Pinnacle Financial Partners (PNFP) 17 Jul 242024 Q2 Earnings call transcript

Good morning, everyone, and welcome to the Pinnacle Financial Partners Second Quarter 2024 Earnings 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. Today's call is being recorded and will be available for replay on Pinnacle Financial's website for the next 90 days. [Operator Instructions] During this presentation, we may make comments which may constitute forward-looking statements. any subject actual uncertainties of results, to materially are that other Pinnacle statements implied differ cause or may performance from forward-looking to forward-looking and risks, facts Financial by All such expressed statements. results or achievements factors forward-looking such Financial's Pinnacle report description other ended these statements. A and more beyond or put undue risks ability not and in annual are detailed quarterly on cautioned and are for to control Pinnacle reports. is reliance predict, the of XX, Many December to listeners its XX-K on Financial's contained filed such subsequently Form of year XXXX, Pinnacle Financial otherwise. whether forward-looking presentation, as any disclaims a result revise information, any or to or of contained events this update statements in new obligation future

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

with Hopefully, Matt. you, to this start knows we're Thank snapshot. going everybody

return. And best primary objective here that believe is total to these are Our the ensure we shareholder metrics done. get we

a As there's noise, of lot are the quarters measures. GAAP more begin non-GAAP revealing. like always, the with we this, But for where perhaps in measures me,

really meaningful period, tangible expect did team increases sale and a run a a treasury the value-creating rate, our our our X-year quarter, better value at time risk-based loss work, be strategy. ongoing to capital lift both provides creates this and to payback, are here same book, but securities management extraordinary course, slightly and the securities revenue with what opinion, elegant in than earnings of we in it of book This and reposition some my which, to on

have the case metrics, Unfortunately, all last P&L in up our is the the existence. general, of moving rates Harold the for part steadily banks the interest campers to the inverted years, the had the yield to and and for sheet rising metrics extraordinary over better objective night to a given everyone been an at looking non-GAAP as of So XX-year awakened impacts balance couple That's story about right. rapidly by curve. knows, bear. recalibrate the tells in big X earnings of

on said, run camper I you One the camper shoes you". just "Well, and of to He that outrun And his do the to bear. that don't them asking, bear. I know stopped have cannot I you think other put up. run if two tie really now

I And been running required, out that hated so of calibration we're I peers. believe our most has but this that

the point see inflection for even producers PPNR record is ongoing projected. we our better and the incremental in and opportunities than would of invest you to them quarter, As EPS top EPS revenue, see with supporting And this even adjusted revenue of has row, across our you facilities, an growth PPNR. have been truth the revenue, we're you attracting numbers lists, and those look as

able I'm contractions detail. greater book we're with to deposit the of us to to fast and underlying result a But as But market allow deposits. there. building many from to the to quickly higher-cost grow specialty the deposits a very Turning grow client enough sheet client important growth. Harold numbers money will balance broker grow going deposit encouraged prolonged review in growth unable are supply, in on away products, by deposits. in remix

aware to originally risk-based CRE that less of a albeit function XX down as construction risk-based hoped, pretty are of of XX.X%. growth case current months the than our of most It's allocated a strategic loans, capital been now and our allocated ago. bucket. had In began in total outsized we or fast These less rates XXX% traveling we construction XX to capital targets to to We've the XX% reduction less are or CRE. currently

there. In the approaching categories our among contracted loans target our of we're highlights So various industrial having $XX underlying which clients. million quarter, dollars, commercial we're and CRE rapidly our success the during

charge-offs the a So is to come you ticked of the lot quarter. basis snapshot points in XX a while numbers underlying the quarter's of row, but across have of asset growth bottom get the in I've strength the quality noise, remarkable. net up

formation formation guide We problem this to basis with problem point. XX loan at to on -- points virtually no continue the year

numbers me let to turn Harold, let it in you, over the So detail. you review

Terry. morning, everybody. Good Thanks,

start will less little anticipated. than a which loans, We we with came in

we're X.X% our believe result, to growth slightly As outsized our still our lowering for to will growth loan We growth. outlook be compared a peers.

spreads, We also believe and doing great prime we're for particularly still a job that on credit. SOFR-based

we're New the difficult pleased that environment. the it's existing so volumes loans at grow to at were as in coming best books, same essentially spread

One plan of financial is on renewal repricing fixed to our of keys loans. increasing the our rate

billion the with the flows indicates, of portfolio fixed-rate average yield an to of remainder loan we're expecting from about XXXX come our cash As in plan around $X X.X%. in over

around rate saw increase over to fixed yields. the As XXXX, of first our in a originated average were prior half X.XX%, loans yields meaningful

