Good morning, everyone, and welcome to the Pinnacle Financial Partners' Fourth 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. [Operator Instructions] Before we begin, Pinnacle does not provide earnings guidance or forecast. 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 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 comparable GAAP measures will be available on Pinnacle Financial's website at www.pnfp.com. With that, I'm now going to turn the presentation over to Mr. Terry Turner, Pinnacle's President and CEO.

Thank you, operator. Good morning. As we always do, I’ll begin with this dashboard. It’s particularly focused on revenue growth, earnings growth, and asset quality, because we have believed and we continue to believe that short-term themes like M&A or deposit betas and so forth will come and go, but over time, the three most highly correlated metrics for long term shareholder return are revenue growth, earnings growth, and asset quality. So, looking at these metrics, all presented on a GAAP basis. It seems to me we continue to be a reliable grower. Revenue growth, which is the primary emphasis of this firm as opposed to expense containment, it continues at a reliable and rapid pace. I don’t want anyone to interpret my comments that we’re cavalier about expenses, we’re not. In fact, our expense to asset ratio was very low by industry standards. I simply mean that we don’t reject outside expense growth so long as we grow revenue still faster. Harold will develop that idea a little further when he reviews the quarter in greater detail. The revenue growth is primarily attributable to the fact that we continue to grow loans and deposits at a rapid and reliable basis. And asset quality continues to bounce along the bottom in terms of the level of problem loans or level of net charge-offs. And consequently, we continue to grow the fully diluted EPS at a rapid and reliable pace, which in turn grows the tangible book value and elevates ROTCE, now north of 18%. Because of all the noise that is associated with BNC merger and the restructuring in conjunction with the tax law change at the end of 2017, in some cases, non-GAAP measures may better illustrate the relative performance of the firm. So, on this chart, I’d like…

Thanks, Terry. Revenues, excluding gains and losses on sale of securities for the quarter were up 8.9 million from the previous quarter at almost 250 million, an increase of approximately 14.6, linked-quarter annualized. Net interest income is up almost 800,000 from the third quarter of 2018. The fair value accretion negatively impacted the quarter’s results, as it decreased 3.9 million during the quarter to 13.2 million. We anticipate decreases in discount accretion in future quarters, as the level of acquired loans and recent mergers becomes less impactful and post-merger prepayment slows. We’re now forecasting around $38 million of discount accretion for 2019, more on that in a second. The dark green line on the chart denotes our non-GAAP revenue per share. We reported $2.83 adjusted revenue per share in the fourth quarter of 2017 and reporting $3.22 this quarter, nearly 14% growth. Obviously, that's the goal to keep the revenue train moving north, we will continue to keep an eye on our profitability metrics, but as it stands today, we can afford to invest in our platform with robust hiring activity aimed primarily at C&I and private bankers. As we noted last quarter, our targets are all designed to increase our earnings per share on a reliable and sustainable way and build tangible book value per share through the cycle. This slide focuses on revenue per share growth, even on trailing 12 month, as the basis for the amounts, we continue to experience double digit revenue per share growth. Now, this is during a time of significant internal focus around integration of the Bank of North Carolina. Let me assure you, there is a great deal of energy in our franchise right now. We’re definitely on offense in Tennessee, the Carolinas and Virginia. Our associates are engaged, focused and excited…

Okay. Thanks, Harold. Well, I did want Harold to get ahead with the M&A analogy, so I've got a quote from Ferdinand Foch, the Supreme Allied Commander at the conclusion of World War I. He once famously said, my center is giving way, my right is retreating, situation excellent and I’m attacking. For me, I think the 2018 battle felt something like that and our share price gave way and our PE and price to tangible book value retreated, but our position in the market was excellent and we executed our plan well all year long. I don't think it’s news to anybody on this call that 2018 was the vast major for small cap bank stocks, they were particularly difficult for PNFP. You can see here on the left that despite the fact that our EPS outgrew the peers and the consensus is that we will continue to outgrow peers in 2019, our share price lasts more than peers and our price to tangible book value collapsed dramatically more than peers. But on the right, you can see that post recession, PNFP has generally traded well above peers until this year and now trades less than peers and that was a 33% growth in EPS for 2018, which some believe may provide a unique opportunity for investors. Generally, investors punished acquirers in 2018, many feared the integration risk for us, it was associated with our BNC merger. In fact, our deal rationale was that we would protect BNC’s high growth CRE business but that we have built out a high growth C&I business that would have the impact to turbocharge the total loan growth in the Carolinas and Virginia. In order to do that, we plan to hire 65 C&I and private bankers in the Carolinas and Virginia over…

[Operator Instructions] Our first question comes from Jared Shaw with Wells Fargo Securities.

