidance low maintaining to for at growth. our are We mid-teens loan

box on for loans our and be more Spreads pricing, very over reduce loan on last growth. to credit the respectful. discipline outsized serve floating mentioned have construction tightened variable and several we've should the we deployed which continued to rate quarters, normally As

are also on line improve spreads our rate by fixed seeing We given lending emphasis leadership.

we deposit of on relationship managers. the of deal our part essentially thus the Our effort same loan great the line which far a as believe reflects beta, is

to plus rate new with and spreads paper. loans pricing rate on to and X% X% both Our fixed maintain aim respect achieve renewed to and floating on variable our is loan yields

As NIM chart which we basis start the quarter. our GAAP more than the top anticipated XX points, the is decreased reflects, at of

second billion our by liquidity caution, slightly quarter, higher. our $X.X is abundance of and an liquidity of quarter increased end the noted last average approximately we As during cash quarter, out in

loan as we going a half provide the lot well as the quarter, So of funding third some second help have into for growth of us should in year. which the wholesale cash eliminate

the quarter transaction sale to night. We this cash approximately million leaseback Contributing the last sale of impact mentioned the received release from we nonearning the assets. $XXX was build press in fixed of the

near-term $XXX order sold of also investment in interest-bearing million the eliminate us These increased impact into allowed sale the transactions from We from to under-earning lease cash two costs. assets reposition to negative securities.

Our out there. most forecasts consistent rate forecast with is rate

point slightly is to is more are XXXX. decreases We from optimistic quarter a that don't the terminal the for that funds, but we see rate until in that by the we be late Fed slightly net occurring Fed raise rest pessimistic will be forecast July that, interest mid for results. our flat second With to of likely quarterly the up XXXX income may

continued we presenting well loan metrics. credit perform portfolio to again are the As traditional in second quarter. Pinnacle's our credit, for very

is implementing the to of that belief of these Our quarter several losses of for quarter. changes for ratio our credit X.XX%. the remainder year. should our models during credit did consistent fairly increase the We to are allowance this We quarter the and during reworked CECL this loans remain total

increases point believe, be increases during macro seller from second dependent, we modest should XXXX. fairly the this on We trends. don't half primarily anticipate of Any

chart over new a to estate very in As reduced quarters, from appetite the quarter, give real prior construction. noted is limited, commercial on perspective does for CRE for we appetite bottom the the the any, how but basically have you our more. appetite the continue Also, on a last year if or we few unchanged right have last real

credit remains portfolio In summary, our strong. perspective outlook a our for from loan

So with information are potential from left credit, originations. last we to time, more Again, macro begin around deals trends advantaged the if a develop, top consistent we believe of recession trends position strength. chart with and negative in enter we construction as any

residential which appetite We originations new chart consistent the indicate began for lines largely long-time are warehouse, homes for A appetite set residential bars The in chart limited new chart. gold a old summer, multifamily the our limited of is commitments. eliminating and on residential. new about note would builders. reducing, that for guidance with lines is The construction our concentrated new under quick last

in resi years. guidance for have continue builders to cases, been some in support our We under place, that lines

As existing you now market markets, which given right have a which and very lot inventories, of the builders from in residential the the home housing the of in-migration lack of busy state are around likely is our know, especially relevant country.

fixed -- the CRE Secondly, information right, the chart we and maturities loans. the for top rate are top on and left construction status updates providing of about

that coming and these to manageable; incremental regarding will chart: this yield our absolute last three X% be rate Two loans with that remain size over the fixed renewal increased has and comments up range. to to X% for the strong, costs. believe to for target occupancy afford years levels the rental we continue of able into the remains volumes five interest the increases borrowers Our

underwriting for years rates XXX to underwriting our any be or commercial resources higher. new than previous required contract Again, real from their our to Additionally, on afford both several points construction borrowers cases, part basis rate, that is the higher these in our we at based our believe to commitment XXX underwritten estate practices. rates, most due which the increased conclusions and have on increased has revenues

I'll few the in to Now always, And on BHG a speak as fees. minutes.

revenues loss our environment. on on gain challenging slightly up of banking of turn the impact pleased from were first That and is be proving Excluding securities sale BHG, units to sale quarter. assets of said, fee-generating investment effort the the fee with the we're what fixed a the the of

the reduced payroll and all We high Seasonal were while XXXX. the for cost, benefit decreases around continue revenues, part in the essentially rate down was will costs personnel and expenses the personnel from come single-digit primary were BHG as growth sale costs. occupancy other categories to quarter were to lease items, taxes offset that in over at XXXX for were the the flat depreciation amounts. reduced expenses costs these by anticipate expense quarter other Linked first contributor fee other increased by excluding and up cause similar in a leaseback

to payout annual at XX% Additionally, we target end the cash reduced from the anticipated of of our awards quarter. XX% approximately second incentive

