PNFP - Earnings call transcript Q1 2019 | Pinnacle Financial Partners, Inc.

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Operator

Good morning, everyone, and welcome to the Pinnacle Financial Partners' First Quarter 2019 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 on 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. we Before guidance Instructions] begin, not does [Operator provide or forecast. Pinnacle earnings

most may forward-looking from we achievements Financial make such statements listeners presentation, statements. implied of Many annual subject XX-K. Form Financial to and A presentation, may and Pinnacle and statements factors risks report put disclaims any forward-looking to description such or Pinnacle to a update factors this future and in any detailed to statements. by results, forward-looking cause the During on the whether are comments Financial's events which actual of results of All any of these constitute expressed such may statements. as contained beyond not or to result forward-looking recent other that cautioned materially Financial's Pinnacle or more uncertainties differ information, control otherwise. forward-looking performance contained or is revise predict, other on or undue are ability are risks obligation reliance Pinnacle new in

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

Terry Turner

operator and you, morning. Thank good

asset term M&A long revenue believed management with growth, as time believe and a on have is or those focused do, that quality, always As we I’ll our begin dashboard, kinds betas, like short because we earnings deposit shareholder things growth noise and associated Because go and BNC time, with for particularly all over the merger, in growth, are for correlated highly metrics non-GAAP and three that’s measures long of will growth the asset things relative the quality. most many returns performance cases, come the over the term revenue of but revenue, earnings this the illustrate is of debated year-over-year. which in first left. net in like revenues, on purchase income losses a related greater much on charges, reduction transactions X% portfolio better the merger on quarter and up top fee interest on and year-over-year, up first Total to X% was gains the investment of adjusted so nearly which Harold The firm, XXXX. for income XX.X% in were shortly. will large And accretion, detail I’d the up accounting discuss was chart, focus despite this

want EPS for I to focus is on the in top row quarter, the $X.XX in at the Next, chart middle. on which the

the related book in Of XX% ROTCE previous a the grow basis had below tangible table year picture share, row value book the the a but and charges, chart, on ability XX.X% no and EPS right, course, same XQXX to reliable to book a and which of capital and Immediately value value per XQXX. roughly quarter. want our of on nice through XX.XX% with paints I rapid accrete CAGR transactions, this merger year. highlight securities is adjusting last charges losses the first then the for on immediately up fully over roughly And to quarter diluted the periods tangible gains merger was five at

in capital nicely you and it did line in see can the As when which XXXX, progressed and make until large quarter second of raise that the you order the acquisition. was post recession, review advance to trend we first of BNC

of ‘XX. of end closed the reminder, a second the BNC deal As at quarter the

And of able quarter highlight in were lastly, when almost XX% grew at the the middle the deal the I a another row, compared common first the deposits close that on chart to and to XXXX. on core in rate following of the core XXXX equity, can deposit first that of of meaningfully quarter indicator again, acquisition. return growth the see alter we want you strong So, to power tangible of second the

quarter a great with was deposit of for right all, year-over-year core adjusted X%, growth year-over-year year-over-year growth revenue great XX%, first us. XX.XX%. EPS All So, quarter in the a growth XX% and roughly at quarter of near ROTCE

thesis. believe review will [indiscernible], in will I see financial this Harold Now, able you detail. performance overarching greater to be XQXX

First, strategy Peter lunch. for Drucker culture eats once said,

think right. our dramatic we to to distinctive into In which differentiated growth culture experience, create translate and continue profitability. was he harness Pinnacle, continue client I to we a

long and our our competence only business. perhaps of in best successful books large target bankers highly core market. tenure most retain is bankers Next, attract important ability our with the We to

As and be extraordinary. can result, profit a it’s asset rapid a highly growth, the not successful the strong only a on leverage revenue producer quality

and What returns. about truth in growth EPS how is hit long there targeting care to continue the just and quarter, tangible [indiscernible] able it. we the quarter lastly, we we Thirdly, are been for long the not keys growth we top to is term we only sustainable We’ve the to year. profitability, but And quartile model published the they value, produce most sheet balance year outsized to believe after after book means produce target, we've And profitability. the while targets shareholder end because [ph].

through the will us first Harold quarter, So, if you will. walk

Harold Carpenter

We've Thanks, for talking years. Terry about per growth several and good morning, share revenue been everybody.

is per share share expenses, grow share earnings we you attention if We of there revenue is are many [indiscernible] per is revenue best we know, expense of the about growth. and pay It one of more fun on while per to or we growth. easier believe plus headed north to initiatives. revenue whether measurements is focus As winning losing

continue per slower, you months, digit to For growth. the XX we trailing experience our basis double was revenue can share see, as

represents year-over-year growth. group’s dotted the line Secondly, the peer

this integration be the more the in during of time in many shown of North internal around recent know Keep outpace to our peers couldn't are they consistently I mergers of we chart, a pleased per working well Carolina. mind As with is the revenue Bank on assert that with significant peers and share. outcomes. continued have the focus

Let Pinnacle. me say about this

really proud efforts objective stronger Virginia. value employer are of whether loans, earnings book expectations any and et measure, new cetera, those investor the We retention, team's it's tangible growth, in in positive in to deal our We believe hires, significantly but and creation, respect with great into and Carolinas said, peers in by Carolinas believe franchise not That of of a deposits, and Virginia, Tennessee right now. we’ve the we've we we a as likely our energy our runway those markets. entry of only lot left, well got have our

taller is associates excited taller. engaged, the XXXX. firm our for on XXxX, bars focused offense remainder blue of Our and just opportunities get are about those and Hopefully, our

