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PNFP Reports Record Diluted Earnings Per Share of $0.64 for 2Q 2015

July 21, 2015 5:30 PM

ROA of 1.44%; Efficiency Ratio of 51.1%

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.64 for the quarter ended June 30, 2015, compared to net income per diluted common share of $0.49 for the quarter ended June 30, 2014, an increase of 30.6 percent. Net income per diluted common share was $1.25 for the six months ended June 30, 2015, compared to net income per diluted common share of $0.96 for the six months ended June 30, 2014, an increase of 30.2 percent.

“Second quarter was a period of outstanding focus and execution by Pinnacle associates throughout the firm,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “Important strategic initiatives like building a capital markets unit and emphasizing commercial real estate lending continued to build momentum during the quarter. We made great progress in assimilating a new banking team in Memphis and planning for the integration of two outstanding banking franchises, Magna Bank in Memphis and CapitalMark Bank & Trust in Chattanooga. Perhaps most importantly, we continued the rapid organic balance sheet and earnings growth in our core franchise in Nashville and Knoxville with core earnings expansion for the 17th consecutive quarter.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

“Loan growth, which was outstanding in the second quarter, is viewed by many others as the barometer of our success,” Turner said. “However, our view has always been that a better indication of true success is core deposit growth. Even in a quarter with significant loan growth, we were able to grow our core deposits at an even faster rate. We also have enjoyed great hiring success year-to-date and believe our model of hiring the best bankers will enable us to continue our rapid organic balance sheet growth in Nashville and Knoxville as well as our new markets, Memphis and Chattanooga.”

OTHER SECOND QUARTER 2015 HIGHLIGHTS:

“Although we experienced growth in our net interest income in the second quarter, we also experienced a decrease of approximately 0.11 percent in asset yields, which had remained fairly steady for several quarters,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “This resulted in our net interest margin of 3.65 percent, which is below the low end of our target range of 3.70 percent. The decrease in the net interest margin for the quarter was a result of increased pricing competition for loans as well as the ongoing process of repositioning our balance sheet for rising rates.

“We continue to believe our organic growth model will provide us the necessary volumes to maintain our track record of quarter-over-quarter revenue growth during what we hope to be a relatively short time period before the long-awaited rising rate environment,” Carpenter continued. “Ongoing organic growth will be the foundation of our business model in our targeted four Tennessee markets. The integration of CapitalMark and Magna are on track for a third quarter 2015 merger close. Both franchises are growing their revenue base currently, and we fully expect their growth to continue post-merger. We believe being able to grow a banking franchise in the midst of a merger is unusual and a testament to the quality of the personnel and leadership at both of these franchises.”

Approvals from the primary regulators, the Tennessee Department of Financial Institutions and the Federal Deposit Insurance Corporation, have been obtained for the previously announced mergers. Carpenter noted that the primary pending items related to the legal closings were the required shareholder votes at both CapitalMark and Magna as well as the approval by various agencies for which Magna Bank services residential mortgages. Furthermore, Carpenter stated that Pinnacle Bank was in the process of completing a currently estimated $50 million subordinated debt issuance to various accredited institutional investors and that this debt issuance should be completed before July 31, 2015.

“We continued to experience improved operating leverage in the second quarter with another record efficiency ratio of 51.1 percent,” Carpenter said. “We are very excited about this result given the increased hiring we have experienced in our markets this year. As we announced in May, we originally recruited a Memphis banking team of eight banking professionals, which has since expanded to 11. In addition, we have added 12 new revenue producers to our ranks in Nashville and Knoxville this year with others in the pipeline that, hopefully, will find their way to our firm.

“As we have stated in the past, the achievement of improved operating leverage is based on increasing our revenues along with the careful management of our expense base. As a firm, we remain focused on revenue growth and achieving it by recruiting the best financial professionals in our markets.”

BOARD OF DIRECTORS DECLARES DIVIDEND

On July 21, 2015, Pinnacle’s Board of Directors also declared a $0.12 per share cash dividend to be paid on Aug. 31, 2015 to common shareholders of record as of the close of business on Aug. 7, 2015. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle’s Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on July 22, 2015 to discuss second quarter 2015 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to approximately $6.5 billion in assets at June 30, 2015. At June 30, 2015, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and five offices in Knoxville. The firm expanded to West Tennessee in April 2015 with a loan-production office in Memphis. Additionally, Great Place to Work® named Pinnacle one of the best workplaces in the United States on its 2014 Best Small & Medium Workplaces list published in FORTUNE magazine. The American Banker also recognized Pinnacle as the second best bank to work for in the country.

Additional information concerning Pinnacle, which is included in the NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.

