Good morning everyone and welcome to the Pinnacle Financial Partners’ Fourth Quarter 2014 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Harold Carpenter, Chief Financial Officer. Please note that Pinnacle’s earnings release and this morning’s presentation are available on the Investor Relations page of their Web site at www.pnfp.com. Today’s call is being recorded and will be available for replay on Pinnacle’s Web site for the next 90 days. At this time all participants have been placed in a listen-only mode. The floor will be opened for your questions following the presentation. (Operator Instructions) Before we begin, Pinnacle does not provide earnings guidance or forecasts. 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 such factors are beyond Pinnacle Financial’s ability to control or predict and listeners are cautioned not to put any undue reliance unto such forward-looking statements. A more detailed description of these and other risks is contained in Pinnacle Financial’s most recent Annual Report on Form 10-K. Pinnacle Financial disclaims any obligation to update or reserve any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and reconciliation of the non-GAAP measures to comparable GAAP measures will be available on Pinnacle Financial’s website at www.pnfp.com. With that, I am now going to turn the presentation over to Mr. Terry Turner, Pinnacle’s President and CEO.

Thank you, operator. I’m excited about our fourth quarter performance. It was a great quarter for us, but I maybe more excited about the momentum and opportunity that we see going forward into 2015 as we are -- coming off a quarter here, fourth quarter, we set lots of new records, we crossed 6 billion in assets. We set a new record for quarterly non-interest income greater than $40 million, new ROAA record at 1.27%, new record low on efficiency ratio at 53.2% and most importantly a record for quarterly EPS at $0.53. I want to start with the chart that we’ve been utilizing since January of 2012 to highlight our growth versus target. It was our belief at that time that our existing relationship managers plus several new sales associates that we intended to and indeed did hire in 2012, 2013, and 2014 that they had the capacity to produce approximately $1.27 billion in net loan growth over the three-year period beginning in January 2012. So we’re plotting the actual production over the three year cycle on the top bar against that three year target that we outlined on the bottom bar, and as you can see we exceeded that target. As most of you know, our approach to improved operating leverage, increase profitability and earnings growth really have been one of rapid revenue growth as opposed to expense cutting, and so achieving these loan growth targets was really the cornerstone of our three year profit plan and that’s when I start with it. At the same time that we begin discussing loan growth targets, we laid out our sustainable business model, which at the time called for say 1.20% ROAA, the midpoint of our targeted range. We broke down targets for the four critical components to produce that…

Thanks Terry. Although we’ve seen a significant increase in the fee line in relation to our total revenues, we remain a spread bank and we’re pleased to report net interest income continued to increase in the fourth quarter. As expected and reported, in the prior quarter margin contracted a modest amount during the quarter but remaining within our net interest margin targets of 3.7% to 3.8% for 2014. We expect to experience continued increase in net interest income as we grow our customer base and our markets. Concerning loans specifically, as expected we experienced a big push late in the quarter for loan bookings, and as the chart indicates average loans were only 4.44 billion for the quarter while EOP loans were approximately $154 million greater than the average balance, signaling that we expect to see average loan balances continue their quarter-to-quarter increases as we head into the first quarter of 2015. As to loan yields, our loan yield remains stable at 4.34% this quarter and it basically held steady for the past four to five quarters. As to deposits, again here in the fourth quarter, we were able to continue lowering our funding cost. We’ve mentioned for several quarters that our pace of reduction was slow and it has in fact done that as the cost of funds decreased one basis point from the third quarter. However it should be noted that the decrease of one basis point would achieve, while we grew deposits -- growth rate of approximately 12%, which speaks to the relationships of our financial advisors have in the market. As to deposit balances, we continue to emphasize non-interest bearing deposit business, which we believe might be the most valuable product in our bank and that our business strategy continues to work with year-over-year average non-interest…

