Pinnacle Financial Partners(US:PNFP)2024-11-07 19:46Financial Performance - Diluted net income per common share for Q3 2024 was $1.86, up from $1.69 in Q3 2023, and for the nine months ended September 30, 2024, it was $4.08 compared to $5.99 in the same period last year [154]. - Net income for Q3 2024 was $146.7 million, representing a 10.6% increase from $132.6 million in Q3 2023 [169]. - Basic net income per common share increased to $1.87, up 10.7% from $1.69 in Q3 2023 [170]. - Return on average assets improved to 1.15%, up from 1.08% in Q3 2023, marking a 6.5% increase [170]. - Return on average shareholders' equity increased to 9.07%, a 4.7% rise from 8.66% in the same quarter last year [170]. Revenue and Income Sources - Net interest income for Q3 2024 was $351.5 million, a 10.8% increase from $317.2 million in Q3 2023 [169]. - Noninterest income for Q3 2024 increased by $24.4 million, or 26.9%, but decreased by $94.5 million, or 26.7%, for the nine months compared to the same periods in 2023 [157][158]. - Income from wealth management increased by $6.8 million (29.7%) and $14.0 million (20.2%) for the three and nine months ended September 30, 2024, compared to the same periods in 2023, driven by a rise in the number of wealth management advisors and strong market performance [181]. - Commissions and fees from investment services at Pinnacle Asset Management rose by approximately $4.6 million and $9.3 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 [181]. Loan and Deposit Growth - Total loans increased to $34.3 billion at September 30, 2024, up from $32.7 billion at December 31, 2023, representing a growth of $1.6 billion, or 5.0% [162]. - Total deposits rose to $41.0 billion at September 30, 2024, an increase of $2.4 billion, or 6.3%, from $38.5 billion at December 31, 2023 [162]. - Loans, net of allowance for credit losses, grew to $33.92 billion, a 4.9% increase from $32.32 billion as of December 31, 2023 [170]. - Total loans outstanding increased to $34.3 billion at September 30, 2024, up from $32.7 billion at December 31, 2023 [208]. Expenses and Efficiency - Noninterest expense increased by $46.1 million, or 21.6%, for Q3 2024, and by $136.5 million, or 21.4%, for the nine months compared to the same periods in 2023 [159]. - The efficiency ratio was 55.6% for Q3 2024, compared to 52.3% in Q3 2023, indicating an increase in expenses relative to revenue generation [160]. - Total noninterest expense increased by 21.6% and 21.4% for the three and nine months ended September 30, 2024, totaling $259.3 million and $773.1 million, respectively [194]. - Salaries and employee benefits expenses rose by $29.9 million and $57.9 million for the three and nine months ended September 30, 2024, largely due to an increase in the associate base and annual merit increases [195]. Credit Quality and Allowance for Losses - The allowance for credit losses was $391.5 million at September 30, 2024, up from $353.1 million at December 31, 2023, reflecting increased reserves due to macroeconomic conditions [163]. - The provision for credit losses was $26.3 million and $90.9 million for the three and nine months ended September 30, 2024, compared to $26.8 million and $77.3 million for the same periods in 2023 [177]. - Total loans past due 30 to 89 days decreased to $60.2 million as of September 30, 2024, from $116.4 million at December 31, 2023, representing a reduction of approximately 48.3% [215]. - Total loans past due 90 days or more increased to $82.0 million as of September 30, 2024, compared to $33.4 million at December 31, 2023, indicating a rise of approximately 145.0% [215]. Capital and Funding - Shareholders' equity rose to $6.3 billion as of September 30, 2024, compared to $6.0 billion at December 31, 2023 [236]. - The company has authorized a share repurchase program for up to $125.0 million, effective through March 31, 2025, but did not repurchase any shares during 2023 or the first nine months of 2024 [240]. - Pinnacle Bank had approximately $6.5 billion in available Federal Reserve discount window lines of credit as of September 30, 2024 [266]. - The company has approximately $192.0 million in cash available to support Pinnacle Bank's capital needs as of September 30, 2024 [238]. Economic and Market Conditions - The Federal Reserve has reduced short-term interest rates by 50 basis points in 2024, impacting the company's interest rate outlook [176]. - The company's earnings simulation model indicated a 0.28% increase in net interest income with a 100 bps increase in rates as of September 30, 2024 [248]. - The economic value of equity (EVE) model showed a decrease of 6.38% with a 100 bps increase in rates as of September 30, 2024 [252]. - Scheduled loan payments provide a stable source of funds, but loan payoffs and deposit flows are significantly influenced by interest rates and economic conditions [264].