- Earnings call transcript Q3 2022

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Operator

Good morning, everyone, and welcome to the Pinnacle Financial Partners' Third Quarter 2022 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Mr. Harold Carpenter, Chief Financial Officer. Please note Pinnacle's earnings release and this morning's presentation are available on the Investor Relations page of our website at pnfp.com. recorded for be the being on for is website Pinnacle's next call and available will replay Today's XX days. all time, listen-only this participants placed been At in mode. have a the be your open The floor questions will following presentation. for [Operator constitute statements. may Instructions] comments forward-looking During may presentation, make this which we may Pinnacle expressed All statements Financial forward-looking materially any results that to implied to results, by performance, statements. and other risks, differ forward-looking actual uncertainties, or or such subject facts are cause achievements of from beyond are and factors such Financial's not ability put predict of Many on or control Pinnacle statements. listeners to to cautioned are such undue reliance forward-looking A filed more the description these reports. quarterly for XXXX, year annual Financial's is and other XXst, detailed in Pinnacle contained XX-K of on ended subsequently Form its report December risks and or of future new presentation, forward-looking to disclaims contained statements obligation this information, result Pinnacle Financial whether any a otherwise. revise any as or update events, in

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

Terry Turner

call. Paul, Thank earnings you morning quarter for and third thank for you, joining us the this

Last operating we quarter firm despite of to the but should introductory might better believe already confident number the encounter. financial how in you've performance critical I my environment order varying for really seen third for understand quarter forward in to I'm are perform the going quarter, not us. ascertain fabulous I only As list that the another tried was comments, themes a to quarter

quarters quarter given alter motivated one, As conductions. think which various quarter's in I see reminder, incented again overarching last mentioned to and outcomes those and Number management themes you'll a is are in -- I interwoven this the that quick numbers. market

example, outcomes current an actions we A betas it, people incented motivated but equity I the are the value don’t are accretion get in long-term deposit cash specifically of growth, interesting based Pinnacle said EPS classified case we're growth of optimize tangible level number like what we and and at of incentive accept in market assets, case the asset-sensitivity rates and the overall ROTCE outcomes of the just we that cost and all or of accept metrics to and plan. kinds the plan our lot PPNR annual alter As growth and incentive on initiatives. don’t just chasing about book

a that our to several of having things years, so largest loan than any or single It valid our so we number hires without understanding three, of can will culture. grow associate statistically help the new for of credit different upgraded commitment in the are we like It's the tangible program. our year much enjoy when fun two, greater XX because have by last experience sauced that, time, culture hiring why a studies years book and talent financial while correlations [PH] professionals the of associate best only nothing for and is explains engagement increasing turnover, I to profitability, important reduced sacrificing returns. and is explain outcomes And improved contributor low outcome, to hire that quality. bankers we improved than to and balance and from. things our growth sales the trying better think of helps more success and suffering grow likely reputation many you just over the isn't have a the so in turnover. associate understand call value deposit Number engagement productivity, total not. demonstrated continue record And much short-staffed like growth our we've But and level is to comes between not like numbers services we and a great up, important shareholder our where believe frequency high and of ongoing And at equal are sheet many those asset momentum. war that Number

our exception. we're they virtually on Research, to the service seize the typically not long Greenwich with have remaining market extremely long to continuing extent profitable. that to view just one bank make profitability. in top prospect the long significantly fact, near top in where to as in them cannot, attract that we FinTech. that or up calls, last. been number high through typical exist in when the four, That's calling not auction people who's loans credit quartile not income proprietary the your haul we while metric how the And from profile. move that and sales securitizing invest high with quality typically ability get secondary standing RMs bankers put result funded prospect relationships, all alternately our get are Its their I'm different borrowers invest and case, which opportunities notable yield In business us BHG a results to forcing at of to able And aware continues every experienced opposed over that's is in to important lets many as dead or believe in to while platform them of in we very kind market we their business for anyone us, model meaningfully

why shareholder metrics believe why tangible normalized accretion, our asset at the value just points. linked you and things But revenue like relentless in slope that As extraordinary earnings long-term We that's can of the book I've share, of this living already expect per show are returns. the in quarter can share, to classified quality, to produce charge-offs quality, revenues, balance see going continue upward assets that them we more times. incentives NPAs in quarter that XX you forward. and literally result we out, and That's best growth, per like the see where asset basis sheet dashboard operate earnings alluded, at fully asset lows we've to metrics and volumes On been and as growth. quality

there of continued I'd metrics been able X we've top in Tier classified some fact, when quartile the to if those time Tier on NPAs X be for construct in we In to the the capital to terms this for quarter. third we're capital metrics and and given assets the shocked peer aren't again quarter, reductions

spend one lumpy. time given again, more nature Harold non-GAAP commercial extraordinary. know those very continue you our charge-offs We loan quarter, which much talk of in this a metrics credit of measures, had most and not the moment, I earnings of book, about will at the be important much up metrics on [PH] are As the generally to upbeat won't are some picture as generally growth market what's all quite the story as least the well I time usually for time. of as virtually paint ready exceeding expectations, and and because right, that do, is to been idea and but

over the extraordinary last years we've As sheet results balance added that several talent momentum. I in just mentioned, the

help our on our in pure the last where B, from but our JB&B lending. Capital, geographies like Number our again, source equipment loan our Advocate D.C., the We the the Birmingham, lending which recruiting broader and and generation the one, did two market a not everyone like of BHG, growth. to we're years. franchise SoHo, expansions quarter growth into four C, strategic segments. last only better the expansions, based slide and like growth asset specialty Leasing. half Atlanta, we are categories growth understand also groups net begin noted plays on As dissecting categorized over

D, us only or growth have less, not two and what been with they a contributed of years. strategic RMs legacy us our and from expansion that markets that included with markets. is in this than and for have more two half years a newer So, then RMs the And been our are and that our half finally

