Tim Mitchell

Tim Mitchell of Raymond James Financial asked for clarification on the loan growth outlook, seeking to reconcile strong pipeline commentary with concerns about competition, and how the bank balances growth against margin protection. He also questioned the sensitivity of the net interest income (NII) forecast to the two anticipated rate cuts.

Answer

CFO William Furr detailed that while pipelines are strong, it takes 90-180 days for these to fund, and intentional declines in certain C&I portfolios are offsetting growth, leading to the 0-2% full-year guidance. CEO Jeremy Ford added that competition is more about structure than rate. Regarding NII, Furr confirmed the outlook assumes two rate cuts and expects NII to stabilize a few million dollars below Q2's level, with deposit beta performance being a key mitigating factor against repricing assets.

Tim Mitchell from Raymond James Financial asked about the drivers for the loan growth outlook, the bank's priorities for capital deployment, and the expected run rate for non-interest income.

Answer

CEO Bart Caraway reiterated the $50M-$100M quarterly loan growth target, driven by new customer acquisition outpacing payoffs. He noted that organic growth is the primary use of capital, with buybacks providing optionality. CFO R. John McWhorter added that the core non-interest income run rate is expected to be around $3 million per quarter.

Tim Mitchell from Raymond James asked about the interest rate assumptions underlying the NIM and NII guidance and questioned the company's strategic preference between M&A and organic growth through hiring.

Answer

EVP & CFO Thomas Owens clarified that the guidance incorporates two potential Fed rate cuts in 2025 but noted the bank's slight asset sensitivity could provide a tailwind if cuts do not occur. President & CEO Duane Dewey stated that the company is actively pursuing both strategies, focusing on organic growth via talent recruitment in key markets while also conservatively exploring an increasing number of M&A opportunities.

Tim Mitchell from Raymond James Financial asked about the interest rate cut assumptions embedded in the NIM and NII guidance and what factors would drive performance to the high or low end of the range. He also inquired about the company's strategic preference between organic growth and M&A.

Answer

EVP & CFO Thomas Owens stated the forecast includes Fed rate cuts in September and December, noting the bank is slightly asset-sensitive, so a lack of cuts would be a tailwind. He affirmed they would defend the NIM with deposit rate cuts if the Fed does act. President & CEO Duane Dewey responded that the company is pursuing both strategies, actively recruiting talent for organic growth while also being very interested in participating in M&A.

Tim Mitchell from Raymond James Financial asked about the interest rate cut assumptions embedded in the updated NIM and NII guidance and also inquired about the company's preference between M&A and organic growth strategies.

Answer

EVP & CFO, Thomas Owens, stated that the forecast includes Fed rate cuts in September and December, but the bank is positioned to defend its margin in either a cutting or stable rate environment due to its asset sensitivity and repricing tailwinds. President & CEO, Duane Dewey, responded that the company is actively pursuing both growth avenues, recruiting talent for organic expansion in key markets while also being 'very, very interested in participating' in the increasing M&A dialogue.

Tim Mitchell asked about the interest rate cut assumptions embedded in the updated NIM and NII guidance and what factors would drive performance to the high or low end of the range. He also inquired about the company's preference between M&A and organic growth strategies.

Answer

EVP & CFO Thomas Owens explained that the forecast includes Fed rate cuts in September and December 2025. He noted the bank is slightly asset-sensitive, so a lack of cuts would be a tailwind, while any cuts would be met with deposit rate reductions to defend the margin. President & CEO Duane Dewey stated that the company is actively pursuing both strategies, focusing on organic growth by recruiting talent in key markets while also being very interested in participating in the current M&A environment.

Tim Mitchell from Raymond James asked about the interest rate assumptions in the NIM guidance and questioned the company's preference between M&A and organic growth strategies.

Answer

EVP & CFO Thomas Owens explained the guidance includes two Fed rate cuts in the second half of the year, but the bank is positioned to defend its NIM if cuts occur. President & CEO Duane Dewey stated the company is actively pursuing both organic growth through talent acquisition in key markets and is also very interested in participating in M&A with a conservative approach.

Tim Mitchell from Raymond James asked about the interest rate assumptions underlying the updated NIM and NII guidance and questioned the company's preference between M&A and organic growth through talent acquisition.

Answer

EVP & CFO Thomas Owens explained that the baseline forecast includes Fed rate cuts in September and December, but the bank is positioned to defend its NIM through deposit repricing if cuts occur, or benefit from an asset-sensitive position if they do not. President & CEO Duane Dewey confirmed the company is pursuing both growth strategies, actively recruiting talent in key markets while also being 'very interested' in participating in the current M&A environment.

Tim Mitchell of Raymond James Financial asked about the interest rate cut assumptions embedded in the updated NIM and NII guidance and what factors would drive results to the high or low end of the range. He also inquired about the company's preference between M&A and organic growth strategies.

Answer

EVP & CFO Thomas Owens explained that the forecast includes Fed rate cuts in September and December, noting the bank is slightly asset-sensitive. He stated that if cuts occur, they would defend the NIM with deposit rate adjustments. President & CEO Duane Dewey responded to the strategy question by affirming a dual focus, stating, 'on both counts, yes,' indicating active talent recruitment for organic growth alongside a strong interest in pursuing M&A opportunities conservatively.

Tim Mitchell from Raymond James Financial asked if there is a target ceiling for BHG's contribution to total earnings and whether the bank's loan growth could exceed its guided range if broader economic loan demand were to accelerate.

Answer

CFO Harold Carpenter responded that the goal is not to cap BHG's growth but to reduce its relative contribution over time by accelerating growth in the core bank. President & CEO Terry Turner confirmed that their current growth outlook is based almost entirely on new hire production, so any pickup in loan demand from the existing client base due to a stronger economy would be additive and could lead to growth exceeding the current forecast.

Tim Mitchell from Raymond James Financial asked if there is a target level for BHG's earnings contribution and whether the bank's view on the investment has changed. He also questioned if loan growth could surpass guidance if broader industry demand were to accelerate.

Answer

CFO Harold Carpenter responded that the long-term goal is for Pinnacle's core earnings to grow faster, thereby naturally reducing BHG's relative contribution from its historical 15-20% level. President & CEO Terry Turner confirmed that a pickup in general economic loan demand would be additive to their current growth projections, which are almost entirely based on new hire production.

Tim Mitchell of Raymond James Financial asked if there is a target level for BHG's earnings contribution and whether the bank's loan growth could surpass guidance if broader industry loan demand were to accelerate.

Answer

CFO Harold Carpenter stated that the long-term goal is to reduce BHG's relative earnings contribution by growing the core bank at a faster rate. CEO Terry Turner confirmed that a pickup in general economic loan demand would be additive to their current projections, which are primarily driven by new hires, creating the potential to exceed the current loan growth guidance.

Tim Mitchell of Raymond James inquired about the bank's approach to share buybacks given current stock prices and market uncertainty. He also asked how management balances near-term EPS with long-term investments in branches and personnel if loan growth moderates.

Answer

CFO Tim Hicks confirmed the bank expects to continue repurchasing shares at current levels and that the Board will consider a new authorization. Chairman and CEO George Gleason emphasized the strategy of capitalizing on market opportunities, stating that the 10% noninterest expense growth guidance is intact and includes significant investments. COO Cynthia Wolfe specified plans to open approximately 30 net new branches during the year, which is factored into the expense outlook.