Good morning everyone, and welcome to the Pinnacle Financial Partners' Fourth Quarter 2015 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 earning release and this morning's presentation are available on the Investor Relations page on 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 open 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 undue reliance on such forward-looking statements. A more detailed description of these and other risk is contained in Pinnacle Financial's most recent Annual Report on Form 10-K. Pinnacle Financial disclaims any obligation to update or revise 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 on the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to the comparable GAAP measures will be available on Pinnacle Financials Web site 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. Good morning. We've got a lot to talk about this morning. I'll begin with a two-slide overview. Harold will follow that with a deeper dive into the fourth quarter. Then I will try to summarize our performance for the quarter and the year. Then Harold will come back and talk about our incremental investment in BHG that we announced last night, and then finally, I will end with our outlook for 2016 and the five-year time horizon. So with that as I've done really every quarter for the last couple of years, I will begin here because it's a great way to provide a snapshot of the quarter, but more than that to provide some broader context to our firm's philosophy, strategy and execution. Our shares were up again in 2015, roughly 30%. We remain a top-quartile performer in terms of total shareholder return on a one-year, three-year, and five-year basis. Our basic thesis for consistently driving our share price higher is that over time, number one, revenue, our top line growth; number two, earnings, our bottom line growth; and number three, asset quality are the three most important valuation drivers. And so we focus intentionally on those variables. Also, through good times and bad, companies that consistently grow book value per share, grow share price, and so, for quite some time we've been providing quarterly dashboard to highlight our progress on these key valuation drivers. The top row graphs shows real top line and bottom line growth with a 31.6% revenue growth rate year-over-year, 35.5% growth rate in net income year-over-year, and core earnings for the quarter at $0.69 was a record high, the nineteenth consecutive quarter of increase in EPS, up 29.9% year-over-year. And I might comment from a profitability perspective, excluding merger charges, our…

Thanks, Terry. Our fourth quarter 2015 net interest income was up approximately $9.5 million over the third quarter, obviously due to expansion of average loan balances from CapitalMark and Magna, but also aided by approximately $190 million in loan growth from our legacy Pinnacle franchise. As to margins, our margin increased this quarter to 3.73% with increase attributable to the impact of the acquired franchises. We believe we can hold our margins through the first half of the year while at the same time grow our net interest income as we build loan volumes. With that said, it's pretty difficult right now to project margins given the uncertainty in the rate environment. Concerning loans specifically, as the chart indicates average loans were 6.46 billion for the fourth quarter. EOP loan balances are higher than average balances and our sales pipelines remain strong going into 2016. And at this point, we expect continued low double-digit loan growth in 2016. Our Chattanooga and Memphis franchises at the end of the year was approximately 1.36 billion in loans reflecting growth over their prior year, pre-merger balances of 15.5%. As to loan yields, our loan yields increased to 4.46% this quarter. We expect loan yields to be steady to down slightly in 2016. Holding loan yields will be largely dependent on two rate increases that we are currently forecasting; one midyear and another late year. As to the deposits, again here in the third quarter we are able to maintain our low funding cost. The slight increase is attributable to the acquired deposits. I believe we have opportunities there to reduce the cost of some non-core funding sources. As to deposit balances, we had a great quarter for deposit growth with deposits up almost $371 million in the fourth quarter. We're most pleased with…

Thank you, Harold. More than three years ago, we laid out our sustainable business model, which in turn call for a targeted range of 1.10 to 1.30 for ROA. We also broke down the targets for the full critical components that are required to produce that ROA; the margin, the non-interest income to assets, the non-interest expense to assets, and net charge-offs. Since in ordinary times charge-offs are really the primary influence on provision expense. In mid-2014, in conjunction with our 2014 to 2016 strategic plan, we increased our ROA target range by 10 basis points to a range of 1.20% to 1.40%. In conjunction with our recently completed 2015 to 2017 strategic planning process, we decided to leave the ROA target as is, but as it is related to the four individual components, we decided to increase the non-interest income to average assets by 10 basis points, and decrease the target range for the net interest margin by 10 basis points really to reflect the current operating environment. I think as Harold has already pointed out, for some time we have been operating in or better than all those target ranges for everything except for the expense to asset ratio, and really over the last couple of quarter with strong asset growth in the third and fourth quarters in 2015 adjusting for merger-related expenses we are now inside the range for the expense to asset ratio as well. So overall, the fourth quarter was another great quarter with top-quartile profitability and efficiency, and record EPS excluding merger-related expenses. Hopefully that provides a good look at the fourth quarter in 2015. Now I want to turn it back to Harold to talk a little more about our incremental investment in BHG.

