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Pinnacle Financial Grows Quarterly Net Income Per Fully Diluted Share 143 Percent Over Fourth Quarter Of 2010

OTHER FOURTH QUARTER 2011 HIGHLIGHTS:

  • Core Deposits
    • Core deposits increased by $52.9 million during the fourth quarter of 2011. Core deposits consist of all deposits other than time based deposits issued in denominations of $250,000 or greater.
    • Over the last year, the firm has successfully repositioned its deposit base so that average balances for noninterest-bearing demand, interest checking and money market accounts for the fourth quarter of 2011 increased to $2.88 billion from $2.64 billion for the fourth quarter of 2010, or 9.0 percent, while average balances for higher-cost time deposits decreased from $1.17 billion to $759 million, or 35.1 percent, during the same time period.
  • Operating results
    • Net income available to common stockholders for the fourth quarter of 2011 was $5.68 million, compared to the prior year s fourth quarter net income available to common stockholders of $2.25 million. Third quarter 2011 net income available to common stockholders totaled $24.54 million, which included a $16.97 million income tax benefit that was composed primarily of the reversal of the valuation allowance of net deferred tax assets of approximately $22.48 million, reduced by estimated 2011 income tax expense.
    • Noninterest income for the quarter ended Dec. 31, 2011, was $9.7 million, compared to $10.1 million for the third quarter of 2011 and $8.7 million for the same quarter last year. Excluding the impact of net securities gains and losses, noninterest income was up 10.7 percent over the same quarter last year.
      • Wealth management revenues, which include investment services, trust services and insurance, were $3.09 million during the fourth quarter of 2011, an increase of 16.0 percent over the same period last year due primarily to additional emphasis on internal referral programs and the addition of several new associates over the past two years.
      • Net gains on mortgage loans sold increased to $1.46 million during the fourth quarter of 2011, compared to $1.30 million during the third quarter of 2011 due primarily to a significant increase in mortgage loan refinance activity.
    • Pre-tax pre-provision income for the quarter ended Dec. 31, 2011, was $14.6 million, compared to $8.3 million for the fourth quarter of 2010, an increase of 77.1 percent.
    • Income tax expense was $1.4 million for the fourth quarter of 2011, compared to no expense in the fourth quarter of 2010, resulting in an effective tax rate for the fourth quarter of 2011 of 15.7 percent. During the third quarter of 2011, the Company recorded a $22.48 million reversal of a deferred tax valuation allowance but pursuant to generally accepted accounting principles had reduced the reversal recognized in the third quarter of 2011 by estimated tax expense for the fourth quarter of 2011. The Company’s effective tax rate during fourth quarter of 2011 was more than the Company had estimated primarily due to increased operating results versus its forecast. The Company anticipates an effective tax rate range of 31.0 percent to 34.0 percent during 2012.

“In addition to our fourth quarter 2011 net interest margin increasing to 3.65 percent, our net interest income increased by 9.0 percent over last year’s fourth quarter,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “We continue to reduce our cost of funds and believe that we will experience increased margins and net interest income over the next few quarters. Although we anticipate expansion in our top line revenues in 2012, it will be a challenging year. Loan pricing will remain competitive, and the economic factors affecting the broader markets will likely result in reduced yields for our investment portfolio as prepayments continue to escalate. We will likely reduce the balance of our investment portfolio in 2012, thus providing additional cash flows to support quality lending opportunities that appear to be emerging in our two primary banking markets.”

  • Capital
    • At Dec. 31, 2011, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 8.4 percent, compared to 7.1 percent at Dec. 31, 2010, and 8.2 percent at Sept. 30, 2011. At Dec. 31, 2011, Pinnacle’s total risk-based capital ratio was 15.3 percent, compared to 15.4 percent at Dec. 31, 2010, and 15.9 percent at Sept. 30, 2011.

“We are pleased that we were able to redeem 25 percent of our outstanding TARP preferred shares with existing cash balances just before the end of 2011,” Turner said. “Our strategy for redemption has been consistent for quite some time, and we intend to maintain a productive dialogue with our primary regulators to formulate a workable plan aimed at complete redemption over the next year or so with minimal dilution to our shareholders.”

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