Good morning, everyone, and welcome to the Pinnacle Financial Partners’ Second Quarter 2018 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’s website 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 maybe constitute forward-looking statements. All forward-looking statements are subject to risks, uncertainties, and other factors 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 risks 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. The presentation of the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP measures to the 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, Daniel. As we’ve done in these quarterly earnings call for several years now, up again with this dashboard which is intended to give a quick snapshot of our performance during the quarter and outlines not only the absolute level of performance during the quarter but trends, which are so important to a growing company like ours. These measures are all presented on a GAAP basis. On this slide, I think we want to focus on revenue growth, that’s one of our key themes for today’s call. In the chart on the top left, you can see total revenues continue to set a new high each quarter, up 5.2% on a linked-quarter basis or 21% in terms of annualized revenue growth during the quarter. Regarding our growth in balance sheet volumes, which is generally the best predictor of future revenue growth. Looking now at just below the revenue chart, the loan chart, organic loan growth during the quarter was an excess of $700 million, which is an annualized growth rate for the quarter of roughly 18%. So, second quarter was a dangerous quarter in terms of current revenue growth and an outlook for future revenue growth. Because of all the noises associated with the BNC merger, restructurings in conjunction with the tax law change in the fourth quarter and so forth, in some cases the non-GAAP measures might better illustrate the relative performance of the firm. So on this chart I'd like to focus first on EPS, net of merger-related expenses, that was $1.15, which is in the chart on the top row in the middle. It’s up roughly 37% over the same quarter last year. And then immediately to the right on the first row, the tangible book value per share chart, which paints a nice picture of…

Thanks, Terry. Revenues for the quarter were up $11.5 million from the previous quarter ending at $230.2 million. While we grew those revenues, we also again experienced a decrease in our quarter-over-quarter efficiency ratio, which is again, are pleased to somehow we create operating leverage around here. Net interest income is up from the previous quarter of 2 -- about $7.8 million, reflecting an annualized growth rate of 18%. Much of this was attributable to increased average loan balances and also improved loan yields resulting from the recent interest rate hikes. The impact of fair value accretion increased $700,000 during the quarter to $16.1 million, which is above where we expected to land in Q2. We anticipate decreases in discount accretion in future quarters as the level of acquired loans and recent merger becomes less impactful and post-merger prepayments slowed. Best guess at this point is that fair value accretion is likely to remain around $55 million for 2018 and perhaps $13 million to $15 million in the third quarter. At the end of June, we’ve got about $130 million in total loan discounts remaining on our balance sheet. The dark green line on the chart denotes our non-GAAP revenue per share. We reported $2.64 of adjusted revenue per share in the second quarter of 2017, and are reporting $2.97 this quarter, so we’ve grown adjusted revenue per share by roughly 12.5% year-over-year. Obviously, our goal is continually increase this measurement. As you all know, it’s a lot easier to grow earnings per share if you’re growing revenue per share as we expect continue to do so as we move through 2018 when we’re growing balance sheet. This is the new slide, but again focusing on revenue per share growth using trailing 12-months as the basis for the amounts. Two…

Okay. Thanks, Harold. As a reminder, since the beginning, when we described the deal rationale we’ve always talked about the fact that BNC had a double-digit growth CRE platform and then our goal was to not disturb or diminish that in any way. But in addition to that, both known to that high-growth C&I platform, we’ve certainly have the impact of steepening the already high growth rate. To that end, we've communicated our intent to hire roughly 65 C&I and private banking relationship managers in the Carolinas and Virginia over a five-year period of time beginning in July of 2017. To be on that phase, we would need to hire 13 in the Carolinas and Virginia by July of 2018. So you can see, having hired 19, we're roughly 46% ahead of schedule, in terms of hiring C&I and private bankers in the new market. I want to comment, that it's not just about the number hired, but qualitatively, Rick Callicutt and his team have done a fabulous job to seasonal market vulnerabilities to hire some of the best bankers in their markets, while the sources for new hires has been broad, mainly we have hired from a good number of different banks. Clearly, the majority of the new financial adviser coming from those large retail national players, we'd like to compete. And impressively, the average experience level of these 19 commercial and private bankers is 24 years, which is consistent with Pinnacle’s long-term results of hiring experienced bankers with large client followings. And so, I would do on the success criteria we recently laid out. Year-to-date, in 2018, it appears to be working like we're good on the board. In the first half of 2018, we saw a continued double-digit growth in the CRE platform and meaningful acceleration in…