Thanks, Terry. I won't spend a lot of time on the slide, but here are some key points with the incremental BHG investment we announced last night. We expect the transaction to close in late-February or early-March. We are paying approximately $114 million for 19% interest, compared to $75 million payment for a 30% interest that we executed last year. Obviously, the value of BHG has increased significantly in the last 12 months as they have seen significant growth in all key financial categories, which we'll talk about here in just a second. The BHG is also been the objective of a few interested suitors over the last several years. That said, the transaction price to the 19% we believe approximately it's 10 to 12 times after-tax net income, which we consider to be a reasonable price. We also have full year lockups, which both we and BHG believe are critical to our partnership. We can now invest the time in investigating those new revenue channels for the benefit of both firms. More details about BHG's growth, which was exceptional in 2015, as you see, they have growth correlation between origination growth and revenue growth, but that growth was eclipsed by the growth in pretax net income at greater than 70% for 2015 and plus it's all organic growth. Going into 2016, their pipelines remain in great shape. Lastly, this is an analysis of the various rate categories for their loan growth, just looking at the total loan FICO scores in the low 700s, $1.6 billion in balances with an average rate of 15.7%. It's obviously a niche business that's focused on certain market segments that require that they spend less time dealing with loan applications and lenders along with the rapid response to their applications and funding requirements. With that, I'll turn you back over to Terry to wrap up.

Okay. As we wrap up, I'd like to put a bow on 2015 and spend a few minutes on our longer term outlook; 2015 was another wonderful year for our firm. We continued our record for double-digit EPS growth. We actually exceeded a $2.40 per share earnings budget that we had going into 2015. And so I really want to try to focus on this and bring some clarity to it. Our 2015 budget or target represented a 20% growth rate in earnings per share over 2014, which I think says something about our aspiration, and then we exceeded that 20% growth target by roughly 50%, which says something about our execution. So I think we set big goals for our associates, but we developed action plans and executed against them. In addition to achieving our targeted our ROA, all four components, margin, non-interest income to assets, non-interest expense to assets, and net charge-offs, all are inside the long-term target rage. Here in 2015, we had a plan to transition away from the loan floors, liability sensitivity that served us so well during low rates to a slightly asset sensitive position. I don't think we will ever be taking big bets on our balance sheet sensitivity. So I think we're exactly where I'd like to be right now. Operating leverage has been our theme for the last three years. We saw our efficiency ratio improve in 2015 to just 50.6% adjusted to merger-related expenses, almost exclusively based on sustainable organic revenue growth. I've already spent some time on our Board's philosophy regarding targeting top-quartile performance, and we believe in 2015, we had top-quartile profitability, top-quartile asset quality, and we believe that resulted in top-quartile total shareholder returns. So all in all, it was a great year. Looking after the next…

Thank you, Mr. Turner. The floor is now open for your questions. [Operator Instructions] Our first question is from Tyler Stafford with Stephens. You may begin.

Hey, good morning guys.

Hi, Tyler.

Hey. Just a question on BHG, so it looks like they grew revenue and pretax income by almost 50% year-over-year, so they have seen some pretty phenomenal growth in '15. So I was curious if you could give us any insight into how much growth you're assuming in your 2% and 4% increasing guidance in '16 and '17?

Yes, Tyler, it's Harold. Obviously we're not expecting 70% earnings growth this next year, our pretax growth. I think you ought to marshal that thing down, but it will be a number that they believe they will outgrow us. So it's still a pretty healthy number, but it won't be nearly that 70%.

Okay. And then moving over to the margin, I was hoping we could get some color on the higher loan yield this quarter, can you size up how much of that 13 basis point increase quarter-over-quarter was due to accretion, prepayment fees versus kind of the impact from higher rates?

Yes, the higher rates didn't impact us that much in the fourth quarter, or the Fed move, I'll say that. We did see -- January 1st we have about a half a billion dollars in LIBOR-based loans that did re-price. So we are pretty optimistic about the impact going into 2016, and I think we've mentioned in the press release we've got about 2.1 billion that's re-priced here since the rate increase. I think what did happen in the fourth quarter is obviously the discount accretion, and that's probably contributing about three to five basis points to the margin. All the purchased accounting stuff is difficult to kind of get communicated, and what we believe is that partial accounting probably helped us out in 2015 by about a penny.

