Pinnacle Financial Partners Inc Q4 2024 Earnings Call Summary

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

Question: Ben Gerlinger - Citigroup Inc. - Analyst : Good morning. Just want to touch base on expenses a little bit. I know that a large contributing factor is going to be the success of both hires and funding up their loan book. But when you think about just kind of the nuance between the high end and the low end? Is it largely just that? Or is there any places you might have, Harold, to pull levers or potentially do something outside just the personnel-related costs.

Question: Ben Gerlinger - Citigroup Inc. - Analyst : Got you. Well, don't delay any hiring people are upset on the expenses [of deep from the] franchise value. When you think -- I don't know, just the cadence of margin or NII throughout the year, I mean, repricing on the funding side has been pretty solid. Do you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:30PM, PNFP.OQ - Q4 2024 Pinnacle Financial Partners Inc Earnings Call think that there's a little bit of a back book still have to go there that can drive it second half of the year? Or is it really just kind of getting kind of fixed asset repricing on the left-hand side, higher that drives the kind of the latter three and four quarter of this year?

Question: Ben Gerlinger - Citigroup Inc. - Analyst : Got. I appreciate that. I just want to note you drive lower in the next six months? Or is this kind of looking over the 12 [plus]?

Question: Ben Gerlinger - Citigroup Inc. - Analyst : Okay. Sounds good.

Question: Jared Shaw - Barclays - Analyst : Hey, good morning guys. Yeah, maybe sticking with the variable expense that you're targeting sort of a full payout for the incentive comp. What does that assume for NII in revenues. Is that assuming sort of the higher end of the range or even beyond the range or what does the revenue picture look like to.

Question: Jared Shaw - Barclays - Analyst : Yeah. That's okay. That's good color. And just looking -- you look at the slide that Terry pointed out earlier, just with the year trend in NII being above basically, call it, at the high end of this range. What would have to happen to see NII come in higher than the range? It feels like you're talking about some good trends and continued growth, continued hiring the benefit of potentially being able to reprice some of those deposits. What would have to happen to sort of come in higher than the range.

Question: Jared Shaw - Barclays - Analyst : Okay. All right. That's good color. And just finally for me, maybe any updated strategic expectations for BHG as we look at them continuing to grow the reserve for the off-balance sheet loans. Does that continue to sort of be the biggest area they're trying to backfill right now?

Question: Jared Shaw - Barclays - Analyst : Okay. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:30PM, PNFP.OQ - Q4 2024 Pinnacle Financial Partners Inc Earnings Call

Question: Michael Rose - Raymond James - Analyst : Hey, good morning guys. Thanks for taking my questions. Just as it relates to slide 21, which I thought was really interesting. Can you just help us frame that? And just given what you're expecting to bring on in terms of hires, which I think you said would be similar this year as opposed to last year. Could we expect those kind of capacity numbers to actually continue to grow from here so that as we move into 2027, those numbers would move higher? Just trying to get a better sense of how we should kind of use and kind of think about this slide. Thanks guys.

Question: Michael Rose - Raymond James - Analyst : Well, just as it relates to slide 21, you give the $5.9 billion and the $5.6 billion in loans, but I assume that's based on what you have in terms of lenders today, but you are going to continue to hire, right? So is it a fair assumption that those numbers would move higher over time as you hire lenders or RMs.

Question: Michael Rose - Raymond James - Analyst : Yeah. I think what I was just trying to drive at is it does seem like you guys can run at these levels or even higher over the next couple of years in terms of growth, at least in dollars. So that's a --

Question: Michael Rose - Raymond James - Analyst : Yeah. Okay. Perfect. And then maybe, Terry, just given the change in the administration and what we know so far, which maybe not a lot, but a lot of expectations out there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:30PM, PNFP.OQ - Q4 2024 Pinnacle Financial Partners Inc Earnings Call Does it change your kind of world view on M&A? I mean you guys do have a really nice currency. I know you guys are growing organically, but is there any change in thought as it relates to M&A potential as we move forward?

Question: Michael Rose - Raymond James - Analyst : Perfect. Thanks for taking my questions.

Question: Catherine Mealor - Keefe, Bruyette, & Woods, Inc. - Analyst : Thanks. Good morning.

Question: Catherine Mealor - Keefe, Bruyette, & Woods, Inc. - Analyst : I'd love to ask about the fee growth guide of 8% to 10%. Have we seen a higher level of fee growth in 2024. And so just curious if there's just conservatism in that 8% to 10% range or if there's why would that not be kind of similar to the levels that we've seen over the past couple of quarters?

