PNFP - Earnings call transcript Q4 2020 | Pinnacle Financial Partners, Inc.

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Operator

Good morning, everyone. And welcome to the Pinnacle Financial Partners Fourth Quarter 2020 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. release relations morning's site page earnings on are at Pinnacle's investor the of note and presentations this available www.pnfp.com. Please their Web for site is on days. call being and be Today's recorded Pinnacle's the for available Web next XX will replay participants time, placed been all mode. in At listen-only have this a The following presentation open [Operator Instruction]. questions be floor your will for the

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

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

Terry Turner

for listened of familiar Thank you, SEC home joining coming his from accounting Vanderbilt students accounting for to know as operator. you and our you this the our forth. a calls Nashville, to past everyone's earnings us Tennessee, University. decide financials, professor for at used has Vanderbilt case our There's filings, have that that the I fact with we're our an class morning. all years in Pinnacle so and follow footnotes, Thank

in so he two, was to guys earnings to to had an said told sort open-end they me they our opened, he call, sound the reactions. following he one, listen immediately assignment sure that those that the the just overarching to their said, He optimistic; of And And call. class, Southern. it and two overarching question reaction sure sound get

is the was may guess reaction. call adjusted with during like quarterly strong to have that quarter basis. want Pinnacle honestly, success core Fourth every you reflecting in chart dashboard, so quality, many measures revenue tangible We for very non-GAAP variables had key truly value same and there's growth that at our accretion, net on And the to following all today, this order fee book began reflecting income key quarter. performance But the so, that required quickly growth, focus We on asset pre-provision growth, our metrics the to here move I quarter call a managing we're my measures. GAAP the an adjustments deposit outstanding us.

roughly fully-diluted quarterly have when basis. As top a EPS on time revenues a many in year-over-year can XXXX. total are banks on XXXX predicting earn not XXXX can what meaningfully the row, X% they all you here revenues, been up adjusted see up earned at and in PPNR were

level our deposits pace challenges, review in forward. XX.X%. record can growing in nearly a per last XX.X% the to total than over NPAs really have to are just share of with during COVID just assets continue fully XXXX value row, quality is growth And exceeded to per the producers XX% we market lowest of charge quarter bottom market and up ability based track XXXX. talk per will on see held revenue two XXXX the row, in movement fourth well net expect most while diluted half it will in share in up greater produce basis year. second tangible and in our detail hired the loans I'm the that's our many, we to can continue EPS producers, at growth to see our share for consistently book differentiates XXXX, XXX in actually represents our primarily to last annualized X.X% in believe due and the by Core I five last to second peers. over book points, much Adjusted offs about XX% greater rapid the continue not that proud to asset you Harold and Across XX%. to quarter revenue detail. Tim shortly, spite a with share, results Along years, the entire compared enormous XXXX's is you going up very at the our from value to over tangible potential, the of prolific years, more take in the quarter PPNR points year up loan expectations XXXX are We XX which opportunity down year. But generally, this hiring. of accelerate We've going turn XX basis for growth classified nearly if quarter. that that and share the Harold PPNR for review

solid fundamentals, encouraged find trajectory our be of through of go net expectations. to to was margin I Mortgage there's quarter. cost particularly great BHG's this that we deposits. pandemic outperform Fee this our income a during interest regarding the report by the lot continues card a had As details, year.

We and as know, revenue talked our of reviewing that last allocating earlier comparisons. to up meaningful his our peer about optimism. XX.X% accomplished by capital full the learning nearly human year was team of what giving well loan defense performance work he you update Tim that's and on borrower. there XXXX, economy. this a the vaccine seeing transition our to going is asset for Though, we're me, as we and share XXXX than for our still better are QX, all to our quality book borrower per in and least part Our rollout median from to from significantly as relative inspired $XX.XX, in inside At clients. the unknowns to reopening time

over let it Harold, to So you. me turn

Harold Carpenter

some shown with Thanks, Terry. Good morning, anticipated last quite for time fourth quarter results time. we've everybody. our slides from basically we've consistent on of what Many are

don't information. a new of So there's believe ton I

So growth I'll fourth a quarter. for highlights. wealth We hit experienced the did of loan the

quarter. PPP, between it We have Excluding just we're yet quarter but and don't third annualized a almost fourth a trend positive signal. was up X%

We give will growth. to us on lean few on years advantage our new over the an loan hires last

That firm. in in is entrepreneurs forecast loan see too we're do the reemerge growth apologize loan will that you for a digit outperform to begin fog We of way. help where markets us in growth know, single As lift markets. we we think PPP when any more and for great don't see reasonable believe XXXX our that market business leaders our excluding so number said, growth we high a predictable

loan yields will yields As in XXXX. the loan flat. be loan a pretty ex-PPP Keeping yields fight were

even the our curve there's out yields. lot relationships into will to be us harder should steepening of there. to a helpful We maintain liquidity Granted our but lean

the that a half in back about difficult the a So finding excited bank sheet during XXXX. because deploying of as program pricing is hopefully funding news lot don't amount all a know liquidity. out more can The place and and borrowers next I is got banks of considerable round the of of PPP a plus doesn't we're leverage, you've we amount using there balance meaningful have first

we're the volumes the will second businesses by expect similar impacted don't level first, be incredibly first, do just second to be this and PPP in as successful the market be as to continue the of those to believe have our we believe that we pandemic. Although, beneficial in the as in to also round ready small round

files the last for that the weeks we've few round, Over interested expedite process. pre-loaded clients to are in data those second the

explain these their interest. contacting to clients program we’ve new and and are gauge So them currently surveyed the

of received we're a As almost applications $XXX to million, rapid X,XXX yesterday, close off so totaling approximately of business we pretty start.

