PNFP Reports Diluted Earnings Per Share of $0.78 for 4Q 2016

Excluding merger-related charges, diluted EPS was $0.83 for 4Q 2016

NASHVILLE, Tenn.--()--Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.78 for the quarter ended Dec. 31, 2016, compared to net income per diluted common share of $0.65 for the quarter ended Dec. 31, 2015, an increase of 20.0 percent. Net income per diluted common share was $2.91 for the year ended Dec. 31, 2016, compared to net income per diluted common share of $2.52 for the year ended Dec. 31, 2015, an increase of 15.5 percent.

Excluding pre-tax merger-related charges of $3.3 million and $11.7 million for the three months and year ended Dec. 31, 2016, respectively, net income per diluted common share was $0.83 and $3.07, respectively. Net income per diluted common share was $0.69 and $2.61 for the three months and year ended Dec. 31, 2015, excluding pre-tax merger-related charges of $2.5 million and $4.8 million, respectively. As a result, net income per diluted common share excluding merger-related charges increased 20.3 percent and 17.6 percent, respectively, over the same periods ending Dec. 31, 2015.

Pinnacle completed the acquisition of Avenue Financial Holdings, Inc. (Avenue) on July 1, 2016. The financial statements accompanying this press release and the financial condition and results of operations described herein reflect the impact of the Avenue acquisition beginning on July 1, 2016 and are subject to future refinements in the firm’s purchase accounting adjustments.

“2016 was a very eventful year,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “In the first quarter of 2016, we announced the Avenue Bank acquisition in Nashville, followed by the technology conversion of the former CapitalMark Bank & Trust in Chattanooga and the Avenue technology conversion later in the year. We also acquired an additional 19 percent interest in Bankers Healthcare Group, LLC (BHG) early in 2016, increasing our ownership in BHG to 49 percent. These transactions occurred after a very busy year of acquisitions in 2015. Our effective acquisition and integration capabilities in concert with our continued ability to produce rapid organic growth are evident throughout the financial results. Excluding merger-related charges, we are reporting year-over-year earnings per share growth of 20.3 percent for the fourth quarter of 2016. Looking forward, we are optimistic about 2017, believing that our current momentum in the very strong urban markets of Tennessee puts us in a position to continue the outsized growth in revenue and earnings per share.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Revenues for the quarter ended Dec. 31, 2016 were a record $120.2 million, an increase of $1.8 million from the third quarter of 2016. Revenues increased 22.5 percent over the same quarter last year.
  • Loans at Dec. 31, 2016 were a record $8.450 billion, an increase of $208.9 million from Sept. 30, 2016 and $1.907 billion from Dec. 31, 2015, reflecting year-over-year growth of 29.1 percent. Annualized linked-quarter loan growth approximated 10.1 percent when comparing balances as of Dec. 31, 2016 to balances as of Sept. 30, 2016.
  • Average deposit balances for the quarter ended Dec. 31, 2016 were a record $8.791 billion, an increase of $336.8 million from Sept. 30, 2016 and $2.004 billion from Dec. 31, 2015, reflecting year-over-year growth of 29.5 percent.

“We continue to believe that outsized organic growth through hiring the best bankers in our markets is the cornerstone of our firm,” Turner said. “Our loan and deposit growth rates for 2016 were very strong at 14.6 percent and 11.8 percent, respectively, exclusive of the $952 million in loans and the $967 million in deposits we acquired as a result of the Avenue merger. We are also pleased with the continued organic loan growth in our newly acquired markets, as Chattanooga’s loans increased by 13.0 percent during 2016, and Memphis’ loans were up 26.6 percent in 2016 excluding a $156.5 million loan purchase in the Memphis market in 2016.

“Relative to hiring the best bankers in our markets, during 2016 we also increased our associate base by 121 FTE’s including 81 revenue producers, of which 30 were attributable to the Avenue acquisition. These new associates provide capacity for continued rapid growth in the years to come.”

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.30 percent for the fourth quarter of 2016, compared to 1.18 percent for the third quarter of 2016 and 1.24 percent for the same quarter last year. Return on average assets was 1.27 percent for 2016, compared to 1.34 percent for 2015.
    • Excluding merger-related charges in each respective period, return on average assets was 1.37 percent for the fourth quarter of 2016, compared to 1.31 percent for both the third quarter of 2016 and the fourth quarter of 2015. Excluding merger-related charges, return on average assets was 1.34 percent for 2016, compared to 1.38 percent for 2015.
  • Fourth quarter 2016 return on average common equity amounted to 9.61 percent, compared to 8.93 percent for the third quarter of 2016 and 9.24 percent for the same quarter last year. Fourth quarter 2016 return on average tangible common equity amounted to 15.49 percent, compared to 14.47 percent for the third quarter of 2016 and 14.97 percent for the same quarter last year. Return on average tangible common equity was 15.26 percent for 2016, compared to 15.07 percent for 2015.
    • Excluding merger-related charges in each respective period, return on average tangible common equity amounted to 16.34 percent for the fourth quarter of 2016, compared to 16.01 percent for the third quarter of 2016 and 15.81 percent for the fourth quarter of 2015. Excluding merger-related charges, return on average tangible common equity was 16.11 percent for 2016, compared to 15.53 percent for 2015.

“We continue to operate our firm at a high level of profitability,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Even with significant investments in Avenue and BHG and in new revenue producing associates in 2016, our return on average assets and return on average tangible common equity after excluding merger-related charges remain very high versus peers. While we believe the profitability metrics are very important, the consistent growth of the core earnings capacity of our firm through attracting the best revenue producers in our markets will remain our primary focus.”

