Pinnacle (PNFP) 2025년 3분기 실적 증언록

Image source: The Motley Fool.

Date

Thursday, October 16, 2025 at 9:30 a.m. ET

Call participants

- President & Chief Executive Officer — M. Turner

- Chief Financial Officer — Harold Carpenter

Need a quote from a Motley Fool analyst? Email [email protected]

Full Conference Call Transcript

M. Turner: Thank you, Matthew, and thanks for joining us. I'm sure no one is keeping track, but next week will be Pinnacle's 25th anniversary, which makes this the 100th quarterly close for Harold and me. Happily, this is one of the best in a long history of beat and raise quarters as has been our custom for a very long time. We begin every quarterly call with the same shareholder value dashboard. GAAP measures first, followed by the non-GAAP measures, which are the ones that I focus on to manage the firm.

As you can see across the bottom row, our asset quality metrics remain well below pre-COVID median levels with all problem loan metrics continuing to operate at or near historical lows. On the middle row, of course, everything is up and to the right, you can see the balance sheet continues to reliably build quarter after quarter with double-digit CAGR for loans and core deposits over nearly a 5-year period of time. That's largely attributable to our ability to recruit and retain proven revenue producers and consolidate their relationships. We expect balance sheet growth to continue based on the revenue producers that are currently on our payroll, but have not yet completed consolidating their books to us.

And we've continued hiring at a similar pace in 2025, which should help to continue to further produce balance sheet growth, more on future balance sheet growth expectations and hiring in a minute. And then moving on to the top row, you can see that the sustainable and reliable balance sheet growth has resulted in rapid revenue and EPS and the double-digit CAGR for tangible book value per share growth, which we believe are the 3 metrics most highly correlated with total shareholder return. That's been our relentless pursuit over the last 25 years and has resulted in the second highest total shareholder return among all the publicly traded banks in the country since our NASDAQ listing in 2002.

A number of times over the years, I've used the flywheel concept, which was developed by Jim Collins in Good to Great, to help crystallize for investors the sustainable momentum that we've built in this firm. I think I last used it in 2022, and it's hard to imagine that many are unfamiliar with the concept, but the idea is that through a series of disciplined, consistent efforts in the right direction, you eventually produce accelerated and sustained growth. I don't think that could be a better descriptor of Pinnacle over time than accelerated and sustained growth.

For us, that hedgehog strategy, that disciplined and consistent effort in the right direction, is our continuous recruitment and retention of market-leading revenue producers. I've developed in previous quarterly investor calls, how that hiring translates into the kind of sustainable balance sheet growth you saw on the previous slide. In last quarter's earnings call, I demonstrated how our hiring to date could yield approximately $19 billion in loan growth that would materialize over the next 5 years, again, with no further hiring and irrespective of tariffs, Fed rate moves, general economic conditions and so forth, simply based on the continued consolidation of relationships by the relationship managers on our payroll at that time.

And third quarter '25 is just another quarter on that march with third quarter linked-quarter annualized growth rates of 14.5% for noninterest-bearing deposits, 10.6% for core deposits, 8.9% for loans, 31.5% for revenue and 54% for adjusted EPS. So for those who wondered whether we could sustain momentum post-merger, I hope we've at least put that question to bed. Annual FDIC data were released in the third quarter, which make clear not only the success that we've enjoyed over the last decade, but why we are so optimistic about the future. We've long targeted the market share leaders in our markets.

Here, you can see the magnitude of their vulnerability given up over the last decade, as noted in the red circles, 10.3% in Nashville, 15.1% Chattanooga, 13.9% in Knoxville and 16.7% in Memphis. That is major vulnerability. And then across the bottom in the blue circles, you see the incredible effectiveness of the Pinnacle model in the same time period. Picking up another 3% in Nashville, where we enjoy the #1 rank and not by a little, but by a lot; 8.4% in Chattanooga; 7.8% in Knoxville and 5.1% in Memphis. Hopefully, this illustrates our excitement about the ongoing match up, our ability to continue rapid balance sheet growth and ultimately, to produce outsized revenue and EPS growth.

