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PNFP Reports Diluted EPS of $1.23, ROAA of 1.54 Percent and ROTCE of 18.14 Percent for 4Q 2018

January 15, 2019 5:10 PM

Excluding gains and losses on investment securities transactions, diluted EPS was $1.25 for 4Q 2018

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.23 for the quarter ended Dec. 31, 2018, compared to net income per diluted common share of $0.35 for the quarter ended Dec. 31, 2017, an increase of 251.4 percent. Net income per diluted common share was $4.64 for the year ended Dec. 31, 2018, compared to net income per diluted common share of $2.70 for the year ended Dec. 31, 2017, an increase of 71.9 percent.

Excluding gains and losses on the sale of investment securities in both 2018 and 2017, merger-related charges and the after-tax charges related to the revaluation of the firm’s deferred tax assets in 2017, net income per diluted common share was $1.25 for the three months ended Dec. 31, 2018, compared to net income per diluted common share of $0.97 for the three months ended Dec. 31, 2017. Excluding those same items, net income per diluted common share was $4.74 for the year ended Dec. 31, 2018, compared to $3.57 for the year ended Dec. 31, 2017, an increase of 32.8 percent.

"Despite investor concerns regarding the banking industry’s ability to sustain earnings and profitability, Pinnacle is reporting a year-over-year growth in adjusted earnings per share of approximately 33 percent in 2018," said M. Terry Turner, Pinnacle’s president and chief executive officer.

"Importantly, the real power of our differentiated franchise is perhaps even more evident as we move into 2019 when market growth in loan and deposit volumes has slowed and growth is increasingly dependent upon the ability to take market share. In 2018, the FDIC reported that we now possess the largest share of FDIC insured deposits in the Nashville MSA. Greenwich Associates validates that not only do we have the No. 1 ‘lead bank’ share among businesses with annual revenues from $1 to $500 million in Nashville, but that the trajectory of both our market share and our net promoter scores also are continuing to trend higher. This long-proven ability to take share based on a truly differentiated service model is now being demonstrated in every major market in the Southeast in which we operate."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

"Our model of hiring experienced bankers that we believe will produce outsized loan, deposit and fee growth continues to work extremely well," Turner said. "We hired 107 high-profile revenue producers in 2018, a strong predictor of our continued future growth. We believe our recruiting strategies are creating even more opportunities for our firm to attract the best bankers in our markets.

"Going into 2018, we set an expectation that we intended to remix our loan portfolio, dialing back the percentage of commercial real estate loans and driving up the percentage of C&I loans to lessen our concentration in commercial real estate. All in, organic loan growth for 2018 amounted to 13.3 percent since Dec. 31, 2017. We experienced 20.0 percent loan growth in our primary loan growth segments, C&I and owner-occupied commercial real estate. Growth in these segments remained strong all year long, with the fourth quarter reporting an annualized growth rate of 11.9 percent. We experienced a slight net decrease in our commercial real estate-investment, multi-family and construction categories in the fourth quarter. For the year, loan growth in these categories amounted to only 7.6 percent.

"We have long been recognized for our strong organic loan growth, but 2018 was a further testament to the ability of our business model to fund that loan growth with strong core deposit growth. Core deposits reflected strong growth during 2018 and in the fourth quarter, as core deposits increased 11.1 percent for the year and increased by 10.2 percent on a linked-quarter annualized basis in the fourth quarter."

FOCUSING ON PROFITABILITY:

"Our profitability metrics remain very strong and provide us ongoing leverage to hire more revenue producers and further invest in our future growth," said Harold R. Carpenter, Pinnacle’s chief financial officer. "We are pleased with our 1.54 percent return on average assets and 18.14 percent return on tangible common equity for the fourth quarter. Additionally, since the merger with BNC Bancorp was completed in June 2017, our tangible book value per common share has increased by more than 20.8 percent, inclusive of the impact of more than $39.4 million in merger-related charges, $10.5 million in losses associated with investment securities restructurings, $31.5 million in after-tax losses associated with the revaluation of deferred tax assets resulting from the Tax Cuts and Jobs Act and $39.9 million in after tax losses associated with revaluation of our bond portfolio through our accumulated other comprehensive loss account.

"Key profitability and growth metrics like our ROAA, ROTCE, organic loan, core deposit and EPS growth rates would suggest that our decision to acquire BNC Bancorp was a sound one, that the BNC integration was successful, and that it places us in a very strong position as we enter 2019."

MAINTAINING A FORTRESS BALANCE SHEET:

"Overall, asset quality for our firm remains exceptional," Carpenter said. "Our commercial real estate exposure continues to decline in relation to total risk-based capital. The commercial real estate to total risk-based capital ratio decreased to 277.7 percent at Dec. 31, 2018, while the ratio of construction loans to total risk-based capital also decreased to 85.2 percent at Dec. 31, 2018. We expect growth in commercial real estate and construction to remain soft for the first and second quarters of 2019, with anticipated increases in the latter half of 2019 based on projects we currently have committed."

GROWING REVENUES

"Despite a $3.9 million reduction in discount accretion from fair value adjustments between the third and fourth quarters, we are reporting growth in net interest income and a significant increase in noninterest income for the fourth quarter of 2018 when compared to the third quarter," Carpenter said. "Although our reported net interest margin decreased to 3.63 percent from 3.65 percent, pricing of our core loans and deposits positively impacted our margins in the fourth quarter. BHG had a strong fourth quarter and finished 2018 with $51.2 million in fee revenues for our firm in 2018."