Thanks Harold. There is no management action that I’ve always relied on, which is expectations shape behavior. For those of you who have been following our proxy disclosures over the years you know that in addition to the asset quality threshold that must be achieved before the first dollar of incentive can be paid, our executive compensation is specifically linked to producing top quartile performance within our peer group and by the way for most recurring [ph] metrics our peer groups outperforms the industry at large. So one explanation for our persistent ongoing top quartile performance is that’s the performance expectation that we’ve established in the past, and looking forward our board continues to target top quartile performance and links executive compensation to it. Another management action is you get what you incent. As I’ve already mentioned our executive compensation is to actually achieve top quartile performance. So that results in very high targets and dogged execution. Here the floor management has developed detailed action plans to meet those expectations. As you can see on the chart, 2014 was another year top quartile execution and performance and I believe that approach to establish an ongoing performance targets is tightly linked to total shareholder returns. And speaking of total shareholder returns, here you see our one, three and five year total shareholder returns against our peers' way up in the top quartile. And I just want to comment, I don’t spend time on the last two charts just because I had some charts. I spend time on them because I think they highlight one of the most distinct characteristics of our firm. So many firms target medium benchmarks and frankly that’s what they get, maybe in performance, but at Pinnacle, we target top quartile returns and we link executive compensation to…

Thank you Mr. Turner. The floor is now open for your questions following the presentation. [Operator Instructions]. Our first question comes from the line of Stephen Scouten of Sandler O'Neill. Your line is now open.

Just wanted to touch, base, can you give me a little bit more detail on the expected pace of continued growth heading into 2015, especially relative to the still significant pay down activity? Any color you can give there especially -- I know you mentioned maybe the run rate still looks like it did three years ago potentially, but any color you can give there, or expected new hires that would increase that run rate? Anything of that nature?

I’d just say this. If you go back three years ago, when we announced what that target was, we went through a process with all our financial advisors, generally referred to as relationship managers and tried to outline exactly what each individual’s capacity was. We backed it off for some target miss and published the number at one point to $7 billion. In that number we included hires that we intended to make during 2012, but not during 2013 and ’14. In other words that was the capacity that we would have at that time to produce that growth. And the idea of being that we already had an expense base that would produce nearly $1.3 billion in asset growth. We recently have been through that exercise, and again I don’t want to get back exactly in the position that we’ve been in the past, where we’re marketing quarter-by-quarter and showing how we’re growing against the target. But I don’t mind to say that the capacity exercise that we’ve been through, as it relates to 2015, ’16 and ’17 looks at least as good as it did when we made that announcement back in 2012. I’m just saying that we haven’t sopped up our capacity. In fact we’ve built capacity and hired meaningful numbers of revenue producers during 2012, 2013 and 2014 and that’s one of the reasons we continue to have this great capacity. I would say in terms of ongoing hires we -- I mentioned the CRE business that we intend to build. That’s one that could happen sooner as supposed to later I think. We’re in pretty late stage negotiation with a couple of folks. You know you never celebrate till you get them onboard. We will find some and build that business somehow some way. But honestly I believe that we’re likely to announce hires on that front quickly, and we’re very actively recruiting and see good opportunities for continued hiring of relationship managers from our large region competitor. So again the capacity exists today. I don’t need to hire any people to sort of have the capacity, the three year loan growth capacity that we’re talking about. But I will say, I do expect that we’ll continue to add incremental capacity in each of the next three years.

Okay that’s helpful. And I guess in regards to the pay down front, you don’t necessarily see any change in conditions that will allow that to trail off at all or even get back to 2012 levels or anything of that nature?

Honestly every year since 2012 I have assumed that it was going to better and it hadn’t. And so our planning is that it’s not going to get better. I hope it does. It’s possible that it does, and if it does that will be great. That will be a clear boon to our net loan origination capabilities. But our planning assumption is more of the same.