Maybe if we could start with just a little discussion on the deposit side, it’s great to see that the beta slowed. Do you think that that's sustainable, and when you look at the – on slide 12, you have your rate chart with the rate sheet where the posted rates went down, negotiated rates went up, but beta slowed. Can you sort of talk to some of the dynamics there? What portion of those relationships are coming with negotiated rate versus the rate sheet? And do you think that we could see a continued slowdown or a sustained lower beta as we go into 2019?

Yeah. Jared, I think what we'll see -- I'll start with the larger question first. I think we will see slowing deposit cost increases. I think that’s because the rate environment is becoming less -- doesn't require those kind of significant increases. I think that’s because we’ve repriced a lot of our deposits to a much more competitive price previously, and I also believe we've got some higher priced wholesale money that we're going to see leave the bank here in the first quarter. So, we're cautiously optimistic that we will see continued growth in our core margin here in the first quarter and into the second quarter. Did I get to all that?

Yeah. I think that's good. And then sort of as a corollary to that, how is the progress going on, having the relationship managers go into the commercial customers and try to get a bigger market share of – or wallet share of deposits. You were talking about that at the Investor Day, is that showing good progress or do you think there's still room for that to accelerate as you go into 2019?

Yeah. Thanks for that, back in the summer, we asked our relationship managers to build lists of depositors that they were doing business with and find those deposits that were at other franchises, and we think that went well. It's like a lot of different tactics, you have to revisit it occasionally, you can't do it every week or every month. What you have to do is kind of pull that project to the front, let it work and then 3 or 4 months later, let it -- do it again. But I think we saw -- the last part of the year, we saw core deposit growth that was in line with some of the best quarters we’ve ever had.

And then just finally, you mentioned that you see – you expect to see some wholesale money leaving in the first quarter. How much – what’s the balance of that wholesale book that you think could leave?

It will be north of $300 million.

Our next question comes from Stephen Scouten with Sandler O'Neill.

A question for you, Terry, on the pace of new hires, obviously, it's been phenomenal and you guys are well ahead of schedule. Do you guys think about intentionally trying to slow that at all to kind of ladder in these new hires and their related production or do you kind of just let momentum run as long as you can bring new people in. How do you think about that and the pace of those hires?

Yeah. I think generally, we would continue to let the momentum run. Generally, as you have heard us talk about before, the process here is to target high-producing relationship managers. When you start looking at salary multiples on a high-producing relationship manager, you get numbers like 20 to 25 times salary. And so the question to me is, why would I ever want to slow down hiring revenue producers that can produce that sort of salary multiple, and again you’ve got to hire the support that goes with it and so forth to get to a bottom line number. But again, I think you get that idea here. If you can hire an high-producing relationship manager, I've never understood why you wouldn’t hire them. And so to that extent, we’ll continue to let the momentum run, and we will seize the opportunity as long as we can. Stephen, I might just hit at this. We talk so much about being ahead on the hiring plan in the Carolinas and Virginia, but we’re still hiring at a dramatic pace in Tennessee as well, and again, it just goes back to that idea of we have a continuous recruitment cycle for our returning relationship managers.

And then as that pertains to loan growth, I mean, obviously, you're still guiding to the low to mid double digits. Is that -- to hit that range, do we need to see paydowns move back into that 400 million to 500 million a quarter that we saw in the first half of ’18, or is that loan growth in your minds really predicated on all these new hires, delivering even in spite of heavy paydowns, how can we think about the likelihood of delivering on that number I guess?

Yeah. We’ve sent out all the financial plans for 2019 to all the market managers, and so they’ve all signed up for what they have to do. And they're all creating lists of potential clients to go get that business from, but I think it's going to take a little bit of both. We will need some kind of slowdown in these projects that are getting paid off, and a lot of it has to do with the timing of when these projects were signed up initially, and they were likely a year or more ago. And so, we're hopeful that we'll see some retrenchment in these paydowns and payoffs as we go through 2019.

