Pinnacle Financial Partners Beats On Q2 Earnings

Pinnacle Financial Partners Inc PNFP reported Q2 2023 revenues of $489.2 million, up 25.4% Y/Y, beating the consensus of $414.9 million.

Net interest income rose 19.2% Y/Y to $315.4 million, which includes $0.776 million of discount accretion associated with fair value adjustments. Noninterest income grew 38.5% Y/Y to $173.8 million.

Net interest margin came in at 3.20%, compared to 3.17% in Q2 2022. 

In Q2, client deposits grew 17.1% on a linked-quarter annualized basis, with a continued mix shift to interest-bearing accounts from noninterest-bearing accounts.

Loans were up 11.3% to $31.2 billion on an annualized linked-quarter basis, in line with the outlook reflecting PNFP's planned efforts to moderate loan growth by constraining certain asset classes and boosting loan pricing. 

The company witnessed quarterly deposit growth of over $1.5 billion, led by higher client funding.

In Q2, provisions for credit losses were $31.7 million, compared to $12.9 million year-ago quarter. 

Adjusted EPS of $1.79 came above the consensus of $1.63.

The company generated a $85.7 million gain on the sale of fixed assets from its sale-leaseback transaction, which positively impacted EPS by $0.84. 

As of June 30, 2023, total assets stood at $46.9 billion. 

Dividend: PNFP's Board of Directors approved a quarterly cash dividend per share of $0.22 to be paid on Aug. 25, 2023, to shareholders of record as on Aug. 4, 2023. 

"Our cumulative deposit beta at June 30, 2023 increased to 48.0 percent, which is consistent with our expectations. We believe with more rate hikes in the forecast for 2023, our funding costs will increase just not at the same rate as the second quarter increase. Furthermore, we anticipate that the impact of our hiring and usual seasonal growth will enable us to continue to grow our deposits for the remainder of the year at levels that should support our current outlook of high single-digit percentage deposit growth for 2023 over 2022," said M. Terry Turner, president, and CEO.

Price Action: PNFP shares closed higher by 5.61% at $64.72 on Tuesday.