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PINNACLE FINANCIAL PARTNERS INC (PNFP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong adjusted results: adjusted diluted EPS $1.90, up 24% YoY, with GAAP diluted EPS $1.77; net interest margin held at 3.21% and adjusted PPNR grew 10.3% YoY .
  • Balance sheet momentum continued: loans reached $36.14B (+9.0% YoY) and deposits $44.48B; noninterest-bearing deposits rose $337M QoQ; core deposits climbed to 85% of total funding .
  • Management maintained 2025 loan growth guidance of 8–11% and deposit growth of 7–10%; NIM outlook “flattish with upward bias,” and NII growth targeted at 11–13% for 2025; BHG 2025 earnings growth outlook was raised from 10% to 20% .
  • Mixed versus consensus: adjusted EPS above S&P Global Primary EPS, while revenue fell short; securities restructuring produced a $12.5M investment loss but is expected to add ~$1M spread revenue per quarter going forward .

What Went Well and What Went Wrong

What Went Well

  • “Adjusted revenues increased by 14.2%” YoY after normalizing for securities losses and the prior-year mortgage servicing asset; adjusted PPNR rose 10.3% YoY to $199.9M .
  • Deposit growth was a standout (+15.3% annualized in Q1), with strong noninterest-bearing inflows and core deposits representing 85% of funding; NIM held at 3.21% .
  • BHG performance exceeded internal expectations: fee income $20.4M (vs. $16.0M LY), stronger production ($1.2B originations) and improved credit costs; management raised BHG 2025 earnings growth outlook to 20% .

Management quotes:

  • CEO Terry Turner: “Our continuously expanding number of relationship managers grew loans 9.0 percent… Both our recruiting and business development pipelines are robust” .
  • CFO Harold Carpenter: “Adjusted revenues increased by 14.2 percent… Both our net interest income and net interest margin results… were in line with our expectations” .
  • CFO: “BHG had a stronger quarter than we originally anticipated… production volumes were strong and credit costs were slightly better than we anticipated” .

What Went Wrong

  • Reported noninterest income declined $11.7M YoY due to the prior-year mortgage servicing asset recognition and lower fair value adjustments on equity investments; GAAP efficiency ratio worsened to 59.52% (from 56.61% LY) .
  • Investment securities restructuring generated a $12.5M loss in Q1; although expected to pay back in ~3 years and add ~$1M spread revenue per quarter, it weighed on GAAP revenue and EPS optics this quarter .
  • NPAs increased to 0.48% of loans/ORE/other NPAs (vs. 0.42% in Q4), including a downgraded Atlanta multifamily loan; classified asset ratio rose to 4.44% (vs. 3.79% at year-end) .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenues ($USD Millions)$428.1 $475.3 $462.9
Net Interest Income ($USD Millions)$318.0 $363.8 $364.4
Noninterest Income ($USD Millions)$110.1 $111.5 $98.4
Diluted EPS (GAAP) ($)$1.57 $1.91 $1.77
Adjusted Diluted EPS ($)$1.53 $1.90 $1.90
Net Interest Margin (%)3.04% 3.22% 3.21%
Efficiency Ratio (%)56.61% 55.10% 59.52%
Return on Average Assets (%)1.00% 1.15% 1.05%

Segment/line-item highlights (selected):

Line Item ($USD Millions)Q1 2024Q1 2025
Wealth Management Revenues$26.0 $32.8
Income from Equity Method Investment (BHG)$16.0 $20.4
Other Noninterest Income$51.7 $38.0
Salaries & Benefits$146.0 $172.1
Equipment & Occupancy$39.6 $46.2

Key KPIs:

KPIQ1 2024Q4 2024Q1 2025
Loans (Period-end, $USD Billions)$33.16 $35.49 $36.14
Total Deposits ($USD Billions)$39.40 $42.84 $44.48
Noninterest-bearing Deposits ($USD Billions)$7.96 $8.17 $8.51
Net Loan Charge-offs (Quarter, $USD Millions)$16.22 $20.81 $13.99
NPAs / Loans+ORE+Other NPAs (%)0.33% 0.42% 0.48%
ACL / Total Loans (%)1.12% 1.17% 1.16%
Book Value/Share ($)$76.23 $80.46 $81.57
Tangible Book Value/Share ($)$51.98 $56.24 $57.47
CET1 (%)10.4% 10.8% 10.7%

Consensus vs. actual (S&P Global):

MetricQ1 2024Q4 2024Q1 2025
Primary EPS Consensus Mean* ($)1.54081.77741.7989
Reported Diluted EPS (GAAP) ($)1.57 1.91 1.77
Adjusted Diluted EPS ($)1.53 1.90 1.90
Revenue Consensus Mean* ($USD Millions)422.2470.3478.5
Reported Total Revenues ($USD Millions)428.1 475.3 462.9

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan Growth vs YE 2024 (%)FY 20258–11% (reiterated in Q1 release) 8–11% (maintained) Maintained
Deposit Growth (%)FY 2025Qualitative strength noted; explicit range not priorly stated7–10% (maintained for 2025) New explicit/maintained
Net Interest MarginQ2 2025“Flattish” bias previouslyFlattish with upward bias Maintained / positive tilt
Net Interest Income Growth (%)FY 2025Not previously quantified11–13% New explicit
BHG Earnings Growth (%)FY 2025~10% ~20% Raised
Net Charge-offs (bps of avg loans)FY 202516–20 bps 16–20 bps Maintained
Provision to Avg Loans (bps)FY 2025Not previously quantified24–27 bps New explicit
Tax Rate (ETR)FY 2025Q4 ETR 17.7% ~18% going forward Slight increase
CRE Concentration TargetsMid-2025Target <225% (non-owner/multifamily/construction) Track down from 236.4% toward target On track

