PNFP - Earnings call transcript Q3 2024 | Pinnacle Financial Partners, Inc.

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Operator

Good morning, everyone, and welcome to the Pinnacle Financial Partners Third Quarter 2024 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Mr. Harold Carpenter, Chief Financial Officer. Please note, Pinnacle's earnings release and this morning's presentation are available on the Investor Relations page of their website at www.pnfp.com. recorded website be days. for being on for is Financial's Pinnacle the call and available will replay Today's next XX Instructions]. [Operator

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

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

M. Turner

non-GAAP most to this measures for the because, non-GAAP value every job personally, a shareholders. find us that measures the for going earnings call this doing provide the quickly to GAAP I picture measures thanks and of all begin you, Thank we're clearer you of dashboard. but to I'm of joining morning. know expect that go you first, with shareholder I Matthew,

fabulous quarter XX% deposits a X% nicely, X% and all quarter quarter. up grew Balance up sheet third quarter with annualized. see linked was core loans annualized assets can You linked Earning volumes up annualized.

they've for growth Asset quality remains metrics revenue all shareholder highly very the me growth, important most returns, and this with tangible total X up are the strong book most value quarter. EPS correlated long-term again and historically nicely accretion, been because

know growth trajectory X-year Let X. double-digit growth, CAGRs me law Obviously, the the the Double-digit as propel X X for years even I measures, to some we sustained of point is return. won't somehow able shareholder to numbers the CAGRs of large XX the overtake the but after metrics of always out of for those us. be measures those persistent for going critical outsized we grow I'm that culture all and that fearful X there remain highly proud term, consistent X-year correlated are total long most in that that

those So a key model. as on somehow upon results Rob that are here man me simple, that won't be opposed primarily or some my or to repeatable always McCabe consistent, partner, dependent

our firm. growth of and Northeast, landscape. dynamics for how that competitive before time. comes markets is banks very and fact Southeast about. growth West hard to been consistently able results the for minute that size that vivid a picture detail, tailwind match than want our in we Bureau is will we've the in sure another huge. over the markets numbers Third shrink for in growth. But Midwest it the be But to It make I Southeast. exists growth in the to banks more paint Census important and the exactly serve quarter a Obviously, And understands review quarter great and was everybody I outsized while of those deliver take major

other Virginia the Here, We we and specifically with we consistently in share those entered BNC. over North size vulnerable market in to where do we're XXXX plotting but Tennessee. vulnerable South markets and competed leaders in and dominated the We successfully Carolina, with the in against last here we take to the who market for because us from our the markets markets whom to extent acquisition We're Tennessee's the the business decade. share gains and Virginia growth of importantly, blessed have urban Carolina share more and of Carolina compete markets before. because X same dynamics some targeted competitors competitors losses have wanted

then they've most among and important given you So size such is those dynamics. a concentrated ongoing up, for contributor landscape part, even can it record share is vulnerable most competitive the track which our consistently than the to more impressive why same established growth see banks is growth and the the that here of

like to Here's according FDIC Tennessee, what plan the our the share looked share market, Nashville, in first deposit statistics.

have we in assets share an more than over firm-wide position next billion. Now XX% you roughly with position. a can our closest And competitor, are Nashville astounding see share lead that $XX

As most commercially bank. of a you know, focused we're

data for of next competitor. commercial We've in state more been to this businesses There lead bank the than same the in see Nashville. So sales executing that closest the from Greenwich million the share across according Xx $XXX you middle, we playbook market XX% share to a million with Tennessee. have our is can $X

with back start all the Memphis, in novo see de similar remarkably can XXXX, Knoxville and in Chattanooga followed by acquisitions XXXX, markets. X in growth in First, you a both in

we measured the Today, #X. the fourth we're to in position our where And as share chart, acquisition rapidly #X, following climbed following And Nashville, the XXXX. in terms #X from like FDIC In #XX now Greenwich. the commercial in we're Knoxville, of data, our XXXX, acquisition position FDIC we're Memphis, Nashville. by the on on were novo tenure Chattanooga, start #X. de were a chart closing in we at recently same of terms we market FDIC most #X similar of share the in on XXXX, In in the we and FDIC were in to released

As acquired I in ago, a mentioned XXXX. minute BNC we

a with XX% a loan Carolinas you we CAGR transition CAGR Here, in Virginia, the the can and XX% see since made dramatic acquisition. deposit and the

Importantly, apply the commercial Pinnacle's we on repeatable see and model. right, you simple, consistent growth in the deposits can when

like same Carolinas executing and Southeastern playbook Tennessee, across the we're in large Just markets in with dynamics taking way. the D.C. Virginia. the of are Nashville. I've we over share, similar a to market our Jacksonville, still novo that the growth demonstrated where urban XX-year Florida, Atlanta, number had already competitive in de we all we And there, by and landscape trajectory in in the a history the that and XXXX, markets like began extensions Nashville

in pace And see is the markets the even start-up it appears smaller even can markets our repayable of the the rapid was the using the some Nashville. You model, than replicating that largest left there right, this consistent, we're well. on as deposit in in more on start-up period simple, Nashville growth it

propel firm revenue virtually the and the in about hedgehog it's a vulnerable, an market Southeastern have top growth order laser-like nearly more all to for plan. X nationally the in attract to luck last retain yes, most associates U.S. on and together incentive cash the EPS perennially Fortune's EPS quarter But happenstance. year, with among the ability So and bankers the recognized listed the Place the even important the is leveraging create years, to using we our quartile plan, us with win that, leaders Frankly, simple produce environment finance at In And Best to every firms annual Knoxville to Pinnacle pervasive. roughly insurance Work XX just revenue repeating last some quarter. top share associates our and then or for in market we recruitment that award-winning added continually incentive and best third as once-in-a-generation Think targeted and opportunity. This not work lose it's single growth Memphis EPS our repeatable, model. We benefit Best growth and roughly quartile incentive in for America just markets, revenue again itself focus to consistent are using with noncommission it's strategy attract management markets in here in are in culture a markets strong and to together, earn operating Work simple, differentiated best target. Place offering the best and and of of every continues X,XXX our bankers their aligning associated we've those

are investors, As convince that their know asset. try valuable you to most people I their the those that are people their bankers best, will

