Linked-quarter annualized growth for loans was 10.7%; Net interest margin increased to 3.23% in 2Q25

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $2.00 for the quarter ended June 30, 2025, compared to net income per diluted common share of $0.64 for the quarter ended June 30, 2024, an increase of approximately 212.5 percent. Net income per diluted common share was $3.77 for the six months ended June 30, 2025, compared to net income per diluted common share of $2.21 for the six months ended June 30, 2024, an increase of approximately 70.6 percent.

After considering the adjustments noted in the table below, net income per diluted common share was $2.00 for the three months ended June 30, 2025, compared to $1.63 for the three months ended June 30, 2024, an increase of 22.7 percent. Net income per diluted common share, adjusted for the items noted in the table below, was $3.90 for the six months ended June 30, 2025, compared to net income per diluted common share of $3.16 for the six months ended June 30, 2024, an increase of approximately 23.4 percent.

"Second quarter results demonstrate again the reliability of our differentiated model to produce outsized revenue, earnings per share and loan growth regardless of the operating environment," said M. Terry Turner, Pinnacle's president and chief executive officer. "Our second quarter revenues increased by approximately 36.4 percent linked-quarter annualized over the first quarter of 2025 and 21.8 percent over the same quarter last year. Fully diluted earnings per share after adjustments were up 21.1 percent linked-quarter annualized over the first quarter of 2025 and 22.7 percent over the same quarter last year. Also, loan growth for the second quarter was approximately 10.7 percent linked-quarter annualized in comparison to the first quarter of 2025.

"During the second quarter, we continued to be very active on the recruiting front, attracting 38 revenue producers as we continue to invest in the future growth of our firm. Thus far this year, we have hired 71 revenue producers which puts us on pace to have another very strong recruiting year for our firm. During the second quarter, we announced an expansion into Richmond, VA, another outstanding banking market in the Southeast. We entered Richmond with a de novo start by hiring six local bankers with an average experience level of approximately 28 years. We are very excited to welcome these banking professionals to the Pinnacle family."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at June 30, 2025, were $54.8 billion, an increase of approximately $546.6 million from March 31, 2025, and $5.4 billion from June 30, 2024, reflecting a linked-quarter annualized increase of 4.0 percent and a year-over-year increase of 11.0 percent. A further analysis of select balance sheet trends follows:

"Loan growth was one of our highlights for the second quarter," said Harold R. Carpenter, Pinnacle’s chief financial officer. "Our commercial and industrial (C&I) loan segment continued to show strong growth as these loans increased 21.9 percent linked quarter annualized in the second quarter. Our other loans, including commercial real estate loans, increased linked-quarter at an annualized rate of approximately 3.5 percent between the first and second quarters. We expect growth rates for other loan segments to increase primarily because our appetite for sound commercial real estate projects has increased because of essentially achieving our lower concentration limits for commercial real estate lending. We have been below our construction lending concentration limit for several quarters and are now just slightly above our limit for the broader commercial real estate lending concentration limit.

"We will continue to rely on our recent hires, newer markets and specialty areas to fuel our loan growth as they move clients from competitors to our firm in an outsized way. As to deposit growth, our deposits increased by $519.8 million in the second quarter from the first quarter. Perhaps most important is that our noninterest bearing deposits, which are primarily composed of client operating accounts, increased by $133.4 million in the second quarter, and are now up by $470.3 million year-to date, or about 11.5 percent annualized."

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

Pre-tax, pre-provision net revenues (PPNR) for the three and six months ended June 30, 2025 were $218.5 million and $405.9 million, respectively, compared to $95.2 million and $280.9 million, respectively, recognized in the three and six months ended June 30, 2024. As noted in the table below, adjusted PPNR for the three and six months ended June 30, 2025 were $218.7 million and $418.6 million, respectively, compared to $195.7 million and $377.0 million, respectively, recognized in the three and six months ended June 30, 2024, an increase of 11.8 percent and 11.0 percent, respectively.

Net interest income for the second quarter of 2025 was $379.5 million, compared to $332.3 million for the second quarter of 2024, a year-over-year growth rate of 14.2 percent. Net interest margin was 3.23 percent for the second quarter of 2025, compared to 3.14 percent for the second quarter of 2024.

Total revenues for the second quarter of 2025 were $505.0 million, compared to $366.6 million for the second quarter of 2024. As noted in the table below, adjusted total revenues for the second quarter of 2025 were $505.0 million, compared to $438.7 million for the second quarter of 2024, a year-over-year increase of 15.1 percent.

