Good day, everyone and welcome to Pinnacle Financial Partners’ Third Quarter 2014 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 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 contain 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 risks is contained in Pinnacle Financial’s most recent Annual Report on Form 10-K. Pinnacle Financial disclaims any obligation to update or reserve any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures of the comparable GAAP measures will be available on Pinnacle Financial’s website at www.pnfp.com. With that, I am going to turn the presentation over to Mr. Terry Turner, Pinnacle’s President and CEO.

Good morning. As most of you know for the better part of three years now on these earnings calls, we have been discussing our strategic approach to growth and profitability, which is essentially that we grow our balance sheet in the form of loans at an annualized double-digit pace, while growing non-interest expenses at a substantially slower rate. We believe that strategy has resulted in dramatically improved profitability due to the operating leverage that we have been able to create. So, again this morning, I thought I’d start with a dashboard that provides a simple snapshot of how that strategy has worked through the third quarter of 2014. The top row of graphs shows real earnings growth with an organic revenue growth rate of just under 9% year-over-year in the face of pretty stiff volume and margin headwinds. Fully diluted EPS was up 23.8% year-over-year and our return on assets, which is not on the slide, climbed to 1.25% and the return on tangible capital has now climbed to 13.7%. As you can see on the second row of graphs, we are getting outside of balance sheet growth in the form of loans, up 11.4% in the third quarter over 2014 compared to the same quarter last year. You can also see that we have increased average transaction accounts by 14.7% during that same timeframe. So, the transaction accounts now represent 47% of total deposits. In my opinion, that’s a real franchise value growing loans organically at a double-digit pace and then growing transaction accounts organically at an even faster rate. And after having initiated a dividend payout in December 2013, we have been creating both regulatory and book capital with tangible book value per share up 13.7% year-over-year which is generally highly correlated share price increases. The third row…

Thanks Terry and good morning everyone. As Terry mentioned, with $130 million in growth left to fully subscribe our three year net loan growth target, we feel really good about our ability to achieve our goal. We are very pleased with the level of new loan originations during the third quarter, which equated to almost $373 million which is the highest volume of loan originations generated by our sales force ever in the third quarter of the year. Our markets remained stronger than many others. And our relationship managers are very much out in market discussing capital needs with their clients. We have historically had a strong fourth quarter in loan production which adds to our confidence that we will hit our target. As for red bars, we again incurred significant levels of payoffs during the third quarter. As most of you know by now this has been the most significant headwind for us and the ultimate achievement of our net loan growth targets. We experienced the largest increase in net interest income in quite some time between the second and the third quarter. We are very pleased with our net interest income growth, as well as net interest margin expansion in the third quarter. As to the margin we expect some pull back in the fourth quarter of a modest amount, but expect to remain well within our net interest margin targets of 3.7% to 3.8%. We also expect to experience continued increase in net interest income primarily based on anticipated loan growth. Concerning loans specifically as the chart indicates average loans were $4.36 billion, while EOP loans were approximately $63 million greater than the average balance signaling that we are hopeful to see average loan balances continue their quarter-to-quarter increase as we head into 4Q ’14. As to…

Alright. As we begin to talk about our future outlook, there is no management action that I have always relied on, which is expectation shape behavior. For those of you who have been filing our CDNA, you know that in addition to the asset quality threshold that we have to achieve before any incentives are paid, our executive compensation is linked to producing top quartile revenue and EPS growth among our peer group. And by the way for most return metrics, our peer group outperforms the industry at large. So, one explanation for our persistent ongoing top quartile performance is that’s the performance expectation, our Board has established. Another management action you made is you get what you incent. And as I just mentioned, our compensation to top quartile performance, so that results in very high targets and that will get execution. I believe that approach to establish an ongoing performance targets is tightly linked to total shareholder returns. I indicated earlier that (indiscernible) will meet the three-year growth targets that we disclosed nearly three years ago and that hopefully about the fourth quarter of this year in addition to achieving our targeted ROAA. We should have each of the four components. The NIM, the fees, the expenses and the net charge-offs all operating better than or within the targeted range. Those targets were originally established in July 2011 in conjunction with our 2011 to 2013 strategic plan. And so this summer as a part of the 2014 to 2016 strategic plan. We increased the target range for ROAA to 1.20% to 1.40% and the fee to asset target range to – are 80 basis points to 100 basis points. We will continue to report against the originally disclosed targets for the remainder of 2014. And then we will begin…

Thank you, Mr. Turner. The floor is now open for your questions following the presentation. (Operator Instructions) Our first question comes from the line of Stephen Scouten with Sandler O'Neill. Your line is open. Please go ahead.

