Good morning, everyone, and welcome to the Pinnacle Financial Partners First Quarter 2013 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer. He's joined by Harold Carpenter, Chief Financial Officer. Please note Pinnacle 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. [Operator Instructions] Before we begin, Pinnacle does not provide earnings guidance or forecasts. In this presentation, we may make comments which may 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. A presentation of 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 Financial's website at www.pnfp.com. With that, now I'm going to turn the presentation over to Mr. Terry Turner, Pinnacle’s President and CEO.

Good morning.. Today's conference call, similar to previous quarterly calls, I'll briefly review the highlights of our first quarter performance. Harold will review the first quarter in greater detail, and then I'll take some time to give my thoughts on our profitability targets and what we're working on for the remainder of 2013. I want to start today by revisiting our central messaging over the last few years. Basically, since the first quarter of 2009 in each quarterly conference call, we discussed our 2 primary priorities: number one, to reduce the risk in our loan portfolio; and number two, concurrently rebuild the core earnings capacity of our firm. We dedicated a number of associates to focus on the accelerated disposition of troubled assets, while a much larger group of our associates focused on building our customer base, growing our loan portfolio and growing core deposits. Credit metrics, such as net charge-off ratios, NPA ratios, classified asset ratios and so forth, have all shown remarkable progress over the last few years, and we anticipate continued gradual improvement going forward. But you'll notice last emphasis in this call on the credit metrics. I hope you won't assume that we're trying to divert your attention away from credit. The truth is we're very proud of our accomplishments in credit, but we're now substantially more focused on the opportunities that we believe are out in front of us. And so we'll focus more time this morning on how we continue building the core earnings capacity of the firm, which we believe is the key to driving shareholder value. I expect by now, everyone's aware that fully diluted EPS for the first quarter was $0.39. We're now operating at record levels on a good number of financial metrics. Thankfully, we believe there are lots of…

Thanks, Terry. Let me start with loans and more specifically, loan growth. Obviously, we are very pleased with the blue bars on this chart. In the period, loans were up 13% over last year. Our first quarter growth of $60-plus million exceeded the growth we experienced in the first quarter of last year, which was approximately $46.5 million. We remain optimistic, given our pipeline, that loan growth will continue during the remainder of 2013, and our relationship managers are very much out in our marketplace in pursuit of quality lending opportunities. Loan yields, which are depicted by the green line, remain a challenge for our industry. We're pleased with the 4.58% yield in the first quarter, but we anticipate continued yield dilution for the remainder of this year. Many banks are discussing line utilization. We began including it in the supplemental information chart on commercial line utilization. This chart reflects that our commercial borrowers line utilization has not fluctuated very much over the last several quarters, but it did decrease 54% this quarter. We now have approximately $941 million in available commercial line, up approximately 8.8% from the amount of the prior quarter and hopefully pointing towards future funding. Our belief would be that if confidence hopefully is restored, some of these commitments will turn into funded borrowings. As we mentioned in earlier calls, we and many other banks are experiencing unprecedented levels of payoffs. That is a significant headwind to loan growth and was again significant in the first quarter of 2013. During the first quarter, we recorded payoffs of almost $100 million. As we mentioned in our last quarter conference call, we anticipated the first quarter to be another quarter of significant loan pay-down. We continue to believe that the acceleration in loan payoff is largely tied to…

Okay. Thanks, Harold. As we discussed in last several conference calls, I believe we're substantially done with our balance sheet rehabilitation and are now able to focus more intently on the high-performing profitability and returns and seizing the rapid growth opportunities that we continue to believe exist for us. We believe they exist for 2 reasons. Number one, the lending capacity of our lenders that are currently on our payroll. There are a good number of those that are still relatively early in the consolidation of books of business. And then secondarily, the ongoing vulnerabilities of large regional competitors in our market. On this slide, we've got key strategic targets we've been discussing with you for several quarters. Harold alluded to them just a minute ago. You can see there at the bottom an ROAA target range of 1.10% to 1.30%. And then going back to the top, the key component parts, a NIM range of 3.70% to 3.90%, net charge-offs in the range of 20 to 35 basis points, noninterest income to total average assets of 70 to 90 basis points and noninterest expenses to total average assets of 2.10% to 2.30%. You can see that we made progress each quarter last year and again in the first quarter of 2013 against all of those targets. In the interest of time, I won't spend any time on the margin, charge-offs and the fees because, as you can see, we're already operating at the midpoint or better of all those ranges. And so the only item on the chart that's not at the midpoint, or better, of the target range is the noninterest expense, the total average asset number that Harold just reviewed with you. Maybe to reiterate the point that Harold made on the growth in loans, associated growth…

[Operator Instructions] And our first question comes from Jefferson Harralson from KBW. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division: I think you laid it out pretty well. I just want to get a clarification on the margin guidance. Are you -- is it -- is the margin guidance 3.70% to 3.90% or 3.70% to 3.80% for the rest of -- for 2013?