Now, loans first ‘XX comparing to our first ‘XX average loans, growth annualized quarter average approximated quarter XX.X%.

to We growth quarter Virginia, be in continue was mid-double XX%. comparison Carolinas loan the of quarter organic of nearly will the their and that first to XXXX XXXX for low loan In to digits believe first over XXXX XXXX. the our in growth

greater be the XX% produce to Importantly, key and loans. in obviously C&I working franchise growth. our their deposit should as and C&I C&I CRE growth a and total platform owner is core our our Currently, book than from growth and experienced seem estate occupied fee These is related perspective. real owner C&I goals to things up Creating robust XX% to of than year-over-year. occupied grown they've commercial more

expect the nice be we're We things quarter, to second seeing happen fairly quarter. loan growth consistent in this some

start anticipating and work still back on drawing are through components, half for loans. funding We as year, increases their construction equity projects in the of the bank

quarter, all details loans, to annualized Except as fourth traditionally occasions, our growth. to The chart we pure green rates acquired X yields a experienced peers quarter lot are there XXXX, linked the quarter. loan is bars indicates, several last rates information loan in quarter, firm basis bar it's second. quarter medians and increased this outperformed shown adjusted we've out. paydowns, loan a X.XX% with yields Again, of quarter increase point remove Additionally, and chart each X.XX% from the more The where organic respect in large organic on in graph significant growth growth on the on here. blue a of so our to

chart in goals. the income. of impact that extra large chart on we hit but type. growth are you We small right not tickets so the this the also The interest that it's appreciate regarding on is relied book better provided information, our can by on busy, of offer somewhat loan granularity on loan information loan our this net the detailed We the to we’ve discount where accretion

was future. We earnings overcome growth it and will to of balance ability chart on headwind is As to line, our discount key less at our income deliver of gold know XXXX see interest the was to a our you discount way less that bars less continue particular less of those to GAAP net be be by revenue going where to can our to in quarter and attention Anyways, accretion the through are the results is this the our our sheet in to blue entitled impact and obviously growing and blue growth. the bars accretion we're primary first X.X% continues big shareholders. to all impactful increased

in rate one-third roughly maturities the order to rate better intentional with natural book us relative discussed at been loans evolution an for by is that in that to and to quarter, merger get without can approximately year interest XX% quite our our as is optimal level future stand We've now fixed allocation additional one North management a and wholesale allocation we've some and bank two-third, we This quarters Bank slide of was discussing us of of of than prepared in recent end greater rate time. also teams believe with be loan significant our variable environment. between growth We've first range for any made is originations a our any the reasonable progress Another with now. the We you in time see, approximate an prior to XX% for amount XX%. consistent should in of fixed loans. split our Carolina believe

balance flat these to of net the futures XXXX our possibilities to Fed rate and be that be and minimum impacted are interest least rate risk rates the from fed may either up predicting in addition that down. off at working capital now at even or in fund’s Rest the Additional position rate pause minimizing not be appear aware XXXX. XXXX. the our to and interest is so interest we're margin market are later sheet table for assured might in in to positions and environment, hikes cut a The on significantly current altogether

well as interest and in own of derivatives reposition additional portfolios, We the liquidity as regardless have including We given unwinding the in. this balance our so risk, securities numerous levers all position macro at managing looking layering what's our to to position. sheet various funding pull team firm rate the are rate balance is the bank going or best on we to to manage wholesale in win, [indiscernible] of in environment, operating the put wholesale interest market strategies sheet

we've As commercial exposure been to maybe reduce firm’s construction. estate and our our known, real goal saying to investment that was

our we're our have to capital reduce in portfolios wiggle into charts to well quarter last These and metrics that based out total risk portfolio the worked the respectively. and over are estate as diligently this these seek XX% were insight our intended granularity chart at exposure some years. At you underwriting end, us the give we XXX% We we in real two not relation of does our the comfort projects. give for after as to

to brand peers’ larger our projects likely are well are As they not but book. our known,

developers. lot businesses capital a and that builders of and from our think I local

chart, there. the left detail to see can As you

Our the by the approximate of -- volume aggregate sizes. -- about the portfolio ticket

construction The support greater coverage we projects quality XX below than firmly the loan top the a number have are service right also segment included both ratios from projects. cost, real We've of this these on the larger of credits, commercial some also does to and debt for to million. value, estate. million projects loan we chart While larger, significantly that have show the $XX XX

always of forefront minds, credit. the complacent appear Now, credit, or just I so comments a never credit few about at is when additional frivolous on we hope our we talk

relatively charge-offs. in experienced our we quarter, and asset asset decrease first the ratios along the in classified increases non-performing with net minor For

agree first the chug to commented teams that credit might those actually we event along. first is aren't recently debt on the and of seeing further announced anticipate XXXX management with us we to would that credit to issues macro pause a one that have issues systemic pay quarter how credit may about results, far So, XXXX. respect attention quarter credit contribute will macro to thus too we and specific borrowers. few current pause not Like there's our that to book optimistic positive extension impact in in be said, continues call cycle. will the Obviously, related the the That any

