Q3 2024 Pinnacle Financial Partners Inc Earnings Call

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Michael Terry Turner: Good morning, everyone, and welcome to the Pinnacle Financial Partners 3rd quarter 2024 earnings conference call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer, and Mr. Harold Carpenter, Chief Financial Officer. Please note Pinnacle's earnings release and this morning's presentation are available on the Investor Relations page of their website at www.pnfp.com. Today's call is being recorded and will be available for replay on Pinnacle Financial's website for the next 90 days. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation.

Speaker Change: Good morning, everyone, and welcome to the Pinnacle Financial Partners 3rd Quarter, 2024, earnings conference call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer, and Mr. Harold Carpenter, Chief Financial Officer.

Speaker Change: Please note, Pinnacles earnings release and this morning's presentation are available on the investor relations page of their website at www.pnfp.com

Speaker Change: Today's call has been recorded and will be available for replay on Pinnacle Financial's website for the next 90 days.

Speaker Change: At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. If you'd like to ask a question at that time, please press star 1 on your touch-tone phone. Analysts will be given preference during the Q&A. We do ask that you please pick up your handset to allow optimal sound quality.

Operator: If you'd like to ask a question at that time, please press star 1 on your touchtone phone. Analysts will be given preference during the Q&A. We do ask that you please pick up your handset to allow optimal sound quality.

Operator: During this presentation, we may make comments which may constitute forward-looking statements. All forward-looking statements are subject to risks, uncertainties, and other facts that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of sets factors are beyond Pinnacle Financial's ability to control or predict, and listeners are cautioned not to put under-reliance on sets forward-looking statements. A more detailed description of these and other risks is contained in Pinnacle Financial's annual reports on Form 10-K for the year ended December 31, 2023, and it subsequently filed quarterly reports.

Speaker Change: During this presentation, we may make comments which may constitute forward-looking statements.

Speaker Change: All Ford-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of pinnacle financial to different material from any results expressed or implied by such Ford-looking statements.

Speaker Change: Many of such factors are beyond payin pinnacle financials ability to control or predict, and listeners are caution not to put under reliance on such forward-looking statements.

Speaker Change: A more detailed description of these and other risks is contained in pinnacle financials and your reports on Form 10K for the year ended December 31, 2023, and it subsequently filed quarterly reports.

Operator: Pinnacle Financial disclaims the obligation to update or revise any forward-looking statements containing this presentation, whether as a result of new information, future events, or otherwise.

Speaker Change: Pinnacle Financial Disclaims in the obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise.

Operator: In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable gap financial measures and a reconciliation of the non-gap measures to the comparable gap measures will be available on Pinnacle Financial's website at www.pnfp.com.

Speaker Change: In addition, these remarks may include certain non-gap financial measures as defined by SEC Regulation G.

Speaker Change: A presentation of the most directly comparable Gap Financial Measures and a reconciliation of the non-Gap Measures to the comparable Gap Measures will be available on pinnaclefinancial's website at www.pnfp.com.

Michael Terry Turner: With that, I'm now going to turn the presentation over to Mr. Terry Turner, Pinnacle's president and CEO. Thank you, Matthew, and thanks to all of you for joining us this morning. I expect most of you know that I'm going to begin every earnings call with this shareholder value dashboard. Gap measures first, but quickly go to the non-GAAP measures because, firstly, I find that the non-GAAP measures provide a clear picture of the job we're doing for shareholders. You can see third quarter was a fabulous quarter, balance sheet volumes all grew nicely with loans up, 6% link, order annualized, earning assets up, 12% link, order annualized, and quarter deposit up, 9% annualized.

Speaker Change: with that. I'm now going to turn the presentation over to Mr. Terry Turner, Pinnacle's President and CEO.

Terry Turner: Thank you, Matt Duton. Thanks to all of you for joining us this morning. I expect most of you know that I'm going to begin every earnings call with this year older Bay of Dashboard.

Terry Turner: Get matters first, but quickly go to the non-gap measures because, personally, I find that the non-gap measures provide a clear picture of the job we're doing for shareholders.

Terry Turner: You can see third quarter was a fabulous quarter, balance sheet volumes all grew nicely, but looms up, 6% length, quarter annualised, hurting assets of 12% length, quarter annualised, and quarter positive 9% annualised.

Terry Turner: As a quarter, it may be very strong, and because they've historically been the most highly correlated with long-term total shareholder returns, the three most important metrics for me, or revenue growth, EPS growth, and tangible book value accretions, all at nicely getting this quarter. Let me point out the persistent growth in those three critical measures and the double-digit five-year carriers for all three double digits, five-year carriers for the three most highly correlated metrics for total shareholder return.

Terry Turner: As a quarter of May is very strong and because of it, it has started to be in the most highly correlated with long-term total shareholder returns.

Terry Turner: The three most important metrics for me are revenue growth, EPS growth, and tangible book value accretions all at night again this quarter. Let me point out the persistent growth in those three critical measures and the double digit five-year carriers for all three.

Terry Turner: Double digits, five-year carriers for the three-most highly-correlated measures for toe-share over return.

Terry Turner: Obviously, I'm proud of the long-term consistent trajectory of those three measures, but I know that even after 24 years of staying outside of the road, there are always some that remain fearful that somehow we won't be able to fail the culture as we grow, that the law of large numbers is going to overtake us. So that somehow those results are primarily dependent on me or on my partner Rob McKay, or some key man that won't always be here, as opposed to a simple, consistent, reputable model.

Terry Turner: Obviously, I'm proud of the long term consistent trajectory of those three mayors, but I know that even after 24 years of staying outside of the road, there are always some that remain fearful that somehow we won't be able to fail the culture as we grow.

Terry Turner: That the law of law is number is going to overtake us.

Terry Turner: So, there's some out of those results that primarily defend it from me or on my partner Rob McKay, or some keep man that won't always be here, as opposed to a simple, consistent, reputable model.

Terry Turner: Third quarter was another great order of our size growth for our firm, but the poor review of results in detail won't take a minute and make sure everybody understands exactly how that growth comes about. And while we've been able to consistently deliver it over time, obviously the fact that we serve major markets in the Southeast is huge. Census Bureau number of kind of vivid picture of the tailwind that exists for banks in the Southeast. It'll be very hard for banks in the shrinking Northeast with Midwest markets match our growth. But more important in the size and growth dynamics is the competitive landscape.