OTHER HIGHLIGHTS:

  • Revenue growth
    • Revenue per fully-diluted share was $10.20 for 2016, compared to $8.51 in 2015, reflecting growth of 19.9 percent year-over-year. Revenue per fully-diluted share was $2.61 for the quarter ended Dec. 31, 2016, compared to $2.58 for the third quarter of 2016 and $2.39 for the fourth quarter of 2015.
    • Net interest income for the quarter ended Dec. 31, 2016 increased to $89.4 million, compared to $86.6 million for the third quarter of 2016 and $71.5 million for the fourth quarter of 2015.
      • The firm’s net interest margin was 3.72 percent for the quarter ended Dec. 31, 2016, compared to 3.60 percent last quarter and 3.73 percent for the quarter ended Dec. 31, 2015.
    • Noninterest income for the quarter ended Dec. 31, 2016 was $30.7 million, compared to $31.7 million for the third quarter of 2016 and $26.6 million for the fourth quarter of 2015.
      • Net gains from the sale of mortgage loans were $2.9 million for the quarter ended Dec. 31, 2016, compared to $5.1 million for the third quarter of 2016 and $2.2 million for the quarter ended Dec. 31, 2015.
        • The year-over-year growth rate was attributable to both an increase in the number of mortgage originators as well as the positive impact of the low interest rate environment on mortgage production and the pipeline hedge. New home mortgage originations accounted for 57.0 percent of the firm’s net gain on mortgage loan sale volumes in the fourth quarter of 2016.
        • The linked-quarter decrease in net gains on mortgage loans sold was primarily attributable to seasonal fluctuations in business flows as well as an increased rate environment.
      • Wealth management revenues, which include investment, trust and insurance services, were $6.2 million for the quarter ended Dec. 31, 2016, compared to $5.3 million for the third quarter of 2016 and $5.4 million for the quarter ended Dec. 31, 2015, resulting in a year-over-year growth rate of 16.0 percent.
      • Income from the firm’s investment in BHG was $8.1 million for the quarter ended Dec. 31, 2016, compared to $8.5 million for the quarter ended Sept. 30, 2016 and $7.8 million for the fourth quarter last year. For the year ended Dec. 31, 2016, income from the firm’s investment in BHG was 52.5 percent more than the amount reported for the year ended Dec. 31, 2015.

“Our revenue producers grow their client base by ensuring they meet all of the financial service needs of their clients across our full set of commercial and wealth management products,” Carpenter said. “We believe that focusing on revenue growth as the primary lever, as opposed to expense cutting, is the better approach to producing consistent and rapid earnings growth. Focusing on revenue growth along with our disciplined approach to acquisitions and investments, has led to meaningful growth in revenue per share this year.”

“Our core margin increased from 3.39 percent during the third quarter of 2016 to 3.40 percent in the fourth quarter of 2016,” Carpenter said. “During the fourth quarter of 2016, discount accretion for fair value adjustments required by purchase accounting contributed approximately 0.32 percent to our net interest margin. We anticipate that purchase accounting will contribute between 0.15 percent to 0.25 percent to our net interest margin in the first quarter of 2017.”

  • Noninterest expense
    • Noninterest expense for the quarter ended Dec. 31, 2016 was $62.8 million, compared to $63.5 million in the third quarter of 2016 and $52.2 million in the fourth quarter last year.
      • Salaries and employee benefits were $38.0 million in the fourth quarter of 2016, compared to $36.1 million in the third quarter of 2016 and $30.9 million in the fourth quarter of last year, reflecting a year-over-year increase of 23.0 percent primarily due to the impact of the Avenue merger, as well as continued increases in recruiting in our primary markets.
        • Costs associated with the firm’s annual cash incentive plan amounted to $4.9 million in the fourth quarter of 2016, compared to $3.9 million in the fourth quarter of 2015 and $2.8 million in the third quarter of 2016.
      • Pre-tax merger-related charges were approximately $3.3 million during the quarter ended Dec. 31, 2016, compared to $2.5 million for the quarter ended Dec. 31, 2015. Pre-tax merger related charges during the fourth quarter included increased costs associated with the integration of Avenue into Pinnacle.
      • The efficiency ratio for the fourth quarter of 2016 decreased to 52.2 percent from 53.7 percent in the third quarter of 2016, and the ratio of noninterest expenses to average assets decreased to 2.26 percent from 2.32 percent in the third quarter of 2016.
        • Excluding merger-related charges and other real estate owned (ORE) expense, the efficiency ratio increased from 48.9 percent for the third quarter of 2016 to 49.6 percent for the fourth quarter of 2016, and the ratio of noninterest expense to average assets increased from 2.11 percent to 2.14 percent between the third and fourth quarters of 2016.

“We are pleased to report that excluding merger-related charges, our core efficiency ratio remained below the 50 percent threshold for the fourth quarter of 2016,” Carpenter said. “Our belief has been that investors will reward those franchises that can demonstrate an ability to operate a rapidly growing franchise profitably and efficiently. Given the operating leverage that has been created by both our rapid organic growth and our effective investments,acquisitions and integrations, we believe we will be able to maintain our expense base within our stated long-term goals for noninterest expenses to average assets within a range of 2.10 percent and 2.30 percent excluding merger-related charges in 2017.”

  • Asset quality
    • Nonperforming assets decreased to 0.40 percent of total loans and ORE at Dec. 31, 2016, compared to 0.41 percent at Sept. 30, 2016 and 0.55 percent at Dec. 31, 2015. Nonperforming assets decreased to $33.7 million at Dec. 31, 2016, compared to $34.1 million at Sept. 30, 2016 and $36.3 million at Dec. 31, 2015.
    • The allowance for loan losses represented 0.70 percent of total loans at Dec. 31, 2016, compared to 0.73 percent at Sept. 30, 2016 and 1.00 percent at Dec. 31, 2015. The impact of the application of purchase accounting to Avenue’s loan balances, which were recorded at fair value upon acquisition, resulted in a year-over-year reduction to the firm’s ratio of allowance for loan losses to total loans of approximately 0.08 percent as of Dec. 31, 2016.
      • The ratio of the allowance for loan losses to nonperforming loans was 213.9 percent at Dec. 31, 2016, compared to 211.5 percent at Sept. 30, 2016 and 222.9 percent at Dec. 31, 2015.
      • Net charge-offs were $4.3 million for the quarter ended Dec. 31, 2016, compared to $7.3 million for the third quarter of 2016 and $3.8 million for the quarter ended Dec. 31, 2015. Annualized net charge-offs as a percentage of average loans for the quarter ended Dec. 31, 2016 were 0.21 percent, compared to 0.35 percent for the third quarter of 2016 and 0.23 percent for the fourth quarter of 2015.
      • Provision for loan losses decreased to $3.0 million in the fourth quarter of 2016, from $6.1 million in the third quarter of 2016 and $5.5 million in the fourth quarter of 2015.