Average deposits deposits, period billion. deposits X target being of XX% XX% are end billion year-over-year. our Year-over-year were total of which or deposits. of billion core is increased Now, up balances up deposit X.X about on funded. X.X Concurrently, right balances core

did This that quarter, increase slide to the up of point like work costs X.XX%. quarter X.XX%. in quarter here from our stand of that a gets changes rates to first upgrade though deposit in the the X XXXX rate deposit What next at through Our basis quarter at so deposit end volume I'll and only the at basis But of quarter ELP XX I’d was fourth the points period first XX second. XXXX, for X.X%. currently X.X% December even in was at out X.XX. is compares the fourth point average rate our increased The

emphasis been with as our deposit only rates in weeks good deposit as a We rates We're in we've into keeping We in well believe currently. a second pretty deposit stating, check. the match ample need markets our being balancing vols, liquidity growth dramatic for quarter. the the between we have the core to we're loan that few our with Fed salesforce expectations. obviously still aren’t volumes increase As seeing after feel

deposits core loans while up XX.X, year-over-year As are up are XX.X%. noted,

Basically, period depositors You quarter, types to likely some decisions rate our experienced would as a We funding can of end deposit were X.X% XQXX the and with bank drove a the Tennessee Carolinas decrease. respectively. decrease core well that protocol at the fourth the end first net tied of first XX% to changes transaction a team sizable in to of the XQXX and one, the profile some see one-off specific two year-over-year in the quarter to end the decrease to deposits March. earnings of also during we the highlight on this and amount contributing quarter that we wholesale of our with growth impact in funding. mentioned modify like from XXXX from I'd we events management call that as by that to call

that index As depositor to few rate the management, a cheaper to a very rate the can find we first money quarter. the increased elsewhere. we attracted was cycle had through a left market bank rates, in has years us account $XXX depositor corporate and with funding to million ago, This been with us but

to bank. is deposits, find play amounted cheaper also in million the at to money respect these Collectively, decrease rate federal broker could reductions. Another we net deposit home loan with the almost in $XXX where

it's the classify exactly we wanted, but work. and Additionally, this as we way what not things

to secured had companies portfolio cash the investors’ by but things, of balance During also many companies We by several their portfolio balances. the loans secured several depositors quarter, investment restructured sheet. at investor the

that XX by investor and being cash we XX this elected in loans very which as reduced We're secured transaction often. size of highlighting deposits million reduced million. During don't loans to given this quarterly, unusual, resulted the by see restructure, being

when were loans it these so was paid meaningful us. several to And off,

closure, approximate depositors see in we we sell firm. occurred leave it as companies depositors year who and their additionally, the occasionally last million was of an fourth our $XXX quarter Additionally, experienced those

quarter, as by were chart no see million. to here highly cash that in those the quarter. details approximately you the on reduce can noteworthy XXX liquid balances were there able like such Fortunately, this first we right events our balances The

book, sheet into were of previously. the own we use some to on some deposit bond employed way XX,XXX, from in match of money balance ultimately such Some a of pressure I noted which to liquidity losses, some able this the that our took price was it

BHG the Now, quarter year-over-year. first greater or than up turning million million over XX% had $XX quarter. fees fees, X.X great to amounted Their another contribution X.X XXXX. million, up was to

revenues anticipate slightly to first several up to of We've had the We Wealth to compared XXXX. XX% last XXXX compared were first Management quarter for in for BHG XX% year. of year, continue the growth to in was this significant relatively contributed related insurance income, mortgage, fees success to year. hires up was our lending in fee and both have stable, investment primarily Deposit from last and related that remained footprints trust. quarter services, which meaningfully

XQ decrease positive and contributed to to this had As in run we XQ that overall of rates, the fourth quarter. a quarter lot the events

hit another BHG this quarter, to revenues we get run from year. the home fourth up slightly contingency insurance primarily from the in last at Wealth year looking remember, fourth you subsidiaries. year the usual is As management and quarter great a our due is of

we were of lot mortgage get to As mortgage. residential revenues. by as was us, environment not back this to it effective mortgage work was recent this We've a had SBA the various customer our on but of mortgage revenues our to first space. swap had with long related is the continues -- in year. is in quarter, quarter. of bolstered an The our of income years, and component fairly first component helpful by though a also even Core our least a smaller all of rate exiting BOLI total modest business to know, Other increased line SBA program really important our the We our as position effect originators. and shutdown but program the to well share at down fourth strong back quarter. in government in mortgage so of more revenues the number their space team like to term the deals. with They mostly banks XXXX, not in a also activity had seen in exiting residential or drops some great rates, increases only lending originators

expenses, expenses thought Now due quarter recent merit the quarter. where the this in for two at accruals, with continue decline, We came to Other rate also which than increase larger for signaling increases by first to will pleased boring quarter retention incentive typical contribute decrease hiring in that, our hopefully it Expenses increase run a in was things attributable during XXXX, our end accruals We’ve X%. booked announcements expenses. largely year fourth and plan to accrual large will hope to We're salaries we incentive with important additional incentives. replicated hires was a approximated year. being not rates fairly about to offset which on that us. report to merger

count With our can to to that client report markets Our investment March engagement are workforce And initiatives as in back and of last ORE for those leaning as expenses, our we’re that, at on up year. services, the shrink. Pinnacle gains pleased expenses turnover continues December associates losses, efficiency from to consistent finish. in and and XX I'll appreciating merger employee Terry Wrapping related on adjusted turn XX.X%, newer and was ratio, culture. are down our over to it XX working