So in your commentary for a -- to be able to hold the NIM flat in the first half of the year, does that assume a fairly equal level of accretion for the first couple of quarters from what you saw in the fourth quarter?

Yes, that accretion number will come down over the year. The first quarter will see some modest decrease, and then it will just keep on coming down.

Okay, all right. Thanks, guys.

Thank you. Our next question comes from Kevin Fitzsimmons with Hovde Group. You may begin.

Hey, good morning, guys.

Hi, Kevin.

Hi, Kevin.

Hey, Harold, just wanted to touch on the margin outlook in a little more detail, I think what you said was you thought you could hold the margin in the first half of the year and -- but you said you forecasted a couple rate moves. So what -- assuming those come as expected, what are you guys thinking over the balance of the year and -- if they come, and then what if they don't come? Thanks.

Yes, I think if we get the rate increases, we'll be in good shape. I don't necessarily think we'll see any kind of drop off in the margin. It may go down a couple, three ticks. If we don't get the rate increases, we might see anywhere from $1 million to $4 million in kind of net interest income kind of dilution. So we're anxious to see what's going to happen there and try to figure out ways to overcome it if we feel like that those rate increase won't happen.

Okay, thanks. One quick follow-up, Terry, on last quarter's call, I think the subject came up about crossing the $10 billion threshold and I believe what you said back then was you are comfortable with crossing it organically. And the size you are now and the clip you guys are growing, that seems like it's something that isn't too far out there. Just curious if there's -- what your thoughts are on that between organic growth and M&A that comes up, because it seems like you're not really focused on large M&A to vault you over that. It's more like end-market [ph], small M&A. And then just as a side note, how you are thinking about Durbin, because in your fee commentary it sounded like you guys are making some pretty deliberate moves to beef up certain areas, such as interchange that aren't getting directly impacted by Durbin. Thanks.

Yes, I think -- Kevin, I think you basically have it right. From 30,000 fees, what I have tried to communicate is it does not make sense to me for us to go out and try to do some transformative acquisition to avoid the impact of Durbin. When I say that, I am not acting like that wouldn't be a good idea, and if that happens, then that's fine. What I am really trying to communicate is we're not going to let something like that control how we run our business. We've got a pretty specific business model that works extraordinarily well. It produces organic growth at an outsized pace, and so I am comfortable with that. We have done considerable analysis on the impacts across the $10 billion, and Kevin as you know, I mean there are three or four different variables that would affect your P&L. The largest component of which is the foregone revenue associated with the Durbin Amendment, but you've got incremental FDIC premiums, you've got costs associated with DFAS, and so all of those different P&L impacts as you know come in at different times based on when you cross and the different measurement periods and all that. I just rambled through that to say I think we have a good understanding of exactly what the P&L impact is against a variety of scenarios and how we would cross that threshold. And so, I don't know if I can be more clear than this, I don't object to just growing organically through it, and I am not about to go out here and manufacture some transaction just to say out-slick [ph] the Durbin Amendment. On the other hand, I don't think it's unreasonable to expect that we can -- that we'll do as you pointed out, end-market transactions, and as we would analyze those, it's something -- and as we have analyzed those, when we look at that, we look at net out the impact of the Durbin Amendment and other cost associated with crossing $10 billion and still look for meaningful accretion on a net basis in those transactions. So I don't know if that's helpful to you. I think some people get frustrated with that answer, but I guess all I want to communicate is we're going straight ahead. I suspect we got opportunities from an M&A perspective that will be useful to us as we across that threshold, but I do just want to communicate that as a company we don't run our company based on the short run phenomenon and those kinds of things. We've got a strategy that I think works extraordinarily well. We are running straight ahead.

Okay, great. Very helpful, thank you.

Thank you. [Operator Instructions] Our next question is from Brian Martin with FIG Partners. You many begin.

Hi, guys.

Hey, Brian.

Hey, Harold, can you just comment -- I guess maybe I missed when you were talking about the cost of funds and deposits, just your outlook there just as it pertains to the earlier discussion on the margin?

Yes. We're not looking for any kind of meaningful increase in our deposit funding cost. We've experienced an increase primarily because of the acquired franchises, but we think we've got some opportunities there to work with their depositors. Since the rate increase, I think we only had a few depositors where we've given some of kind of marginal increase too, but it's really not impacting us currently. Now granted when we get another rate increase or even a third rate increase, those we're obviously going to have to increase some betas on that one.

