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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.
Pinnacle Financial
Pinnacle Financial
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.
- Suspended share repurchase program.
- Eliminated much of 2020 hiring plan.