Terry Turner

vulnerability the more more evident at were differentiated clients, will is be to large mentioned of our experience we Thanks, to hope a just little the a in the more the create that on or dominate with those they'll our I able continue want reviewed provide to we the differentiated color. you, of experience to take My for minute for our banks associates, outset Okay. to belief a more the our the capitalize we clients. Harold thesis markets. more tenets that the I but Harold. And engage provide another I key this two financial just metrics

XX really execute market terms banks Work to Companies alone, among As of for number America, number best not parents, the best in to of number ranked and our for associates. terms America, workplace best XX workplaces and XX our for in number in for women Best number the XX diminished size in millennials. XXXX you and see, workplace XX we best engaging workplace XXX were ability can expansion our In has

the to then In as Memphis in in of here best the honors both also place work recognized and addition to in we've all Nashville, been those Hall Knoxville. and Fame

a highlighted got by insurance. Fortune we've second during the in first quarter year, the in this were best there, see recognized finance magazine item and can You country we the as workplace

BNC we of in announced completed brand might we to recall, system agreed went transformative of September the and XXXX November merger refer conversion conversion many what We deal, the You when then in Bancorp XXXX. the in the June XXXX. XXXX through a merger January as and in

all Carolinas of So in want a and the that special this our XXXX, that is of August where is work. of associates our XX% right that, company Virginia agreed thick firm’s in the and to culture in agreed people XX%

BNC at recognized in the ago, where agree we have I So company year want place institute and firm’s that’s work and in in merger the a and how and finance XX% to third successfully best were place the and on were integration on of place seventh our not lines, Along so first insurance. see that the we About finance great can mentioned year, the and conversion this quarter the But to a power you great their Carolinas to integration, announced, the work. based second same work just during our finance Pinnacle culture such culture, associates In country leverage those of this place is that at the best the following as insurance, and effort, as the bad. we to largely minute to we merger to later, begin to of magazine is culture. responded survey, people when all in a XXXX, Fortune best in insurance. the special associates Virginia in the work our work were Pinnacle was

able the their bring in leads which should said is leave bad good behind, the our able to they business and which the outsized quickly. bankers our asset growth. move Generally, retain with recruiting product and are culture competence credits critical relationship, market, leverage best to bankers they're that earlier, to quality. and entire attract I along only Experienced to which strong credits, As funding the of able to see fee we're move strategies books to to then our experienced

growth As only to far with as an time. of asset over outsized way quality strong I know, extended produce period that's the

by remember about many worried quarter model digit improved quality Carolinas digit XXX their quarter And will year double basis and double growth, and you that, fee that CRE that growth of five revenue year-over-year. time. another in end efficiency, know maintain hired of the of BNC reminder truth, extraordinary. in the the and communication the growth, digit owned we'd lots we results should merger, deposit order quarter of that XX. loan XXXX, XX bankers we charge-off successful questions, with excellent and XXXX whether First of and are of loan plan would metrics strain improving operating hired adjusted turbocharge a the XX profit digit and growth, do leverage. growth an ratio by was of leverage suggest just in hiring over we points have hired double roughly efficiency core said rapid We power of announced when double experienced is building the Virginia both another first C&I we I but XX banker private of Most platform. period the C&I the producers platform. in XXXX. We hire the get the to then In That to first new

burden, puts obvious expense our expense than rate. ahead in concerned current run already in year that schedule. keep that which assumption run rate, the XX, is burden mind us get they those XXX% roughly for hired about a a we've of And [indiscernible] had significant with more that fact, In of

experienced the growth. think as BNC’s and of very CRE for all I real in outstandings producing year-over-year. and footprint. revenue CRE and conjunction perspective And our And how successful the growth We growth occupied think maintain at fact business, or can't attract you And Again, core met. integration, growth deposits a measures model. growth I for leadership year-over-year their estate to am this his bankers client leverage specific in ability since best XXXX experience, bodes have mentioned the We've with this target ROAA our stated our and owner the earlier, a Callicutt transition. quartile I future create that market, powerful been C&I and how with I with well we from transform success every XX.X% time, We in proud a X.X% our to we at model but growth transformed were during XX% earnings that our market model our target Harold did least been to culture grow retain we've it. tell ability the achieve in In footprint. nearly significantly engine able presence I C&I in publishing more with year-over-year for commercial in Rick that we of top to to say did key along and profitability.

quartile with only the inside top better operating see, top and but same, as we ROTCE more do the well. you targeted than produce of the a not quarter as necessary first can right, ROAA the each assets, As on we on the can was are And see component return you quartile produce range.

EPS just in focused really to belief said banks on I means rapid, can that produce book ago, grow book What returns. will is rapidly all we're and a EPS it’s reliably shareholder is few end. minutes value a our value the time really because and that As tangible and best over reliable that an growth tangible

is of per book the XX.X% is value EPS tangible the for five and through for quarter first share XX.X%. So year CAGR XXXX,

see rapid growth on you chart, As will the both and can be these reliable.

to outlook So and expectations used to this for wrap up, in communicate slide our last earnings our XXXX. quarter, I call

year-over-year XX.X% to great growth. with start Now, through deposit X.X% core a year-over-year year-over-year EPS we're the first quarter, off growth, loan XX.X% growth,

pace. Additionally, we rapid hired to grow expenses than book to at meaningfully revenue continue and producers. grow revenues tangible a faster XX value We’ve

stop So questions. lines and there the for operator, I’ll open we'll

Operator

question is first Our Scouten Stephen of of from Instructions] Sandler the [Operator line O'Neill.

