Pinnacle Financial Partners, Inc. (PNFP)

Investor Day 2018

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Jun 7, 2018

All right. Welcome to Nashville. We appreciate you coming and being a part of it. We hope some of you that have been here a couple of days and will be here for a couple of more will get a better insight into why they call it It City. I guess, I'm required to let you know you can't rely on anything we're about to tell you because things don't always turn out like we hope. And we have some non GAAP measures that you'll find reconcilments in Harold's the appendix of Harold's presentation among other places. We had lots of questions here. Terry, what are you trying to do? What's the purpose of the Investor Day? What do you want to get done? So these are really the objectives here. Number 1 is to showcase the quality and depth of management. We're excited for you to see. We feel like everybody knows Harold and me perhaps overexposed. And so we want to make sure you have an opportunity to understand the depth of our management team. So today, from an organizational standpoint, you have a chance to hear from Rob McKay. Rob is not here right this minute, but he had another engagement this morning, but he will be here and he will talk about what's going on in Tennessee. For those of you who don't understand our relationship, welcome to everybody else's world. Nobody gets it. He and I are best friends. We're long time running mates. We're partners. We founded the company together. In this company, he is the Chairman's Board of Directors. And in this company, he works for me and is responsible for the Tennessee operation and the wealth management business. In our careers, I've worked for him. He's worked for me. We could do it either way. And so there's a tremendous depth, personal relationship that makes the management of this thing easy. I've tried to make sure people understand that ask about succession in case of emergency. My wife's instructions are bet on Rob. So that'd be my instructions to you, too. I'll just say quickly, for those of you who don't know Rob, he is a journeyman banker. He and I worked together in a small bank in Knoxville, ended up with First American, which was a $20,000,000,000 company. When we left, Rob was Vice Chairman of the company, having at some point in his career run the retail line of business, the corporate line of business, the trust and investment lines of business and the non banking businesses. And so he's a well skilled banker. And I'll just make this one comment because I do hope that you I hope we do some things that maybe help you with your model, but that's not the main thing we're trying to talk about here. We're trying to help you get how this thing works and why it works and all those kinds of things. And so I'll just say, so you can understand the connectedness to this market, Rob is extraordinarily well connected here. His brother is the governor of the state of Tennessee, his fraternity brother is Senator Corker. Senator Lamar Alexander is his father in law's best friend. And so there's a great connectedness that's powerful and helpful in terms of how we do business. You'll have a chance to hear again from Rick Callicut. Most of you know Rick. Rick and I have had a fabulous relationship. I think what sort of the common thread for us is that we're generally energetic communicators that love building things. And so Rick has done a fabulous job to sort of adopt our models and Virginia. He knows every banker over there. He's a Chairman just finishing up as Chairman of the North Carolina Bankers Association. So again, you've got this power base and connectedness that's important to us. You won't hear from Hugh Quiner, although he's here today. Where is Hugh? Hugh's in the back. Hugh's the Chief Administrative Officer. He is a founder in this company with Rob and I. The 3 of us worked for a small bank together in Knoxville. He worked for me as a systems analyst back in the late '70s. And so we've been traveling together for whatever it is, 35 years or so, except Hugh had a 8 year break in service where he left to go work for a software vendor. He worked for 2 different software vendors in Florida, one of whom is Kirchmann Corporation. Some of you may know them. They were a large builder and provider of bank software. And Hughes literally installed bank software all over the Western Hemisphere, and that's not an exaggeration. And so he's well skilled in that. He's also the most creative person, I think, among our management team. He really formed the relationship with BHG. He negotiated that transaction. He formed a partnership with another small investment we made for a company called CoreServe that is a front end processor for credit cards and it put us in a position to build $120,000,000 credit card portfolio in a scale business that otherwise just wouldn't be possible. And so I won't go on with all those things, but he's our principal creative thinker. I want to introduce Harold. Everybody knows Harold. Many of you know Harvey White. Where's Harvey? Harvey is the Chief Credit Officer of the firm. We've worked together a long time. His background prior to coming here was that he was the Chief Credit Officer for a multistate region at Regions Bank. He and our long time friends, I tell people Harvey was with First American Corporation when they acquired the bank that Rob and Hugh and I were with in Knoxville. And so the first guy they sent over was Harvey to come over there and sit on me and Rob and make sure we didn't give the bank away. So he's a great credit guy, but in his career, he's been back and forth, and I think that will be an important thing when you hear from some of our credit guys. They've been back and forth between the line and credit, which is a powerful thing. Harvey has been a Citi executive in the Regions organization as well as serving as a Chief Credit Officer. Rob builds the Wealth Management businesses and Kim Jinney, you won't hear from today, but Kim will be in and out, I think, who is our enterprise wide risk manager. So again, you'll get to hear from that group. And then underneath that, you'll be exposed to regional presidents. We've got several of them in the room, Mark Carlton, who's our Market President in Raleigh, Rob Ellenberg, where's Rob? Rob is back here, the Market President in Charlotte. Kirk Bailey, Kirk Bailey is up here. He's a Market President in Memphis and Craig Holly, who's our Market President in Chattanooga. Again, I think one of the themes that you'll see all these guys either started their own bank or started a de novo operation for another bank. And so again, you get this theme of people that are real live bankers that know how to build and move organizations forward. Beyond just the exposure of the management team, we want to try to get behind a little bit why Pinnacle has been such a rapid and reliable grower. We've done that over 18 years. And so I guess I want to try to help people get behind. Why does it work that way? There are 4 themes that I think you might pick up on as we go through the day. One is we've got, I think, a proven confidence in our ability to take the best bankers in the market away from large regional competitors. I'm always apologetic that I don't have some grand strategy. Really, we don't. We just try to get in urban markets dominated by large regional banks, get up underneath them, take their best people and their best clients. That's basically what we do in a nutshell. And so we're able to attract market best bankers. A lot of people say, how does that work? Tell me about comp. And we can talk about comp. There are some important aspects of it. But the truth is, if you think about the folks that I just mentioned in the Southeastern markets, it's Wells Fargo, it's SunTrust, it's Bank of America, those kinds of players regions, those kinds of companies. And so if in the markets that we serve, if you're working at those companies, you're in a very disengaging work environment. You're micro managed. You're generally reporting to somebody in some other city. You get your credits approved somewhere else and it's Service levels keep you from taking care of your clients. And so it just gets hard. And so that's really the vulnerability that we seize on. We don't hire people that have less than 10 years experience. The average experience of the people we hire is 27 years. I know a lot of people are thinking, yeah, yeah, whatever. Look, that's an important theme. It's really important because from a management theory standpoint, you have to build your control infrastructure down to the lowest common denominator. And so if you're in a company and a bunch of trainees and so forth, you got to put build a control infrastructure down there, which drives great bankers nuts. But if your average experience level is 27 years, again, you build a different kind of control infrastructure. The second thing that happens with that hiring model is you get rapid growth. People move their books of business quickly. It's much different than handing them a Dun and Brad list and having to get out, call and meeting people to loan money too, if you will. So you get rapid growth. You also get great asset quality. Again, these folks on average 27 years, if they've been handling a book of business for 2.5 decades, they know the clients well and, oh, by the way, they leave the bad credits behind. So it is a way to our zone, we're generally spread businesses. Maybe it's 75% of our revenues or 80% of revenues, but the trick for companies like ours to grow earnings is to grow the balance sheet. We do that rapidly and soundly through that hiring mechanism, which has put us in a position since 2013 to compound our fully diluted EPS at 23%, compound tangible book value at 15%. Hey, Abbott. Thanks for letting us know. The Harold will spend some time on the goal setting mechanisms here. I think they're an important aspect of what propels this company to do what it does, why it's consistently a top quartile performer. We'll talk about the goal setting mechanism, which is intended to drive us into top quartile performance, talk about the incentive mechanisms where everybody's incented to produce that outcome. And it is unique and it is different and it is distinctive in terms of how we match up against our competitors. And then the last thing, we do have an extraordinarily Let me tell you, that is the single most important reason why our performance is good. Gallup led the research data 2 decades ago that really built the correlations between an engaged workforce and producing outsized outcomes on productivity, on sales results and on asset quality. And those things link to share price performance. And so again, if you believe what Russell Footsie says about it, go back to 1998, take all the companies listed on the top 100 best places to work, build a balanced portfolio, sell the companies that fall off the list, buy the companies that come on the list through 2015, you produce 3x the market return, 300%. So again, when we get in difficult situations, which we've been in like 2,009, 'ten, 'eleven, my belief is our company can you can't hide from trouble, but we can get through it in a hurry. Do better in those situations because of our engaged workforce. I want to demonstrate the power of the Tennessee model. I think over the last 18 months, I would say at least 50% of my conversation with investors has to do with BNC and the integration, BNC, how you're doing, hiring and so forth, which is an important topic. But I think what happens is many people lose sight of the power of the model in Tennessee, the trajectory of that model, how fast it's running today. We're going to talk about hiring success in the Carolinas and Virginia, but I would say we're having even more success still in the Tennessee footprint. And so Rob will tell you that story. You'll hear from Rick. We do want to talk about the BNCN integration. Harold will have some slides. There are a number of things where we'll try to help you get sort of the distinction in our integration and others, but we think it's different and better. Just a quick reminder for you. What we said in the deal rationale from the beginning was case of BNC and they were largely a CRE Bank. That's an oversimplification, but I think you understand the model I'm talking about there. It was a double digit asset grower. And so we said we don't want to mess that up. We want to make sure we don't diminish that, that we keep that running that pace and doing that. But what we want to do is bolt on a C and I business, which is what we do for a living. And we believe the marketplace is absolutely right in terms of the competitive landscape. If you go back to the comment I made earlier about we want to be in large urban markets dominated by these large regional players, get up underneath them, As a As a quick reminder, we've said we want to hire 65 C and I bankers over a 5 year period of time. If Rick tries to cut a corner on you, he'd probably say 64 because that's what he committed to. But to make the math easy, I went to 65. There's 13 a year. And so you could see through the 1st 9 months, we're at that level. He'll give you an update on where we are, and there's tremendous momentum, I think, in the hiring. And again, I just try to make this point for you, not only are we hiring these C and IPrivate Bankers, but we're hiring a good number of other revenue producers that support those C and I businesses, particularly the wealth management businesses and so forth. So Rick will get you up to speed on that. A lot of people ask, well, how is it going? My sense is, it's going extraordinarily well In the Q1, the Carolinas and Virginia footprint grew their CRE business at about 15.5 and grew the C and I business at about 26%. And so that's sort of the play we called and what we've set out to do. I can't make that happen quarter in, quarter out, but I can make it happen a long haul. And so anyway, Lord willing, that's what we'll do. We'll talk about Wealth Management Businesses. Rob will cover that in some of his Tennessee comments. It's an important topic, I think, because as you think about fee income lift here, leading up to the BNCN transaction, our fee to asset ratio ran in the 1.08% range. Today, it's at 81 basis points. And so the path, a critical part of the path, of course, BHG is a meaningful impact on that. But the next biggest piece of that is the wealth management businesses. And so as we drive that fee income, it is critical that we build the C and I business, all the other revenue streams and fee businesses that go with that. And so I think Rob can paint you a picture of how we're doing that. I want to hit a little bit at the law of large numbers. Every time we make an acquisition, people will hit the panic button and say, wait a sec, you can't continue to grow at the pace you've grown at before. And so I guess I just want to try to make this illustration or this distinction between what we do here and what we've done at other companies. When I was at First American, I was the retail line of business head for a long period of time. And so the way I grew my balance sheet and the way I grew my P and L statement was really managing aggregates. I built product introductions. I built sales campaigns, direct mail campaigns, ad campaigns, sales contests, all that sort of stuff and that's how we moved our balance sheet, moved our P and L. And I think that's how virtually all my competitors view their path to growing the balance sheet. For whatever it's worth, we do the opposite of that here. We do virtually none of that. We, I guess, went probably 7 or 8 years before we ever ran an ad of any sort, never in the newspaper of high school annual, a television or radio or any of that sort of stuff. And so you say, well, how does it work? What we do, think about it, is hire great bakers and have them move their relationship. You can underline that word relationship. So we're managing at a micro level. When we hire somebody, he knows who his clients are. He's got an opinion about how fast they can move them. He's got a plan to move them. When he moves him, he harvests the whole client relationship, the loan, the deposits and the fees. And that's how we generate our balance sheet growth, is the principal driver of what our EPS growth is. And so we're not managing aggregates here. People have a list and they know who it is they're trying to move and at what pace think they move them and that's where that growth comes from. I think the idea of a geographic focus is also critical to us. I had a little conversation here earlier about one of the large regionals and just talking about the frustration due to the line of business organization. And it creates fragmentation in in the marketplace. People don't know who they report to. Or if they do know who they report to, they're in some other market and the guy sitting next to them reports to somebody else, creates a really fragmented approach. In our company, what we do is have somebody who's responsible for Nashville, Tennessee Memphis, Tennessee Chattanooga, Raleigh, whatever, and they run a bank. It's a community bank approach that's distinctive versus the large regional bank competitors with whom we compete. And I believe that, that closeness to the client that we create there is why Greenwich would say again, Greenwich is doing research for 6 20 banks on this topic. They're trying to discover what banks in the United States have a brand, have a distinguishable brand, 11. They say 11 out of 6 20 banks have any distinguishable brand. It's all the same, But we're one of the 11 and our brand is for 2 things, trustworthiness and ease of doing business. And again, I think this idea of hiring people, concentrating on relationship management, managing on a geographic basis is a really important geographic basis is a really important part of how that brand gets built. Give you a chance for think about how it works. The 2 most recent market extensions were by way of acquisition, both acquisitions in 2015. And our idea is we take a great company, we try to overlay our culture and hiring mechanisms, we start recruiting, we fill the company up with vibrant bankers, which will be distinctive versus our regional competitors and that has the impact of accelerating growth. That's the idea. And so you're looking at Chattanooga and Memphis in the period following the 2015 acquisitions. And so in the case of Chattanooga, they had 23 revenue producers when we started and over a 2 year period moved it out to 34 and then 39. In the case of Memphis, had 40 revenue producers. 2016, 2017, we moved it out to 47 68. And so again, you get this idea of getting up underneath these banks, taking their people and you get great loan and deposit growth that goes with that. That's the way we move the business. And so when you start looking at these compound growth rates over a 2 year period in Chattanooga, you increased the revenue producers 30% per annum, grow the loans and deposits basically 20% or north. And in the case of Memphis, same idea on the revenue producers and grow the loans and deposits at really extraordinary growth rates. And so again, when you think about the law of at a rapid pace. We'll talk about deposit funding. My belief is that the principal challenge for the industry, particularly underneath the money center banks, that will be the principal challenge for all of us for some period of time. So I want to talk about that and how it works in our company. Basically, our models require that we run 75% to 85% core funding. And when I say 75% to 85%, what I'm saying is basically we build our sales goals around 85% self funding. So auto commercial industrial unit auto produce 85% of its own funding. That's the way we build the sales goals. From an asset liability standpoint, we can operate at 75% core funding, in other words, 25% non core funding. And so again, I've tried to make this point. We gather that money through this relationship management strategy when we're not hiring lenders and trying to hire some depositors or deposit gatherers. We are trying to hire people that control clients and have them move loans and deposits and fees. And so that's a really critical concept here. I think what we call our client advisory group in Nashville is instructive about how that works. It is a C and I group. It's got 29 bankers in there, some combination of C and I and private banking bankers in there, 29. 20 of those people have been with us more than 5 years. And so that's sort of a proxy for a mature portfolio 5 years. Generally in that time or shorter, they should have consolidated their books. And so in that group among those people that have a mature book, the average is $99,000,000 in loans and $84,000,000 in deposits. And so again, you get this idea that sort of 85% self funding in a mature book is how that works. As you know, it doesn't always work just like that. Sometimes credit will be a lead. That's more a catalyst for somebody to move a relationship than the deposit side if you're just looking at the law of averages. So we have to do other things to create emphasis and intentionality about gathering deposits. And so I think an advantage for our company is starting as a de novo bank with we had one branch here in Nashville, north of Broadway when we started. And so we've had to be intentional about how we're going to gather this money, how do we move these relationships and so forth. And so I think our muscles in that regard are good. Basically, the way we do it is we hire RMs. We hire RMs of all varieties, but we do put an intentional effort to find those RMs that are net deposit providers. Private bankers typically fall in that category. We take our existing RMs and we focus them on pockets or pools of money like bankruptcy trustees, title companies, HSA providers, all those kinds are large pools of deposits. So if we can develop some value add or figure out how to get connected in those associations, We can tap into large pools of money. In our case, we have limited branch distribution everywhere. We wouldn't be branch advantaged anywhere. And so we have the opportunity to continue to add branches. I think in the last 2 years, we added 5 branches. And so that's incremental deposit distribution. We augment deposit branch distribution with a courier deposit pickup system. We've got several markets that use that well. Craig Holly in Chattanooga is the poster child for that and he can talk about how that works in his market. We obviously leverage a full suite of electronic banking tools. We have everything that our competitors do in terms of remote deposit capture for commercial clients and mobile banking deposits for consumers and so forth. We are beginning to utilize some mass market techniques. That's not really been a tool that we've used. But in the Carolinas, where we have better branch distribution and lower share, there's opportunity to do advertising. We're doing a money market campaign in that market with some success. That's a rate based deal, a 1.69 money market account. That's a relatively high rate, but it's not 2.03, and we're having good success. I think Rick will give you an update on how that's working. And then the last thing I would say is we do focus on non bank investments as opportunities. The thing we talk about non bank investments, BHG is a classic example. We got associated with them looking for some higher yielded assets. We turned it into a fee opportunity based on our percentage ownership. I mentioned this company, CoreServe, have a small investment there. The goal was they built a front end process of a credit card that let us build $120,000,000 12 percent yield in credit card portfolio in a business that we otherwise wouldn't have been able to get to. And so we have some opportunities. You're going to hear from Andy Moats, who the superstar in our company came from Avenue and is building out a music business and we're making an investment in company called Artist Growth that we think will be a value added provider that will let us corner music tours and the like to gather deposits through that mechanism. So those are all things that we do to focus on deposits. I'm going to try one more time on M and A, see if I can create clarity on that. You won't hear about it much as we go through the day, but at the conclusion, I'm going to walk down through A then B then C and give you a chance to ask any questions that you want to ask about that. And over the course of the day, you'll also have a chance to hear from BHG. And our goal there is simply to demystify. A lot of people have questions. Let's just bring Al in and let him talk about his business, what he's doing, how it works and all those kinds of things. So that is what we're going to do. That's it for my introduction. I'll be glad to take any questions. Jenny? Why they shouldn't why should someone not come to Pinnacle? I think the thing that people most frequently use is, hey, man, you're going to get over there. You're just going to be a small fish over there. They got too many superstars. You're not going to stand out. You're not going to do any good. You could do better to stay here because you're a superstar in our program. That would be the number one competitive challenge, I think. Anybody else? Yes. You stock your relationship management team with 25 year veterans in round numbers. What's the risk of running out of 25 year veterans in a market like Nashville or Memphis or Chattanooga? Yes. Let me do this if I can because I think Rob and Rick are both going to talk about that, Rob in particular. So let me just hold that one so we can stay close. But if you don't feel like you got an answer, I've got an answer for you. Anybody else? All right. Harold, you demand. All right. Can you all hear me? All right. I'm going to talk about Thank you. On the sales side. Okay. Change. Over the last 3 years, there's been a lot of change around here. Capital Mark Magna, Bank of North Carolina, Avenue, all that has brought significant assets, and that's what you guys see and understand and try to get try to grapple with in your model build. But don't lose sight that 177% increase in people. And that's what we try to manage around here is our people. Along with that, you can see these metrics on revenue per person, expense per person, assets per person, we're pretty proud of that. Those would be, we think, top decile, top quartile kind of numbers. So as we've added all of this infrastructure and added all these assets, we've added these people, but these people have come to us and produced revenues for us. So one of my favorite old CFOs said, cost cutters get paid 10 times earnings, revenue growers get paid 20 times earnings. So we want to be a revenue grower. You've seen these charts before or derivations of these charts on earnings growth, revenue growth, tangible book value growth. We're pretty proud of these charts. We're focused on these measurements. These are the ones that we spend all day long worrying about. But that's all historical information, right? So what we're worried about now is what the future holds. Tangible book value creation, dollars 24 north of $24 a share. Targets for this year should see a meaningful increase in that per share, tangible book value per share for the rest of the year and then going into next year. So we're excited about what could happen to that particular measurement here over the next, call it, 3 to 7 quarters. Along those lines, you've seen these charts before, the correlation between return on average tangible equity and price to tangible book. I'm not teaching you any new information here. But at the same time, we've got to ride the green line, right? There's still multiple expansion available to us if we can increase that ROTCE. Moving on into PE, to be honest with you, we're confused about these charts. We get a lot of questions about our PE. We don't understand it. It's almost like we like these names. We don't like these names. It's kind of the way it's kind of shaping up. So I guess the burden that Terry has, the rest of this management team has is how do you create enough tailwind in these shares so that you move from the middle part of these charts to the right side of the charts, right? Because apparently, the market is really not trying to is not differentiating the earnings part of this equation. So what we've got to do is figure out a way somehow, some way to move it to the right. If you've got questions, please interrupt me and we'll I'll try to respond to them best I can, but this is the most perplexing charts I've got. All right. A lot of change at Pinnacle, a lot of change in North Carolina. The 4 big bank mergers in North Carolina, I think if you look at the numbers, we're pretty proud about what we've been able to accomplish, what Rick and his team have been able to do. I mentioned earlier, we've got Ron and his team, we've got Craig Holly and Kirk Bailey here. All those guys led their franchises for many years and they're still with us and they're still productive. That's really important to kind of what our brand is during these acquisitions. All right. Get a lot of questions about deposits. How are you going to be able to compete on deposits in this growing digital framework? What are you going to do? All right. So our belief is with the large caps, they're spending a ton of money on digital and they're getting a ton of consumer accounts on digital, all right? They're getting small business accounts. They're building something, and as a result, those accounts are coming. We're going to practice the relationship bank game and we're going to keep on practicing that relationship bank game. We think we win at it. The consumer banking game for us is a slog. First of all, we don't think we can beat Wells Fargo, Bank of America or JPMorgan at it. So we're not going to try to compete with them on it. But in the consumer business, there's branches, there's high priced executives that listen to marketing pitches all day long, there's trying to keep up with how you incent people. All of those kind of things go into building that consumer you also have if you're going to do consumer deposits, you've got to do consumer lending. And that is also fraught with a lot of process and peril. So we're not seeding the consumer business to the big banks, but we're also not pretending we're going to be able to compete with them there either. So what we're going to do is go after middle market commercial, small business and affluent. That's kind of what we've been doing for the last 15, 18 years. That's what we're going to keep on doing. All right. The blue bars represent our annualized loan growth for every quarter. The gray bars are the median of peer group. We beat the median. I think there are 11 quarters up there, all 11 quarters. The blue line represents our cost of funds. The gray line represents the median cost of funds. They're related. Loan growth and deposit pricing are absolutely related. If we were only growing loans at 5%, I'll bet you my bottom dollar that that blue line wouldn't be nearly as steep, right? My deposit beta wouldn't be 38%. As we look into the 2nd quarter, that blue bar is likely to be just as tall as the Q1, if not taller. We're having a great 1st 6 months of loan growth. We anticipate this year being a bigger year for loan growth than we've kind of talked about low double digit. As a result of that, we think that blue line is also going to increase. All right, now, I know none of you are skeptics. Nobody is a skeptic. But some of you might think with all that loan growth that you're layering in heavy kind of big ticket kind of numbers that create this tailwind on loan growth. There's a little small chart there. I bet if I asked you before this chart showed what was our average construction ticket, you likely would have said something north of $900,000 Or if our average commercial real estate ticket is 1.3 $1,000,000 My bet is most of you would have said something a lot higher than that. We've got a very granular portfolio and thank Harvey, the credit guys, the line guys for producing this portfolio that touches a lot of clients. Credit, you can't have loan growth without good credit. We think our credit stacks up with anybody. This goes back pre recession. I'll just go ahead and throw another Harvey plug at you. He came to us right about the top of the bars on that chart and ever since then he's been riding them down. So we're glad to have Harvey and Tim and Mike here with us. Going to share some thoughts with you here later on. On deposit growth, Now in the Q1, our deposit growth was not good. It was less than anticipated. This quarter is going to be better. But I think what I want to make sure you understand is over the last 11 quarters, we beat our peer median 7 of those 11 quarters. And the way things run around here, just like that robs in and out, but the way things run around here is those quarters where you see less deposit growth, you can bet Rob and Rick are beaten on people saying let's go get some deposits. And sure enough, they show up. We talk about deposits all the time. We lead with that with the sales force. Rarely do we have to beat on anybody to bring loan growth. That just kind of happens. But right now, this firm has turned its attention to deposit growth. And I think that blue bar will elevate nicely. Loan to deposit ratio, that's the blue line and the gray line. We are now above that 96% threshold. To be honest with you, we can manage that blue line. I can we can manage it with wholesale funds. So we can keep that blue line below 100 with using alternative funding sources. So I wouldn't get too wrapped up about loan to deposit ratios. And again, you can see average ticket sizes there in the bottom of the chart. That's there for your information. This, when we talk about our bank, internally, we talk about the client bank and the wholesale bank, all right, the client bank, all the customers, all that. The blue line represents the cost of funds for the client bank. So that's what Rick and Rob and all those guys are running. The beta on our client bank is about 19%. The wholesale bank is where the funding charges are coming. My wholesale bankers are here, Brian, Jeremy and David, that's the wholesale bank. That's their responsibility is that goal line. So we count on them to manage what that line does, what the liquidity risk of the firm is, what the interest rate sensitivity risk, all that stuff, but they're on it. Now that goal line is going up, but over time, those core deposits will come in and that core that goal line may go up, but it will be less impactful. Does that make sense? All right. Here's a serious chart. This is our non core funding dependency ratio, wholesale funding, whatever, over time. The blue bars are us, the gray bars are median. We operated this model before Bank of North Carolina with a non core funding dependency ratio of 10% to 15%. Bank of North Carolina acquisition occurred, we knew it was going to happen. It elevated up into the 20% range. 