Okay and then one other question on the net interest margin. And first of all thanks for the all the incremental detail. That’s pretty phenomenal detail. But the one thing I had a little confusion on was maybe the comment that if the current rate environment stays flat, there might be five basis points of incremental compression. So would that basically that the low end of your targeted NIM range of 370 there could be maybe 5 basis points of incremental downside there assuming that the 10 year stays flat and maybe the Fed only increases 50 basis points, or I guess what are assumptions maybe there? A little extra detail?

I think it’s from current run rate Steven. We always stay within that 370 to 380 range. We are really optimistic and hopeful that this 10 year will rebound some, but I think that’s what -- that's all it is, is hope at this point.

So even on the downside you think you should be able to stay in that 370 range?

Sure.

[Operator Instruction] Our next question from line of David [indiscernible] of Raymond James. Your line is now open.

You spoke to the new producers that you might be looking to hire. Could you maybe speak to the expense bill that you would expect with that, and maybe talk to where your current loan pipeline stands?

Yes. Let me start on the expense size, because again I think, if you followed our Company for an extended period of time, my basic thesis is that we have an expense base that’s going to produce a disproportionate amount of revenue growth. In other words our loan pipelines, and the capacity that I mentioned are as large as they were three year ago. So we ought to expect similar asset growth given no increase, no build in the expense base. Now moving forward I have said I do expect that we will have increases in expense base, because we’ll higher incremental capacity. But we've also said that we expect that you’ll see an improvement in our efficiency ratio during 2015, and have also said that we expect that the growth on the asset side will be disproportionally higher than the growth in the expense base, such that the expense to asset ratio comes inside our target range of 2.10% to 2.30%. So again just to try to get clear, we don’t need any incremental expenses to continue loan growth at the pace we’ve had. We will add capacity, but we’ll add it in a way, so it’s that the efficiency ratio advances and such that the expense to asset ratio advances. Is that helpful?

Yes, absolutely. Maybe what your pipeline is?

I guess I would just characterize our pipelines as general consistent with where they’ve been over the last several quarters. I think traditionally first quarter is a relatively lighter production quarter then the other three. I don’t know. We may see a little less loan production in first quarter than fourth quarter but I don’t look for it. As an example I would look forward to be as modest a growth in 2015 was in 2014. So again, I think our pipelines are very healthy.

Last question from me, maybe you could talk a little bit about your thoughts on M&A a little bit more? You're clearly focused on the Chattanooga and Memphis markets as areas for growth, but what size and what are your thoughts on M&A as we look out to 2015?

Yes, I think -- yes I would say that I believe in general there is more M&A chatter today than there have been in the recent past and I would say for our firm we probably have preliminary discussions going with a number of banks on a number of fronts. I don’t think you ought to read a lot into that other than just there is incremental activity from where it’s been. I’ve mentioned that in both Chattanooga and Memphis, I think there are conceivable targets for acquisitions, and we just have to see where that goes. One of the things for our Company that I think is important here, we’re not afraid of the M&A. We’ve done in the past. I can’t imagine over the three, four, five year period of time we won't do more M&A. But when you have the sort of organic growth capacity that our Company has, you have to acquire pretty rapidly growing bank to make that an accretive transaction, and so it gives you a pretty limited number of targets. And again in both markets we have active dialog going-on with potential targets. Again, I wouldn’t overplay that, but just some level of dialog. People are aware of our interest and so forth. But we also have dialog going on with various folks that might be able to produce a good lift out force, in either of those markets. And so again I guess I would just say, I characterize that this way we got great organic growth capabilities, that limits a number of M&A targets that make sense to us. We are capable of, and like the de novo expansion and have dialog going-on on those fronts, but if we found the right M&A opportunity, we’d do it.

Thank you, our next question comes from Kevin Fitzsimmons of Hovde Group, your line is now open.

It's Kevin Fitzsimmons, Hovde Group. Just one quick question. Most of mine have been asked and answered. Terry, over the years, you guys have -- it’s been a very consistent strategy that you go out and you try and get the good loan officers from some of the large regionals and you have that capacity in mind to bring over a certain period of time and that you can’t argue with the numbers that -- it has played out. But as you guys build your presence in Nashville over the years and it’s no secret that Nashville is a good market and I just continually hear other banks talking about and taking steps about going into Nashville. Are you starting to see pressure on you guys from the other end? In other words, people talking to and starting to take any of your own folks that you guys in the sense become the target and that same game? Do you see any of that or is that just it’s more they go after the large regionals just like you guys do?