XXXX, loan markets, new PPP nine new many of have billion on said legacy it's which in denoted from primarily think which of XX.X% people. the loan XXst, that So, like know our best on the thus XX that while we've XXXX our We've growth through come countless XX least experience times, at in XXth, rest and of inclusive months, have is -- is average, we're in And in and annualized to in initiatives, the net we between we've experienced new years. the for XX% pay-downs, to Almost slide. us, years markets to said of they bank this you more market. work far is and for of lenders our December markets, Many first southeast. EOP from the September red growth are $X.X

a as been We are So, you get talent experienced of to to loans new information specialties years, little moving you can borrowers where having as to stretch markets how and simply extraordinary get that lenders to are loans and frequently plus see about the want performing, working the success, have XX-year I this the new asked clients these Pinnacle this we're is a all just platform. characterize new with for growth PNFP. loan our bit

their where as annual emphasis it For one just value attract I released what they Putting us associates clients. struggle pays the on the everyone the where enables that quarter. those that third serve we examples off. deposit of is is as place position in well the of know share associates FDIC the clients a with the here's well, of culture, can market their aware information was to best in

as than important had we're that able But faster growth we've moving is great have with of Here the importantly, success impact grow in we've variable market. the all, just more MX concerned great share. forward. and our going in see which the evidenced saying of are rate funding. way Many a deposits shrink an be in of markets That'll you market can to on by first been the market, success could another deposit

the top A data to the purchased share will the grow in foremost to the XX couple grow banks minute. provider if comment Associates, in we And Virtually from say vulnerable is a from at this would all pace growth of don't further deposit United currently you're on our from larger, banks the country used deposit these unable so market time-to-time, Greenwich same near we've markets. States. we in were we in think here looking more what large that I banks commercial could Harold our slides data. I anywhere take research

say would Carolina, universally South primary Tennessee, with by Carolina, XXX to competitors. I businesses all meaning in So, North million annual million it's client footprint, on X Roanoke. entire our and sales based from across our responses Atlanta, accepted It's

slide. the line the Promoter of is Small the at on the Pinnacle left focus which bottom the Net chart, let's of on So, top Business

the scale that portion your bar in Trust XX engaged Pinnacle to clients active a to extremely a question, means us surveyed that's engagement. to a where blue words, at means see of zero extremely or navy of of You unusual rated are provider the how or friend the are likely nine XX% clients of highly recommend level using XX the not zero our other a colleague XX% In likely. on lead and XX, of all likely an promoters. me, you

the a Another they the us as of But XX% rated are you bar, are seven seven the promoters of somewhere gold to Score, while so bar, red last scale. the And portion combining up detractors. number outside that vocal XX% the referred they're detractors, to X%, the of not or fired between of XX-point you seven well, And or number you Net bad, in on see our eight less for passive, market. portion be scoring zero us the really better eight, write that bar rated the XX%, meaning, you of a advocates that's that's not because the generally as XX, or the rated as six. they a clients and then two, Promoter

to Greenwich, in is As see country. is better Promoter same in the fabulous story the from that Promoter only the you in only all Score of footprint. Net middle you that can our right it's competitors of market a see southeast, among one the slide, can where And score not on our the our lower the Score And major differentiated XX. best is the business is according wildly Net

the you the Now, competitors, of portion percentage detractors generally each in listed each major order. our look mind, And share market red their on that of for of at bars. are might keep banks in

to seizing our have continue So, seeing. and as been see, and the top can for volumes banks opportunity we you of enormous all that's three the footprint time in some expect detractors have

successful with quarter, outsized So, with great grew share annualized major share relationship meaningfully growth loan really increase dependent with move compete, which opposed X.X% And growth, annualized in to XX growth. represented an culture and XX bar. this of this more a why their been Excuse so percentage some the whom as deposits over whom in than you from reliability you and grew think quarter, why them who to for this of on about move purpose of expressly as the a or of XX.X% upset taking for we've produce intend happily to foreseeable any the of last the their their more. a continue is loans demand, explains largely economic we linkage core the speed and basis us it's years, clients walking to of of clients That their we is our on the clients, future. is basis between why their an I percentage to EPS business we me. that blue intend And believe the expressly large not by banks on next have revenue large just to all the intent percentage number why we have the this away indicated of will tighten to distinctive months. and their compete group, banks many the our taking through My clients

leap the to sustainability and XX been culture data something the to that revenue better our reflecting years, connect of good, share you mysteriously So, just last distinctive growth. we've will over you quality client don't dots of here in a building actually can actual market resulted with have take and Greenwich faith understand feedback the the

review that, turn in-depth to So, it the quarter. more view. Harold I'll XX,XXX-foot that's the for over With of

Harold Carpenter

everybody. Good Terry. morning Thanks

As will usual, we loans. start with

was growth. loan growth quarter another with linked XX% quarter us strong The third almost for EOP annualized quarter

the going support quarter, hikes. escalation growth November into yields anticipate XX% double-digit low in yield Loan for in growth quarter primarily were which due third loan pipeline yields with and We rate current loan low rate Our in increases the this to December. year. would further up fourth

assumption of on noted XX gotten average planning were for Our hikes points is and Since third basis the in quarter we've not current the points XX there full quarter, November basis basis XXX point December. effect the during slide. in rates third the

yields fourth more so. and we we be that XX in Given quarter, fourth XX will to quarter increases points up the anticipate basis or

are to As of we in essentially as November September quarters, won't left a sit X%. the floors loan were re-measure hike increases The beta The our results tracked talked of full ground should rate get XXXX. moving capture put green forward. here the last bottom at betas for stake the rate each what have we're share each several and we the the end those, loan when effect we and of hike. we September, a We've rate We are our and but over so summarizes the for larger loan will around yields estimates bars hike. about chart the also meeting we the until yet don't we hike September through FOMC

course November, around alone Of we target is planning our based are current assumptions, feel us. on a for December beta somewhere reasonable but XX%

for growth At book deposits. the deposit deposit our outbound to well Really on managers as XX% present, are relationship active pleased seekers. third it deposits linked-quarter call annualized to as in report Now quarter. protectors

are from we've up shift a balances community DDA others the down the like DDA quarter during in about EOP leather Pinnacle. but did quarter, price. the the reasonable experience it's some about and for finding at average So, always prior as balances were mix funding it's like actually quarter. shoe at It's said being We

deposit net attempt the will crossed and these what chart is chart about that Housing right initiatives Everybody We're We others funding with betas, we providers we're know This come headway the are building keep previously. organizations to show of where actively deposit target HAS, special top our types and to will out More fingers we constructed to that these talk to currently strong to around deposit thinking. similar initiatives. of hold. we're grow. as this franchises chart the Associations, Community specific we loan gathering non-profit, making continue believe wants edge where shown

think that Our year. assumption can we XX% deposit earlier is planning talking with total been we we've about that us hold since the a beta in

around For strategies one developing growth. number and our our tactics funding the plus years our first was existence, XX of objective

continue We our banks country beta in given gotten believe are made other as years. difficult. liquidity We their around like has and Managers more new markets to assumption last Relationship the both reassessing many the significant chances over few we've the investment

to As investing in a pricing book discipline our in an to fair not you'll Pinnacle, more talk believe clients borrowers. all we just have many too than that if about our leadership Hopefully deposits, significantly others. year been is are long having more deposit that comparison important as appreciate steadily what we hear not bank in environment hear and ever upright depositors from this

