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PNFP Pinnacle Financial Partners

Participants
Terry Turner President and Chief Executive Officer
Harold Carpenter Executive Vice President and Chief Financial Officer
Catherine Mealor Keefe, Bruyette & Woods, Inc.
Stephen Scouten Sandler O’Neill
Jennifer Demba SunTrust Robinson
Brian Martin FIG Partners
Tyler Stafford Stephens
Nancy Bush NAB Research
Call transcript
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Operator

Good morning, everyone, and welcome to the Pinnacle Financial Partners Third Quarter 2017 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 replay available is Pinnacle’s on the call and made will for Today’s next XX this have mode. participants time, in At listen-only a been placed all questions The be floor presentation. opened your will following for the not [Operator or earnings forecasts. Pinnacle guidance provide Instructions] begin, Before we does

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

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

Terry Turner

highlights earnings you correlated this with three always business. tightly tangible the our We revenue morning. always value grow and growth all the performance with quickly Companies we dashboard. that, are performance the you, quality call the our metrics quarterly Good this on and momentum drive price to Thank metrics believed virtually that asset that being with do on We’ve it morning. We that appreciate because begin book use most Victor. We earnings call growth, typically us that produce typically This to XXth our you on closed earnings measures. all trade above roughly income income, growth, that and is and see like expect that ROTCEs grow for particular year. ours, on at BNC focused XX% well slide. is this consistently above spread where balance of companies of price, of on multiples PE I slide of the represents know, can share companies growth medium sheet key June total most this well median GAAP we acquisition share

so, all the And that by financials impacted transaction. are

So and to earnings quarter, the we firm. continue revenue the third grow for of capacity the

in We future is we sheet our and growth continue of organically substantial and just very earnings to predictive balance a I believe very grow mentioned, quality as asset remains which pace, the revenue strong.

so As non-GAAP the quarter, I given expenses into on those. move rate greater all these on the in adjusting at company, measures provide metrics, for actually on going least insight run for let’s merger-related merger and the core the say important integration me, each transition to

primarily walk won’t the two. direction, right will just through the each since the I all non-GAAP highlight for sloped adjusting in are at now Looking arrows measures, I merger-related metric, nicely expenses,

Let’s look first on at row. the the first ROTCE

needs acquisition in million million $XXX As XX, XXXX, with shares the of X.X and firm, January to the BNC proceeds. on you will issued in recall growth we support the conjunction net future totaling

promise both full the through leveraging capital. QX diligent order So And prospects in and Nevertheless, a in it additional and we’ll we’re that those protecting to quarter optimize a shares be additional warrant had in partial that, to of thrilled in quarter growth we growth have I impact QX. impact returns. the it the

to back a As you already can XX.XX escalating ROTCE. see, it’s quickly

the can below on Secondly, to the its performance average overall margin, targets, see, current XXXX, on the level you targeted we book the average with the book to the our is correlation seriously. that that continue And return for of asset the measures twice In to and and protected profit quarters. targets the continued of conjunction in actually have to now tangible ROTCE our target it, of X.X% conjunction and key growing for the model last the take between published this any as to that growing level our it you target, obvious. we at achieved we’ve with on have recession price grow the over tangible we of we’ve X.X%. chart, levels, fact, value originally specifically back after associated call, of Those return assets, and having acquisition, publish coming chart, fee assets to charge-offs. increased that lead as in firm expenses continue, I the followed profitability, assets excuse just net share component me, value commented in pretty we’ve two the know time that length to out We range

GAAP As are was X.XX%, well good XXXX in component the assets this with against another performing third you see general, targets. can quarter on a all and return average measures of slide, measurements, reflecting the on quarter pretty

adjusted ago, contemplate disruptive, performance which more metrics be moment a for merger-related on expenses mentioned next targets since not to these expenses, do slide. I merger-related is find I As the

So here discussion with I each of for for merger-related measures range same might a expenses. are the measure. quick the start target the adjusted

of know, ROA, the it plan, plan this at remains didn’t year’s target we alter X.XX%. the the And three-year XXXX planning of range for to As in a X.XX% XXXX. This through year we on year’s overall conduct most quarter. remainder you process strategic each focused third

fee range with to the to for and adjusted margin range to to X.X% as to a However, of X.XX%; a the X.XX% mix to down range X.XX%. we acquisition, range assets expenses a assets changes to down associated X.XX% result business the targeted up a our of of to X.X%; BNC of

for to than currently or each we’re can inside better in expenses, operating you target see, except merger-related our for assets. range As the ROA measure component adjusted fees

of our us an have that of range. for target wealth to we six a will firm to footprint. followed years it I’d that that full For several expect to time, as we C&I to march to management X.XX, to as recall BNC X.XX a build asset midpoint eight range products management quarter expense stronger of inside the towards the work there. our our long for And and fees and period range those assets took implement had target ago, set treasury new we platform in of you

the we’d the in high-end near target overall the measure, to expect approach range As the component X.X% that operate range. of we of profitability ROA

continuous things that and of focus for One Pinnacle and quarter. in distinguishes of earnings I on is in current continues of peers firm you revenue went growth. the a that the our to forward additional period of the infrastructure the order third This give terms many relentless slide think in to propel from building how continually our snapshot

