Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) Q1 2024 Results Conference Call April 23, 2024 9:30 AM ET

Company Participants

Terry Turner - Chief Executive Officer
Harold Carpenter - Chief Financial Officer

Conference Call Participants

Casey Haire - Jefferies
Steven Alexopoulos - JPMorgan
Catherine Mealor - KBW
Brandon King - Truist Securities
Stephen Scouten - Piper Sandler
Michael Rose - Raymond James
Timur Braziler - Wells Fargo
Brett Rabatin - Hovde Group
Matt Olney - Stephens
Samuel Varga - UBS
Jared Shaw - Barclays
Brian Martin - Janney Montgomery

Operator

Good morning, everyone. And welcome to the Pinnacle Financial Partners First Quarter 2024 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Mr. Harold Carpenter, Chief Financial Officer. Please note Pinnacle's earnings release and this morning's presentation are available on the Investor Relations page of their Web site at www.pnfp.com. Today's call is being recorded and will be available for replay on Pinnacle's Web site for the next 90 days. At this time, all participants have been placed on a listen-only mode. The floor will be opened for your questions following the presentation [Operator Instructions].

During the presentation, we may make comments, which may constitute forward-looking statements. All forward-looking statements are subject to risks, uncertainties and other facts that may cause actual results, performance or achievements of Pinnacle Financial Partners to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond Pinnacle Financial's ability to control or predict. And listeners are cautioned to not put undue reliance on such forward-looking statements. A more detailed description of these and other risks is contained in Pinnacle’s financial annual report on Form 10-K for the year ended December 31, 2023, and its subsequently filed quarterly reports. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise.

In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G, a presentation of the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP measures to the comparable GAAP measures will be available on Pinnacle Financials Web site at www.pnfp.com. With that, I am now going to turn the presentation over to Mr. Terry Turner, Pinnacle’s President and CEO.

Terry Turner

Thank you, Paul. And thank all of you for joining us here this morning. Most of you have endured these calls and so we're going to begin every one of these calls with this shareholder value dashboard. These metrics are really our North Star. There are a lot of interesting things that can be talked about and obviously, Harold will talk about more things in more detail here in just a few minutes. But ultimately, we're here to produce shareholder value and this is how we think you do it over time. Looking at the GAAP measures first and then the adjusted numbers, which really better reflect how we run the business. At a glance, you can see that we continue to grow revenue more rapidly and reliably than peers and we continue to grow our balance sheet volumes more rapidly and reliably than peers, which is the fuel for our future revenue growth. And that we relentlessly focus on compounding tangible book value. And then across the bottom, now the key asset quality metrics we focus on reflecting both problem loan formation and losses. In general, those measures continue to be among the best in the peer group, and as you can see, compare favorably to our longer term historical averages. But that said, during the quarter, we increased our allowance for credit losses on loans from 1.08% to 1.12%, primarily as a result of further deterioration in a previously disclosed problem borrower and to provide additional protection given the higher for longer rate scenario. So from 30,000 feet this quarter, we've got the reserve build on one side, largely being offset by the recognition of a conversion mortgage servicing right and lower expenses in the form of reduction in associate incentives. Nevertheless, for me, there's a lot to celebrate here, particularly in terms of revenue growth with growth in both noninterest income and net interest income, double digit core deposit growth and even net growth in noninterest bearing deposits. So with that, Harold, let's take a more in-depth look to quarter.