“Overall, asset quality during the fourth quarter was strong,” Carpenter said. “During the fourth quarter, we continued to reduce our investment in non-prime consumer auto loans. Net charge-offs from the non-prime consumer auto portfolio were $3.7 million during the fourth quarter of 2016, compared to $3.6 million of net charge-offs in the third quarter of 2016. We have reduced portfolio balances in this non-prime portfolio from $66.9 million at Dec. 31, 2015 to $30.0 million at Dec. 31, 2016 and anticipate continued reductions in this portfolio over the next several quarters.”

BOARD OF DIRECTORS DECLARES DIVIDEND

On Jan. 17, 2017, Pinnacle’s Board of Directors approved a quarterly cash dividend of $0.14 per common share to be paid on Feb. 24, 2017 to common shareholders of record as of the close of business on Feb. 3, 2017. 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. 18, 2017 to discuss fourth quarter 2016 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 American Banker recognized Pinnacle as the sixth best bank to work for in the country in 2016.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to approximately $11.2 billion in assets at Dec. 31, 2016. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in the state’s four largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well as several surrounding counties.

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

FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those identified by the words “may,” “will,” “should,” “could,” “anticipate,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “potential,” or “project” and similar expressions. 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:

  • deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
  • continuation of the historically low short-term interest rate environment;
  • 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;
  • changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;
  • effectiveness of Pinnacle Financial’s asset management activities in improving, resolving or liquidating lower-quality assets;
  • increased competition with other financial institutions;
  • greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA, the Knoxville MSA, the Chattanooga, TN-GA MSA and the Memphis, TN-MS-AR MSA, particularly in commercial and residential real estate markets;
  • rapid fluctuations or unanticipated changes in interest rates on loans or deposits;
  • the results of regulatory examinations;
  • the ability to retain large, uninsured deposits;
  • a merger or acquisition;
  • risks of expansion into new geographic or product markets;
  • any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets;
  • 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 or otherwise to attract customers from other financial institutions;
  • further deterioration in the valuation of other real estate owned and increased expenses associated therewith;
  • Inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels;
  • risks associated with litigation, including the applicability of insurance coverage;
  • the risk that the cost savings and any revenue synergies from our recent mergers may not be realized or take longer than anticipated to be realized;
  • disruption from the Avenue merger with customers, suppliers or employee relationships;
  • the risk of successful integration of the businesses we have recently acquired with ours;
  • the amount of the costs, fees, expenses and charges related to the Avenue merger;
  • the risk of adverse reaction of Pinnacle Bank’s and Avenue's customers to the Avenue merger;
  • the risk that the integration of the operations of the companies we have recently acquired with Pinnacle Bank’s will be materially delayed or will be more costly or difficult than expected;
  • approval of the declaration of any dividend by Pinnacle Financial’s board of directors;
  • the vulnerability of Pinnacle Bank’s network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches;
  • the possibility of increased compliance 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;
  • 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 the terms of our agreement with them;
  • the possibility that the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets will exceed current estimates; and
  • changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments.

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 or furnished to 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 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, net income, earnings per diluted share, efficiency ratio, core net interest margin, noninterest expense and the ratio of noninterest expense to average assets and noninterest expense to the sum of net interest income and noninterest income, in each case excluding the impact of expenses related to other real estate owned, gains or losses on sale of investments, FHLB prepayments and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Bank’s mergers with CapitalMark Bank & Trust, Magna Bank and Avenue as well as Pinnacle Financial’s and its bank subsidiary’s investments in BHG. This release may also contain certain other non-GAAP capital ratios and performance measures. These non-GAAP financial measures exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial’s acquisition of Avenue, which Pinnacle Financial acquired on July 1, 2016, Magna Bank which Pinnacle Bank acquired on September 1, 2015, CapitalMark Bank & Trust which Pinnacle Bank acquired on July 31, 2015, Mid-America Bancshares, Inc. which Pinnacle Financial acquired on November 30, 2007, Cavalry Bancorp, Inc., which Pinnacle Financial acquired on March 15, 2006 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 2016 versus the comparable periods in 2015 and to internally prepared projections.

 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
           
      December 31, 2016     September 30, 2016     December 31, 2015

ASSETS

Cash and noninterest-bearing due from banks $ 84,732,291 $ 81,750,005 $ 75,078,807
Interest-bearing due from banks 97,529,713 165,262,687 219,202,464
Federal funds sold and other   1,882,036         9,964,345         26,670,062  
Cash and cash equivalents 184,144,040 256,977,037 320,951,333
 
Securities available-for-sale, at fair value 1,298,047,437 1,223,751,538 935,064,745

Securities held-to-maturity (fair value of $25,233,254, $27,025,050, and $31,585,303 December 31, 2016, September 30, 2016 and December 31, 2015, respectively)

25,251,316 26,605,251 31,376,840
Residential mortgage loans held-for-sale 47,710,120 55,986,356 47,930,253
Commercial loans held-for-sale 22,587,971 15,531,588 -
 
Loans 8,449,924,736 8,241,020,478 6,543,235,381
Less allowance for loan losses   (58,980,475 )       (60,248,505 )       (65,432,354 )
Loans, net 8,390,944,261 8,180,771,973 6,477,803,027
 
Premises and equipment, net 88,904,145 84,916,306 77,923,607
Equity method investment 205,359,844 199,429,034 88,880,014
Accrued interest receivables 28,234,826 25,945,676 21,574,096
Goodwill 551,593,796 550,579,616 432,232,255
Core deposit and other intangible assets 15,104,038 16,240,711 10,540,497
Other real estate owned 6,089,804 5,589,046 5,083,218
Other assets   330,651,001         336,065,529         265,183,799  
Total assets $ 11,194,622,599       $ 10,978,389,661       $ 8,714,543,684  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Noninterest-bearing $ 2,399,191,152 $ 2,369,224,840 $ 1,889,865,113
Interest-bearing 1,808,331,784 1,575,359,467 1,389,548,175
Savings and money market accounts 3,714,930,351 3,834,770,407 3,001,950,725
Time   836,853,761         890,791,297         690,049,795  
Total deposits 8,759,307,048 8,670,146,011 6,971,413,808
Securities sold under agreements to repurchase 85,706,558 84,316,918 79,084,298
Federal Home Loan Bank advances 406,304,187 382,338,103 300,305,226
Subordinated debt and other borrowings 350,768,050 262,506,956 141,605,504
Accrued interest payable 5,573,377 3,009,165 2,593,209
Other liabilities   90,267,267         100,428,538         63,930,339  
Total liabilities 9,697,926,487 9,502,745,691 7,558,932,384
 
