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Derivative Instruments (Tables) | 12 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Summary of Interest Rate Swaps | Non-hedge derivatives For derivatives not designated as hedges, the gain or loss is recognized in current period earnings. Pinnacle Financial enters into swaps to facilitate customer transactions and meet their financing needs. Upon entering into these instruments to meet customer needs, Pinnacle Financial enters into offsetting positions in order to minimize the risk to Pinnacle Financial. These swaps qualify as derivatives, but are not designated as hedging instruments. The income statement impact of the offsetting positions is limited to changes in the reserve for counterparty credit risk. A summary of Pinnacle Financial's interest rate swaps to facilitate customer transactions as of December 31, 2024 and 2023 is included in the following table (in thousands):
| December 31, 2024 |  | December 31, 2023
| Notional Amount |  | Estimated Fair Value (1) |  | Notional Amount |  | Estimated Fair Value (1)
Interest rate swap agreements: |  |  |  |  |  |  |
Assets | $ | 2,633,014 |  |  | $ | 62,494 |  |  | $ | 2,037,740 |  |  | $ | 66,462 |
Liabilities | 2,633,014 |  |  | (63,225) |  |  | 2,037,740 |  |  | (67,206) |
Total non-hedging derivatives | $ | 5,266,028 |  |  | $ | (731) |  |  | $ | 4,075,480 |  |  | $ | (744) |
(1) The variation margin payments for derivatives cleared through central clearing houses are characterized as settlements. At December 31, 2024 and 2023, there were no interest rate swap agreements designated as non-hedge derivatives cleared through clearing houses. The effects of Pinnacle Financial's interest rate swaps to facilitate customers' transactions on the income statement during the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
|  |  | Amount of Gain (Loss) Recognized in Income
| Location of Gain (Loss) Recognized in Income |  | Year ended December 31,
|  | 2024 |  | 2023 |  | 2022
Interest rate swap agreements | Other noninterest income |  | $ | 5 |  |  | $ | (308) |  |  | $ | 53 |
Schedule of Derivative Instruments | Derivatives designated as cash flow hedges For derivative instruments that are designated and qualify as a cash flow hedge, the aggregate fair value of the derivative instrument is recorded in other assets or other liabilities with any gain or loss related to changes in fair value recorded in accumulated other comprehensive income, net of tax. The gain or loss is reclassified into earnings in the same period during which the hedged asset or liability affects earnings and is presented in the same income statement line item as the earnings effect of the hedged asset or liability. Pinnacle Financial uses forward cash flow hedge relationships in an effort to manage future interest rate exposure. The hedging strategy converts the SOFR-based variable interest rate on forecasted borrowings to a fixed interest rate and is used in an effort to protect Pinnacle Financial from floating interest rate variability. A summary of Pinnacle Financial's cash flow hedge relationships as of December 31, 2024 and 2023 is as follows (in thousands):
|  |  |  |  |  |  |  |  |  |  |  | December 31, 2024 |  | December 31, 2023
|  | Balance Sheet Location |  | Weighted Average Remaining Maturity (In Years) |  |  |  | Receive Rate |  | Pay Rate |  | Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
Asset derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate floor - loans |  | Other assets |  | 2.84 |  |  |  | 4.00%-4.50% minus USD-Term SOFR 1M |  | N/A |  | $ | 875,000 |  |  | $ | 15,566 |  |  | $ | 875,000 |  |  | $ | 36,483 |
Interest rate collar - loans |  | Other assets |  | 2.84 |  |  |  | 4.25%-4.75% minus USD-Term SOFR 1M |  | USD-Term SOFR 1M minus 6.75%-7.00% |  | $ | 875,000 |  |  | $ | 17,252 |  |  | $ | 875,000 |  |  | $ | 38,314 |
|  |  |  |  |  |  |  |  |  |  |  | $ | 1,750,000 |  |  | $ | 32,818 |  |  | $ | 1,750,000 |  |  | $ | 74,797 |
The effects of Pinnacle Financial's cash flow hedge relationships on the statement of comprehensive income (loss) during the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
| Amount of Gain (Loss) Recognized in Other Comprehensive Income
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
Asset derivatives |  |  |  |  |
Interest rate floors and collars - loans | $ | (19,902) |  |  | $ | (7,414) |  |  | $ | 1,002 |
The cash flow hedges were determined to be highly effective during the periods presented and as a result qualified for hedge accounting treatment. If a hedge were deemed to be ineffective, the amount included in accumulated other comprehensive income (loss) would be reclassified into a line item within the statement of income that impacts operating results. A hedging relationship is no longer considered to be effective if a portion of the hedge becomes ineffective, the item hedged is no longer in existence or Pinnacle Financial discontinues hedge accounting. Gains on cash flow hedges totaling $9.0 million, $9.7 million and $10.0 million, net of tax, were reclassified from accumulated other comprehensive income (loss) into loan interest income during the years ended December 31, 2024, 2023 and 2022, respectively. There are no unrealized gains, net of tax, remaining to be reclassified from accumulated other comprehensive income (loss) into net income as of December 31, 2024. Derivatives designated as fair value hedges For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. Pinnacle Financial utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable securities available-for-sale. The hedging strategy on securities converts the fixed interest rates to variable interest rates based on SOFR or federal funds rates. These derivatives are designated as partial term hedges of selected cash flows covering specified periods of time prior to the call dates of the hedged securities. Pinnacle Financial also utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on FHLB advances with payments beginning on various dates throughout 2024 and the first quarter of 2025. During 2024, Pinnacle Financial entered into a portfolio layer method fair value hedge with a notional amount of $300 million. Under the portfolio layer method, the hedged item is designated as a hedged layer of a closed portfolio of available-for-sale securities that is anticipated to remain outstanding throughout the hedge period ending September 1, 2026. A summary of Pinnacle Financial's fair value hedge relationships as of December 31, 2024 and 2023 is as follows (in thousands):
