Pinnacle Financial Partners Inc Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Gerlinger - Citi - Analyst : Hey, good morning. I want to take a moment. Look at slide number 9. It's the vintage of hires from 2020 to 2024. I just want to make sure I got that correctly that kind of five-year cohort, you're expecting them to have kind of peak out at roughly $19 billion. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, PNFP.OQ - Q2 2025 Pinnacle Financial Partners Inc Earnings Call

Question: Ben Gerlinger - Citi - Analyst : Right. No, I totally get that. Where I was going and going with it was. I'm just kind of thinking that the five-year cohort, you essentially hired what would be the kind of 70th largest bank in the United States with no dilution or no M&A, so when I think about just the magnitude of your hiring in the flywheel. If the rules change, and let's say you took away every bright line, whether it be 100 or whatever, do you have any appetite to do M&A? Or is it simply just the Pinnacle brand and workhorse of the onboarding staff within HR can sustain a pretty healthy growth, you really have no appetite at all?

Question: Ben Gerlinger - Citi - Analyst : No, absolutely. I think that's great. And the only other question I had in terms of just growth is, I know if we started with Nashville and Tennessee and the Southeast and kind of drifted north of the Atlantic a little bit. Is there any other geographies to think about at this point? Or is it just deepening the current map that you have laid out in front of you?

Question: Jared Shaw - Barclays - Analyst : Thanks. --Sorry, I couldn't hear you there for a minute. I guess just focusing -- staying on growth. And if we look at slide 9, that's showing the growth potential from those new hires ramping up and bringing those businesses over. What are you hearing from your existing customers or existing RMs in terms of sort of the appetite for growth, whether that's through utilization increases or just sort of customer sentiment overall.

Question: Jared Shaw - Barclays - Analyst : Okay. And then you talked a little bit about the appetite for increasing CRE. How should we think about you lagging into that from here? And where would you like to see that as a target of capital?

Question: Jared Shaw - Barclays - Analyst : Great, thanks a lot.

Question: Catherine Mealor - Keefe, Bruyette & Woods North America - Analyst : Thanks. Good morning. Yeah. I wanted to just turn to BHG for a minute. It was really nice to see the higher earnings coming from BHG. I guess my first question on just the bigger outlook for the second half of the year on BHG. Is that primarily coming from just kind of better origination growth and better volumes? Or is it also a part of that coming from credit? Kind of curious what's really driving that? And then just within that, a secondary question was I noticed that the equity in BHG and then your equity method on your balance sheet does decline this quarter. I was just curious what was driving that.

Question: Catherine Mealor - Keefe, Bruyette & Woods North America - Analyst : Okay. Great. And then maybe one other question just back on deposits on the funding piece of the growth. Can you talk a little -- it was great to see your deposit costs kind of stabilize? And I assume that's part of your margin guidance into next quarter is that you kind of see maintaining a stabilization in deposit cost. Any -- can you give us any color on to what incremental deposit costs look like today as we grow, especially as deposit growth improves in the back half of the year?

Question: Catherine Mealor - Keefe, Bruyette & Woods North America - Analyst : You're saying that your current cost of interest-bearing deposits has been 319 website. So you're saying 50 bps over that is about where new deposits are coming on?

Question: Catherine Mealor - Keefe, Bruyette & Woods North America - Analyst : Okay. Okay. Great. But your incremental loan yields are still coming on, it seems like in the high 60s.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Hey, good morning, everyone. I just wanted to follow up on the BHG business mix. I noticed some of the trends around the commercial delinquencies were kind of going up, but the consumer looks to be improving. It looked like maybe that mix of business is pretty close to balance between commercial and consumer loans based those trends you disclosed on slide 45, but can you give us a better feel for what that BHG business mix looks like currently? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, PNFP.OQ - Q2 2025 Pinnacle Financial Partners Inc Earnings Call

Question: Stephen Scouten - Piper Sandler Companies - Analyst : So the improvement in the consumer would be more impactful than the slight kind of worsening maybe in commercial, if I think about it broadly.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Perfect. Great. And then can you remind us with the incentive payout, it's great to see it going up to 115% because of what it implies, obviously, for the success of the franchise. What would you need to see to take it to that 125%. Because obviously, the guide in and of itself didn't change a lot, but is it just greater certainty around what EPS will be for the full year? Just kind of give us a feel for what would take you to the top end of that payout range?

