Pinnacle Financial Gains Balance Sheet, Earnings Momentum In 4Q12

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) today reported that its net income per diluted common share available to common stockholders was $0.34 for the quarter ended Dec. 31, 2012, compared to net income per diluted common share available to common stockholders of $0.17 for the quarter ended Dec. 31, 2011. Included in fourth quarter 2012 results was a $2.1 million charge due to a Federal Home Loan Bank (FHLB) advance restructuring that was offset by $2.0 million in gains on the sale of securities. Net income per diluted common share available to common stockholders was $1.10 for the year ended Dec. 31, 2012, compared to net income per diluted common share available to common stockholders of $1.09 for the year ended Dec. 31, 2011.

Financial results for the year ended Dec. 31, 2012 include the impact of accelerated accretion of $1.7 million for the remaining preferred stock discount associated with the second quarter redemption of the remaining outstanding shares of TARP preferred stock which, if excluded, would result in net income per fully diluted share of $1.15 for 2012. Excluding the impact of an income tax benefit of $22.5 million as a result of last year’s release of a valuation allowance for deferred tax assets, net income for the year ended Dec. 31, 2011 would have been $0.43 per fully diluted common share. As a result, excluding the impact of both the accelerated accretion of the preferred stock discount and the tax benefit from the release of the valuation allowance, net income per diluted common share available to common stockholders for the year ended Dec. 31, 2012, was approximately 167.4 percent over the same period in 2011.

“This past year was a remarkable one for our firm and associates,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “We continued to experience dramatic improvement in asset quality. Nonperforming assets as a percentage of total loans and OREO decreased from 2.66 percent at Dec. 31, 2011, to 1.11 percent at Dec. 31, 2012, during a period when our net charge-offs were just 0.29 percent. Additionally, our organic growth model regained momentum as we experienced net loan growth of 12.8 percent in 2012 and 38.7 percent growth in average non-interest bearing demand deposits. We redeemed the remaining preferred shares issued in conjunction with the TARP program with no additional common shareholder dilution. We believe we have now substantially completed the rehabilitation of our balance sheet, and we again find ourselves optimistic about our growth and profitability prospects for the coming year.”

Building the Core Earnings Capacity of the Firm

  • Loans at Dec. 31, 2012, were $3.712 billion, an increase of $187.0 million from Sept. 30, 2012, and $420.8 million from Dec. 31, 2011, a year-over-year growth rate of 12.8 percent. Commercial and industrial loans plus owner-occupied commercial real estate loans were $2.041 billion at Dec. 31, 2012, an increase of $159.2 million, or 8.5 percent, from Sept. 30, 2012, and $313.3 million, or 18.1 percent, from Dec. 31, 2011.
  • Since expanding to Knoxville in the summer of 2007, Pinnacle has continued its strong growth in that market. The Knoxville footprint reached $641.6 million in loans at the end of fiscal year 2012, up from $594.2 million at Sept. 30, 2012, and an increase of 16.4 percent from $551.1 million at Dec. 31, 2011.
  • Average balances of noninterest bearing deposit accounts were $978.4 million in the fourth quarter of 2012, up 22.4 percent over third quarter of 2012 and 38.7 percent over the same quarter last year.
  • Revenues for the quarter ended Dec. 31, 2012 were $55.4 million, compared to $49.0 million for the same quarter of last year. Excluding securities gains, revenues for the quarter ended Dec. 31, 2012 were $53.4 million, compared to $51.4 million for the third quarter of 2012 and $48.9 million for the same quarter of last year. Revenues for the quarter ended Dec. 31, 2012, excluding securities gains, were up 3.8 percent on a linked-quarter basis and 9.2 percent over the same quarter last year.
  • Net interest margin increased for the ninth consecutive quarter to 3.80 percent for the quarter ended Dec. 31, 2012, up from 3.78 percent last quarter and from 3.65 percent for the quarter ended Dec. 31, 2011.
  • The firm’s efficiency ratio, excluding the $2.0 million of securities gains, $1.4 million in ORE expense and $2.1 million of charges related to the restructuring of $60.0 million of FHLB advances, was 58.8 percent for the fourth quarter of 2012.
  • Pre-tax pre-provision income was $20.5 million for the quarter ended Dec. 31, 2012, up 15.3 percent over last quarter and 40.0 percent over the same quarter last year.