XXXX. on do new half the quarter have work some loans, in so to yields were X.XX% second Our of second only we

Our for to should targets, it's we and but about hand, first the we some, rate the will the cuts being capital. second show Interest XXXX borrowers for half. eliminating of more about better loan borrow growth believe uncertainties in help need the growth believe confident than economy, half

based share. them third we we they quarter. second with that years. have of revenue what producers another market that had advantage are our as as move lenders have Atlanta, in that quarter, Washington And on us a have about competitive point, some new Jacksonville, To Atlanta hear and loan bankers than to less to and optimism been XX% have Atlanta. By great quarter. recruiting from X approximately in ready great is Atlanta way, both impressive should growth the for great brought I very the Our in Accordingly,

on had deposit we growth. believe quarter another We strong

increased Excluding the same million, difficult quarter. that the deposits, in the in with as as growth outflows than essentially second client quarter deposit the decrease We're second deposits $XXX pleased the that by usually first quarter most effort broker quarter result of tax April. more having given our is we

category. quite funds. deposits You of that to of will the moved deposits our our bit also we product are XX% deposit now index Fed notice indexed into Almost a

we be prepare down obviously environment, should this As helpful. for a rate

of high single deposit we to digits deposit XXXX our to a year. volume this lowered growth, have As range forecast within mid-

that loan deposit less forecast, to growth. the reducing Some due thus is our of putting volume pressure on

We to wholesale also on deposits year. this expensive more reliance reduce plan the

We client but deposits remain What Fed more grow as does to efforts our remainder into the shape second. said, as cycle. of beta as obviously on impact than in will has we down a the our most well the ever. for service core energized as a that believe here probably in hit projections year, a do deposit rate our That better rate we are

our increased competitive we managers of basis the our our as average point deposit job ago. In like rates last have June, points only As have XX in impact an Since managing rates includes costs markets. months our of last to to that XX deposit continue weighted basis and amazing July last raise our we the in deposit done my said before, year. in the over XX relationship XXXX, opinion, position

to second press As Terry quarter the increase [indiscernible] in believe in we the experienced the said market night, finally we release X.XX%. in last inflection an

We growth, expect more margin growth the expansion in interest second rate are income we maintaining our year. to XXXX to at for of X% half net come XX% the as this

unusual year. Fed, cuts, kept at of this a have said, We not on that November. to the of no rate the rate given the margin rate we from absence XXXX determined see in believe in We the first occur higher still range becoming market September here. really until cuts fairly at That delayed or seem rate cuts, X happening no our our will actions interest cuts data, can X [indiscernible] forecast because but volatility

been The actions last early in from discussed release perspective the the balance the swaps we want credit objectives time place of got was call sheet big we we a book, finally and the and where press pieces this of the all achieve. all on working to in some pretty other the We've bond the achieve news to for management quite can night. reposition execute all and

to We from we say achieve get portion hold growth turned be outlook increased but we've That's interest was last slide months planned considered outlook are have for income interest all this understatement. the been XX% how on a and little with to several great we net planned this of our X% I More repositioning to elected out in of had revenues growth our income outlook to why a later, for quarter. net consistent. when pleased would a this the to the

continue We rates. also impactful other revenue will hopefully work run initiatives bolster to our that less

our So rate in at great a sheet PNFP think XX June balance positioned. for We and is breakdown cycle. is ready shape interest well

was on the we up high deposit will believe relatively Our on down. beta way way be the strong as

cuts work begin. to force rate once with Our set these is sales clients up

collateral, we in As quarter, the situation for we've though even night. owner-occupied bid in we're an mentioned met accepted million million press real in for again last $XXX traditional credit, release estate deteriorated We presenting credit incremental the credit metrics. of the second our commercial charge-off $XX thus, That charge-offs. the

still felt best Our was our mentioned doing nonperforming we We're group the working special play. credit asset so last leaders quarter. with

content one. still asset loss officers working to Our borrower are that special for with group minimize that

we're XXXX. of As the guidance XX XX for charge-offs, to basis with our to outlook for our range maintaining points

of have growth basis with all to else XX loan XX results is our average loan included less, loss outlook this provisioning a range additional provision equal. relation around guidance year We loans to in in points. Since reduced also

CECL Loan the provision we grow of growth to loans, reserve and growth. impacting is as one have we our our greater that loan biggest X% build than factors at of

interest less results income in but provision. also So net fewer loans less

quarters. all change for what No wears credit. that real So like in now after feels several

potential Our charts for in a lows, credit product as where are be we headed. be historic indicate to offering indicator loans experience past which dues should meaningful near and should

you perhaps has larger sign, particularly for balance small about And sheet less so construction for The have. real the on commercial a just and the end good nonowner-occupied to credit on borrowers more real be have that added don't consumers slides. the short affluent we begin in outlook information supplemental estate just More primarily commercial that businesses for to reduced know, and rates estate.