Again, not incentive costs substantially which speaks or equity to variable performance-based. quarter-over-quarter respect nature our incentives, with of incentive to much accruals all change So the are outlook either for incentives. reduced for cost our the cash

we like to leverage hiring, our slowing are back need we feel projects deferring we with should throttle enough have on to. along expenses Additionally,

year have incorporated lowered into updated for We have growth our expense and forecast our outlook. again this that

was XXXX, previously As it for guidance to to growth teens lowered high XXXX digits mid-teens low stands, growth for over expense XXXX. low our to have single we

losses. securities Influence provided which in end almost end, transaction, view sale Our $XX the share $XX.XX we of year. by retaining book the leaseback in of $XX incremental million this part common increase in gains, anticipate capital up XX%. quarter this to increased through million value at In offset tangible at was the pretax of environment, macro per least this

actions book or preferred alter the The we've March served taken plans and capital of have tangible slide any tangible on the We of currently bottom our several X Tier ratio to believe ratios as common and capital value capital have peers. preserve left of the of sort via to our us the stack no to well offering. chart compares our end

don't anticipate ability rules, way. rules to we these come capital we could with significant withstand the the Although results changes our any to that our are potentially changes capital to and pleased

details consistent BHG with Now the year. several $X to the we the look at a production the quarters about rest of The is and consistent billion per at outlook few for right top has various billion been calls $X.X over last comments chart that quarter. before

few of is over BHG the proven these very able network strong. that of some Placements somewhat signaled for ever the fickle to level a some been the to to less by while asset institutional placements channel highest some last quarter to years, demand the the which were liquid were in investors most BHG's the country for respected managers paper in be penetrate BHG times, during and has really at has second the bank of competitors.

unique continues grow provide BHG's sheet on-balance come last to the has their calls replicated priority sheet to institutional we said, believe can't necessary a between investors competitor of any network, be orders BHG funding, periodic has That the BHG the made which liquidity off-balance Over as paper which level as BHG to bank and and manage. to BHG. investor to to by table, placements. may Historically, receive other years, several pivot bank

is loan to structured the This whole network. different slightly in replacement is list a new bank capacity. quarter, slide negotiated two to significant that regard where to additional the provide new in to BHG purchases private channel cases are successfully the trying funding were of with with loan we're production. both channels that large available similar to sales BHG These funding their these What's $XXX second in the million of in clarity

BHG's as treatment asset Gain no Performance managers three the has acquired and respective lines sale warehouse on recourse. afforded BHG with loan has the loans the private to in to the the well-known of these constant with that such firms. acquire equity capital have sales more negotiated future. have markets of investors three loans in firms participated that contact sold the been in past are many

in is auction manage in bank information past that funding in billion several All just and usual various to risk liquidity provide BHG the a trends able it. flexibility and different of the remains funding format. shown platform collectively The in, very between effectively channels. slightly spread liquid we've requires This channels dollars these the the necessary the to detailing meet capacity to

on chart all represents which off-balance blended historical sheet a bank and gain buildup sale top balances. strategies, bottom sheet the funding of chart balance the chart the The incorporates of is network of the

in with spreads. pre-COVID As with anticipated, the have with spreads rates bank being higher rates auction consistent come

quarter, was the second expects three fairly of for the loans second to sheet And bank today, network the given BHG the than spreads it slightly half the on as consistent higher last balance balance stands buildup XXXX. into the During going years. blended reflecting of sheet be over balances spreads

of spreads. have quarters, its the has with XXX. This XXXX the noted scores credit on will and to production tranches BHG impact FICO we've both in its last to base. in As lower Average several an box quarters, borrowing previous respect tightened over have particularly increased

towards assets. less As quarters, models we've has originated stated BHG in modifying credit prior risky been their

borrowing strong tighter for with up credit looking remained its indications refreshes are scores from volumes years. base. weakness Production in of its Credit monthly, underwriting. BHG always score previous even credit

BHG's borrowers base. XX% is to with approximately of production the quality repeat Additionally, loan their adding of

off-balance reserves balance sheet losses and both sheet for details slide This and loans. on

we most determined lower lending an loans tranches. that written XXXX of these in exceeding of production previous quarters, Their stop in that conclusion several tranches was and to was As mentioned require contained rates XXXX, internal element into BHG remediation. and for tolerances in their loss of reinflation lower which for elected several

quarters the first sooner. at lost losses approximately three two origination. quarters. in XX% couple result, -- a incurred a occur outsized believe Typically As we is similar could pace as years over BHG, the content to next the great the But of last light of inflation, for come within of with losses should come

As COVID. a BHG in-person resources will and be instituting bulk result, borrowers, for including to which significant suspended collection new up activities, loggers more was during closings expended has hiring

originations has strong to last quarters in BHG this quarter slightly Thus two originations billion far, $X.X had track the $X.X more achieve less and another through production to is half, production lower than in than last conservative last are credit efforts year, a billion with billion $X the with they be slightly is which be on but what approximately year. tighten bias even to box. will close of than the the year had half BHG likely year. first the year prior should to that

out at Net to to XXXX. the on from million -- again, quarter's to numbers for of million, results. from are The reduction. being is prior be detailing earnings a now slide to a our current work production tighter which reduction XX% XX% last financial Quickly, forecasted $XXX year's year of $XXX outlook XX% XX% forecast usual last

we really plan will continue recession, severe knows. nor a be to it else how anyone We neither for but

we resiliant. day. is our relationship-based, know that is franchise job business that is and Our the risk to nimble this What model face every manage

significant have has team before. and tackled economic management downturn the Our experience

the able from curve thrown confidence and franchise back binding turn whatever expect that, have we'll can that with us shareholders come our manage that We great be Terry. to have balls to high-quality us. it And at to handle I'll over get currently

that, I've now than the and an that to went primary on my sure went I shares. have we which call that -- quarterly completed. the quarter. of mentioned opportunity understand Thanks, what investors in-depth work that have the Harold. what hard review up make during Obviously, is an goal more we've just of back I to offer beyond to But said the performance, down come thoughts to

producing get a value, our to for shareholder total or But of to approach returns shareholder long-term better understanding aka, TSR.