Hi guys. Good morning, great quarter.

Hi, Steve.

Good morning Steve.

A question for you on the expense front, I was impressed, surprised to see the salary expenses down and I was kind of wondering if you could give some color on continued new hires and maybe what drove that quarter-over-quarter difference there?

Yes. Steve, let me talk about hires, I think generally we have indicated that the annual run rate for revenue hires, relationship managers we call them FAs, generally we are looking for 12 a year or so. And that’s what we have done in the last couple of years. And that’s what we now have done during the third quarter. That’s where we are year-to-date is 12 revenue producers. So, I think we would frankly want to get ask about hiring in and I have tried to indicate this in the past, the season for hiring honestly is the second and third quarter of the year. And the reason I say that is as you get late in the year, people have their eyes set on what their bonus is going to be and they don’t want to leave that on the table, so it’s hard to get somebody to leave prior to receiving that bonus. And then that same thing occurs during the first quarter, which is generally when those bonuses are paid. So, the real hiring season is second and third quarter. And as I say we have hit the targeted number of hires that we set out to make. That said, we view hiring opportunistically, it’s not like we got a budget once we – if we budget 12, we hit 12, we quit. We will continue to hire people. We may have an opportunity to hire another person or two this year, but as I say the market conditions generally dictate that the hiring picks up light in the first quarter, really in the second and third quarter next year, so.

Okay. So would you say that this is a kind of a reasonable run rate in the near-term until maybe hiring picks up further again in those quarters in 2015?

Yes. Steve, I think we are in pretty good shape on salaries and benefit costs for the rest of this year. It will probably be a little bit of increase in the fourth quarter, but nothing significant.

Okay. And just one other question, on the move towards asset sensitivity one that was I am impressed again there that you are able to, I think you said you are actually slightly asset sensitive already just seeing what you have done in the last quarter. And I am curious if that movement makes you temper your future activities, I know you said you want to continue to move further in the next couple of quarters, but just given the rate movements we have seen even over the last few weeks, does that change your process and expectations?

Yes. I think first of all, we will stick with our plan of removing some of these floors, but we will monitor – obviously monitor our progress towards our asset sensitivity goal. We just want to be – we want to be a little further into the asset sensitivity. We want our metrics to increase just a little bit more before we start backing off on this floor removal process. But for sure, we are monitoring all the discussion about these rate increases and trying to understand if there might be some deferral of this late 3Q, 4Q ‘15 kind of rate increase, because we have benefited for so many years now by being slightly liability sensitive. And so to go too far one way it’s just not where we want to be.

Sure, sure. Well, thanks. I appreciate that. If you get any real clarity from the Fed on what direction, they are really going you let us all know, okay?

Yes, I am counting on you, Steve.

That will be a good one. Thanks, guys.

Thank you. (Operator Instructions) Our next question comes from the line of Jefferson Harralson with KBW. Your line is open. Please go ahead.

Hi, thanks. I want to follow up on Stephen’s on the interest rate sensitivity. With the changes that you made, if you think about the fixed floating and floating with floors, is it fair to say that about 30% of your loans move with rates currently and that’s going to move to closer to 60% just on the second 100 basis points?

Yes, that’s very much true, Jefferson. In fact, I think you are really close on the 30%, it maybe a little bit more north of that, but not much.

Okay. And Page 9 already has a swap included that’s a decline between Q2 and Q3, that includes the swap, the 100, that’s the floating to fixed that you did or the fixed to floating that you did that. I guess Page 9, what is the cause of that decline this quarter, is it the impact of the swap?

Well, I think I understand your question. We are down $100, $40 of it was due to the intentional removal, $60 was just market force.

Okay. And lastly as you go through time, you are going to be needing securities portfolios, not large and you have a lot of loan growth, you are going to need, I don’t know, $100 million to $120 million a quarter of funding, what type of mix you think is going to – is that funding going to come from or how do you think about – what that mix can be for next year and the year after?

I don’t know how much further we can reduce the size of our securities book. We have got a lot of public fund depositors that we rely on that securities book to support. So, I am not sure if we can get the absolute level down very much further. So, I think it’s going to be blocking and tackling on core deposits.

And you think there is going to be a remix towards CDs as….

I don’t know.

Borrowing FHLB advances?