As team working it our to with but clients. our is remains round rigorous process, the first forgiveness through

We net first income interest fourth forgiveness due XXXX. in lift to PPP expected lift quarter more in and half of the the expect

in deposit XX% We've XX% deposits. quarter. another growth $X.X significant at since bearing year. experienced quarter, commercial Now up check end. up billion on accounts deposits of non-interest The is number at since ending big last We almost year to had

XX%. remember, to can its loan lowest at average I average Our than ever level was deposits

deposits We're at points to reverse rates. yield and flow new various getting average the we in getting see to in XX cautious ways down intentional point very XX this to to deploy were We're to of interested We at expect those a cash. ELP about We about given leverage questions that XXXX. be for at the year excess trend we'll few get of in very than whatever liquidity. XX points opportunities beginning quickly. excess deploying numbers at cash some some curve, steepening basis were end We basis less but basis points on

banks wasn’t borrowings quarter, $XX.X although, This next to Bank as million opportunity which build. book several will did other across the some others, fully prepayment reduce large as we to to. $XXX to reduce announced Similar maturity the board during have an reduction NIM. nearly should Home funding what and redeem opportunity help our help we incurred and So Federal wholesale costs Loan funding of million our prior the our anticipate quarters, over we

start of be that the back of a within carrying two unwound but XX a flow paid Combined few also around XXXX should cash been We years. for years. loss two January we've hit million in that between

that right other too Federal Home the those get is with opportunities excited will have Loan but long respectively, evaluate borrowings for about we period to us now. currently payback We

hedge once paying in million should Federal wholesale liquidity Loan hedge, in to off Bank the we interest $X stay recognize flow swap. previous have to loss no by cash Home need Therefore funding to was expense cancel that unrealized the swell, and to we cash we due flow the funding. close we hit longer the to As the the carry By XXXX. early unwinding the advance

approximately Our liquidity million quarter. a $X us costs bill

a at and will liquidity We than PPP point, impact negatively the points excess We liquidity our excess in XX and likely basis by down third a quarter. NIM the adjusted quarter NIM basis fourth believe a row. We after X basis PPP Thus, which up XXXX. XX to that We we're X.XX%, is liquidity compares This shed our we'd both from slower going from be NIM calculation X.XX%. more big believe some our this in like. approximately our points, two similar is into will points up a this so quarter. quarter out focus of Seriously, called is bank of quarters trend. last previous our

to brief. than Now income. fee I'll Fees the $XX million quarter. more for be were

few BHG year year pass fees cards but up had in a that XXXX a knows For expect in the in over year, believe was big management great was as either. a We a doesn't repeat report for issue revenues fee continues we quarter. XX.X% then mortgage. to about Everyone BHG every mortgage to I'll year. talk XX% don't XXXX, again, grew Wealth XXXX more year remarkable. but their get which were power minutes

the made will our We in XXXX have a several XXXX expect they have year key part across hires markets. they in as latter great of

release, as 'XX our to expenses, stated last by to a anticipated bonus expenses were week. press higher due in Board than approved XQ award the As we've discretionary

is primarily to Due As tied a the result directly we've our to to failed targets to in CECL cash the increased hit COVID, results. adoption. provision past, year of due EPS required incentive our stated this we as annual

quarter, and modified cash year plant. last based to modified structure component. our the would During a the on XX% have incentive calculated plan PPNR mentioned incorporate we of a as our a plan All in, I opportunity target

associates their increment will The into ramp XXXX impact help for to momentum. results participating a PPNR XXXX given modestly of Board targets of the elected to Our with of XX% award our to us COVID lot results.

and our in know, missing with incentives $X.XX that in capital payout its in to compensation, was our incentive you our issue similar line another approximates $XX so per $X Just to resulted target found on coupled million savings and way tangible for in savings XXXX. that in a results, XXXX. That share million bottom equity into

employees Speaking our XXXX. repeated of for those are savings we firm, the in hopeful aren't

this X,XXX additional to of be and planned year participants. some we XXXX All and pleased will to with Board's means That us, said, are overachieve. the missed decision what for the obviously, the $X.XX focus

peer target payout both a XXXX and on target group That's EPS our within objectives forward we hard PPNR meeting and to to in to quartile a it, The is incorporate our targets. exceeding determined performance our we of less will So than and Quickly do trend trend work firm will and on XXXX. leadership associates. to still to some our comments develop let top still financial our design not plan look will capital. avoid a

Our authorization the buyback Board at previous end XXXX. approved $XXX has program program. of million expired The year

will We of not of likely authorization any those impact see begin XXXX. in deploying are first quarter material the consider funds but to to the from soon

this of couple issuance a year. have also We debt for up are renewal sub that

yesterday. are given We dividend and/or consider will we affirm that due in grateful are redemption well. so as our quarterly many we for things. we course. So board the of all shareholders, The that refinance But increased

growing we book We accomplished an of on time, our of [XXXX]. per PPNR that book and about things value per particularly thing share in intentional year are are We've way, and is share. earnings we by are value tangible that One share end since increased we've growing XX%. also in per a since proud outsized focused tangible lot

funded holding the past is Business ramped most Now tangible flows during familiar nearly reopening slide than on we share focus pandemic. our the have they're all on traditional most. people, our being in have up BHG. sale and and the slide renewed depth have bars set a growth. we This BHG most markets being every we their continue provides green around economies going bars how will of That these this strong appear for revenues on in Not great with value more covered We local optimistic time and book snapshot importantly, more loans sold with and our business confidence The as three with recorded are on Obviously, model more records banks. a are over The and loans BHG's as previously. said, downstream blue generated. cylinders. originations flows represent to this our to chart is has a on our are quarter per clients optimism up is hitting been of of years. gain model being which loans wholesale gain the This through