I'm not clients our do I'm to going So convince going that. to you that. let to try

these have southeastern banks our share the with footprint business relationship this in Greenwich. in from largest better would clients perspective long On over business is the those to relate -- as And managers financial left, X-state those literally term. produce in a the in to Southeast our clients multiple managers best rate and the We highly how talent they expect, markets. amassed you how outcomes according valued relationship the

Southeastern talent associates national of you effectiveness. of PPNR experience, test consistently to in in earnings. resulted creation. client It's our in to primary On a competitors the right, best associate, see a can critical the terms higher us per build compared has Attracting long-term businesses, and for people peer-leading our grow ability terms reputation and among repeatedly both consumers and to has unmatched systems, about both which an value of enabled

across TSR our leadership X, a growth that new XX is the has and frames. on if of XX-year bottom It's see decade right, a for is You across And XX, at outpaced earnings and can growth you close. substantially phenomenon. true peers nobody the time not the EPS look top chart,

their their it Everyone's time the of dangerous bow this X so below ability attract put when it's market deposit consistently unusual sides see in average. because loan takes to about a all book books. on to Averages We on consolidate million this a basis. relationship over the chart, talent validated model so and are our associated straight-line on years and their volumes. But retain to best both a and any And of in self-funded nobody's over consolidate balance ability managers times years. consolidated, you sheet. generally average, roughly in on range number And on that, roughly and above to comes clients $XX average. It the or X

simple, within that left balance see extraordinary the if are You loan have we stages of land deposit labeling X-year a period. And a right, cohorts managers cohort X the consolidation and on on. year of on layer at in various that repeatable I've the volumes. that books our the consolidation consolidation the already next so consistent, continue in currently 'XX, managers pace. that next you, see XXX expectation And volumes it's told producing you year relationship and sheet the start-up just that years and and after laddered total and large we'll we It's the over 'XX our at incrementally of relationship on model. their average another that can these

not you results, culture would our as as factors matter through to not or historical these quarter not that diminish. And upon on vibrant able so very economy, other success strong growth. is success, be dependent the we success quarter our enhance It's walked key and ongoing It's see grow hopefully, leaders. and that more you'll to And although a persistent only administrations. change our third our Harold but loan our me that our dependent for the this underlie strengthen third with continues demand vibrant that economy growth on model not even meaningfully likely dependent of not

as consistent remarkably growth model. in result simple, of Our times difficult repeatable persistent this even and a very

walk quarter greater in Harold detail. So us the through will

Harold Carpenter

Good Thanks, everyone. morning, Terry.

for for now We a consider or our by we C&I loan was estate, When $XXX critical growth real quarter these increased and X% just million linked X.X% quarter the quarter, to will $XXX annualized. growth of modifying X reflect our to range expectations million annualized. growth. with loans, quarter a X% start which segments XX% approximately We're linked owner-occupied in during XXXX

cycle, this quite pleased been appears with We loan a growth bit and to environment is uncertain currently. But It's of up election are uncertainty long, what coming an obviously there with year. and the year all rate which future, creates near to both somewhat back in be the these the point matters take. the tend less to borrowing uncertainty initiation and bring of down of a to entrepreneurs confidence hopefully

SOFR-based in deposit loan particularly a beginning are end-of-period the reflect loans, betas on decrease rates to by quarter More As to Fed end-of-period just second. and end. rates, our

year One increasing on of rate of all pricing the plan long financial the fixed has to keys renewal been loans. our

is lift indicates, we're basis slide of fixed-rate during an of cash As the come in yield right cash quarter. from a of XXX flows reasonable top nearly this the billion fourth us X.X%. fourth about our the portfolio $X around loan year believe expecting quarter average during points flows We these with yield to as

than approximately with XX% is us advantage revenue been producers have years. competitive less of our that Our X

them processes us market of move begin for are we to for well continue All and XXXX. which ready share, to bodes our planning

continue been a new we as our will us on the has real XXXX. Deposit spot year. win enter fourth We for growth and all head quarter lenders to with into bright

we deposits are quarter, increased million and quarter. the by the to again, noninterest-bearing We're signaling beginning finally brokered with deposits that in in also for growth volume third pleased Excluding $XXX accounts. we their performance see DDA third

forecast we Given X% a third with growth, are volume our somewhat more around quarter X% our specificity deposit to growth maintaining deposit estimate.

this be indexed categories. of to move index funds deposit We Almost for are downing should now prepare environment, deposits Fed into the we product helpful. deposits to continue as XX% our a

like rates forecast flexibility our fourth as our believe current information betas X includes position included which and deposits. quarter. gives materialize, thus it As point We've to the we competitive rate cuts basis and us we said loans far more continue deposit some additional XX for rate have in to before, should on

has reprice assets. diligent and impact to as environment last We how to our pleased can and are sure as very that few been over of relationship performed the have a quickly as making weeks managers we're rate the earning deposit we lower the offset loan pricing on our with our deposits able

our the mitigate quarters. beta of interest far, to we by margin we both has net interest that through impact loan move importantly, So continue can we remain and several our our our optimistic net more deposit Fed cuts the income as and data next outperformed rate to the

pleased As posted we we quarter. late the are expected, with last did expansion restructuring the investment X.XX% security quarter, this with and anticipate NIM

rate Our be quarter incremental our will flattish outlook the that after for the believe we fourth consider NIM is we cuts.