Well, Kevin I would say that your general thesis is right. I don’t find it to be any -- I guess I just sort of give you a little color commentary on what is the level of people coming to Nashville and I don’t found it any more aggressive today than it’s been really since we started coming out of the recession. We’ve got, we’ve had new interest in this market by a folks like JP Morgan Chase, new interest by folks like Wells Fargo. You got U.S. Bank [indiscernible] do something here, you’ve got regional players coming in with LPO, Citi, National, PNC [ph]. So those are folks that have already made the decision to come here and are here and have been here for a year, two years, three years and so forth. And so I guess again I don’t fear that 2015 is somehow going cause it to be more. It might be more of the same but it’s not -- I can’t imagine it will be any more aggressive in terms of people coming to the market. Again I’m aware of other folks who say they want to come and I do expect they will, but I guess I’m just trying to characterize that I don’t look forward to being more competitive in 2015 than say it was in 2014 and ’13 and something like that. I think the second thing that will be in the target. I would say -- my own feeling is -- my own assumption is that we are the number one target of potential hirers and headhunters and so forth. I happened to bump in to a headhunter the other day who I'd never met, a name I'd known for a while but personally I'd never met, and his comment was Terry, man, it’s so nice to meet you. You and I have never chatted but I've talked to probably everybody that works for you, and I believe he was sincere. I think he had talked everybody that has worked with Pinnacle. And again in his talks and discussions he knew people way down in our organization, and what they had built and who was working on the professional doctor practices and who was working in the middle market and who came from which bank and frankly indicated which banks he had been recruiting for and some banks that he had recruited, tried to hire this person or that person, so forth. So I just rambled through that. I don’t want to sort of overstate the position Kevin, but I think most people would acknowledge, we do have the largest and the best known cadre of commercial bankers in Nashville and perhaps in Knoxville as well. And so our folks are being hit by headhunters every day, and I don’t look forward to be stiffer in 2015 than it was in 2014 or 2013.

Okay that’s helpful, one quick follow-up.

Kevin if I could, I might -- I just thought one more thing that might comment on. I think in our -- 2015 is our 15th year anniversary year and during that period we probably lost two revenue producers that I can think of, who left this firm and went to work in another bank. I mean an astounding thing. We just don’t lose our revenue producers.

Oh, that puts some perspective. Okay great. Just one quick follow-up. It seems like when the discussion of M&A comes up, it seems that incrementally over the past I don’t know five or six quarters, it has gradually become a little more of an open possible avenue for your guys, and in terms of how you’re portraying it? And you have been very open about the fact that when you look back to pre-downturn, you guys did a few deals that in hind side they were probably beefing up in construction and land at the wrong time, right, I think you would say that?

You all head [indiscernible]. Go ahead Kevin.

Theoretically that is. And as you look out now, it’s very understandable especially with your organic loan growth engine to be very careful, and to be conservative looking at these deals, but as you’re looking at them, and given the experience, are there any areas or certain types of banks that you just want to stay away from, that you’re looking and saying we don’t want to -- we've got a great company and growth engine the way we have it. So we don’t want to disrupt it or screw it up by adding the following kind of banks on, or are there any things like that that you just want to stay away from?

