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PNFP Reports Diluted Earnings Per Share of $0.62 for 3Q 2015

October 20, 2015 5:31 PM

Excluding merger-related charges, diluted EPS was a record $0.66 for 3Q 2015

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.62 for the quarter ended Sept. 30, 2015, compared to net income per diluted common share of $0.52 for the quarter ended Sept. 30, 2014, an increase of 19.2 percent. Net income per diluted common share was $1.86 for the nine months ended Sept. 30, 2015, compared to net income per diluted common share of $1.48 for the nine months ended Sept. 30, 2014, an increase of 25.7 percent.

Excluding pre-tax merger-related charges of $2.2 million and $2.3 million for the three months and nine months ended Sept. 30, 2015, respectively, net income per diluted common share was $0.66 for the three months ended Sept. 30, 2015, or a 26.9 percent increase over the same period last year, and $1.90 for the nine months ended Sept. 30, 2015, or a 28.4 percent increase over the nine-month period ended Sept. 30, 2014.

Pinnacle completed the acquisitions of CapitalMark Bank & Trust (CapitalMark) on July 31, 2015 and Magna Bank (Magna) on Sept. 1, 2015. On July 31, 2015, CapitalMark had total assets of approximately $1.2 billion, gross loans of approximately $879.8 million, total deposits of approximately $971.1 million and operated four bank offices in or near Chattanooga and Knoxville, TN. On Sept. 1, 2015, Magna had total assets of approximately $569.3 million, gross loans of approximately $498.8 million, total deposits of approximately $464.1 million and operated five bank offices serving the Memphis, TN market. The financial statements accompanying this press release and the financial condition and results of operations described herein reflect the impact of the acquisitions beginning on the respective acquisition dates and are subject to future refinements to the firm’s purchase accounting adjustments.

“The third quarter was an exceptional one for our firm in terms of ongoing execution of our growth plans, resulting in record earnings growth,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “With the accelerated closing of both the CapitalMark and Magna mergers during the quarter, our associates are now focused on the successful completion of the upcoming technology conversions and the complete integration of these two very valuable franchises into our firm.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

“The rapid rate of growth in loan and core deposit volumes in the legacy Pinnacle footprint is likely not a surprise to anyone,” Turner said. “However, the equally rapid rate of growth in loans and core deposits in our newly acquired franchises during this period of merger and integration is a testament to our new Pinnacle associates and the quality of the franchises they have built. Additionally, our ongoing recruitment efforts this year in Nashville and Knoxville have added 19 revenue-producing associates as we continue to invest in future growth. This level of recruitment is significantly higher than that of the past few years.”

FOCUSING ON PROFITABILITY:

“We are very pleased with our operating metrics this quarter and continue to believe our metrics compare favorably to most peer groups,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “We are now in the best banking markets in Tennessee, and even though pricing remains very competitive, we still continue to see significant opportunities to take market share and grow volumes at acceptable spreads.”

OTHER THIRD QUARTER 2015 HIGHLIGHTS:

“We continue to see growth in bottom-line earnings during this extended rate cycle,” said Carpenter. “Our emphasis on floating rate credit, as we approach what many believe to be the onset of rising short-term rates, should benefit us in future periods. Fortunately, we operate in robust markets that provide us opportunities to expand our loan volumes and create ongoing revenue growth even during this challenging rate environment. We are also excited about our market extensions into Chattanooga and Memphis and look forward to the additional revenue opportunities that we believe are available to us in those markets.”

“Excluding merger and other charges, our efficiency ratio for the third quarter was 52.2 percent, and the ratio of expenses to average assets declined to 2.30 percent, now at our long-term target range,” Carpenter said. “We are very pleased with these results, especially after the increased hiring we have experienced this year. We believe that we should increase our operating leverage still further in future periods, especially after the technology conversions for CapitalMark and Magna take place.”

BOARD OF DIRECTORS DECLARES DIVIDEND

On Oct. 20, 2015, Pinnacle’s Board of Directors also declared a $0.12 per share cash dividend to be paid on Nov. 27, 2015 to common shareholders of record as of the close of business on Nov. 6, 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 Oct. 21, 2015 to discuss third 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. Pinnacle’s focus begins in recruiting top financial professionals. 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 third best bank to work for in the country.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to more than $8.5 billion in assets at Sept. 30, 2015. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in the state’s four largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well as several surrounding counties.