25% is when we start having to think about adjustments. Does that make sense? I don't think we'll get to 25%. We may go over 25%. If we do, we won't live there. We'll have to figure something out. That's why we pay all these guys all that money is to go out there and get those deposits to reduce that non core funding dependency ratio. But that is the that's kind of our stake in the ground. Any questions? Okay. Flipping from deposits and we're going to talk about core margin here in a minute. All right. So accretion income, Try to eliminate some confusion around accretion income. We booked about $52,000,000 in purchase accounting in 2017. It's probably going to be $55,000,000 this year. That's about $5,000,000 less than what we originally thought based on how the pay downs are coming in on the non purchase impaired loans. All right. Next year, we think it's going to be about $40,000,000 So that's about a $15,000,000 reduction. That's not inconsistent with what we thought originally based on what the consultants told us we should expect on the runoff. The blue line down at the bottom, that's kind of what's happening to the unaccretable balance. So that thing will run out over the next, call it, 3 to 5 years. Now that's a $50,000,000 reduction in accretable discount, which will hit the GAAP EPS, but low double digit, mid double digit loan growth should provide ample net interest income to overcome that number and still hit our growth targets for 2019. Any questions so far? All right. Let's talk about our planning and our target setting and how we go about that process. Brock? It could get as high as 25%. So but we don't think that's going to happen this quarter. We think for the rest of this year, it's going to peak out here in the Q2. Where's Dan Stubblefield? He's there. So we think it's going to peak out this quarter. Our typical yearly deposit flow is that in the last half of the year is when our clients build their deposit balances as they go into the 4th and first quarters. So we're anticipating increases in deposit flows because of that. Steven? Well, because right now our loan growth is more than we thought, all right? And as Rob tells me constantly, Harold, lenders, we've hired a bunch of lenders and guess what, they lend Harold. So we're going to support them. We're not engaging clutches just yet. But if we get into that 25% range, we might engage a clutch. But that's still double digit loan growth with a clutch. Anything else? Did I hear you say mid double digit loan growth? Mid, low to mid. Low and we did 18% in the Q1. Okay. All right. Let's talk about this is important stuff if you want to understand how we operate around here. And I've got a picture of you all see the red slide on the bottom? Who is that? Darth Vader. That's who that is. All right. But he talks about his process. We have a process. It starts now. It has started well, it started about a month or 2 ago where we start talking about strategic planning. We gather data from all the markets. People like Craig and Kirk, Mark and Rob present information on their markets to us and we try to assess like what's going on in Charlotte, what's going on in Raleigh, how many branches do they need, all that kind of stuff to try to build out a plan over the next three and a half years that meets our growth goals. What's the old saying, begin with the end in mind? So that's what we do. We're going through a budget process where we look at what's going to happen what we think we can get done next year. That's kicking off now, so that we can kind of understand what the street expects of us in 2019 and how we're going to achieve our growth goals for 2019. Every week we go through a forecasting process. So as you hear about us in conferences and we start thinking, oh, well, something might change, it's because these forecasts are coming out every week that say, okay, this is what we think we're going to do this quarter, this is what we're going to do this year. So that the budget will give us a plan for the year, but it won't happen that way. We're going to have to make some changes along the way to create opportunities to hit the plant. All right. So the linkage between this planning process and compensation back in the early 2000s Mercer did a study and they said, okay, what drives total shareholder return? And they came up with 3 metrics: revenue growth, earnings growth and soundness, all right? It wasn't about ROA. It wasn't about efficiency. It wasn't any of that. It was about earnings growth, revenue growth and soundness. If you could kind of put in the recipe the right mix of those three measurements, then the share price ought to respond. So with that, we said what if you focus on those 3 metrics or 3 measurements and you set targets that consistently put your firm in the top quartile of an appropriate peer group and you incent everybody in the firm with the same plan, what would be the result? So that's the kind of plan we set up was the consultants go give us a peer group. We try to figure out, okay, what's that peer group going to do over the planning horizon and how do we get into the 25th percentile or the top quartile of that peer group? What plan do we need to have in place that puts us in that position over the course of many years? Now some of this is religion, right? You just believe it, but and you don't change it. We think that this process has served us well over time. So this was the math in 2017. So this is live data. We reported EPS of $2.70 revenues of $690,000,000 ROA of $1.11 When you adjust out merger costs, deferred taxes, Bank of North Carolina, we ended up at $3.53 $5.15 $1.47 Why did I drag you through all that algebra? Because what I'm going to what we believe is that our plan is much more objective and shareholder friendly than I won't say all of our peers plans, but substantially all of our peers plans. So last year, get through classified asset ratio, we get into the metrics on EPS and revenues, we ended up at $3.53 with an 80% payout, earnings of a 15% payout. So targets 100, we got 95%. The Board was kind enough to award us an additional 10 because we could afford it. We thought we could afford it because the plan has to be funded if it's going to get paid. So far so good? So what I'm trying to pitch to you is that this plan is only in play if we can hit our numbers. Here's a history of it. Over time, going back to 2000, we started the firm. That's the payout. The blue bar represents the named executive officers. That's Terry, Rob, Hugh, me and Harvey. Well, Harvey since 2,009 and what everybody else got paid. You can see we got goose eggs during the recession and during several years the named executive officers got goose eggs, again, because of what the earnings results were and what we needed to hit as a target. Down at this bottom right is what the impact of our plan is to EPS. So like last year, it was about $0.36 pretax, about 7% of our fully diluted shares on actual payouts. This year, it works out to be about $0.45 $0.46 pretax, that's assuming 100% payout. On the equity side, you can see on the bottom left, if you read through that, about $6,000,000 of the equity incentives are performance based. We'll talk about that here in just a second. But what I'm trying to say is that a lot of our incentives only get paid if we get numbers. And those numbers are set at the top quartile of a peer group. Any questions, comments? Kevin? Well, if we couldn't fix the headwinds with some other part of the P and L, then the incentive plan comes down. It doesn't get paid. It provides us a cushion. So it does. That's why we accrued 75% in the Q1. As we look out for the year, 75% seemed to be a fair number. There's $38,000,000 in that green bar thereabout in the incentive pool at 100%. Would do. Something they wouldn't do is, like, Daim, the funds ran faster than you thought. We're going to give you a pass on that. That doesn't happen. We're missing on the funding assumption. You got to hit it on the yield assumption or fee assumption or cut the expenses, but the idea is you got to deliver the earnings. So there is some discretion in there. As I say, if they're bona fide items, it can be isolated, but just economic conditions, if they're having to hit numbers, I mean, any of those kinds of things, all that's off the table. You have to figure out some way to make the algebra work. Okay. On equity incentives, everybody gets 1. Everybody gets incentives. We do restricted shares, no options. The leadership of the firm is on a performance plan. There's about 100 of us now that are on a performance plan. We have to hit ROATA targets. And again, most of the so 100 people, that means there's about 2,300 people who aren't on a performance plan that still get equity incentives. They're on a time vested plan. So it's 5 years out, it's kind of a glue in your chair kind of thing. So we always want to keep equity incentives out in front of this workforce so that there's an investment there. They only get it if they're here and if they work. So all right. I'm not going to go through this. There's a lot of catch up making here. But on performance unit awards, if I earn them in 2017, I don't get them till 2022, all right? If I earn them in 2018, 2022. So whatever awards I got in 2017, if I earn them all, I don't get them till 2022. That's provided we hit a soundless threshold in 2022. All right. So we think all that's fair and we think it's shareholder aligned. We're not going to go through this chart, but I talked to several of my colleagues who have recently come to us from SunTrust and Regions. So what this chart does is it takes a corporate incentive plan like what we run, compares it to a commercial incentive plan, which a large firm might run for their commercial bankers and then a retail incentive plan that a large firm might run for their retail bankers. Now a lot of smaller banks have adopted these similar kind of incentive systems because that's what the big guys do. What I've tried to do here is align that with what shareholder alignment looks like, what associate buy in looks like, what kind of associates thrive in these different incentive plans and what the administrative burden is. If you go through all this, I think you'll and granted I'm biased, So the tone and tenor of the slide might be a little biased. But we line up with this corporate incentive plan. We think it wins. We think it's the best way to manage a bank, especially a relationship bank where you're hiring 25 year veterans. You got to work in our market for 10 years to come to work for us. We average at about 25, 27. So it's a cheat sheet for you. All right. Here's a slide you're probably most interested in. These are our sustainable business model and where we think we're going. We don't have updated numbers for you, but we are leaning or biased one way or the other here. So we'll go to strategic planning with our Board here in a couple of weeks. We'll present this to them. And then probably Q2 conference call, Q3 conference call, we'll update with real live data. But right now, we're not adjusting our ROA targets. We think at least for 2018, 2019, we think they're still good targets. On margin, there's funding pressure. We talked about the chart where we're above median on funding. If I showed you the same chart on loan yields, it'd be the same kind of situation. But loan growth and loan yields are better, funding costs will be higher. Whether or not that we modify that 360 to 380, I'm not sure. If we modify it, it won't be much. On net charge offs, we may tweak it. We won't tweak it up. We may tweak it down. Fees, we're likely to tweak it down. We were thinking 3 to 5 quarters, I think now, Terry, more like 5 to 8 quarters, something like that, maybe on the fee goals. Expenses, we'll consider a reduction in that range for expenses because we think our the expense burden is coming in better than we thought. We're now in a target environment. So all the, I don't want to say, guesswork in what we think on expenses with we're now in North Carolina. We like the way we're set up in North Carolina, South Carolina, Virginia. We've got the people where they need to be, the right people in the right seats, all that stuff. So the target environment is good. So now we can get a lot more predictive on our expense burden going forward. Forward estimates. Normally people don't like to talk about this, but we're at a 32%. This chart, what it does, let me back up. It takes what like 2015 right here. On Oneonetwenty fourteen, our estimates were $2.12 a share. A year later, they were $2.29 And then the 2015 right after year end close was $2.59 We reported $2.59 See how that chart works? All right. So right now, we were at $398,000,000 back at the 1st of 2017. That was pre tax reform, pre bank in North Carolina. But Avenue was in those numbers, dollars 4.78, we're at $471,000,000 that's a 32% growth. The way we've been talking about that and several of you know this, a third related to tax reform, a third related to Bank of North Carolina, a third related to core growth. We think that's fair. So we still think we're in the ballgame on that. So we like that number. 5, 2018 next year is 10% growth. The candy weeded, that's probably not going to get it. So we need to be probably bigger. We need Dan is going to have to work harder. We need a better number there. So that's what this whole strategic planning exercise is about is to try to check that number. Do we have the capital? Do we have the liquidity? Do we have the growth, the funding growth necessary to support a bigger balance sheet to grow that number. All right. That's all I got. If you got any more questions, I'll try to respond to them. Do you all want to take a break? Oh, wait, Jonathan. Yes. We're only what the Street's got us at right now is a 10% growth rate of 2018. That's likely not going to be good enough. So as we look at the peer banks, try to figure out what it takes to be in the top quartile, we'll have to build plans to achieve that growth rate or whatever that might be. Does that make sense? All right. So Exactly. I thought you're saying 10% we're not going to get there. No, no, I'm not saying that at all. Dan hadn't showed me his cards yet. But my bet is that when we line up the peer group, 10% won't put us in that top quartile. So we'll have to ratchet up to figure out how to get in that top quartile. Because I think there's so much emphasis on core margins and GAAP margins, accretion income in or out and all that stuff. On the 59th, I think there's just a caution, there's still a caution flag out. Think if we can throw up that's not a good term, throw up. I think if we hit this 4.71 number, I think it will respond because just the runway of 4.71 is pretty strong. Any other question? Brock? Yes. If we modify it, it's likely not to go higher. It may go lower, but it won't go low a lot. I mean, it will I'm thinking maybe 5 basis points or something like that, something like that. That's just me. Probably after 2Q, we'll go to the Board here in the middle of June with the strategic planning retreat. We'll kind of talk about the next 3 to 4 years of what we think we can do with this firm. And it'll either be in the Q2 conference call or the Q3 conference call. And Terry gets to trump me on all that. So he gets to decide. Exactly. Can I just shout out for the accounts in the room? You all don't ever beat me up about taxes. We're doing really good on taxes and we spend all day long trying to get 10 basis points out of my ETR. Can we get some love for that, please? I mean, I guess I could reduce postage and you guys will be all fired up. But if I reduce taxes, nobody says anything. Right, Dana? Catherine? One more margin question. So on the last quarter conference call, you had talked about seeing an upward bias to the core margin. So it sounds like that probably is unlikely if you're thinking the range is going to be at the low end of that 360 to 3.60 I think will be on the lower ends. I think what we're going to try to do is defend the core margin this quarter. I don't know if we're going to be able to do it or not. That blue bar on that loan growth number is more than we thought. So with that comes funding cost with that. But I'm not like Terry said, not backing away $1.50 $1.70 on the ROA targets. The core margin feels lower, but growth is better. Expenses, you feel are better. Net charge offs, you think are better and fees. And don't forget taxes. Taxes are better. The taxes are better. Share count. The net is still the $150,000,000 to $170,000,000 ROI. Yes. Okay. A couple of things. A break, do you all want to take a quick break? Yes. Sally owns a lot of shares at Pinnacle. She wants to take a quick break. So we're going to take a quick break. Does anybody not have a book? Everybody's got a book. All right. Let's take about a 5 minute break. Let's hustle because you're going to want all the Rob McCabe you can get. Is this mic working? It sounds like it, doesn't it? Okay. All right. I'll go ahead and get started. I'm Rob McCabe. My responsibilities are the State of Tennessee and the business lines in Wealth Management, which are trust, investment management, insurance and also run capital markets. Those latter two operations, we run more as a line of business because of the obvious specialization. I've got a number of my colleagues today here in specialty businesses and geographic managers, which you'll get to interact with. I hope you will. But I was just thinking about what our collective mindset is, and I think it is that we expect to deliver the results that we're accountable for. We always have. I think as it's been mentioned several times, we feel like we have the best bankers available in the market. Also, we know there are plenty of other experienced bankers, primarily in their late 30s early 40s that can come to Pinnacle and reach their full personal professional financial potential. Our job is to identify them and recruit them, and that's where we're focused right now, and there are plenty of them. Harvey is here, but I would say underwriting is not an especially difficult pressure for us now competitively. What is difficult now is pricing, especially on fixed rate lending, irrespective of duration. That's the big pressure right now on the margin in addition to cost of funds. It's been mentioned our loan volume, our production is greater than expected. I think that's correct. We've got plenty of loan volume. I think deposit acquisition is much more difficult. Everybody knows that. We're highly focused on deposit acquisition and mining the fee business opportunities of the core bank. There are many legitimate reasons that deposit gathering is difficult. One, monetary policy and 2, just rising interest rates. I think our belief is it's a legitimate observation, but at this point, it's a conjecture which we intend to overcome. So that's our mindset. I'd not ask any of my colleagues, Craig, see anything different. Okay. Let's give you a brief overview of Tennessee. Here is our current franchise. You can see on the left, Memphis, one county Shelby County and Middle Tennessee, 8 counties and Chattanooga in the lower right, 2 counties and Knoxville, 3 counties. So we're in 46 office locations statewide in 4 urban areas. We are an urban bank. Terry has talked about that. We get out community bank. When we get outside of that footprint, we just don't intend to do so. We have recently gone into Southern and Southwestern Kentucky, principally because we have seasoned bankers that have relationships in that area, and we're very comfortable with that approach. I'll give you 4 slides just on these markets that are a little high level. Middle Tennessee is by far our best market, no question about it. We've avoided Amazon. Our goal was to come in second with Amazon, but not let them sort of pollute the diversified industry structure that we have. You see we have HCA, BMI. We've got all the professional sports. We talked last night about AllianceBernstein, which will bring 1,000 jobs here at an average salary, we're told, of $200,000 which is really a bull's eye for Nashville and the biggest trophy the state has ever earned. But health care is the number one driver. Music, entertainment and tourism, Terry touched on it. Andy is our expert along with Ron Samuels. Publishing, light manufacturing, etcetera. State capital should not be underestimated. They employ 20,000 people. And the key thing here is the population growth. The statistics show that there are 80 to 100 people today per day moving here. The unemployment rate is 2.2%. The MSA is close to 0 here in Nashville. We used to say full employment was 5%. Anything below that was frictional. I think that number has moved down, but we are very fully employed here in Middle Tennessee. We get our business from SunTrust. They're probably the top 1, 2 or 3 opportunity that we have, some mining at regions. The weakness the recent weakness in wells helps us. Renaissance is weak. And First Tennessee and some of the Wealth Management businesses some disruption. So that's where we focus. Knoxville is an easy to underestimate market. It is stable. There's a lot of intellectual capital there due to Oak Ridge and the University of Tennessee. The Department of Energy employs 20,000 people. It is a health care center, not nearly what Nashville is, but it does have diversified employment and it's beginning to get recognitions. Most of these have to do with quality of life, quality of life in Knoxville is excellent. It also has low unemployment rates. SunTrust is our principal well of opportunity once again and increasingly regions. Both of these companies run more lines of business structure, so local leadership and continuity is a disadvantage to them compared to our geographic orientation. Memphis, I don't know quite how to say it. Kirk, it's an attractive market, but relative to the other three, it's probably the least attractive because primarily because of its growth metrics. The unemployment rate is a little higher, 3.5%. A lot of that has to do with the ability of the workers to fill quality jobs that are available. Also, Kirk, where's Kirk? I think the population is really flat, correct? It's not growing. But still, it is the most geographically advantaged city possibly in the country for distribution. So you can see it as FedEx has 15,000 employees, AutoZone 5, ServiceMaster 2,200, International Paper 2,100. We're great stable employers and also great corporate citizens that support the core of the city. And you can see relative to distribution, we've got major rail line hubs, 93,000 logistic jobs. There is plenty of business there. We try to work on First Tennessee there, but they kind of are the kings. We do we're doing a little better against them. But once again, SunTrust and Renaissance primarily as a result of the Metropolitan acquisition, right, Kirk? There are plenty of talent there, especially on the commercial side that thinks Renaissance might be a little more commercial real estate and small business less commercial and more real estate and small business. Chattanooga would be easy to underestimate. It's historically been an industrial town oriented towards manufacturing. Volkswagen calls it his home, and there are any number of supply chain participants in the area, but it also has a legacy of light to heavy industry, which has been great to us. It's also near a heavy tourism area up on the Ocoee and up in the mountains. Dollars 1,000,000,000 of revenue comes to the city because of that. There's also great wealth in Chattanooga. There are 4 or 5 families down there that are billionaires that do a great job of taking care of the health and welfare of the city. A low unemployment rate, First Tennessee really does the best job in that market. I did not realize that until a couple of years ago. They've been a little bit unassailable, but SunTrust used to own that market when it was American National. Now they don't. They're weak. We're hiring their people. And Regions is also vulnerable. Craig, good with that? All right. Here's our success equation. People stated in different ways. Here's how I look at it. I think in every market, we have well known experienced leaders with stature in the business. They've been there. They are go to people. They're socially active, civically active and viewed be advisors in steady hands in any business or local or civic or growth potential activity that would occur. I think we have highly credible people in each market. And as we have grown organically, we've only hired people with 10 years of experience in the market. Harold has said that, and that's true. We have a very disciplined approach to hiring in that regard. Now when you buy banks, they haven't adhered to that model. So we have to work through the development of younger people. Some people don't quite make it, but then when we hire additional people in those markets or to fill out programs that we acquired, we adhere to this model. That's been a huge benefit to us in terms of being making quality geographic decisions. We have people that know what to do. They know when to raise their hand, when they don't know what to do, and that makes us much more competitive against the line of business people that are control oriented. We in the product and service lines, we compete well with super regionals. We have every product and service line. We have a FINRA broker dealer in Capital Markets. So we do mergers and acquisition consulting, valuations, strategic reviews, and we're able to do non public debt and equity raises for our clients. And we believe that on any over a 5 year period, 40% of our small business owners or middle market company owners are going to have some type of transaction, buying, selling, wanting evaluation or some succession plan, and we need to be in the middle of that conversation to get a fee, not only that, but to capture the wealth management result that occurs. We have little or no turnover, big advantage. One big advantage of that is that with all the professionals that we have, there are usually 2, 3 or 4 of us in the bank that know any one customer. The customer doesn't have one single point of contact. So it's a much more enriching and collaborative and overwhelming experience for the client. Terry talked about the attractive work environment. I wouldn't underestimate that. I will tell you, there is not a lot of disenchantment. There's not a lot of politics, not a lot of conversation about somebody's being mean to me. It's really the conversation, the tension is largely about delivering something that we promised to the client. 