Shares of Pinnacle Financial Partners (NASDAQ:PNFP) plummeted 5.01% in Thursday's trading session, despite the regional banking company reporting better-than-expected third-quarter earnings results.

The Nashville-based financial services firm announced Q3 CY2025 earnings that surpassed Wall Street's expectations. Pinnacle reported earnings per share of $2.19, beating analysts' consensus estimates of $2.03 by 7.8%. The company's revenue also came in strong at $544.8 million, up 16.7% year-over-year and exceeding analyst projections of $519.9 million by 4.8%.

Despite the positive earnings surprise, investors seemed to focus on other aspects of the report. The company's net interest margin of 3.3% only narrowly beat estimates of 3.2%, while its efficiency ratio of 55.6% slightly missed expectations. Additionally, although Pinnacle's tangible book value per share grew 10.6% year-over-year to $61.53, it appears the market was hoping for even stronger growth in this key metric for banking stocks.

The sharp stock decline following an earnings beat suggests investors may be concerned about the sustainability of Pinnacle's growth or potential headwinds in the regional banking sector. As interest rates remain elevated, there could be growing worries about the impact on loan demand and credit quality for regional banks like Pinnacle Financial Partners.