energy in as to to XXXX. the believe national year, are rate XXXX, interest interest X% a believe a XXXX net for are income that everyone will yield scenarios curve our we modifying we growth next plays X% out of how net on outlook The know influence currently. coming We income we growth all about environment curve have I for We lot running significant are. the for the growth thinking is We borrowing all all and traditional better of back the with continuing for banks that yield us decreasing. curve to commercial with risk and performed operating existing a or like impact A of optimistic inverted believe clients are curve, mirror increased to better our traditional elections rearview ours. so

credit charge-off traditional review our We an mentioned performed presenting credit during the $X of C&I that again one press release We last night. We're a metrics. of million in in-depth credit partner. as will a to seeks place year elected in on credit the remainder permanent occur next charge quarter, Resolution, off the of portion we hope nonaccrual. the the company takeout a

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

a in in relation we matter. around or fourth our narrowing XX head how guidance to change to as range about provisioning No average basis XX we points. the credit quarter for into are XXXX real that also of We feel loans to

for loans believe past and potential to near currently. loans which be charts a credit are classified problem meaningful lows, indicate Our we we performing indicator should historic what as is dues,

quarter as estate as office. is this real the won't well commercial fourth head the primarily multi-family, XXXX. commercial into More We to and believe into more have continue from and well in to real we no estate, information about perform reason industrial on supplementals as again,

we risk-based successfully thought to XX% press quarter. sooner of last the our now we total which below As September we was capital at noted construction for than XX, dropped in release, loans have target

incremental we Our to commitments until that let next that the strategic XXXX. anticipate changed below XX% now and concentration to construction quarters late and don't XX% said, client that further the and prioritize appetite cautiously. We over the fall threshold. see this to the are me stress, proceed That expect will our any modestly continue any new concentration several we has we into to only will range, space mid- relationships in

XX% to mid-XXXX. book. admired last for media couple commercial know the our have a banks. tracking that, CRE total The negative around roller you We on multifamily pride of many construction years of have we this commercial are for I target coaster and book. attention nonowner-occupied our real regional been modest. our we a of limits house on ourselves impact always achieve estate estate in all know Pinnacle, Candidly, granular very are and Beyond currently real

Our largest our perform we and continue. to are portfolio we ticket for to estate that very real franchises. sizes other far Thus from our conservative in continues expect hear Pinnacle, what to commercial for well, bank comparison

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

securities XQ. on the sale the XQ second X.X% were loss the Excluding and quarter, revenues between up in of fee

strong commercial the Our will wealth units fees quarter continue leading our also year with wealth account into doing analysis have with well management into and expect deposits had The quite fully a efforts and way. the of are the XXXX. associated management fourth professionals

run rates increase in fair million during quarter, realized adjustments to $X.X from million several the our and investments. of to of As about an XQ, value second other in $X we fixed increased the equity assets of approximately from sale comparison

more of range outlook end as reasonable this for we be guidance second came which slightly than our primary again the where quarter. given Expenses to last we're would the BHG, seems year. of they growth business several to to of performance lines from of over our XX% thought raising in XX% the of excluding As revenues, to fee XXXX, our XX% for year, a XX%

which XXXX. better year than Importantly, as XXXX of Again, payout to last XX% target increasing quarter. thought incentive raising our fiscal end the we we're are the a belief be target of our our we target points for will to

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

Additionally, with the producers XX strong the new revenue first year. for our hiring the third quarter XX to in was X months really compared of

pipeline into recurring quarter-over-quarter second swaps protection are executed up credit strong franchise. primarily across fourth loss expenses in deposit Going our quarter, $X.X related the from quarter. the fee the to the remains new Lending charge to related the recruitment we a due million

noninterest to quarter look we our approximate we As currently estimate total for fourth XQ level. the level the should quarter, third expense

be will we and BHG, to quick. Now

up originations originations As the picked quarter slide indicates, $X in with billion. third approaching again the

should the somewhat with consistent quarter. fourth quarter production the BHG As be third to

placements, to grow. enter the for second consistent both and As great originations, demand less the BHG XXX to number inventory build in fill the BHG were which total from fourth with continues we the loans order XXXX. Also, loans from institutional remains there to than of to placements paper, the More quarter as and XX than eligible continues was and BHG in larger the orders trailing buyers auction over purchase bank buyers. months acquired platform unique to quarter. banks

Balance platform prior As in environment. decrease, believes what from X.X% from increased third higher fairly spreads has in in remained BHG third them as up have to the BHG the holding and with spreads, X.X% second. a auction the perspective. Off-balance rates spreads both good will for losses be in a rate sheet are rate sheet quarter, amounted All volume in substitution quarter. the believes news that quarter. spreads consistent to the been a X.X%

losses prior which occurred the fell on of why sheet dues higher. actual similar has sheet in third sheet trending in increased Again, are sign The circumstance the BHG XQ. were amount up a a which not-so-distant the faster in A reserves is X.X%. was to hopefully to the sheet on-balance in better future. XQ losses losses the result, losses, losses the direction, is experience decreased. quarters, percentage balance X.X% the right than balances even is that off-balance in X increased a modestly from balance As percentage news for as of On dollar or quarter, though actual loss credit past good

third in $XX.X the the Our amount. expect and BHG to amounted fees million quarter to approximate fourth approximately quarter, that we

sustainable remains around as product pipe as stronger in balance dynamic and time country future. the focused that stronger of much stronger Our management on BHG be this sheet. is most even and should concluding profitable and an one is not franchise models balance pushing and sheet, building the an the We BHG even such, a are as the important building the in BHG through with as an thoughts competitor believe fintech on maintaining even

in to our outlook lowered quarter. our end, performance Again, of and remainder our XXXX in XXXX. about in the expectations we expectations strong third for Now some outlook feel our the the we've confident cases more In our given others. raised

annual of next our should All for for year. XXXX. effort started good this be planning sign a We've

our markets Our blocks quartile revenue financial same: bills be new we lean building quartile top will are as hiring the plan. our investments earnings the we made build will The and success into and our top growth. we've XXXX in

