0001115055December 312025Q1FALSE77,556,0962,504,9132,560,2521,7071,707——1,0001,00010,00010,0002252252252251.001.00180,000180,00077,55477,24277,55477,2420.2216.880.2416.88no5.7—1.70.45776255707762560.4166666666666667—0.025.0010.1012.50.0http://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherLiabilitieshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherAssetshttp://fasb.org/us-gaap/2024#OtherLiabilitiesxbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pureutr:Ratepnfp:subsidiary00011150552025-01-012025-03-310001115055us-gaap:CommonClassAMember2025-01-012025-03-310001115055us-gaap:NoncumulativePreferredStockMember2025-01-012025-03-3100011150552025-04-3000011150552025-03-3100011150552024-12-3100011150552024-01-012024-03-310001115055us-gaap:DepositAccountMember2025-01-012025-03-310001115055us-gaap:DepositAccountMember2024-01-012024-03-310001115055us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember2025-01-012025-03-310001115055us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember2024-01-012024-03-310001115055pnfp:InsurancesalescommissionsMember2025-01-012025-03-310001115055pnfp:InsurancesalescommissionsMember2024-01-012024-03-310001115055us-gaap:MortgageBankingMember2025-01-012025-03-310001115055us-gaap:MortgageBankingMember2024-01-012024-03-310001115055pnfp:GainonsaleofinvestmentsecuritiesnetMember2025-01-012025-03-310001115055pnfp:GainonsaleofinvestmentsecuritiesnetMember2024-01-012024-03-310001115055us-gaap:FiduciaryAndTrustMember2025-01-012025-03-310001115055us-gaap:FiduciaryAndTrustMember2024-01-012024-03-310001115055pnfp:IncomefromequitymethodinvestmentMember2025-01-012025-03-310001115055pnfp:IncomefromequitymethodinvestmentMember2024-01-012024-03-310001115055pnfp:GainLossOnSaleOfFixedAssetsMember2025-01-012025-03-310001115055pnfp:GainLossOnSaleOfFixedAssetsMember2024-01-012024-03-310001115055us-gaap:FinancialServiceOtherMember2025-01-012025-03-310001115055us-gaap:FinancialServiceOtherMember2024-01-012024-03-310001115055us-gaap:PreferredStockMember2023-12-310001115055us-gaap:CommonStockMember2023-12-310001115055us-gaap:AdditionalPaidInCapitalMember2023-12-310001115055us-gaap:RetainedEarningsMember2023-12-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-3100011150552023-12-310001115055us-gaap:RetainedEarningsMember2024-01-012024-03-310001115055us-gaap:CommonStockMember2024-01-012024-03-310001115055us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001115055us-gaap:PreferredStockMember2024-03-310001115055us-gaap:CommonStockMember2024-03-310001115055us-gaap:AdditionalPaidInCapitalMember2024-03-310001115055us-gaap:RetainedEarningsMember2024-03-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-3100011150552024-03-310001115055us-gaap:PreferredStockMember2024-12-310001115055us-gaap:CommonStockMember2024-12-310001115055us-gaap:AdditionalPaidInCapitalMember2024-12-310001115055us-gaap:RetainedEarningsMember2024-12-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-12-310001115055us-gaap:RetainedEarningsMember2025-01-012025-03-310001115055us-gaap:CommonStockMember2025-01-012025-03-310001115055us-gaap:AdditionalPaidInCapitalMember2025-01-012025-03-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-01-012025-03-310001115055us-gaap:PreferredStockMember2025-03-310001115055us-gaap:CommonStockMember2025-03-310001115055us-gaap:AdditionalPaidInCapitalMember2025-03-310001115055us-gaap:RetainedEarningsMember2025-03-310001115055us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-03-310001115055us-gaap:CommercialLoanMember2025-01-012025-03-310001115055us-gaap:CommercialLoanMember2024-01-012024-03-310001115055us-gaap:ConsumerLoanMember2025-01-012025-03-310001115055us-gaap:ConsumerLoanMember2024-01-012024-03-310001115055pnfp:BankersHealthcareGroupLLCMember2025-03-310001115055pnfp:BankersHealthcareGroupLLCMember2025-03-310001115055pnfp:BankersHealthcareGroupLLCMember2024-12-310001115055pnfp:BankersHealthcareGroupLLCMember2025-01-012025-03-310001115055pnfp:BankersHealthcareGroupLLCMember2024-01-012024-03-310001115055pnfp:BankersHealthcareGroupLLCMember2025-01-012025-03-310001115055pnfp:BankersHealthcareGroupLLCMember2024-01-012024-03-310001115055pnfp:BankersHealthcareGroupLLCMember2024-12-310001115055us-gaap:USTreasurySecuritiesMember2025-03-310001115055us-gaap:USGovernmentAgenciesDebtSecuritiesMember2025-03-310001115055us-gaap:MortgageBackedSecuritiesMember2025-03-310001115055us-gaap:USStatesAndPoliticalSubdivisionsMember2025-03-310001115055us-gaap:AssetBackedSecuritiesMember2025-03-310001115055us-gaap:CorporateDebtSecuritiesMember2025-03-310001115055us-gaap:USTreasurySecuritiesMember2024-12-310001115055us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-12-310001115055us-gaap:MortgageBackedSecuritiesMember2024-12-310001115055us-gaap:USStatesAndPoliticalSubdivisionsMember2024-12-310001115055us-gaap:AssetBackedSecuritiesMember2024-12-310001115055us-gaap:CorporateDebtSecuritiesMember2024-12-3100011150552022-01-012022-03-3100011150552020-01-012020-03-3100011150552018-07-012018-09-3000011150552022-03-3100011150552020-03-3100011150552018-09-300001115055us-gaap:AssetPledgedAsCollateralMember2025-03-310001115055us-gaap:AssetPledgedAsCollateralMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:ResidentialMortgageMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberus-gaap:SpecialMentionMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:SubstandardAccrualMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Memberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2024Memberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2023Memberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2022Memberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2021Memberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:PriorMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberus-gaap:PassMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberus-gaap:SpecialMentionMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:SubstandardAccrualMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Memberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2024Memberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2023Memberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2022Memberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:A2021Memberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:PriorMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055us-gaap:ResidentialRealEstateMemberus-gaap:PassMember2025-03-310001115055us-gaap:ResidentialMortgageMemberus-gaap:PassMember2025-03-310001115055us-gaap:ResidentialRealEstateMemberus-gaap:SpecialMentionMember2025-03-310001115055us-gaap:ResidentialMortgageMemberus-gaap:SpecialMentionMember2025-03-310001115055us-gaap:ResidentialRealEstateMemberpnfp:SubstandardAccrualMember2025-03-310001115055us-gaap:ResidentialMortgageMemberpnfp:SubstandardAccrualMember2025-03-310001115055us-gaap:ResidentialRealEstateMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055us-gaap:ResidentialMortgageMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055us-gaap:ResidentialRealEstateMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055us-gaap:ResidentialMortgageMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055us-gaap:ResidentialRealEstateMember2025-03-310001115055pnfp:A2025Memberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:A2024Memberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:A2023Memberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:A2022Memberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:A2021Memberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:PriorMemberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055us-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberus-gaap:PassMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberus-gaap:SpecialMentionMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:SubstandardAccrualMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Memberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2024Memberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2023Memberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2022Memberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2021Memberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:PriorMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberus-gaap:PassMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberus-gaap:SpecialMentionMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:SubstandardAccrualMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Memberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2024Memberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2023Memberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2022Memberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2021Memberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:PriorMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:SubstandardAccrualMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:SubstandardNonaccrualMember2025-03-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Memberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2024Memberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2023Memberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2022Memberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:A2021Memberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:PriorMemberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMemberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:PassMember2025-03-310001115055us-gaap:SpecialMentionMember2025-03-310001115055pnfp:SubstandardAccrualMember2025-03-310001115055pnfp:SubstandardNonacrrualMember2025-03-310001115055pnfp:SubstandardNonaccrualMember2025-03-310001115055pnfp:DoubtfulNonaccrualMember2025-03-310001115055pnfp:A2025Member2025-01-012025-03-310001115055pnfp:A2024Member2025-01-012025-03-310001115055pnfp:A2023Member2025-01-012025-03-310001115055pnfp:A2022Member2025-01-012025-03-310001115055pnfp:A2021Member2025-01-012025-03-310001115055pnfp:PriorMember2025-01-012025-03-310001115055pnfp:RevolvingLoansMember2025-01-012025-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberus-gaap:SpecialMentionMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:SubstandardAccrualMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberus-gaap:PassMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberus-gaap:SpecialMentionMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:SubstandardAccrualMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055us-gaap:ResidentialRealEstateMemberus-gaap:PassMember2024-12-310001115055us-gaap:ResidentialRealEstateMemberus-gaap:SpecialMentionMember2024-12-310001115055us-gaap:ResidentialRealEstateMemberpnfp:SubstandardAccrualMember2024-12-310001115055us-gaap:ResidentialRealEstateMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055us-gaap:ResidentialRealEstateMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055us-gaap:ResidentialRealEstateMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberus-gaap:PassMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:SubstandardAccrualMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberus-gaap:PassMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:SubstandardAccrualMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:SubstandardAccrualMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:SubstandardNonacrrualMember2024-12-310001115055us-gaap:ConsumerPortfolioSegmentMemberpnfp:DoubtfulNonaccrualMember2024-12-310001115055us-gaap:PassMember2024-12-310001115055us-gaap:SpecialMentionMember2024-12-310001115055pnfp:SubstandardAccrualMember2024-12-310001115055pnfp:SubstandardNonacrrualMember2024-12-310001115055pnfp:DoubtfulNonaccrualMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2025-03-310001115055us-gaap:FinancialAssetPastDueMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialMortgageMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialMortgageMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ResidentialMortgageMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialMortgageMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialMortgageMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMember2024-12-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMember2024-12-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-12-310001115055us-gaap:FinancialAssetPastDueMember2024-12-310001115055us-gaap:FinancialAssetNotPastDueMember2024-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2023-12-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2023-12-310001115055us-gaap:ResidentialRealEstateMember2023-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2023-12-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2023-12-310001115055us-gaap:ConsumerPortfolioSegmentMember2023-12-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2024-01-012024-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2024-01-012024-03-310001115055us-gaap:ResidentialRealEstateMember2024-01-012024-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-01-012024-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:ConsumerPortfolioSegmentMember2024-01-012024-03-310001115055pnfp:CommercialRealEstateOwnerOccupiedMember2024-03-310001115055pnfp:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001115055us-gaap:ResidentialRealEstateMember2024-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-03-310001115055pnfp:CommercialandIndustrialPortfolioSegmentMember2024-03-310001115055us-gaap:ConsumerPortfolioSegmentMember2024-03-310001115055us-gaap:RealEstateMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055pnfp:OtherMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-03-310001115055us-gaap:RealEstateMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055pnfp:OtherMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-03-310001115055us-gaap:RealEstateMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055pnfp:BusinessAssetsMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055pnfp:OtherMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055us-gaap:RealEstateMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055pnfp:BusinessAssetsMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055pnfp:OtherMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055us-gaap:RealEstateMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055pnfp:OtherMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-03-310001115055us-gaap:RealEstateMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055pnfp:BusinessAssetsMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055pnfp:OtherMemberus-gaap:ConsumerPortfolioSegmentMember2025-03-310001115055us-gaap:RealEstateMember2025-03-310001115055pnfp:BusinessAssetsMember2025-03-310001115055pnfp:OtherMember2025-03-310001115055us-gaap:RealEstateMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055pnfp:OtherMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-12-310001115055us-gaap:RealEstateMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055pnfp:OtherMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-12-310001115055us-gaap:RealEstateMemberus-gaap:ResidentialRealEstateMember2024-12-310001115055pnfp:BusinessAssetsMemberus-gaap:ResidentialRealEstateMember2024-12-310001115055pnfp:OtherMemberus-gaap:ResidentialRealEstateMember2024-12-310001115055us-gaap:RealEstateMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055pnfp:BusinessAssetsMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055pnfp:OtherMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055us-gaap:RealEstateMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055pnfp:BusinessAssetsMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055pnfp:OtherMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-12-310001115055us-gaap:RealEstateMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055pnfp:BusinessAssetsMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055pnfp:OtherMemberus-gaap:ConsumerPortfolioSegmentMember2024-12-310001115055us-gaap:RealEstateMember2024-12-310001115055pnfp:BusinessAssetsMember2024-12-310001115055pnfp:OtherMember2024-12-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialRealEstateOwnerOccupiedMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberus-gaap:ResidentialRealEstateMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberus-gaap:ConsumerPortfolioSegmentMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMember2025-01-012025-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMemberus-gaap:ResidentialRealEstateMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMemberus-gaap:ConsumerPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:ExtendedMaturityMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberus-gaap:ResidentialRealEstateMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMemberus-gaap:ConsumerPortfolioSegmentMember2024-01-012024-03-310001115055us-gaap:PaymentDeferralMember2024-01-012024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialRealEstateMember2025-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialRealEstateMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialRealEstateMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ResidentialRealEstateMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialRealEstateMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberpnfp:CommercialandIndustrialPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2024-03-310001115055us-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001115055us-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001115055us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001115055us-gaap:FinancialAssetNotPastDueMember2024-03-310001115055pnfp:CommercialAndIndustrialMember2025-03-310001115055pnfp:CommercialAndIndustrialMember2024-12-310001115055pnfp:LessorsOfNonresidentialBuildingsMember2025-03-310001115055pnfp:LessorsOfNonresidentialBuildingsMember2024-12-310001115055pnfp:LessorsOfResidentialBuildingsMember2025-03-310001115055pnfp:LessorsOfResidentialBuildingsMember2024-12-310001115055naics:ZZ2361172025-03-310001115055naics:ZZ2361172024-12-310001115055naics:ZZ5122302025-03-310001115055naics:ZZ5122302024-12-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2025-03-310001115055pnfp:ConstructionandLandDevelopmentPortfolioSegmentMember2024-12-310001115055pnfp:NonowneroccupiedcommercialrealestateandmultifamilyloansMember2025-03-310001115055pnfp:NonowneroccupiedcommercialrealestateandmultifamilyloansMember2024-12-310001115055us-gaap:CommitmentsToExtendCreditMember2025-03-310001115055us-gaap:HomeEquityMember2025-03-310001115055us-gaap:StandbyLettersOfCreditMember2025-01-012025-03-310001115055us-gaap:StandbyLettersOfCreditMember2025-03-310001115055us-gaap:StandbyLettersOfCreditMember2024-12-310001115055pnfp:A2018EquityIncentivePlanMember2025-03-310001115055us-gaap:RestrictedStockMember2024-12-310001115055us-gaap:RestrictedStockMember2025-01-012025-03-310001115055us-gaap:RestrictedStockMember2025-03-310001115055pnfp:TimeBasedAwardsMemberpnfp:AssociatesMembersrt:MaximumMember2025-01-012025-03-310001115055pnfp:TimeBasedAwardsMemberpnfp:AssociatesMember2025-01-012025-03-310001115055pnfp:TimeBasedAwardsMemberpnfp:AssociatesMember2025-03-310001115055pnfp:OutsideDirectorAwardsMembersrt:DirectorMember2025-01-012025-03-310001115055pnfp:OutsideDirectorAwardsMembersrt:DirectorMember2025-03-310001115055pnfp:RestrictedStockUnitsMember2024-12-310001115055pnfp:RestrictedStockUnitsMember2025-01-012025-03-310001115055pnfp:RestrictedStockUnitsMember2025-03-310001115055pnfp:A2024RestrictedStockUnitsMember2025-01-012025-03-310001115055pnfp:A2024RestrictedStockUnitsMember2025-03-310001115055pnfp:A2025PerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MinimumMember2025-01-012025-03-310001115055pnfp:A2025PerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MaximumMember2025-01-012025-03-310001115055pnfp:A2025PerformanceUnitAwardMemberpnfp:LeadershipTeamMember2025-01-012025-03-310001115055pnfp:A2025PerformanceUnitAwardMemberpnfp:Tranche20252027Member2025-01-012025-03-310001115055pnfp:A2024PerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MinimumMember2025-01-012025-03-310001115055pnfp:A2024PerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MaximumMember2025-01-012025-03-310001115055pnfp:A2024PerformanceUnitAwardMemberpnfp:LeadershipTeamMember2025-01-012025-03-310001115055pnfp:A2024PerformanceUnitAwardMemberpnfp:Tranche20242026Member2025-01-012025-03-310001115055pnfp:A2023PerformanceUnitAwardsMemberpnfp:SeniorExecutiveOfficersMembersrt:MinimumMember2025-01-012025-03-310001115055pnfp:A2023PerformanceUnitAwardsMemberpnfp:SeniorExecutiveOfficersMembersrt:MaximumMember2025-01-012025-03-310001115055pnfp:A2023PerformanceUnitAwardsMemberpnfp:LeadershipTeamMember2025-01-012025-03-310001115055pnfp:A2023PerformanceUnitAwardsMemberpnfp:Tranche20232025Member2025-01-012025-03-310001115055pnfp:A2022SpecialPerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MinimumMember2025-01-012025-03-310001115055pnfp:A2022SpecialPerformanceUnitAwardMemberpnfp:SeniorExecutiveOfficersMembersrt:MaximumMember2025-01-012025-03-310001115055pnfp:A2022SpecialPerformanceUnitAwardMemberpnfp:LeadershipTeamMember2025-01-012025-03-310001115055pnfp:A2022SpecialPerformanceUnitAwardMemberpnfp:Tranche20222024Member2025-01-012025-03-310001115055pnfp:PerformanceUnitAwardsMember2025-01-012025-03-310001115055pnfp:PerformanceUnitAwardsMember2024-01-012024-03-310001115055pnfp:PayFixedAndReceiveVariableSwapsMemberus-gaap:NondesignatedMember2025-03-310001115055pnfp:PayFixedAndReceiveVariableSwapsMemberus-gaap:NondesignatedMember2024-12-310001115055pnfp:PayVariableAndReceiveFixedSwapsMemberus-gaap:NondesignatedMember2025-03-310001115055pnfp:PayVariableAndReceiveFixedSwapsMemberus-gaap:NondesignatedMember2024-12-310001115055us-gaap:NondesignatedMember2025-03-310001115055us-gaap:NondesignatedMember2024-12-310001115055us-gaap:NondesignatedMember2025-01-012025-03-310001115055us-gaap:NondesignatedMember2024-01-012024-03-310001115055us-gaap:CreditDefaultSwapMemberus-gaap:NondesignatedMember2024-06-280001115055us-gaap:CreditDefaultSwapMemberus-gaap:ResidentialRealEstateMember2024-06-280001115055us-gaap:CreditDefaultSwapBuyingProtectionMember2025-03-310001115055us-gaap:CreditDefaultSwapMemberus-gaap:NondesignatedMember2025-03-310001115055us-gaap:CreditDefaultSwapMemberus-gaap:NondesignatedMember2024-12-310001115055us-gaap:CreditDefaultSwapMemberus-gaap:NondesignatedMember2025-01-012025-03-310001115055us-gaap:CreditDefaultSwapMemberus-gaap:NondesignatedMember2024-01-012024-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateFloorMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateFloorMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateCapMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateFloorMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateFloorMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:AssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:AssetsMemberus-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:AssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:AssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:AssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-03-310001115055us-gaap:SecuritiesInvestmentMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:AssetsMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:AssetsMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:LiabilityMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:LiabilityMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:LiabilityMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055pnfp:FederalFundsRateMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055pnfp:SecuredOvernightFinancingRateMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-03-310001115055us-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-03-310001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-03-310001115055us-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-12-310001115055us-gaap:LoansMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2025-01-012025-03-310001115055us-gaap:LoansMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-03-310001115055us-gaap:AssetsMemberus-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-300001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-012022-04-300001115055us-gaap:SecuritiesInvestmentMemberus-gaap:FairValueHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-300001115055us-gaap:FairValueMeasurementsRecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2025-03-310001115055us-gaap:FairValueMeasurementsRecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001115055us-gaap:FairValueMeasurementsNonrecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2025-03-310001115055us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2025-03-310001115055us-gaap:FairValueMeasurementsNonrecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2024-12-310001115055us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2024-12-310001115055us-gaap:AvailableforsaleSecuritiesMember2024-01-012024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2024-01-012024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2024-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2024-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2024-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2023-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2023-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2023-12-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2025-01-012025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2025-01-012025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2025-01-012025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2024-01-012024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2024-01-012024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2025-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AvailableforsaleSecuritiesMember2024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAssetsMember2024-03-310001115055us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ServicingContractsMember2024-03-310001115055us-gaap:CarryingReportedAmountFairValueDisclosureMember2025-03-310001115055us-gaap:EstimateOfFairValueFairValueDisclosureMember2025-03-310001115055us-gaap:FairValueInputsLevel1Member2025-03-310001115055us-gaap:FairValueInputsLevel2Member2025-03-310001115055us-gaap:FairValueInputsLevel3Member2025-03-310001115055us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-12-310001115055us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-12-310001115055us-gaap:FairValueInputsLevel1Member2024-12-310001115055us-gaap:FairValueInputsLevel2Member2024-12-310001115055us-gaap:FairValueInputsLevel3Member2024-12-310001115055srt:SubsidiariesMember2025-01-012025-03-310001115055srt:SubsidiariesMember2025-03-3100011150552022-12-3100011150552020-04-012020-06-300001115055srt:ParentCompanyMember2025-03-310001115055srt:ParentCompanyMember2024-12-310001115055srt:SubsidiariesMember2024-12-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionOneMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionOneMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionTwoMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionTwoMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionThreeMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionThreeMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionFourMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjectToMandatoryRedemptionFourMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionFiveMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionFiveMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionSixMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionSixMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionSevenMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionSevenMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionEightMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionEightMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionNineMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionNineMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionTenMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionTenMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionElevenMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionElevenMember2025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionTwelveMember2025-01-012025-03-310001115055pnfp:TrustPreferredSecuritiesSubjecttoMandatoryRedemptionTwelveMember2025-03-310001115055pnfp:PinnacleFinancialNotes2019Member2025-01-012025-03-310001115055pnfp:PinnacleFinancialNotes2019Member2025-03-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(mark one)
|
|
|
|
|
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2025
or
|
|
|
|
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
Commission File Number: 001-39309
Pinnacle Financial Partners Inc.

, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Exact name of registrant as specified in its charter) |
Tennessee |
|
62-1812853 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
21 Platform Way South, Suite 2300 |
Nashville, |
TN |
|
37203 |
(Address of principal executive offices) |
|
(Zip Code) |
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changes since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
|
|
|
|
|
|
|
|
|
Title of Each Class |
Trading Symbol |
Name of Exchange on which Registered |
Common Stock, par value $1.00 |
PNFP |
The Nasdaq Stock Market LLC |
Depositary Shares (each representing 1/40th interest in a share of 6.75% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series B) |
PNFPP |
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ☒ Accelerated Filer ☐
Non-accelerated Filer ☐ Smaller reporting company ☐
(do not check if you are a smaller reporting company) Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of April 30, 2025 there were 77,556,096 shares of common stock, $1.00 par value per share, issued and outstanding.
Pinnacle Financial Partners, Inc.
Report on Form 10-Q
March 31, 2025
|
|
|
|
|
|
TABLE OF CONTENTS |
Page No. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "aim," "anticipate," "intend," "may," "should," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers of Pinnacle Bank and its subsidiaries or BHG, including as a result of persistent elevated interest rates, the negative impact of inflationary pressures and challenging economic conditions on our and BHG's customers and their businesses, resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iii) the impact of U.S. and global economic conditions, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and geopolitical instability; (iv) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs; (v) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout the Southeast region of the United States, particularly in commercial and residential real estate markets; (vi) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to limit the rates it pays on deposits or uncertainty exists in the financial services sector; (viii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (ix) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (x) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of the negative impact to net interest margin from elevated deposit and other funding costs; (xi) the results of regulatory examinations of Pinnacle Financial, Pinnacle Bank or BHG, or companies with whom they do business; (xii) BHG's ability to profitably grow its business and successfully execute on its business plans; (xiii) risks of expansion into new geographic or product markets; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xvi) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xvii) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xviii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam or ransomware attacks, human error, natural disasters, power loss and other security breaches; (xxi) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxii) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xxiii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiv) the risks associated with Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Bank); (xxv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxvi) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvii) the availability of and access to capital; (xxviii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions involving Pinnacle Financial, Pinnacle Bank or BHG; and (xxix) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements included in this report can be found in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2024, subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this report, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.
|
|
|
|
|
|
Item 1. |
Part I. Financial Information |
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
March 31, 2025 |
|
December 31, 2024 |
ASSETS |
|
|
|
Cash and noninterest-bearing due from banks |
$ |
338,603 |
|
|
$ |
320,320 |
|
Restricted cash |
114,234 |
|
|
93,645 |
|
Interest-bearing due from banks |
3,425,902 |
|
|
3,021,960 |
|
|
|
|
|
Cash and cash equivalents |
3,878,739 |
|
|
3,435,925 |
|
Securities purchased with agreement to resell |
80,566 |
|
|
66,449 |
|
Securities available-for-sale, at fair value |
5,950,177 |
|
|
5,582,369 |
|
Securities held-to-maturity (fair value of $2.5 billion and $2.6 billion, net of allowance for credit losses of $1.7 million and $1.7 million at Mar. 31, 2025 and Dec. 31, 2024, respectively) |
2,768,617 |
|
|
2,798,899 |
|
Consumer loans held-for-sale |
143,305 |
|
|
175,627 |
|
Commercial loans held-for-sale |
12,114 |
|
|
19,700 |
|
Loans |
36,136,746 |
|
|
35,485,776 |
|
Less allowance for credit losses |
(417,462) |
|
|
(414,494) |
|
Loans, net |
35,719,284 |
|
|
35,071,282 |
|
Premises and equipment, net |
323,129 |
|
|
311,277 |
|
Equity method investment |
432,177 |
|
|
436,707 |
|
Accrued interest receivable |
220,614 |
|
|
214,080 |
|
Goodwill |
1,849,260 |
|
|
1,849,260 |
|
Core deposits and other intangible assets |
20,007 |
|
|
21,423 |
|
Other real estate owned |
3,638 |
|
|
1,278 |
|
Other assets |
2,853,177 |
|
|
2,605,173 |
|
Total assets |
$ |
54,254,804 |
|
|
$ |
52,589,449 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Deposits: |
|
|
|
Noninterest-bearing |
$ |
8,507,351 |
|
|
$ |
8,170,448 |
|
Interest-bearing |
14,802,202 |
|
|
14,125,194 |
|
Savings and money market accounts |
16,913,656 |
|
|
16,197,397 |
|
Time |
4,256,254 |
|
|
4,349,953 |
|
Total deposits |
44,479,463 |
|
|
42,842,992 |
|
Securities sold under agreements to repurchase |
263,993 |
|
|
230,244 |
|
Federal Home Loan Bank advances |
1,886,011 |
|
|
1,874,134 |
|
Subordinated debt and other borrowings |
426,042 |
|
|
425,821 |
|
Accrued interest payable |
51,318 |
|
|
55,619 |
|
Other liabilities |
604,835 |
|
|
728,758 |
|
Total liabilities |
47,711,662 |
|
|
46,157,568 |
|
Shareholders' equity: |
|
|
|
Preferred stock, no par value, 10.0 million shares authorized; 225,000 shares non-cumulative perpetual preferred stock, Series B, liquidation preference $225.0 million, issued and outstanding at Mar. 31, 2025 and Dec. 31, 2024, respectively |
217,126 |
|
|
217,126 |
|
Common stock, par value $1.00; 180.0 million shares authorized; 77.6 million and 77.2 million shares issued and outstanding at Mar. 31, 2025 and Dec. 31, 2024, respectively |
77,554 |
|
|
77,242 |
|
Additional paid-in capital |
3,120,969 |
|
|
3,129,680 |
|
Retained earnings |
3,293,559 |
|
|
3,175,777 |
|
Accumulated other comprehensive loss, net of taxes |
(166,066) |
|
|
(167,944) |
|
Total shareholders' equity |
6,543,142 |
|
|
6,431,881 |
|
Total liabilities and shareholders' equity |
$ |
54,254,804 |
|
|
$ |
52,589,449 |
|
See accompanying notes to consolidated financial statements (unaudited).
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
Three months ended March 31, |
|
|
|
2025 |
|
2024 |
|
|
|
|
Interest income: |
|
|
|
|
|
|
|
Loans, including fees |
$ |
547,368 |
|
|
$ |
541,199 |
|
|
|
|
|
Securities: |
|
|
|
|
|
|
|
Taxable |
61,853 |
|
|
44,470 |
|
|
|
|
|
Tax-exempt |
25,230 |
|
|
24,600 |
|
|
|
|
|
Federal funds sold and other |
33,709 |
|
|
40,214 |
|
|
|
|
|
Total interest income |
668,160 |
|
|
650,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Deposits |
273,393 |
|
|
300,968 |
|
|
|
|
|
Securities sold under agreements to repurchase |
1,026 |
|
|
1,399 |
|
|
|
|
|
Federal Home Loan Bank advances and other borrowings |
29,313 |
|
|
30,082 |
|
|
|
|
|
Total interest expense |
303,732 |
|
|
332,449 |
|
|
|
|
|
Net interest income |
364,428 |
|
|
318,034 |
|
|
|
|
|
Provision for credit losses |
16,960 |
|
|
34,497 |
|
|
|
|
|
Net interest income after provision for credit losses |
347,468 |
|
|
283,537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Service charges on deposit accounts |
17,028 |
|
|
13,439 |
|
|
|
|
|
Investment services |
18,817 |
|
|
14,751 |
|
|
|
|
|
Insurance sales commissions |
4,674 |
|
|
3,852 |
|
|
|
|
|
Gain on mortgage loans sold, net |
2,507 |
|
|
2,879 |
|
|
|
|
|
Investment losses on sales, net |
(12,512) |
|
|
— |
|
|
|
|
|
Trust fees |
9,340 |
|
|
7,415 |
|
|
|
|
|
Income from equity method investment |
20,405 |
|
|
16,035 |
|
|
|
|
|
Gain on sale of fixed assets |
210 |
|
|
58 |
|
|
|
|
|
Other noninterest income |
37,957 |
|
|
51,674 |
|
|
|
|
|
Total noninterest income |
98,426 |
|
|
110,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
Salaries and employee benefits |
172,089 |
|
|
146,010 |
|
|
|
|
|
Equipment and occupancy |
46,180 |
|
|
39,646 |
|
|
|
|
|
Other real estate expense, net |
58 |
|
|
84 |
|
|
|
|
|
Marketing and other business development |
8,666 |
|
|
6,125 |
|
|
|
|
|
Postage and supplies |
3,370 |
|
|
2,771 |
|
|
|
|
|
Amortization of intangibles |
1,417 |
|
|
1,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noninterest expense |
43,707 |
|
|
46,145 |
|
|
|
|
|
Total noninterest expense |
275,487 |
|
|
242,365 |
|
|
|
|
|
Income before income taxes |
170,407 |
|
|
151,275 |
|
|
|
|
|
Income tax expense |
29,999 |
|
|
27,331 |
|
|
|
|
|
Net income |
140,408 |
|
|
123,944 |
|
|
|
|
|
Preferred stock dividends |
(3,798) |
|
|
(3,798) |
|
|
|
|
|
Net income available to common shareholders |
$ |
136,610 |
|
|
$ |
120,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
Basic net income per common share |
$ |
1.78 |
|
|
$ |
1.58 |
|
|
|
|
|
Diluted net income per common share |
$ |
1.77 |
|
|
$ |
1.57 |
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
76,726,545 |
|
|
76,278,453 |
|
|
|
|
|
Diluted |
76,964,625 |
|
|
76,428,885 |
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
Three months ended March 31, |
|
|
|
2025 |
|
2024 |
|
|
|
|
Net income |
$ |
140,408 |
|
|
$ |
123,944 |
|
|
|
|
|
Other comprehensive gain (loss), net of tax: |
|
|
|
|
|
|
|
Change in fair value on available-for-sale securities, net of tax |
(14,514) |
|
|
(3,103) |
|
|
|
|
|
Change in fair value of cash flow hedges, net of tax |
8,567 |
|
|
(19,646) |
|
|
|
|
|
Accretion of net unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax |
(1,559) |
|
|
(1,369) |
|
|
|
|
|
Net gain on cash flow hedges reclassified from other comprehensive income into net income, net of tax |
— |
|
|
(2,472) |
|
|
|
|
|
Net loss on sale of investment securities reclassified from other comprehensive income into net income, net of tax |
9,384 |
|
|
— |
|
|
|
|
|
Total other comprehensive gain (loss), net of tax |
1,878 |
|
|
(26,590) |
|
|
|
|
|
Total comprehensive income |
$ |
142,286 |
|
|
$ |
97,354 |
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars and shares in thousands) |
Preferred Stock Amount |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comp. Income (Loss), net |
Total Shareholders' Equity |
|
Shares |
Amounts |
Balance at December 31, 2023 |
$ |
217,126 |
|
76,767 |
|
$ |
76,767 |
|
$ |
3,109,493 |
|
$ |
2,784,927 |
|
$ |
(152,525) |
|
$ |
6,035,788 |
|
|
|
|
|
|
|
|
|
Preferred dividends paid ($16.88 per share) |
— |
|
— |
|
— |
|
— |
|
(3,798) |
|
— |
|
(3,798) |
|
Common dividends paid ($0.22 per share) |
— |
|
— |
|
— |
|
— |
|
(17,269) |
|
— |
|
(17,269) |
|
Issuance of restricted common shares, net of forfeitures |
— |
|
190 |
|
190 |
|
(190) |
|
— |
|
— |
|
— |
|
Restricted shares withheld for taxes & related tax benefits |
— |
|
(49) |
|
(49) |
|
(4,088) |
|
— |
|
— |
|
(4,137) |
|
Issuance of common stock pursuant to restricted stock unit (RSU) and performance stock unit (PSU) agreements, net of shares withheld for taxes & related tax benefits |
— |
|
311 |
|
311 |
|
(14,738) |
|
— |
|
— |
|
(14,427) |
|
Compensation expense for restricted share awards, RSUs and PSUs |
— |
|
— |
|
— |
|
10,340 |
|
— |
|
— |
|
10,340 |
|
Net income |
— |
|
— |
|
— |
|
— |
|
123,944 |
|
— |
|
123,944 |
|
Other comprehensive loss |
— |
|
— |
|
— |
|
— |
|
— |
|
(26,590) |
|
(26,590) |
|
Balance at March 31, 2024 |
$ |
217,126 |
|
77,219 |
|
$ |
77,219 |
|
$ |
3,100,817 |
|
$ |
2,887,804 |
|
$ |
(179,115) |
|
$ |
6,103,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Amount |
Common Stock |
|
|
Accumulated Other Comp. Income (Loss), net |
Total Shareholders' Equity |
|
Shares |
Amounts |
Additional Paid-in Capital |
Retained Earnings |
Balance at December 31, 2024 |
$ |
217,126 |
|
77,242 |
|
$ |
77,242 |
|
$ |
3,129,680 |
|
$ |
3,175,777 |
|
$ |
(167,944) |
|
$ |
6,431,881 |
|
|
|
|
|
|
|
|
|
Preferred dividends paid ($16.88 per share) |
— |
|
— |
|
— |
|
— |
|
(3,798) |
|
— |
|
(3,798) |
|
Common dividends paid ($0.24 per share) |
— |
|
— |
|
— |
|
— |
|
(18,828) |
|
— |
|
(18,828) |
|
Issuance of restricted common shares, net of forfeitures |
— |
|
143 |
|
143 |
|
(143) |
|
— |
|
— |
|
— |
|
Restricted shares withheld for taxes & related tax benefits |
— |
|
(51) |
|
(51) |
|
(5,735) |
|
— |
|
— |
|
(5,786) |
|
Issuance of common stock pursuant to RSU and PSU agreements, net of shares withheld for taxes & related tax benefits |
— |
|
220 |
|
220 |
|
(13,394) |
|
— |
|
— |
|
(13,174) |
|
Compensation expense for restricted share awards, RSUs and PSUs |
— |
|
— |
|
— |
|
10,561 |
|
— |
|
— |
|
10,561 |
|
Net income |
— |
|
— |
|
— |
|
— |
|
140,408 |
|
— |
|
140,408 |
|
Other comprehensive income |
— |
|
— |
|
— |
|
— |
|
— |
|
1,878 |
|
1,878 |
|
Balance at March 31, 2025 |
$ |
217,126 |
|
77,554 |
|
$ |
77,554 |
|
$ |
3,120,969 |
|
$ |
3,293,559 |
|
$ |
(166,066) |
|
$ |
6,543,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
Three months ended March 31, |
|
2025 |
|
2024 |
Operating activities: |
|
|
|
Net income |
$ |
140,408 |
|
|
$ |
123,944 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
Net amortization/accretion of premium/discount on securities |
11,234 |
|
|
14,030 |
|
Depreciation, amortization and accretion, net |
27,280 |
|
|
23,096 |
|
Provision for credit losses |
16,960 |
|
|
34,497 |
|
Gain on mortgage loans sold, net |
(2,507) |
|
|
(2,879) |
|
Investment losses on sales, net |
12,512 |
|
|
— |
|
Loss (gain) on other equity investments, net |
159 |
|
|
(2,882) |
|
Stock-based compensation expense |
10,561 |
|
|
10,340 |
|
Deferred tax expense |
16,690 |
|
|
10,209 |
|
Losses on dispositions of other real estate and other investments |
9 |
|
|
56 |
|
Gain on sale of fixed assets |
(210) |
|
|
(58) |
|
|
|
|
|
Income from equity method investment |
(20,405) |
|
|
(16,035) |
|
Dividends received from equity method investment |
24,934 |
|
|
3,601 |
|
Excess tax benefit from stock compensation |
(3,605) |
|
|
(2,414) |
|
Gain on commercial loans sold, net |
(467) |
|
|
(186) |
|
Commercial loans held for sale originated |
(62,603) |
|
|
(51,031) |
|
Commercial loans held for sale sold |
70,656 |
|
|
54,429 |
|
Consumer loans held for sale originated |
(678,002) |
|
|
(466,061) |
|
Consumer loans held for sale sold |
712,832 |
|
|
468,570 |
|
Increase in other assets |
(86,175) |
|
|
(34,413) |
|
Increase (decrease) in other liabilities |
(211,952) |
|
|
30,470 |
|
Net cash provided by (used in) operating activities |
(21,691) |
|
|
197,283 |
|
Investing activities: |
|
|
|
Activities in securities available-for-sale: |
|
|
|
Purchases |
(582,508) |
|
|
(165,236) |
|
Sales |
188,486 |
|
|
— |
|
Maturities, prepayments and calls |
66,753 |
|
|
39,236 |
|
Activities in securities held-to-maturity: |
|
|
|
|
|
|
|
Maturities, prepayments and calls |
23,061 |
|
|
5,917 |
|
Net decrease (increase) in securities purchased under agreements to resell |
(14,117) |
|
|
3,987 |
|
Increase in loans, net |
(679,602) |
|
|
(505,746) |
|
Proceeds from sale of loans |
9,131 |
|
|
— |
|
Purchases of software, premises and equipment |
(21,345) |
|
|
(17,316) |
|
Proceeds from sales of software, premises and equipment |
532 |
|
|
129 |
|
Proceeds from sale of other real estate |
146 |
|
|
1,549 |
|
Purchase of bank owned life insurance policies |
(100,000) |
|
|
— |
|
Proceeds from bank owned life insurance settlements |
— |
|
|
1,622 |
|
Proceeds from bank owned life insurance surrender |
— |
|
|
141,308 |
|
Purchase of derivative instruments |
(21,661) |
|
|
— |
|
Proceeds from sale (purchase) of FHLB stock, net |
6,389 |
|
|
(11,420) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in other investments, net |
(39,271) |
|
|
(29,730) |
|
Net cash used in investing activities |
(1,164,006) |
|
|
(535,700) |
|
Financing activities: |
|
|
|
Net increase in deposits |
1,636,475 |
|
|
862,224 |
|
Net increase (decrease) in securities sold under agreements to repurchase |
33,749 |
|
|
(8,071) |
|
Federal Home Loan Bank: Advances |
— |
|
|
450,000 |
|
Federal Home Loan Bank: Repayments/maturities |
(26) |
|
|
(450,000) |
|
|
|
|
|
|
|
|
|
Principal payments of finance lease obligation |
(101) |
|
|
(93) |
|
|
|
|
|
Restricted shares withheld for taxes & related tax benefits |
(5,786) |
|
|
(14,427) |
|
Issuance of common stock pursuant to RSU and PSU agreements, net of shares withheld for taxes & related tax benefits |
(13,174) |
|
|
(4,137) |
|
|
|
|
|
Common stock dividends paid |
(18,828) |
|
|
(17,269) |
|
Preferred stock dividends paid |
(3,798) |
|
|
(3,798) |
|
Net cash provided by financing activities |
1,628,511 |
|
|
814,429 |
|
Net increase in cash, cash equivalents, and restricted cash |
442,814 |
|
|
476,012 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
3,435,925 |
|
|
2,230,349 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
3,878,739 |
|
|
$ |
2,706,361 |
|
See accompanying notes to consolidated financial statements (unaudited).