Stockholders’ equity:

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

- - -

Common stock, par value $1.00; 90,000,000 shares authorized; 46,359,377 shares, 46,159,832 shares, and 40,906,064 shares, issued and outstanding at December 31, 2016, September 30, 2016, and December 31, 2015, respectively

46,359,377 46,159,832 40,906,064
Additional paid-in capital 1,083,490,728 1,074,112,218 839,617,050
Retained earnings 381,072,505 351,484,480 278,573,408
Accumulated other comprehensive (loss) income, net of taxes   (14,226,498 )       3,887,440         (3,485,222 )
Stockholders’ equity   1,496,696,112         1,475,643,970         1,155,611,300  
Total liabilities and stockholders’ equity $ 11,194,622,599       $ 10,978,389,661       $ 8,714,543,684  
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
           
Three Months Ended Year Ended
December 31, December 31,
      2016     2015     2016     2015
Interest income:    
Loans, including fees $ 94,197,055 $ 71,601,444 $ 335,734,531 $ 232,847,334
Securities
Taxable 5,128,240 4,201,602 19,178,997 15,060,392
Tax-exempt 1,532,728 1,482,703 6,014,037 5,783,443
Federal funds sold and other   635,119       510,776         2,681,363       1,478,711  
Total interest income   101,493,142       77,796,525         363,608,928       255,169,880  
 
Interest expense:
Deposits 7,302,654 4,599,159 23,917,318 13,209,425
Securities sold under agreements to repurchase 46,453 38,622 185,305 138,347
Federal Home Loan Bank advances and other borrowings   4,730,661       1,683,994         14,512,024       5,189,193  
Total interest expense   12,079,768       6,321,775         38,614,647       18,536,965  
Net interest income 89,413,374 71,474,750 324,994,281 236,632,915
Provision for loan losses   3,046,204       5,459,353         18,328,058       9,188,497  
Net interest income after provision for loan losses 86,367,170 66,015,397 306,666,223 227,444,418
 
Noninterest income:
Service charges on deposit accounts 3,849,534 3,499,480 14,500,679 12,745,742
Investment services 3,319,952 2,786,839 10,757,348 9,971,313
Insurance sales commissions 1,177,710 1,102,747 5,309,494 4,824,007
Gains on mortgage loans sold, net 2,868,783 2,180,864 15,754,473 7,668,960
Investment gains on sales, net 395,186 (9,954 ) 395,186 552,063
Trust fees 1,732,691 1,481,818 6,328,021 5,461,257
Income from equity method investment 8,136,190 7,839,028 31,402,923 20,591,484
Other noninterest income   9,262,461       7,726,952         36,554,938       24,715,442  
Total noninterest income   30,742,507       26,607,774         121,003,062       86,530,268  
 
Noninterest expense:
Salaries and employee benefits 37,994,096 30,877,853 140,818,772 105,928,914
Equipment and occupancy 9,227,917 8,384,525 35,071,654 27,241,477
Other real estate, net 43,784 99,394 395,561 (305,956 )
Marketing and other business development 2,385,723 1,465,122 6,536,484 4,863,307
Postage and supplies 1,000,316 1,052,427 3,929,323 3,228,300
Amortization of intangibles 1,136,673 916,581 4,281,459 1,973,953
Merger related expenses 3,264,199 2,489,396 11,746,584 4,797,018
Other noninterest expense   7,711,986       6,906,131         33,505,586       23,149,743  
Total noninterest expense   62,764,694       52,191,429         236,285,423       170,876,756  
Income before income taxes 54,344,983 40,431,742 191,383,862 143,097,930
Income tax expense   18,248,519       13,577,634         64,159,167       47,588,528  
Net income $ 36,096,464     $ 26,854,108       $ 127,224,695     $ 95,509,402  
 
Per share information:
Basic net income per common share $ 0.79     $ 0.67       $ 2.96     $ 2.58  
Diluted net income per common share $ 0.78     $ 0.65       $ 2.91     $ 2.52  
 
Weighted average shares outstanding:
Basic 45,445,910 40,000,102 43,037,083 37,015,468
Diluted 46,098,020 41,015,154 43,731,992 37,973,788
 
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
   

 

2016

    2016     2016     2016     2015     2015
 
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 3,193,496 2,991,940 2,467,219 2,340,720 2,275,483 2,192,151
Consumer real estate - mortgage loans 1,185,917 1,185,966 1,068,620 1,042,369 1,046,517 1,044,276
Construction and land development loans 912,673 930,230 816,681 764,079 747,697 674,926
Commercial and industrial loans 2,891,710 2,873,643 2,492,016 2,434,656 2,228,542 2,178,535
Consumer and other 266,129 259,241 246,866 246,106 244,996 246,101
Total loans 8,449,925 8,241,020 7,091,402 6,827,930 6,543,235 6,335,989
Allowance for loan losses (58,980 ) (60,249 ) (61,412 ) (62,239 ) (65,432 ) (63,758 )
Securities 1,323,299 1,250,357 1,137,733 1,048,419 966,442 1,003,994
Total assets 11,194,623 10,978,390 9,735,668 9,261,387 8,714,543 8,549,064
Noninterest-bearing deposits 2,399,191 2,369,225 2,013,847 2,026,550 1,889,865 1,876,910
Total deposits 8,759,307 8,670,146 7,292,826 7,080,212 6,971,414 6,600,679
Securities sold under agreements to repurchase 85,707 84,317 73,317 62,801 79,084 68,077
FHLB advances 406,304 382,338 783,240 616,290 300,305 545,330
Subordinated debt and other borrowings 350,768 262,507 229,714 209,751 141,606 142,476
Total stockholders’ equity 1,496,696 1,475,644 1,262,154 1,228,780 1,155,611 1,134,226
 
