Harold Carpenter : Yes. I think we’ll have a keener eye on operating leverage going into 2024. I think what we’ve got to do is position the firm in a spot to where revenue growth, whatever that number might be, that our expense growth is within that range. We’ll have to sharpen our pencils pretty hard this year to see that, that happens. But as of since today, that’s kind of where we’re prepositioning all the budgeters and the planners that are working as a matter of fact, today on how to get a good 2024 plan. As Terry said, their warrants and incentive accrual at 100% of target.
Terry Turner: Catherine, I think you know this, but just to make sure everybody gets it, the focus of our company has been and continues to be a top quartile performer in terms of revenue and earnings growth. And so, EPS growth and so that hasn’t changed at all. That will continue to be the case. And I think to Harold’s point, it’s our intent and our belief that we’ll be able to plan that does that, even in the base of a meaningful pickup to the incentive expense because, as you know, we’re currently approving at 65% and hopeful that we will be accruing at 100% or north next year. So anyway, that gives you some sense of what our outlook and belief is.
Catherine Mealor : Yes. And I don’t mean this to be a loaded question, but just kind of thinking about your peers and think about EPS growth in this year. We’ve — most of the Street is forecasting for EPS to be down for most of your peers into next year. And so even if you’re the top quartile, and that’s flat EPS growth or even down EPS growth, still better than peers, but still flat to down. Is that a scenario that you can still have a full payout of incentive comp or do you feel like you hold yourself to a higher standard where you might need to still kind of adjust to that to hit an EPS target that’s appropriate for Pinnacle?
Terry Turner: Yes. Thank you for that. That’s a good question. I think what I would say is if we were to do what you just described there and just find our way to say, okay, all we got to do is get above 75% of peers, that wouldn’t take much earnings growth, and that would be about three years of flat earnings growth, EPS growth for Pinnacle if that were to be the case. And you can be sure that is not my target. So, at any rate, I guess the technical answer to your question is that’s something that could happen. I suppose it could happen, but I don’t think you ought to expect it will happen.
Operator: The next question is coming from Brody Preston from UBS. Brody your line is live.
Brody Preston : Good morning everyone. Harold, I just wanted to follow up on the deposit cost. I think you said the blended rate is coming on at 3.5. Is that — that’s inclusive of the noninterest-bearing, correct?
Harold Carpenter : Yes. Yes, that would include noninterest-bearing on — now this is just new accounts. So that’s right.
Brody Preston : So, just based on the commentary, I think you said 10% to 15% is noninterest-bearing earlier on the call. So, it implies about like an interest-bearing cost on new money at about 4%. Is that accurate?
Harold Carpenter : That’s probably fair. CDs are built into that. So yes.
Brody Preston : Okay. So, is that, I guess, on the interest-bearing deposit cost slide, the spot rate, is that where we should expect that to trend maybe over the next couple of quarters?
Harold Carpenter : I don’t think you’ll get that high. I think new account growth — the volumes are — they’re meaningful to us, but they’re not what generates a lot of the bulk of the deposit growth. So, the net deposit growth — I think core deposits was $826 million. Probably new account growth was maybe half of that, something like that.
Brody Preston : All right. And also, just on the loan side, I think you said you had about $300 million to $400 million coming due for fixed rate loans next quarter. Is that a fairly consistent level that we should be thinking about through — on a quarterly basis through 2024?
Harold Carpenter : Yes. I was trying to do the math in my head because I’ve got about $6 billion coming up for renewal over the next two years. And it’s pretty evenly dispersed weighted more towards the near term. So whatever that number comes out to be probably with the CRE renewals. Yes, it’s probably similar within $750 million, something like that in the near term in the quarter.
Brody Preston : Okay. Okay. Cool. And then just on the BHG, I appreciate the commentary on some of the puts and takes there. You mentioned that they had a building that they were planning on selling that they wrote down. I don’t know if you got this granular with them or not, but do you happen to know kind of what percentage the write-down was? I’m assuming that, that was like an office building or something that they no longer need.
Harold Carpenter : Yes. I think the number — I think they bought it like $20-something million. It’s down in South Florida. So, I think that’s what the write-down in corporate.
Brody Preston : You said they bought it for what?
Harold Carpenter : About $20-something million. I want to say it’s about a 24 number but don’t [indiscernible].
Brody Preston : Okay. And I think you said you had 7% of loans were SNCs. Do you happen to know of that, what were the lead underwriter on?
Harold Carpenter : The SNCs that we’re the lead underwriter on?
Brody Preston : Yes, sir.
Harold Carpenter : Now those are all where the other bank is the lead underwriter on the SNC. We’ve got about $1.4 billion in participations that we’ve sold, but none of those are in the SNC category.
Brody Preston : Okay. So, the SNC exposure is all — the 7% is just all SNCs that the other banks that will lead underwriters on.
Harold Carpenter : That’s right. And you know how all that works. In order for them to buy our loans, we got to buy their loans. There’s a lot of reciprocity in this process. And right now, I’m running about $2.2 billion or $2.3 billion in acquired participations of card SNCs.
Brody Preston : Okay. Then I did just want to follow up or it isn’t really a follow-up for this call, but I think it’s been asked before. Just in terms of the long-term view on succession planning. And I think you guys have built a pretty unique model, which is attractive, but also might be challenging for another bank to kind of maintain if they were to try to buy you guys, especially just given the independent culture that you have. I mean, how do you think about long-term kind of the growth path for Pinnacle succession planning and maybe partnering with another bank?