Stephen Scouten

guys And So I maintain an and you things level goal this talked that's you think that's of trend? I hiring same say. you many take think years? curious, have you the guys is bureaucracy as face allowed one you to of so can how the true. that's you advantage love hard of to face point, that I'm bigger at to just and But know and some Terry you grow think bigger, long what the today, continue what to is. advantage of continue that that do for activity forth, you so these about that that them larger how banks I impediments

Terry Turner

billion I that XXXX question. XXXX. albeit just growth a But a high because you, question than less was don't say then, to and asking that that’s back I were you we were bank, been the in they time around great Stephen, I same think we were that or an can through continue We’ve some and up everybody hi, to bank at all a get job, to high leg sort began $X acquisition each a point. question, of that growth always you think culture.

and that's best in And rated the the which a of the place of wanted to we through and country, show work one as so were in reasons to fact finance to seventh me, we achievement. the I transaction, slides a, really those monumental the walk terms BNC before insurance that, announced is

was And can to through we up level as the up conversion, that were and brand the we to best year engagement second the integration, this perhaps, best. that, all XX%. merger, transition, as able but third you advanced there see the year, of went system I the we to think sustain the last then

So, is probably great [indiscernible]. work how to culture a it great a and place

a amount we culture, that So with do of which there maintaining acquisitions, that feeds with both new say do goes we're and integrate have we about strong is new I think say into intentional just and I think on effort itself. big that I it. hires again, how it, a

ran think we're pressures the fabulous I as And kinds that would can't four size a a it believe way for our a be I decade, I you model forth, think three, long you'll you of were, example, things. like times get that. other really geographic they I and do go all running before But were I bank community they it, things that's those a BB&T, banks. here tell they to I and impossible be sustain size based it Stephen. those some but bureaucracy And will and what using would more turned probably force that operate an of use organizations. which just when of because and from more bigger, regulatory and bureaucratic there's into on believe from lot to that, just really one point to your to there just so would at where had there a really question. they will time those running point, a between away we suggest model,

Stephen Scouten

NIM a the today, know XX last then hikes XX expected thinking XXX, expectation two that fact decline bit here, the And maybe what changed saying NIM to what to million is little end be guidance I accretion is think you maybe of mean, I within of we curve obviously And million what accretion, rate quarter change? XXX the haven't but should about here, I to I from you the in the to but quarter. the expect that? range? this at last forward that drove lower quarter, mean, was the that, maybe spoke Does the and

Harold Carpenter

is This Harold.

Let me first. talk the about accretion

of a didn't in discount leaving the take quarter, the did the a kind had think lot than of kind payoffs downs, from more we in payoff that, so of accretion our I balance front, where on we payoffs, probably here of year, first loan, here relatively in paydown the meaningful sheet, kind pay of everything occur calm the stayed last first we and a quarter, more kind first quarter.

think As NIM this whole the NIM year. to I of a contraction in see lot we'll guidance, don't

of horizon stay at of least I end that's is or where currently. kind the year, the low relatively this range bulk our it'll the at of for think

Stephen Scouten

I And quarter? mentioned an like you had past, million think quarter, in idea Harold, give last you Can that the us was in you guys payoffs, a where high number. pretty this XXX

Harold Carpenter

what That happened was, or fourth the $XXX can't quarter. number, I million know, in I it number, don't but less than the XXX it $XXX was recall million about

Operator

of Our Wells Shaw question next of from comes Fargo line the Jared Securities.

Jared Shaw

for -- of outposts on providing the side, starting there. the the some deposit just Maybe with thanks those color

How I $XXX level think into on quarter the give managers Can from been about that speaking in us As going then, this getting sustainable customers. look going? good and in update second a deposit past, is that we the as coming at know you refocusing client you've is existing relationship C&I on that is growth million flow we're the progress quarter, a the you that? that

Terry Turner

Yeah, I deposit after quarter, day. so the far this day think Today tax side. we're nice seeing a in balance is

manager we're out kind where quarter, next find the kinds over primarily probably deposit information of quarter. go we're the various There in base. about we'll from their so them level, initiatives far our are relationship optimistic around. here It's help of working expectations all second all this the So that days. generating few some customer deposits own checks here at and But see cleared

So first of that year of we X% be bank core part we that think digit low of can double believe the loan in kind fund will deposits. kind the at still We this numbers. growth

go And the the like in we so the second Federal we did first don't one. to into here lean anticipate, back having Bank in Home Loan quarter

Jared Shaw

Okay, thanks. deposits core that Or get having those the on two separate mix is to of price -- And what's new like Are those of you to incentive an conversations? in? accounts? operating coming are looking pricing a sort

Terry Turner

the not it's year. like think depositors. XXXX. all I'm reductions phones any significant did I it this costs But from deposit on Yeah, The planning of ringing hearing seeing over any in requirements not aren’t map. in we're

our increase are deposit – three on what from it’s for it in lowered a see Fed tailwind or rates the But still going call without quite rates we'll think expectations some bit the increases, given quarters. it’s the to I next, two do. of us deposit