95% of our time is productive. Flat organization, I feel like I can go to Knoxville or Chattanooga, and I know the bankers, I know the brokers. We're a phone call away. We don't have a hierarchy. We don't pull rank unless somebody is really screwing up. It's just that simple. So it feeds our geographic effectiveness. And local decision making has to occur to take advantage of your geographic focus. Our leaders, Mike DeStefano, Missy Wallen, Ed White, Kirk, Craig, Andy Moats, we're all involved in recruiting, sales and service and civic involvement. We have a number of meetings on Monday. We have a sales on Monday morning, and we'll talk about what's important now. It's projected throughout the state of Tennessee. It will have anything to do from a financial literacy topic or capability we have that's underutilized on the fee side or a focus on something like deposits that we need everybody's total attention now in terms of how it affects the profit plan, the EPS we're expected to deliver and the incentive they expect to put in their pocket. All of that linkage is connected Monday. And we it just is we have 75 people in a room in Nashville and broadcast throughout the state. So there's no difficulty in understanding what's important now in our footprint. And we also let's see, we have a track record of success. When we go out and recruit, people know that we've been there a while, that we have some stature and we've delivered a result. So that helps us in recruiting people who may be looking, as I said, to reach their full personal professional financial potential. So all that fits together. Questions on that? These are difficult to read, but here's any number 15 or so of experienced market leadership that whose reputations and actions are in sync with the previous slide. Ed White, I don't think Ed is here today. Ed would be the pied piper of bankers in Nashville. He probably has a $2,500,000,000 $3,000,000,000 book. People want to work for Ed White. And he is the principal commercial force in this city. And he can handle 23 people on the span of control because they all know what to do. Go down the list, we got about 8 people here in the mid state, John Cannon, Commercial Real Estate. You can go on down the list, Ron and Kent, who came from Avenue. We've got Clay Hart here, who was the President of Renaissance here until about 2 months ago when we hired him. He's come over to our bank. He's a 40 ish person that's looking for that promise of professional development and financial literacy that we've made to him. Vissy Wallen and Mike DeStefano in Knoxville, Craig and Kenny Dyer, a great combination, and Chattanooga, along with Ryan Murphy and then Kirk and Lisa Foley, who's not here in Memphis. There are many other people. We have 200 people that I think could carry on a reasonable conversation with any of you. These are the leaders. And you can see where they got their training. You have these slides, right, copies of the slides. You can see where they got their training, all known names, and you can see their age. We have some people a little older. We say they don't have any expiration dates. We'll just see how far we can go. But we're intensely interested in developing younger people, not only to migrate books of business, but take people who had specialized experiences, which people tend to do now, and give them a more generalist view. Okay. This chart, which is the Greenwich Research for the full year 2017, to me, feels like the most evidence of the validation of the model that Terry and Harold have been educating us all on. In Nashville, we started in the year 2000. And you look at lead market share, you're the lead bank in Net Promoter Score, which I understand means willingness to recommend generally, right, Terry? So what you want to be is in the upper right hand box. So we've come from 0 to 23% or 24% of lead share and almost a 90% net promoter score. Or to go over to Knoxville, we started de novo in 2,007, correct? So applying the same model, the same disciplines, we've moved up to a 10% share and way over on net promoter score. Chattanooga and Memphis, those acquisitions occurred in 2015. And you can see the type of share and the type of client advocation we have in both of those markets. We're working hard to build share in Memphis. We pretty well doubled the size of our bank last year. That's where our most aggressive hiring is going on. So we're very proud of this and view this as a validation of the model and gives us great confidence that the work Rick is doing and his team will yield the same result. Busy slide, but this has to do with deposit share. Here are the regions. We have 46 branches. The banking business has a little over 1400 in the state of Tennessee. So we have 3.3 percent of the branch share. We have almost $10,000,000,000 of deposits. This was last year, 2017, June of 2017, deposits. That doesn't mean we're a great picker of locations. It means that we're able to leverage these locations because of the relationship, credibility and productivity of our bankers. So our branches produce 2.5x in deposits that ratio. We believe that significant deposits remain available in every market. That's because we've got tens the rest of them have 95,000,000,000 dollars That means there's a lot out there. So if we attract the bankers and focus our bankers on gathering deposits, we will be successful in funding. At one point, this bank had close to a 50% non core funding ratio, Terry, right? So we woke up and thought that wasn't a great idea. So we spent a lot of time working on deposits, and we worked that down in the core bank to 15% over time. We have an acquisition. We have aggressive loan growth goals. So we have to redouble our efforts. So plenty of money available. You see who the lead banks are in the respective markets. You can see most how dominant Memphis, for example, is how it's dominated by First Tennessee. Just a general slide about who we compete against. In Middle Tennessee, Blue, we don't compete against First Tennessee too much. They kind of have their group of clients. They're sort of they have a Maginot line between us and them. We're friends, but they're very competitive. But we don't generally go after their clients, but we go after Regions and SunTrust. We generally cooperate with FirstBank. We do participations with FirstBank. They're sort of our partners, and that works out pretty well. In Knoxville, again, it's Regence and SunTrust. First Tennessee, we compete against some, but they have been such an aggressive pricer in there. Long term fixed rates, that kind of thing. You just can't get the clients because of the pricing. But I think we have better relationships and far more influential commercial bankers in there. So we'll pick off them where we can. Chattanooga, First Tennessee has done the best job there. I underestimated it. I did not realize they've done such a good job. They're clearly the leader. We're at 10% share. We work on regions in SunTrust and some of the other banks that have smaller footprints. In Memphis, we kind of go after everybody, and that's paid off. We can compete against First SSC in Memphis. They're so large with that 32.7% share, there's somebody somewhere that's vulnerable as long as we have the right people. You guys good with that? All right. All right. Here are some revenue hires year over year. I think this is May to May. We've hired 22 revenue producers in the banking side. You can see in Nashville, we've hired 9 Knoxville, net 3 Memphis, net 10 and Chattanooga, that's not really fair. We had a huge hiring year the year before. We've also got 4 people that have shown up here in the last week, 1 from First Citizens, their market leader 2 that will populate our Ooltewah branch, which is being constructed and a strong producer from Cenovus, which will be in Hixson, right? So we've got 4 to add there. In Wealth Management, we've added, I don't know, 15. Not in insurance, we've added them in trust and brokerage in fairly significant amounts. And we're getting great traction with seasoned brokers in particular. We've done a great job with trust administrators in all of our Tennessee markets. We're having a little more difficult time in trust in the Carolinas, but we're doing very well on brokerage. In the Carolinas, we've added 5. One of these is trust, 4 of them are brokerage. We have, I think, acceptance letters today from a key broker in Charlotte and one in Raleigh that we've been recruiting for some time that aren't in these numbers. So our job is to deliver to Rick these product specialists that will mine the fee based business of the core bank to move this number from 0.81 to 0.9, right, Terry? And so as Rick hires bankers that bring clients, we have to be in a position with seasoned advisers to capture that business. So it's in tandem. All right. Let's see. Here are selected revenue hires. Andy hired Tom Fox. Andy, I would say Tom is a sports specialist. Is Andy in here, right? With a national practice, basketball, football, you name it. He's been at Wells. He's a well known commodity in the business. So Andy will have entertainment, music and sports and entertainment. I think Tom's hit the ground running, Andy. All right. Bob Edwards, I've mentioned him here. We hired a number of people from SunTrust. This guy is a pure deposit producer. He will produce $60,000,000 or $80,000,000 of deposits over a reasonable period of time. Rick Siedler was the Market President for Commerce Bank of St. Louis. Kent Cleaver and I recruited him for 2 or 3 years. He's come here. He's already brought us $40,000,000 to $50,000,000 of business in 6 months. It's helping us primarily in Kentucky, doing a great job in Kentucky. Just closed the big $30,000,000 in Paducah, right? So he's an adult. Clay Hart, I mentioned, was the President also of Renaissance. His dad founded the bank, Capital Bank, and he sold it to Renaissance. We were been in conversations with his dad over a period of time, and we Clay felt like he could reach his full potential here. We're a headquartered bank here, otherwise he might have to move to Tupelo, and he is extremely well regarded and mature for us in this market. We're going to build a team around him. So 2 market presence. Knoxville Michael Cole, SunTrust, Capital Markets and Banking background, Jeff Dobbs, a pure deposit producer on the commercial side in Knoxville Joelle Rogan, probably the principal commercial banker at Metropolitan before they were acquired by Renaissance, she came to us. Here are others. Jeff Carter is the market leader for First Citizens. Harold, tell me to speed up here. Okay. All right. Wealth Management, I have to say this. This Oakley Group we hired in brokerage had $650,000,000 of assets and $3,600,000 of recurring revenue. They've already migrated $450,000,000 in assets to $2,100,000 of recurring revenue moving from SunTrust. All right. Our loan volumes, this is, I guess, a 15 month period, December 16, March 18. By product line, we grew 21.7%. Last year, we grew about 19.9%. And then by region, Middle Tennessee grew 15%, Knoxville 10%. And you can see Memphis and Chattanooga, as the model begins to kick in with this hiring, had tremendous increases in lending. On the deposit side, similar period, we grew 21.3%. And so we funded our loan growth with deposits core deposits 97.3%. All right, one Wealth Management slide. Wealth Management for us is about a $50,000,000 business. These units, brokerage will probably earn 25 percent pretax, somewhere along that range because we've got a lot of amortization bonuses. The other 2 will earn over 30% pretax. So we make a lot of money in these businesses and get a lot of operating leverage. Q1 of last year, if you looked at this business, it was $9,900,000 Bank BNC had about $2,700,000 of that, about $550,000,000 in brokerage, dollars 1,000,000 in trust, dollars 1,000,000 in brokerage. We've grown 23%. They are about the same. They're up about $100,000 Most of the growth currently has come in Tennessee. That's because we've been populating their markets with these specialists that have to get started. And you can see the type of distribution we have, which is fairly diversified, which we're proud of. Then in terms of assets under management, Bank of North Carolina's numbers in here, they had $550,000,000 in brokerage and about $1,000,000 in trust, very strong trust operation over in High Point. And we've grown that business 52% in terms of assets under management, big numbers, changes in Pinnacle Asset Management. We've heard 7 brokers from SunTrust that are all in between $600,000 $3,500,000 producers. We've got, I think, an unlimited runway here. But the idea is to bind the business of the core bank and make money. That's what we're trying to do. Okay. That's all I have. I'd be happy to answer any questions along with my colleagues. If I may, Rob, real quick. In case you might not have realized, we are capturing this entire meeting on a webcast and there will be a transcript produced. So it is vital we capture everyone's questions and comments on microphone. So to do that, we're going to put mics at the center tables and we'll try to capture everyone on the edges with their own handhelds. But if you do want to speak or ask a question, look for Mike first. Thank you. We're good. Well, thank you for permitting me to present. Are we on? Or is that just me talking loud? I'll make sure some of you guys in the back can hear me as I'm talking about Q2 here. It's been nice for me to see some of the familiar faces and old friends back when David and I were doing all of our 1 on 1 meetings and presentations and things like that. So it's good to reacquaint ourselves. I've got really three things I want to accomplish this morning. One is to give you an update on each of the markets in which we participate, give you my opinion on where we are relative to recruiting in each of those markets and where I think we are relative to the conversion systems conversion and things like that. And then we'll talk a little bit about hiring and our strategy relative to hiring, where we are today relative to what's now become what I always find out what Terry is, we start with one number and then all of a sudden I go to a meeting and it's a different number. So he went from 64 to 65 on me there, but we've been able to get ahead of it a little bit. In the U. S. Of A, there are 51 MSAs. In the last 5 years, there have been 25 of those MSAs that have grown in the last 5 years. 16 of those MSAs have grown more than 5,000 people. Raleigh and Charlotte are in the top 6 in the country in growth. And if you ask people that are trying to travel down 17 and Highway 26 in Charleston, they'd say half the U. S. Of A has moved to Charleston in the last 12 months. I mean, it's tough. Things are happening in those markets, and we're seeing a tremendous amount of inflows. Rob mentioned earlier, Nashville, 80 to 100 people a day moving to Nashville as of what, Rob, 60 days ago, they're estimating 100 people a day are moving into Metro Charlotte. It's very concentrated in where they're moving in those markets, but moving in those markets. Raleigh. We went to Raleigh in 2000 mid-twenty 11, albeit in B and C. We moved into Raleigh in 2011. That now today is about $1,000,000,000 asset market for us. We believe and Mark Carleton would tell you that I've hung it on him to grow that to a $2,500,000,000 market. And my mission, if you ask all of my regional execs would say to you, at least I would believe that they would say to you, that my mission to them is to build a community bank in your market. I want Mark Carleton to build a $2,500,000,000 community bank in that market. We provide all the resources necessary for him to do that, which would include branch support, which would include CA support, financial advisor support, credit support, all those kind of things that would help make March successful. Now that's a $1,000,000,000 franchise now with what March 7 offices. Those 7 are only 3 in Raleigh, 2 in Chapel Hill, 1 in Durham and 1 in Cary, North Carolina. So we believe in the Raleigh market, we're just out of the 1st inning and maybe getting ready to swing in the 2nd inning relative to where our opportunity to grow is. If If you think about Eastern North Carolina and I'll just have a pointer, here we go. If you think about Eastern North Carolina and Interstate 40, other major areas of growth in North Carolina or as you sort of move down the line would be Wilmington. We do business in Wilmington, both out of Raleigh and out of Charlotte with some preferred clients, but we have no presence in that market. Greenville, North Carolina is sort of the next hub of business, more agricultural business, but some more moved into that market over the last several years, big hospital medical facilities in that market. So those are markets where we have we do some business, but we have no real presence in those markets. But we are concentrated really around growing Raleigh in the perimeter of Raleigh within 25 miles of that core of Raleigh. Triad is our legacy market. We're about $2,500,000,000 in that market. I'll tell you that we are not where we ought to be in Winston Salem. That's where BB and T is headquartered. BB and T's headquarters is about 20 minutes or so from where I sit. We have deployed 2 additional bankers in that market, I guess, in the last 9 months, and we believe that we've got an excellent opportunity to continue to mine those bankers there and grow our Triad footprint. That would be the one that would be the most difficult thing to do for us would be in that core Triad market. We're seeing growth in that market for the first time since 2,006. So in the last 11 years, we've seen no relative growth in that market today. The plans were just submitted for an Amazon distribution center in Kernersville, North Carolina, which is right. We have an office here in Kernersville in Forsyth County. Caterpillar just built a new plant. Highway 73, which is this big corridor that comes through here that really now travels all the way down to 95 and down to Myrtle Beach is getting more and more and more use. So that's been highly, highly successful in recruiting new business for us. We're seeing furniture manufacturing come back. My office there in High Point, we have the international home furnishings market twice a year. 100,000 people show up twice a year for that and it continues to grow. We've done our first real financing, Tim Houston's is here, on showroom space. There's been a big expansion of showroom space from folks moving from California into the High Point area. Charlotte, again, as I mentioned, one of the fastest growing cities in the country, our footing is there about $1,700,000,000 in assets. Rob Ellenberg, who's here, Rob just had his he's throwing his number up. He's telling me now it's higher than that. So he must have done something overnight to move that number. I won't cut it short. Why again? We've got limited distribution in that market. In the core city of Charlotte, we have, what, Rob, 4 offices in the core. One of those offices really we're expected to relocate that. We believe that there's probably an opportunity over the next 3 to 4 years to build 2 to 3 additional offices to give us a wider brand of distribution. And when you think about Charlotte, you really ought to think about it in terms of Rock Hill and Fort Mill. Governor and South former Governor Nikki Haley did a great job in recruiting business and positioning the State of South Carolina to recruit significant business with their tax structure. And we've had a lot of people from Charlotte jump over the line into South Carolina and moving their entire companies down there. The good news is we just opened a new office in the area in South Charlotte called Ballantyne. We're 5 miles from Fort Mill, and we're 8 miles from Rock Hill. So we're in position to service those markets and call in those markets right now. But again, Charlotte is seeing a significant amount of growth. Probably the more one of the more understated areas, I would say to you, is the Greenville, South Carolina market. BMW makes all their X cars there, soon to be their X8s, which I think are to be delivered later this year. Michelin is headquartered there. What a lot of people don't really understand is the inland port that's now located there. This has become a huge logistics area. And as you can see, Highway 26, it will take you all the way over to 40, of course, 85 that takes you all the way through Atlanta, all the way down into Florida. And the traffic coming from the Port of Charleston has been tremendous up Highway 26. And I was just over there the other day, and we're getting ready to see an expansion of that move up 26 and across 20 there to improve that logistical outlook. In Greenville, we're only about $350,000,000 We've only been there about, I guess, 4.5 years. Many of you remember Certus. I hope none of you are invested in Certus, but many of you remember Certus. We bought some branches, bought some loans, and that really expanded our presence in Greenville from what was really only a one office, very small presence. I'm happy to tell you as we sit here today, we've had some great recruiting success there. They're not on board yet, but we have 2 of the top business bankers who will be joining us shortly from Wells Fargo in that market, both of which have been there north of 25 years. So we really believe that's going to be a great opportunity for us. And I think we're going to see some other teammates over the next several months potentially join us as well. Charleston is a what I call an emerging market. Everybody loves Charleston. Everybody likes to go the food's great and all that kind of thing. But real commerce takes place inland. Real commerce takes place and really begins now. If you're traveling down Highway 26 toward Charleston, you'll see a new interchange on 26. And if you look to your left, you're going to see Nexton, a real residential sort of retail community that's popping up. If you look to your right, you're going to see Volvo. The new Volvo plant is under construction there and soon to be production soon to be in production. As you move on down 26 into North Charleston, you're going to see Boeing land in Plains there. My daughter, who just graduated from South Carolina, is going to work for Boeing in Charleston. And from what she's telling me, their expansion plans over the next 10 years are to double that facility and that presence in that market. They're going to be moving some West Coast operations down into Charleston. This region is the only reason where we had any disruption relative to our market presence through the transaction. Charlie Rivers, who was a former CEO of Harbor National, some of you may have known Charlie, retired, and we had an excellent opportunity to hire a guy named Mickey Renner. Mickey Renner was running business banking for Wells Fargo in all the state of South Carolina. Mickey was a 27 year blue Wachovia guy in Colombia. And so all the business bankers in all these markets reported to him. Mickey came on board, just joined us about 3 weeks ago and was really instrumental in helping us recruit that upstate team and will continue to help us in both South Carolina and in North Carolina. Mickey spent a lot of his time in North Carolina. So I think it will be great help to us there. This just gives you sort of some more detail, and you have that in your book. I want to focus on sort of where we came from. The 16th of this month will be 1 year since we closed that transaction. We closed the transaction on 16th, and you'll see the trend line. The trend line was just up a little bit, and then we retrenched. So think about this. And again, some of you who are previous shareholders of BNC, we had just closed on the purchase of High Point Bank that was in our core market. It was 105 year old bank, and we closed on that deal what day, November 1, 2016, dollars 600,000,000 trust insurance all that kind of thing. June of 2016, we had just made the acquisition of South Coast and we had converted South Coast to the BNC platform. So we convert South Coast in June. We convert High Point Bank, and those 2 together accounted for, what, about $1,200,000,000 in footings. I lived in High Point all my entire life practically. And so buying the hometown bank, 1 105 year old bank and then selling it less than 90 days later, I'm not sure I was going to be able to live in High Point anymore. But the short story is that's $1,200,000,000 of clients who got flipped twice in less than 15 months, right, who got flipped twice in less than 15 months. Those are employees who really, to a great extent, more South Coast than High Point that weren't fully in the fall relative to the culture of our company. They had been there long enough to do that, to be there to do that. So the disruptors in this transaction were and the risk in this transaction were, are are we going to be able to keep our people and are we going to be able to keep our clients. So when the deal closed, you can see we went up a little bit and we came down. This run from June until December was full of, man, I didn't expect this. I mean, we just made an acquisition. Nobody expected us to sell the bank. Nobody thought we had any idea. We had set out to build a $10,000,000,000 company. We had all the plans to build a $10,000,000,000 company. We still have the plans to build a $10,000,000,000 footprint. That's where we're headed. But in the middle of that, we did this deal. We had a very bumpy conversion. We were playing defense from a deposit standpoint. We closed 10 offices. We closed 10 offices in December. And despite that, I was very proud of the fact we grew $75,000,000 in deposits Q1. We grew $200,000,000 in loans Q1 of 2018. So this sort of tells you, hey, here's where we came from. We saw the momentum and the refocus. When I say refocus, that's true. We had a lot of people playing a lot of defense with our clients. Things weren't exactly working. The plug we didn't have all the plugs in the right place exactly during that period of time, even in the Q1. You had issues here in Tennessee. Had issues here in Tennessee as well. Now we've been able to get people's heads up, keep them focused, motivated and give them some goals and expectations that will allow us to achieve the earnings expectations we have for this year. The highest and I mentioned changing the numbers. When we modeled this transaction for 2018, I think we modeled somewhere between $600,000,000 $625,000,000 in loan growth. Is that right, David? Lower? He's pointing lower. He says 5. I think it was 6. Anyway, we'll be up. We did almost $200,000,000 1st quarter. 2nd quarter, we're on track to be just south of $250,000,000 in loans. The good news is we're also on track to fund our loans at about $1.15 So every dollar of loans we make, we think we're going to grow deposits $1.15 We've grown deposits here to date about $240,000,000 loans about $170,000,000 as we sit here today. We feel like that we have been able to sort of right the ship, get people engaged and we're able to move the ball forward. Terry has been understanding about the fact that this brand, people in North Carolina didn't know who Pinnacle was. They have real reason to know who Pinnacle was. So the branding really first started with and Terry hadn't talked about the orientation process. Many of you probably know about that. But we've put what, Terry, 600, 700 people to a 2.5 day orientation process that goes all the way back to the culture of this company, how we achieve, the goals that we achieve, what the expectations are and it's culminated with everyone climbing over a 12 foot wall, people pushing from the bottom and people pulling from the top to demonstrate how the teamwork in this company goes. And that was really one of the very first things that really got people's attention. It gave me an opportunity to talk to our people and say, hey, this is how we got here. I had many people come up to me and say, You know what, I was mad at you. We had a good thing going. Why did you do this? Now I get it. Now I understand. So that's been the momentum builder for this company, for our section of this company, for our area of this company has been able to get those people's heads up and move the ball forward. C and I growth. We've hired only C and I bankers, either C and I bankers or small business bankers, since we did the transaction. Terry mentioned earlier our plan to hire 65. As we sit here today, with the commitments that we have that are anticipated to join us by the end of the quarter, we'll have hired 20. We'll have hired 20 of those 65. And that does not include, as Rob mentioned, that doesn't include any wealth. That doesn't include any mortgage. I'm also responsible for the SBA division. It doesn't include SBA, and I'll talk about that a little bit in a minute. So that doesn't include other revenue producers. These are purely commercial bankers. This is showing you a little bit about the loan growth numbers. This number, for the very first time in the history of this company has exceeded that number. And this number today, this slide is a little bit old, that number today is about $360,000,000 in terms of growth. Just to give you a little bit of perspective, the largest loan growth, year over year growth we ever had in the previous company was just under $600,000,000 about $565,000,000 This gives you a little bit about market growth in each of the areas. You can see Charlotte has really, really accelerated. Raleigh is having an outstanding year this year. We've got a lot of new hires over there. Now I said to you, we've hired 20 or at least we've got 3 or 4 coming in here shortly by the end of the month. 17 of those have been hired since October. 