Of XXXX, significant towards most the in the acquisition is BNC course, investment future earnings.

already march Since very go $XX the in highlight as in the to synergy the convert I is number mitigated be previous to to let’s diligence mind, in one. the point, should in the synergy we down targeted Silverlake on that next million which and point calls, our on eliminations contemplated case original the several the you detail. last it early weekend, been this up job let fully to That because to associated The much we’ll this great the review so final of due key Henry XXXX. chart in should case, can the end over Day Beginning last our system deployed the Move how Pinnacle bullet Jack bullet on items crystallize timeline me risks under we’ve with I’ve continue see We with won’t case. quickly. implementation conversion. But in timeline. through Veteran’s be perhaps

bullet we issue. no that Jack that signed encounter And transition system Silverlake And pricing, BNC. BNC began to They the et during the no Pinnacle the change essentially more utilizing with the Pinnacle Carolinas the and with products further moving all Henry offices, Pinnacle ATMs, contemplated processing we of Pinnacle September, in the other words, cetera. Virginia. to brand XX, transition Pinnacle that occurred are currently then has During one In for Pinnacle point core should regard. clients on on that client in August completed

for Carolinas the in the BNC conversion system been clients no same further August. that since regard. Pinnacle Virginia we’ve again, should the in change processing remains that and legacy clients to So encounter of is All the

XX% BNC work proud of our plan plan they the the So in produce to targeted our in and earnings worked I’m conjunction associates which accretion we merger. precision the with order extremely our nearly with and

producers. revenue investment in growth future second hiring largest the is additional of The

times, we’ve act I activity if which opportunities? say his can additional number all hiring Carolinas would afford point, added Rick and you in And of M&A team us M&A total, a were As by the is, my yes. North asked XX this in to in Carolina at see, the – XX Virginia. and year-to-date of the that answer might Callicutt We’ve been hired

growth else, we a I I we’re to The revenue revenues. Let see regard. trust think, to and mortgage company, brokers, a have forth. if reason me producers, we we include expenses, can so about is, grow where talk preferred that originators, anything which manage going managers, paint relationship administrators I in this above picture are revenue Generally, so better

And Carolina key key Virginia, our is so build the to is the and potential our C&I the large a I of there adding growth. revenue in revenue realizing out producers capability. think, case But to to

least, Obviously, banking brokers, and revenue managers you substantially intend than when to greater that. And total five-year so forth producers number of hire, over a XX we at time. private of period to originators end, mortgage C&I so that include and be the will relationship

well, watched you, profitability over of incredible we’re when be our say strong, during asset think loan current to those quarter for and firm may order net of we I finally, target revenue performance the you that in really continued terms that’s against say, to growth. investing the then I quarter hiring extremely period And inside our in me at like just expense merger you rate this that with third during about years XX.X% of expensive. understand organic the reviewed the going of get growth and To integration. growth in talking and X.X%. X.XX% the linked that targets sounds to skeptics But expecting a we’re to done annualized propel we’re forward was period to us what that’s earnings

review So with a in-depth the of it to that, let quarter. over more me Harold turn for

Harold Carpenter

denotes revenue revenue first the million quarter, raise, quarter from revenue first attributable increase our as debt revenue with $XX QX, and which bars third on $X.XX Carolinas per Virginia. We the reporting quarter to between by we XX% third per Terry. Obviously, the share time. of Revenues Total $XXX spread discount green revenue chart; and quarter is Thanks, believe annualized $X.XX and capital goal the diluted, the the the million $XXX increase. for second per accretion new between share. the per share in reported amount blue and our per with per over this our quarter share continually shown million represented the revenue per increased share million quarter our income line in the $XX.X of of substantial in on two increase our the share in in increased $X.XX to of impacting dark quarter a second our the quarters. to on chart The markets rate share growth

a As per share earnings know, you easier lot to per when share it’s growing. revenue grow all is

forward as we well pipelines, our the client to the fourth strong footprint. throughout our remains our As applies quarter, This to recruiting pipelines. as both pipelines look

impactful, As accounting, will results lessen on but it impact to time. over gradually its purchase be our should

is quarter This loan discount posted Thus in $XXX.X a the strong excess $XX.XX $XXX loan second of We quarter, in loans, organic or the the Tennessee Concerning the to Carolinas accretion amortize of $XXX in indicates, our combined go net to for Bank billion compared us to footprint, income growth firms the two least, average XQ loan second us, balances. franchise. $X.X quarter. was next in $XX $X.X approximately which million far, loans million increased compared million quarter. in million particularly quarter $XXX of the the an the in the to million in over it and third to XXXX. growth loan amount quarter. to believe, recognized the We the have $X.XX which fourth into a produced the million compared We loan $XX thus of forward average at quarter to their billion and excites approximately organic discount including increase anticipate, of $XX.X the pressing million billion XXXX, the end three third $XX in was to chart years. in third merger, quarter second as In in accretion significant for in had expected $XXX growth, prior far of North billion fourth million the million approximately the of Virginia, in in loan with Carolina we our two grow as obviously firm at net

in by the loan quarter increased yields compared was points accounting quarter purchase to basis quarter. to XX impacted yields quarter. which X.XX% As this last this XX loan the chart to X.XX% Impacting prior indicates, compared positively points accretion, yields our basis our

of increased The the quarter loan compared X.X% of yields. rate increase in funds quarter Fed slightly impact second did of from help June our yields X.XX% to the core in the XXXX. in late purchase core XXXX Excluding accounting, loan third