“Growing high quality loans in the commercial segments of our markets is the foundation for continued acceleration of operating leverage and profitability,” Turner said. “During 2012, our relationship managers continued to penetrate our markets as evidenced by the 12.8 percent increase in loans this year. Also, the addition of several experienced commercial lenders in 2011 and 2012 bolstered our ability to grow organically and move market share in 2012 and should contribute significantly to our anticipated loan growth in 2013.”

Aggressively Dealing with Credit Issues

  • Nonperforming assets declined by $16.98 million from Sept. 30, 2012, a linked-quarter reduction of 29.1 percent and the 10th consecutive quarterly reduction.
    • Nonperforming assets were 1.11 percent of total loans plus other real estate at Dec. 31, 2012, compared to 1.65 percent at Sept. 30, 2012, and 2.66 percent at Dec. 31, 2011.
    • Nonperforming loans declined by $13.75 million during the fourth quarter of 2012, a linked-quarter reduction of 37.6 percent and the 11th consecutive quarterly reduction. Nonperforming loans are down 52.3 percent from Dec. 31, 2011.
    • Other real estate declined by 14.8 percent, or $3.24 million, during the fourth quarter of 2012 compared to the third quarter of 2012, inclusive of $0.6 million in property foreclosures.
  • Net charge-offs were $2.16 million for the quarter ended Dec. 31, 2012, compared to $6.34 million for the quarter ended Dec. 31, 2011, and $1.94 million for the third quarter of 2012. Annualized net charge-offs for the three and 12 months ended Dec. 31, 2012, were 0.24 percent and 0.29 percent, respectively.
  • Provision for loan losses expense decreased from $5.44 million for the fourth quarter of 2011 to $2.49 million for the fourth quarter of 2012. The results reflect a reduction in net charge-offs and a substantial improvement in the credit quality of the loan portfolio compared to the same period in 2011.
  • The allowance for loan losses represented 1.87 percent of total loans at Dec. 31, 2012, compared to 1.96 percent at Sept. 30, 2012, and 2.25 percent at Dec. 31, 2011. The ratio of the allowance for loan losses to nonperforming loans increased to 304.2 percent at Dec. 31, 2012, from 188.9 percent at Sept. 30, 2012, and 154.6 percent at Dec. 31, 2011.

“Our priority for the last three years has been to aggressively deal with credit issues,” Turner said. “With the ratio of nonperforming assets to total loans plus OREO of 1.11 percent and with the steady reduction in troubled asset inflows, we believe the rehabilitation of our balance sheet is substantially complete. We can now further intensify our focus and resources on growing our franchise in Middle and East Tennessee consistent with the competitive opportunities that exist for us in these two very attractive banking markets.”

Pinnacle reported nonperforming loan inflows of $5.9 million for the fourth quarter of 2012 compared to $4.6 million in the third quarter of 2012, as well as nonperforming asset resolutions of $22.9 million in the fourth quarter of 2012, up from the third quarter of 2012 resolution amount of $12.5 million. Turner noted that during the fourth quarter of 2012, Pinnacle realized, through a bankruptcy settlement, a $5.6 million recovery of a loan previously charged-off in 2009. Concurrently, Pinnacle accelerated its disposition strategy with respect to certain troubled assets which included a bulk sale of approximately $9.0 million in nonperforming assets. Turner also noted that bulk sales are not a typical disposition strategy for Pinnacle, and he does not expect the firm to adopt bulk sales as a recurring strategy for the future disposition of troubled assets.

The following is a summary of the activity in various nonperforming asset and troubled debt restructuring categories for the quarter ended Dec. 31, 2012:
(in thousands)     Balances

Sept. 30, 2012
   

Payments, Sales and Reductions
    Foreclosures     Inflows     Balances

Dec. 31, 2012
Troubled debt restructurings:
Commercial real estate – mortgage $ 16,631 $ (4,103 ) $ - $ 7,736 $ 20,264
Consumer real estate – mortgage 6,031 (208 ) - 488 6,311
Construction and land development 372 (302 ) - - 70
Commercial and industrial 935 (249 ) - - 686
Consumer and other   121       (2 )       -         -       119
Totals   24,090       (4,864 )       -         8,224       27,450
Nonperforming loans:
Commercial real estate – mortgage 14,983 (8,447 ) - 2,754 9,290
Consumer real estate – mortgage 10,548 (5,642 ) (333 ) 1,333 5,906
Construction and land development 5,857 (1,467 ) (28 ) 147 4,509
Commercial and industrial 4,896 (3,329 ) - 1,471 3,038
Consumer and other   287       (168 )       (202 )       163       80
Totals   36,571       (19,053 )       (563 )       5,868       22,823
Other real estate:
Residential construction and development 7,680 (2,243 ) 28 - 5,465
Commercial construction and development 9,931 (615 ) - - 9,316
Other   4,206       (942 )       535         -       3,799
Totals   21,817       (3,800 )       563         -       18,580
Total nonperforming assets and troubled debt restructurings $ 82,478     $ (27,717 )     $ -       $ 14,092     $ 68,853
 