Sorry, Jefferson. It's 3.70% to 3.80% for 2013. The long-term target is 3.70% to 3.90%. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division: All right. Perfect, perfect. The -- you guys are running -- it's a capital-related question. You guys had talked about a dividend in the past, as the earnings power certainly ramped-up gives you more room to consider thinking about paying one. And you have a TCE over 9.5%. Can you talk about where you plan on running this TCE over time? And your thoughts on dividend.

I don't think we've changed our position from the fourth quarter conference call on dividends. It was interesting to see the CCAR results come out. So I think we are all anxious to see what Basel III is going to look like, and I understand it may be coming out towards the end of the summer. So I think that's the biggest thing that we're waiting to see to kind of maybe structure any sort of dividend potential for this firm. We've also got a $25 million holding company line that we'd like to see get eliminated over the next few years. I think we're paying about 3.5%, 3.30%, something like that on that line. So we'd like to see that go away as well. So dividends are something that we would like to aspire to get to, but right now, we'd like to see some more cards played with respect to capital -- regulatory capital constraints, so on and so forth.

And our next question comes from Kevin Fitzsimmons from Sandler O'Neill. Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: Just a few questions. On the jump, we saw this quarter in other noninterest income, I believe you attributed it to interchange and swap fees. Can you just characterize, is that something that we can expect to be a run rate going forward? Or is that kind of an unusual jump this quarter that you wouldn't expect to repeat next quarter?

The swap fee number was less than $500,000, but it was a meaningful increase over last year, which was almost 0. That number will be lumpy, and it's based on how we -- whatever transaction may present itself to us at the time. The interchange number, we're really pleased with our interchanges. We changed vendors last year midstream, which has helped. We've got more volume going through that pipe this year than we had last year. We've got some credit card products that's helping us this year. At the long term, where interchange is going to go, I have no idea. That seems to be a hot button, and so we're hopeful that we can keep it for a very long time. Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: Okay. Great. And then just 1 quick follow-up. I know you're being pretty clear about the margin guidance, that the margin is going to decrease from this level. Loan growth, it seems you feel that the substantial level of payoffs is going to continue, but you seem pretty upbeat about net loan growth. What does that all spell out for NII? Do you feel your balance sheet growth is going to be enough to offset the margin compression and that you would be able to grow NII throughout 2013?

Yes, I think we'll see some measured increase in net interest income for the remainder of the year. We talked a little bit about pretax pre-provision not growing very much in the second quarter. I guess what our messaging is that we're very cautious with respect to these loan yields. And we're seeing, in March, our loan yields were in the low 350 -- low 450s. So we're seeing that happen currently. Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: And what you're seeing in the loan yields, you would characterize that as just really what everyone else is seeing in the market and not some byproduct of the model of taking market share, right?

I think that's true, Kevin. I guess we, in these kinds of discussions, always try to make this point. If you're market share-taker, as we are, it's nearly inconceivable that you'll move it for a higher rate than they're paying at their competitors. So I think the thesis of your question is basically true. The loan rates are collapsing, I think, at our bank and other banks in this market and in the national market, and that bears on us in that we're not going to be able to move share for rates that are higher than what they're currently paying at their existing bank.

And our next question comes from Matt Olney from Stephens Inc.

On the capital question, I think you already addressed the potential for paying a dividend in the future, but could you also address your appetite for M&A in the future and, if you went down that route, what you'd be looking for in particular?

What was the last thing that you said, Matt? I couldn't understand the last thing.

If you went down the M&A route, what kinds of things would you be looking at in particular?