CREATING OPERATING LEVERAGE

"We are very pleased with the operating leverage we have created for our firm," Carpenter said. "During the fourth quarter of 2018, we were able to increase our incentive accruals and have increased our cash incentive payout to $35.9 million as of Dec. 31, 2018, for fiscal 2018, an increase of $13.7 million from Sept. 30, 2018. At Pinnacle, annual cash incentives are directly linked to the firm’s revenue growth, earnings per share growth and loan quality. Given our continuing loan quality, and because the momentum in revenue and earnings per share was so strong in the fourth quarter, we were able to fund the incentive accrual at a meaningfully elevated level in the fourth quarter versus prior quarters."

BOARD OF DIRECTORS DECLARES DIVIDEND

On Jan. 15, 2019, Pinnacle’s Board of Directors approved the quarterly cash dividend of $0.16 per common share to be paid on Feb. 22, 2019 to common shareholders of record as of the close of business on Feb. 1, 2019. 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. (CST) on Jan. 16, 2019 to discuss fourth quarter 2018 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 is the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, according to 2018 deposit data from the FDIC. Pinnacle earned a place on FORTUNE’s 2017 and 2018 lists of the 100 Best Companies to Work For in the U.S., and American Banker recognized Pinnacle as one of America’s Best Banks to Work For six years in a row.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $25.0 billion in assets as of Dec. 31, 2018. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 11 primarily urban markets in Tennessee, the Carolinas and Virginia.

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

Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "plan," "believe," "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 statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (iii) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities’, 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) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (vii) greater than anticipated adverse conditions in the national or local economies including in Pinnacle Financial’s markets throughout Tennessee, North Carolina, South Carolina and Virginia, particularly in commercial and residential real estate markets; (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) a merger or acquisition; (xi) risks of expansion into new geographic or product markets; (xii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiii) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xiv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xv) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Financial’s level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xvi) approval of the declaration of any dividend by Pinnacle Financial’s board of directors; (xvii) the vulnerability of Pinnacle Bank’s network and online banking portals, and the systems of parties with whom Pinnacle Financial contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance and operational costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank’s corporate and consumer clients; (xix) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xx) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxi) risks associated with the ongoing shutdown of the United States federal government, including adverse effects on the national or local economies and adverse effects resulting from the shutdown of the U.S. Small Business Administration’s SBA loan program; (xxii) the availability of and access to capital; (xxiii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxiv) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC’s website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investments, the revaluation of Pinnacle Financial’s deferred tax assets and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Bank’s merger with BNC. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial’s acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial’s results to the results of other companies. Pinnacle Financial’s management utilizes this non-GAAP financial information to compare Pinnacle Financial’s operating performance for 2018 versus certain periods in 2017 and to internally prepared projections.

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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
(dollars in thousands) � � � � � �

December 31,

2018

� �

September 30,

2018

� �

December 31,

2017

ASSETS
Cash and noninterest-bearing due from banks $ 202,924 $ 145,638 $ 176,553
Interest-bearing due from banks 516,920 394,129 496,911
Federal funds sold and other 1,848 � � 11,313 � � 106,132
Cash and cash equivalents 721,692 551,080 779,596
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Securities available-for-sale, at fair value 3,083,686 3,004,582 2,515,283
Securities held-to-maturity (fair value of $193.1 million, $192.5 million, and $20.8 million at Dec. 31, 2018, Sept. 30, 2018, and Dec. 31, 2017, respectively) 194,282 194,997 20,762
Consumer loans held-for-sale 34,196 47,417 103,729
Commercial loans held-for-sale 15,954 11,402 25,456
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Loans 17,707,549 17,464,009 15,633,116
Less allowance for loan losses (83,575) � � (79,985) � � (67,240)
Loans, net 17,623,974 17,384,024 15,565,876
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Premises and equipment, net 265,560 268,387 266,014
Equity method investment 239,237 221,302 221,667
Accrued interest receivable 79,657 73,366 57,440
Goodwill 1,807,121 1,807,121 1,808,002
Core deposits and other intangible assets 46,161 48,737 56,710
Other real estate owned 15,165 17,467 27,831
Other assets 904,359 � � 927,663 � � 757,334
Total assets $ 25,031,044 � � $ 24,557,545 � � $ 22,205,700
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 4,309,067 $ 4,476,925 $ 4,381,386
Interest-bearing 3,464,001 3,195,657 2,987,291
Savings and money market accounts 7,607,796 7,262,968 6,548,964
Time 3,468,243 � � 3,471,965 � � 2,534,061
Total deposits 18,849,107 18,407,515 16,451,702
Securities sold under agreements to repurchase 104,741 130,217 135,262
Federal Home Loan Bank advances 1,443,589 1,520,603 1,319,909
Subordinated debt and other borrowings 485,130 465,487 465,505
Accrued interest payable 23,586 20,944 10,480
Other liabilities 158,951 � � 115,738 � � 114,890
Total liabilities 21,065,104 20,660,504 18,497,748
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Preferred stock, no par value; 10.0 million shares authorized; no shares issued and outstanding

— — —
Common stock, par value $1.00; 180.0 million shares authorized at Dec. 31, 2018 and Sept. 30, 2018 and 90.0 million shares authorized at Dec. 31, 2017; 77.5 million, 77.9 million shares and 77.7 million shares issued and outstanding at Dec. 31, 2018, Sept. 30, 2018 and Dec. 31, 2017, respectively 77,484 77,867 77,740
Additional paid-in capital 3,107,431 3,123,323 3,115,304
Retained earnings 833,130 750,363 519,144
Accumulated other comprehensive loss, net of taxes (52,105) � � (54,512) � � (4,236)
Total stockholders' equity 3,965,940 � � 3,897,041 � � 3,707,952
Total liabilities and stockholders' equity $ 25,031,044 � � $ 24,557,545 � � $ 22,205,700
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This information is preliminary and based on company data available at the time of the presentation.
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(dollars in thousands, except for per share data) � � Three Months Ended � � Year Ended

