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PNFP Reports Diluted EPS of $1.65, ROAA of 1.32% and ROATCE of 15.63% For 1Q2022

April 18, 2022 5:27 PM

Annualized linked-quarter loan growth of 18.5% for 1Q2022, 22.5% exclusive of PPP paydowns

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.65 for the quarter ended March 31, 2022, compared to net income per diluted common share of $1.61 for the quarter ended March 31, 2021, an increase of approximately 2.5 percent. Items significantly impacting the comparability between the two periods were:

"In our view, the economic landscape remains fragile," said M. Terry Turner, Pinnacle's president and chief executive officer. "Russia's invasion of Ukraine and the various economic sanctions enacted in response are likely to continue to weigh on our economy. The full impact of the ongoing supply chain issues, inflation, inverted yield curves and a potential recession are as yet unknown. Our response thus far has been to seek to protect tangible book value, to initiate a number of targeted loan portfolio reviews, including our COVID-impacted and commercial real estate portfolios, and to heighten our diligence on cybersecurity and fraud detection.

"Despite the uncertain economic environment, we are pleased with our first quarter performance and remain optimistic for 2022," Turner said. "As a result of our prolific hiring over the last few years, we had anticipated rapid loan growth this year based primarily on market share movement as the new revenue producers continue to consolidate their clients from their previous employers to us. Not only are we realizing outsized loan growth in our legacy Tennessee, Carolinas and Virginia markets, but we are also having great success in our market extensions to Atlanta, Washington, D.C., Birmingham, and Huntsville. The prolific hiring continued during the first quarter with 28 additional revenue producers. The loan growth we experienced during the first quarter, along with our current loan pipelines and our continued ability to attract new associates, have bolstered our confidence that we could meet or exceed mid-teen percentage loan growth for this year."

BALANCE SHEET GROWTH:

Total assets at March 31, 2022 were $39.4 billion, an increase of approximately $4.1 billion from March 31, 2021, reflecting a year-over-year increase of 11.6 percent. A further analysis of select balance sheet trends follows:

Balances at

Balances at

(dollars in thousands)

March 31,
2022

December 31,
2021

Linked-Quarter
Annualized
% Change

March 31,
2021

Year-over-Year
% Change

Loans

$

24,499,022

$

23,414,262

18.5

%

$

23,086,701

6.1

%

Less PPP loans

157,180

371,118

(230.6

)%

2,221,409

(92.9

)%

Loans excluding PPP loans

24,341,842

23,043,144

22.5

%

20,865,292

16.7

%

Securities and other interest-earning assets

10,704,157

11,046,895

(12.4

)%

8,237,831

29.9

%

Total interest-earning assets excluding PPP loans

$

35,045,999

$

34,090,039

11.2

%

$

29,103,123

20.4

%

Core Deposits:

Noninterest-bearing deposits

10,986,194

10,461,071

20.1

%

8,103,943

35.6

%

Interest-bearing core deposits(1)

19,412,489

18,855,840

11.8

%

16,857,447

15.2

%

Noncore deposits and other funding(2)

3,428,850

3,452,034

(2.7

)%

5,062,784

(32.3

)%

Total funding

$

33,827,533

$

32,768,945

12.9

%

$

30,024,174

12.7

%

(1): Interest-bearing core deposits are interest-bearing deposits, money market accounts, time deposits less than $250,000 and reciprocating time and money market deposits issued through the IntraFi Network.

(2): Noncore deposits and other funding consists of time deposits greater than $250,000, securities sold under agreements to repurchase, public funds, brokered deposits, FHLB advances and subordinated debt.

"During the first quarter, loan growth approximated an annualized rate of 18.5 percent when compared to balances at Dec. 31, 2021. Excluding the impact of PPP, loans increased at an annualized rate of 22.5 percent," Turner said. "As we have been highlighting for the past several quarters, replacing last year's PPP revenue and extraordinary volume of mortgage origination fees is primarily a function of new loan growth this year, and we are off to a tremendous start. Additionally, we were pleased with our core deposit growth in the first quarter of 14.7 percent and that our average deposit costs decreased during the quarter to 13 basis points."

PRE-TAX, PRE-PROVISION NET REVENUES (PPNR):

Pre-tax, pre-provision net revenues (PPNR) for the quarter ended March 31, 2022 were $160.3 million, a decrease of 1.4 percent from the $160.9 million recognized in the quarter ended March 31, 2021.

Three months ended

March 31,

(dollars in thousands)

2022

2021

% change

Revenues:

Net interest income

$

239,475

$

222,870

7.5

%

Noninterest income

103,496

92,709

11.6

%

Total revenues

342,971

315,579

8.7

%

Noninterest expense

182,661

154,696

18.1

%

Pre-tax, pre-provision net revenue (PPNR)

$

160,310

$

160,883

(0.4

)%

Adjustments:

Investment losses on sales of securities, net

61

—

NM

ORE expense (benefit)

105

(13

)

NM

Adjusted PPNR

$

160,476

$

160,870

(0.2

)%

"We continue to highlight PPNR and our efforts to grow PPNR consistently," said Harold R. Carpenter, Pinnacle’s chief financial officer. "PPNR was flattish compared to last year’s first quarter, but given the headwinds of reduced PPP revenues and reduced revenues from our residential mortgage business, we are pleased with our first quarter PPNR results. In addition to our anticipated loan growth this year, we believe that BHG's performance will result in at least 20 percent noninterest income growth in 2022 and that our wealth management businesses will also have a strong year given market volatility and several significant hires that were accomplished in 2021. As to expenses, compensation costs increased nearly 19 percent over last year, due primarily to increased headcount, annual merit raises and seasonal payroll taxes. We are optimistic that our hiring model will continue to provide us even more opportunities to add revenue producers this year. As a result, including the impact of inflation and the addition of JB&B on our expense base, we believe our noninterest expenses for 2022 will approximate mid-teen percentage increase over 2021 noninterest expense.