I got you. Okay. And then just the efficiency ratio and the expense outlook, and I guess it sounds as though the -- even though you're at kind of an all-time low here on the efficiency ratio, the expectation would be that that could be a bit lower from the current levels going forward if all things go according to plan?

Yes, that's exactly right. We think we've still got operating leverage. Here in 2016, a big event coming up is this CapitalMark Technology Conversion that's scheduled for the middle of March; that will be helpful. Plus, we did a -- we noted in the press release we hired 36 people last year. A lot of those people came on at the last part of the year. I don't know if we'll get 36 this year, but the pipeline remains very active. So I think we'll get our fair share, but a lot of those people that we hired last year are now building their books. So the investment has been made, now we hope to reap the benefit of it.

Okay. And then just the loan growth in the quarter, fourth quarter, can you give some color by region where that came from? I mean was one market stronger than another or pretty much strong across the board?

I think it will be obviously different for each market. I will say it this way, Nashville had a great year, Knoxville had a good year this year, not like what they had in previous years, but they had a really strong loan growth year. Chattanooga had a phenomenal year, and Memphis, they were up at the -- I think Memphis and Chattanooga were both up 15.5% over the prior year balances. Chattanooga was more than that. Memphis was less, but we've now got a good solid core group of people in Memphis in all areas C&I, private banking, and CRE. So they are expecting big things over there.

I got you. Okay, that's all I have. Thanks, guys.

Thanks, Brian.

Thank you. Our next question is from Nancy Bush with NAB Research. You may begin.

Good morning.

Hey, Nancy.

Could you just talk a little bit about the CRE initiative, what you -- if you could just sort of give us an idea of kind of the average loan that you're booking right now, if there is such a thing? Just give us a little bit of color about what you are seeing and whether you expect that's going to be changing over time as the initiative goes on.

Yes, I would say, Nancy, I think as we've tried to indicate here, some people ask questions of how you are expanding CRE, aren't you late in the cycle doing that, those kinds of things. And so, I think it is important to communicate and be clear about exactly what our strategy is. Think about what we've done in the C&I segment, I mean what we did was basically line up and aim at the large regional banks and try to take the best clients in the market away from the large regional banks who had them all when we started the company. And so, we've become the lead bank to the leading owner-managed businesses in our market. And so I just say that so that's exactly what the strategy in CRE. There are all kinds of ways to approach the CRE business and I am not being critical of any of them. I mean some people focus exclusively on projects. And if they find projects they like they will do them, all that kind of thing. That is not what we do. What we do is focus on the best developers in our market. And as you know, with real estate developers, they generally have more than one bank, and so it's not difficult for us to get in their bank group, and frankly, it's not that hard for us to become their lead bank. And so, that's what we're doing. And my point about that is those -- the top developers in the market came through the last recession and did just fine and they will do fine in the next recession and so forth. So again, we think that game is about client selection, and we think we're in a position better than the other large regional banks in our market to know and serve those large and successful developers. Boy, it's hard when you say give me an average transaction. I mean I am not sure that would be insightful because we've got stuff on the low end and stuff on the large end. I think if you said, Terry, tell me stuff you like to do, what you're doing a fair amount of? We do a fair amount of build-to-suit type transactions for large national -- that are for developers that work for large national firms. So in other words, build-to-suits for Walmarts and those kinds of things, Tractor Supplies and so forth where you've got major credit tenant doing expansion, and so, we finance the build-to-suit. If you said tell me the single most frequent or like transaction you do, that would probably be it.

Okay, great. And just one other thing, Terry, I mean you're in close touch with your clients, and Nashville along I guess Greenville, Spartanburg, and Atlanta, is one of the markets in the Southeast that has a lot of international relationships and gets a little bit more impacted by international developments. Are your clients scared right now? I mean with all the stuff that has been going on early in the year, which seem surprising to everybody, is anybody pulling back from any deals or expressing any panic at this point?

I don't think so, Nancy. It's frequently talked about and I don't think anybody likes to see some of the pullbacks that we've seen. Of course everybody is going to talk about pullbacks in stock market. Maybe talk about pullbacks in oil prices and so forth, but I have not seen anybody act like, hey, I am not moving forward on something I intended to do. Or, I don't hear people that have a negative outlook about 2016. I think it is more the same. My belief about owner-managed businesses or let's just say my belief about owners' mindsets, really over the last four or five years, and I will maybe just say since coming out of the recession, when we get out of the recession, everybody got off the panic button and that's a good thing. And so that's a modestly optimistic outlook, but I have not felt owners were tremendously optimistic over the last four or five years, meaning that they -- I guess they say they're not on the panic button, but at the same time we have not seen them wanting to take extraordinary risks in terms of adding plans, adding shares, all those kinds of things. So I think 2016 feels like more of the same to me even though some of the macro numbers are bouncing around in sort of a wild way.