December 31,

2018

� �

September 30,

2018

� �

December 31,

2017

� �

December 31,

2018

� �

December 31,

2017

Interest income: � � � � � �
Loans, including fees $ 228,599 $ 221,901 $ 189,193 $ 850,472 $ 578,286
Securities
Taxable 13,013 12,209 12,295 48,192 39,060
Tax-exempt 10,286 10,074 5,178 35,995 13,712
Federal funds sold and other 4,197 � � 3,926 � � 1,705 � � 12,058 � � 5,080
Total interest income 256,095 � � 248,110 � � 208,371 � � 946,717 � � 636,138
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Interest expense:
Deposits 50,123 44,172 21,367 151,043 59,584
Securities sold under agreements to repurchase 150 165 129 588 406
FHLB advances and other borrowings 15,607 � � 14,353 � � 11,858 � � 58,744 � � 32,842
Total interest expense 65,880 � � 58,690 � � 33,354 � � 210,375 � � 92,832
Net interest income 190,215 189,420 175,017 736,342 543,306
Provision for loan losses 9,319 � � 8,725 � � 6,281 � � 34,377 � � 23,664
Net interest income after provision for loan losses 180,896 180,695 168,736 701,965 519,642
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Noninterest income:
Service charges on deposit accounts 6,617 6,404 6,078 24,906 20,034
Investment services 5,925 5,237 4,723 21,175 14,315
Insurance sales commissions 2,038 2,126 1,961 9,331 7,405
Gains on mortgage loans sold, net 3,141 3,902 3,839 14,564 18,625
Investment gains and losses on sales, net (2,295) 11 (8,265) (2,254) (8,265)
Trust fees 3,375 3,087 2,645 13,143 8,664
Income from equity method investment 17,936 14,236 12,444 51,222 37,958
Other noninterest income 20,533 � � 16,475 � � 12,777 � � 68,783 � � 46,168
Total noninterest income 57,270 � � 51,478 � � 36,202 � � 200,870 � � 144,904
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Noninterest expense:
Salaries and employee benefits 74,725 69,117 63,346 271,673 209,662
Equipment and occupancy 19,073 19,252 17,114 74,276 54,092
Other real estate, net 631 67 252 723 1,079
Marketing and other business development 3,628 3,293 2,093 11,712 8,321
Postage and supplies 1,831 1,654 1,662 7,815 5,736
Amortization of intangibles 2,576 2,616 3,071 10,549 8,816
Merger-related expenses — — 19,103 8,259 31,843
Other noninterest expense 16,945 � � 17,991 � � 16,332 � � 67,880 � � 47,011
Total noninterest expense 119,409 � � 113,990 � � 122,973 � � 452,887 � � 366,560
Income before income taxes 118,757 118,183 81,965 449,948 297,986
Income tax expense 23,439 � � 24,436 � � 55,167 � � 90,508 � � 124,007
Net income $ 95,318 � � $ 93,747 � � $ 26,798 � � $ 359,440 � � $ 173,979
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Per share information:
Basic net income per common share $ 1.24 � � $ 1.22 � � $ 0.35 � � $ 4.66 � � $ 2.73
Diluted net income per common share $ 1.23 � � $ 1.21 � � $ 0.35 � � $ 4.64 � � $ 2.70
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Weighted average shares outstanding:
Basic 77,096,522 77,145,023 76,785,573 77,111,372 63,760,578
Diluted 77,469,803 77,490,977 77,437,013 77,449,917 64,328,189
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This information is preliminary and based on company data available at the time of the presentation.
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
� � � � � � � � � � � � � � �
(dollars in thousands) December September June March December September
� 2018 � � � � 2018 � � � � 2018 � � � � 2018 � � � � 2017 � � � � 2017 �
Balance sheet data, at quarter end:
Commercial and industrial loans $ 5,271,420 5,006,247 4,821,299 4,490,886 4,141,341 3,971,227
Commercial real estate - owner occupied 2,653,433 2,688,247 2,504,891 2,427,946 2,460,015 2,433,762
Commercial real estate - investment 3,855,643 3,818,055 3,822,182 3,714,854 3,564,048 3,398,381
Commercial real estate - multifamily and other 655,879 708,817 697,566 651,488 645,547 617,899
Consumer real estate - mortgage loans 2,844,447 2,815,160 2,699,399 2,580,766 2,561,214 2,541,180
Construction and land development loans 2,072,455 2,059,009 2,133,646 2,095,875 1,908,288 1,939,809
Consumer and other 354,272 368,474 363,870 364,202 352,663 357,528
Total loans 17,707,549 17,464,009 17,042,853 16,326,017 15,633,116 15,259,786
Allowance for loan losses (83,575 ) (79,985 ) (75,670 ) (70,204 ) (67,240 ) (65,159 )
Securities 3,277,968 3,199,579 2,975,469 2,981,301 2,536,045 2,901,029
Total assets 25,031,044 24,557,545 23,988,370 22,935,174 22,205,700 21,790,371
Noninterest-bearing deposits 4,309,067 4,476,925 4,361,414 4,274,213 4,381,386 4,099,086
Total deposits 18,849,107 18,407,515 17,857,418 16,502,909 16,451,702 15,789,585
Securities sold under agreements to repurchase 104,741 130,217 128,739 131,863 135,262 129,557
FHLB advances 1,443,589 1,520,603 1,581,867 1,976,881 1,319,909 1,623,947
Subordinated debt and other borrowings 485,130 465,487 465,433 465,550 465,505 465,461
Total stockholders' equity 3,965,940 3,897,041 3,826,677 3,749,303 3,707,952 3,673,349
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Balance sheet data, quarterly averages:
Total loans $ 17,630,281 17,259,139 16,729,734 15,957,466 15,520,255 15,016,642
Securities 3,148,638 3,075,633 2,970,267 2,829,604 2,850,322 2,741,493
Federal funds sold and other 645,644 647,728 442,401 335,093 439,167 376,769
Total earning assets 21,424,563 20,982,500 20,142,402 19,122,163 18,809,744 18,137,904
Total assets 24,616,733 24,125,051 23,236,945 22,204,599 21,933,500 21,211,459
Noninterest-bearing deposits 4,317,782 4,330,917 4,270,459 4,304,186 4,165,876 3,953,855
Total deposits 18,368,012 18,112,766 16,949,374 16,280,581 16,091,700 15,828,480
Securities sold under agreements to repurchase 119,247 146,864 123,447 129,969 134,983 160,726
FHLB advances 1,689,920 1,497,511 1,884,828 1,584,281 1,465,145 1,059,032
Subordinated debt and other borrowings 469,074 468,990 474,328 471,029 477,103 473,805
Total stockholders' equity 3,939,927 3,874,430 3,795,963 3,732,633 3,706,741 3,655,029
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Statement of operations data, for the three months ended:
Interest income $ 256,095 248,110 230,984 211,528 208,371 201,896
Interest expense � 65,880 � � � � 58,690 � � � � 48,748 � � � � 37,057 � � � � 33,354 � � � � 28,986 �
Net interest income 190,215 189,420 182,236 174,471 175,017 172,910
Provision for loan losses � 9,319 � � � � 8,725 � � � � 9,402 � � � � 6,931 � � � � 6,281 � � � � 6,920 �
Net interest income after provision for loan losses 180,896 180,695 172,834 167,540 168,736 165,990
Noninterest income 57,270 51,478 47,939 44,183 36,202 43,248
Noninterest expense � 119,409 � � � � 113,990 � � � � 110,908 � � � � 108,580 � � � � 122,973 � � � � 109,736 �
Income before taxes 118,757 118,183 109,865 103,143 81,965 99,502
Income tax expense � 23,439 � � � � 24,436 � � � � 23,000 � � � � 19,633 � � � � 55,167 � � � � 35,060 �
Net income $ 95,318 � � � � 93,747 � � � � 86,865 � � � � 83,510 � � � � 26,798 � � � � 64,442 �
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Profitability and other ratios:
Return on avg. assets (1) 1.54 % 1.54 % 1.50 % 1.53 % 0.48 % 1.21 %
Return on avg. common equity (1) 9.60 % 9.60 % 9.18 % 9.07 % 2.87 % 6.99 %
Return on avg. tangible common equity (1) 18.14 % 18.44 % 18.01 % 18.12 % 5.76 % 14.25 %
Dividend payout ratio (16) 13.79 % 14.89 % 16.57 % 18.36 % 20.00 % 17.34 %
Net interest margin (2) 3.63 % 3.65 % 3.69 % 3.77 % 3.76 % 3.87 %
Noninterest income to total revenue (3) 23.14 % 21.37 % 20.83 % 20.21 % 17.27 % 19.88 %
Noninterest income to avg. assets (1) 0.92 % 0.85 % 0.83 % 0.81 % 0.66 % 0.80 %
Noninterest exp. to avg. assets (1) 1.92 % 1.87 % 1.91 % 1.98 % 2.22 % 2.05 %
Efficiency ratio (4) 48.25 % 47.32 % 48.18 % 49.66 % 58.22 % 50.77 %
Avg. loans to avg. deposits 95.98 % 95.29 % 98.70 % 98.02 % 96.45 % 94.87 %
Securities to total assets 13.10 % 13.03 % 12.40 % 13.00 % 11.42 % 13.31 %
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This information is preliminary and based on company data available at the time of the presentation.
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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
December 31, 2018 December 31, 2017