"We all appreciated that growing PPNR in 2022 would be challenging for the entire banking industry. We believe our loan growth momentum going into the second quarter is very strong, and assuming rates continue to increase and eliminate the impact of a larger percentage of our loan floors, not only should our revenue growth accelerate, but our margins should begin to expand as well."

PROFITABILITY:

Three months ended

March 31,
2022

December 31,
2021

March 31,
2021

Net interest margin

2.89

%

2.96

%

3.02

%

Efficiency ratio

53.26

%

50.20

%

49.02

%

Return on average assets

1.32

%

1.39

%

1.42

%

Return on average tangible common equity (TCE)

15.63

%

16.13

%

17.16

%

Book value per common share

$

66.30

$

66.89

$

62.33

Tangible book value per common share

$

41.65

$

42.55

$

37.88

"We remain pleased with our profitability metrics for the first quarter," Carpenter said. "There is much discussion about the rate environment and its impact on our balance sheet sensitivity going forward. We believe our balance sheet is positioned more conservatively than most given our disciplined adherence to loan floors over the last few years. Over the course of the last few weeks and since the most recent increase in Fed funds rates, our loan yields have expanded by almost 6 basis points, while our total deposit costs have increased approximately 2 basis points. Thus far, and we are very early in the up-rate cycle, we are pleased with how our relationship managers are working with their clients and setting expectations for the next several quarters.

"Additionally, the impact of increased rates on tangible book value has garnered attention. Our tangible book value per share decreased by 2.1 percent this quarter, primarily due to the impact of rising rates on accumulated other comprehensive income. Early in the first quarter of 2022, we transferred approximately $1.1 billion of available-for-sale securities to held-to-maturity to help counter the impact of rising rates on tangible equity. Tangible book value per share is a key initiative of ours, so we will continue to position our firm to grow tangible book value over the long term."

MAINTAINING A STRONG BALANCE SHEET:

Three months ended or as of

March 31,
2022

December 31,
2021

March 31,
2021

Annualized net loan charge-offs to avg. loans(1)

0.05

%

0.14

%

0.20

%

Nonperforming assets to total loans, ORE and other nonperforming assets (NPAs)

0.14

%

0.17

%

0.36

%

Classified asset ratio (Pinnacle Bank) (2)

3.60

%

4.10

%

7.30

%

Allowance for credit losses (ACL) to total loans

1.07

%

1.12

%

1.22

%

ACL to total loans, excluding PPP

1.07

%

1.14

%

1.35

%

(1): Annualized net loan charge-offs to average loans ratios are computed by annualizing quarterly net loan charge-offs and dividing the result by average loans for the quarter.

(2): Classified assets as a percentage of Tier 1 capital plus allowance for credit losses.

"Our credit performance has been strong for many years, and this was even more evident in the first quarter," Carpenter said. "Several of our loan credit metrics are at the lowest point they have been at in many years. During the first quarter, our allowance for credit losses to total loans (excluding PPP loans) (ACL) decreased from 1.14 percent at year end 2021 to 1.07 percent at March 31, 2022. We believe that continued reductions in our ACL are possible through most of 2022."

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CT on April 19, 2022, to discuss first quarter 2022 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 2021 deposit data from the FDIC, is listed by Forbes among the top 25 banks in the nation and earned a spot on the 2022 list of 100 Best Companies to Work For® in the U.S., its sixth consecutive appearance. American Banker recognized Pinnacle as one of America’s Best Banks to Work For nine years in a row and No. 1 among banks with more than $11 billion in assets in 2021.

Pinnacle owns a 49 percent interest in Bankers Healthcare Group (BHG), which provides innovative, hassle-free financial solutions to healthcare practitioners and other licensed professionals. Great Place to Work and FORTUNE ranked BHG No. 4 on its 2021 list of Best Workplaces in New York State in the small/medium business category.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $39.4 billion in assets as of March 31, 2022. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 15 primarily urban markets across the Southeast.

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 of Pinnacle Bank and its subsidiaries or BHG resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on Pinnacle Financial's and its customers' business, results of operations, asset quality and financial condition; (iii) further public acceptance of the booster shots of the vaccines that were developed against the virus as well as the decisions of governmental agencies with respect to vaccines including recommendations related to booster shots and requirements that seek to mandate that individuals receive or employers require that their employees receive the vaccine; (iv) those vaccines' efficacy against the virus, including new variants; (v) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (vi) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (viii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (ix) 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; (x) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina, Georgia, Alabama and Virginia, particularly in commercial and residential real estate markets, including the negative impact of inflationary pressures on our customers and their businesses; (xi) the results of regulatory examinations; (xii) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xiii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xiv) BHG's ability to profitably grow its business and successfully execute on its business plans; (xv) risks of expansion into new geographic or product markets; (xvi) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to lower rates it pays on deposits; (xvii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xviii) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xix) 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; (xx) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xxi) 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 Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xxii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxiii) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxiv) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), 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; (xxv) 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 or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Financial and Pinnacle Bank) if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xxvi) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxvii) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxiii) the availability of and access to capital; (xxix) 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, including as a result of Pinnacle Bank's participation in and execution of government programs related to the COVID-19 pandemic; and (xxx) 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 for the year ended December 31, 2021, and subsequently filed 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 common share, PPNR, 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 investment securities, FHLB restructuring charges, hedge termination charges and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude the impact of loans originated under the PPP. 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 as well as the impact of Pinnacle Financial's Series B Preferred Stock. 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 2022 versus certain periods in 2021 and to internally prepared projections.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