Terry Turner: Third Porter was enough, another great order of outside the roads for our firms. But the poor review of results in detail won't take a minute and make sure everybody understands exactly how that growth comes about. And while we've been able to consider the delivered overtime.

Terry Turner: Obviously, the fact that we serve major markets in the Southeast is huge, since the Bureau Lumber of Pain and the vivid picture of the tailwind that exists for banks in the Southeast, it'll be very hard for banks in the shrinking Northeast with mid-west markets to match our growth, but more important than the size and growth dynamics is the competitive landscape.

Terry Turner: Here, we're plotting the shared gains and losses for us and the other market share leaders that tell us these four of them markets over the last decade. We're blessed to be business in markets where we consistently take share of vulnerable competitors that dominated the market here to forward.

Terry Turner: We entered the North Carolina South Carolina in Virginia markets in 2017 with our acquisition at BNC.

Terry Turner: Ways specifically targeted the Carolina Magini Marcus.

Terry Turner: to some extent because of the size and growth dynamics, but more importantly, because we weren't competing against those same vulnerable competitors with whom we had successfully competed into the sea.

Terry Turner: So you can see here that the shared accounts are trading among those same vulnerable banks and if the most part they've established track record of consistently given it up, which is why the competitive landscape is the most important contributor to our ongoing growth, even more than such in presence as a growth time ends.

Terry Turner: Here's what that chair climb looked like in our first market in Nashville, Tennessee, according to the FDIC and five chair statistics. Now, firm wide assets are over $50 billion and you can see that we have a lead chair position in Nashville with roughly 50% more share than our next closest competitor, a sounding position.

Terry Turner: and both of you know we're a commercially focused bank so this is the commercial market shared at a according to Greenwich for businesses in sale from 1 million to 500 million in Nashville.

Terry Turner: They're in the middle, you can see that we have 30% lead by a chair, more than 4x, our next closes competitor.

Terry Turner: With the next cuteness, same playbook across the state of Tennessee, first with a no-vostart in Knoxville back in 2007, followed by acquisitions in Chattanooga and Memphis, both in 2015. You can see the remarkably similar growth in all three markets.

Terry Turner: In 2015, following our acquisition in Memphis, we were number 13 on the FDSC chart. In the most recently released FDSC data, we climbed to number 3. In China, Nougat, we were in the fourth position in terms of FDSC share following our acquisition in 2015. Today we're number two, rapidly closing on number one.

Terry Turner: and a nodule from the Namos star of 2007, we're now number four on the FTSHR, the similar position where we were at the same tenure in Nashville.

Terry Turner: and like Nashville, we're number one in terms of the commercial market share as made here by Grinch.

Terry Turner: As I mentioned, it's been a go away for our B&C in 2017. Here you can see the dramatic transition we made in the Carolina's in Virginia with a 10% long gagger and a 14% positive gagger since the acquisition.

Terry Turner: and Port of Fame held the rise. You can see the growth and commercial deposits when we apply a pinnacle symbol, consistent and repatable model. Just like the urban market to Tennessee, we're as cute as saying, play those across Carolina's Embergenium.

Terry Turner: and in 2019, we began a number of the number of all market extensions and market extensions in the largest out there. These are markets like Atlanta, DC, Jacksonville, Florida, all with similar growth dynamics and a competitive landscape to that in Nashville.

Terry Turner: I've already demonstrated the trajectory that we had in Nashville over our 24-year history there.

Terry Turner: where we were still taken cheer by the way. You can see the largest markets on the left that the deposit growth is even more rapid than it was in the startup period in Nashville, and even some of the small markets on the right using this simple consistent repaidable model in the periods we're replicating our startup pace in Nashville there as well.

Terry Turner: So yes, we have the added benefit of operating some of the best markets in the U.S. Frankly, it's even more important that the shareholders and those drones out there have to market for vulnerable, to offer us a once in a generation opportunity.

Terry Turner: But the hedgehog strategy here is to attract and retain the best bankers in the market. Letters in our award-winning work environment use in our differentiated reprieve of the model.

Terry Turner: We create a laser-line focus on revenue and EPS growth for every single non-commissioned associate in our firm. You and our wind together lays together incentive plan.

Terry Turner: and then for roughly 24 years, virtually every year, we've targeted top 4,000 revenue and EPS growth in order for management and associates to earn their incentive at target.

Terry Turner: Think about that, and ability to continually attract the best-banger than the market, and allowing nearly all roughly 3500 associates to produce top 4-dollar revenue and EPS growth with one simple annual cash in the plant. It's simple, consistent, and reputable, not lower half of the patent stands.

Terry Turner: It's not even recognized, called your continuous palli-cell, with panelages listed last quarter, 14-third best place to work America among the nation's endurance firms, and it's pervasive. In most markets, we are, for any of the best places to work with Memphis, and Knoxville, or fading again just last quarter.

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

Terry Turner: So I'm not going to try to convince you that, I'm going to let our clients do that. On the left, this is how business clients in our eight state footprint right in our relationship managers. And how they relate those vulnerable banks with a larger share in those in these South Asian markets.

Terry Turner: We literally have amassed the best talent in South East from a business kind of perfect in the according to Greenwich.

Terry Turner: and as you would expect, Halle Vayne, Relationship Manager for these better financial outcomes over the long term. On the right, you can see how our associates prepared our primary South Asian competitors in terms of PPNR, per associate, the critical test of effectiveness.

Terry Turner: The track in the best talent is a night list of build-of-the-nature recitation for non-magnifying experience, both amongst consumers and businesses, both in terms of people and systems.

Terry Turner: which has resulted in fear-leading long-term value creation. It's about our ability to consistently and repeatedly grow earnings. You can see on the top right T.S.R. leadership is not a new phenomenon. It's true for all 5, 10, 15, and 20 years timeframes.

Terry Turner: and if you look at the CBS Road across the bottom of that chart, our earnings growth has substantially outpaged peers for a decade and nobody's close.

Terry Turner: and so to put a bowl in all that in this one jar, you see our unusual ability to consistently attract and retain market best out and their ability over time to consolidate their clients and associate loan and deposit by.

Terry Turner: We validated this bot lane number of times over the years, averages are dangerous, so nobody's average, everyone's above or below average.

Terry Turner: But all that ever to take your relationship matters about five years to consolidate their boats. The generally comes in on a roughly straight line basis. And when consolidated, it's roughly a self-funded boat in the 65 million dollar range on both sides of the bow-cheat.