Average

Balances

� � � Interest � � �

Rates/

Yields

Average

Balances

� � � Interest � � �

Rates/

Yields

Interest-earning assets � � � � � � � � � � � �
Loans (1) (2) $ 17,630,281 $ 228,599 5.22 % $ 15,520,255 $ 189,193 4.87 %
Securities
Taxable 1,829,051 13,013 2.82 % 2,113,407 12,295 2.31 %
Tax-exempt (2) 1,319,587 10,286 3.77 % 736,915 5,178 3.74 %
Federal funds sold and other � 645,644 � � � � 4,197 � � � 2.58 % � 439,167 � � � � 1,705 � � � 1.54 %
Total interest-earning assets 21,424,563 $ 256,095 � � � 4.85 % 18,809,744 $ 208,371 � � � 4.46 %
Nonearning assets
Intangible assets 1,854,831 1,861,739
Other nonearning assets � 1,337,339 � 1,262,017
Total assets $ 24,616,733 $ 21,933,500
�
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing demand deposits $ 932,961 $ 3,291 1.40 % $ 668,680 $ 1,214 0.72 %
Interest checking 2,296,450 6,139 1.06 % 2,019,957 2,273 0.45 %
Savings and money market 7,424,287 24,138 1.29 % 6,679,876 11,669 0.69 %
Time � 3,396,532 � � � � 16,555 � � � 1.93 % � 2,557,311 � � � � 6,211 � � � 0.96 %
Total interest-bearing deposits 14,050,230 50,123 1.42 % 11,925,824 21,367 0.71 %
Securities sold under agreements to repurchase 119,247 150 0.50 % 134,983 129 0.38 %
Federal Home Loan Bank advances 1,689,920 9,307 2.18 % 1,465,145 6,052 1.64 %
Subordinated debt and other borrowings � 469,074 � � � � 6,300 � � � 5.33 % � 477,103 � � � � 5,806 � � � 4.83 %
Total interest-bearing liabilities 16,328,471 65,880 1.60 % 14,003,055 33,354 0.95 %
Noninterest-bearing deposits � 4,317,782 � � � � — � � � — � � 4,165,876 � � � � — � � � — �
Total deposits and interest-bearing liabilities 20,646,253 $ 65,880 � � � 1.27 % 18,168,931 $ 33,354 � � � 0.73 %
Other liabilities 30,553 57,828
Stockholders' equity � 3,939,927 � 3,706,741
Total liabilities and stockholders' equity $ 24,616,733 $ 21,933,500
Net interest income $ 190,215 $ 175,017
Net interest spread (3) 3.25 % 3.52 %
Net interest margin (4) 3.63 % 3.76 %
�
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $5.8 million of taxable equivalent income for the quarter ended December 31, 2018 compared to $3.1 million for the quarter ended December 31, 2017. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.
(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 December 31, 2018 would have been 3.58% compared to a net interest spread of 3.73% for the quarter ended December 31, 2017.
(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) Year ended Year ended
December 31, 2018 December 31, 2017