continues to perform construction and very well. nonowner-occupied Our portfolio

for continue to We for construction. push lower exposure

be Our XXXX. total we target capital, before achieved year-end will of risk-based of believe XX%

perceive interest some bottom as year. and the have table we ourselves strategic don't That new is to appetite, But unchanged, many stress in space change book. offense by modest. a relationships of sort any this, We let way we things limits of some warehouse and commercial meaningful commitments me I on our right and high-quality pride should this limited noted again, home like this real very client Our anyone multifamily. estate more know our know solid we only, continue are book. the any said, you red here. All on almost are anticipate to granular to considered, no on

bank ticket largest projects. our high-profile for we don't seek to We are conservative what Our franchises. other in out hear comparison the just from sizes bulky

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

half through units other had BHG of our to management of fee interchange items, linked and gains various charges pleased blocking fully revenues a rest X%, The and quarter. were report management efforts first the doing We're are Excluding with up X.X% associated our that linked fees well. respectively. expect bank the strong of wealth quite the year. and wealth and will quarter both also professionals joint XX%, Service continue tackling nonrecurring

XX% we're fee the half reasonable performance the for our revenues seems several of first of year, of raising this in, a primary again business given year. guidance the of All XX% range in core lines to

Second quarter balance out expenses sheet came our would expenses in about the back repositioning. connected they with after you where we thought

Again, XXXX. target points XXXX are increasing XX% the will we our believe raising are we end last than of for fiscal payout better we XX% incentive target to Importantly, thought to at that the we fact year quarter. from be

and will the believing performance up thus, As is you closely correlated financial other one can't raise and incentive know, our without plan the direct linkage as move that between well. we our

XX strong in to was new with quarter and producers revenue hiring -- recruited really our first XX the quarter. compared Additionally, the second XX% in

pipelines the into are in Going recruiting franchise. our speak more few third minutes. Terry very across strong quarter, to will the a this

million protection fees call increase $XXX we million to incentives, $XXX million impact of the hiring we've and the year. credit With the to expense increase swaps from to in revenue elected it producer strong loss for $X outlook our default

to just this reinforcement just many growth book time. from growing is presented time because to keeping it important but back Sure, the compounding slide focus this we growth crude. a of as as book and book value Lastly, a this how bank firm. Bringing value tangible repositioning critical, know, earnings on investors is keen bottom tangible time is about as

fared to up maintain as book the value minimized elected rate to tangible during well book heads. our exposure Our a cycle AOCI bond we that

our Even repositioning with common book significant capital other equity ratios value most after Tier of the we and our X a expanded ratios. tangible executed second quarter, in along

Now to BHG.

Last we longer environment anticipated. in which production the up As better the the second a originations indicates, for higher good was assumptions and for news could than that impact their year. stated rate quarter, results slide quarter, picked

XXXX As first wake for consistent XXXX levels. this for lower of be half, second the higher a will with a and results result, production BHG in half tighter in production credit targets longer believes the

the less quarters. it's was This been As BHG was institutional great by XXXX needing total institutional such fund ABS have accomplished in quarter competing been design orders be and the thinking both from time future previously was to buyers. for still issuance. the due than placements this issuance placements, inventory which as that Also, the quarter they total BHG's years, prior first They approximately opposite originations, year. inventory for platform BHG's X an the larger of in This to build next and likely another negotiated now standards from to auction is and demand paper successfully from first will orders X the as larger an buyers. were

in, loan from auction consistent As BHG them, BHG sheet a holding do when from be during spreads only a quarter platforms decreases spreads the predefined will with X.X%. perspective rate second are environment. the even to the in still perspective. news also fairly that begin, spread Balance believes volume to all spreads, higher but good are to [indiscernible] rate not this

on-balance modest reserves BHG off-balance loss for off-balance the related expense but was decreased off reserves, did sheet to reserves the sheet for loans a now actual at credit quarter for There in sheet the On in credit balance second for increase uptick losses which loans. first quarter was business, sheet X.X%.

to losses sheet balance up On X.X%. were also

A sheet even balances is though average higher. the increased loss losses actual quarter, on-balance circumstance So percentage for quarter, occurred on-balance the than the the in was percentage fell amount second for which actual dollar similar sheet losses faster losses, last decreased. why

BHG and vintage past to credit. head approve hopefully are of perhaps given attributable sheet on-balance continue June credit the reflects respect by needs does portfolio. believes better pre-COVID XXXX bank the levels that the getting the quarters. soon. to keep X through off-balance to through sheet BHG's time, substantially are some losses January with issues Loans X current The held to XX% dues the still they 'XX news that Data to

for last as interested we to As of originations forward level look for their rate year models the not effort achieve in in credit especially and build. take to time, mentioned BHG great origination last achieving the the higher would volume earnings, longer same environment, given adjusting is as

should production approximate first half earlier, XXXX I of second As mentioned BHG's half.