Terry Turner: You can see on the left that we currently have a total of 235 relationships and managers that are at various stages of consolidation within that five-year consolidation startup period.

Terry Turner: and on the ride, you see the extraordinary loan and deposit volumes that we've labelled on our balance sheet, just in 25 and 26, if these cohorts are relating to you, man, you're just continuing the consolidation of their votes over the next two years at the average pace.

Terry Turner: and I've already told you it's our expectation that we'll layer in another large cohort next year and year after that and so on.

Terry Turner: Produced an incrementally ladder violence at the civil, conserved at repeatable models.

Terry Turner: and so with Harold Holmes, through our third quarter of the results, hopefully you may be able to see these factors that underlie, not only our historical success, but our third quarter success, and are all going to success for that matter.

Terry Turner: that our culture continues to strengthen as we grow, not diminish, and that this persistent growth model is not dependent on me or other key later, is not dependent on a change of administrations. It's not even mainly dependent on a more vibrant economy, although a vibrant economy is strong on demand very likely to enhance our growth.

Terry Turner: Our remarkably persistent growth, even in difficult times, is the result that is very simple and says that in repaying the mob. So, I will walk us through the Porter Grider data.

Speaker Change: Hi, Terry. Good morning everyone. We will start with loans, which increased by 599 million during the quarter of 6.5% length quarter angle. When we consider just seeing that an owner-occupied corner for real estate, our loan growth in these two critical segments was approximately 7,6 million or 17% length quarter angle.

Speaker Change: We're a modified Harold X-Face 26-24 and our reflector range of 7-8% growth.

Speaker Change: We are obviously pleased with Ombro this year, it's been an uncertain environment all year long and there is quite a bit of uncertainty currently, but with the election coming up and what appears to be the initiation of a downright cycle.

Speaker Change: Both of these matters tend to point to somewhat less uncertainty in the near future, which hopefully creates confidence and brings out the nourishment back to the borrowing team.

Speaker Change: As to our in the period rates, particularly self-revised loans, in the period rates are beginning to reflect with that decrease by quarter-end. More alone in the positive by this in just a second.

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

Speaker Change: As the top right slide indicates, we're expecting about a billion dollars in cash flows from a fixed right loan portfolio here in the fourth quarter of this year, with an average yield of around 1.1 percent. We believe you lived a nearly 200-bisest points in the reasonable, as these cash flows come to us here in the fourth quarter.

Speaker Change: Our competitors advantage is that approximately 22% of our revenue producers have been with us less than two years.

Speaker Change: All of them are ready to continue to move the market share which bugs the well for us and will begin our planning process for 2025. We continue to lean on our new lenders as we enter with the fourth order and head into 2025.

Speaker Change: Department of Health has been a real bright spot for us all here. Excluding broken, we increased a spot by 887 million in the third quarter. We're also pleased with non-interpreting deposits in their performance in the third quarter. Again, signaling that we are finally beginning to see volume growth for DDA accounts.

Speaker Change: Given our third quarter to positive growth, we are maintaining our deposit by the forecast with somewhat more specificity around a 79% growth estimate.

Speaker Change: We continue to move the positive into the index to positive product areas.

Speaker Change: Almost 50% of our deposits are now indexed at the funds as we prepare for a down-range environment this should be held.

Speaker Change: As we have said before, we continue to like our competitive position as to deposit rates and believe it gives us more flexibility Sure our current rate forecast materialized, which includes two additional 25-based support rate cuts in the fourth quarter.

Speaker Change: We've included an informational bias thus far for loans in the pot of us.

Speaker Change: We are very pleased with how alone in the positive pricing has performed over the last few weeks. As our relationship managers have been diligent and making sure that we're able to reprise our deposits as quickly as we can to all set the impact of a lower rate environment on our earnings assets.

Speaker Change: So far, our deposit rate, I have outperforming our loan rate, and we provide optimistic that we can continue to mitigate the impact of rate cuts by the set to both our net interest margin and more importantly, our net interest income as we move through the next several quarters.

Speaker Change: As expected, with the investment security restructuring late-class quarter, we did not anticipate an image-panchant and our employees would be 3.22% we posted this quarter.

Speaker Change: Our outlet for the fourth quarter is that we believe our NM will be flash after we consider the incremental rate touch.

Speaker Change: We are Modifier Outlook for Medicinecome Growth for 2024 to 7a% growth for 2020.

Speaker Change: We know everyone is thinking about 2025.

Speaker Change: and that is your income as we are. The yield curve will have a significant influence on how all that plays out next year, so we are running a lot of rates in our EOS curve.

Speaker Change: We believe all banks perform better with the traditional jail curve, and I believe all of us are optimistic that the risk of the existing inverted curve continuing are in fact the precinct. Like traditional curve, commercial products coming back with increased energy to RLM and national elections in the rearview mirror, we believe all points to a better operating environment for a road by point out.

Speaker Change: For again presenting our traditional credit metrics, we mentioned one nine million dollar charge off of a C&R for this in the press release last night. We performed an in-depth review of that credit during the quarter elected to charge off a portion of the credit, the place where my girl law approved.

Speaker Change: Resolution we hope will occur next year as the company seeks a part of the takeout part. That's where our outlook for Charzons for narrowing our guidance to a range of 21 to 23 VICE points for 24. We're also narrowing our guidance to run for visiting in the Lazy Nairford Lums to a range of 32 to 35 VICE points.

Speaker Change: No real change in how we build our presence as we head into the fourth quarter or 2025 for that matter.

Speaker Change: Our chart for past news, classified loans, and potential problem laws indicate we are performing near historic loans, which should be a meaningful indicator as to where we believe credit is currently.

Speaker Change: We have no reason to believe this will continue to perform well as we had in the fourth quarter, as well as in the 2025.

Speaker Change: More about commercial real estate and again in the supplemental is more information on the official real estate from our house, from the public family, to industrial and all this.

Speaker Change: As we noted in the press release, we have now successfully dropped a lower part of 70% of the structural elements of total risk-based capital at September 30, which was sooner than we thought last quarter.

Speaker Change: Our appetite has changed, mostly, now that we are below the 70% threshold. That's it, and let me stress, any new commitments to this site continue to prioritize strategic supply relationships only, and that we will proceed constantly.

Speaker Change: We anticipate that our construction concentration will fall out of the next several quarters into the 50% range and we don't expect to see any incremental lift in the concentration until mid to late 25.

Speaker Change: Beyond all that, we are currently tracking to achieve our 225% target, for total not on our archivite commercial real estate multifamily construction, in May of 2025.