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Nature of Business — Pinnacle Financial Partners, Inc. (Pinnacle Financial) is a financial holding company whose primary business is conducted by its wholly-owned subsidiary, Pinnacle Bank. Pinnacle Bank is a commercial bank headquartered in Nashville, Tennessee. Pinnacle Financial completed its acquisitions of CapitalMark Bank & Trust (CapitalMark), Magna Bank (Magna), Avenue Financial Holdings, Inc. (Avenue) and BNC Bancorp (BNC) on July 31, 2015, September 1, 2015, July 1, 2016 and June 16, 2017, respectively. Pinnacle Bank completed its acquisitions of Advocate Capital, Inc. (Advocate Capital) and JB&B Capital, LLC (JB&B) on July 2, 2019 and March 1, 2022, respectively. Pinnacle Bank also holds a 49% interest in Bankers Healthcare Group, LLC (BHG), a company that primarily serves as a full-service commercial loan provider to healthcare providers and other skilled professionals for business purposes but also makes consumer loans for various purposes. Pinnacle Bank provides a full range of banking services, including investment, mortgage, insurance, and comprehensive wealth management services, in several primarily urban markets and their surrounding communities.
Basis of Presentation — The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2024 (2024 10-K).
These unaudited consolidated financial statements include the accounts of Pinnacle Financial and its wholly-owned subsidiaries. Certain statutory trust affiliates of Pinnacle Financial, as noted in Note 12. Other Borrowings, are included in these unaudited consolidated financial statements pursuant to the equity method of accounting. Significant intercompany transactions and accounts are eliminated in consolidation.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for credit losses and the determination of any impairment of goodwill or intangible assets. It is reasonably possible Pinnacle Financial's estimate of the allowance for credit losses and determination of impairment of intangible assets could change as a result of the uncertainty in current macroeconomic conditions. The resulting change in these estimates could be material to Pinnacle Financial's consolidated financial statements.
Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for the three months ended March 31, 2025 and 2024 was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, |
|
2025 |
|
2024 |
Cash Transactions: |
|
|
|
Interest paid |
$ |
307,725 |
|
|
$ |
341,042 |
|
Income taxes paid, net |
1,599 |
|
|
1,216 |
|
Operating lease payments |
11,246 |
|
|
9,142 |
Noncash Transactions: |
|
|
|
Loans charged-off to the allowance for credit losses |
17,972 |
|
|
20,832 |
|
Loans foreclosed upon and transferred to other real estate owned |
2,515 |
|
|
435 |
|
Loans foreclosed upon and transferred to other assets |
70 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right-of-use asset recognized during the period in exchange for lease obligations |
87,434 |
|
|
5,673 |
|
Income Per Common Share — Basic net income per common share (EPS) is computed by dividing net income available to common shareholders by the weighted average common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The difference between basic and diluted weighted average common shares outstanding is attributable to restricted share awards and restricted share unit awards, including those with performance-based vesting provisions. The dilutive effect of restricted share awards and restricted share unit awards is reflected in diluted EPS by application of the treasury stock method.
The following is a summary of the basic and diluted net income per common share calculations for the three months ended March 31, 2025 and 2024 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
2025 |
2024 |
|
|
|
Basic net income per common share calculation: |
|
|
|
|
|
Numerator - Net income available to common shareholders |
$ |
136,610 |
|
$ |
120,146 |
|
|
|
|
|
|
|
|
|
|
Denominator - Weighted average common shares outstanding |
76,727 |
|
76,278 |
|
|
|
|
Basic net income per common share |
$ |
1.78 |
|
$ |
1.58 |
|
|
|
|
Diluted net income per common share calculation: |
|
|
|
|
|
Numerator - Net income available to common shareholders |
$ |
136,610 |
|
$ |
120,146 |
|
|
|
|
|
|
|
|
|
|
Denominator - Weighted average common shares outstanding |
76,727 |
|
76,278 |
|
|
|
|
Dilutive common shares contingently issuable |
238 |
|
151 |
|
|
|
|
Weighted average diluted common shares outstanding |
76,965 |
|
76,429 |
|
|
|
|
Diluted net income per common share |
$ |
1.77 |
|
$ |
1.57 |
|
|
|
|
Recently Adopted Accounting Pronouncements — In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends the guidance for income tax disclosures to include certain required disclosures related to tax rate reconciliations, including certain categories of expense requiring disclosure, income taxes paid, including disclosure of taxes paid disaggregated by nation, state, and foreign taxes, and other disclosures for disaggregation of income before income tax expense (or benefit) and income tax expense (or benefit) by domestic and foreign allocation. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. Pinnacle Financial adopted ASU 2023-09 on January 1, 2025 and will incorporate the required annual disclosures into the consolidated financial statements for the year ended December 31, 2025 with required interim disclosures being incorporated in subsequent interim periods.
Newly Issued Not Yet Effective Accounting Standards — In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which amends the guidance to require additional disaggregation and disclosures about certain expenses. The guidance is effective for public business entities for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. Pinnacle Financial is assessing ASU 2024-03 and its potential impact on its accounting and disclosures.
Other than those pronouncements discussed above and those which have been recently adopted, Pinnacle Financial does not believe there were any other recently issued accounting pronouncements that may materially impact its consolidated financial statements.
Subsequent Events — ASC Topic 855, Subsequent Events, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. Pinnacle Financial evaluated all events or transactions that occurred after March 31, 2025 through the date of the issued financial statements with no subsequent events being noted as of the date of this filing.
Note 2. Equity method investment
A summary of BHG's financial position as of March 31, 2025 and December 31, 2024 and results of operations as of and for the three months ended March 31, 2025 and 2024, were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
March 31, 2025 |
|
December 31, 2024 |
Assets |
$ |
4,025,567 |
|
|
$ |
3,784,225 |
|
|
|
|
|
Liabilities |
3,499,819 |
|
|
3,257,078 |
|
Equity interests |
525,748 |
|
|
527,147 |
|
Total liabilities and equity |
$ |
4,025,567 |
|
|
$ |
3,784,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, |
|
|
|
|
|
2025 |
|
2024 |
Revenues |
|
|
|
|
$ |
240,663 |
|
|
$ |
277,260 |
|
Net income |
|
|
|
|
$ |
44,146 |
|
|
$ |
32,803 |
|
At both March 31, 2025 and December 31, 2024, technology, trade name and customer relationship intangibles associated with Pinnacle Bank's investment in BHG, net of related amortization, totaled $5.7 million. Amortization expense of $40,000 was included for the three months ended March 31, 2025 compared to $59,000 for the same period in the prior year. Accretion income of $29,000 was included in the three months ended March 31, 2025 compared to $39,000 for the same period in the prior year.
During the three months ended March 31, 2025, Pinnacle Bank received dividends of $24.9 million from BHG compared to $3.6 million received during the three months ended March 31, 2024. Earnings from BHG are included in Pinnacle Financial's consolidated tax return. Profits from intercompany transactions are eliminated. During the three months ended March 31, 2025 and 2024, Pinnacle Bank purchased no loans from BHG. At March 31, 2025 and December 31, 2024, there were $147.4 million and $161.7 million, respectively, of BHG joint venture program loans held by Pinnacle Bank. These loans were purchased from BHG by Pinnacle Bank at par and BHG and Pinnacle Bank share proportionately in the credit risk of the acquired loans based on the rate on the loan and the rate of the purchase. The yield on this portfolio to Pinnacle Bank is between 4.50% and 6.00% per annum. During the three months ended March 31, 2025 and 2024, Pinnacle Bank sold no BHG joint venture program loans back to BHG.
Note 3. Securities
The amortized cost and fair value of securities available-for-sale and held-to-maturity at March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
March 31, 2025: |
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
1,460,687 |
|
|
$ |
7 |
|
|
$ |
8,394 |
|
|
$ |
1,452,300 |
|
U.S. Government agency securities |
223,183 |
|
|
10 |
|
|
18,586 |
|
|
204,607 |
|
Mortgage-backed securities |
2,498,506 |
|
|
7,318 |
|
|
93,099 |
|
|
2,412,725 |
|
State and municipal securities |
1,634,080 |
|
|
2,534 |
|
|
88,712 |
|
|
1,547,902 |
|
Asset-backed securities |
220 |
|
|
2 |
|
|
— |
|
|
222 |
|
Corporate notes and other |
344,924 |
|
|
1,167 |
|
|
13,670 |
|
|
332,421 |
|
|
$ |
6,161,600 |
|
|
$ |
11,038 |
|
|
$ |
222,461 |
|
|
$ |
5,950,177 |
|
Securities held-to-maturity: |
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
19,864 |
|
|
$ |
— |
|
|
$ |
746 |
|
|
$ |
19,118 |
|
U.S. Government agency securities |
305,413 |
|
|
— |
|
|
10,037 |
|
|
295,376 |
|
Mortgage-backed securities |
362,343 |
|
|
249 |
|
|
28,459 |
|
|
334,133 |
|
State and municipal securities |
1,847,378 |
|
|
584 |
|
|
215,613 |
|
|
1,632,349 |
|
Asset-backed securities |
155,241 |
|
|
29 |
|
|
5,487 |
|
|
149,783 |
|
Corporate notes and other |
80,085 |
|
|
— |
|
|
5,931 |
|
|
74,154 |
|
|
$ |
2,770,324 |
|
|
$ |
862 |
|
|
$ |
266,273 |
|
|
$ |
2,504,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
March 31, 2025: |
|
|
|
|
|
|
|
Allowance for credit losses - securities held-to-maturity |
(1,707) |
|
|
|
|
|
|
|
Securities held-to-maturity, net of allowance for credit losses |
$ |
2,768,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
December 31, 2024: |
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
1,419,727 |
|
|
$ |
28 |
|
|
$ |
14,277 |
|
|
$ |
1,405,478 |
|
U.S. Government agency securities |
238,636 |
|
|
2 |
|
|
24,572 |
|
|
214,066 |
|
Mortgage-backed securities |
2,068,950 |
|
|
976 |
|
|
107,567 |
|
|
1,962,359 |
|
State and municipal securities |
1,537,910 |
|
|
15,382 |
|
|
46,735 |
|
|
1,506,557 |
|
Asset-backed securities |
45,280 |
|
|
85 |
|
|
27 |
|
|
45,338 |
|
Corporate notes and other |
476,900 |
|
|
107 |
|
|
28,436 |
|
|
448,571 |
|
|
$ |
5,787,403 |
|
|
$ |
16,580 |
|
|
221,614 |
|
|
$ |
5,582,369 |
|
Securities held-to-maturity: |
|
|
|
|
|
|
|
U.S Treasury securities |
$ |
19,841 |
|
|
$ |
— |
|
|
$ |
954 |
|
|
$ |
18,887 |
|
U.S. Government agency securities |
315,286 |
|
|
— |
|
|
13,719 |
|
|
301,567 |
|
Mortgage-backed securities |
366,029 |
|
|
6 |
|
|
34,573 |
|
|
331,462 |
|
State and municipal securities |
1,854,942 |
|
|
1,956 |
|
|
178,744 |
|
|
1,678,154 |
|
Asset-backed securities |
161,957 |
|
|
41 |
|
|
6,920 |
|
|
155,078 |
|
Corporate notes |
82,551 |
|
|
— |
|
|
7,447 |
|
|
75,104 |
|
|
$ |
2,800,606 |
|
|
$ |
2,003 |
|
|
$ |
242,357 |
|
|
$ |
2,560,252 |
|
Allowance for credit losses - securities held-to-maturity |
(1,707) |
|
|
|
|
|
|
|
Securities held-to-maturity, net of allowance for credit losses |
$ |
2,798,899 |
|
|
|
|
|
|
|
During the quarters ended March 31, 2022, March 31, 2020 and September 30, 2018, Pinnacle Financial transferred, at fair value, $1.1 billion, $873.6 million and $179.8 million, respectively, of securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related net unrealized after tax losses of $1.5 million, net unrealized after tax gains of $69.0 million and net unrealized after tax losses of $2.2 million, respectively, on these transferred securities remained in accumulated other comprehensive income (loss) and are being amortized over the remaining life of the transferred securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. At March 31, 2025, approximately $3.5 billion of securities within Pinnacle Financial's investment portfolio were pledged to secure either public funds and other deposits or securities sold under agreements to repurchase. At March 31, 2025, repurchase agreements comprised of secured borrowings totaled $264.0 million and were secured by $264.0 million of pledged U.S. government agency securities, mortgage-backed securities, municipal securities, asset-backed securities and corporate notes. As the fair value of securities pledged to secure repurchase agreements may decline, Pinnacle Financial regularly evaluates its need to pledge additional securities to the customers with whom it has entered into the repurchase agreements for the customers to remain adequately secured.
The amortized cost and fair value of debt securities as of March 31, 2025 by contractual maturity is shown below. Actual maturities may differ from contractual maturities of mortgage- and asset-backed securities since the mortgages and assets underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories in the following summary (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale |
|
Held-to-maturity |
March 31, 2025: |
Amortized Cost |
|
Fair Value |
|
Amortized Cost |
|
Fair Value |
Due in one year or less |
$ |
103,606 |
|
|
$ |
103,613 |
|
|
$ |
60,635 |
|
|
$ |
60,198 |
|
Due in one year to five years |
146,988 |
|
|
139,827 |
|
|
297,494 |
|
|
284,548 |
|
Due in five years to ten years |
380,758 |
|
|
363,820 |
|
|
80,126 |
|
|
74,737 |
|
Due after ten years |
3,031,522 |
|
|
2,929,970 |
|
|
1,814,485 |
|
|
1,601,514 |
|
Mortgage-backed securities |
2,498,506 |
|
|
2,412,725 |
|
|
362,343 |
|
|
334,133 |
|
Asset-backed securities |
220 |
|
|
222 |
|
|
155,241 |
|
|
149,783 |
|
|
$ |
6,161,600 |
|
|
$ |
5,950,177 |
|
|
$ |
2,770,324 |
|
|
$ |
2,504,913 |
|
At March 31, 2025 and December 31, 2024, the following available-for-sale securities had unrealized losses. The table below classifies these investments according to the term of the unrealized losses of less than twelve months or twelve months or longer (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments with an Unrealized Loss of less than 12 months |
|
Investments with an Unrealized Loss of 12 months or longer |
|
Total Investments with an Unrealized Loss |
|
Fair Value |
|
Unrealized Losses |
|
Fair Value |
|
Unrealized Losses |
|
Fair Value |
|
Unrealized Losses |
At March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
957,969 |
|
|
$ |
3,061 |
|
|
$ |
390,891 |
|
|
$ |
5,333 |
|
|
$ |
1,348,860 |
|
|
$ |
8,394 |
|
U.S. Government agency securities |
2,268 |
|
|
4 |
|
|
199,013 |
|
|
18,582 |
|
|
201,281 |
|
|
18,586 |
|
Mortgage-backed securities |
805,246 |
|
|
6,802 |
|
|
599,399 |
|
|
86,297 |
|
|
1,404,645 |
|
|
93,099 |
|
State and municipal securities |
328,147 |
|
|
3,502 |
|
|
991,044 |
|
|
85,210 |
|
|
1,319,191 |
|
|
88,712 |
|
Asset-backed securities |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate notes |
59,229 |
|
|
1,357 |
|
|
149,033 |
|
|
12,313 |
|
|
208,262 |
|
|
13,670 |
|
Total temporarily-impaired securities |
$ |
2,152,859 |
|
|
$ |
14,726 |
|
|
$ |
2,329,380 |
|
|
$ |
207,735 |
|
|
$ |
4,482,239 |
|
|
$ |
222,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
1,123,453 |
|
|
$ |
12,223 |
|
|
$ |
177,930 |
|
|
$ |
2,054 |
|
|
$ |
1,301,383 |
|
|
$ |
14,277 |
|
U.S. Government agency securities |
2,347 |
|
|
18 |
|
|
210,127 |
|
|
24,554 |
|
|
212,474 |
|
|
24,572 |
|
Mortgage-backed securities |
990,956 |
|
|
9,211 |
|
|
607,659 |
|
|
98,356 |
|
|
1,598,615 |
|
|
107,567 |
|
State and municipal securities |
446,241 |
|
|
5,590 |
|
|
348,807 |
|
|
41,145 |
|
|
795,048 |
|
|
46,735 |
|
Asset-backed securities |
30,369 |
|
|
27 |
|
|
— |
|
|
— |
|
|
30,369 |
|
|
27 |
|
Corporate notes |
131,073 |
|
|
1,215 |
|
|
274,601 |
|
|
27,221 |
|
|
405,674 |
|
|
28,436 |
|
Total temporarily-impaired securities |
$ |
2,724,439 |
|
|
$ |
28,284 |
|
|
$ |
1,619,124 |
|
|
$ |
193,330 |
|
|
$ |
4,343,563 |
|
|
$ |
221,614 |
|
The applicable dates for determining when available-for-sale securities were in an unrealized loss position were March 31, 2025 and December 31, 2024. As such, it is possible that an available-for-sale security had a market value less than its amortized cost on other days during the twelve-month periods ended March 31, 2025 and December 31, 2024, but is not included in the "Investments with an Unrealized Loss of less than 12 months" category above.
As shown in the tables above, at March 31, 2025, Pinnacle Financial had approximately $222.5 million in unrealized losses on approximately $4.5 billion of available-for-sale securities. For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, Pinnacle Financial assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because Pinnacle Financial currently does not intend to sell those available-for-sale securities that have an unrealized loss at March 31, 2025, and it is not more-likely-than-not that Pinnacle Financial will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, Pinnacle Financial has determined that no write-down is necessary. In addition, Pinnacle Financial evaluates whether any portion of the decline in fair value of available-for-sale securities is the result of credit deterioration, which would require the recognition of an allowance for credit losses. Such evaluations consider the extent to which the amortized cost of the security exceeds its fair value, changes in credit ratings and any other known adverse conditions related to the specific security. The unrealized losses associated with available-for-sale securities at March 31, 2025 are driven by changes in interest rates and are not due to the credit quality of the securities, and accordingly, no allowance for credit losses is considered necessary related to available-for-sale securities at March 31, 2025. These securities will continue to be monitored as a part of Pinnacle Financial's ongoing evaluation of credit quality.
Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.
The allowance for credit losses on held-to-maturity securities is measured on a collective basis by major security type. Pinnacle Financial has a zero loss expectation for U.S. treasury securities in addition to U.S. Government agency securities and mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and accordingly, no allowance for credit losses is estimated for these securities. Credit losses on held-to-maturity state and municipal securities and corporate notes and other securities are estimated using third-party probability of default and loss given default models driven primarily by macroeconomic factors over a reasonable and supportable period of twenty-four months with an eight month reversion to average loss factors. At both March 31, 2025 and December 31, 2024, the estimated allowance for credit losses on these held-to-maturity securities was $1.7 million.
Pinnacle Financial utilizes bond credit ratings assigned by third party ratings agencies to monitor the credit quality of debt securities held-to-maturity. At March 31, 2025, all debt securities classified as held-to-maturity were rated A or higher by the ratings agencies. Updated credit ratings are obtained as they become available from the ratings agencies.
Periodically, available-for-sale securities may be sold or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements and raising funds for liquidity purposes or preparing for anticipated changes in market interest rates. Additionally, if an available-for-sale security loses its investment grade or tax-exempt status, the underlying credit support is terminated or collection otherwise becomes uncertain based on factors known to management, Pinnacle Financial will consider selling the security, but will review each security on a case-by-case basis as these factors become known. During the three months ended March 31, 2025, $188.5 million of available-for-sale securities were sold resulting in gross realized gains of $42,000 and gross realized losses of $12.6 million. During the three months ended March 31, 2024, no available-for-sale securities were sold.
Pinnacle Financial has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair values of available-for-sale securities. See Note 9. Derivative Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.
Note 4. Loans and Allowance for Credit Losses
For financial reporting purposes, Pinnacle Financial classifies its loan portfolio based on the underlying collateral utilized to secure each loan. This classification is consistent with those utilized in the Quarterly Report of Condition and Income filed by Pinnacle Bank with the Federal Deposit Insurance Corporation (FDIC).
Pinnacle Financial uses the following loan categories for presentation of loan balances and the related allowance for credit losses on loans:
•Owner occupied commercial real estate mortgage loans - Owner occupied commercial real estate mortgage loans are secured by commercial office buildings, industrial buildings, warehouses or retail buildings where the owner of the building occupies the property. For such loans, repayment is largely dependent upon the operation of the borrower's business.
•Non-owner occupied commercial real estate loans - These loans represent investment real estate loans secured by office buildings, industrial buildings, warehouses, retail buildings, and multifamily residential housing. Repayment is primarily dependent on lease income generated from the underlying collateral.
•Consumer real estate mortgage loans - Consumer real estate mortgage consists primarily of loans secured by 1-4 family residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower.
•Construction and land development loans - Construction and land development loans include loans where the repayment is dependent on the successful completion and eventual sale, refinance or operation of the related real estate project. Construction and land development loans include 1-4 family construction projects and commercial construction endeavors such as warehouses, apartments, office and retail space and land acquisition and development.
•Commercial and industrial loans - Commercial and industrial loans include loans to business enterprises issued for commercial, industrial and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.
•Consumer and other loans - Consumer and other loans include all loans issued to individuals not included in the consumer real estate mortgage classification. Examples of consumer and other loans are automobile loans, consumer credit cards and loans to finance education, among others. Many consumer loans are unsecured. Repayment is primarily dependent on the personal cash flow of the borrower.
Loans at March 31, 2025 and December 31, 2024 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
Commercial real estate: |
|
|
|
|
Owner occupied |
|
$ |
4,594,376 |
|
|
$ |
4,388,531 |
Non-owner occupied |
|
8,338,098 |
|
|
8,130,118 |
Consumer real estate – mortgage |
|
4,977,358 |
|
|
4,914,482 |
Construction and land development |
|
3,525,860 |
|
|
3,699,321 |
Commercial and industrial |
|
14,131,312 |
|
|
13,815,817 |
Consumer and other |
|
569,742 |
|
|
537,507 |
Subtotal |
|
$ |
36,136,746 |
|
|
$ |
35,485,776 |
|
Allowance for credit losses |
|
(417,462) |
|
|
(414,494) |
|
Loans, net |
|
$ |
35,719,284 |
|
|
$ |
35,071,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans receive risk ratings assigned by a financial advisor subject to validation by Pinnacle Financial's independent loan review department. Risk ratings are categorized as pass, special mention, substandard, substandard-nonaccrual or doubtful-nonaccrual. Each of the risk rating categories is further described below. Pass rated loans include multiple ratings categories representing varying degrees of risk attributes that are less than those of the other defined risk categories further described below. Pinnacle Financial believes its categories follow those used by Pinnacle Bank's primary regulators. At March 31, 2025, approximately 80.3% of Pinnacle Financial's loan portfolio was analyzed as a commercial loan type with a specifically assigned risk rating. Consumer loans and small business loans are generally not assigned an individual risk rating but are evaluated as either accrual or nonaccrual based on the performance of the individual loans. However, certain consumer real estate-mortgage loans and certain consumer and other loans receive a specific risk rating due to the loan proceeds being used for commercial purposes even though the collateral may be of a consumer loan nature. Consumer loans that have been placed on nonaccrual but have not otherwise been assigned a risk rating are believed by management to share risk characteristics with loans rated substandard-nonaccrual and have been presented as such in Pinnacle Financial's risk rating disclosures.
Risk ratings are subject to continual review by a financial advisor and a senior credit officer. At least annually, Pinnacle Financial's credit procedures require that every risk rated loan of $1.5 million or more be subject to a formal credit risk review process. Each loan's risk rating is also subject to review by Pinnacle Financial's independent loan review department, which reviews a substantial portion of Pinnacle Financial's risk rated portfolio annually. Included in the coverage are independent reviews of loans in targeted higher-risk portfolio segments such as certain commercial and industrial loans, land loans and/or loan types in certain geographies.
Following are the definitions of the risk rating categories used by Pinnacle Financial. Pass rated loans include all credits other than those included within these categories:
•Special mention loans have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in Pinnacle Financial's credit position at some future date.
•Substandard loans are inadequately protected by the current net worth and financial capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize collection of the debt. Substandard loans are characterized by the distinct possibility that Pinnacle Financial could sustain some loss if the deficiencies are not corrected.
•Substandard-nonaccrual loans are substandard loans that have been placed on nonaccrual status.