Stephen, I might add to Harold’s comments just to make a pretty interesting stake as it relates to CRE. As you know, when we projected that we would create the 100 or really the 300 guideline there on CRE, we did tap the brakes internally and then beyond that, we tapped the brakes in conjunction with some specific asset classes like hospitality and multifamily and so those phenomenon are now playing through what the net loan growth is, but I guess I want to reiterate having come back inside our guidelines, we have commitments that would indicate, we will outrun paydowns at a pretty meaningful pace for CRE, but it really turns into sort of a second, really third quarter item before that find its way, the fundings find their way on to our balance sheet.

Okay. That makes a lot of sense. And maybe one last quick one, Harold, you said you were modeling in two rate hikes for 2019. As you model that out, if say, we didn't get either of those rate hikes, do you know what the kind of basis point impact would be or even directional impact would be to your NIM, if we were to not get any rate hikes here in 2019?

Yeah. I think if we hit our growth goals this year, it could be impactful. I don’t know what that number might be if – we’re still growing the loan book and we have to go raise, if we have to replicate 2018 into 2019, and have to go find a bunch of deposits to fund the loan growth, then it will be more impactful. Here currently, it doesn’t appear that it’s going to be. It looks like our deposit models are working and that we'll be able to grow these deposits to fund this loan growth, but if we have to go out and secure deposits to fund this loan growth at these elevated rates, then I think we'll have some pressure on our long term sustainable business model on net interest margin.

Our next question comes from Brett Rabatin with Piper Jaffray.

Wanted to first ask just on BHG and the great year you had in ’18, can you maybe just give a little more color around the fourth quarter and then what your assumptions are for that 5% to 10% growth in ’19, what kind of market does that anticipate for those guys?

Yeah. I’ll try to answer that. They too have a lot of confidence in what their business model is producing right now. Al’s been very adamant with me that his revenue streams that he's producing this year are 2018 revenues that he's not pulling out loans that were booked in prior years and selling those or going into any kind of cookie jar. He's very excited about the advances they’ve made with respect to their marketing programs, with respect to their credit programs. He thinks those investments that they made over the last one, two, three years have produced the results we're seeing today. He feels like that next year, 2019, they will beat 2018. They're going to focus on management intention on new products, this patient lending product that we think will become more relevant towards the end of 2019 will be helpful. As far as near term results and what we're looking at in the first and second quarters, I think we’ve been looking at probably a consistent kind of, maybe a little better in the first and second quarter than what they did in the first and second quarter of 2018 in relation to the total year, if that makes sense. That might be more the target for, but we're excited about this relationship and where it’s headed.

Okay. That’s great color there. And then just want to make sure I understood on the core deposit initiatives and I’m thinking about ’19, are you guys changing anything that you're doing in ’19 to continue to fund the loans with core deposits, are there new initiatives relative to ’18 that you're looking to roll out?

Brett, I think I’ll describe that this way. I think the initiatives that we outlined for 2018 have been fruitful and so we would expect a continuation of those same initiatives.

Okay. And then maybe just one last one if I could sneak in, any update on what you guys are thinking there. I know it's been kind of meaningful potential increase in the reserve?

Yeah. I don’t think – I think we’re still working through our models to put a little finer point on those. But I think we are on plan to begin booking that day one entry in the first quarter of next year.

Our next question comes from Jennifer Demba with SunTrust.

You mentioned earlier in the call that the credit performance continues to be stellar. Just curious as to what you're expecting in terms of charge-off levels in 2019 and where you see the most credit risk in terms of asset classes?

Yeah. I think from an absolute perspective, we’re not anticipating any kind of decrease in credit quality. Like everyone knows, credit quality over the last several years for the banking industry has been remarkable. And we're not seeing any kind of matter that would cause us to say, okay, we need to try to look at our budgets for 2019 and say, increase our charge-off forecast. So as far as asset classes, Terry, you got any color?

Our view is that when you sort of go through the various industry analyses and so forth, that you've got movement around the edges, but Jennifer, we've talked about some of these asset classes like multifamily in downtown Nashville, we’ve had a hard stop on that in the past. That’s an area where I would say, we have a caution flag now, which makes this better than we used to believe it was. And I think hospitality is an area that we would still look pretty hard at before we want to do another transaction there, but I think with those two modest exceptions there, but they don’t believe we feel good about risk in the loan book.

Our next question comes from William Curtiss with Hovde Group.