X.XX%. from However, XX were that ended loan core of of that footprint, North at yields our yields basis Bank we’re lower pleased Carolina so the Tennessee points than

the maintaining low deposits, base, our third funding costs. able here in As to again, we’re grow to while quarter, funding

the aggregate the XX quarter. at third costs increase Our points in stand X basis did funding for and quarter from second third points the basis currently quarter

North As and pricing, of to two negate of Carolina – be items, due out change point increase it X basis the Thus, two backing the increase cost items each increased quarter to costs. minus rate other. Bank These X the due points. purchase increase, plus to deposit workout in were reduction accounting costs of cost overall our impacting full points in the the basis matters to X end a appears items overall and about which around were basically two funding a a the a of funding funding funds. that basis actual is at day, aforementioned is of Those

June, So X we XX a rate increase late Fed point point call XX%. is it or over funds the believe basis our beta in basis increase

As several The continue but in pace for for rates environment, increased in rising to general fund a two most to will prominent a pipeline. pressure the we’ll future, costs also factors increase are significant to loan deposit measured deposit a need rate

and of to the volume this the our has have depositors won’t funding. is far fourth articulate increases to Our both strategies. With a increase serve relationship quarter core are North no $XXX in our sensitivity, reason quarter reciprocal on and bank managers remain affluent loan liquidity our as We and in as to million an work deposit we more consumer create of to of that deposits, book about experience will well asset both the out reduction supplementals, includes key security value we’ve as Caroline, believe Bank commercial deposit selling and utilization in broker a earnings. involved occur and growth well In in accounts firm. focus in endpoint. sheet typically growth advances year. equation completed deposit balance as Funding restructuring there’s wholesale experienced which a in which market the ability We think with was funding, home endpoint our to competitors. federal our significant There chart our superior

net NIM our from work we’ll reduction work will of will to all but to the fees Switching impact $XX margin the to to – on sheet, million and with income, noninterest $XX margin, which quarter. remain we next million income in we due core still now growing believe, hard the experience see over several balance the some we should asset likely accounting, purchase to a compared impact second consistent in reduced we these quarters. growth. amounted overall interest maintain As to We sensitive hard

terms residential $XXX of mortgage yield at had loan million this with group Our another of in quarter sales quarter outstanding approximately a spread production in X.XX%.

$XXX,XXX million quarter, XXXX. from this of reporting Healthcare We’re Group $X.XX up quarter of revenues third Bankers

percentage in of their We exceptional million Offsetting on XX% in the are or given to be year. is $X.X Amendment that and us attributable million and other in income by and meaningfully this given loan point quarter. in with the an started of and Durbin most quarter. Their $XXX,XXX again XXXX, sales far. strong they Xst were advisory third in believe fees, amount. Amendment, year the increased experienced will $X the $XXX,XXX contributing net this We be fees in the range, to pipelines loan the improve at quarter this larger of PNFP, XXXX increases ownership fourth for in We over interchange Interchange best last noninterest which up should impacted increase their are the quarter by the to impacted third in Capital of plus to Virginia. bulk continue credit that the early performance We were reduction to up by quarter also quarter. consumer in fourth quarter. were XXXX. SBA XX% estimate other XX% quarter Virginia fees July BHG will for quarter, anticipate the Carolinas quarter markets this ownership very optimistic the that we the Durbin the that and equates also for experience the Carolinas over growth revenues last which which third

was ratio was to ORE efficiency back a efficiency XX.X%, GAAP our Now while and excluding charges our ratio expense basis core on operating leverage, merger-related XX.X%.

with to the the amounted Virginia. expense and attributable noninterest quarter of a third million Carolinas Our to $XX.X increase increase total significant amount

incentive million Virginia. Salary the X,XXX footprint, the headcount attributable First, project of quarter-end, for amount expenses. quarter goals. our sales which was increased you incentive costs of based that incentive our and personnel are each followed at one of plan to story quarter. costs, were on We not many for know in years got based that proportionally to individual and the full-year second begin and we’ve almost which annual to FTEs on $XX.X and Virginia up cost how September Those over have that’s works Carolina accruing the corporate our XXXX, concerning Carolinas approximately results, system XXX

still XXXX. than ROE a targeted accruing are for at We less

set only also to get we’ll but big so we’ll back here, know, numbers. hard hit continually we we back You to around those incentives, our reduced if it work get targets

earnings rate we we and incentive If keys run increase. expense our incentive the case If get earnings of our point, the targets, be conversion, reduced. the deployed. is A and don’t, quickly costs emphasize is the to are the which of to our expense case will Obviously, incentive linked. indirectly revenues mid-November. anticipating Just going accrual technology hit synergy will occur in forward synergy how critical will component one

portion our that into guess won’t As until case got think will target, until expenses synergy bulk annual the fully lesser XX% find of the deployed perspective, way best first My to run still we a largely some synergy is realized currently, XXXX. our later not yet rate XXXX. from P&L result, by case think million XXXX we a synergy about enough of of harvested Of $XX those their the year. amounts our but is be will being in with in the year-end and quarter have we’ve we

about our on Excluding in which quarter as afford merger on and we fourth up those can where the additional end quarter know, spoke hopefully be will I run incentive costs, just costs, depending whether the third you slightly rate costs. expense we higher

be few the over of fourth we’ve hires base meaningful impacting impact expense will several made months. the Additionally, last quarter the

call our charges XX% is Most, one-time Terry million the the next way will XX% guess best our wrap or remainder to we have the not the about cost, incurred its that back anticipated merger work to in up. turn that to of if back $XXX we on January. merger to quarters. of pre-tax I’ll will two P&L in all over it With that, through As over