So begin perhaps is shareholder kind to produced historically. return place the just what we've best examine of total

total last single over among the you see the peers. As best produced return has here can PNFP shareholder decade,

over look it invite I'd if the last look inception over look go over first our second And in it our decade, and you, since a to at decade, at our get you it chance, back years, the XXXX, XX the in those think years. or irrespective XX consistent find Absolutely top economic I rate over near the of various cycles XX you'd years, the performance segments. over at last time us all at last

won't TSR happened. I primary to revenue that with I of number TSR growth that what little reported show time. is yours, three tangible and infinite value would how or accretion. so of and that growth, suspect they're And I book of bear experts, metrics no The there a there of over highly that stock over correlated examine correlation number bank and analyses to are that are metrics an now that time, EPS are suppose

a deposits, loan metrics like net interest name just of margin include efficiency and leverage But yields, funds, few. cost noninterest-bearing deposit ratios, they percentage, deposits, total cost operating beta to

total that percentage is decade, already ever shareholder have returns million. above In $X over confident NIM record yet fact, been rarely for the seen you've our last our track I'm

Our likely better never has funds been cost median. of than

up yields our of been has and down. our less to and go high, no better when is deposits Loan beta deposits than most both noninterest-bearing generally been peers. deposit median generally rates total ratio have they when than Our always come

There's metrics. of nothing wrong any with those

In making But measure we be than beta a been revenues, about. do just standard point model study accretion fact, the cost correlated we which build without It'd inputs. growing care I inputs growth accreting model the all book highly percentage because NIM to or of the and tangible the that many revenue on value and deposits EPS of honestly with is historically, or those to book focus we like them. growing more hard TSR, I'm have EPS of and the deposits value thing tangible growth, percentage total main more much noninterest-bearing

say tangible growing book growing more you what much asset exceeds associates of certain if classified here's associated paid annual accreting annual this value, I mean. of revenues, our XXX%. EPS participate we XXX% No tightly When our salaries level. sales in incentive pool, and know, on cash to any in virtually is a focus and I Most our incentive firm cash ratio

second revenue bunch of had payout, in those a the focused metrics virtually revenue loans, growth single the every determine the literally every growth mine, growth EPS highly and the this two associates we But bad correlated have on salaried variables. including we made and TSRs, is have with growth Since rate. associated EPS firm salaried that been

one this those believe along continues can. the few with incentive And My compound other other that's firm critical like salaried rates. depends earnings of growth on associated I revenue with reasons every growth and two our firm to personal

long-term incentive associates equity terms shares. In of are XXX% granted plan, of our

so award annual in peer-relative team, ROATCE. including time me, peer-relative the is tangible this and top measurements the accretion the our For or but vesting are recurring most and for XXX value firm, the performance-based, two shares of substantial leaders leadership associates, vested, majority those book primary are

firm in share the tangible to from in long-term an book to an have clearing ratio, asset beyond we leadership In of this of case restricted words, terms banks threshold, this maximize quality for is which the our group our and outrun accretion plan other of value NPA grants XX% peer vesting in the incentive the of ROATCE. the

at other firm did we yields little Parenthetically, sheet near had bond despite following virtually the book lows. this were on all-time balance that insight with extraordinary our liquidity -- you a why leadership bank the every may give on when not and the of pandemic, load that

how here's that So plays out.

high years, influx response government a supply easing, CPI recent liquidity all and mammoth most otherwise or calendar we've a in me, from a to a percipitous seen the X%, Within last an increase inflation in curve rates and funds at number COVID to pandemic, the in as of five yield quantitative failures of history and as deposits, excuse the stimulus in the tightening associated a dramatic addition inverted quantitative -- pipeline dramatic banks. in Fed increase decrease pandemic, money

the dramatic five-year that, all through can versus peers'. our growth the on right, EPS see outperformance you And of upper

that was the macroeconomic growth tangible can lower primary regardless the revenue the then of and of share dramatic the see dramatic you compounding that right, book the the And you on driver all On growth left, volatility. in value. EPS per see very lower

shareholder continual So to of EPS several saw primary I value tangible the and believe has you been book producing that the contributor return compounding total revenue, peer-leading back. slides

years So begin like going you next you XX chart the or XX the look over might is or to now about next next begin years years, here. to when what over the five think over TSR the

in markets other we think pace important dramatically of revenue serve growth hate we The profile the enjoy potential the some in than are to the turbocharge dynamic we the the even advantage and at more in our the earnings markets competitive growth regions and to different is the had country. a rest likely has intend we've I to compound nation, revenue I'd Southeastern But this EPS built. to the which to growth. that than have serve of

has contributor our taker. vibrant the to market XX share over has fastest-growing markets more But been sure, looking to foremost on of the tailwind. ability here be commercial a What certain certainly substantially you a banks We're We've data can you're at and one years competitors. research important vulnerable the share market of Greenwich segment. Associates, banks last been market provider is market take U.S. to from the the by growth our been produced

of see the chart, creative critical business, cash research, manager, variables like relationships, you being on ease left digital things and satisfaction their from insights, their forth. doing relationship valued client Down long-term satisfaction based so is the of of capabilities side quality the experience, the trustworthy, the This dashboard. management

As you would red the colored the various by the at shades lighter green dark that from colored scores are and see worst. the orange are the be can elements elements or of in trailing all the green to elements are that market-leading; colored yellow between bottom, best and bottom at scale, all are to the market;

So in $X $XX satisfaction the Pinnacle scores you for three That's columns small to these businesses. rightmost for important metrics all see from companies with million sales million.