As can strong we our a and getting up don't of for earlier, so and another be through get spend lot as a I confidence yield into we move Pinnacle. time to clients for start I if I'm want manager more Q&A. curve owner information, whole confident lot been of will mentioned XXXX beyond wrapping We've growth, year an borrowing inverted again

believe of the markets on banking giving service. where competitors United delivering we as market relationship-based operate markets very believe away what vulnerable the differentiated and a has impact from best and level are in share are in we We in that States shy the up large cap we banking fortunate that and our

years, also, choice. We have over an employer of the become

found have recruiting success our Our No leaders way of awareness spend do of our to the market introducing its markets. associates brand our our hours markets outside of in and a longer has way. by tremendously all to prospective as already into efforts helped have in the brand our brand

In our is gold only resonate are out. our client be year hit that year quartile work goals, a consistently book translates financial tangible successful Our very results to place associates potential believe and our growth among our best strategic will end, also if recruits revenue shareholders. but We well as in value the rewarded. to on performance shareholders and goals, and environment to focused growth. growth, experience as and work we these not and we Top earnings ultimately

Matt, And open for we that, up Q&A. with will

Operator

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

Brett Rabatin

to XX about talking Slide expectations I with just the wanted flattish XQ. start and margin for

quarter. performance far seen and the margin so aren't least fixed deposits loans little surprised quarter in and maybe fourth a Can loans walk of performing some a for your you on you've fourth with in that how expectations betas kind again the better beta the just tied loans at we rate XQ, see repricing through those loans and expectations I'm the SOFR and deposits of Given for little XQ? some

Harold Carpenter

sure. get way. at it to this Yes, I'll try

be to margin will we flattish. fair will that As itself, be -- the think

think some hedges into won't for we we into to opportunities like sheet as get until balance cuts, but that get rate I have we'll XXX come to occur basis deeper better play, points. past

that next, we've XX XX points, points sense. in our over call base it, basis cuts, the some if got with heavy lifting So client do basis to makes rate still

a call have it, to where over work of kind to of to still mini we kick we'll So to in these a, hedges pretty here next and few the get some a just balance up. calvary some sheet get hard shows on months point depositors

flattish for the we still be quarter, expect As do don't interest see year. of growth be net to and next some we flattish, expect expect but to so income, the that NIM to we to kind

Brett Rabatin

you with lot indexed just the -- but moving to I have about, hey, to is tend it's helpful, think great I like, obviously the then guys liability guys a know is of is maybe versus you fairly can being be a but particular? loan maybe deposits fairly until got the Looks not pushbacks think through That's And some over of to know fair betas margin XX% just portfolio of get here? about the thinking job curve. one outrun we Harold. and quickly. X, done lot as fair you about in to or variable a the sensitive portfolio in Okay. Do a versus pricing you do that loan like things thinking it Or quarter sensitive, timing the in matriculate X or margin yield to that of quarter asset what through you repricing from think ask SOFR lower maybe a

Harold Carpenter

opportunity some we've we down, that. And the lot. Well, basis do what do our There's obviously point or is. be risk But to a it obviously believe where a of go does It be won't going it we're that might but relationship the their kind lower the managers going for able rely going to is a got a to again, have keep rate into to -- be to communicate continue margin lower these X. of into to do. margin pushing these deposits to clients with the on index, be reduce to categories. lot tailwind that's we're to what XX% By that's

there. stop So guess I'll I

Brett Rabatin

one, then your bucket, this average. Impressive comments whole industry in if efforts period versus any last sneak I is growth Any seasonality maybe focused in And in your could quarter? around to just DDA that just around one And Okay. on? DDA. grow which the the

Harold Carpenter

that those think deposit and been all the accounts that's the pulling is story the of for don't We and markets in will it noninterest-bearing, be you've attract quarter. successful our for the product And quarter, we've critical get third fourth to think of that and the we In the order there street. a to across attracting lot client think relationship. got newer entire We don't seasonality. story all Yes.

to lift and forward we not also but move think why get that's so some we're Atlanta, D.C. Jacksonville. going only and as And we

M. Turner

say extraordinarily bank versus Brett, I to their might -- which just to penetration us our add, which bank, accounts. is business if you a is say way lead high look view all I the at their means clients our got we Greenwich be would lead data, clients operating competitors, that

a dramatic at And taking we're so pace pretty adding again, clients share.

biggest So we're that XX,XXX that's taking thing doing relative growing DDAs the is feet, share. to from market

Operator

Your question next from is coming Russell Stephens. Gunther from

Russell Elliott Gunther

into some the you sense of of today the you've discussing is slides and prepared that remarks to then taking how touch Memphis. makes thoughts still a M&A been in Carolinas from your Is on interest spent successful that strategy the in organically you? there Could You or there? time terms and share into just

M. Turner

the Let me question. clarify

for asking, have appetite we do M&A? an You're

Russell Elliott Gunther

Yes, from the strategy mean we of there. how I success there? that's the through right. spent And you've next organic the taking the time share going some forward? deck that Is on part then had slide going

M. Turner

Yes.