Terry Turner

Okay. Thank Harold. you,

with you done, both on extraordinary have done focus going extending specifically growth the able the chart forward, here create to market grip been get we XXXX. actual Chattanooga, begin growth opportunity to previous help Memphis on intended the of to we is As and were we’ve we’ve acquisitions which in a a

can philosophy been slide, our Starting think the XXXX, it year-to-date markets. generally as national I larger deposit the has hiring you the the in see loan look markets is bottom in revenue our slide strong producers see you XXXX Again, growth then competitors first instructive been very in and in and growth core at Carolinas to that and this both the relates you successful move those entered opportunity as and dramatic hiring that the And overlay in continues. you up have and methodologies, we of it regional growth. extremely dramatic having that XXXX, see, and dominate at which Virginia. momentum against our

You client having that track combination and is market to the the the of see mortgage bankers, and can our so brokers originators best many ability experience distinctive of in desired result.

growth relatively Our these markets extremely newly is strong. in trajectory acquired

cultural me than our there, other on time that integration the reiterate call, we won’t and and and have Pinnacle purposeful a quarter’s Virginia been Carolinas last believe. to go have the back inculcating so the to I culture created among let about great BNC in associates excitement systematic amount move this the to I now and fair a progress on the I So discussing there. of spent

first in cost should XXXX. get think, we to just contemplate harvest earnings And as fact in to position hit quarter revenue be pointed won’t out didn’t despite revenue I substantial in we synergies, while that stakeout the $XX there roughly deal announced, believe Harold until a in XXXX, synergies mid of accretion we the we’re million the the we synergies. XXX% order

And origination estate which residential is cards on commercial name My spread which that’s a platform, just then purchasing that is mandatory right XXXX, cards points of few. over meaningful range is things earlier despite course, converting that loans book. contemplate XX basis a robust, by previously to relationship quarters currently mortgage to help And been $XXX to business building it managers momentum to call, the asset eight already I on BNC we their residential commercial heretofore into treasury the a a with capability to has to might more BNC brokerage, all fees not forecasted meaningful convert Back-to-back call. Permanent that, and for take of client fixed. product had realize the BNC XX should had a process that sell to like synergies guess clients the the on best our real as offered. to mortgage about premium has of swaps, delivery the had not magnitude in efforts floating we’ve Specifically, production, already credit expect five-year talked now out the to which established. mortgage to including the on be period discussed, that, discussed opportunity us business, floating build concentration fixed been heretofore to hiring widen yield target management I million six able basis, specifically of C&I a we from time. C&I or their earlier BNC roughly not

range. like in the firm, X.XX% that of you effort the translate already to into that earnings in target and we’ve high-end potential of felt XXXX, market like didn’t much we all understand an of to our ROA roadmaps Now when financials, to given our really the X.XX% the

organic produce here’s growth combined the intend to we through XXXX new so in existing And asset footprint.

straight a line. just right won’t grow me Let say it on now,

no be some ROA no of will expectation midpoint the you for every But the be target on will to range target, the ROA quarter, be exactly quarters or quarter be asset growth second growth the our of and additional won’t current future and will quarters some than some earnings begin certainly quarter. almost My third and higher lower. markets. quarter’s less sense guess with First with the M&A new get is

don’t know, you organic high-growth anything. So you expect far in footprint, always in we to do substantial. existing targeted. as we talk as to about we have which be that markets can other But southeast Obviously, see, our the highlighted we growth have as as

just fully sure beyond I it don’t we I because make you want don’t already rehash growth. pretty our if on growth more I know, be do guess have you opportunities intend expect But for the layer – to is you. that But that As that trajectory still organic we additional thing. discussed earnings previous today, growth do saw, to will discussed other slide and we’ll calls. just sized I call on we’ve opportunities fabulous, another is, afforded to this my

Let those me want say, was it call I seek we as the this been hiring potential forward, move wrap much the in most crystallizing C&I up, growth we latter growth and out half in talked Carolinas to footprint. earnings in regional is into markets which new this focused with model our we’re deploying of meaningful that shareholder dominate advantage idea. these a conclude taking and of on growth our market to recent organic really to What produce The we’re and national proven experience Memphis so on that’s and markets. on in the we successful we build as model operate platform outsized of large what focused is Virginia of we long-term both markets our as that the high-growth the vulnerabilities aggressively the focus two about franchises our in we Chattanooga in as value. markets continue has To end, existing currently large in

extensions opportunities As it’s in mentioned, fill of market high-value other existing we’ll accretive extraordinary do in guess integration But is, that’s BNC, the enough. footprint. my an I M&As just our have successful as finish we or to opportunity, frankly,

the in not way a And in of other luxurious in being opportunities, so pressed the lot we’re what’s than incremental truly any really to position best of interest do a of but having shareholders. anything long-term

really and there stop I’ll questions. it So I open for we’ll think

Operator

now comes you, for question following Turner. Mealor from floor open the [Operator from The Catherine first Thank KBW. Instructions] Mr. the And questions of our line is presentation.

line Your now is open.