Yes, I think your observation that we’re more open to M&A today than we have been at various points in our past is probably accurate, and I think what makes that the case is that our stock is relatively advantaged and really take out multiples are more reasonable than they were at the peak of the market. And so the combination of our growth and stock advantage and the more reasonable price targets and those kind of things makes it more likely as opposed to less likely. Again I don’t want to overplay it. I don’t -- I honestly don’t care if I make an acquisition or not. Again we can go at it either way. But I'm just saying that phenomenon makes it a little more likely than it might otherwise be. I think in terms of the kinds of banks that we loan acquired, Kevin, I might just take this opportunity, you and I have had lots of discussions about it over the years. I honestly am not sensitive about the acquisitions we made. I believe we made great acquisitions. I've got a number one market share position. I took losses on the residential real estate exposure that they had, but that was the flaw and not the acquisition or the target specifically. It was just the fact that we set the concentration residential real estate exposure.

Right.

But in those markets I've got a number one deposit market share position in one of the fast growing counties in the United States. That’s a cool thing. If you look at the $2 in EPS I make today, a significant portion of it comes from that acquisition. And so I think over time we did get what we want despite having been at the wrong place at the wrong time on the residential construction. So I’ll put that in perspective. If I could do that deal again, I probably would liked to have done it later in the cycle where I got it at the low, instead of the high, but it was a good acquisition. And so again I would -- I guess just say that the kinds of banks that we wouldn’t want to target -- there's one thing that stands out. We had tons of opportunities Kevin, as you might guess to acquire banks in the state of Tennessee. Many have been slow growth, no growth markets. Many have been rural markets, those kind of things. We have no interest in the small no growth markets. We have no interest in rural markets, those kinds of things. Our interest is in urban markets. That’s where we do -- well, that’s where we can bang on these large regional banks the best, and so that would be an area of concentration. And I think generally we’re not aimed at companies without a concentration of what you might call mass market retail. We have a preference for folks who can succeed in the relationship managed segments, primarily the commercial segment, and to lesser extent, the private banking segment.

Thank you. Our next question comes from Brian Martin of FIG Partners. Your line is now open.

Harold, can you talk a little bit about the fee income being up this quarter and just kind feeling good about this type of run rate. It sounds like those vendor incentives and a couple of other things that were in there, is that kind of a normalized level? Is that what you’re suggesting as you kind of get into second quarter and beyond? Or was any of that stuff kind of non-recurring and based on the fee income [ph].

Well I guess you could assume that the Raymond James payment is non-recurring but we’re also expecting a payment in the first quarter, on our insurance contingency fees and hopefully by that time we’ll see some energy in some more of the core fee revenue categories. So we’re optimistic that we’re at a different run rate.

And then just one follow up on the M&A. It sounds like the two markets, the Chattanooga and Memphis are targets. I assume Nashville is still a focus as well if there is an opportunity that came up there?

Yes no doubt. I guess I might have been well served to make that comment. I've made it so many times in the past I guess. But Nashville would be an awesome opportunity for us. We love our distribution there. I think it’s advantaged in terms of the number of offices that we have here. I think its 28 offices and most of the large regional banks that have greater share than we do here probably have twice that many offices. And so again it’s an advantage distribution system, but I don’t need any more, and so if I could do an in market deal, I ought to get an outsized cost take out and that’d be a great thing.

All right. Fair enough. And then just the last thing with the pricing Terry on kind of new business, it looked like -- the loan yields are relatively flat this quarter. I guess how those pricing kind of the expectations with the growth expectations you have in 2015?

Brian I’d love to tell you I think man everything is sleek and so we won’t be under any pressure, but I don’t believe that’s the case. I think everybody in the market will be under pressure. I think we still operate in an environment that's a slow growth environment at best, and I think the industry and our markets in particular are washed with liquidity and so there is just too much money chasing too few deals. I think there will be pressure on pricing, I don’t think it’s been so bad over the last two or three quarters and I'm optimistic that will continue. But again, I think you have to see, there is no big pricing pressure due to asset origination difficulty for the industry that still persist.

Okay. So some possible pressure on that loan yield numbers is kind of the way to think about it?

I think -- again, you’d have to say there's potential pressure on it, but again I think we said we believe we can hold our margin in the 370 to 380 range.

Thank you. And I'm showing no further questions at this time. Ladies and gentlemen thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Have a great day everyone.