Speaker Change: Andedly, we have always admired our commercial real estate, but...

Speaker Change: The last couple of years have been a roller coaster of negative media attention around CR-E and the impact on regional likes. I know many of you know this, for Pinnacle. Our house limits are very modest. We brought ourselves on a brand new boat. Our largest ticket thousands for our bank are conserved into in comparison to what we hear from other franchises.

Speaker Change: Good morning, I'm Harold Carpenter. Our commercial real estate portfolio continues to perform very well and we expect that to continue.

Speaker Change: Now, see!

Speaker Change: and as always I'll speak to the ASK in a few minutes.

Speaker Change: Excluding the loss on the sale securities in the second quarter, fee revenues were up 8.3% to 0.3 Q and 2 Q. Our wealth management units have had our strong year and fully expect the efforts of our wealth management professionals will continue into the fourth quarter and end of 2025.

Speaker Change: As to run rates and comparison to the same quarter, there in 3Q we've realized an increase of about $1.5 million from the signaled fixed assets and approximately $3 million in increased pair of AUDJs, but from several of our other equity investments.

Speaker Change: As to our outlook for 2024, we're again writing guidance for our feet revenues, excluding the SG from 14 to 17% to a range of 23 to 26% growth that will last year, which centuries ago, given the performance of several of our primary business lines this year.

Speaker Change: The expenses came in slightly more than where we thought they would be as of the end of the second quarter. Unfortunately, we are increasing our incentive targets to a 90% target turnout for this year 2020 board.

Speaker Change: The game we're raising our target was points to our believe 2024 was incredibly off as of the end of the last quarter. As you know, directly this between our financial performance and our sense plans are correlated and thus we can't raise one one without believing in the other when we move up as well.

Speaker Change: Additionally, our hiring was really strong for our portal with 37 new revenue producers compared to 89 for the past six months of the year.

Speaker Change: The one in the fourth quarter are 355 remains strong across the branch out.

Speaker Change: Lending related expenses are a quarter of a quarter primarily due to a 2.1 million-dollar new recurring chart related to the loss protection fee from the credit of the falls while we executed in the second quarter.

Speaker Change: As we look to the fourth order, we currently as train our total lives expense well for 4Q, should approximate the third order level.

Speaker Change: Out of the H.G. and we will be quick. As a slide in the case, Origination is picked up again on the third quarter with the Origination's Procting $1 billion.

Speaker Change: As a report for the issue production should be somewhat consistent with the third order.

Speaker Change: As the place, let's talk about places where less than originations, which was consistent with the circuit board.

Speaker Change: VHG continues to build inventory in order to build larger orders in the fourth quarter and as we enter 2020 by.

Speaker Change: Also, there remains great demand for the AC type for both from the Autent Platform and the Institutional Bar. More than 600 unique bank bars required loans over the Trellank 12 months, and the number of banks eligible to purchase loan from the AC continues to grow.

Speaker Change: As the spread's auction platform spreads increased to 9.2% in a third quarter. Valchee spreads have remained fairly consistent with the prior quarter. All in the issue, please spread their hold in the end, what has been a higher rate in Varma, the issue believes as rates decrease. That would be good news for them for both of them and I rate perspective.

Speaker Change: All found she's substitution losses amounted to 4.2% to 3.4% up and 3.4% mistake.

Speaker Change: As a result, the ECC increased reserves for off-balance sheet losses to 6.2%. The good news is that past days are turning in the right direction, which hopefully is a sign of a better credit experience in the not-sub-business future.

Speaker Change: Home Valid sheet losses were up modestly to 7.4% in 3Q from 2Q. Again, even though the percentage of all the balance sheet losses increased in the third order, the actual dollar amount for all the balance sheet losses decreased.

Speaker Change: A similar circumstance has occurred in the prior two quarters, as balances fell fast for the natural losses, which is why the percentage was high.

Speaker Change: Our PhD's amount to approximately 16.4 million in the third order, and we expect the fourth order to approximate that amount.

Speaker Change: Our concluding thoughts on the HG this top or out are the demands with its focus on building the sustainable franchise and as such pushing as much product for the fight is not as important as maintaining and building in the even sharper balance sheet.

Speaker Change: Now to our outlet for the remainder of 2024. Again, we've raised our expectations in some cases and lowered expectations in others.

Speaker Change: In the end, we feel more confident about our 2020 route, given our trial of Republican Third Court.

Speaker Change: All of this should be a good side for 2025. We started our angle planning effort for next year. Our financial village will be the same. Top 4 tile revenues and top 4 tile earnings room. The investments we've made in our new markets and our higher interests on the building blocks we will lean into as we build our 2020 plan.

Speaker Change: Now, as I mentioned earlier, if we can get beyond an inverted yield curve and our owner manager class getting more confidence is start borrowing again for growth on top of the 20-25 will be another strong year for Peno.

Speaker Change: We've been through a lot of information so I don't want to spend a whole lot of time or I think but tough as we've been in the Q&A.

Speaker Change: We are very fortunate that we operate in what we believe in the best biking markets in the United States and in the markets where we believe our large tech competitors are vulnerable and given up market share as a shy way of a relationship based biking in the impact that has on delivery, different shape and level of service.

Speaker Change: We have also over the years become an employer choice.

Speaker Change: are recruiting efforts or have helped tremendously the success of our brand in all of our markets.

Speaker Change: The longer-doer market leaders have to spend hours introducing our brands to respect the associate, as brand awareness has already found its way into our markets in and outside of the way.

Speaker Change: Our best place to work and work in our results of resonate among not only our associates, but also potential recruits in that translates to a very successful client experience and ultimately to our shareholders.

Speaker Change: In the end, we are focused on Arting's growth, revenue growth, and tangible growth value growth.

Speaker Change: Top 4 Top 4 to the goal you're in in Europe We believe that we can simply hit these financial goals as well as our strategic goals, our shareholders will be forward. And that would definitely love for us for today.

Speaker Change: Certainly, everyone the floor is now open for your questions. If you'd like to ask a question at this time, please press star 1 on your touch-tone phone. Analysts will be given preference during the Q&A. Again, we do ask that when you ask your question, please pick up your handset to provide optimal sound quality.

Speaker Change: Your first question is coming from Brett Raderton from the Health Group, your line is live.

Speaker Change: Hey guys, it's morning.