(dollars in thousands, except for share and per share data)

March 31,
2022

December 31,
2021

March 31,
2021

ASSETS

Cash and noninterest-bearing due from banks

$

187,093

$

188,287

$

189,251

Restricted cash

29,680

82,505

162,834

Interest-bearing due from banks

3,103,008

3,830,747

2,780,137

Federal funds sold and other

—

—

55,186

Cash and cash equivalents

3,319,781

4,101,539

3,187,408

Securities purchased with agreement to resell

1,332,753

1,000,000

450,000

Securities available-for-sale, at fair value

3,569,723

4,914,194

3,677,019

Securities held-to-maturity (fair value of $2.4 billion, $1.2 billion and $1.0 billion, net of allowance for credit losses of $1.1 million, $161 and $198 at March 31, 2022, Dec. 31, 2021 and March 31, 2021, respectively)

2,566,386

1,155,958

1,014,345

Consumer loans held-for-sale

67,224

45,806

85,769

Commercial loans held-for-sale

35,383

17,685

12,541

Loans

24,499,022

23,414,262

23,086,701

Less allowance for credit losses

(261,618

)

(263,233

)

(280,881

)

Loans, net

24,237,404

23,151,029

22,805,820

Premises and equipment, net

296,779

288,182

289,515

Equity method investment

382,256

360,833

327,512

Accrued interest receivable

95,147

98,813

98,477

Goodwill

1,850,951

1,819,811

1,819,811

Core deposits and other intangible assets

31,997

33,819

40,130

Other real estate owned

8,237

8,537

10,651

Other assets

1,606,357

1,473,193

1,480,707

Total assets

$

39,400,378

$

38,469,399

$

35,299,705

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

10,986,194

$

10,461,071

$

8,103,943

Interest-bearing

6,838,659

6,530,015

5,814,689

Savings and money market accounts

12,416,101

12,179,663

11,361,620

Time

2,054,860

2,133,784

3,012,688

Total deposits

32,295,814

31,304,533

28,292,940

Securities sold under agreements to repurchase

219,530

152,559

172,117

Federal Home Loan Bank advances

888,870

888,681

888,115

Subordinated debt and other borrowings

423,319

423,172

671,002

Accrued interest payable

8,575

12,504

15,359

Other liabilities

283,320

377,343

300,648

Total liabilities

34,119,428

33,158,792

30,340,181

Preferred stock, no par value, 10.0 million shares authorized; 225,000 shares non-cumulative perpetual preferred stock, Series B, liquidation preference $225.0 million, issued and outstanding at March 31, 2022, Dec. 31, 2021 and March 31, 2021, respectively

217,126

217,126

217,126

Common stock, par value $1.00; 180.0 million shares authorized; 76.4 million, 76.1 million and 76.1 million shares issued and outstanding at March 31, 2022, Dec. 31, 2021, and March 31, 2021, respectively

76,377

76,143

76,088

Additional paid-in capital

3,045,914

3,045,802

3,027,311

Retained earnings

1,972,686

1,864,350

1,515,451

Accumulated other comprehensive income (loss), net of taxes

(31,153

)

107,186

123,548

Total stockholders' equity

5,280,950

5,310,607

4,959,524

Total liabilities and stockholders' equity

$

39,400,378

$

38,469,399

$

35,299,705

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

(dollars in thousands, except for share and per share data)

Three months ended

March 31,
2022

December 31,
2021

March 31,
2021

Interest income:

Loans, including fees

$

227,047

$

230,026

$

227,372

Securities

Taxable

11,048

9,696

7,728

Tax-exempt

17,446

16,931

15,498

Federal funds sold and other

3,076

2,540

1,319

Total interest income

258,617

259,193

251,917

Interest expense:

Deposits

10,250

10,648

17,468

Securities sold under agreements to repurchase

56

54

72

FHLB advances and other borrowings

8,836

9,728

11,507

Total interest expense

19,142

20,430

29,047

Net interest income

239,475

238,763

222,870

Provision for credit losses

2,720

2,675

7,235

Net interest income after provision for credit losses

236,755

236,088

215,635

Noninterest income:

Service charges on deposit accounts

11,030

12,663

8,307

Investment services

10,691

11,081

8,191

Insurance sales commissions

4,036

2,328

3,225

Gains on mortgage loans sold, net

4,066

4,244

13,666

Investment gains (losses) on sales, net

(61

)

393

—

Trust fees

5,973

5,926

4,687

Income from equity method investment

33,655

30,844

28,950

Other noninterest income

34,106

33,244

25,683

Total noninterest income

103,496

100,723

92,709

Noninterest expense:

Salaries and employee benefits

121,852

110,048

102,728

Equipment and occupancy

25,536

24,997

23,220

Other real estate, net

105

37

(13

)