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

FORWARD-LOOKING STATEMENTS

Certain of the statements in this press 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," “pursue,” "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, the Knoxville MSA, the Chattanooga, TN-GA MSA and the Memphis, TN-MS-AR 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 the Nashville, Knoxville, Chattanooga or Memphis MSAs; (xii) a merger or acquisition; (xiii) risks of expansion into new geographic or product markets, like the recent expansion into the Chattanooga and Memphis MSAs; (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), to retain financial advisors (including those at CapitalMark Bank & Trust and Magna Bank) 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 recent mergers with CapitalMark and Magna may not be realized or take longer than anticipated to be realized; (xx) disruption from the CapitalMark and Magna mergers with customers, suppliers or employee relationships; (xxi) the risk of successful integration of CapitalMark's and Magna's business with ours; (xxii) the amount of the costs, fees, expenses and charges related to the CapitalMark and Magna mergers; (xxiii) reputational risk and the reaction of Pinnacle Financial's, CapitalMark's and Magna's customers to the recent CapitalMark and Magna mergers; (xxiv) 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; (xxv) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxvi) 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; (xxvii) 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; (xxviii) the risks associated with our being a minority investor in Bankers Healthcare Group, LLC, including the risk that the owners of a majority of the equity interests in Bankers Healthcare Group decide to sell the company; and (xxix) 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 herein and 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 Reports on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2015 and August 7, 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
September 30, 2015 June 30, 2015 December 31, 2014

ASSETS

Cash and noninterest-bearing due from banks $ 68,595,726 $ 66,487,191 $ 48,741,692
Interest-bearing due from banks 245,289,355 201,761,829 134,176,054
Federal funds sold and other 13,153,196 4,698,433 4,989,764
Cash and cash equivalents 327,038,277 272,947,453 187,907,510
Securities available-for-sale, at fair value 972,295,754 806,221,152 732,054,785

Securities held-to-maturity (fair value of $31,850,119, $33,830,072 and $38,788,870 at September 30, 2015, June 30, 2015 and December 31, 2014, respectively)

31,698,000 33,914,863 38,675,527
Residential mortgage loans held-for-sale 47,671,890 31,542,696 14,038,914
Commercial loans held-for-sale 20,236,426 - -
Loans 6,335,988,628 4,830,353,621 4,590,026,505
Less allowance for loan losses (63,758,390 ) (65,572,050 ) (67,358,639 )
Loans, net 6,272,230,238 4,764,781,571 4,522,667,866
Premises and equipment, net 81,527,013 73,633,237 71,576,016
Equity method investment 81,763,986 82,892,986 -
Accrued interest receivables 21,510,180 17,125,955 16,988,407
Goodwill 425,150,723 243,290,816 243,529,010
Core deposit and other intangible assets 11,640,802 2,438,245 2,893,072
Other real estate owned 4,772,567 6,792,503 11,186,414
Other assets 247,262,954 180,962,299 176,730,276
Total assets $ 8,544,798,810 $ 6,516,543,776 $ 6,018,247,797

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Noninterest-bearing $ 1,876,910,141 $ 1,473,086,196 $ 1,321,053,083
Interest-bearing 1,293,247,497 1,071,433,689 1,005,450,690
Savings and money market accounts 2,691,218,826 2,031,801,876 2,024,957,383
Time 739,302,052 417,289,165 431,143,756
Total deposits 6,600,678,516 4,993,610,926 4,782,604,912
Securities sold under agreements to repurchase 68,077,412 61,548,547 93,994,730
Federal Home Loan Bank advances 545,329,689 445,345,050 195,476,384
Subordinated debt and other borrowings 142,476,000 133,908,292 96,158,292
Accrued interest payable 1,703,146 637,036 631,682
Other liabilities 52,308,493 40,103,864 46,688,416
Total liabilities 7,410,573,256 5,675,153,715 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; 40,802,904 shares, 35,977,987 shares and 35,732,483 shares issued and outstanding at September 30, 2015, June 30, 2015 and December 31, 2014, respectively