Jared Shaw

you've made it's and And limit into going BB&T that create hires? are progress to hiring Or you the to SunTrust deal. that then you increase the there the your opportunity the Do goals? an maybe to with additional on the XX going target front, think that lean you where – great see to is yourself

Terry Turner

hiring changing I really not year. not is Yeah, every think, our goal that tactics we're really would way, which all we're it we guess say, this is, say I managers quality high deploy, really, we’ll know I would, I the relationship at you target aim year, this, the goals. changing to And

probably that increase the hire. more But tactics. vulnerability people we’ll transaction the not number will created there's other is, ramp will in we those the, deals the we're the of that to so SunTrust so advance hire not target. yet going vulnerability transactions going our or but extent more hiring, And people, of to And we're more to my necessarily come, BB&T change exists, the up more that actually the take gift place, our to

Jared Shaw

And just grow in you're capital finally you that you to stock do given active to the levels, buybacks significant quarter. sort we of, about here, amount but here. recovery should on this of for in market think with the able How the were continuing management, me buy feel still the a capital, you'll be stock capital price,

Terry Turner

think I intentions over here that the allocation remaining few quite a our first next that same are quarter. we’ll Yeah, three shares in did We still deploy acquire the quarters. the

and down quarter, that the second tailing and third quarter, be fourth here in probably will We quarter.

the So, intention entire is allocation. but $XXX deploy our to million

Operator

line question Raymond of Rose next from the James. of Our Michael is

Michael Rose

the better in kind of is operating got is for I the at that offset but expense can back at hikes, the expectations I some this end mortgage, no low expense accretion PAA I trust the Hey, rate just mean, this and NIM boring generate better expectation maybe and BHG still in a of and in step range, X of less actually year, revenue wanted earlier, components. maybe the the million year? certainly GAAP look you Harold better described you against of the when reconcile revenue? as outlook positive little leverage it, little guess bit kind less With to a of the, bit

Harold Carpenter

take we about decrease down believe be of about but steady a we leaps and We're a will are ratio not efficiency Michael, able we bounds, to the more. Yeah, that there. bit talking little talking kind still

said, that got checkbook open hiring. Now Terry's an kind on of

have don't with expenses see so any than that. this through kind year. of just big And respect other to to surprises But we manage we that,

Michael Rose

first quarter, think X% XX%. Clearly, quarter if instance, loans that, that broadening business and longer XX% top their offering just BHG, you it change their commentary a any like advisors, base, there of Maybe are? the what now stronger said, into of I seems to any just to XX% to term you expectations they're I of going client on book out financial said know, investment is from think last for strong outside just a is I on BHG, quarter, fourth very up? earlier there

Harold Carpenter

others, bread expanded into forth. But to and veterinarians, and into doctors, still really what's Their going is so and testing I where disciplines, some into analytics dentists, and there. a have kind a loan. on of capture improved the They call and it, CPAs Yeah. other hot they're lead be so butter potential our their career is lawyers to their transition ability think to customer market

last So, to paying it in years all three or here technology and seems two they've be invested the form. over that

their that substitution and rates they're are thing their so analytics experiencing other improved quite bit. much The is have too credit come a down

Michael Rose

the that you've least the at you're one on, expectations any some one around the initial parallel of first have CECL, reported for of thoughts the to loan any for and that of sort me, one given larger banks have day of report day Maybe thoughts quarter sort more this of banks one impact done smaller impact.

Harold Carpenter

reserves. be likely it'll you but can you drive give got day that our shared we're anywhere initial -- it, more. say will We that one impact, to have we're XX% somewhere to we've a got, our We've kind range, be, I'll truck a through, board. going we’ll that That from, of number be call we've in range. probably XX%, increased quantification with a could

Michael Rose

especially and lower I some the that have of that what does Okay, larger some the end range, pretty seem that banks to on kind higher, the end say very range the upper of a the of relative to would bit to the banks, then larger of little positive. perhaps range, is right a similar inline of

Operator

Mealor Our the line of next comes Catherine from question KBW. of

Catherine Mealor

bit within pricing up all on follow the XX, strategic of really the of quarter? a this growth some in of One on client the net of helpful. was the deposit pricing some you the put chart slide these brokered of FHLB in in you’ve the you and then the that talk change little runoff the about difference buckets different and pricing here put Can versus

Harold Carpenter

money, that the all the run-off, in low-Xs. that was and the brokered high-Xs Yeah. The of we replaced strategic in

Catherine Mealor

client the the low-Xs You’re piece? net is – saying that’s the

Harold Carpenter

in We low-Xs. the from Yeah. the the was left that we the XXX in went -- in that replaced and bank XXX the came it range money million with XXX,

Catherine Mealor

any then today? to color And you it loan loan the the of yields is pricing as loan increase with other on the the on yields, and ability give curve can on side with thoughts sheet outlook balance your your and

Harold Carpenter

Yeah. that increased quarter, in book yields rate to this was we very saw helpful us. fixed some our In

particularly as impact go those positively we to think through the I we the year, with obviously construction loan our and ought in -- increase funding, yields.

through what the least hopeful now, first to we're but here we're at flat, that continue loan rest be we still not now. that's right that up -- if accounting year granted, over keep So the increment can of working yields what would we're the thinking we're issue,