OTHER FOURTH QUARTER 2012 HIGHLIGHTS:
  • Improving Balance Sheet Composition
    • Average balances for noninterest-bearing demand and interest checking made up 42.9 percent of average total deposits for the quarter ended Dec. 31, 2012, up from 35.4 percent for the quarter ended Dec. 31, 2011. Average core deposits were 88.8 percent of average total deposits for the quarter ended Dec. 31, 2012, up from 86.8 percent for the quarter ended Dec. 31, 2011.
    • The firm has steadily reduced the size of its investment portfolio by $190.1 million since the beginning of 2012. At Dec. 31, 2012, securities were just 14.0 percent of total assets, down from 18.4 percent at Dec. 31, 2011.
    • Total construction and development loans were $313.6 million at Dec. 31, 2012, down from a peak of $674.4 million or 19.41 percent of total loans at March 31, 2009. Total construction and development loans represented 8.45 percent of total loans at Dec. 31, 2012, compared to 8.87 percent at Sept. 30, 2012, and 8.33 percent at Dec. 31, 2011.
    • At Dec. 31, 2012, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 8.97 percent, compared to 9.15 percent at Sept. 30, 2012, and 8.44 percent at Dec. 31, 2011.

“We are very pleased with the effort of our relationship managers in the continued attraction of high quality borrowers,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Our loan portfolio has changed meaningfully over the last three years as we reduced problem assets and our exposure to residential construction. At the same time, we have been focusing on growing our commercial and commercial real estate portfolios, which have long been the primary focus of our firm. Additionally, our funding base has changed significantly, with core funding comprising 89.9 percent of our funding base at year-end 2012 compared to 58.7 percent at year-end 2009. All of this was accomplished by our relationship managers in an environment of increasing competition from the large regional banks headquartered outside our markets.”
  • Revenue growth
    • Net interest income for the quarter ended Dec. 31, 2012, was $42.2 million, compared to $40.9 million in the third quarter of 2012 and $39.3 million for the fourth quarter of 2011. Net interest income for the fourth quarter of 2012 was at its highest quarterly level since the firm’s founding in 2000.
    • Noninterest income for the quarter ended Dec. 31, 2012, was $13.1 million, compared to $10.4 million for the third quarter of 2012 and $9.7 million for the same quarter last year. Excluding securities gains, noninterest income was up 6.11 percent on a linked-quarter basis and at its highest quarterly level since the firm’s founding.
      • Gains on mortgage loans sold, net of commissions, were $1.77 million during the fourth quarter of 2012, compared to $1.98 million during the third quarter of 2012 and $1.46 million during the fourth quarter of 2011.

“We grew top line revenues by 8.9 percent in 2012,” Carpenter said. “The revenue growth was largely based on incremental loan volumes and reduced funding costs. We believe net loan growth will be the primary contributor to our revenue growth objectives for 2013. As for fee revenues, we also anticipate decreased mortgage revenues in 2013 given the substantial refinance activity that has already occurred. To offset these headwinds, our relationship managers are focused on continuing our rapid balance sheet growth and seeking new fee opportunities with our clients.”
  • Noninterest and income tax expense
    • Noninterest expense for the quarter ended Dec. 31, 2012, was $34.9 million, compared to $33.6 million in the third quarter of 2012 and $34.4 million in the fourth quarter of 2011.
      • Salaries and employee benefits costs increased by 0.44 percent from the third quarter of 2012 and 3.13 percent from the same period last year.
      • Included in noninterest expense for the fourth quarter of 2012 was $1.36 million in other real estate expenses, compared to $2.40 million in the third quarter of 2012 and $4.19 million in the fourth quarter of 2011.
      • During the fourth quarter of 2012, the firm prepaid $60 million of FHLB advances from current liquidity and, therefore, incurred $2.1 million in prepayment penalties that were included in fourth quarter 2012 noninterest expense. These FHLB advances had an annual effective rate of 1.91 percent.
    • Income tax expense was $6.28 million for the fourth quarter of 2012, compared to $1.45 million in the fourth quarter of 2011 and $5.02 million in the third quarter of 2012. The firm ended the year with an effective tax rate of approximately 33.0 percent for 2012 compared to the substantial tax benefit last year attributable to the recapture of the valuation allowance for the firm’s deferred tax assets.

