Regional banking company Pinnacle Financial Partners (NASDAQ: PNFP) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 37.8% year on year to $505 million. Its non-GAAP profit of $2 per share was 4.8% above analysts’ consensus estimates.

Is now the time to buy PNFP? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Pinnacle Financial Partners delivered results in Q2 that surpassed Wall Street’s revenue and non-GAAP earnings expectations, continuing its pattern of outpacing peers in an environment marked by slow industry-wide loan growth. Management attributed the performance primarily to its ongoing strategy of hiring experienced revenue producers, which has enabled double-digit growth in earning assets and core deposits, even as other regional banks struggle. CEO Terry Turner emphasized, “Our model produced double-digit earning asset growth and 13% core deposit growth, roughly five times the peer median.”

Looking ahead, management’s guidance is based on sustained hiring momentum and the resulting expansion of the bank’s customer base, with new and existing markets seen as key drivers for growth in loans and deposits. CFO Harold Carpenter noted, “With our new markets and new relationship managers, this should provide for another strong year of deposit growth for us.” The company also expects further improvement from its BHG segment and is preparing for a deposit cost environment that could benefit from Federal Reserve rate cuts, although management remains cautious about the pace and timing of such changes.

Key Insights from Management’s Remarks

Management credited the quarter’s growth to the bank’s ability to recruit seasoned relationship managers and to capitalize on core deposit gains, while also highlighting contributions from its fee-generating businesses.

• Experienced banker recruitment: Pinnacle’s growth model is centered on hiring revenue producers with nearly two decades of experience, enabling rapid movement of client relationships and reliable asset growth. CEO Terry Turner explained the strategy relies heavily on referrals from current associates, ensuring high-quality hires who can quickly transfer their book of business.

• Core deposit expansion: The bank achieved 13% core deposit growth over the past year, a rate significantly above peers, by targeting large market share leaders in its footprint. Management noted that this growth was not dependent on broader economic conditions but instead was the result of relationship-driven market share gains.

• BHG segment outperformance: The Bankers Healthcare Group (BHG) business segment delivered strong fee income, with management raising its growth outlook for BHG earnings in 2025 from 20% to approximately 40%, citing better credit performance and lower operating costs.

• Geographic market deepening: While Pinnacle has expanded into new markets like Richmond, Virginia, management emphasized that most hiring and growth will continue within the existing footprint, especially in urban centers of the Southeast. Turner confirmed, “We just need to push ahead in these markets that we’re in that ought to produce outsized growth going forward.”

• Stable margin outlook: Net interest margin (NIM) improved slightly during the quarter, and management expects it to remain flat to slightly up in the coming months, supported by stable deposit costs and incremental loan yields, barring unexpected rate cuts.

Drivers of Future Performance

Pinnacle’s forward outlook depends on continued hiring, market share gains, and the impact of potential interest rate changes on deposit and loan pricing.

• Ongoing relationship manager hiring: Management believes that sustained recruitment of experienced bankers will drive further loan and deposit growth, regardless of the pace of economic recovery. Turner stated that nearly all recent loan growth has come from new hires, and the company has dozens of outstanding job offers to maintain this trajectory.

• Deposit cost management and rate environment: Carpenter indicated that future Federal Reserve rate cuts could allow the bank to lower deposit costs, supporting net interest margin expansion. The current strategy is to maintain or improve deposit betas (the degree to which deposit rates follow market rates) should the rate environment shift.

• BHG and fee-based growth: The company expects BHG to continue its strong performance, with both origination growth and credit quality improvements contributing to higher fee income. Management also forecasts fee revenue growth in wealth management and core banking services.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) whether Pinnacle can sustain its pace of experienced relationship manager hiring, (2) how effectively it converts new hires into core deposit and loan growth within existing and new urban markets, and (3) the degree to which deposit cost management and potential interest rate cuts support margin expansion. The ongoing performance of the BHG segment will also be an important indicator of non-interest income growth.

Pinnacle Financial Partners currently trades at $90.25, down from $95.16 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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