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PINNACLE FINANCIAL PARTNERS INC (PNFP)·Q3 2025 Earnings Summary

Executive Summary

  • Strong beat and raised outlook. Adjusted diluted EPS was $2.27 vs S&P consensus of $2.04*, and GAAP diluted EPS was $2.19; total revenues were $544.8M vs $525.9M consensus*, driven by loan growth, deposit mix improvement, and robust BHG fees .
  • Net interest margin expanded 3 bps to 3.26% (Q/Q), efficiency improved to 55.64%, and ROAA/ROTCE held solid at 1.22%/14.49% .
  • Guidance raised/updated: NII growth to ~13–14% YoY; noninterest income growth to 20–22% (from 12–15%); EOP loans 9–10% (narrowed from prior 8–11%); EOP deposits 8–10%; 2025 provision to avg loans 26–27 bps; NCOs ~18–20 bps; expenses $1.150–$1.155B; effective tax rate low ~18% .
  • Catalysts: continued NIM expansion into Q4, accelerating noninterest income (notably BHG), improved noninterest-bearing deposit mix, and high-confidence Synovus merger timeline and synergy narrative (cost saves $250M, revenue upside unmodeled) .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based revenue strength: total revenues up 16.7% YoY to $544.8M; NII +12.9% YoY and noninterest income +28.4% YoY; NIM rose to 3.26% with management expecting further expansion in Q4 (“we expect continued expansion in the fourth quarter”) .
    • Deposit mix tailwind: noninterest-bearing deposits rose $312.2M Q/Q (14.5% linked-quarter annualized), with core deposits +10.6% (linked-quarter annualized); CFO highlighted “very valuable operating accounts” and consistent deposit betas through cuts .
    • BHG acceleration: BHG income was $40.6M (vs $16.4M YoY), with originations $1.7B (vs $989M YoY) and strong loan sale spreads (>10%) and on-balance margins (>11%); FY25 BHG earnings expected to grow ~85–90% YoY .

  • What Went Wrong

    • Expense pressure from performance comp and merger costs: noninterest expense rose 16.9% YoY to $303.1M; adjusted noninterest expense $295.3M; merger-related expenses were $7.7M; cash incentive accruals increased to 125% payout assumption given stronger outlook .
    • CRE payoffs weighed on mix despite C&I strength; management cited ~$560M of early CRE payoffs as a drag, with plans to re-engage in construction as concentrations normalize .
    • Slight uptick in some watchlists/classifications (still benign): potential problem loans ticked up largely due to a single healthcare credit under turnaround management; NPAs/loans+ORE at 0.41% and ACL/loans at 1.15% remain solid .

Financial Results

Headline metrics vs prior periods and estimates

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($M)$466.7 $505.0 $544.8
Diluted EPS (GAAP)$1.86 $2.00 $2.19
Diluted EPS (Adj.)$1.86 $2.00 $2.27
Net Interest Margin3.22% 3.23% 3.26%
Efficiency Ratio55.56% 56.72% 55.64%

Revenue components

Revenue Component ($M)Q3 2024Q2 2025Q3 2025
Net Interest Income$351.5 $379.5 $396.9
Noninterest Income$115.2 $125.5 $147.9
Total Revenues$466.7 $505.0 $544.8
of which Wealth Mgmt Fees$29.5 $32.3 $38.2
of which BHG Income$16.4 $26.0 $40.6

Banking KPIs

KPIQ3 2024Q2 2025Q3 2025
Loans (EOP, $B)$34.31 $37.11 $37.93
Total Deposits (EOP, $B)$40.95 $45.00 $45.73
Noninterest-Bearing Deposits (EOP, $B)$8.23 $8.64 $8.95
ROAA (annualized)1.15% 1.15% 1.22%
ROTCE (annualized)13.61% 13.75% 14.49%
Efficiency Ratio55.56% 56.72% 55.64%
Annualized NCOs / Avg Loans0.21% 0.20% 0.18%
NPAs / Loans+ORE+Other NPAs0.35% 0.44% 0.41%
ACL / Loans1.14% 1.14% 1.15%

Estimates vs Actuals (S&P Global consensus)

MetricQ1 2025Q2 2025Q3 2025
EPS Consensus (Primary EPS)$1.80*$1.91*$2.04*
EPS Actual (Adj.)$1.90 $2.00 $2.27
Revenue Consensus ($M)$478.5*$497.3*$525.9*
Revenue Actual ($M)$462.9 $505.0 $544.8

Values with asterisks (*) are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income growth vs 2024FY 2025n/a~13–14% YoY Raised
Noninterest Income growthFY 202512–15% 20–22% Raised
End-of-Period Loan GrowthFY 20258–11% (prior stated in Q1) 9–10% Narrowed/updated
End-of-Period Deposit GrowthFY 2025Low end increased (prior lower) 8–10% (raised low end) Raised low end
Net Interest MarginQ4 2025/near-term“Increase into Q3” (Q2 view) “Continued expansion in Q4” Maintained upward trajectory
Provision to Avg LoansFY 2025n/a~26–27 bps Set/raised
Net Charge-offsFY 2025~18–20 bps ~18–20 bps Unchanged
Total ExpensesFY 2025Prior implied at 115% payout accrual $1.150–$1.155B (incl. 125% payout accrual) Raised/mod. higher
Effective Tax RateFY 2025Low ~18% Low ~18% Maintained
BHG Contribution (Q4)Q4 2025n/a~+$30M noninterest income New datapoint