has have necessarily business are sheet green with because As quarter. the ending appetite for income. the bars fourth but building you of over can years, see, the decreased fairly of of because model loans the flat, for at loans their last the Coupons XX.X% not fluctuated three balance and their down diversifying interest

quarter. it. on has chart BHG. the strongest they details this, spreads As have there developed BHG's net it The they said be they quality. platform their remain the steadily it's which almost to XXXX. BHG's model The BHG, in good the banks the borrowers they country. base. BHG's acquired the funding in the to last in one and previous There occasions. news chart, XXX we've improved the The last from it and I borrowing chart in continue fast XX belongs the to got out several the I left few of of it, up real borrowings, but fell over network of time in fourth real over in X,XXX The related most X.X% capitalize taken like to on time, own is that get funding offer past XXXX. been also chart has are quality right powerful scorecards and and before, to shown mid-Xs, but bank Like to steadily years years bottom to They quality busy, years. I trying increase right to our gain This to wholesale may Again, improving find in and banks be firms to replicate a said credit platforms BHG's has but refine over top individual particularly they've loans for now the

orange as annual is these who how rate, X.XX%, XXXX line year years loss rates. would the shows bars The origination, the outstanding who with impact details Looking upward, a and obligation X.XX% to of toward the chart earlier basically loans and recourse other have bar the BHG's prepayment The note green slightly. than will accrual our just it lower losses with at to increased cause on related over level is recourse in at with community banks. their early where pointing from COVID the percentage credit BHG chart. of continue reserve the interest is for in move lines the acquired they may Pandemic banks in the used details that higher in much of sold reserve $X.X life sold loans losses underlying loss We've in quarter during for knew to the currently some. out years billion borrowing few be payouts. but With to the two base, also the build the to quality for likely events updated ago. loss and The COVID, since to a BHG the line last while network blue have a reserve landed other is consistent banks. losses Included loan. months loans. of thus, opinion, related losses by very that they of future incremented loans more than important These banks. charge-offs the One vintage, the are losses that to and has percentage these first reserve impressive

the reimburses BHG bank early, off pay premium. that for borrowers good So unpaid

We reserves XXXX XXXX. lift any that Just XX% about makes in significant of in so don't year-to-date anticipate know, rates. the up loss you recourse

it we'll it been for in a It's quarter last see again. BHG and anticipate we said big things and we big year XXXX. Lastly,

incrementally quarter the on not $XXX first the went allows out opportunity markets securitization. third early trends to execute to diversify top shows much funding another another new. model. to BHG's the as expecting its the sale continue XXXX, little revenue its line credit to on so million on BHG income, priced Appreciate BHG's important their the During business a provide at well with gain of chart items source in sheet. is which stream, more but as This balance from similar competitively XXXX. grade with right to rating. related that BHG securitization The investment securitization allowed improved, away We're It that on interest more

at year comforting. held end $XXX $X by franchise. noted It's million BHG and As loans, It's over almost both interesting in BHG I billion sound borrowings. The and slightly and funded XXXX, $XXX over $XXX million healthy in million in reserves a capital. find bar in has red a over cash franchise.

clients problems knows will demand every and where So managed. difficult is up this It's take difficult understatement. an Loan at are a this for their best wrapping is is year Deposit my growth fourth is for year the is we another very time. through had putting yield has are in but quarter Pinnacle with it's solving Deposit and say forth held. curve operating sluggish Loan BHG both up. the BHG work that relate XXXX pleased significant great know the headed. To and and day, effort environment. how colleagues all in down. weird again We who working pricing much Loan ended to growth and optimistic. with quarter Pinnacle remarkable. credit pricing headed been I'm

Depositors to borrowers [mid]. figured how through businesses this their to for seem However, the are cycle. spots trust out manage bright and have us to continue Pinnacle

quartile. top operating very clients discipline best Our and remains important. have the remains We do leverage also

we hoped way Additionally rearview vaccine. quarter, for COVID-XX to had and our finds mirror. hopefully, an effective its Last

This quarter, we a vaccine. have

has fact, tangible In optimism. hope we vaccines, transitioned have many to

well we Carolinas. Our like We Tennessee business. like do recruiting as and We is to markets where continue remain do several as Carolinas in scoring platform all we a favor patterns force do with We and Georgia. Migration prospects. the over and business in franchise our to Tennessee, the whom franchise. competitive in our

are I've score said in in as Charlotte, before, We Raleigh, can Charleston, and think winning we Atlanta. big we

So it credit. talk turn with I'll that, to about over Tim to

Tim Huestis

given hold charge-offs, assets additional first that Pinnacle's metrics the combination credit optimistic you, Using of of may the our and PPP package, up the and half portfolio We Thank Harold. XXXX remain classified acknowledge net challenging new our we for past prove loan continues but to COVID of the NPAs, clients, the clients loans due stimulus very some loans, traditional well. of to vaccines.

in The for our emphasis rate. by rent non-pass and/or had bankers the collecting As rate reviews that quarters, and credit results thorough completed low Particular credits were to two and our encouraging. risk fourth quarter we monthly borrowers' was teams roles on credit the to prior reevaluate financial our client assigned loans pass a on work placed our risk rated due statements COVID.