•Doubtful-nonaccrual loans have all the characteristics of substandard-nonaccrual loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
The following tables present loan balances classified within each risk rating category by primary loan type and year of origination or most recent renewal as of March 31, 2025 and December 31, 2024, as well as the gross loan charge-offs by primary loan type and year of origination or most recent renewal for the three months ended March 31, 2025 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
2024 |
2023 |
2022 |
2021 |
Prior |
Revolving Loans |
Total |
|
March 31, 2025 |
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
Pass |
$ |
270,827 |
|
$ |
778,636 |
|
$ |
770,986 |
|
$ |
1,043,020 |
|
$ |
762,808 |
|
$ |
812,956 |
|
$ |
70,635 |
|
$ |
4,509,868 |
|
|
Special Mention |
— |
|
10,256 |
|
12,279 |
|
22,041 |
|
4,193 |
|
16,044 |
|
— |
|
64,813 |
|
|
Substandard (1) |
— |
|
— |
|
3,953 |
|
897 |
|
160 |
|
197 |
|
— |
|
5,207 |
|
|
Substandard-nonaccrual |
— |
|
3,951 |
|
4,956 |
|
575 |
|
1,151 |
|
3,855 |
|
— |
|
14,488 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial real estate - owner occupied |
$ |
270,827 |
|
$ |
792,843 |
|
$ |
792,174 |
|
$ |
1,066,533 |
|
$ |
768,312 |
|
$ |
833,052 |
|
$ |
70,635 |
|
$ |
4,594,376 |
|
|
Current period gross charge-offs |
$ |
— |
|
(111) |
|
— |
|
— |
|
— |
|
(62) |
|
— |
|
$ |
(173) |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
Pass |
$ |
445,318 |
|
$ |
1,149,465 |
|
$ |
838,286 |
|
$ |
3,163,570 |
|
$ |
1,579,816 |
|
$ |
803,024 |
|
$ |
128,755 |
|
$ |
8,108,234 |
|
|
Special Mention |
— |
|
5,912 |
|
1,610 |
|
73,967 |
|
65,573 |
|
12,818 |
|
— |
|
159,880 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
— |
|
— |
|
4,090 |
|
34,466 |
|
29,874 |
|
1,120 |
|
434 |
|
69,984 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial real estate - non-owner occupied |
$ |
445,318 |
|
$ |
1,155,377 |
|
$ |
843,986 |
|
$ |
3,272,003 |
|
$ |
1,675,263 |
|
$ |
816,962 |
|
$ |
129,189 |
|
$ |
8,338,098 |
|
|
Current period gross charge-offs |
$ |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer real estate – mortgage |
|
|
|
|
|
|
|
|
|
Pass |
$ |
173,764 |
|
$ |
364,988 |
|
$ |
473,240 |
|
$ |
860,568 |
|
$ |
943,317 |
|
$ |
791,731 |
|
$ |
1,322,635 |
|
$ |
4,930,243 |
|
|
Special Mention |
— |
|
— |
|
— |
|
2,697 |
|
10,458 |
|
— |
|
— |
|
13,155 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
110 |
|
692 |
|
6,820 |
|
6,221 |
|
4,787 |
|
14,097 |
|
1,233 |
|
33,960 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Consumer real estate – mortgage |
$ |
173,874 |
|
$ |
365,680 |
|
$ |
480,060 |
|
$ |
869,486 |
|
$ |
958,562 |
|
$ |
805,828 |
|
$ |
1,323,868 |
|
$ |
4,977,358 |
|
|
Current period gross charge-offs |
$ |
— |
|
— |
|
(50) |
|
(29) |
|
(25) |
|
(40) |
|
(306) |
|
$ |
(450) |
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
|
|
|
|
|
|
|
|
Pass |
$ |
269,220 |
|
$ |
923,846 |
|
$ |
559,236 |
|
$ |
1,333,106 |
|
$ |
262,128 |
|
$ |
13,963 |
|
$ |
82,436 |
|
$ |
3,443,935 |
|
|
Special Mention |
8,395 |
|
2,229 |
|
858 |
|
— |
|
68,185 |
|
— |
|
6 |
|
79,673 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
— |
|
471 |
|
1,781 |
|
— |
|
— |
|
— |
|
— |
|
2,252 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Construction and land development |
$ |
277,615 |
|
$ |
926,546 |
|
$ |
561,875 |
|
$ |
1,333,106 |
|
$ |
330,313 |
|
$ |
13,963 |
|
$ |
82,442 |
|
$ |
3,525,860 |
|
|
Current period gross charge-offs |
$ |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
|
|
|
|
|
|
|
Pass |
$ |
1,518,057 |
|
$ |
3,610,503 |
|
$ |
1,667,177 |
|
$ |
1,409,099 |
|
$ |
626,476 |
|
$ |
408,601 |
|
$ |
4,548,322 |
|
$ |
13,788,235 |
|
|
Special Mention |
14,990 |
|
46,746 |
|
65,882 |
|
25,625 |
|
13,876 |
|
879 |
|
71,267 |
|
239,265 |
|
|
Substandard (1) |
4,354 |
|
1,099 |
|
17,082 |
|
18,043 |
|
77 |
|
8,840 |
|
4,190 |
|
53,685 |
|
|
Substandard-nonaccrual |
335 |
|
2,418 |
|
14,806 |
|
11,420 |
|
18,118 |
|
1,600 |
|
1,430 |
|
50,127 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial and industrial |
$ |
1,537,736 |
|
$ |
3,660,766 |
|
$ |
1,764,947 |
|
$ |
1,464,187 |
|
$ |
658,547 |
|
$ |
419,920 |
|
$ |
4,625,209 |
|
$ |
14,131,312 |
|
|
Current period gross charge-offs |
$ |
— |
|
(1,818) |
|
(3,140) |
|
(3,290) |
|
(856) |
|
(346) |
|
(5,074) |
|
$ |
(14,524) |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and other |
|
|
|
|
|
|
|
|
|
Pass |
$ |
83,960 |
|
$ |
38,088 |
|
$ |
21,966 |
|
$ |
24,181 |
|
$ |
38,707 |
|
$ |
21,929 |
|
$ |
340,152 |
|
$ |
568,983 |
|
|
Special Mention |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
513 |
|
40 |
|
184 |
|
22 |
|
— |
|
— |
|
— |
|
759 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Consumer and other |
$ |
84,473 |
|
$ |
38,128 |
|
$ |
22,150 |
|
$ |
24,203 |
|
$ |
38,707 |
|
$ |
21,929 |
|
$ |
340,152 |
|
$ |
569,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current period gross charge-offs |
$ |
— |
|
(55) |
|
(57) |
|
— |
|
(1,040) |
|
(316) |
|
(1,357) |
|
$ |
(2,825) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
2024 |
2023 |
2022 |
2021 |
Prior |
Revolving Loans |
Total |
|
Total loans |
|
|
|
|
|
|
|
|
|
Pass |
$ |
2,761,146 |
|
$ |
6,865,526 |
|
$ |
4,330,891 |
|
$ |
7,833,544 |
|
$ |
4,213,252 |
|
$ |
2,852,204 |
|
$ |
6,492,935 |
|
$ |
35,349,498 |
|
|
Special Mention |
23,385 |
|
65,143 |
|
80,629 |
|
124,330 |
|
162,285 |
|
29,741 |
|
71,273 |
|
556,786 |
|
|
Substandard (1) |
4,354 |
|
1,099 |
|
21,035 |
|
18,940 |
|
237 |
|
9,037 |
|
4,190 |
|
58,892 |
|
|
Substandard-nonaccrual |
958 |
|
7,572 |
|
32,637 |
|
52,704 |
|
53,930 |
|
20,672 |
|
3,097 |
|
171,570 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total loans |
$ |
2,789,843 |
|
$ |
6,939,340 |
|
$ |
4,465,192 |
|
$ |
8,029,518 |
|
$ |
4,429,704 |
|
$ |
2,911,654 |
|
$ |
6,571,495 |
|
$ |
36,136,746 |
|
|
Current period gross charge-offs |
$ |
— |
|
(1,984) |
|
(3,247) |
|
(3,319) |
|
(1,921) |
|
(764) |
|
(6,737) |
|
$ |
(17,972) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
2022 |
2021 |
2020 |
Prior |
Revolving Loans |
Total |
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
Pass |
$ |
759,519 |
|
$ |
771,996 |
|
$ |
1,064,314 |
|
$ |
784,688 |
|
$ |
432,886 |
|
$ |
439,607 |
|
$ |
67,023 |
|
$ |
4,320,033 |
|
|
Special Mention |
16,638 |
|
— |
|
14,231 |
|
3,192 |
|
9,582 |
|
5,032 |
|
— |
|
48,675 |
|
|
Substandard (1) |
599 |
|
3,983 |
|
900 |
|
337 |
|
59 |
|
198 |
|
— |
|
6,076 |
|
|
Substandard-nonaccrual |
3,944 |
|
5,393 |
|
— |
|
1,003 |
|
1,780 |
|
1,627 |
|
— |
|
13,747 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial real estate - owner occupied |
$ |
780,700 |
|
$ |
781,372 |
|
$ |
1,079,445 |
|
$ |
789,220 |
|
$ |
444,307 |
|
$ |
446,464 |
|
$ |
67,023 |
|
$ |
4,388,531 |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
Pass |
$ |
1,273,096 |
|
$ |
862,747 |
|
$ |
3,040,361 |
|
$ |
1,789,729 |
|
$ |
474,094 |
|
$ |
449,924 |
|
$ |
124,971 |
|
$ |
8,014,922 |
|
|
Special Mention |
5,970 |
|
— |
|
31,783 |
|
29,828 |
|
1,525 |
|
1,827 |
|
— |
|
70,933 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
— |
|
4,627 |
|
114 |
|
38,456 |
|
— |
|
1,066 |
|
— |
|
44,263 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial real estate - non-owner occupied |
$ |
1,279,066 |
|
$ |
867,374 |
|
$ |
3,072,258 |
|
$ |
1,858,013 |
|
$ |
475,619 |
|
$ |
452,817 |
|
$ |
124,971 |
|
$ |
8,130,118 |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer real estate – mortgage |
|
|
|
|
|
|
|
|
|
Pass |
$ |
397,681 |
|
$ |
487,027 |
|
$ |
879,118 |
|
$ |
972,489 |
|
$ |
397,775 |
|
$ |
428,832 |
|
$ |
1,312,971 |
|
$ |
4,875,893 |
|
|
Special Mention |
— |
|
— |
|
— |
|
367 |
|
— |
|
— |
|
— |
|
367 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
395 |
|
6,146 |
|
6,918 |
|
6,588 |
|
1,810 |
|
14,720 |
|
1,645 |
|
38,222 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Consumer real estate – mortgage |
$ |
398,076 |
|
$ |
493,173 |
|
$ |
886,036 |
|
$ |
979,444 |
|
$ |
399,585 |
|
$ |
443,552 |
|
$ |
1,314,616 |
|
$ |
4,914,482 |
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
|
|
|
|
|
|
|
|
Pass |
$ |
1,052,892 |
|
$ |
586,930 |
|
$ |
1,589,567 |
|
$ |
347,539 |
|
$ |
7,415 |
|
$ |
7,992 |
|
$ |
77,014 |
|
$ |
3,669,349 |
|
|
Special Mention |
2,464 |
|
— |
|
— |
|
25,121 |
|
— |
|
— |
|
— |
|
27,585 |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
475 |
|
1,912 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,387 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Construction and land development |
$ |
1,055,831 |
|
$ |
588,842 |
|
$ |
1,589,567 |
|
$ |
372,660 |
|
$ |
7,415 |
|
$ |
7,992 |
|
$ |
77,014 |
|
$ |
3,699,321 |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
|
|
|
|
|
|
|
Pass |
$ |
4,334,110 |
|
$ |
1,877,507 |
|
$ |
1,553,642 |
|
$ |
782,366 |
|
$ |
223,143 |
|
$ |
232,580 |
|
$ |
4,441,222 |
|
$ |
13,444,570 |
|
|
Special Mention |
60,125 |
|
99,687 |
|
44,986 |
|
2,519 |
|
714 |
|
677 |
|
73,126 |
|
281,834 |
|
|
Substandard (1) |
5,998 |
|
2,624 |
|
18,843 |
|
5 |
|
17 |
|
8,693 |
|
4,658 |
|
40,838 |
|
|
Substandard-nonaccrual |
2,838 |
|
11,226 |
|
12,311 |
|
19,228 |
|
554 |
|
767 |
|
1,651 |
|
48,575 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Commercial and industrial |
$ |
4,403,071 |
|
$ |
1,991,044 |
|
$ |
1,629,782 |
|
$ |
804,118 |
|
$ |
224,428 |
|
$ |
242,717 |
|
$ |
4,520,657 |
|
$ |
13,815,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
2022 |
2021 |
2020 |
Prior |
Revolving Loans |
Total |
|
Consumer and other |
|
|
|
|
|
|
|
|
|
Pass |
$ |
109,143 |
|
$ |
26,333 |
|
$ |
27,121 |
|
$ |
43,271 |
|
$ |
24,089 |
|
$ |
663 |
|
$ |
306,256 |
|
$ |
536,876 |
|
|
Special Mention |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard (1) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Substandard-nonaccrual |
541 |
|
— |
|
25 |
|
39 |
|
— |
|
— |
|
26 |
|
631 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total Consumer and other |
$ |
109,684 |
|
$ |
26,333 |
|
$ |
27,146 |
|
$ |
43,310 |
|
$ |
24,089 |
|
$ |
663 |
|
$ |
306,282 |
|
$ |
537,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
|
|
|
|
|
|
|
Pass |
$ |
7,926,441 |
|
$ |
4,612,540 |
|
$ |
8,154,123 |
|
$ |
4,720,082 |
|
$ |
1,559,402 |
|
$ |
1,559,598 |
|
$ |
6,329,457 |
|
$ |
34,861,643 |
|
|
Special Mention |
85,197 |
|
99,687 |
|
91,000 |
|
61,027 |
|
11,821 |
|
7,536 |
|
73,126 |
|
429,394 |
|
|
Substandard (1) |
6,597 |
|
6,607 |
|
19,743 |
|
342 |
|
76 |
|
8,891 |
|
4,658 |
|
46,914 |
|
|
Substandard-nonaccrual |
8,193 |
|
29,304 |
|
19,368 |
|
65,314 |
|
4,144 |
|
18,180 |
|
3,322 |
|
147,825 |
|
|
Doubtful-nonaccrual |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total loans |
$ |
8,026,428 |
|
$ |
4,748,138 |
|
$ |
8,284,234 |
|
$ |
4,846,765 |
|
$ |
1,575,443 |
|
$ |
1,594,205 |
|
$ |
6,410,563 |
|
$ |
35,485,776 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding loan modifications made to borrowers experiencing financial difficulty. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $54.3 million at March 31, 2025, compared to $46.9 million at December 31, 2024.
The table below presents the aging of past due balances by loan segment at March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
30-59 days past due |
|
60-89 days past due |
|
90 days or more past due |
|
Total past due |
|
Current |
|
Total loans |
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
3,385 |
|
|
$ |
1,011 |
|
|
$ |
13,455 |
|
|
$ |
17,851 |
|
|
$ |
4,576,525 |
|
|
$ |
4,594,376 |
|
Non-owner occupied |
86 |
|
|
86 |
|
|
30,669 |
|
|
30,841 |
|
|
8,307,257 |
|
|
8,338,098 |
|
Consumer real estate – mortgage |
13,891 |
|
|
4,577 |
|
|
15,907 |
|
|
34,375 |
|
|
4,942,983 |
|
|
4,977,358 |
|
Construction and land development |
— |
|
|
249 |
|
|
1,747 |
|
|
1,996 |
|
|
3,523,864 |
|
|
3,525,860 |
|
Commercial and industrial |
18,099 |
|
|
8,220 |
|
|
33,066 |
|
|
59,385 |
|
|
14,071,927 |
|
|
14,131,312 |
|
Consumer and other |
3,335 |
|
|
2,324 |
|
|
1,417 |
|
|
7,076 |
|
|
562,666 |
|
|
569,742 |
|
Total |
$ |
38,796 |
|
|
$ |
16,467 |
|
|
$ |
96,261 |
|
|
$ |
151,524 |
|
|
$ |
35,985,222 |
|
|
$ |
36,136,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
7,857 |
|
|
$ |
2,726 |
|
|
$ |
10,089 |
|
|
$ |
20,672 |
|
|
$ |
4,367,859 |
|
|
$ |
4,388,531 |
|
Non-owner occupied |
1,217 |
|
|
— |
|
|
39,469 |
|
|
40,686 |
|
|
8,089,432 |
|
|
8,130,118 |
|
Consumer real estate – mortgage |
19,986 |
|
|
1,621 |
|
|
20,615 |
|
|
42,222 |
|
|
4,872,260 |
|
|
4,914,482 |
|
Construction and land development |
125 |
|
|
— |
|
|
1,541 |
|
|
1,666 |
|
|
3,697,655 |
|
|
3,699,321 |
|
Commercial and industrial |
15,992 |
|
|
8,515 |
|
|
31,077 |
|
|
55,584 |
|
|
13,760,233 |
|
|
13,815,817 |
|
Consumer and other |
2,592 |
|
|
1,500 |
|
|
1,160 |
|
|
5,252 |
|
|
532,255 |
|
|
537,507 |
|
Total |
$ |
47,769 |
|
|
$ |
14,362 |
|
|
$ |
103,951 |
|
|
$ |
166,082 |
|
|
$ |
35,319,694 |
|
|
$ |
35,485,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table details the changes in the allowance for credit losses for the three months ended March 31, 2025 and 2024, respectively, by loan classification (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
Commercial real estate - non-owner occupied |
Consumer real estate - mortgage |
Construction and land development |
Commercial and industrial |
Consumer and other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2025: |
|
|
|
|
|
|
|
|
Balance at December 31, 2024 |
$ |
36,997 |
|
$ |
80,654 |
|
$ |
80,042 |
|
$ |
33,620 |
|
$ |
174,799 |
|
$ |
8,382 |
|
|
$ |
414,494 |
|
Charged-off loans |
(173) |
|
— |
|
(450) |
|
— |
|
(14,524) |
|
(2,825) |
|
|
(17,972) |
|
Recovery of previously charged-off loans |
13 |
|
10 |
|
223 |
|
2 |
|
2,267 |
|
1,465 |
|
|
3,980 |
|
Provision for credit losses on loans |
2,265 |
|
(10,838) |
|
6,632 |
|
(3,161) |
|
20,663 |
|
1,399 |
|
|
16,960 |
|
Balance at March 31, 2025 |
$ |
39,102 |
|
$ |
69,826 |
|
$ |
86,447 |
|
$ |
30,461 |
|
$ |
183,205 |
|
$ |
8,421 |
|
|
$ |
417,462 |
|
Three months ended March 31, 2024: |
|
|
|
|
|
|
|
|
Balance at December 31, 2023 |
$ |
28,690 |
|
$ |
57,687 |
|
$ |
71,354 |
|
$ |
39,142 |
|
$ |
148,212 |
|
$ |
7,970 |
|
|
$ |
353,055 |
|
Charged-off loans |
(94) |
|
(2,000) |
|
(623) |
|
— |
|
(14,808) |
|
(3,307) |
|
|
(20,832) |
|
Recovery of previously charged-off loans |
17 |
|
14 |
|
244 |
|
7 |
|
2,822 |
|
1,513 |
|
|
4,617 |
|
Provision for credit losses on loans |
1,077 |
|
16,880 |
|
4,839 |
|
(5,415) |
|
14,946 |
|
2,170 |
|
|
34,497 |
|
Balance at March 31, 2024 |
$ |
29,690 |
|
$ |
72,581 |
|
$ |
75,814 |
|
$ |
33,734 |
|
$ |
151,172 |
|
$ |
8,346 |
|
|
$ |
371,337 |
|
The adequacy of the allowance for credit losses is reviewed by Pinnacle Financial's management on a quarterly basis. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management's evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay the loan (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.
The current expected credit losses (CECL) methodology requires the allowance for credit losses to be measured on a collective basis for pools of loans with similar risk characteristics, and for loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For commercial real estate, consumer real estate, construction and land development, and commercial and industrial loans, Pinnacle Financial primarily utilizes a probability of default and loss given default modeling approach. These models utilize historical correlations between default and loss experience, loan level attributes, and certain macroeconomic factors as determined through a statistical regression analysis. Segments using this approach incorporate various economic drivers.
Commercial and industrial loans consider gross domestic product (GDP), the consumer credit index and the national unemployment rate, commercial construction loans and commercial real estate loans including nonowner occupied and owner occupied commercial real estate loans consider the national unemployment rate and the commercial property and commercial real estate price indices, construction and land development loans consider the commercial property, consumer credit and home price indices dependent upon their use as residential versus commercial, consumer real estate loans consider the home price index and household debt ratio and other consumer loans consider the national unemployment rate and the household financial obligations ratio.
A third-party provides management with quarterly macroeconomic scenarios, which management evaluates to determine the best estimate of the expected losses. For the consumer and other loan segment, a non-statistical approach based on historical charge off rates is utilized.
Losses are predicted over a period of time determined by management to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by Pinnacle Financial and are dependent on the current economic environment among other factors. A reasonable and supportable period of fifteen months was utilized for all loan segments at March 31, 2025 and December 31, 2024, followed by a twelve month straight line reversion to long term averages at each measurement date.
The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. These adjustments are based upon quarterly trend assessments in portfolio concentrations, policy exceptions, associate retention, independent loan review results, competition and peer group credit quality trends. The qualitative allowance allocation, as determined by the processes noted above, is increased or decreased for each loan segment based on the assessment of these various qualitative factors.
Loans that do not share similar risk characteristics with the collectively evaluated pools are evaluated on an individual basis and are excluded from the collectively evaluated pools. Individual evaluations are generally performed for loans greater than $1.0 million which have experienced significant credit deterioration. Such loans are evaluated for credit losses based on either discounted cash flows or the fair value of collateral.
The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, as of March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
Business Assets |
Other |
Total |
March 31, 2025 |
|
|
|
|
Commercial real estate: |
|
|
|
|
Owner occupied |
$ |
17,358 |
|
$ |
— |
|
$ |
— |
|
$ |
17,358 |
|
Non-owner occupied |
72,438 |
|
— |
|
— |
|
72,438 |
|
Consumer real estate – mortgage |
36,418 |
|
— |
|
— |
|
36,418 |
|
Construction and land development |
2,304 |
|
— |
|
— |
|
2,304 |
|
Commercial and industrial |
— |
|
48,797 |
|
709 |
|
49,506 |
|
Consumer and other |
— |
|
— |
|
205 |
|
205 |
|
Total |
$ |
128,518 |
|
$ |
48,797 |
|
$ |
914 |
|
$ |
178,229 |
|
December 31, 2024 |
|
|
|
|
Commercial real estate: |
|
|
|
|
Owner occupied |
$ |
17,486 |
|
$ |
— |
|
$ |
— |
|
$ |
17,486 |
|
Non-owner occupied |
46,745 |
|
— |
|
— |
|
46,745 |
|
Consumer real estate – mortgage |
40,795 |
|
— |
|
— |
|
40,795 |
|
Construction and land development |
2,441 |
|
— |
|
— |
|
2,441 |
|
Commercial and industrial |
— |
|
63,626 |
|
752 |
|
64,378 |
|
Consumer and other |
— |
|
— |
|
23 |
|
23 |
|
Total |
$ |
107,467 |
|
$ |
63,626 |
|
$ |
775 |
|
$ |
171,868 |
|
The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. Pinnacle Financial uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, a loan modification will be granted by providing principal forgiveness on certain loans. When principal forgiveness is provided, the amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is charged-off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
In some cases, a loan restructuring will result in providing multiple types of modifications. Typically, one type of modification, such as a payment delay or term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification, such as principal forgiveness or an interest rate reduction, may be granted. Additionally, multiple types of modifications may be made on the same loan within the current reporting period. Such a combination is at least two of the following: a payment delay, term extension, principal forgiveness, or interest rate reduction. Upon determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.
The following table shows the amortized cost basis of the loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024, disaggregated by class of loans and type of modification granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2025 |
|
Term Extension |
|
Amortized Cost Basis |
% of Total Loan Type |
Financial Effect |
|
|
|
|
Commercial real estate: |
|
|
|
Owner occupied |
$ |
— |
|
— |
% |
|
Non-owner occupied |
— |
|
— |
% |
|
Consumer real estate – mortgage |
— |
|
— |
% |
|
Construction and land development |
— |
|
— |
% |
|
Commercial and industrial |
4,567 |
|
0.03 |
% |
Added a weighted average 0.46 years to the term of the modified loans |
Consumer and other |
— |
|
— |
% |
|
Total |
$ |
4,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2024 |
|
Term Extension |
|
Amortized Cost Basis |
% of Total Loan Type |
Financial Effect |
|
|
|
|
Commercial real estate: |
|
|
|
Owner occupied |
$ |
— |
|
— |
% |
|
Non-owner occupied |
— |
|
— |
% |
|
Consumer real estate – mortgage |
— |
|
— |
% |
|
Construction and land development |
— |
|
— |
% |
|
Commercial and industrial |
19,208 |
|
0.16 |
% |
Added a weighted average 0.41 years to the term of the modified loans |
Consumer and other |
— |
|
— |
% |
|
Total |
$ |
19,208 |
|
|
|
No loans that were previously modified and subsequently defaulted were charged off during the three months ended March 31, 2025 and 2024. During the three months ended March 31, 2025, no loans experienced a payment default subsequent to being granted a modification in the prior twelve months. The following table shows loans that experienced a payment default during the three months ended March 31, 2024, subsequent to being granted a modification in the prior twelve months:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2024 |
|
|
Payment Delay |
Term Extension |
|
Total |
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
— |
|
$ |
5,529 |
|
|
$ |
5,529 |
|
|
Non-owner occupied |
13,298 |
|
— |
|
|
13,298 |
|
|
Consumer real estate – mortgage |
— |
|
— |
|
|
— |
|
|
Construction and land development |
— |
|
— |
|
|
— |
|
|
Commercial and industrial |
— |
|
— |
|
|
— |
|
|
Consumer and other |
— |
|
— |
|
|
— |
|
|
Total |
$ |
13,298 |
|
$ |
5,529 |
|
|
$ |
18,827 |
|
|
The table below presents the aging of past due balances as of March 31, 2025 and March 31, 2024 of loans made to borrowers experiencing financial difficulty that were modified in the previous twelve months:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
30-59 days past due |
60-89 days past due |
90 days or more past due |
Current |
Total modified loans |
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Non-owner occupied |
— |
|
— |
|
— |
|
— |
|
— |
|
Consumer real estate – mortgage |
— |
|
— |
|
— |
|
— |
|
— |
|
Construction and land development |
— |
|
— |
|
— |
|
— |
|
— |
|
Commercial and industrial |
— |
|
— |
|
— |
|
19,119 |
|
19,119 |
|
Consumer and other |
— |
|
— |
|
— |
|
— |
|
— |
|
Total |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
19,119 |
|
$ |
19,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2024 |
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
— |
|
$ |
5,529 |
|
$ |
— |
|
$ |
— |
|
$ |
5,529 |
|
Non-owner occupied |
— |
|
— |
|
— |
|
26,780 |
|
26,780 |
|
Consumer real estate – mortgage |
— |
|
— |
|
— |
|
— |
|
— |
|
Construction and land development |
— |
|
— |
|
— |
|
— |
|
— |
|
Commercial and industrial |
— |
|
— |
|
3,226 |
|
19,209 |
|
22,435 |
|
Consumer and other |
— |
|
— |
|
— |
|
— |
|
— |
|
Total |
$ |
— |
|
$ |
5,529 |
|
$ |
3,226 |
|
$ |
45,989 |
|
$ |
54,744 |
|
|
|
|
|
|
|
The table below presents the amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest at March 31, 2025 and December 31, 2024. Also presented is the balance of loans on nonaccrual status at March 31, 2025 and December 31, 2024 for which there was no related allowance for credit losses recorded (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
Total nonaccrual loans |
|
Nonaccrual loans with no allowance for credit losses |
|
Loans past due 90 or more days and still accruing |
|
Total nonaccrual loans |
|
Nonaccrual loans with no allowance for credit losses |
|
Loans past due 90 or more days and still accruing |
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
14,488 |
|
|
$ |
5,417 |
|
|
$ |
177 |
|
|
$ |
13,747 |
|
|
$ |
6,614 |
|
|
$ |
— |
|
Non-owner occupied |
69,984 |
|
|
4,090 |
|
|
— |
|
|
44,263 |
|
|
4,152 |
|
|
— |
|
Consumer real estate – mortgage |
33,960 |
|
|
1,386 |
|
|
476 |
|
|
38,222 |
|
|
1,376 |
|
|
23 |
|
Construction and land development |
2,252 |
|
|
319 |
|
|
— |
|
|
2,387 |
|
|
319 |
|
|
— |
|
Commercial and industrial |
50,127 |
|
|
1,525 |
|
|
2,964 |
|
|
48,575 |
|
|
19,715 |
|
|
2,873 |
|
Consumer and other |
759 |
|
|
— |
|
|
720 |
|
|
631 |
|
|
— |
|
|
619 |
|
Total |
$ |
171,570 |
|
|
$ |
12,737 |
|
|
$ |
4,337 |
|
|
$ |
147,825 |
|
|
$ |
32,176 |
|
|
$ |
3,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle Financial's policy is the accrual of interest income will be discontinued when (1) there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected or (2) the principal or interest is more than 90 days past due, unless the loan is both well secured and in the process of collection. As such, at the date loans are placed on nonaccrual status, Pinnacle Financial reverses all previously accrued interest income against current year earnings. Pinnacle Financial's policy is once a loan is placed on nonaccrual status each subsequent payment is reviewed on a case-by-case basis to determine if the payment should be applied to interest or principal pursuant to regulatory guidelines. Pinnacle Financial recognized no interest income from cash payments received on nonaccrual loans during the three months ended March 31, 2025 and 2024. Had these loans been on accruing status, an additional $3.3 million and $2.6 million of interest income would have been recognized for the three months ended March 31, 2025 and 2024, respectively. Approximately $72.3 million and $36.3 million of nonaccrual loans were performing pursuant to their contractual terms as of March 31, 2025 and December 31, 2024, respectively.
Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industries. Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications. Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at March 31, 2025 with the comparative exposures for December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
|
Outstanding Principal Balances |
|
Unfunded Commitments |
|
Total exposure |
|
Total Exposure at December 31, 2024 |
Lessors of nonresidential buildings |
$ |
4,675,803 |
|
|
$ |
936,311 |
|
|
$ |
5,612,114 |
|
|
$ |
5,439,776 |
|
Lessors of residential buildings |
2,366,436 |
|
|
429,337 |
|
|
2,795,773 |
|
|
2,871,227 |
|
New Housing For-Sale Builders |
580,278 |
|
|
862,720 |
|
|
1,442,998 |
|
|
1,394,494 |
|
Music Publishers |
903,837 |
|
|
431,925 |
|
|
1,335,762 |
|
|
1,114,105 |
|
Among other data, Pinnacle Financial monitors two ratios regarding construction and commercial real estate lending as part of its concentration management processes. Both ratios are calculated by dividing certain types of loan balances for each of the two categories by Pinnacle Bank’s total risk-based capital. At March 31, 2025 and December 31, 2024, Pinnacle Bank’s construction and land development loans as a percentage of total risk-based capital were 65.6% and 70.5%, respectively. Non-owner occupied commercial real estate and multifamily loans (including construction and land development loans) as a percentage of total risk-based capital were 236.4% and 242.2% as of March 31, 2025 and December 31, 2024, respectively. Banking regulations have established guidelines for the construction ratio of less than 100% of total risk-based capital and for the non-owner occupied ratio of less than 300% of total risk-based capital. When a bank’s ratios are in excess of one or both of these guidelines, banking regulations generally require an increased level of monitoring in these lending areas by bank management. At March 31, 2025, Pinnacle Bank was within the 100% and 300% guidelines and has established what it believes to be appropriate monitoring of its lending in these areas as it aims to keep the level of these loans below the 100% and 300% thresholds within the applicable guidelines.
At March 31, 2025, Pinnacle Bank had granted loans and other extensions of credit amounting to approximately $40.0 million to current directors, executive officers, and their related interests, of which $37.7 million had been drawn upon. At December 31, 2024, Pinnacle Bank had granted loans and other extensions of credit amounting to approximately $39.4 million to directors, executive officers, and their related interests, of which approximately $37.4 million had been drawn upon. All loans to directors, executive officers, and their related interests were performing in accordance with contractual terms at March 31, 2025 and December 31, 2024.
Loans Held for Sale
At March 31, 2025, Pinnacle Financial had approximately $12.1 million in commercial loans held for sale compared to $19.7 million at December 31, 2024. These include commercial real estate and apartment loans originated for sale to a third-party as part of a multi-family loan program. Such loans are closed under a pass-through commitment structure wherein Pinnacle Bank's loan commitment to the borrower is the same as the third party's take-out commitment to Pinnacle Bank and the third party purchase typically occurs within thirty days of Pinnacle Bank closing with the borrowers. Also included are commercial loans originated for sale to BHG as part of BHG's alternative financing portfolio.
At March 31, 2025, Pinnacle Financial had approximately $123.8 million in consumer loans held for sale, excluding mortgage loans, compared to $160.2 million at December 31, 2024. These include consumer loans originated for sale to BHG as part of BHG's alternative financing portfolio.
At March 31, 2025, Pinnacle Financial had approximately $19.5 million of mortgage loans held-for-sale compared to approximately $15.4 million at December 31, 2024. Total mortgage loan volumes sold during the three months ended March 31, 2025 were approximately $145.6 million compared to approximately $148.6 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, Pinnacle Financial recognized $2.5 million in gains on the sale of these loans, net of commissions paid, compared to $2.9 million during the three months ended March 31, 2024.
These residential mortgage loans held-for-sale are originated internally and are primarily to borrowers in Pinnacle Bank's geographic markets. These sales are typically on a mandatory basis to investors that follow conventional government sponsored entities and the Department of Housing and Urban Development/U.S. Department of Veterans Affairs guidelines.
Each purchaser of a residential mortgage loan held-for-sale has specific guidelines and criteria for sellers of loans and the risk of credit loss with regard to the principal amount of the loans sold is generally transferred to the purchasers upon sale. While the loans are sold without recourse, the purchase agreements require Pinnacle Bank to make certain representations and warranties regarding the existence and sufficiency of file documentation and the absence of fraud by borrowers or other third parties such as appraisers in connection with obtaining the loan. If it is determined that the loans sold were in breach of these representations or warranties, Pinnacle Bank has obligations to either repurchase the loan for the unpaid principal balance and related investor fees or make the purchaser whole for the economic benefits of the loan. To date, Pinnacle Bank's liability due to the breach of these representations and warranties has been insignificant.
Note 5. Mortgage Servicing Rights
On March 31, 2024, Pinnacle Financial recognized a mortgage servicing asset totaling $11.8 million related to a commercial mortgage loan portfolio. Upon the sale of these commercial loans, the rights to service loans (MSRs) are capitalized and represent the fair value of future net servicing fees from servicing activities associated with these commercial mortgage loans. Pinnacle Financial has elected to account for this class of MSRs under the fair value measurement method. Pinnacle Financial recognizes MSRs upon the sale of commercial mortgage loans to external third parties when it retains the obligation to service the loans. MSRs are included in other assets on the consolidated balance sheets with any subsequent changes in fair value being recognized in other noninterest income. The MSR asset fair value is determined using a discounted cash flow model which incorporates key assumptions such as prepayment speeds, interest rates, discount rates, and other economic factors.
The following is a summary of the changes in the carrying value of MSRs, accounted for at fair value, for the three months ended March 31, 2025 and 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Three months ended |
|
March 31, 2025 |
|
March 31, 2024 |
Fair value, beginning of period |
$ |
11,854 |
|
|
$ |
— |
|
Initial recognition of servicing asset |
— |
|
|
11,812 |
|
Additions from loans sold with servicing retained |
125 |
|
|
— |
|
Estimate of changes in fair value due to: |
|
|
|
Payoffs, paydowns, and repurchases |
(351) |
|
|
— |
|
Changes in valuation inputs or assumptions |
(413) |
|
|
— |
|
Fair value, end of period |
$ |
11,215 |
|
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6. Income Taxes
ASC 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as "more-likely-than-not" to be sustained by the taxing authority. This section also provides guidance on the derecognition, measurement and classification of income tax uncertainties, along with any related interest and penalties, and includes guidance concerning accounting for income tax uncertainties in interim periods.
The unrecognized tax benefit related to uncertain tax positions related to state income tax filings was $10.1 million at both March 31, 2025 and December 31, 2024. During the three months ended March 31, 2025, Pinnacle Financial paid no taxes related to state income tax filings for tax years prior to 2025. During the three months ended March 31, 2024, Pinnacle Financial paid $3,000 of taxes related to state income tax filings for tax years prior to 2024.
Pinnacle Financial's policy is to recognize interest and/or penalties related to income tax matters in income tax expense. No interest and penalties were recognized during the three months ended March 31, 2025 and March 31, 2024.
Pinnacle Financial's effective tax rate for the three months ended March 31, 2025 was 17.6%, compared to 18.1% for the three months ended March 31, 2024. The difference between the effective tax rate and the federal and state income tax statutory rate of 25.00% at March 31, 2025 and 2024, respectively, is primarily due to investments in bank qualified municipal securities, tax benefits of Pinnacle Bank's real estate investment trust and municipal investment subsidiaries, participation in the Tennessee Community Investment Tax Credit program, and tax benefits associated with share-based compensation and bank-owned life insurance, offset in part by the limitation on deductibility of meals and entertainment expense, non-deductible FDIC premiums and non-deductible executive compensation.
Income tax expense is also impacted by the vesting of equity-based awards, with expense or benefit recorded as a discrete item as a component of total income tax, the amount of which is dependent upon the change in the grant date fair value and the vest date fair value of the underlying award. For the three months ended March 31, 2025 and 2024, Pinnacle Financial recognized excess tax benefits of $3.6 million and $2.4 million, respectively, with respect to the vesting of equity-based awards.
Note 7. Commitments and Contingent Liabilities
In the normal course of business, Pinnacle Financial has entered into off-balance sheet financial instruments which include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial customers that use lines of credit to supplement their treasury management functions, thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing of their cash flows. Other typical lines of credit are related to home equity loans granted to consumers. Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. At March 31, 2025, these commitments amounted to $15.7 billion, of which approximately $1.9 billion related to home equity lines of credit.
Standby letters of credit are generally issued on behalf of an applicant (customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated earlier due to criteria specified in the standby letter of credit. A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions. The standby letter of credit would permit the beneficiary to obtain payment from Pinnacle Financial under certain prescribed circumstances. Subsequently, Pinnacle Financial would then seek reimbursement from the applicant pursuant to the terms of the standby letter of credit. At March 31, 2025 and December 31, 2024, these commitments amounted to $475.6 million and $387.3 million, respectively.
Pinnacle Financial typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer's creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management's credit evaluation of the customer. Collateral held varies but may include cash, real estate and improvements, marketable securities, accounts receivable, inventory, equipment and personal property.
The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should Pinnacle Bank's customers default on their resulting obligation to Pinnacle Bank, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments. At March 31, 2025 and December 31, 2024, Pinnacle Financial had accrued reserves of $12.5 million for the inherent risks associated with these off-balance sheet commitments in other liabilities on its balance sheet. There was no provision for these unfunded commitments for the three months ended March 31, 2025 and March 31, 2024.
Various legal claims also arise from time to time in the normal course of business. In the opinion of management, the resolutions of these claims outstanding at March 31, 2025 are not expected to have a material adverse impact on Pinnacle Financial's consolidated financial condition, operating results or cash flows.
Note 8. Equity Compensation
Pinnacle Financial's Second Amended and Restated 2018 Omnibus Equity Incentive Plan (2018 Plan) permits Pinnacle Financial to reissue outstanding awards that are subsequently forfeited, settled in cash, withheld by Pinnacle Financial to cover withholding taxes or expire unexercised and returned to the 2018 Plan.
At March 31, 2025, there were approximately 1.6 million shares available for issuance under the 2018 Plan.
Restricted Share Awards
A summary of activity for unvested restricted share awards for the three months ended March 31, 2025 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Grant Date Weighted-Average Cost |
Unvested at December 31, 2024 |
705,934 |
|
|
$ |
82.48 |
|
Shares awarded |
152,381 |
|
|
|
Restrictions lapsed and shares released to associates/directors |
(167,392) |
|
|
|
Shares forfeited |
(9,689) |
|
|
|
Unvested at March 31, 2025 |
681,234 |
|
|
$ |
90.66 |
|
Pinnacle Financial has granted restricted share awards to associates (including certain members of executive management) and outside directors with time-based vesting criteria. Compensation expense associated with time-based vesting restricted share awards is recognized over the time period that the restrictions associated with the awards lapse on a straight-line basis based on the total cost of the award. The following table outlines restricted stock grants that were made, grouped by similar vesting criteria, during the three months ended March 31, 2025. The table reflects the life-to-date activity for these awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant year |
Group (1) |
Vesting period in years |
Shares awarded |
Restrictions lapsed and shares released to participants |
Shares withheld for taxes by participants |
Shares forfeited by participants (4) |
Shares unvested |
Time Based Awards |
|
|
|
|
|
|
|
|
|
2025 |
Associates (2) |
|
5 |
|
146,072 |
|
59 |
|
40 |
|
1,328 |
|
144,645 |
|
Outside Director Awards (3) |
|
|
|
|
|
|
|
|
|
2025 |
Outside directors |
|
1 |
|
6,309 |
|
— |
|
— |
|
— |
|
6,309 |
|
(1)Groups include employees (referred to as associates above) and outside directors. When the restricted shares are awarded, a participant receives voting rights and forfeitable dividend rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed. Once the restrictions lapse, the participant is taxed on the value of the award and shares are withheld by Pinnacle Financial to pay the applicable income taxes associated with the award. For time-based vesting restricted share awards, dividends paid on shares for which the forfeiture restrictions do not lapse will be recouped by Pinnacle Financial at the time of termination. For awards to Pinnacle Financial's directors, dividends are placed into escrow until the forfeiture restrictions on such shares lapse.
(2)The forfeiture restrictions on these restricted share awards lapse in equal annual installments on the anniversary date of the grant.
(3)Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan. Restrictions lapse on March 1, 2026 based on each individual board member meeting attendance goals for the various board and board committee meetings to which each member was scheduled to attend.
(4)These shares represent forfeitures resulting from recipients whose employment was terminated during the year-to-date period ended March 31, 2025. Any dividends paid on shares for which the forfeiture restrictions do not lapse will be recouped by Pinnacle Financial at the time of termination or will not be distributed from escrow, as applicable.