Our accomplishing. our something and and balance can track growth effectively record growth, maintaining will the we we we that between a fund belief profitability and have is believe of prudently appropriate

Now liquidity. to

Our believe we to quarter, our ample liquidity near-term continue growth. decreased this we liquid but assets have fund to slightly

to investment be As allocation flattish securities, to our bonds fourth to quarter. in anticipated is the

income points the XX upcycle, last by As rate our points basis chart to quarter. increased basis left compared the GAAP top reflects NIM XX with

the we're going fourth So, quarter. this into pleased with

belief the income guidance net are see our growth growth half year the net In minimal NAMM full next the first will year. with are hikes XX is should low expansion that the half rate XXXX quarter. year, Our of fourth percentage year. another planning likely is that stall upping NAMM assumption to for assuming Accordingly, quarter interest interest last in increased or the in we of our next summary, of income over in we off along top for first our

As a credit Pinnacle's credit loan portfolio very we metrics are again to continues presenting well. our perform traditional

a so quarter Terry the weakened, believe our been C&I customers. credit homes into was the had recorded spite due October, credit earlier, we which had non-accrual credit, as are In classified very as are end. We by of paying this pleased partial assets September at As our We in downward work. much late pending our dues, alleged that ended, defective mentioned in to. of conservative where past this the installed evidenced of that all one on we're to we levels charge-off attention trend loan and of placed one classified supplier's XX, a part more previously three-year don't result effective the at with as in headwinds the loan all class an the again well primarily economic totals, failure almost quarter classified

a to keeping XXXX. Our is appropriate over pre-COVID would the of which compares given so, current X.XX%, we than our basis now. of X.XX%, last previously ACL We less the reserve or points ACL for but pre-CECL the the is at been quarter believe again thought month end us right the for events XX have ACL flattish

larger anticipated All a of at $XX.X provision million. we in culminates this than expense

it's chains, conversations impacting borrowers continue labor to about and We businesses. have their with supply how inflation,

economy. an get implementing what A things as credit many in We diligence We we base. the here. few a about our identify all borrowing changes sustainable mentioning questions weaknesses the about worth effort result inflationary with intent of to are have actively any been

is asset be have a to the but environment our whether book to our commercial. us limited We healthy believe segment. macro pause We gives this with allocations sponsors, it or appetite for new substantially our strong increasing construction, as very residential

around chain We're have testing, supply diligence and rates, increased traditional value our stress increasing diligence so and officers on loan and so impact, particularly profitability. also forth. around to credit coverage, due of the Our metrics our debt

will a a to minutes. Now, expenses lot as on fees BHG in speak the fees or few spend always, and on expenses. won't and time I I of

so were putting announced units NSFs in thought we pleased optics quarter quarter our how decreases the the Third change note we are a are charge in and reminder, we charges fees, difficult see a we the of we we second All overdraft Service last fees would and third that which with said, generating in fee as we by coming quarter, that how early off effort are quarter. are fees forward. July. in did impacted a record

will We reason fourth we the to a management in recent believe rebound have some result quarter hires. of wealth in as see a

other and that equity floral a Excluding quarter fee see barring believing this result. and should that we investments, are stronger BHG any fourth additional fees from near quarter our we're we downdraft

the we over investments, XXXX and BHG these impact in XXXX other for still continue to single-digit of that play. high Excluding equity believe is growth

expense in led strong As increase percentage to we're addition growth was is overall our across disruption increasing high attributable XXXX. markets, which to to total expenses, markets, to the run our This a headcount new recruiting which has the JB&B. rate -- in teens market of and growth opportunities

addition, But believe achieve success we that franchise, peak seems and recruiting payouts plan. for incentive operating In our and awards which at bankers cash our maximum annual continue best attracting about to our to the of of capacity. all should be to it's we target XXX%

salary will was the conclusion, for quarter, anticipating quarter, prior fourth we in two reason in had fourth expense. We're the that in quarter of Our different was great fairly don't the it the from be which quarters. hiring believe in third quarter fourth third we quarter that third another expense be non-compensation although strong the In the quarter. as the we the hiring a increase quarter was flat as quarter with won't increased anticipate and the quarter strong second

up tangible capital last to to at from book value quarter quarter. $XX.XX As increased end, slightly

We levels. stands X.X% tangible like currently. capital above common equity remain that at our ratio Our capitalized ratios well

head XXXX. growth these of we'll markets Tier particularly Pinnacle X our we levels monitoring and mindful be the Bank exceptional capital and and of into light quarter are at levels, as our We in the into debt fourth

alter ratio plans book of have Tier we've well from sort any and X tangible believe capital served that, we Aside tangible our offering. our have stack to to common via preferred taken no preserve and or actions capital us value the

had BHG of outlook Now, great anticipated. outlook slightly than for projection a in than at year. more this the opinion the XX% before quarter. comments look we we better a BHG have few a about revenues our the quarter fee XX% rest than increased booking quarter XXXX for $XX growth We're of from XXXX million and over last more in to our had

the X.X% had auction that As the slightly anticipated record quarter on come by anticipate lower That's into Spreads XX% will the be than does X% beginning at range. as that than indicates, the the with to in the anticipate chart rate rise. on from short the to as BHG spreads quarter quarter. originations. the X.X% slide more BHG another end in last had BHG slightly of the bottom left indicates. come of approaching borrower should the borrower platform moving bank rates year, on rates end They continue amounts

as the securitizations third XX% result, a That X% of to pleased historical again or how loan third flexibility that to can the the really their we're we with network will as between spreads so. growth. pivot anticipate and said quarter bank quarter ranges within their fluctuate fund As to they BHG's highlights

to than which the substitutions XX. loan at and September $XXX slide BHG the as June titled now stood $XXX Formally million at accrual million sold accrual quarter of X.XX% September BHG's obligation this accrual, which XX, portfolio at is increased more end this accrual loan titled at for as the from prepayments, recourse

the of for of right As lowest remain levels the chart losses loss the the the recourse past in second show portion bars years. credit the in at XX blue some bottom quarter