40,802,904 35,977,987 35,732,483
Additional paid-in capital 835,279,986 567,945,383 561,431,449
Retained earnings 256,648,129 237,243,866 201,371,081
Accumulated other comprehensive income, net of taxes 1,494,535 222,825 4,158,368
Stockholders’ equity 1,134,225,554 841,390,061 802,693,381
Total liabilities and stockholders’ equity $ 8,544,798,810 $ 6,516,543,776 $ 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 Nine months ended
September 30, June 30, September 30, September 30,
2015 2015 2014 2015 2014
Interest income:
Loans, including fees $ 61,453,541 $ 50,325,643 $ 47,510,761 $ 161,245,890 $ 136,296,125
Securities
Taxable 3,953,948 3,460,243 3,469,311 10,858,790 10,817,854
Tax-exempt 1,416,954 1,400,479 1,533,029 4,300,740 4,694,438
Federal funds sold and other 367,671 316,286 268,455 967,935 828,335
Total interest income 67,192,114 55,502,651 52,781,556 177,373,355 152,636,752
Interest expense:
Deposits 3,587,048 2,592,476 2,435,426 8,610,266 7,512,428
Securities sold under agreements to repurchase 39,437 29,371 38,702 99,725 100,546
Federal Home Loan Bank advances and other borrowings 1,506,528 1,050,119 770,367 3,505,199 2,352,501
Total interest expense 5,133,013 3,671,966 3,244,495 12,215,190 9,965,475
Net interest income 62,059,101 51,830,685 49,537,061 165,158,165 142,671,277
Provision for loan losses 2,227,937 1,186,116

851,194

3,729,144 1,593,180
Net interest income after provision for loan losses 59,831,164 50,644,569 48,685,867 161,429,021 141,078,097
Noninterest income:
Service charges on deposit accounts 3,258,058 3,075,655 2,912,617 9,246,262 8,669,229
Investment services 2,525,980 2,399,054 2,353,118 7,184,474 6,645,362
Insurance sales commissions 1,102,859 1,105,783 1,037,043 3,721,260 3,566,835
Gains on mortgage loans sold, net 1,894,731 1,652,111 1,352,976 5,488,096 4,256,451
Investment gains on sales, net - 556,014 29,221 562,017 29,221
Trust fees 1,437,039 1,230,415 1,109,278 3,979,439 3,326,877
Income from equity method investment 5,285,000 4,266,154 - 12,752,456 -
Other noninterest income 5,906,747 5,733,592 4,094,200 16,988,490 11,724,284
Total noninterest income 21,410,414 20,018,778 12,888,453 59,922,494 38,218,259
Noninterest expense:
Salaries and employee benefits 27,745,643 23,774,558 21,721,663 75,051,061 65,244,092
Equipment and occupancy 6,932,758 5,877,971 6,477,076 18,856,952 18,103,458
Other real estate, net (686,071 ) (114,567 ) 417,197 (405,350 ) 1,294,355
Marketing and other business development 1,252,270 1,186,165 945,805 3,398,185 2,919,696
Postage and supplies 795,403 731,219 569,707 2,175,873 1,674,515
Amortization of intangibles 602,545 227,413 236,163 1,057,372 711,514
Merger related expenses 2,248,569 59,053 - 2,307,622 -
Other noninterest expense 6,215,863 5,005,513 3,991,944 16,243,612 11,959,708
Total noninterest expense 45,106,980 36,747,325 34,359,555 118,685,327 101,907,338
Income before income taxes 36,134,598 33,916,022 27,214,765 102,666,188 77,389,018
Income tax expense 11,985,846 11,252,191 9,017,943 34,010,894 25,655,089
Net income $ 24,148,752 $ 22,663,831 $ 18,196,822 $ 68,655,294 $ 51,733,929
Per share information:
Basic net income per common share $ 0.64 $ 0.65 $ 0.52 $ 1.91 $ 1.49
Diluted net income per common share $ 0.62 $ 0.64 $ 0.52 $ 1.86 $ 1.48
Weighted average shares outstanding:
Basic 37,828,324 35,128,856 34,762,206 36,009,658 34,688,064
Diluted 38,792,783 35,554,683 35,155,224 36,944,169 35,069,764
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)

