What Management Said
Read the full Q2 2026 transcript ↗During today's quarterly earnings call, we will reference the slides and press release that are available within the investor relations section of our website, pnfp.com. We have remained focused on the leverage points that help us deliver on our commitments and continue a long and proud heritage of growth and success. For the second quarter of 2026, we reported diluted EPS of $2.07, an adjusted diluted EPS of $2.50, excluding $82 million of pre-tax adjusted items. Year-to-date adjusted EPS is up 26% versus the same period last year.
We are maintaining our 2026 guidance with our year-to-date performance giving us added conviction in the ranges we set. Starting with the balance sheet, loans grew $2.9 billion linked quarter, ahead of our expectations. This strong growth in earning assets, up 4% quarter-over-quarter, led to 2% growth in net interest income. This is the broad-based, high-quality growth that has long been the hallmark of this firm, and the combination is making it even more powerful.
Fee income is another area where our differentiation shows up with double-digit year-to-date growth on a combined firm basis. Core banking, wealth management, and capital markets all posted strong year-over-year growth. On the expenses, we stayed disciplined while continuing to invest in the areas where we see the greatest opportunity to accelerate long-term growth. As expected, charge-offs remain low and NPAs declined this quarter to 50 basis points.
What went well
- Pinnacle reported second-quarter 2026 diluted EPS of $2.07 and adjusted diluted EPS of $2.50 (excluding $82 million of pre-tax adjusted items), with adjusted EPS up 5% linked-quarter and 25% versus second quarter 2025, and year-to-date adjusted EPS up 26%.
- Period-end loans grew $2.9 billion, or 14% annualized, from the first quarter, ahead of expectations and led by broad-based C&I lending across geographies plus continued specialty-lending strength; on a year-to-date combined basis loans rose 6% (12% annualized), exceeding prior guidance.
- Deposits grew $795 million despite seasonal tax-season and public-funds headwinds, and excluding the public-funds decline core deposits grew $963 million, or 1%, keeping the firm on pace for full-year deposit growth of 8%-10%.
- Net interest income was $956 million, up 2% or 10% annualized from the first quarter, on 4% (15% annualized) growth in earning assets.
- Fee income showed double-digit year-to-date growth on a combined-firm basis, with core banking and capital markets fees each up 3% linked-quarter as revenue synergies drove another strong quarter of capital markets execution.
- Credit quality was a clear strength: net charge-offs were $48 million (22 basis points), the non-performing asset ratio improved to 0.5% from 0.58%, and the allowance for credit losses declined to 1.17% from 1.19% as the reserve on new production came in below the portfolio average.
- The recruiting engine added 74 experienced revenue producers, up 48% from the first quarter and up 14% versus the combined second quarter of 2025, with 34 more starting or accepting offers in the first half of July and 124 added year-to-date (roughly half from core legacy-Synovus markets); year-to-date banker retention was 94%.
- Preliminary CET1 rose 12 basis points to 9.93%, and year-to-date adjusted return on average tangible common equity was 17.7%, approaching the 18% 2027 target.
- Coalition Greenwich's first-quarter report placed Pinnacle first among peers in business momentum — the net percentage of clients planning to do more with the bank — by a wide margin.
- Management said the combination has produced roughly 19% adjusted-diluted-EPS accretion year-to-date versus standalone consensus at announcement, with merger accounting (loan-mark/securities-restructuring revenue offset by intangible amortization) having zero net EPS impact.
What went wrong
- Net interest margin fell 9 basis points to 3.44% (about 6 basis points excluding first-quarter non-recurring items), pressured by a 3-4 basis point decline in average SOFR and higher-cost funding as seasonal deposit softness pushed the loan-to-deposit ratio higher.
- Adjusted non-interest revenue declined $12 million from the first quarter, driven largely by lower BHG income; equity-method income from BHG was $24 million as BHG shifts its loan-placement strategy toward securitizations and whole-loan sales.
- The firm incurred $51 million of non-recurring merger expenses during the quarter, primarily personnel and technology integration costs.
- Management tempered the full-year NIM outlook to 3.44%-3.47% and acknowledged that incremental growth in 2026 comes with higher-cost funding and therefore less incremental net interest income (recovered in pre-provision net revenue through low incremental expense).
- Shared national credit balances rose to about 12.5% of the loan book, above the firm's stated long-run target of less than 10%; management characterized the quarter as an anomaly tied to elevated lead-arranger activity and prefunding of second-half payoffs.