Thank you, Mr. Turner. The floor is now open for your questions following the presentation. [Operator Instructions] Our first question comes from Jared Shaw with Wells Fargo Securities. Your line is now open.

Hi, good morning.

Hi, good morning.

Maybe just start maybe on the funding side, great color around that. When we look at the reduction in borrowings this quarter, did that entire $400 million – was that just shifted over to the wholesale CD side or was that something less than the growth in CDs?

Jared, can you repeat the question? I’m sorry.

Sure, yes. When you look at the borrowings, the FHLB borrowing declined the $400 million there, was that replaced entirely by sort of that noncore CD line, you talked about with the munis? Or was it less than the $400 million in that transition?

Yeah I think it was a little bit less than the $400 million, but not a lot less, Jared. But if you look at the average balances on the Federal Home Loan Bank borrowings, they stay pretty flat for the quarter. So that transaction happened at the end of the quarter. Does that make sense?

Yes, absolutely. And then what’s the rate differential between the new CDs versus what you paid off on the FHLB, if you could provide a little color please?

That was about 11 basis points.

Okay, great. And then on the fee income side, I guess, first, in the quarter, you had a nice little jump there in other fee income. Anything there that we should be aware of or is that a good base going forward? And then sort of corollary to that, longer-term, I see on Slide 17, you brought down the target for fee income, but longer-term, should we expect in out years that fee income goes back to the level where we saw sort of pre-BNC?

Yes, I mean, well that’s effectively the goal was to try to give the C&I platform built in the Carolinas and Virginia and that comes with the deposit fees, and investment fees and all the other ancillary services. Yes, we did have in the second quarter, a reevaluation of some joint venture investments. And that contributed about $2 million to that other non-interest income number.

Great, thank you very much.

Thanks, Jared.

Thanks, Jared.

Thank you. And our next question comes from Stephen Scouten with Sandler O’Neill. Your line is now open.

Hey guys, good morning.

Good morning.

Terry, great color on kind of your expectations for a continued double-digit loan growth. I do have a question relative to the kind of 18 percent-ish growth we’ve seen year-to-date versus maybe what’s historically been more like 12% to 13%. Has there been any sort of composition change to date, now that you guys are a larger bank, are you doing larger loans? Or is this really just a manifestation of all that impressive hiring activity over the last few years? And can you kind of reconcile where you really think we might fall within that kind of historical range versus what we’ve seen year-to-date?

Yes, Stephen, I don’t think there’s any change in the personality of the lending, meaning, our company continues to be focused on being a C&I lender. We’re not doing hard shared credits. I think Harold has already reviewed the really granular nature of the loan portfolio, average ticket sizes that we’re doing, and so forth. As you all know, I mean, every ticket is not worth the averages, but you’ve got an average that low income from not doing large and hard shared credits. I don’t think there’s any personality change from that perspective. I do think that it is a fair representation that the principal driver has been the rapid success of hiring great bankers out of that large books business and move those loans more quickly than others can do. So I hope I’m answering your question.

Yeah, it does. I mean, I guess do you think this above a 15% rate is sustainable? Or are you guys are still comfortable with the kind of double-digit messaging?

See let me say this we work hard to try to deliver whatever we say. I feel comfortable talking about mid-double-digit range that sounds right to me. If you want to know the truth, if you were – I would say that we’ll be at mid-double-digit range from say 14% to 17% or some, I mean, that sounds like mid-double digit to me, so I go mid-double digit guidance range. It seems like there is some prospect that we can do better than that, but again, I’d rather just stick with the guidance that we’ve given.