Additional Information and Where to Find It

In connection with the proposed mergers of CapitalMark Bank & Trust ("CapitalMark") and Magna Bank ("Magna") with and into Pinnacle Bank, Pinnacle Financial Partners, Inc. ("Pinnacle") has filed registration statements on Form S-4 and on Form S-4A with the Securities and Exchange Commission (the "SEC") that have been declared effective by the SEC to register the shares of Pinnacle common stock that will be issued to CapitalMark's and Magna's shareholders in connection with the transactions. The registration statements include a proxy statement/prospectus (that is being delivered to CapitalMark's and Magna's shareholders in connection with their required approval of the proposed mergers) and other relevant materials in connection with the proposed merger transactions involving Pinnacle Bank and each of CapitalMark and Magna.

INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGERS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PINNACLE, CAPITALMARK, MAGNA AND THE PROPOSED MERGERS.

Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Free copies of each proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Pinnacle Financial Partners Inc., 150 3rd Avenue South, Suite 900, Nashville, TN 37201, Attention: Investor Relations (615) 744-3742; CapitalMark, 801 Broad St., Chattanooga, TN 37402, Attention: Investor Relations (423) 386-2828; or Magna, 6525 Quail Hollow Road, Suite 513, Memphis, TN 38120 Attention: Shareholder Services (901) 259-5600.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

FORWARD-LOOKING STATEMENTS

Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "goal," "objective," "intend," "plan," "believe," "should," "hope," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial to maintain the historical growth of its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (xi) the development of any new market other than Nashville or Knoxville; (xii) a merger or acquisition, like the proposed mergers with CapitalMark and Magna; (xiii) risks of expansion into new geographic or product markets, like the proposed expansion into the Chattanooga, TN-GA and Memphis, TN-MS-AR MSAs associated with the proposed mergers with CapitalMark and Magna; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Financial) or otherwise to attract customers from other financial institutions; (xvi) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xviii) risks associated with litigation, including the applicability of insurance coverage; (xix) the risk that the cost savings and any revenue synergies from the proposed mergers with CapitalMark and Magna may not be realized or take longer than anticipated to be realized; (xx) disruption from the mergers with customers, suppliers or employee relationships; (xxi) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreements that Pinnacle Financial and Pinnacle Bank have entered into with CapitalMark and Magna; (xxii) the risk of successful integration of CapitalMark’s and Magna’s business with ours; (xxiii) the failure of CapitalMark’s and Magna’s shareholders to approve the mergers; (xxiv) the amount of the costs, fees, expenses and charges related to the mergers; (xxv) reputational risk and the reaction of Pinnacle Financial’s, CapitalMark’s and Magna’s customers to the proposed mergers; (xxvi) the failure of the closing conditions to be satisfied; (xxvii) the risk that the integration of CapitalMark’s and Magna’s operations with Pinnacle Financial’s will be materially delayed or will be more costly or difficult than expected; (xxviii) the possibility that the mergers may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xxix) the dilution caused by Pinnacle’s issuance of additional shares of its common stock in the mergers; (xxx) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxxi) the vulnerability of our network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxxii) the possibility of increased compliance costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial has significant investments, and the development of additional banking products for our corporate and consumer clients; and (xxxiii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A more detailed description of these and other risks is contained in Pinnacle Financial's most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2015 and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2015. Many of such factors are beyond Pinnacle Financial's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
June 30, 2015 March 31, 2015 December 31, 2014

ASSETS

Cash and noninterest-bearing due from banks $ 66,487,191 $ 61,498,151 $ 48,741,692
Interest-bearing due from banks 201,761,829 227,823,492 134,176,054
Federal funds sold and other 4,698,433 4,455,077 4,989,764
Cash and cash equivalents 272,947,453 293,776,720 187,907,510
Securities available-for-sale, at fair value 806,221,152 769,018,224 732,054,785

Securities held-to-maturity (fair value of $33,830,072, $39,407,835 and $38,788,870 at June 30, 2015, March 31, 2015 and December 31, 2014, respectively)

33,914,863 39,275,846 38,675,527
Mortgage loans held-for-sale 31,542,696 18,909,910 14,038,914
Loans held-for-sale - 7,934,778 -
Loans 4,830,353,621 4,645,272,317 4,590,026,505
Less allowance for loan losses (65,572,050 ) (66,241,583 ) (67,358,639 )
Loans, net 4,764,781,571 4,579,030,734 4,522,667,866
Premises and equipment, net 73,633,237 71,281,505 71,576,016
Equity method investment 82,892,986 78,626,832 -
Accrued interest receivables 17,125,955 18,262,956 16,988,407
Goodwill 243,290,816 243,442,869 243,529,010
Core deposit and other intangible assets 2,438,245 2,665,659 2,893,072
Other real estate owned 6,792,503 8,441,288 11,186,414
Other assets 180,962,299 183,679,047 176,730,276
Total assets $ 6,516,543,776 $ 6,314,346,368 $ 6,018,247,797