Catherine Mealor

past fair? ability couple of just increase you're the yields lag coming from construction of outside then purchase And a rate pricing back an same there's maybe year, come level in loan not from the still saying the fixed of from there's bias, quarters, the is still funding which the run-off, saw still that continue to lag upward to half -- forward. but we at understood, so the is accounting Okay, accretion

Harold Carpenter

yields, that's is I originations. breakthrough think to I based fair, to seeing and of think on in see a bias we're construction fixed bit what is a loan little uptick rate on our primarily do, an going

Operator

of from line our is SunTrust. of question the next Demba And Jennifer

Jennifer Demba

interest to the you upcoming expanding in market, the competitive dynamic Atlanta in about could given just there? Terry, change the your talk

Terry Turner

to. I’ll glad be Yeah.

level to had set, just that we've a think Atlanta market. time said the for in long we I interest

extension we or acquisition go a to, As you we do novo either by believed know, market a basis. we've de always on that can

think own That basis. when and be about good [indiscernible] I SunTrust like or know a like and never that idea. Jennifer, the there, a transition people, some certainly liked for vulnerability novo on their with we've increase in a will We tend given our all for time, the about have might counting I’ll something felt de but BB&T Atlanta be approach all, would associated just our because optimism store it, we about that talk to that. comment, opportunity some novo want de to

billion that And period a we so be make. build like would to reasonably short plight that find $X the to in the the would we be could management is bank time, team we idea would like felt of that

the than or of management two function different disciplines bank in people bankers just I team and a in is which hire is the and profile market high really all that can it So think attract sales that LPO. across the kind work and all stuff, start a team some of an

it So hopefully, of that's think helpful what I is. in terms

Operator

of of is the Piper from Brett Our next Jaffray. Rabatin line question

Brett Rabatin

pace about year the it somewhat that's of in and or be go growing you bank. BHG the us thinking over predict, growth? know just you little for year results the some back here, terms to it's another be new you Wanted and talked this first guess to bit about just a year products, ‘XX give hard color of growth overall from just can kind and throughout quarter-to-quarter year, about the and than expectations of I but that slow I is year Can to ’XX faster like talk typically maybe build maybe been going to does

Harold Carpenter

had growth Yeah, ’XX. we ‘XX don't ‘XX will number. a replicate significant think

a this year as ‘XX flatter less, kind of predictable but hockey it's to So tend to call think going the kind year. I than guys last it, of the Last it be was, be curve. a to curve XX% is will XX% year, think budget stick, flattered I a more little in

Brett Rabatin

been been portfolio? the markets newer commercial particular helping And to the opportunities you're in growth, Okay. just markets, in better markets the then of grow terms real are some estate thinking are you any obviously particularly of, markets, have for there about with that out in

Harold Carpenter

in Raleigh, triad a particular, say in also And good as Yeah, then I the I in also, perspective. CRE from see in Charlotte excellent would think, well. we growth is North Carolina

Operator

Brock of And Vandervliet line question from the of our next is UBS.

Brock Vandervliet

Longer to being given funded. longer loan the term have the think more objective term you you core and term, and think, the is basis? near more a could deposits, hire able you success to know officers bank Do seem core you XX% on core do of generate fund I increasing

Terry Turner

that’s target. words, I think we company do would and and you is I internally, the In stick purposes, that's I for in this certainly the a change want don't with that best to planning to change see than but sense to I'd better assumption. the enough work other work substantive of My that. possible about again, that that way outside But will for we probably think planning those direction,

Brock Vandervliet

there strategically given consider? the Or Group monetize Is success is organization shown, may just something and ownership there Bankers sense Healthcare that within that business, that And any that this way? want with their to to goes, they they've stable success in structure? steady we should great some is she begin as

Harold Carpenter

very might on they the years, us. to with to in entrepreneurs, I engaged like sits doubt, point, as now, Yeah, right understand I term the to And, that closely. probably future, when for maximized growing out operate they're entrepreneurial of that very principles, a in at longer whatever it there's try the are I them company for conversations maximize it's they it a But company is that least They I liquidity they’re to no year, And strong. some all I the as partnership that need deck, all they're liquidity future, two, and a understand with I'm watch think they're and upslope them. a at be from We're and exist think, our our curve. with operating revenue because horizon. think the going also is three we on going hands event. maybe think concern that with But very that event a I call the engaged market foreseeable think, number

also to trying probably profitably maximize one They're responsibly, trying to to So order grow trying to that's do. effectively as as trying day they're and return. in that not to they're what only it it make it -- but they're grow

Terry Turner

the to a is Harold’s might, Brock, point, our nature of and I the earnings there on and his still because time the of energetic I least been, he's, business. to entrepreneurial would and I belief at early ever were and on so that think question as generation long just today and a some three he's personal to talk CEO for in anyway, again, and stage basis, event think, he’s I growth is a suspect some good I long think view he's there individually, got, if I as focused company is I add revenue that’s the fire of because a at believes of later I got I liquidity be just there's about event, comment, point, think Yeah. a probably to you an but a the at liquidity BHG, will in But runway. one, that principles that say he's on do think

Operator

question line the Stafford from Tyler next is Stephens. Our of of

Gordon McGuire

Tyler. on McGuire This for is Gordon

trying -- to deposit those repositioning, there just intraquarter? if in repositioning million benefit carryover XQ, timing into $XXX the the out to back might on going figure what that was any So be

Harold Carpenter

primary quarter. well, Yeah, a of meaningful but was contributor. that -- there Gordon, early The depositor in the last the happened the deposit broker quarter, change that January happened throughout call was the fairly XXX, occurred those of component in part that that was it, all the that corporate happened, a

of of the from say question, of end I'd it your probably it, occurred XX% before most So, January.