decreased assets $XX million. classified Our

category, last third For fourth hotel had into attributed a This two property pass quarters. consistent criticized that survey XXX wide weeks million. to four to grade in and the loan clients The during of the quarters, loans December, criticized second $XXX conservative methodology The hospitality be as survey part three targeted made clients balance such was of moved in our a We was million. of was low we at had with balances variety last Similar increase XXX% to The year on of, year compared borrowers' XXXX, to revenue quarter quarter XXXX. would be to XXXX to or and year to first full XXXX the fourth to be revenue liquidity months for cover full guardedly revenue XXXX XX% XX% full reported quarter between revenue to operating XXX% in for $XXX up XXXX consumer loans with loan first estimates quarter question revenue year or for to rating first grading industries. just and fourth restaurants estimated a the quarter hotel of questions of the applied be and XXXX, of completed XX% totaling revenue XXXX months expenses. XXX% minor hand been responses construction between estimated XXXX between prior entertainment, these quarter quarter construction fourth small XX% said remain XXXX. fourth conducted would C&I 'XX XX% compared an we're segments, greater. liquidity end a of and quarter quarter. modest net Three during for of services. increase XXXX types loans asking the of our of assortment seven of XX% XX% was question optimistic. first regarding we to

and when loan first deferrals. of unknown, second impact the out reached was to During quarters clients proactively XXXX, Pinnacle COVID's largely economic to payment offer

range Our were XXX payment deferrals from credit days qualification. minimal XX with to and administered

and or time, modifications different. term obvious to clients we a of with at solution philosophy loan very bandaid is challenges much attempt We the deferrals rate. incremental us assign a period new XXXX view. the Given to little our short re-underwrite to uncertainty approached did in not regarding Pinnacle's as risk help borrower that in risk

clients help negotiated COVID. framework to were to the the as our modifications Our from term longer of the bridge side solution other

Our the philosophy of bank's our majority With deferrals the rate and paying the efforts improve to was that distinction in borrower collected XXXX terms each borrower very financial and clients. of the interest vast to modification we our our with modification. clients and between to are modification monthly. key A contemplate is our accurately XXXX the rerisk help modification, to simultaneously our position information current

table, make a XX% our modifications, XXXX of have XXXX loans hotel up hotel our of total modification. As the loans illustrated XX% in our

interest fit the earlier While as on consideration during each circumstances, repayment loan with months XX to concessions, interest generally in loan Pinnacle period, individual was the reserve borrower an changing accrued consisted only of three to pay hotel our the maturity. to borrowers' terms shorten deferral modifications loan modification for accumulated interest the establish such and specific negotiated the that for deposit

deck, hotel up. illustrated As is our book held supplemental our in

service our segments hotel of was and conservative occupancy COVID composition extended that high STR's loan to is of occupancy Our XX.X% our books stay impact. history our and to hotels. national this provide average for slide around economy portfolio hospitality detail redeemed portfolio November XX.X%. attribute We limited the to underwriting, compared This of of

assets We bankers. a segments, bring We slide hire within their up. selection. include exemplifies, clients few with our special clients. well. metrics very is excellent contributing team. Pinnacle's finally, up They Pinnacle's even best of with them. detection PPP these for very this And factors this believe have client early held coupled As performance a held successful loan experienced the performance for credit the program problem experienced

continue defensive will throughout client our We work XXXX. client by

And I'll Harold working As be them will deliver the it to few talk added to in program next We indicated, loan provide moving in to to PPP forward an weeks our this clients again outsized with security. about now hand back pandemic. Terry

Terry Turner

Thanks, Tim.

the taking a can earnings form you Tim previous XXXX asset capital of and loss and following and of moves my to loan our highlighting position capacity our call we great return loss told the about shore last Harold done to earnings quality firm As trajectory liquidity up XXXX's job various our well and have but about part reserves. in I in the of incremental pandemic. analysis, how expectation earnings to April, first quarter that more was the final XXXX be wouldn't

following to building equally PPNR, on pandemic, addition us as we footing position Board which Our see, was taking any in this back firm other what us opportunity well the offensive as more transition to I will some served pandemic. to and XXXX. in XXXX, even did in nimble revenue beginning last to than And XX our of for focus provide believe is hired to half has a market you producers year history, we're to on this incentive more believe share the capitalize we which in exactly that, can be in what extraordinary

due excellent. commercial last same EPS Adjusted over XX% same year. the through last year. mentioned same year past quarter that XX% and has my were quarter what transaction loan quarter they've as platform their securitized power inaugural classified they loans testament of or the and the was last quarter quality fourth was loans view, assets model with to generate. an also another XX originate I in and assets its to XX asset in have sell down comments, of issuance, value validated to X.X% NPAs As AA believe at auction quality to record my over differentiated up points revenues the first of in basis points, the was continued the PPNR We appears up and the Adjusted consumer basis by and proprietary XX% quarter to be was introductory CRO successfully outstanding volumes rated over BHG on up their

the already predicted during we still hire and PPNR to ins might EPS pointed with XX XXXX. period how as XXXX, out, we've this producers growth figured out some of even dramatic afford be revenue And to All the disastrous. in

And to as to expect the to I'll positioned should subsides on you questions. ourselves that we've back several on move the take quarters. focused glad is pandemic last XXXX my focusing and Happily, be goal, continue we'll same our into the over we to us as been economy the reopens. we first items so find there, Operator, and stop guidance offense as move well quarter was

Operator

Sandler. Instructions] first Stephen from comes question Our [Operator Scouten Piper with

StephenScouten

back kind things on you your math doing as that like hiring If maybe looks last right, So statement more the of perspective. of follow-up on the Terry, I'm XX from aggressive you're new… it a a hired side there

TerryTurner

some kind Steve, what really question the connection. I can't understand is. got we of wired

StephenScouten

in back queue… Okay. I'll the hop

TerryTurner

it. repeat could you If

StephenScouten

the I can in queue. back just hop

my technology working. me Let is make sure

guys. Sorry about that,

Operator

line the from Jennifer comes Securities with [Technical question of next Truist Demba Our Difficulty]…

TerryTurner

hear back I is new a Terry. think I you this room -- I'm now. can in. in where I'm I can Stephen,

So question? repeat would you the

JenniferDemba

I This Jennifer. think may is have off. Stephen hopped

premium have to in in Terry, hiring, So you I'm 'XX but now currency wondering be more you two again. is more a want said again, interest interest and 'XX? your also one, for questions you. hiring M&A Thanks. what versus Number now, your aggressive you with in