Okay, all right, thank you.

Thank you. Our next question is from Peyton Green with Piper Jaffray. You may begin.

Hi, yes. Good morning. I was wondering maybe if you can talk a little bit, Harold, I just want to make sure did you mention that it was 1 million to 4 million in net interest income dilution, if the Fed did not hike…

Yes, that's where we think we might end up in 2016 against our plan if there is not these rate increases in midyear, and the one at the end of the year is really not impactful at all.

Right. Okay, so it's really just the June -- okay, but then of the 5.5 million in interchange and other non-interest income, how much of that is debit card interchange versus what might be credit card swipe?

Yes, the debit card interchange, and I'll just get to this quickly, because I think I know where you're heading with your question. The Durbin Amendment would probably impact us by $6 million to $7 million currently. So if we -- and that's losing about 85% of our revenue base.

Okay, 6 million to 7 million annually, okay. All right, great.

And if I can just carry on about that, Terry mentioned a $10 billion, and rightly or wrong, the way we look at that is you know, I think our street estimates next year have us was about 20% earnings growth or somewhere in that neighborhood, if you consider all the $10 billion implications, FDIC insurance, DFAS, all of those things, we think we got about $8 million kind of number that we're dealing with and that's about us, somewhere around $0.12 to $0.14 a share, so that would be about 7% or 8% earnings growth. So the way we looked at it is $10 billion is going to cost us about four months of earnings growth.

Got it, okay. All right, great, and then maybe I mean how -- I guess Terry you mentioned the customer base feels pretty consistent with how they felt about business opportunities, what would make you change your mind in terms of the balance sheet and in terms of the asset sensitivity? I mean do you feel like this is kind of where you wanted to be all long, and so those businesses are good kind of status quo from this point forward or would you come more towards neutral or is this really is neutral?

Honestly I think the best description Peyton is that we're modestly asset sensitive. That's a good spot for a commercially-oriented bank, that's a natural spot for us to be in. You know our numbers very well. I mean we basically deployed floors as the principal tool. I mean we had several floors principal tool that we used to really switch the natural make up of our balance sheet to a little more liability sensitivity in that down market. And I think it served as well. I can't recite the numbers, but we made a lot of money on those floors. We basically have moved back to a comfortable spot, a spot we'd like to be in. It's modestly asset sensitive. And as I've said in my earlier comments, again, I think Peyton you have watched as a long time; we're not balance sheet bettors, I mean we don't do a lot of that, we might lean a little to the left or little to the right, but we're not ever going to make a big bet on asset sensitivity. So I like the spot that we're in, and I don't foresee any alteration to it in the foreseeable future.

Okay, great. Thank you very much for taking my questions.

Okay. Thanks, Peyton.

Thank you. Our next question comes from Dan Furtado with Philadelphia Financial. You may begin.

Hi. It's Jordan in for Danny, actually. Can you talk about the loss provision in the quarter, big, up a little more, is there any one time thing in there, is that kind of the run rate going forward?

Yes, there was no big individual loss in the quarter, Jordan. It's I think the fourth quarter probably had some additional consumer credit in there that we took losses on. Also, and the way we look at is just there is all kinds of discussion about how you're supposed to look at this provisioning number. The way we're trying to integrate CapitalMark and Magna is their loans are constantly renewing, and so as those loans renew I'm recognizing some accretion income from their loan book in the margin, but as those loans come on to my books and now they're -- now I get to call them Pinnacle loans for lack of a better term. We're going ahead and putting up some provision expense for those credits. And so, during 2015, my folks are telling me that number came in at about $3 million in additional provisioning cost because of the CapitalMark and Magna loans that we've now gone through our renewal period with and now the accretion income is gone, so now we've got provision expense associated with. So anyway, that may not be the right way to look at it, but that's the way we're looking at it.

So, is that -- 3 million is going to be the next couple of quarters as well, or is that just going to be some…

Yes, I think we will continue to do that over the next few quarters. I'm not sure that we will be at $5.5 million in provision expense in the first quarter. Right now don't look like that.

Okay, thank you.

All right.

Thanks, Jordan.

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day.