• Wealth management revenues, which include investment, trust and insurance services, were $32.3 million for the second quarter of 2025, compared to $27.8 million for the second quarter of 2024, a year-over-year increase of 16.4 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 $26.0 million for the second quarter of 2025, compared to $18.7 million for the second quarter of 2024, a year-over-year increase of 39.3 percent.
  • BHG's loan originations were $1.5 billion in the second quarter of 2025, compared to $1.2 billion in the first quarter of 2025 and $871 million in the second quarter of 2024.
  • Loans sold to BHG's community bank partners were approximately $614 million in the second quarter of 2025, compared to $605 million in the first quarter of 2025 and $467 million in the second quarter of 2024.
  • BHG reserves for on-balance sheet loan losses were $279.1 million, or 10.5 percent of loans held for investment at June 30, 2025, compared to 9.2 percent at March 31, 2025, and 9.9 percent at June 30, 2024.
  • At June 30, 2025, BHG increased its accrual for estimated losses attributable to loan substitutions and prepayments to $624.4 million, or 7.8 percent of the unpaid balances on loans that were previously purchased by BHG's community bank network, compared to 7.5 percent at March 31, 2025 and 5.9 percent at June 30, 2024.
• Other noninterest income was $47.9 million for the quarter ended June 30, 2025, an increase of $6.1 million from the second quarter of 2024. Contributing to the increase in other noninterest income during the second quarter of 2025 was approximately $3.2 million in revenues due to the increase in fair value of other equity investments.

Noninterest expense for the second quarter of 2025 was $286.4 million, compared to $271.4 million for the second quarter of 2024. As noted in the table below, adjusted noninterest expense for the second quarter of 2025 was $286.3 million, compared to $243.0 million for the second quarter of 2024.

• Salaries and employee benefits were $181.2 million in the second quarter of 2025, compared to $150.1 million in the second quarter of 2024, reflecting a year-over-year increase of 20.7 percent.
  • Cash incentive costs in the second quarter of 2025 totaling $33.5 million were approximately $16.0 million higher than the second 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 Company's annual cash incentive plan and, importantly, an increase in the estimated payout for anticipated incentive award payouts. The second quarter 2024 accrual assumed an approximate 80 percent of target payout for 2024 compared to a second quarter 2025 accrual that assumes an approximate 115 percent of target payout for 2025.
• Equipment and occupancy costs were $48.0 million in the second quarter of 2025, compared to $41.0 million in the second quarter of 2024, resulting in a year-over-year increase of 17.1 percent. This increase was primarily attributable to the opening of nine new full-service locations throughout the Company's footprint since January 1, 2024 and the relocation of the Company's corporate headquarters to a new location in downtown Nashville during the first quarter of 2025.
• Marketing and other business development costs were $8.8 million in the second quarter of 2025, compared to $6.8 million in the second quarter of 2024, resulting in a year-over-year increase of 29.5 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 $48.4 million in the second quarter of 2025, compared to $73.5 million in the second quarter of 2024, resulting in a year-over-year decrease of 34.1 percent. Primarily impacting the changes in other noninterest expense between the second quarter of 2025 and the comparable period in 2024 was the impact of the $28.4 million in fees paid in the second quarter of 2024 to terminate the resell agreement and professional fees incurred in connection with the capital optimization initiatives completed in the second quarter of 2024.

"Revenue growth has been a focus for us since our founding almost 25 years ago," Carpenter said. "Second quarter revenues amounted to approximately $505.0 million, which was a 37.8 percent increase over the same period last year. Loan growth was the driver for net interest income growth as second quarter net interest income was 14.2 percent greater in the second quarter of 2025 than the same quarter last year. As anticipated, we did experience some margin expansion in the second quarter from the first quarter and expect continued expansion into the third quarter. We attribute margin expansion, in part, to our deliberate focus on prudently managing our funding costs in spite of meaningful growth in our interest earning asset base.

"Noninterest income growth was another highlight for the quarter," Carpenter said. "Excluding the impact of a bond restructuring trade during the first quarter of 2025, we continued to see quarter-over-quarter growth in nearly every core banking fee category. We are particularly pleased with our efforts in commercial analysis and wealth management as we continue to experience strong growth in these strategically important areas. BHG had another sound quarter, providing $26.0 million in fee revenues to our firm in the second quarter of 2025, which was approximately $5.6 million higher than the first quarter of 2025 and $7.3 million higher than the second quarter of 2024."

"We continue to be pleased with the overall soundness of our firm," Carpenter said. "Our capital ratios remain strong, and we have successfully reduced our concentration levels in commercial real estate. All the while, our tangible book value per share, which we believe is a key metric to creating shareholder value, continues to grow in an outsized way. All things considered, despite economic uncertainties and based on our differentiated model, we remain optimistic regarding our performance for the remainder of 2025."

BOARD OF DIRECTORS DECLARES COMMON DIVIDENDS

On July 15, 2025, Pinnacle Financial's Board of Directors approved a quarterly cash dividend of $0.24 per common share to be paid on Aug. 29, 2025 to common shareholders of record as of the close of business on Aug. 1, 2025. Additionally, Pinnacle's Board of Directors approved a quarterly cash dividend of approximately $3.8 million, or $16.88 per share (or $0.422 per depositary share), on Pinnacle Financial's 6.75 percent Series B Non-Cumulative Perpetual Preferred Stock payable on Sept. 1, 2025 to shareholders of record at the close of business on Aug. 17, 2025. The amount and timing of any future dividend payments to both preferred and common shareholders will be subject to the approval of Pinnacle's Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CT on July 16, 2025, to discuss second 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 investors.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 $54.8 billion in assets as of June 30, 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 and uncertain 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.