Pinnacle Financial Q2 2021 Earnings Report
Key Takeaways
Pinnacle Financial Partners reported a strong second quarter with net income per diluted common share increasing by approximately 104 percent compared to the same quarter last year. Net interest income grew 18.6% annualized and fee income grew 23.7% annualized.
Net income per diluted common share was $1.69, compared to $0.83 for the quarter ended June 30, 2020, an increase of approximately 104 percent.
Excluding certain items, net income per diluted common share was $1.68, compared to $0.89 for the quarter ended June 30, 2020, an increase of nearly 89 percent.
Revenues for the quarter were $331.4 million, an increase of $57.8 million from the second quarter of 2020, a year-over-year growth rate of 21.1 percent.
Net interest income for the quarter was $233.2 million, a year-over-year growth rate of 16.2 percent.
Pinnacle Financial
Pinnacle Financial
Forward Guidance
Total expenses for the third and fourth quarters of 2021 should be flat to down from the amounts reported in the second quarter of 2021.
Positive Outlook
- Further reductions in deposit rates are likely.
- Increased investments in Atlanta, Huntsville and Birmingham are expected to contribute to positive operating leverage.
- Ongoing positive operating leverage is expected from onboarding a large number of market-leading revenue producers.
- Deployment of liquidity into investment securities.
- Redeeming $130 million in bank-level subordinated indebtedness in late July 2021, using on-balance sheet liquidity which will also result in reduced funding costs going forward.
Challenges Ahead
- Maintaining loan yields will continue to be a focus item for the company.
- Expenses increased by $11.4 million over the first quarter of 2021 due to incentive accruals.
- Equity investments in other businesses had several big wins in the second quarter of 2021 with these investments contributing $3.6 million in incremental second quarter revenues.
- Mortgage did experience a linked-quarter decline of $7.0 million this quarter as rates began to fluctuate and the absolute volume of originations retreated in comparison to the impressive amount of business produced over the last several quarters.
- The firm estimates its second quarter 2021 net interest margin was negatively impacted by approximately 17 basis points as a result of PPP loans and additional liquidity, compared to approximately 27 basis points for the first quarter of 2021 and 32 basis points for the second quarter 2020.