Pinnacle Financial Partners Inc (NASDAQ:PNFP) Q2 2020 Earnings Conference Call - Final Transcript

Jul 22, 2020 • 09:30 am ET

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Pinnacle Financial Partners Inc (NASDAQ:PNFP) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Stephen Scouten with Piper Sandler. Your line is now open.

Analyst
Stephen Scouten

Good morning, guys. Thanks for all the detail here this morning.

Executive
M. Terry Turner

Thanks Steve.

Analyst
Stephen Scouten

I'm curious on the guidance around BHG, it seems like it was intimated that 3Q revenue could be similar to 2Q. But then, looking at the one slide, it also notes the year-over-year earnings growth should be up. So, I'm wondering if that implies an extremely large 4Q. And if so, is that driven by the securitization or something altogether different?

Executive
M. Terry Turner

Yeah, I'd say, 3Q will be similar to 2Q. We're not sure about 4Q right now. But -- and I'm trying to find that slide.

Analyst
Stephen Scouten

I think it was Slide 22 where it shows BHG net earnings going up in 2020.

Executive
M. Terry Turner

Yeah, I think that's a range of earnings between like $110 million to maybe going up above.

Analyst
Stephen Scouten

Okay, got it. That makes sense. Okay, thank you. And then, kind of thinking about the NIM moving forward, obviously, you noted the 32 basis points of drag from liquidity and PPP loans. But I'm wondering where you think -- whenever liquidity does normalize, let's call it, sometime early '21 for argument sake, where you think the NIM to normalize at that point in time? Is that kind of back north of 3%?

Executive
Harold R. Carpenter

Yeah, we think so. We think that the NIM will begin to increase back into the low-3s, call it, second quarter next year. At the same time, the accretion from the BNC loans that we acquired will be trailing off to pretty much an insignificant amount.

Analyst
Stephen Scouten

Great. Okay. And maybe just last thing for me. Obviously, you guys noted that you will continue hiring. You have slowed [Phonetic]. I'm just wondering if you could give some color as to where you are in the pace of the Atlanta plans relative to the 50 RM target longer term. And then, you guys have never really been a bank that put some -- cutting expenses on a net basis, more about investing for future growth. But is there any likelihood in this environment we could see some sort of expense initiatives? Thanks.

Executive
M. Terry Turner

In the case of Atlanta, I believe these numbers are roughly correct. I think we ended the first quarter with about $40 million in loan outstandings and nearly $30 million in core deposits. I'd view that to be successful and ahead of plan for what was effectively the first quarter operation there. So, we continue to be excited both about the recruiting pipeline of associates, as well as the recruitment of clients. It looks like to me their pipelines are solid for another good quarter here in the third quarter.

I think as it relates to the expense initiatives, I think your assumption is basically right. Our approach on expense initiatives, I would characterize more about trying to drive PPNR up now because that's how we fund a lot of stuff we've got in front in this -- at