I wanted to make sure -- I want to make sure I heard some correctly. It sounds like you guys might be fairly active with buybacks this year and if so, can you kind of give us a sense of how you're thinking about it and or maybe just some updated thoughts on buybacks?

Yeah. Well, that one slide in there, I think 2019 will use all that money in buyback programs in all likelihood. I hope we don’t, but we're hoping to be able to take it all. The share price obviously will have impacts on our decisioning. But at the same time, we want to be able to have enough dry powder so that we can use it throughout the year.

And then wanted to go back -- you had mentioned I think the 38 million of accretion income that you expect for this year, any sense for where that may go in 2020, is it still too early to put something out there?

I think it’s early. For sure. It was a significant decrease between 2018 and 2019.2020 will not have that kind of decrease, but that component of our revenue stream will become less and less impactful overtime.

And then just the last one for me, on the other fees and I think you've called it out I think in your remarks and also in the release, but just curious if you can kind of help us size up the other fee income and maybe what the appropriate base would be going forward, so it sounds like there may have been some unusual items this quarter?

Yeah. I mean, the increases, the volatility I guess in that line item was primarily around valuation of some other assets and there was like a $600,000 increase. We had a similar increase in the second quarter and a decrease in the third quarter and then an increase again in the fourth quarter. So it pops around quite a bit. So call it maybe $300,000 of run rate impact.

Our next question comes from Tyler Stafford with Stephens.

Hey Harold, I want to start on just the expenses this quarter and around the incentive comp. So obviously you guys hit the numbers and not surprising that the incentive piece stepped up. I'm just curious if you could give any color for the magnitude that we should see that stepping down in the first quarter, as we just kind of reset the bar on the accruals on the incentive comp?

Yeah. I think while we’re up 3.5 million, 4 million bucks in incentive comps in the fourth quarter, that won’t get replicated, that will come down in the first quarter. There is a slide in the back that’s got cash and equity incentives. I think we’ve booked like $10 million in the first quarter of last year. It will be more than that, but it won’t be a lot more.

And then I just wanted to maybe clarify one of your answers to Stephen’s questions earlier, just about the core NIM and the impact from rate hikes, but maybe thinking about it just in terms of NIIs, so you guys have the slide 10, the graph just showing the core ex-accretion NII growth you’ve seen and obviously despite the softer loan growth this quarter, you still put up mid-teens, 15% plus core NII growth. If we are thinking about it just in terms of NII and we don't get to rate hikes, can you just size up the magnitude of core NII growth that you would expect to see in 2019?

Yeah. I mean that -- our budgets would say that we would have consistent growth in net interest income next year. If we don't get the rate hikes, I'm not really as concerned about that today as I would have been call it, 9 months ago. Because the rate hikes gave us some cover on rising deposit costs. I don't think -- if we don't get the right hikes, I don't think we have as bigger delta to overcome on deposit cost increases as we did in 2018. Because I think we’ve rebooked, we've already repriced a lot of our deposit book currently. And the wholesale market was what, really kind of got to us in the 2018. I mentioned a beta of 39%. If you parse that apart and say the wholesale beta was up around 70 or 80, the client beta was around 20 to 25. So I feel better about a no rate increase rate environment today than I did call it 6, 9 months ago.

And then just last one for me.

Sorry, let me just tack on to that one comment too. And a lot of it has to do with the way we’ve repositioned this balance sheet. I know intuitively you think, okay, they’re putting more floating rate assets on, so they want more rate increases to take advantage of that. But in reality, when these rate increases come and your growth base, you got to go find that funding, and typically, you'll have to rely more on the wholesale target and that’s a more expensive proposition.

Yeah. So maybe just simplistically, if your loan growth outlook is low to mid double digits, there is not going to be that much absent rates up or down pressure on the margin, should kind of core NII at least be kind of 10% type plus.

Yeah. I think that's a better way -- you said better not yet.

And then just lastly, going back to the dry powder comment around the buyback, for the year, how is M&A at this point kind of playing into your thinking from an executive level?

Tyler, I think we try to be candid about the markets we want to be in. We try to be candid about the kinds of targets that we would pursue in those markets, the kind of financial results we would expect those things to produce in order to be attractive. We've not really changed any of that guidance and so you can sort of do the math with the socket, these levels need multiples, I wouldn't expect a lot of M&A to take place. But you get the expansion in advantaged stock, again, we’ve pretty well spelled what play we would like to run.