Okay. Yes. I think we have said for quite some time that I view this firm to be primarily built on an organic growth model. We believe we're in a fortunate position to take market share from large regional national competitors. And so that's what we spend the bulk of our time on is building and maintaining that growth engine. While M&A is not the principal mechanism by which we'll grow the firm, it -- I would be surprised, honestly, if you looked at us over a 2-, 3-year period, that we had not made any acquisitions. I believe there will be opportunities. This is perhaps an inflection point in the market where the pricing has an opportunity to align between the bid and the ask, which really hadn't been there for some time. And so I guess that just the long-winded way to say, I think there will be opportunities, and we ought to have an advantaged currency. And so there may be some opportunity there. So then the question is, what type of M&A might we do? The kinds of things that make sense to me, Matt, would be an end market deal in Nashville. And the thesis there is that you ought to get outside synergy since we like our distribution and might find an opportunity to put together an attractive deal in that vein. Similarly, an end market deal in Knoxville would make sense, really, for the opposite reason. The truth is, we've got about, round number, $650 million in loans in Knoxville with only 3 offices. And -- so we probably need some more distribution. Right now, the plan is, we'll just build it out on a de novo basis. But if we found an attractive opportunity that would accelerate our distribution, we would want to see that. And then I think the third category of things that might make sense to us from an M&A perspective would be fee businesses and, particularly, within that, wealth management businesses. You know we're in the trust business, we're in the brokerage business, we're in the insurance business. We make a little money in all of those businesses, but I don't believe we hit a satisfactory return threshold. They're important to us from a strategic standpoint. It's how we compete, it's how we move business from large regional banks. But it's -- we clearly don't have scale. And so if we were able to find opportunities to bolster those fee businesses and improve our scale, that would have appeal as well.

Okay. That's helpful, Terry. And then as a follow-up for Harold. Harold, it looks like the end-of-period securities balances increased for the first time in a few years. Is it safe to say that we'll continue to see the securities balance increase for the remainder of 2013? And if so, what types of products are you buying right now?

Yes. We're buying the same stuff we've always bought, mid-level mortgage-backs. And -- but basically, where our balances on securities, we're probably at the low point. We mentioned that at the last call that we were, again, towards the bottom on our securities book, primarily due to our pledging requirements. That said, we're looking hard at our securities book right now and trying to figure out what we want it to do for the rest of the year, and that would involve public fund deposits and how we approach that business as well. So I think for now, we're status quo on the level of our securities book and where it's going to go this year, but that's kind of a point of active discussion within our company right now.

And our next question comes from Mac Hodgson from SunTrust.

Just a couple of follow-ups. Harold, on the margin, I think you gave good detail. I was just curious if there was anything unusual in there related to prepayment fees, any impact from day count, things like that.

Yes, the word I get on that, Mac, is that it was a minimal impact this quarter. It's been larger in prior quarters. It might have been 1 to 2 basis points impact this time. The margin was -- the liquidity issue that we mentioned on the call really pumped the margin probably another 2 to 3 basis points. We just held fewer Fed funds and liquidity sources this quarter, which helped. And then the first quarter is usually a quarter where you'll see some uptick in margin.

Based on days.

Based just on the number of days.

And on the expense growth guidance you gave for this year, I think 2% to 3% kind of core, is that a reasonable long-term rate of growth for the company?

I think -- we believe, yes. This is -- the short answer is yes. We just have a kind of belief that investors are going to require operators to increase operating leverage consistently over the next few years. So we're probably in the mid to high 50s on efficiency ratio. We think that investors are going to require that number to go down a few more points before they get satisfied that you're a good operator.

Okay, great. And just lastly on -- if you could provide a little more color on the loan growth in the quarter. I know a lot of it came from commercial real estate. Could you give detail on how much of that was kind of investor versus owner-occupied, maybe product types and geography, Knoxville versus Middle Tennessee, and also just maybe where most of the paydowns came from, did it mostly come on the C&I side this quarter? Or did you also see a lot on the commercial real estate side?