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits:
Noninterest-bearing $ 1,473,086,196 $ 1,424,971,154 $ 1,321,053,083
Interest-bearing 1,071,433,689 1,065,900,049 1,005,450,690
Savings and money market accounts 2,031,801,876 1,878,270,087 2,024,957,383
Time 417,289,165 420,168,133 431,143,756
Total deposits 4,993,610,926 4,789,309,423 4,782,604,912
Securities sold under agreements to repurchase 61,548,547 68,053,123 93,994,730
Federal Home Loan Bank advances 445,345,050 455,443,811 195,476,384
Subordinated debt and other borrowings 133,908,292 135,533,292 96,158,292
Accrued interest payable 637,036 632,021 631,682
Other liabilities 40,103,864 41,224,052 46,688,416
Total liabilities 5,675,153,715 5,490,195,722 5,215,554,416
Stockholders’ equity:

Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding

- - -

Common stock, par value $1.00; 90,000,000 shares authorized; 35,977,987 shares, 35,864,667 shares and 35,732,483 shares issued and outstanding at June 30, 2015, March 31, 2015 and December 31, 2014, respectively

35,977,987 35,864,667 35,732,483
Additional paid-in capital 567,945,383 563,831,066 561,431,449
Retained earnings 237,243,866 218,909,667 201,371,081
Accumulated other comprehensive income, net of taxes 222,825 5,545,246 4,158,368

