• Adjusted Revenue Growth: Strong, with double-digit five-year CAGR.
• Adjusted Fully Diluted EPS Growth: Strong, with double-digit five-year CAGR.
• Tangible Book Value Per Share Growth: Strong, with double-digit five-year CAGR.
• Net Interest Income 10-Year CAGR: 12.7%, peer-leading.
• Loan Growth: $2.8 billion or 8.6% for 2024.
• End of Period Loan Growth: 13.7% linked quarter annualized.
• Deposit Growth: $1.9 billion in the fourth quarter; core deposits up 13% year-over-year.
• Net Charge-Offs: 23 basis points for the year.
• Fee Growth: Adjusted fees up 15% year-over-year.
• 2025 Loan Growth Expectation: 8% to 11% end-of-period growth.
• 2025 Deposit Growth Expectation: 7% to 10% over 2024.
• 2025 Net Interest Income Growth Expectation: 11% to 13%.
• 2025 Fee Growth Guide: 8% to 10%.
• 2025 Expense Guide: $1.13 billion to $1.15 billion.
• BHG Originations: $1.16 billion in the fourth quarter.
• BHG Contribution to Earnings: Approximately 6% of consolidated earnings for 2024.

• Warning! GuruFocus has detected 6 Warning Sign with PNFP.

Release Date: January 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pinnacle Financial Partners Inc (NASDAQ:PNFP) reported strong adjusted revenue growth, fully diluted EPS growth, and tangible book value per share growth, all with double-digit five-year CAGRs.
• The company set a new record in 2024 for hiring highly experienced revenue producers, which fuels optimism for continued growth in 2025.
• Loan growth was robust, with a 13.7% increase in the fourth quarter, providing a strong start for 2025.
• Deposit growth was a highlight, with a $1.9 billion increase in the fourth quarter, one of the strongest quarters ever.
• The company has a strong track record of net interest income growth, with a 10-year CAGR of 12.7%, outperforming peers.

Negative Points

• The operating environment remains uncertain, particularly regarding interest rates and the yield curve.
• There is a reliance on new revenue producers for loan growth, which may not be sustainable if hiring slows.
• BHG's contribution to consolidated earnings decreased from 9% in 2023 to 6% in 2024, indicating potential challenges in this segment.
• The company faces competitive pressures in loan origination yields, which could impact profitability if not managed effectively.
• There are concerns about credit quality, particularly in the C&I book, which could affect future charge-offs and provisioning.

Q & A Highlights

Q: Can you elaborate on the factors contributing to the variability in expenses, particularly regarding personnel-related costs? A: Harold Carpenter, CFO: The variability in expenses is largely tied to personnel-related costs, such as incentive accruals and hiring. While there are some non-personnel costs that could be adjusted, such as delaying branch build-outs, the primary focus remains on managing personnel expenses and hiring strategically to support growth.

Q: What are the expectations for net interest income (NII) and margin trends throughout the year? A: Harold Carpenter, CFO: We expect NII growth to be solid, driven by loan growth and margin assumptions. If the economy heats up, loan demand could outpace our plans, providing upside potential. We are optimistic about maintaining a strong NII growth trajectory.

Q: How does the company plan to manage deposit growth and pricing in the current environment? A: M. Terry Turner, CEO: We are focusing on lowering high deposit rates and growing operating accounts, both commercial and consumer. We believe there is room to manage deposit costs down, independent of Fed movements, and are actively working on initiatives to optimize our deposit base.

Q: What is the strategic outlook for BHG, especially regarding the reserve for off-balance sheet loans? A: Harold Carpenter, CFO: BHG is focused on building a stronger balance sheet and optimizing its production platform. They exited the SBA loan program and are concentrating on core business areas to enhance earnings and franchise value.

Q: Can you provide insights into the fee growth guidance and any potential for upside? A: Harold Carpenter, CFO: The fee growth guidance of 8% to 10% includes a level of conservatism. We aim for higher performance, particularly in wealth management and other core banking strategies. There may be upside from nonrecurring items, but our focus is on sustainable fee growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.