Average

Balances

� � Interest � �

Rates/

Yields

Average

Balances

� � Interest � �

Rates/

Yields

Interest-earning assets � � � � � � � �
Loans (1) (2) $ 16,899,738 $ 850,472 5.09 % $ 12,254,790 $ 578,286 4.79 %
Securities
Taxable 1,804,958 48,192 2.67 % 1,724,612 39,060 2.26 %
Tax-exempt (2) 1,202,143 35,995 3.58 % 488,478 13,712 3.76 %
Federal funds sold and other � 518,923 � � � 12,058 � � 2.32 % 335,491 � � � 5,080 � � 1.51 %
Total interest-earning assets 20,425,762 $ 946,717 � � 4.71 % 14,803,371 $ 636,138 � � 4.38 %
Nonearning assets
Intangible assets 1,859,183 1,273,577
Other nonearning assets � 1,269,083 939,269
Total assets $ 23,554,028 $ 17,016,217
�
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing demand deposits $ 835,929 $ 9,774 1.17 % $ 583,052 $ 3,926 0.67 %
Interest checking 2,228,399 18,993 0.85 % 1,745,298 7,335 0.42 %
Savings and money market 6,994,938 73,431 1.05 % 5,455,607 32,844 0.60 %
Time � 3,070,071 � � � 48,845 � � 1.59 % 1,765,089 � � � 15,479 � � 0.88 %
Total interest-bearing deposits 13,129,337 151,043 1.15 % 9,549,046 59,584 0.62 %
Securities sold under agreements to repurchase 129,899 588 0.45 % 119,055 406 0.34 %
Federal Home Loan Bank advances 1,663,968 34,174 2.05 % 788,237 12,399 1.57 %
Subordinated debt and other borrowings � 470,189 � � � 24,570 � � 5.23 % 420,790 � � � 20,443 � � 4.86 %
Total interest-bearing liabilities 15,393,393 210,375 1.37 % 10,877,128 92,832 0.85 %
Noninterest-bearing deposits � 4,305,942 � � � — � � — � 3,331,741 � � � — � � — �
Total deposits and interest-bearing liabilities 19,699,335 $ 210,375 � � 1.07 % 14,208,869 $ 92,832 � � 0.65 %
Other liabilities 18,281 30,218
Stockholders' equity � 3,836,412 2,777,130
Total liabilities and stockholders' equity $ 23,554,028 $ 17,016,217
Net interest income $ 736,342 $ 543,306
Net interest spread (3) 3.35 % 3.53 %
Net interest margin (4) 3.68 % 3.76 %
�
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $16.2 million of taxable equivalent income for the year ended December 31, 2018 compared to $12.3 million for the year ended December 31, 2017. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.
(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 year ended December 31, 2018 would have been 3.65% compared to a net interest spread of 3.73% for the year ended December 31, 2017.
(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
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
� � � � � � � � � � � � � � � � �
(dollars in thousands) December September June March December September
� 2018 � � � � 2018 � � � � 2018 � � � � 2018 � � � � 2017 � � � � 2017 �
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 87,834 77,868 70,887 70,202 57,455 53,414

Other real estate (ORE) and other nonperforming assets (NPAs)