September

June March December September June
2015 2015 2015 2014 2014 2014
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 2,192,151 1,671,729 1,560,683 1,544,091 1,478,869 1,457,335
Consumer real estate - mortgage loans 1,044,276 740,641 723,907 721,158 706,801 698,528
Construction and land development loans 674,926 372,004 324,462 322,466 322,090 292,875
Commercial and industrial loans 2,178,535 1,819,600 1,810,818 1,784,729 1,724,086 1,697,634
Consumer and other 246,101 226,380 225,402 217,583 189,405 169,190
Total loans 6,335,989 4,830,354 4,645,272 4,590,027 4,421,251 4,315,562
Allowance for loan losses (63,758 ) (65,572 ) (66,242 ) (67,359 ) (66,160 ) (66,888 )
Securities 1,003,994 840,136 808,294 770,730 753,028 782,066
Total assets 8,544,799 6,516,544 6,314,346 6,018,248 5,865,703 5,788,792
Noninterest-bearing deposits 1,876,910 1,473,086 1,424,971 1,321,053 1,357,934 1,324,358
Total deposits 6,600,679 4,993,611 4,789,309 4,782,605 4,662,331 4,651,513
Securities sold under agreements to repurchase 68,077 61,549 68,053 93,995 64,773 62,273
FHLB advances 545,330 445,345 455,444 195,476 215,524 170,556
Subordinated debt and other borrowings 142,476 133,908 135,533 96,158 96,783 97,408
Total stockholders’ equity 1,134,226 841,390 824,151 802,693 781,934 764,382
Balance sheet data, quarterly averages:
Total loans $ 5,690,246 4,736,818 4,624,952 4,436,411 4,358,473 4,251,900
Securities 925,506 836,425 788,550 760,328 767,895 782,436
Total earning assets 6,844,784 5,764,514 5,581,508 5,382,479 5,264,591 5,187,589
Total assets 7,514,633 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615
Noninterest-bearing deposits 1,689,599 1,437,276 1,342,603 1,373,745 1,317,091 1,202,740
Total deposits 5,898,369 4,884,506 4,791,944 4,758,402 4,655,047 4,518,963
Securities sold under agreements to repurchase 71,329 61,355 66,505 82,970 66,429 59,888
FHLB advances 393,825 388,963 290,016 95,221 135,920 224,432
Subordinated debt and other borrowings 147,619 135,884 121,033 96,722 100,404 99,015
Total stockholders’ equity 986,325 836,791 815,706 796,338 774,032 757,089
Statement of operations data, for the three months ended:
Interest income $ 67,192 55,503 54,679 53,533 52,782 50,564
Interest expense 5,133 3,672 3,410 3,220 3,245 3,338
Net interest income 62,059 51,831 51,269 50,313 49,537 47,226
Provision for loan losses 2,228 1,186 315 2,041 851 254
Net interest income after provision for loan losses 59,831 50,645 50,954 48,272 48,686 46,972
Noninterest income 21,410 20,019 18,493 14,384 12,888 12,598
Noninterest expense 45,107 36,747 36,830 34,391 34,360 33,902
Income before taxes 36,134 33,917 32,617 28,264 27,215 25,668
Income tax expense 11,985 11,252 10,774 9,527 9,018 8,498
Net income $ 24,149 22,665 21,843 18,737 18,197 17,170
Profitability and other ratios:
Return on avg. assets (1) 1.27 % 1.44 % 1.45 % 1.27 % 1.25 % 1.21 %
Return on avg. equity (1) 9.71 % 10.86 % 10.86 % 9.33 % 9.33 % 9.10 %
Return on avg. tangible common equity (1) 14.04 % 15.39 % 15.56 % 13.52 % 13.69 % 13.50 %
Dividend payout ratio (18) 19.92 % 20.78 % 22.22 % 16.67 % 17.58 % 18.29 %
Net interest margin (1) (2) 3.66 % 3.65 % 3.78 % 3.76 % 3.79 % 3.71 %
Noninterest income to total revenue (3) 25.65 % 27.86 % 26.51 % 22.23 % 20.65 % 21.06 %
Noninterest income to avg. assets (1) 1.13 % 1.27 % 1.23 % 0.97 % 0.89 % 0.89 %
Noninterest exp. to avg. assets (1) 2.38 % 2.33 % 2.45 % 2.33 % 2.37 % 2.40 %

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

2.30 % 2.31 % 2.42 % 2.37 % 2.34 % 2.38 %
Efficiency ratio (4) 54.04 % 51.14 % 52.79 % 53.16 % 55.04 % 56.67 %
Avg. loans to average deposits 96.47 % 96.98 % 96.52 % 93.23 % 93.63 % 94.09 %
Securities to total assets 11.75 % 12.89 % 12.80 % 12.81 % 12.84 % 13.51 %
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) Three months ended Three months ended
September 30, 2015 September 30, 2014