Brett Raderton: I wanted to start with slide 23 and just talking about the flatish margin expectations for 4Q. Given the beta performance that you've seen so far with loans into deposits and the fixed rate loans repricing in 4Q, I'm a little surprised some margin expectations aren't a little better for at least the fourth quarter. Can we just walk through again kind of your expectations for the fourth quarter betas, loans into deposits and maybe how you see some of those sofa tied loans? What are the loans performing in 4Q? Thank you.

Speaker Change: Yeah, sure, I'll try to get it this way. As to the margin itself, we think that will be flatish. I think as we get deeper into rate cuts, we'll have better opportunities for some balance sheet hinges to take to come into play, but that won't occur until we get like past 100 basis points. [inaudible]

Speaker Change: So, we're still got some heavy lifting to do with our client base of the next call it 50 basis points, 75 basis points and rate cuts, that makes sense. So, we'll have to still work on depositors pretty hard here over the next few months just to get to a point to where some of these balance sheet edges kick in and we get some kind of a call it a mini calorie shows up.

Speaker Change: As an editor, you're saying, well, we still expect to see some growth next quarter, and so we don't expect that to be flattish. But we do expect the name of the candidate flattish from here.

Speaker Change: Okay.

Speaker Change: That's helpful, Harold. And then just thinking about, you know, one of the pushbacks I tend to get is like, hey, you guys have obviously done a great job. Moving a lot of deposits to being indexed, but the loan portfolio is fairly variable with over 60% grew pricing fairly quickly.

Speaker Change: Do you guys think the margin, I know you got a lot of things to think about, and it's maybe not fair to ask until we know what the yield curve looks like in a quarter or two, but just thinking about timing, maybe versus liability sensitive versus assets sensitive, is it fair that the margin could be lower in a quarter or two from here, or do you think you can outrun maybe some of the loan repricing this as beta's matriculate through that so-for portfolio in particular? No, no, no, no, no, no, no.

Speaker Change: Well, we do believe we've got the opportunity to kind of keep the margin where it is. There's obviously going to be some risk that the margin does go down, but it won't be a lot. It might be a basis point or two. That again, we're going to have to do as we rely on our relationship managers to continue to be able to take with their class to be able to reduce these lower into these lower-rated categories.

Speaker Change: and that's what we're going to do. But pushing a lot of the positive to the 50% index, that's obviously a tailman for that.

Speaker Change: I guess I'll stop there.

Speaker Change: Okay, and then I can speak at one last one just around DDA, you know, impressive and pretty growth versus average. Any seasonality in the DDA this quarter and just, you know, maybe any comments around your efforts to grow that bucket, which, you know, whole industry is focused on.

Speaker Change: Yeah, we think there is seasonality. We don't think that's all the story for the third quarter and we don't think it'll be all the story for the fourth quarter. In order to attract those positive counsel, not interest bearing, you've got to get the entire client relationship and we've been successful in a lot of our new markets and attracting that and pooling that critical product across the street. And so that's why we think we're going to get some lift. And so that's what we're going to be doing. And so that's what we're going to be doing.

Speaker Change: as we move forward and not only Atlanta but also DC and Jackson.

Speaker Change: Brett, how am I to say that, you know, if you look at Greenwich data, I would say, you know, our lean bank penetration is extraordinarily high.

Speaker Change: versus all our competitors, which is a way to say that the class, business, class, US to be their lead-buying.

Speaker Change: which means we got their operating details.

Speaker Change: and so again we're adding class at a pretty dramatic pace, taking charge of so from 30,000 feet, that's the biggest thing that we're doing relatively grow in DAs is thank you for being here.

Speaker Change: Okay, great. You certainly taking a lot of marker chair over the years. Thanks for all the color guys.

Speaker Change: Thank you. Your next question is coming from Russell Gunther from Stevens. Your line is live.

Russell Gunther: Hey, good morning, guys. You spent some time in prepared remarks in this slide.

Russell Gunther: Discussing how successfully you've been in terms of M&A and then organically taking share from there into the Carolinas and the Memphis. Is that a strategy today that still makes sense or is of interest to you? Could you just touch on this thought today?

Speaker Change: Let me clarify the question, you're asking, do we have an appetite for M&A?

Speaker Change: Yeah, that's right. I mean, we spent some time on the deck going through health, this success you've had there and then the next light taking organic share from there is that part of the strategy going forward.

Speaker Change: You know what I'm saying is unlikely, you know, I never say never, but I think it is very unlikely that will

Speaker Change: and being acquiring bikes and I think you've heard this like full of the reason that it is our ability to hire so many people, our ability to do these market extensions and grow so rapidly with a significantly.

Speaker Change: Lower risk from all the new annexations, because I don't think it's likely we wouldn't like accretions.

Speaker Change: Russell, I think one of the points I'd hope to make is okay, we entered some of these markets by way of acquisition, but the organic growth that we put on the pace of that organic growth was substantially beyond what those companies were doing when we acquired them. So they really just tried to illustrate the power of this simple model of hiring the best bankers in the market, having them consolidate their books of business from where they were to hear is a really reliable growth mechanism, so because all that, I don't think you ought to have much expectation, we'll be at foreign banks.

Speaker Change: I appreciate your thoughts there, guys, and then just one more for me, switching gears, if it could, to BHG, appreciate the thoughts on the four key trends. But as we think about, to comment that lower rates should be better from a volume and rate perspective and past these trending in the right direction. If it reasonable to think that that revenue could grow in 25 or their big picture, take you could share in terms of a revenue trajectory going forward.

Speaker Change: Yeah, Russell, I'll try to work my way around in the question. We really don't want to give out too much 20, 25 numbers. But we've had conversation with VHS, their expectations for next year. I would, I would imagine that it's probably going to be a mid-single to high-single digit kind of number when we finally get to it. But we've got more work to do there. We've got some, we've got a lot of kind of work to do around what their expense base is going to look like, so on and so forth for next year. [inaudible]

Speaker Change: Got it. Okay, guys. Thank you very much for taking my question.

Speaker Change: All right, thank you Rose.

Speaker Change: Thank you. Your next question is coming from a Jared Shaw from Barclays. Your line is live.

Speaker Change: Hi, this is John Row, I'm Fratera.

Speaker Change: So I'm John . I guess just sticking to the PhD for a second, the reserve for on balance sheet losses has been coming down, I guess the last few quarters, but the liability for substitution and pre-statement, it looks like that's still trending up, I guess. Why won't these be moving in the same direction, and I guess is there any...