acquisition would them. that these when Russell, me I were I people And think so because but I'd be make of pace to points hope say unlikely growth will I our extensions heard banks. to it risk unlikely, think I a rapidly entered with acquired of growth think than we that the our it's many these is think for we say way companies that I I that what profile it's lower is make an think is, we what acquisition, don't market to doing I beyond say okay, to organic before, the you've markets hire one grow ability we'll so never, of the never likely some put we doing is those significantly on of ability very organic of reason do but that, the substantially acquiring was acquisitions. by

consolidate mechanism. they the illustrate of is to trying their just hiring where hear really of them in the market, really simple model this a best power business reliable the we're So having bankers to books from were growth of

acquiring much we'll banks. that, all to think be going expectation because don't you're of So I have

Russell Elliott Gunther

Understood.

switching reasonable XQ appreciate to your a better in the if rates Is is could, takes more there, lower from that, thoughts just could think appreciate to big I thoughts guys. that in trending BHG, grow in about past then are gears, volume of trend. be we 'XX? I Okay. the perspective me, you think for could Or one we comment But as going direction. revenue the on should right there to that picture it revenue trajectory and the and rate due terms share forward? And

Harold Carpenter

when to my going out But year. high imagine want expectations way there. we've BHG their of forth kind base give would it. next number I'll and for Yes, to to a look -- what so We've to too their much of got I expense more around we've be for next with get Russell, to question. try do finally as like, We of it's going to that single-digit so that to got got we've kind work to mid-single do to year. work is had some numbers. really probably don't XXXX lot work we on a around conversations But

Operator

Your next Jared from question coming is from Barclays. Shaw

Jonathan Rau

be Rau I and the losses looks the few coming still The And any and why Is Jared. has that's Jon prepayment be sheet direction? guess could guess liability I to on-balance the for up. on trending those in it moving good for guess, but guess, substitution is that here? wouldn't substitution BHG at headed? for for been I same reserve down, last prepayments second. on where color just liability like is level sticking for I there a quarters, This a

Harold Carpenter

network Bank out Yes, the for are I'll have give to substitution you the about. is think Bank. sold the One -- of Community of are, loans Community responsibility been things a the that the that couple

some own So there sheet. they their balance the losses is loans in how BHG, to them those have come versus on lag

longer are loans those tenure. likely have Secondly,

losses typically XX the within of the content and the to the related months. on most balance first I So loss newer are loans sheet see

this So for banks as with well that quite of as the for going as has a not community while with these that's been losses sheet around to tail them time. do off-balance some nearly loans the are submitting on have

Jonathan Rau

That's Okay. really helpful.

leading sheet maybe the credit guess on-balance So credit a we think trends indicator of off-balance of I sheet the could more of is terms?

Harold Carpenter

on we eventually, We so. the balance off-balance replicate Yes, the believe sheet. with will believe sheet

Now on trailing trailing a content with them calculated reserve the ways. One loss X is a in emphasis reserves with are CECL-based other associated and different XX. is the the

Jonathan Rau

other good really I And then one just color. guess for one That's Great. Okay. me.

Moving over year for bringing going It is to sounds the hiring. new like XXXX pretty big hires. to on be a still

pace you the the total and expect sort deposits still the kind you of there in of loans markets, initial kind should at your as deepen some presence diminishing new can As to Or a return of the and that as of of the same terms to expansion number up of RMs in some the bringing hires? we hires market? expect we of is on ramp in

M. Turner

the so X, relationship associates different I what lot is you forth. this they've we reason of illustration that -- they've that numbers today you X, Yes. we're been is, And showing that those here of back X assumptions can those in a of when And XXX there in. are that the those you used almost and current say when My year at they've to stage assumptions when resemble go-forward the on are times, -- belief are been X XXX basis. terms see and a the managers, we've consolidation been the here buildup always here model good been whatever tested have guess, in it from here that or that comes when people might there

And them I asked? move rate good is answering forward so assumption. Am what average you believe we that at to yes, run for the a

Jonathan Rau

Yes, it. exactly that was

Operator

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

Stephen Scouten

touched Just bit know, And move from think in presumably potential a outflows move I customers the Harold, this quarter on this index rates question pressure you But sort those as are that as on you lower last exactly the move to creates index? you future? do to how around little clarifying of in well. negotiated getting any deposits. a

Harold Carpenter

anyway. we but with I based rate, the -- a I think doing on for rate rate schedules them rate it's index did in us leave change don't that bucket of will to increased Well, negotiated any clients not the into individual real what taking lower bucket. out there's bucket we're we clients think

there. got confidence outflows So And seeing these got is great what clients. -- folks we've I relationship to think our I a with lean around this think we've that do have lot there these not of that into

M. Turner

into remember conversations the one apparent back if some headed cycle. we were that we Stephen, a of it of things, the seemed you when had down rate

respond I think down how that we particularly associates our and had environment. prepping both rate our we associates, the clients we also our in indications gave would for begun already

which company, our so the you that's get is and relationship inside managers, businesses, those by as have how understanding there's we relationship how with we keep clients. the know, a they business great And whole both the key to

somebody as of any on kinds negotiations. so of said, We're are things. up those those Harold sneaking not one-off And

it there that risk of is me would attrition. much So seem not to

Stephen Scouten

the crossed helpful. the bank? look continue XX, the do continue personnel nothing lot a you've to added changed. nothing from from you showed, keep The growth And kind regional as How lot profile how so more clearly, the large banks That's and is of one do know, of Terry, you to Is like still great and just and in through But years. the you more a you in Or XX Fantastic. of mean, what it that Or it keeps yourself anything incentives taken the regional you deck changed, this is. starting significantly? them guys the crossed I in like large slides outperform you a quarter. there you to And you like particular really don't impediment? becomes an that that they have from is that centralizing look in I culture? ways of

M. Turner

Yes.