$XX studied for Middle for to leader sales in our market score $XXX one these businesses sales far the million right, footprint. that to chart that's combined million to virtually on market segment $XXX metrics. every And single multistate long Pinnacle's see million segment. million I've of the very then throughout the a $XXX the in

including this and to First important and understand five Wells Greenwich in America, Fargo, as Pinnacle, obviously or do. identify addition cover markets banks if of charts Citizens we these that Horizon. is And Bank P&C, critically market any could to other leaders share compare I their our Truist, six know dominate as entire First footprint the overwhelmingly don't

is terms Score. most the to ball score surprised, away market It the Promoter overall the of footprint, leader But our and far all-important and Net satisfaction Promoter I'd client important Score. we're be across Net in seems me

brand community. your that fully brand your Most to clients you their you friends are less comparison so colleagues, a know the in and advocate to the with it's that clients intend number they're engaged they so disengaged reputation the with that from detracting of that for your with that of are

among million $XX XX the market, you see to our And companies $XXX league-leading million companies sales is middle $XX with businesses, league-leading from and Score here $X million; a from Promoter can Net to small from in XX sales a million.

clients Connecting national money more our slide and all largest with by footprint. than the our the the on and competitors spent our throughout our rate regional on rate highly experience last, digital clients their's technology this their digital of regardless experience,

while bank at failure. virtually of dramatic Silicon a to deposits the grow aftermath. providers. we about be look And said large a while scores, to national clients regional clients no been has the much you the lost it potential Valley following apparent at migration should When these in pace continue So we

the our not national you Net And bank hard you bank between at leave Look at to top leave hard it's us bottom. competitors to Scores hate. the Promoter be large the absolutely very love. at difference It'd dramatic in honestly, and the a

banks on Some compete price.

for wait sets your pursuit explains our creating relentless that downs. fans the to raving us, that revenue But balance just yield regardless economic Some curve EPS sheet. a of this of grow and ups for almost it's and ability

footprint is and businesses surprisingly, in next to banks the So when over of not Greenwich [technical response. difficulty] frequent our business about most away which XX Pinnacle their a are share likely earn the months, far

likely to a their you respondents As the see, at most small business receive of market middle named Pinnacle of share Pinnacle as can year-end, XX% bank business. named business respondents and XX% of

And the banks response. clients That's was away probed an and at the share momentum. risk least are mentioned of Greenwich which incredibly far strong business, their most losing Pinnacle regarding frequently for when

our in for undifferentiated large is national further our more point the Consequently, national making substantiation two vulnerability is the segments, banks. our net momentum in our vulnerable in markets, large banks lack the be among XX a are to about versus been at true banks of market-leading might regional I've relative XX markets thesis the businesses banks in that of

otherwise, our clients But in business suggest given these momentum footprint might business net segments score. our within

and EPS value book belief it's historically what TSR. revenue sum up, have highly growth, really So tried our accretion to most growth been is to say I've that tangible correlated it

risk incentives. proof's We believe relationship-based more with than That's produced model why we focus pudding. and historically the through our manageable our in short-term entire it our firm has strong TSR on many, the long-term

the generally attracts and the fact high-touch That's more the differentiated, we've that fact irrespective volatility. less over about of to [technical are outperform tech likely we demonstrically economic key nation that the think you clients. that and serve model markets earnings difficulty] a got that When compounding time, the to

We'll take questions. stop and there, operator,

is Jared today live. is the And coming your Wells Fargo. line first from Instructions]. from [Operator Shaw Jared, question

growth customers? that share more Where maybe there I deposit money from? existing national you seeing more we've well. your biggest coming peers coming you some wallet seen of that think runway is to much Or the players? deposit that I just that taking today guess take the is is as your guess how growth from? more detail Is is some And great, from are a that market in on share? just little where really

last They Yes, bringing of years. lot a is things give a are One there I'll Jared, firm. of still question. about. out that's think you their to got several we've couple over people hired the great clients our to we've