15 or 16 of the 17 came with non solicits. We haven't hired I can only remember one that didn't have a non solicit agreement. So these are bankers that we sort of have to maneuver around and do things to try to put them in a position to make contact with their client and not violate their non solicits, but also help us move the ball forward. So again, if you can think about it, 17 bankers in less than 6 months, 6.5 months, all came with non solicits. This again gives you some information. And you can see the integration, the systems here. The December was when we closed those offices. We know we lost $40,000,000 in deposits, but what we don't know is what other business we lost. We don't know people that might have been banking at that branch and have their account somewhere. We don't know exactly what that is, but we can put our finger on somewhere between $40,000,000 $45,000,000 for sure. This gives you again total deposits growth since March on just the core funding side. We are doing a money market campaign. I'll tell you, we're competing against higher rates in the market beyond the $169,000,000 We're competing with some folks. Charleston, 2 percent is out there. We've done about $80,000,000 in new money in that money market. But what's the risk when you run a money market campaign? You cannibalize your existing portfolio, reprice a bunch of money markets and you go, oh, well, my effective rate is X. As we sit here today, we've repriced about $70,000,000 and we got $80,000,000 of new money. So it's been well worth the investment. And those are accounts we're going to lose anyway. Those are accounts that I think, David, the effective rate on those accounts was 109 or 110 already because they were high affluent clients that we had specialized rates on. All right. I want to talk just a second about SBA. Again, I'm responsible for the SBA business. It sits in Greenville, South Carolina, a guy named David Hopinworth, who's a 40 year veteran of that business, sits in Greenville. They're going to hit their they're about 20% ahead on fee income year to date. We do intend to continue to grow that platform. In fact, we're in the midst of recruiting 3 additional FAs, 1 in Knoxville, 1 in Charlotte and 1 in Atlanta as we speak. So we would like to expand that footprint and expand that business and do believe that could be with the sort of the disruption that's happened with all consolidation, a disruptor that would lead to some opportunity for us. One of the people asked me how I recruit these people. It's a 3 pronged approach. These guys in the room work their existing employees or existing associates or existing bankers, who are the best bankers you know, that sort of thing. I do a lot of work myself and using my contacts, my knowledge of the market and some resources to go do that. And then my wife, who runs her own financial recruiting firm, was responsible for north of 150 people, including these 2 guys here in this room, to help us recruit those people. And so she continues to work with us and actually work with these guys on recruiting and locating bankers both on the SBA side and on client services or the client advisory side. All right. I'm happy to answer any questions. Yes, ma'am. So it seems like a lot of the deposit growth that you've had so far has been on the money market campaign. And so as you think about moving forward, do you think the deposit growth strategy changes meaningfully as your C and I bankers continue to rank up their books of business? Yes. And that the money market has been about 20% of that deposit growth year to date. So we do believe that with the ramping of the bankers, the other thing that we started doing and Mark Carleton was the 1st beneficiary of this is we started hiring some financial advisors and we're going to strategically place those in each market. Not treasury people. They are financial advisors who are responsible for building a deposit portfolio. Mickey Renner and I spent an hour or so the other day talking about targets deposit target opportunities in the state of South Carolina. We quickly through his contacts, he sits on several boards there, through his contacts and contacts his mothers down there, we quickly developed a pipeline of north of $1,000,000,000 in suspects that currently bank at Wells Fargo that deposits are sitting there. And so that's going to be a big focus of the new guys we bring on board. That's a big focus of his. And so we've got to do probably a better job in some of the other markets of developing that sort of suspect list. But his experience in South Carolina in particular is going to be critical to us. Our markets today that fund themselves, Charleston funds themselves, The upstate funds themselves. I guess, David, who else? Excuse me? Roanoke. Roanoke funds them. And I didn't talk about Roanoke. We had bought a bank up in Roanoke in 2015, essentially ended up losing the entire team up there. What we thought at the time was going to be tough has turned into a blessing. A guy named David Allen who had worked for BNC legacy BNC guy went up there. And some of our biggest hires, Terry mentioned this last night, some of our biggest hires on the C and I side have actually been in Virginia. We got NCMB or I say NCMB, Bank of America, I go that far back because he does. Their only C and I banker left who covered Eastern Virginia and West Virginia is in our office. Wells Fargo, we just got their top guy less than 45 days ago, and we think they're going to get their number 2 guy there. We just got the lead private banker in the market from BB and T, who will be joining us here shortly. So Dave has built a fantastic, very formidable team in that market, and they virtually just haven't even moved the needle yet on what the potential is up there. Yes, sir? Yes, there's been a lot of acquisition activity in your markets with some of the other smaller banks being acquired. How has that changed in the competitive dynamics? As you are competing against what has been smaller banks that are now similar size to you, are you competing for talent with them, customers? And how are they competing versus the bigger banks? Yes. So if you think about Charlotte today, there are no real community banks you compete with in Charlotte anymore. They don't exist. You got a little bank called Aquesta who has one office. They're really up Highway 77, up in the Cornelius, Huntersville, up in that market. But there are no community banks that we compete against in that market. In the Triad, you still have First Bank, who made an acquisition there and have been in that market for probably a long time. For us, prior to the transaction for the 1st for the last 3 or 4 years, we've really been competing more in the metro markets with BB and T Wells, BofA, P&C Regions, Yadkin, who now is FNB. We've hired some FNB people, former Yadkin people. They've had a lot of disruption at that company. We've hired some SBA people from Yatkin. Capital Bank First Tennessee, we've hired 3 from First Tennessee since that deal was announced. And so they're trying to protect their turf, I'm going to tell you that. The South State Park Sterling transaction, I think things are a little tough over there. But the price of admission to hiring these people also has gone up. Last four people I've hired have had a 2 handle on their base. And we lost 2 that we really would have loved to have hired, but talking about a base for a C and I lender at $280,000 with a 50% opportunity on their incentive. SunTrust guys that are now moved over to a competitor, we just didn't feel like we need to go there. We just didn't feel like we needed to go there. But this other competitor is pretty desperate to show progress. What's the typical non solicit term for these 15 hires since October? And what's been the success rate in targeting some of their existing clients even during that period? Or is much of that really going to come once that non solicit rolls off? Yes. The non solicitors are 1 year typically. We've had a few non competes, but primarily it's a non solicit. You may have seen where FNB went after some SBA guys down in Raleigh. First Citizens is very active and very concerned about people with non solicits. Our strategy around that is to say, hey, man, you have a non solicit and we don't want you to violate that. What we do is, is we promote that banker in that market to make sure as many people as possible indirectly know where they are. If a client calls in and wants to speak to them, there's nothing anybody can do about that. But if we're sending if we're calling, if we're sending e mails, if we're doing things we ought not to be doing, then they can get in trouble and we don't want that to happen. So we tread lightly. We vet that. We have other FAs, call them, if we think there's an opportunity and Mark's got several of those, Rob's got several of those that had non solicits. So we have other FAs try to make those try to make introductions to the company. What else? All right, guys. Thank you. I started trying to pull an agenda together. One thing we felt like was important for us to communicate to you was kind of what the thoughts are from boots on the ground. Really to me the stars of our show really are the guys that run these markets for us. They're the ones that kind of hire the people, motivate the people, all that all those things. So we've got 4 of our all stars here, 2 from Tennessee and then 2 from towards them and then let you guys kind of ask the more difficult towards them and then let you guys kind of ask the more difficult probing intense questions. That sound reasonable. So we'll try to keep this kind of moving at a fast clip for the next call it 30 minutes. And then after that, we'll let the credit guys come up here and really entertain it. All right. Okay. So we got Craig with in Chattanooga, Kirk in Memphis, Mark's in Raleigh and Rob's in Charlotte. So they're all kings of their own little kingdom over there. And I'm glad they're here for sure. All right. So briefly, like in like 30 seconds, tell us like how you got to be the President? Where were you before? Where did you cut your teeth? All that kind of stuff. Let's start with Craig. Okay. I was a career AmSouth guy. I got in 25, almost 26 years there and left in 2,005 to start Capital Markets Chattanooga. We grew the bank to about $1,000,000,000 and then we partnered with Pinnacle in July of 2015. So I started with a company called Leader Federal in Memphis. It's been about 20 years with them. We sold that back to Union Planners, which is now Regions, obviously, in 1996. We started Magna Bank in Memphis about 1999 and sold to Pinnacle in 2015 also. Okay. Kind of my story. I've been doing this 31 years, so I'll just give you the cliff notes. In 2000 and 5, I had the opportunity to join First Charter, which was a Charlotte Concord, North Carolina based company and help First Charter expand into the Triangle market. They were later acquired by 5th Third Bank out of Cincinnati and I stayed home for another year or so running the middle market banking department in the Triangle for 5th Third. Opportunity came up to meet with Mr. Calicut, Mr. Spencer and some others from Bank of North Carolina about helping BNC Bank of North Carolina then enter the Triangle market. So I got to do a replay in 2010. It was April 2010. And so we started a 3 man loan production office, de novo in Raleigh and been a great move, been a lot of fun. It's fun playing offense every day when you're building something. So we've been at it now for 8 years. My story, I got a call from Rick Calicut in August of 2007 and said, they wanted to talk to me about starting their presence in and around Charlotte. I was happy where I was at, where it's 1st charter. Mark followed me there. I was happy. 2 weeks later, I get called in from vacation. They tell me the bank sold the 5th Third. I knew I wasn't working there. I called Rick back as I'm walking out of that meeting. He said, I saw that news. Did you change your mind? I said, I'll see you in an hour in High Point. And he was kind enough to meet me halfway. And literally 2 weeks later, I started my orientation now. It's 2.5 days with Mr. Turner. My orientation was about 14 minutes. They handed me a laptop and said, go get some business. 2010, kind of the same story. Rick did the same thing and we've grown from there. It's been a great ride and we hope to keep that going. All right. So all 4 of you guys are in markets that we kind of highlight as growth markets and we want to win in those markets. Tell me tell us just in your own words, how are you going to win in your market? What's going to be the key things you need to win? And then a little bit later, we'll talk about how big you need to be. Yes. Just want to Yes. Just go down the road. Okay. I was talking with Sally. I told her earlier my title really ought to be Chief Recruiter because I spend a good part of my time along with the other leadership team members in Chattanooga, Kenny Dyer and Ryan Murphy, strategizing over the our competition in the market and who the good bankers are. And we really feel like that's the key to growing our bank. You've heard Terry talk about it frequently. And it really does work. As we look forward as we look back, when we sold the Pinnacle in 2012, we had 15 revenue producers. Today, we have 40. Within the next 90 days, we'll have 43. We've got 3 people that have committed to coming that aren't here yet. And that's what drives our results. I think Rob put the names of Dan Goldberg and Jeff Carter up on the screen earlier. We hired Dan Goldberg from Synovus a year ago and today he has a $50,000,000 loan book and a $15,000,000 deposit book. Jeff Carter, the 1st citizen market leader, has been there 4 weeks and has already booked $15,000,000 in loans and $7,500,000 in deposits. So the key really is bringing in that talent to the bank. All right. Just briefly, Craig, what motivated Jeff Goldberg to even talk to you? I mean what was it? Dan Goldberg. Dan Goldberg. You're going to remember those guys. I remember Dan Goldfarb. All right. Dan Goldberg is going to be he's going to be on our list. And again, Sally and I were talking about this earlier. At the end of the day, your experienced, talented bankers, they want to be able to do one thing, and that's take care of their clients. They want to work in an environment that allows them to serve their clients, and that's what we provide them at Pinnacle. Terry has talked about the geographic management. Make the decisions there. In most cases, that banker makes the decision. And that's what good bankers want. They just want to be able to serve their clients. Kurt? We were at Magna primarily a real estate lending bank, large residential and commercial real estate lending group. The first thing that we had to do was to understand the Pinnacle culture and I would say that took 6 or 8 months to get everybody on the same page together because we need to recruit people into a healthy culture. And since then, we've been active recruiting people. You're going to hear this thing repetitively, recruiting people in the C and I space and the private client space. It's the first thing we talk about on Monday mornings, what's our recruiting pipeline look like. Who do I need to meet with that week that we're trying to recruit? It's how we build the company. And we're winning on a lot of fronts in the Memphis market from the same people that Harold and Terry and others have told you about the big larger banks somewhat impersonal. We're offering local decision making, everything you've heard, flexibility and we're actively winning. We recruited, I think in the last year about 20 people. We have 10 to recruit this year. These are producers. We've hired 6 so far this year. So to answer your question here, we'll build in the bank around recruiting. Mark? Yes, sir. I think with us, a lot of its reputation. A good reputation in the marketplace will it makes the recruiting a lot easier. I was sharing with Rick or Terry this morning that we've got one C and I middle market new hire. I mean he's been with us since October. We tried to recruit him 5 years ago unsuccessfully because BNC was just simply not a C and I bank. And we didn't have the treasury capabilities be such anyway. But we've just got him in October of last year as a result of Pinnacle, Pinnacle's reputation as a middle market bank. And this guy is a 40 year banker, a 39 year banker and it was important to him that he aligned himself with a C and I bank. So I think reputation in the marketplace just like you all, I our industry is very small when it comes to people knowing people. So everybody here seems to know everybody. And our industry is the same way in each of the markets. So you know in the market who you want to hire, who the best bankers are. And so by keeping a good reputation, once you start winning some business, where it gets around, man, Pinnacle Bank won that deal, they won that deal. And then it just creates a lot of momentum in hiring. Also in addition to reputation and winning business and doing it the right way, you get momentum by the people you hire, okay, because in addition to say, wow, they won that deal, the other buzz on the street as well, Pinnacle hired Larry Davis. Can you guys believe that? And then it just opens it up. It makes the story a little more credible when there's people that are mutually known throughout the market and they say Pinnacle is a special place the way they do business. So that helps. But I think recruiting the right people, the right team, spirited individuals is a big key to it that have a proven book, a proven following in the marketplace. Rob? Yes, along the same lines as these guys, I mean, we've been we've won because we've hired the right people. And what I've always seen and what I believe is that A players want to work with A players. And so we've targeted those A players who then have those A clients. And it's unique and I even had somebody the other day say, you guys had it figured out at B&C, Pinnacle has it figured out, why doesn't everybody else? I said, I don't know, but don't tell them. Other factors, I think, are those good bankers, those good clients speed to market. We've got our geographic footprints and we're able to operate really quick with Tim Eustis and his credit group and getting things back on back to the client really, really quickly and being a lot faster to market than some of our competitors. So we've had some recent success with some C and I folks in Charlotte out of South State Bank. We've taken advantage of kind of some of the turmoil going on over there with their merger. Those folks have really hit the ground running. Between the 2 of them, I think in April, they did $20,000,000 in deposits. So 2 really good wins, looking to build on that momentum. All right. What about you guys? Any questions? Jennifer? I'll repeat it. Okay. Craig, are you in the Dalton market right now? Craig, are you in the Dalton market right now? Good question. And yes, we are. Let me tell you how we cover that market. Terry mentioned earlier our Curry operation. We started Capital Markets with just one location in Chattanooga and grew to be the 4th largest bank in that market in just a few years. A lot of that success was driven by a very robust courier service. So we have clients in Dalton that we bank both loans and deposits today, but we handle that through a courier service. So we have probably have 500 plus clients on our courier service and we probably do 30, 600, 4000 pickups a month and a number of those clients are in Dawson. Yes, ma'am. The question is whether or not Pinnacle has been able to take business away from the old First Security franchise that's now ACBI in Chattanooga. We have benefited from that combination. And actually, one of the leaders in our market, Kenny Dyer, was involved in the start up predecessor to FSG, had a lot of those relationships that followed him over once that transaction occurred. And then I believe we've hired 1 or 2 FSG associates since that time. Kevin? Well, just to give some frame of reference. So First Tennessee has got about 35% market share in Memphis on deposits and about 40% on C and I small business lending. So the first thing it would do just because of disruption would present a lot of opportunities for clients that we would immediately call on. There's some talent at First Tennessee that we would be interested in clearly. I think because of disruption, they would certainly be open to talking to us. But they don't have the talent pool that they used to have. It's been diluted some. They have stickiness to their clients because of their longevity and their branch network and their legacy of service to the city. So I'd say we would recruit some of their folks, but I think we would have greater opportunity to get to some of their long term clients because of the disruption of whomever that happens to be that comes into the marketplace. Well, we have. We've hired 2 bankers from First Tennessee this year. 1 is more private banking focused and the other is, I'd say large business banking, not quite middle market level, but with the acquisition of Capital Bank in Raleigh, well, they're in Raleigh, but Capital Bank, that created some opportunities for us to talk to some key people at First Tennessee. They were mostly a private bank in Raleigh anyway, 1st Tennessee was or a large corporate. It seemed like it was 1 or the other. So we were able to sort of handpick a couple of folks that we really like out of there. But I think the disruption created some of that opportunity for us. In our market, First Tennessee has got the lead share. We've hired a couple of their guys, but if an occurred, it'd create some opportunities both with bankers and specifically with clients. Along those same lines, but from a different perspective, when the BNC Pinnacle thing was announced, obviously, folks were calling on our folks. And to this day, we still haven't lost any bankers. The client impact has been minimal. So we've done a good job of kind of keeping that thing in place and at the same time benefiting from a lot of the turmoil and a lot of the M and A activity in Charlotte, South State and Park Sterling and a couple of others. And I'd like to say the same for Raleigh too. We haven't lost any bankers through this. Candidly, I think we've hired 22 bankers since July. Now that can be mortgage, insurance, investments, financial advisors, support staff, but 22 new hires since July. So we're it's a good message, it's a good story and it's one that the market really likes in the triangle. That's a pretty common theme as I think about it and it says something about how well we do these consolidations. We have not lost a single banker, financial advisor that was with us at CapitalMark since the conversion. And same thing goes for the clients. So that's pretty much unheard of in the business. All right. Rob, a question for you. You're in Charlotte. Yes, sir. There's a couple of big banks there. So how does Little Pinnacle or how do you get your lenders, your relationship managers, how do you amp them up to go take on Wells Fargo, Bank of America? How do you position them to feel like so they feel like they've got an advantage? Or how do you position Pinnacle with potential clients? Most of our folks have been at those big banks, so they know how those operations go. They're going to get meeting to death. From a client perspective, our folks know that we're going to be significantly quicker to market than BofA and Wells. It's really rare that we run into BofA on many of the deals that we're chasing and the clients we're chasing. Wells is a little bit different. They do a good job in that smaller business banking segment. But again, my folks, they're competing with every bank in Charlotte for the good client base. And there's 5 banks looking at every deal. Our folks win there more than their fair share. I think the number suggests that. Kurt, you've mentioned you compete with First Tennessee. They're kind of the 900 pound gorilla in the room. You've mentioned that their talent pool has been diluted. Is that how do you feel like your advantage in Memphis when you go against the First Tennessee plant? Well, we don't have the advantage. We have other regionals, which is the local decision making because they're there. They make the quick decisions. We're more aggressive than they are. We're more responsive to the customer. Again, they rely very heavily on their legacy position in the marketplace to retain their business, not really win new business. So we're out competing more aggressively for the new business that exists. We're a little bit more nimble than they are even though they're in the market in terms of responsiveness. We were up against them on a fairly large C and I deal in the last couple of weeks. We had a term sheet out, term sheet return. The deal approved before First Tennessee got their term sheet to them. So I would say we're a little bit quicker than they are in the marketplace. We're also much more aggressive in the real estate sector than they are. First since they exited the residential real estate fairly directly about 4, 5 years ago, they don't compete in that space at all in the marketplace. We've got a fairly robust CRE mortgage banking group that's housed in Memphis that services the Pinnacle footprint. So we've been they've recently acquired that capacity in North Carolina, but we've been boxing the ears pretty good in Memphis on that business also. So I guess the answer is we're just a little bit more aggressive in asking for the business. And I don't want to say that they're complacent. They're very good bankers, but they're comfortable with their position and we're uncomfortable with our position. We're trying to grow and compete and win and they're a little bit more accepting of where they are. Any questions? John? Well, I can speak for what I know in Raleigh. I think our peers that are with the larger are very frustrated because they're having to go to Cincinnati for approval, Pittsburgh for approval, basically out of market, out of state in some cases to get the support they may need for a large credit opportunity. That's one of the things that we compete on every day. We had Tim Houston's on an airplane Monday a week ago, last Monday or Tuesday flying to Asheville to meet with a large skilled nursing operator, along with a team of bankers from Raleigh, okay. Now the regionals aren't going to do that. The large regionals aren't going to do that. And so we already have received so much praise just from that one opportunity. Now this is a former BB and T banker that's joined our company with skilled nursing specialty lending, okay. So I mean he's kind of an industry expert and he captures the audience when he's making a call into that industry because he's kind of got the reputation as the guy that knows what he's doing. So we've got a large opportunity and it would be a wholesale banking change out of BB and T into Pinnacle. But the point in sharing that with you is we've got the decision makers local. And in this case, the decision makers were in front of the client in Asheville, North Carolina, which is what, 3, 4 hours away from Raleigh and candidly, probably a a couple hours away from Greensboro. So we made it happen. It impressed them and we're going through our due diligence phase right now, but it is a wonderful opportunity. I'll just mention one other thing and I'll be quiet. We uncovered an opportunity in Greenville, North Carolina. It was a large deposit opportunity with a utility company there. Bank of America client for a number of years. BofA was giving them 0 attention. Matter of fact, they were using our courier to bring all of their deposits from Greenville to Raleigh and using the Raleigh Bank of America office. We got one of the senior guys from Mike Hamentry's department in Nashville in Treasury to hop on a plane, come to Greenville and made our presentation to them. And they're like, we haven't seen this many people from Bank of America in years. I can't believe you came all the way from Nashville to help with this proposal. That's how we win. We win because we're playing offense every day and candidly we're playing because we're having a lot of fun doing it, Okay. We're with a company that truly recognizes and celebrates success as a team. All right, I got Without exception, every single one I talk to that works for our friends at the regionals are they have some sort of frustration. I see it day in and day out. I would say it runs in cycles. Clearly, right now, for example, there was a bank in Memphis Metropolitan Bank that was acquired by Renaissance. They're going through the adjustment to the Renaissance culture. So there's a lot of uncertainty and questions. So you take advantage of that as a recruiter. SunTrust is particularly vulnerable right now. They've just gone through an analysis that they're redistributing work to some from out of the local areas into some regional and hub type operations. So their people are upset is too strong a word, but they're worried about their connectivity to local decision making, local support even. So you just keep your ear to the ground about where the disruption is and then you go where that disruption is to try to attract the best people. But it is an issue. And I would just add in Charlotte, I think if the folks at those super regionals, if their employees are happy about the stock price, that's probably the only thing they're excited about. And that's an honest an honest assessment. I've talked to multiple folks from those institutions on a weekly basis and lots of local leadership turnover over the last couple of years, I think, has affected that. All right. One more question and then we'll go to credit. But if the credit guys start making their way up here, we'll transition as quickly as possible. But this morning, I think Mark, Rick mentioned he wanted you to be a $2,500,000,000 bank or something like that. Which means 3. Yes. So that's what we're going to talk about now is, Rob, you're like a $1,800,000,000 loan bank, dollars 1,000,000,000 in funding. How big can you be? What's it going to take quickly? We'll be at 2 by the end of the year. So my goal is to double that within the next 3. So the only way we'll get to How are you going to get the funding? Sir, how are you going to get the funding? Hire more C and I bankers. Just like the most recent hires we've had have been 5, not one of those folks has made a CRE loan. We've hired 5 since October. So again, we've seen I think we're I looked at the numbers this morning and we are we're $60,000,000 in loan growth quarter to date $50,000,000 in deposit growth quarter to date. Mark, you're about $1,000,000,000 in loans and call it $500,000,000 or so in deposits, how big? Yes, sir. Interesting, we've had double digit loan growth this year and our deposit growth has exceeded our loan growth. So we've got folks focused on the deposit piece like I've never seen it before. It's going to take just continuing to hire the right people, people that want to come over and have fun and see that we're doing something special here. And like I mentioned with this one particular guy, he's probably got 5 or 6 more years left in his working career, if you will. And he said, man, I just want to help you all build what you're doing. It's