Restricted Stock Unit Awards
A summary of activity for unvested restricted stock units for the three months ended March 31, 2025 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Grant Date Weighted-Average Cost |
Unvested at December 31, 2024 |
109,970 |
|
|
$ |
80.84 |
|
Shares awarded |
39,431 |
|
|
|
Restrictions lapsed and shares released to associates |
(51,105) |
|
|
|
Shares forfeited |
(723) |
|
|
|
Unvested at March 31, 2025 |
97,573 |
|
|
$ |
96.51 |
|
Pinnacle Financial grants restricted stock units to its Named Executive Officers (NEOs) and leadership team members with time-based vesting criteria. Compensation expense associated with time-based vesting restricted stock unit awards is recognized over the time period that the restrictions associated with the awards lapse on a straight-line basis based on the total cost of the award. The following table outlines restricted stock unit grants that were made, grouped by similar vesting criteria, during the three months ended March 31, 2025. The table reflects the life-to-date activity for these awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant year |
Vesting period in years |
Shares awarded |
|
Restrictions lapsed and shares released to participants |
|
Shares withheld for taxes by participants |
|
Shares forfeited by participants (1) |
|
Shares unvested |
2025 |
3 |
39,431 |
|
|
2 |
|
|
1 |
|
|
59 |
|
|
39,369 |
|
(1)These shares represent forfeitures resulting from recipients whose employment was terminated during the year-to-date period ended March 31, 2025. Dividend equivalents are held in escrow for award recipients for dividends paid prior to the forfeiture restrictions lapsing. Such dividend equivalents are not released from escrow if an award is forfeited.
Performance Stock Unit Awards
The following table details the performance stock unit awards outstanding at March 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Awarded |
|
|
|
|
Grant year |
NEOs (1)
|
Leadership Team other than NEOs |
Applicable performance periods associated with each tranche (fiscal year) |
Service period per tranche (in years) |
Subsequent holding period per tranche (in years) |
Period in which units to be settled into shares of common stock (2) |
2025 |
50,887 |
— |
122,120 |
|
41,008 |
|
2025-2027 |
0 |
0 |
2028 |
2024 |
80,211 |
— |
192,499 |
|
53,710 |
|
2024-2026 |
0 |
0 |
2027 |
2023 |
103,136 |
— |
247,515 |
|
61,673 |
|
2023-2025 |
0 |
0 |
2026 |
|
|
|
|
|
|
|
|
|
2022 |
— |
— |
230,000 |
|
— |
|
2022-2024 |
0 |
1 |
2026 |
(1)The NEOs are awarded a range of awards that generally may be earned based on attainment of goals between a target level of performance and a maximum level of performance. The 230,000 performance units awarded to the NEOs in 2022 may be earned based on target level performance and do not include a maximum level payout.
(2)Performance stock unit awards granted in or after 2022, if earned, are expected to settle in shares of Pinnacle Financial common stock in the period noted in the table, if the performance criterion included in the applicable performance unit award agreement are met. Performance units granted in 2022 have been earned and will settle in shares of Pinnacle Financial common stock following their post-vest holding period.
During the three months ended March 31, 2025 and 2024, respectively, the restrictions associated with 290,036 and 435,881 performance stock unit awards previously granted lapsed based on the terms of the underlying award agreements and approval by Pinnacle Financial's Human Resources and Compensation Committee, and were settled into shares of Pinnacle Financial common stock with 103,319 and 158,117 shares, respectively, being withheld to pay the taxes associated with the settlement of those shares.
Stock compensation expense related to restricted share awards, restricted stock unit awards and performance stock unit awards for the three months ended March 31, 2025 was $10.6 million compared to $10.3 million for the three months ended March 31, 2024. As of March 31, 2025, the total compensation cost related to unvested restricted share awards, restricted stock unit awards and performance stock unit awards estimated at maximum performance not yet recognized was $100.8 million. This expense, if the underlying units are earned, is expected to be recognized over a weighted-average period of 2.14 years.
Note 9. Derivative Instruments
Financial derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship and classification as either a cash flow hedge or fair value hedge for those derivatives which are designated as part of a hedging relationship.
Pinnacle Financial's derivative instruments with certain counterparties contain legally enforceable netting that allow multiple transactions to be settled into a single amount. The fair value hedge and interest rate swaps (swaps) assets and liabilities are presented at gross fair value before the application of bilateral collateral and master netting agreements, but after the initial margin posting and daily variation margin payments made with central clearing house organizations. Total fair value hedge and swaps assets and liabilities are adjusted to take into consideration the effects of legally enforceable master netting agreements and cash collateral received or paid as of March 31, 2025 and December 31, 2024. The resulting net fair value hedge and swaps asset and liability fair values are included in other assets and other liabilities, respectively, on the consolidated balance sheets. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.
Non-hedge derivatives
For derivatives not designated as hedges, the gain or loss is recognized in current period earnings. Pinnacle Financial enters into swaps to facilitate customer transactions and meet their financing needs. Upon entering into these instruments to meet customer needs, Pinnacle Financial enters into offsetting positions in order to minimize the risk to Pinnacle Financial. These swaps qualify as derivatives, but are not designated as hedging instruments. The income statement impact of the offsetting positions is limited to changes in the reserve for counterparty credit risk. A summary of Pinnacle Financial's interest rate swaps to facilitate customers' transactions as of March 31, 2025 and December 31, 2024 is included in the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
|
Notional Amount |
|
Estimated Fair Value (1) |
|
Notional Amount |
|
Estimated Fair Value (1) |
Interest rate swap agreements: |
|
|
|
|
|
|
|
|
Assets |
|
$ |
2,717,683 |
|
|
$ |
45,078 |
|
|
$ |
2,633,014 |
|
|
$ |
62,494 |
|
Liabilities |
|
2,717,683 |
|
|
(45,619) |
|
|
2,633,014 |
|
|
(63,225) |
|
Total |
|
$ |
5,435,366 |
|
|
$ |
(541) |
|
|
$ |
5,266,028 |
|
|
$ |
(731) |
|
(1) The variation margin payments for derivatives cleared through central clearing houses are characterized as settlements. At March 31, 2025 and December 31, 2024, there were no interest rate swap agreements designated as non-hedge derivatives cleared through clearing houses.
The effects of Pinnacle Financial's interest rate swaps to facilitate customers' transactions on the income statement during the three months ended March 31, 2025 and 2024 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in Income |
|
Location of Gain (Loss) Recognized in Income |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|
2025 |
|
2024 |
Interest rate swap agreements |
Other noninterest income |
|
|
|
|
|
|
|
|
|
$ |
187 |
|
|
$ |
(178) |
|
On June 28, 2024, Pinnacle Financial executed a credit default swap (CDS) with a counterparty with a notional amount of $86.5 million. At the execution date, the CDS notional amount was equal to 5% of a reference pool of $1.7 billion in first lien consumer real estate - mortgage loans whereby the counterparty assumed the first loss position for these loans up to approximately $86.5 million in aggregate losses. Pinnacle Financial pays to the counterparty an annual loss protection fee equal to 7.95% of the corresponding notional amount of the CDS for as long as the loans in the reference pool remain outstanding. The notional amount of the CDS will decline over time as the loans in the reference portfolio are paid down, mature or the counterparty absorbs the first loss portion of losses on those loans. The CDS qualifies as a derivative, but is not designated as a hedging instrument. Changes in the fair value of the CDS are recognized as a gain or loss in current period earnings in other noninterest income. A summary of Pinnacle Financial's CDS as of March 31, 2025 and December 31, 2024 is included in the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
|
Notional Amount |
|
Estimated Fair Value |
|
Notional Amount |
|
Estimated Fair Value |
Credit default swap |
|
$ |
80,354 |
|
|
$ |
(649) |
|
|
$ |
81,993 |
|
|
$ |
185 |
|
The effects of Pinnacle Financial's CDS on the income statement during the three months ended March 31, 2025 and 2024 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Loss Recognized in Income |
|
Location of Loss Recognized in Income |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|
2025 |
|
2024 |
Credit default swap |
Other noninterest income |
|
|
|
|
|
|
|
|
|
$ |
(834) |
|
|
$ |
— |
|
Derivatives designated as cash flow hedges
For derivative instruments that are designated and qualify as a cash flow hedge, the aggregate fair value of the derivative instrument is recorded in other assets or other liabilities with any gain or loss related to changes in fair value recorded in accumulated other comprehensive income (loss), net of tax. The gain or loss is reclassified into earnings in the same period during which the hedged asset or liability affects earnings and is presented in the same income statement line item as the earnings effect of the hedged asset or liability. Pinnacle Financial uses forward cash flow hedge relationships in an effort to manage future interest rate exposure. During the three months ended March 31, 2025 Pinnacle Financial paid $11.8 million to purchase an interest rate floor with a notional amount of $1.5 billion to mitigate the impact of changing interest rates on SOFR-based variable rate loans. The floor has an effective start date beginning in the third quarter of 2026. Pinnacle Financial also paid $9.9 million during the three months ended March 31, 2025 to purchase an interest rate cap with a notional amount of $1.0 billion to mitigate the impact of changing deposits rates on federal funds-based deposit accounts. The cap has an effective start date beginning in the first quarter of 2026. A summary of the cash flow hedge relationships as of March 31, 2025 and December 31, 2024 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
Balance Sheet Location |
Weighted Average Remaining Maturity (In Years) |
Receive Rate |
Pay Rate |
Notional Amount |
Estimated Fair Value |
|
Notional Amount |
Estimated Fair Value |
Asset derivatives |
|
|
|
|
|
|
|
|
|
Interest rate floor - loans |
Other assets |
4.06 |
2.00%-4.50% minus USD-Term SOFR 1M |
N/A |
$ |
2,375,000 |
|
$ |
30,212 |
|
|
$ |
875,000 |
|
$ |
15,566 |
|
Interest rate collars - loans |
Other assets |
2.59 |
4.25%-4.75% minus USD-Term SOFR 1M |
USD-Term SOFR 1M minus 6.75%-7.00% |
875,000 |
|
21,823 |
|
|
875,000 |
|
17,252 |
|
Interest rate cap - deposits |
Other assets |
2.92 |
N/A |
3.75% minus USD-Federal Funds |
1,000,000 |
|
8,490 |
|
|
— |
|
— |
|
|
|
|
|
|
$ |
4,250,000 |
|
$ |
60,525 |
|
|
$ |
1,750,000 |
|
$ |
32,818 |
|
The effects of Pinnacle Financial's cash flow hedge relationships on the statement of comprehensive income (loss) during the three months ended March 31, 2025 and 2024 were as follows, net of tax (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) |
|
|
|
Three Months Ended March 31, |
Asset derivatives |
|
|
|
|
2025 |
|
2024 |
Interest rate floors, collars and caps |
|
|
|
|
$ |
8,567 |
|
|
$ |
(19,646) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The cash flow hedges were determined to be highly effective during the periods presented and as a result qualify for hedge accounting treatment. If a hedge was deemed to be ineffective, the amount included in accumulated other comprehensive income (loss) would be reclassified into a line item within the statement of income that impacts operating results. The hedge would no longer be considered effective if a portion of the hedge becomes ineffective, the item hedged is no longer in existence or Pinnacle Financial discontinues hedge accounting. No gains on cash flow hedges were reclassified from accumulated other comprehensive income (loss) into net income during the three months ended March 31, 2025 compared to $2.5 million net of tax during the three months ended March 31, 2024. There are no further amounts to be reclassified from accumulated other comprehensive income (loss) into net income related to previously terminated cash flow hedges.
Derivatives designated as fair value hedges
For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. Pinnacle Financial utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable available-for-sale securities. The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates or SOFR. These derivatives are designated as partial term hedges of selected cash flows covering specified periods of time prior to the call dates of the hedged securities. Pinnacle Financial also utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on Federal Home Loan Bank of Cincinnati (FHLB) advances. During the third quarter of 2024, Pinnacle Financial entered into a portfolio layer method fair value hedge with a notional amount of $300 million. Under the portfolio layer method, the hedged item is designated as a hedged layer of a closed portfolio of available-for-sale securities that is anticipated to remain outstanding throughout the hedge period ending September 1, 2026.
A summary of Pinnacle Financial's fair value hedge relationships as of March 31, 2025 and December 31, 2024 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
|
Balance Sheet Location |
|
Weighted Average Remaining Maturity (In Years) |
|
Weighted Average Pay Rate |
|
Receive Rate |
|
Notional Amount |
|
Estimated Fair Value (1) |
|
Notional Amount |
|
Estimated Fair Value (1) |
Asset derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - securities |
|
Other assets |
|
10.31 |
|
3.28% |
|
Federal Funds/ SOFR |
|
$ |
3,137,761 |
|
|
$ |
50,363 |
|
|
$ |
3,198,426 |
|
|
$ |
67,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - borrowings |
|
Other liabilities |
|
2.48 |
|
SOFR |
|
3.48% |
|
1,175,000 |
|
|
(9,713) |
|
|
1,175,000 |
|
|
(21,428) |
|
|
|
|
|
|
|
|
|
|
|
$ |
4,312,761 |
|
|
$ |
40,650 |
|
|
$ |
4,373,426 |
|
|
$ |
45,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The variation margin payments for derivatives cleared through central clearing houses are characterized as settlements. At both March 31, 2025 and December 31, 2024, the notional amount of fair value derivatives cleared through central clearing houses was $3.0 billion with a fair value that approximates zero due to $26.2 million and $72.7 million in variation margin payments.
Notional amounts of $244.4 million as of March 31, 2025 receive a variable rate of interest based on the daily compounded federal funds rate and notional amounts totaling $4.1 billion as of March 31, 2025 receive a variable rate of interest based on the daily compounded SOFR.
The effects of Pinnacle Financial's fair value hedge relationships on the income statement during the three months ended March 31, 2025 and 2024 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain (Loss) |
|
|
|
|
|
Amount of Gain (Loss) Recognized in Income |
|
|
|
|
Three Months Ended March 31, |
Securities |
|
|
|
|
|
2025 |
|
2024 |
Interest rate swaps - securities |
Interest income on securities |
|
|
|
|
|
$ |
(16,701) |
|
|
$ |
26,812 |
|
Securities available-for-sale |
Interest income on securities |
|
|
|
|
|
$ |
16,701 |
|
|
$ |
(26,812) |
|
FHLB advances |
|
|
|
|
|
|
|
|
|
Interest rate swaps - FHLB advances |
Interest expense on FHLB advances and other borrowings |
|
|
|
|
|
$ |
11,715 |
|
|
$ |
(25,961) |
|
FHLB advances |
Interest expense on FHLB advances and other borrowings |
|
|
|
|
|
$ |
(11,715) |
|
|
$ |
25,961 |
|
|
|
|
|
|
|
|
|
|
|
The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount of the Hedged Assets/Liabilities |
|
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/Liabilities |
|
March 31, 2025 |
|
December 31, 2024 |
|
March 31, 2025 |
|
December 31, 2024 |
Line item on the balance sheet |
|
|
|
|
|
|
|
Securities available-for-sale |
$ |
3,800,740 |
|
|
$ |
3,905,016 |
|
|
$ |
(50,363) |
|
|
$ |
(67,064) |
|
Federal Home Loan Bank advances |
$ |
1,165,287 |
|
|
$ |
1,196,428 |
|
|
$ |
(9,713) |
|
|
$ |
(21,428) |
|
During the three months ended March 31, 2025, amortization expense totaling $54,000 related to previously terminated fair value hedges was recognized as a reduction to interest income on loans compared to $104,000 for the three months ended March 31, 2024.
In April 2022, interest rates swaps designated as fair value hedges with notional amounts totaling $164.3 million and market values totaling $14.3 million were terminated. Approximately $986,000 in gains were recognized at the time of termination and the remaining $5.2 million at March 31, 2025 will be accreted as additional interest income on the previously hedged available-for-sale mortgage backed and municipal securities over the same period as existing purchase discounts or premiums on these securities.
Note 10. Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. The definition of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to acquire the asset or received to assume the liability at the measurement date. The statement emphasizes that fair value is a market-based measurement; not an entity-specific measurement. Therefore, the fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.
Valuation Hierarchy
FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.
Assets
Securities available-for-sale – Where quoted prices are available for identical securities in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and certain other financial products. If quoted market prices are not available, then fair values are estimated by using pricing models that use observable inputs or quoted prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. In certain cases where there is limited activity or less transparency around inputs to the valuation and more complex pricing models or discounted cash flows are used, securities are classified within Level 3 of the valuation hierarchy.
Other investments – Included in other investments are investments recorded at fair value primarily in certain nonpublic investments and funds. The valuation of these nonpublic investments requires management judgment due to the absence of observable quoted market prices, inherent lack of liquidity and the long-term nature of such assets. These investments are valued initially based upon transaction price. The carrying values of other investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through financial reports provided by the portfolio managers of the investments.
A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of the particular investment, industry valuations of comparable public companies and changes in market outlook and the third-party financing environment over time. In determining valuation adjustments resulting from the investment review process, emphasis is placed on current company performance and market conditions. These investments are included in Level 3 of the valuation hierarchy if the entities and funds are not widely traded and the underlying investments are in privately-held and/or start-up companies for which market values are not readily available. Certain investments in funds for which the underlying assets of the fund represent publicly traded investments are included in Level 2 of the valuation hierarchy.
Mortgage Servicing Rights – On March 31, 2024, Pinnacle Financial recognized a mortgage servicing asset totaling $11.8 million related to a commercial mortgage loan portfolio. Upon the sale of these commercial loans, the MSRs are capitalized and represent the fair value of future net servicing fees from servicing activities associated with these commercial mortgage loans. Pinnacle Financial has elected to account for this class of MSRs under the fair value measurement method. Fair value for MSRs is determined utilizing a discounted cash flow model which calculates the fair value of each servicing right based on the present value of the expected cash flows from servicing revenues less servicing costs of the portfolio. The valuation of MSRs uses assumptions market participants would use in determining fair value, including prepayment speeds, interest rates, discount rates and other economic factors, which are considered significant unobservable inputs. Due to the nature of the inputs used in the valuation, MSRs are classified within Level 3 of the valuation hierarchy.
Other assets – Included in other assets are certain assets carried at fair value, including interest rate swap agreements to facilitate customer transactions, interest rate swap agreements designated as fair value hedges, interest rate caps, collars and floors designated as cash flow hedges and interest rate locks associated with the mortgage loan pipeline. The fair value of interest rate swap agreements is based on Pinnacle Financial's pricing models that utilize observable market inputs. The fair value of the cash flow hedge agreements is determined by calculating the difference between the discounted fixed rate cash flows and the discounted variable rate cash flows. The fair value of the mortgage loan pipeline is based upon the projected sales price of the underlying loans, taking into account market interest rates and other market factors at the measurement date, net of the projected fallout rate. Pinnacle Financial reflects these assets within Level 2 of the valuation hierarchy as these assets are valued using similar transactions that occur in the market.
Collateral dependent loans – Collateral dependent loans are measured at the fair value of the collateral securing the loan less estimated selling costs. The fair value of real estate collateral is determined based on real estate appraisals which are generally based on recent sales of comparable properties which are then adjusted for property specific factors. Non-real estate collateral is valued based on various sources, including third party asset valuations and internally determined values based on cost adjusted for depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified within Level 3 of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower's underlying financial condition.
Other real estate owned – Other real estate owned (OREO) represents real estate foreclosed upon by Pinnacle Bank through loan defaults by customers or acquired by deed in lieu of foreclosure. Upon Pinnacle Bank's acquisition of OREO, the property is recorded at the lower of cost or fair value, based on appraised value, less selling costs estimated as of the date acquired with any loss recognized as a charge-off through the allowance for credit losses. Additional OREO losses for subsequent valuation downward adjustments are determined on a specific property basis and are included as a component of noninterest expense along with holding costs. Any gains or losses realized at the time of disposal are also reflected in noninterest expense, as applicable. OREO is included in Level 3 of the valuation hierarchy due to the lack of observable market inputs into the determination of fair value as appraisal values are property-specific and sensitive to the changes in the overall economic environment.
Liabilities
Other liabilities – Pinnacle Financial has certain liabilities carried at fair value including certain interest rate swap agreements to facilitate customer transactions, interest rate swaps designated as fair value hedges, interest rate caps, collars and floors designated as cash flow hedges and interest rate locks associated with the funding for its mortgage loan originations. The fair value of these liabilities is based on Pinnacle Financial's pricing models that utilize observable market inputs and is reflected within Level 2 of the valuation hierarchy.
The following tables present financial instruments measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying value in the consolidated balance sheet |
|
Quoted market prices in an active market (Level 1) |
|
Models with significant observable market parameters (Level 2) |
|
Models with significant unobservable market parameters (Level 3) |
March 31, 2025 |
|
|
|
|
|
|
|
Investment securities available-for-sale: |
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
1,452,300 |
|
|
$ |
— |
|
|
$ |
1,452,300 |
|
|
$ |
— |
|
U.S. Government agency securities |
204,607 |
|
|
— |
|
|
204,607 |
|
|
— |
|
Mortgage-backed securities |
2,412,725 |
|
|
— |
|
|
2,412,725 |
|
|
— |
|
State and municipal securities |
1,547,902 |
|
|
— |
|
|
1,547,730 |
|
|
172 |
|
Agency-backed securities |
222 |
|
|
— |
|
|
222 |
|
|
— |
|
Corporate notes and other |
332,421 |
|
|
— |
|
|
319,520 |
|
|
12,901 |
|
Total investment securities available-for-sale |
5,950,177 |
|
|
— |
|
|
5,937,104 |
|
|
13,073 |
|
Other investments |
214,440 |
|
|
— |
|
|
22,495 |
|
|
191,945 |
|
Mortgage servicing rights |
11,215 |
|
|
— |
|
|
— |
|
|
11,215 |
|
Other assets |
171,410 |
|
|
— |
|
|
171,410 |
|
|
— |
|
Total assets at fair value |
$ |
6,347,242 |
|
|
$ |
— |
|
|
$ |
6,131,009 |
|
|
$ |
216,233 |
|
|
|
|
|
|
|
|
|
Other liabilities |
$ |
70,186 |
|
|
$ |
— |
|
|
$ |
70,186 |
|
|
$ |
— |
|
Total liabilities at fair value |
$ |
70,186 |
|
|
$ |
— |
|
|
$ |
70,186 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
Investment securities available-for-sale: |
|
|
|
|
|
|
|
U.S. Treasury securities |
$ |
1,405,478 |
|
|
$ |
— |
|
|
$ |
1,405,478 |
|
|
$ |
— |
|
U.S. Government agency securities |
214,066 |
|
|
— |
|
|
214,066 |
|
|
— |
|
Mortgage-backed securities |
1,962,359 |
|
|
— |
|
|
1,962,359 |
|
|
— |
|
State and municipal securities |
1,506,557 |
|
|
— |
|
|
1,506,222 |
|
|
335 |
|
Agency-backed securities |
45,338 |
|
|
— |
|
|
45,338 |
|
|
— |
|
Corporate notes and other |
448,571 |
|
|
— |
|
|
435,682 |
|
|
12,889 |
|
Total investment securities available-for-sale |
5,582,369 |
|
|
— |
|
|
5,569,145 |
|
|
13,224 |
|
Other investments |
198,721 |
|
|
— |
|
|
22,170 |
|
|
176,551 |
|
Mortgage servicing rights |
11,854 |
|
|
— |
|
|
— |
|
|
11,854 |
|
Other assets |
177,100 |
|
|
— |
|
|
177,100 |
|
|
— |
|
Total assets at fair value |
$ |
5,970,044 |
|
|
$ |
— |
|
|
$ |
5,768,415 |
|
|
$ |
201,629 |
|
|
|
|
|
|
|
|
|
Other liabilities |
$ |
98,311 |
|
|
$ |
— |
|
|
$ |
98,311 |
|
|
$ |
— |
|
Total liabilities at fair value |
$ |
98,311 |
|
|
$ |
— |
|
|
$ |
98,311 |
|
|
$ |
— |
|
The following table presents assets measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
Total carrying value in the consolidated balance sheet |
|
Quoted market prices in an active market (Level 1) |
|
Models with significant observable market parameters (Level 2) |
|
Models with significant unobservable market parameters (Level 3) |
Other real estate owned |
$ |
3,638 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,638 |
|
|
|
|
|
|
|
|
|
Collateral dependent loans (1) |
113,523 |
|
|
— |
|
|
— |
|
|
113,523 |
|
Total |
$ |
117,161 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
117,161 |
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
Other real estate owned |
$ |
1,278 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,278 |
|
Collateral dependent loans (1) |
84,273 |
|
|
— |
|
|
— |
|
|
84,273 |
|
Total |
$ |
85,551 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
85,551 |
|
(1) The carrying values of collateral dependent loans at March 31, 2025 and December 31, 2024 are net of valuation allowances of $51.8 million and $54.7 million, respectively.
In the case of the available-for-sale (AFS) investment securities portfolio, Pinnacle Financial monitors the portfolio to ascertain when transfers between levels have been affected. For the three months ended March 31, 2025, there were no transfers between Levels 1, 2 or 3. During the three months ended March 31, 2024, one AFS security with a carrying value of $12.8 million previously classified as Level 2 was transferred to Level 3 due to unobservable inputs becoming significant. The nature of the remaining assets and liabilities is such that transfers in and out of any level are expected to be rare.
The table below includes a rollforward of the balance sheet amounts for the three months ended March 31, 2025 and 2024 (including the change in fair value) for financial instruments classified by Pinnacle Financial within Level 3 of the valuation hierarchy measured at fair value on a recurring basis including changes in fair value due in part to observable factors that are part of the valuation methodology (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three months ended March 31, |
|
|
|
2025 |
2024 |
|
|
|
|
Available-for-sale securities |
Other investments |
Mortgage servicing rights |
|
Available-for-sale securities |
Other investments |
Mortgage servicing rights |
|
|
|
|
|
|
|
|
Fair value, beginning of period |
$ |
13,224 |
|
$ |
176,551 |
|
$ |
11,854 |
|
|
$ |
479 |
|
$ |
157,140 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
Total realized gains (losses) included in income |
13 |
|
183 |
|
(639) |
|
|
13 |
|
(714) |
|
11,812 |
|
|
|
|
|
|
|
|
|
Changes in unrealized gains/losses included in other comprehensive income (loss) |
2 |
|
— |
|
— |
|
|
16 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
Transfers into Level 3 |
— |
|
— |
|
— |
|
|
12,841 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
Purchases |
— |
|
16,920 |
|
— |
|
|
— |
|
7,467 |
|
— |
|
|
|
|
|
|
|
|
|
Issuances |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
Settlements |
(166) |
|
(1,709) |
|
— |
|
|
(165) |
|
(1,658) |
|
— |
|
|
|
|
|
|
|
|
|
Transfers out of Level 3 |
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
Fair value, end of period |
$ |
13,073 |
|
$ |
191,945 |
|
$ |
11,215 |
|
|
$ |
13,184 |
|
$ |
162,235 |
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
Total net realized gains (losses) included in income |
$ |
13 |
|
$ |
183 |
|
$ |
(639) |
|
|
$ |
13 |
|
$ |
(714) |
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
The following tables present the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at March 31, 2025 and December 31, 2024. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash, cash equivalents, and restricted cash, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as non-interest bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount |
|
Estimated
Fair Value (1)
|
|
Quoted market prices in an active market (Level 1) |
|
Models with significant observable market parameters (Level 2) |
|
Models with significant unobservable market parameters (Level 3) |
March 31, 2025 |
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
Securities purchased with agreement to resell |
$ |
80,566 |
|
|
$ |
80,569 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
80,569 |
|
Securities held-to-maturity |
2,768,617 |
|
|
2,504,913 |
|
|
— |
|
|
2,504,913 |
|
|
— |
|
Loans, net |
35,719,284 |
|
|
35,221,791 |
|
|
— |
|
|
— |
|
|
35,221,791 |
|
Consumer loans held-for-sale |
143,305 |
|
|
143,654 |
|
|
— |
|
|
143,654 |
|
|
— |
|
Commercial loans held-for-sale |
12,114 |
|
|
12,144 |
|
|
— |
|
|
12,144 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
Deposits and securities sold under |
|
|
|
|
|
|
|
|
|
agreements to repurchase |
44,743,456 |
|
|
43,826,215 |
|
|
— |
|
|
— |
|
|
43,826,215 |
|
Federal Home Loan Bank advances |
1,886,011 |
|
|
1,904,091 |
|
|
— |
|
|
— |
|
|
1,904,091 |
|
Subordinated debt and other borrowings |
426,042 |
|
|
430,451 |
|
|
— |
|
|
— |
|
|
430,451 |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
Securities purchased with agreement to resell |
$ |
66,449 |
|
|
$ |
66,451 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
66,451 |
|
Securities held-to-maturity |
2,798,899 |
|
|
2,560,252 |
|
|
— |
|
|
2,560,252 |
|
|
— |
|
Loans, net |
35,071,282 |
|
|
34,440,683 |
|
|
— |
|
|
— |
|
|
34,440,683 |
|
Consumer loans held-for-sale |
175,627 |
|
|
175,838 |
|
|
— |
|
|
175,838 |
|
|
— |
|
Commercial loans held-for-sale |
19,700 |
|
|
19,724 |
|
|
— |
|
|
19,724 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
Deposits and securities sold under |
|
|
|
|
|
|
|
|
|
agreements to repurchase |
43,073,236 |
|
|
42,190,235 |
|
|
— |
|
|
— |
|
|
42,190,235 |
|
Federal Home Loan Bank advances |
1,874,134 |
|
|
1,874,588 |
|
|
— |
|
|
— |
|
|
1,874,588 |
|
Subordinated debt and other borrowings |
425,821 |
|
|
431,996 |
|
|
— |
|
|
— |
|
|
431,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.
Note 11. Regulatory Matters
Pursuant to Tennessee banking law, Pinnacle Bank may not, without the prior consent of the Commissioner of the Tennessee Department of Financial Institutions (TDFI), pay any dividends to Pinnacle Financial in a calendar year in excess of the total of Pinnacle Bank's retained net income for that year plus the retained net income for the preceding two years. Additionally, approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of Pinnacle Bank to fall below specified minimum levels. Under Tennessee corporate law, Pinnacle Financial is not permitted to pay dividends if, after giving effect to such payment, it would not be able to pay its debts as they become due in the usual course of business or its total assets would be less than the sum of its total liabilities plus any amounts needed to satisfy any preferential rights if it were dissolving. In deciding whether or not to declare a dividend of any particular size, Pinnacle Financial's board of directors must consider its and Pinnacle Bank's current and prospective capital, liquidity and other needs. In addition to state law limitations on Pinnacle Financial's ability to pay dividends, the Federal Reserve imposes limitations on Pinnacle Financial's ability to pay dividends. Federal Reserve regulations limit dividends, stock repurchases and discretionary bonuses to executive officers if Pinnacle Financial's regulatory capital is below the level of regulatory minimums plus the applicable 2.5% capital conservation buffer.
In addition, the Federal Reserve has issued supervisory guidance advising bank holding companies to eliminate, defer or reduce dividends paid on common stock and other forms of Tier 1 capital where the company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, the company’s prospective rate of earnings retention is not consistent with the company’s capital needs and overall current and prospective financial condition or the company will not meet, or is in danger of not meeting, minimum regulatory capital adequacy ratios. Recent supplements to this guidance reiterate the need for bank holding companies to inform their applicable reserve bank sufficiently in advance of the proposed payment of a dividend in certain circumstances.
During the three months ended March 31, 2025, Pinnacle Bank paid $30.4 million of dividends to Pinnacle Financial. As of March 31, 2025, based on the criteria noted above Pinnacle Bank could pay approximately $1.0 billion of additional dividends to Pinnacle Financial without prior approval of the Commissioner of the TDFI. Since the fourth quarter of 2013, Pinnacle Financial has paid a quarterly common stock dividend. The board of directors of Pinnacle Financial has increased the dividend amount per share over time. The most recent increase occurred on January 21, 2025 when the board of directors increased the dividend to $0.24 per common share from $0.22 per common share. During the second quarter of 2020, Pinnacle Financial issued 9.0 million depositary shares, each representing a 1/40th fractional interest in a share of Series B noncumulative, perpetual preferred stock (the "Series B Preferred Stock") in a registered public offering to both retail and institutional investors. Beginning in the third quarter of 2020, Pinnacle Financial began paying a quarterly dividend of $16.88 per share (or $0.422 per depositary share), on the Series B Preferred Stock. The amount and timing of all future dividend payments by Pinnacle Financial, if any, including dividends on Pinnacle Financial's Series B Preferred Stock (and associated depositary shares), is subject to discretion of Pinnacle Financial's board of directors and will depend on Pinnacle Financial's receipt of dividends from Pinnacle Bank, earnings, capital position, financial condition, liquidity and other factors, including regulatory capital requirements, as they become known to Pinnacle Financial and receipt of any regulatory approvals that may become required as a result of each of Pinnacle Financial's or Pinnacle Bank's financial results.
Pinnacle Financial and Pinnacle Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Pinnacle Financial and Pinnacle Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Pinnacle Financial's and Pinnacle Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Pinnacle Financial and Pinnacle Bank periodically evaluate risk weightings and may enter into transactions or undertake procedures that may reduce risk weightings, such as during the second quarter of 2024 when Pinnacle Financial entered into a CDS on a pool of first lien consumer real estate-mortgage loans, as more fully described in Note 9. Derivative Instruments, and implemented enhanced control processes with respect to certain commercial loans which permitted recharacterization of the loans, each of which reduced risk weighted assets of both Pinnacle Financial and Pinnacle Bank.
Quantitative measures established by regulation to ensure capital adequacy require Pinnacle Financial and its banking subsidiary to maintain minimum amounts and ratios of common equity Tier 1 capital to risk-weighted assets, Tier 1 capital to risk-weighted assets, total risk-based capital to risk-weighted assets and Tier 1 capital to average assets.
As permitted by the interim final rule issued on March 27, 2020 by the federal banking regulatory agencies, each of Pinnacle Bank and Pinnacle Financial elected to delay the estimated impact on regulatory capital of Pinnacle Financial's and Pinnacle Bank's adoption of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which was effective January 1, 2020. The initial impact of adoption of ASU 2016-13, as well as 25% of the quarterly changes in the allowance for credit losses subsequent to adoption of ASU 2016-13 (collectively the “transition adjustments”), was delayed until December 31, 2021. As of January 1, 2022, the cumulative amount of the transition adjustments became fixed and were phased out of the regulatory capital calculations evenly over a three year period, with 75% recognized in 2022, 50% recognized in 2023 and 25% recognized in 2024. Beginning on January 1, 2025, the temporary regulatory capital benefits were fully reversed.