I into the get our of we when book. year, that also start play deposit into seeing seasonality this think time you

last balances. And quarter difficulty] here consequently, we [technical third the building funds, anticipate call their fully that public we swell it, also over the of clients fund public more that here fourth lastly, the In handful outsized a our a quarter. they're see or I'll won, quarter and And so a in more then in we'll it way so, and and way. say

hired does the The Truist, of I add where second might to terms point's in I has to the Wells I Harold's first it from, that comes been revenue we producers comments, folks Fargo. has contributor have been largest getting think Jared, largest important. of think

consolidating about they based serve their so forth. better are clients And on to so relationships and here ability

being asset were it deposit to what say, firm people, think I one that hear them think wouldn't to -- you would a part the that's the inside being you I best anyway, of if hey, unsaid want of transition come generators. be to from it. generators and big this firm to one to So I about talk best of But we're this

product some offering got firm of energy of money have a deposit mentioned so in we've last different a introduced the property that value-added like the lot money of for over past, verticals that like years. large that the specialties value-added of number homeowners them a associations, that managers, on And things pools inside we've built. where of I've where we've there's variety attack we product couple of a pools

literally good as verticals men we are And being them. are speak. have number things of out those really those of in that a other rolled So there

and transition just on, that our also you'll bit specialties. So relationship beyond commented ability -- to but my a of is I a in those and again, the we hope belief Harold through gather approach little both see

color. expansion. job expansion people be your give update then you've great at markets great should you've recently an about that in you of maybe pace pace on hiring How hiring, done a of targeted? market producers we of at the And point? can That's some looking thinking hiring this revenue And the new

we're in. just of the I it, guess, I markets with part the start Yes. second that comment -- on expansion maybe

billion, they indications funding, I been I that the can given commitments their Atlanta believe recent of $X have if DC, market think net outstandings. already in are market of about north more generally provider that you large we've I $X.X loan The that. think believe for a billion

in generally, loan $XXX in well And is pretty short in the that. million Commitments million I both markets. approaching in $XXX are really those maybe funding, outstanding. strong order, think about momentum above And

to clients measure lead talk our say recruiting so markets, to in in treasury were that you would and recruiting efforts if our Rob large based both they they're great think enjoying the forth. Pelton Garcia those a strength of success on or people and I management Caroline

excited continue we're those to be So rate, at -- expansions. we any about

we think in recruit. people, hiring terms of we're to continue I --

My many of did to There's we but think quite as people I might momentum. guess still hiring hire lot. we year this we as last hire a continue is do we'll year, a well. lot not

me. our conceivable that might to as two, a it's way hold could a always event, build we've feel like And to as we I the got market big bank. extension; find try out possibility or that in We a to

opportunity heard anybody, build trying we're not us bank, if to But just an in build with proceed not hiring had we big about the and We're LPO. past. talk You've the to we'd that. that a

your And so I to there. question I hope responded

what Yes, you we Any or that's for directly then, maybe loan we said, And in be Harold, And thinking just finally from in or near balances growth reduction? should to should term? assume HLB I goes just either any great. then about for cash GSF cash me, That's guess, that great. how reduction go target where the there?

growth It's use we of about, can kind in think upwards here be we $X won't right. deposits. at of first got also the year probably book. billion that's going call broker loan -- that fund to to that help to happen around We've it, Yes, the it all and size of -- it'll over our through probably the next wholesale six months and part happen once, help of consistently reduce into the And the next year.

Stephen Piper question from next is Sandler. coming from The Scouten

a guess of the of things that lot strength you like really And been deposits? people I culture you about how incent this towards asking how really you've feel shift -- But your shift. spoken the this change noted incentives you and is deposit I'm to the guess to shift has guessing a about base. just one curious occurred? of drive that Have has a kind your had I I'm I'm

Or the cultural to you on really deposits think people, these we to book How is migration, can revenue I your to continuing loans, you guess, first. focus about and want telling that growth occurred? got book it if that's

it's you a that's because not me. you believer. appreciate I'm as hoping a to a it's this I convince aimed and And I'm going be changed to at associates We've growth know, EPS all guys. all our revenue Stephen, it question, great firm hard you all. important Yes. I'm and the not incentive when of to that it growth, get at, illustrate to believer

easy to illustrate works. really so order that It to is money buy or to and Guys, would our shock you is it the our buy important I lower got to We've revenues at move got money to more how price. company grow it to can't a how whatever loans. think we is more book we've easy in EPS,

there is. think and up in just meeting, associate quarterly a performance the I show last slide what the we put financial all

you here, function okay, of our a we're it's all And them, largely on and funds. show margin look, of cost

reduced And so accrual. track down then track, don't reason miss show expenses, we're right and on incentive we're because the but our go you we on the on

clear, in of out mine on money is put of so quarter we took here happened in it rates we we terms and bucket incentive clients' our in them And paid in accrual, the deposits. to this just guys, what be your pocket our in

I move we're people to. back able the we're And so are to have going we and by It that altered is incentive. doubt again, constrained forth, not not we it. that how

from in That's can lower? a you whole. of terms for and And guys very margin give at the or book outlook, speak amount a as think if the helpful. when where think, And guess, in to you the the margin cost here? June you rates Harold, incremental to about I if give you deposits was then, how do XX. and June get floors progression have kind compression the of like relative of loan margin But might period quarter I of the of I'm end not sure we you

loans, very on what We're pushing floors got also their on conscious about We've for rates floors pushing Yes. loans. to for we're deposits. they're paying and folks be on

think deliberate I our half to we the second be go the we with can more into deposit as year. rates respect of

As third down to to in and be going it's margin performance in likelihood. quarter, fourth the all

to in likely increase But we'll net us up. rate that that one flat to have think to be support to some We our think don't is with our We income depositors. more interest coming miss. there's said, way

we're two of make we're to gathered. ground of here last, with we've focused the three these said, So try sure revenue we've on be call respect that that quarters the don't to any to line. over or And as Terry the some to sacrifice gained that going clients going we it,

stop and I'll to there, see your Stephen, I've if So gotten

makes lot No, sense. I think a of Yes. that

I set maybe of that guys your betas. a slide think betas, showed you year to deposit deposit those but ago it in your irrespective NII outperformance you where speaks

a that's point. think good I

for Maybe the just me, new lastly around hires.