Perfect, perfect, okay. And then one other one from me, really is any color maybe Harold that you can give around the deposit betas you’ve seen on the nice core deposit growth you had versus maybe the noncore stuff? Is that a number you have at all? I’m just trying to decipher how much of that 23 basis point move was kind of core versus noncore and how we can think about that quarter-over-quarter moving forward? If that 23 bps we saw in 2Q is likely the pace we’ll see moving forward or some of that was pulled forward into this quarter?

Yes, the beta along the wholesale deposits is significantly higher than the core deposits. I’m looking for my information on that, but I think it is somewhere around, call it 17% kind of percent on the core book versus, call it, I don’t know, 60% on the wholesale book. I’m trying to figure out I’m trying to gather my thoughts on what I’m looking at cycle-to-date or quarter-to-date. The quarter-to-date numbers are much higher. But that will probably be kind of the relationship between the core and the wholesale book Steve.

Okay, okay. And I guess as a follow-up to that, maybe, with the big deposit growth you put up this quarter, I mean, do you think you can mitigate some of that pressure in the subsequent quarters and kind of keep the core NIM flattish from here, or could we see downside pressure?

I think we’ll see some downside pressure in the core NIM. I don’t think we’ll see what we saw this quarter. But you’re right, we had a great quarter. We had a great growth quarter in deposits. So I’m not going to say we don’t feel like we can – I’m not going to say I’m always like Trump like, I don’t know. I’m not going to say that we’re going to take the foot off the pedal deposit growth with the sales force. They’re still going to be focused on growing deposits, but the growth quarter we had in the second quarter does give us some degree of flexibility as we go into the third quarter and looking at deposit growth if that makes sense. The other thing I’ll add to it is, I think, we found where the pressure point is on pricing. I’ve mentioned this to our board yesterday. It doesn’t appear like there’s been this kind of this unlimited appetite by depositors that require an ever escalating deposit price. I think to our benefit the large caps have kept their deposit pricing lower which gives us an opportunity to secure deposits from some of their depositors at an obviously a little bit higher price but that price is not escalating dramatically. Does that make sense, Steve?

Yeah, that’s really helpful here. Thanks so much. And guys thanks for the color and congrats on a great quarter.

Thank you.

Thank you. And our next question comes from Catherine Mealor with KBW. Your line is now open.

Hey, good morning everyone. Just a clarifying question on the way you talk about deposit beta, Harold. So, when you say you think you have a 50% deposit beta for this year, you’re thinking about that on a cumulative basis or on a basis just for this year?

I think that’s a basis for this year, and we’re looking at effective fed funds rate when we talk about that, Catherine. So yeah, it was for this year.

Okay. And so that to Stephen point, it would almost suggest that the beta, I think when you get – I think when you get the full benefit for June and we get another one, let’s say in September, then the actual beta should decline from this quarter – from the level that we saw this quarter. So linked quarter, we may not see over 20 bps increase in interest-bearing deposit cost like we saw this quarter. Is that a fair assumption?

Yeah. We’re not expecting another large increase in deposit costs like we experienced this quarter, but I’ll tell you that in context that if that’s what we need to support loan growth and support this pipeline, we will have that kind of deposit cost increase. But we’re not expecting it. I’ll say it that way.

Got it, okay. That’s helpful. Thank you.

Okay.

Thank you. Our next question comes from David Feaster with Raymond James. Your line is now open.

Hey, good morning guys.

Hey, David.

C&I growth has been tremendous and competition has picked up, and this is a testament to your – you’ve executed exactly as you would have thought and more than we have given you credit for. Could you give us some pulls of what you’re seeing in the C&I space? What segments you’re seeing the most opportunity? And maybe is there any irrationality in certain segments given increased competition?