BHG sheet to from balance X% X.XX% Additionally, or on also given own the environment increased sheet $XXX reserve million its loan loans balance losses quarter. of last macro for

believe going into remains quality impressive again strongest we borrowing and cycle borrowing one The we fourth and its base credit environment, Credit so believe refreshes thus macro the in through remained of their increase likely attributes. levels will for XXXX. Given far. into opinion our of the reserves its base. the and quarter always BHG monthly resilient their have borrowers score looking at with scores previous were consistent quarters, BHG the weaknesses BHG's

monitoring XX, about year greater due X.XX% September approvals consumer its XX practices X.XX% its a which allocations away BHG's end dues December ago. their June at Past They at to than is were at months their on withstand portfolio forecasted over risk the adjusted to score should credit at XX% from X.XX% quickly. adjusted and their able be of their of increases at give business, it National they XXXX. that XX past borrowers. forecasts pass origination have confidence unemployment higher more regional BHG borrowers tolerance, As in to inflationary from few earnings allows weather trends, than non-medical to that dues borrower past way are compared a we paid BHG X.XX% borrowers allows the being approximately to days consistent the consumers, believe of better comparison their and and adjust with to space. other were $XXX,XXX average annually. have In this environment others well in BHG's commercial

and credit credit We are their in out. experience comfortable their models this bears

Lastly, another great quarter. in quarter operating the BHG had third

calls more in platform earnings be on to year stronger believe the the would calls auction during sheet. this the as -- than As half, earnings two their mentioned first likely of second they loan bank balance sent earnings the in this I the whole year, previous first XXXX loans we half half than of the year, two rather

securitization As their platform the sale auction delivers income network of loans. income, life immediate while the gain delivers you know, interest the on bank over

other lenders it get able a as acceptable us their models having appears of to Additionally, reevaluate BHG to pleased business during did accomplish operating this to securitization FinTech when at securitization were environment. given very be rate done. the to million $XXX X% September was BHG

selling that to want to spreads reconsider such compressed The This rerated that and and X.X% to funding. In most first profitability this point auction are issuances grade as issuances, two all compared platform Just seven for the key a end, average is it prior loans for have the have rated. first to are six to BHG's recent as platform tranche BHG. quarter. BHG's the soundness June now highlight than better and all XXXX flexibility the BHG is issuance the Securitization more weighted investment flexibility has X.X% a spreads held rate at side note, balance A Class key do in it. the year compression anticipated. Kroll senior drivers now do have We tranches all AAA in for through this motivates and the securitizations they in sheet with

into outlook strongest of near-term to to fourth platform, new and in strong forward, up and least updated consistent been open macro-economic is and to we now Credit the of XXXX. less the some mentioned increasing as into at earnings levels reemphasize. originating the broaden for they I as more believe has previous will to BHG liquidity their will strong head one their over about shrinkage Again, quarters, they may quarter points also historical credit like modifying with but XXXX. Quickly, we two be here's XXXX. remains quarter growth we towards which over at are models BHG attributes. earnings next very with As XXXX. and quarters. continue earlier, anticipates four XXXX seek Production estimates BHG fourth remainder going the looking based Spread guidance believe has assets. an on alternatives their strong the their to funding XX% already key production BHG volumes reserves have few is and that Off-note is risky occur least I'd data,

For loans, growth low XXXX. our increased to we've XX% for outlook

current don't for like adjusted a changes Fed XXXX forecast now impact will necessary, planning year reasonable to by you believe current and as and but consider our assumption rate X.X% will funds rate our monitor We modify materially. continue outlook to end, our we any we have

Given income income interest year, net We still see in being improvement that, in growth result should XX this in increases which believe we teens. hires low should in in continued result net we expense in factors should interest percentage growth other high the the believe and rate.

for grow sell All at We and outlook in to time, is the negative growth Based XXXX how of were was together of no as XXXX the rate next XXXX, it quarter. research concerns to provide earnings. our side put XXXX. XX% trying XXXX peer about low a our out at on better this more figure year. looking anticipating the got this were growth by earnings to time, plan group just at end single-digit year of we'll EPS Last information to our

us our So, who as we thus PPNR, primarily XXXX Sally and I'm we financial year. Pinnacle we're teammates performance for targets loan will us, are beat my to as believe Trust far this our with pleased deposit and speaking revenue, earnings Paul, listening top building with any performance for have quartile our see remains same, thrown what at next earnings that, stop gets started are and I'll questions. plans there goal year matter if no all. the in, we

Operator

live. first Thank your is you, Turner is line Steven, now Mr. [PH], from coming open Morgan. Steven questions. is for The floor [Operator question from Instructions] your the Alexopoulos JP

Steven Alexopoulos

Hi, everyone. good morning,

Terry Turner

Good morning.

Harold Carpenter

Hey Steve.

Steven Alexopoulos

want I to start.

level? mix as Or fund the on it non-interest of at about strong QE first it is migrating right, XX% Harold So, which that you Do QT before today. you we're you before can These back bearing went migrating continue pandemic to XX% you loan now. back, do that right? in you from to think growth? see hold Do see deposits, the total

Harold Carpenter

accounts Well, going back no, lot go it's had don't operating initiatives of a gathered we've we around We've of pre-COVID to clients. a lot levels. think and to

did in we October we're -- particularly there. there don't where the far we previously. we're get on think days we'll XX pretty good on that now in in so But deposit back So, bearing. only about feeling noted book hanging this in, granted, mix down We see is non-interest shift

Steven Alexopoulos

maybe sources of where and look could you it we So, funding sources is. about mix there's hold the enough when at

Harold Carpenter

think so. We that down couple dramatic. to I going think notches, drift it's I don't might but be a of Yes,

Steven Alexopoulos

you. Got

the XXXX, I just as think next next hiring Okay. expenses, give about And appreciate XXXX? I took quarter least at some framework we us similar give about be when you'll that ramp we level about year, through think and place growth can mean, you XXXX? should but hiring through XXXX, just given then a expense we us at of the

Harold Carpenter

give about and let data you points, I'll then Well, talk Terry momentum. some I'll

at of teens to expense we're currently. Terry? see at least -- should That's mid we year. high kind of teens think growth I high looking what kind next

Terry Turner

revenue high a a I don't producers as forward. to I expect saw, for XX third and I going think was at to record us. quarter, quarter higher you stay remain on forward quarter Yes. look but momentum, Steve, it

that data for is and correct a foreseeable I to your think line continue would or on I occurs the so the more hiring it less straight expect And future.