Management believes, as of March 31, 2025, that Pinnacle Financial and Pinnacle Bank met all capital adequacy requirements to which they are subject. To be categorized as well-capitalized under applicable banking regulations, Pinnacle Bank must maintain certain total risk-based, Tier 1 risk-based, common equity Tier 1 and Tier 1 leverage ratios as set forth in the following table and not be subject to a written agreement, order or directive to maintain a higher capital level. The capital conservation buffer is not included in the required ratios of the table presented below. Pinnacle Financial's and Pinnacle Bank's actual capital amounts and resulting ratios, not including the applicable 2.5% capital conservation buffer, are presented in the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual |
|
Minimum Capital Requirement |
|
Minimum
To Be Well-Capitalized (1)
|
|
Amount |
Ratio |
|
Amount |
Ratio |
|
Amount |
Ratio |
At March 31, 2025 |
|
|
|
|
|
|
|
|
Total capital to risk weighted assets: |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
5,630,159 |
|
13.0 |
% |
|
$ |
3,456,873 |
|
8.0 |
% |
|
$ |
4,321,092 |
|
10.0 |
% |
Pinnacle Bank |
$ |
5,372,342 |
|
12.4 |
% |
|
$ |
3,452,533 |
|
8.0 |
% |
|
$ |
4,315,666 |
|
10.0 |
% |
Tier 1 capital to risk weighted assets: |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,842,896 |
|
11.2 |
% |
|
$ |
2,592,655 |
|
6.0 |
% |
|
$ |
2,592,655 |
|
6.0 |
% |
Pinnacle Bank |
$ |
4,954,079 |
|
11.5 |
% |
|
$ |
2,589,399 |
|
6.0 |
% |
|
$ |
3,452,533 |
|
8.0 |
% |
Common equity Tier 1 capital to risk weighted assets |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,625,647 |
|
10.7 |
% |
|
$ |
1,944,491 |
|
4.5 |
% |
|
N/A |
N/A |
Pinnacle Bank |
$ |
4,953,957 |
|
11.5 |
% |
|
$ |
1,942,050 |
|
4.5 |
% |
|
$ |
2,805,183 |
|
6.5 |
% |
Tier 1 capital to average assets (*): |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,842,896 |
|
9.5 |
% |
|
$ |
2,040,936 |
|
4.0 |
% |
|
N/A |
N/A |
Pinnacle Bank |
$ |
4,954,079 |
|
9.7 |
% |
|
$ |
2,037,616 |
|
4.0 |
% |
|
$ |
2,547,020 |
|
5.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2024 |
|
|
|
|
|
|
|
|
Total capital to risk weighted assets: |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
5,515,492 |
|
13.1 |
% |
|
$ |
3,358,116 |
|
8.0 |
% |
|
$ |
4,197,645 |
|
10.0 |
% |
Pinnacle Bank |
$ |
5,246,472 |
|
12.5 |
% |
|
$ |
3,352,352 |
|
8.0 |
% |
|
$ |
4,190,440 |
|
10.0 |
% |
Tier 1 capital to risk weighted assets: |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,751,357 |
|
11.3 |
% |
|
$ |
2,518,587 |
|
6.0 |
% |
|
$ |
2,518,587 |
|
6.0 |
% |
Pinnacle Bank |
$ |
4,851,336 |
|
11.6 |
% |
|
$ |
2,514,264 |
|
6.0 |
% |
|
$ |
3,352,352 |
|
8.0 |
% |
Common equity Tier 1 capital to risk weighted assets |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,534,108 |
|
10.8 |
% |
|
$ |
1,888,940 |
|
4.5 |
% |
|
N/A |
N/A |
Pinnacle Bank |
$ |
4,851,213 |
|
11.6 |
% |
|
$ |
1,885,698 |
|
4.5 |
% |
|
$ |
2,723,786 |
|
6.5 |
% |
Tier 1 capital to average assets (*): |
|
|
|
|
|
|
|
|
Pinnacle Financial |
$ |
4,751,357 |
|
9.6 |
% |
|
$ |
1,989,495 |
|
4.0 |
% |
|
N/A |
N/A |
Pinnacle Bank |
$ |
4,851,336 |
|
9.8 |
% |
|
$ |
1,984,252 |
|
4.0 |
% |
|
$ |
2,480,315 |
|
5.0 |
% |
(1) Well-capitalized minimum Common equity Tier 1 capital to risk weighted assets and Tier 1 capital to average assets are not formally defined under applicable banking regulations for bank holding companies.
(*) Average assets for the above calculations were based on the most recent quarter.
Note 12. Other Borrowings
Pinnacle Financial has twelve wholly-owned subsidiaries that are statutory business trusts created for the exclusive purpose of issuing 30-year capital trust preferred securities and from time to time Pinnacle Financial has entered into certain other subordinated debt agreements. These instruments are outlined below as of March 31, 2025 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Date Established |
Maturity |
Total Debt Outstanding |
Interest Rate at March 31, 2025 |
Coupon Structure at
March 31, 2025
|
Trust preferred securities |
|
|
|
|
PNFP Statutory Trust I |
December 29, 2003 |
December 30, 2033 |
$ |
10,310 |
|
7.36 |
% |
3-month SOFR + 2.80% (1) |
PNFP Statutory Trust II |
September 15, 2005 |
September 30, 2035 |
20,619 |
|
5.96 |
% |
3-month SOFR + 1.40% (1) |
PNFP Statutory Trust III |
September 7, 2006 |
September 30, 2036 |
20,619 |
|
6.21 |
% |
3-month SOFR + 1.65% (1) |
PNFP Statutory Trust IV |
October 31, 2007 |
September 30, 2037 |
30,928 |
|
7.41 |
% |
3-month SOFR + 2.85% (1) |
BNC Capital Trust I |
April 3, 2003 |
April 15, 2033 |
5,155 |
|
7.81 |
% |
3-month SOFR + 3.25% (1) |
BNC Capital Trust II |
March 11, 2004 |
April 7, 2034 |
6,186 |
|
7.41 |
% |
3-month SOFR + 2.85% (1) |
BNC Capital Trust III |
September 23, 2004 |
September 23, 2034 |
5,155 |
|
6.96 |
% |
3-month SOFR + 2.40% (1) |
BNC Capital Trust IV |
September 27, 2006 |
December 31, 2036 |
7,217 |
|
6.26 |
% |
3-month SOFR + 1.70% (1) |
Valley Financial Trust I |
June 26, 2003 |
June 26, 2033 |
4,124 |
|
7.66 |
% |
3-month SOFR + 3.10% (1) |
Valley Financial Trust II |
September 26, 2005 |
December 15, 2035 |
7,217 |
|
6.05 |
% |
3-month SOFR + 1.49% (1) |
Valley Financial Trust III |
December 15, 2006 |
January 30, 2037 |
5,155 |
|
6.28 |
% |
3-month SOFR + 1.73% (1) |
Southcoast Capital Trust III |
August 5, 2005 |
September 30, 2035 |
10,310 |
|
6.06 |
% |
3-month SOFR + 1.50% (1) |
|
|
|
|
|
|
Subordinated Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle Financial Subordinated Notes |
September 11, 2019 |
September 15, 2029 |
300,000 |
|
7.34 |
% |
3-month SOFR + 3.04% (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt issuance costs and fair value adjustments |
(6,953) |
|
|
|
Total subordinated debt and other borrowings |
$ |
426,042 |
|
|
|
(1) Rate transitioned to three month SOFR plus a comparable tenor spread adjustment beginning after July 1, 2023 as three month LIBOR ceased to be published effective July 1, 2023.
(2) Previously was to migrate to three month LIBOR + 2.775%, but migrated to three month SOFR + 3.04% beginning September 15, 2024 through the end of the term as three month LIBOR ceased to be published effective July 1, 2023.
Note 13. Segment Reporting
Pinnacle Financial operates through a single operating and reporting segment primarily as a bank, although Pinnacle Financial does provide additional non-banking services customary for a financial services institution including investment, insurance, trust and mortgage lending services. The chief operating decision maker (CODM) is comprised of Pinnacle Financial’s senior leadership team which during the three months ended and at March 31, 2025 consisted of thirteen individuals including the Chief Executive Officer and Chief Financial Officer. The CODM assesses the performance, allocates resources and makes operating decisions for Pinnacle Financial on a consolidated basis primarily based on Pinnacle Financial’s combined net interest income and noninterest income as well as net income as presented on the same basis as in the accompanying consolidated statement of operations. As Pinnacle Financial’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying consolidated balance sheet as “total assets” and the significant segment expenses are listed on the accompanying consolidated statement of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of our financial condition at March 31, 2025 and December 31, 2024 and our results of operations for the three months ended March 31, 2025 and 2024. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements. The following discussion and analysis should be read along with our consolidated financial statements and the related notes included elsewhere herein and the risk factors discussed elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024 (Form 10-K) and the other reports we have filed with the Securities and Exchange Commission since we filed the Form 10-K. Unless the context otherwise requires, the terms "Pinnacle Financial," "we," the "company," "our," or similar terms refer to Pinnacle Financial Partners, Inc. and, where appropriate, its subsidiaries.
Overview
General. Our diluted net income per common share for the three months ended March 31, 2025 was $1.77 compared to $1.57 for the same period in 2024. At March 31, 2025, loans increased to $36.1 billion as compared to $35.5 billion at December 31, 2024, and total deposits increased to $44.5 billion at March 31, 2025 from $42.8 billion at December 31, 2024.
Results of Operations. Our net interest income increased to $364.4 million for the three months ended March 31, 2025 compared to $318.0 million for the same period in the prior year, representing an increase of $46.4 million, or 14.6%. For the three months ended March 31, 2025 when compared to the comparable period in 2024, this increase was largely the result of organic loan growth and a declining cost of funds in the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. The net interest margin (the ratio of net interest income to average earning assets) for the three months ended March 31, 2025 was 3.21% compared to 3.04% for the same period in 2024 and reflects increased average earning asset balances as well as a reduction in our cost of funds despite increased average interest-bearing balances. Additionally, our noninterest bearing deposit balances increased during the three months ended March 31, 2025 when compared to the same period in 2024.
Our provision for credit losses was $17.0 million for the three months ended March 31, 2025 compared to $34.5 million for the same period in 2024. The change in provision expense for the three months ended March 31, 2025 as compared to the same period in 2024 is in part the result of a reduction in specific reserves associated with certain loans due to improvements in the borrowers' financial condition or payoff of a portion of or, in certain cases, the full, outstanding balances. Also impacting provision expense for the three months ended March 31, 2025 were net charge-offs totaling $14.0 million compared to $16.2 million for the same period in 2024.
Noninterest income decreased by $11.7 million, or 10.6%, during the three months ended March 31, 2025 compared to the same period in 2024, due in large part to a mortgage servicing right we recorded in the first quarter of 2024 which resulted in the recognition of $11.8 million in income which was not replicated during the first quarter of 2025. Income from our equity method investment in BHG was $20.4 million during the three months ended March 31, 2025 compared to $16.0 million during the three months ended March 31, 2024. Additionally, income from our wealth management groups (investments, insurance and trust) reflect strong revenue growth increasing $6.8 million during the three months ended March 31, 2025 compared to the same period in 2024. Service charges on deposit accounts also reflect strong revenue growth with an increase of $3.6 million, or 26.7%, during the three months ended March 31, 2025 compared to the same period in 2024. Interchange and other consumer fees also positively impacted noninterest income with an increase of $2.0 million during the three months ended March 31, 2025 compared to the same period in 2024. The increases in noninterest income were offset in part by $12.5 million in net losses on the sale of investment securities in the first quarter of 2025. Also negatively impacting noninterest income during the three months ended March 31, 2025 compared to the same period in 2024 was a $3.0 million decrease in income from our other equity investments as well as a $1.3 million decrease in income related to bank-owned life insurance.
Noninterest expense increased by $33.1 million, or 13.7%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Impacting noninterest expense for the three months ended March 31, 2025 as compared to the same prior year period was an increase of $26.1 million in salaries and employee benefits. The increase in salaries and employee benefits was primarily the result of an increase in our associate base to 3,595.0 full-time equivalent associates at March 31, 2025 compared to 3,386.5 at March 31, 2024, as well as annual merit increases effective in January 2025 and increases in cash and equity incentive accruals due to our belief at March 31, 2025 that we were likely to achieve a payout percentage under our annual cash incentive plan in 2025 that would be higher than what we believed we would payout at March 31, 2024 under our 2024 annual cash incentive plan and increased vesting under our performance-based vesting restricted stock unit awards based on estimated performance through March 31, 2025. Noninterest expense categories, other than salaries and employee benefits, were $103.4 million during the three months ended March 31, 2025 compared to $96.4 million during three months ended March 31, 2024, an increase of 7.3%. The three months ended March 31, 2025 as compared to the same 2024 period was impacted by changes in equipment and occupancy costs and lending and deposit-related expenses. Equipment and occupancy costs were $46.2 million for the three months ended March 31, 2025 compared to $39.6 million for the three months ended March 31, 2024 and were negatively impacted by the overall growth in our infrastructure, construction and operation of additional locations, including our new Nashville headquarters and new technology implemented.
Other noninterest expense includes lending-related expenses, deposit-related expense, wealth-management expenses and other items. Lending-related expenses were $16.1 million for the three months ended March 31, 2025 compared to $12.7 million for the three months ended March 31, 2024 and were impacted by the loss protection fees of $1.7 million associated with a credit default swap which began in the second quarter of 2024. Deposit-related expenses were $17.7 million during the three months ended March 31, 2025 compared to $21.2 million for the three months ended March 31, 2024. Contributing to the decline in deposit-related expenses in the first quarter of 2025 was the lack of an FDIC special assessment in 2025 compared to a $7.3 million special assessment in the first quarter of 2024.
Our efficiency ratio (the ratio of noninterest expense to the sum of net interest income and noninterest income) was 59.5% for the three months ended March 31, 2025 compared to 56.6% for the three months ended March 31, 2024. The efficiency ratio measures the amount of expense that is incurred to generate a dollar of revenue. Our efficiency ratio during the three months ended March 31, 2025 compared to the same period in 2024 was both positively and negatively impacted by the changes to net interest income, noninterest income and noninterest expense discussed above.
During the three months ended March 31, 2025, we recorded income tax expense of $30.0 million compared to $27.3 million for the three months ended March 31, 2024. Our effective tax rate for the three months ended March 31, 2025 was 17.6% compared to 18.1% for the three months ended March 31, 2024. Our tax rate in each period was impacted by, among other things, the vesting and exercise of equity-based awards previously granted under our equity-based compensation program. For the three months ended March 31, 2025, we recognized excess tax benefits of $3.6 million in connection with the vesting and exercise of these equity-based awards compared to excess tax benefits of $2.4 million for the three months ended March 31, 2024. The increase in excess tax benefits recognized during the three months ended March 31, 2025 as compared to the same period in 2024 was the primary reason for the decrease in the effective tax rate between periods.
Financial Condition. Loans increased $651.0 million, or 1.8%, during the three months ended March 31, 2025 when compared to December 31, 2024. The increase is primarily the result of loans made to borrowers that principally operate or are located in the markets in which we have recently entered or expanded our presence, increases in the number of relationship advisors we employ and continued focus on attracting new customers to our company, including those targeted by our franchise and leasing segments and our solar financing group. Loan growth was also positively impacted during the three months ended March 31, 2025 by the continued growth of certain specialty lending groups, including franchise lending and equipment lease financing. Total deposits were $44.5 billion at March 31, 2025 compared to $42.8 billion at December 31, 2024, an increase of $1.6 billion, or 3.8%. Interest-bearing deposits grew during the three months ended March 31, 2025 by approximately $677.0 million, or 4.8%, from December 31, 2024, as a result of our intentional focus on gathering and retaining these deposits and increases in the number of relationship advisors we employ.
At March 31, 2025, our allowance for credit losses was $417.5 million compared to $414.5 million at December 31, 2024. The increase in the allowance for credit losses during the three months ended March 31, 2025 was primarily the result of overall growth in the portfolio year-over-year. Additionally, during the three months ended March 31, 2025 net charge-offs were $14.0 million compared to $16.2 million for the same period in 2024.
Capital and Liquidity. At March 31, 2025 and December 31, 2024, our capital ratios, including the capital ratios of our bank subsidiary, Pinnacle Bank ("Pinnacle Bank"), exceeded regulatory minimum capital requirements and those necessary to be considered well-capitalized under applicable federal regulations. See Note 11. Regulatory Matters in the Notes to our Consolidated Financial Statements elsewhere in this Quarterly Report on Form 10-Q (Form 10-Q) for additional information regarding our capital ratios. From time to time we may be required to support the capital needs of our bank (Pinnacle Bank). At March 31, 2025, Pinnacle Financial had approximately $242.7 million of cash that could be used to support our bank. We believe we have various capital raising techniques available to us to provide for the capital needs of our company and bank, such as issuing subordinated debt or entering into a revolving credit facility with a financial institution. We also periodically evaluate capital markets conditions to identify opportunities to access those markets if necessary or prudent to support our capital levels.
On January 16, 2024, our board of directors authorized a share repurchase program for up to $125.0 million of our outstanding common stock. The authorization for this program remained in effect through March 31, 2025. On January 21, 2025, our board of directors authorized a share repurchase program for up to $125.0 million of our common stock which commenced upon the expiration of the previously authorized share repurchase program that expired on March 31, 2025. The new authorization is set to remain in effect through March 31, 2026. We did not repurchase any shares under the prior share repurchase program during 2024 or the first three months of 2025.
Critical Accounting Estimates
The accounting principles we follow and our methods of applying these principles conform with U.S. GAAP and with general practices within the banking industry. There have been no significant changes to our Critical Accounting Estimates as described in our Form 10-K.
Selected Financial Information
The following is a summary of certain financial information for the three month periods ended March 31, 2025 and 2024 and as of March 31, 2025 and December 31, 2024 (dollars in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
2025 - 2024 Percent |
|
|
|
2025 |
2024 |
Increase (Decrease) |
|
|
|
Income Statement: |
|
|
|
|
|
|
Interest income |
$ |
668,160 |
|
$ |
650,483 |
|
2.7 |
% |
|
|
|
Interest expense |
303,732 |
|
332,449 |
|
(8.6) |
% |
|
|
|
Net interest income |
364,428 |
|
318,034 |
|
14.6 |
% |
|
|
|
Provision for credit losses |
16,960 |
|
34,497 |
|
(50.8) |
% |
|
|
|
Net interest income after provision for credit losses |
347,468 |
|
283,537 |
|
22.5 |
% |
|
|
|
Noninterest income |
98,426 |
|
110,103 |
|
(10.6) |
% |
|
|
|
Noninterest expense |
275,487 |
|
242,365 |
|
13.7 |
% |
|
|
|
Income before income taxes |
170,407 |
|
151,275 |
|
12.6 |
% |
|
|
|
Income tax expense |
29,999 |
|
27,331 |
|
9.8 |
% |
|
|
|
Net income |
140,408 |
|
123,944 |
|
13.3 |
% |
|
|
|
Preferred stock dividends |
(3,798) |
|
(3,798) |
|
— |
% |
|
|
|
Net income available to common shareholders |
$ |
136,610 |
|
$ |
120,146 |
|
13.7 |
% |
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
Basic net income per common share |
$ |
1.78 |
|
$ |
1.58 |
|
12.7 |
% |
|
|
|
Diluted net income per common share |
$ |
1.77 |
|
$ |
1.57 |
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
|
Return on average assets (1) |
1.05 |
% |
1.00 |
% |
5.0 |
% |
|
|
|
Return on average shareholders' equity (2) |
8.50 |
% |
7.94 |
% |
7.1 |
% |
|
|
|
Return on average common shareholders' equity (3) |
8.80 |
% |
8.24 |
% |
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
December 31, 2024 |
|
|
|
|
Balance Sheet: |
|
|
|
|
|
|
Loans, net of allowance for credit losses |
$ |
35,719,284 |
$ |
35,071,282 |
1.8% |
|
|
|
Deposits |
$ |
44,479,463 |
$ |
42,842,992 |
3.8% |
|
|
|
(1) Return on average assets is the result of net income available to common shareholders for the reported period on an annualized basis, divided by average assets for the period.
(2) Return on average shareholders' equity is the result of net income available to common shareholders for the reported period on an annualized basis, divided by average shareholders' equity for the period.
(3) Return on average common shareholders' equity is the result of net income available to common shareholders for the reported period on an annualized basis, divided by average common shareholders' equity for the period.
Results of Operations
Net Interest Income. Net interest income represents the amount by which interest earned on various interest-earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of our revenues. Net interest income totaled $364.4 million for the three months ended March 31, 2025 compared to $318.0 million for the same period in the prior year, representing an increase of $46.4 million, or 14.6%. For the three months ended March 31, 2025 when compared to the comparable period in 2024, this increase was largely the result of organic loan growth and a declining cost of funds in the three months ended March 31, 2025 when compared to the three months ended March 31, 2024.
The following tables set forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest spread and net interest margin for the three months ended March 31, 2025 and 2024 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2025 |
Three Months Ended March 31, 2024 |
|
Average Balances |
Interest |
Rates/ Yields |
Average Balances |
Interest |
Rates/ Yields |
Interest-earning assets |
|
|
|
|
|
|
Loans (1) (2) |
$ |
36,041,530 |
|
$ |
547,368 |
|
6.24 |
% |
$ |
33,041,954 |
|
$ |
541,199 |
|
6.67 |
% |
Securities |
|
|
|
|
|
|
Taxable |
5,432,730 |
|
61,853 |
|
4.62 |
% |
3,919,534 |
|
44,470 |
|
4.56 |
% |
Tax-exempt (2) |
3,247,204 |
|
25,230 |
|
3.76 |
% |
3,387,667 |
|
24,600 |
|
3.48 |
% |
Interest-bearing due from banks |
2,645,347 |
|
28,893 |
|
4.43 |
% |
2,476,800 |
|
32,753 |
|
5.32 |
% |
Securities purchased under agreements to resell |
58,407 |
|
1,635 |
|
11.35 |
% |
543,788 |
|
3,858 |
|
2.85 |
% |
Federal funds sold |
— |
|
— |
|
— |
% |
— |
|
— |
|
— |
% |
Other |
254,839 |
|
3,181 |
|
5.06 |
% |
253,474 |
|
3,603 |
|
5.72 |
% |
Total interest-earning assets |
47,680,057 |
|
$ |
668,160 |
|
5.79 |
% |
43,623,217 |
|
$ |
650,483 |
|
6.11 |
% |
Nonearning assets |
|
|
|
|
|
|
Intangible assets |
1,870,164 |
|
|
|
1,873,871 |
|
|
|
Other nonearning assets |
2,975,610 |
|
|
|
2,814,172 |
|
|
|
Total assets |
$ |
52,525,831 |
|
|
|
$ |
48,311,260 |
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Interest-bearing deposits: |
|
|
|
|
|
|
Interest checking |
$ |
14,136,443 |
|
111,751 |
|
3.21 |
% |
$ |
11,567,773 |
|
112,728 |
|
3.92 |
% |
Savings and money market |
16,345,027 |
|
118,842 |
|
2.95 |
% |
14,608,687 |
|
134,752 |
|
3.71 |
% |
Time |
4,330,730 |
|
42,800 |
|
4.01 |
% |
4,857,032 |
|
53,488 |
|
4.43 |
% |
Total interest-bearing deposits |
34,812,200 |
|
273,393 |
|
3.18 |
% |
31,033,492 |
|
300,968 |
|
3.90 |
% |
Securities sold under agreements to repurchase |
230,745 |
|
1,026 |
|
1.80 |
% |
210,888 |
|
1,399 |
|
2.67 |
% |
Federal Home Loan Bank advances |
1,877,596 |
|
21,272 |
|
4.59 |
% |
2,214,489 |
|
24,120 |
|
4.38 |
% |
Subordinated debt and other borrowings |
427,624 |
|
8,041 |
|
7.63 |
% |
428,281 |
|
5,962 |
|
5.60 |
% |
Total interest-bearing liabilities |
37,348,165 |
|
303,732 |
|
3.30 |
% |
33,887,150 |
|
332,449 |
|
3.95 |
% |
Noninterest-bearing deposits |
8,206,751 |
|
— |
|
0.00 |
% |
7,962,217 |
|
— |
|
0.00 |
% |
Total deposits and interest-bearing liabilities |
45,554,916 |
|
$ |
303,732 |
|
2.70 |
% |
41,849,367 |
|
$ |
332,449 |
|
3.20 |
% |
Other liabilities |
455,011 |
|
|
|
379,277 |
|
|
|
Total liabilities |
46,009,927 |
|
|
|
42,228,644 |
|
|
|
Shareholders' equity |
6,515,904 |
|
|
|
6,082,616 |
|
|
|
Total liabilities and shareholders' equity |
$ |
52,525,831 |
|
|
|
$ |
48,311,260 |
|
|
|
Net interest income |
|
$ |
364,428 |
|
|
|
$ |
318,034 |
|
|
Net interest spread (3) |
|
|
2.49 |
% |
|
|
2.16 |
% |
Net interest margin (4) |
|
|
3.21 |
% |
|
|
3.04 |
% |
(1) Average balances of nonperforming loans, consumer loans held-for-sale and commercial loans held-for-sale are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $12.5 million of taxable equivalent income for the three months ended March 31, 2025 compared to $11.8 million for the three months ended March 31, 2024. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the three months ended March 31, 2025 would have been 3.09% compared to a net interest spread of 2.91% for the three months ended March 31, 2024.
(4) Net interest margin is the result of annualized net interest income calculated on a tax-equivalent basis divided by average interest-earning assets for the period.
For the three months ended March 31, 2025, our net interest margin was 3.21% compared to 3.04% for the same period in 2024. The expansion in our net interest margin during the comparable three month periods ended March 31, 2025 and 2024, respectively, reflects increased average earning asset balances and a reduction in our cost of funds despite increased average interest-bearing deposit and interest-bearing liability balances. Additionally, our noninterest-bearing average deposit balances increased during the first quarter of 2025. During the three months ended March 31, 2025, our earning asset yield decreased by 32 basis points from the same period in the prior year reflecting the impact of the 100 basis point decrease in short-term interest rates since September 2024. Conversely, our total funding rates, led by decreases in interest-bearing deposits rates, decreased by 50 basis points during the three months ended March 31, 2025 compared to the same period in the prior year.
We seek to fund increased loan volumes by growing our core deposits, but, subject to internal policy limits on the amount of wholesale funding we may maintain, will utilize wholesale funding to fund shortfalls, if any, or provide additional liquidity. To the extent that our dependence on wholesale funding sources increases, our net interest margin would likely be negatively impacted as we may not be able to reduce the rates we pay on these deposits as quickly as we can on core deposits as rates have and may continue to decline. We continue to deploy various asset liability management strategies to manage our risk to interest rate fluctuations.
Provision for Credit Losses. The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management's evaluation, is adequate to provide coverage for all expected credit losses. Our provision for credit losses was $17.0 million for the three months ended March 31, 2025 compared to $34.5 million for the same period in 2024. The provision for credit losses is impacted by growth in our loan portfolio, recent historical and projected future economic conditions, our internal assessment of the credit quality of the loan portfolio and net charge-offs. The change in provision expense for the three month period ended March 31, 2025 as compared to the same period in 2024 is in part the result of a reduction in specific reserves associated with certain loans due to improvements in the borrowers' financial condition or payoff of a portion of, or in certain cases the full, outstanding balances. Also impacting provision expense for the three months ended March 31, 2025 were net charge-offs totaling $14.0 million compared to $16.2 million for the same period in 2024.
Noninterest Income. Our noninterest income is composed of several components, some of which vary significantly between quarterly and annual periods. Service charges on deposit accounts and other noninterest income generally reflect our growth, while investment services, fees from the origination of mortgage loans, swap fees and gains or losses on the sale of securities will often reflect financial market conditions or our asset/liability management efforts and fluctuate from period to period.
The following is a summary of our noninterest income for the three months ended March 31, 2025 and 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
2025 - 2024 |
|
|
|
|
2025 |
2024 |
Increase (Decrease) |
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Service charges on deposit accounts |
$ |
17,028 |
|
$ |
13,439 |
|
26.7% |
|
|
|
|
Investment services |
18,817 |
|
14,751 |
|
27.6% |
|
|
|
|
Insurance sales commissions |
4,674 |
|
3,852 |
|
21.3% |
|
|
|
|
Gains on mortgage loans sold, net |
2,507 |
|
2,879 |
|
(12.9)% |
|
|
|
|
Investment losses on sales of securities, net |
(12,512) |
|
— |
|
(100.0)% |
|
|
|
|
Trust fees |
9,340 |
|
7,415 |
|
26.0% |
|
|
|
|
Income from equity method investment |
20,405 |
|
16,035 |
|
27.3% |
|
|
|
|
Gain on sale of fixed assets |
210 |
|
58 |
|
>100% |
|
|
|
|
Other noninterest income: |
|
|
|
|
|
|
|
Interchange and other consumer fees |
19,996 |
|
18,032 |
|
10.9% |
|
|
|
|
Bank-owned life insurance |
9,633 |
|
10,944 |
|
(12.0)% |
|
|
|
|
Loan swap fees |
1,385 |
|
578 |
|
>100% |
|
|
|
|
SBA loan sales |
1,503 |
|
1,229 |
|
22.3% |
|
|
|
|
Gain (loss) from other equity investments |
(159) |
|
2,883 |
|
(>100%) |
|
|
|
|
Other noninterest income |
5,599 |
|
18,008 |
|
(68.9)% |
|
|
|
|
Total other noninterest income |
37,957 |
|
51,674 |
|
(26.5)% |
|
|
|
|
Total noninterest income |
$ |
98,426 |
|
$ |
110,103 |
|
(10.6)% |
|
|
|
|
Our fee categories of wealth management and service charges on deposit accounts, including interchange and other consumer fees, reflect strong year-over-year revenue growth. The increase in service charges on deposit accounts of $3.6 million, or 26.7%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is primarily attributable to revenues from commercial deposit accounts, including analysis fee revenue, as well as increased merchant and check card fees reflective of growth in our deposit accounts and the economic strength of our markets.
Income from our wealth management groups (investments, insurance and trust) is also included in noninterest income and was impacted in part during the three months ended March 31, 2025 by market volatility. For the three months ended March 31, 2025, commissions and fees from investment services at our financial advisory unit, Pinnacle Asset Management, a division of Pinnacle Bank, and fees from our wealth advisory group, PNFP Capital Markets, Inc., increased by approximately $4.1 million when compared to the three months ended March 31, 2024. At March 31, 2025 and 2024, Pinnacle Asset Management was receiving commissions and fees in connection with approximately $13.3 billion and $10.8 billion, respectively, in brokerage assets.
Revenues from the sale of insurance products by our insurance subsidiaries for the three months ended March 31, 2025 increased by $822,000 compared to the same period in the prior year. Included in insurance revenues for the three months ended March 31, 2025 was $977,000 of contingent income that was recorded in the period but based on 2024 sales production and claims experience compared to $545,000 recorded in the same period in the prior year that was based on 2023 sales production and claims experience. Additionally, at March 31, 2025 our trust department was receiving fees on approximately $7.3 billion of managed assets compared to $6.3 billion at March 31, 2024. We believe the improvement of $6.8 million, or 26.2%, in income from our wealth management lines of business during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024 is primarily attributable to an increase in capacity as we hire more revenue producers across the firm, but particularly in the areas of our most recent market extensions.
Gains on mortgage loans sold, net, consists of fees from the origination and sale of mortgage loans. These mortgage fees are for loans primarily originated in our current markets that are subsequently sold to third-party investors. Substantially all of these loan sales transfer servicing rights to the buyer. Generally, mortgage origination fees increase in lower interest rate environments and more robust housing markets and decrease in rising or higher interest rate environments and more challenging housing markets. Mortgage origination fees will fluctuate from quarter to quarter as the mortgage interest rate environment changes. Gains on mortgage loans sold, net, were $2.5 million for the three months ended March 31, 2025 compared to $2.9 million for the same period in the prior year. The reduction in mortgage fee income was primarily attributable to higher mortgage interest rates year-over-year. We hedge a portion of our mortgage pipeline as part of a mandatory delivery program whereby the hedge protects against changes in the fair value of the pipeline. The hedge is not designated as a hedge for U.S. GAAP purposes and, as such, changes in its fair value are recorded directly through the income statement. The change in the fair value of the outstanding mortgage pipeline at the end of any reporting period will directly impact the amount of gain recorded for mortgage loans held for sale during that reporting period. At March 31, 2025, the mortgage pipeline included $93.3 million in loans expected to close in 2025 compared to $91.9 million in loans at March 31, 2024 expected to close in 2024.
During the three months ended March 31, 2025, $188.5 million of investment securities were sold in our available-for-sale securities portfolio. Net losses on the sale of these investment securities were $12.5 million for the three months ended March 31, 2025. These securities were sold in an effort to reposition a portion of our securities portfolio to enhance future earning potential. During the three months ended March 31, 2024, no investment securities were sold in our available-for-sale securities portfolio.
For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, we assess whether or not we intend to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because we did not intend to sell those available-for-sale securities that were in an unrealized loss position at March 31, 2025, and it was not more-likely-than-not that we would be required to sell the securities before recovery of their amortized cost bases, which may be maturity, we determined that no write-down was necessary at March 31, 2025.
Income from equity-method investment. Income from equity-method investment is comprised solely of income from Pinnacle Bank's 49% equity-method investment in BHG. BHG is engaged in the origination of commercial and consumer loans largely to healthcare providers and other skilled professionals throughout the United States. The loans originated by BHG are either financed by secured borrowings or sold to independent financial institutions and investors.
Income from this equity-method investment was $20.4 million for the three months ended March 31, 2025 compared to $16.0 million for the same period last year. In 2019, BHG began retaining more loans on its balance sheet. For much of its history, BHG has sold the majority of the loans it originates to a network of bank purchasers through a combination of online auctions, direct sales and its direct purchase option. BHG’s decision to sell loans through its auction platform (or, recently, directly to institutional investors) or retain loans on its balance sheet is impacted by a variety of factors, including interest rates, credit experience and demand levels from the community bank network of buyers and institutional buyers to whom BHG markets these loans. In a rising or elevated rate environment, BHG may choose to sell more loans if the cost of financing loans on its balance sheet is not as attractive as a sale, either directly to asset managers or through its auction platform, while in a falling or lower rate environment it may choose to retain more loans on its balance sheet if funding alternatives for doing so are attractive. During 2024 and the first three months of 2025, BHG sold loans totaling approximately $806 million and $287 million, respectively, directly to asset managers. Since 2020, BHG has completed ten securitizations totaling approximately $3.3 billion, with the latest securitization of approximately $400 million having been completed in the first quarter of 2025. BHG also entered into funding facilities in the fourth quarter of 2022, first quarter of 2023 and third quarter of 2024 including facilities with U.S. asset managers with outstanding balances of $415 million and $455 million at March 31, 2025 and December 31, 2024, respectively, and an annualized interest rate at March 31, 2025 of approximately 7.65%. These facilities, which are secured by loans on BHG's balance sheet, represent incremental funding sources to BHG. We anticipate that BHG will complete additional securitizations in the future or otherwise establish other borrowing facilities to facilitate the retention of additional loans on BHG's balance sheet.
Income from equity-method investment is recorded net of amortization expense associated with customer lists and other intangible assets associated with Pinnacle Bank's investment in BHG of $40,000 for the three months ended March 31, 2025 compared to $59,000 for the three months ended March 31, 2024. At March 31, 2025, there were $5.7 million of these intangible assets that are expected to be amortized in lesser amounts over the next 11 years. Also included in income from equity-method investment is accretion income associated with the fair valuation of certain of BHG's liabilities of $29,000 for the three months ended March 31, 2025 compared to $39,000 for the three months ended March 31, 2024. At March 31, 2025, there were $68,000 of these liabilities that are expected to accrete into income in lesser amounts over the next two years.
During the three months ended March 31, 2025, Pinnacle Bank received dividends of $24.9 million from BHG compared to $3.6 million received during the three months ended March 31, 2024. Dividends from BHG during such periods reduced the carrying amount of Pinnacle Bank's investment in BHG, while earnings from BHG during such periods increased the carrying amount of Pinnacle Bank's investment in BHG. Profits from intercompany transactions are eliminated. Our proportionate share of earnings from BHG is included in our consolidated tax return. During the three months ended March 31, 2025 and March 31, 2024, Pinnacle Bank purchased no loans from BHG. At March 31, 2025 and December 31, 2024, there were $147.4 million and $161.7 million, respectively, of BHG joint venture program loans held by Pinnacle Bank. These loans were purchased at par from BHG by Pinnacle Bank and BHG and Pinnacle Bank share proportionately in the credit risk of the acquired loans based on the rate on the loan and the rate of the purchase. The yield on this portfolio to Pinnacle Bank is between 4.50% and 6.00% per annum. During the three months ended March 31, 2025, Pinnacle Bank sold no BHG joint venture program loans back to BHG.