Speaker Change: and its color on where the liability for substitution of pre-payment could be at the because level here.

Speaker Change: John, you get a couple of things to think about. One is a substitution that the loads are better.

Speaker Change: And it's been sold out to the committee behind that work, our responsibility to the committee behind. So this year, there is some lag in how those losses come to them, versus the loans they have on their own balance sheets.

Speaker Change: I have longer tenure, so the losses related to the old Balochy problems are newer and typically see most of the lost time tailed in the first 30 months.

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

Speaker Change: Okay, thanks, that's really helpful. So I guess maybe we could think of the...

Speaker Change: that on balance sheet credit trends is more the leading indicator of the off balance sheet credit trends.

Speaker Change: Now we believe with each of the off balance sheets will replicate with the all balance sheets. The reserves associated with them are calculated in two different ways, one in the sea, so based reserve and the other is a trailing loss content with emphasis on the trailing twill.

Speaker Change: Okay, great, that's really good color.

Speaker Change: and then I guess just one other one for me, moving over to the higher ring, it sounds like 2020 fast, so I'm going to be a pretty big year for ring on new hires.

Speaker Change: As you kind of decent presence in some of the expansion markets, can we expect the new hires to ramp up in terms of bringing on loans in the houses at the same pace as some of the initial hires, or with a sort of a diminishing return that we should expect to, as you kind of add this to the total number of rons in the market.

Speaker Change: My belief is that the assumptions that we used in that illustration are good assumptions on a go-forward basis. The reason I say that is...

Speaker Change: Am I answering what you ask?

Speaker Change: I think that was exactly it. Thank you so much for coming up.

Speaker Change: Thank you, your next question is coming from Steven Schouten from Pagper Sandler. Your line is live.

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

Steven Schouten: is a reasonably moved lower in the future.

Steven Schouten: Yo, I don't think there's any increase.

Steven Schouten: Ummm...

Steven Schouten: RISC doctors for applause to leave us.

Speaker Change: So I think what we've got to do is lean into this relationship with these clients.

Speaker Change: and I think we've got great confidence around there, not seen a lot of outflows there.

Speaker Change: Hey, Steven, one of the things, if you remember, some of the conversations that we had back when it seemed apparent we were headed into a down rate cycle, I think we gave indications that we had already begun prepping both our associates, particularly our associates, and also our clients for how we would respond in the down rate environment, and so, you know, inside the company, there's great understanding by our relationship managers, which is, you know, both how we get business, and how we keep businesses, the depth of relationship to have with those clients, and so, as Harold said, those are one-off negotiations, we're not sneaking up on somebody, any of those kinds of things, so it would not seem to me

Speaker Change: at Triusco, the Trasian.

Russell Gunther: Fantastic, that's helpful. And Terry, I mean, you guys added in a lot of great floods in the day.

Russell Gunther: and clearly, like you showed, you crossed 10 and nothing changed, you crossed 50, nothing changed, the growth profile is still what it is. But you continue to look more and more like one of the, you know, large regional banks that you've kind of. [inaudible]

Speaker Change: Taking a lot of the personnel from through the years, I need to continue to outperform them so significantly. Or how do you keep yourself from starting to look like a large regional bank? Because it really just the incentives and the culture or is there anything in particular that keeps you from centralizing in the way that they have that becomes an impediment?

Speaker Change: Yeah, I think that's a great question, so first of all.

Speaker Change: I think start with the culture, everybody's said you've been around what's the long time.

Speaker Change: Even before you showed up pain for sanitary, you can't fulfill that culture, you know, as you get big but the truth is, if you, we do an internal work environment survey here, we have 93% of our associates fill it out, if you're not familiar with those instruments, I don't think you're going to find anybody that would have that kind of engagement with their associates so that they would give you the feedback. And beyond that, the answers that they give are always above 70% in the top box rating, in other words, as they rate their level of agreement. Those numbers have been consistent over a long time, they're not getting worse, any of those kinds of things. Specifically, we're moving up the chart on things like this.

Speaker Change: Best Place to Work Among Millennials, Best Place to Work Among Women. As I said in the presentation, Best Place to Work Among Financial Services, Third Best Behind American Express and Security, those things are getting better and not worse. So I don't mean to go on and on about it, but I just want to say that the culture, there's no doubt that I and others have an important influence over it. You could screw it up if you want it to, but...

Speaker Change: It does more or less propel itself, you know, once it has the power, once it's rooted in and so forth, it propels itself. So I think the culture will continue to help us. I think our geographic focus will continue to help us. I've got fears that are smaller than me that have gone to line of business organizations and so forth. I get it. That's how all the big companies do it. And so if your goal is, I want to be a big company, then you do that. That's not really our goal. What we're trying to do is be the best. We're trying to offer a distinctive flying experience. And that's the motivation to keep it geographic and we'll get bigger in my opinion because we've got all these market extension opportunities and we can take care of these people and so forth. But my belief is that we ought to continue to take care of one of the things. Thank you.

Speaker Change: I'm trying to get across because so many people saving the year question there is kept because I man the law law is not just going to get those guys, I can't keep growing that thing at that pace.

Speaker Change: You know we did keep growing at that pace and it's just a really simple thing.

Speaker Change: We're able to attract bankers from other banks who leave those banks and come over here and bring their clients with them May not wish I had some really sophisticated thing that we've thought up some hot tag, thin tag

Speaker Change: Cool thing, we ain't got it, but we do, and we just have a great place to work, that they won't leave those big companies to come here and bring their class. And so you can see we're hiring people at a dramatic pace, that's not slowing down, it's picking up speed. And so again, not to ramble on too much, but just...

Speaker Change: My home communication is at least as I see it. I don't think the law of large numbers is going to get us. I'm not saying it won't get you, you know, five years ten years, twenty years down the road. I don't know about that, but as far as I can see, it doesn't look like the law of large numbers is going to get us, it doesn't look like the cultures going to dissipate all those kinds of things.

Speaker Change: Thanks for the Comprehensive Answer that's fantastic and congrats on all the continued success.

Speaker Change: Thank you, your next question is coming from Ben Gerliger from City, your line is live.

Speaker Change: Thank you for joining everyone

Speaker Change: and the heavy motor ride, then we...

Speaker Change: I'm doing well, I appreciate it. I also really appreciate Todd 21 and I know touched on it quite a bit. I think it's really just real straight over.