Noninterest expense excluding the impact of OREO expenses was approximately $33.5 million in the fourth quarter of 2012, compared to $31.2 million in the third quarter of 2012 and $30.2 million in the fourth quarter of 2011.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CST) on Jan. 16, 2013, to discuss fourth quarter 2012 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, mortgage and insurance products and services designed for small- to mid-sized businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. Comprehensive wealth management services, such as financial planning and trust, help clients increase, protect and distribute their assets.

The firm began operations in a single downtown Nashville location in Oct. 2000 and has since grown to over $5.0 billion in assets at Dec. 31, 2012. At Dec. 31, 2012, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and three offices in Knoxville.

Additional information concerning Pinnacle can be accessed at www.pnfp.com.

Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “expect,” “anticipate,” “goal,” “objective,” “intend,” “plan,” “believe,” “should,” “seek,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial to grow its loan portfolio in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial’s asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits with the expiration of the FDIC’s transaction account guarantee program (xi) the development of any new market other than Nashville or Knoxville; (xii) a merger or acquisition; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiv) the ability to attract additional financial advisors or to attract customers from other financial institutions; (xv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital requirements, including those resulting from currently proposed changes to capital calculation methodologies and required capital maintenance levels; and, (xvii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A more detailed description of these and other risks is contained in Pinnacle Financial’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2012. Many of such factors are beyond Pinnacle Financial’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
       
      December 31, 2012     December 31, 2011

ASSETS
Cash and noninterest-bearing due from banks $ 51,946,542 $ 63,015,997
Interest-bearing due from banks 111,535,083 108,422,470
Federal funds sold and other   1,807,044         724,573  
Cash and cash equivalents 165,288,669 172,163,040
 
Securities available-for-sale, at fair value 706,577,806 894,962,246
Securities held-to-maturity (fair value of $583,212 and $2,369,118 at
December 31, 2012 and December 31, 2011, respectively) 574,863 2,329,917
Mortgage loans held-for-sale 41,194,639 35,363,038
 
Loans 3,712,162,430 3,291,350,857
Less allowance for loan losses   (69,417,437 )       (73,974,675 )
Loans, net 3,642,744,993 3,217,376,182
 
Premises and equipment, net 75,804,895 77,127,361
Other investments 26,962,890 44,653,840
Accrued interest receivable 14,856,615 15,243,366
Goodwill 244,040,421 244,076,492
Core deposit and other intangible assets 5,103,273 7,842,267
Other real estate owned 18,580,097 39,714,415
Other assets   98,819,455         113,098,540  
Total assets $ 5,040,548,616       $ 4,863,950,704  
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing $ 985,689,460 $ 717,378,933
Interest-bearing 760,786,247 637,203,420
Savings and money market accounts 1,662,256,403 1,585,260,139
Time   606,455,873         714,496,974  
Total deposits 4,015,187,983 3,654,339,466
Securities sold under agreements to repurchase 114,667,475 131,591,412
Federal Home Loan Bank advances 75,850,390 226,068,796
Subordinated debt and other borrowings 106,158,292 97,476,000
Accrued interest payable 1,360,598 2,233,330
Other liabilities   48,252,519         42,097,132  
Total liabilities 4,361,477,257 4,153,806,136
 
Stockholders’ equity:

Preferred stock, no par value; 10,000,000 shares authorized; 71,250 shares issued and outstanding at December 31, 2011
- 69,096,828

Common stock, par value $1.00; 90,000,000 shares authorized; 34,696,597 shares and 34,354,960 shares issued and outstanding at December 31, 2012 and 2011, respectively
34,696,597 34,354,960
Common stock warrants - 3,348,402
Additional paid-in capital 543,760,439 536,227,537
Retained earnings 87,386,689 49,783,584
Accumulated other comprehensive income, net of taxes   13,227,634         17,333,257  
Stockholders’ equity   679,071,359         710,144,568  
Total liabilities and stockholders’ equity $ 5,040,548,616       $ 4,863,950,704  
 