something that's special and won't be part of it. So if we can find more people like him, I mean, he's got 40 years of banking in our market. I mean, gosh, he could probably take the next 5 years moving all his business over from the other banks. So I think that's the key along with additional branches will be helpful. Craig, dollars 1,150,000,000 in loans, dollars 800,000,000 in deposits. When we first met, you were a $750,000,000 loan kind of company, something like that, dollars 700,000,000 Right. End up, Mark. Yes. So we've probably moved into the number a strong number 3 share on the loan side, probably number 2. It's harder to get those numbers. On the deposit side, we're a solid number 4. The next step will be regions. And we build out our branch channel, we're committed to doing 1 a year over the next several years. That would be a big part of it. And then just really executing on our recruiting strategy will allow us to continue to take share. And as a reminder, First Tennessee SunTrust and Regions still own 55% of that Chattanooga market. So there's a tremendous opportunity, even if the market doesn't grow, for us to continue to grow our Chattanooga bank there. So how big do you think you can be in Chattanooga? Well, I think given enough time, we'll be the largest bank, both loans and deposits. It's going to take a few years to catch First Tennessee at $2,200,000,000 I think. But we're closing the gap. My money is on you. All right. Kurt, Magna was a $600,000,000 bank, something like that, dollars 350,000,000 in loans, 2015, right? Something like that. Right. You're now at $1,250,000,000 in loans and $1,000,000,000 in deposits. Remarkable. How big do you think you can be? What's it going to take? And how long? We've got a target of being $2,500,000,000 It's a little fuzzy 20 20, 2021, depends on the conversation we're having with Terry or Rob. But we can realistically get there. We're on track to be close to $1,500,000,000 by the end of this year. Year to date, we're slightly ahead of deposits and loans. That will flip in the second half of the year. Loans will really pick up the second half of the year. If we grow 20% a year after that, we're not going to grow at the pace we grew last year. That was unusual. But if we grow 20% a year, which I think we can comfortably do going forward, we'll be at that $2,500,000,000 mark by about 2021. Then we'll set another goal. We're not going to catch persistency in our marketplace. We know that. But we'll aggressively grow the company, taking share from the big three in the market being SunTrust, Regions and First Tennessee. All right. Thanks, guys. I really appreciate it. Thank you. All right. We'll do a similar format here with credit officers. And while they get mic up just in terms of ground rules here, I'm going to kick it off with some questions of the same questions you guys asked me. We'll let these guys give you the answer. But please I urge you if you got questions about underwriting or what's in the portfolio, what's the personality out, what are the concentration? I would just whatever you want to know about our credit book and credit metrics and all those things, these are the guys who know the answer. So don't leave here without getting your questions asked. We'll spend amount of time trying to walk through this. So quickly by way of introduction, many of you have had lots of opportunity to interface with Harvey White. Harvey White is our Chief Credit Officer and I introduced him earlier. And on his staff immediately to his left, you have Mike Hendren. Mike Hendren is our Senior Credit Officer for Commercial Real Estate. And we get thousands of questions about the commercial real estate book and all those kinds of things. Mike is the guy with the answers. He's the shepherd over that for our company and is an experienced banker, real estate banker not just as a credit officer, but as a real estate lender in this market over 2 decades, 3 decades, I guess, really. And then on the far left is Tim Eustis. Tim is Tim was here in Nashville immediately prior to the BNC transaction. And Rick, I think, really Rick's idea said, hey, we're going to build this C and I business. I need a senior credit officer over here who's an experienced C and I guy, which Tim is. And so that was a happy marriage and I think it's been good for everybody. They've got a great partnership. So Tim is serving as the Senior Credit Officer for the Carolinas and Virginia. So there are the roles that we have. Harvey, take a minute or so and just everybody on a level set here on how we approve credit, how does credit approval work in our company? All right, Terry. Just by way of background as I walk through how we do it, just keep in your mind that we're all on this in same incentive program. We were all hired partly because of our experience, but partly because of the culture and the way we are team players that kind of things. Almost all of us have been on the line side. Almost all of us on the credit were really came up through the regionals or super regionals. And therefore were indoctrinated much the same way of underwriting credit. So there's not a whole lot of difference of opinion there. We do not have any committees. We do on a signature system alone. I don't believe in committees. I think you get into grandstanding and second guessing and hiding behind a group decision as opposed to individual decision. So we've always believed in a signature system. Line management most or FAs or line managers most would have $1,500,000 of lending authority. Most credits that we do under $1,000,000 gets centrally underwritten anyway. So if you think about it, all they have is $1,500,000 Not much really gets done without the second set of eyes. So really on anything over about $1,500,000 you get a credit officer involved. What we try to do is have a decision maker, several of the guys earlier mentioned, on-site in the major markets. So really all markets except I guess Roanoke and Greenville, we have an on the ground credit officer typically has $10,000,000 of authority and is again very close joined at the hip goes on calls with local FAs, local area execs that type of thing. I was or we were generally adamant that nobody ever in North Carolina, South Carolina, Virginia have to say, hey, your decision is being made in Tennessee. So Tim has the same authority I have. He can go to the House Limited or the banks. So they have in state, end market the ability to do anything we can do here. I will mention in addition to the senior credit officers, credit analysts are a strong part of the decision making team. We like them to go on calls like we like our credit officers to. We like them to not just push numbers, but express an opinion. Again, they're still on the same incentive program, so they know that deals need to be made, but they know that good deals need to be made. So and then finally, I'll just say, keep in mind because of our business model of hiring people and they get to bring their business, we know most of these folks. I mean, it isn't as though we're doing a whole line of prospects that we haven't even heard of. In most markets, we have leadership from the major banks. I mean in Knoxville, we have I mean I was from Regions, we have a SunTrust person and BB and T person, we have plenty of 1st NSE people. So most of the clients or most people we're going after are making decisions on somebody on the team has known. So it's an unusually team approach. All right. Here's the most famous question everybody gets. What inning are we in? I don't know. 7 used to be a good number everybody like. I look at it and say, well, you're having a lot of people start pushing out. I mean several things I hear from people I talk to and the financial press. A lot more people are saying, hey, maybe it is more years out, 3 or 4 years out. I do think that a lot of people believe it's going to be a little bit of a softer landing this time. So maybe we're not in a sudden death playoff type of game. There may be extra innings or however you want to look at that. But I do think that it's probably out there a ways and would be a softer landing. I just don't see the excesses in certainly the C and I side that we saw earlier. Mike is the real estate guy can speak to the real estate world and what he's seeing there. But generally, I'm seeing pretty good discipline in terms of requiring equity, those kind of things. So I really kind of believe, Terry that whenever the game is over it's not going to be a sudden death. It's going to be a softer landing and it's not in the next year or 2. Yes. All right. I'm going to switch gears with you here real quickly. You led the credit due diligence as a part of the BNC transaction. We're now 12 months into it. So how do we do? What are your thoughts on credit performance? Well, I'll just step back and say, yes, for the due diligence, we took a team of 8 or 9 people, spent a week in there in their shop in High Point, had good cooperation from their data people. So we're able to look at files. We looked at every credit above $2,600,000 I think it was. We got up to about a 60% coverage. We were amazed as a team how similar they were to the way they looked at credit the way we did. Several ways of looking at that. Their risk rating system was very much like ours. When you looked at the distribution of their portfolio by risk rating, I mean it mirrored ours almost unbelievably. That has tended to be borne out. We've had very few ones that we've gone in even after merger and had more chance to look at. We said, oh no, this wasn't graded right. So they had real good discipline in grading credits. And again, all of their guys for the most part came from the super regionals or the regionals as we did. So there's a lot of similarity in just the way we approached underwriting. All right. And I don't want to put words in your mouth, but let me give you something to respond to. I believe it's true that we not really had any surprises as it relates to loan losses all those sorts of things. That's correct. They I mean they had better numbers than we did going in. I Rick, you had net recoveries for several years there just prior to the merger. And yes, you're right, we have not our internal loan review people have not found things that we missed any of that. No, it's been a clean, clean transition, clean portfolio. All right. I'm going to switch gears here a little bit and go to Hendren on commercial real estate. Let me ask you the same question because sometimes you get a different answer on based on perspective. So what inning are we in? I've said frequently that I don't know what inning we're in, but we're going to behave as though we're in the 7th inning. I think as a commercial real estate lender, you always behave as though you're in innings 5 through 7. So from that standpoint, I think there's still good runway. All right. Let's talk about Nashville. Here's a question that I bet I've been asked 12 times here in the last 2 days. So what about Nashville? Is this thing going to blow up? What are you worried about here in Nashville? In terms of the economy and space market fundamentals here in Nashville, commercial real estate is a set of boxes that house the economy. If the economy is expanding, you need more boxes. It's really just that simple. And so what we're seeing is we're generating jobs, we're generating good jobs. I saw a statistic yesterday when I was doing a little research that said we were the number 3 destination for college graduates sets up from number 12 last year. That's significant, I think, demographic. We're also the number one bachelorette destination in America. We cannot be overlooked at all. But I do think we're left to benefit both from business and leisure travel. And as long as we can continue to generate jobs, I think they're bodes well space market fundamentals. All right. So what areas do you have cautions out on? What are you concerned about? Those kinds of things. From our perspective, when looking at the book, we're slightly over weighted in hospitality. So we've dialed that back a pretty good bit. We're going to limit our hotel lending going forward. As most of you, I'm sure know, not all of you, that is an industry and a business and a property that has a lot of operating leverage. Its expenses as a percentage of its income run extremely high, maybe 60% for a limited service hotel, whereas you may be paying $8 $8 of expenses for $32 rents in the office market. So that's a market that gets to market every single day because no one leases hotel rooms for 7, 10 years. So that's a sector I think that concerns me a little bit, but it always concerns me because it's vulnerable, more vulnerable than the other product types. That you throw in the back, we've got about 5,000 rooms coming online here over the next couple of years, would suggest caution. I suspect you were surprised by the rates you had to pay for the hotel where you're staying. And so from that standpoint, we do a little relief, quite frankly, on ADR. And so we think that will settle down over time. Just so you know, we only have one hotel construction loan in the Central Business District here in Nashville at an LTV that's less than 50%. We have a guarantor that we require to pledge $4,000,000 to shore up that guarantee. It's someone we've done business with as a firm for 15 years And we took the extra precaution of selling about onethree of that as a participation. So we have a total of, I 3 deals in Nashville, 4 deals total, including 3 in the burbs. So we've been very intentional, at least when speaking about Nashville, to limit our exposure to that to that particular industry. Somewhat similar in apartments. I know that Mike has been an advocate of not doing the high rise downtown multifamily in Nashville ever since I've known you. So it's a space we really never got in it. This is not a recent getting out of doing something. No, I think that's right. One of the things that we're keen on is properties that have too long of gestation period. We've evolved into an interim construction lender the most part. If you look at the business we closed over the last 6 months, it's a little over $500,000,000 73% of that is construction. And so my mantra is let's get it built, let's get it leased, let's get it gone when we're talking about dealing in the large space. So from that standpoint, we feel good about the approach we're taking in that business. CoStar lists 47 properties under construction in Nashville. We're financing 4 of those, which seems about right to me. All right. Mike, I'll just put it out here in a general way, but I'm asking you give some personality of of what's in our book, who are we loaning to, what give some sense of the personality of what we do. And then when we get done with that, we'll contrast that with other stuff that's going on in the marketplace. Yes. I think our living enterprise when it comes to commercial real estate is almost a bifurcated model. We have a lot of community community commercial real estate carry, I would call it, either from the firm's founding when we couldn't do big deals and also through some of the community bank In terms of exposure, we're still underweighted in multifamily because we always have been. So from that standpoint, we still got runway there. And I was looking at along those lines, if that alarms you a little bit, our weighted average loan to value among our top 25 apartment construction loans is 58.4%. That's pretty good, I think. So from that standpoint, we're underweighted. We're perhaps a little overweighted in hotel, but that will care of itself over time. If you look at our numbers, we might be considered a little overweighted in retail, but that's a little bit misleading because it's a very granular book. It's evenly distributed between anchored, unanchored and single tenant. And so from that standpoint, I'm not too concerned about that. Although fundamentally, I'm very alarmed at what's going to happen in the retail space over the next 2, 5, 10 years, although I'll be long gone in 10 years. Just looking at, for example, in our unanchored strip retail, which might alarm you, we've got 248 loans. The average is only about $1,400,000 outstanding. So it's street corner kind of stuff. In strip anchored, the average loan size is $4,000,000 We've only got one loan anchored over $20,000,000 So again, we're not in that top end space. We're not in the mall business. I like the granularity and the profile of that business. Industrial is what everybody is doing right now. We've really significantly increased our industrial exposure. I think from that standpoint, we're not a big lender on assisted living. We have a handful of transactions, but most of our business is going to continue to be sponsor driven, Terry. That's always been the hallmark of this firm And that's evident throughout our real estate book as well. We like people I hate to say this, but if there are no borrowers here, the devil you know is everyone knows and we see them outside of working multiple functions. So everyone knows and we see them outside of working multiple functions. So it's pretty much the same profile we get on the C and I side. But we spend a lot of time selecting people, making sure that people don't select us. And we don't do one off transactions. All right. So ours is really small and granular. Who's doing all this stuff? Well, that's interesting. You think about 47 apartments, we're doing 4. That means 43 are being done by someone else. I think it's pretty evenly distributed. I think the high profile large transactions are being done by some of the national banks, certainly by Bank of the Ozarks, in which gets their profile and their profile to some extent makes sense. I mean, they're a low leverage, high yield lender and they generally pick pretty good products from my perspective. So it's all across the board. It's funny I mentioned we had closed on a little over $500,000,000 over the last 6 months. We've also lost $328,500,000 dollars that we had approved over the last 6 months. That's 20 3 loans. So we're losing business, which as a credit officer, I don't I kind of like to see as long as we're getting our share. Most of it is due to pricing, some due to structure. All right. I'm I'll give you guys a chance. I might bring Tim in just get some perception. Tim, if you don't mind on sort of what's where you think we are in the BNCN integration? What's it been like? What are the issues that you face there? Yes. The integration thus far, Terry, has gone well. We've really been focused on matching the talent acquisition. So as we've hired new FAs, Terry, we've made sure to hire very good credit advisors or credit analysts. And by credit analysts, I'm not talking a 26 year old with an MBA. Typically, they're my age or a little bit younger. So the credit delivery channel, it's our process is we unlike most regional banks, we get credit involved on day 2 or 3. And the thought there is if you've got experienced bankers, an experienced credit advisor and credit officer, if the deal looks really good, we're very fast to delivery with a term sheet and offering. And if it doesn't look good, we're catching it on day 2 or 3 and helping that banker put it down. And I'd contrast that with the regional banks if you work at SunTrust or Regions and you're doing corporate lending, typically you might have to prepare a package to get your manager to bless it. Then there might be another package to go to the 1st credit approver. And then there might be a second or third package to go to the final credit approver in Atlanta. That's exactly what we're not doing. We've got part of the regional approach of credit officer in each market. So it's really been, Terry, about building the trust with the line so that they let their guard down. They invite us in early. We match the talent on the credit side to fit the FA and then just speed to delivery. So it's going well. All right. Jen, I see you got the mic there. You got a question? I just have a question. Yes, good. Going back to the granularity of the portfolio across the entire company, what is the largest one size? I guess what is the relationship you have in terms terms of total? Yes. What you have, we have house limits depend upon risk rate either 20, 40 or 60. We do have right at 20 loans that are 20 relationships that are above 60. I think 95 or 100, 105 would be our very largest. But what that is, Jan, is where it's probably a developer who has 4 different projects at $25,000,000 each, usually different geographies, that type of thing. The largest the one that I'm thinking about is pushing 100 is somebody that develops for O'Reilly's and Dollar General, those type of locations will develop for them. So they have multiple projects over multiple states going into that $100,000,000 number. You get below that and we have a couple in the $75,000,000 range that would fit that same profile. In terms of what you would really think about as pure concentration to an individual company, for example, 60 is about as big as we have and we don't have many of those. And you said it takes, I think, 2 people to approve a $10,000,000 sub-ten million credit. In theory, yes, most of our credit officers have $10,000,000 authority, but it's concurring authority. And we credit guys can't do anything on our own. So somebody, a leader or NFA has to have recommended it and we're concurring. What about this $100,000,000 credit? How many people have to look at that? I do, but what we do is any time that we have a house settlement exception and that would be, I take it to the executive committee usually via e mail and just let them know, hey, here are the kind of deals that we're going above are. But Tim or I, either one can go to the house limits. Either one of us can go to 60, but above that, I'm at the Executive Committee now. That's the Executive Committee of the Board of Directors. Okay. And you said you were a little overexposed on hospitality total across the company. I assume you meant what is the size of the portfolio? I think when we talk about overexposed, I'm talking about weight more than I'm exposure perhaps, that's something of a misnomer. But about 85 percent of our book is going to be national chain franchise properties, 15% is going to be independent. We're talking about totally outstanding term debt of about 6.44 $4,000,000 there on hospitality. And from that standpoint, we try to look at all property types and set a guideline as a percentage of our risk based capital. And that has a pretty tight limit and it's just a little bit over right now. How about health care exposure? What's the total health care exposure for Pinnacle? It's a if you look at exposure, it'd be up here over $1,000,000,000 If you look at actual outstandings, it's a little under 900,000,000 dollars And anybody else, that would go to everything from an HCA to the product. In fact, if you look at the concentration within the NAS, most of what we have is individual physicians' practices, that type of thing. Okay. So that would be that would mean a doctor all the up to HCA? Yes. That includes all that. And what's your syndicated exposure? It's fairly small actually. Let me put it this way in terms of participations purchased is the way we look at it whether it's a national syndicated grid or not. And we only do them really for the HSA or somebody that's in market that's the only way you get at them. And we have established a limit of like 6% of the portfolio that we feel should go there and we're below that. We're down around 5% right now. And again, it's all to end market folks that we know. HCA would be an example. Others, we got just a few more minutes here. This is your chance. All right, Jen, you'll start the show here. So Mike said an interesting thing that Mike, I thought you said something interesting, but you always pretend you're kind of in the 7th. You always pretend you're in the 7th anyway you're not. So what happens if you guys start seeing some really crazy stuff in the market? You've got sort of a double digit loan growth goal for yourself. Even with hiring, I mean, will you pump the brakes if you see things that are just do not make sense and you think will expose yourself down the road? Oh, no. We're just going full fledged ahead. I mean, I have a stupid question. But I mean, kind of give us the idea of what how you would position that, the investment community should that which I was hoping at some point that is going to happen, right? Yes. I think I guess 2 or 3 things. One is I've had some discussions with some of you. We run concentrations where you're looking at the C and I business generally in industry classifications and CRE business generally in asset classifications. And we've got to Mike's point, we've got separate targets for each one of those things. It's a function of risk based capital and those targets have been set based on what we believe the overall risk parameters of that particular business are and all those kinds of things and so they're variable. And we publish with great frequency more frequently than monthly to all our lenders in the company where are we on this stuff and there's a green light, a yellow light or a red light on stuff. And so we're we change those lights from time to time and it gets communicated every Monday morning in the communication protocols that Rick and Rob so forth have talked about. So we're tapping the brakes all the time on stuff and going back to things saying, okay, that looks like that's worked out and we move it forward. So there's a communication infrastructure. There's a measurement process number 1 and then a communication infrastructure that pushes that information out generally on a weekly basis so people know what's in, what's out. So first part of the answer is, yes, we tap the brakes all the time, have tapped it any number of times. I think Mike's had caution flags on multifamily for a period of time. I guess as Mike, if you said, you probably feel better about multifamily today than you might have 12 months ago. And our perception is those things change and that gets communicated in a pretty direct and robust way. Yes, Terry, among other things, we use a lot of that service coverage covenants. And what we've begun to do on particularly apartment construction and hotel construction, which are inherently speculative, We're taking a look at how those deals are performing right out of the gate so that we can see if there are any trends. And just so you'll know, the only deal we've got in East Nashville, they opened the doors in December of last year. They're 57% leased. In East Nashville, 717 opening and they're 90% leased. Belmont Music Row property opened twelvesixteen, it's 92% leased. We got a deal in Southeast Nashville that opened its stores on two seventeen that's 97% leased. We're going to do the same thing for our hotel properties to make sure those deals are coming out of the gate and doing well. So we'll if we start seeing some covenant defaults on that, we'll sit down and we'll all talk this thing through. Yes. And Jim, let me just say because I think part of your question is, hey, how intense is the pressure to do deals? And again, I get back to, hey, we're all both sides of the equation want to do good business. I mean, I had one earlier this week and it happened to be an acquisition deal. It would have been an HLT bucket. And the FAA and I just sat down, we talked through it. And he and I both agreed, now that's a little too rich for our blood. And hey, he wanted to turn it down as much as I did once we sort of together got to that conclusion. So we're on an individual credit, not afraid of letting them go some. And we're big believers that I mean, we gave them a no that very answer that afternoon. We said, hey, here are the issues we see. Here's the way we could do it if you put this much equity in those kind of things. So getting back to them with either a no or a hey, here's what it would take, we think keeps from burning bridges, but helps us maintain discipline. Maybe on a broader part of the question, Jim, I guess is, Terry, are you willing to come to the market and say you can't produce this loan growth because asset quality won't support it? And the answer to that is definitely yes. I mean, you look around at these guys here, they've been at it. They've been through 2 and 9. I think everybody in here has got the courage to say, hey, well this isn't working here. We're not going to be able to do this. And so anyway maybe that's helpful. So this question is a little bit of a setup here in terms of getting to the question. You've got the most experienced bankers in your market, 25 year bets on average that know all of the best customers. So you know who the A customers are, the B customers, C customers in your portfolio and then inside the market. Because Nashville and probably the other markets as well are so attractive for population growth, job growth, corporate relocations, obviously, that means that other banks that are out of market want to come here and participate in some of that growth with LPS. So how do you view your portfolio from a vulnerability perspective and as others come in and seek to move business from you and others. And how do you use that if you do as a kind of credit defense mechanism I mean, do you allow sort of these new entrants into the market to believe that they're taking in a credit when in fact it might be a secret? Does that make sense? Yes. I think real quickly, I guess relative to the competitive pressures that exist when you've got an oversupply of banks chasing too few deals, I would say this, we are aggressive extraordinarily aggressive about retaining our clients, particularly our good clients. We're less aggressive about retaining bad clients. But good clients we're aggressive about retaining. And so we don't generally let people take our business away from us based on price. If it's underwriting and there are those things, I didn't get through this because we ran out of time, but I'd let these guys talk about declinations. I mean, we decline stuff all the time where, hey, that's just a place we're not going to and we're not going to do and occasionally we lose business on those kinds of things. But I would say that we're fierce competitors. If you came in and tried to take a high grade client from us, we're not going to let you beat us on price for the most part. We'll let you beat us on underwriting, if you want to do that. Have you seen much of that in the last couple of years as Nashville has really sort of accelerated the local GDP? No, I don't think so. Rob's not in the room, but I think Rob's comment earlier in his presentation was, hey, what we find is immense