AverageBalances

Interest Rates/ Yields

AverageBalances

Interest Rates/ Yields
Interest-earning assets
Loans (1) $ 5,690,246 $ 61,454 4.33 % $ 4,358,473 $ 47,511 4.34 %
Securities
Taxable 758,148 3,954 2.07 % 598,713 3,469 2.30 %
Tax-exempt (2) 167,358 1,417 4.49 % 169,182 1,533 4.80 %
Federal funds sold and other 229,032 368 0.64 % 138,223 269 0.92 %
Total interest-earning assets 6,844,784 67,193 3.93 % 5,264,591 $ 52,782 4.03 %
Nonearning assets
Intangible assets 325,053 246,821
Other nonearning assets 344,796 241,364
Total assets $ 7,514,633 $ 5,752,776
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,169,502 $ 656 0.22 % $ 871,620 $ 366 0.17 %
Savings and money market 2,427,660 2,129 0.35 % 1,997,900 1,427 0.28 %
Time 611,608 802 0.52 % 468,436 643 0.54 %
Total interest-bearing deposits 4,208,770 3,587 0.34 % 3,337,956 2,436 0.29 %
Securities sold under agreements to repurchase 71,329 39 0.22 % 66,429 39 0.23 %
Federal Home Loan Bank advances 393,825 331 0.33 % 135,920 150 0.44 %
Subordinated debt and other borrowings 147,619 1,177 3.16 % 100,404 620 2.45 %
Total interest-bearing liabilities 4,821,543 5,134 0.42 % 3,640,709 3,245 0.35 %
Noninterest-bearing deposits 1,689,599 - - 1,317,091 - -
Total deposits and interest-bearing liabilities 6,511,142 5,134 0.31 % 4,957,800 $ 3,245 0.26 %
Other liabilities 17,166 20,944
Stockholders' equity 986,325 774,032
Total liabilities and stockholders' equity $ 7,514,633 $ 5,752,776
Net interest income $ 62,059 $ 49,537
Net interest spread (3) 3.51 % 3.68 %
Net interest margin (4) 3.66 % 3.79 %
(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 September 30, 2015 would have been 3.62% compared to a net interest spread of 3.77% for the quarter ended September 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) Nine months ended Nine months ended
September 30, 2015 September 30, 2014

AverageBalances

Interest Rates/ Yields

AverageBalances

Interest Rates/ Yields
Interest-earning assets
Loans (1) $ 5,036,614 $ 161,246 4.33 % $ 4,247,723 $ 136,296 4.30 %
Securities
Taxable 689,105 10,859 2.11 % 594,069 10,818 2.43 %
Tax-exempt (2) 161,558 4,301 4.76 % 172,292 4,694 4.86 %
Federal funds sold and other 198,470 968 0.65 % 145,422 828 0.90 %
Total interest-earning assets 6,085,747 177,374 3.94 % 5,159,506 $ 152,636 4.01 %
Nonearning assets
Intangible assets 272,732 247,086
Other nonearning assets 292,317 241,094
Total assets $ 6,650,796 $ 5,647,686
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,091,866 $ 1,661 0.20 % $ 901,330 $ 1,186 0.17 %
Savings and money market 2,126,761 5,027 0.32 % 1,954,549 4,245 0.28 %
Time 485,935 1,922 0.53 % 488,941 2,081 0.54 %
Total interest-bearing deposits 3,704,562 8,610 0.31 % 3,344,820 7,512 0.29 %
Securities sold under agreements to repurchase 66,414 100 0.20 % 62,954 101 0.23 %
Federal Home Loan Bank advances 357,981 775 0.29 % 148,237 460 0.44 %
Subordinated debt and other borrowings 134,943 2,731 2.71 % 99,363 1,892 2.45 %
Total interest-bearing liabilities 4,263,900 12,216 0.38 % 3,655,374 9,965 0.35 %
Noninterest-bearing deposits 1,491,097 - - 1,216,881 - -
Total deposits and interest-bearing liabilities 5,754,997 12,216 0.28 % 4,872,255 $ 9,965 0.26 %
Other liabilities 15,567 18,018
Stockholders' equity 880,232 757,413
Total liabilities and stockholders' equity $ 6,650,796 $ 5,647,686
Net interest income $ 165,158 $ 142,671
Net interest spread (3) 3.56 % 3.65 %
Net interest margin (4) 3.67 % 3.75 %
(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 nine months ended September 30, 2015 would have been 3.65% compared to a net interest spread of 3.74% for the nine months ended September 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) September June March December September June
2015 2015 2015 2014 2014 2014
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 30,049 17,550 16,915 16,705 21,652 15,678
Other real estate (ORE) 4,773 6,793 8,441 11,186 12,329 12,946
Total nonperforming assets $ 34,822 24,343 25,356 27,891 33,981 28,624