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 Twelve Months Ended
December 31 December 31
      2012     2011     2012     2011
Interest income:
Loans, including fees $ 41,705,546 $ 38,917,962 $ 160,036,709 $ 154,748,491
Securities
Taxable 3,574,460 5,179,009 16,931,417 23,971,787
Tax-exempt 1,604,162 1,800,793 6,576,701 7,394,134
Federal funds sold and other   318,900       548,047       1,876,731       2,232,423  
Total interest income   47,203,068       46,445,811       185,421,558       188,346,835  
 
Interest expense:
Deposits 3,730,199 5,718,988 16,842,852 30,588,033
Securities sold under agreements to repurchase 85,094 178,958 455,499 1,110,078
Federal Home Loan Bank advances and other borrowings   1,144,741       1,255,194       5,258,749       5,184,313  
Total interest expense   4,960,034       7,153,140       22,557,100       36,882,424  
Net interest income 42,243,034 39,292,671 162,864,458 151,464,411
Provision for loan losses   2,487,938       5,438,846       5,568,830       21,797,613  
Net interest income after provision for loan losses 39,755,096 33,853,825 157,295,628 129,666,798
 
Noninterest income:
Service charges on deposit accounts 2,622,709 2,290,699 9,917,754 9,244,165
Investment services 2,050,708 1,402,016 6,984,970 6,246,414
Insurance sales commissions 1,045,459 943,959 4,461,404 3,999,153
Gain on mortgage loans sold, net 1,768,428 1,461,224 6,698,618 4,155,137
Gain on sale of investment securities, net 1,987,872 133,055 2,150,605 960,763
Trust fees 863,234 746,257 3,195,950 2,999,731
Other noninterest income   2,769,456       2,749,616       9,987,335       10,334,847  
Total noninterest income   13,107,866       9,726,826       43,396,636       37,940,210  
 
Noninterest expense:
Salaries and employee benefits 19,556,285 18,962,481 78,056,564 74,424,851
Equipment and occupancy 5,202,436 4,977,335 20,420,333 19,986,976
Other real estate expense 1,364,495 4,193,073 11,544,067 17,431,926
Marketing and other business development 1,276,050 1,031,884 3,635,810 3,303,151
Postage and supplies 562,805 576,469 2,379,730 2,120,722
Amortization of intangibles 683,430 715,514 2,738,994 2,862,837
Other noninterest expense   6,205,765       3,917,180       19,389,368       18,976,865  
Total noninterest expense   34,851,266       34,373,936       138,164,866       139,107,328  
Income before income taxes 18,011,696 9,206,715 62,527,398 28,499,680
Income tax expense (benefit)   6,281,538       1,446,918       20,643,517       (15,237,687 )
Net income 11,730,158 7,759,797 41,883,881 43,737,367
Preferred dividends - 1,004,410 1,660,868 4,606,493
Accretion on preferred stock discount   -       1,074,698       2,153,172       2,058,146  
Net income available to common stockholders $ 11,730,158     $ 5,680,689     $ 38,069,841     $ 37,072,728  
 
Per share information:
Basic net income per common share available to common stockholders $ 0.35     $ 0.17     $ 1.12     $ 1.11  
Diluted net income per common share available to common stockholders $ 0.34     $ 0.17     $ 1.10     $ 1.09  
 
Weighted average shares outstanding:
Basic 33,960,664 33,485,253 33,899,667 33,420,015
Diluted 34,527,479 34,127,209 34,487,808 34,060,228
 
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
                       
 

 
December September June March December September

(dollars in thousands)
    2012     2012     2012     2012     2011     2011
 
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 1,178,196 1,167,136 1,167,068 1,123,690 1,110,962 1,087,333
Consumer real estate - mortgage loans 679,927 680,890 687,002 688,817 695,745 711,994
Construction and land development loans 313,552 312,788 289,061 281,624 274,248 278,660
Commercial and industrial loans 1,446,577 1,279,050 1,227,275 1,180,578 1,145,735 1,095,037
Consumer and other 93,910 85,300 74,277 63,160 64,661 68,125
Total loans 3,712,162 3,525,164 3,444,683 3,337,869 3,291,351 3,241,149
Allowance for loan losses (69,417 ) (69,092 ) (69,614 ) (71,379 ) (73,975 ) (74,871 )
Securities 707,153 739,280 790,493 839,769 897,292 942,752
Total assets 5,040,549 4,871,386 4,931,878 4,789,583 4,863,951 4,868,905
Noninterest-bearing deposits 985,689 844,480 806,402 756,909 717,379 722,694
Total deposits 4,015,188 3,719,287 3,709,820 3,605,291 3,654,339 3,712,650
Securities sold under agreements to repurchase 114,667 134,787 127,623 118,089 131,591 128,954
FHLB advances 75,850 190,887 270,995 226,032 226,069 161,106
Subordinated debt and other borrowings 106,158 106,783 122,476 97,476 97,476 97,476
Total stockholders’ equity 679,071 672,824 659,287 718,665 710,145 724,374
 