� 15,393 � � � � 17,731 � � � � 20,229 � � � � 24,533 � � � � 28,028 � � � � 24,682 �
Total nonperforming assets $ 103,227 � � � � 95,599 � � � � 91,116 � � � � 94,735 � � � � 85,483 � � � � 78,096 �
Past due loans over 90 days and still accruing interest $ 1,558 1,773 1,572 1,131 4,139 3,010
Accruing troubled debt restructurings (5) $ 5,899 6,125 5,647 6,115 6,612 15,157
Accruing purchase credit impaired loans $ 14,743 21,473 22,993 24,398 26,719 29,254
Net loan charge-offs $ 5,729 4,410 3,936 3,967 4,200 3,705
Allowance for loan losses to nonaccrual loans 95.2 % 102.7 % 106.7 % 100.0 % 117.0 % 122.0 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.34 % 0.25 % 0.23 % 0.24 % 0.38 % 0.24 %
Potential problem loans (6) 1.00 % 1.16 % 1.00 % 0.97 % 1.05 % 0.97 %
Allowance for loan losses 0.47 % 0.46 % 0.44 % 0.43 % 0.43 % 0.43 %
Nonperforming assets to total loans, ORE and other NPAs 0.58 % 0.55 % 0.53 % 0.58 % 0.55 % 0.51 %
Nonperforming assets to total assets 0.41 % 0.39 % 0.38 % 0.41 % 0.38 % 0.36 %
Classified asset ratio (Pinnacle Bank) (8) 12.4 % 13.7 % 12.6 % 12.6 % 12.9 % 12.7 %
Annualized net loan charge-offs to avg. loans (7) 0.11 % 0.10 % 0.10 % 0.10 % 0.13 % 0.14 %
Wtd. avg. commercial loan internal risk ratings (6) 44.4 4.5 4.4 4.4 4.5 4.5
�
Interest rates and yields:
Loans 5.22 % 5.15 % 5.04 % 4.91 % 4.87 % 4.91 %
Securities 3.22 % 3.11 % 2.91 % 2.87 % 2.68 % 2.64 %
Total earning assets 4.85 % 4.76 % 4.66 % 4.56 % 4.46 % 4.50 %
Total deposits, including non-interest bearing 1.08 % 0.97 % 0.78 % 0.60 % 0.53 % 0.48 %
Securities sold under agreements to repurchase 0.50 % 0.44 % 0.47 % 0.40 % 0.38 % 0.37 %
FHLB advances 2.18 % 2.16 % 2.06 % 1.79 % 1.64 % 1.48 %
Subordinated debt and other borrowings 5.33 % 5.29 % 5.20 % 5.11 % 4.83 % 4.84 %
Total deposits and interest-bearing liabilities 1.27 % 1.15 % 1.01 % 0.81 % 0.73 % 0.66 %
�
Capital and other ratios (8):
Pinnacle Financial ratios:
Stockholders' equity to total assets 15.8 % 15.9 % 16.0 % 16.3 % 16.7 % 16.9 %
Common equity Tier one 9.6 % 9.4 % 9.3 % 9.2 % 9.2 % 9.4 %
Tier one risk-based 9.6 % 9.4 % 9.3 % 9.2 % 9.2 % 9.4 %
Total risk-based 12.2 % 12.1 % 12.0 % 12.0 % 12.0 % 12.3 %
Leverage 8.9 % 8.8 % 8.8 % 8.8 % 8.7 % 8.9 %
Tangible common equity to tangible assets 9.1 % 9.0 % 8.9 % 9.0 % 9.1 % 9.1 %
Pinnacle Bank ratios:
Common equity Tier one 10.5 % 10.3 % 10.2 % 10.3 % 10.3 % 10.7 %
Tier one risk-based 10.5 % 10.3 % 10.2 % 10.3 % 10.3 % 10.7 %
Total risk-based 11.5 % 11.4 % 11.2 % 11.3 % 11.4 % 11.8 %
Leverage 9.8 % 9.6 % 9.7 % 9.8 % 9.7 % 10.1 %

Construction and land development loans as a percentage of total capital (19)

85.2 % 87.8 % 94.6 % 96.1 % 89.4 % 88.1 %

Non-owner occupied commercial real estate and multi-family as a percentage of total capital (19)

277.7 % 287.6 % 304.3 % 306.2 % 297.1 % 289.1 %
�
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) December September June March December September
� 2018 � � � 2018 � � � 2018 � � � 2018 � � � 2017 � � � 2017 �
�
Per share data:
Earnings – basic $ 1.24 1.22 1.13 1.08 0.35 0.84
Earnings - basic, excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 1.26 1.22 1.15 1.13 0.98 0.91
Earnings – diluted $ 1.23 1.21 1.12 1.08 0.35 0.83
Earnings - diluted, excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 1.25 1.21 1.15 1.13 0.97 0.90
Common dividends per share $ 0.16 0.14 0.14 0.14 0.14 0.14
Book value per common share at quarter end (9) $ 51.18 50.05 49.15 48.16 47.70 47.31
Tangible book value per common share at quarter end (9) $ 27.27 26.21 25.28 24.24 23.71 23.32
Revenue per diluted share $ 3.19 3.11 2.97 2.83 2.73 2.80
Revenue per diluted share, excluding investment (gains) losses on sale of securities, net $ 3.22 3.11 2.97 2.83 2.83 2.80
Noninterest expense per diluted share $ 1.54 1.47 1.43 1.40 1.59 1.42
Noninterest expense per diluted share, excluding the impact of other real estate expense and merger-related charges $ 1.53 1.47 1.38 1.34 1.34 1.30
�
Investor information:
Closing sales price on last trading day of quarter $ 46.10 60.15 61.35 64.20 66.30 66.95
High closing sales price during quarter $ 61.04 66.20 68.10 69.45 69.30 66.95
Low closing sales price during quarter $ 44.03 60.05 61.35 60.20 63.85 58.50
�
Other information:
Gains on residential mortgage loans sold:
Residential mortgage loan sales:
Gross loans sold $ 236,861 278,073 264,934 237,667 289,149 299,763
Gross fees (10) $ 6,184 7,756 7,134 6,036 7,364 9,050
Gross fees as a percentage of loans originated 2.61 % 2.79 % 2.69 % 2.54 % 2.55 % 3.02 %
Net gain on residential mortgage loans sold $ 3,141 3,902 3,777 3,744 3,839 5,963
Investment gains (losses) on sales of securities, net (15) $ (2,295 ) 11 — 30 (8,265 ) —
Brokerage account assets, at quarter end (11) $ 3,763,911 3,998,774 3,745,635 3,508,669 3,266,936 2,979,936
Trust account managed assets, at quarter end $ 2,055,861 2,074,027 1,920,226 1,844,871 1,837,233 1,880,488
Core deposits (12) $ 16,489,173 16,076,859 15,400,142 14,750,211 14,838,208 14,236,205
Core deposits to total funding (12) 79.0 % 78.3 % 76.9 % 77.3 % 80.8 % 79.1 %
Risk-weighted assets $ 21,137,263 20,705,547 20,151,827 19,286,101 18,812,653 18,164,765
Number of offices 114 115 115 114 114 123
Total core deposits per office $ 144,642 139,799 133,914 129,388 130,160 115,742
Total assets per full-time equivalent employee $ 10,897 10,917 10,911 10,677 10,415 9,930
Annualized revenues per full-time equivalent employee $ 427.5 424.9 419.9 412.8 393.1 390.8
Annualized expenses per full-time equivalent employee $ 206.2 201.0 202.3 205.0 228.8 198.4
Number of employees (full-time equivalent) 2,297.0 2,249.5 2,198.5 2,148.0 2,132.0 2,194.5
Associate retention rate (13) 92.3 % 91.1 % 89.6 % 89.9 % 93.5 % 98.3 %
�
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
� � Three Months Ended Year Ended
(dollars in thousands, except per share data) December 31, � � September 30, � � December 31, December 31, December 31,
� 2018 � � � 2018 � � � 2017 � 2018 � � � 2017 �
�
Net interest income $ 190,215 189,420 175,017 736,342 543,306
�
Noninterest income � 57,270 � � � 51,478 � � � 36,202 � 200,870 � � � 144,904 �
Total revenues 247,485 240,898 211,219 937,212 688,210
Less: Investment (gains) losses on sales of securities, net � 2,295 � � � (11 ) � � 8,265 � 2,254 � � � 8,265 �

Total revenues excluding the impact of investment (gains) losses on sales of securities, net

� 249,780 � � � 240,887 � � � 219,484 � 939,466 � � � 696,475 �
�
Noninterest expense 119,409 113,990 122,973 452,887 366,560
Less: Other real estate (ORE) expense 631 67 252 723 1,079
Merger-related charges � — � � � — � � � 19,103 � 8,259 � � � 31,843 �
Noninterest expense excluding the impact of ORE expense and merger-related charges � 118,778 � � � 113,923 � � � 103,618 � 443,905 � � � 333,638 �
�
Adjusted pre-tax pre-provision income (14) $ 131,002 � � � 126,964 � � � 115,866 � 495,561 � � � 362,837 �
�
Efficiency ratio (4) 48.25 % 47.32 % 58.22 % 48.32 % 53.26 %
Adjustment due to investment gains and losses, ORE expense and merger-related charges � (0.70 )% � � (0.03 )% � � (11.01 )% (1.07 )% � � (5.36 )%
Efficiency ratio (excluding investment gains and losses, ORE expense and merger-related charges) � 47.55 % � � 47.29 % � � 47.21 % 47.25 % � � 47.90 %
� � � � � � � � � � �
Total average assets $ 24,616,733 � � � 24,125,051 � � � 21,933,500 � 23,554,028 � � � 17,016,217 �
�
�
Noninterest expense to average assets 1.92 % 1.87 % 2.22 % 1.92 % 2.15 %
Adjustment due to ORE expense and merger-related charges � (0.01 )% � � — % � � (0.35 )% (0.04 )% � � (0.19 )%

Noninterest expense (excluding ORE expense and merger-related charges) to average assets (1)

� 1.91 % � � 1.87 % � � 1.87 % 1.88 % � � 1.96 %
�
Net income $ 95,318 93,747 26,798 359,440 173,979
Merger-related charges — — 19,103 8,259 31,843
Investment (gains) losses on sales of securities, net 2,295 (11 ) 8,265 2,254 8,265
Tax effect on merger-related charges and

investment gains and losses (18)