Balance sheet data, quarterly averages:
Total loans $ 8,357,201 8,232,963 6,997,592 6,742,054 6,457,870 5,690,246
Securities 1,265,096 1,232,973 1,064,060 993,675 1,002,291 925,506
Total earning assets 9,884,701 9,794,094 8,362,657 8,018,596 7,759,053 6,844,784
Total assets 11,037,555 10,883,547 9,305,941 8,851,978 8,565,341 7,514,633
Noninterest-bearing deposits 2,445,157 2,304,533 2,003,523 1,960,083 1,948,703 1,689,599
Total deposits 8,791,206 8,454,424 7,093,349 7,037,014 6,786,931 5,898,369
Securities sold under agreements to repurchase 82,415 87,067 65,121 69,129 72,854 71,329
FHLB advances 307,039 583,724 653,750 383,131 376,512 393,825
Subordinated debt and other borrowings 319,790 266,934 225,240 162,575 142,660 147,619
Total stockholders’ equity 1,493,684 1,442,440 1,247,762 1,188,153 1,153,681 986,325
 
Statement of operations data, for the three months ended:
Interest income $ 101,493 97,380 83,762 80,974 77,797 67,192
Interest expense   12,080       10,745       8,718       7,072       6,322       5,133  
Net interest income 89,413 86,635 75,044 73,902 71,475 62,059
Provision for loan losses   3,046       6,108       5,280       3,894       5,459       2,228  
Net interest income after provision for loan losses 86,367 80,527 69,764 70,008 66,016 59,831
Noninterest income 30,743 31,692 32,713 25,856 26,608 21,410
Noninterest expense   62,765       63,526       55,931       54,064       52,191       45,107  
Income before taxes 54,345 48,693 46,546 41,800 40,433 36,134
Income tax expense   18,248       16,316       15,759       13,836       13,578       11,985  
Net income $ 36,097       32,377       30,787       27,964       26,855       24,149  
 
Profitability and other ratios:
Return on avg. assets (1) 1.30 % 1.18 % 1.33 % 1.27 % 1.24 % 1.27 %
Return on avg. equity (1) 9.61 % 8.93 % 9.92 % 9.47 % 9.24 % 9.71 %
Return on avg. tangible common equity (1) 15.49 % 14.47 % 15.34 % 15.04 % 14.97 % 14.49 %
Dividend payout ratio (18) 19.31 % 19.93 % 20.90 % 21.62 % 18.97 % 19.92 %
Net interest margin (1) (2) 3.72 % 3.60 % 3.72 % 3.78 % 3.73 % 3.66 %
Noninterest income to total revenue (3) 25.59 % 26.78 % 30.36 % 25.92 % 27.13 % 25.65 %
Noninterest income to avg. assets (1) 1.11 % 1.16 % 1.41 % 1.17 % 1.23 % 1.13 %
Noninterest exp. to avg. assets (1) 2.26 % 2.32 % 2.42 % 2.46 % 2.42 % 2.38 %

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

2.14 % 2.11 % 2.37 % 2.37 % 2.30 % 2.30 %
Efficiency ratio (4) 52.24 % 53.69 % 51.90 % 54.20 % 53.21 % 54.04 %
Avg. loans to average deposits 95.06 % 97.38 % 98.65 % 95.81 % 95.15 % 96.47 %
Securities to total assets 11.82 % 11.39 % 11.69 % 11.32 % 11.10 % 11.75 %
 
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
    December 31, 2016     December 31, 2015

Average
Balances

    Interest     Rates/ Yields    

Average
Balances

    Interest   Rates/ Yields
Interest-earning assets
Loans (1) $ 8,357,201 $ 94,197 4.60 % $ 6,457,870 $ 71,601 4.46 %
Securities
Taxable 1,046,866 5,128 1.95 % 818,780 4,202 2.04 %
Tax-exempt (2) 218,230 1,533 3.75 % 183,511 1,483 4.29 %
Federal funds sold and other   262,404       635     0.96 %       298,892       511   0.68 %
Total interest-earning assets 9,884,701 $ 101,493     4.11 % 7,759,053 $ 77,797   4.01 %
Nonearning assets
Intangible assets 566,766 441,835
Other nonearning assets   586,088   364,453
Total assets $ 11,037,555 $ 8,565,341
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,661,762 $ 1,319 0.32 % $ 1,321,587 $ 826 0.25 %
Savings and money market 3,807,287 4,314 0.45 % 2,809,146 2,674 0.38 %
Time   877,000       1,670     0.76 %       707,495       1,099   0.62 %
Total interest-bearing deposits 6,346,049 7,303 0.46 % 4,838,228 4,599 0.38 %
Securities sold under agreements to repurchase 82,415 46 0.22 % 72,854 39 0.21 %
Federal Home Loan Bank advances 307,039 1,064 1.38 % 376,512 400 0.42 %
Subordinated debt and other borrowings   319,790       3,667     4.56 %       142,660       1,284   3.57 %
Total interest-bearing liabilities 7,055,293 12,080 0.68 % 5,430,254 6,322 0.46 %
Noninterest-bearing deposits   2,445,157       -     -         1,948,703       -   -  
Total deposits and interest-bearing liabilities 9,500,450 $ 12,080     0.51 % 7,378,957 $ 6,322   0.34 %
Other liabilities 43,421 32,703
Stockholders' equity   1,493,684   1,153,681
Total liabilities and stockholders' equity $ 11,037,555 $ 8,565,341
Net interest income $ 89,413 $ 71,475
Net interest spread (3) 3.43 % 3.55 %
Net interest margin (4) 3.72 % 3.73 %

_____________________

(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended December 31, 2016 would have been 3.60% compared to a net interest spread of 3.67% for the quarter ended December 31, 2015.
(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, 2016     December 31, 2015

