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"We are also pleased to report diluted earnings per share of $1.91 for the fourth quarter. In this declining rate environment, we successfully lowered our average cost of deposits by 34 basis points during the fourth quarter, offsetting the 33 basis point decline in average loan yields. Consequently, we were able to maintain our net interest margin quarter over quarter and grow net interest income by $12.3 million, a 14.0 percent linked-quarter annualized growth rate.

"So not only do we continue to produce outsized growth in the current cycle, but we also continue making significant investments in people and market extensions that we expect to benefit our shareholders well into the future."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at Dec. 31, 2024, were $52.6 billion, an increase of approximately $1.9 billion from Sept. 30, 2024, and $4.6 billion from Dec. 31, 2023, reflecting a linked-quarter annualized increase of 14.9 percent and a year-over-year increase of 9.7 percent. A further analysis of select balance sheet trends follows:

"As we noted in our third quarter earnings release, we were optimistic loan growth would accelerate during the fourth quarter," Turner said. "Ultimately, the fourth quarter was one of our strongest quarters ever for loan and deposit growth, with loan growth of $1.2 billion and deposit growth of $1.9 billion.

"For most of our history, we have been viewed as one of the strongest organic loan growers among small and mid-cap banks. And now, our ongoing investments in organic deposit growth strategies like adding new branch locations and extending into new markets, building new industry verticals for segments that are typically net providers of funds, and hiring bankers that have strong depositor followings are yielding outsized deposit growth as well."

PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) GROWTH AND PROFITABILITY:

Pre-tax, pre-provision net revenues (PPNR) for the three months and year ended Dec. 31, 2024, were $213.4 million and $701.8 million, respectively, compared to $145.2 million and $807.6 million recognized in the three months and year ended Dec. 31, 2023, respectively.

Net interest income for the fourth quarter of 2024 was $363.8 million, compared to $351.5 million for the third quarter of 2024 and $317.3 million for the fourth quarter of 2023, a year-over-year growth rate of 14.7 percent. Net interest margin was 3.22 percent for the fourth quarter of 2024, compared to 3.22 percent for the third quarter of 2024 and 3.06 percent for the fourth quarter of 2023.

Noninterest income for the fourth quarter of 2024 was $111.5 million, compared to $115.2 million for the third quarter of 2024 and $79.1 million for the fourth quarter of 2023.

• Wealth management revenues, which include investment, trust and insurance services, were $31.2 million for the fourth quarter of 2024, compared to $29.5 million for the third quarter of 2024 and $23.5 million for the fourth quarter of 2023, a year-over-year increase of 33.1 percent. The increase in wealth management revenues was attributable to several factors but primarily is the result of an increase in capacity, with more revenue producers across the firm, but particularly in the areas of the firm's most recent strategic market expansions.

• Income from the firm's investment in Banker's Healthcare Group (BHG) was $12.1 million for the fourth quarter of 2024, compared to $16.4 million for the third quarter of 2024 and $14.4 million for the fourth quarter of 2023, a year-over-year decline of 16.4 percent.

  • BHG's loan originations were $1.2 billion in the fourth quarter of 2024, compared to $989 million in the third quarter of 2024 and $786 million in the fourth quarter of 2023.

  • Loans sold to BHG's community bank partners were approximately $505 million in the fourth quarter of 2024, compared to approximately $521 million in the third quarter of 2024 and $446 million in the fourth quarter of 2023.

  • BHG reserves for on-balance sheet loan losses were $240 million, or 9.3 percent of loans held for investment at Dec. 31, 2024, compared to 9.1 percent at Sept. 30, 2024, and 9.3 percent at Dec. 31, 2023.

  • At Dec. 31, 2024, BHG increased its accrual for estimated losses attributable to loan substitutions and prepayments to $531 million, or 7.1 percent of the unpaid balances on loans that were previously purchased by BHG's community bank network, compared to 6.2 percent at Sept. 30, 2024 and 5.4 percent at Dec. 31, 2023.

