PNFP Reports 1Q25 Diluted EPS of $1.77; Adjusted Diluted EPS of $1.90

Year-over-year loan growth was 9.0%

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.77 for the quarter ended March 31, 2025, compared to net income per diluted common share of $1.57 for the quarter ended March 31, 2024, an increase of approximately 12.7 percent. After considering the adjustments noted in the table below, net income per diluted common share was $1.90 for the three months ended March 31, 2025, compared to $1.53 for the three months ended March 31, 2024, an increase of 24.2 percent.

"There is great volatility and economic uncertainty associated with tariffs, taxes and other policy changes," said M. Terry Turner, Pinnacle's president and chief executive officer. "As always, we remain nimble and responsive to the macro environment, but I believe the strength of our differentiated model is most evident in periods like this with economic uncertainty and slower growth for the industry. Our continuously expanding number of relationship managers grew loans 9.0 percent comparing the first quarter of 2025 to the first quarter of 2024. We continue to hire the best bankers in our markets which allows us to grow a solid balance sheet as they consolidate their books of business to Pinnacle. Both our recruiting and business development pipelines are robust, which underpins our ongoing growth expectations.

"During the first quarter, we added 33 revenue producers to our firm, compared to 37 in the first quarter of last year. Despite the current economic uncertainties, we will continue to invest in future growth by recruiting the best bankers in our existing markets and, if the right talent becomes available, we would also consider extending into other large, urban markets in the Southeast."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at March 31, 2025, were $54.3 billion, an increase of approximately $1.7 billion from Dec. 31, 2024, and $5.4 billion from March 31, 2024, reflecting a linked-quarter annualized increase of 12.7 percent and a year-over-year increase of 11.0 percent. A further analysis of select balance sheet trends follows:

"We are off to a great start with deposit growth of 15.3 percent annualized in the first quarter of 2025," Turner said. "We were particularly pleased that our noninterest bearing deposits grew by $336.9 million during the quarter, an annualized growth rate of 16.5 percent. Year-over-year net loan growth was 9.0 percent comparing first quarter 2025 to first quarter 2024. Net loan growth during the first quarter of 2025 was $651.0 million compared to net loan growth of $486.8 million first quarter last year, a 33.7 percent increase. Consequently, we remain confident and believe that our previous guidance of 8 to 11 percent growth for 2025 over 2024 year-end loan balances remains a reasonable estimate for us at this time."

PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) GROWTH AND PROFITABILITY:

Pre-tax, pre-provision net revenues (PPNR) for the three months ended March 31, 2025 were $187.4 million, compared to $185.8 million recognized in the three months ended March 31, 2024. As noted in the table below, adjusted PPNR for the three months ended March 31, 2025 were $199.9 million, compared to $181.3 million in the three months ended March 31, 2024, a double-digit growth rate.

Net interest income for the first quarter of 2025 was $364.4 million, compared to $318.0 million for the first quarter of 2024, a year-over-year growth rate of 14.6 percent. Net interest margin was 3.21 percent for the first quarter of 2025, compared to 3.04 percent for the first quarter of 2024.

Noninterest income for the first quarter of 2025 was $98.4 million, compared to $110.1 million for the first quarter of 2024. As noted in the table below, adjusted noninterest income for the first quarter of 2025 was $110.9 million, compared to $98.3 million for the first quarter of 2024, a year-over-year increase of 12.9 percent.

• Wealth management revenues, which include investment, trust and insurance services, were $32.8 million for the first quarter of 2025, compared to $26.0 million for the first quarter of 2024, a year-over-year increase of 26.2 percent. The increase in wealth management revenues continues to be primarily attributable to an increase in capacity as we hire more revenue producers across the firm, but particularly in the areas of the firm's most recent market extensions.
• Income from the firm's investment in Banker's Healthcare Group (BHG) was $20.4 million for the first quarter of 2025, compared to $16.0 million for the first quarter of 2024, a year-over-year increase of 27.3 percent.
  • BHG's loan originations were $1.2 billion in the first quarter of 2025, compared to $692 million in the first quarter of 2024.
  • Loans sold to BHG's community bank partners were approximately $605 million in the first quarter of 2025, compared to $533 million in the first quarter of 2024.
  • BHG reserves for on-balance sheet loan losses were $245.0 million, or 9.2 percent of loans held for investment at March 31, 2025, compared to 9.3 percent at Dec. 31, 2024, and 10.3 percent at March 31, 2024.
  • At March 31, 2025, BHG increased its accrual for estimated losses attributable to loan substitutions and prepayments to $577.5 million, or 7.5 percent of the unpaid balances on loans that were previously purchased by BHG's community bank network, compared to 7.1 percent at Dec. 31, 2024 and 5.7 percent at March 31, 2024.
• Other noninterest income was $38.0 million for the quarter ended March 31, 2025, a decrease of $13.7 million from the first quarter of 2024. During the first quarter of 2024, the Company recognized a mortgage servicing asset associated with its Freddie Mac Small Business Lending (SBL) platform of approximately $11.8 million, which was reflected in other noninterest income and is the primary cause of the decrease in other noninterest income in the first quarter of 2025 when compared to the first quarter of 2024.

Noninterest expense for the first quarter of 2025 was $275.5 million, compared to $242.4 million for the first quarter of 2024. As noted in the table below, adjusted noninterest expense for the first quarter of 2025 was $275.4 million, compared to $235.0 million for the first quarter of 2024.