And here, you're looking at the same data across other Southeastern markets where you can see fundamentally the same competitive vulnerabilities. Along the bottom row, we see the magnitude of the vulnerability we're attempting to seize from those share leaders that we target, look at these markets like 11.9% share loss in Greensboro, North Carolina; 11.9% share loss in Raleigh, North Carolina; 10.8% share loss in Greenville, South Carolina; 9.1% share loss in Charleston, South Carolina; 12.1% share loss in Atlanta, Georgia, where post-merger, we'll have the #4 market share position. Honestly, that is one of the things that excites me most about our combination with Synovus.

When you combine that FDIC data with the Greenwich data demonstrating the differentiated service level that Pinnacle provides when combined with Synovus, you can see why we believe that we'll be the fastest-growing, most dynamic large regional bank in the country. Here, you're looking at Greenwich data for businesses with sales from $1 million to $500 million in the legacy Pinnacle footprint. North and South, we're plotting market share; East and West were plotting Net Promoter Scores. Obviously, the goal is to get to the top right quadrant.

So the first observation is that with this merger, we will have arrived, combining Pinnacle's share with Synovus' share in our existing footprint, puts us on the heels of the 3 market share leaders, which are in the top left box. That's an 8% share position -- lead share position. And that leads to the second even more important observation, combining Pinnacle's Net Promoter Scores with Synovus' Net Promoter Scores in our footprint, we retained the highest Net Promoter Score. And all of that leads to the third and single most important observation.

This merger is unique in its ability to run a differentiated service model, literally the best with a combined Net Promoter Score near 80, and we'll be competing against banks who amassed great share in previous decades, but who have lost an engagement of their clients. Some of Net Promoter Scores in the 20s, making them likely to continue giving up share, particularly to a bank like ours with similar mass in the market, but with a meaningfully differentiated service level. In my career, I have never seen a more advantaged competitive position than the one we've enjoy post-merger. I recognize some have been concerned about the loss of momentum post-merger announcement.

As you saw earlier, there was certainly no loss of momentum in terms of financial performance in Q3. And here, you can see there was no loss of hiring momentum in Q3. Hiring almost exactly the number of revenue producers that we hired on average in the first 2 quarters of 2025 pre-announcement and consistent with the quarterly run rate over the previous 4 quarters. Interestingly, the kill rate on job offers, meaning the turning job offers into hires, it remained unchanged post announcement, hiring 91.5% of those that were offered jobs in the first 2 quarters pre-announcement and 91.6% in the third quarter.

And so from 30,000 feet drawn on Mark Twain, rumors of our untimely demise were greatly exaggerated. Our flywheel continues to spin. And when you overlay this model on the Synovus franchise, the growth revenue producers and therefore, the growth in revenue should be extraordinary. So with that, let me turn it over to Harold for a detailed look at the quarter.

Harold Carpenter: Thanks, Terry. And I guess Mark Twain as well.

M. Turner: There you go.

Harold Carpenter: Good morning, everybody. We will again start with loans. End-of-period loans increased 8.9% linked quarter annualized, but a little less than we anticipated, but still a strong effort by our relationship managers, one that does not cause us to think any less about the fourth quarter. As our fourth quarter pipelines and quarter-to-date results are in great shape, we will continue to lean on our new markets and new revenue producers to provide the punch for our loan growth. Given third quarter results and fourth quarter pipeline, we've adjusted our end-of-period loan outlook range to consider 9% to 10% growth this year. We're also pleased with how our loan yields performed during the third quarter.

Although the lift from fixed rate repricing is not as opportunistic as it once was, we will anticipate continued lift in fixed rate loan rates, loan yields should decrease in the fourth quarter consistent with Fed funds rate decreases, but these decreases, we believe, will be at consistent betas and obviously, we will offset these decreases with corresponding decreases in deposit rates. EOP deposit growth came in at 6.4% linked quarter annualized. Over the years, we typically experience more deposit growth in the second half of the year than the first half.