Stockholders’ equity

841,390,061 824,150,646 802,693,381
Total liabilities and stockholders’ equity $ 6,516,543,776 $ 6,314,346,368 $ 6,018,247,797
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
2015 2015 2014 2015 2014
Interest income:
Loans, including fees $ 50,325,643 $ 49,466,706 $ 45,089,706 $ 99,792,349 $ 88,785,364
Securities
Taxable 3,460,243 3,444,599 3,628,264 6,904,842 7,348,543
Tax-exempt 1,400,479 1,483,307 1,563,612 2,883,786 3,161,409
Federal funds sold and other 316,286 283,978 282,822 600,264 559,880
Total interest income 55,502,651 54,678,590 50,564,404 110,181,241 99,855,196
Interest expense:
Deposits 2,592,476 2,430,742 2,481,762 5,023,218 5,077,002
Securities sold under agreements to repurchase 29,371 30,917 31,329 60,288 61,844
Federal Home Loan Bank advances and other borrowings 1,050,119 948,552 824,912 1,998,671 1,582,134
Total interest expense 3,671,966 3,410,211 3,338,003 7,082,177 6,720,980
Net interest income 51,830,685 51,268,379 47,226,401 103,099,064 93,134,216
Provision for loan losses 1,186,116 315,091 254,348 1,501,207 741,986
Net interest income after provision for loan losses 50,644,569 50,953,288 46,972,053 101,597,857 92,392,230
Noninterest income:
Service charges on deposit accounts 3,075,655 2,912,549 2,965,644 5,988,204 5,756,612
Investment services 2,399,054 2,259,440 2,164,410 4,658,494 4,292,244
Insurance sales commissions 1,105,783 1,512,618 1,144,871 2,618,401 2,529,792
Gains on mortgage loans sold, net 1,652,111 1,941,254 1,668,604 3,593,365 2,903,475
Investment gains on sales, net 556,014 6,003 - 562,017 -
Trust fees 1,230,415 1,311,985 1,071,848 2,542,400 2,217,599
Income from equity method investment 4,266,154 3,201,302 - 7,467,456 -
Other noninterest income 5,733,592 5,348,151 3,582,067 11,081,743 7,630,084
Total noninterest income 20,018,778 18,493,302 12,597,444 38,512,080 25,329,806
Noninterest expense:
Salaries and employee benefits 23,774,558 23,530,860 21,772,469 47,305,418 43,522,429
Equipment and occupancy 5,877,971 6,046,223 5,822,662 11,924,194 11,531,692
Other real estate, net (114,567 ) 395,288 226,006 280,721 877,158
Marketing and other business development 1,186,165 959,750 1,064,990 2,145,915 1,973,891
Postage and supplies 731,219 649,251 544,194 1,380,470 1,104,808
Amortization of intangibles 227,413 227,414 237,676 454,827 475,351
Merger related expenses 59,053 - - 59,053 -
Other noninterest expense 5,005,513 5,022,236 4,233,931 10,027,749 8,062,459
Total noninterest expense 36,747,325 36,831,022 33,901,928 73,578,347 67,547,788
Income before income taxes 33,916,022 32,615,568 25,667,569 66,531,590 50,174,248
Income tax expense 11,252,191 10,772,857 8,497,589 22,025,048 16,637,146
Net income $ 22,663,831 $ 21,842,711 $ 17,169,980 $ 44,506,542 $ 33,537,102
Per share information:
Basic net income per common share $ 0.65 $ 0.62 $ 0.49 $ 1.27 $ 0.97
Diluted net income per common share $ 0.64 $ 0.62 $ 0.49 $ 1.25 $ 0.96
Weighted average shares outstanding:
Basic 35,128,856 35,041,203 34,697,888 35,085,271 34,650,377
Diluted 35,554,683 35,380,529 35,081,702 35,477,098 35,024,859
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
(dollars in thousands) June March December September June March
2015 2015 2014 2014 2014 2014
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 1,671,729 1,560,683 1,544,091 1,478,869 1,457,335 1,456,172
Consumer real estate - mortgage loans 740,641 723,907 721,158 706,801 698,528 703,592
Construction and land development loans 372,004 324,462 322,466 322,090 292,875 294,055
Commercial and industrial loans 1,819,600 1,810,818 1,784,729 1,724,086 1,697,634 1,568,937
Consumer and other 226,380 225,402 217,583 189,405 169,190 158,931
Total loans 4,830,354 4,645,272 4,590,027 4,421,251 4,315,562 4,181,687
Allowance for loan losses (65,572 ) (66,242 ) (67,359 ) (66,160 ) (66,888 ) (67,524 )
Securities 840,136 808,294 770,730 753,028 782,066 774,134
Total assets 6,516,544 6,314,346 6,018,248 5,865,703 5,788,792 5,600,933
Noninterest-bearing deposits 1,473,086 1,424,971 1,321,053 1,357,934 1,324,358 1,180,202
Total deposits 4,993,611 4,789,309 4,782,605 4,662,331 4,651,513 4,500,577
Securities sold under agreements to repurchase 61,549 68,053 93,995 64,773 62,273 68,093
FHLB advances 445,345 455,444 195,476 215,524 170,556 150,604
Subordinated debt and other borrowings 133,908 135,533 96,158 96,783 97,408 98,033
Total stockholders’ equity 841,390 824,151 802,693 781,934 764,382 742,497
Balance sheet data, quarterly averages:
Total loans $ 4,736,818 4,624,952 4,436,411 4,358,473 4,251,900 4,130,289
Securities 836,425 788,550 760,328 767,895 782,436 748,539
Total earning assets 5,764,514 5,581,508 5,382,479 5,264,591 5,187,589 5,023,692
Total assets 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615 5,514,031
Noninterest-bearing deposits 1,437,276 1,342,603 1,373,745 1,317,091 1,202,740 1,128,743
Total deposits 4,884,506 4,791,944 4,758,402 4,655,047 4,518,963 4,509,493
Securities sold under agreements to repurchase 61,355 66,505 82,970 66,429 59,888 62,500
FHLB advances 388,963 290,016 95,221 135,920 224,432 83,787
Subordinated debt and other borrowings 135,884 121,033 96,722 100,404 99,015 98,651
Total stockholders’ equity 836,791 815,706 796,338 774,032 757,089 740,743
Statement of operations data, for the three months ended:
Interest income $ 55,503 54,679 53,533 52,782 50,564 49,291
Interest expense 3,672 3,410 3,220 3,245 3,338 3,383
Net interest income 51,831 51,269 50,313 49,537 47,226 45,908
Provision for loan losses 1,186 315 2,041 851 254 488
Net interest income after provision for loan losses 50,645 50,954 48,272 48,686 46,972 45,420
Noninterest income 20,019 18,493 14,384 12,888 12,598 12,732
Noninterest expense 36,747 36,830 34,391 34,360 33,902 33,646
Income before taxes 33,917 32,617 28,264 27,215 25,668 24,506
Income tax expense 11,252 10,774 9,527 9,018 8,498 8,140
Net income $ 22,665 21,843 18,737 18,197 17,170 16,367
Profitability and other ratios:
Return on avg. assets (1) 1.44 % 1.45 % 1.27 % 1.25 % 1.21 % 1.20 %
Return on avg. equity (1) 10.86 % 10.86 % 9.33 % 9.33 % 9.10 % 8.96 %
Return on avg. tangible common equity (1) 15.39 % 15.56 % 13.52 % 13.69 % 13.50 % 13.45 %
Dividend payout ratio (18) 20.78 % 22.22 % 16.67 % 17.58 % 18.29 % 19.16 %
Net interest margin (1) (2) 3.65 % 3.78 % 3.76 % 3.79 % 3.71 % 3.76 %
Noninterest income to total revenue (3) 27.86 % 26.51 % 22.23 % 20.65 % 21.06 % 21.72 %
Noninterest income to avg. assets (1) 1.27 % 1.23 % 0.97 % 0.89 % 0.89 % 0.94 %
Noninterest exp. to avg. assets (1) 2.33 % 2.45 % 2.33 % 2.37 % 2.40 % 2.47 %

Noninterest expense (excluding ORE, FHLB prepayment charges, and merger related expense) to avg. assets (1)