- Expenses are set to increase about $20 million linked-quarter in the third quarter, driven by BHG and personnel costs, after a seasonally lower second quarter.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Period-end loan growth | FY2026 | 9%-11%, tracking the top end of the range |
| Total deposit growth | FY2026 | 8%-10%, middle of the range |
| Net interest margin | FY2026 | 3.44%-3.47% |
| Adjusted revenue | FY2026 | $5.0 billion-$5.2 billion, trending to $5.05 billion-$5.1 billion |
| Adjusted non-interest expense | FY2026 | middle of $2.675 billion-$2.775 billion |
| Adjusted effective tax rate | FY2026 | middle of 20%-21% |
| Net charge-offs | FY2026 | 20-25 basis points |
| CET1 ratio | FY2026 | building toward the 10.25% target; ~30 bps of capital generated per quarter before RWA growth |
| Merger cost-synergy realization | FY2026-FY2027 | approximately 40% realized in 2026, on track for ~75% in 2027 |
| Revenue synergies | FY2026 | approximately $20 million in 2026 (~$10 million, or 50%, realized year-to-date) |
| Third-quarter expense step-up | Q3 2026 | approximately +$20 million linked-quarter (BHG and personnel) |
| Average cash balances | 2H 2026 | $4.0 billion-$4.5 billion |
| Expense growth | FY2027 | high-single-digit, less the incremental 35% of $250 million in synergies |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Adjusted diluted EPS | +25% YoY, +5% QoQ ($2.50 adjusted; $2.07 GAAP) | Broad-based balance-sheet growth and core client fee income, with zero net merger-accounting impact |
| Period-end loans | +14% annualized QoQ (+$2.9 billion) | Broad-based C&I lending across geographies plus specialty-lending strength |
| Net interest income | +10% annualized QoQ ($956 million) | 4% growth in earning assets outpaced a modest 9 bps NIM decline |
| BHG equity-method income | $24 million (down QoQ) | BHG shift toward securitizations and whole-loan sales, in line with expectations |
| Net charge-offs | 22 basis points | Disciplined underwriting and lower reserve on new production; NPAs improved to 0.5% |
| Adjusted ROATCE | 17.7% year-to-date | Strong core profitability approaching the 18% 2027 target |
| Revenue producers hired | +14% vs combined Q2 2025 (74 added, +48% QoQ) | Elevated talent dislocation and a referral-based recruiting model working across the full franchise |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Synovus merger integration | Merger closed January 1, 2026; first combined quarter ahead of plan | Six months in; ~19% YTD adjusted-EPS accretion vs standalone consensus, ~40% cost synergies in 2026, on track for operational/brand conversion in March 2027 | — |
| Revenue producer hiring model | 50 producers added in Q1 2026 | 74 added in Q2 (+48% QoQ), 124 YTD with ~50% from core Synovus markets, 34 more in early July; on track for a record 250, 94% retention | — |
| Net interest margin trajectory | 3.53% in Q1 2026 | 3.44% in Q2 (down 9 bps); full-year guide 3.44%-3.47% with a stated ~3.30% floor and continued high-single-digit NII growth | — |
| BHG strategy | Shift toward securitizations/whole-loan sales flagged in Q1 | $24 million equity-method income; near-term revenue optimization accepted to improve long-term profitability | — |
| Up-market and shared national credit lending | SNC historically under 10% of loans | SNC rose to ~12.5% of loans on lead-arranger activity and prefunding; management expects it to revert below 10% | — |
| Capital management and buybacks | CET1 9.8% at Q1 | CET1 9.93%, building toward 10.25%; share repurchases described as a real possibility in 2027 once the target is reached | — |
| Technology and AI | Convert then innovate | ~20 AI engineers and 40 power users deployed internally; post-conversion roadmap focused on commercial treasury, payments and ERP integration | — |
Q&A Summary
What changed on the margin versus the mid-quarter update, and was it driven by higher growth needing higher-cost funding?
Management said the 9 bps NIM decline (about 6 bps ex Q1 non-recurring items) was driven mainly by a 3-4 bps drop in average SOFR and seasonal deposit softness raising the loan-to-deposit ratio, not the growth model; total cost of deposits rose only 1 bp and the dynamic is expected to reverse in the second half.
Why is Pinnacle avoiding the loan-spread compression peers are seeing?
Kevin Blair attributed it to a different value proposition — bankers consolidate portfolios of clients they already have relationships with rather than winning on low price — plus disciplined pricing rigor from an ownership/equity culture aligned to the firm's goals.
How do you dispel concerns about funding the loan growth and the NII outlook after tempering the margin guide?
Jamie Gregory pointed to the proof points of delivered growth and hiring, said enhanced disclosures de-risk the outlook, and noted incremental growth comes with higher-cost funding but low incremental expense so the earnings are recovered in PPNR.
Are there enough good lenders to keep hiring at this pace?
Blair said recruiting is a self-reinforcing cycle — producers bring teams and Rolodexes — and pointed to 34 sign-ons already in July and 13% year-over-year growth on a combined basis; there are enough bankers to keep adding without lowering standards.
What drove the allowance ratio lower and the reserve on new production?
Blair said production has skewed to asset classes carrying lower lifetime loss — core C&I and low-risk-weight structured lending — rather than deliberately targeting higher-quality assets; it reflects growing 'down the middle' without stretching on price or credit.
Where does the CET1 build stand relative to the 10.25% target?
Gregory said the firm generates about 30 bps of capital per quarter before RWA growth, so reaching 10.25% by year-end depends on second-half loan growth; a pending Fed NPR could add roughly 40 bps of capital in 2027 and reshape the target.
How is the $130 million revenue-synergy target progressing and what will 2026 deliver?
Blair said the firm targeted about $20 million of revenue synergies in 2026 and is at roughly 50% (~$10 million) through June, mostly via capital markets syndication and FX; the full benefit follows the March 2027 systems conversion, and the $130 million target remains attainable.
Are share repurchases possible in 2027?
Gregory said buybacks are absolutely a possibility, with longer-term capital planning balanced between best-in-class organic loan growth and capital-management actions led by share repurchases once capital targets are met.
More on Pinnacle Financial Partners, Inc.
Reported 2026-07-23 · figures from the Pinnacle Financial Partners, Inc. Q2 2026 earnings call.
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