Question: Catherine Mealor - Keefe, Bruyette, & Woods, Inc. - Analyst : Yeah. That's fair. And I feel in the fees, it's probably maybe just a lot of the income from other equity investments because that was about $14 million this quarter, and that can be so lumpy and hard to model. So maybe you just kind of conceptually start that at a lot lower and then you could see some surprises there, which could lead to upside. Is that a fair way to think about it?

Question: Catherine Mealor - Keefe, Bruyette, & Woods, Inc. - Analyst : Yeah. Okay. That makes sense. And then also on the NII growth, you talked a little bit about the margin expectations for next quarter. But -- is there the assumption that we should see NIM expansion throughout the year as a way to hit that 11% to 13% NII growth.

Question: Catherine Mealor - Keefe, Bruyette, & Woods, Inc. - Analyst : Great. Okay. Thank you so much. Appreciate it.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Hi, everyone. Can you give more color on the -- can you give more color on the very strong loan and deposit growth you saw in the fourth quarter. Was there anything specific in the quarter that contributed to 4Q being one of your strongest ever growth quarters, particularly on the loan side?

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Thank you. And then my follow-up, in the press release, you noted that BHG exited the SBA loan program. Is there anything else BHG has in the pipeline or they're thinking about in terms of optimization and focusing back on the core business? Thank you.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Thank you.

Question: Nick Holowko - UBS - Analyst : Hi, good morning. I think on slide 10, you noted that the origination yields that you were experiencing in the quarter were impacted by some rate volatility and competition. Was there anything or standing out that you experienced during the quarter on the competition front? And if we don't get any more cuts and the yield curve kind of maintains its current shape, could we expect some improvement in the origination yields going forward?

Question: Nick Holowko - UBS - Analyst : Yeah, that's perfect. And then maybe just as a follow-up, the outlook -- your outlook on credit calls for unbased improvement in charge-off experience and provisioning for 2025. I think the bulk of the increase you saw in '24 was more on the C&I side, but you have some maturities coming up on CRE in 2025. And -- so can you just talk a little bit about where you expect to see the improvement in the year ahead?

Question: Nick Holowko - UBS - Analyst : Thanks for taking my questions.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Hey, good morning guys.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Harold, I was wondering if you could comment just a little bit on the margin outlook. I guess if we do get a steepening in the curve here kind of what does the margin trend kind of throughout the year and kind of going into '26 here? I guess in terms of longer term, just kind of how should we be thinking about that in the new kind of environment? And then I guess secondly, I guess, if we don't see the cuts you're expecting, I guess, maybe your recent comments just sounds like it doesn't change much with your NIM or NII guide, but first part more on just kind of what are the margin trends with a better environment here.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Got you. Okay. And as far as the -- I think just o the fee income, just one, I guess, more specific question. Just on the nonrecurring items or volatile items, (technical difficulty), you want to frame the Harold's outside of the equity gains in the other line, there was a onetime gain of -- not a onetime gain, but there was an unusual gain. Is that -- I guess, I think you mentioned some comments in there or maybe earlier, what was in that other line that was may be somewhat lumpy.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Okay. So really only about $1.5 million was kind of in the lumpy range in terms of in that other line?

Question: Brian Martin - Janney Montgomery Scott - Analyst : Yeah. Okay. And then if we -- I guess one other comment about if we don't get any more cuts, it sounds like you're still optimistic about the margin here, given actions you started to take or are taking. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:30PM, PNFP.OQ - Q4 2024 Pinnacle Financial Partners Inc Earnings Call

Question: Brian Martin - Janney Montgomery Scott - Analyst : Got you. And as far as the deposit outlook given the initiatives you guys have had, it sounds like the momentum there is still going to continue. Is there any area specific on the deposit front? I think you said some more on the DDA side, kind of what you expect there and just kind of initiatives to, I guess, to sustain this great deposit growth.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Got you. And just the last one for me. In terms of the people you -- the recruiting this year, are there areas of the business or geographies where you're more focused or see more optimism in terms of your ability to bring people over or you expect to bring people over.

Question: Brian Martin - Janney Montgomery Scott - Analyst : Got you. Okay. Thanks for taking the questions and congrats on a great quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:30PM, PNFP.OQ - Q4 2024 Pinnacle Financial Partners Inc Earnings Call

Question: Russell Gunther - Stephens Inc. - Analyst : Hey, good morning guys. I just had one follow-up question. Harold, you alluded to some potential work you guys could do on the bond book. And I wanted to just better understand how you're thinking about that. Is that something that would be a lever that if pulled would be purely gravy to that NII guide? Or something you'd only look to do if that NII guide became more challenging over the course of the year?

Question: Russell Gunther - Stephens Inc. - Analyst : Okay. Great understood. Hey, thanks for taking my question guys.