• Other noninterest income was $50.4 million for the quarter ended Dec. 31, 2024, an increase of $1.8 million from the third quarter of 2024 and $22.9 million from the fourth quarter of 2023. Fourth quarter 2024 other noninterest income was positively impacted by gains on leases, fair value adjustment to our mortgage servicing asset and customer swap revenues when compared to third quarter 2024.

Noninterest expense for the fourth quarter of 2024 was $261.9 million, compared to $259.3 million for the third quarter of 2024 and $251.2 million for the fourth quarter of 2023.

• Salaries and employee benefits were $164.7 million in the fourth quarter of 2024, compared to $160.2 million in the third quarter of 2024 and $133.3 million in the fourth quarter of 2023, reflecting a year-over-year increase of 23.5 percent.

  • Full-time equivalent associates increased to 3,565.5 at Dec. 31, 2024 from 3,516.5 at Sept. 30, 2024 and 3,357.0 at Dec. 31, 2023, a year-over-year increase of 6.2 percent.

  • Cash incentive costs in the fourth quarter of 2024 were approximately $3.1 million higher than the third quarter of 2024 due to increasing the accrual for the annual cash incentive plan to a higher payout percentage than was anticipated at Sept. 30, 2024, and $14.7 million higher than the amounts recorded in the fourth quarter of 2023. An increased number of personnel and an elevated payout percentage for 2024 compared to 2023 were the primary reasons for the year-over-year increase.

• Equipment and occupancy costs were $42.8 million in the fourth quarter of 2024, compared to $42.6 million in the third quarter of 2024, reflecting an increase of 0.5 percent. Those costs were $38.0 million in the fourth quarter of 2023, resulting in a year-over-year increase of 12.5 percent.

• Marketing and other business development costs were $8.2 million in the fourth quarter of 2024, compared to $5.6 million in the third quarter of 2024, reflecting an increase of 45.9 percent. Those costs were $6.8 million in the fourth quarter of 2023, resulting in a year-over-year increase of 19.6 percent. Comparing the fourth quarter of 2024 to the third quarter of 2024 and the fourth quarter of 2023, several factors contributed to the increase of marketing and business development costs, including increases in both client and associate engagement expenses, primarily as a result of our increased headcount and market expansion.

• Noninterest expense categories, other than those specifically noted above, were $46.3 million in the fourth quarter of 2024, compared to $50.9 million in the third quarter of 2024, reflecting a decrease of 9.1 percent. Those costs were $73.0 million in the fourth quarter of 2023, resulting in a year-over-year decrease of 36.6 percent. Several factors contributed to the decrease in other noninterest expense in the fourth quarter of 2024 compared to both the third quarter of 2024 and fourth quarter of 2023, including lower accruals relating to both state tax obligations and other professional fees.

"One of our goals for 2024 was to advance our total revenue performance with balance sheet growth and robust fee initiatives," said Harold R. Carpenter, Pinnacle’s chief financial officer. "We are reporting $475.3 million in total revenues for the fourth quarter of 2024, compared to $396.4 in total revenues for the fourth quarter of 2023, an increase of approximately 19.9 percent. As we look to 2025, we are optimistic that the effects of a steeper yield curve should positively impact our results. We also have increasing confidence that our experienced bankers and advantaged markets will continue to allow us to attract clients to our firm at an accelerated pace. Both bode well for our ability to continue the rapid growth of our revenue base in 2025. We are also keenly focused on loan and deposit pricing as we enter 2025. Since the last Fed rate cut in September 2024, through January 16, 2025, our loan beta performance is approximately 45 percent which is being outpaced by our deposit beta performance of approximately 58 percent. This is outstanding work by our relationship managers, in my opinion.

"As to expenses, total expenses for 2024 were approximately $1.0 billion, or $999.1 million after excluding adjustments noted elsewhere in this release, which is consistent with our outlook as of the end of last quarter. Contributing to our increased expense levels for the fourth quarter was an increased accrual at a higher payout percentage for our cash incentive plan, which stands at an approximate payout of 98.0 percent of target awards."