TerryTurner

as share know, our relatively So just a primarily capability core my great bankers in to our has grower, are ability view markets reminder, that hire And view as and we low you done really the markets. some been to get attractive organic as an with in is we're principal is that or my mechanism always positions. attract today and

continue to to believe going which model, will our be we're push that expect to organic on ought you good. growth think I we our so hiring, And

Jennifer, to would the say, on different in doubt. may I I view guess others, have be in book don't principal time, stock that last our the Others I've my And a trying thrust. my significantly stock as unfairly so bank asked I believe that stocks than so But M&A question. And characterize investing great been a it start view. it's interested wouldn't will that over forth. few as and thrust about no at treated. disadvantaged. based my more was didn't was anyway, people all as I compressed cause a There's our And think to of deploy years a that's be so premium net that well, value company. when own traded M&A my to it it is thoughts me one. my principal -- is currency I

possibilities additional looked to it But grow forth, hiring As that mechanism that best so to open I is does be be guess organic I the make through we're to want evaluated again, there. at can my my making said, I in don't primarily think and principle will whatever The I is. up trying But overweighted sure growth get and deploy thrust considered organically. principal people. play intend commentary next we to smart

JenniferDemba

in Pinnacle could. talk Can travel? meet whether the and or branches, need pandemic, it prospects you run? your about strategy Second question, business be envision What post or if change long that less estate, how you think or strategy clients changes you and do just the over corporate real you with for how I could do

TerryTurner

will be Yes. will they But I modest. there be us, I'm confident that believe for Jennifer, honestly, changes.

that. recap believe to I just why So

commercial that. know, a strategy we're branching principally our bank, so around has built been As you

I Of course, their to markets. where mean little had growth Charlotte, BNC a win at that a Atlanta markets terms a But of little then, the Raleigh we're model, in different we've in we great some of in, distribution course, in distribution de novo, and disadvantage. of like like desire branch heavier

like needs the of back shared legacy we're trimmed end network that. that to So or or companies whatever, a that we're have distribution not likely branch of lot other get this on

since that did that we in announced to the I BNC of Jennifer, context you, put Just sort XXXX. deal, we for think

the footprint. about we've closed BNC think concentrated They're, obviously, I in our offices in XX footprint.

to So rightsized I that you want sure make think get of optimized the have. or Again, we we've we sort just the picture. distribution

Raleigh, South invested is and investing in that Charleston, we're in Our position investing we're Carolina we're Charlotte, in we're investing in Atlanta.

follower And generally a and to The feedback the we're to is that so focused you means can strategy way our facing meaningful productive. to that phone strategy expectation is keep seeing put and so technology, fast a in of geographic doubt We're is not need. forth. a I distribution commercial pain of so use terms from to have travel effective standpoint, more information, that come not but are they just the that trying get markets. our those to is a the There's focus make on trying we're And more we gather we our in we're on that you clients, Bank. more talked them is we're financial it terms about Again, that no clients be our more generally our advisers, in could in guess them clients markets. on travel points as us aspect all that on of it I consider real today some focused calling on And trying to lot I our client strategic FAs, are that things a trying a in we're local just trying clients and Again, in the in of And in call in say, position people capabilities. to things. not to the advising those use that's as would think We're then and is them, is -- just variables. budget. see dip of additional what investment Swiss a two that trying focused my on

both next years. our where several investment the will over be really that's So

in look for changes don't major I So our strategy.

I think it's pretty simple and pretty much straight ahead.

Operator

from The Piper next Scouten the with Stephen line comes question Sandler. of

StephenScouten

around? this hear me you Can time

TerryTurner

we can. Yes,

StephenScouten

net-net, you pretty in of about new hires last years, being mean, this So I'm two both curious, you but on ended but I particular, XX in Jennifer's of up the pace the for flat just quarter. here I question, look fourth revenue with know like producers touched new

more on do relative So than could you on be basis think a standpoint? a basis, active hiring significantly mean the I XXXX last two years

TerryTurner

I think it more be will active.

as is process much trying to sales we at of in in point, because that XXXX. the out, lengthened COVID the strong side. for it expectation vulnerability my is weight the the whom turnover bank grow fourth of the the really or could your way know, large side, on or of And one I slow XXXX reputation variable, be hiring than that in. was think business competitors that markets in whether kind stronger we're with cycle, organizations. Stephen, if moving several in those of recruit actually environment, the another, is on high the people in And ought going that vaccine think compete, you negative if those And slower really it's quarter. lots is coming to many the of the in length a things positive But the our you is would really strong I so the the to

StephenScouten

But seems last fourth even It more time. And of your loan new this of these looks would hiring in of kind know changed you hires Harold Obviously, the have all time better on I'm the continual especially call. quarter, the to I'm that anticipated, curious than kind wondering, maybe demand growth guys growth say, and like at things. said upside? plan still overall you kind occurred what on over sluggish. I quarter from side have was benefited of

in transpired the that you would XXXX? into expected so new came than you what growth and see quarter better And have as apart out you from the just look kind higher of curious what

HaroldCarpenter

could directly up. my there large began some I wish that I I fund on I it. put to believe, think, construction in were finger But part, projects

but I lines with C&I some think borrowers. also, end I'm my -- I there's I'm put in some exactly, saw hopeful all year on can't credit. some finger of And optimism it hopeful we coming borrowings

growth loan first be maybe think optimism that to to like So sluggish. We continue people some the begin first quarter. renewed quarter going that take see risks. I'm is will willing to But into fairly and some hopeful

StephenScouten

years a And deal to point just a or then you it where it's would the for in your life would me, I just three, at up bit done lot little thing ago. from to guys cycle to have Jenny's be pursue M&A a last question would the move need on when maybe different potential needle? four you really of following maybe be, mean M&A for make size this sense

views are be something I'm maybe of your in where So what curious for asset just relevant? it of size need to to terms be