And hiring and so I intend year expense a XXXX. we frankly, how is to because rate the that on growth mean it throughout be elevated have we at the bears continue similar just what exactly say. will in hired you

Steven Alexopoulos

share finally, credit of many BHG not the stock the that's verticals. on given just credit would really but macro to BHG, for with are BHG how Just any sidelines, concern the Okay, on Could there, then their own And out because quality, at sidelines there you worried color on lenders you helpful. given could most credit the here, on people Thanks. of including FinTech nervous are helpful. the additional provide environment? particularly Pinnacle's you your be outlook these newer outlook expanded the investors

Terry Turner

first to after? -- Harold, I’ll and you go add want go

Harold Carpenter

it, the of environment in they're charge-offs to for, Sure. We've their at that credit quarters think in or their continue conversations Group monitor kind of they believe and -- confidence with the their or Healthcare this ability a over Bankers is there pressure, with to in several are borrowers best But inflationary their significant their up. with book to doubt last confident tweak the book, call respect no cracks their their sound. had currently find They could models. uptick a weaknesses. -- their lot leadership models If very about confidence

Terry Turner

a me talk is, analytics, comfort work great people some that you've they all things variables, they've try and about that add have I Obviously, us I started give we I'm really as think things. in couple that to of since on what risk always investor, kinds continue credit group I for are a huge think heard Steve understand one, to all might other in got been us an just number quite the But past. you because the their to set, XX% FICO own main proprietary their information thing don't on more they're I demonstrate variable that's We provide score, they is it's which score. credit credit -- off mechanism. but the underwrite model, that FICO level the you using FICO is others and obviously, and foremost predictive understand, a scoring scores, their the common they than all variable, that can of can

they've to any And novices, they the of which it could not sell so again, sustaining of cycles, without credit not number banks a are that. been Recession went say through many these they good credit losses, the Great through through

And started credit still out, broadened again, think I scorecard they so grade, strength. it as a is its their analytical but

a industry is that the so they And model I the sort score, rich their that love is than little which a FICO fact standard. the more capability have, of

thing that's that think confidence. one of a I lot me gives

me I great As confidence. second thing better would had another -- the than is, performance the they so better and these and a gives was It been deal item I guys I good. performance extraordinarily think bank's mentioned, that's their performance of past banks' through recessions our was that say most again, than and in

is is, thing when third the of credit. think I consumer much it so --

with people It's small not different or idea of I won't borrowing annual home a name improvement various money that products mean borrowers These $XXX,XXX a about class or credit for are washing machine Somebody something. bar. a know, of consumer in are income. the are are underwriting I borrower their and I people than through I for these the FinTechs most FinTech average of substantial FinTech doing go think think are is it borrower. -- here of -- what their and their for so their I any and providers all don't different what $XXX,XXX. again, for, borrower the that is other other providers underwriting income so has so are the mix business guess When and and them I me orientation to has that the even credit them

I three ran through those things. just anyway, So,

Steven Alexopoulos

Okay. That's Thanks questions. great for taking color. my

Terry Turner

Yes.

Operator

question the Stephen is O'Neill. Scouten from line you. is Thank Sandler And Stephen, next live. from coming your

Stephen Scouten

especially down I the in both [Technical growth laid expectations Thank you. you on everyone. have to into then side. dig Good the wanted Difficulty] loan beta growth XXXX presentation, kind guess out I on deposit and morning, the historical and that of the you

Terry Turner

there? you are Steve Hello?

Stephen Scouten

me? Difficulty] can hear [Technical you Yes, guys

Terry Turner

You kind of out on blanked me?

Stephen Scouten

again, again. I it if high growth I'm growth loan it's teens have high your loan Difficulty] looking what Okay, deposit guess relative would might expectations beta be guidance, you [Technical -- to offense in where with going XXXX to to just those growth of think seem we trying about kind expectations for because teens be

Terry Turner

the I the think gist I Steve, of got question.

me, blanked thing the experienced not You, others the kind call sure if not. I'm or on out of, on same

start range environment. fairly the in that and if will as we're flat to year it the likely just balance interest stayed the deposit over for topping through will years, left looking rates it sheets it around looking time. net a next last lag the margin the at and if historically the interest of our side done into way two going a I the at during likely off, think I effect that performance rate -- rates, that stops anticipating at the the raising X.XX% past, net has Fed yields fairly the -- margin responds and two X.XX% it that consistent was be years in last

margins of on Fed -- the respect our So, our with down at that increases. rate helpful? once we'd to their performance anticipate Is that least kind settles

Stephen Scouten

Yes, that's helpful.

I like having Sounds might technology be issues.

on. Thanks I'll So, let a somebody hop lot. else

Terry Turner

Steve. Thanks

Operator

The from next coming is Raymond you. from question Thank Michael line Rose Michael, live. is your James.