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Great. And then just lastly for me. Can you guys give an update on the opportunity in Richmond, the new hires you have there? And kind of what you think the scale of that opportunity could be over the next 2 or 3 years?

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Well, I mean, just how big a bank you think you could run in Richmond, if that's $1 billion in asset kind of franchise there in the Richmond market or... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, PNFP.OQ - Q2 2025 Pinnacle Financial Partners Inc Earnings Call

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Okay. And feel pretty good about that based on the initial -- I guess, the initial progress and opportunity set there?

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Okay, so the improvement in the consumer would be more impactful than than than the slight kind of worsening maybe in commercial if I think about it broadly.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Perfect. Great. And then can you remind us with the incentive payout, it's great to see it going up to 115% because of what it implies obviously for the success of the franchise. What would you need to see to take it to that 125% because obviously the guide in and of itself didn't change a lot, but is it just greater certainty around what EPS will be for the full year, just kind of give us a feel for what would would take it to the top end of that payout range.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Right. And then just lastly for me, can you guys give an update on the opportunity in Richmond, the new hires you have there and kind of what you think the scale of that opportunity could be over the next 2 or 3 years.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Well, I mean, just how big a bank you think you could run in Richmond if that's a billion in asset kind of franchise there in the Richmond market.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Okay, and feel pretty good about that based on the initial, I guess the initial progress and opportunities out there.

Question: Stephen Scouten - Piper Sandler Companies - Analyst : Fantastic, thanks for the color. Congrats on the quarter.

Question: Jackson Singleton - Autonomous Research - Analyst : Good morning. This is Jackson Singleton on for Casey Haire. Just wanted to touch on the NIM. Could you just please provide some more color on the drivers and what could drive the 3Q NIM to maybe be up a couple of bps? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, PNFP.OQ - Q2 2025 Pinnacle Financial Partners Inc Earnings Call

Question: Jackson Singleton - Autonomous Research - Analyst : Okay. Great. And then as my follow-up, just wondering if you could provide some color just on beta expectations and if you feel like there's more room for improvement here going forward?

Question: Jackson Singleton - Autonomous Research - Analyst : Okay. Got it. Great. Thanks for taking my questions.

Question: Samuel Varga - UBS - Analyst : Hey, good morning. I just wanted to drill down on the fixed on the fixed rate loan renewals. You obviously noted that part of the story is a bit less exciting, which makes sense, given just the increased competition for these loans. Can you comment a bit on is sort of the pace of spread compression, like could we see that slow down now? Or do you think that more and more people are likely to come in and try to compete for these loans?

Question: Samuel Varga - UBS - Analyst : Okay. Great. And then just a broader question. Can you provide any updates on regulatory developments? Over the past few months, there's been a lot of different proposals talked about and coming out. I'm just curious if that changes at all, how you think about running the bank from an operational standpoint.

Question: Samuel Varga - UBS - Analyst : Great. Thanks for taking my questions.

Question: Tim Mitchell - Raymond James - Analyst : Hey, good morning, everyone. Thanks for taking my questions. Just want to follow up on the BHG conversation and kind of a bigger picture question, but the EPS contribution from that business has increased the past couple of quarters. And based on the new guide, it sounds like it will continue to do so. So I was just curious your thoughts on whether there's a level that you would target or not want to exceed in terms of earnings contribution? And then within that context, if there's any change to your attitudes towards the investment in BHG? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, PNFP.OQ - Q2 2025 Pinnacle Financial Partners Inc Earnings Call

Question: Tim Mitchell - Raymond James - Analyst : Okay. Makes sense. And then just one follow-up on loan growth. On your comments around kind of sentiment from existing customers. It sounds like the vast majority of your loan growth outlook is tied to the benefit from hiring and so forth. So is it fair to think that if loan growth were to accelerate for the industry more broadly? Essentially banks that are relying on economic growth that you could actually exceed the range for 2025? Or is there other considerations that maybe that's not so realistic?

