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Mar 31, 2020
Pinnacle Financial Q1 2020 Earnings Report
Pinnacle Financial's earnings decreased due to increased provision for credit losses related to the COVID-19 pandemic, though loan and deposit growth and fee revenues exceeded expectations.
Key Takeaways
Pinnacle Financial Partners reported a decrease in net income per diluted common share to $0.37 for Q1 2020, compared to $1.22 for Q1 2019. The results were impacted by an $86 million increase in the allowance for credit losses due to the COVID-19 pandemic. However, the company saw growth in loans, deposits, and fee income.
Diluted EPS was $0.37, a decrease of 69.7% compared to Q1 2019.
Loans increased to $20.4 billion, reflecting year-over-year growth of 12.2%.
Deposits reached a record $21.3 billion, an increase of 15.4% from the previous year.
The company increased its allowance for credit losses by $86 million due to the COVID-19 pandemic.
Forward Guidance
Pinnacle Financial anticipates further increasing its liquidity position during the second quarter and expects 2020 annualized expense growth to be in the low to mid-single digit percentage increases in comparison to 2019.
Positive Outlook
- Continuing to increase on-balance sheet liquidity position.
- Expects minimal impact on net interest income from additional liquidity.
- Targeting a cash incentive award payout of approximately 50 percent for 2020.
- Focusing hiring plan on Atlanta buildout, key revenue producer adds, and critical operational positions.
- Believe 2020 annualized expense growth will be in the low to mid-single digit percentage increases in comparison to 2019.
Challenges Ahead
- Additional liquidity will have a dilutive impact on net interest margin in 2020.
- Expenses increased in the first quarter of 2020 due in large part to the impact of COVID-19 to off-balance sheet reserves, primarily for unfunded lines of credit.
- Reduced targeted cash incentive award for 2020 to a payout of approximately 50 percent.
Historical Earnings Impact
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