Balance sheet data, quarterly averages:
Total loans $ 3,580,056 3,488,736 3,402,671 3,280,030 3,261,972 3,207,213
Securities 719,861 766,547 818,795 875,509 924,153 939,778
Total earning assets 4,493,216 4,379,742 4,365,715 4,316,973 4,347,352 4,308,710
Total assets 4,964,521 4,860,394 4,847,583 4,820,951 4,852,311 4,786,485
Noninterest-bearing deposits 978,366 799,508 755,594 701,760 705,580 671,796
Total deposits 3,883,423 3,705,672 3,636,240 3,597,271 3,641,845 3,699,553
Securities sold under agreements to repurchase 142,333 136,918 130,711 129,892 141,818 145,050
FHLB advances 124,781 214,271 232,606 238,578 209,619 111,699
Subordinated debt and other borrowings 108,489 112,406 101,872 97,476 97,476 97,476
Total stockholders’ equity 680,383 669,673 718,841 719,788 729,622 708,973
 
Statement of operations data, for the three months ended:
Interest income $ 47,203 46,441 45,953 45,824 46,446 46,888
Interest expense   4,960       5,509       5,768       6,320       7,153       8,532  
Net interest income 42,243 40,932 40,185 39,504 39,293 38,356
Provision for loan losses   2,488       1,413       634       1,034       5,439       3,632  
Net interest income after provision for loan losses 39,755 39,519 39,551 38,470 33,854 34,724
Noninterest income 13,108 10,430 9,910 9,949 9,727 10,080
Noninterest expense   34,851       33,578       33,916       35,820       34,374       35,676  
Income before taxes 18,012 16,371 15,545 12,599 9,207 9,128
Income tax expense (benefit) 6,282 5,022 5,106 4,234 1,447 (16,973 )
Preferred dividends and accretion   -       -       2,655       1,159       2,079       1,564  
Net income available to common stockholders $ 11,730       11,349       7,785       7,206       5,681       24,537  
 
Profitability and other ratios:
Return on avg. assets (1) 0.94 % 0.93 % 0.65 % 0.60 % 0.46 % 2.06 %
Return on avg. equity (1) 6.86 % 6.74 % 4.36 % 4.03 % 3.09 % 13.88 %
Return on avg. tangible equity (1) 10.85 % 10.76 % 7.58 % 6.13 % 4.93 % 20.69 %
Net interest margin (1) (2) 3.80 % 3.78 % 3.76 % 3.74 % 3.65 % 3.60 %
Noninterest income to total revenue (3) 23.68 % 20.31 % 19.78 % 20.12 % 19.84 % 20.81 %
Noninterest income to avg. assets (1) 1.05 % 0.85 % 0.82 % 0.83 % 0.80 % 0.84 %
Noninterest exp. to avg. assets (1) 2.79 % 2.75 % 2.81 % 2.99 % 2.81 % 2.99 %

Noninterest expense (excluding ORE and FHLB prepayment charges) to avg. assets (1)
2.52 % 2.55 % 2.56 % 2.60 % 2.50 % 2.57 %
Efficiency ratio (4) 62.96 % 65.38 % 67.70 % 72.43 % 70.12 % 73.66 %
Avg. loans to average deposits 92.19 % 94.15 % 93.58 % 91.18 % 89.57 % 86.69 %
Securities to total assets 14.03 % 15.18 % 16.03 % 17.53 % 18.45 % 19.36 %
 
