Pinnacle Financial Partners Q3 Earnings Call Highlights

Key Points

• Strong third-quarter results: Adjusted EPS rose 8% sequentially and 19% year over year to $2.69, supported by loan and deposit growth, higher fee income and recruiting momentum.
• Balance-sheet and fee growth continued: Loans increased 8% annualized and core deposits grew 13% annualized, while adjusted non-interest revenue rose $53 million, helped by record BHG production and a $23 million leasing gain.
• Merger integration remains on track: Pinnacle added 96 experienced revenue producers during the quarter and expects to exceed its 2026 hiring target, with operational and brand conversion still scheduled for March 2027. Credit quality remained stable, with net charge-offs of 23 basis points and nonperforming assets at 0.50%.

Pinnacle Financial Partners NYSE: PNFP reported third-quarter 2026 diluted earnings per share of $2.40 and adjusted diluted EPS of $2.69, excluding $56 million of pretax adjusted items, as loan and deposit growth, fee income and recruiting activity continued to support results following its merger.

Adjusted EPS rose 8% from the prior quarter and 19% from the third quarter of 2025, Chief Financial Officer Jamie Gregory said. Year-to-date adjusted EPS increased 23% from the comparable prior-year period, while adjusted return on average tangible common equity was 18.3% in the third quarter.

President and CEO Kevin Blair said the company’s results reflected progress in integrating the combined organization while maintaining client relationships, hiring bankers and managing credit quality. Operational and brand conversion remains scheduled for March 2027.

Balance-sheet growth supports net interest income

Period-end loans increased $1.7 billion from the second quarter, or 8% on an annualized basis, led primarily by commercial and industrial lending. Deposits rose $2.1 billion on a linked-quarter basis, with growth across geographic markets and specialty banking units. Excluding public-fund headwinds, core deposits increased about 3% from the second quarter, or 13% annualized.

Net interest income increased $30 million from the second quarter to $986 million as earning-asset growth more than offset a four-basis-point decline in net interest margin. The margin was 3.40%, while loan yields increased one basis point to 6.12%.

Gregory said the company expects its margin to expand slightly in the fourth quarter, helped by the late-quarter Federal Reserve rate increase, fixed-rate asset repricing, expected recovery in loan fees and purchase accounting accretion, and core deposit growth. Those factors will be partly offset by the company’s planned buildup of high-quality liquid assets.

Looking beyond the fourth quarter, Gregory said incremental balance-sheet growth is expected to carry a margin near 3.30%, creating modest pressure on overall margin in 2027 rather than an immediate decline to that level. He said fixed-rate asset repricing should continue through 2027 and into 2028.

The company expects to issue about $1 billion of debt annually for the first three years following the merger as part of its liquidity plans. Each $1 billion of debt issuance adds “a couple basis point impact” to funding costs, Gregory said. While potential regulatory changes could affect the longer-term timing of the liquidity buildup, management said they have not changed near-term plans.

Fee income rises, led by BHG and leasing gain

Adjusted non-interest revenue increased $53 million from the second quarter. Results included a $23 million gain in the equipment leasing business and record production at BHG, which lifted investment income to $48 million from $24 million in the prior quarter.

Gregory said BHG’s gains were driven by production and funding mix rather than expense reductions. Management expects BHG’s production, distribution and investment-income contribution to remain at a similar level in the fourth quarter. The company raised its full-year BHG income outlook to $150 million to $160 million, from guidance of $110 million to $120 million provided in July.

Blair said core banking fees were up about 10% year to date, wealth revenue rose 11%, and capital-markets revenue climbed 23%. He cited a 50% increase in lead-arranger fees and a 26% increase in derivatives revenue. Merger-related revenue synergies totaled about $20 million year to date, largely from capital markets, with management expecting further opportunities after the March 2027 conversion places the combined company on a single platform.

Adjusted non-interest expense was $690 million, up 4% from the prior quarter, driven by higher incentive accruals tied to performance and modest headcount growth. The adjusted tangible efficiency ratio improved 95 basis points from the second quarter to 48.9%.

The company incurred $56 million in nonrecurring merger expenses in the quarter, bringing the year-to-date total to $382 million. Management said that remains in line with its full-year merger-expense outlook of $400 million to $450 million.

Credit quality and capital remain stable

Net charge-offs were $50 million, or 23 basis points, within the company’s stated 20- to 25-basis-point range. The nonperforming asset ratio was unchanged at 0.50%, and the allowance for credit losses ratio ended the quarter at 1.19%.

Gregory said reserve building during the quarter reflected loan growth and macroeconomic scenario weighting rather than deterioration in the loan portfolio. The company has assigned 45% of its economic scenarios to below-consensus outcomes, he said. Management expects reserve funding to remain at a similar rate if the economic outlook does not change.

Blair said commercial real estate production could remain pressured because higher rates affect valuations and developers are finding fewer projects that “pencil.” The company expects most loan growth to continue coming from C&I lending rather than commercial real estate.

Preliminary common equity Tier 1 capital rose eight basis points from the second quarter to 10.01%. Management continues to target a 10.25% CET1 ratio and said its priority is funding client-driven growth rather than restarting share repurchases. Gregory said the recent pace of capital accretion could bring the company to its target in a few quarters.

Recruiting and conversion preparations continue

Pinnacle added 96 experienced revenue producers during the third quarter and 222 year to date. More than half of the year-to-date hires joined in core Synovus markets. Blair said October recruiting was strong enough that the company expects to exceed the upper end of its original 225-to-250 hiring target for 2026.

Revenue-producer retention, excluding merger-related synergies, was 95% year to date. Blair said bankers hired within the past year have generated enough business to cover roughly 88% of their cash compensation, while those employed for one to three years are generating two to three times their cash compensation.

Management also cited Coalition Greenwich survey results that ranked Pinnacle first in net promoter score among larger banks in its footprint. The company said non-CD deposit account closures in 2026 were lower than in 2025, both by dollars and account count.

For 2026, Pinnacle maintained its outlook for loan growth at the upper end of its 9% to 11% range and deposit growth around the midpoint of its 8% to 10% range. It expects full-year net interest margin of 3.44% to 3.46%, adjusted non-interest expense just above the midpoint of its $2.675 billion to $2.775 billion range, and charge-offs within its 20- to 25-basis-point range.

Blair said the company will provide its 2027 outlook in December.

About Pinnacle Financial Partners (NYSE:PNFP)

Pinnacle Financial Partners, Inc is a bank holding company headquartered in Nashville, Tennessee. Through its primary subsidiary, Pinnacle Bank, the company provides banking and financial services to businesses, professionals, entrepreneurs and individuals.

Its offerings include commercial and consumer loans, deposit accounts, treasury and cash-management services, mortgage lending, investment and wealth-management services, trust services and insurance solutions. Pinnacle emphasizes relationship-based banking and serves clients through offices and financial professionals in Tennessee and selected markets in the Carolinas and Virginia.

Founded in 2000, Pinnacle has expanded from its Nashville base into a broader regional banking franchise through organic growth and acquisitions.

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