Catherine Mealor

Good morning. Thanks.

Terry Turner

morning. Good

Catherine Mealor

First on expenses.

at you in the So, expense that mentioned we But incentive Terry, accruing quarter-over-quarter, accruing award stay the – that second increase target. you’re still same saw you’re specifically that below quarter? comp or mentioned or still you did your incentive that in levels Harold,

Harold Carpenter

No, up Catherine. it quarter, this was

think, target around were third and up it at quarter end of I the the to in like XX% accruing that XX%, raised quarter. the something at here XX%, second we we’ve

Catherine Mealor

Okay, great.

Okay, picture that’s Terry. helpful. And then a question you, bigger for

time you as hit put enough need that So ROA on point and get kind of $XX think at I to additional goals, change you really deal do earning or balance goal, any formula? company. target to your And capital to strong X.X% could capital can to you sheet, of the M&A for accrete that expect you think it two to out-year you’re growth? some billion to without you’re going that over we needing thinking about talking a about will with activity, the those about But you that this more that’s raise to a of do capital, capital outside support raise know, X.X% level

Harold Carpenter

bit to about We think of that going think just costs into we’re I our not over Harold. merger that quarter, two need not in capital we I’m are go kind capital. we’ll kind any don’t markets that. able way right – accrete right little to get now, common to to we’re we won’t a do time We take saying, had to – Catherine, but don’t going not is may The out. impacted be diluted the or some a I’m need working to probably now, to raises. million debt But time, models this capital any raise. I of $X sub-debt this

I be okay. we’ll So think, anyway, yes,

Catherine Mealor

Usually the little to EPS. get was bit And helpful commentary that then bit any Florida? revenue that’s a third give to a on Okay, that of I of or Irma, was an the linked bigger we lastly, maybe commentary credit-related quarter. see light was on BHG ramp maybe from related they’re terms down to BHG? and Hurricane in whether given you it in Can quarter the fourth in trying

Harold Carpenter

quarters. probably there for way Yes, think to issues that impact have they’ve some Hurricane is, happened or now in worked I what was there three through down Florida. collection been four the some But their

And optimistic – to so strong quarter third they’re post pretty that able they’re be going fourth to a here. really

Catherine Mealor

All Thank Okay. great. right, you.

Operator

O’Neill. the Scouten from you. Stephen And Sandler line our of next Thank question comes from

begin. may You

Stephen Scouten

you are How morning. good doing? guys, Hey,

Harold Carpenter

good. Doing

Terry Turner

Good. you? How are

Stephen Scouten

mean, Hey, with hit fair you I say, following question doing XX% still it mean, to assuming to well, on there, just mean, Harold, BHG, I Doing that seem well. so intimate. I you’ll which Catherine’s appreciable think is kind need right pretty up near million. mean, in of $XX deliver? am that’s I of is to – a I you’d there the in quarter what ballpark can you see jump that fourth they

Harold Carpenter

think you’re yes. I close,

Stephen Scouten

little side the I strong But footprint the in I number. and combined I’m and a bit And thinking incorrect fell on expected to, a nice. about Okay. color units expectations, guess, I or combined your within as obviously were as mortgage higher give mean, Can fees, relative mortgage any well, how maybe you really also good a the basis, me have would BNC there fashion? if it mortgage is that quarter gains given how on to its was an

Harold Carpenter

flows. business quarter are impacted that No, increases on where group, the mortgage I the think, the I’m but pipelines some do their during sure not they have rate today

They’re Carolinas Ross think, now. in to the additional and I and group Virginia are brokers. some mortgage his recruit right looking active

the environmental, firms your production when quarter, So I I two million to expect think, pull guess, Steve. more would we don’t it’s you see more together, $XXX I there in the assumption think, than in about

Stephen Scouten

obviously, just Okay, a would strong, the on the the Carolinas But overall in impressive. $XX than maybe million expected. that’s maybe Tennessee market And fair. growth in loan lighter have then is I extremely growth, was little seems which

new mix? to on up just from and going kind is of So Carolinas I a there the what’s that of kind platform, XQ Virginia? driving for to business XQ note, move anything that growth or that’s adapting changing of mean,

Terry Turner

Terry. is this Stephen,

I wouldn’t change on can’t And I there. things have imagine some of a impacted going lot think couple that in that of impact. are got there obviously a

sold. quite think CRE. pay number and of I of honestly being with their bigger result had really high is extraordinarily downs markets And good impact the that that, saw people actually going they to to do the concentration in period during a their as projects permanent a

they headwind in had downs. side really think pay I their some up again, So CRE

Stephen Scouten

Okay.