• Salaries and employee benefits were $172.1 million in the first quarter of 2025, compared to $146.0 million in the first quarter of 2024, reflecting a year-over-year increase of 17.9 percent.
  • Cash incentive costs in the first quarter of 2025 totaling $20.1 million were approximately $6.8 million higher than the first quarter of 2024. The increase in cash incentive costs was due to increases in headcount, annual merit raises and other base salary adjustments for participants in the plan and an increase in the anticipated incentive award payouts from a first quarter 2024 accrual which assumed an approximate 80 percent of target payout to a first quarter of 2025 accrual which assumes an approximate 100 percent.
• Equipment and occupancy costs were $46.2 million in the first quarter of 2025, compared to $39.6 million in the first quarter of 2024, resulting in a year-over-year increase of 16.5 percent. This increase was primarily attributable to opening nine new full-service locations throughout the company's footprint over the last 12 months and, during the first quarter of 2025, relocation of its corporate headquarters to a new location in downtown Nashville.
• Marketing and other business development costs were $8.7 million in the first quarter of 2025, compared to $6.1 million in the first quarter of 2024, resulting in a year-over-year increase of 41.5 percent. The primary drivers of the increases in marketing and business development costs were the Company's partnership with The Pinnacle, Nashville's newest live music venue, which opened in March 2025, and other factors including increases in both client and associate engagement expenses due to our increased headcount and market extensions.
• Noninterest expense categories, other than those specifically noted above, were $48.6 million in the first quarter of 2025, compared to $50.6 million in the first quarter of 2024, resulting in a year-over-year decrease of 4.0 percent. Several factors contributed to the decrease in other noninterest expense in the first quarter of 2025 compared to the first quarter of 2024, including the recording of an FDIC special assessment in the first quarter of 2024, offset in part by loss protection fees associated with a credit default swap which began in the second quarter of 2024.

"Our year-over-year increase in first quarter revenues was 8.1 percent, but after giving effect to losses on the sale of securities in the first quarter of 2025 and the recognition of the mortgage servicing right asset in the first quarter of 2024, adjusted revenues increased by 14.2 percent," said Harold R. Carpenter, Pinnacle's chief financial officer. "Both our net interest income and net interest margin results for the first quarter of 2025 were in line with our expectations.

"BHG had a stronger quarter than we originally anticipated as production volumes were strong and credit costs were slightly better than we anticipated. We were also pleased with the year-over-year growth in virtually all of our banking fee categories including wealth management, deposit fees and others. Conversely, other noninterest income decreased in the first quarter of 2025 due to the recognition of the mortgage servicing asset last year and fair value adjustments related to our other equity investments which were $3.0 million less in the first quarter of 2025 compared to the first quarter of 2024."

CAPITAL, SOUNDNESS AND TAXES:

"Our capital ratios remain in a strong position after the first quarter of 2025," Carpenter said. "We are below our long-term target for exposure to construction and land development loans as the ratio of these loans to total capital decreased to 65.6 percent at March 31, 2025. Our net charge-offs were at 0.16 percent, which was within the range we estimated when we released our 2024 full-year results."

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CT on April 15, 2025, to discuss first quarter 2025 results and other matters. To access the call for audio only, please call 1-877-209-7255. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. The firm is the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, according to 2024 deposit data from the FDIC. Pinnacle is No. 9 on FORTUNE magazine's 2025 list of 100 Best Companies to Work For® in the U.S., its ninth consecutive appearance and was recognized by American Banker as one of America's Best Banks to Work For 12 years in a row and No. 1 among banks with more than $10 billion in assets in 2024.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $54.3 billion in assets as of March 31, 2025. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in several primarily urban markets across the Southeast.

Additional information concerning Pinnacle, which is included in the Nasdaq Financial-100 Index, can be accessed at www.pnfp.com.

Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "aim," "anticipate," "intend," "may," "should," "plan," "looking for," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers of Pinnacle Bank and its subsidiaries or BHG, including as a result of persistent elevated interest rates, the negative impact of inflationary pressures and challenging economic conditions on our and BHG's customers and their businesses, resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iii) the impact of U.S. and global economic conditions, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and geopolitical instability; (iv) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs; (v) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout the Southeast region of the United States, particularly in commercial and residential real estate markets; (vi) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to limit the rates it pays on deposits or uncertainty exists in the financial services sector; (viii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (ix) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (x) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial's results, including as a result of the negative impact to net interest margin from elevated deposit and other funding costs; (xi) the results of regulatory examinations of Pinnacle Financial, Pinnacle Bank or BHG, or companies with whom they do business; (xii) BHG's ability to profitably grow its business and successfully execute on its business plans; (xiii) risks of expansion into new geographic or product markets; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xvi) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xvii) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xviii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam or ransomware attacks, human error, natural disasters, power loss and other security breaches; (xxi) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxii) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xxiii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiv) the risks associated with Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Bank); (xxv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxvi) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvii) the availability of and access to capital; (xxviii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions involving Pinnacle Financial, Pinnacle Bank or BHG; and (xxix) general competitive, economic, political and market conditions. Throughout this document, numbers may not foot due to rounding. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2024, and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest expense, noninterest income and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, charges related to the FDIC special assessment, income associated with the recognition of a mortgage servicing asset in the first quarter of 2024, fees related to terminating an agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives in the second quarter of 2024 and other matters for the accounting periods presented. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure as well as the impact of Pinnacle Financial's Series B Preferred Stock. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2025 versus certain periods in 2024 and to internally prepared projections.