TerryTurner

do doing But something interested double generally, digit going that. that's something us to focus sort of on hard more size produce accretion back accretion. from EPS of It to get asset that would yield I'd anything the we're just for can earnings in say accretion. else, that we you earnings sort standpoint we but for an it that than be that would looking into didn't do

I earnings accretion. begin of in probably produce produce on bank the chance to mean, billion there to out $X get so got sort to to said, or that you've -- And have to that north

Operator

Our next question JP with comes Alexopoulos from Morgan. Steven

StevenAlexopoulos

Harold. start to for Maybe

Regarding $XXX is single XXXX. digit the expenses, the that million off for expenses adjusted off for million? high total, guidance the Is that or of base $XXX

TerryTurner

hiring use million, that think of that think based we accrual, the you should should use. probably that on I incentive Steven, be will you the what recoupment the $XXX are and number

StevenAlexopoulos

near BHG, reserves over you likely it high that on is reserves Do release to so start that earnings growth? term? And you're industry of see quarter. terms release here guidance more the then single bank that so maybe giving starts the the this BHG And we're in in seeing digit to

TerryTurner

there's planned But seen year's some, Based no way. regarding if but they'll that. will thinking high I've this reserve single in be obviously, looks they in our for like their that it be it release. probably on should what we're that not next say year, there consider results And number. I'll No, digit next plans monitoring

StevenAlexopoulos

it reserved. would is agree year they're now, net came to appear the we where over look where Will relative fairly if they're out reserve dramatically you But the that? for charge-offs with at

TerryTurner

would that. I agree with

next Like I to year. think and sheet, see balance by healthy that a very be release said, surprised they've not I we're I reserve sheet. built some balance comforted would

StevenAlexopoulos

look with headwind strong not finally, work income sure outlook, calling help us fee have fee this if to you through. then help about you're Can guys, think everybody that? I the I mortgage XXXX. for you like strong. in -- at Can I'm mean think what by fee you else And will And obviously, growth income you

TerryTurner

Yes. to talk I'll try around it.

strong Most to So business we the of a might a other units. be expecting, Hopefully, looking word, mortgage, we're to can we're probably out currently. kind growth That be numbers mid are not the better nonmortgage single it's repeat going somewhere that. of we at anticipating units, said, fee stretch. or any anticipating get by around digit of

Operator

from comes Our next Group. Rabatin Brett Hovde question with

BrettRabatin

pace growth deposit Can you and wanted first think, had just I quarter. you to the from slower about What's to back fourth of in that go think for, so quarter obviously, I talk just but deposits you obviously growth I looking really maybe slowing talking core fourth growth going talk forward here? Can strong going the growth really deposit anticipation you're in deposit you're core -- about a just the driving strong. in forward? XX% about versus you profile slower growth accounts, the had

TerryTurner

Brett. think going there, are on in things several I there

number broad to in put here perspective. one, it and me let think a I up back try

years, of we internally I've have back over with couple as of about the and last used that firm. personality term associate Going the our we talk said about our changing this we're

be strong as to not core been We've to of deposit viewed reputationally, viewed great be think we'd I terms generators. asset generators. be in probably

so is thrust switched personality incentive altered mean? franchise irrespective, say, the those and primarily, the drum, changed was our an both We've okay, cost. always so instead we of deposit the focus about thing and mindset beat and growth plan. the volume means that in to firm we provide have commercial things. But that into growth, important tied of focused said does kinds XXXX, And the in us earnings help XXXX. the that of We What change and to on what that Some the forth. on secondarily revenue on revenue to of of

work diligence forth. has deposits that people so quantifications and gathering think many on I as and their

dividends, We've times. middle I pretty we built bank we lead have. pay a example, number of we an great of some initiatives, to us. different HSAs long sorts phenomenal which and have for have We've some also those managers, middle But opportunity opportunity other on market for a various to platform funds also settlement accounting insurance focused a sort businesses, that, which dividends launched qualified support, value paid is for associations, added as that's with We've organizations of capability products. think built captive believe beyond in market an of got a homeowners focused for beginning XXXX product us. on market businesses is that's that property

growth strong finding we're so And there.

but feel of pay in need gatherer So go in beginning want to and change perspective. and to and on firm personality be capabilities dividends of some I going a to forward. there's deposit are the lot pay it bust you dividends, product better on to our going a structural that expect a that are give just in things There's don't to I put I

to And own PPP. build that, that. of clients of then a means, a Now the clients' in in we our on whatever to have as but liquidity lot of other business of to bunch kind are, sheet result this nothing with mechanisms sheet money do their on words, there's balance know, where PPP. as those has tons And put they you liquidity our of a environment that addition balance in got beyond

that it a changes all we're the what's right going function now tied the on, so structural of some of of make. function on some of going to stuff into trying that is COVID, And

a We So diminishment this. I've get rambled down that see to all liquidity through to ought to build. this in

the of think is latter we in case economy Our this half year. will begin this reopen to

growth, think to associated we pay it So weighs some liquidity the also other liquidity ought these initiatives that's have in But we that should to dividends. diminish. continue diminishment corporate that with to slows have and do on PPP you are going

takes and just I'm you again, puts there. trying to So the give

BrettRabatin

Do anticipate is And going being don't it this And And curious or just you at with was was. then a use the the than growth higher you you other then the buyback. be get to of your about active stock more thing re-up? to obviously, buyback lot your there maybe I year a is, if was it.

