PNFP

Overall Financial Performance

• Reported diluted EPS of $2.07; adjusted diluted EPS of $2.50, up 5% quarter-over-quarter and 25% year-over-year; year-to-date adjusted EPS is up 26% versus the same period in 2025
• Year-to-date adjusted return on average tangible common equity is 17.7%
• Zero net impact from merger accounting, as revenue accretion from loan marks and Q1 securities restructuring was fully offset by increased intangible amortization
• Balance sheet growth: Period-end loans grew $2.9 billion (14% annualized) linked quarter, with growth broad-based across geographies and specialty platforms, led by CNI lending; year-to-date loan growth is 6% (12% annualized), exceeding prior guidance
• Period-end deposits grew $795 million linked quarter; excluding seasonal public funds outflows, deposits grew $963 million (1%) in Q2, with year-to-date deposit growth of 2%
• The firm completed $1 billion of municipal securities repositioning into more liquid assets, improving portfolio duration and high-quality liquid assets with no material impact to net interest income or CET1; also issued $750 million in senior debt to strengthen and diversify liquidity and funding

Merger Integration Progress

• Six months post-close of the merger, the firm is gaining market share and deepening client relationships despite typical integration headwinds
• 74 experienced revenue producers were added in Q2, up 48% from Q1 and 14% versus Q2 2025; 34 additional producers have already started or accepted offers in the first half of July; 124 producers added year-to-date, with ~50% coming from core former Synovus markets, confirming the integration model works across the full franchise
• Retention of existing team members (excluding merger-related synergies) is 94% year-to-date; client satisfaction and loyalty scores are best-in-class
• Merger revenue synergies of $130 million total are on track; ~$10 million of revenue synergies have been recognized year-to-date (50% of the full-year 2026 target of $20 million), with most coming from the expanded capital markets platform; full synergy realization will occur after system conversion in March 2027
• Cost synergies are on track to hit 40% of the target in 2026 and 75% in 2027, matching original commitments

Competitive and Strategic Advantages

• The firm's Southeast US footprint grows at roughly twice the national average, creating a strong long-term growth backdrop
• Pinnacle ranks first among peers in business momentum per Coalition Greenwich's Q1 2026 report, with a wide margin over competitors that struggle with bureaucracy and slow decision-making
• Elevated industry talent dislocation is ongoing, and Pinnacle's model of empowering bankers makes it a destination of choice for top talent, driving sustained hiring growth

• Full year 2026 broad guidance ranges are maintained from prior announcements
• Loan growth is tracking to the top end of the prior 9-11% full-year range
• Deposit growth is tracking to the middle of the prior 8-10% full-year range, with strong seasonal growth expected in the second half of the year
• Full year net interest margin is now expected in the 3.44% to 3.47% range, a modest downward revision from prior outlooks
• Full year total revenue is expected in the $5.05 billion to $5.1 billion range, maintained at prior guidance
• Adjusted full year expenses are expected in the middle of the prior $2.675 billion to $2.775 billion range, with the expected increase from H1 driven by deliberate growth investments including revenue producer hiring, market expansion, and inflationary costs
• Adjusted effective tax rate is expected in the middle of the 20% to 21% range
• Full year net charge-offs are expected to remain within the prior 20 to 25 basis point range
• Management expects strong core deposit growth outpacing loan growth in H2 2026, which will act as a tailwind to NIM; other H2 NIM tailwinds include fixed rate asset repricing, recovering SOFR rates, and normalization of prepayment activity, offset by modest headwinds from liquidity building and debt issuance
• Incremental margin pressure is expected over the medium term as the firm builds liquidity to long-term target levels, but management notes NII will still grow at a high single-digit rate, supporting double-digit pre-provision net revenue and EPS growth while maintaining return on tangible common equity

The firm does not break out results into distinct product segments in this call. Overall consolidated Q2 2026 results are as follows:

• Net interest income: $956 million, up 2% quarter-over-quarter
• Net interest margin (NIM): 3.44%, down 9 basis points from Q1 2026 (down 6 basis points excluding Q1 non-recurring items)
• Adjusted non-interest revenue: Declined $12 million quarter-over-quarter, driven by lower BHG equity method investment income which came in at $24 million for the quarter; core banking, wealth management, and capital markets all delivered quarter-over-quarter growth, with core banking and capital markets fees each up 3% from Q1
• Adjusted non-interest expense: Down 2% quarter-over-quarter, with realized merger synergies and seasonally lower personnel costs offsetting continued investments in revenue producers and technology; adjusted tangible efficiency ratio was 49.8% as expected at this stage of merger integration; $51 million in non-recurring merger-related expenses were recorded during the quarter
• Credit quality: Net charge-offs of $48 million (22 basis points); non-performing asset ratio improved to 0.5% (down from 0.58% in Q1); allowance for credit losses ended the quarter at 1.17% (down from 1.19% at end-Q1)
• Capital: Preliminary Common Equity Tier 1 (CET1) ratio ended the quarter at 9.93%, up 12 basis points from Q1

• Industry-wide competitive pressure on loan spreads and deposit pricing could lead to faster-than-expected margin compression
• Sustained higher funding costs for incremental balance sheet growth could pressure net interest margin
• Changes in SOFR rates and broader interest rate movements could impact net interest income and margin differently than currently forecast
• The timing and magnitude of future Federal Reserve policy actions create uncertainty around future net interest income performance
• System conversion for merger integration is not scheduled until March 2027, leaving full revenue synergy realization dependent on successful completion of this project
• External economic conditions could impact loan demand, credit quality, and deposit flows differently than currently forecast
• Ongoing competitive retention efforts by rival banks could slow talent hiring, though management notes this has not materially impacted hiring to date

Q: What caused the larger-than-expected 9 basis point Q2 NIM decline, and is the current path of margin dilution still consistent with ongoing NII upside? / A: The larger decline stemmed from three factors: an average 3-4 basis point drop in SOFR rates that has mostly recovered in July, slower-than-expected prepayments in the CNI loan book, and larger-than-expected end-of-quarter balance sheet growth that increased cash and securities balances. While balance sheet growth is margin dilutive, it drives steady 2% quarterly NII growth with very little incremental marginal expense. This growth is still accretive to shareholders and maintains strong returns on tangible common equity, supporting sustained double-digit EPS growth. (287 chars)

Q: What is driving Pinnacle's ability to avoid the industry-wide spread compression seen at peer banks? / A: Pinnacle competes on a relationship-focused value proposition of distinctive service and advisory, rather than competing on price. Most new growth comes from experienced bankers joining the firm who bring their existing client relationships with them, so there is no need to win new business by offering below-market spreads. Pinnacle also maintains rigorous pricing discipline, with all employees incentivized through equity ownership to protect spreads. (283 chars)

Q: Is there upside to the current top-end of the 9-11% full-year loan growth guidance, given very strong Q2 performance? / A: There is upside potential to the current range, as loan pipelines are strong and growth is broad-based across both geographic banking and specialty lending, with production spreads actually increasing quarter-over-quarter rather than compressing. Management kept guidance at the high end of the prior range because it excludes unforecasted utilization increases (which contributed ~$500 million of Q2 growth) and expects some moderation of outsized first-half growth in certain specialty segments, plus ongoing CRE payoff activity. (305 chars)

Q: What is the current outlook for the firm's BHG partnership and any potential strategic actions for the business? / A: Lower Q2 BHG income was driven by a temporary pause in one distribution channel to update operating agreements, which has already resumed. BHG production grew $900 million quarter-over-quarter, credit performance remains strong, and 2026 investment income guidance was actually raised due to strong momentum. There is no update on strategic options, and management expects continuing to execute the current partnership strategy will deliver the most long-term value. (289 chars)

Q: What is the current outlook for CET1 capital progression, and are share repurchases expected to resume in 2027? / A: The firm generates ~30 basis points of CET1 per quarter before risk-weighted asset growth from loan expansion, which consumes ~15-20 basis points of that accretion. While it is unclear if the 10.25% target will be hit by end-2026, material CET1 accretion is expected in H2 2026, and the pending Fed NPR rule will add an additional 40 basis points of capital in 2027. Share repurchases are a definite possibility in 2027, as core earnings are expected to be strong enough to support both strong loan growth and capital management actions. (370 chars)