Marketing and other business development

3,777

4,562

2,349

Postage and supplies

2,371

2,191

1,806

Amortization of intangibles

1,871

2,057

2,206

Other noninterest expense

27,149

26,525

22,400

Total noninterest expense

182,661

170,417

154,696

Income before income taxes

157,590

166,394

153,648

Income tax expense

28,480

32,866

28,220

Net income

129,110

133,528

125,428

Preferred stock dividends

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

125,312

$

129,730

$

121,630

Per share information:

Basic net income per common share

$

1.66

$

1.72

$

1.61

Diluted net income per common share

$

1.65

$

1.71

$

1.61

Weighted average common shares outstanding:

Basic

75,654,986

75,523,052

75,372,883

Diluted

75,930,372

76,024,700

75,657,149

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)

March

December

September

June

March

December

2022

2021

2021

2021

2021

2020

Balance sheet data, at quarter end:

Commercial and industrial loans

$

8,213,204

7,703,428

7,079,431

6,771,254

6,355,119

6,239,588

Commercial real estate - owner occupied loans

3,124,275

3,048,822

2,954,519

2,817,689

2,869,785

2,802,227

Commercial real estate - investment loans

4,707,761

4,607,048

4,597,736

4,644,551

4,782,712

4,565,040

Commercial real estate - multifamily and other loans

718,822

614,656

621,471

724,253

790,469

638,344

Consumer real estate - mortgage loans

3,813,252

3,680,684

3,540,439

3,335,537

3,086,916

3,099,172

Construction and land development loans

3,277,029

2,903,017

3,096,961

2,791,611

2,568,969

2,901,746

Consumer and other loans

487,499

485,489

459,182

440,124

411,322

379,515

Paycheck protection program loans

157,180

371,118

708,722

1,372,916

2,221,409

1,798,869

Total loans

24,499,022

23,414,262

23,058,461

22,897,935

23,086,701

22,424,501

Allowance for credit losses

(261,618

)

(263,233

)

(268,635

)

(273,747

)

(280,881

)

(285,050

)

Securities

6,136,109

6,070,152

5,623,890

5,326,908

4,691,364

4,615,040

Total assets

39,400,378

38,469,399

36,523,936

35,412,309

35,299,705

34,932,860

Noninterest-bearing deposits

10,986,194

10,461,071

9,809,691

8,926,200

8,103,943

7,392,325

Total deposits

32,295,814

31,304,533

29,369,807

28,217,603

28,292,940

27,705,575

Securities sold under agreements to repurchase

219,530

152,559

148,240

177,661

172,117

128,164

FHLB advances

888,870

888,681

888,493

888,304

888,115

1,087,927

Subordinated debt and other borrowings

423,319

423,172

542,712

671,994

671,002

670,575

Total stockholders' equity

5,280,950

5,310,607

5,191,798

5,101,231

4,959,524

4,904,611

Balance sheet data, quarterly averages:

Total loans

$

23,848,533

23,225,735

22,986,835

23,179,803

22,848,086

22,524,683

Securities

6,143,664

5,813,636

5,451,232

5,036,786

4,666,269

4,567,872

Federal funds sold and other

4,799,946

4,356,113

3,743,074

3,143,078

3,356,199

3,621,623

Total earning assets

34,792,143

33,395,484

32,181,141

31,359,667

30,870,554

30,714,178

Total assets

38,637,221

37,132,078

35,896,130

35,053,772

34,659,132

34,436,765

Noninterest-bearing deposits

10,478,403

10,240,393

9,247,382

8,500,465

7,620,665

7,322,393

Total deposits

31,538,985

30,034,026

28,739,871

28,013,659

27,620,784

27,193,256

Securities sold under agreements to repurchase

179,869

141,781

164,837

173,268

143,586

121,331

FHLB advances

888,746

888,559

888,369

888,184

934,662

1,250,848

Subordinated debt and other borrowings

441,755

484,389

586,387

674,162

673,662

673,419

Total stockholders' equity

5,331,405

5,262,586

5,176,625

5,039,608

4,953,656

4,852,373

Statement of operations data, for the three months ended:

Interest income

$

258,617

259,193

260,868

259,236

251,917

257,047

Interest expense

19,142

20,430

23,325

26,011

29,047

36,062

Net interest income

239,475

238,763

237,543

233,225

222,870

220,985

Provision for credit losses

2,720

2,675

3,382

2,834

7,235

9,180

Net interest income after provision for credit losses

236,755

236,088

234,161

230,391

215,635

211,805

Noninterest income

103,496

100,723

104,095

98,207

92,709

83,444

Noninterest expense

182,661

170,417

168,851

166,140

154,696

161,305

Income before taxes

157,590

166,394

169,405

162,458

153,648

133,944

Income tax expense

28,480

32,866

32,828

30,668

28,220

23,068

Net income

129,110

133,528

136,577

131,790

125,428

110,876

Preferred stock dividends

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

125,312

129,730

132,779

127,992

121,630

107,078

Profitability and other ratios:

Return on avg. assets (1)

1.32

%

1.39

%

1.47

%

1.46

%

1.42

%

1.24

%

Return on avg. equity (1)

9.53

%

9.78

%

10.18

%

10.19

%

9.96

%

8.78

%

Return on avg. common equity (1)

9.94

%

10.20

%

10.62

%

10.65

%

10.41

%

9.19

%

Return on avg. tangible common equity (1)