Average
Balances

    Interest     Rates/ Yields    

Average
Balances

    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 7,586,346 $ 335,735 4.51 % $ 5,394,775 $ 232,847 4.39 %
Securities
Taxable 937,710 19,179 2.05 % 721,829 15,060 2.09 %
Tax-exempt (2) 201,842 6,014 4.00 % 167,091 5,783 4.63 %
Federal funds sold and other   293,542       2,681     0.91 %       223,732       1,479     0.66 %
Total interest-earning assets 9,019,440 $ 363,609     4.06 % 6,507,427 $ 255,169     3.96 %
Nonearning assets
Intangible assets 509,899 315,366
Other nonearning assets   495,554   310,628
Total assets $ 10,024,893 $ 7,133,421
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,464,671 $ 4,140 0.28 % $ 1,149,772 $ 2,487 0.22 %
Savings and money market 3,426,842 14,289 0.42 % 2,298,746 7,701 0.34 %
Time   777,343       5,489     0.71 %       541,766       3,021     0.56 %
Total interest-bearing deposits 5,668,856 23,918 0.42 % 3,990,284 13,209 0.33 %
Securities sold under agreements to repurchase 75,981 185 0.24 % 68,037 138 0.20 %
Federal Home Loan Bank advances 481,711 4,136 0.86 % 362,668 1,175 0.32 %
Subordinated debt and other borrowings   243,905       10,376     4.25 %       136,888       4,015     2.93 %
Total interest-bearing liabilities 6,470,453 38,615 0.60 % 4,557,877 18,537 0.41 %
Noninterest-bearing deposits   2,179,398       -     -         1,606,432       -     -  
Total deposits and interest-bearing liabilities 8,649,851 $ 38,615     0.45 % 6,164,309 $ 18,537     0.30 %
Other liabilities 31,349 19,905
Stockholders' equity   1,343,693   949,207
Total liabilities and stockholders' equity $ 10,024,893 $ 7,133,421
Net interest income $ 324,994 $ 236,632
Net interest spread (3) 3.46 % 3.55 %
Net interest margin (4) 3.70 % 3.72 %
 
 

_____________________

(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the year ended December 31, 2016 would have been 3.61% compared to a net interest spread of 3.66% for the year ended December 31, 2015.
(4) Net interest margin is the result of net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                       
 
(dollars in thousands)

 

December

September June March December September
   

 

2016

    2016     2016     2016     2015     2015
 
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 27,577 28,487 33,785 42,524 29,359 30,049
Other real estate (ORE) and other nonperforming assets (NPAs)   6,090       5,656       5,183       5,338       6,990       5,794  
Total nonperforming assets $ 33,667       34,143       38,968       47,862       36,349       35,843  

Past due loans over 90 days and still accruing interest

$ 1,134 2,093 1,623 4,556 1,768 3,798
Troubled debt restructurings (5) $ 15,009 8,503 9,861 9,950 8,088 8,373
Net loan charge-offs $ 4,314 7,271 6,108 7,087 3,785 4,041
Allowance for loan losses to nonaccrual loans 213.9 % 211.5 % 181.8 % 146.4 % 222.9 % 212.2 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.26 % 0.24 % 0.33 % 0.32 % 0.31 % 0.31 %
Potential problem loans (6) 1.36 % 1.13 % 1.38 % 1.65 % 1.61 % 1.44 %
Allowance for loan losses 0.70 % 0.73 % 0.87 % 0.91 % 1.00 % 1.01 %
Nonperforming assets to total loans, ORE and other NPAs 0.40 % 0.41 % 0.55 % 0.70 % 0.55 % 0.57 %
Nonperforming assets to total assets 0.30 % 0.31 % 0.40 % 0.52 % 0.42 % 0.42 %
Classified asset ratio (Pinnacle Bank) (8) 16.4 % 15.2 % 19.3 % 24.2 % 18.7 % 17.1 %
Annualized net loan charge-offs to avg. loans (7) 0.21 % 0.35 % 0.35 % 0.42 % 0.23 % 0.28 %
Wtd. avg. commercial loan internal risk ratings (6) 4.5 4.6 4.5 4.5 4.5 4.5
 
Interest rates and yields:
Loans 4.60 % 4.43 % 4.53 % 4.49 % 4.46 % 4.33 %
Securities 2.26 % 2.29 % 2.46 % 2.62 % 2.45 % 2.51 %
Total earning assets 4.11 % 3.98 % 4.06 % 4.09 % 4.01 % 3.93 %
Total deposits, including non-interest bearing 0.33 % 0.31 % 0.29 % 0.28 % 0.27 % 0.24 %
Securities sold under agreements to repurchase 0.22 % 0.23 % 0.24 % 0.28 % 0.21 % 0.22 %
FHLB advances 1.38 % 0.87 % 0.77 % 0.56 % 0.42 % 0.33 %
Subordinated debt and other borrowings 4.56 % 4.15 % 4.19 % 3.89 % 3.57 % 3.16 %
Total deposits and interest-bearing liabilities 0.51 % 0.46 % 0.44 % 0.37 % 0.34 % 0.31 %
 
Pinnacle Financial Partners capital ratios (8):
Stockholders’ equity to total assets 13.4 % 13.4 % 13.0 % 13.3 % 13.3 % 13.3 %
Common equity Tier one capital 7.9 % 7.6 % 7.9 % 7.8 % 8.6 % 8.7 %
Tier one risk-based 8.6 % 8.4 % 8.8 % 8.7 % 9.6 % 9.8 %
Total risk-based 11.9 % 10.5 % 11.0 % 11.0 % 11.3 % 11.4 %
Leverage 8.6 % 8.3 % 8.7 % 8.8 % 9.4 % 10.0 %
Tangible common equity to tangible assets 8.8 % 8.7 % 8.9 % 8.9 % 8.6 % 8.6 %
Pinnacle Bank ratios:
Common equity Tier one 9.3 % 8.6 % 8.4 % 8.3 % 9.0 % 9.1 %
Tier one risk-based 9.3 % 8.6 % 8.4 % 8.3 % 9.0 % 9.1 %
Total risk-based 11.2 % 10.5 % 10.6 % 10.6 % 10.6 % 10.8 %
Leverage 9.2 % 8.6 % 8.3 % 8.4 % 8.8 % 9.4 %

Construction and land development loans as a percent of total capital (21)