That’s a great question, but I think the answer is we continue to – certainly in the C&I book to have a well-diversified portfolio. If you can look back there in the past earnings calls slides, when we break down the portfolio components and so forth, it’s an extraordinary well-diversified book. I don’t think we find that we’re growing the C&I category, because there’s something inherently going on in that sector that’s creating that growth. I would just take you back to your older comment, where that growth comes from is it’s coming from the relationship management. So, if a relationship management of the private banker, who is concentrated on doctors in terms of building a deposit book, then that’s what shows up on our balance sheet, it is not a sort of macroeconomic thing that’s causing deposits from doctors to occur it is that we are a banker, who has a concentration among doctors. And so I’d say the same thing would apply as we hire C&I bankers, some were specialties of this phase was in franchise lending or different things. And so you’ll see some tapering up in whatever category they are moving. But again, we don’t see it tied to any particular economic factor that’s causing surge in one category versus another.

Okay, great. And then you talked about, that’s probably on the sidelines for M&A in near-term and highlighted the success that you’ve had on the de novo front. Could you just talk about your appetite for de novo expansion in near-term? And whether Atlanta is still a market that you’d be interested in? I know you’ve talked about that in the past, but maybe given the M&A activity there, it’s more competitive or maybe there’s some dislocation opportunity that you can capitalize on? Just your thoughts there.

Well, I would say that as I’ve mentioned, walking out, I’d say, they’ll target mortgage. We’re still interested in all of those markets. And I would say that just in terms of attractiveness, the way we would evaluate the attractiveness of the Atlanta market, given what you just said is not that it’s more competitive, but there’s more opportunity there, there’s more vulnerability there. Generally, what happens when there’s M&A consequential transaction and when there are several of those transactions, that creates a lot of vulnerability for banks and they’re tied to their people, which as you know is what we try to seize on. So, I would say just from a general attractiveness standpoint, Atlanta would be highly attractive from that perspective. But again, I want to be realistic. My bet is if we’re talking three or four net years from now, you’re going to say that we’ve done a lot of stuff and look exactly like what we have just told you what we’re going to do. We’re talking nine months from now, 12 months from now, something like that, we probably would have done a lot of those things, I’m just trying to give you the basic practicality of where we are in discussions and all those kind of things that these things are likely to be a lot of that kind of activity in the next nine to 12 months.

Okay, great. Thank you.

Thank you.

Thank you. And our next question comes from Jennifer Demba with SunTrust. Your line is now open.

Thank you. A question, we’ve seen a couple of banks have some health care loan issues this quarter. Wondering if you guys could clarify the size of your health care portfolio? And give us some color on the components, whether it be corporate loans, hospital loans, doctor’s practices, et cetera?

.:

Yeah. I think so, I think so, I mean do you have any just hospitals or I mean, would you put – you wouldn’t put, obviously, assisted living and stuffs like that senior housing. Would you put that in the bucket too?

Let’s see…

I don’t think we’ve got that level of detail with us today. We’ll have to hold that out. I know we have a view of independent hospitals in middle Tennessee. I’m not sure about what’s going on in Carolinas or Virginia. But it’s – I think, Terry has already mentioned, we’ve got some loans to some of the larger hospital chains here in town. And we go through the rigorous sneak reviews and look at what their S&Ps and all that might be before we do those things.

Okay.

So right now, we don’t have any issues with the health care book.

Great. Thank you. Nice quarter.

Thank you.

Thank you. And our next question comes from Will Curtiss with Piper Jaffray. Your line is now open.

Hey, good morning guys.

Good morning.

I wanted to see, Harold, maybe can you help us out on the expense side and kind of how we should think about the third quarter, just given the hires that you made during the quarter? And I would assume it's not fully reflected in the current base so just given the timing, but just curious your thoughts on the expense base going forward? Thanks.

Yeah, the expense base I think we’ve got a pretty good run rate going on. It all depends on, our intention is to hit our numbers this year. So if we can hit our numbers and also continue to fund the incentive plan, that will be what causes the expense base to healthy. So absent that the expense base ought to be fairly flat going forward. We've booked about $7 million in incentive expense this quarter. That's up from about 5.7 in the first quarter. So and again we increased our kind of our target range from 75% to 80%. So as we go through the year, hopefully, we can increase that number even more. But again that will be a burden to the expense line.