15.63

%

16.13

%

16.98

%

17.32

%

17.16

%

15.37

%

Common stock dividend payout ratio (16)

12.94

%

10.65

%

11.13

%

11.73

%

13.69

%

15.84

%

Net interest margin (2)

2.89

%

2.96

%

3.03

%

3.08

%

3.02

%

2.97

%

Noninterest income to total revenue (3)

30.18

%

29.67

%

30.47

%

29.63

%

29.38

%

27.41

%

Noninterest income to avg. assets (1)

1.09

%

1.08

%

1.15

%

1.12

%

1.08

%

0.96

%

Noninterest exp. to avg. assets (1)

1.92

%

1.82

%

1.87

%

1.90

%

1.81

%

1.86

%

Efficiency ratio (4)

53.26

%

50.20

%

49.42

%

50.13

%

49.02

%

52.99

%

Avg. loans to avg. deposits

75.62

%

77.33

%

79.98

%

82.74

%

82.72

%

82.83

%

Securities to total assets

15.57

%

15.78

%

15.40

%

15.04

%

13.29

%

13.21

%

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

March 31, 2022

March 31, 2021

Average
Balances

Interest

Rates/
Yields

Average
Balances

Interest

Rates/
Yields

Interest-earning assets

Loans (1) (2)

$

23,848,533

$

227,047

3.94

%

$

22,848,086

$

227,372

4.11

%

Securities

Taxable

3,234,641

11,048

1.39

%

2,271,325

7,728

1.38

%

Tax-exempt (2)

2,909,023

17,446

2.94

%

2,394,944

15,498

3.15

%

Interest-bearing due from banks

3,347,804

1,303

0.16

%

3,168,308

713

0.09

%

Resell agreements

1,281,746

1,214

0.38

%

5,000

—

—

%

Federal funds sold

—

—

—

%

22,809

—

—

%

Other

170,396

559

1.33

%

160,082

606

1.54

%

Total interest-earning assets

34,792,143

$

258,617

3.11

%

30,870,554

$

251,917

3.41

%

Nonearning assets

Intangible assets

1,863,730

1,861,386

Other nonearning assets

1,981,348

1,927,192

Total assets

$

38,637,221

$

34,659,132

Interest-bearing liabilities

Interest-bearing deposits:

Interest checking

6,391,316

2,599

0.16

%

5,466,389

2,599

0.19

%

Savings and money market

12,587,219

5,124

0.17

%

11,321,344

6,713

0.24

%

Time

2,082,047

2,527

0.49

%

3,212,386

8,156

1.03

%

Total interest-bearing deposits

21,060,582

10,250

0.20

%

20,000,119

17,468

0.35

%

Securities sold under agreements to repurchase

179,869

56

0.13

%

143,586

72

0.20

%

Federal Home Loan Bank advances

888,746

4,474

2.04

%

934,662

4,494

1.95

%

Subordinated debt and other borrowings

441,755

4,362

4.00

%

673,662

7,013

4.22

%

Total interest-bearing liabilities

22,570,952

19,142

0.34

%

21,752,029

29,047

0.54

%

Noninterest-bearing deposits

10,478,403

—

—

7,620,665

—

—

Total deposits and interest-bearing liabilities

33,049,355

$

19,142

0.23

%

29,372,694

$

29,047

0.40

%

Other liabilities

256,461

332,782

Stockholders' equity

5,331,405

4,953,656

Total liabilities and stockholders' equity

$

38,637,221

$

34,659,132

Net interest income

$

239,475

$

222,870

Net interest spread (3)

2.77

%

2.86

%

Net interest margin (4)

2.89

%

3.02

%

(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 included $8.5 million of taxable equivalent income for the three months ended March 31, 2022 compared to $7.3 million for the three months ended March 31, 2021. 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 three months ended March 31, 2022 would have been 2.88% compared to a net interest spread of 3.00% for the three months ended March 31, 2021.

(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)

March

December

September

June

March

December

2022

2021

2021

2021

2021

2020

Asset quality information and ratios:

Nonperforming assets:

Nonaccrual loans

$

26,616

31,569

46,692

53,105

72,135

73,836

ORE and other nonperforming assets (NPAs)

8,437

8,537

8,415

9,602

10,651

12,360

Total nonperforming assets

$

35,053

40,106

55,107

62,707

82,786

86,196

Past due loans over 90 days and still accruing interest

$

1,605

1,607

1,914

1,810

2,833

2,362

Accruing troubled debt restructurings (5)

$

2,317

2,354

2,397

2,428

2,460

2,494

Accruing purchase credit deteriorated loans

$

12,661

13,086

12,158

12,400

13,904

14,091

Net loan charge-offs

$

2,958

8,077

9,281

9,968

11,397

10,775

Allowance for credit losses to nonaccrual loans

982.9

%

833.8

%

575.3

%

515.5

%

389.4

%

386.1

%

As a percentage of total loans:

Past due accruing loans over 30 days

0.11

%

0.09

%

0.09

%

0.07

%

0.09

%

0.19

%

Potential problem loans (6)

0.41

%

0.47

%

0.60

%

0.74

%

0.70

%

0.77

%

Allowance for credit losses (20)

1.07

%

1.12

%

1.17

%

1.20

%

1.22

%

1.27

%

Nonperforming assets to total loans, ORE and other NPAs

0.14

%

0.17

%

0.24

%

0.27

%

0.36

%

0.38

%

Classified asset ratio (Pinnacle Bank) (8)