Michael Rose

Hey, good morning.

us on a colors gave much you very Just of lot appreciated. BHG,

to know, you really On for as to recourse of comfortable kind grow I expected the on it you hard it's kind of hate forecast. growth, is to hand, one -- hand, terminology feel the grow, that the well. the or reserves that continue but I other new

And you we that takes should how than Thanks. just really good the the slowdown? you of Can BHG growth a XXXX? in puts and at the So, year of give growth had into a about better us through expected? kind think business of stab going

Harold Carpenter

of sale have pivot pace kind opportunities have preliminary I to year's they -- platform had at to BHG Group. they on to too into we've year. year's that. do -- XX% deliver gain outlook. next somewhere and Michael, I'm platform think assume around And bank don't to next Steve, have it their think Yes, Healthcare some Bankers rate auction to had next growth like might platform. with be we've will be the conversations about they a mean, we between conversations production more hesitant continue continue detail, They something much believe get the to the would and their a because securitization with unreasonable some number, reasonable that I need

Michael Rose

couple just But hiring of going we wanted that. market and doing credit Certainly Maybe thoughts obviously into have about dislocations the you even just since we're understood. maybe more while been on of think, you entertained a advantageous some think see, you've think year I potentially given And very are thanks front. is the Thanks. then up whole it's issues more for of just again, broadly I kind as see that a that you've been to could given going dislocations. to banks an dislocations transaction the guys bank and getting some And the years. active that for thanks, of about have you avenue to that the next the open speaking, next talked maybe

Terry Turner

on it's Michael, my before heard you answer front, and different. that think no really I

which to position, absolutely it's say But fair long momentum don't Never hiring market has of, have, think as we that think do it I never, to to foreseeable can can, we I the say for I that say going that share play won't just changed. it, future, the think as I we don't continue Our you can. continue sort expect I we that. don't see

to to do compelling really transaction a You'd to it. have have want

position find bank. luxurious one and we consider exit the again, large their continuing I who market think play, bank certainly, But a, want is have we built I standing to employees just in it. preferred we're share organic large more growth a think, for And a if really those, so to bank bias toward our would of

that'll I again, our expect be principal lever. so And

Michael Rose

one Appreciate it. one. Maybe just final quick

next what Is talked beta some assumptions expenses rate more and for outlook Thanks. expectation be given the BHG leverage and you you've year. Just the could you initially that said putting the operating together challenging? just that to and of expectations that on generate Is positive about year. next going

Terry Turner

Harold, you want take to that?

Harold Carpenter

believe I are kind XX% Yes, near-term. core here ratio we've all that our in it's world the the options better I believe of efficiency franchise Sure. in increase that think the sub I unreasonable. don't that got and to at We're

Michael Rose

Thanks taking my Helpful. for questions.

Operator

Thank Wells Jared button. Fargo line live, And question Jared, the you. mute next coming Shaw is check Jared Securities. your line your from please a from live. your is of

You may go ahead with your question.

Jared Shaw

update Thanks that. look Harold utilize avenues? about back CECL-friendly could estimate more that steps to taking BHG potential I on guess an BHG, of Sorry could for to going the maybe you for disposition question. right And what give taking -- now? the a they're like some one day

Harold Carpenter

platform with future cash out sell part and of, They a of of residual flows out sell Yes, currently about. and the then flows, do -- can CECL several flows then and with credits carve take cash it of some that the there's can couple similar do with guidance; you sure. sell so different maybe domain. investors. those gain those they to The more CECL, cash avoid the that is the can sale what options, on of I'll talk One the call kind within also the institutional maybe banks, they those

to X% with thinking get there's X.X% one a now So, could variety they the they their to impacts. day can CECL. at to are of reserves, Right try which tactics range different deploy avoid CECL are currently into XX%

you there, talking all I been about but far. that's know the what we've thus So, that if Jared, way don't gets

Jared Shaw

travel in Okay, the said thinking said you you -- And the you going past, about few think or last that, it any your percentage we in your then path? maybe over ownership the update were should that how and stake founders. quarters, could you as BHG be a sheet the own Pinnacle then with on sounded How you forward? stream about of forge balance thinking like earnings you're

Harold Carpenter

of in our stake and strong got start perspective definitely with in finish. then let our bottom our owning But we've real not any -- I'll think on majority I BHG, ownership we're don't interested change Terry, the you the franchise.

two all and the Pinnacle same we're both founders of page. on think the franchise, I the

were there opportunity see founders now one, if entertain transaction. that, liquidity an I The page for it and it not were come we're ourselves, said, all there. goes the a any down I supportive right I pipe. But I from we'd is the think, same to on like and if there market of of where kind real the believe think event, something

Terry Turner

accurate. he Jared, to add I think, comments, I mean, said you what I Harold's know, might is

the you pretty six has is that the nine you it what is different been the around think that months look ago, value what if XX is, has time ago, rapidly months it bounces at valuation, or know whatever of that would say and case as dramatically I ago, company it over it's months months three period. I moved ago,

things willing those done. what what down you liquidity talk is get obviously, in got you to fact, a influence all seller. And When event, be can, to about a and willing so buyer

And -- so and looking those there again, are valuations are so forth. always people and that circling for

I valuations, this similar we ride point stakes, reduce think really are at we sell the I owners our company. other to Harold at or -- the a said as the spot. and willing be think two We'd

just moves And where market about and again, that how and it's find willing seller. willing so buyer the

us strategic growth, maintain very provided extent a generates, happy, to want be to BHG is if profitability. extraordinary minority funding, to indicated interest terms it's think, had income the in in high company people here and nobody a good the state but it in I've idea. has flexibility, think me, some tremendous I a love I the I our that reduction advantage been in of extraordinary allowing

I away to became But investor it if perception, income, I things. be of want all probably so add don't that to to of percent candid. our that kinds And think, completely would lesser those multiples, give PE, a

it's very is we that'll willing So, be say exactly to a to about, sale comes we're so and to continue going situation if comfortable right, would current that the what as be the impossible consider a but well. happen, but to any in company or reduction fine,

Jared Shaw

expansion sounds the have at I good next like Certainly momentum over and into we look economic weaker a go all as and looking you different seven backdrop shifting in guess with outlook you of from Or year. equally that or where we'll If to or at impact Okay, you you, slide a having hiring. maybe right. all base loan going the markets Thanks. we're avenues can the And of growth that sort from I growth a do broad a on a bigger come has with this do into bigger relative see shift growth you diversified XXXX? hiring? the dependence think that think platform see

Terry Turner

My own is sense of to relatively that it it ought remain similar.

legacy will I but growth a markets, that from when of months the at is is think the probably the now. than take as generally new you their -- in similar home, look I be markets allocation XX it growth think pretty thing the faster

Jared Shaw

Great. Thanks a lot.

Operator

live. question Thank from you. Catherine, your Miller from next is And coming is the Catherine line KBW.

Catherine Miller

good Thanks morning.