Got it. Okay. And then maybe going back to the fee income discussion and kind of the outlook for BHG, I think you still expect 12% to 15% annual growth, if that's correct. Which I guess would imply kind of a decent ramp here in the next couple of quarters. So just how should we think about the growth trend for the rest of the year, does it look sort of like – last year where you had a big jump in the fourth quarter?

Yes, I think we're not anticipating anything different this year. They run a bunch of sales campaigns in the fourth quarter. We have a feeling they'll do likewise this year. Our business flows are good. They've got a lot of banks want to buy their credits, they're warehousing a lot of loans on their balance sheet that they intend to release periodically. So yes, we're still anticipating 12% to 15% growth and it will probably be in – more so in the fourth quarter than the third.

Okay, great. And then just real quick, do you have what the core loan yield was this quarter? I think last quarter, it was 4.50%.

I do not have it with me. I've got it upstairs. I'll get that for you in a little.

All right, thank you very much.

Thank you. And our next question comes from Tyler Stafford with Stephens. Your line is now open.

Hi Terry and Harold.

Hey Tyler.

So my question is on Slide 34. So that bullet point three mentions growing both loans and NII at a mid double-digit pace. So I just want to clarify if you believe you can organically grow NII at a mid double-digit pace annually despite those accretion headwinds and the funding pressures?

Yes, I think we've got a plan in place to do that. It takes a lot of loan growth to do that, but I think we've got opportunities.

Thank you, there is no more question.

Thanks Tyler.

Thank you. And our next question comes from Brock Vandervliet with UBS. Your line is now open.

Hi good morning. Thanks for taking the question. I just wanted to talk about loan growth. First of all, loan growth this quarter was excellent, above 20% annualized. It seemed like in the Investor Day, you talked about growth being this strong in the second quarter but curtailing off somewhat in the second half. Is that still the case or do you expect this level to continue into Q3 and Q4?

As far as absolute dollars, it's probably – our plan is that right now, the pipelines look like that we are going to be able to be close to what we booked in the first and second quarters and in the third and fourth quarter. We generally have a strong third quarter. And in the fourth quarter is kind of a crapshoot on sometimes it's the best quarter of the year and sometimes it's not. But I guess we've been very pleased with the first and second quarter loan growth to sit here and say, okay, we'll be able to replicate that in the third and fourth quarter. We're just kind of hedging our bets a little bit.

Got it, okay. And separately on the NIM guide, 365 to 375 and your NIM this quarter was 369, above kind of the center point of that range. Do we look at that as guidance really for the remainder of the year or do you look at that as longer-term?

I think it's the longer term number we’ve just gotten through our strategic planning effort. We do that for the next call it, 3.5 years. So and the way that kind of goes, Brock, is we set targets and we try to figure out how to hit those targets. And we try to rationalize what those results look like. And it seems like a 355 to 375 is a reasonable target for us over the next, call it, 3.5 years.

Okay, thank you.

Thank you.

Thank you. And our next question comes from Brian Zabora with Hovde Group. Your line is now open.

Thanks. Good morning.

Hi Brian.

Just a question on CRE, could you just talk about the current environment, some of the banks had talked about higher paydowns. Obviously, you generated strong growth but did you see kind of the same industry dynamic? And could you just talk about pricing and structure to those credits?