Question: Tim Mitchell - Raymond James - Analyst : Okay, great thanks for taking my questions.

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Hi, good morning. First question is -- first question is back on deposits. I'm just wondering with future rate cuts, do you think you'll be able to get the same type of beta on the way down with the future rate cuts? Or does the competitive landscape and/or increased lending, does that maybe mitigate some of the potential benefit from reducing deposit costs with subsequent rate cuts?

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Okay. And I think the last comment was around 50% of the deposit base was indexed and you got close to 100% beta on that. So we should expect similar type of performance on the next costs.

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Okay. Great. And then on BHG, again, just bigger picture. Just can you talk to the monetization there if the improvement in the credit, the build-out on the reserve side. Do you feel like the partners are closer to getting something done there? Or is the macro still somewhat prohibiting? And I'm just wondering, in general, Terry talked about succession planning. There's a lot of kind of speculation out in the market as to what might happen to Pinnacle. Is that at all impacting your ability to hire new producers? Or do you expect that to impact your ability to hire new producers with some of the ambiguity out there in the marketplace?

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Yeah.

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Okay. Could you just maybe comment on monetization of BHG and what that time line might look like?

Question: Timur Braziler - Wells Fargo Securities, LLC - Analyst : Great. Thank you. I appreciate that color.

Question: Brian Martin - KKR - Analyst : Hey, good morning, guys.

Question: Brian Martin - KKR - Analyst : Hey, Just a couple of things. Harold, just clarifying on the BHG, given kind of the annual outlook for revenue, I guess, could second quarter be the high point for the year and it maybe drift a bit lower in terms of the quarterly performance in the back half of the year? Is that seem fair based on your commentary on the outlook for growth?

Question: Brian Martin - KKR - Analyst : Okay. We're on the $25 million level. Okay. And then just in terms of -- Terry, you talked about just the outlook for hiring. Just if you talk about just the opportunity like you did this quarter to go to Richmond, so go to a new market versus kind of backfilling the markets you're currently in? Is there -- is the outlook still pretty positive that you can get to these new markets wherever they are? I know you mentioned Florida, a couple of others, but are you optimistic about new markets more so than new people hired or just both at this point?

Question: Brian Martin - KKR - Analyst : Okay. Got you. Okay. And just the last one for me was just on the kind of the current -- the new loan yield production in the quarter. And then just -- Harold, just in terms of the margin, I think you talked about maybe getting that to expand it a bit more rapid pace than kind of what we're seeing currently. Just what does it take to really see the margin climb north of that, let's say, [ 330 ] level or in the coming quarters? I guess what what's the recipe for that just as we think about where trends do in '26?

Question: Brian Martin - KKR - Analyst : Yeah.

Question: Brian Martin - KKR - Analyst : Okay. And as you get into, I guess, the yield curve itself I guess what are your expectations on that, at least in the near term, it's not based on your kind of your guidance or kind of what your outlook is in the near term?

Question: Brian Martin - KKR - Analyst : Okay. That's all I have. Thanks guys. Nice quarter, Thank you Thank you, Brian.

Question: Anthony Elian - JPMorgan - Analyst : Hi everyone, Harold, on the 22% annualized C&I growth you saw in the quarter, I was wondering if you could provide more color what drove that? Any specific subsegments within C&I that contributed to that strong growth?

Question: Anthony Elian - JPMorgan - Analyst : Fair enough. And then, Terry, my follow-up, another question on the revenue producers. So you hired 38 in 2Q, total of 71 in the first half. My question is, is the pool of talent available in the Southeast and adjacent markets still as robust as it's been in the past few years. I only ask this because there are a couple of other banks in the Southeast that are now also active with hiring talent. I'm just curious if there's enough talent, enough experience talent to go around.

Question: Anthony Elian - JPMorgan - Analyst : That's great. Appreciate the color. Thank you.