3.6

%

4.1

%

5.6

%

6.8

%

7.3

%

8.1

%

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

0.05

%

0.14

%

0.16

%

0.17

%

0.20

%

0.19

%

Wtd. avg. commercial loan internal risk ratings (6)

44.9

45.3

46.0

46.1

45.2

45.1

Interest rates and yields:

Loans

3.94

%

4.04

%

4.13

%

4.11

%

4.11

%

4.20

%

Securities

2.12

%

2.08

%

2.04

%

2.25

%

2.29

%

2.27

%

Total earning assets

3.11

%

3.20

%

3.32

%

3.42

%

3.41

%

3.44

%

Total deposits, including non-interest bearing

0.13

%

0.14

%

0.17

%

0.20

%

0.26

%

0.33

%

Securities sold under agreements to repurchase

0.13

%

0.15

%

0.14

%

0.13

%

0.20

%

0.21

%

FHLB advances

2.04

%

2.04

%

2.04

%

2.03

%

1.95

%

2.00

%

Subordinated debt and other borrowings

4.00

%

4.23

%

4.45

%

4.52

%

4.22

%

4.13

%

Total deposits and interest-bearing liabilities

0.23

%

0.26

%

0.30

%

0.35

%

0.40

%

0.49

%

Capital and other ratios (8):

Pinnacle Financial ratios:

Stockholders' equity to total assets

13.4

%

13.8

%

14.2

%

14.4

%

14.0

%

14.0

%

Common equity Tier one

10.5

%

10.9

%

10.5

%

10.5

%

10.3

%

10.0

%

Tier one risk-based

11.2

%

11.7

%

11.3

%

11.3

%

11.2

%

10.9

%

Total risk-based

13.3

%

13.8

%

14.0

%

14.5

%

14.5

%

14.3

%

Leverage

9.5

%

9.7

%

9.3

%

9.2

%

8.9

%

8.6

%

Tangible common equity to tangible assets

8.5

%

8.8

%

9.0

%

9.0

%

8.6

%

8.5

%

Pinnacle Bank ratios:

Common equity Tier one

11.4

%

11.9

%

11.7

%

11.9

%

11.8

%

11.4

%

Tier one risk-based

11.4

%

11.9

%

11.7

%

11.9

%

11.8

%

11.4

%

Total risk-based

12.1

%

12.6

%

12.5

%

13.1

%

13.0

%

12.7

%

Leverage

9.6

%

9.9

%

9.7

%

9.6

%

9.4

%

9.1

%

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

87.4

%

79.1

%

89.3

%

80.1

%

76.0

%

89.0

%

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

243.7

%

234.1

%

252.4

%

248.8

%

256.0

%

264.0

%

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)

March

December

September

June

March

December

2022

2021

2021

2021

2021

2020

Per share data:

Earnings per common share – basic

$

1.66

1.72

1.76

1.70

1.61

1.42

Earnings per common share - basic, excluding non-GAAP adjustments

$

1.66

1.71

1.76

1.69

1.61

1.58

Earnings per common share – diluted

$

1.65

1.71

1.75

1.69

1.61

1.42

Earnings per common share - diluted, excluding non-GAAP adjustments

$

1.65

1.70

1.75

1.68

1.61

1.58

Common dividends per share

$

0.22

0.18

0.18

0.18

0.18

0.16

Book value per common share at quarter end (9)

$

66.30

66.89

65.36

64.19

62.33

61.80

Tangible book value per common share at quarter end (9)

$

41.65

42.55

40.98

39.77

37.88

37.25

Revenue per diluted common share

$

4.52

4.47

4.50

4.37

4.17

4.03

Revenue per diluted common share, excluding non-GAAP adjustments

$

4.52

4.46

4.50

4.37

4.17

4.03

Investor information:

Closing sales price of common stock on last trading day of quarter

$

92.08

95.50

94.08

88.29

88.66

64.40

High closing sales price of common stock during quarter

$

110.41

104.72

98.00

92.94

93.58

65.51

Low closing sales price of common stock during quarter

$

90.46

90.20

83.84

84.25

63.48

35.97

Closing sales price of depositary shares on last trading day of quarter

$

26.72

28.21

28.14

29.13

27.62

27.69

High closing sales price of depositary shares during quarter

$

28.53

28.99

29.23

29.13

27.83

27.94

Low closing sales price of depositary shares during quarter

$

25.63

27.42

28.00

27.38

26.83

26.45

Other information:

Residential mortgage loan sales:

Gross loans sold

$

270,793

352,342

347,664

394,299

546,963

479,867

Gross fees (10)

$

5,700

10,098

11,215

15,552

18,793

23,729

Gross fees as a percentage of loans originated

2.11

%

2.87

%

3.23

%

3.94

%

3.44

%

4.94

%

Net gain on residential mortgage loans sold

$

4,066

4,244

7,814

6,700

13,666

12,387

Investment gains (losses) on sales of securities, net (15)

$

(61

)

393

—

366

—

—

Brokerage account assets, at quarter end (11)

$

7,158,939

7,187,085

6,597,152

6,344,416

5,974,884

5,509,560

Trust account managed assets, at quarter end

$

4,499,911

4,720,290

4,155,510

3,640,932

3,443,373

3,295,198

Core deposits (12)

