- Revenue Growth Pinnacle Financial Partners' revenue grew 15.1% year-over-year, with adjusted EPS up 22.7% and tangible book value per share up 10.9% in Q2 '25.
- Loan and Deposit Growth End-of-period loans increased by 10.7% linked quarter annualized, while deposit growth came in at a 4.7% linked quarter annualized growth rate.
- 2025 Outlook Pinnacle adjusted its 2025 outlook, including loan growth of 9% to 11%, total deposit growth of 7% to 10%, and fee growth of 12% to 15%.
- Net Interest Income and Expenses Net interest income growth outlook for 2025 is estimated to be 12% to 13%, with net charge-offs expected to be around 18 to 20 basis points and expenses in the range of $1.145 billion to $1.155 billion.
- Bankers Healthcare Group (BHG) Growth BHG is expected to see 40% growth in 2025, with earnings driven by both origination growth and credit, and is expected to contribute significantly to Pinnacle's growth.
Financial Highlights
The company's financial highlights include end-of-period loans increased by 10.7% linked quarter annualized, deposit growth at a 4.7% linked quarter annualized growth rate, and net interest income growth outlook for 2025 estimated to be 12% to 13%. Additionally, net charge-offs for 2025 are expected to be around 18 to 20 basis points. The Bankers Healthcare Group (BHG) is expected to see 40% growth in 2025.
Growth Strategy
The growth is attributed to hiring experienced revenue producers, primarily from larger competitors, with an average experience of 18 years. This strategy allows for rapid and reliable growth while maintaining outstanding asset quality. Pinnacle's market share takeaway strategy targets the largest market share leaders in its footprint, capitalizing on their difficult client experience.
Valuation Metrics
At current prices, PNFP trades at a P/E Ratio of 15.26, a P/B Ratio of 1.37, and a P/TBV of 1.53. The stock's Dividend Yield is 0.78%, and the Free Cash Flow Yield is 6.36%. The ROIC is 4.78%, and the ROE is 9.2%. With a Net Debt / EBITDA of -0.6, the company's valuation seems reasonable, considering its growth prospects.
Outlook and Guidance
The company has adjusted its 2025 outlook, including loan growth of 9% to 11%, total deposit growth of 7% to 10%, fee growth of 12% to 15%, and expenses in the range of $1.145 billion to $1.155 billion. Management remains optimistic about growth, citing a 5-year cohort of hires from 2020 to 2024, expected to peak at around $19 billion.
Risk and Opportunities
According to management, clients are cautious due to uncertainty around tariffs and macroeconomic issues, but they see underlying optimism among business owners. The company expects commercial real estate (CRE) growth to pick up, targeting 70% of capital for construction and 225% for CRE. As noted by management, "We see a lot of opportunity for growth, particularly in our target markets." The company's focus on organic growth, with 6 M&A transactions accounting for $12 billion of its $55 billion in assets, also presents opportunities for future growth.