price based competition, particularly on fixed rate credit extended duration, particularly owner occupied real estate. Man, it's astounding to me how some of that stuff gets done in the pricing there. But and you guys ought to comment instead of me, but I don't find again, I promise you I can take you over here today and pull out a deal and show it to you and say, look at this, this is stupid. They didn't get the guarantees or whatever it is. But I don't find that broadly going on in the marketplace. I can't say, hey, man that group is screwing up the credit. The underwriting seems reasonable. It's more about price and duration, but you guys ought to comment. I would agree with that, but I also would say, Inspector, I mean, like Greenwich will tell you, hey, once we get a client, we just cover them up with service, we cross sell and I don't mean hard sell, but we take care of all their needs and we make it hard for them to move. And I mean that the Grange and Social stuff would tell you that, that yes, it's got to be a price shopper or a huge price differential for us to lose it on that. I think on the real estate side, one, most of the real estate borrowers really value surety of closing. They've got a deadline. They've got to close be at the closing table. And I think our reputation is such as we've never left anybody standing. The other thing too, I think we tend to be nimble. It's an interesting dynamic in the current environment that you approve a deal and then they come back and want the money, here's the term, take it or leave it. But we're extremely nimble. Usually, it's just come down the hall, 5 minute conversation. Yes, we'll prorate the guarantees or yes, we'll live with something that wasn't part of your original approval. And those decisions can be made in 15 minutes to get back with the client. And I think people place a strong value on that too. The other thing too is if necessary, we're going to get rob and Terry in front of clients. There aren't many places where you can get at a bank our size that level of senior exposure with our better clients. And they're good at it. And while Terry enjoys it, Rob lives for it. I thought we were just getting going. So you can't come to Nashville and not talk about music, especially during CMA Festival. So for those attending tonight, enjoy that. I apologize in advance for some of the fashion choices made by the folks of Nashville tonight. This is kind of our Mardi Gras, and it gets pretty interesting. So we'll get back to normal next week. It's a busy week for us as you can imagine, a lot of late nights. All of our artists are in town at once. So we'll be out late with you tonight. So music, huge influence, relatively small industry, but the good news is not a lot of competitors either. Key thing here, we compete on knowledge, not risk. We do not bet on what record labels do. They're the equity investors. We look backwards, they look forwards. You have to understand a couple unique things. You have to have a few unique products. We'll talk about some of those non traditional cash cycles as an example, an artist can go on the road, make $1,000,000 they can come back the next year, be in the studio, not make $1,000,000 So how do you get them approved for a secondary market mortgage? The answer is you can't. You have to have a good portfolio mortgage product. Intellectual property lending. Our collateral is songs. Our collateral may be records. We'll talk more about that. Very, very stable, very high quality collateral, but not a lot of people understand it. We do. Specialty products, royalty advances to songwriters, tour lending, we'll get into more detail on that. Unique service expectations, my phone is always on. Our team's phone is always on, we get calls at 2 am, we get calls every weekend. You have to love this business to be in this business. Some of those calls get pretty entertaining as you could imagine. So largely centered in Nashville, New York and LA, only have a physical presence in Nashville. We are on a lot of airplanes. The last 2 weeks alone for me has been New York, Los Angeles, a ranch in Oklahoma meeting with a professional athlete, South Beach meeting with a professional football player, Pocono at a racetrack. And that's probably a good segue into our sports business. With the hire of Tom Fox from U. S. Bank and Wells, we have officially launched and gotten into the sports business. Pinnacle already had some pretty good exposure to athletes and a private banking business built around professional athletes, but we're going to take that to the next level. That's a very fragmented decentralized business. And we think with Tom at the helm there that there's going to be a great opportunity, particularly deposit and wealth management opportunity. We don't do a lot in film and TV at this time. I don't know if anybody is familiar with the term FANGA, Facebook, Amazon, Netflix, Google, Apple, insatiable appetite for content right now. So that has created some opportunity for us. TV studios as an example, which is largely a private banking sort of a game, but it is a landlord's market there. That would be really the only real estate we do and that's really more owner occupied real estate. So getting into the market as a whole and some of the opportunities, these are our clients, this is what they look like. We bank artists. Artists make a lot of their money from writing songs and from touring. Thanks to streaming, there's a new income stream for artists that they historically did not participate in. We often work with ancillary businesses for artists as well. Think Doctor. Dre Beats, think Kenny Chesney's Rum Company, that sort of thing. Artists are now leveraging their influence, not just their music. On the songwriting side, it's increasingly a singles driven business. There are less songwriters than there might have been 10 years ago. You could make a living getting a cut on a record, say, a decade ago. Today, you have to have the single. So there are less writers, but the ones that are successful are very successful. A lot of catalogs being sold were involved in the sale and finance of many of those. On the record label side, so historically record labels sold things. The 1st 18 months was critically important. So it was a cash business. And after that, what they call the master right had limited value. Today, thanks to streaming, which is about 70% of a record label's revenue, they now have an annuity. It is a consumption model, not a sales model. The other thing that happened is that 70% of streaming is coming from back catalog. So all of a sudden, these master rights that had limited value to record labels for all these years is now 70% of their revenue. So that really just doubled our opportunity as a bank. We're very active in publishing or music copyright M and A and labels have really doubled that. Now we can be active in master write M and A as well. Publishing very stable, new trend over the last 2 years, a lot of institutional money has come into this market. We're working with over $2,000,000,000 in institutional funds right now. Think BlackRock, Blackstone, think pension funds, international money, that sort of thing is all in the space. They are searching for non correlated annuity yield and they have determined that the music copyright, a well diversified, well seasoned catalog can provide that for them. So there's a lot of new fund structures. Our relationships are both with the music publishers, which are really the operators and directly with the institutional investors. Those have been very, very good opportunities for us and we think that's going to continue. Touring, main source of income from artists, there's some ancillary business there we work with. So think lighting, sound, merch, talent agents, all those parties, we're involved with all of those. And then tour lending is a big new opportunity for us, I'll talk about shortly. Music Tech, it's active. We're not very active in that space, pretty high risk. I will note the Spotify IPO was very positive for our business, however. Again, we've talked about geographies. Nashville seems to be winning as a music community. We're in New York a lot. We're in L. A. A lot, but it's nice to have our own backyard be doing so well. And then sports, again, pretty decentralized. This is the team. So Pinnacle has over 2,000 employees. We have 11. We are kind of a special ops group here. This is mostly the Avenue Bank team. So if you want to connect the dots to what does Avenue look like 2 years later, this is part of that story. Our competitors, I would say the 2 primary ones, SunTrust and City National. SunTrust less and less on a local level, but we do see them out of Atlanta on kind of a capital markets and commercial level. City National, they have physical presence in L. A, in New York, in Nashville. They're very heavy on the film and TV side and they do a nice job in music as well. First Tennessee has 1 or 2 employees, Regence has 1 or 2 employees. They're in the game, but not to the extent that City National and SunTrust are. Again, a lot of West Coast entertainment banks more focused on film and TV than we would be at this point in time. We compete with Credit Agility. We were fast at Avenue, we might be faster here. I've been very, very impressed with how quickly we turn around quality credit opportunities. Again, knowledge and service, we're not betting on bands. A few highlights on our book of business. And when I say our, this is my team. So there are lots of other sports, film, TV, music opportunities spread out throughout the footprint of Pinnacle. So when I say we're $500,000,000 in loans and deposits, I'd say there's another $250,000,000 to maybe even as high as $500,000,000 of industry related business spread out throughout the footprint. So it's likely approaching a $1,000,000,000 impact as an industry, but my group alone is what we'll talk about here. That does not include wealth management, assets under management, that does not include secondary market mortgage activity, both big parts of what we do. Good thing, it's a self funded book of business. Sometimes some years deposits grow a little faster, some years loans grow a little faster, but largely self funded. The private banking side of the business a little more deposit heavy, the commercial side a little more loan heavy. 2017 loan growth 43%, 2016 exceeded that number, 2018 will exceed that number. So we went from a jog to a sprint. We could not have done that at Avenue. Pinnacle has given us resources, given us legal lending limit we've hired. So we've really stepped on the gas pedal since the Avenue merger. Loan yield 4.9 3% that is heavily, heavily floating rate, very little fixed rate exposure there. About 1 third of our deposits are checking 0 interest bearing checking accounts. So you can see as we grow, we get the benefit of the lift in our floating rate yield and create nice net interest margin there. Fee heavy credit cards critically important. I can't remember the last charge off. So credit has been very, very pristine as well. A little snapshot on the loan side. The pipeline deposit side, I feel really good about right now as well. On the top there, that's new loan commitments. So that's not outstanding. That's just commitments, again, not including secondary market mortgage. For every $2 in loan commitment, we'll probably fund 1. But if you look back that what's that 6, 7, maybe 8 quarters, that's well north of $200,000,000 So that's really back to the time a little bit after the Avenue merger, we've done over $200,000,000 worth of business. The loan pipeline is as big as I've ever seen it, north of $100,000,000 there. That's actually grown since this presentation. And if you look at the loan mix, 56% publishing label, 15% commercial that might be something like a talent agent, owner occupied. This is almost 80% commercial by dollar. If you looked at it by number of loans, it would probably be 80% private banking. A few examples on the right side of the page won't go into those other than to say we're getting paid for what we do. We get roughly 100 basis point premium to typical risk in non music industry related C and I business. So these are spreads in the LIBOR 300 plus. These are 50 basis point to 100 basis point loan fees. Loan to value is generally under 50%, often under 30%. This is a very, very good business for us, lot of significant capital investment as well. So really good capital partners. So what does our collateral look like? This is what it looks like. We have thousands of songs as collateral. You wonder, are they new releases? What genre are they? They are songs that you have heard. These are the annuities. There's Elvis, Beatles, Twist and Shout, I Want Candy, Rumor Has It by Adele, ACDC Back in Black. This is iconic stuff. And every time you hear these songs on the radio, it's servicing our interest in some way. We had one client had 8 cuts on the last year's Ed Sheeran record, which was the biggest record of 2017. A lot going on in this space. Music publishing is now monetizing what we call ROW or Rest of World. So we're seeing monies come out of China, India, Russia, thanks to streaming for the first time ever. So the industry is growing in that way. Technology is helping with the industry quite a bit, both on the cost of administering these catalogs and also think of Alexa or home entertainment or Peloton as an example, if anybody has a Peloton streaming workouts live to your home with that music, we're starting to see all these new revenue line items find their way onto the income statements of our clients. And then sports, so again, talked about just adding sports. We're really, really excited about this. We've been involved to some degree. We are the official bank of the Titans, official bank of the Grizzlies. We have had some exposure in racing as you can see there. All the leagues you see on that page, we have existing clients, professional athletes that are involved in these leagues. These are pro athletes, generally 5, 10, 15 years retired into their career. An average client for us is $2,000,000 to $10,000,000 in assets under management, maybe $500,000 $1,000,000 in deposits, needs a mortgage. You get about 15 of these pro athletes and it's a $100,000,000 book of business. Since Tom joined us 5 weeks ago, our pipeline is well north of $100,000,000 in this space already. And if you think about it, Tom had one client who's a coach. He's moved 14 times. That's 14 mortgages that Tom has done for this individual over a period of 15 years. We are often the only thing consistent in an athlete's life. So we'll hop on a plane and go where we need to. You may say why Nashville for sports. Believe it or not, there's a lot of top tier sports agents in our market with CAA located here, another group called Rep 1 and the agents are often the referral sources for us. This is not a commercial business for us at this time, but it certainly could be at some point in the future. And I will note all of our marketing partnerships with things like the Titans Grizzlies are really self funded with direct business that comes from those opportunities. So won't get into those details, but those are real win wins for us. So saving a little time for artist growth. What is artist growth? We had a cryptic press release, purposely cryptic a few weeks ago, and we've made a small investment in this company. So I spent a couple of years on the road in 1999, early 2000 with a couple of 80s hair metal bands. I'm happy to tell stories later. Stay off of Slaughter's bus, would hand you a sheet of paper, a book at the beginning of the tour and it would say, here's your hotel rooms, here's your dates, here's your venues. And every morning you get a day sheet, it would say rehearsal, go live, buses load, all those sorts of things. It's herding cats to get all the parties involved and all the logistics involved using paper, right? So there's a handful of companies out there that have created tour logistics applications. They've done okay, artist Growth is better. Artis Growth has open API technology and can integrate with multiple parties. What I mean by integrate, if you have an agent, let's say it's William Morris and they're integrated with Artis Growth, the growth, the core system for William Morris will integrate into artist growth and automatically, not manually, automatically all of your dates, the venues, your guaranteed minimums, all your notes, will be there, can integrate with your travel agent. Anything changes, it's there. It's permission based. So everyone on your team, your manager, your agent, your travel agent, your wife, your girlfriend, sometimes they have both. All there, all permission based, you can see some things, you can see all things. So it's a one stop shop for merch counts, for guest lists. And then it also has a financial component to it. So show by show, you can see how much money you've made and how much you've spent. To this point, the financial component of Artis Growth is manual. We will begin to automate it. This data is invaluable to us. So are the opportunities with Artis Growth and what we're working on and currently in a beta test program on. I'm going to start with tour loans. I'll explain the others in a second, but tour loans will give you a sense for what we can do. So first of all, artists have agents. If you have a major agent, they book your shows for you. They book those shows with a promoter or a buyer. I had a hunch that most shows booked by major agents get performed and get paid. So we worked with the 2 largest agencies in the world and found out that 98.5% of the time a show that gets booked by a major agent gets performed by the artist and gets paid 98.5 percent of the time. 1.5 percent of the time there may be a cancellation, but it's rarely an entire tour that gets canceled. It's 1 show, 2 shows, 3 shows. And on top of that there's something called tour cancellation insurance. So 98.5% of the time, our artists are going to get paid. That 1.5% of time, a handful of shows, not typically the entire tour, and we have tour cancellation insurance. On top of it, you need to understand that an artist generally gets a guaranteed minimum. They do not take the risk of tickets being sold. Dollars 10,000 a night, dollars 1,000,000 a night, dollars 1,000,000 a night, the promoter takes the risk whether anybody shows up, not the artist. And the promoter puts a 10% to 50% deposit down that's held in escrow with the agent. Here's the problem. Before an artist goes on the road, they need to fund that tour. They have to put deposits down on light, sound, LED screens, staging, per diem, rehearsal, etcetera. And so what can happen, it can be 10 dollars 1,000 it can be $2,000,000 that they may have to come out of pocket or sell equity in a tour in order to get on the road. We talked to everybody. We talked to Rod Stewart, to Megadeath, to Dolly Parton, to Jason Aldean, to Kenny Chesney, you name it. And everybody said, if I don't have to write that check, I don't want to write that check. Or maybe there are midsized artists that can't write that check yet. Labels provide some tour support. It's very expensive. So long story short, guaranteed minimums, low cancellation risk, we have all the data built into artist growth, it's already there. Effectively, you load 10 minutes worth of information, give us a driver's license, your touring entity documents, an algorithm runs where we can advance against future guaranteed minimums. Within 48 hours you can have all the money that you need for your tour. And then as each show is performed, the revenue is redirected back to us. We were paid back from revenue, not from net income. That's the kind of thing that the data and artist growth can do for us. We'll also leverage it for credit cards. So artists don't always have the best credit scores. Debt to income isn't exactly a metric that works for them, but we have data here. So we can approve credit cards with non traditional metrics. And on top of that, do things like linking the travel notes on a credit card to someone's tour schedule. We're constantly answering our phones because an artist can be in 3 states in a day and they are constantly perturbed by the fraud notices that they receive because of their heavy travel schedule. We can solve that. We can build rewards programs around the type of activities and things that an artist may need. And then lastly, again, going to this debits and credits component of artist growth, we can link tour accounts into this program effectively becoming a music touring specific online banking that the world's never seen. So this is first of its kind, really proud of Pinnacle for being entrepreneurial here. It's received great praise so far and it's in beta test. We expect next year to be a pretty big year for artist growth. So with that, I think I'm out of time, but really happy, a lot of horses in the race, sports, publishing from Baby Acts to Iconic Acts, the private banking side, the commercial side and turning music tech into fintech with hardest growth. Has City National been vulnerable since selling to RBC? City National is very good at what they do. So far, we haven't seen a lot of vulnerabilities. Okay. One other question. What would cause you to open an office in LA, New York, wherever? The commercial side of the business does not require bricks and mortar. We're very well known in that space already. To the extent that we found the right people and felt like there was a private banking opportunity in those markets, we could do that. Okay. Any other segments of the market you're looking at in entertainment that's Our hands are full right now with music, with this artist growth layering on sports. I don't think you'll see us get too active in film and TV yet, but eventually we'll add some expertise there. I guess what I'm think of I used to cover City National and years ago, they decided they were going to open a New York office and they basically took the Broadway community in manner of a month, right? Yes. There's a lot of deposit opportunity. I'm not thinking of that particular opportunity, but it was they were able to capture it fast and dominate it fast. There's again, we have a heavy growth rate right now and I think there's lots more opportunity out there. Yes. So I'm not sure if you can fully answer this question, but it was a recent acquisition in the Chicago area, 5th Third bought NBFI and if I'm not mistaken, 5th Third is the official bank of the Nashville Predators and I think MBFI is the official bank of the Chicago Blackhawks and that's kind of like oil and water. Do you think there's going to be an opportunity at some point for maybe the Predators to come under the Pinnacle umbrella? That'd be more of a question for marketing. We're certainly Predators fans. And I'm sure if the opportunity presented itself, we would look at it. Yes, I think that's really the way to look at it. For the deals we've done, I think you know enough about our company, we're not interested in just having a logo on a jersey or something like that. We're not looking for exposure. What we're looking for is economics. And so all the deals that we've done have been tied to what we're paying and what we get in terms of the exact revenue streams, how many can we sell, how many firms, so forth and does that pay for what we're doing. And in the case of the Titans, it's extraordinary to look for new. In the case of the Grizzlies, we're not through where we need to get through, but it's on a trajectory that makes sense. And if we can line up the same thing with the Predators, we'd love to do that. It'd be a great athletes we talk to have had fraud and mismanagement in their past when it comes to wealth management. When we can say we're titans and of the Grizzlies, it's instant credibility. It's really, really helped kind of close the loop on that conversation. Andy, I was just curious, and sorry if I missed this, but you said it's $500,000,000 or so in balance sheet impact today. What do you think the potential that can be in the next 2, 3 years? And do you think this business mix would be in 56% publishing? Does that hold with what you're seeing moving forward? And maybe last component of that is just average loan size within that $500,000,000 Yes, sure. So yes, I think there's still a lot of growth left. We're at our 2022 number right now. So I've been really, really pleased with the market. I do think the music publishing business will hold and continue to grow. A lot of the facilities we've closed might be $30,000,000 $40,000,000 in size, probably $20,000,000 to $40,000,000 Some of those have $2,000,000 $3,000,000 $4,000,000 funded right now. So as they begin to acquire content, honestly, we could stop today and grow 20% a year for the next 2 years with the deals that are on the books. So the growth is certainly there. And as I mentioned, really the market doubled with streaming. So now record labels are fair game to lend into as well. Add sports to it, add whatever artist growth and a tour lending program could do, you can start to see that we hit $1,000,000,000 and keep going. Other thoughts? Thanks everybody. All right. Thanks, Andy. Andy mentioned something about Pinnacle was good enough to be entrepreneurial or something with artist growth. The reason we were entrepreneurial is that Andy Moat said we need to do this. And so brag on Andy a little bit. As far as somebody that's well respected, well known in that industry, you'd have to go aways to beat Andy Vokes. He's been around it for a long time now. And there's saw a bunch of pictures. We're not going to say they were our clients, but I'm not going to say they're not our clients. So anyway and if you ever want to go have a beer with him, he can tell you some stories too, because he's in an incredible spot. All right. So last kind of formal session of the day, Bankers Healthcare Group. We've got Al Crawford, the CEO there, here, not there, here. And I've known Al now for call it 3, 4 years. I've not known a guy like Al ever before. He's got a passion for what he does that is I think remarkable. He's a great partner for Pinnacle. We've enjoyed this relationship immensely. And he's come down here from Syracuse, New York. He said, Well, what do you want us to say? What do you want me to say? And Terry and I were meeting with you. Well, our intention here is to kind of demystify Bankers' Healthcare Group. So with that, Mr. Crawford? Thank you, Harold. Thank you, Terry. Again, as Harold said, I'm Al Crawford. I'm Chairman and CEO of Bankers Healthcare Group. I'm one of the original founders. We founded the company back in 2,001. 