that's think question. great I a

you But an time can't people big. said been that long as environment even here. watching all, are you've showed around we get survey internal of propel before first a everybody's truth I culture is tire, that So work you think do with the the you if -- up, culture, saying, you start

of XX% have out. our filled associates We

words any associates in you other beyond If that they box think long -- would to the that they are find their not kinds of they the those top raise in that, you're rating, have you're don't those would agreement. I kind engagement worse, going always that feedback. And give have Those that not anybody level things. been numbers They're of familiar with give time. above getting of consistent of so the instruments, over answers XX% as the in with their a

up chart third presentation better, Among Women. Place Best things Place Millennials, and said American to Financial among Place Work Express worse. getting in to Synchrony, among like things there, behind are on services, moving Work Best I we're Specifically, Best not the those Work to as And the best

doubt do more it, an I on influence I culture, go to mean does But itself. And it, to. that propels and so and important once in propel so no the of it I wanted to screw it's just -- up say rooted want if you others it it that less but you and have the or there's I on could don't has about it Once itself. forth, power,

to the will I think So help continue us. culture

and it. are it. do big companies line smaller I focus forth. get will to that geographic that peers so how continue our think gone than help the all me I got us. organizations have business That's I've to of

do share so all It And get a market to our we to keep that. trying But I so my it and bigger that is forth. geographic. be trying a from really and extension and do because take then company, these opportunities we're to distinctive you is share. not will What be offer continue experience got client people to We're if in opinion, your is we belief big ought we take want these That's goal. can my goal that's the to to best. motivation the

to going They number those at skeptical, that trying pace. the of are keep get there your is was I I because things the of guys. large thing to One mean, growing get can't across to people to question so many saying law that

ain't is sophisticated that thing. people growing them. fintech, those cool a clients bring What come from that to just really able pace, simple and You it's that have their we bankers a had those want Man, of to leave big place high-tech, thought come who we've banks some it. to great banks here We're know companies we and clients. do things just work we thing, with I I got that other over we do lead and keep their really at here, wish attract some bring

hiring That's not we're And picking up speed. so slowing you down. can at a people dramatic see pace. It's

the all going those I of it us. that. dissipate road, not And the culture as the law get of things. I'm as But won't it far X at so number don't going my of saying too see, us. not communication I I kinds to like whole about again, see is down years least look to to know you ramble think is but is on going get law large the to I XX large It look years, doesn't XX years, just much, doesn't as get don't like numbers can is it,

Stephen Scouten

on fantastic congrats Terry. continued That's the all and Perfect, success.

Operator

question from Gerlinger is Ben next from Your coming Citi.

Benjamin Gerlinger

I Slide I XX. appreciate touched I you a it Also, quite appreciate on know it. bit. really

it you I think look when illustrative hiring, X/X bank there yet. even up you kind have, isn't guys the you the people, it just DNA that of roughly stopped it's don't really should materially. like just of the shows you if have of loan, at but have you like ramp so you kind the of Like pretty still

come of mix -- leads forward. next the is manageable and but balance have what much growth left going more potential, the think about of sheet, I you you calculus. kind banks general kind more or of and deposits of so of putting like What additive, kind the margin the we it's that they're over when there outlook bringing a curious, between C&I the claims I it's should question deposits think sure you franchise more with rates. that's when huge much of sure guys the people kind of right the Were most for you hired, into obviously on? So I'm I'm side loans of is, you've It was over, deposits? on think part relationships But you my that's oriented. of are expect rates a about and coming they're so

Harold Carpenter

question. Yes, Ben, that's a great

C&I I do think private and bankers. we emphasize

we've we capacity belief healed those. that lenders, have there. real a general commercial there our estate well think I got We're with

are are And Huntsville or in in, lenders. private what a you're Louisville, Jacksonville C&I like bankers have a a let's just market we depending broader or so or they're if mix a D.C., lender say, So Atlanta you're Green to and on client they market say. general base, C&I think and going if bring in interested I forth, Bowling on then you're so in

we a looking bank But all do time former a calculus to and much pretty that amount is that our to use consistent just that depends. their person reasonable bring over period. from the I think their So to it book employer significant for that within we're of

We needs somebody do with So sure we're that. Otherwise, if saying, help we up to We make to keep get that. give help. them. go try them the

M. Turner

that. I just Ben, to might add

there's miles -- do the you a deposits. something because XX of everybody hour, my point, you is And bankers large that how ours a is pace bankers large rental X:X period on to these some if you I've time sheet which it's always million around it at on like $XX of as nobody's of average, above high-growth or that's over comments, in a It's sides can X-year a business that that do can. self-funded pretty an you a self-funded But had to fund averages self-funded. like the is are book. market think But building biggest assets But and works really both have your bankers, point, at To so said a more provide book. And balance some the dangerous the for than is includes private about bankers energy emphasis small Harold's average I below. we're business company thing take bring. to sort the sheet include how that always and produce commercial DC, balance relationships is that we when and forth. average, look

rate, relationship, rambling are the consolidating any to so people And includes of I'm their both balance whole just sheet. sides and say that generally,

Benjamin Gerlinger

hires? additional to sort but anything is fair gave synergies, Got you just it's higher of on or up. growth? initiatives mitigate And by of growth we off of you. If No, expense it guys of could kind table But of synergies scale. scene expense obviously, there some where pulling the some lever the of of Or kind the behind any next year? side the flywheel that's this anything, kind assume guidance like double-digit you helpful. Is that, double-digit Also stopping. kind of speeding equal isn't to just dovetailing with then

Harold Carpenter

the to we The will growth Yes, we the where in this hiring. will have impact to incentive I our can end we'll year how take us year more next always will that. don't slow think much we and to expense be pool do down up that biggest least that expense do biggest things will have growth first at for influencer get year, expense or next part back of at year. of to the we'll the much target how number And next year the target. next the because target at we year will growth load be the

M. Turner

way, generally whatever, if just is if X noninterest just a obviously, a growth the the it's last to X take growth Ben, grow look this I'll double-digit expense we this, And wrong this, say you the but over faster. pride. say our revenues We could over rate. great somebody going take decades, I expense comment and over years, decade, at

to look got to their have you XXX it, here, again, coming. like to hit those is rate people expense all point me run so that yet with important of at I've whole which consolidate is XXX% that revenue the book really the And you

believe we're we continue and hire to noninterest they're which elevated growth do continue move I going so expense And concerned long growth again, to as business, then EPS you don't and rate. to as about people, going those more growth. an to fear books We're revenue

Benjamin Gerlinger

your Yes, I sense. a problem have. that because to high-class appreciate they're great job I paying makes is bankers appreciate a doing it.