TerryTurner

significant use We'll, And nearly of point of defend Well, need planning we'll assumption quarter this obviously, stock where But significant right would as money not we we'll price spend probably it it of share when impact the the to is given I have been first the that that the or earnings to to. think next XX% the use otherwise is. year a at now, into portion is during year. the it as year. some

Operator

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

JaredShaw

Just second more with as it maybe second just going help, I targeting some PPP, that -- I you on And of round customers a guys first the getting with those guess, you thinking the and on looking successful are successful second are you're concerned in earlier of out round? working are in you, them about your round. round? those commercial customers how at that, then potential Can so guess, give us size the you the about unrated

TerryTurner

first that the on round than of that More me borrowers the Let application in of involved morning. in XX% year. on update about at just almost based you last flow second this We're $XXX million round. were PPP were

probably balances. $X.X with almost nearly we based don't did somewhere prior maybe around $X.X can number. weeks if the we going XX,XXX of last get year, We did on we loans So billion couple to if anticipate be somewhere that last level. that the remember, We're borrowers of billion, over the thinking surveys billion you that XX,XXX, we're $X to in kind and

respect to that So where with the thinking end looking Jared? we're we're of what to for program. up Is that's second were kind going at you

JaredShaw

or with overlay those still do look then is much billion with sensitive concerned that get are how industries those little think great. -- where borrowers you that you're at Yes, to that's COVID going more? $X when more that your still a bit And struggling you're you the and you about, credits going penetration

TerryTurner

will retail, Yes, go to lot for of loans. dollar But time fewer I hotels, of those kind think a entertainment think restaurants sure. I big and be will this there

I months. next will think smaller through are be get these businesses few largely that to it to trying

JaredShaw

at seeing able a based in of or period did get on and And time ramp in you breakeven XX to the do should you those contributing longer sort them that or up for you then customers when the to looking year. to bottom really and anticipate line? COVID think their hires Are we starts be of that,

TerryTurner

XX,XXX, what hiring. what on of Jared, producers been Generally, our that have business assumption books I -- think and from we're hiring we're revenue people our generally the forth. so big has always just client

majority book the depending terms a so whether of three you're banker, we market their expect about talking so mortgage there some And period it, in forth, a books of time, vast how are their generally, to But of upon originator banker, dynamics them years. four to call consolidate people private get four and a over middle broker, different those moved. year a

them words, There it generally them get recruit work through did a I COVID. does may that as believe and months. not it's mean we way. in I year. than generally the moved take mentioned but it that in little did be But and think some to boat the does their -- it's to it to it take other slowness pre XX there stress like don't belief get to breakeven us Our book somebody is without lot. ought to us in We get a little It COVID. longer elongate the first takes earlier, In going longer a I they're it to

it two kind month of it I thing. think or elongates a

how how different cross So about they'll assumptions planning consolidate quickly we don't quickly dramatically outlook. they'll breakeven or have their

Operator

question UBS. next with comes Brock Our from Vandervliet

BrockVandervliet

was about I level. with Did curious just not CECL wonder that if start adopt they we I could or yet? BHG. reserve

TerryTurner

they No, CECL. not adopted have

formally CECL. I to think years are two out having they adopt from

yet. no, not compliant CECL So they're

BrockVandervliet

they managing have flex in that might more So level.

appreciate in an color you that away was I rate, might here fourth rate the in if if that I I see the the happen. bank as pull with And about buy disclosure. there thought and the soon issue any COVID the had down BHG, potentially you had bank didn't broke was obviously, wondering Okay. bank quarter. as tick on that buy

TerryTurner

them. competitive. get folks I a high are think attractive platform numbers that in paper BHG when They've an is seen where the the down I we'll here couple talked of because so update auction and getting to days, is very to the into yields bank Xs

the they yes, balance that now, restricted it's into auction a to the platform right So very flow solid ready trying of this after kind the -- the for lot of get securitization. next there's of with paper. sheet, banks But a buildup

BrockVandervliet

follow offline. I'll up on more that

or mentioned You there? completed. those? those considered sticking stabilized now outlook you a a of credit, were couple What's the to for loans Are to waiting had been third party kind just of just moved take financing, criticized construction that are out for

TimHuestis

move we We like only interest modified a where purely third hospitality just say to longer rate a felt just criticized. I category, were our did prior industry moved party provided such period. prudent that waiting that for Not it quarters. was into them to them consistent have would loans construction a risk was takeout. into be few of the we with where We

BrockVandervliet

for it reasonably that It was just sheet. there's probably But balance with issue remains a formally there attractive at no terms? remaining on loan construction,

TimHuestis

Correct.

with a they those we, couple of reserve interest a that until hotel established deposit and were there as weather through help an kind increased. put would that of COVID occupancy rates think to them to Pinnacle I travel modification, on

Operator

from next comes James. Raymond Our with Michael Rose question

MichaelRose

but guidance. answered, the had million NII $XX you PPP? that of think my on get like been Is I have XXXX. questions Harold, of inclusive I wanted Most to clarification, in some

the Just does trying base round starting of you talking of that just point? out is? figure include us help two can what to that about? then a from kind And you're the If any

HaroldCarpenter

million of from forgiveness PPP of think accretion of in does it second the any -- got include include XXXX does It kind I've will not in coming Most income happen $XX the that but from program. I round.