2.31 % 2.42 % 2.37 % 2.34 % 2.38 % 2.43 %
Efficiency ratio (4) 51.14 % 52.79 % 53.16 % 55.04 % 56.67 % 57.38 %
Avg. loans to average deposits 96.98 % 96.52 % 93.23 % 93.63 % 94.09 % 91.59 %
Securities to total assets 12.89 % 12.80 % 12.81 % 12.84 % 13.51 % 13.82 %
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
(dollars in thousands) Three months ended Three months ended
June 30, 2015 June 30, 2014

AverageBalances

Interest Rates/ Yields

AverageBalances

Interest Rates/ Yields
Interest-earning assets
Loans (1) $ 4,736,818 $ 50,326 4.27 % $ 4,251,900 $ 45,090 4.27 %
Securities
Taxable 681,829 3,460 2.04 % 609,884 3,628 2.39 %
Tax-exempt (2) 154,596 1,400 4.86 % 172,552 1,563 4.85 %
Federal funds sold and other 191,271 316 0.66 % 153,253 283 0.87 %
Total interest-earning assets 5,764,514 55,502 3.91 % 5,187,589 $ 50,564 3.97 %
Nonearning assets
Intangible assets 245,964 247,081
Other nonearning assets 309,234 238,945
Total assets $ 6,319,712 $ 5,673,615
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,074,853 $ 532 0.20 % $ 911,878 $ 391 0.17 %
Savings and money market 1,951,863 1,488 0.31 % 1,913,453 1,392 0.29 %
Time 420,514 572 0.55 % 490,892 699 0.57 %
Total interest-bearing deposits 3,447,230 2,592 0.30 % 3,316,223 2,482 0.30 %
Securities sold under agreements to repurchase 61,355 29 0.19 % 59,888 31 0.21 %
Federal Home Loan Bank advances 388,963 224 0.23 % 224,432 187 0.33 %
Subordinated debt and other borrowings 135,884 826 2.44 % 99,015 638 2.58 %
Total interest-bearing liabilities 4,033,432 3,671 0.37 % 3,699,558 3,338 0.36 %
Noninterest-bearing deposits 1,437,276 - - 1,202,740 - -
Total deposits and interest-bearing liabilities 5,470,708 3,671 0.27 % 4,902,298 $ 3,338 0.27 %
Other liabilities 12,213 14,228

Stockholders’ equity

836,791 757,089

Total liabilities and stockholders’ equity

$ 6,319,712 $ 5,673,615
Net interest income $ 51,831 $ 47,226
Net interest spread (3) 3.54 % 3.61 %
Net interest margin (4) 3.65 % 3.71 %
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended June 30, 2015 would have been 3.64% compared to a net interest spread of 3.69% for the quarter ended June 30, 2014.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
(dollars in thousands) Six months ended Six months ended
June 30, 2015 June 30, 2014

AverageBalances

Interest Rates/ Yields

AverageBalances

Interest Rates/ Yields
Interest-earning assets
Loans (1) $ 4,681,194 $ 99,792 4.31 % $ 4,191,430 $ 88,785 4.28 %
Securities
Taxable 654,011 6,905 2.13 % 591,708 7,349 2.50 %
Tax-exempt (2) 158,609 2,884 4.90 % 173,873 3,161 4.90 %
Federal funds sold and other 179,703 601 0.67 % 149,082 560 0.90 %
Total interest-earning assets 5,673,517 110,182 3.96 % 5,106,093 $ 99,855 3.99 %
Nonearning assets
Intangible assets 246,138 247,220
Other nonearning assets 292,065 240,951
Total assets $ 6,211,720 $ 5,594,264
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,052,405 $ 1,005 0.19 % $ 916,431 $ 821 0.17 %
Savings and money market 1,973,818 2,898 0.30 % 1,932,514 2,819 0.29 %
Time 422,057 1,121 0.54 % 499,364 1,437 0.57 %
Total interest-bearing deposits 3,448,280 5,024 0.29 % 3,348,309 5,077 0.30 %
Securities sold under agreements to repurchase 63,916 60 0.19 % 61,187 62 0.21 %
Federal Home Loan Bank advances 339,763 444 0.26 % 154,498 310 0.33 %
Subordinated debt and other borrowings 128,499 1,555 2.44 % 98,834 1,272 2.58 %
Total interest-bearing liabilities 3,980,458 7,083 0.36 % 3,662,828 6,721 0.36 %
Noninterest-bearing deposits 1,390,201 - - 1,165,946 - -
Total deposits and interest-bearing liabilities 5,370,659 7,083 0.27 % 4,828,774 $ 6,721 0.27 %
Other liabilities 14,754 16,533