Operator

JPMorgan. Your next question from Elian from coming is Anthony

Anthony Elian

favorably In revenue curve coming positively prepared optimism for the would year's you sloped example, more is, have it you rates long better outlook? become to in degree continue the slopes the that lead currently more doesn't the could than yield decline, that for what if to to But XXXX impact outlook? a next quarters, remarks, if if the that revenue yield curve commented

Harold Carpenter

for thanks the Tony, question.

talk neutral and a life go of just continues last sheet. a like it we if it manage trying dealing we that spread of can I as think our to the be neutrality million of balance always we from blue because the hard target just as to with We of couple But to around XXXX. we're think XXXX. hopeful to advantaged kind think curve we point We inverted sheet and manage through inverted probably during there's looks why the that try to be overnight been last can. assumptions the gets into at we've at years. to just as pursue years got in harder lag know about some this can that. about be curve, in when a balance you're inverted you we're getting has X some rate an curve candid, to well years. over that an want hopeful. And the And And we with along of talking reason that But couple over as

we for if we good of get there, us probably think traditional slope curve and lot a that's can news So well. bankers as a

Anthony Elian

the have that going follow-up my just XX. slide, represent on and come Slide on is then numbers the of on expect the in capacity X scenario back the and next loans X.X% the deposits XXXX, to that the The on And loans the highlighted cumulative you blue sheet sheet? recognized do growth the and expect you over be basis for you X.X% bar, to XXXX just Or an to balance for what balance that years? sky could average you

Harold Carpenter

outlook any you of of of than in it's indicative more XXXX average. remarks. on yet the an give sort other about think talked prepared not prepared what I kind to We're we've

Operator

from next question from Mealor is Catherine Your coming KBW.

Catherine Mealor

double-digit follow-up and that dependent I in you into there mean, the level NII the we balance that to -- just double-digit next grow any One move on year? it's if pace Or reason ability into to single-digit kind I a as do we pace I to believe curve. mean a at outlook. high But can't any the all year, saw this sheet is -- maybe know NII the next it is safer is XXXX? at on yield there reason have grow as we of

Harold Carpenter

Yes, Catherine.

the For the I well growth, think in would percentage is. if our us, look loan tight correlation it out growth correlated. they there's as to because a growth strong percentage closely how a you margin several performs and over be last of probably high as But way years,

loan target this year. So year, kind but growth we're what better we optimistic put do for not out are we ready we're than a to that should of doing next

Catherine Mealor

of bit are there? higher of great. I've rate. And was just higher. a kind 'XX. aware great the feels back your 'XX and run I'm kind especially even maybe or in charges as Is a service kind with -- model need you could fees, then -- account that Can this for to this back in pull beat and be charges we growth, say outlook any noticed for quarter and maybe this that elevated That's there fee on of guide about really little is in commentary half to talk anything like the but then of quarter growth assuming I coming that And 'XX. service in of we just Okay.

Harold Carpenter

Yes.

-- think -- in value comments we it touched show kind up is that third investments some around to for that the fourth we're bit fixed I of on sale that on little some the other and those quarter of the not are a adjustments repeating. quarter gain but we in don't on numbers what as, well, fair know equity going planning assets

be is next you, grow a core have mortgage going revenues think -- what into it whether have or year, full a be reasonable wealth next will of year we at we as the year well. Going will business or XXXX, to rate we management BOLI

next So we're fees optimistic be where about year. could

time a accounts. you're back charges, it's and going getting the and related sure right commercial a lot use And year, clients, negotiating been what fair you've fees we're a for of file deposit to that of deliver. management service that devils analysis price through was long course have paid our levels. with to As of service lot lot a getting details the the a paid they far the like we of banking make for sure we around it done the that in over we've right as treasury if the making that And

Operator

Your Varga next from is coming from Sam UBS. question

Samuel Varga

banker investment for seems like even? by AUM think monetizing I over guess, some just that And hires rate and some wanted commentary of at numbers services wanted next is just couple put based if years what line I the the business item. private just run fees so I to that the ask a just on or I second for here. see on is specifically And It the you better to again? getting wanted impacted to about that you're talk of

Harold Carpenter

of much business hires impacted to to it's of Yes, books hiring recent Raymond by dual run a We the and platform with very your those Pinnacle. bring ability James.

but they've and platform in backbone the our getting transferred we've particularly recent Jacksonville hires. for they're So like Jacksonville, success it's with -- that, had in to great

that Sam? item were you grow. after, what intend to that see fully we so Is continue to And line

Samuel Varga

might Sorry, been mute have I there. on

bankers the bring brokerage well? how over, quickly do guess come over private you as I So the as accounts

M. Turner

So make let sure me I clarify.

the hire So under are. we a have management typically private generally function most typically in we product hire control whatever that of assets brokers involved both bankers are are trust paid the we that And specialties as relationship. then -- administrators and that

across those hiring we're the bankers, so the private administrators. brokers fronts, all And the and trust

services investment It's fee. that's XX% line, commissions, advisory is about that commission on primarily advisory of income think I an which that fee. commissions. an not transaction It's

