Pinnacle Financial Partners Inc Q3 2025 Earnings Call Transcript

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

Question: Catherine Mealor - Keefe Bruyette & Woods Inc - Analyst : Just one follow-up on the BHG question. Is there any reason to assume that -- I mean that was an amazing growth this quarter. We got another one coming this quarter for BHG earnings. Is there -- I mean is it fair to still assume growth in BHG into '26 relative to the record levels we're seeing in '26? So clearly, not the 80% to 90% growth rate, right, that will moderate. But just -- is there any reason to assume to not assume that we shouldn't still grow BHG next year off of these levels?

Question: Catherine Mealor - Keefe Bruyette & Woods Inc - Analyst : Okay. Great. And then fee income, even separately from BHG was really strong at both Pinnacle and Synovus this quarter. Is that -- would you say that that is encapsulated? As we think about the merger slide deck and looking towards that [1160] kind of pro forma [2070P], this strength in fee income reflected in that? Or is this even coming in better than you would have expected as you think about that pro forma run rate?

Question: Catherine Mealor - Keefe Bruyette & Woods Inc - Analyst : Yeah, perfect. That's what I had -- I was hoping and assumed to you saying, yes, you do have a history of beating consensus, Terry. All right. Great.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Terry, on hiring, I'm wondering if anything will change on legacy Pinnacle's hiring strategy post deal close given the organization will be doubling its assets, right? So I know on slide 11, you're forecasting another strong year for hiring next year and in '27. But what gives you confidence that the existing strategy you've had in place for two decades now will continue to be successful after you close the deal?

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Terry, and then my follow-up on BHG, what specifically drove the growth in originations in the third quarter? And given the strong results on both originations and credit in 3Q, what's driving the expected decline in BHG income in 4Q to $30 million?

Question: Stephen Scouten - Piper Jaffray Inc - Analyst : I appreciate the time. So I wanted to go back to slide 9. This feels like the whole story to me. I love this slide. I feel like it proves a great point. I mean -- is that the right way to think about it, like the right side of the slide, in particular, the expansion markets and who knows like we might see some of these banks in here go away as well, which could even only increase the opportunity. But you guys have this now establish stability over the next at least handful of years, whereas there's still dislocation and the opportunity for you to take a bunch of market share. Can you confirm that for me maybe if that is, as I see it, the whole story and really how you think about that opportunity set?

Question: Stephen Scouten - Piper Jaffray Inc - Analyst : I'm just wondering if Kevin is going to be able to get you to step back at all in two or four years on all that, that's really the question. It feels like that excitement is real opportunity to real. So that's a great answer. I appreciate it.

Question: Stephen Scouten - Piper Jaffray Inc - Analyst : That's a good fear. I like it. And maybe like on the flip side of this, I mean, everything sounds like it's going great. The deal sounds like it's on schedule. This is maybe a stupid question because I don't hear it, but is there anything that is an incremental risk at all? Is there anything that you're worried about as you've gotten into this? Or anything you're like if something were to crack. This is where my energy is focused? Or is it really just, hey, I mean, we're on the offense and we're just full steam ahead.

Question: Stephen Scouten - Piper Jaffray Inc - Analyst : That's great. And maybe just one last follow-up on what you just said, Terry. And forgive me for not looking this up. I know you used to put it at the bottom of the press release, but that employee retention, like as memory serves me, it's always kind of floated in this 91% to 96% range for years and years. So that's pretty consistent with what you guys have delivered on over the long term, correct?

Question: Brett Rabatin - Hovde Group LLC - Analyst : Wanting to first go back to the margin. And in the slide deck, you referenced margin tailwinds and I think, Harold, you said you think the 4Q margin going to be a little stronger. Can you just talk about the tailwinds as you see them? Is that primarily on the deposit beta side? And just anything else you would say about kind of the dynamic with the margin as we go into 4Q?

Question: Brett Rabatin - Hovde Group LLC - Analyst : Okay. That's helpful. And then the other question I had was around strong DDA growth in the quarter, and I think, obviously, some of that was related to specialty deposits. Can you talk about that dynamic, how much of that was maybe specialty deposits. And then as we think about those specialty businesses, what kind of share you're at in those businesses and -- is that something you can continue to grow at the pace you have?

Question: Brett Rabatin - Hovde Group LLC - Analyst : Okay. But Harold, is it fair that that pace can continue or any thoughts on --

Question: Michael Rose - Raymond James Financial, Inc. - Analyst : I was just looking at slide 28, where you have the loan growth by expansion markets versus legacy markets. Looks like you've had some headwinds in the legacy markets over the past couple of quarters. Can you just address that? And then separately, once you guys combine, I know your C&D and construction -- CRE concentrations are below where you wanted to get them. But is that an opportunity for growth on a combined basis once the deal is closed as we move forward?

Question: Michael Rose - Raymond James Financial, Inc. - Analyst : Very helpful, Terry. And maybe just one follow-up, and I know it's minor credit has been very good. But on slide 15, you did have a little bit of pickup in classified potential problems, things like that. Anything that you guys are more broadly looking at? I know there's a lot of concern around some of these structured credit, NBFI stuff. I know the bank showed up in a loss position last night in other credit. But anything that you guys are just broadly keeping a closer eye on or a little bit concerned about?

Question: Casey Haire - Autonomous Research - Analyst : So earlier today, we -- Kevin and Jamie talked about capital and you don't have capital ratio targets post deal. But just wanted to touch on -- I know you guys have tended to run with more capital to make your clients feel better and I'm just wondering if that dynamic will hold. Or does it mitigate somewhat given you're now over $100 billion in assets?

Question: Casey Haire - Autonomous Research - Analyst : Okay. Great. And just another follow-up on slide 11, the recruiting strategy, a bit of a two-parter. So one, have the terms of your hires? Have they been similar or have you had to maybe sweeten the economics a little bit? And then two, you guys have talked about Texas in the past and expanding there. A lot of M&A activity there could be a market that would -- your guys' recruiting strategy would resonate well. Just some thoughts there.