like chart, XXXX look So look as at production you it a the should lot levels.

look is half. the the As to half also first earnings, will that BHG second anticipating likely like

their base. BHG they their lines PNFP earnings. help increase XX% line a expense from results and deploy can always trimmed represents have near-term to that of tactics and exited bottom year has business They decrease XX%. For prior to

ever The approximately leadership think seen of of our credit aimed second a decisions XXXX I overhang loss putting business did model near from behind exiting I $XX to and concerning has a don't all have strategic of them. million BHG real, more climate. The term the economic that several of model regardless SBA optimistic the about pay leadership business related but COVID line. the the sustainable include more been made The at quarter of business creating has their

BHG with partnership ever. as as Our remains strong

over that, Terry. turn I'll it With back to

Harold. Thanks,

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For us, it's simple a measurement.

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to thin growth ability Our market-leading shareholder value. produce earnings thick through and compound

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I'll the me let remainder financial year. of over you outlook So the it Harold, stop quantify to our to there. for turn

Thanks, Terry.

the to Now on XXXX. our slide traditional for outlook

earlier, mentioned raised lowered others. cases expectations I in we've our As and some our and expectations

though to loan lowered we're growth. interest Just even recap, maintaining the for guidance income, we net

sheet in balance increase on meaningful maintaining repositioning. our outlook. rate the a We're have run charge-off also We

quarter is less. provision less think loan given Our we for outlook be this will production

fee we hiring expand which primarily increase we Core than and will believe, previously be in will BHG. to offset will incentives the much reduction levels, fee success. due income, loss to or confidence slightly thought higher, our protection the serve have increased Expenses and from we better of

initiatives. of positive believe inflection although still some a as And feel some overall we there that, some like than has feels uncertainties, given macro XXXX about ways last more environment better occurred to of concluded it well. With that the the balance bit quarter. we is is that end, In our for sheet there the performance success in outlook second our our quarter, definite strong XXXX outlook the has the confident all

be to XXXX. of to our about next for effort annual has We're year. All for this planning start good sign a

as the will our top few XXXX all goals revenue our financial plan. we've quartile Our into are our earnings success, be quartile The markets new in build uncertainties over lean will the investments hiring blocks years, made past even building we and top the the growth. same, we and with

with open Q&A. Matt, So let's that, for up it

Your question Instructions] from [Operator coming Group. from Brett first is Rabatin Hovde

kind the XX than core XQ. I the loan some legacy repositioning wanted on are just either on markets and in of the markets and you slides XX, due the not those Or if the already to markets in and the you there markets quarter the loan growth I of on from of quarter the Great lower penetrated was How much in pricing at of deposit growth look portfolio? ask, is that legacy growing kind selectivity? this slowing portfolio. is further more is to growth legacy markets of difficult? And penetration legacy

that's as with broader do Yes, said, with great economy for and how that We lenders to be Brett. contract working. period growth up think that's perspective. believe always question, we the from time, a -- their they are over they keep time, begins will us extended an of percentage always a That least at to able

growth concerns don't legacy newer think legacy do the have, you lower got and our we've expect, but there. So a are don't about our might markets, very high expectations base. I as so as for with markets they markets start the expectations lower we from our where got we we for we've

still legacy -- will to growth. know, as you up hire markets, going pretty But we spectacular that looking markets get we're in people. some to we're this and overall As as in hire these we're

outlook Okay. your XX% then the incentive a the And better. to in little That's XX%. helpful. Obviously, target is increase from

increase the Is adjusted the NII you've out might Let's incentive taken to the for if can a up to being back we or better think ends of How is than year, that the about target if margin taken of just XX%. the say half either get by much there relationship NII the what or XXX%... get reduced margin you better. in $X

too I we'll in don't to is grid that's a next proxy. here, but year's produced, close specific get definite it want and there

through There's as well science. work So lot be a that. as here art able you'd to of

year. what's think for this I'll lot be this think driven I about in a quarter. -- talk the confidence we got more first where just we'll our uptick for We've

to like accrual. So that's needed we felt why increase we the incentive

do the will around be year, should show of me up to like probably $X.XX of in up executive on in rest As taken we kind for another everybody to incentive give as dollar fund is move the approach $X.XX earnings leeway we up going in on show things else's. but the because or some dollar accrual that theirs officers order make somewhere the that revenue another end to adjusted have sure downward around past, occasion year-end. we And named and of

with talking So do But adjust Board numbers to work we gross the sometimes with it. about we the here I'm -- compensation XX%. of the committee

helpful. really That's Okay.