of have them new And management. a over particular some guess, view concentrated? you that have driven hires us give the of platform wealth You I of Has strength that kind there? been been had strength some into in more Can management wealth those on time? where

private segment. that a wealth a say people segment. across number Well, good business management brokerage as lot might refer of bankers, in as relationship of as to which no mean managers doubt believe as that, and us not, it there's the well what some really for a or as we double-digit trust, management growth focused And I well that have individuals. in they're to it's hiring wealth I on are the hiring hired wealth When hiring

had we've all across those So hiring segments.

that's that so year management or segment we a in design. probably the by two the than normal, I I -- hiring little is have or think but think necessarily wealth over more had don't last year

people. more I think it is availability of

in you what that to that And the at so for. know is high again, they aim we do frustrated we -- are as just organizations had try producers work

wouldn't think at sort there, their I which look people. ability in mix in to there's have than about XXXX. much I hire so different norm would I expected I for be that XXXX all. elevated been And to example as the an frustration our say, of has would fueled wouldn't the expect ongoing hiring I

Alexopoulos coming JPMorgan. from The from is next Steven question

pace favorable outflows even of start, non-interest of had terms so the you increase I of want abate then and commentary to starting bearing in the to to deposit starting abate.

lessening competitive you to see you the you Is abate function into here? comfort drill a You're what the you bit starting of competition that Harold, a unpredictable. said could that little also a You down I is Maybe gives environment that cited, think saw? bit?

Yes.

XXX I -- think coming calls the gathering, of our lot -- the day the is like deposit less it's of the hires watch primarily units coming over we It's around sort is book anxious. that those like opportunity new from deposit a slower. some when It we've more into things. around there's had the call our over pace feels feels last It it, days. days, trends every XX

I lot the this from need profit generally, before of start started today. this have. that's And it Eventually, competitors of they margins and go believe competitors, have is I recent feel these price-based some short-term have competitors, call were Terry to to will necessary to activity short-lived. phenomenon. the a about -- they What to is a be talking we back we but price-based before create whatever that we regional to

I don't think at offering. rates competitive can they that be they're the

I price that, will environment completely think extent. And competitors time. in on price hopefully, we've period can't also consequently, abate that but can history I of kind wrong is for be be competitors so long that to a competitive of some been

Yes. That's Harold. helpful,

of you up appreciate you'll your where you teens what's today, of to But we where high I low I down and -- range? taking digit know think terms outlook a a expenses variables expense bit. right guidance in end the increase likely in On the there's single now? where bias stand this lot percent

On expenses?

Yes.

to go my I probably somewhere if twist in really pain, were in to kind it that I'd put call back and think have neighborhood. and my of to behind to a, make X% just me XX%, you arm it, be

Okay. then me. Perfect. And for helpful. question That's final

sure. through the P&L of walk just I go-forward transaction? want you to from the on us the could a sale make terms basis leaseback, Harold, impact In

Yes.

savings feet, rate of it, investment and Just to period, we million generate call call from, expense the we securities, a, from kind from from to now X XX,XXX cash from X.X%. assets call cash of fixed moving additional in selling the $XXX the to lease over less the from million taking X.XX%, it, now, it, to X.X% a those $XXX run generated X% is $XX a depreciation increase. about properties XX-month that were those But probably able million

of thought of offset last bond play the increase candid million sale -- probably reposition increase. book. reposition the $XXX the basically be as quarter of leaseback, when in the much started call the completely fourth And year, lease consequently, bonds all as was more or of another, we expense And just kind yield sale we in around the in back at million got that That looking to gain all we with would the this it, the we could on leaseback. we $XXX the

quarter in warehouse created or first to there's to whether the just recession be or going a with activity gain. quarter second we into from and going elected the the the not, all capital now But not that we and the

it. Got

earnings moving forward? create fairly So as the benefit and an view overall neutral you is from capital excess

the to And point. investment the expense. the basically that's the why we securities is exactly of That's of did lease neutralize the sale impact

The King from Truist coming Brandon is next Securities. from question

below by including updated Harold, could get mix, to mentioned get previously I to wanted I your you deposit that on know, So XX%. year-end, assumptions guide. we

just to that sort wanted today? I trajectory, see So if you feel with comfortable things given where stand of still

Yes.

put like think deposits that, reasonable or board. noninterest-bearing where in of on feel to think that's a number any going anybody I Brandon, here else, We go we has we don't are I this kind -- idea to the environment. still

our a deposit cash account management and have keep to people they reasonable be it we're our about seem in our -- seems of feel amount an have our be that But business. two about that operating account; to level to like is does force, feeling and sales get side, like to treasury to people, you play: our have the operating at where to end clients talk this of one that cash on in to in better things your a day, I things you are this the clients for our need to this manage need

model occurring to conversations every for whole on it And think think reduction I this why so as are those leans to day. I continue hold kind us. is of we feeling that And relationship-based this better into we noninterest-bearing just think

understand then I Makes well. but saw Got the that a sense. I to quarter. it. was real it. pretty real the And in commercial in the there increase talk increase I consumer sizable about had Got as jump allowance, wanted And estate estate,

there's if to just around see that any context So want increase?