80.3 % 87.9 % 89.7 % 86.5 % 90.2 % 83.5 %

Non-owner occupied commercial real estate as a percent of total capital (21)

256.0 % 265.5 % 253.9 % 242.5 % 251.4 % 230.5 %
 
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                       
 
(dollars in thousands, except per share data)

 

December

September June March December September
   

 

2016

    2016     2016     2016     2015     2015
 
Per share data:
Earnings – basic $ 0.79 0.71 0.75 0.70 0.67 0.64
Earnings – diluted $ 0.78 0.71 0.73 0.68 0.65 0.62
Common dividends per share $ 0.14 0.14 0.14 0.14 0.12 0.12
Book value per common share at quarter end (9) $ 32.28 31.97 29.92 29.26 28.25 27.80
 
Investor information:
Closing sales price $ 69.30 54.08 48.85 49.06 51.36 49.41
High closing sales price during quarter $ 71.15 57.26 51.73 51.32 56.80 55.18
Low closing sales price during quarter $ 49.70 47.44 45.15 44.56 47.90 45.03
 
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 221,126 214,394 198,239 163,949 164,992 145,751
Gross fees (10) $ 6,535 6,702 5,530 4,049 2,724 3,294
Gross fees as a percentage of loans originated 2.96 % 3.13 % 2.79 % 2.47 % 1.65 % 2.26 %
Net gain on mortgage loans sold $ 2,869 5,097 4,221 3,568 2,181 1,895
Investment gains (losses) on sales of securities, net (17) $ 395 - - - (10 ) -
Brokerage account assets, at quarter-end (11) $ 2,198,334 2,090,316 1,964,769 1,812,221 1,778,566 1,731,828
Trust account managed assets, at quarter-end $ 1,002,742 978,356 953,592 1,130,271 862,699 900,895
Core deposits (12) $ 7,834,973 7,714,552 6,591,063 6,432,388 6,331,608 5,890,312
Core deposits to total funding (12) 81.6 % 82.1 % 78.7 % 80.7 % 84.5 % 80.1 %
Risk-weighted assets $ 10,210,711 10,020,690 8,609,968 8,304,164 7,868,570 7,546,924
Total assets per full-time equivalent employee $ 9,491 9,323 9,176 8,616 8,228 7,960
Annualized revenues per full-time equivalent employee $ 405.3 399.8 408.5 373.2 367.6 308.5
Annualized expenses per full-time equivalent employee $ 211.7 214.6 212.0 202.3 195.6 166.7
Number of employees (full-time equivalent) 1,179.5 1,177.5 1,061.0 1,075.0 1,058.5 1,073.5
Associate retention rate (13) 92.7 % 93.9 % 95.2 % 94.0 % 92.9 % 96.1 %
 
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - November 2016 945.7 945.5 940.7 934.9 926.6 919.5
Knoxville MSA nonfarm employment - November 2016 395.6 395.5 394.0 393.6 391.4 388.5
Chattanooga MSA nonfarm employment - November 2016 251.5 250.7 251.3 249.4 249.1 248.1
Memphis MSA nonfarm employment - November 2016 632.5 634.7 633.8 632.1 629.3 630.6
 
Nashville MSA unemployment - November 2016 3.8 % 4.0 % 3.7 % 3.3 % 4.6 % 4.7 %
Knoxville MSA unemployment -November 2016 4.6 % 4.8 % 4.3 % 3.8 % 5.3 % 5.4 %
Chattanooga MSA unemployment - November 2016 5.0 % 5.2 % 4.7 % 4.6 % 5.5 % 5.7 %
Memphis MSA unemployment - November 2016 5.2 % 5.5 % 5.3 % 4.7 % 6.4 % 6.4 %
 
Nashville MSA residential median home price - December 2016 $ 266.4 256.9 260.0 245.0 242.9 236.9
Nashville MSA inventory of residential homes for sale- December 2016 (16) 6.6 8.0 8.5 7.9 7.1 8.7
 
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
                       
December September June March December September
(dollars in thousands, except per share data)       2016     2016     2016     2016     2015     2015
 
Net interest income $ 89,413 86,635 75,044 73,902 71,475 62,059
 
Noninterest income 30,743 31,692 32,713 25,856 26,608 21,410
Less: Investment (gains) and losses on sales, net   (395 )     -       -       -       10       -  

Noninterest income excluding investment (gains) and losses on sales of securities, net

  30,348       31,692       32,713       25,856       26,618       21,410

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

  119,761       118,327       107,757       99,758       98,093       83,469
 
Noninterest expense 62,765 63,526 55,931 54,064 52,191 45,107
Less: Other real estate expense 44 17 222 112 99 (686 )
Merger-related charges   3,264       5,672       980       1,830       2,489       2,249  

Noninterest expense excluding the impact of other real estate expense, and merger-related charges

  59,457       57,837       54,729       52,122       49,603       43,544
 
Adjusted pre-tax pre-provision income (15) $ 60,304       60,490       53,028       47,636       48,490       39,925  
 
 
Efficiency Ratio (4) 52.2 % 53.7 % 51.9 % 54.2 % 53.2 % 54.0 %

Adjustment due to investment gains, ORE expense, and merger-related charges

  -2.6 %     -4.8 %     -1.1 %     -2.0 %     -2.6 %     -1.8 %

Efficiency Ratio (excluding investment gains, ORE expense, and merger-related charges)

  49.6 %     48.9 %     50.8 %     52.2 %     50.6 %     52.2 %
 
Total average assets $ 11,037,555       10,883,547       9,305,941       8,851,978       8,565,341       7,514,633  
 
Noninterest expense to avg. assets 2.26 % 2.32 % 2.42 % 2.46 % 2.42 % 2.38 %
Adjustment due to ORE expenses and merger-related charges   -0.12 %     -0.21 %     -0.05 %     -0.09 %     -0.12 %     -0.08 %

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

  2.14 %     2.11 %     2.37 %     2.37 %     2.30 %     2.30 %
 
Equity Method Investment (19)
Fee income from BHG, net of amortization $ 8,136 8,475 9,644 5,148 7,839 5,285
Funding cost to support investment   1,797       1,760       1,732       980       660       590  
Pre-tax impact of BHG 6,339 6,715 7,912 4,168 7,179 4,695
Income tax expense at statutory rates   2,487       2,634       3,104       1,635       2,816       1,842  
Earnings attributable to BHG $ 3,852       4,081       4,808       2,533       4,363       2,853  
 