is JPMorgan. coming from Alexopoulos Steven next Your question from

want to start. I

runoff loan growth, little second most guys taking know bankers softer, the has come moving that business The factor? a Is factor down movement on of was of bit. I year new to you newer and growth a moving from So is over. the But you the a that guide bankers pace guys, business quarter slowed bit a full the has too. of books has from CRE are a bit here?

get just think quantified, of sense sort things. don't of people numbers of show those and hard of irrespective people quantify The of of and things, all lot I Steve, rely the truth are things, kinds math how I try work things kinds help things. is. what that my underneath to on it to where really are a the those is We

will to So be many in things down. number there the that quarter, times loan are your cause

close next back of quarter. a loans You few and forth. of All payoffs those quarter, get expect going close were you thought you things things couple this a didn't move to kinds

the they belief the cut quarter it, in our to stronger, feel going my into would vibrant say, at and much the through than about second quarter quarter. more bottom, much have, fourth third Just pipelines

there trying you, but feels odds what And if you be ends think in I and closed meaningfully move to but don't just anybody's think like a and what X. quarters are there, to we're closed it that's quarter I get ability seeing particularly and to slowdown know through. X in to No, so anyway, will I X better than helpful X me don't just in gets got business.

of some growth. job but from the I that it. loan your lost, peers share was bankers defending it Terry. on I'm helpful, And a better everybody focused just are response. wondering wondering of they is way Got from doing if doesn't sound That's

me. doesn't feel to that It like

can from -- net don't Harold, then, happen margin third the us help impact that said earlier, the NIM securities the much how impact that And the should this repositioning, if Like but in you And quarter? did on Okay. think I benefit the quarter? interest about in know you when that NIM?

I'll Well, this put you just it to way.

information kind billion the reinvested. it, think the -- release on press in a differential we ] enough you get call of [ we gave to I X% spread $X.X like to

securities, reinvesting experienced the I that in investment on some the push the NIM. think for reinvested we yields that our second we us the of that -- of impacting because bit up our get NIM, if on little We quarter And towards you ended gave some. plow a which second you'll -- started into quarter. of end our NIM

Okay. loaded But you back-end this. it was terms did in of when

Yes.

page, sure had was make the shape. in the all to are all that. have the counterparty of attorneys We same we on good All

mid- it, call the, towards happened that to so late June. And

Okay. And BHG. on final question

change them? in XX,XXX feet net you and to from you're the notable pretty a went year, digit down up about for XX% XX%. zoom the the the You really Could income what's out talk expectations mid-single from now for right? driving this in outlook change So

Yes.

those I substitution upped second attributable the the I of are they significant think banks credit what think accelerate. to And I thought off-balance primarily for originally. platform -- loans change think of year for they've from there. will credit the that auction has be The out out most sheet, half began that's submitting the to their pace the

in those just they're so the over of And the of year. coming losses second half anticipating more

Jared question is from Shaw next coming Barclays Capital. from Your

well you but in is is a using that back discussion of markets, on there that the in deposit Are also, pricing to noticeable really expansion discussion of the -- deposits on more just cost expense? drive side, Maybe looking to overall difference to ECR deposits those that? going And in guess, sort I some as include of the as the interest around the markets? expansion

Yes.

don't lower not accept to I are There's no generally the a you're substantially pricing interest another them are. I you're bank, clients? think client say from your doubt come to that if answer going over moving we probably get would think move to to using question and rates. the we a on I --

cycle, in in But to extensions might it the there. extent at markets, marginal versus just regular funding you So market what the the higher would rates average a higher for the rate moving terms a and think your much of off is. point be you're don't than matching rate difference production I find

think footprint, thing, us of in, across Greenwich kind be important. of another our XX% Jared, roughly lead think I data, whole the our -- their to our in I all clients view bank. go When is that to you

it And so same the extensions. to making only these market point I'm in say is that

clients bank Our relationship moving their and managers to clients those from us. their switching are somewhere are else lead

the similar, -- markets. to rates production marginal the say, I production but in least be would that course, it'd at So the relates the to growth pricing, anyway, similar say it be I as of would legacy higher, even marginal would

So, on side, a up just obviously. deposit pricing We fact. the new little keep to you give with account

New that's them. of accounts that account XX quarter. that's Every higher what points to And the the basis than went XX system. came in over was at about quarter. [ new And second about first ]in the XXX in all deposit

lot a than loan uptick the of So new fluidity lot deposit has kind the for book it The a in appreciate I kind book deposit differently behaves book. a significant it. more of accounts. was

[ in accounts also to you've at So our that came repricing ]. balance had old accounts to got but sheet we the that are and attract new XXX

to that could the to reevaluate there? loans lower ] that you down That's [ letting Do capital. Okay. -- at the we [ run target $XXX slowly and with And hit expect ]? of when continue at color. million appetite payoffs. we your book, Once see would million then and expect from go look Or to that CRE that you're to $XXX you see the growth in you maintain point, great

and allocation million. I think answer No, would to simple expect we your question the the at $XXX target is reengage to Yes.