Yes.

duration macro case the I think allocation the estate to primarily assets. increase those is real in of the the consumer related and

extend but we're model go assets ago. fan Does that loans on loans you penalizes the not, we're day, argue out, make sense CECL or going those made up and decisions of a end the those Brandon? those automatically So CECL not then not of the the back or and at big when to whether about years to several you, rates

Yes.

here, So nothing kind just purely of quantitative? qualitative

loss had fixed on I residential the we To time remember of be honest, last to can't mortgage. any kind rate four one a

Mealor Catherine from next The from question coming KBW. is

guidance back July the about longer and the how think to circle of helpful we year. scenario? don't we we -- think as in think still hike into about just next margin level might think you've up to a higher flat get extend your we about thoughts NII that to cuts But and and want back 'XX, year. or but in next into funds, a that say given you the is next how rate at to And do it's we're I half in of you look for year, get Fed year as kind just NII move let's then your of

curve of intermediate Yes. assumption think that the factor do. be in does I long Well, the what would one big end

banker As fan you know, curve. a of an no is inverted

in lot to our we of sort more that clients part require sales our going stuff. all on how of with a it's so front and force and price And work

mid-teens net don't going as we going be kind as what at interest would we depends and to ability we all don't we're think is on income very think We the grow it far to of there. at we XXXX. look in a hard But far, well see XXXX. So our But believe happen level, be moving into as positioned the credit to long is it going curve. of intermediate end that

we scenario, in you do where teens, next quarter? NII point maybe you low pace maybe your year think going think pull growth to at growth to And into of like that single-digit reconsider you'll a the be the pace what get lower how quickly expense high you to as saw kind might the count this a back

book next have year. of going And how back being we expense are and into One for replenishment full incentive of that's out again respect up a achieve trying then lot costs that to next with XXXX incentive We'll to a going great our year. figure question. the to be ends whatever to to where a Yes, consider would things hiring.

of to on it call we not to objectives revenue meet get leave level they support We're we our asked for very we and still have they that, support on units with are call actively producers, We've do -- order kind would what to just what looking hold in our I'll do to hiring. there producers. in whatever We're it it positions. but need internally, Catherine. their out today, revenue conservative as are, -- it, far as not -- our

very It maybe modest. one a should just the strong, little like didn't ratio, the guidance of And the That's you growth it feels loan increase follow-up seems maybe like the great. then to reserve in that's bit half. -- still first And Yes, on in Okay. expect but helpful. like back slow it half big be just feel the a relative year credit.

it be And unexpected number outside is so fair expense front what the you're credit some of the back we in to that absolute on should lower seeing the this of dollar in the year provision the quarter? change relative million saw $XX-some of number half assume to the

provision anticipate don't that half quarter. in we second second Yes, being in it high as the the was Yes.

is Olney Matt The from next question from Stephens. coming

patient I color Harold, It the to mentioned, be view to a that kind liquidity more then year. want the $X this, these strategy this, X, you that get to you the And excess billion, up around as like I I is Thanks. I and sure broker liquidity. down any amount, these to that products? deposits on And want be guess make sounds take part understand deploying Did could could when right? of do on roll? start CDs? these paid Are you

call paying that also money six I've the some it, they'll public the over six over off the, Yes, got months. think fund months. roll I be next will next off

So it those don't of kind take think year. be I it will a things. will

six I probably Matt, to eight this my of where remember more we're maturity liquidity think I seven, number. schedule. It's at kind if looking months, like it's

rate two see Slide thinking I kind And of deck that, migrating to would rate your kind more put but out that guess Fed the over you do helpful. cut? become that next as about that especially That's get part bank XX how kind then would there. on assume I of year. Okay. of the curious sensitivity year, of moving interest of on and the we over closer just think Where liquidity, as any see you the funds next neutral, you I it's

I exactly you're No, right think that. on

leaps go funds, get kind historical is have our be kind numbers, bounds. creep, will It rate There deposit terminal thing. but advantage once and into loans stabilized on a we'll be back such think be if going value fixed I won't small the a there likely of we I in also of of sensitivity repricing will rate Fed in norms. it think to -- will get to but a environment

Yes.

Okay.

growth selective months managing the a didn't front, be XQ. on in that this I'm Okay. It That's growth quarter. the from we you recent and flattish looks being what the in lastly surprised helpful. And more take growth implies then about and will full very like down loan talked guidance you've guidance year careful. just flow saw loan also

Can of speak what versus to you you're currently pipeline the far and as as months just ago? seeing a kind today few

approach Matt, our you I know well. Yes, think

So irrespective much by factors of other hires. loan the And new phenomenon that whatever of generated exist. of relationships the banking growth is occurs sort of consolidation by economic

move anymore. good I it for or need Well, people, sometimes would their clients to And hire have they to take to I mean won't clients, otherwise, be zero. not we anybody. want they them just that's they

we do, point growth. the some any said kinds which construction at and pricing of think, obvious I want of the HLTs less things an asset curves we things. use -- class, asset like as to What we so fuels Harold's class And We've things rate, is margin. on that those

are And really so down what there marginal changes the that tamp are growth.