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Deposit mix (DDA)DDA up $133M Q/Q in Q2; YTD +$470M (~11.5% annualized) and strong DDA growth in Q1 (+$337M; +16.5% LQA) DDA +$312M Q/Q; +$782.5M YTD (~12.8% annualized); treasury/specialty deposits driving momentum Improving
NIM trajectoryQ1 NIM 3.21% with expectation for further expansion ; Q2 NIM 3.23% with expected expansion into Q3 NIM rose to 3.26%; management expects continued expansion in Q4 Improving
Loan growth mix (C&I vs CRE)Q2 C&I +21.9% LQA; CRE appetite re-engaging as concentrations normalize C&I outpaced; company re-engaged construction as below thresholds; expects CRE contribution to improve Improving medium term
Credit quality/CREQ1/Q2 NPAs low; CRE concentrations lowered towards targets NPAs 0.41%; ACL 1.15%; early CRE payoffs persisted; one healthcare credit monitored Stable/benign
Noninterest income/BHGQ1 BHG $20.4M; Q2 BHG $26.0M BHG $40.6M; Q4 guide ~$30M; FY25 BHG growth 85–90% YoY Strong, slight Q4 normalization
Hiring/talentQ1: +33 revenue producers; Q2: +38; entering Richmond VA +35 revenue producers; 93% retention; offer “kill rate” steady; scaling post-merger Sustained
Synovus mergerS-4 effective Sep 30; timeline early Q1 2026; cost saves $250M Progressing; leadership and systems decisions advanced; timeline intact; reiterated cost saves, revenue synergy potential On track/positive

Management Commentary

  • CEO: “On a linked-quarter annualized basis, third quarter revenues increased 31.5 percent, diluted earnings per share increased 38.0 percent, adjusted diluted earnings per share increased 54.0 percent, noninterest-bearing deposits increased 14.5 percent, core deposits increased 10.6 percent and total loans increased 8.9 percent” .
  • CFO: “As anticipated, our net interest margin expanded in the third quarter, and we expect continued expansion in the fourth quarter… we attribute margin expansion… to our deliberate focus on managing our funding costs” .
  • CFO on BHG: “BHG had an exceptional third quarter… off-balance sheet loan sales were at spreads in excess of 10%, while margins for on-balance sheet loans are now in excess of 11%… we estimate BHG’s results should contribute approximately $30 million to our noninterest income” (Q4) .
  • CEO on merger: “We’re rapidly progressing through the final milestones [for] first quarter close… Virtually all key metrics were peer leading or number one… it’s my hope that our third quarter performance… delivered the first privilege” .

Q&A Highlights

  • Hiring scalability: Management confident the relationship-banker-led recruiting model scales post-merger; expects acceleration within Synovus footprint (incremental 35–80 RMs per year), with strong economics per experienced RM .
  • BHG: Growth driven by production and aggregator partnerships; Q4 moderation reflects seasonality/caution on costs, not demand; optionality remains high .
  • Margin tailwinds: Drivers include deposit beta reduction, mix shift to DDA, and loan repricing; management expects further NIM improvement in Q4 .
  • DDA growth sustainability: Emphasis on small business operating accounts and treasury/specialty deposit wins; some seasonal build expected in Q4 .
  • Credit/Watchlist: A single healthcare credit largely drove the potential problem loan uptick; broader NDFI exposure granular and monitored .

Estimates Context

  • Q3 2025 vs S&P consensus: EPS $2.27 (Adj.) vs $2.04* (beat by $0.23); Revenues $544.8M vs $525.9M* (beat by ~$18.9M) .
  • Trajectory: Company beat consensus in Q1 ($1.90 vs $1.80*) and Q2 ($2.00 vs $1.91*) as well, reflecting momentum in NII, DDA mix, and BHG .
  • Implications: Street models likely need to lift NII, fee income (BHG/wealth), and NIM trajectories; expense run-rate also trending higher on performance comp and merger costs .

Values with asterisks (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Upside surprise with durable drivers: beats on EPS/revenue driven by NIM expansion, DDA strength, and outsized BHG; management guides further NIM gains into Q4 .
  • Positive estimate revision setup: Raised FY25 noninterest income and NII growth plus BHG’s higher run-rate should drive upward revisions despite higher expenses .
  • Loan growth intact with improving CRE runway: C&I remains strong; management re-engaging construction lending as concentration headwinds abate, aiding 2026 growth .
  • Credit remains benign: NPAs at 0.41%, ACL/loans 1.15%, and NCOs ~18–20 bps FY guide; watchlist uptick idiosyncratic .
  • Merger progressing well: cost saves ($250M) reiterated; leadership/systems decisions advanced; revenue synergies unmodeled but likely upside .
  • Near-term trading lens: focus on Q4 NIM delivery, BHG seasonality ($~30M guide), and continued DDA gains; any merger approval milestones could be incremental catalysts .
  • Medium-term: balance sheet growth, recruiting engine, and merger integration create a path to sustained EPS/TBVPS compounding with peer-leading profitability .

Other Relevant Q3 Items

  • Dividend: Board approved $0.24 per share common dividend (payable Nov. 28, 2025; record Nov. 7, 2025) and $16.88 per share on Series B preferred (Dec. 1, 2025) .
  • Merger process: S-4 declared effective Sep. 30; both boards/shareholders actions proceeding; closing expected early Q1 2026 .