CRE that for important class be in asset it it capital. I really to like that is allocation a asset to like class continue of felt be will smaller risk-based a belief to economic you going Our forward, needed we an we balance that of that -- know for because desire and not sheet outsized concentration conditions how was desire reasons both the all understand. what our have about meant and felt the in our appropriate, our firm. terms just We of run to just to because be

the -- a But All we haven't done [ ] yes, risk here. people still we .

continue those have all We things. subsequent us be clients dialogue requests, kinds a with about that of to

to up. growth a we yes, way so the long-winded pick And to expect say,

next Brandon coming is King Your Truist. question from from

So lending you the by mentioned rate been index that challenged the fixed environment. has rate

also, forward? that? give you us some could far inform about think does as as that to And So trying yields going you context how how loan you're how navigate

down In million only new rate the were they at on we originations, about were $XXX Yes. XX%. second but quarter, fixed

So I but leaders the on. is and reengage think to, figure what's out rate the markets, there I'm think, what with from do pressure need still I we is market need going to do sure better. I

to call million. think it's $XXX sales yields it, and closer I up they're $XXX So getting back emphasis where million, those that, about more to

Our target the on is side. $XXX million lower

continue relationship hang there that. to to managers out to see going we're So our for that

it sometimes, the what we get more get, to indicate we than like we times but averages don't. As not, want to

achieve moved of on their are we're The believe to and decreases handles are of there going that. take because channel applying to SOFR-based our that. pressure a we higher current opting fixed that into But advantage have of and going go are floating the credit and borrowers because time as coming, spreads to to they try at rate SOFR-based keep to try lot they're believe floating loans, to lot a and rate the they've

from try where get a so treasury don't your really perspective balance out sheet do we are. and good that to I make to is Brandon? now, Did So that right feel what sure we we in about manage get we we effectively of question, whack

Yes, that And regards that coming yes. deposits deposits, from more the to are that then quarters? you answers Yes, the index to it. is negotiated the do in shift Or of planning move to complete? in

the Obviously, done. of were I pleased that overall of and we that. think clients that a our threshold kind there's of be in that. a bought it's result We for hit in deposit lot the pretty as where much [indiscernible] or moved book yields direction. We've that larger

And so you engage rates, they well, But we and more. pleased client always need that our to faced you're really that held deposit time about be with, the check pay are to managers going you with any do. their way a relationship

from Mealor KBW. next Your question is from coming Catherine

of following outlook. some the up margin on Maybe just

the Harold, Just big back of you bond quarter, pretty happened the bond a mentioned, in most in increase I restructure still quarter. know maybe of you first on this half your that securities but deals. this the saw yields

quarter if trying maybe where you us kind about can all think of just so once together? put bond And this of is indication start yields to an will you think give maybe third

Yes.

see an I think yields, be that part will margin of in the going all in we increase bond forward. increase the

down. we're first that some under sitting quarter bond were were in had yielding. investments cash yields that some We The

I'm quarter, So -- believe sorry, second this into third the uptick quarter we going see we'll yes.

it. Got

Okay.

So quarter, the we like add but what increase of the saw but in calculate just to core at there bond billion X% it's fair $X.X to better say, yields impact second then just the an one, I the was mean, to of in in bond quarter? relative in yields, the we are spread, restructure, not bond more only kind first also

think I that's an assumption. accurate

loan it a the on with what first in little back half also growth the of then we get we yields the maybe the maybe then saw fair that higher in origination loan quarter a of fixed half think bit in to And increase billion yields, little that rate and in repricing, year better new better Great. second is bit levels kind per the Okay. the $X see a year half of year. the of a you of than could

Yes.

quarter fixed on fourth closer to we fully rate and experienced those see what more increase third to loan originations renewals the be second in in ought the ought and research -- We would to targets. get to quarter. we to we expect indicate Our yields from

see you Okay. next just year. Great. until securitization quarter of maybe On off the you And the BHG, more won't margin. of probably first mentioned one then another that

placements? Do think see kind more for is or preference BHG's movement one-on-one you of think negotiated with PE you do you'll transactions those more auction of what so firms? And

Yes.