And our next question comes from Michael Rose with Raymond James.

Just a couple of quick questions. Just wanted to talk about the expense growth, if you guys continue to hire at a pretty elevated rate, which it seems like that is in the cards. You guys have historically grown expenses at at least a double digit rate, it's obviously been stronger and executed by some of the deal metrics here recently, but should that be the expectation going forward if you continue to outpace on the hiring side? I guess it gets to my broader question, if reported NII is going to be under a bit of pressure from the client purchase accounting accretion and I don't know if the explicit expectations are for fee income, but do you think you could actually still generate positive operating leverage in 2019?

Yeah. That would be the plan, Michael. We still believe we’ve got enough energy to generate these loan growth goals that we have. And with that comes opportunity to hire people. Now, when you want to focus directly on the expense base, I think it is important to understand how flexible we can be with our incentive accruals and granted, you’ve taken sense away from associates that’s painful, but at the same time, that's the way our system works, so that if Terry goes out and hires a bunch of people, we don't get a pass on that from an incentive perspective from our board. So we've got to figure out way to cover those costs, even though we might ramp up hiring. I think also that operating leverage is critical to the shareholder base. They tend to like to talk about operating leverage. We may miss on revenues from time to time, but you shall be good operator. So it’s a meaningful component of our internal discussions here as to how we can continue to improve our operating leverage.

And maybe just one final question for me, for Terry, can you just talk about those -- the general level of competition. It seems like it's got a lot of people that have gone after C&I, particularly in the Tennessee market, how does that translate into your ability to grow and I know a lot of your ability to grow is based on hiring lenders and then bringing over the books of business, but do you get to a point where you purposely begin to maybe slow down, because the loans that are out there just don't make sense from an incremental return on investment point of view?

Yeah. Michael, thank you for that question, because that’s a really important thing. When I told to institutional investors, I detect there is questions a lot of times about, how are you getting this growth, I mean, you guys look to spread asset quality, you must be stretching on pricing, you must be stretching on these things and I believe that a lot of large companies, if they are producing assets, loan growth, they probably are doing that, but here, the growth is primarily driven by hiring people and moving market share. And I think it's important to get who it is that we're hiring, we don’t hire people that are circulating resumes, we don’t hire inexperienced people. We're looking for people at least 10 years of experience. The average experience of the people that we hire is 24 years. And so when we're hiring these people that have been managing the book of business for 2.5 decades at a large regional bank and when they bring that book to us, you get two things, you get rapid growth, which is what we're talking about, but you also get outstanding asset quality and that occurs for two reasons. Number one, because they know that book will. Their wealth for me was going on and while it might be new to our balance sheet, it is not new to the lender. And then the second aspect of that is, to the extent they have any bad loans, they just leave them where they are. It’s kind of opposite of an adverse selection problem here. We get kind of a turbo charged asset quality when you do that. And so again I think you’re buoyant to grade when in this economic landscape, if I were out here trying to produce double digit loan growth just by asking my existing salesforce to run a step faster, that would be a bad idea in my judgment and I wouldn't be interested in trying to grow the portfolio in that way, we're only interested in producing this growth by a virtue of hiring experienced people and having them move well from loan books, from their bank to us.

And our next question comes from Brock Vandervliet with UBS.

Just going back to the Bankers Healthcare Group, I mean, the performance there's just been monstrous for 2018. The 2019 guide looks like a pretty hard step down. Is that partly conservatism or was there a meaningful pull forward in performance into ’18? How should we think about that?

Well, I think there is conservatism in the forecast. They outperformed their plan meaningfully for 2018 and I guess there is just some degree of hesitancy to say they're going to repeat that in 2019. They’ve not outperformed a plan like that in the previous two years that we've been associated with them. But in 2018, they did quite well. I think they’ll also be trying to figure out how they can bring on these new business lines and try to make those more meaningful to them.

But Harold, I might just add to your comment. I think if you were talking to the CEO of BHG, he – again, I’m not -- we're not the owner of that company, we don't control everything there. We are a partial owner of the company, but I think where you talking to the CEO of that company, he would be very optimistic about what his revenue growth capabilities are in 2019.

And one thing you haven't talked too much about is loan pricing, particularly on the commercial real estate components. Are you seeing any ability to widen spreads there?