Past due loans over 90 days and still accruing interest

$ 5,364 483 1,609 322 83 649
Troubled debt restructurings (5) $ 8,373 8,703 8,726 8,410 7,606 7,552
Net loan charge-offs $ 4,041 1,856 1,432 842 1,580 890
Allowance for loan losses to nonaccrual loans 212.2 % 373.6 % 391.6 % 403.2 % 305.6 % 426.6 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.34 % 0.38 % 0.30 % 0.40 % 0.32 % 0.45 %
Potential problem loans (6) 1.44 % 1.86 % 1.97 % 1.81 % 1.98 % 1.79 %
Allowance for loan losses 1.01 % 1.36 % 1.43 % 1.47 % 1.50 % 1.55 %
Nonperforming assets to total loans and ORE 0.55 % 0.50 % 0.54 % 0.61 % 0.77 % 0.66 %
Nonperforming assets to total assets 0.41 % 0.37 % 0.40 % 0.46 % 0.58 % 0.49 %
Classified asset ratio (Pinnacle Bank) (8) 17.1 % 19.0 % 20.3 % 18.1 % 20.0 % 18.1 %

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

0.20 % 0.14 % 0.13 % 0.10 % 0.11 % 0.09 %
Wtd. avg. commercial loan internal risk ratings (6) 4.5 4.5 4.5 4.4 4.5 4.5
Interest rates and yields:
Loans 4.33 % 4.27 % 4.35 % 4.34 % 4.34 % 4.27 %
Securities 2.51 % 2.56 % 2.79 % 2.81 % 2.85 % 2.93 %
Total earning assets 3.93 % 3.91 % 4.02 % 4.00 % 4.03 % 3.97 %
Total deposits, including non-interest bearing 0.24 % 0.21 % 0.21 % 0.20 % 0.21 % 0.22 %
Securities sold under agreements to repurchase 0.22 % 0.19 % 0.19 % 0.19 % 0.23 % 0.21 %
FHLB advances 0.33 % 0.23 % 0.31 % 0.56 % 0.44 % 0.33 %
Subordinated debt and other borrowings 3.16 % 2.44 % 2.44 % 2.48 % 2.45 % 2.58 %
Total deposits and interest-bearing liabilities 0.31 % 0.27 % 0.26 % 0.25 % 0.26 % 0.27 %
Pinnacle Financial Partners capital ratios (8):
Stockholders’ equity to total assets 13.3 % 12.9 % 13.1 % 13.3 % 13.3 % 13.2 %
Common equity Tier one capital 8.7 % 9.4 % 9.4 % 10.6 % 10.6 % 10.5 %
Tier one risk-based 9.8 % 10.8 % 10.8 % 12.1 % 12.2 % 12.1 %
Total risk-based 11.4 % 12.0 % 12.0 % 13.4 % 13.4 % 13.4 %
Leverage 10.0 % 10.5 % 10.4 % 11.3 % 11.2 % 11.0 %
Tangible common equity to tangible assets 8.6 % 9.5 % 9.5 % 9.6 % 9.5 % 9.3 %

Pinnacle Bank ratios:

Common equity Tier one 9.1 % 10.1 % 10.0 % 11.4 % 11.5 % 11.5 %
Tier one risk-based 9.1 % 10.1 % 10.1 % 11.4 % 11.5 % 11.5 %
Total risk-based 10.8 % 11.2 % 11.3 % 12.6 % 12.8 % 12.8 %
Leverage 9.4 % 9.8 % 9.7 % 10.6 % 10.6 % 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
(dollars in thousands, except per share data) September June March December September June
2015 2015 2015 2014 2014 2014
Per share data:
Earnings – basic $ 0.64 0.65 0.62 0.54 0.52 0.49
Earnings – diluted $ 0.62 0.64 0.62 0.53 0.52 0.49
Common dividends per share $ 0.12 0.12 0.12 0.08 0.08 0.08
Book value per common share at quarter end (9) $ 27.80 23.39 22.98 22.46 21.93 21.47
Tangible common equity per common share at quarter end $ 17.09 16.56 16.12 15.57 15.01 14.53
Weighted avg. common shares – basic 37,828,324 35,128,856 35,041,203 34,827,999 34,762,206 34,697,888
Weighted avg. common shares – diluted 38,792,783 35,554,683 35,380,529 35,292,319 35,155,224 35,081,702
Common shares outstanding 40,802,904 35,977,987 35,864,667 35,732,483 35,654,541 35,601,495
Investor information:
Closing sales price $ 49.41 54.37 44.46 39.54 36.10 39.48
High closing sales price during quarter $ 55.18 54.88 45.19 39.95 39.75 39.48
Low closing sales price during quarter $ 45.03 44.25 35.52 34.65 35.21 33.46
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 145,751 112,609 95,782 94,816 96,050 83,421
Gross fees (10) $ 3,186 3,066 2,234 2,359 2,431 1,972
Gross fees as a percentage of loans originated 2.19 % 2.72 % 2.33 % 2.49 % 2.53 % 2.36 %
Net gain on mortgage loans sold $ 1,895 1,652 1,941 1,374 1,353 1,669
Investment gains on sales, net (17) $ - 556 6 - 29 -
Brokerage account assets, at quarter-end (11) $ 1,731,828 1,783,062 1,739,669 1,695,238 1,658,237 1,680,619
Trust account managed assets, at quarter-end $ 839,518 924,605 889,392 764,802 720,071 687,772
Core deposits (12) $ 4,832,719 4,608,648 4,412,635 4,381,177 4,260,627 4,245,745
Core deposits to total funding (12) 82.8 % 81.8 % 81.0 % 84.8 % 84.6 % 85.2 %
Risk-weighted assets $ 7,425,629 5,829,846 5,591,382 5,233,329 5,049,592 4,924,884
Total assets per full-time equivalent employee $ 7,960 8,141 8,153 7,877 7,744 7,734
Annualized revenues per full-time equivalent employee $ 308.5 360.0 365.3 336.0 327.0 320.6
Annualized expenses per full-time equivalent employee $ 166.7 184.1 192.9 178.6 180.0 181.7
Number of employees (full-time equivalent) 1,073.5 800.5 774.5 764.0 757.5 748.5
Associate retention rate (13) 96.1 % 94.7 % 94.0 % 93.3 % 93.5 % 93.8 %
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - August 2015 908.1 906.6 890.9 886.7 884.7 874.3
Knoxville MSA nonfarm employment -August 2015 386.8 387.8 382.7 381.5 378.9 373.4
Chattanooga MSA nonfarm employment - August 2015 245.0 245.4 242.5 240.7 240.2 238.6
Memphis MSA nonfarm employment - August 2015 620.5 621.8 618.7 617.5 618.1 613.7
Nashville MSA unemployment - August 2015 4.3 % 4.6 % 4.6 % 5.2 % 5.3 % 5.2 %
Knoxville MSA unemployment -August 2015 5.0 % 5.4 % 5.3 % 6.1 % 6.2 % 6.1 %
Chattanooga MSA unemployment - August 2015 5.6 % 5.6 % 5.7 % 6.3 % 6.5 % 6.4 %
Memphis MSA unemployment - August 2015 6.5 % 6.5 % 6.5 % 7.4 % 7.6 % 7.5 %
Nashville residential median home price - September 2015 $ 236.9 240.0 222.4 213.5 211.4 222.0
Nashville inventory of residential homes for sale- September 2015 (16) 8.7 9.2 8.2 7.6 9.9 10.6
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
September June March December September June
(dollars in thousands, except per share data) 2015 2015 2015 2014 2014 2014
Net interest income $ 62,059 51,831 51,269 50,313 49,537 47,226
Noninterest income 21,410 20,019 18,493 14,384 12,888 12,598
Less: Investment gains on sales, net - (556 ) (6 ) - (29 ) -
Noninterest income excluding investment
gains on sales, net 21,410 19,463 18,487 14,384 12,859 12,598
Total revenues excluding the impact of investment
gains on sales, net 83,469 71,294 69,756 64,697 62,396 59,824
Noninterest expense 45,107 36,747 36,831 34,391 34,360 33,902
Less: Other real estate expense (686 ) (115 ) 395 (630 ) 417 226
FHLB prepayment charges - 479 - - - -
Merger related expenses 2,249 59 - - - -