Yeah, I think, I guess, in terms of market dynamics, number one, paydowns, we do see relatively higher level of paydowns and we do expect that to continue before the perceived future. What I'll call alternative financing, long-term financing markets are wide open and generally attractive so that people are able to take projects and put them in permanent facilities at very low rates with no recourse. And so I think we and others in the industry are likely to see a high level of paydowns over an extended period of time in the CRE book. I think in terms of pricing and underwriting guidelines, again, I don’t say we're not on the panic button about that, but it is important to get this above the book that we have. Harold talked about the granularity of the CRE book and when you look at the construction book – and take residential out of the commercial construction book, we are less than a $2.5 million average ticket size. You can see we are dealing with the largely relationship based clients, in our market, we are not dealing with large national providers and we are not dealing with 40-storey buildings in downtown urban markets and those kinds of things. And so the client said the reserves and the product base that we provide them, I think works a little differently and so we, again, I would say it is more competitive from a project standpoint. I do see, from time-to-time, some underwriting slippage but we don't see that to be an overwhelming trend, again, in the segment that we serve.

That’s very helpful. And then just a question on deposit pricing is there any different dynamics in the Carolinas and Virginia versus Tennessee?

Brian, we've been kind of surprised that there's not a real big difference. I think the prices, or the rates that are being offered in both markets are fairly consistent. We’ve got a bigger noninterest bearing deposit book in Tennessee than do in the Carolinas, and that's one of Rick's objectives is to build that operating account flow over there. But for interest-bearing accounts, they're pretty consistent.

Great, thanks for taking my questions.

Sure.

Thank you. And our next question comes from Brian Martin with FIG Partners. Your line is now open.

Hi guys.

Hi Brian.

Hey, just one question, just Harold, that restructuring you did on the FHLB in the time deposits, I guess, that impact was not in the margin in the second quarter. So it's a favorable impact in the third quarter. Is that – understand when the timing is that happened?

Yes, it will be helpful to the margin in the third quarter. You’re right.

So I guess, a modest positive, is the way you think about it the given size of it? I guess, that’s quite fair?

Yeah, I think so. I think it is a modest positive. The way we’re looking at rates, and for sure, I’ll tell you there is some hotels to your backwards, but generally, the Federal Home Loan Bank, is they’re based on the shorter end of the curve, probably two years in NIM and the wholesale market was more advantageous on the longer end of the curve. So it was just one of those lines.

I got you. And then you talked about mainly doing another forward interest rate swap, I guess, what’s the – I guess, can you just talk about you would think about doing that? Or I guess, the timing of when that could occur?

So it could occur as early as the end of this week, first part of next week. We are talking about somewhere around a $300 million or $400 million tranche with a forward start into 2019.

Okay. And the other question I have, I guess, answered, the expense number, I guess, just think about it would be instead of camping the driver, I mean it sounds like most of the salaries are lot of that’s already kind of in the numbers based on, I think you said there’s about $1 million excess this quarter that was kind of non-recurring?

Yes. And we also had kind of a little bit of a heavier ORE expense number this quarter. So, but – and I think we had – there’s probably some more expenses scattered around the technology accounts that is all heavier than what we would normally see.

Okay. Okay, so the $1 million you quoted, Harold, that was kind of excess, does that include the oil? Or that does not include the oil, just to be clear on what was…

Does not.

It does not. Okay. All right. Understood. And then the last thing for me was the mortgage number in the quarter. I guess, I know there’s a lot of changes as you guys have kind of alluded to in the call, can you give us a little color how you’re thinking about mortgage going forward? Given like you said the rates have obviously impacted their performance to some degree, so.

Yes. We’ve lowered our expectations for mortgage in 2018. They’ve got a budget gap, I guess, I can tell you that. They don’t – we don’t anticipate filling that gap, but I think there’s building momentum in the Carolinas and Virginia. I think our mortgage guys here in Tennessee have partnered with the guys in Tennessee and Carolinas. And I think it will create some momentum over there, particularly going into 2019 that probably wasn't there or wasn't as strong as it was going into 2018.

Okay. That’s helpful. I appreciate the color guys. Thanks.

Thanks Brian.

Thank you. And our next question comes from Nancy Bush with NAB Research. Your line is now open.

Good morning, gentlemen. Two questions for you. Terry, you operate in states that have a higher than the national average emphasis on manufacturing , particularly auto manufacturing. And I’m wondering, are you starting to hear any kind of talk about tariffs? What the impact may be? Pushback? How it may impact growth, et cetera?