Stockholders’ equity

826,307 748,957

Total liabilities and stockholders’ equity

$ 6,211,720 $ 5,594,264
Net interest income $ 103,099 $ 93,134
Net interest spread (3) 3.60 % 3.63 %
Net interest margin (4) 3.71 % 3.73 %
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the six months ended June 30, 2015 would have been 3.70% compared to a net interest spread of 3.72% for the six months ended June 30, 2014.
(4) Net interest margin is the result of net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
(dollars in thousands) June March December September June March
2015 2015 2014 2014 2014 2014
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 17,550 16,915 16,706 21,652 15,678 15,606
Other real estate (ORE) 6,793 8,441 11,186 12,329 12,946 15,038
Total nonperforming assets $ 24,343 25,356 27,892 33,981 28,624 30,644

Past due loans over 90 days and still accruing interest

$ 483 1,609 322 83 649 7,944
Troubled debt restructurings (5) $ 8,703 8,726 8,410 7,606 7,552 15,108
Net loan charge-offs $ 1,856 1,432 842 1,580 890 934
Allowance for loan losses to nonaccrual loans 373.6 % 391.6 % 403.2 % 305.6 % 426.6 % 432.7 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.38 % 0.30 % 0.40 % 0.32 % 0.45 % 0.43 %
Potential problem loans (6) 1.86 % 1.97 % 1.81 % 1.98 % 1.79 % 2.01 %
Allowance for loan losses 1.36 % 1.43 % 1.47 % 1.50 % 1.55 % 1.61 %
Nonperforming assets to total loans and ORE 0.50 % 0.54 % 0.61 % 0.77 % 0.66 % 0.73 %
Nonperforming assets to total assets 0.37 % 0.40 % 0.46 % 0.58 % 0.49 % 0.55 %
Classified asset ratio (Pinnacle Bank) (8) 19.0 % 20.3 % 18.1 % 20.0 % 18.1 % 21.2 %

Annualized net loan charge-offs year-to-date to avg. loans (7)

0.14 % 0.13 % 0.10 % 0.11 % 0.09 % 0.09 %
Wtd. avg. commercial loan internal risk ratings (6) 4.5 4.5 4.4 4.5 4.5 4.5
Interest rates and yields:
Loans 4.27 % 4.35 % 4.34 % 4.34 % 4.27 % 4.30 %
Securities 2.56 % 2.79 % 2.81 % 2.85 % 2.93 % 3.17 %
Total earning assets 3.91 % 4.02 % 4.00 % 4.03 % 3.97 % 4.04 %
Total deposits, including non-interest bearing 0.21 % 0.21 % 0.20 % 0.21 % 0.22 % 0.23 %
Securities sold under agreements to repurchase 0.19 % 0.19 % 0.19 % 0.23 % 0.21 % 0.20 %
FHLB advances 0.23 % 0.31 % 0.56 % 0.44 % 0.33 % 0.59 %
Subordinated debt and other borrowings 2.44 % 2.44 % 2.48 % 2.45 % 2.58 % 2.61 %
Total deposits and interest-bearing liabilities 0.27 % 0.26 % 0.25 % 0.26 % 0.27 % 0.29 %
Pinnacle Financial Partners capital ratios (8):
Stockholders’ equity to total assets 12.9 % 13.1 % 13.3 % 13.3 % 13.2 % 13.3 %
Common equity Tier one capital 9.4 % 9.4 % 10.6 % 10.6 % 10.5 % 10.3 %
Tier one risk-based 10.8 % 10.8 % 12.1 % 12.2 % 12.1 % 12.2 %
Total risk-based 12.0 % 12.0 % 13.4 % 13.4 % 13.4 % 13.5 %
Leverage 10.5 % 10.4 % 11.3 % 11.2 % 11.0 % 11.0 %
Tangible common equity to tangible assets 9.5 % 9.5 % 9.6 % 9.5 % 9.3 % 9.3 %
Pinnacle Bank ratios:
Common equity Tier one 10.1 % 10.0 % 11.4 % 11.5 % 11.5 % 11.7 %
Tier one risk-based 10.1 % 10.1 % 11.4 % 11.5 % 11.5 % 11.7 %
Total risk-based 11.2 % 11.3 % 12.6 % 12.8 % 12.8 % 12.9 %
Leverage 9.8 % 9.7 % 10.6 % 10.6 % 10.5 % 10.5 %
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

June March December September June March

(dollars in thousands, except per share data)