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

43,544 36,324 36,436 35,021 33,943 33,676
Adjusted pre-tax pre-provision income (15) $ 39,925 34,970 33,320 29,676 28,453 26,148
Efficiency Ratio (4) 54.0 % 51.1 % 52.8 % 53.2 % 55.0 % 56.7 %
Adjustment due to investment gains, ORE expense,
FHLB prepayment charges and merger related expense) -1.9 % -0.2 % -0.6 % 1.0 % -0.6 % -0.4 %
Efficiency Ratio (excluding investment gains, ORE expense,
FHLB prepayment charges and merger related expenses) 52.2 % 50.9 % 52.2 % 54.1 % 54.4 % 56.3 %
Total average assets $ 7,514,633 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615

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

2.30 % 2.31 % 2.42 % 2.37 % 2.34 % 2.38 %
Earnings per share excluding merger related expenses
Net income $ 24,149 22,664 21,843 18,737 18,197 17,170
Merger related expenses 2,249 59 - - - -
Tax effect on merger related expenses (882 ) (23 ) - - - -
Net income less merger related expenses $ 25,515 22,746 21,843 18,737 18,197 17,170
Basic earnings per share $ 0.64 0.65 0.62 0.54 0.52 0.49
Adjustment to basic earnings per share due to merger related expenses 0.04 - - - - -
Basic earnings per share excluding merger related expenses $ 0.67 0.65 0.62 0.54 0.52 0.49
Diluted earnings per share excluding merger related expenses $ 0.62 0.64 0.62 0.53 0.52 0.49
Adjustment to diluted earnings per share due to merger related expenses 0.04 - - - - -
Diluted earnings per share excluding merger related expenses $ 0.66 0.64 0.62 0.53 0.52 0.49
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
September June March December September June
(dollars in thousands, except per share data) 2015 2015 2015 2014 2014 2014
Net income $ 24,149 22,665 21,843 18,737 18,197 17,170
Merger related expenses 2,249 59 - - - -
Tax effect on merger related expenses (882 ) (23 ) - - - -
Net income less merger related expenses $ 25,515 22,747 21,843 18,737 18,197 17,170
Return on average assets 1.27 % 1.44 % 1.45 % 1.27 % 1.25 % 1.21 %
Adjustment due to merger related expenses 0.07 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Return on average assets (excluding merger related expenses) 1.35 % 1.44 % 1.45 % 1.27 % 1.25 % 1.21 %
Tangible assets:
Total assets $ 8,544,799 6,516,544 6,314,346 6,018,248 5,865,703 5,788,792
Less: Goodwill (425,151 ) (243,291 ) (243,443 ) (243,529 ) (243,533 ) (243,550 )
Core deposit and other intangible assets (11,641 ) (2,438 ) (2,666 ) (2,893 ) (3,129 ) (3,365 )
Net tangible assets $ 8,108,007 6,270,815 6,068,237 5,771,827 5,619,041 5,541,877
Tangible equity:
Total stockholders' equity $ 1,134,226 841,390 824,151 802,693 781,934 764,382
Less: Goodwill (425,151 ) (243,291 ) (243,443 ) (243,529 ) (243,533 ) (243,550 )
Core deposit and other intangible assets (11,641 ) (2,438 ) (2,666 ) (2,893 ) (3,129 ) (3,365 )
Net tangible common equity $ 697,434 595,661 578,042 556,271 535,272 517,467
Ratio of tangible common equity to tangible assets 8.60 % 9.50 % 9.53 % 9.64 % 9.53 % 9.34 %
Average tangible equity:
Average stockholders' equity $ 986,325 836,791 815,706 796,338 774,032 757,089
Less: Average goodwill (297,495 ) (243,383 ) (243,505 ) (243,531 ) (243,544 ) (243,559 )
Core deposit and other intangible assets (6,662 ) (2,581 ) (2,809 ) (3,040 ) (3,278 ) (3,484 )
Net average tangible common equity $ 682,168 590,827 569,392 549,767 527,210 510,046
Return on average tangible common equity (1) 14.04 % 15.39 % 15.56 % 13.52 % 13.69 % 13.50 %
Adjustment due to merger related expenses 0.79 % 0.06 % 0.00 % 0.00 % 0.00 % 0.00 %
Return on average tangible common equity
(excluding merger related expenses) 14.84 % 15.44 % 15.56 % 13.52 % 13.69 % 13.50 %
Total average assets $ 7,514,633 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615
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. This average is for PNFP legacy loans only.
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 as well as other real estate owned expenses and FHLB restructuring charges.
16. Represents one 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.

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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