Jason Day finished seven strokes off the pace but it could have been much worse for the Australian than a one-under 71.
The world number two received an extraordinarily lucky break at the par-four 18th, where he hooked his drive over the out-of-bounds line and into the property of an adjacent house.
Fortunately, his ball hit a tree in the backyard of the house and took an enormous ricochet back into play, leaving a relieved Day in position to salvage par.
Hoffman had no such wayward issues and also made his share of putts for a change after discovering pre-tournament that his alignment had been a little off.
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Despite the blond locks and laid-back attitude that make him look more surfer than golfer, the San Diego native is widely regarded as having one of the best long games on tour.
"Year in and year out, ball-striking is what I do well," the four-times PGA Tour winner told Golf Channel after posting a 10-under total of 134.
"I'm driving it in play but any time I get the putter going I can play well.
"This year has been a below average putting year. I really stumbled onto something this week and it feels great."
Hoffman holed two putts from outside 30 feet among his seven birdies, but he was most proud of the 10-footer he sank at the last.
"Those 35-40 footers are luck but if I keep making them inside 10 feet I’m going to be OK," he said.
Grillo was not pleased with the quality of his play despite a 68 putting him in second place on the leaderboard.
"It was a very up-and-down day," the world number 32 said. "I didn't hit it good off the tee. I was very lucky today, made a couple of chip-ins."
Third-placed Fitzpatrick also used a sharp short game to stay on the leaderboard with a 69.
"I scrambled really well," he said. "That was a big thing, saving par. Just really comfortable with the putter right now."
In the first staging of the event since the September death of Palmer, his grandson Sam Saunders missed the cut by one stroke.
(Reporting by Andrew Both in Cary, North Carolina, editing by Nick Mulvenney)