Terry Turner

to a you expect I you But we’ll can to as We to continue downs. think, on see I us know. two, meaningful for pay double-digit again, be growth, they’ll, quarter loan the that likely or think, count next all

Stephen Scouten

really Yes. helpful. No, that’s

is people Memphis just one from hiring front, five Okay. And the and revenue guys obviously, number on year-to-date. the and producer XX Carolina me, you in then incremental for last one give Chattanooga look like

always So the XX to you more if what obviously, some years in lost have guys if that’s think I that experienced now, there is that math, Nashville? I been and have it correct guys net-net about for do lenders. you’ve Nashville? in you say do And you people hired case, how lending mean, your personnel

along younger begin out we those and So of folks affect a maybe phase their in transition? that should think how careers bring you turnover or the about staff, see some I to

Terry Turner

revenue can Stephen, that of that think revenue to producers I that left. think in trying just the three came I acquisition through subsequently turnover. think through I’m back

And two on the I than Pinnacle or a normal can’t so two producers anything in find might one legacy think footprint. there. you other or of retirement

an pretty do plans, add continue to fear our workforce here, level and transition interesting We ability to aging specific an have really on have you’re So the but people. theme. relationship we to down don’t

I think some $XXX six good that’s total and of fact We size the brokers. But lift book. a the had the basically, hires. actually their meaningful was that pretty assets of out a we’ve business, brokerage under Harold about again, people, alluded support million to made in management sized in

we just that so And since lift out made quarter-end.

people just capability in to hire I my again, so our to an And belief is anecdote here that to gave as strong. say Nashville continue you is

Stephen Scouten

Perfect. another Congrats really good quarter. on Thanks, guys.

Terry Turner

Stephen. you, Thank right. All

Operator

Jennifer Thank you. line comes Demba. next And our from

now is open. line Your

Jennifer Demba

morning. you. Good Thank

Terry Turner

Jennifer. Hi,

Jennifer Demba

here. there’s Terry, I you Atlanta just your in interest not if could and on many targets wonder, M&A elaborate

if wondering a Just then it’s to thoughts as wondering, here? C&I have feel you BNC now just just lenders in And presence follow-up, have footprint? what the necessary and are many how you your really secondly, a wondering

Terry Turner

take have a me to that. exact for give going let pretty very I a modest It going monumental Unfortunately, tell great are answer start was versus you with I and you me basis. number we’ve Well, the do don’t made go-forward the a there of over good I handful can’t me know. But let second in one front of to we couldn’t hires is but have don’t on now. we – not that – information any to guess, believe that’s a the answer I we first. I what so it’s that

commercial know I the on market question us. course, It’s that better the would market we other attractive I terms you And compete and us, landscape. And in, a think, say than great. on I it’s are grand you saw the resembles Atlanta do. there I of markets Atlanta, of growth because to to it competitive that think is in attractive market. dynamics an size

So veins, market. always talk the I novo Atlanta think secretive we all I as know, desire be about try it a our about not would I would transaction two market expansion look talk de an M&A you When like at about it to in make look to what expansion like. and to what

again, of an anything guess, number we of just I think with But just and Atlanta. those I And If on the come the novo growth I market we to M&A we nearing I you of doing M&A hell-bent the because trying for to do number fair acquisitions why in which about guess, I’m to or there questions and it’s But by this pace try of by us shareholders. I to Jen, come I probably agree do competitive us so make grow might So to Atlanta we to on that the landscape. BNC and come before might if might is dynamics keep both there, the best the like we could exists else. forth. look, have do going probably we’re or as But lot long-term of because we done for talked we’re think, and de And size expansion. clarify, in one, of say, like hammer point hey, genuine call. end limited. I that. interest I concentrate to about the were My it I is that trying to opportunities I we the desire home what’s a our targets want get of is we might say, do because

in we to pretty in serve. Atlanta. the even so real in it put way we right Atlanta currently doesn’t it just XX do think And see time I estate novo make de growth me the a markets acquisition, the if currently future months, it Again, substantial you get never for we concern to that been I to us can can by to we have that. But have, foreseeable haven’t even the last though found the for by could a or

for just of And so going again, go to we sport are it. not the

doesn’t fit with going that not We’re buy banks to us.

out I’m we’re of do and acquisition while or those better BNC, to going to not kinds we again by either trying undertake We’re hopeful de not it going might things. here get to overpay., get novo. we’re But

Jennifer Demba

Thanks, Terry.

Operator

the And Partners. our line Brian next from question with Martin FIG of comes

now Your line open. is

Brian Martin

guys. Hi,

Terry Turner

Hi, Brian, how are you doing.

Harold Carpenter

Hi, Brian.

Brian Martin

Thanks.

guess, how I if what the about the the Just back outlook benefits, the you’re you next your core a a about couple of just kind Harold, over of margin core kind talk of on just margin quarters? the on rates thoughts you just Can walk quarters. the you maybe of and for do thinking in things, have included couple of over couple coming through Harold. margin kind

Harold Carpenter

margin able we’ll the Brian, is think, well. I pretty be to what defend Yes, do

We not decrease costs. we’ve the increases remaining there’s although are a Carolina, funding as we with margins. as got in think We thinking not much significant opportunities not significant some in I’m see had. seeing there core we’ll back North in But

Brian Martin

And we that, flattish still more positive in in muted you it Okay. there or go thinking are is December, I an in is if a how increase as get quarter? guess, deep? about you first impact

Terry Turner

from the assets already we’ve the think No, absorbed given liabilities and Carolinas we Virginia? we’re and –

Brian Martin

Yes.