believe in or the pure economic that loan Matt. less what have and ago, of the impact. like, what loan is terms I CRE we today two Fed I do quarter been that would demand than both say be requests having that economic a the would would they see looks C&I, But easily

question from UBS. from next Preston Rudy is coming The

the over the to previous taking fixed next yields about Is the if what it rate I to to when knew half off that now? ask of four, rolling just the just to think were loans yield rate portion I good of XX that ask, you rate book my ago. right loan portfolio. wanted what's could months dollar I fixed X.XX% for to were? origination for X% loans if we when four wanted kind we're questions. And amount repricing back fixed of looks on your and like about use then I a about Thanks deck, go the rate start years fixed

what's Brody, be the yield the and with I have C&I what are me. slide. rate imagine got construction fixed to Most book or variable. floating C&I my know in between the But the just what with respect I difference terribly would book in real would estate Yes, in maturities don't wouldn't commercial I of different that. don't C&I what's I on real commercial versus be volume book estate just the that the the the is book.

I And would so higher, slightly I but more. much mean it know don't how be

Got it.

Okay.

I portion can for new rate? the what rates have just to that a renegotiated on recently moving to? ask So portion that that deposit just on the CRE And book. those negotiated wanted as book Also just on has proxy. renegotiated, use recently of that where I are

low seen substantial the all Yes. or of rates be bell versus I that. those in range. that rate not a curve where have amount in that high the a in form. My -- I've track of rates one book think substantially, been repriced somewhere the and shape number way of that you my would deposits like book lately, would is, renegotiated. what mid-Xs, And deposit But has I imagine the all

Got transaction it. that the buyer? And on the cap for know sale was the do transaction, to leaseback happen you on what rate

No, I would don't. thing know, really That interesting don't. I to but be an

it. Got

$XXX them slide time. struggle did those with then I what Did or of any and loans rate? And them the at the the any million CRE least were just I your Okay. guess, to second leave the you targeted Did have in quarter, of happened in wanted ask they bank? rates? you increase re-up million under with per to just construction loans? rate maturing deck $XXX at that And fixed did of last

I'll my there look go back left only small but bank. numbers, at was and I think that percentage the a

to probably third, to one one the left maybe think third and XX% bank went permit market. I the

still I think are the rest probably us. with hanging

it. Got

of Okay. ones. And couple a last just

is that duration conditional assuming you're have duration to calculation? you AFS that what portfolio what of do and in rate the know the effective the prepayment On portfolio,

talking of you AFS you're percentage? if that book are think length I talking about average -- the Or years, the is right? about

Yes, yes.

think, the percentage is around I I around And somewhere X%. is life in think the the duration, X. AFS book now

CPR the what know is you in Do Okay. that duration Harold? calculation,

that to I it don't, Brody, but and get you. get you, can I for I'll

just touched then last on appreciate you. And I you it. Awesome. but I'm think one, just might misheard I earlier, have it I sorry if

your there the that the like increase there CRE in Just increase drove for the been that -- kind any last had anything model within it just because reserve. metric of declining Was specific quarters? several was CRE

that any that. to point can't anything of contributed book. like of in or know in There's anything to loans there I anything. the individual No, kind no specific it -- CRE don't I

decline was was the specific variable I larger was more interested, you were that's I in what modeling. ACL if ACL -- that maybe any was the within getting modeling where there price a there I factoring within just Harold, more at.

one. that So know there think I don't really is to -- the there one. I question answer if was I don't

question Jonnie Martin from Brian from Montgomery. The coming next is

stuff asked spot thing, last couple think, you just Most on, But the deposits. just a one I my of on of Harold, gave rate questions. was

the quarter? the Just the have was do the rate you on what margin end at of spot

though it's outlook in drop your kind just couple but stabilize itself the maybe it margin sounds dollars rates quarters that of just that the just going is -- Is the on based to is Or fair? next talked income, about and net going on the interest -- you've today, year? of to later as of

up. Yes, on that I that's next But net fair. don't we -- the over that number front focus of quarters. But financial me. information interest margin flat to going of we it's decline again, is have will income the our think monthly to in think is couple

Yes. Got you.

kind or normalizes of year. suggesting so? the you're by to what That's liquidity And months that end of Okay. six seven

Yes.

the end I be the think of we'll close by year.

just Okay. All right. two. And then last

a Just on -- narrowed little BHG, more. just bit kind outlook the of

potentially Just thinking there? play how should -- know, year, we Harold, as we CECL is think on or be with about 'XX, BHG I any how these next in losses about depending high-level don't out

over we're years on look last into all, Yes. same going I at from not several giving a I one growth BHG's you XXXX. would think at, which rates more I lot on the time, XXXX. outsized think the depending guidance But of -- not first they'll normalized and become --

we from Jared question coming And Wells in have another from Fargo. Shaw

follow-up BHG. quick on Just a the

say You covered by purchasers? just the when there Or or recourse recourse, called also balance there's losses those any investors. you absorbed truly sales off under sheet a those the institutional that's no and no substitution the out to be will Were borrowers agreement? loan

right. That's theirs. those they bought That's understanding is From right. loans -- my they're and

those the they quite wasn't same the the But time, the don't level. on same recourse. at have So at gain

does questions were this time. this conclude today's conference. And in There at other no queue

time, You participation. day. have for may disconnect Thank your this and a lines at wonderful your you