Well, let's take the paydown question first. We had more paydowns in C&I than any other category. I think Harold sort of walked through the basic for contributors to that volume of paydowns a minute ago. Mac, I will say this, who knows what the future holds. The most recent Greenwich data suggests that -- and let me maybe reiterate this other point. Harold also talked about line utilization and the fact that our line utilization actually contracted during the first quarter. As you know, a healthy economy generally drives line utilization higher as opposed to lower. And so that would give you some caution. Now having made those 2 points about the paydowns in the line utilization, the Greenwich data, and this is national data, not Nashville-based data, that the projections for the remainder of the year is that the fundings ought to increase at -- and they ought to increase and the paydowns ought to decrease in the next 3 quarters. Again, I can't substantiate to that. All I can do is give it to you. And -- so, again, I think that has some bearing on what ought to happen going forward. In other words, you ought to get growth in C&I based on line utilization. You ought to have a decrease in paydown so that your net growth continues to pick up. That's generally consistent with what our current roadmaps look like. The current roadmaps would have something less in terms of projected paydowns than what we had at this point in the first quarter and have something better in terms of loan growth than what we had at this point in the first quarter. So I think in terms of the growth, as you mentioned in the first quarter, a good part of that was commercial real estate. The bulk of that was income-producing properties. And I would say, the largest category in that growth would continue to be what I refer to as build-to-suit projects for credit tenants.

And is it mostly, I imagine, Middle Tennessee versus Knoxville as far as originations?

Yes -- well, yes. During the first quarter, that is true. But I would say, if you were to look at it over a 12- or 15-month period, the percentage growth in that category would probably have been higher in Knoxville than Nashville.

And our next question comes from Kevin Reynolds from Wunderlich Securities.

The question I have -- I had to hop on a little bit late, so you may have addressed this already. But inside the loan dynamics, there's seasonality and there's economic activity levels. But have you sensed the change in the competitive landscape, I mean, particularly with respect to the -- sort of the larger banks that you've been competing with day in, day out? Do you get the sense that they are less willing to give up their customers, say, in first quarter versus in prior quarters? Or is this -- is the competitive landscape about the same as it has been? Is there any change going on there?

Kevin, that's a good question. I think I'd have to answer that, in the whole, it's about the same. Occasionally, you see on really high-profile marquee accounts. They'll sort of dig their heels in and say, "We're not going to lose it at any price." But I would say, broadly, it's the same.

Okay. Has there been any change with the smalls?

No, I don't think so. I think that -- I think there would be 0 change there.

And our next question comes from Michael Rose from Raymond James. Michael Rose - Raymond James & Associates, Inc., Research Division: Just 2 quick follow-up questions. I noticed deposits declined quarter-to-quarter, and your loan-to-deposit ratio is creeping up there. Any impact from the TAG -- the expiration of the TAG and the kind of -- is the goal here to keep that ratio under 100%?

Yes, that's a good question, Michael. First of all, from a loan-to-deposit ratio, we don't have any stated objective about that. So there's no goal to keep it below 100%. As for the TAG program, we've tried to research that 9 ways to Sunday to figure out if there was a meaningful and significant impact for the elimination of the TAG program. And we've surveyed account officers. We've done all of that. We've had a couple of hits, but there have been, in no way, any meaningful kind of a reduction because of the TAG program going away. The deposits did fall in the first quarter. We anticipated that with respect to a few depositors that came in at the end of the year. We knew there would be some funds leaving the bank shortly after year-end, and that did happen. But we also had some larger corporate depositors here at the end of the quarter that needed their money for distributions to partners and others. And so we're hopeful and, actually, we believe, will occur, that those funds will replenish over the next several quarters. So as far as accounts -- not losing accounts, we are having some pretty strong heart-to-heart discussions with some depositors who, we believe, still, their rates are outside the market. But not -- we've not, I don't believe, lost any meaningful deposit accounts to a competitor, in recent memory anyway. Michael Rose - Raymond James & Associates, Inc., Research Division: Okay. And then just switching gears. I noticed that the mortgage loans sold this quarter were down by $11 million or $12 million quarter-to-quarter, but the gain on sale margin appears like it has gone up pretty consistently. Can you kind of explain what's driving that?

Well, I think it's just more attentive pricing on our part. I don't know of any specific reason why the spread number went up this quarter.

Michael, I would say candidly that some of it has been influenced by the compensation limitations as a result of regulation, which really effectively prohibit mortgage originators from having an incentive to bid down that yield spread premium. And -- so, again, because of that change, it forces a centralized pricing that's got more discipline and actually has widened our yield spread premium. Michael Rose - Raymond James & Associates, Inc., Research Division: Okay, that's helpful. And one more, if I could. I noticed that the employee headcount quarter-to-quarter was down about 10 employees, not that great. But kind of what's the outlook for hiring? Do you have anybody in -- particularly on the lender side, in the process now? And I did notice that your associate retention rate did go down a little bit quarter-to-quarter.