Yeah. Nancy, I think it would be fair to say that it’s a topic of discussion. But I think, in terms of clarity and people changes forecasts and doing those kinds of things, I have not heard any of that. Again, it’s just cocktail chatter at this point, I think.

Is there anything that you think you have to incorporate into your thought process, growth process, et cetera, any time in the very near future?

I really don’t, Nancy. I think, again, I just go back and reiterate, and it is one of the things that I love about the model that we run. What we do is, hire bankers and move their books of business, that’s where growth comes from. And if we’re simply reliant on the pure macroeconomics of the situation, but we would be subject to loss of volatility on our ability to grow kind of things will contract and then we expand and that would be the defining basis of our growth. But defining basis of our growth is really hiring people with large books of business, so I don’t expect, I think the question is, do you expect that contain growth or tempered down those kind of things, I think the answer to that is I really don’t.

Okay. Secondly, this is kind of multidimensional question. I mean, I’ve listened to your presentation this morning. And I think we’re all totally in accord with your growth and your methods and the mindset that you have in your culture there. But that’s not being reflected in your stock right now. And as you know, your stock is flat-to-down year-over-year. And down what, about 9% year-to-date. You're very cheap based on a P/E basis, much cheaper than it used to be based on a tangible book value basis. What are your thoughts about this? Is this – and I sense the certain amount of frustration in your commentary this morning, and I'm wondering if that's frustration that's directed at stock price?

Well, I hope that's was Harold sounded frustrated not me. I'm just kidding you, Nancy. Yes, I think it's fair to say, I am frustrated from the perspective that we've laid out a plan without being and continue to believe irrespective of what's going on with the short-term share price, is the right thing to do for our shareholders, is going to produce extraordinary long-term shareholder value and that's all I care about and that's what we are working for. So I'm not concerned about that. Nancy, if somebody asked me in one of the investor conferences and say, Terry, what are you going to do differently? And I'd say, look, we are above this, there's two things. One, you manage your fundamentals of business and two, you tell him the story. And the stock will hopefully take care of itself. So I'm making that bet in terms of what we're doing differently, I think, we will say we're not doing a tad down thing differently than we have done in the past, we are running straight line and we're hiring revenue producers, we are growing in outsized phase. We doing it on a sound basis. We are getting funded, all those kind of things. So we're going to continue to manage the fundamental. Maybe, I can come up with a better way to tell the story, so if I could do that and produce some improvement in share price volumes in short run. I would love to see that out but if you have ideas on what we are to be taking that we are not, please feel free to list them up.

Okay. I would ask, I mean, if this sort of cheap stock valuation continues, I mean, would you think about your dividend, and I get it, you've got other opportunities for growth than plowing capital into a dividend, but I mean, would you think about being a little bit more competitive and sharing a little more capital on the dividend side?

Well, I guess the answer is we'll think about anything and we'll think about everything. But if you said, Terry, tell me the truth, are you really want to delaying things and trying dividend, not meaningfully. I’m not saying, we wouldn’t concern – we’ve had increases in dividends. They’ve always been modest and I think that minus [ph] that would continue to be the case. I can't imagine that if we can grow our earnings at the rate we grow earnings at that we would to instead slow the growth and pay out dividend. It wouldn't make sense to me to do that. So, anyway, I'm sincere when I say, we talk about it, we debate it as you can imagine. Some people say, I have you been considering this alternative, or that alternative is also work but again, right now, I know it sounds contrite or what you hear in most of the call. We're excited about the growth prospects of this company and I have never seen an opportunity to gather mainline clients at a piece we are gathering them. We have produced the volumes and earnings over time so we're going to keep going down that path and my guess that will be – where that is appreciated.

All right. Thank you.

Thank you. And I'm not showing any further questions at this time. Ladies and gentlemen, thank you for participating in today’s conference. This does concludes today and you may all disconnect. Everyone have a wonderful day.