Speaker Change: kind of the DNA you guys have, like when you look at it roughly one-sixth of the bank isn't there yet, like you have the people, but you don't have the loans, so it's kind of just shows that like even if you stop hiring, you should still wrap up pretty materially and kind of leads into my next question.

Speaker Change: when you think about flight.

Speaker Change: Most things manage both sides about these left and right with rates where you guys, you have so much growth potential I think it's much more of the kind of the calculus is what are you putting on rates and deposits that come on so it's more so kind of curious of the people you've hired I'm sure it's more C and I oriented but when you think about the clients that they're bringing over is there a general mix of deposits or what should kind of expect for the relationships coming over between loans and deposits I'm sure there are obviously franchises are additive but that's a huge part of the marginal look going forward

Speaker Change: Yeah, that's a great question. I think we do have a South Sea and I and private bankers.

Speaker Change: I think we have a general belief that Carpenter Home State Lenders, we've got those, we're well healed there with our capacity there. So we are interested in...

Speaker Change: That we're looking for that person to bring a significant amount of their book from their former employer over to our bank and to do that within a reasonable time period. So we keep up with that, we try to make sure if somebody needs help, we give them the help to do that otherwise we're saying, you know, go get them.

Speaker Change: Ben, I might just answer you that I think, you know, as I said in my comments, averages are always dangerous, goes nobody's average, everybody's bummer below. But, you know, in average it's a pretty...

Speaker Change: Self-funded book, you know, it's about $65 million on both sides of the balance sheet over a five-year period of time that these relationship managers bring and the Harold point, that includes some private bankers and commercial bankers, large business bankers, small vests, bankers and so forth, but that's sort of how the average works. It is a self-funded book and you do have to provide energy and emphasis around deposits. To your point, the biggest rental for a company like ours is always how do you find the balance sheet when you can produce assets at the pace we can, but if you take a look at...

Speaker Change: Something like DC, which is a really large high-growth market that we're building 90 miles an hour. You know, that thing is more than two to one, so funded. And so anyway, I'm just rambling to say generally people are consolidating their whole relationship and that includes both sides of the balance sheet.

Speaker Change: Now that's helpful.

Speaker Change: I'm also kind of just doubting off of that, like with the additional tires, I'm going to get guidance that

Speaker Change: This flywheel isn't stopping if anything, it's speeding up. Is it fair to kind of assume double digit hires equals double digits expense growth next year, or is there any sort of initiative behind the scene or synergies that, obviously some synergies just by scale, but anything kind of lever pulling on you guys side of the table, or we could kind of mitigate some of the expense growth?

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

Speaker Change: So you've been in the pocket as far as you know obviously.

Speaker Change: Somebody's going to take this comment the wrong way, but I just like this. We've generally taken great pride in if you look at our non-herst experience growth over a decade, over two decades, over the last five years, whatever, into double-digit experience.

Speaker Change: Growth Rate, we just grow the revenues faster. And so, again, the point you hit at, which is really important to me, is like you look at all those 234 people that have yet to consolidate their whole books here, I've got 100% of that expense run rate with the revenue coming. And so, again, as long as we believe we're going to continue to hire people, and they're going to continue to move those books business, which I do. Then you don't fear elevated. The non-interesting expense growth rate, we're concerned about revenue growth and EPS growth.

Speaker Change: Yeah, that makes sense. I appreciate paying your bankers because they're doing a great job as a high-class problem to have. I appreciate thank you very much. All right, thank you.

Speaker Change: Thank you. Your next question is coming from Anthony Ellian from JP Morgan. Your line is live.

Anthony Ellian: Hi, good morning. In the prepared remarks, you comment to that if the yield curve slopes more favorably in the coming quarters, that could lead to a better 2025 revenue outlook. But if the yield curve doesn't become more positively slope than it currently is, for example, if long rates continue to decline, to what degree would that impact the optimism you have for next year's revenue outlook?

Speaker Change: Thanks for the question, I think you're getting out while we want to try to pursue as neutral a balance sheet as we can.

Speaker Change: You know, over the last couple of years.

Speaker Change: We think we're in bandage because of our neutrality, our balance sheet. We think we can manage through it if the inverted curve continues to just kind of lag along during 2025. But we can all be helpful.

Speaker Change: and it looks like that we've got some reason to be hopeful that at some point in.

Speaker Change: 2025 and when we talked about an inverted curve just to be candid, we're talking about from the overnight rate to probably around five years.

Speaker Change: So, if we can get a traditional Slump Carpenter, we think that's good news for us and probably a lot of majors as well.

Speaker Change: Thank you, and then my follow-up on slide, just going back to slide 21, the cumulative growth capacity that you highlight in deposits and loans for 2025 and 2026. Do the numbers you have on the bar, the 5.9 and the 5.6 for loans represent the blue sky scenario that you expect to come onto the balance view over the next two years, or is that just an average basis of what you expect could be recognized on the balance sheet? Thank you.

Speaker Change: I think it's more indicative of an average.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Katherine Meeler from ABW. Your line is live.

Katherine Meeler: Thanks, good morning. We'll follow up on just the NII Outlook. I mean, if you have the ability to grow.

Katherine Meeler: To grow the balance sheet at a double digit pace into next year. If there is any reason, and I know it's all maybe dependent on the yield curve.

Katherine Meeler: I mean, is there any reason to believe that we can't grow an I.I. in a double digit pace as we move into next year or is it safer to kind of do this high single digit level that we saw?

Katherine Meeler: in the 2020-24.

Catherine: You're a Catherine.

Katherine Meeler: For us, the strong correlation to the long growth percentage group as well as in a high percentage group.

Katherine Meeler: probably because of the way our margin performs an out-time it is, but.

Katherine Meeler: I'd like to look at, look out over the last several years they would be closely correlated. So we're not ready to put out, you know, kind of a long growth target for next year, but we are optimistic that we should do better than what we're doing this year.

Katherine Meeler: Okay, that's it.

Katherine Meeler: Great.

Speaker Change: and then on Fees, that was a really great beat this quarter and a higher guide for 24. Can you talk a little bit about, especially I've noticed these service charges are coming in higher. I'm assuming this is just a count growth, but just any kind of commentary there and then maybe your outlook for growth in service charges and it was in this quarter, maybe I can even say like in the back half of 24 C run rate, is there anything that feels elevated that we need to be aware of to kind of pull back as we model 25.