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macro uncertaintyPreparing for down-rate cycle; margin flattish expected (Q3) Management actively assessing tariff impacts; trucking/leverage lending under watch; CECL baseline unchanged; adverse scenario informs qualitative overlays Heightened vigilance; stable reserving approach
Deposit strategy & betas~50% deposits indexed to Fed funds; deposit betas outperform loan betas (Q3/Q4) Intentional deposit repricing; guidance to relationship managers to go dollar-for-dollar with cuts; CDs mostly ≤12 months Continued indexation; strong reprice discipline
Yield curve & NIMQ3 margin 3.22%; flattish outlook near-term (Q3) Q1 NIM 3.21%; flattish with upward bias; multiple rate-cut scenarios modeled Stable NIM; upside if curve steepens
CRE exposureReduced construction concentration below 70%; target <225% total CRE (Q3) Construction ratio down to 65.6%; total CRE 236.4%; cautious reopening of construction Progress toward targets; cautious growth later 2025
BHG performance/outlookLate-2024 stabilization; mid-to-high single-digit 2025 rev growth prelim (Q3) Strong Q1; ABS spreads favorable; raise 2025 earnings growth to 20% Upside vs prior
Recruiting/new marketsRecord hiring 2024; strong pipelines (Q3/Q4) 33 new revenue producers in Q1; expansion into Richmond, VA Sustained pace; footprint deepening

Management Commentary

  • CEO Terry Turner emphasized the “hedgehog strategy” of continuously hiring top bankers to consolidate books, enabling reliable, high-quality growth “almost irrespective of the economic landscape” .
  • CFO Harold Carpenter: “We are estimating… NII growth outlook will continue to approximate a range of 11% to 13%” for 2025; “our NIM will remain flattish with some upward bias” in Q2 .
  • On BHG, CFO: “Production was strong… credit was better than anticipated… raising our earnings estimates for 2025… from 10% growth to 20%” .

Q&A Highlights

  • CECL framework: Baseline unchanged; adverse scenario informs qualitative overlays (reserve methodology steady) .
  • BHG placement flexibility: Ample capacity via bank channel; planning another ABS later in the year contingent on markets .
  • Deposits: April seasonality can slow growth; pricing discipline and index-linked deposits support lower cost of funds with rate cuts .
  • Loan yields: Expect relative stability in Q2 absent cuts; fixed-rate repricing continues to provide lift over time .
  • Risk monitoring: Tariffs may pressure trucking/leverage lending; reserves guided by unemployment/GDP scenarios .
  • Tax rate: ~18% guidance for modeling .
  • Capital: CET1 dipped modestly; management aims to stabilize with growth planning .

Estimates Context

  • EPS: S&P Primary EPS consensus for Q1 2025 was $1.80*; PNFP delivered GAAP diluted EPS $1.77 and adjusted diluted EPS $1.90, indicating a beat on adjusted but slight miss on GAAP .
  • Revenue: Consensus $478.5M* vs reported total revenues $462.9M; miss largely reflects $12.5M securities loss and lower other noninterest income vs prior-year mortgage servicing asset .
  • Outlook: With NII guided up 11–13% and BHG raised to 20% 2025 earnings growth, street models may need to lower near-term reported revenue (GAAP) while lifting adjusted EPS trajectories.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Adjusted earnings power remains robust: normalized revenue and PPNR growth in double digits, supported by deposit strength and fixed-rate loan repricing; tactical securities restructuring should accrete spread ~$1M/quarter near-term .
  • Balance sheet growth is durable, driven by consolidation from newly hired revenue producers; Q1 saw 33 new producers and Richmond expansion, underpinning the 8–11% loan growth target for 2025 .
  • Rate-path resilience: With ~50%+ of deposits indexed and disciplined repricing, NIM is set to be “flattish with upward bias”; NII growth guided to 11–13% for 2025 offers visibility despite macro uncertainty .
  • Credit contained: Net charge-offs at 16 bps, NPAs modestly higher but within bounds; 2025 NCO guide maintained at 16–20 bps, provision 24–27 bps, with specific monitoring of trucking/leverage lending .
  • BHG upside is meaningful: Strong Q1 momentum and raised 2025 earnings growth to ~20% enhances fee-income mix and adjusted EPS trajectory .
  • Stock drivers: Sustained deposit/core funding gains, execution on recruiting-led market share capture, BHG performance, and any curve steepening could catalyze multiple expansion; watch GAAP vs adjusted optics given securities losses normalization .
  • Risk watch: Tariffs/supply chain stress, yield-curve inversion persistence, and CRE concentration path; management continues to de-risk CRE and retain capital flexibility .

Additional Items

  • Dividend: $0.24 per common share payable May 30, 2025; preferred dividend $16.88 per share payable June 1, 2025 .
  • Capital & soundness: TCE/TA 8.5%; CET1 10.7%; TBV/share $57.47; construction exposure reduced to 65.6% of total capital; total CRE (non-owner/multifamily/construction) at 236.4% of total capital .