Pinnacle Profit Doubled as Merger Costs Receded
Adjusted earnings rose 5% sequentially to $2.50 a share.
Pinnacle Financial Partners (PNFP), the bank holding company, more than doubled second-quarter profit available to common shareholders as costs from its Synovus merger receded.
Net income available to common shareholders rose to $313 million from $135 million in the first quarter, while diluted earnings increased to $2.07 a share from $0.89. Profit rose 101% from a year earlier, though diluted earnings advanced 4%. Adjusted net income increased to $379 million from $363 million sequentially and adjusted earnings were 25% above the year-earlier period.
Reported revenue slipped to $1.203 billion from $1.217 billion in the first quarter, with year-over-year comparisons distorted by the Jan. 1 Synovus merger. Adjusted revenue edged up to $1.238 billion from $1.229 billion. Net interest income rose 2% sequentially to $956 million, even as the net interest margin narrowed nine basis points to 3.44% because first-quarter nonrecurring items fell away, loan yields followed SOFR lower and wholesale funding increased.
Loans grew faster than deposits. Period-end loans increased 3% to $88.1 billion, led by 6% growth in commercial-and-industrial lending, while commercial real-estate loans declined 1%. Deposits rose 1% to $100.9 billion as gains in money-market and non-interest-bearing balances were partly offset by declines in interest-bearing demand and savings accounts.
Non-interest revenue fell 13% to $247 million, reflecting a $29 million investment-securities loss and lower equity-method investment income. Adjusted non-interest revenue also declined as BHG shifted its placement strategy. That pressure was offset by a 24% drop in reported non-interest expense as merger-related costs fell to $51 million from $275 million. The adjusted tangible efficiency ratio improved to 49.8% from 51.3%.
Credit measures strengthened alongside the loan growth. Nonperforming loans declined 10% to $415 million, the nonperforming-asset ratio fell to 0.50%, and the net charge-off ratio eased to 0.22%. The provision for credit losses declined 17% to $63 million, while coverage of nonperforming loans increased to 248.18%.
Pinnacle added 74 experienced revenue producers during the quarter, up from 50 in the first quarter. Its preliminary common-equity Tier 1 ratio rose to 9.93% from 9.81% sequentially, though it remained below the 10.70% recorded a year earlier.