As a result, we are increasing the low end of our estimated growth rate for total end-of-period deposits to 8% and maintaining the high end at 10% in deposit growth for 2025. As we highlighted in the press release last night, we are very excited about the performance of our noninterest-bearing deposits and the growth we have seen this year. To see the rebound in those dollars this year is very much a tailwind in our spread income as we head into the fourth quarter and 2026. Many thanks to our revenue producers, treasury professionals and specialty deposit units for all the hard work getting these very valuable operating accounts.

We're also very pleased with how deposit pricing has performed thus far and how both of our loan and deposit betas have performed through the current rate cycle. We anticipate our betas will remain consistent given we anticipate incremental rate cuts in the fourth quarter. We anticipated a modest increase in NIM in the third quarter, so we're pleased that our NIM finished up 3 basis points at 3.26%. Our outlook for the fourth quarter of 2025 is more bullish as our NIM should continue to increase with the anticipated 2 additional rate cuts.

As for our 2025 outlook for net interest income, we have increased our estimated growth range for net interest income and now believe our growth outlook will approximate a range of 13% to 14% over 2024 results. Obviously, any surprise, Fed funds rate decisions and the slope of the yield curve will have influence on how all of this plays out for the remainder of this year. As to rate cut, we've modeled out many scenarios and again, feel we're in pretty good shape to manage through most rate forecasts that are talked about in the markets today. Our current Fed funds rate forecast contemplates a rate cut in October and another in December.

At this time, we do believe more rate cuts are helpful. But given the timing, we believe whatever might happen otherwise will not have a substantial impact on our anticipated 2025 results. As to credit, our net charge-offs decreased to 18 basis points in the third quarter from 20 basis points in the second quarter. For the full year 2025, our net charge-off outlook is unchanged as we estimate net charge-offs for 2025 coming in at approximately 18 to 20 basis points. We've increased our estimated 2025 outlook for our provision to average loans to 26 to 27 basis points. This increase is partially attributable to the increase in our reserve for unfunded commitments.

That increase is very much volume related and consistent with the increased outstanding unfunded lines of credit issued to our borrowers in the third quarter. A quick word about BHG. BHG had an exceptional third quarter, providing fee revenues to us of over $40 million. Production was again strong in the third quarter. Credit losses also were improved third quarter compared to second 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%. Now that said, we are anticipating BHG's fourth quarter results to be less in earnings than the third quarter.

But for the fourth quarter, we are estimating BHG's results should contribute approximately $30 million to our non-interest income. Given these matters, we and BHG are both comfortable in raising our earnings estimate for BHG earnings growth in 2025 to approximate 85% to 90% growth over the results reported in 2024. Several factors are contributing to this decision, stronger production lead flow, great spreads, better credit performance and better operating margins, all of which should point to what should be a very strong year for BHG. Lastly, to our outlook for 2025. I mentioned much of the information on the slide.

Again, the investments we've made in our new markets and our hiring success are the building blocks we will lean into in order to position us for top quartile, growth in EPS and tangible book value per share amongst our peers. As for non-interest income, banking fees and wealth management are performing well. Along with BHG's estimated growth this year, we are comfortable increasing our guidance for non-interest income from 12% to 15% growth to now 20% to 22% growth this year. As I mentioned previously, BHG will likely approximate $30 million in the fourth quarter and make up most of the overall variance between our third quarter and fourth quarter anticipated results.

As to expenses, our prior outlook reflected 115% of target award for our associates, which now given our more positive outlook for the year, we are increasing to an anticipated 125% target as of September 30. Through all of that, we are modifying our total expense outlook to a range of $1.15 billion to $1.155 billion for estimated expenses for this year. As the slide indicates above, we are projecting an effective tax rate for 2025 in the low 18% range, which will basically be consistent with last year.

Now as to PPNR and summing all of that up, we look at our fourth quarter PPNR, excluding BHG and merger costs, we think fourth quarter will be flat to up from the third quarter. And as to year-over-year PPNR, we think we'll be in the 7% to 8% range in growth. Even as all the uncertainties around rates and tariffs play out, we are confi