Terry Turner

Catherine. Hey

Catherine Miller

that full the that at those And of think, do it as we dynamics into think between that backup -- I kind just giving XX% XXXX, move loans to year, the you do not margin Want indirectly kind a thought but the loan kind cycle? loan of deposit two, as beta. or good XX% next number the change for with is yet, year, I cumulative the to all beta generally and next of XX% may of the is you new just beta, really How know that cumulative how next through betas and trend and year? was helpful next look guidance that two cumulative year we you're pricing

Harold Carpenter

see sure think and the I we information we like what flatten go. where is where to all, betas the we'd in increases if question think far mentioned rate deposit want our the as versus just margin, as beta be first interested earlier, more I itself, or pressure, once that think We stall -- probably some once with And But well, more cycle the people was through ease or beta rate all Yes, loan the rates. about kind of margin to probably the emphasize but probably as -- I the beta is more of probably we margin out. margin. would -- it help -- the get come probably more longer do it, -- in likelihood, given with will Fed in make but we're the to to a of stalls, that be influential provide more on think competition, -- where we begins going the -- competitive margin lag deposit the is, term would the on deposits kind down once would the stop

Catherine Miller

we'll it. on see you the Got you margin thinking next And this where -- are substantial quarter any quarter? extension that, of mean next expect, again kind margin I quarter, near-term out thoughts think may how it shake on the as

Harold Carpenter

Yes, we're uptick. it the not currently little But more another quarter. to maybe going a XX somewhere fourth for point planning be half half into than ought basis --

Catherine Miller

quarter. saw Half of this the we increase

Harold Carpenter

That's right.

Catherine Miller

okay. it, Got

and then of year? rest come flatten the to And you through so you probably down out peak as move early to XXXX the start

Harold Carpenter

basis flattens planning much assumption two the point second the is Yes, see year, rate pretty ought in half so last next and the XX out year our of margin quarter. the in to decreases we that

Catherine Miller

see. growth the to And was Thanks. on Got great just growth, deposit the composition of it. then balanced

specialty factors expect the picture, thinking then well? much talk you've do how you think strategies composition could that as know are some come? outlook kind you bearing, deposit how still net the mentioned deposit comes also about you from then about different that where -- And you think non-core you of how to I about big grow of into versus strategically got, growth Just that you but core? will interest talked you growth

Harold Carpenter

you let XX% XX% fund growth. the loan to that will start need to Traditionally, our and go of base provide I'll funding core we from Terry, there. our client

Bank And gap to gap. to try or the Home go the the to so we've fund brokered always to to call respect wholesale Federal to markets, Loan fund had -- it, with try

had last our couple at of growth. We've get not wholesale loan fund had over all much problem. to liquidity here go to we've years, So, the not to that the markets to

markets, to loan will the have internally do growth, to go a to we So, be there capacity fund gap. wholesale stop but

that us deposit we kind earlier, but that. our of, book. a a is it getting Before some anywhere our said will in But built a see our franchise fund limitation, value of near kind -- to I had growth, belief loan of of do our lot I -- we wholesale funding, XX% our franchise like don't

we've managers got we're doing are make so that that to think And relationship And sure under looking for today. just rocks our deposits. I

from new from our growth and our to deposit Terry? come going is where think new this hires new is markets. I

Terry Turner

think deposit homeowners' associations, and when been I commented building around that inclusive Yes, went which would we over I have, some is community HSAs, last I of add to the -- associations they specialties we funding managers, forth. are success, the funding, Harold he some will built. two, They're be the or year specialty here get been think around of as three over part having through all have breakeven, well. believe and and property And as so non-profit a those we meaningful out slide,

terms funding. the of to the think us important addition product new in to people markets, cost I are in low in new specialties So,

Catherine Miller

so you I Thank Great. much. all got. That’s

Terry Turner

All right.

Operator

Montgomery. question Martin next line live. The your Brian Janney is you. Thank coming of from - Brian,

Brian Martin

Hey, the question. good morning, guys. Thanks taking for

circling Just here. back maybe

comments questions was but that one the salary talking Are just you guidance, expenses giving about on on that high more there that hired? for you've kind Just I Was the already -- total the earlier? when just know people -- growth, talking you from really the talking expense you're growth about clarification not or were teens about expense of the line? clarity?

Harold Carpenter

as earlier in when opportunity, said, be to it, call, going you what in that's put our end going probably we're -- would for hiring opportunistic that at But But high do to out going Again, much journey. alluded the all few a going we're Currently, XXXX. to teens effect, of we're through the of first pretty whenever maybe mid to people, it's executing to we're the expenses. teens for an the day. get hires. plan, the we're it mid many-step we of to Yes, be steps well, start hire at is shake or going Terry we our you planning where to total

chance plan we the year, the hire XXX, we if to we next that might whatever in have after revenue but so put a we're going be, double producers maybe that, And may to or XXX might or number it. just go

Brian Martin

you. Got

BHG? today? down sense. that makes the just it Should shifting guess to your drift third a no, think at about as it should Okay, quarter, strong, I How it now. bit obviously -- BHG Harold, I but lower gears quarter is right fourth shapes expectation up

Harold Carpenter

all back Don't I time. say Brian through question more go your if caught -- know -- one that that

Brian Martin

is I also the expected Yes, to BHG performance? lower about but quarter third your comments strong, mean, quarter to be a just XQ, but down, your outlook given of third for relative bit in fourth quarter, kind was

Harold Carpenter

loans Yes, the quarter. perspective is which our if change what did more what platform, current could this they is I to think they auction so send

right they believe more which fourth their sheet, down to quarter. So, they're now, on balance could going the warehouse loans tamp earnings in

Brian Martin

you. Got

we quarter's guess forward, just just what's income, guess, item the as average guess, or think relative kind or think this past about other to take kind the the of of just and looking on sale at last about quarters? have that number about mark quarters, -- I going drop Okay. way an there. maybe this the of And to of -- gain volatility the fee investments, kind I just I given as that -- quarter, was But you that of guys then and just best the equity loss that significant talked one-line just

Harold Carpenter

in with Yes, now, kind we're not investments. more not anticipating much information movement to those all we're quarter. any all see But where the it in get that planning on our down today. quarter of anything number the on right shakes -- year-to-date on respect of the fourth out. up movement We'll here through or And

Brian Martin

you. Got

you of are they have, new month recent are on whether on where And most -- where Okay. -- loan today? kind are just whatever then guess loans today? new yield, coming Harold, putting you where of I be they or September the data

Harold Carpenter

at September, to down at flip at the of look were information could of number. But end of supplemental and X%. I Well, the -- the we back end the that

we're So, in that getting imply there. that way

Brian Martin

that slide, it. grab missed it's I If did. I'll if in I

on problem no that. So,

Harold Carpenter

All right.