Yes, the -- just so you know, on associate retention rate, that's all in. We count everybody. A lot of people give you voluntary turnover and all that kind of stuff. So we give everybody that leaves is included in the turnover. And I would say, I think we've tried to hit at this over the last several years, that what we're trying to do is to optimize the throughput of our people so that if we have folks that are not at their maximum level of production, we've got a plan to get them there. If we don't think they're going to get there, we'll swap them out and add somebody back in that we think can get there. So if you get just a little bit of turn -- churn there on the friction, but again, we actually made a couple of good hires in the first quarter that are revenue producers and have a couple more, I would expect, to make in the second quarter as well that would -- should be pretty large revenue producers. So a lot of it is just optimizing headcount.

And our next question comes from Brian Martin from FIG Partners.

Guys, most of my questions were answered here, but maybe just 2 things. Terry, was there -- what was -- given that headcount reduction this quarter, what was the net change in lenders in -- from fourth to first quarter, just in that component?

Brian, I can go look for the answer, but I can't recite it off the top of my head.

Okay, that's fine. I thought it was easy. You knew it, that's fine. If not, maybe just one other thing, Terry, and that was, I guess, has there been a change, I mean, in your -- you talked about your M&A outlook or just the possibility that maybe something is out. In the past, it kind of seemed as though you've been more interested in hiring a group of folks like you have and going to a market, whereas now, maybe it seems as though M&A may be more of a possibility, I guess. Is there any change in your outlook with M&A? Or has that just always been the same way?

Yes, I don't -- I guess -- it's an interesting thesis there. I guess as it relates to going to other markets on a de novo basis, my interest in that has not changed in any way. I just view it to be opportunistic. And when and if we find the right group, we would seize it -- so there's no change there. And I don't -- I think the outline that I gave today about the kinds of acquisitions that we would pursue, I hope that's the same outline I've been giving for the last year or more. I do have a belief, and it's -- I hate to use this word, but it may be a little more intuition than fact-based. But I do have a belief that the bids and asks are perhaps in a position where they can get closer than I would have thought a year ago. And so, again, that might mean there would be a little more -- it would increase the likelihood you might do more M&A just because I think bids and asks are getting closer.

And our next question comes from Bill Dezellem from Tieton Capital Management.

Would you please characterize what you view as the growth opportunities for Pinnacle today versus how you were viewing them back in the mid-2000s? And I think you partially answered this question before, but I'm hoping you would be able to encompass all aspects of that question.

Bill, let me get clear, you're looking for a characterization of our growth outlook today versus in the early 2000s?

Yes, early to mid-2000s. And not just your growth outlook but your ability to grow because you are larger today than you were then, but you have expanded into Knoxville, whereas you weren't there before, and you're early there. You have made reference to wanting to, at some point, if the opportunity presents itself, not only consider Memphis but consider Chattanooga. And so there are lots of pieces to that question, I think.

Yes. Yes, I think I got it. I'll take a stab at it. And if I'm not dealing with what you want, you can redirect me here. But the -- as you alluded to, when we started this company, we started in 2000. We had a in-house limit of $1.8 million. That's our -- that was our in-house loan limit. And so to that point, an average credit risk in this company would have a $15 million limit, and above average risk would have a $25 million limit. So that's one aspect of growth. We're in a position where we can handle virtually any business in Nashville and Knoxville, whereas when we started in early days, we would have been constrained by our size, by our capital levels and by our lending limit. So that's an aspect of growth that I would characterize as being much better today than in the past. I think in conjunction with that, our position in the marketplace is better. When you start, you got a lot of people that will root for the hometown team, but you got a lot of people that said, "Boy, I need to watch that for a while before I start moving my relationship." And, of course, our credibility and mass in the market with 16% lead share in Nashville, we're -- these would be my words. I believe we are the go-to bank, if you look at the -- some of that Greenwich data I tried to include in the presentation about how people view this company and their likelihood that they would add us as a provider and what our existing customers think about us and their likelihood to recommend. Again, all of that stuff would point to a greater growth potential today than in the early…

And I'm showing no further questions at this time, gentlemen. This does conclude our conference call. Ladies and gentlemen, thank you for participating, and have a wonderful day.