(600 ) 3 (10,736 ) (2,748 ) (15,734 )
Revaluation of deferred tax assets � — � � � — � � � 31,486 � — � � � 31,486 �
Net income excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 97,013 � � � 93,739 � � � 74,916 � 367,205 � � � 229,839 �
�
Basic earnings per share $ 1.24 1.22 0.35 4.66 2.73
Adjustment due to merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 0.02 � � � — � � � 0.63 � 0.10 � � � 0.87 �
Basic earnings per share excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 1.26 � � � 1.22 � � � 0.98 � 4.76 � � � 3.60 �
�
Diluted earnings per share $ 1.23 1.21 0.35 4.64 2.70
Adjustment due to merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 0.02 � � � — � � � 0.62 � 0.10 � � � 0.87 �
Diluted earnings per share excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 1.25 � � � 1.21 � � � 0.97 � 4.74 � � � 3.57 �
�
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
� � Three Months Ended � � � Year Ended
(dollars in thousands, except per share data) December 31, � � September 30, � � December 31, December 31, � � December 31,
� 2018 � � � 2018 � � � 2017 � 2018 � � � 2017 �
�
Return on average assets 1.54 % 1.54 % 0.48 % 1.53 % 1.02 %
Adjustment due to merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 0.02 % � � — % � � 0.88 % 0.03 % � � 0.33 %
Return on average assets excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 1.56 % � � 1.54 % � � 1.36 % 1.56 % � � 1.35 %
�
Tangible assets:
Total assets $ 25,031,044 24,557,545 22,205,700 25,031,044 22,205,700
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,808,002 ) (1,807,121 ) (1,808,002 )
Core deposit and other intangible assets � (46,161 ) � � (48,737 ) � � (56,710 ) (46,161 ) � � (56,710 )
Net tangible assets $ 23,177,762 � � � 22,701,687 � � � 20,340,988 � 23,177,762 � � � 20,340,988 �
�
Tangible equity:
Total stockholders' equity $ 3,965,940 3,897,041 3,707,952 3,965,940 3,707,952
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,808,002 ) (1,807,121 ) (1,808,002 )
Core deposit and other intangible assets � (46,161 ) � � (48,737 ) � � (56,710 ) (46,161 ) � � (56,710 )
Net tangible common equity $ 2,112,658 � � � 2,041,183 � � � 1,843,240 � 2,112,658 � � � 1,843,240 �
�
Ratio of tangible common equity to tangible assets � 9.12 % � � 8.99 % � � 9.06 % 9.12 % � � 9.06 %
�
Average tangible assets:
Average assets $ 24,616,733 24,125,051 21,933,500 23,554,028 17,016,217
Less: Average goodwill (1,807,121 ) (1,807,121 ) (1,803,546 ) (1,807,533 ) (1,234,316 )
Average core deposit and other intangible assets � (47,711 ) � � (50,292 ) � � (58,192 ) (51,650 ) � � (39,261 )
Net average tangible assets $ 22,761,901 � � � 22,267,638 � � � 20,071,762 � 21,694,845 � � � 15,742,640 �
�
Return on average assets 1.54 % 1.54 % 0.48 % 1.53 % 1.02 %
Adjustment due to goodwill, core deposit and other intangible assets � 0.12 % � � 0.13 % � � 0.05 % 0.13 % � � 0.09 %
Return on average tangible assets 1.66 % 1.67 % 0.53 % 1.66 % 1.11 %
Adjustment due to merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 0.03 % � � — % � � 0.95 % 0.03 % � � 0.35 %
Return on average tangible assets excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 1.69 % � � 1.67 % � � 1.48 % 1.69 % � � 1.46 %
�
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
� � Three Months Ended � � � Year Ended
(dollars in thousands, except per share data) December 31, � � September 30, � � December 31, December 31, � � December 31,
� 2018 � � 2018 � � 2017 2018 � � 2017
�
Average tangible stockholders' equity:
Average stockholders' equity $ 3,939,927 3,874,430 3,706,741 3,836,412 2,777,130
Less: Average goodwill (1,807,121) (1,807,121) (1,803,546) (1,807,533) (1,234,316)
Average core deposit and other intangible assets � (47,711) � � (50,292) � � (58,192) (51,650) � � (39,261)
Net average tangible common equity $ 2,085,095 � � 2,017,017 � � 1,845,003 1,977,229 � � 1,503,553
�
Return on average common equity 9.60% 9.60% 2.87% 9.37% 6.26%
Adjustment due to goodwill, core deposit and other intangible assets � 8.54% � � 8.84% � � 2.89% 8.81% � � 5.31%
Return on average tangible common equity (1) 18.14% 18.44% 5.76% 18.18% 11.57%
Adjustment due to merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 0.32% � � —% � � 10.35% 0.39% � � 3.72%
Return on average tangible common equity excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets � 18.46% � � 18.44% � � 16.11% 18.57% � � 15.29%
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Total average assets $ 24,616,733 � � 24,125,051 � � 21,933,500 23,554,028 � � 17,016,217
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Book value per common share at quarter end $ 51.18 50.05 47.70 51.18 47.70
Adjustment due to goodwill, core deposit and other intangible assets � (23.91) � � (23.84) � � (23.99) (23.91) � � (23.99)
Tangible book value per common share at quarter end (9) $ 27.27 � � 26.21 � � 23.71 27.27 � � 23.71
�
Noninterest expense per diluted share $ 1.54 1.47 1.59 5.85 5.70
Adjustment due to ORE expense and merger-related charges � (0.01) � � — � � (0.25) (0.12) � � (0.51)
Noninterest expense (excluding ORE expense and
merger-related charges) per diluted share 		$ 1.53 � � 1.47 � � 1.34 5.73 � � 5.19
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Equity method investment (17)
Fee income from BHG, net of amortization $ 17,936 14,236 12,444 51,222 37,958
Funding cost to support investment � 2,354 � � 2,260 � � 2,034 8,732 � � 7,604
Pre-tax impact of BHG 15,582 11,976 10,410 42,490 30,354
Income tax expense at statutory rates � 4,073 � � 3,131 � � 4,084 11,107 � � 11,908
Earnings attributable to BHG $ 11,509 � � 8,845 � � 6,326 31,383 � � 18,446
�
Basic earnings per share attributable to BHG $ 0.15 0.11 0.08 0.41 0.29
Diluted earnings per share attributable to BHG $ 0.15 0.11 0.08 0.41 0.29
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This information is preliminary and based on company data available at the time of the presentation.
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
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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 for quarters ended prior to Dec. 31, 2018 and 10 to 100 for all subsequent periods to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. The risk rating scale was changed to allow for granularity, if needed, in criticized and classified risk ratings to distinguish accrual status or structural loan issues. A "10" risk rating is assigned to credits that exhibit Excellent risk characteristics, "20" exhibit Very Good risk characteristics, "30" Good, "40" Satisfactory, "50" Acceptable or Average, "60" Watch List, "70" Criticized, "80" Classified or Substandard, "90" Doubtful and "100" Loss (which are charged-off immediately). Additionally, loans rated "80" 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 quarter-to-date net loan charge-offs and dividing the result by average loans for the quarter-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 tangible 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 I capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
Tier I risk-based – Tier I 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 I 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 by common shares outstanding. Tangible book value per share computed by dividing total stockholder's equity, less goodwill, core deposit and other intangibles 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. Periods prior to the second quarter of 2018 have been restated to reflect regulatory changes that were adopted in the second quarter of 2018 that permit reciprocal deposits to be treated as core deposits if they otherwise qualify as such. 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. Associate retention rate does not include associates at acquired institutions displaced by merger.
14. Adjusted pre-tax, pre-provision income excludes the impact of other real estate expenses and income, investment gains and losses on sales of securities and merger-related charges.
15. 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.
16. 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.
17. Earnings from equity method investment includes the impact of the issuance of subordinated debt as well as the funding costs of the overall franchise. Income tax expense is calculated using statutory tax rates.
18. Tax effect calculated using the blended statutory rate of 39.23 percent for all periods prior to 2018. For 2018, tax effect calculated using the blended statutory rate of 26.14 percent.
19. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

MEDIA CONTACT: Joe Bass, 615-743-8219

FINANCIAL CONTACT: Harold Carpenter, 615-744-3742

WEBSITE: www.pnfp.com

Source: Pinnacle Financial Partners, Inc.

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