Terry Turner

be should increase us. to rate beneficial A

Brian Martin

talk then Okay, the in expenses the on But I the made, very kind third fair about little think on third you then in it. you just impact of that that. that the fourth paid assuming quarter I the missed takes and I comp, hires fourth to I if you maybe with, your guess, Harold, on give you going well a back in of recently you little kind hires in bit enough. about background the maybe missed talked expenses, think are guess, incentive quarter some some just color, is you’ve numbers? of number few can numbers and puts kind quarter, outlook, gave and can and – just I of about just But you I I’m the – it And is quarter of talked

Harold Carpenter

pretty mean, quarter fourth nice I they’ll rate. find hires quarter. we’ve quarter, into run fourth third the made And the some Yes, way over into their here the

to quarter. a it think, it’s But much not if at increase. as expenses be, will higher. I see the less quarter, third we’re increase in a going substantial as that there slightly fourth steady think core I will it least, don’t the just be in

Brian Martin

basis. absolute an on Okay,

Harold Carpenter

sure. For

Brian Martin

All right.

when into you fee is of kind of would to early or income be that late expect kind Okay. it’s about kind inside of right. of just the the you it’s get And target then get range Terry of end maybe that – kind I maybe I target range? talked type you think where expect the right – hear the it’s to to All kind of XXXX, of within the to your we and XXXX fee income new of be, did to your

Terry Turner

I said quarters, six but was think, specifically Yes, that’s generally I to accurate. what eight

Brian Martin

Yes.

all had, I Thanks so much. guys. That’s right. all Okay,

Terry Turner

Brian. right. All Thanks,

Operator

you. from our of Thank Stephens. from comes next the And question line Tyler Stafford

You may begin.

Tyler Stafford

Hey, good morning, guys.

Terry Turner

Tyler. Hi,

Tyler Stafford

of million it the Durbin you was million impact expecting, on hit. looks little $XX want start Hey, had like, Harold, annualized guys call a north only $XX quarter. to this it, to $X I I But million.

or So you’re of the and down some just delayed for reason, the offset extent step is some expected not there to Durbin you are able another that? Durbin hit from was to

Harold Carpenter

legacy probably Well, Bank accounts. would on was the There it thought we the of Carolina it a was on North deferral than franchise less be.

quarters So up after coming conversion. in it the we’ll the pick

next quarter So that of year. first the in will happen

factoring think, million be to I But we’ll we X.X some So were won’t $XXX,XXX. be to will $X.X that nearly additional hits. the see – we It X it saw.

Tyler Stafford

in that The $X.X saying? incremental you’re will hit million from BNC to be $XXX the XQ,

Harold Carpenter

Yes, I think so.

Tyler Stafford

within All expenses, that X.XX, average right, a fairly to of range in it. new imply the increase to expenses operating to be X.XXs asset got does that range. On large expense

savings X.XX or talking the after of hires about growth, you is, the the growth guess So, improve Harold, X.XX? see all my actually an cost will is for lower again, question range think do you there operating opportunity hiring you’re the BNC, are that range I you’d fully XX to expense that normal just to long-term from that and operating within that keep realized

Harold Carpenter

I is new Yes, well, X, X it’s X.XX think, the to number. X.XX to

the, X case operate is over is I within the able synergy really acquisitions. what guess, to – to to accelerates So that longer is ought X.XX be we on term. But our

pace So expense able far, to kind at our and over our people come down. our still to ratio to been of measured a history, and be ratio able we’ve both efficiency average see add asset our –

help give So high-end same bring credit folks the expense it, lot I call adding a burden. at not new units hires. significant, in extra we’re that in of volumes thought, to I an with of a of kind would our But lot the manage operational increased their our these time, to on ability

think we’re we Tyler? and got go to executive need out that place – Does go management, makes I So hire to guess. in I of – managers we’ve don’t don’t kind we need sense, that new

Tyler Stafford

does. it No, Yes.

that X, does that the for Maybe clears FHLB at that on expect reading out expectations that to X.XX XQ, be billion guess I margin, the would the I $X.X spike slide, XQ? X.XX. But to the or at to still X, just that advances you so quarter-end, Looking X.XX so helps. was it it’s that for in it’s

Harold Carpenter

go you to Tyler? can that back sorry, again, I’m

Tyler Stafford

Yes, sorry.

average the going the spike and in – XQ of that of the the perspective in So for $X.X just third FHLB the question billion were near-term in you’re advances there should on the in from go-forward that’s had the relative to if you a just end kind quarter. wondering period the There – I’m – on margin be forward?