Brian Martin

Okay. Thanks for the guys. taking questions,

Harold Carpenter

Brian. Thanks

Operator

the Thank Jennifer is question Truist Securities. from coming next is you. live. from Demba your And Jennifer, line

Jennifer Demba

Good you. Thank morning.

Terry Turner

Jennifer. Hey

Harold Carpenter

Jennifer. Hi

Jennifer Demba

commercial Terry us and just give your if on could lending. in wondering thoughts performance your especially your markets you expansion

market at looking you. and gone each expectations? you just versus eight, could things Just where talk about if Thank your -- how just -- slide have

Terry Turner

the right in, here expect I'll I Yes, just addressing probably that going think throw just thoughts. I we about be I'm hit almost have in excited interested so we're would a is ahead try generally on to exactly them it. and redirect Atlanta where what what If I'll We're target you're say would out would little not me for volumes Atlanta. to and are we on hoped. on hiring, what's market

deposit I of on both I that terms in case Alabama, hiring of both think, in of balance have sheet and outperformed really balance they -- would attractive. say what sides of expectations [Indiscernible] sheet, were early volumes terms Birmingham, both the and the they volumes our and been in loan the have

do I excited than probably those what think I going said. most of I about. that's D.C., better then we're case had me just am we the market And then would so And to personally, for markets in say, the in

existence, As the you still we're stages, can are early pretty but building their see bad pipelines months in dramatically. in

had You both for of what next well. hiring forma sides can people than great pro the and in quarters. balance the They'll -- what's they've and do to again them, happen our we over success sheet pipeline the the see expect better as original was, what two

those that's anyway, addressed I interested at you're if look big markets please what how in, redirect. not So,

Jennifer Demba

normalizing just and it you these -- Thank asked Or wonder losses credit. do normal have is? you historical between the think it normal what median? low is historically is, think at just been you the you -- have Are levels? is we historical problem asset And median? much. so And Investors color. normal great of is lot about I where question And what somewhere a That's analysts

Terry Turner

like and obviously has you period to sort Well, over you normal, start the I to think when of the of me time apply ups using downs. term cycle, through that a get

there's levels forth, basis would which think assets we assets, to are so cycle. and our non-performing at, classified don't an under currently expect company, And so I through I entire the any that operate of

to things I whole classified -- over handful we've I So, think way level about away -- of from a be again, those not that. a -- want ways assets partially been we're ought going at just think are we I I operating rate, me median non-performing to at think the understand to But think we're that don't to to and assets of for any what people the last at numbers say, expect I'm normalize, we're think quarters. they're to reasonable happen through cycle. Again,

maybe foreseeable to numbers are again, some to For assumption. now, plan it'll go future, up median surely, the have the and extent good

Jennifer Demba

Thanks.

Operator

we you. a KBW Miller line Catherine Catherine, is And your coming live. have with Thank from follow-up.

Catherine Miller

you I rate. your follow-up has Thanks. growth just like mentioned, expense expenses, a when underperform had started, stack a call high started on since the teens

in come teen the back see expected, we Thanks? expense So, that side guidance be us be nimble that as you how I you going you expense the remind If can maybe margin to to the nimble high slow just how growth if expected. you gave? pulling loan provide on wanted on in can to come to not revenue opportunity circle is lower comment, growth or back and the than

Terry Turner

to first? Harold you want go

Harold Carpenter

out I for of around earnings the ability that tied expense are Yes, out The to the thing Yes, Thanks our we've take always mean, incentive book. growth. that money follow-up. I'll plans here is go we do first. Catherine always big of all got we to can the

to earnings we've our plan opportunities doesn't of fortify our kind reasonable then our circumstances. if sum got sure growth a under and so make And to come large is around, growth out earnings incentive take of P&L of quite money the

this we longer hiring, financial is -- thing pull can on always back other the our did growth. and will that back The we crisis, during impact term

that there's Terry, in when of we So, do really But after we lot our we're can go I'll not to there. a anxious that book stop expense absolutely variability necessary. it's that.

Terry Turner

quartile it, but don't targets I incentives, get and if are produce we to I earnings have just Harold performance. and Catherine, they two XXX% top in people targets Yes, it, guess had our earnings set we hit that don't mean, said I saying things. who of -- our case, there sacrificed to are be

I'm lever with will and you shareholders there's unless paid. And don't expense biggest that a that have. the get familiar do that's I so extent. to protect We don't do that And that get shareholders that think paid company

understand a a successful. so I second to we are on people the it base we paying think that huge the line, yet a the expense today part expenses and I that that a in feel don't thing do for this is away on but pound it's for come. straight hiring Again, we're reason, revenues do, because of

continues immense of XX think -- And is and so that profitability to comes we people. leverage and hiring single in in. right so expenses that in in revenue there's grow you cease revenue All revenue producers my quit will that there. an profit roll just come hired huge idea, When only quarter amount when about having this that there's the to message the

and expenses the revenue quit to And growing, but have the hiring grow. if difficulties, so then we people continues we stop so

So, not growth. does of earnings in you short it operated that balance and of anyway, run, growth, this extended how And period but works, term it why quit sure earnings sheet growth time. hiring. that's though view an I'm over earnings produce we've impacts longer own And everybody my even it can't the accelerates understands the

Catherine Miller

And fair model, for that’s correct? just it's you're put just I it, a business Got assume to follow-up. be growth if above Thanks going out your the to given rate then -- that, that mean helpful. just high growth teens revenue going is there, rate to expense the

Terry Turner

No doubt. No doubt.

Catherine Miller

Awesome. Thank you.

Terry Turner

Catherine. Thanks right. All

Operator

Thank you. Ladies and today's gentlemen, this conference. conclude does

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

Terry Turner

Thank you.

Pinnacle Financial Partners (PNFP) 19 Oct 222022 Q3 Earnings call transcript