Basic earnings per share attributable to BHG 0.08 0.09 0.12 0.06 0.11 0.07
Diluted earnings per share attributable to BHG 0.08 0.09 0.11 0.06 0.11 0.07
 
Net income $ 36,097 32,377 30,787 27,965 26,855 24,149
Merger-related charges 3,264 5,672 980 1,830 2,489 2,249
Tax effect on merger-related charges (20)   (1,281 )     (2,225 )     (385 )     (718 )     (977 )     (882 )
Net income less merger-related charges $ 38,080       35,824       31,382       29,077       28,367       25,516  
 
 
Basic earnings per share $ 0.79 0.71 0.75 0.70 0.67 0.64
Adjustment to basic earnings per share due to merger-related charges   0.05       0.08       0.01       0.03       0.04       0.03  
Basic earnings per share excluding merger-related charges $ 0.84       0.79       0.76       0.73       0.71       0.67  
 
 
Diluted earnings per share $ 0.78 0.71 0.73 0.68 0.65 0.62
Adjustment to diluted earnings per share due to merger-related charges   0.05       0.07       0.02       0.03       0.04       0.04  
Diluted earnings per share excluding merger-related charges $ 0.83       0.78       0.75       0.71       0.69       0.66  
 
 
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
                       
December September June March December September
(dollars in thousands, except per share data)       2016     2016     2016     2016     2015     2015
 
 
 
Return on average assets 1.30 % 1.18 % 1.33 % 1.27 % 1.24 % 1.27 %
Adjustment due to merger-related charges   0.07 %     0.13 %     0.03 %     0.05 %     0.07 %     0.08 %
Return on average assets (excluding merger-related charges) (1)   1.37 %     1.31 %     1.36 %     1.32 %     1.31 %     1.35 %
 
 
Tangible assets:
Total assets $ 11,194,623 10,978,390 9,735,668 9,261,387 8,714,543 8,549,064
Less: Goodwill (551,594 ) (550,580 ) (427,574 ) (431,841 ) (432,232 ) (429,416 )
Core deposit and other intangible assets   (15,104 )     (16,241 )     (8,821 )     (9,667 )     (10,540 )     (11,641 )
Net tangible assets $ 10,627,925       10,411,569       9,299,273       8,819,879       8,271,771       8,108,007  
 
Tangible equity:
Total stockholders' equity $ 1,496,696 1,475,644 1,262,154 1,228,780 1,155,611 1,134,226
Less: Goodwill (551,594 ) (550,580 ) (427,574 ) (431,841 ) (432,232 ) (429,416 )

Core deposit and other intangible assets

  (15,104 )     (16,241 )     (8,821 )     (9,667 )     (10,540 )     (11,641 )
Net tangible common equity $ 929,998       908,823       825,759       787,272       712,839       693,169  
 
Ratio of tangible common equity to tangible assets   8.75 %     8.73 %     8.88 %     8.93 %     8.62 %     8.55 %
 
 
Average tangible equity:
Average stockholders' equity $ 1,493,684 1,442,440 1,247,762 1,188,153 1,153,681 986,325
Less: Average goodwill (551,042 ) (541,153 ) (431,155 ) (430,228 ) (430,574 ) (317,461 )
Core deposit and other intangible assets   (15,724 )     (11,296 )     (9,367 )     (10,237 )     (11,261 )     (7,634 )
Net average tangible common equity $ 926,918       889,991       807,240       747,688       711,846       661,230  
 
Return on average common equity 9.61 % 8.93 % 9.92 % 9.47 % 9.24 % 9.71 %
Adjustment due to goodwill, core deposit and other intangible assets   5.88 %     5.54 %     5.42 %     5.57 %     5.73 %     4.78 %
Return on average tangible common equity (1) 15.49 % 14.47 % 15.34 % 15.04 % 14.97 % 14.49 %
Adjustment due to merger-related charges   0.85 %     1.54 %     0.30 %     0.60 %     0.84 %     0.82 %

Return on average tangible common equity (excluding merger-related charges)

  16.34 %     16.01 %     15.64 %     15.64 %     15.81 %     15.31 %
 
 
Total average assets $ 11,037,555       10,883,547       9,305,941       8,851,978       8,565,341       7,514,633  
 
 
Net interest margin 3.72 % 3.60 % 3.72 % 3.78 % 3.73 % 3.66 %
Adjustment due to fair value   0.32 %     0.21 %     0.22 %     0.20 %     0.18 %     0.11 %
Core net interest margin   3.40 %     3.39 %     3.50 %     3.58 %     3.55 %     3.55 %
 
 
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 prepayments include loans where the company, as a result of the borrower’s financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.

6.

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

7.

Annualized net loan charge-offs to average loans ratios are computed by annualizing 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 total assets - End of period total stockholders' equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.
Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.

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

9.

Book value per share computed by dividing total stockholders’ equity less preferred stock 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.

Employment and unemployment data is from BERC- MTSU & Bureau of Labor Statistics. Labor force data is seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. Historical data is subject to update by the BERC- MTSU & Bureau of Labor Statistics. Historical data is presented based on the most recently reported data available by the BERC- MTSU & Bureau of Labor Statistics. The Nashville home data is from the Greater Nashville Association of Realtors.

15.

Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments of securities, net, as well as other real estate owned expenses, FHLB prepayment charges and merger-related charges.

16.

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

17.

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

18.

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

19.

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.

20.

Tax effect calculated using the blended statutory rate of 39.23% for all periods presented.

21.

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

Contacts

Pinnacle Financial Partners, Inc.
Media Contact:
Nikki Klemmer, 615-743-6132
or
Financial Contact:
Harold Carpenter, 615-744-3742
www.pnfp.com

Contacts

Pinnacle Financial Partners, Inc.
Media Contact:
Nikki Klemmer, 615-743-6132
or
Financial Contact:
Harold Carpenter, 615-744-3742
www.pnfp.com