2 of my partners, Bobby and Eric Castro, were brothers. They were very, very big in the lease franchise equipment financing origination. They had worked for many different finance companies. And really I consider them they were in their 30s at that time, 2 of the better originators in the country when it came to small ticket leases, finance. My background was a little bit more of kind of a poor man securitization where I work with community banks around the country and matched banks that had a need for assets with banks that had maybe a concentration problem or had a FDIC or regulatory problem. And I would move portfolios from one bank to another bank and charge a fee to do that. So, Bobby, Eric and I met in Martha's Vineyard and literally within 2 weeks, we were talking about going into business together. We were both brokers. Bobby and Eric were brokers. I was a broker. We had never really owned the business ourselves. So the idea of maybe building something using their ability to originate and My Community Bank network was appealing to both sides. Our strategy was we both I had placed a lot of different medical paper over the years before meeting Bobby and Eric and they had done a lot of medical originations. So the idea was to stay away from the bigger institutions, stay away from PofA, stay away from Capital One, Wells Fargo, SunTrust, who were some of the bigger players in the medical space. And so we went with an idea and a concept that we'd really go small ticket. We'd work in the $100,000 and under ticket size. And we would bring a working capital loan just specifically to the medical community. And we would stay on the commercial side of the equation and we push the term out aggressively. We push the term from what back in 2001 was custom was about 36 months for a short term small ticket loan. We pushed it all the way out to 84 months. And we offered an affordable payment to the doctor. And we thought in the medical space, because again, practices should improve, their performances should increase, anybody who chance until either you move or they move. But if you stay in the same area, chances are you visit that same healthcare practitioner year after year after year and their that would coincide with the growth of their business. That would coincide with the growth of their business. Surprisingly enough, we did not like startups. BofA is, they're on the dental side. We didn't want to run into their rejects. So our the average age of our doctor, our healthcare professional is approximately 15 years. So ours was a kind of concierge service to a doctor who was established, who needed some type of capital, working capital for any reason really on the commercial side and needed it and wanted it in a hassle free environment. So we concentrated heavily on going to those individuals. And those individuals, if you look back over the last 17 years, tended to be in business for about 15 years. So they were experienced, their practices were well established, they were established as doctors and there really wasn't in opinion a big credit risk for $100,000 with a practice that on average was making about $1,000,000 a year. The value of making the decisions fast and the competition, this was a big pet peeve of mine. I knew the banks well. I had worked with the banks over the years moving portfolios. And one of the things I learned pretty quickly about the banks was that they really took their time to make a credit decision on portfolios that I would bring them. So one of the things that I said is I changed my opinion in terms of how credit can be analyzed. And I said to Bobby and Eric, if we can make a system, if we can have the technology to be able to really review the information at light speed, we should be able to give a decision to the medical professional the same day. I was a little bit of a contrarian where I said, I don't think taking time increases credit value. I don't think moving slowly increases credit value. I think the credit is what the credit is when it walks in the door. And if you take 2 to 3 to 4 to 5 weeks to review the credit, that doesn't make it any stronger than if you had reviewed it and got an answer to the borrower day 1. So we leveraged my knowledge of traditional banking and we wanted to be fast. We wanted to get the information in the door. We wanted to create a platform that would score the credits on the individuals that were coming to us, on the corporations that were coming to us, and we wanted to get back to the medical professional immediately. The second thing that was key in the model was we did not want to rely on the medical professional getting us information. So we use 3rd party providers to get us the information at white speed. I have or my credit officers, we have about a 15 person credit department, have the doctors' tax returns within 4 hours straight from a provider, straight from the IRS. We have their W-2s. We have their 1099s. We get it all within a 12 hour period and we pay to get it. So, the applicant comes in and they sign a very, very quick release for a 4,506 or another form that allows us to get their W-2s. They sign that. It comes online on our system, our vision system, which is proprietary. The system prompts it to go and request the tax returns from the IRS and all the other financial information. We use Xyleen to check lien searches to check to see if there's any other debt out there. We do license searches and the system is prompting it all on the way. It does not hit a credit officer until it is scored and it is either accepted or it's declined with the initial screen. And I know I'm kind of getting into the weeds here a little bit on the credit side, but it's important to understand that we can go through the whole process, have a very, very presentable package to our FDIC banks, and we usually accomplish that within 12 hours. And it's full tax returns for 3 years, W-2s, cash flow analysis, DTIs, everything that you're looking at, at a traditional bank, but we do it for the borrower. So, at the end of the day, we've actively gone after the borrower. We bring the borrower in. We go to the borrower's practice. And then we make a decision within, generally speaking, 12 hours and we're back to the borrower with either an acceptance and approval or a decline within that same amount of time. For that, we wanted to get paid. And so if I could give you an example of what we're banks that we work with and I meet with them. I give seminars about every banks that we work with and I meet with them. I give seminars about every 2 months around the country and update the banks on where we are, what our financial position is, what the future looks like. It's usually about an 8 hour session. And I usually tell them the easiest way, why does the doctor come to us? Why would a borrower come? You'll see later on in the slide, our gross rate is 14, I think, 2.5% in the Q1 of 2018. Our sell rate without disclosing our gross rate to the 875 banks that bid on our auction every day is, I think, a 5.15 right now. Again, I tell the banks, you underwrite it, you take a look at it, you look at this loan as if it walked in your lobby because it is walking in your lobby. We're bringing it in your lobby. We've already funded it and we're selling it to you. Again, we're in the low fives with the auction. Where are we as a company? We're in the low 14s with the service that we're giving. And a lot of people say, why would a doctor come to you at 14% that a bank would lend to at 5%. And I say for the same reason, when I'm in New York City at our New York City office and I go out to LGA, I can take the subway for $5.50 I would never do that today. I might have done that 30 years ago, but I would never do that today. I could take a taxi for probably, I don't know, probably like $45 Uber Black cost me $125 And I usually take Uber Black because I know they're going to be right there at the door when I walk out. I know they're going to drive me in a clean car, air conditioning, no smoke, and they're going to get me LGA right on time, and it's going to be a very pleasant experience. For that, I pay the premium. I can get there for $5.50 but I pay $125 to get there. That's the exact same reason medical professionals come to BHG, because they're going to come in today and I can fund them in 72 hours. And I can deliver a package to the banks that has as much information as they will get over a 4 to 5 week period from the doctor if they rely on the doctor to go get that information for them. It doesn't appeal to every single doctor out there, but it appeals to approximately right now about $70,000,000 a month of $100,000 loans. It's the model that we built the business on. We use if you look down through marketing platform is key. We're a approximately $225,000,000 asset company. If you matched us up against the bank and I put my budget for marketing, digital, within $50,000,000 a year. I would probably guess that I'm probably somewhere in $15,000,000 a year more than theirs. We'll spend $16,000,000 $17,000,000 this year going after the client, driving the client into our lenders, which is a sales force of about 68 people. And we will constantly, constantly be knocking on their door. So our marketing platform is key to producing the lead flow. They're the group, it's a 25 person marketing department in Syracuse, New York. We probably would be one of the 3rd biggest agencies in upstate New York if we're an independent agency. Trade Association involvement. BofA is that we compete with BofA's medical division aggressively, not necessarily for their big $1,000,000 loan, but we do compete for the same doctors for the $100,000 working capital loan. So we see them at trade associations. We're going to I'll tell you the biggest difference to give you a little flavor of BHG. They're going to own the show. You go up to Yankee Deno in Boston, they own the show. They have just huge presence from the walls to the path that you walk along. BHG is going to have a booth about the size of this. But I'm going to have 3 guys in that booth that if I catch 1 of them inside the booth for the entire show, they're gone. They're going to be out in the aisle. They're going to meet and greet every single dentist that walks through that path. So we're very, very, very I use the word aggressive in terms of if we're going to be at a show, we're going to be at a trade show, we're not going to be in Milwaukee, Wisconsin. So consequently, you've got maybe a 5 second chance So we brand and we're aggressive with our branding. We're at all the shows. So we brand and we're aggressive with our branding. We're at all the shows. We don't have the budget that BofA has nor SunTrust nor Wells, but we have guys and gals who like to talk to people and who like to sell and we have very much a sales culture. Underwriting loans pursue district standards using automation to the fullest extent possible. We have over 100 credit models, loss rate last 5 years approximately 2.4%. Again, it follows heavily the national average. I think we'll be under 2% this year. In 2018, the portfolios are performing better than they've ever performed. Again, we're running off a gross rate of 14% plus. If we can run at 2% or honestly 2.54%, we'll run at that for the rest of our lives and be very happy. Fair Housing Professionals on staff, we have over 15 analysts. I think our special sauce today and it wasn't in 2,001, our special sauce is that we've underwritten over $15,000,000,000 of individual working capital loans with doctors, dentists and vets and healthcare professionals. We have all that data. I've got 15 very, very much, much more intelligent than me analysts who pour over that data. We funded, I think, about $3,700,000,000 of that. The balance has either been declined or didn't accept our loan, but we've got a lot of information on it. We have a lot of behavioral information as to who responded, what they looked like when they responded. We use Fair Isaac, TransUnion. We buy a tremendous amount of data before that from them before we even outbound. So we can look at funding behavior. We can look at response behavior. If you look at the one slide later on, it shows that our lead flow is down in 2018, but our margins are way up. That's by design. We're bringing in better quality lead flow that we know from a behavioral standpoint will close, they will fund. So we don't want to bring in a lot of lead flow that's not going to fund and jack up our expenses. So in 2018, the quality of our lead flow by design is up and our pull through ratios are higher than they've ever been. And again, I attribute that to the 15 analysts who pour and pour and pour over the data that we've accumulated over the years. Vision Phoenix, the bottom, that's the proprietary system we run on. FDIC has been in, OCC was in 2003, 2004, OCC was in 2010, 2012, 2014, 2016, 2017 and they're coming in July with 15 examiners. We're not a bank, but we open our doors wide open to examination and we've been examined heavily for the last 17 years. FDIC said if the banks in the United States ran their credit on our Vision Phoenix system, they would need 50% less FTIC officers because it is so user friendly. It stores every single piece of information that we get from the borrower in a cloud online. So we had no paper. It is all stored. It is all prompted. It collects the data itself. It runs along a river. And by the time it gets to a credit officer, everything is in a compartment and everything is stored. So at that point and it's very secure. At that point, our credit officers do manually handle it. People have asked me historically, are you guys a fintech? I said, I don't know if we're fintech. I know we use technology to the extreme degree to move very, very quickly, but I also know we talk with every single borrower that we work with. We just set it up for the credit officer, then the credit officer has a discussion with the borrower and every single applicant has a live voice when they come in. They work with a sales representative. 72%, I think it is, of our leads come in through the Internet. So we look at, I think, 4,200 leads approximately a month. Again, 70%, 72% of those are coming in via the web. We sell loans to financial institutions seeking improved loan yields and commercial loan growth. It's been a super growth for us, banks like Pinnacle. It's been a super relationship to have the growth that we've had. As we move along here, we've had and there's another slide in here that I can jump to quickly and give you a little bit more detail about the banks. And I'll do that in a minute. Over $3,250,000,000 in commercial medical loans originated, as I said just a couple of minutes ago, dollars 101,701,000,000 outstanding as of twelvethirty one, dollars 711,000,000 originated in 2017. The default rate we talked about, hoping to move more towards the 2%. Diverse financing network having sold loans to over 8.75 U. S. Banks. In 2017, we sold loans to 4, excuse me, 22 different banks. In 2017, 118 banks bought their first BHGE loan. Yes, okay. Over our 358 employees in 3 major locations, you could see, as we're moving along, loan fundings have grown. We went through the 2,008, 2009, 2010, 2011, 2012 and we actually picked up major market share during the mortgage meltdown. We really weren't affected at all. I think during that period, we had probably 125 banks that were buying from us. We probably had about 30 40 that went on the sideline. Quick story, out of Bank of Tampa, very good friend, call me up and say, Alan, shocked, we're getting a run on our deposits. Put a $5,000,000 order in with us. We were direct placed and it was before the auction. And he said, I'm going to have to pull back. We had 75 other banks that we're not having to run on deposits and continue to want product aggressively. In the earlier days, OCC would ask me, Al, why have you gone with a big money center bank or a bigger line? I said, well, I grew up working with community banks. It's a very diversified platform that we use. And today, we've got 875 banks. And like I said, we went through the mortgage crisis and we actually took market share down as some of our competitors were on the sidelines. Loan distribution, as you guys can imagine, the medical community population. California number 1, New York number 2, Texas number 3, Florida number 4, then you get into Pennsylvania, Ohio, Illinois and then it starts to get a little bit smaller after you go through those big 5, 6 states for us. We market, market, we look at everything. I mean, we're looking at physicians, dentists. Those are your average FICO scores that we get as you see the bands there for our borrowers. The other ones, you've got some tricking us, the higher the FICO, the lower the profitability, the tougher the risk base pricing becomes. That's one of the other big differences, I'd say, between us and a bank. We risk base price, period. I do not put a rate sheet out on Monday morning and say everybody fits into this box. We have 12 different groupings. Within each grouping, we have 5 different levels. We analyze performance aggressively and our top rate is 23.99, our best rate is 4.99. Our most profitable rate is probably in the group 5, 6 and 7, where we're probably living in that 12% to 14% area. They tend to close well, they tend to perform well and we tend to be able to get a little bit of rate out of risk based prices. I mentioned this earlier, I won't bore you guys this again, but we use analysts, we use them in marketing for behavioral studies, response. You'll have a group of doctors that maybe it doesn't pay to go more than once every 3 months. You'll have another group of doctors that you should be mailing every week because when they want to borrow, they want to borrow that minute. And if our piece is in front of them either digitally or by mail, if they want to borrow that week, they're going to get the money from somebody. So if you're not in front of them, they're going to borrow from somebody else. With that group, we will mail them, we will digitally contact them, we'll use Facebook, we'll use Instagram, we'll use any social media that we have access to, we will hit them weekly. There may be another doctor, group of doctors, your top, top, top guys, they don't borrow. So we don't waste money sending it to them on a weekly basis. We'll send it to them on an annual basis and see if we can catch them there. But the rate of return on those specific mailers or those specific contact points is very, very small. So we're not going to waste a lot of money on those specific ones. You move over to the predictive analyst, we have marketing acquisition model, we have a credit scoring model. We tune that credit scoring model up daily, just following what works, what doesn't work. We might see some interruption in loss and say, hey, we've got to put that risk rate. We'll continue to do it, but maybe we put 150 basis points more to the sales force when we're working with that group if we're seeing a little bit of interruption there. In the closing scoring model, we have the risk model, data management, external data, demographics. We have a data warehouse, which obviously is extremely valuable. We rank our sales guys. They got a board as big as that area right there. My number one guy converts to 72%. He's a beast. You can't beat the guy. He gets a doctor on the phone. The doctors love him. He converts to an application of 72%. Our worst individual probably right now is maybe converting at 58%. They won't get a lot of lead flow. He won't get a lot of lead flow. We will continue to push, push, push very much like an NFL team. And I tell the staff this. If you're a ridiculous back, you're going to get the ball. If you're good at conversion, if you're good at selling, if you're good at talking with a OBGYN, you're going to get the ball, you're going to get the calls. If you're not, you're not getting the calls. We have an aggressive culture. We have a very communal culture. We believe heavily in organizational health. I meet with them once a week. I read a book with them. I'm reading the culture code with them right now. We bring in about 50 of the managers. We read the culture code. We believe in back in each other. We don't permit a lot of backwater channel stuff. I don't want to hear people talking about other people are talking negatively about the company. And we're very communal in that sense where we're really looking to build a team and a team idea to be successful. You guys can see this is just a stat lead flow performance. You're average lead 4,241. You're looking at revenue per lead. This is what I was talking about, which fascinates me. It's our Q1 2018 lead flows down actually. You're at 4,002 versus 4,241, but average revenue is 7,500,000 versus 5,600,000 So we're doing more with the leads that we have. We're targeting better people from a behavioral and a credit standpoint they're going to fund and our margin is up. Credit statistics, walking really quickly here. Our average CMS, that's our internal credit matrix system that's constantly being updated as a 752,000,000 our average FICO is 728,000,000 our average borrower makes $252,000 a year, our average approval size is 71,000 average debt to income is 30 percent and our average year's license is 17. Funding, that's our 8.75 banks. We have 9 bank representatives that cover the country. On a regional basis, I think there's 4 states where we don't have bank that's purchased from us. Maine, whatever the one in the middle there is, Alaska and Hawaii. The auction came about 4 years ago. We were at 7% on a sale rate direct to the banks. We screwed around with this really makeshift auction, our tech guys, I said, let's try making them bid a little bit. And within 2 weeks, they dropped the rate under 6. And within a week after that, they dropped the rate under 5. So, needless to say, we took every single person that was available in the technology division and said, build this auction out, because it dropped rate crazily. We've had what now, are we going to have 4 prime raises or we've had 4 prime raises. We've actually had a drop of 0.19. We're down 19 basis points on the auction in 2018. So I think the average yield that we're looking at is, like I said, I think it's around 5.19, which is actually down. It might even be less than that from where we were last year, which is crazy given the increase in the short term rates. Again, I think it's competition. You have a bank that's maybe regional that says, hey, I'm in Nashville, I like this doctor, I want to buy him. And then you got a big bank that's coming in over the top, maybe out of San Francisco, they both want to buy that loan, they'll compete with it until 3 The auction runs for 24 hours. It comes out, let's say, it comes out today at 3 and it runs till tomorrow at 3 and it's a cold stop at 3. And then we close the same day, send docs out and we'll fund tomorrow on all the auction deals that went today. Number of banks, we've talked about this origination, origination of credit, funding, placements, institutions. Probably there's an issue of substitution and collections. Substitution and collections, I came from the broker world as I told you guys. I came from the asset brokerage side. I saw a lot of great deals and I saw bad deals and I saw companies that leveraged up and got in trouble because of the leverage and then did stupid things because of that leverage. So I said, in our company, we are not going to legally stand behind it. And as a matter of fact, given the mortgage crisis, we are also not going to do handshake deals. We're going to put a piece of paper out there that says we may opt to solve a deal at 90 days. We may opt not to solve a deal at 90 days. We do not sell to pension funds. We do not sell to individuals that don't understand finance. We only sell to institutional banks. Banks understand what it means to lend. So when I stand up there every 2 months, I tell them, sorry, you'll blow through sale on us if you count on our sub. The sub is there as an option if we are financially of the wherewithal to go ahead and say yes. We vote on it every month at the Board. We bring them up. You guys have seen the growth of the company, we've been very fortunate. Our financials have been strong every year, so we've always opted to sub. And we build a lot of margin in. We have a recourse liability on balance sheet. So, we have a liability and we have reserves for our off balance sheet propensity to sub. If we stop solving, that recourse obligation would flip over to the asset side. I think it's $72,000,000 today. So it's something that is a as the slide says, to keep liquidity in the bank network, they appreciate it. FDIC appreciates it. But we are very aggressive to say you cannot count on it. And every single lawyer, every single attorney that comes in and reviews the documents before their bank buys one, takes a look at this and says, guys, this isn't worth the paper it's written on and tells their board that they cannot count on BHG to substitute a deal if it goes bad. And we say, you're correct, but you're a sophisticated institution. These are good loans with great doctors. Don't look at the substitution to buy this. Look at the credit underneath the loan. And that should suffice as a bank for you to participate on the auction. And if we're there and we're in the right mood and everything's working out, we will sub the deal. But we do not have a legal obligation to sub it. Knowing that we're probably going to want to try to sub the deal, we have I think we have the best collectors in the country. Again, they are low salaried, high commission, get the payment back from the doctor. They are extremely compliant. They've been to CFPP courses and everything else. So they're very compliant, but they're also very aggressive. For them to pay their mortgage, take care of their family, they've got to collect the money. So just about every single bank out there, I don't know if any that don't elect us to collect it. All funds are transferred ACH from the borrower to the bank. Again, I saw too many debacles that I didn't like, so we don't have the money going through us. The only time we handle the money is if we're in a collection mode. Otherwise, it's a present value discount formula where we're getting ours upfront and reinvesting or if there's an interest differential where there's not a present value discount involved, we sweep on a quarterly basis from the bank or an account we have at the bank back to us. Products of the future, Fund X, we're going to be one of the 14 companies that have a non bank SBA license. We went into the process. We bought it for $2,300,000 a year ago, and I think we are days away from getting federal government approval. We can start moving towards some of our bigger competitors that and I don't want them moving into our space, but we get opportunities for $500,000 $2,000,000 $3,000,000 loans every single day. I'd say we probably get 10 opportunities a day. So we will start to fund those. We will probably sell them out through our bank group at very healthy premiums, keep the non guaranteed portion and look to generate some real nice fee income from the SBA license and the ability to go into a bigger ticket size. I didn't mention earlier, but we get a little bit weak into these about 300,000 I really like the 50,000 to 200,000 level. Average term, as I've said, 84 months. Average ticket, 100, 125. We'll move up higher if it's a multiple guarantee practice. Every deal we have gets personal guarantee from the doctor also. And that's honestly what we chase, not the equipment. Patient lending, I think it's one of the biggest markets out there. It's $450,000,000,000 It's crazy. We backed into this. Our banks these 8 75 banks in 50 states have relationships with every single hospital and surgery center out there. So we've brought our patient financing program, our platform in conjunction with Epic River and we connect the bank with the local provider. So the bank is introducing us to the provider. We're going in and selling the provider, the surgery center of the hospital, a program for them to finance their patients. We're flipping right back around and taking the local community bank, let's say, in Mount Vernon, Illinois, they've got a 55 bed hospital. The Bank of Mount Vernon brings us in, introduces us to the hospital. We set up the technology to link the hospital to the bank. The bank funds the deals at $5,550, refund to the widow fund. The patient pays about $10.99 ARPU is 300 basis points. We are not funding, the bank is funding, we are not involved in any risk and the provider is providing a 60 day buyback for recourse for any loans that go bad. My first question to provider, I spent a lot of time in the last year in the field, is do you charge before or you charge after? If it's a hospital, they charge after. I said, so you already own the loans, you're already under full recourse. So for us to go in there and technologically finance and give them an electronic platform where the patient can pick their own payment and make it an affordable payment instead of getting stuck with that high deductible as a bullet, it's very, very appealing to the patient. The patients tend to pay at a much higher rate and So we've talked to probably 100 providers in the last 6 months. And I'd say right now, we're at about a 90% success rate for those providers coming forward. I think we could be the number one patient lending company in the country. I think we can knock LendingClub, but I think we can knock CareCredit. Everything I've heard from the providers I've talked to around the country, they don't like the other options. So right now, we're dealing with a number, AmSurge right here has 177 surgery centers. We're in the final negotiations with them. Surgery partners, we're talking with them. We've got 5 different hospitals that we're working with locally as well as we're hopefully on the final strides with Ballad. It's out of Johnson City, Tennessee. And again, we're looking hopefully, I'm thinking over the next 3 to 5 years, if we have 1,000,000,000 dollars outstanding in receivables, our fee on that is 3 points. So we'd be looking at $30,000,000 and that $1,000,000,000 doubles the next year, doubles the next year because the amortizations are 60 months. So you'd probably peak out on an AM probably around 3 point $5,000,000,000 and earn that same three points from those same providers over and over and over. So, it's an industry I really love. Again, we are not the lender. We're more of the facilitator and the aggregator in this marketplace. But the exciting thing is we have the banks close to 900 providing access to the surgery centers and the hospitals in their communities because generally they're on the boards there. And then we're bringing in the ability of the bank to lend and they want to lend in their community and putting the 2 together. And it's really a nice marriage for the 2 of them. We're providing the platform with Epic and the introduction, and we're charging a fee for that. We've talked a lot about the value proposition. Speed and then there's supplemental financial information also that's included in the back. Any questions? Yes. How has the coupon for the docs changed? And how do you expect that to change as rates continue to move up? And do you think there's a point in the rate backdrop where the demand for this product from the docs drops off? That's a great question because that's something I'm always concerned about. Does the demand stay there? We've been on a minimal of 10% to 15% growth a year. I think rates moving up is actually helping us because as you saw 2017, I think we were around 14%. It gives our closers and our sales guys a In the past, we just sat there with rates just on the ground. In the past, we just sat there with rates just on the ground. It was honestly a little bit more difficult a year and a half ago to get a doctor to lock into 14% than it is today. So our top side is actually inched up a little bit and we've been able to hold the downside, the auction side, because I think of the competition of the banks with their experience for the loans. Today at least in this upward moving rate environment, we've been able to get a little bit more out of the topside and hope to continue. Yes. Maybe talk a little bit about the evolution of the business. When it first started, what was the turnaround time to get back to these doctors? What was the monthly closings? And over the last 17 years, how has the credit cycle emerged within the business? Did you see any kind of uptick when you first started out and the Spectralogy kind of backfilled it? Has that come down or has that been pretty stable at that 2.5%? Great question. As an owner and with my other two partners, it was just the 3 of us and 2 other people, The credit was basically what the banks really wanted at that point. We had $25,000 in capital, that's it. And so Bobby had a deal that he wanted to take away from BofA for $1,000,000 I said, Bobby, our average ticket size is like $75,000 I don't want to go on $1,000,000 And he said, it's the best deal. We didn't do the deal, but the reoccurring theme is Bobby's type He's a sales guy. He's never met a doctor he doesn't love. He's never met a doctor he doesn't want to get funding for. So he lost his vote in credit after about 6 months. But having said that, I would say that we are much, much better today than we were when it was just Bobby, Eric and me and the banks. We ran loss ratios in 2,000 8 and 2009. December 2008 was a scary day. We actually had about 153 ACH failures that came in that month. We were running it at probably 70. So I went home the end of that and just said, when does this stop? I mean, these guys are starting to get hit. It was also a little bit of a perfect storm for the doctors. They love to spec on real estate and they love to day trade. So at the end of the day, when the market crashed and the real estate market crashed, they were a bunch. But the thing I loved about them is you had your dentist that was maybe playing golf 3 times a week and practicing maybe 2 times a week, during the crisis, these guys went back to work. These guys, these gals, they stopped playing golf 5 times a week or 3 times a week and they got in that office 5 days a week and went and pulled teeth for the government on Saturday morning and made cash. So we saw an interruption, an interruption in delinquency, but we also saw them come back probably at a much faster pace than the overall market did. We followed the market. We definitely bellwether it up. I think 2,009 was our high mark for default, much higher than today. And we've come straight down every single year since then. I will say this, in 2012, we looked at outside