got they've to as option pretty in word, from loan better a orders that volumes firms of are for lack For various much when. BHG's

manage manage to. make their sale that or manage BHG, institutional production platform. try buyers they'll they're on sure auction they what try That's these gain treatment So auction between they going because the to to to they their placements talking to get platform the to and -- with will large

happened you'll in So than here to going platform more 'XX. see probably in what 'XX loans auction the

is next Your coming question from Wells from Fargo. Timur Braziler

question Maybe last on there just following up on BHG. Catherine's

the why the and declined indication bank buyers well. Is there in looking for quarter something you need kind Just going quarter-on-quarter. the placements fire network as decline placements kind is link of the quarter to Or funding quarter, as and product? that else this then the there demand at slowed of any broader maybe on for the that

Yes.

of consistent and fairly these of years is interest I all, are all of X I think side think, originations first the the X rest are credit like has and X down are the ago, market from where cycle that's I tightening -- box. the the going origination or rate about year, we the to which or talking on think because be for

go loans make and sell are as that be up. sense, on as they I networks, the probably loosened is but come far up it's with -- a credit the The into if They the that been. obviously, or as could product it's -- down, their strong underwriting cycle firm limitation where there sure rate rate. the so Does growth Xx their ever that's credit began loans would their might box guess the the demand into interest bank Timur? that their making buyer as consistent on the turn institutional side numbers side on if So for production to

Maybe That's helpful. a switching guidance. Yes. just question margin over and on to nuance your

margin kind margin to for guide for you slightly that slightly the year-on-year the supersede previous up flat up is The guidance for in Are current guidance expecting margin? So flat XQ. or to is up. year-on-year still of Does the year? current that

I it slightly go it will slightly I but to for up assertion, back and the to have up. that flat will to revisit think think be year. I flat be

incentives. first I that made to should think was in incentive that still to question if Okay. the incentives, Is lower XXX% the earnings remember rate order And somewhere some think comment be grow hit me, maybe would revisiting way I right just about quarter on the grow, of then fourth there call, last Brett's for correctly, earnings year-on-year. need on If than it don't XXX%. to

fair around, somewhere Yes. level Generally, that in certain to a target target everybody. at payout that what I'll neighborhood. is we'll call that it we believe this is way. we it, do And year, was think put I for full say

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

kind guess index the spike we the so, in if a your Is negotiated the in I move in that shows coming deposits. migration? of reduction the disclosure in rate from I related X near-term question sensitivity And costs had lot around that see should to asset that quarter-over-quarter. to a of

there's what But ever rate and sensitivity we've interest contributing is are today. price today negotiated -- we're the to No, between at that between managers able where I we probably I probably neutrality expense, as that that pricing of where -- that -- they're is to they all. big call absolute paying neutral think thin, as within see it, the that our -- a pretty I what risk is table been. a interest we're think think And increase negotiate don't cost far relationship you'll range as don't as

that the Was shift Yes. And transition? was there. it. Got quarter-over-quarter biggest that

right. That's Yes. Yes.

Got it.

XXX And lot stated they're just mean, kind of and lower level. ] concern thinking maybe a obviously, than I regulatory Great. [ about Okay. these such, and the at the guide concentration then CRE

Terry, already, be way, when to last you if, in so opportunity is any wondering know, I'm there commented optionality like me, creates this to I -- of and I'm but might just at occur? BNC to -- able to and time were M&A to level guys you and if you buy concentrated. or is was this any intended So part wondering the optionality some on something starting an create low more elevated really be that this bought Because increases got that ever

Yes.

think how a think assumption, and to M&A, figure on I to energy acquire we're just any spending out bank. Steve, don't I the on time underlying trying

that I just business ability where to why think so is books the dramatically out something. It's would want to and good. case you figure acquire our people attract is hard to move

So are I think guess, don't think it at for I I a that's out. motive X simply, said all. The motivation, motivations there taking

the in and the probably of general peaking for the that just is But to it belief in investor was one risk to in equally are that terms highly think was a get of sort terms less market of capital an off we profile CRE. time have desire to people management. a allocated our I screens have perspective, it concentrated from important it had was

the we'd middle concentrations people I just rather wiser us, ago, was going important But class of and more As of always the the just to level business. mean, a of and the I concentration said we as just, pack be lot we're in know, be bit screening in of CRE terms an to what pack. be in that's are you a the of for to middle asset that get would felt like little it to

Got it. sense. Makes

is Gunther next from Your coming Stephens. question from Russell

to and and referenced in reduce just there's as similar would Just loan going portfolios helpful categories point. be commercial The me at release able the that forward? you related get actions were potential where color this one to place enhanced increased what put if impacted were processes to RWA, for for some control

didn't amount meaningful It's this band It's privacy We answer it I'll loans. the Yes. of a fairly disclose portfolio our of issues. narrow a primarily around way. credit.