Part of me wants to be really bold and say I think that ship sailed, but I am not – we are really feeling a whole lot of CD sales right now. This, like I think, folks are really interested more in having flexibility with their money and not tying up funds. So – and maybe it’s just our customer base in comparison to other banks, but we are not seeing a whole lot of CD demand at all.

Okay, alright. Thanks, guys.

Thanks.

Thank you. And I am showing no further questions at this time. I am sorry we are showing another question from the line of Brian Martin with FIG Partners. Your line is open. Please go ahead.

Hi, guys. Nice quarter. Maybe just one question Harold on the originations and kind of loan projection going forward. I mean, at what point I mean do you guys feel like the payouts could slow a little bit or I guess have any just kind of at this level, is there any change in your thought there, I mean the originations remained very strong like you guys talked about, but something that we will call on payouts perspectively?

Yes, that’s an interesting question. We analyzed historical payoffs in a variety of different ways. We are still believing that I think we have cited four reasons in the past for payoffs, cash is pretty abundant a lot of the REITs and insurance companies are lowering their ticket sizes and getting into what has traditionally been a bank business and plus we are seeing a lot of liquidations of businesses where business owners have determined that they have survived the great recession and now are ready to kind of liquidate their businesses. So there is a lot of reasons for it. And obviously, the question is how long will this continue. And I guess we are in the midst of our planning for the next two years and what we are kind of assuming is that these payoffs aren’t going to subside that we are going to have to generate the same level of growth production in order to hit our loan growth targets are the same ratio of productions to payoff to hit our loan growth targets.

Brian I might add to Harold’s comment, I mean I think for our planning purposes only thing to assume is that payoffs are going to continue at a similar rate. I think one of the things that has driven – that we see in our commercial payoffs in addition to I guess in combination with many business owners saying, hey I will take the time to exit. There is a tremendous amount of money in the market generally in the form of private equity, but various funds and so forth that are coming way down market looking for return. And so my belief is that that’s one of the reasons we are experiencing unprecedented payoffs is all this (total) money looking for a better return coming down market and either buying businesses or recapping businesses or the like. And so my belief is when you get to the different part of an economic cycle when you get to the different rate curves, when you get to the different yield opportunity for some of this money they will probably go back to more traditional asset classes. And that will provide us a good opportunity. I think, again I don’t want to go too far in this, but one of the things that sort of hitting on our balance sheet is that we are growing our working capital line commitments about 15% per annum, which generally matches the loan growth rate, double-digit growth rate. But line utilization continues to shrink and shrink even in this quarter, which again, I don’t know how to – I don’t know exactly to correlate that to economic health because as Harold already pointed out there is lot of liquidity in the system, but I do think it say us something about the pace of economic growth here that the working capital needs of owner managed businesses aren’t expanding. And so again I think it does say so about the economy. And so again for me looking for a silver lining, I say, well, that’s all, so I have got a lot of hidden capacity here when economy does get some legs. The fact that I am growing clients, growing line commitments and so forth when working capital asset expansion occurs, line utilization increases, there is a lot of growth that ought to materialize on our balance sheet.

Okay, that’s helpful. Thanks guys. And then maybe just any update or any change on M&A outlook?

I think our M&A outlook is the same as it’s been for some time, Brian. We view ourselves primarily as an organic grower. We have an advantage stock. We are likely to use it. We have a preference for end market transactions in Nashville where we think if we get outsized cost synergy we like end market deals in Knoxville, which would expand our distribution in mass. We like market extensions in the Chattanooga and Memphis. We have a preference to go there on a de novo basis, but there will be a target that we might consider in those markets if we find the right opportunity to expand in market. So I think that’s the same thing that we would say it for several years now.

Okay, alright. Thanks guys.

Okay, thanks Brian.

Thank you. And our next question comes from the line of Peyton Green with Sterne Agee. Your line is open. Please go ahead.

Okay. You know what, gentlemen my question has been asked and answered. I appreciate it. Congratulations on a very nice quarter.

Thanks, Peyton.

Thank you. And our next question comes from the line of Andy Stapp with Hilliard Lyons. Your line is open. Please go ahead.

Hi, guys.

Hi, Andy.

Just noticed mortgage banking was down a tad linked quarter, just wondering what was causing that?

Yes. I think there is a combination of things, but I think it’s just general business cycle stuff. It primarily calls for the reduction.

Okay. Alright, that was it.

Alright. Thanks, Andy.

Thanks. Bye-bye.

And I am showing no further questions at this time. Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.