Yes. I think spreads have been fairly consistent. The chart kind of puts a five year treasury there to kind of gauge it throughout the year. I think what is important to me is that the absolute rate that we will get on fixed rate commercial lending, commercial real estate lending has increased this year and it's caused for the whole book, the average for the whole book, the weighted average for the whole book to increase. So, we're in better shape today than we were a year ago on that. And I think it's because a lot of our leaders in these markets are paying particular attention to how they price both investment and owner occupied properties.

And our final question comes from Brian Martin with FIG Partners.

Just a couple of things, just follow-up, just on the loan growth, either one of you guys, it sounds like the first half growth, I mean, Terry, I think you said somewhere somebody did that the growth may be a little bit more even throughout the year as opposed to last year, but given your comments about the real estate being in the construction in the first half, it makes sense that the first half is maybe a little bit less than the second half in terms of loan growth or I'm misreading that.

I guess that’s true, but I wouldn't put too much emphasis on that, Brian. I think my point was that we've had a meaningful contraction in CRE lending in the latter half of 2018. I think you ought to expect it to be similar in early 2019 and I guess the point that I was really making is we have made loans and commitments where that construction funding is slated to take place later in the year. So, the loan to book to so forth will materialize there. But I think you know this, we're relying on C&I to be the principal engine of growth for the company. We saw that roughly 20% last year and again, we have a similar outlook going into 2019

And then just Harold just going back to the margin for a minute and the NII, I guess, the margin, if you don't get the rate increases, it sounds as though, I guess, in general, you're outlook on the margin -- the core margin would be for it to be relatively stable, given where it was at this quarter. Does that seem kind of fair? Is that what you're suggesting, given the less pressure on funding costs?

Yeah. I think that would be an accurate assessment. If the rate increases don’t occur and with the reduction in discount accretion, increase in the GAAP margin would be very difficult, but at the same time, we believe in that and I know rate increase environment, pressure on deposit funding will be less, so as far as pricing for deposits.

Okay. So maintaining the core margin without that discount accretion Harold, I guess, if you don't have the rate increases, it sound as though it's pretty stable or maybe up a little bit if you're getting rid of some of these wholesale funding?

I think so, because I don't sense that we will have to be as aggressive on the wholesale side to fund loan growth.

You said, the wholesale funding is leaving in the first quarter. If the reduction is 300 million, is that what it was?

Yeah. We will either reduce or we’ll reallocate to another wholesale provider, but it will be – we’re likely to pick up 100 basis points easy in that money.

And then just last one Harold, on the fee income, I think you said, it sounds like there was minimal that was non-recurring in the quarter at kind of an unusual couple of $100,000, so this quarter's run rate of fees is pretty good way to think about how you go into 2019 first quarter.

Yeah. I don't – since BHG had a – if you look at total fees, I think BHG had a big number, a significant contemplate, but otherwise, I’m not sensing any large adjustments that came in in the fourth quarter. There will be run up in deposit service charges, just because of seasonality. We’ll pick up again some of that in January, but other than that, I don't know of any unusual adjustments.

Okay. And that BHG, that seasonality that we saw play out this year mean it should be similar next year, I mean, if you're talking what are 5% or 10% increase, each quarter would be up year-over-year, is that the way to think about it or is it more, as that seasonality continues?

There's always going to be seasonality in their numbers. This year, it was accentuated because of some of these improvements, particularly with respect to 2018, their substitution losses improved significantly towards the end of the year. So in the third and fourth quarter, they had fewer substitution losses and they attributed that to the quality of their underwriting that they put in place over the last several years.

So could the year over year increase in the first quarter Harold be greater because of that better performance you saw on the second half, was it in the first half of last year?

Yes.

And last and just I think it’s obvious, but if you got the buyback in place, any updated thoughts on M&A. I guess, you came over stock prices and is it obviously less attractive or just how are you thinking about M&A. Has anything changed on that front?

I would say nothing has changed, Brian. I think we’ve sort of laid out where we like to go, what the criteria for transactions would be and I think at this share price, this loan pool, many transactions have been worked, but if we get a expansion and a more advantaged stock, again, we’re sort of being clear on what we’re interested in doing.

Ladies and gentlemen, thank you for participating in the question-and-answer session of today's call as well as today's conference. This does conclude the program. You may all disconnect and have a wonderful day.