concerns enhancements about to did we the will recharacterization, obviously, business it, -- line enhanced portfolio I that was sensitive a to but of want and get kind and you to but those more on be to But for expensive to And didn't ongoing pretty forth. control to this to are apologize we group about I'll so it they're and that future was do say structure tell they're new important able that there it's continue of pretty and more to Russell, way. people. is not that our want and opportunities that, not us, it being are I'll so to elected about with put able talk in that credit. what way. why so we've what it we've meaningful, that portfolio do talk be But

what Understood. able I and you're to been rest And my asked share. of answered. the appreciate have questions

guys. So you, thank

UBS. question is Zach Westerlind coming next Your from from

Just a the front. one me for quick on deposit

since have pretty guys flat much to noninterest-bearing You been deposits able year-end. keep

those curious interest-bearing how that deposits? would where win deposit that into can Just color kind to of Any any guide. fits give helpful. your you you overall be guys there Is there you are can point think starting back

it's our our volumes. had and Right believe Yes, grow able growth great hopefully of performance a We've new Zach, question. call to a be is here. guide we're bottom include now, from at noninterest-bearing noninterest-bearing it, would quite XX% we'll bit, we Yes, account in consistent the noninterest-bearing. our

it's growth, account that though coming that noninterest-bearing are accounts new XX% over And grow time. at a that in. new even at into there put will hopeful that seed So of lot we're money

consistent but us that we for that But fairly see it's number is the expand. rest the of be year. right we'll So planning call assumption optimistic, believe our to going perhaps now,

from Martin coming Janney. next question Brian Your is from

Just me. a couple of small ones for

about Harold, that that going as in mentioned as I Just forward but release, where far the tax should rate, what's the you going forward, -- lands? something think how we just know

the than that, thing. quarter, fourth that a that Yes. have more rate quarter, we'll optimization, to go consistent tax probably in repositioning forward capital first We believe kind all bond we of going back the kind of

be we'll those levels. feel like we at So back

you XQ mean there fee it then a at line. strong in rate on be not on but kind look across Like sustainable individual income, run anything pretty Okay. the felt on good. when was just was level, focusing you okay. forward? this quarter going the that without of unusual It non-sustainable board, anything And as I there look the might

No, I don't think really so.

anything don't I there. in valuation X but that's there's think I of -- think there's that have, investments we of there's is one there some anything unusual these well, don't I -- think and unconsolidated area these area

anything quarter, we feel we call right had asset need like servicing income. didn't we to quarter. out that mortgage So Last this

in why so the that's And item. line decrease that

Right. Understood.

key mean, optimism And there maybe the Terry, Terry, for lot what given half first the the then I half? Okay. the loan growth you driver last than optimistic on in you on growth second the that, to loan the half, point just any more would a just I versus just of X is -- guess seem first

like. all of Well, has the do the and would what the I principal of have as quarters, is new for guess, number think look growth just numbers with provider as And hires. the it pipelines you a indicated to

continue as to So move know or we some how month people, And or hire some you it Brian, to a them books. pipeline works. been move feels day, a that a would X as get that stronger done. it have to mean days a ago. continue people takes I open like, today position in But quarter I whatever it than or X XX in or we're just we say, discussions they

you. Got

third you year, the of the if quarter one And would last the quarter margin I just expansion quarter I impact. full Okay. than margin is the the that in half given then seem the back greater guess the margin. margin Makes given it guess, on the think the sense. repositioning, about fourth

So rate sheet the down the and then of just wanted perform. puts of and would how just us impact a to remind in environment, takes of that the sensitivity and And just kind there. balance kind of confirm that the

Yes.

reemphasize perspective, quarter can assumption fourth loans this hold can any deposit markets. new are lot new into loan should fixed on get this spreads rate of positive any out don't margin don't think all got over see these if think on couple if the I there there's of of begin noninterest-bearing and whether A years. about just into out them increases. decreases a much these But increases We've hired the from gotten -- moves the lot we've on on in this and rate I they're we repricing tight third there here. particularly we pretty new that we're We quarter, managers because rate know in these want last or going them these not from all all we markets. there's on our more margin a continued relationship very this new obviously to or and of and volumes. I we've

pick reasonably half. see loan that we'll this in have we optimistic So growth the up here second

of XQ, sense Okay. than XQ that could make that And change way optimization. that? with the kind as impact far look as pickup full the see Harold, the to would greater of at Is thought the then margin. in linked versus right XQ the the just XQ, quarter just on in quarter the you given being a

the -- quarter the some some there's of be reinvested in will maybe in assets. optimization second there third some Well, and money higher-yielding will the quarter at end from that get cash the

will So it be a or it amount could could happen. I there of meaningful not, happen. don't know if uptick but

Got you.

Okay. All all That's had. right. I

That you. Thank today's completes our event. Q&A Everyone, session. this concludes

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