For the three months ended March 31, 2025, BHG reported $240.7 million in revenues, net of substitution and prepayment losses of $132.6 million, compared to revenues of $277.3 million for the three months ended March 31, 2024, net of substitution and prepayment losses of $78.9 million. Earnings from BHG are likely to fluctuate from period-to-period. Approximately $95.0 million, or 39.5%, of BHG's revenues for the three months ended March 31, 2025 related to gains on the sale of commercial and consumer loans compared to $109.8 million, or 39.6%, for the three months ended March 31, 2024. These loans have typically been sold by BHG with no recourse to a network of community banks and other financial institutions at a premium to the par value of the loan, although the purchaser may access a BHG cash reserve account of up to 3% of the loan balance to support loan payments. BHG retains no servicing or other responsibilities related to the core product loan once sold. As a result, this gain on sale premium represents BHG's compensation for absorbing the costs to originate the loan as well as marketing expenses associated with maintaining its business model. During the three months ended March 31, 2025, BHG sold loans to its network of community banks and other financial institutions totaling $1.3 billion compared to $929 million during the three months ended March 31, 2024. At March 31, 2025 and 2024, there were $7.7 billion and $6.9 billion, respectively, of these loans previously sold by BHG that were being actively serviced by the purchasing banks. BHG, at its sole option, may also provide purchasers of these loans the ability to substitute the acquired loan with another more recently-issued BHG loan should the previously-acquired loan become at least 90-days past due as to its monthly payments. As a result, BHG maintained a liability as of March 31, 2025 and 2024 of $577.5 million and $390.6 million, respectively, that represents an estimate of the future inherent losses for the outstanding core portfolio that may be subject to future substitution due to payment default or prepayment. This liability represents 7.5% and 5.7%, respectively, of core product loans previously sold by BHG that remain outstanding as of March 31, 2025 and 2024, respectively. The change in the dollar amount of this liability and the percentage of this liability to core product loans sold by BHG that remain outstanding during the three months ended March 31, 2025 compared to the comparable period ended March 31, 2024 was principally the result of an increase in the amount of loans previously sold by BHG to financial institutions that remain outstanding, BHG's historical loss experience with these loans and BHG management's estimate of future substitution and prepayment losses.
In addition to these loans that BHG sells into its auction market or directly to institutional investors, at both March 31, 2025 and 2024, BHG reported loans that remained on BHG's balance sheet totaling $3.2 billion. A portion of these loans do not qualify for sale accounting and accordingly an offsetting secured borrowing liability has been recorded. At March 31, 2025 and 2024, BHG had $2.3 billion and $2.6 billion, respectively, of secured borrowings associated with loans held for investment. At March 31, 2025 and 2024, BHG reported an allowance for credit losses totaling $245.0 million and $306.2 million, respectively, with respect to the loans on its balance sheet. The decrease in allowance for credit losses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was principally the result of prioritizing loan sales over retaining loans, improved quality of the loans remaining on BHG's balance sheet and changes in the economic environment. Interest income and fees associated with these on-balance sheet loans amounted to $134.5 million for the three months ended March 31, 2025 compared to $140.6 million for the three months ended March 31, 2024.
Included in our other noninterest income are interchange and other consumer fees, gains from bank-owned life insurance, swap fees earned for the facilitation of derivative transactions for our clients, Small Business Administration (SBA) loan sales and other noninterest income items. Interchange revenues increased 10.9% during the three months ended March 31, 2025 as compared to the same period in 2024 primarily as a result of increased commercial credit card usage. Other noninterest income also includes changes in the cash surrender value of bank-owned life insurance (BOLI) which was $9.6 million for the three months ended March 31, 2025 compared to $10.9 million in the same period in the prior year.
The assets that support these policies are administered by the life insurance carriers and the income we recognize (i.e., increases or decreases in the cash surrender value of the policies) on these policies is dependent upon the crediting rates applied by the insurance carriers, which are subject to change at the discretion of the carriers, subject to any applicable floors. Earnings on these policies generally are not taxable. During the first quarter of 2025, we purchased an additional $100 million in BOLI policies. Loan swap fees increased $807,000 during the three months ended March 31, 2025 as compared to the same period in 2024. SBA loan sales are included in other noninterest income and increased by $274,000 during the three months ended March 31, 2025 when compared to the same period in the prior year. The change in both loan swap fees and SBA loan sales are most directly impacted by the changing market conditions during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Additionally, the carrying values of other equity investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through financial reports provided by the portfolio managers of the investment. Income related to these investments decreased $3.0 million during the three months ended March 31, 2025 when compared to the same period in the prior year. The other components of other noninterest income decreased $12.4 million during the three months ended March 31, 2025 compared to the same period in the prior year. The decrease during the three months ended March 31, 2025 is primarily the result of recognition during the first quarter of 2024 of an $11.8 million mortgage servicing right associated with our Freddie Mac Small Business Loan platform.
Noninterest Expense. Noninterest expense consists of salaries and employee benefits, equipment and occupancy expenses, other real estate expenses and other operating expenses. The following is a summary of our noninterest expense for the three months ended March 31, 2025 and 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
2025-2024 |
|
|
|
|
|
2025 |
2024 |
Increase (Decrease) |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
Salaries and employee benefits: |
|
|
|
|
|
|
|
|
|
Salaries and commissions |
$ |
112,172 |
|
$ |
97,772 |
|
14.7% |
|
|
|
|
|
|
Cash and equity incentives |
30,859 |
|
23,911 |
|
29.1% |
|
|
|
|
|
|
Employee benefits and other |
29,058 |
|
24,327 |
|
19.4% |
|
|
|
|
|
|
Total salaries and employee benefits |
172,089 |
|
146,010 |
|
17.9% |
|
|
|
|
|
|
Equipment and occupancy |
46,180 |
|
39,646 |
|
16.5% |
|
|
|
|
|
|
Other real estate expense, net |
58 |
|
84 |
|
(31.0%) |
|
|
|
|
|
|
Marketing and other business development |
8,666 |
|
6,125 |
|
41.5% |
|
|
|
|
|
|
Postage and supplies |
3,370 |
|
2,771 |
|
21.6% |
|
|
|
|
|
|
Amortization of intangibles |
1,417 |
|
1,584 |
|
(10.5%) |
|
|
|
|
|
|
Other noninterest expense: |
|
|
|
|
|
|
|
|
|
Deposit related expense |
17,720 |
|
21,246 |
|
(16.6%) |
|
|
|
|
|
|
Lending related expense |
16,095 |
|
12,693 |
|
26.8% |
|
|
|
|
|
|
Wealth management related expense |
1,183 |
|
922 |
|
28.3% |
|
|
|
|
|
|
Other noninterest expense |
8,709 |
|
11,284 |
|
(22.8%) |
|
|
|
|
|
|
Total other noninterest expense |
43,707 |
|
46,145 |
|
(5.3%) |
|
|
|
|
|
|
Total noninterest expense |
$ |
275,487 |
|
$ |
242,365 |
|
13.7% |
|
|
|
|
|
|
Total salaries and employee benefits expenses increased $26.1 million for the three months ended March 31, 2025 compared to the same period in 2024. The change in salaries and employee benefits was largely the result of an increase in our associate base in 2025 versus 2024 as well as annual merit increases effective in January 2025 and increases in cash and equity incentive accruals due to our belief at March 31, 2025 that we were likely to achieve a payout percentage under our annual cash incentive plan in 2025 that would be higher that what we believed we would payout at March 31, 2024 under our 2024 annual cash incentive plan and an increase in the percentage of our performance-based vesting restricted stock units that we currently estimate our associates will earn under our performance-based vesting restricted stock unit awards based on estimated performance through March 31, 2025. Our associate base increased to 3,595.0 full-time equivalent associates at March 31, 2025 from 3,386.5 at March 31, 2024. We expect total salary and benefit expenses for the year ended 2025 to increase when compared to the comparable period in 2024 as we continue our focus on hiring experienced bankers in all of our markets.
We believe that cash and equity incentives are a valuable tool in motivating an associate base that is focused on providing our clients effective financial advice and increasing shareholder value. As a result, and unlike many other financial institutions, all of our bank's non-commissioned associates participate in our annual cash incentive plan with a minimum targeted bonus equal to 10% of each associate's annual salary, and all of our bank's associates participate in our equity compensation plans.
Under the 2025 annual cash incentive plan, the targeted level of incentive payments requires achievement of a certain soundness threshold and a targeted level of annual earnings per common share and annual revenues (subject to certain adjustments). To the extent that the soundness threshold is met and earnings per common share and revenues are above or below the targeted amount, the aggregate incentive payments are increased or decreased. Historically, we have paid between 0% and 125% of our targeted incentives. For 2025, our annual incentive plan provides for maximum payouts of up to 125% of target, as well as increased levels of targeted percentage payouts for certain of our senior associates.
Cash incentive expense for the three months ended March 31, 2025 totaled $20.3 million compared to $13.6 million during the same prior year period due to an increased number of associates and our estimate at March 31, 2025 that we are likely to achieve a payout percentage under our annual cash incentive plan in 2025 that would be higher than what we estimated we would payout in the first quarter of 2024 under our annual cash incentive plan in 2024.
Also included in cash and equity incentives for the three months ended March 31, 2025 were approximately $4.8 million of compensation expenses related to equity-based restricted share awards compared to $4.5 million for the three months ended March 31, 2024 as well as approximately $5.7 million for the three months ended March 31, 2025 of compensation expenses related to equity-based restricted share units with either time-based or performance-based vesting criteria compared to $5.8 million for the three months ended March 31, 2024. Under our equity incentive plans, we provide a broad-based equity incentive program for all of our bank's associates, a significant percentage of which is performance-based for our senior executive officers. We believe that equity incentives provide a vehicle for all associates to become meaningful shareholders of Pinnacle Financial over an extended period of time and create a shareholder-centric culture throughout our organization.
Employee benefits and other expenses include costs associated with our 401k plan, health insurance, payroll taxes and contract labor. These expenses increased by $4.7 million for the three months ended March 31, 2025 compared to the same prior year period. These increases reflect the increase in our associate base and increased employer costs to support the health insurance plans offered to our associate base in the respective periods.
Equipment and occupancy expenses for the three months ended March 31, 2025 were $46.2 million compared to $39.6 million for the three months ended March 31, 2024. The increase during the three month period ended March 31, 2025 and 2024 is in part due to the relocation of our corporate headquarters to a new Nashville location in April 2025, the overall growth of our infrastructure, the construction and operation of additional locations and new technology implemented.
Marketing and business development expense for the three months ended March 31, 2025 was $8.7 million compared to $6.1 million for the three months ended March 31, 2024. The primary drivers of the increases in marketing and business development costs were our partnership with The Pinnacle, Nashville's newest live music venue, which opened in March 2025, and other factors including increases in both client and associate engagement expenses due to our increased headcount and market extensions. We continue to expect these costs to rise modestly in 2025 when compared to 2024 taking into account anticipated increases associated with the associates we have hired in the last twelve months and expect to hire during the remainder of 2025.
Intangible amortization expense was $1.4 million for the three months ended March 31, 2025 compared to $1.6 million for the same period in 2024. At March 31, 2025, we had $7.7 million in core deposit intangible and $9.0 million in book of business intangible assets remaining, net of amortization. These assets are being amortized on an accelerated basis which reflects the anticipated life of the underlying assets. Annual amortization expense of these intangibles is estimated to decrease from $5.4 million to $1.1 million per year over the next five years with lesser amounts for the remaining amortization period.
Other noninterest expenses, which consists primarily of deposit, lending, wealth management and administrative expenses decreased by $2.4 million for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. Deposit-related expenses were $17.7 million during the three months ended March 31, 2025 compared to $21.2 million for the three months ended March 31, 2024. Contributing to the decline in deposit-related expenses in the first quarter of 2025 was the lack of an FDIC special assessment in 2025 compared to a $7.3 million special assessment in the first quarter of 2024. Lending related expenses, which represents costs associated with loan origination as well as operation of our credit card program, were $16.1 million for three months ended March 31, 2025 compared to $12.7 million for the three months ended March 31, 2024 and were impacted by loss protection fees of $1.7 million associated with a credit default swap which began in the second quarter of 2024. Wealth management related expenses during the three months ended March 31, 2025 grew $261,000 when compared to the same period in 2024. Other noninterest expenses decreased $2.6 million during the three months ended March 31, 2025 as compared to the same period in 2024 primarily due to a reduction in state franchise taxes.
Our efficiency ratio (the ratio of noninterest expense to the sum of net interest income and noninterest income) was 59.5% for the three months ended March 31, 2025 compared to 56.6% for the three months ended March 31, 2024. Our efficiency ratio during the three months ended March 31, 2025 compared to the same period in 2024 was both positively and negatively impacted by the changes to net interest income, noninterest income and noninterest expense discussed above.
Income Taxes. During the three months ended March 31, 2025, we recorded income tax expense of $30.0 million compared to $27.3 million for the three months ended March 31, 2024. Our effective tax rate for the three months ended March 31, 2025 was 17.6% compared to 18.1% for the three months ended March 31, 2024. Our effective tax rate differs from the combined federal and state income tax statutory rate in effect of 25.00% at March 31, 2025 and 2024 primarily due to our investments in bank-qualified municipal securities, tax benefits from our real estate investment trust and municipal investment subsidiaries, participation in Tennessee's Community Investment Tax Credit program, tax benefits associated with share-based compensation and bank-owned life insurance, offset in part by the limitation on deductibility of meals and entertainment expense, non-deductible FDIC insurance premiums and non-deductible executive compensation. Our tax rate in each period was also impacted by the vesting and exercise of equity-based awards previously granted under our equity-based compensation program. For the three months ended March 31, 2025, we recognized excess tax benefits of $3.6 million compared to excess tax benefits of $2.4 million during the three months ended March 31, 2024 with respect to the vesting of equity-based awards. The increase in excess tax benefits recognized during the three months ended March 31, 2025 as compared to the same period in 2024 was a primary reason for the decrease in the effective tax rate between the three months ended March 31, 2025 and the comparable period in 2024.
Financial Condition
Our consolidated balance sheet at March 31, 2025 reflects an increase in total loans outstanding to $36.1 billion compared to $35.5 billion at December 31, 2024. Total deposits increased by $1.6 billion to $44.5 billion between December 31, 2024 and March 31, 2025. Total assets were $54.3 billion at March 31, 2025 compared to $52.6 billion at December 31, 2024.
Loans. The composition of loans at March 31, 2025 and at December 31, 2024 and the percentage (%) of each classification to total loans are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
Commercial real estate: |
|
|
|
|
|
|
|
Owner occupied |
$ |
4,594,376 |
|
|
12.7 |
% |
|
$ |
4,388,531 |
|
12.4 |
% |
Non-owner occupied |
8,338,098 |
|
|
23.1 |
% |
|
8,130,118 |
|
22.9 |
% |
Consumer real estate – mortgage |
4,977,358 |
|
|
13.8 |
% |
|
4,914,482 |
|
13.9 |
% |
Construction and land development |
3,525,860 |
|
|
9.7 |
% |
|
3,699,321 |
|
10.4 |
% |
Commercial and industrial |
14,131,312 |
|
|
39.1 |
% |
|
13,815,817 |
|
38.9 |
% |
Consumer and other |
569,742 |
|
|
1.6 |
% |
|
537,507 |
|
1.5 |
% |
Total loans |
$ |
36,136,746 |
|
|
100.0 |
% |
|
$ |
35,485,776 |
|
|
100.0 |
% |
At March 31, 2025, our loan portfolio composition had changed slightly from the composition at December 31, 2024 with commercial real estate and commercial and industrial lending generally continuing to make up the largest segments of our portfolio. At March 31, 2025, approximately 35.5% of the outstanding principal balance of our commercial real estate loans was secured by owner occupied commercial real estate properties compared to 35.1% at December 31, 2024. Owner occupied commercial real estate is similar in many ways to our commercial and industrial lending in that these loans are generally made to businesses on the basis of the cash flows of the business rather than on the valuation of the real estate. We are pursuing reduced levels of commercial real estate loans by limiting growth in these loan segments until certain benchmarks are achieved.
Lending Concentrations. We periodically analyze our loan portfolio to determine if a concentration of credit risk exists to any one or more industries. We use broadly accepted industry classification systems in order to classify borrowers into various industry classifications. We have a credit exposure (loans outstanding plus unfunded commitments) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
|
Outstanding Principal Balances |
|
Unfunded Commitments |
|
Total exposure |
|
Total Exposure at December 31, 2024 |
Lessors of nonresidential buildings |
$ |
4,675,803 |
|
|
$ |
936,311 |
|
|
$ |
5,612,114 |
|
|
$ |
5,439,776 |
|
Lessors of residential buildings |
2,366,436 |
|
|
429,337 |
|
|
2,795,773 |
|
|
2,871,227 |
|
New Housing For-Sale Builders |
580,278 |
|
|
862,720 |
|
|
1,442,998 |
|
|
1,394,494 |
|
Music Publishers |
903,837 |
|
|
431,925 |
|
|
1,335,762 |
|
|
1,114,105 |
|
Banking regulations have established guidelines for the construction ratio of less than 100% of total risk-based capital and for the non-owner occupied ratio of less than 300% of total risk-based capital. Should a bank’s ratios be in excess of these guidelines, banking regulations generally require an increased level of monitoring in these lending areas by bank management. Both ratios are calculated by dividing certain types of loan balances for each of the two categories by Pinnacle Bank’s total risk-based capital. At March 31, 2025, Pinnacle Bank’s construction and land development loans as a percentage of total risk-based capital were 65.6% compared to 70.5% at December 31, 2024. Construction and land development, non-owner occupied commercial real estate and multifamily loans as a percentage of total risk-based capital were 236.4% and 242.2% as of March 31, 2025 and December 31, 2024, respectively. Over time, we have targeted a non-owner occupied commercial real estate, multifamily and construction and land development loans to total risk-based capital ratio of less than 225% and construction and land development loans to total risk-based capital ratio of less than 70%. At September 30, 2024, Pinnacle Bank was below the target for construction and land development loans and as such began considering originating new loans using a measured underwriting process, focusing on high-quality developer clients primarily focused in the industrial and multifamily commercial real estate segments. Pinnacle Bank believes it has established appropriate controls to monitor and regulate its lending in these areas as it aims to keep the level of these loans to below the 100% and 300% thresholds.
The following table presents the maturity distribution of our loan portfolio by loan segment at March 31, 2025 according to contractual maturities of (1) one year or less, (2) after one but within five years, (3) after five but within fifteen years and (4) after fifteen years. The table also presents the portion of loans by loan segment that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less |
After one but within five years |
After five but within fifteen years |
After fifteen years |
Total |
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
296,100 |
|
$ |
2,670,008 |
|
$ |
1,146,996 |
|
$ |
481,272 |
|
$ |
4,594,376 |
|
Non-owner occupied |
2,342,277 |
|
5,438,720 |
|
480,438 |
|
76,663 |
|
8,338,098 |
|
Consumer real estate - mortgage |
128,597 |
|
505,751 |
|
326,578 |
|
4,016,432 |
|
4,977,358 |
|
Construction and land development |
1,522,793 |
|
1,808,686 |
|
130,062 |
|
64,319 |
|
3,525,860 |
|
Commercial and industrial |
3,434,744 |
|
8,330,108 |
|
1,891,913 |
|
474,547 |
|
14,131,312 |
|
Consumer and other |
189,623 |
|
326,590 |
|
12,964 |
|
40,565 |
|
569,742 |
|
Total loans |
$ |
7,914,134 |
|
$ |
19,079,863 |
|
$ |
3,988,951 |
|
$ |
5,153,798 |
|
$ |
36,136,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with fixed interest rates: |
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
205,221 |
|
$ |
1,446,702 |
|
$ |
644,576 |
|
$ |
261,138 |
|
$ |
2,557,637 |
|
Non-owner occupied |
504,768 |
|
2,643,669 |
|
189,234 |
|
44,788 |
|
3,382,459 |
|
Consumer real estate - mortgage |
67,024 |
|
328,778 |
|
68,200 |
|
1,973,100 |
|
2,437,102 |
|
Construction and land development |
136,035 |
|
286,189 |
|
53,122 |
|
46,914 |
|
522,260 |
|
Commercial and industrial |
988,128 |
|
2,658,313 |
|
1,065,917 |
|
350,591 |
|
5,062,949 |
|
Consumer and other |
81,764 |
|
157,085 |
|
11,444 |
|
40,491 |
|
290,784 |
|
Total loans |
$ |
1,982,940 |
|
$ |
7,520,736 |
|
$ |
2,032,493 |
|
$ |
2,717,022 |
|
$ |
14,253,191 |
|
|
|
|
|
|
|
Loans with variable interest rates: |
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
Owner occupied |
$ |
90,879 |
|
$ |
1,223,306 |
|
$ |
502,420 |
|
$ |
220,134 |
|
$ |
2,036,739 |
|
Non-owner occupied |
1,837,509 |
|
2,795,051 |
|
291,204 |
|
31,875 |
|
4,955,639 |
|
Consumer real estate - mortgage |
61,573 |
|
176,973 |
|
258,378 |
|
2,043,332 |
|
2,540,256 |
|
Construction and land development |
1,386,758 |
|
1,522,497 |
|
76,940 |
|
17,405 |
|
3,003,600 |
|
Commercial and industrial |
2,446,616 |
|
5,671,795 |
|
825,996 |
|
123,956 |
|
9,068,363 |
|
Consumer and other |
107,859 |
|
169,505 |
|
1,520 |
|
74 |
|
278,958 |
|
Total loans |
$ |
5,931,194 |
|
$ |
11,559,127 |
|
$ |
1,956,458 |
|
$ |
2,436,776 |
|
$ |
21,883,555 |
|
The above information does not consider the impact of scheduled principal payments. Loans totaling $1.1 billion at their contractual floor or ceiling rate at March 31, 2025 are presented as fixed interest rate loans in the table above.
Loans in Past Due Status. The following table is a summary of our loans that were past due at least 30 days but less than 89 days and 90 days or more past due as of March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2025 |
|
2024 |
Loans past due 30 to 89 days: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2025 |
|
2024 |
Commercial real estate: |
|
|
|
Owner occupied |
$ |
4,396 |
|
|
$ |
10,583 |
|
Non-owner occupied |
172 |
|
|
1,217 |
|
Consumer real estate – mortgage |
18,468 |
|
|
21,607 |
|
Construction and land development |
249 |
|
|
125 |
|
Commercial and industrial |
26,319 |
|
|
24,507 |
|
Consumer and other |
5,659 |
|
|
4,092 |
|
Total loans past due 30 to 89 days |
$ |
55,263 |
|
|
$ |
62,131 |
|
|
|
|
|
Loans past due 90 days or more: |
|
|
|
Commercial real estate: |
|
|
|
Owner occupied |
$ |
13,455 |
|
|
$ |
10,089 |
|
Non-owner occupied |
30,669 |
|
|
39,469 |
|
Consumer real estate – mortgage |
15,907 |
|
|
20,615 |
|
Construction and land development |
1,747 |
|
|
1,541 |
|
Commercial and industrial |
33,066 |
|
|
31,077 |
|
Consumer and other |
1,417 |
|
|
1,160 |
|
Total loans past due 90 days or more |
$ |
96,261 |
|
|
$ |
103,951 |
|
|
|
|
|
Ratios: |
|
|
|
Loans past due 30 to 89 days as a percentage of total loans |
0.15 |
% |
|
0.18 |
% |
Loans past due 90 days or more as a percentage of total loans |
0.27 |
% |
|
0.29 |
% |
Total loans in past due status as a percentage of total loans |
0.42 |
% |
|
0.47 |
% |
Potential Problem Loans. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $54.3 million, or 0.2% of total loans at March 31, 2025, compared to $46.9 million, or 0.1% of total loans at December 31, 2024. Potential problem loans represent loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, or worse, but not considered nonperforming loans. Potential problem loans totaling $732,000 were past due at least 30 days but less than 90 days as of March 31, 2025.
Nonperforming Assets and Modified Loans. At March 31, 2025, we had $175.2 million in nonperforming assets compared to $149.1 million at December 31, 2024. Included in nonperforming assets were $171.6 million in nonaccrual loans and $3.7 million in OREO and other nonperforming assets at March 31, 2025 and $147.8 million in nonaccrual loans and $1.3 million in OREO and other nonperforming assets at December 31, 2024. The change in nonaccrual loans at March 31, 2025 as compared to December 31, 2024 is largely the result of an increased amount of commercial and industrial and commercial real estate loans being assigned to nonaccrual status. At March 31, 2025, there were $11.8 million of modified loans to borrowers experiencing financial difficulty, of which $4.6 million were accruing as of the modification date and remain on accrual status.
Allowance for Credit Losses on Loans (ACL). The current expected credit losses (CECL) methodology requires us to estimate all expected credit losses over the remaining life of our loan portfolio. Accordingly, the ACL represents an amount that, in management's evaluation, is adequate to provide coverage for all expected future credit losses on outstanding loans as of the date of its calculation. As of March 31, 2025 and December 31, 2024, our ACL was approximately $417.5 million and $414.5 million, respectively, which our management believed to be adequate at each of the respective dates. Our ACL as a percentage of total loans was 1.16% at March 31, 2025 compared to 1.17% at December 31, 2024. The change in the ACL as a percentage of total loans since December 31, 2024 is primarily the result of overall growth in and changes to the underlying loan level attributes in certain segments of the loan portfolio as well as a reduction in specific reserves on individually evaluated loans and improvement in certain qualitative factors used in our CECL models.
Our CECL models rely largely on recent historical and projected future macroeconomic conditions to estimate future credit losses. Macroeconomic factors used in the model include the unadjusted and seasonally adjusted national unemployment rate, GDP, commercial property price index, consumer credit, commercial real estate price index, household debt ratio, household financial obligations ratio and certain home price indices. Projections of these macroeconomic factors, obtained from an independent third party, are utilized to predict quarterly rates of default.
Under the CECL methodology, the allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and for loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. At both March 31, 2025 and December 31, 2024, a reasonable and supportable period of fifteen months was utilized for all loan segments followed by a twelve month straight line reversion period to long term averages.
The following table sets forth, based on management's estimate, the allocation of the allowance for credit losses on loans to categories of loans, loan balances by category, the percentage of loans in each category to total loans and allowance for credit losses as a percentage of total loans within each loan category as of March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
December 31, 2024 |
|
ACL Allocated ($) |
Total Loans ($) |
ACL to Total Loans (%) |
Loans to Total Loans (%) |
ACL Allocated ($) |
Total Loans ($) |
ACL to Total Loans (%) |
Loans to Total Loans (%) |
Commercial real estate: |
|
|
|
|
|
|
|
|
Owner occupied |
$ |
39,102 |
|
$ |
4,594,376 |
0.85 |
% |
12.7 |
% |
$ |
36,997 |
|
$ |
4,388,531 |
0.84 |
% |
12.4 |
% |
Non-owner occupied |
69,826 |
|
8,338,098 |
0.84 |
% |
23.1 |
% |
80,654 |
|
8,130,118 |
0.99 |
% |
22.9 |
% |
Consumer real estate - mortgage |
86,447 |
|
4,977,358 |
1.74 |
% |
13.8 |
% |
80,042 |
|
4,914,482 |
1.63 |
% |
13.9 |
% |
Construction and land development |
30,461 |
|
3,525,860 |
0.86 |
% |
9.7 |
% |
33,620 |
|
3,699,321 |
0.91 |
% |
10.4 |
% |
Commercial and industrial |
183,205 |
|
14,131,312 |
1.30 |
% |
39.1 |
% |
174,799 |
|
13,815,817 |
1.27 |
% |
38.9 |
% |
Consumer and other |
8,421 |
|
569,742 |
1.48 |
% |
1.6 |
% |
8,382 |
|
537,507 |
1.56 |
% |
1.5 |
% |
|
|
|
|
|
|
|
|
|
Total |
$ |
417,462 |
|
$ |
36,136,746 |
|
1.16 |
% |
100.0 |
% |
$ |
414,494 |
|
$ |
35,485,776 |
|
1.17 |
% |
100.0 |
% |
The following table presents information related to credit losses on loans by loan segment for the three months ended March 31, 2025 and year ended December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
Net (charge-offs) recoveries |
Average loans |
Ratio of net (charge-offs) recoveries to average loans (1) |
For the three months ended March 31, 2025: |
|
|
|
|
Commercial real estate: |
|
|
|
|
Owner occupied |
$ |
2,265 |
|
$ |
(160) |
|
$ |
4,449,291 |
|
(0.01) |
% |
Non-owner occupied |
(10,838) |
|
10 |
|
8,341,899 |
|
— |
% |
Consumer real estate - mortgage |
6,632 |
|
(227) |
|
4,933,754 |
|
(0.02) |
% |
Construction and land development |
(3,161) |
|
2 |
|
3,536,199 |
|
— |
% |
Commercial and industrial |
20,663 |
|
(12,257) |
|
14,102,116 |
|
(0.35) |
% |
Consumer and other |
1,399 |
|
(1,360) |
|
493,130 |
|
(1.12) |
% |
Total |
$ |
16,960 |
|
$ |
(13,992) |
|
$ |
35,856,389 |
|
(0.16) |
% |
|
|
|
|
|
For the year ended December 31, 2024: |
|
|
|
|
Commercial real estate: |
|
|
|
|
Owner occupied |
$ |
14,734 |
|
$ |
(9,242) |
|
$ |
4,148,383 |
|
(0.22) |
% |
Non-owner occupied |
35,597 |
|
(12,630) |
|
8,025,805 |
|
(0.16) |
% |
Consumer real estate - mortgage |
8,176 |
|
(31) |
|
4,859,901 |
|
— |
% |
Construction and land development |
(5,521) |
|
(1) |
|
3,720,471 |
|
— |
% |
Commercial and industrial |
65,542 |
|
(49,712) |
|
12,534,846 |
|
(0.40) |
% |
Consumer and other |
7,061 |
|
(6,649) |
|
466,804 |
|
(1.42) |
% |
Total |
$ |
125,589 |
|
$ |
(78,265) |
|
$ |
33,756,210 |
|
(0.23) |
% |
(1) Net charge-offs for the year-to-date period ended March 31, 2025 have been annualized.
Pinnacle Financial's management assesses the adequacy of the allowance for credit losses on loans on a quarterly basis. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management's evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay the loan (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.
Based upon our evaluation of the loan portfolio, we believe the allowance for credit losses on loans to be adequate to absorb our estimate of expected future credit losses on loans outstanding at March 31, 2025. While our policies and procedures used to estimate the allowance for credit losses as well as the resultant provision for credit losses charged to operations are considered adequate by management, they are necessarily approximate and imprecise. There are factors beyond our control, such as conditions in the local and national economy, local real estate market or a particular industry or borrower which may negatively impact, materially, our asset quality and the adequacy of our allowance for credit losses and, thus, the resulting provision for credit losses.
Investments. Our investment securities portfolio, consisting primarily of U.S. Treasury securities, Federal agency bonds, mortgage-backed securities and state and municipal securities, amounted to $8.7 billion and $8.4 billion at March 31, 2025 and December 31, 2024, respectively. Our investment portfolio serves many purposes including serving as a stable source of income, as collateral for public funds deposits and as a potential liquidity source. A summary of our investment portfolio at March 31, 2025 and December 31, 2024 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
December 31, 2024 |
Weighted average life |
10.94 years |
|
11.03 years |
Effective duration* |
2.43% |
|
2.11% |
Tax equivalent yield |
4.30% |
|
4.27% |
(*) The metric is presented net of fair value hedges tied to certain investment portfolio holdings. The effective duration of the investment portfolio without the fair value hedges as of March 31, 2025 and December 31, 2024 was 6.26% and 6.18%, respectively.
Restricted Cash. Our restricted cash balances totaled approximately $114.2 million at March 31, 2025 compared to $93.6 million at December 31, 2024. This restricted cash is maintained at other financial institutions as collateral primarily for our derivative portfolio. The increase in restricted cash is attributable primarily to an increase in collateral requirements on certain derivative instruments for which the fair value has decreased. See Note 9. Derivative Instruments in the Notes to our Consolidated Financial Statements elsewhere in this Form 10-Q.
Securities Purchased with Agreement to Resell. At March 31, 2025 and December 31, 2024, we had $80.6 million and $66.4 million, respectively, in securities purchased with agreement to resell. This balance is the result of repurchase agreement transactions with financial institution counterparties. We initially secured many of these investments to allow us to deploy some of our then excess liquidity position into instruments that improved the return on funds in the then current historically low interest rate environment. The remaining repurchase agreements are set to mature in 2026.
Deposits and Other Borrowings. We had approximately $44.5 billion of deposits at March 31, 2025 compared to $42.8 billion at December 31, 2024. Our deposits consist of noninterest and interest-bearing demand accounts, savings accounts, money market accounts and time deposits. At March 31, 2025 and December 31, 2024, we estimate that we had approximately $18.2 billion and $16.5 billion, respectively, in uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit. We estimate that we had approximately $2.8 billion and $2.4 billion, respectively, in our uninsured deposits at March 31, 2025 and December 31, 2024, respectively, which were collateralized at those dates. We routinely enter into agreements with certain customers to sell certain securities under agreements to repurchase the security the following day. These agreements (which are typically associated with comprehensive treasury management programs for our clients and provide them with short-term returns for their excess funds) amounted to $264.0 million at March 31, 2025 and $230.2 million at December 31, 2024. Additionally, at both March 31, 2025 and December 31, 2024, Pinnacle Bank had borrowed $1.9 billion in advances from the Federal Home Loan Bank of Cincinnati (FHLB). The amount of FHLB advances at each date was impacted by our decision in the first half of 2023 to increase our levels of on-balance sheet liquidity in response to the then current economic environment and its impact on the banking sector following the failures of multiple high-profile banking institutions. At March 31, 2025, Pinnacle Bank had approximately $2.6 billion in additional availability with the FHLB; however, incremental borrowings are subject to applicable collateral requirements and are made in a formal request by Pinnacle Bank and the subsequent approval by the FHLB.
Generally, we have classified our funding base as either core funding or noncore funding as shown in the table below. The following table represents the balances of our deposits and other funding, the average rate paid for each type and the percentage of each type to the total at March 31, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
Average Rate Paid |
Percent |
|
December 31, 2024 |
Average Rate Paid |
Percent |
Core funding: |
|
|
|
|
|
|
|
Noninterest-bearing deposit accounts |
$ |
8,507,351 |
|
0.00% |
18.1% |
|
$ |
8,170,448 |
|
0.00% |
18.0% |
Interest-bearing demand accounts |
7,610,761 |
|
2.77% |
16.2% |
|
6,557,434 |
|
3.11% |
14.5% |
Savings and money market accounts |
12,756,825 |
|
2.59% |
27.1% |
|
11,871,478 |
|
3.18% |
26.2% |
Time deposit accounts less than $250,000 |
1,773,533 |
|
3.70% |
3.8% |
|
1,811,134 |
|
4.01% |
4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
Average Rate Paid |
Percent |
|
December 31, 2024 |
Average Rate Paid |
Percent |
Reciprocating deposits (1) |
8,607,243 |
|
3.53% |
18.3% |
|
8,868,699 |
|
4.27% |
19.5% |
Reciprocating CD accounts (1) |
757,286 |
|
4.29% |
1.6% |
|
767,711 |
|
4.67% |
1.7% |
Total core funding |
40,012,999 |
|
2.37% |
85.1% |
|
38,046,904 |
|
2.77% |
83.9% |
Noncore funding: |
|
|
|
|
|
|
|
Relationship based noncore funding: |
|
|
|
|
|
|
|
Other time deposits |
1,521,617 |
|
4.06% |
3.2% |
|
1,492,395 |
|
4.58% |
3.3% |
Securities sold under agreements to repurchase |
263,993 |
|
1.80% |
0.6% |
|
230,244 |
|
2.46% |
0.5% |
Total relationship based noncore funding |
1,785,610 |
|
3.76% |
3.8% |
|
1,722,639 |
|
4.34% |
3.8% |
Wholesale funding: |
|
|
|
|
|
|
|
Brokered deposits |
2,741,029 |
|
4.38% |
5.8% |
|
3,024,980 |
|
4.79% |
6.7% |
Brokered time deposits |
203,818 |
|
4.98% |
0.4% |
|
278,713 |
|
4.91% |
0.6% |
Federal Home Loan Bank advances |
1,886,011 |
|
4.59% |
4.0% |
|
1,874,134 |
|
4.57% |
4.1% |
|
|
|
|
|
|
|
|
Subordinated debt and other funding |
426,042 |
|
7.66% |
0.9% |
|
425,821 |
|
6.36% |
0.9% |
Total wholesale funding |
5,256,900 |
|
4.74% |
11.1% |
|
5,603,648 |
|
4.83% |
12.3% |
Total noncore funding |
7,042,510 |
|
4.50% |
14.9% |
|
7,326,287 |
|
4.71% |
16.1% |
Totals |
$ |
47,055,509 |
|
2.70% |
100.0% |
|
$ |
45,373,191 |
|
3.11% |
100.0% |
(1)The reciprocating categories consists of deposits we receive from a bank network (the IntraFi network) in connection with deposits of our customers in excess of our FDIC coverage limit that we place with the IntraFi network. Regulatory guidance defines reciprocating deposits in a portfolio of a bank of our size over and above $5.0 billion as noncore funding. However, we have witnessed no distinction in the behavior of the deposits in our portfolio over and above $5.0 billion versus the deposits up to $5.0 billion. Therefore, we have included the entire portfolio of reciprocating deposits in the table above as core funding.