2015 2015 2014 2014 2014 2014
Per share data:
Earnings – basic $ 0.65 0.62 0.54 0.52 0.49 0.47
Earnings – diluted $ 0.64 0.62 0.53 0.52 0.49 0.47
Common dividends per share $ 0.12 0.12 0.08 0.08 0.08 0.08
Book value per common share at quarter end (9) $ 23.39 22.98 22.46 21.93 21.47 20.88
Tangible common equity per common share at quarter end $ 16.42 15.88 15.62 15.02 14.53 13.93
Weighted avg. common shares – basic 35,128,856 35,041,203 34,827,999 34,762,206 34,697,888 34,602,337
Weighted avg. common shares – diluted 35,554,683 35,380,529 35,292,319 35,155,224 35,081,702 34,966,600
Common shares outstanding 35,977,987 35,864,667 35,732,483 35,654,541 35,601,495 35,567,268
Investor information:
Closing sales price $ 54.37 44.46 39.54 36.10 39.48 37.49
High closing sales price during quarter $ 54.88 45.19 39.95 39.75 39.48 38.64
Low closing sales price during quarter $ 44.25 35.52 34.65 35.21 33.46 31.02
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 112,609 95,782 94,816 96,050 83,421 61,290
Gross fees (10) $ 3,066 2,234 2,359 2,431 1,972 1,384
Gross fees as a percentage of loans originated 2.72 % 2.33 % 2.49 % 2.53 % 2.36 % 2.26 %
Net gain on mortgage loans sold $ 1,652 1,941 1,374 1,353 1,669 1,235
Investment gains on sales, net (17) $ 556 6 - 29 - -
Brokerage account assets, at quarter-end (11) $ 1,783,062 1,739,669 1,695,238 1,658,237 1,680,619 1,611,232
Trust account managed assets, at quarter-end $ 924,605 889,392 764,802 720,071 687,772 613,440
Core deposits (12) $ 4,608,648 4,412,635 4,381,177 4,260,627 4,245,745 4,087,477
Core deposits to total funding (12) 81.8 % 81.0 % 84.8 % 84.6 % 85.2 % 84.8 %
Risk-weighted assets $ 5,829,846 5,591,382 5,233,329 5,049,592 4,924,884 4,730,907
Total assets per full-time equivalent employee $ 8,141 8,153 7,877 7,744 7,734 7,528
Annualized revenues per full-time equivalent employee $ 360.0 365.3 336.0 327.0 320.6 319.7
Annualized expenses per full-time equivalent employee $ 184.1 192.9 178.6 180.0 181.7 183.4
Number of employees (full-time equivalent) 800.5 774.5 764.0 757.5 748.5 744.0
Associate retention rate (13) 94.7 % 94.0 % 93.3 % 93.5 % 93.8 % 95.6 %
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - May 2015 900.5 890.9 886.7 884.7 874.3 868.4

Knoxville MSA nonfarm employment - May 2015

387.2 382.7 381.5 378.9 373.4 373.6
Chattanooga MSA nonfarm employment - May 2015 245.6 242.5 240.7 240.2 238.6 237.5
Memphis MSA nonfarm employment - May 2015 619.7 618.7 617.5 618.1 613.7 612.0
Nashville MSA unemployment - May 2015 4.7 % 4.6 % 5.2 % 5.3 % 5.2 % 5.2 %
Knoxville MSA unemployment -May 2015 5.4 % 5.3 % 6.1 % 6.2 % 6.1 % 6.3 %
Chattanooga MSA unemployment - May 2015 5.7 % 5.7 % 6.3 % 6.5 % 6.4 % 6.7 %
Memphis MSA unemployment - May 2015 6.7 % 6.5 % 7.4 % 7.6 % 7.5 % 7.9 %
Nashville residential median home price - June 2015 $ 240.0 222.4 213.5 211.4 222.0 195.0
Nashville inventory of residential homes for sale - June 2015 (16) 9.2 8.2 7.6 9.9 10.6 9.4
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
June March December September June March
(dollars in thousands, except per share data) 2015 2015 2014 2014 2014 2014
Tangible assets:
Total assets $ 6,516,544 6,314,346 6,018,248 5,865,703 5,788,792 5,600,933
Less: Goodwill (243,291 ) (243,443 ) (243,529 ) (243,533 ) (243,550 ) (243,568 )
Core deposit and other intangible assets (2,438 ) (2,666 ) (2,893 ) (3,129 ) (3,365 ) (3,603 )
Net tangible assets $ 6,270,815 6,068,237 5,771,827 5,619,041 5,541,877 5,353,762
Tangible equity:

Total stockholders’ equity

$ 841,390 824,151 802,693 781,934 764,382 742,497
Less: Goodwill (243,291 ) (243,443 ) (243,529 ) (243,533 ) (243,550 ) (243,568 )
Core deposit and other intangible assets (2,438 ) (2,666 ) (2,893 ) (3,129 ) (3,365 ) (3,603 )
Net tangible common equity $ 595,661 578,042 556,271 535,272 517,467 495,326
Ratio of tangible common equity to tangible assets 9.50 % 9.53 % 9.64 % 9.53 % 9.34 % 9.25 %
Average tangible equity:

Average stockholders’ equity

$ 836,791 815,706 796,338 774,032 757,089 740,743
Less: Average goodwill (243,383 ) (243,505 ) (243,531 ) (243,544 ) (243,559 ) (243,610 )
Core deposit and other intangible assets (2,581 ) (2,809 ) (3,040 ) (3,278 ) (3,484 ) (3,722 )
Net average tangible common equity $ 590,827 569,392 549,767 527,210 510,046 493,411
Return on average tangible common equity (1) 15.39 % 15.56 % 13.52 % 13.69 % 13.50 % 13.45 %
For the three months ended
June March December September June March
2015 2015 2014 2014 2014 2014
Net interest income $ 51,831 51,269 50,313 49,537 47,226 45,908
Noninterest income 20,019 18,493 14,384 12,888 12,598 12,732
Less: Investment gains on sales, net (556 ) (6 ) - (29 ) - -

Noninterest income excluding investment gains on sales, net

19,463 18,487 14,384 12,859 12,598 12,732

Total revenues excluding the impact of investment gains on sales, net

71,294 69,756 64,697 62,396 59,824 58,644
Noninterest expense 36,747 36,831 34,391 34,360 33,902 33,649
Less: Other real estate expense (115 ) 395 (630 ) 417 226 651
FHLB prepayment charges 479 - - - - -
Merger related expenses 59 - - - - -

Noninterest expense excluding the impact of other real estate expense, FHLB prepayment charges and merger related expenses

36,324 36,436 35,021 33,943 33,676 32,998
Adjusted pre-tax pre-provision income (15) $ 34,970 33,320 29,676 28,453 26,148 25,646
Efficiency Ratio (4) 51.1 % 52.8 % 53.2 % 55.0 % 56.7 % 57.4 %
Total average assets $ 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615 5,514,031

Noninterest expense (excluding ORE expense, FHLB prepayment charges and merger related expenses) to avg. assets (1)

2.31 % 2.42 % 2.37 % 2.34 % 2.38 % 2.43 %
Equity method investment (19)
Fee income from BHG $ 4,266 3,201 - - - -
Funding cost to support investment 421 277 - - - -
Pre-tax impact of BHG 3,845 2,924 - - - -
Income tax expense at statutory rates 1,508 1,147 - - - -
Earnings attributable to BHG $ 2,337 1,777 - - - -
Basic earnings per share attributable to BHG $ 0.07 0.05 - - - -
Diluted earnings per share attributable to BHG $ 0.07 0.05 - - - -
Impact of Memphis denovo expansion (20)
Net (loss) income from Memphis expansion $ (257 ) - - - - -
Basic (loss) earnings per share attributable to Memphis expansion $ (0.01 ) - - - - -
Diluted (loss) earnings per share attributable to Memphis expansion $ (0.01 ) - - - - -
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
1. Ratios are presented on an annualized basis.
2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.
3. Total revenue is equal to the sum of net interest income and noninterest income.
4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
5. Troubled debt restructurings include loans where the company, as a result of the borrower’s financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.

6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A “1” risk rating is assigned to credits that exhibit Excellent risk characteristics, “2” exhibit Very Good risk characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or Average, “6” Watch List, “7” Criticized, “8” Classified or Substandard, “9” Doubtful and “10” Loss (which are charged-off immediately). Additionally, loans rated “8” or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings.

7. Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period.
8. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:
Equity to total assets – End of period total stockholders’ equity as a percentage of end of period assets.

Tangible common equity to total assets - End of period total stockholders’ equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.

Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.

Tier one common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of tier 1 capital as a percentage of total risk-weighted assets.

9. Book value per share computed by dividing total stockholders’ equity less preferred stock and common stock warrants by common shares outstanding.

10. Amounts are included in the statement of operations in “Gains on mortgage loans sold, net”, net of commissions paid on such amounts.

11. At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services.
12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000.
The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.
13. Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.
14. Employment and unemployment data is from BERC- MTSU & Bureau of Labor Statistics. Labor force data is seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. Historical data is subject to update by the BERC- MTSU & Bureau of Labor Statistics. Historical data is presented based on the most recently reported data available by the BERC- MTSU & Bureau of Labor Statistics. The Nashville home data is from the Greater Nashville Association of Realtors.
15. Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments, net and non-credit related loan losses as well as other real estate owned expenses and FHLB restructuring charges.

16. Represents month’s supply of homes currently listed with MLS based on current sales activity in the Nashville MSA.

17. Represents investment gains (losses) on sales and impairments, net occurring as a result of both credit losses and losses incurred as the result of a change in management’s intention to sell a bond prior to the recovery of its amortized cost basis.

18. The dividend payout ratio is calculated as the sum of the annualized dividend rate divided by the trailing 12-months fully diluted earnings per share as of the dividend declaration date.

19. Earnings from equity method investment includes the impact of both direct indebtedness related to the investment as well as incremental funding costs to support investment. Income tax expense is calculated using statutory tax rates.

20. Includes direct expenses attributable to non- Magna Memphis associates and applicable income taxes.

Pinnacle Financial Partners, Inc.

Media Contact:

Nikki Klemmer, 615-743-6132

or

Financial Contact:

Harold Carpenter, 615-744-3742

www.pnfp.com

Source: Pinnacle Financial Partners, Inc.

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