$

30,398,683

29,316,911

27,170,367

25,857,639

24,961,390

23,510,883

Core deposits to total funding (12)

89.9

%

89.5

%

87.8

%

86.3

%

83.1

%

79.5

%

Risk-weighted assets

$

31,170,258

29,349,534

27,945,624

26,819,277

26,105,158

25,791,896

Number of offices

119

118

117

116

115

114

Total core deposits per office

$

255,451

248,448

232,225

222,911

217,141

206,236

Total assets per full-time equivalent employee

$

13,186

13,541

13,188

13,087

13,468

13,262

Annualized revenues per full-time equivalent employee

$

465.5

474.1

489.4

491.3

488.3

459.8

Annualized expenses per full-time equivalent employee

$

247.9

238.0

241.9

246.3

239.4

246.6

Number of employees (full-time equivalent)

2,988.0

2,841.0

2,769.5

2,706.0

2,621.0

2,634.0

Associate retention rate (13)

93.1

%

93.4

%

93.4

%

93.3

%

94.4

%

94.8

%

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

(dollars in thousands, except per share data)

March

December

March

2022

2021

2021

Net interest income

$

239,475

238,763

222,870

Noninterest income

103,496

100,723

92,709

Total revenues

342,971

339,486

315,579

Less: Investment (gains) losses on sales of securities, net

61

(393

)

—

Total revenues excluding the impact of adjustments noted above

$

343,032

339,093

315,579

Noninterest expense

$

182,661

170,417

154,696

Less: ORE expense

105

37

(13

)

Noninterest expense excluding the impact of adjustments noted above

$

182,556

170,380

154,709

Pre-tax income

$

157,590

166,394

153,648

Provision for credit losses

2,720

2,675

7,235

Pre-tax pre-provision net revenue

160,310

169,069

160,883

Adjustments noted above

166

(356

)

(13

)

Adjusted pre-tax pre-provision net revenue (14)

$

160,476

168,713

160,870

Noninterest income

$

103,496

100,723

92,709

Less: Adjustments as noted above

61

(393

)

—

Noninterest income excluding the impact of adjustments noted above

$

103,557

100,330

92,709

Efficiency ratio (4)

53.26

%

50.20

%

49.02

%

Adjustments as noted above

(0.04

)%

0.05

%

—

%

Efficiency ratio (excluding adjustments noted above) (4)

53.22

%

50.25

%

49.02

%

Total average assets

$

38,637,221

37,132,078

34,659,132

Noninterest income to average assets (1)

1.09

%

1.08

%

1.08

%

Adjustments as noted above

—

%

(0.01

)%

—

%

Noninterest income (excluding adjustments noted above) to average assets (1)

1.09

%

1.07

%

1.08

%

Noninterest expense to average assets (1)

1.92

%

1.82

%

1.81

%

Adjustments as noted above

—

%

—

%

—

%

Noninterest expense (excluding adjustments noted above) to average assets (1)

1.92

%

1.82

%

1.81

%

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

(dollars in thousands, except per share data)

March

December

September

June

March

December

2022

2021

2021

2021

2021

2020

Net income available to common shareholders

$

125,312

129,730

132,779

127,992

121,630

107,078

Investment (gains) losses on sales of securities, net

61

(393

)

—

(366

)

—

—

ORE expense

105

37

(79

)

(657

)

(13

)

1,457

FHLB restructuring charges

—

—

—

—

—

10,307

Hedge termination charges

—

—

—

—

—

4,673

Tax effect on adjustments noted above (18)

(43

)

93

21

267

3

(4,297

)

Net income available to common shareholders excluding adjustments noted above

$

125,435

129,467

132,721

127,236

121,620

119,218

Basic earnings per common share

$

1.66

1.72

1.76

1.70

1.61

1.42

Adjustment due to investment (gains) losses on sales of securities, net

—

(0.01

)

—

—

—

—

Adjustment due to ORE expense

—

—

—

(0.01

)

—

0.02

Adjustment due to FHLB restructuring charges

—

—

—

—

—

0.14

Adjustment due to hedge termination charges

—

—

—

—

—

0.06

Adjustment due to tax effect on adjustments noted above (18)

—

—

—

—

—

(0.06

)

Basic earnings per common share excluding adjustments noted above

$

1.66

1.71

1.76

1.69

1.61

1.58

Diluted earnings per common share

$

1.65

1.71

1.75

1.69

1.61

1.42

Adjustment due to investment (gains) losses on sales of securities, net

—

(0.01

)

—

—

—

—

Adjustment due to ORE expense

—

—

—

(0.01

)

—

0.02

Adjustment due to FHLB restructuring charges

—

—

—

—

—

0.14

Adjustment due to hedge termination charges

—

—

—

—

—

0.06

Adjustment due to tax effect on adjustments noted above (18)

—

—

—

—

—

(0.06

)

Diluted earnings per common share excluding the adjustments noted above

$

1.65

1.70

1.75

1.68

1.61

1.58

Revenue per diluted common share

$

4.52

4.47

4.50

4.37

4.17

4.03

Adjustments as noted above

—

(0.01

)

—

—

—

—

Revenue per diluted common share excluding adjustments noted above

$

4.52

4.46

4.50

4.37

4.17

4.03

Book value per common share at quarter end (9)

$

66.30

66.89

65.36

64.19

62.33

61.80

Adjustment due to goodwill, core deposit and other intangible assets

(24.65

)