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

Speaker Change: Going in in 2025, we think the core business is going to grow at a reasonable rate next year whether it be wealth management or mortgage or what have you, we will have a full year of bowling revenues next year as well. So we're optimistic about where fees could be next year. As far as deposit service charges, a lot of it was related to our commercial analysis accounts. So we're going to have a full year and a full year and a full year and a full year and a full year and a full year

Speaker Change: Great. All right, thank you for the, come to me, great quarter. Thank you.

Speaker Change: Thank you, your next question is coming from Sam Varga from UBS, your line is live.

Sam Varga: i want to second specifically the investment services item i just wanted to for some commentary what you think the run rate is here it seems like bas on the just numbers are ting better at monetizing that again and so onewant to see us you knowif some of those impacted by private banker hires are just just about that business over the next couple of years even very much and the your of business we but getting you know the transfer

Speaker Change: To our platform and particularly like in Jacksonville, we've had great success in Jacksonville with recent ours and so we fully intend to see that line on our continued growth.

Speaker Change: Is that what you were up for Samuel?

Sam Varga: Sam, your line is live.

Sam Varga: I'm sorry, I might have been on mute there, so...

Sam Varga: As you bring the private bankers over, I guess how quickly do the brokerage accounts come over as well.

Speaker Change: So let me make sure I clarify. So we have private bankers that typically most typically control the relationship, and then we hire brokers, and we hire trusted administrators that both are involved in product specialties.

Speaker Change: that, you know, or...

Speaker Change: The generally paid is a function of whatever that said, it's under management order and so.

Speaker Change: We're hiring across all those fronts, the private bankers, the brokers, and the trusted administrators. I think on that investment services line, that's primarily about commissions, which 90% of that commission income is an advisory fee. It's not transaction commissions, it's an advisory fee. And so, again, we've been extraordinarily successful with the brokers that we've hired to series seven licensed brokers, consolidating books into Harold's point. I think in Jacksonville, where we've been less than 12 months, they have brought a number of likes, $600 million in assets. And so again, just give you some sense, man, you can drive revenues up.

Speaker Change: Pretty quickly when you're making those kinds of hires and so we're hiring like that all over the footprint.

Speaker Change: Thanks for the clarification. And just for the last one really quick and on the bond book, Harold, I guess, can you come into them? Seems like you have more variable right now. Are you hoping to keep that bond book shorter? Are you hoping to extend it out a little bit to capture sort of the backer end of the yield curve?

Speaker Change: Well, I think we're like where it is currently.

Speaker Change: Samuel, I don't see us growing it. I don't see us. I don't see the duration extending on it.

Speaker Change: We are thinking of quite a bit of yield out of it where it is. I think when we looked at thermal wars as fixed when we acquired a lot of that, that was a hand-gees.

Speaker Change: to convert it more to variable. We've got a lot of running room in front of us before.

Speaker Change: Particularly with respect to where rates go, if rates continue to fall, we've got still quite a bit of yield that we can pick up before the rates fall to a level to where the fixed rate decision would have been a better decision if you could follow that. That sounded like a lot of words, Alan. But at the end of the day, we're picking up quite a bit of yield out of that variable rate bond book and we'll continue to pick up that yield until rates fall quite a bit. [inaudible]

Speaker Change: Got it. Thank you, Harold. I appreciate it.

Speaker Change: Thank you. Your next question is coming from Brian Martin from Jenny Mark Gomerie. Your line is live.

Brian Martin: Hey, good morning, guys. A couple of quick ones for me. Just Harold on the margins, just on the loans that replace immediately with the race. Can you remind us what that is?

Speaker Change: The loans that started again, Brian , the loans that really priced immediately with rate cuts, you know, what we'll move immediately is rates cut on the loan side. I know you talked about the fixed rates that are going to continue to move higher, but just in terms of rates declining on the variable rate loans, the variable rate loan percentage.

Speaker Change: Y'all from Race Credit, we'll brief right immediately, and that's about it.

Speaker Change: Are you looking for that bear more ice? Beta?

Speaker Change: Yes.

Speaker Change: So, that would be probably about 30% of the variable ring lungs. It's about 14% of total lungs.

Speaker Change: 14% of the name of Christ, the replies daily.

Speaker Change: Bailey, gotcha. Okay, perfect. And then just one question, I know you're not commenting a lot about the long growth outlook, but just in terms of 25, just in terms of the mix, like this year we've seen that, you know, the focus on reducing the CRE exposure, as we look to next year, does the mix of long growth look similar or should it, I guess, seems like it would include a bit more from your comments earlier, Harold, that, you know, CRE, maybe the back half of next year, 25 or just how we should be thinking about that, in terms of your comments also about, you know, maybe looking for a little bit better long growth next year than this year.

Speaker Change: Yeah, I think so, we don't expect to see any kind of big uptake.

Speaker Change: and Construction, the Archimortural State Investment Property, likely until, you know, college the last time in the year, as you say.

Speaker Change: for next year. Okay.

Speaker Change: Gotcha. Okay. And then just the deposit growth was very strong in this quarter. Can you just was any part of that? I know you guys have been focused on the deposit verticals. Was some of that driven by those verticals or was there anything outsized in terms of contributing to that growth this quarter?

Speaker Change: Now I think it's largely in those verticals and the business model that we put forth with those verticals where we've got experts in those industries that are across the footprint, helping to relationship managers, garners those deposits.

Speaker Change: Okay, and last two of me just housekeeping, Harold, just the tax rate, how do I think about that? And I think you said on the fee income side, the only two really non-recurring, you know, a non-sustainable numbers to think about are that, you know, the...

Speaker Change: The security, the equity investments and the gains, this quarter, that about the $2 million in gains, this quarter, everything else is pretty repeatable.

Speaker Change: Yeah, we feel pretty good, we kind of dug into that B-Mage of...

Speaker Change: Pretty hard to try to figure out what to run right might look like and those are the two items that kind of came to the top.

Speaker Change: Okay, and then the tax rate, how to think about the tax rate going forward.

Speaker Change: Now we ought to be a 20% kind of ETR kind of firm.

Terry Turner: We're also seeing a lot more inbound traffic for college, private wealth mortgages, and the like, and we think with these target ranges, our relationship managers will be more inclined to negotiate with borrowers and try to secure some of that business for us. In the past, our target ranges were probably on the high end of the market, and we felt like we were missing out on some loan growth because our relationship managers were hesitant to try to negotiate with borrowers when we were, you know, who were that above, that part of the, you know, others.

Unnamed Speaker: Great, appreciate to college. Thanks for taking my questions.

Operator: Thank you. That completes our Q&A session.

Operator: Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.