Harold Carpenter

Bank. Yes, I do us leveraging think anymore with the Loan Federal you’ll don’t see Home

just accomplished the deposit should quarter based most quarter. that got our see third in growth the we’ve think, We on histories. core increased fourth I in of

Tyler Stafford

on sensitivity then And me for that. last for just here. asset Thanks Okay. the just

and asset any in color normal sensitivity see the new sensitivity I the profile disclosures find the right in deck, Now the your XQ with BNC, couldn’t second asset didn’t slide now? quarter on XX-Q

Harold Carpenter

to used think in files XX-Q that difficult have in of we’re been giving. numbers data are we because degree kind the asset for sensitive. kind it’s give those to you of this I of Yes, that don’t able calculations just But color we’ll our high And remain confidence we on us to we were primarily, – preliminary that detailed more disclose the give the two we are past, asset the merged. sensitive. where The lot we’ve a on

Tyler Stafford

Okay.

Harold Carpenter

get to consistent we’re we’ll files So those go disclosures. on all when – are the to system and right merged, that same same then two back or we’ll assumptions be so the everybody’s then data the do able

Tyler Stafford

Got it. That sense. make

and Okay, thanks, Harold Terry.

Terry Turner

All right.

Operator

from the comes Nancy Research. with line you. Thank next And our of question NAB Bush

line is Your open. now

Nancy Bush

gentlemen, morning, you? how Good are

Terry Turner

Nancy. Good,

Nancy Bush

the to buy somewhere change for be for but you, you forward unless Terry, well only think, have double that got you not the something, of going to especially it’s an a initial part past be future down premium, I And going it’s to they line deals that question anybody the sellers as a guys generally, a versus difficult community of an going goes know, sort you deals. now, capital your regulations banks In or dip. be for past, on as get when were the I growth sold there here. themselves, there’s to expectation will

just die? on that’s part of going changed awhile this expectations is the those have to or So sellers take something to

Terry Turner

a I sale that out I still of would and on dip They acquired methodology. subscribe expect were honest – then thing of donation any them of generalization, that I looking But I’ll not really at mean, know premium think mindset bank. CapitalMark, to the I’m the the sure, last with with kind for we’ve banks would has Magna, I as the that BNC. are that’s there double lot that there answer they’re of a of you, acquisitions, don’t into discussions Avenue of the been meaning, be our had recent the four all. not and entered the part a with

consistent I’m – attractive I because smoke. blow going reasons. period to an and One, believe, an what for And acquirer acquiree-friendly earned secondarily, think believe words. I performance they to other time, the not I an in I new that acquirer-friendly, trying their we’re and think, is, so over driven own. to can get of of of don’t two viewed believe they we a have stock the strong our they’re reputation I And as been I be accretion it has has so in mean, long stock bank

all we’ve the looking at way done in going look of we’re management. we you and deal that the If because hacking there management what the out go for continuity, not we’re so

We’re working it’s us a in think, incentive a have trading to reputation, every hopefully plan of include we’re both plans, plan, annual plans up meaningfully incentive means the pretty equity cash those kind things. just of they the comp and terms in which as come associated and honestly, we And place synergy to we’ve I negative which we done, quite a Nancy, in hard great with work. – deal have our with

that dip. all I double as so think it has, I believe get really is to catalyst served And a stuff the I’m going than more

Nancy Bush

Okay.

Terry Turner

But there that kind out are same again, have you’re there I’m off. the continue speaking to people certain of mindset that would that

Nancy Bush

some the second drawing in or Are done competitor come I if just majors? a of or banks? could that And you’ve Okay. hires quick have from BNC primarily from the The infrastructure, community question. the still ask you in footprint they BNC

Terry Turner

it’s I Nancy. mixed, would say,

banks, been small company banks that from other that there. We have but say market. over in really able But hired big of the hired peers, to number are there that the of we footprint, some make a I guess, from experience have we’re in hires a have obvious might banks that in not some community have have hiring major our been recently of we from but you acquired few that

Nancy Bush

you. Thank right. All

Terry Turner

Okay.

Operator

you. Sandler Thank our next question Stephen And comes Scouten from O’Neill. of the line from

You may begin.

Stephen Scouten

Tyler I had can I Hey, know sheet. the you borrowings, FHLB on efforts sheet? I release you I deposit balance asking in BNCN done about balance just down. on guys, wasn’t guys around you noticed some the that still you give but of restructuring if are question. broker was categories – the do what could or mentioned trying the the more of press one just were have remix sure follow-up to you as And already talk some color them,

Harold Carpenter

off was Yes, – side, I’ll a of One two deposits broker funding talk that there issues. one was, amount I’ll about priced meaningful were well, just LIBOR. issue, the on

two deposits. over rate so and one home And floating into We transitioned they Federal those were loan year. advances

bond at us. that book, So that also asset securities then one to had sensitivity had years least, created really their disappear. for really still. bond going well on started pricing their done over two-year acquired some, they scenarios, that municipal book, in yield And and a was had yield those we accounting quite through lot strong a our When few purchase the of

bond. new as And of and so we purchase that shortened lot book or accounting a securities the of because other municipal of brought impact a and

sensitivity were a that done we’ve try like things more balance asset So right more mind to to out sheet. that, couple sensitive come now or create that to that two of those of asset

Stephen Scouten

I really was it. That helpful. appreciate thanks. Great,

Operator

may conference. disconnect. thank gentlemen, today’s you participating Thank This Everyone does ladies have you. program in And for conclude and the great a all day. you and