Harold's we've number in been brought X we've to the in they consolidating brokers months, been we've again, books. with so think assets. that point, licensed million hired where XX than $XXX the I Jacksonville, brokers successful have like Series a And And less extraordinarily

just can And those some sense, kinds revenues up give so you drive to hires. when quickly you're pretty of man, you making again,

And so that all footprint. like hiring the we're over

Samuel Varga

Got of comment book. extend capture bond curve? you the -- end yield to a to it it. book And Are on on variable you little my keep hoping out Harold, guess, the like now? hoping you just rate last Are bond quickly that more really the shorter? sort have it can X of seems I to back you bit

Harold Carpenter

on it the I see don't us it. us growing see don't I I Well, duration currently, I Samuel. don't -- it. where extending we is see think like

yield We it are is. it quite up picking where bit a of out of

acquired of things we up -- particularly when to it us to quite yield pick of go. respect I can versus variable, variable hedges think If got to we with decision before to you a decision, lot to rates That's a room a we that at if of bit in been continue book, yield out of a before, day, running still yield rates we're But level rates to follow fixed at of have convert rate front fall. lot we we'll quite that the up bond We've a and where would of fall can got picking that those rates variable a pick of end words, the better where quite up bit. lot that. bit until a like Sam. continue sounding rate looked when more of to a we've fall the

Operator

from Janney coming is question Brian from Martin next Your Montgomery.

Brian Martin

quick A couple ones of me. for

just us rates. Just, Harold, the on the you that is? immediately remind on loans reprice that margin, with what Can

Harold Carpenter

-- loans reprice that The say immediately the loans with? that Brian, that again,

Brian Martin

declining rates on of rates move as the variable are terms side? will loans immediately fixed the the I what With know to higher. kind talked rate continue cuts, But cut of the percentage. rate move loan in to about going rates that loan on variable just rate you

Harold Carpenter

the prime variable beta? immediately, will that's reprice looking that rates you all rates credit Yes, and about at -- are

Brian Martin

Yes.

Harold Carpenter

probably the They priced of XX% of total It's about So about were variable loans. that loans. rate would daily. XX% be

Brian Martin

Daily. okay. Got you. XX%,

year, the growth And a on just exposure. just we've Okay. commenting about not mix, the terms the like X know that question. the 'XX, then in in CRE I seen you're focus But terms loan just of reducing lot this outlook. Perfect. of

does at a Harold, As Or should maybe loan like comments your more it seems it that I include similar? we of earlier, bit look mix growth to 'XX? would guess, year from how CRE, it the looking next look back better year year, we bit Or should the half comments growth maybe next loan for thinking little year. about about than this in of be of terms just that next of your also a --

Harold Carpenter

the call last see uptick construction year, say. likely the Yes, it, commercial investment of real big kind I so. or of We half you as think expect any to in property until, estate don't

Brian Martin

next For Got year, okay. you.

was strong Okay. And this then just growth very the deposit quarter.

of was that focused some outsized -- verticals? of you this anything can Just deposit -- guys quarter? that? by those the driven you Or in of terms I have that been to there just was Was any part on know growth verticals. contributing

Harold Carpenter

that with managers in those are footprint, relationship verticals got we've the No, those forth industries where I garner the in deposits. helping we put that think experts those model verticals largely business those it's and across

Brian Martin

you. Got

Okay.

me, last Harold. Okay. X And for housekeeping, just

think are Just quarter, gains the think said $X nonsustainable pretty the rate, the gains income -- about to how nonrecurring, equity about about fee on the the . tax and the repeatable only side, X else million And quarter, you this really that the investments think securities to that. everything I is in numbers this

Harold Carpenter

into Yes. are to We top. and pretty to to the may good. came figure of run X fee of what base feel We've that look rate pretty the kind kind the items try that those dug hard like out

Brian Martin

going how And rate the about tax then the rate, think Okay. tax forward? to

Harold Carpenter

of Yes. kind be kind We ought to of ETR a XX% firm.

Operator

is Raymond Mitchell question next Your coming Tim from James. from

Timothy Mitchell

on Tim is for Michael. This

X Just into some on color we CD shed roll-off lot renewal on of about you could year? question schedule, index kind deposits. hoping as we the the move But the talked Because a portion on rates, portion, next I the rates of the was the portfolio. maturity

Harold Carpenter

XX% or book generally, Yes. less. The months is CD our of -- book about of X about our And CD XX% is X less. year or

how that's flows of it out. year So kind in year and

just Sometimes X be just books. fixed get it deposit will it, But of about time the hustling the of liabilities that flow rate money of XX% call -- we be it extend months XX% and will brokered will some kind book the will to that. on normal be X another, months with maturing next out half to kind deposits, brokered over after

Timothy Mitchell

And rate Understood. target more renewals. then one just loan on the for

I So you've taken also that's a of lower previous bit large from a assume expectations down product competition. some but that range. maybe rates, the for

how that you like continue could to you are presumably as rates those of would some borrowers light conversations lower? kind and expect shed what moving trend hoping Just with

Harold Carpenter

our target the relationship target to we our managers our to something seeing a We're lower into the will because wealth on were like. growth negotiate of -- more is private think negotiate with and with We more managers Yes, and for the market, more that. you're that high to rates these absolutely were missing loan In borrowers we mortgages inclined business with call try ranges, to we try above us. secure also target it, hesitant right others. for, borrowers traffic far and the And did we on end felt above be lot ranges relationship of we that at inbound think some like that the out when were were on some past, probably competitive.

Operator

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

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

Pinnacle Financial Partners (PNFP) 16 Oct 242024 Q3 Earnings call transcript