Pinnacle Financial Partners(PNFP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a third quarter linked quarter annualized growth rate of 14.5% for non-interest-bearing deposits, 10.6% for core deposits, 8.9% for loans, 31.5% for revenue, and 54% for adjusted EPS [9] - The net interest margin (NIM) increased by three basis points to 3.26% in the third quarter, with expectations for further increases in the fourth quarter due to anticipated rate cuts [21][22] - The estimated growth range for net interest income has been increased to approximately 13% to 14% over 2024 results [22] Business Line Data and Key Metrics Changes - End-of-period loans increased by 8.9% linked quarter annualized, with an adjusted outlook for loan growth set at 9% to 10% for the year [19] - Non-interest income guidance has been increased from 12% to 15% growth to now 20% to 22% growth for the year, driven by strong performance in banking fees and wealth management [26] Market Data and Key Metrics Changes - The company has successfully increased market share in key markets, with notable gains in Nashville, Chattanooga, Knoxville, and Memphis, where competitors have lost significant market share [10][11] - The company is targeting additional market share in southeastern markets, with significant share losses noted among competitors in cities like Greensboro and Atlanta [11] Company Strategy and Development Direction - The company aims to build a "Southeast Growth Champion" through strategic hiring and market share acquisition, leveraging the merger with Synovus Financial Corp. to enhance growth potential [29][30] - The focus remains on recruiting and retaining market-leading revenue producers to sustain balance sheet growth and shareholder returns [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain momentum post-merger, with hiring rates and financial performance remaining strong [15][28] - The outlook for 2025 is optimistic, with expectations for continued growth in revenue and earnings, despite potential economic uncertainties [28] Other Important Information - The company reported a decrease in net charge-offs to 18 basis points in the third quarter, with an unchanged outlook for net charge-offs for the full year [24] - BHG's exceptional performance contributed over $40 million in fee revenues, with expectations for continued strong growth in 2025 [25] Q&A Session Summary Question: Are there 300 RMs that fit the Pinnacle model in the market? - Management indicated that while there may not be 300 RMs available immediately, the hiring strategy has historically proven successful in attracting talent over time [34] Question: How does the pro forma balance sheet affect BHG's use case? - Management stated that BHG's growth is expected to remain consistent, with no significant changes anticipated in the approach post-merger [38] Question: Will the hiring strategy change post-deal close? - Management expressed confidence that the existing hiring strategy will continue to be effective, emphasizing a unique recruitment model that differs from competitors [49] Question: What are the risks associated with the merger? - Management noted that there are no significant risks identified at this time, with a focus on hard work to integrate the companies and maintain high associate retention rates [64] Question: What is the outlook for credit quality? - Management indicated that credit quality remains strong, with a focus on monitoring specific credits, particularly in healthcare [82]