As noted in the table above, our core funding as a percentage of total funding increased slightly, increasing from 83.9% at December 31, 2024 to 85.1% at March 31, 2025 and remained above internal policies. We continue to create and implement new and enhanced deposit gathering initiatives each year as part of our annual strategic planning process in recognition of the more challenging deposit gathering environment we are currently experiencing. When wholesale funding is necessary to complement our core deposit base, management determines which source is best suited to address both liquidity risk management and interest rate risk management objectives. Our Asset Liability Management Policy imposes limitations on overall wholesale funding reliance and on brokered deposit exposure specifically. Both our overall reliance on wholesale funding and exposure to brokered deposits and brokered time deposits were within those policy limitations as of March 31, 2025.
The amount of time deposits as of March 31, 2025 amounted to $4.3 billion. The following table shows our time deposits in denominations of less than $250,000 and in denominations of $250,000 and greater by category based on time remaining until maturity and the weighted average rate for each category as of March 31, 2025 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances |
|
Weighted Avg. Rate |
Denominations less than $250 |
|
|
|
Three months or less |
$ |
1,114,653 |
|
|
3.98 |
% |
Over three but less than six months |
617,100 |
|
|
3.73 |
% |
Over six but less than twelve months |
608,351 |
|
|
3.70 |
% |
Over twelve months |
276,973 |
|
|
3.61 |
% |
|
$ |
2,617,077 |
|
|
3.82 |
% |
Denominations $250 and greater |
|
|
|
Three months or less |
$ |
677,391 |
|
|
3.92 |
% |
Over three but less than six months |
379,693 |
|
|
4.03 |
% |
Over six but less than twelve months |
406,637 |
|
|
3.88 |
% |
Over twelve months |
175,456 |
|
|
3.65 |
% |
|
$ |
1,639,177 |
|
|
3.91 |
% |
Totals |
$ |
4,256,254 |
|
|
3.85 |
% |
Subordinated debt and other borrowings. Pinnacle Bank receives advances from the FHLB pursuant to the terms of various borrowing agreements which assist it in the funding of its home mortgage and commercial real estate loan portfolios. Under the borrowing agreements with the FHLB, Pinnacle Bank has pledged certain qualifying residential mortgage loans and, pursuant to a blanket lien, all qualifying commercial mortgage loans as collateral. At both March 31, 2025 and December 31, 2024, Pinnacle Bank had received advances from the FHLB totaling $1.9 billion.
At March 31, 2025, the scheduled maturities of FHLB advances and interest rates are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled maturities |
|
Weighted average interest rates (1) |
2025 |
$ |
116,250 |
|
|
4.89 |
% |
2026 |
162,500 |
|
|
4.00 |
% |
2027 |
242,090 |
|
|
4.15 |
% |
2028 |
1,375,000 |
|
|
3.97 |
% |
2029 |
— |
|
|
— |
% |
Thereafter |
11 |
|
|
2.75 |
% |
|
1,895,851 |
|
|
|
Deferred costs |
(126) |
|
|
|
Fair value hedging adjustment |
(9,714) |
|
|
|
Total Federal Home Loan Bank advances |
$ |
1,886,011 |
|
|
|
Weighted average interest rate |
|
|
4.05 |
% |
(1)Some FHLB advances include variable interest rates that could increase or decrease in the future. The table reflects rates in effect as of March 31, 2025.
We have established, or through acquisition acquired, twelve statutory business trusts which were established to issue 30-year trust preferred securities and certain other subordinated debt agreements. From time to time we, or our bank subsidiary, have issued subordinated notes to enhance our capital positions. These trust-preferred securities and subordinated notes qualify as Tier 2 capital subject to annual phase outs, with such phase outs beginning five years from maturity, as is the case with the subordinated notes we issued in September 2019 beginning in the third quarter of 2024. These instruments are outlined below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Date Established |
|
Maturity |
|
Total Debt Outstanding |
|
Interest Rate at March 31, 2025 |
|
Coupon Structure at
March 31, 2025
|
Trust preferred securities |
|
|
|
|
|
|
|
|
PNFP Statutory Trust I |
|
December 29, 2003 |
|
December 30, 2033 |
|
$ |
10,310 |
|
|
7.36 |
% |
|
3-month SOFR + 2.80% (1) |
PNFP Statutory Trust II |
|
September 15, 2005 |
|
September 30, 2035 |
|
20,619 |
|
|
5.96 |
% |
|
3-month SOFR + 1.40% (1) |
PNFP Statutory Trust III |
|
September 7, 2006 |
|
September 30, 2036 |
|
20,619 |
|
|
6.21 |
% |
|
3-month SOFR + 1.65% (1) |
PNFP Statutory Trust IV |
|
October 31, 2007 |
|
September 30, 2037 |
|
30,928 |
|
|
7.41 |
% |
|
3-month SOFR + 2.85% (1) |
BNC Capital Trust I |
|
April 3, 2003 |
|
April 15, 2033 |
|
5,155 |
|
|
7.81 |
% |
|
3-month SOFR + 3.25% (1) |
BNC Capital Trust II |
|
March 11, 2004 |
|
April 7, 2034 |
|
6,186 |
|
|
7.41 |
% |
|
3-month SOFR + 2.85% (1) |
BNC Capital Trust III |
|
September 23, 2004 |
|
September 23, 2034 |
|
5,155 |
|
|
6.96 |
% |
|
3-month SOFR + 2.40% (1) |
BNC Capital Trust IV |
|
September 27, 2006 |
|
December 31, 2036 |
|
7,217 |
|
|
6.26 |
% |
|
3-month SOFR + 1.70% (1) |
Valley Financial Trust I |
|
June 26, 2003 |
|
June 26, 2033 |
|
4,124 |
|
|
7.66 |
% |
|
3-month SOFR + 3.10% (1) |
Valley Financial Trust II |
|
September 26, 2005 |
|
December 15, 2035 |
|
7,217 |
|
|
6.05 |
% |
|
3-month SOFR + 1.49% (1) |
Valley Financial Trust III |
|
December 15, 2006 |
|
January 30, 2037 |
|
5,155 |
|
|
6.28 |
% |
|
3-month SOFR+ 1.73% (1) |
Southcoast Capital Trust III |
|
August 5, 2005 |
|
September 30, 2035 |
|
10,310 |
|
|
6.06 |
% |
|
3-month SOFR + 1.50% (1) |
|
|
|
|
|
|
|
|
|
|
|
Subordinated Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle Financial Subordinated Notes |
|
September 11, 2019 |
|
September 15, 2029 |
|
300,000 |
|
|
7.34 |
% |
|
3-month SOFR + 3.04% (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt issuance costs and fair value adjustments |
|
(6,953) |
|
|
|
|
|
Total subordinated debt and other borrowings |
|
$ |
426,042 |
|
|
|
|
|
(1) Rate transitioned to three month SOFR plus a comparable tenor spread adjustment beginning after July 1, 2023 as three month LIBOR ceased to be published effective July 1, 2023.
(2) Previously was to migrate to three month LIBOR + 2.775%, but migrated to three month SOFR + 3.04% beginning September 15, 2024 through the end of the term as three month LIBOR ceased to be published effective July 1, 2023.
Capital Resources. At March 31, 2025 and December 31, 2024, our shareholders' equity amounted to $6.5 billion and $6.4 billion, respectively. At March 31, 2025 and December 31, 2024, our capital ratios, including our bank's capital ratios, exceeded regulatory minimum capital requirements and those necessary to be considered well-capitalized under applicable federal regulations. See Note 11. Regulatory Matters in the Notes to our Consolidated Financial Statements elsewhere in this Form 10-Q for additional information regarding our capital ratios.
We and our bank periodically evaluate risk weightings and may enter into transactions or undertake procedures that may reduce risk weightings, such as during the second quarter of 2024 when we entered into a credit default swap (CDS), as more fully described in Note 9. Derivative Instruments in the Notes to our Consolidated Financial Statements elsewhere in this Form 10-Q, and implemented enhanced control processes with respect to certain commercial loans which permitted recharacterization of the loans. As a result, the loans subject to the CDS and the loans where risk ratings were able to be recharacterized now qualify for reduced risk weights pursuant to risk-based capital guidelines.
From time to time we may be required to support the capital needs of our bank. At March 31, 2025, we had approximately $242.7 million of cash at the parent company that could be used to support our bank. We believe we have various capital raising techniques available to us to provide for the capital needs of our company and bank, such as issuing subordinated debt or entering into a revolving credit facility with a financial institution. We also periodically evaluate capital markets conditions to identify opportunities to access those markets if necessary or prudent to support our capital levels.
Share Repurchase Program. On January 16, 2024, our board of directors authorized a share repurchase program for up to $125.0 million of our outstanding common stock. The authorization for this program remained in effect through March 31, 2025. On January 21, 2025, our board of directors authorized a share repurchase program for up to $125.0 million of our common stock which commenced upon expiration of the share repurchase program that expired on March 31, 2025. The new authorization is to remain in effect through March 31, 2026. We did not purchase any shares under the prior share repurchase program during 2024 or the first three months of 2025.
Dividends. Pursuant to Tennessee banking law, our bank may not, without the prior consent of the Commissioner of the TDFI, pay any dividends to us in a calendar year in excess of the total of our bank's retained net profits for that year plus the retained net profits for the preceding two years, which was $1.0 billion at March 31, 2025. Additionally, approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of Pinnacle Bank to fall below specified minimum levels. During the three months ended March 31, 2025, the bank paid dividends of $30.4 million to us which is within the limits allowed by banking regulations.
During the three months ended March 31, 2025, we paid $18.8 million in dividends to our common shareholders and $3.8 million in dividends on our Series B Preferred Stock. On April 15, 2025, our board of directors declared a $0.24 per share quarterly cash dividend to common shareholders which should approximate $18.8 million in aggregate dividend payments that are expected to be paid on May 30, 2025 to common shareholders of record as of the close of business on May 2, 2025. Additionally, on that same day, our board of directors approved a quarterly dividend of approximately $3.8 million, or $16.88 per share (or $0.422 per depositary share), on the Series B Preferred Stock payable on June 1, 2025 to shareholders of record at the close of business on May 17, 2025. The amount and timing of all future dividend payments, if any, is subject to board discretion and will depend on our earnings, capital position, financial condition and other factors, including, if necessary, our receipt of dividends from Pinnacle Bank, regulatory capital requirements, as they become known to us and receipt of any regulatory approvals that may become required as a result of our and our bank subsidiary's financial results.
Market and Liquidity Risk Management
Our objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing, and capital policies. Our Asset Liability Management Committee (ALCO) is charged with the responsibility of monitoring these policies, which are designed to ensure acceptable composition of asset/liability mix. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management.
Interest Rate Sensitivity. In the normal course of business, we are exposed to market risk arising from fluctuations in interest rates. ALCO measures and evaluates the interest rate risk so that we can meet customer demands for various types of loans and deposits. ALCO determines the most appropriate amounts of on-balance sheet and off-balance sheet items. Measurements which we use to help us manage interest rate sensitivity include an earnings simulation model and an economic value of equity (EVE) model.
Our interest rate sensitivity modeling incorporates a number of assumptions for both earnings simulation and EVE, including loan and deposit re-pricing characteristics, the rate of loan prepayments, etc. ALCO periodically reviews these assumptions for accuracy based on historical data and future expectations. Our ALCO policy requires that the base scenario assumes rates remain flat and is the scenario to which all others are compared in order to measure the change in net interest income and EVE. Policy limits are applied to the results of certain modeling scenarios. While the primary policy scenarios focus on a twelve month time frame for the earnings simulations model, longer time horizons are also modeled. All policy scenarios assume a static volume forecast where the balance sheet is held constant, although other scenarios are modeled.
Earnings simulation model. We believe interest rate risk is best measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with forecasts of interest rates for the next 12 months and are combined with other factors in order to produce various earnings simulations over that same 12-month period. To limit interest rate risk, we have policy guidelines for our earnings at risk which seek to limit the variance of net interest income in both gradual and instantaneous changes to interest rates. For instantaneous upward and downward changes in rates from management's flat interest rate forecast over the next twelve months, assuming a static balance sheet, the following estimated changes are calculated:
|
|
|
|
|
|
|
|
|
|
Estimated % Change in Net Interest Income Over 12 Months |
|
March 31, 2025 |
March 31, 2024 |
Instantaneous Rate Change |
|
|
300 bps increase |
(1.72)% |
2.76% |
200 bps increase |
(0.52)% |
2.31% |
100 bps increase |
0.02% |
1.41% |
100 bps decrease |
0.56% |
(1.42)% |
200 bps decrease |
0.79% |
(2.01)% |
300 bps decrease |
(0.92)% |
(3.00)% |
While an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these scenarios, we believe that a gradual shift in interest rates would have a more modest impact. Further, the earnings simulation model does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, hedging activities we might take and changing product spreads that could mitigate any potential adverse impact of changes in interest rates.
The change in interest rate sensitivity between March 31, 2025 and March 31, 2024 set out in the table above is due to factors impacting both the asset and liability side of the balance sheet. Over the past year, securities with an effective variable rate have increased as a percentage of interest-earning assets while non-maturity deposits indexed to the federal funds rate increased as a percentage of interest-bearing liabilities. These two factors were the primary drivers behind reduced asset sensitivity and a more neutral interest rate position at March 31, 2025 as compared to March 31, 2024.
At March 31, 2025, our earnings simulation model indicated we were in compliance with our policies for interest rate scenarios for which we model as required by our board approved Asset Liability Policy.
Economic value of equity model. While earnings simulation modeling attempts to determine the impact of a changing rate environment to our net interest income, our EVE model measures estimated changes to the economic values of our assets, liabilities and off-balance sheet items as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case EVE. We then shock rates as prescribed by our Asset Liability Policy and measure the sensitivity in EVE values for each of those shocked rate scenarios versus the base case. The Asset Liability Policy sets limits for those sensitivities. At March 31, 2025, our EVE modeling calculated the following estimated changes in EVE due to instantaneous upward and downward changes in rates:
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
March 31, 2024 |
Instantaneous Rate Change |
|
|
300 bps increase |
(16.37)% |
(19.25)% |
200 bps increase |
(10.80)% |
(13.30)% |
100 bps increase |
(5.28)% |
(6.88)% |
100 bps decrease |
5.55% |
7.43% |
200 bps decrease |
(2.28)% |
(1.18)% |
300 bps decrease |
(4.16)% |
(1.49)% |
While an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these scenarios, we believe that a gradual shift in interest rates would have a more modest impact. Since EVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, EVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, hedging activities we might take and changing product spreads that could mitigate the adverse impact of changes in interest rates.
At March 31, 2025, our EVE model indicated we were in compliance with our policies for all interest rate scenarios for which we model as required by our board approved Asset Liability Policy.
Most likely earnings simulation models. We also analyze a most-likely earnings simulation scenario that projects the expected change in rates based on a forward yield curve adopted by management using expected balance sheet volumes forecasted by management. Separate growth assumptions are developed for loans, investments, deposits, etc. Other interest rate scenarios analyzed by management may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements to further analyze or stress our balance sheet under various interest rate scenarios. Each scenario is evaluated by management. These processes assist management to better anticipate our financial results and, as a result, management may determine the need to invest in other operating strategies and tactics which might enhance results or better position the firm's balance sheet to reduce interest rate risk going forward.
Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates. Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising or elevated interest rates. ALCO reviews each of the above interest rate sensitivity analyses along with several different interest rate scenarios as part of its responsibility to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing and capital policies.
Management's model governance, model implementation and model validation processes and controls are subject to review in our regulatory examinations to ensure they are in compliance with the most recent regulatory guidelines and industry and regulatory practices. Management utilizes a respected, sophisticated third party asset liability modeling software to help ensure implementation of management's assumptions into the model are processed as intended in a robust manner. That said, there are numerous assumptions regarding financial instrument behavior that are integrated into the model. The assumptions are formulated by combining observations gleaned from our historical studies of financial instruments and our best estimations of how these instruments may behave in the future given changes in economic conditions, technology, etc. These assumptions may prove to be inaccurate. Additionally, given the large number of assumptions built into our asset liability modeling software, it is difficult, at best, to compare our results to other firms.
ALCO may determine that Pinnacle Financial should over time become more or less asset or liability sensitive depending on the underlying balance sheet circumstances and our conclusions as to anticipated interest rate fluctuations in future periods. Our "most likely" rate forecast is based primarily on information we acquire from a service which includes a consensus forecast of numerous interest rate benchmarks. We may implement additional actions designed to achieve our desired sensitivity position which could change from time to time.
We have in the past used, and may in the future continue to use, derivative financial instruments as one tool to manage our interest rate sensitivity, including in our mortgage lending program, while continuing to meet the credit and deposit needs of our customers. For further details on the derivatives we currently use, see Note 9. Derivative Instruments in the Notes to our Consolidated Financial Statements elsewhere in this Form 10-Q.
We may also enter into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, even though they are not designated as hedging instruments.
Liquidity Risk Management. The purpose of liquidity risk management is to ensure that there are sufficient cash flows to satisfy loan demand, deposit withdrawals, and our other needs. Traditional sources of liquidity for a bank include asset maturities and growth in core deposits. A bank may achieve its desired liquidity objectives from the management of its assets and liabilities and by internally generated funding through its operations. Funds invested in marketable instruments that can be readily sold and the continuous maturing of other earning assets are sources of liquidity from an asset perspective. The liability base provides sources of liquidity through attraction of increased deposits and borrowing funds from various other institutions.
To assist in determining the adequacy of our liquidity, we perform a variety of liquidity stress tests including idiosyncratic, systemic and combined scenarios for both moderate and severe events. Liquidity is defined as the ability to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining our ability to meet the daily cash flow requirements of our customers, both depositors and borrowers. We seek to maintain a sufficiently liquid asset balance to ensure our ability to meet our obligations.
The amount of the appropriate minimum liquid asset balance is determined through severe liquidity stress testing as measured by our liquidity coverage ratio calculation. At March 31, 2025, we were in compliance with our liquidity coverage ratio.
Changes in interest rates also affect our liquidity position. We currently price deposits in response to market rates, and our management intends to continue this policy. If deposits are not priced in response to market rates, a loss of deposits could occur which would negatively affect our liquidity position.
Scheduled loan payments are a relatively stable source of funds, but loan payoffs and deposit flows fluctuate significantly, being influenced by interest rates, general economic conditions and competition. Additionally, debt security investments are subject to prepayment and call provisions that could accelerate their payoff prior to stated maturity. Our financial advisors attempt to price our deposit products to meet our asset/liability objectives consistent with local market conditions. Our ALCO is responsible for monitoring our ongoing liquidity needs. Our regulators also monitor our liquidity and capital resources on a periodic basis.
As noted previously, Pinnacle Bank is a member of the FHLB and, pursuant to a borrowing agreement with the FHLB, has pledged certain assets pursuant to a blanket lien. As such, Pinnacle Bank may use the FHLB as a source of liquidity depending on the firm's ALCO strategies. Additionally, we may pledge additional qualifying assets or reduce the amount of pledged assets with the FHLB to increase or decrease our borrowing capacity at the FHLB. At March 31, 2025, we believe we had an estimated $2.6 billion in additional borrowing capacity with the FHLB; however, incremental borrowings are made via a formal request by Pinnacle Bank and the subsequent approval by the FHLB.
Pinnacle Bank also has accommodations with upstream correspondent banks for unsecured short-term advances which aggregate $105.0 million. These accommodations have various covenants related to their term and availability, and in most cases must be repaid within less than one month. There were no outstanding borrowings under these agreements at March 31, 2025, or during the period then ended, although we test the availability of these accommodations periodically. Pinnacle Bank also had approximately $6.5 billion in available Federal Reserve discount window lines of credit at March 31, 2025.
At March 31, 2025, excluding reciprocating time and money market deposits issued through the IntraFi network, we had approximately $2.9 billion in brokered deposits and $15.4 billion in uninsured and uncollateralized deposits. Historically, we have issued brokered certificates through several different brokerage houses based on competitive bid.
Banking regulators have defined additional liquidity guidelines, through the issuance of the Basel III Liquidity Coverage Ratio (LCR) and the Modified LCR. These regulatory guidelines became effective January 2015 with phase in over subsequent years and require these large institutions to follow prescriptive guidance in determining an absolute level of a high quality liquid asset (HQLA) buffer that must be maintained on their balance sheets in order to withstand a potential liquidity crisis event. Although Pinnacle Financial follows the principles outlined in the Interagency Policy Statement on Liquidity Risk Management, issued March 2010, to determine its HQLA buffer, Pinnacle Financial is not currently subject to these regulations. However, these formulas could eventually be imposed on smaller banks, such as Pinnacle Bank, and require an increase in the absolute level of liquidity on our balance sheet, which could result in lower net interest margins for us in future periods.
At March 31, 2025, we had no individually significant commitments for capital expenditures. However, we believe the relocation of our headquarters which became official in 2025, as a whole, constitutes a significant commitment for capital expenditure. We expect overall capital expenditures related to the relocation to approximate $47 million, inclusive of amounts we have already incurred, substantially all of which we expect to incur through mid-year 2025. As of March 31, 2025, we had incurred $43.6 million of capital expenditure for the relocation project. Additionally, expansion of our locations, including non-branch locations, will increase over an extended period of time across our footprint, including the markets to which we have recently expanded, and certain of our locations will be in need of required renovations. In future periods, these expansions and renovation projects may lead to additional equipment and occupancy expenses as well as related increases in salaries and benefits expense. In addition to the above noted expenditures, if we were to breach the terms of one of the leases entered into in the sale-leaseback transaction completed in the second quarter of 2023 and the counterparty terminated the lease in accordance with its terms, we may be forced to expend significant amounts of capital expenditures to lease, procure and build or renovate a suitable replacement office. Additionally, we expect we will continue to incur costs associated with planned technology improvements to enhance the infrastructure of our firm.
Our short-term borrowings (borrowings which mature within the next fiscal year) consist primarily of securities sold under agreements to repurchase (these agreements are typically associated with comprehensive treasury management programs for our clients and provide them with short-term returns on their excess funds).
We have certain contractual obligations as of March 31, 2025, which by their terms have a contractual maturity and termination dates subsequent to March 31, 2025. Each of these commitments is noted throughout Item 2. Management's Discussion and Analysis. Our management believes that we have adequate liquidity to meet all known contractual obligations and unfunded commitments, including loan commitments and reasonable borrower, depositor and creditor requirements over the next twelve months and that we will have adequate liquidity to meet our obligations over a longer-term as well.
Off-Balance Sheet Arrangements. At March 31, 2025, we had outstanding standby letters of credit of $475.6 million and unfunded loan commitments outstanding of $15.7 billion. Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, Pinnacle Bank has the ability to liquidate securities available-for-sale, or on a short-term basis, to borrow and purchase federal funds from other financial institutions.
We follow the same credit policies and underwriting practices when making these commitments as we do for on-balance sheet instruments. Each customer's creditworthiness is evaluated on a case-by-case basis and the amount of collateral obtained, if any, is based on management's credit evaluation of the customer. However, should the commitments be drawn upon and should our customers default on their resulting obligation to us, our maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those instruments. At March 31, 2025, we had accrued reserves of $12.5 million related to expected credit losses associated with off-balance sheet commitments.
Recently Adopted Accounting Pronouncements
See "Part I - Item 1. Consolidated Financial Statements - Note. 1 Summary of Significant Accounting Policies" of this Form 10-Q for further information.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item 3 is included on pages 39 through 59 of Part I - Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Pinnacle Financial maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to Pinnacle Financial's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Pinnacle Financial carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that Pinnacle Financial's disclosure controls and procedures were effective as of the end of the period covered by this report in ensuring that the information required to be disclosed by Pinnacle Financial in the reports it files or submits under the Exchange Act is (i) accumulated and communicated to Pinnacle Financial's management (including the Principal Executive Officer and Principal Financial Officer) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
Changes in Internal Controls
No change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) or 15d-(f)) occurred during the fiscal quarter ended March 31, 2025 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various legal proceedings to which Pinnacle Financial or a subsidiary of Pinnacle Financial is a party arise from time to time in the normal course of business. There are no material pending legal proceedings to which Pinnacle Financial or a subsidiary of Pinnacle Financial is a party or of which any of their property is the subject.
ITEM 1A. RISK FACTORS
Investing in Pinnacle Financial involves various risks which are particular to our company, our industry and our market area. We believe all significant risks to investors in Pinnacle Financial have been outlined in Part II, Item 1A of the Form 10-K. However, other risks may prove to be important in the future, and new risks may emerge at any time. We cannot predict with certainty all potential developments which could materially affect our financial performance or condition. There has been no material change to our risk factors as previously disclosed in the Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table discloses shares of our common stock repurchased during the three months ended March 31, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total Number of Shares Repurchased (1)(2) |
|
Average Price Paid Per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
|
Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs |
January 1, 2025 to January 31, 2025 |
|
65,470 |
|
|
$ |
115.45 |
|
|
— |
|
|
125,000,000 |
|
February 1, 2025 to February 28, 2025 |
|
60,012 |
|
|
113.14 |
|
|
— |
|
|
125,000,000 |
|
March 1, 2025 to March 31, 2025 |
|
46,317 |
|
|
99.56 |
|
|
— |
|
|
125,000,000 |
|
Total |
|
171,799 |
|
|
$ |
110.46 |
|
|
— |
|
|
125,000,000 |
|
______________________
(1)During the quarter ended March 31, 2025, 498,643 shares of restricted stock, restricted stock units and performance stock units previously awarded to certain of the participants in our equity incentive plans vested. We withheld 171,799 shares of common stock to satisfy tax withholding requirements associated with the vesting of these awards.
(2)On January 16, 2024, our board of directors authorized a share repurchase program for up to $125.0 million of our common stock which commenced upon the expiration of the previously authorized share repurchase program that expired on March 31, 2024. The authorization for this program remained in effect through March 31, 2025. On January 21, 2025, our board of directors authorized a share repurchase program for up to $125.0 million of our common stock which commenced upon the expiration of the previously authorized share repurchase program that expired on March 31, 2025. The new authorization is to remain in effect through March 31, 2026. Share repurchases may be made from time to time, on the open market or in privately negotiated transactions, at the discretion of the management of Pinnacle Financial, after the board of directors of Pinnacle Financial authorizes a repurchase program. The approved share repurchase program does not obligate Pinnacle Financial to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended or discontinued at any time. Stock repurchases generally are effected through open market purchases, and may be made through unsolicited negotiated transactions. The timing of these repurchases will depend on market conditions and other requirements. Pinnacle Financial did not repurchase any shares under its share repurchase program during the three months ended March 31, 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
During the quarter ended March 31, 2025, no director or officer of the Company adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" as such terms are defined in Item 408(a) and (c) of Regulation S-K.
ITEM 6. EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document |
101.SCH* |
|
Inline XBRL Schema Documents |
101.CAL* |
|
Inline XBRL Calculation Linkbase Document |
101.LAB* |
|
Inline XBRL Label Linkbase Document |
101.PRE* |
|
Inline XBRL Presentation Linkbase Document |
101.DEF* |
|
Inline XBRL Definition Linkbase Document |
104 |
|
The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (included in Exhibit 101) |
|
|
|
# |
|
Management contract or compensatory plan or arrangement. |
* |
|
Filed herewith. |
** |
|
Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
PINNACLE FINANCIAL PARTNERS, INC. |
|
|
|
May 9, 2025 |
|
/s/ M. Terry Turner |
|
|
M. Terry Turner |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
May 9, 2025 |
|
/s/ Harold R. Carpenter |
|
|
Harold R. Carpenter |
|
|
Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
EX-3.1
2
exhibit31-2025charteramend.htm
EX-3.1
Document
Exhibit 3.1
(Restated for SEC filing purposes only)
AMENDED AND RESTATED CHARTER
OF
PINNACLE FINANCIAL PARTNERS, INC.
Under the authority of Section 48-20-101, et. al., of the Tennessee Business Corporation Act, as amended, the undersigned corporation adopts the following Amended and Restated Charter:
Article 1. Name
The name of the Corporation is: “Pinnacle Financial Partners, Inc.”
Article 2. Capital Stock
(a) The total number of shares of capital stock which the Corporation is authorized to issue is one hundred ninety million (190,000,000) shares, divided into one hundred eighty million (180,000,000) shares of common stock, $1.00 par value (the “Common Stock”), and ten million (10,000,000) shares of preferred stock no par value (the “Preferred Stock”).
(b) The Board of Directors of the Corporation is authorized, subject to limitations prescribed by law and the provisions of this Article, to provide for the issuance of the shares of Preferred Stock in series, and by filing an article of amendment pursuant to the applicable law of the State of Tennessee to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and relative rights of the shares of each such series and the qualifications, or restrictions thereof. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:
(i) The number of shares constituting that series and the distinctive designation of that series;
(ii) The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payments of dividends on shares of that series;
(iii) Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption rates;
(vi) Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;
(vii) The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and
(viii) Any other relative rights, preferences and limitations of that series.
(c) Fixed Rate Cumulative Perpetual Preferred Stock, Series A
Exhibit 3.1
(Restated for SEC filing purposes only)
A. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series A” (the “Designated Preferred Stock”). The authorized number of shares of Designated Preferred Stock shall be 95,000.
B. Standard Provisions. The Standard Provisions contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of these Articles of Amendment to the same extent as if such provisions had been set forth in full herein.
C. Definitions. The following terms are used in these Articles of Amendment (including the Standard Provisions in Annex A hereto) as defined below:
(a) “Common Stock” means the common stock, par value $1.00 per share, of the Corporation.
(b) “Dividend Payment Date” means February 15, May 15, August 15 and November 15 of each year.
(c) “Junior Stock” means the Common Stock, and any other class or series of stock of the Corporation the terms of which expressly provide that it ranks junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation.
(d) “Liquidation Amount” means $1,000 per share of Designated Preferred Stock.
(e) “Minimum Amount” means $23,750,000.
(f) “Parity Stock” means any class or series of stock of the Corporation (other than Designated Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).
(g) “Signing Date” means the Original Issue Date.
D. Certain Voting Matters. Holders of shares of Designated Preferred Stock will be entitled to one vote for each such share on any matter on which holders of Designated Preferred Stock are entitled to vote, including any action by written consent.
(d) 6.75% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series B
A. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the corporation a series of preferred stock, no par value per share, designated as the “6.75% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series B” (hereinafter called “Series B Preferred Stock”). The authorized number of shares of Series B Preferred Stock shall be 225,000, and such shares shall have a liquidation preference of $1,000 per share. The number of shares constituting the Series B Preferred Stock may be increased from time to time by resolution of the Board of Directors in accordance with the Charter (as then in effect), the Bylaws (as then in effect), and applicable law up to the maximum number of shares of Preferred Stock authorized to be issued under the Charter (as then in effect) less all shares at the time authorized of any other series of Preferred Stock or decreased from time to time by a resolution of the Board of Directors in accordance with the Charter (as then in effect), the Bylaws (as then in effect), and applicable law but not below the number of shares of Series B Preferred Stock then outstanding. Shares of Series B Preferred Stock shall be dated the date of issue, which date shall be referred to herein and in the Standards Provisions (as defined in Section 2(d)(B)) as the “original issue date.” Shares of outstanding Series B Preferred Stock that are redeemed, purchased or otherwise acquired by the corporation shall, after such redemption, purchase or acquisition, be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series until such shares are once more designated as part of a particular series by the Board of Directors. The corporation shall have the authority to issue fractional shares of Series B Preferred Stock.
Exhibit 3.1
(Restated for SEC filing purposes only)
B. Standard Provisions. The Standard Provisions contained in Annex B (the “Standard Provisions”) attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of these Articles of Amendment to the same extent as if such provisions had been set forth in full herein.
Article 3. Registered Office; Registered Agent
The name and address of the Registered Agent and the Registered Office of the Corporation are: Robert A. McCabe, Jr., 21 Platform Way South, Suite 2300, Nashville, (Davidson County) Tennessee 37203.
Article 4. Incorporator
The name and address of the incorporator are:
M. Terry Turner
812 Jones Parkway
Brentwood, Tennessee 37027
Article 5. Principal Office
The mailing address of the principal office of the corporation is: 21 Platform Way South, Suite 2300, Nashville, TN 37203.
Article 6. Purpose
The Corporation is for profit.
Article 7. Board of Directors
(a) The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors. Prior to the annual meeting of shareholders in 2015, the directors of the corporation shall be divided into three classes: Class I, Class II and Class III. Each director elected prior to the annual meeting of shareholders in 2015 shall serve for the full term to which such director was elected. Following the expiration of the term of the Class III directors in 2015, the Class I directors in 2016 and the Class II directors in 2017, the directors in each such class shall be elected for a term expiring at the next annual meeting of shareholders and until their successors are elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office with or without cause. Commencing with the annual meeting of shareholders in 2017, the classification of the Board of Directors shall be eliminated, and all directors shall be elected at each annual meeting of shareholders for terms expiring at the next annual meeting of shareholders. Each director shall hold office for the term for which the director is elected or appointed and until the director's successor shall be elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office with or without cause.
(b) Each nominee for director shall be elected by the affirmative vote of a majority of the votes cast with respect to the director at any meeting of shareholders for the election of directors at which a quorum is present, provided that if, as of (a) the expiration of the time fixed under Section 3.9 of the corporation's Bylaws (or any successor provision) for advance notice of nomination of a director by a shareholder or (b) in the absence of any such provision, a date that is fourteen (14) days in advance of the date the corporation files its definitive proxy statement for the applicable meeting of shareholders at which directors are to be elected (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission, the number of nominees exceeds the number of positions on the Board of Directors to be filled by election at the meeting, the directors shall be elected by a plurality of the votes cast in person or by proxy at the meeting at which a quorum is present.
Exhibit 3.1
(Restated for SEC filing purposes only)
For purposes of this Article 7, a majority of the votes cast means that the number of shares voted “for” a nominee exceeds the shares voted “against” that nominee; abstentions and broker non-votes shall not be deemed to be votes cast for purposes of tabulating the vote.
Article 8. Bylaws; Number of Directors
Except as provided in paragraph (b) of this Article 8, the Board of Directors shall have the right to adopt, amend or repeal the bylaws of the Corporation by the affirmative vote of a majority of all directors then in office, and the shareholders shall have such right by the affirmative vote of a majority of the issued and outstanding shares of the Corporation entitled to vote in an election of directors.
Article 9. Removal of Directors
(a) The entire Board of Directors or any individual director may be removed without cause, at any shareholders' meeting with respect to which notice of such purpose has been given, only by the affirmative vote of the holders of at least a majority of the issued and outstanding shares of the Corporation entitled to vote in an election of directors.
(b) The entire Board of Directors or any individual director may be removed with cause upon the affirmative vote of a majority of all directors then in office or, at any shareholders' meeting with respect to which notice of such purpose has been given, by the affirmative vote of the holders of at least a majority of the issued and outstanding shares of the Corporation entitled to vote in an election of directors.
(c) For purposes of this Article 9, a director of the Corporation may be removed for cause if (i) the director has been convicted of a felony; (ii) any bank regulatory authority having jurisdiction over the Corporation requests or demands the removal; or (iii) at least two-thirds (2/3) of the directors of the Corporation then in office, excluding the director to be removed, determine that the director's conduct has been inimical to the best interests of the Corporation.