CAPITAL, SOUNDNESS AND TAXES:

During the fourth quarter of 2024, and to facilitate the orderly transition of BHG’s decision to exit its Small Business Administration (SBA) loan program, Pinnacle Bank acquired approximately $24.0 million in SBA loans from BHG for $10.0 million. Pinnacle assigned $14.1 million in reserves for these loans in its allowance for credit losses. Approximately $13.6 million of these loans are on nonaccrual status as of Dec. 31, 2024. The transaction increased Pinnacle’s ratio of allowance for credit losses to total loans by approximately 0.04 basis points and the ratio of nonaccrual loans to total loans by approximately 0.04 basis points during the fourth quarter.

Additionally, the effective tax rate for the fourth quarter of 2024 decreased to 17.7 percent. This was primarily the result of reductions in tax reserves for uncertain tax positions that have been resolved.

BOARD OF DIRECTORS INCREASES COMMON DIVIDENDS

On Jan. 21, 2025, Pinnacle Financial's Board of Directors increased its quarterly cash dividend to $0.24 per common share to be paid on Feb. 28, 2025 to common shareholders of record as of the close of business on Feb. 7, 2025. Additionally, the Board of Directors approved a quarterly cash dividend of approximately $3.8 million, or $16.88 per share (or $0.422 per depositary share), on Pinnacle Financial's 6.75 percent Series B Non-Cumulative Perpetual Preferred Stock payable on March 1, 2025 to shareholders of record at the close of business on Feb. 14, 2025. The amount and timing of any future dividend payments to both preferred and common shareholders will be subject to the approval of Pinnacle's Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CT on Jan. 22, 2025, to discuss fourth quarter 2024 results and other matters. To access the call for audio only, please call 1-877-209-7255. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. The firm is the No. 1 and fastest growing bank in the Nashville-Murfreesboro-Franklin MSA, according to June 30, 2024 deposit data from the FDIC. Pinnacle is No. 11 on the 2024 list of 100 Best Companies to Work For® in the U.S., its eighth consecutive appearance and was recognized by American Banker as one of America's Best Banks to Work For 11 years in a row and No. 1 among banks with more than $10 billion in assets in 2023.

Pinnacle Bank owns a 49 percent interest in Bankers Healthcare Group (BHG), which provides innovative, hassle-free financial solutions to healthcare practitioners and other professionals. Great Place to Work and FORTUNE ranked BHG No. 4 on its 2021 list of Best Workplaces in New York State in the small/medium business category.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $52.6 billion in assets as of Dec. 31, 2024. As the second-largest bank holding company in Tennessee, Pinnacle operates in several primarily urban markets across the Southeast.

Additional information concerning Pinnacle, which is included in the Nasdaq Financial-100 Index, can be accessed at www.pnfp.com.

Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, 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," "anticipate," "intend," "may," "should," "plan," "looking for," "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 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; (iv) 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; (v) 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; (vi) 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; (vii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (viii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (ix) 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; (x) the results of regulatory examinations of Pinnacle Financial, Pinnacle Bank or BHG, or companies with whom they do business; (xi) BHG's ability to profitably grow its business and successfully execute on its business plans; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xiv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xv) 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; (xvi) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) 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; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xix) 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; (xx) 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; (xxi) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xxii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiii) 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); (xxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxv) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvi) the availability of and access to capital; (xxvii) 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 (xxviii) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2023, and 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 press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest expense, noninterest income and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, gains associated with the sale-leaseback transaction completed in the second quarter of 2023, losses on the restructuring of certain bank owned life insurance (BOLI) contracts, charges related to the FDIC special assessment, income associated with the recognition of a mortgage servicing asset in the first quarter of 2024, fees related to terminating an agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives in the second quarter of 2024 and other matters for the accounting periods presented. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure as well as the impact of Pinnacle Financial's Series B Preferred Stock. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2024 versus certain periods in 2023 and to internally prepared projections.