|  |  |  |  |  | December 31, 2024 |  | December 31, 2023
|  | Balance Sheet Location | Weighted Average Remaining Maturity (In Years) | Weighted Average Pay Rate | Receive Rate | Notional Amount |  | Estimated Fair Value (1) |  | Notional Amount |  | Estimated Fair Value (1)
Asset derivatives |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps - securities |  | Other assets | 10.36 | 3.25% | Federal Funds/SOFR | $ | 3,198,426 |  |  | $ | 67,064 |  |  | $ | 543,061 |  |  | $ | 42,983 |
Interest rate swaps - borrowings |  | Other assets | N/A | SOFR | —% | $ | — |  |  | $ | — |  |  | $ | 750,000 |  |  | $ | 3,654 |
Liability derivatives |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps - securities |  | Other liabilities | N/A | N/A | Federal Funds/SOFR | — |  |  | — |  |  | 1,569,078 |  |  | (1,275) |
Interest rate swaps - borrowings |  | Other liabilities | 2.73 | SOFR | 3.48% | 1,175,000 |  |  | (21,428) |  |  | 425,000 |  |  | (1,656) |
Total fair value derivatives |  |  |  |  |  | $ | 4,373,426 |  |  | $ | 45,636 |  |  | $ | 3,287,139 |  |  | $ | 43,706 |
(1) The variation margin payments for derivatives cleared through central clearing houses are characterized as settlements. At December 31, 2024 and 2023, the notional amount of fair value derivatives hedges cleared through clearing houses is $3.0 billion and $2.0 billion with a fair value that approximates zero due to $72.7 million and $4.0 million in variation margin payments. Under Pinnacle Financial's outstanding fair value hedges, notional amounts totaling $317.9 million as of December 31, 2024 receive a variable rate of interest based on the daily compounded federal funds rate and notional amounts totaling $4.1 billion as of December 31, 2024 receive a variable rate of interest based on the daily compounded SOFR. The effects of Pinnacle Financial's fair value hedge relationships on the income statement during the years end December 31, 2024, 2023 and 2022 were as follows (in thousands):
| Location of Gain (Loss) |  | Amount of Gain (Loss) Recognized in Income
|  | Year ended December 31,
Securities |  | 2024 |  | 2023 |  | 2022
Interest rate swaps | Interest income on securities |  | $ | 25,356 |  |  | $ | (14,348) |  |  | $ | 80,728 |
Securities available-for-sale | Interest income on securities |  | $ | (25,356) |  |  | $ | 14,348 |  |  | $ | (80,728) |
FHLB advances |  |  |  |  |  |  |
Interest rate swaps - FHLB advances | Interest expense on FHLB advances and other borrowings |  | $ | (23,426) |  |  | $ | 1,998 |  |  | $ | — |
FHLB advances | Interest expense on FHLB advances and other borrowings |  | $ | 23,426 |  |  | $ | (1,998) |  |  | $ | — |
The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at December 31, 2024 and 2023 (in thousands):
| Carrying Amount of the Hedged Assets |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2024 |  | December 31, 2023
Line item on the balance sheet |  |  |  |  |  |  |
Securities available-for-sale | $ | 3,905,016 |  |  | $ | 2,074,621 |  |  | $ | (67,064) |  |  | $ | (41,708) |
FHLB advances | $ | 1,196,428 |  |  | $ | 1,173,002 |  |  | $ | 21,428 |  |  | $ | (1,998) |
Disclosure of Credit Derivatives | A summary of Pinnacle Financial's CDS as of December 31, 2024 and 2023 is included in the following table (in thousands):
|  | December 31, 2024 |  | December 31, 2023
|  | Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
Credit default swap |  | $ | 81,993 |  |  | $ | 185 |  |  | $ | — |  |  | $ | — |
The effects of Pinnacle Financial's CDS on the income statement during the during the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
|  |  | Amount of Gain Recognized in Income
| Location of Loss Recognized in Income |  | Year ended December 31,
|  | 2024 |  | 2023 |  | 2022
Credit default swap | Other noninterest income |  | 185 |  |  | — |  |  | — |

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- Definition Tabular disclosure of credit derivatives which includes information by sellers of credit derivatives, about each credit derivative, or each group of similar credit derivatives, including (a) the nature of the credit derivative - its term, how it arose, the events or circumstances that would require the seller to perform under the credit derivative, and the current status of the payment/performance risk of the credit derivative; (b) the maximum potential amount of future payments (undiscounted) the seller could be required to make under the credit derivative; (c) the current fair value of the credit derivative; and (d) the nature of any recourse provisions under the credit derivative, and any assets held either as collateral or by third parties. A credit derivative is a derivative instrument (1) in which one or more of its underlyings are related to the credit risk of a specified entity (or a group of entities) or an index based on the credit risk of a group of entities and (2) that exposes the seller to potential loss from credit-risk-related events specified in the contract. Examples of credit derivatives within the scope of this paragraph include, but are not limited to, credit default swaps, credit spread options, and credit index products; also includes a hybrid instrument that has an embedded credit derivative (for example, but not limited to, a credit-linked note). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4J Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4K Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4L -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4L + Details
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- Definition Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 2 -SubTopic 10 -Topic 815 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-2 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-1A Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-1B Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 8 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4B Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-1 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5 Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4C + Details
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- Definition Tabular disclosure of interest rate derivatives, including, but not limited to, the fair value of the derivatives, statement of financial position location, and statement of financial performance location of these instruments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-4C + Details
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