Article 10. Liability of Directors
(a) A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages, for breach of any duty as a director, except for liability for:
(i) a breach of the director's duty of loyalty to the Corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
(iii) the types of liability set forth in Section 48-18-304 of the Tennessee Business Corporation Act dealing with unlawful distributions of corporate assets to shareholders; or
(b) Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
Article 11. Shareholder Action by Written Consent
Any action required or permitted by the provisions of the Tennessee Business Corporation Act (the “Act”) to be taken at a shareholders' meeting may be taken without a meeting in accordance with Section 48-17-104 of the Act if the action is taken by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted. Notice of such action without a meeting by less than unanimous written consent shall be given within ten (10) days of the taking of such action to those shareholders of record on the date when the written consent is first executed and whose shares were not represented on the written consent.
Exhibit 3.1
(Restated for SEC filing purposes only)
Article 12. Indemnification
The Corporation shall, to the fullest extent permitted by the provisions of the Tennessee Business Corporation Act, as the same may be amended and supplemented, indemnify its directors and officers, and may indemnify all other persons whom it shall have power to indemnify under the Act from and against any and all of the expenses, liabilities, or other matters referred to in or covered by the Act. Any indemnification effected under this provision shall not be deemed exclusive of rights to which those indemnified may be entitled under any Bylaw, vote of shareholders or disinterested directors, or otherwise, both as to action in their official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Article 13. Reserved.
Article 14. Factors Considered in Business Transactions
The Board of Directors, when evaluating any offer of another party (i) to make a tender offer or exchange offer for any equity security of the Corporation, (ii) to merge or consolidate any other corporation with the Corporation, or (iii) to purchase or otherwise acquire all or substantially all of the assets of the Corporation, shall, in determining what is in the best interests of the Corporation and its shareholders, give due consideration to all relevant factors, including without limitation: (A) the short-term and long-term social and economic effects on the employees, customers, shareholders and other constituents of the Corporation and its subsidiaries, and on the communities within which the Corporation and its subsidiaries operate (it being understood that any subsidiary bank of the Corporation is charged with providing support to and being involved in the communities it serves); and (B) the consideration being offered by the other party in relation to the then-current value of the Corporation in a freely negotiated transaction and in relation to the Board of Directors' then-estimate of the future value of the Corporation as an independent entity.
Article 15. Savings Clause
Should any provision of this Charter, or any clause hereof, be held to be invalid, illegal or unenforceable, in whole or in part, the remaining provisions and clauses of this Charter shall remain valid and fully enforceable.
Article 16. Effective Date
The Amended and Restated Charter is to be effective upon filing with the Secretary of State of Tennessee.
Exhibit 3.1
(Restated for SEC filing purposes only)
ANNEX A
STANDARD PROVISIONS
Section 1. General Matters. Each share of Designated Preferred Stock shall be identical in all respects to every other share of Designated Preferred Stock. The Designated Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Certificate of Designations. The Designated Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Corporation.
Section 2. Standard Definitions. As used herein with respect to Designated Preferred Stock:
(a)“Applicable Dividend Rate” means (i) during the period from the Original Issue Date to, but excluding, the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 5% per annum and (ii) from and after the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 9% per annum.
(b)“Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.
(c)“Articles of Amendment” means the Articles of Amendment filed with the Secretary of State of the State of Tennessee by Pinnacle Financial Partners, Inc. creating the Designated Preferred Stock.
(d)“Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Corporation's stockholders.
(e)“Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.
(f)“Bylaws” means the bylaws of the Corporation, as they may be amended from time to time.
(g)“Certificate of Designations” means the Articles of Amendment, of which these Standard Provisions form a part, as may be amended from time to time.
(h)“Charter” means the Corporation's certificate or articles of incorporation, articles of association, or similar organizational document.
(i)“Dividend Period” has the meaning set forth in Section 3(a).
(j)“Dividend Record Date” has the meaning set forth in Section 3(a).
(k)“Liquidation Preference” has the meaning set forth in Section 4(a).
(l)“Original Issue Date” means the date on which shares of Designated Preferred Stock are first issued.
(m)“Preferred Director” has the meaning set forth in Section 7(b).
(n)“Preferred Stock” means any and all series of preferred stock of the Corporation, including the Designated Preferred Stock.
(o)“Qualified Equity Offering” means the sale and issuance for cash by the Corporation to persons other than the Corporation or any of its subsidiaries after the Original Issue Date of shares of perpetual Preferred Stock, Common Stock or any combination of such stock, that, in each case, qualify as and may be included in Tier 1 capital of the Corporation at the time of issuance under the applicable risk-based capital guidelines of the Corporation's Appropriate Federal Banking Agency (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly announced, on or prior to October 13, 2008).
Exhibit 3.1
(Restated for SEC filing purposes only)
(p)“Share Dilution Amount” has the meaning set forth in Section 3(b).
(q)“Standard Provisions” mean these Standard Provisions that form a part of the Certificate of Designations relating to the Designated Preferred Stock.
(r)“Successor Preferred Stock” has the meaning set forth in Section 5(a).
(s)“Voting Parity Stock” means, with regard to any matter as to which the holders of Designated Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these Standard Provisions that form a part of the Certificate of Designations, any and all series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 3. Dividends.
(a)Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly authorized committee of the Board of Directors, but only out of assets legally available therefor, cumulative cash dividends with respect to each Dividend Period (as defined below) at a rate per annum equal to the Applicable Dividend Rate on (i) the Liquidation Amount per share of Designated Preferred Stock and (ii) the amount of accrued and unpaid dividends for any prior Dividend Period on such share of Designated Preferred Stock, if any. Such dividends shall begin to accrue and be cumulative from the Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the first such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date. In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date will be postponed to the next day that is a Business Day and no additional dividends will accrue as a result of that postponement. The period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period”, provided that the initial Dividend Period shall be the period from and including the Original Issue Date to, but excluding, the next Dividend Payment Date.
Dividends that are payable on Designated Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.
Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be payable to holders of record of Designated Preferred Stock as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of the Certificate of Designations).
(b)Priority of Dividends. So long as any share of Designated Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock, subject to the immediately following
Exhibit 3.1
(Restated for SEC filing purposes only)
paragraph in the case of Parity Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred Stock on the applicable record date). The foregoing limitation shall not apply to (i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset the Share Dilution Amount (as defined below) pursuant to a publicly announced repurchase plan) and consistent with past practice, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount; (ii) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock or Parity Stock in the ordinary course of its business; (iii) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary; (iv) any dividends or distributions of rights or Junior Stock in connection with a stockholders' rights plan or any redemption or repurchase of rights pursuant to any stockholders' rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case, solely to the extent required pursuant to binding contractual agreements entered into prior to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock. “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with generally accepted accounting principles in the United States, and as measured from the date of the Corporation's consolidated financial statements most recently filed with the Securities and Exchange Commission prior to the Original issue Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to such Dividend Payment Date) in full upon Designated Preferred Stock and any shares of Parity Stock, all dividends declared on Designated Preferred Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of Designated Preferred Stock (including, if applicable as provided in Section 3(a) above, dividends on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) (subject to their having been declared by the Board of Directors or a duly authorized committee of the Board of Directors out of legally available funds and including, in the case of Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each other. If the Board of Directors or a duly authorized committee of the Board of Directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of Designated Preferred Stock prior to such Dividend Payment Date.
Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and holders of Designated Preferred Stock shall not be entitled to participate in any such dividends.
Section 4. Liquidation Rights.
Exhibit 3.1
(Restated for SEC filing purposes only)
(a)Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, subject to the rights of any creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount), whether or not declared, to the date of payment (such amounts collectively, the “Liquidation Preference”).
(b)Partial Payment. If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.
(c)Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d)Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Designated Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 5. Redemption.
(a)Optional Redemption. Except as provided below, the Designated Preferred Stock may not be redeemed prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date. On or after the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption.
Notwithstanding the foregoing, prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption; provided that (x) the Corporation (or any successor by Business Combination) has received aggregate gross proceeds of not less than the Minimum Amount (plus the “Minimum Amount” as defined in the relevant certificate of designations for each other outstanding series of preferred stock of such successor that was originally issued to the United States Department of the Treasury (the “Successor Preferred Stock”) in connection with the Troubled Asset Relief Program Capital Purchase Program) from one or more Qualified Equity Offerings (including Qualified Equity Offerings of such successor), and (y) the aggregate redemption price of the Designated Preferred Stock (and any Successor Preferred Stock) redeemed pursuant to this paragraph may not exceed the aggregate net cash proceeds received by the Corporation (or any successor by Business Combination) from such Qualified Equity Offerings (including Qualified Equity Offerings of such successor).
Exhibit 3.1
(Restated for SEC filing purposes only)
The redemption price for any shares of Designated Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.
(b)No Sinking Fund. The Designated Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred Stock will have no right to require redemption or repurchase of any shares of Designated Preferred Stock.
(c)Notice of Redemption. Notice of every redemption of shares of Designated Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Designated Preferred Stock. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Corporation or any other similar facility, notice of redemption may be given to the holders of Designated Preferred Stock at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d)Partial Redemption. In case of any redemption of part of the shares of Designated Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Board of Directors or a duly authorized committee thereof may determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e)Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City of New York, and having a capital and surplus of at least $500 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
(f)Status of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock may be reissued only as shares of any series of Preferred Stock other than Designated Preferred Stock).
Exhibit 3.1
(Restated for SEC filing purposes only)
Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.
Section 7. Voting Rights.
(a)General. The holders of Designated Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by law.
(b)Preferred Stock Directors. Whenever, at any time or times, dividends payable on the shares of Designated Preferred Stock have not been paid for an aggregate of six quarterly Dividend Periods or more, whether or not consecutive, the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Designated Preferred Stock shall have the right, with holders of shares of any one or more other classes or series of Voting Parity Stock outstanding at the time, voting together as a class, to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”) to fill such newly created directorships at the Corporation's next annual meeting of stockholders (or at a special meeting called for that purpose prior to such next annual meeting) and at each subsequent annual meeting of stockholders until all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been declared and paid in full at which time such right shall terminate with respect to the Designated Preferred Stock, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned; provided that it shall be a qualification for election for any Preferred Director that the election of such Preferred Director shall not cause the Corporation to violate any corporate governance requirements of any securities exchange or other trading facility on which securities of the Corporation may then be listed or traded that listed or traded companies must have a majority of independent directors. Upon any termination of the right of the holders of shares of Designated Preferred Stock and Voting Parity Stock as a class to vote for directors as provided above, the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed at any time, with or without cause, and any vacancy created thereby may be filled, only by the affirmative vote of the holders a majority of the shares of Designated Preferred Stock at the time outstanding voting separately as a class together with the holders of shares of Voting Parity Stock, to the extent the voting rights of such holders described above are then exercisable. If the office of any Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the remaining Preferred Director may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred.
(c)Class Voting Rights as to Particular Matters. So long as any shares of Designated Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter, the vote or consent of the holders of at least 66 2/3 % of the shares of Designated Preferred Stock at the time outstanding, voting as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i)Authorization of Senior Stock. Any amendment or alteration of the Certificate of Designations for the Designated Preferred Stock or the Charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock of the Corporation ranking senior to Designated Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii)Amendment of Designated Preferred Stock. Any amendment, alteration or repeal of any provision of the Certificate of Designations for the Designated Preferred Stock or the Charter (including, unless no vote on such merger or consolidation is required by Section 7(c)(iii) below, any amendment, alteration or repeal by means of a merger, consolidation or otherwise) so as to adversely affect the rights, preferences, privileges or voting powers of the Designated Preferred Stock; or
Exhibit 3.1
(Restated for SEC filing purposes only)
(iii)Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Designated Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Designated Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Designated Preferred Stock immediately prior to such consummation, taken as a whole; provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized Preferred Stock, including any increase in the authorized amount of Designated Preferred Stock necessary to satisfy preemptive or similar rights granted by the Corporation to other persons prior to the Signing Date, or the creation and issuance, or an increase in the authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for any other series of Preferred Stock, ranking equally with and/or junior to Designated Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers, and shall not require the affirmative vote or consent of, the holders of outstanding shares of the Designated Preferred Stock.
(d)Changes after Provision for Redemption. No vote or consent of the holders of Designated Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of the Designated Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 5 above.
(e)Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Designated Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules of the Board of Directors or any duly authorized committee of the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and applicable law and the rules of any national securities exchange or other trading facility on which Designated Preferred Stock is listed or traded at the time.
Section 8. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Designated Preferred Stock may deem and treat the record holder of any share of Designated Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 9. Notices. All notices or communications in respect of Designated Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Corporation or any similar facility, such notices may be given to the holders of Designated Preferred Stock in any manner permitted by such facility.
Section 10. No Preemptive Rights. No share of Designated Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 11. Replacement Certificates. The Corporation shall replace any mutilated certificate at the holder's expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder's expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.
Exhibit 3.1
(Restated for SEC filing purposes only)
Section 12. Other Rights. The shares of Designated Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof other than as set forth herein or in the Charter or as provided by applicable law.
Exhibit 3.1
(Restated for SEC filing purposes only)
Annex B
Pinnacle Financial Partners, Inc.
Standard Provisions for Series B Preferred Stock
Section 1. General Matters. Each share of Series B Preferred Stock shall be identical in all respects to every other share of Series B Preferred Stock. The Series B Preferred Stock shall be perpetual, subject to the provisions of Section 6 of these Standard Provisions that form a part of the Articles of Amendment.
Section 2. Definitions. The following terms used herein shall be defined as set forth below:
“Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.
“Articles of Amendment” means those articles of amendment to the Corporation’s Charter filed by the Corporation with the Secretary of State of the State of Tennessee on June 1, 2020, establishing the Series B Preferred Stock.
“Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York.
“Bylaws” means the Second Amended and Restated Bylaws of the Corporation, as they may be amended or restated from time to time.
“Charter” means the Amended and Restated Charter, as amended, of the Corporation, as it may be amended or restated from time to time.
“Common Stock” means the common stock, par value $1.00 per share, of the Corporation.
“Corporation” means Pinnacle Financial Partners, Inc.
“Preferred Stock” means any and all series of preferred stock, having no par value, of the Corporation, including the Series B Preferred Stock.
“Standard Provisions” means these Standard Provisions that form a part of the Articles of Amendment.
“Voting Preferred Stock” means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 7(b) below) or any other matter as to which the holders of Series B Preferred Stock are entitled to vote as specified in Section 7 of these Standard Provisions and any and all other series of Preferred Stock (other than Series B Preferred Stock) that rank equally with Series B Preferred Stock as to the payment of dividends and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 3. Ranking. The shares of Series B Preferred Stock shall rank:
(a) senior, as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, to the Common Stock and to any other class or series of capital stock of the Corporation now or hereafter authorized, issued, or outstanding that, by its terms, does not expressly provide that such class or series ranks pari passu with the Series B Preferred Stock or senior to the Series B Preferred Stock as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, as the case may be (collectively, “Series B Junior Securities”);
(b) on a parity, as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, with any class or series of capital stock of the Corporation now or hereafter authorized, issued, or outstanding that, by its terms, expressly provides that such class or series ranks pari passu with the Series B Preferred Stock as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, as the case may be (collectively, “Series B Parity Securities”); and (c) junior, as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, to any other class or series of capital stock of the Corporation now or hereafter authorized, issued, or outstanding that, by its terms, expressly provides that such class or series ranks senior to the Series B Preferred Stock as to dividends and upon liquidation, dissolution, and winding-up of the Corporation, as the case may be.
Exhibit 3.1
(Restated for SEC filing purposes only)
The Corporation may authorize and issue additional shares of Series B Junior Securities and Series B Parity Securities from time to time without the consent of the holders of the Series B Preferred Stock.
Section 4. Dividends.
(a) Holders of Series B Preferred Stock shall be entitled to receive, only when, as, and if declared by the Board or a duly authorized committee of the Board, on each Series B Dividend Payment Date (as defined below), out of assets legally available for the payment of dividends thereof, non-cumulative cash dividends based on the liquidation preference of the Series B Preferred Stock of $1,000 per share at a rate equal to 6.75% per annum for each Series B Dividend Period (as defined below) from the original issue date of the Series B Preferred Stock to, but excluding, the date of redemption (if any) of the Series B Preferred Stock. If the Corporation issues additional shares of the Series B Preferred Stock after the original issue date, dividends on such shares may accrue from the original issue or any other date specified by the Board or a duly authorized committee of the Board at the time such additional shares are issued.
(b) If declared by the Board or a duly authorized committee of the Board, dividends will be payable on the Series B Preferred Stock quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on September 1, 2020, each such day a “Series B Dividend Payment Date”; provided, however, that if any such Series B Dividend Payment Date is not a Business Day, then such date shall nevertheless be a Series B Dividend Payment Date but dividends on the Series B Preferred Stock shall be paid on the next succeeding Business Day (without interest or any other adjustment to the amount of dividends paid in respect of such delayed payment).
(c) Dividends will be payable to holders of record of Series B Preferred Stock as they appear on the Corporation’s stock register on the applicable record date, which shall be the 15th calendar day before the applicable Series B Dividend Payment Date, or such other record date, not less than 10 calendar days nor more than 30 calendar days before the applicable Series B Dividend Payment Date, as such record date (the “Dividend Record Date”) shall be fixed by the Board or a duly authorized committee of the Board. Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
(d) A “Series B Dividend Period” is the period from and including a Series B Dividend Payment Date to, but excluding, the next succeeding Series B Dividend Payment Date, except that the initial Series B Dividend Period will commence on and include the original issue date of Series B Preferred Stock and continue to but exclude September 1, 2020. Dividends payable on Series B Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dollar amounts resulting from the calculation will be rounded to the nearest cent, with one-half cent being rounded upward. Dividends on the Series B Preferred Stock will cease to accrue on the redemption date, if any, with respect to the Series B Preferred Stock redeemed, unless the Corporation defaults in the payment of the redemption price of the Series B Preferred Stock called for redemption.
(e) Dividends on the Series B Preferred Stock will not be cumulative and will not be mandatory. If the Board or a duly authorized committee of the Board does not declare a dividend, in full or otherwise, on the Series B Preferred Stock in respect of a Series B Dividend Period, then such unpaid dividends shall cease to accrue and shall not be payable on the applicable Series B Dividend Payment Date or be cumulative, and the Corporation will have no obligation to pay (and the holders of the Series B Preferred Stock will have no right to receive) dividends accrued for such Series B Dividend Period after the Series B Dividend Payment Date for such Series B Dividend Period, whether or not the Board or a duly authorized committee of the Board declares a dividend for any future Series B Dividend Period with respect to the Series B Preferred Stock, the Common Stock, or any other class or series of the Corporation’s Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not declared.
(f) Notwithstanding any other provision hereof, dividends on the Series B Preferred Stock shall not be declared, paid, or set aside for payment to the extent such act would cause the Corporation to fail to comply with the laws and regulations applicable to it, including applicable capital adequacy rules of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) or, as and if applicable, the capital adequacy rules or regulations of any Appropriate Federal Banking Agency.
Exhibit 3.1
(Restated for SEC filing purposes only)
(g) So long as any share of Series B Preferred Stock remains outstanding:
(i) no dividend shall be declared or paid or set aside for payment, and no distribution shall be declared or made or set aside for payment, on any Series B Junior Securities, other than (1) a dividend payable on Series B Junior Securities in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equal or junior to that stock or is other Series B Junior Securities or (2) any dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of rights, stock, or other property under any such plan, or the redemption or repurchase of any rights under any such plan;
(ii) no shares of Series B Junior Securities shall be repurchased, redeemed, or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) as a result of a reclassification of Series B Junior Securities for or into other Series B Junior Securities, (2) the exchange or conversion of one share of Series B Junior Securities for or into another share of Series B Junior Securities, (3) through the use of the proceeds of a substantially contemporaneous sale of other shares of Series B Junior Securities, (4) purchases, redemptions, or other acquisitions of shares of Series B Junior Securities in connection with any employment contract, benefit plan, or other similar arrangement with or for the benefit of employees, officers, directors, or consultants, (5) purchases of shares of Series B Junior Securities pursuant to a contractually binding requirement to buy Series B Junior Securities existing prior to the most recently completed Series B Dividend Period, including under a contractually binding stock repurchase plan, (6) the purchase of fractional interests in shares of Series B Junior Securities pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged or (7) the acquisition by the Corporation or any of the Corporation’s subsidiaries of record ownership in Series B Junior Stock for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of the Corporation’s subsidiaries), including as trustees or custodians; nor shall any monies be paid to or made available for a sinking fund for the redemption of any such Series B Junior Securities by the Corporation; and
(iii) no shares of Series B Parity Securities shall be repurchased, redeemed, or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series B Preferred Stock and such Series B Parity Securities, if any, (2) as a result of a reclassification of Series B Parity Securities for or into other Series B Parity Securities, (3) the exchange or conversion of one share of Series B Parity Securities or Series B Junior Securities for or into another share of Series B Parity Securities, (4) through the use of the proceeds of a substantially contemporaneous sale of other shares of Series B Parity Securities, (5) purchases of shares of Series B Parity Securities pursuant to a contractually binding requirement to buy Series B Parity Securities existing prior to the most recently completed Series B Dividend Period, including under a contractually binding stock repurchase plan, (6) the purchase of fractional interests in shares of Series B Parity Securities pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged or (7) the acquisition by the Corporation or any of the Corporation’s subsidiaries of record ownership in Series B Parity Securities for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of the Corporation’s subsidiaries), including as trustees or custodians; nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation; unless, in each case, the full dividends for the most recently completed Series B Dividend Period on all outstanding shares of Series B Preferred Stock have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). Nothing in sub-sections (g)(ii) or (g)(iii) of this Section 4 of these Standard Provisions shall restrict the ability of the Corporation or any affiliate of the Corporation to engage in any market-making transactions or purchases in connection with the distribution of securities in the ordinary course of business.
Exhibit 3.1
(Restated for SEC filing purposes only)
(h) When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Series B Dividend Payment Date (or, in the case of Series B Parity Securities having dividend payment dates different from the Series B Dividend Payment Dates, on a dividend payment date falling within a Series B Dividend Period) in full upon the Series B Preferred Stock and any shares of Series B Parity Securities, all dividends declared on the Series B Preferred Stock and all such Series B Parity Securities and payable on such Series B Dividend Payment Date (or, in the case of Series B Parity Securities having dividend payment dates different from the Series B Dividend Payment Dates, on a dividend payment date falling within the Series B Dividend Period related to such Series B Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series B Preferred Stock and all Series B Parity Securities payable on such Series B Dividend Payment Date (or, in the case of Series B Parity Securities having dividend payment dates different from the Series B Dividend Payment Dates, on a dividend payment date falling within the Series B Dividend Period related to such Series B Dividend Payment Date) bear to each other.
(i) Subject to the foregoing, and not otherwise, dividends (payable in cash, securities, or otherwise), as may be determined by the Board or a duly authorized committee of the Board, may be declared and paid on the Common Stock and any other class or series of capital stock ranking equally with or junior to Series B Preferred Stock from time to time out of any assets legally available for such payment, and the holders of Series B Preferred Stock shall not be entitled to participate in any such dividend.
Section 5. Liquidation.
(a) Upon any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, holders of Series B Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to shareholders, after satisfaction of liabilities and obligations to creditors, if any, and subject to the rights of holders of any securities then outstanding ranking senior to or on parity with Series B Preferred Stock with respect to distributions of assets upon the liquidation, dissolution or winding-up of the Corporation, before any distribution or payment out of the assets of the Corporation is made to holders of Common Stock or any Series B Junior Securities, a liquidating distribution in the amount of the liquidation preference of $1,000 per share plus the per share amount of any declared and unpaid dividends on the Series B Preferred Stock prior to the payment of the liquidating distribution, without accumulation of any dividends that have not been declared prior to the payment of the liquidating distribution. After payment of the full amount of such liquidating distribution, the holders of the Series B Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation.
(b) In any such liquidating distribution, if the assets of the Corporation are not sufficient to pay the liquidation preferences (as defined below) in full to all holders of Series B Preferred Stock and all holders of any Series B Parity Securities, the amounts paid to the holders of Series B Preferred Stock and to the holders of all Series B Parity Securities will be paid pro rata in accordance with the respective aggregate liquidation preferences owed to those holders. In any such distribution, the “liquidation preference” of any holder of Series B Preferred Stock or any Series B Parity Securities means the amount otherwise payable to such holder in such distribution (assuming no limitation on the Corporation’s assets available for such distribution), including any declared but unpaid dividends (and, in the case of any holder of stock other than the Series B Preferred Stock on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) If the liquidation preference has been paid in full to all holders of Series B Preferred Stock and any Series B Parity Securities, the holders of the Corporation’s Series B Junior Securities shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.
(d) For purposes of this Section 5, neither the sale, conveyance, exchange, or transfer of all or substantially all of the assets or business of the Corporation for cash, securities, or other property, nor the merger or consolidation of the Corporation with any other entity, including a merger or consolidation in which the holders of Series B Preferred Stock receive cash, securities, or property for their shares, shall constitute a liquidation, dissolution, or winding-up of the Corporation.
Section 6. Redemption.
(a) The Series B Preferred Stock is perpetual and has no maturity date. The Series B Preferred Stock is not subject to any mandatory redemption, sinking fund, or other similar provision. The Series B Preferred Stock is not redeemable prior to September 1, 2025.
Exhibit 3.1
(Restated for SEC filing purposes only)
On and after that date, shares of the Series B Preferred Stock then outstanding will be redeemable at the option of the Corporation, in whole or in part, from time to time, on any Series B Dividend Payment Date, at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date of redemption. Holders of the Series B Preferred Stock will have no right to require the redemption or repurchase of Series B Preferred Stock. Notwithstanding the foregoing, within 90 days following the occurrence of a Regulatory Capital Treatment Event (as defined below), the Corporation, at its option, may redeem, at any time, all (but not less than all) of the shares of the Series B Preferred Stock at the time outstanding, at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, upon notice given as provided in sub-section (b) below. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the record date for a Series B Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Series B Dividend Payment Date as provided in Section 4(c) above. In all cases, the Corporation may not redeem shares of the Series B Preferred Stock without having received the prior approval of the Federal Reserve or any Appropriate Federal Banking Agency if then required under capital rules or guidelines applicable to the Corporation.
A “Regulatory Capital Treatment Event” means the good faith determination by the Corporation that, as a result of (i) any amendment to, clarification of, or change in, the laws, rules, or regulations of the United States (including, for the avoidance of doubt, any agency or instrumentality of the United States, including the Federal Reserve and other appropriate federal bank regulatory agencies) or any political subdivision of or in the United States (including, for the avoidance of doubt, any agency or instrumentality of the United States, including the Federal Reserve and other federal bank regulatory agencies) that is enacted or becomes effective after the initial issuance of any share of the Series B Preferred Stock; (ii) any proposed change in those laws, rules, or regulations that is announced or becomes effective after the initial issuance of any share of the Series B Preferred Stock; or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws, rules, or regulations or policies with respect thereto that is announced or becomes effective after the initial issuance of any share of the Series B Preferred Stock, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full liquidation value of $1,000 per share of the Series B Preferred Stock then outstanding as “tier 1 capital” (or its equivalent) for purposes of the capital adequacy guidelines, rules or regulations of the Federal Reserve (or, as and if applicable, the capital adequacy rules, guidelines or regulations of any successor Appropriate Federal Banking Agency), as then in effect and applicable, for so long as any share of the Series B Preferred Stock is outstanding.
(b) If shares of Series B Preferred Stock are to be redeemed, the notice of redemption shall be given to the holders of record of Series B Preferred Stock to be redeemed by first class mail, postage prepaid, addressed to the holders of record of such shares to be redeemed at their respective last addresses appearing on the Corporation’s stock register not less than 30 days nor more than 60 days prior to the date fixed for redemption thereof (provided that, if the shares of Series B Preferred Stock or the depositary shares representing Series B Preferred Stock, if any, are held in book-entry form through The Depository Trust Company (“DTC”), the Corporation may give such notice in any manner permitted by DTC). Each notice of redemption will include a statement setting forth (i) the redemption date; (ii) the number of shares of Series B Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date. If notice of redemption of any shares of Series B Preferred Stock has been duly given and if the funds necessary for such redemption have been set aside by the Corporation for the benefit of the holders of any shares of Series B Preferred Stock so called for redemption, then, on and after the redemption date, dividends will cease to accrue on such shares of Series B Preferred Stock; such shares of Series B Preferred Stock shall no longer be deemed outstanding; and all rights of the holders of such shares will terminate, except the right to receive the redemption price described in sub-section (a) above, without interest.
(c) In case of any redemption of only part of the shares of Series B Preferred Stock at the time outstanding, the shares to be redeemed shall be selected (1) pro rata from the holders of record of the Series B Preferred Stock in proportion to the number of shares of the Series B Preferred Stock held by such holders, (2) by lot, or (3) in such other manner as the Corporation may determine to be equitable and permitted by DTC and the rules of any national securities exchange on which the Series B Preferred Stock is listed.
Exhibit 3.1
(Restated for SEC filing purposes only)
Subject to the provisions hereof, the Board (or a duly authorized committee of the Board) shall have full power and authority to prescribe the terms and conditions on which shares of the Series B Preferred Stock shall be redeemed from time to time. If the Corporation shall have issued certificates for the Series B Preferred Stock and fewer than all shares represented by any certificates are redeemed, new certificates shall be issued representing the unredeemed shares without charge to the holders thereof.
Section 7. Voting Rights.
(a) Except as provided below or as expressly required by law, the holders of shares of Series B Preferred Stock shall have no voting power, and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of capital stock of the Corporation, and shall not be entitled to call a meeting of the holders of any series or class of shares of capital stock of the Corporation for any purpose, nor shall they be entitled to participate in any meeting of the holders of the Common Stock. Each holder of Series B Preferred Stock shall have one vote per share on any matter on which holders of Series B Preferred Stock are entitled to vote.
(b) If and whenever dividends on any shares of the Series B Preferred Stock or any shares of Voting Preferred Stock shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a “Nonpayment Event”), the number of directors then constituting the Board shall automatically be increased by two and the holders of the Series B Preferred Stock, together with the holders of all outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect two additional directors (the “Preferred Stock Directors”) to the Board of the Corporation, provided that the Board shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights) and provided, further, that the election of any Preferred Stock Directors shall not cause the Corporation to violate the corporate governance requirements of the Nasdaq Stock Market (or any other exchange on which the Corporation’s securities may be listed), including the requirements that listed companies must have a majority of independent directors.
In the event that the holders of the Series B Preferred Stock, and, if applicable, such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the number of shares of Series B Preferred Stock or of any other series of Voting Preferred Stock then outstanding which have the right to exercise voting rights similar to those of the Series B Preferred Stock described above (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of shareholders), and at each subsequent annual meeting of shareholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series B Preferred Stock or any series of Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 12 below, or as may otherwise be required by law.
When dividends have been paid in full on the Series B Preferred Stock and any Voting Preferred Stock for two consecutive semi-annual or four consecutive quarterly Dividend Periods, as applicable, after a Nonpayment Event, then the right of the holders of Series B Preferred Stock and Voting Preferred Stock to elect the Preferred Stock Directors shall cease (but subject always to re-vesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series B Preferred Stock and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of all of the outstanding shares of the Series B Preferred Stock and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of all of the outstanding shares of the Series B Preferred Stock and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class).
Exhibit 3.1
(Restated for SEC filing purposes only)
Any such vote of shareholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such shareholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders, in which event such election shall be held at such next annual or special meeting of shareholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board for a vote. Each Preferred Stock Director elected at any special meeting of shareholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the shareholders if such office shall not have previously terminated as above provided.
(c) So long as any shares of Series B Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the Charter, the vote or consent of the holders of at least two-thirds of all of the shares of Series B Preferred Stock and Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, shall be necessary for effecting or validating:
(i) Any amendment or alteration of the Charter to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series B Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Any amendment, alteration or repeal of any provision of the Charter so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series B Preferred Stock, taken as a whole; provided, however, that any amendment to authorize, create, or issue, or increase the authorized amount of, any Series B Junior Securities or any Series B Parity Securities, or any securities convertible into or exchangeable for Series B Junior Securities or Series B Parity Securities will not be deemed to materially and adversely affect the powers, preferences, privileges, or rights of Series B Preferred Stock; or
(iii) Any consummation of a binding share exchange or reclassification involving the Series B Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (1) the shares of Series B Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (2) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series B Preferred Stock immediately prior to such consummation, taken as a whole; provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized or issued Series B Preferred Stock or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any Series B Parity Securities or Series B Junior Securities (whether dividends payable on such securities, if any, are cumulative or non-cumulative) will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series B Preferred Stock.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series B Preferred Stock and one or more but not all other series of Preferred Stock, then only the Series B Preferred Stock and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Without the consent of the holders of the Series B Preferred Stock, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series B Preferred Stock, the Corporation may amend, alter, supplement or repeal any terms of the Series B Preferred Stock:
Exhibit 3.1
(Restated for SEC filing purposes only)
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in the Articles of Amendment or these Standard Provisions that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series B Preferred Stock that is not inconsistent with the provisions of the Articles of Amendment and these Standard Provisions.
(e) No vote or consent of the holders of Series B Preferred Stock shall be required pursuant to Section 7(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series B Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) The rules and procedures for calling and conducting any meeting of the holders of Series B Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board (or any duly authorized committee of the Board), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, applicable law and the rules of any national securities exchange or other trading facility on which the Series B Preferred Stock is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series B Preferred Stock, Series B Parity Securities and/or Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series B Preferred Stock are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 8. Conversion Rights. The holders of shares of Series B Preferred Stock shall not have any rights to convert such shares into shares of any other class or series of securities of the Corporation.
Section 9. Preemptive Rights. The holders of shares of Series B Preferred Stock will have no preemptive rights with respect to any shares of the Corporation’s capital stock or any of its other securities convertible into or carrying rights or options to purchase or otherwise acquire any such capital stock or any interest therein, regardless of how any such securities may be designated, issued, or granted.
Section 10. Certificates. The Corporation may at its option issue shares of Series B Preferred Stock without certificates.
Section 11. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series B Preferred Stock may deem and treat the record holder of any share of Series B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 12. Notices. All notices or communications in respect of Series B Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in the Articles of Amendment or these Standard Provisions, in the Charter or Bylaws or by applicable law.
Section 13. Rank. For the avoidance of doubt, the Board (or any duly authorized committee of the Board) may, without the vote of the holders of Series B Preferred Stock, authorize and issue shares of Series B Junior Securities or Series B Parity Securities.
Section 14. No Other Rights. The shares of Series B Preferred Stock shall not have any rights, preferences, privileges, or voting powers or relative, participating, optional, or other special rights, or qualifications, limitations, or restrictions thereof, other than as set forth in the Articles of Amendment, these Standard Provisions or the Charter, or as provided by applicable law.
EX-31.1
3
ex311033125.htm
EX-31.1
Document
Exhibit 31.1
Certification
I, M. Terry Turner, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Pinnacle Financial Partners, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
|
|
May 9, 2025 |
Signature: |
/s/ M. Terry Turner |
|
|
M. Terry Turner |
|
|
President and Chief Executive Officer |
|
|
Pinnacle Financial Partners, Inc. |
EX-31.2
4
ex312033125.htm
EX-31.2
Document
Exhibit 31.2
Certification
I, Harold R. Carpenter, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Pinnacle Financial Partners, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
|
|
May 9, 2025 |
Signature: |
/s/ Harold R. Carpenter |
|
|
Harold R. Carpenter |
|
|
Chief Financial Officer |
|
|
Pinnacle Financial Partners, Inc. |
EX-32.1
5
ex321033125.htm
EX-32.1
Document
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pinnacle Financial Partners (the “Company”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, M. Terry Turner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
|
May 9, 2025 |
|
/s/ M. Terry Turner |
|
|
M. Terry Turner |
|
|
President and Chief Executive Officer |
|
|
Pinnacle Financial Partners, Inc. |
EX-32.2
6
ex322033125.htm
EX-32.2
Document
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pinnacle Financial Partners (the “Company”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harold R. Carpenter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
|
May 9, 2025 |
|
/s/ Harold R. Carpenter |
|
|
Harold R. Carpenter |
|
|
Chief Financial Officer |
|
|
Pinnacle Financial Partners, Inc. |