analytics. We and the company wanted to charge us $500,000 I said forget, let's develop our own team. So we went out and hired 4 or 5 number 1 Stanford, MIT, put them in charge of going through the data, put them in charge of building a better credit matrix system for us. That team's growing to 15, 16 individuals today and they're constantly using the data from the portfolio to make changes to the credit matrix and the credit officers and the whole vision system going forward. So I think today, we're much better than we were before. And I think every day we improve because we do have a lot of intelligence. In defense of Bobby, Eric and me, we didn't have $15,000,000,000 worth of data to see who was going to be successful. We didn't have soft pull technology. We can go into soft pull all we can get information from TransUnion on their game. So they're providing a tremendous amount of intelligence for lenders if they're willing to pay for it. So we can take a lot of our historical data, pump it in to TransUnion and say, how would this have performed? They're going to charge us for that, but it gives us tremendous insight as to what we could expect on a behavioral basis going forward with similar type of profiles. So, I think technology, intelligence, AI, these other companies, putting those people in place, us buying those services from those companies has made it a safer playground for us and the economy strong, which helps. Catherine, one last question. Al, maybe you could hang around a little bit and let people ask you some questions offline, but we'll take one more and move on. All right, cool. And just a supplement question on the credit side. So you said you have the option to purchase these loans back. But and so you and you want to because you have a better credit collectors. And so can you just kind of talk about the past, I don't know, maybe 4 or 5 year credit's been really good, over the past 4 or 5 years. So can you talk about is there an example recently where you have opted not to buy the credit back? And why has that been? Or recently, have you been buying back all delinquent loans just because you can because you have the liquidity to do so? And at what point do you think that changes? What will make that change? Hopefully, 1, the last 5, 6, 7 years, we've never not opted we've never opted not to buy the loan back. When Crowe came in, in 2012, we had 14% reserves because I was very conservative. I was paranoid about the substitution. I wanted to be able to opt. I was worried about bad markets. So in 2010, at the exact long time, I jumped the reserves up to 14%, and we held that at the banks. And so we held a big part of that present value right at the bank and with some big investment houses. We held it with Merrill and Stifel, so we could get a better return because we could buy block investments and not be beholden to the banks just giving us a very small depository rate. Crowe came in, in 2012 and according to them, made the biggest one time adjustment up to an audited financial statement they've ever made. We literally had to have the CEO of Crowe sign off on it. I think the adjustment was a $26,000,000 reversal, which they took out of the liability, the reserve side and slapped it over on the asset side. I'm not I don't love. I argue with Crowe all the time. They tell me that it's not a question, it's not an argument, it's GAAP. So I'll say, hey, I'd like to be a little bit more aggressive with reserves for a rainy day. The economy as you said, the economy is good. Doctors are paying. Everything is going well. I wouldn't mind taking a little bit of the revenue and putting it more aggressively away. But we use a fiftyfortyten methodology, bank methodology for the reserves based on real loss over the last 3 years. And so when I talk to our senior partner at Croix, he says, Al, I'm happy for you, but we're going to stick to the methodology. That's what's GAAP compliant, and that's what you've got to use for reserves. So in the business, of course, I worry about it. I'm always thinking about it. It's something I want to be able to do. We do have risk plans that we've talked about. You could isolate 50 of your best banks in a really bad time and say, hey, we're going to continue to sub there, but not going to stop there. And again, those are just worst case scenario plans that we've had. I do think, as I said earlier, I'll share this quickly and give the mic back to Terry. When Crowe audits our bank, any new bank, they send out an audit statement per loan and they say, do you rely on BHT or do you rely on the credit? When they came in in 2012, they audited every single one of the banks that owned our portfolio. Crowe came back to me and said, We did not have one bank that came back in audit and said they rely on you guys or they rely on the MAAP sub. Every single one said they were relying on the underlying credit. Each year now, they audit just the new banks that buy from us. They don't audit the existing banks in terms of with that question. They audit cash flows aggressively with the banks. So, I think we do have a customer. I kind of equate it to probably a stupid analogy, but you buy a car, you have the car, it's a 3 year lease and they say, we'll give you free oil change and tune up for the next 3 years. If they went out of business, you could probably find a place to get your oil changed somewhere else and you could probably get whatever you need fix someplace else. But it's a nice add on to have as long as they're in business. So with us, I think the banks are kind of forced And I've talked to FDIC many times. I've been in Washington and talked to FDIC. I said, listen guys, you got approximately 1,000 banks with 1,600,000,000. You have 1,600,000 at each bank. If something ever happened to us, which we don't foresee, but if it did, your exposure to us is 1,600,000, which is 16 loans spread out across the country ACH into your banks. So, I don't see a lot of risk with 3% cash put up at every single bank, which is more than the losses that we've run over the last 5 years. So we do and that's something I didn't mention, we do have that cash deposit on deposit at the bank for a loss. So if we decided not to sub, they do have access to that too. And ever since you've had your the partnership with Pinnacle, what's been the biggest benefit to you since that partnership has happened? No doubt about it, hands down structure. And I'll talk a story, Terry Pie doesn't know this, but Hugh Queener and Harold called me after the first after they first bought it. And they said, Hey, Al, what's your next 5 years look like? I said, No, cool what my next 5 years look like. I know what tomorrow looks like and I know we had a good day in funding today, but we don't spend a lot of time on pro formas. That was pre-three years ago. They have made us much, much more, I'd say, market savvy in terms of we hired Wall Street analysts. We brought them in. We hired a P and L guy and a P and L guy. We didn't have those on staff. We have structured board meetings. It was like Bob, Eric and I just got together and said, hey, what's good with the business? Where are the dangers of the business? And when they came on board, Hugh and Harold are both board members. We meet like religion for a full board day, talk about the good parts of the business, the bad parts of the business. So they've been a phenomenal partner for us and they brought us a tremendous amount of structure. We are very entrepreneurial. And that's helped. The guidance numbers that we give them, we're working until 12 o'clock on Christmas Eve. If it's a number we've given them, it's a number they expect. So that's broad expectations, too, with the relationship. And they've been a great partner for us. All right. Thanks, Al. Thanks, Jerry. We really did not have an objective to demystify BHG. We just want to spare you the Southern drawl for one presentation. So that was our principal objective. We're sort of at the end. I'll try to put a bow on what we've done. Maybe need another presentation here. I do have a clicker. I assume click through means moving forward. There we go. All right. So when we started here today, we said we wanted to showcase the depth of management team. I hope you have gotten a feel that we've got a lot of smart people here. I hope you've seen that there's a cohesiveness here in this team, that folks work together well, have good understandings, are really pros at what they do. And we've got lots of flexibility that extends throughout the geography of the company. I hope that you've had a chance to sort of get behind. What explains why Pinnacle has been such a high performing? What explains how year after year and quarter after quarter they show up as a top quartile bank? And again, we talked about those reasons for that. One of it is because that's the way we set the goals. The goals are specifically designed to produce revenue and earnings growth that would cause us to be a top quartile company. Beyond that, the incentives are built so that nobody makes any money unless we're able to do that. And so that drives a performance culture that's really important in how everybody thinks, how everybody performs and so forth. I think the confidence that we have for attracting bankers is really important. Know you hear people talk about things, but I can tell you what we do here is systematic. These guys didn't say it, but I promise you they would tell you when they're talking to me, they're talking as much about the recruiting pipeline as they're talking about the business development pipeline. There aren't many banks that approach their business that way. And so this idea of attracting talent is different than most companies I'm familiar with. And again, I think when you try to get down to the why does that work that way, it primarily works that way because these big regional companies are difficult environments to work in. Again, the goal is not to disparage them. I'm just telling you it's a hard environment to work in. And when somebody can come across and have the freedom to take care of their clients the way they want to take care of and respond to their clients on a quick basis and so forth, work with pros in the market that's a really attractive thing. And so my belief is that will hold up over an extended period of time. So those are some of the reasons why it always shows up. And my belief is that that in conjunction with having a highly engaged workforce, which I do have a sincere belief that I think is data driven that if you can create an engaged workforce, you will produce better sales outcomes, better service outcomes, higher productivity and less turnover. Again, that's not my data, that's Gallup's data, but it's pretty compelling. And so our company is built on that. It's a real It's not a hype. And so in good times and bad, our people have jumped in and engaged and done what we needed to do. I hope you caught some excitement here about the power of the franchise in Tennessee. The trajectory has not slowed in this state. It's not slowed in Nashville. We tend to want to talk about which clients are moving because that's what turns us on. That's what the exciting thing is. And I can tell you we're moving marquee clients in Nashville that a decade ago I've said there's no way you're going to move those out of that bank and we're adding them at a pretty rapid pace even here. And you saw the success and the momentum in Chattanooga and Memphis. We didn't spend a tremendous amount of time on Knoxville, but again that's a 1,600,000,000 dollars de novo bank that we built over there that's running at a rapid pace and so forth. I know you got to feel better about our ability to integrate after looking at what's going on in the BNCN transaction. I think you had a chance to hear from Rick and some market presidents. David Spencer could talk to you about what goes on in the company and how well the integration is going and so forth. It's always hard work. None of them are perfect. And I don't want to pitch it that way, but I would say when I go do listening sessions in Raleigh, North say, tell me what's going on here and man people go around, hey, this messed up, this messed up, this messed up, this messed up. So okay, man, look, we're going to work on this, we're going do that and so forth. And the guy comes up and everything says, hey, I hope I gave you what you wanted. I gave you a list of things that are wrong, but this is easily the best thing I've been through and I've been through 4 of them. This is the best one I've ever been through. And so I think that's sort of the characterization. None of them are flawless, but it was strong in terms of cultural integration, in terms of systems integrations, all those kinds of things. I love working with Rick Calicut. I've told people I like that BNCN transaction better today than the day I made it and that's a hard thing to say. I like it because the markets are better than I thought. I like it because the competitive landscape is better than I thought. And again, I just love my partnership with Rick and these guys in the Carolinas. It's been fabulous. It's been easy. The cultural alignment's not been difficult. And I would say even smaller institutions to be more difficult than the cultural integration we've had to go through. The Wealth management businesses, you can see we've got pros in those businesses. I think we understand what we're doing in them. We're able to grow the revenue. We're able to produce the pretax in them, which is a big part of how we drive up our fee businesses. Again, build a commercial platform in the Carolinas and Virginia, harvest the wealth management that goes with that as well as produce double digit growth in the Tennessee footprint is really what our outlook is. We've hit a lot on this law of large numbers. And again, I think the idea here is that our approach is not managing aggregates. And if you hadn't heard anything else, I hope you get that because I talked to a lot of people and all the questions had to do with, hey, I know I'm thinking like Regions or KeyBank or some of these banks. And we just don't do that. We're not dependent upon fact we wouldn't be any good at all if we were up here trying to innovate some idea, push something out, run it through some macro deal, build ad campaigns and sales contests and stuff like that. But we don't know how to do that. We're not good at that. Well, it's not the game we're going to play. What we're going to do is hire relationship managers that move relationships and harvest the entire relationship, which is the loan, the deposit and the fee. And so again, as long as we're able to work in the markets that we're in, My belief is for an extended period of time we'll produce double digit growth if we go nowhere else, do nothing else, just do what we do right now in those markets and that's a luxurious position to be in, in my judgment. We've tried to hit deposit funding a little bit. I would again just reiterate my own belief is the number one challenge for this industry, the number one challenge for community banks, the number one challenge for Pinnacle will be deposit acquisition. I just think that's sort of the time frame that we're in. But I go back to this approach of can we hire people and can we get them to move their clients and can we harvest the whole relationship, which is generally over the minimum funding requirement in terms of core funding, my belief and confidence would be high on that. Again, don't hold me to that every quarter. I'll have some quarters we'll grow loans faster than deposits and some quarters we'll grow deposits faster than loans. But again, that's what our approach to it is. There's an intentionality in our company about gathering funding that began opening day. Some of us have been in big companies and sat on ALCO committees that never really felt, hey, I made $1,200,000 in loans opening day and I gathered $400,000 in deposits opening day and I better get somebody on because I need the rest of that funding here. And so it's just a different mindset that exists in this company than us working again in a large ALCO environment moving invisible armies around and so forth. So we'll I've tried to hit at a number of these tactics that we use. I'm not going to walk you back through them, but we've used them for a long time. My belief is they're artist growth, but I think you ought to expect we'll find some other opportunities that resemble that that will put us in front of large deposit pools and so forth. And it will take all that stuff for us to fund our bank, but that's our approach to it. On M and A, well, here you go, man. I'm going to try it. So let me start here. Everybody said, hey, man, are you too busy bogged down in BNC and to do an acquisition? There was a day the answer to that was yes, that's not today. I don't think we're so busy doing it. That if one of our targets that we love and believe meets all our criteria, if that were available, we would be in a position to do that in my judgment. So whatever holdup you might find in our M and A, it's not because we're too busy trying to figure out B and C and I think we're far enough through that that we'd be comfortable moving forward. You heard me say just a minute ago that I expect us to produce double digit growth doing what we do right now in the markets that we're in right now for several years. And so what that says to me is, well, why am I going to do anything but that? The reason I would do something but that is because I had some grand opportunity that could accelerate my EPS growth rate or those kinds of things. That's the reason we would do it. But we're not doing it because I'd rather be $28,000,000,000 than $23,000,000,000 I promise you. I mean it doesn't make any difference to me. We're not trying to grow the asset base of the company. We're trying to grow clients and EPS, but we're not trying to grow the asset base of the company. And so we're in a really, I think, luxurious Harold asked that if you're using that word, but it is a luxurious position where we don't need to make any plays. And that's an important part of what our thinking is. So we've outlined markets that we think are strategically attractive. Why are they attractive? Because they're large, most of them are high growth and all of them are dominated by the same group of large regional national franchises that we love to compete with. You've heard me say those, some of you have been hearing me say this since 2002, but some of you have already heard me say this today that real simply what we do is try to get up underneath those banks, take their best people and therefore take their clients. That's really what we do for a living. And so we've outlined some markets. You can go to Memphis and draw a line up to Richmond and down to Charleston through Atlanta and there are 14 urban markets there. We'd like to be in those markets because they're large, most are high growth and all are dominated by those banks. So we'd like to be there. We don't have to go there and I just won't be as clear as I can be. I don't care if we go to Atlanta. I don't care if we go to Richmond. It's not going to hurt my feelings. It's not going to cause me to go out as a failure because we didn't make it to those markets because honestly I don't care. It is about doing what we do, growing this business in a responsible way, hitting the EPS growth rate that we think we can hit. That's what the game is for us and it's not getting to those other markets. We go to those other markets when and if there's some opportunity that we think fits the strategic outline that we've made, drives our EPS, all those kinds of things. So when you take those markets, we've said we'd be willing to go on a de novo basis, we'd be willing to go by M and A. And the same thing applies. It's all about when the opportunity is there. We're not going to Atlanta, I think. Nick asked a question about is it the idea that you build it and they'll come. Would you go down to Atlanta and build something and try to hire people? That'd never be our game. The only reason we'd go somewhere is because we got a group of people that we believe no one understand that market and control other bankers in there and we wouldn't go anywhere without that. That's like the opening criteria for us that we just wouldn't go anywhere unless we had those opportunities. So some of you might say, well, I don't think you're going to get any of those opportunities and you relax, we're not going to do anything else. We'll just keep running what we're doing producing our double digit growth and all that kind of thing. Now I will kind of walk down through this. Again, I've said this any number of times. So if we were going to do an M and A transaction, if we were going to do an M and A transaction, it would need to be urban and not rural. People ask all the time, how about once you buy these rural banks deposits that get the low cost deposits, all that stuff, you ought to have expectations. That's not what we're going to do. And the reason is and again, other people do it and it's a good thing. People figure out how to do it. I can tell you reasons why it might make sense for Cadence to buy a State Bank, all those kinds of things. That's a good idea for them, not for us. And the reason is because we're a high growth franchise. And yes, I could pick up some low cost funding that I get a benefit out of for a few quarters, but I can't grow at 12% 14% in Hinds, Georgia. And so we're not going to Hinds, Georgia. I think your buddy, Sally Hough said, he didn't go up and down every pig path in Georgia. We don't want to go up and down every pig path in Georgia. And so, again, we're just not going to go to small markets. We want large high growth markets because that's where you have a large high growth bank. So urban not rural. It has to be commercial and not retail. You can you listen to this group, we're commercial bankers. That's what we do. That's what we know. We understand the sales cycle. We understand relationship management, all that kind of stuff. We're not going to buy a retail bank. So that's another criteria. If it's a small deal, it needs to be 3% to 5% earnings accretive. If it's a large deal like a BNC transaction, it needs to be 8% to 10%. Now this group of people right here is the smartest group of people on this planet as it relates to community banks. You know there are not 25 banks that just meet what I just talked about there. They're probably not 15, probably not 10. So again, I'm just trying to get down to the brass tacks with you how this thing works. I mean, that's what look, man, I'm going to seize every opportunity I can. It's a good opportunity, but I want you to get it. We're not up here trying to figure out how to make acquisition. Those of you who've been around know there have been 5 banks for sale in Atlanta for 3 years. We could have bought any one of them if they matched all those criteria. But they didn't match those criteria and so we didn't buy them. So I want you to get the idea, hey, I'm delighted you can see, I don't mind to do an M and A transaction, but we're not just sitting up here trying to figure out how to do one. We're not plot and trying to figure it out. And I was laughing with Bill earlier, there's so much speculation, what are they going to buy next? Man, if I were you, I wouldn't spend much time thinking about that really. I don't want to tell you, hey, trust us, we're not going to buy anything because we might. I've told you there are some targets that we have. As far as I know, those people don't want to sell me their bank. But if they decide they do, then we're probably going to work on it and try to put it together. And if it meets these criteria, we're going to do it. If it doesn't, we'll just pass. But again, I don't know if I'm helping you here, but I'm trying to be as clear as I know how to be on what the M and A strategy is. I think that's all the stuff I've said before. But again, I'm just trying to get it where people can understand. If we get a strategically attractive opportunity that meets all those criteria, I hope you want me to make that transaction. If we don't get something that meets that criteria, I hope you don't want me to make that transaction. And if you do, then we're aligned on what the M and A strategy of the company is. So that's sort of it on M and A. That's my last attempt. I'm going to quit talking about it, but just try to get it out there where everybody can save it a little bit. If somebody said, and I think, Jennifer, you've asked before. So what about Atlanta then? You missed all the M and A. How are you going to get there? Well, my guess is if we get to Atlanta, which I've already told you, I don't care whether we do or don't, if we get there, it'd most likely be on a de novo basis. And so what would be the catalyst for that? Well, the catalyst for that would be because we got some big team down there that we think knows how to run a commercial banking franchise and can lift out people and build us a $3,000,000,000 $4,000,000,000 $5,000,000,000 bank down there. That'd be the catalyst. If we don't find that group, we're not interested in hiring a high profile lender 2 or 3 or 4 and having some LPO. That's not what we do. So anyway, those are all kind of guidelines to help you think about M and A. And I hope you enjoyed hearing from Al Crawford. Al is a fabulous partner. I love the partnership that we've had with BHG. I hope if nothing else you can figure out, these guys have a passion for what they do. They're good at it. Watching people be successful. I don't know if you picked up on it, but Al told you that he and his three partners started that business with $25,000 and we can argue about what it's worth, but maybe $1,000,000,000 dollars That's a cool thing. And so these guys have hustled. They've cared about it. They're passionate about it. They're good at it. When I think about that business, I would say the way I characterize it is they are pros at lead generation. They have developed systems and methodologies that let them be effective and efficient at generating doctors that will fund $100,000 tickets. They're good at that. They're great at underwriting. They've got proven Isaac's guys who are the best at building those things and so they've built great underwriting system. And they built an auction platform that lets them sell stuff that they get for 14.5 that they sell for 4.5 through an auction platform that they built. And some of these people want to compare BHG to some of these other things where they're running securitized models and so forth. Man, I love the fact that they sell that stuff to 8 75 banks in the hinterlands that can't generate good assets. And that's really who's buying that stuff as you can see based on the bids that occurs on that. And that's a really cool and valuable business. And so I think you ought to expect that we'll do things like that around the edge. I'm not telling you we got any. We don't have any. But if I find those opportunities, those are things that we love to do and hope we'll have Andy back talking about what's happened at Artis Growth and those kinds of things and we have other things that might help us on a deposit acquisition standpoint. That's really what we invited you here to tell you. I hope you feel like you got your money's worth. I think Harold whispered in my ear that Jennifer suggested we talk about succession planning. Let me say this, I mean, I'll tell you a little bit about succession planning. I don't want to comment on it too much, just primarily because it's an intensely personal thing that a lot of people in this room care about. And I'm not interested in walking through all the details in front of a big crowd. I'm not sure that would ever be appropriate, but it's just not something I particularly want to do today. I would say to you though that we're not cavalier about succession in the company. I'll just give you 2 or 3 parameters to think about on that front. One is, I know that I look tired and bad, but I don't have any desire to retire. I don't have any hobbies. This is it for me. This is what I do with my life. I do this in my family and that's sort of it. I got friends that play golf and I don't. I wasn't any good at it. And so I'm stuck with banking. And so again, I just say to you, Rob and I used to laugh. He always said, I got a plan to live forever and so far I'm on schedule. Chris, one time you made a comment about, hey, Terry, you're getting out there at 63, you don't want to be buying some from management changes and all those kinds of things. It wouldn't be my anticipation. You might want to check with our Board. They might have a different anticipation, but it wouldn't be my anticipation. I'm looking for a way to exit in those kinds of things. So I just maybe start with that as a construct. I think succession planning, you plan on 2 axes. One's emergency succession and one's long term development. And so emergency succession, this company in my judgment, I hope one of the things you can see here is we're broken out with emergency succession. I mean we got people, Rob can run this company as well as I could have run this company. We could have done it differently from the start. We could change it today. I mean this is I mean, this emergency succession has never even been a concern of mine sincerely. And so the emergency succession is easy. I think long term that is a more difficult challenge. Difference. And when I say that, I'm just saying a lot of us that grew up in the banking business years ago had fabulous opportunities to be generalists. And most of what happens today in the banking business is folks that are working in specific alleys and so forth. And so we're conscientious about that. We identify high potential candidates in our company at all levels and those things are reviewed by our development plans for all the folks in that list and all those kinds of things. So we look for opportunities to develop people and put us in a position to have even stronger management as we go forward. So again, I would just without getting into real specifics, I'd just say it's a thing that we care about and we do have both emergency and long term succession planning that goes on in the company, it's reviewed by the Board. Generally at least on a biannual or every 2 year basis. What else can I tell you guys? You know everything I know. Let me say one more time, thank you for coming and investing your time to learn about our company. We got guys that are still gathered around and be glad to take questions or carry on other conversations as you would like. Thanks for being here.

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