Pinnacle Financial Partners(US:PNFP)2025-08-07 19:57PART I – Financial Information This part provides the unaudited consolidated financial statements and detailed notes for Pinnacle Financial Partners, Inc. and its subsidiaries Item 1. Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements of Pinnacle Financial Partners, Inc. and its subsidiaries, along with detailed accounting notes Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Assets | | | | Total assets | $54,801,451 | $52,589,449 | | Loans, net | $36,683,039 | $35,071,282 | | Cash and cash equivalents | $2,990,004 | $3,435,925 | | Liabilities | | | | Total deposits | $44,999,244 | $42,842,992 | | Total liabilities | $48,164,214 | $46,157,568 | | Shareholders' Equity | | | | Total shareholders' equity | $6,637,237 | $6,431,881 | | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total interest income | $694,770 | $668,390 | $1,362,930 | $1,318,873 | | Total interest expense | $315,237 | $336,128 | $618,969 | $668,577 | | Net interest income | $379,533 | $332,262 | $743,961 | $650,296 | | Provision for credit losses | $24,245 | $30,159 | $41,205 | $64,656 | | Net income | $158,540 | $53,162 | $298,948 | $177,106 | | Diluted net income per common share | $2.00 | $0.64 | $3.77 | $2.21 | - Pinnacle Financial entered into a Merger Agreement with Synovus Financial Corp. on July 24, 2025, where both companies will merge into a newly formed entity, Newco, which will be named Pinnacle Financial Partners, Inc. This merger is subject to shareholder and regulatory approvals353637 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial performance and condition, highlighting net income and EPS growth, loan growth, and the impact of the Synovus merger Overview Selected Financial Information Results of Operations Financial Condition Market and Liquidity Risk Management Recently Adopted Accounting Pronouncements | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | | Diluted net income per common share | $2.00 | $0.64 | >100.0% | | Net interest income | $379.5 million | $332.3 million | 14.2% | | Provision for credit losses | $24.2 million | $30.2 million | (19.6%) | | Noninterest income | $125.5 million | $34.3 million | >100.0% | | Noninterest expense | $286.4 million | $271.4 million | 5.5% | | Efficiency ratio | 56.7% | 74.0% | -17.3 pp | | Effective tax rate | 18.4% | 18.2% | +0.2 pp | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------- | | Diluted net income per common share | $3.77 | $2.21 | 70.6% | | Net interest income | $744.0 million | $650.3 million | 14.4% | | Provision for credit losses | $41.2 million | $64.7 million | (36.3%) | | Noninterest income | $223.9 million | $144.4 million | 55.1% | | Noninterest expense | $561.9 million | $513.8 million | 9.4% | | Efficiency ratio | 58.1% | 64.6% | -6.5 pp | | Effective tax rate | 18.0% | 18.1% | -0.1 pp | - Loans increased by $1.6 billion (4.6%) to $37.1 billion at June 30, 2025, from $35.5 billion at December 31, 2024, driven by organic loan growth, increased relationship advisors, and specialty lending groups. Total deposits rose by $2.2 billion (5.0%) to $45.0 billion151158 - The company's net interest margin expanded to 3.23% (3 months) and 3.22% (6 months) in 2025, up from 3.14% and 3.09% in 2024, primarily due to organic loan growth and a declining cost of funds152175 - Noninterest income saw a substantial increase, largely due to the repositioning of the securities portfolio (selling $822.7 million of available-for-sale securities at a net loss of $72.1 million in Q2 2024, which was not repeated in Q2 2025), and increased income from the equity method investment in BHG (up 39.3% for 3 months and 33.7% for 6 months)154184186187 - Noninterest expense increased due to a larger associate base (3,627 FTE at June 30, 2025, up from 3,469 at June 30, 2024), annual merit increases, and higher cash and equity incentive accruals. However, other noninterest expenses decreased significantly due to a one-time $27.6 million fee paid in Q2 2024 to terminate a securities resale agreement155196205 - The Allowance for Credit Losses (ACL) increased to $422.1 million at June 30, 2025, from $414.5 million at December 31, 2024, primarily due to overall portfolio growth. The ACL as a percentage of total loans decreased slightly to 1.14% from 1.17%, reflecting reductions in specific reserves159217 - Pinnacle Financial and Pinnacle Bank continue to exceed