MichaelRose

So of PPP. it is inclusive

deposit then mean, reduction That's laid Okay. pretty at full average off Because at it average? a out. Is both And you those? of I for helpful. in big think I deposits the year about average a I that the of would the and full growth I'm if if growth, year-on-year imply looking targets loan as just that look just year deposit average

HaroldCarpenter

Now normally talking on loan growth. ELP the deposit and we're growth, about

[Technical that? know you any have So if let Difficulty] around me more

MichaelRose

up off-line. follow Yes, I can

all had. Thanks. Okay. I That's

Operator

of line the Miller from with comes Catherine KBW. question next The

CatherineMealor

which of some guidance, it's from helpful, You've I I and is sitting shown given PPNR where a consensus think lot think today. upside clearly is

had would And everybody borrowers but release come things predict. when you we for are we'll know start active to be could little you that how the this and sit what sense I in your more wanted to which to those we a bit best may big flow unknown of and see the perhaps But today timing expectation so and mean, and reserve your start is -- seeing and Thanks. to provision, behaving to you're when together? if release of your of thinking you're when see a leaves see maybe as just losses about here I markets. in, quarter, may also more hard for your two I guidance reserve -- What

TerryTurner

Catherine, and I'll first We thinking to release talk Tim did Yes. little count loss probably of about this reserve what of then speak high in bit reserve a and likelihood kind release year. there's I'll a think quarter. about, we're let in. the We

to it's I significant probably quickly the some can pretty success a depending of planning the But rollout that does by get of mean, lot. unemployment more year. a what to that also and we'll reserve not have is Our pretty you release the assumption end year, on the this --

a the talking what bit. actually we've flattish of reserve felt It reserve first in been last would reserve went little and build. XXXX guess see for fairly been loss of half quarters quarter has couple fourth and release little be see at third we side the bigger quarter. make like emerge but I could about We a the of content of here reserve then We of we year, the you'd So happening the a a end thought over towards the the flat be kind then down at end sense? a quarter, on quicker that that start of it had than Does looking seeing release second may the the end the looks reserve thought. originally

CatherineMealor

It does. of that's And specific is driving is your being credits? unemployment the piece it biggest also that, by or how much driven

TerryTurner

nonperforming every that the is nonperformance expense, model allowance, level credit influencer charge-offs, As you're right, loans all has But past the basically benign far off far, macro relatively been before be influencer reserve. in so of CECL every unemployment would biggest as not of we're dues, charge using [debt]. model, that's the for absolute well ratio, influence any biggest the allowance as as to which kind the

CatherineMealor

And then of timing losses? on

TimHuestis

that you would certainly, the rollout loan stimulus again, very I of the but as the extent PPP mitigant. bit be successful quarter, I into the uptick. serve that will help, a to that think, going vaccine higher slight a and tell program, second similar, and will fiscal little maybe XXXX first not dramatic losses will as anecdotal a we've change and intuition But a the probably got a my

Operator

with Our next comes Montgomery. Janney from Martin question Brian

BrianMartin

maybe your to as more of COVID to if your kind get can on reserve you last or ends put reserve. post through see where back to get on, of comfortable with that's reserve that mean, I kind of you guess, I that think you range range just kind kind looking happen just loan where up? question to and of to the Harold, the or of around might that at the a ratio credit, a question loan, continue range of

TerryTurner

anything where terms was around not thinking we're pre-COVID. the Well, of it

to forecast. number. I might difficult year at credit this of these that basis deep future, the how in that know very be XX, end into XX It's down really So we points to try unemployment to like don't the number it a what given certain were XX, forecast into peg go. can models our

I loss So content, of the you conversation like that are cup Side there's Starbucks, will the a decrease. think It whole see banks and some lot at seeing start all releases with be seems of the when over up not $X that. trends we'll get an regarding and bar we coffee going respect for as to will a nonperformers work show but the guess year on. interesting the like and of just it only course reserve us regulators

think pre-COVID, we'll we get content we had see our what build the I us meaningful material. see So last near that of think some over and reserves year, don't don't us see reductions we you'll but loss had we because should anywhere in significant really course

BrianMartin

bit of in the forward maybe comment the kind on of of the and margin? fundings size the And kind just of little kind just balance go as kind And here, influence you sheet of core just of kind on and timing that? margin the wholesale can pace you the the of reduction a the of then

TerryTurner

$X in talks intend in chart that's Yes, there's the we've got -- that broker think billion I about deck, the that of funding. a wholesale to we slide fully redeem. a like in in that deck Most deposits

I those somewhere things think XX already is or on the those average things, yield basis around on points. XX

quarter, So or say will so By on positive prepayment forth. for of some Loan Federal opportunities down. fourth of related get so that whole on the of lot have I'll don't a year, that come and third and we wholesale that Home margins have a In will deposit borrowings reductions. pricing, optimistically. we kind influence perhaps the to the time that to Bank part penalties our

about And so Bank on $X of Loan we left borrowings. on may prepayments sheet. billion our Home Federal that I've reevaluate balance got

that just may As appetite, I the our prepayment we little towards said penalties end bit on year. of today reevaluate the a is rich the for but that earlier,

BrianMartin

And Tim. for one just then maybe

this up we're kind be Just levels went now credit? would your at criticized know a the the on criticized outlook guess, for that I touch of based a maybe that said Tim, I peak on you I quarter. guess anticipation

TimHuestis

I do.

do. I the will the as own I but that's my We is industry. migrate based book over in the into just what on very you as bit that quarter there pour hospitality think these take migration, of But happened reviews, of little every stable. hotel lot know, that more could A described in-depth time and a a I and it about criticized, we our level back some given grade be like criticized to these. past intuition feel or quarterly think I depths

Operator

Ladies Thank That for and conference participating. this today's call. today's session. gentlemen, you concludes concludes question-and-answer

disconnect. now may You

Terry Turner	Chief Executive Officer
Harold Carpenter	Chief Financial Officer
Tim Huestis	Chief Credit Officer
Stephen Scouten	Piper Sandler
Jennifer Demba	Truist Securities
Steven Alexopoulos	JP Morgan
Brett Rabatin	Hovde Group
Jared Shaw	Wells Fargo Securities
Brock Vandervliet	UBS
Michael Rose	Raymond James
Catherine Mealor	KBW
Brian Martin	Janney Montgomery Scott

Pinnacle Financial Partners (PNFP) 20 Jan 212020 Q4 Earnings call transcript