(24.34

)

(24.38

)

(24.42

)

(24.45

)

(24.55

)

Tangible book value per common share at quarter end (9)

$

41.65

42.55

40.98

39.77

37.88

37.25

Equity method investment (17)

Fee income from BHG, net of amortization

$

33,655

30,844

30,409

32,071

28,950

24,294

Funding cost to support investment

666

388

379

1,230

1,205

1,222

Pre-tax impact of BHG

32,989

30,456

30,030

30,841

27,745

23,072

Income tax expense at statutory rates (18)

8,623

7,961

7,850

8,062

7,253

6,031

Earnings attributable to BHG

$

24,366

22,495

22,180

22,779

20,492

17,041

Basic earnings per common share attributable to BHG

$

0.32

0.30

0.29

0.30

0.27

0.23

Diluted earnings per common share attributable to BHG

$

0.32

0.30

0.29

0.30

0.27

0.23

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

(dollars in thousands, except per share data)

March

December

March

2022

2021

2021

Return on average assets (1)

1.32

%

1.39

%

1.42

%

Adjustments as noted above

—

%

(0.01

) %

—

%

Return on average assets excluding adjustments noted above (1)

1.32

%

1.38

%

1.42

%

Tangible assets:

Total assets

$

39,400,378

38,469,399

35,299,705

Less: Goodwill

(1,850,951

)

(1,819,811

)

(1,819,811

)

Core deposit and other intangible assets

(31,997

)

(33,819

)

(40,130

)

Net tangible assets

$

37,517,430

36,615,769

33,439,764

Tangible common equity:

Total stockholders' equity

$

5,280,950

5,310,607

4,959,524

Less: Preferred stockholders' equity

(217,126

)

(217,126

)

(217,126

)

Total common stockholders' equity

5,063,824

5,093,481

4,742,398

Less: Goodwill

(1,850,951

)

(1,819,811

)

(1,819,811

)

Core deposit and other intangible assets

(31,997

)

(33,819

)

(40,130

)

Net tangible common equity

$

3,180,876

3,239,851

2,882,457

Ratio of tangible common equity to tangible assets

8.48

%

8.85

%

8.62

%

Average tangible assets:

Average assets

$

38,637,221

37,132,078

34,659,132

Less: Average goodwill

(1,830,553

)

(1,819,811

)

(1,819,811

)

Average core deposit and other intangible assets

(33,177

)

(35,152

)

(41,575

)

Net average tangible assets

$

36,773,491

35,277,115

32,797,746

Return on average assets (1)

1.32

%

1.39

%

1.42

%

Adjustment due to goodwill, core deposit and other intangible assets

0.06

%

0.07

%

0.08

%

Return on average tangible assets (1)

1.38

%

1.46

%

1.50

%

Adjustments as noted above

—

%

—

%

—

%

Return on average tangible assets excluding adjustments noted above (1)

1.38

%

1.46

%

1.50

%

Average tangible common equity:

Average stockholders' equity

$

5,331,405

5,262,586

4,953,656

Less: Average preferred equity

(217,126

)

(217,126

)

(217,126

)

Average common equity

5,114,279

5,045,460

4,736,530

Less: Average goodwill

(1,830,553

)

(1,819,811

)

(1,819,811

)

Average core deposit and other intangible assets

(33,177

)

(35,152

)

(41,575

)

Net average tangible common equity

$

3,250,549

3,190,497

2,875,144

Return on average equity (1)

9.53

%

9.78

%

9.96

%

Adjustment due to average preferred stockholders' equity

0.41

%

0.42

%

0.45

%

Return on average common equity (1)

9.94

%

10.20

%

10.41

%

Adjustment due to goodwill, core deposit and other intangible assets

5.69

%

5.93

%

6.75

%

Return on average tangible common equity (1)

15.63

%

16.13

%

17.16

%

Adjustments as noted above

0.02

%

(0.03

)%

—

%

Return on average tangible common equity excluding adjustments noted above (1)

15.65

%

16.10

%

17.16

%

Allowance for credit losses on loans as a percent of total loans (20)

1.07

%

1.12

%

1.22

%

Impact of excluding PPP loans from total loans

—

%

0.02

%

0.13

%

Allowance as adjusted for the above exclusion of PPP loans from total loans (20)

1.07

%

1.14

%

1.35

%

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. Troubled debt restructurings do not include, beginning with the quarter ended March 31, 2020, loans for which the Company has granted a deferral of interest and/or principal or other modification pursuant to the guidance issued by the FDIC providing for relief under the Coronavirus Aid, Relief and Economic Security Act.

6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 10 to 100 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 preferred stock, goodwill, core deposit and other intangibles as a percentage of end of period assets less end of period goodwill, core deposit and other intangibles.

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 credit 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 common share computed by dividing total common stockholders' equity by common shares outstanding. Tangible book value per common share computed by dividing total common stockholders' 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. 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 net revenue excludes the impact of ORE expenses and income, investment gains and losses on sales of securities, FHLB restructuring charges and hedge termination charges.

15. Represents investment gains (losses) on sales and impairments, net occurring as a result of gains or 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 for dividends paid on common shares divided by the trailing 12-months fully diluted earnings per common 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 26.14 percent.

19. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

20. Effective January 1, 2020 Pinnacle Financial adopted the current expected credit loss accounting standard which requires the recognition of all losses expected to be recorded over a loan's life.

pnfp-earnings

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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