Gordon McGuire

reposition your near that to loan ratio of is any kind or opportunity term? put a in does your on the And more there deposit XX% to check

Harold Carpenter

high but and to got Yeah, those through I squeeze it. out term, try orange short I long balance more can try ideas We’ve see to term, some reposition bank. so how the think we we to XXXX, will of comments do working what this continually figure mentioned my some fairly comments, to try to understandably, to of to in speak. we're XXXX, wholesale level going out juice some

Gordon McGuire

talk what portfolio. saw about lastly, strategy investment doing, what the then you're you up of basis quarter? kind those and XX you whether, you buying And you're are implement this points Can repositioning yields what mentioned the Harold, this quarter. I in

Harold Carpenter

we're bond a go. We're quarter. getting credit the a was of getting end more our There of out also some investment The the we've metrics. like of that elevated lot got that the hands was at lower, the the grade little on. We of getting still the bonds. allowing CLOs, out that We're it, to call of municipals

the I to probably probably wholesale sell how CLOs, the that think we've to related they're in million working and quarter, tactics lot in balance talking that bonds about orders we second to and bank got XX little a XXX but out of side team, and will different sheet. million to through earnings a on strategies of a lot get of more people of our

Operator

And from your Brian of of the Partners. next question is Martin FIG line

Brian Martin

you basis Most kind pause? suggesting but from, deposits points. on rate So Fed covered, at, things the expect Is But from based the maybe like continue is low. of it what size the the increase have of on increase is been one where on with XX were to that the Harold. guess you it question side, funding cost sounds of I just to

Harold Carpenter

Yeah.

out we're right, think hey, those are but calls that's about good is and dropped of about to looking we're you scientific think what you do or about have study say, at looking that, this in this all Brian. think at that, and I kind field do the and really dramatically. relationship this some calling our here, We're not, in granted, managers not what

get pretty a deposit trying There's to deposits. our a feel feel try both deposit, that lot we price are in lowest Rob people So, where it pricing relationship about and the messaging McCabe market. right to is possible. from is competitive the of we pretty to good on it, we're Obviously, Rick But get grab but at the managers coming good and of now. top Callicutt

Brian Martin

the continue mean the the yields will the talked purchase in seeing core look but higher, Harold, go I like you of core funding will at a about costs question not about expect when tick so loan when margin, first well. as contraction, ex margin, accounting, the sounds to you today, And Okay. you still lot the up

kind pause. based on the core margin also So of be flat kind is what Fed you're with on suggesting the at should least of

Harold Carpenter

I core hang to is the margin think there. in going

funding quarter not begins to of loan at anticipating big of kind here least and in second, off the loan the second then growth tends falling in will first march for year, fourth the escalate, from have to the profile our fourth looking at We’re as cliff the calendar any catching quarter, even because We're to improve figure in the up, out numbers we core anticipate don't to we how it, funding and fund third third through though growth we sure. the quarter. quarters kind

Brian Martin

them Harold, Okay. as hold or you? level expect And to them that today, do the FHLB at to you advances, decline, they're expect there you

Harold Carpenter

where anticipating big that. Yeah, not on home in bank increase course we paying end Usually, borrowings. over hopefully federal loan quarter we we'll now, of don't into right -- up the and tapping the we're -- not then be is the we're first the year,

Brian Martin

by you hired talked Terry, with having to mean, do you I similar mean, last fair is annualized, in say first Okay. disruption of that caused hiring up? in about mean, hiring today? disruption at any pickup I I that of expect, people, last quarter is on XXX some one the mean, just of you level the was -- not I front but are year, seeing discussions to the are recent seeing you're the sense guess, kind All pick the or on deals, right. I And I momentum, momentum market then the you guess, you

Terry Turner

the I is, what don't that just way, a cycle. people, I recruit it make say but run continuous Brian, get think aggressively we case to would recruitment I you when communicated sure

irrespective sort producers. of limits producing high vulnerability, calls whether chasing the there's market, merger no irrespective to always of revenue in best the So chasing the for, what of there's hiring we're plan bankers

take you the have Nashville, FA would we $XX in deposit million loan here book. average million and If commercial $XXX book an

guy wouldn't that, And paying I the can mean, do don't $XXX,XXX as year, why a extraordinary. he I hire you math on understand that hire can I hire so, mean just frequently that them. multiple you everyone, $XXX,XXX, if you’re is

what the our answer yes, were to in we us, expect perspective, or would trying put that regional Nashville that it you tax on recruitment that but don't speed think vulnerability think ploy it players up guess slow variable is I what is, down would exercise, to to you're or so at help I I'm large in. so the And I doesn’t alter chasing

ahead. We’re just sort of running straight

Brian Martin

seems seems transpired Yeah. and was mean with model, Understood. your there know this but or opportunity of could is run guys kind It I like the getting that’s at. vulnerability I more opportunity you has be I increased market. what’s the more in with what like

Operator

you Thank participation. for your does And you. our program gentlemen, today. this Thank ladies conclude for and

have disconnect. day. You may now great Everyone a

Pinnacle Financial Partners (PNFP) 16 Apr 192019 Q1 Earnings call transcript