all regulatory minimum capital requirements and are considered well-capitalized. The company's board authorized a new $125.0 million share repurchase program effective through March 31, 2026, though no shares were repurchased in the first six months of 2025160161233 Item 3. Quantitative and Qualitative Disclosures about Market Risk This section incorporates market risk disclosures, including interest rate sensitivity and liquidity risk management, by reference from Item 2 - The required information for quantitative and qualitative disclosures about market risk is incorporated by reference from pages 43 through 66 of Part I - Item 2267 Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Changes in Internal Controls - The Chief Executive Officer and Chief Financial Officer concluded that Pinnacle Financial's disclosure controls and procedures were effective as of June 30, 2025268 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025269 PART II – Other Information This part provides additional information including legal proceedings, risk factors, equity security sales, and other disclosures Item 1. Legal Proceedings The company is involved in routine legal proceedings, with no material pending cases expected to adversely impact financial condition or results - There are no material pending legal proceedings to which Pinnacle Financial or its subsidiaries are a party271 Item 1A. Risk Factors This section details investment risks, primarily focusing on the proposed merger with Synovus, including approval contingencies, integration challenges, and transaction costs - The proposed merger with Synovus is contingent upon various conditions, including shareholder and regulatory approvals, which may delay or prevent its completion273274277 - Integration of Synovus's business may face difficulties such as loss of key employees, operational disruptions, customer attrition, and unexpected problems with costs, technology, and credit278279 - Significant transaction and merger-related costs will be incurred, which may not be offset by anticipated cost savings and efficiencies in the near term or at all283 - Failure to complete the merger could adversely affect stock price, business operations, and liquidity, potentially requiring a termination fee of $425.0 million287 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details common stock repurchases for tax withholding purposes, noting no repurchases under the publicly announced share repurchase program | Period | Total Number of Shares Repurchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :--------------------------------------------------------------------------------------------------- | | April 1, 2025 to April 30, 2025 | 4,888 | $95.36 | — | $125,000,000 | | May 1, 2025 to May 31, 2025 | 102 | $107.73 | — | $125,000,000 | | June 1, 2025 to June 30, 2025 | 175 | $109.56 | — | $125,000,000 | | Total | 5,165 | $96.14 | — | $125,000,000 | - The repurchased 5,165 shares were withheld to satisfy tax withholding requirements for vested restricted stock and restricted stock units294 - Pinnacle Financial did not repurchase any shares under its $125.0 million share repurchase program during the three months ended June 30, 2025292 Item 3. Defaults Upon Senior Securities This item is not applicable to Pinnacle Financial Partners, Inc. for the current reporting period Item 4. Mine Safety Disclosures This item is not applicable to Pinnacle Financial Partners, Inc. for the current reporting period Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025293 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the merger agreement with Synovus, various certifications, and Inline XBRL documents - Key exhibits include the Agreement and Plan of Merger with Synovus Financial Corp. (Exhibit 2.1) and related Letter Agreements (Exhibits 10.1, 10.2)295 - Certifications pursuant to Rule 13a-14(a)/15d-14(a) and 18 USC Section 1350 are filed/furnished as Exhibits 31.1, 31.2, 32.1, and 32.2295 - Inline XBRL documents (Instance, Schema, Calculation, Label, Presentation, Definition Linkbase) are included as Exhibits 101.INS through 101.DEF295 Signatures This section contains the required signatures of the principal executive and financial officers for the Form 10-Q, dated August 7, 2025 - The report was signed by M. Terry Turner, President and Chief Executive Officer, and Harold R. Carpenter, Chief Financial Officer, on August 7, 2025298