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
                       

 
Three months ended Three months ended

(dollars in thousands)
    December 31, 2012     December 31, 2011

Average Balances
    Interest     Rates/ Yields    

Average Balances
    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 3,580,056 $ 41,706 4.64 % $ 3,261,972 $ 38,918 4.74 %
Securities
Taxable 541,678 3,574 2.63 % 733,871 5,179 2.80 %
Tax-exempt (2) 178,183 1,604 4.78 % 190,282 1,801 5.01 %
Federal funds sold and other   193,299       319     0.77 %       161,227       548     1.45 %
Total interest-earning assets 4,493,216 $ 47,203     4.24 % 4,347,352 $ 46,446     4.30 %
Nonearning assets
Intangible assets 249,574 252,368
Other nonearning assets   221,731   252,591
Total assets $ 4,964,521 $ 4,852,311
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 688,196 $ 558 0.32 % $ 584,342 $ 757 0.51 %
Savings and money market 1,611,639 1,816 0.45 % 1,592,704 2,624 0.65 %
Time   605,222       1,356     0.89 %       759,219       2,338     1.22 %
Total interest-bearing deposits 2,905,057 3,730 0.51 % 2,936,265 5,719 0.77 %
Securities sold under agreements to repurchase 142,333 85 0.24 % 141,818 179 0.50 %
Federal Home Loan Bank advances 124,781 390 1.24 % 209,619 566 1.07 %
Subordinated debt and other borrowings   108,489       755     2.77 %       97,476       689     2.80 %
Total interest-bearing liabilities 3,280,660 4,960 0.60 % 3,385,178 7,153 0.84 %
Noninterest-bearing deposits   978,366       -     -         705,580       -     -  
Total deposits and interest-bearing liabilities 4,259,026 $ 4,960     0.46 % 4,090,758 $ 7,153     0.69 %
Other liabilities 25,112 31,931

Stockholders’ equity
  680,383   729,622

Total liabilities and stockholders’ equity
$ 4,964,521 $ 4,852,311
Net interest income $ 42,243 $ 39,293
Net interest spread (3) 3.64 % 3.46 %

Net interest margin (4)
3.80 % 3.65 %
 
 
 
(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, 2012 would have been 3.78% compared to a net interest spread of 3.61% for the quarter ended December 31, 2011.
(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
                       

 
Twelve months ended Twelve months ended

(dollars in thousands)
    December 31, 2012     December 31, 2011

Average Balances
    Interest    

Rates/ Yields
   

Average Balances
    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 3,438,401 $ 160,037 4.66 % $ 3,218,123 $ 154,749 4.82 %
Securities
Taxable 612,677 16,931 2.76 % 768,063 23,972 3.12 %
Tax-exempt (2) 182,217 6,577 4.82 % 193,397 7,394 5.10 %
Federal funds sold and other   155,876       1,877     1.33 %       167,932       2,232     1.43 %
Total interest-earning assets 4,389,171 $ 185,422     4.29 % 4,347,515 $ 188,347     4.40 %
Nonearning assets
Intangible assets 250,619 253,443
Other nonearning assets   233,764   232,477
Total assets $ 4,873,554 $ 4,833,435
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 677,632 $ 2,800 0.41 % $ 583,212 $ 3,522 0.60 %
Savings and money market 1,575,174 7,884 0.50 % 1,597,965 13,773 0.86 %
Time   644,039       6,158     0.96 %       876,864       13,293     1.52 %
Total interest-bearing deposits 2,896,845 16,842 0.58 % 3,058,041 30,588 1.00 %
Securities sold under agreements to repurchase 134,989 455 0.34 % 161,845 1,110 0.69 %
Federal Home Loan Bank advances 202,338 2,237 1.11 % 136,741 2,512 1.84 %
Subordinated debt and other borrowings   105,131       3,024     2.87 %       98,201       2,672     2.73 %
Total interest-bearing liabilities 3,339,303 22,558 0.68 % 3,454,828 36,882 1.07 %
Noninterest-bearing deposits   809,268       -     -         650,602       -     -  
Total deposits and interest-bearing liabilities 4,148,571 $ 22,558     0.54 % 4,105,430 $ 36,882     0.90 %
Other liabilities 27,933 24,752

Stockholders’ equity
  697,050   703,253

Total liabilities and stockholders’ equity
$ 4,873,554 $ 4,833,435
Net interest income $ 162,864 $ 151,465
Net interest spread (3) 3.61 % 3.33 %
Net interest margin (4) 3.77 % 3.55 %
 
 

 
(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-earning 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 twelve months ended December 31, 2012 would have been 3.74% compared to a net interest spread of 3.50% for the twelve months ended December 31, 2011.
(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
                       
 

 
December September June March December September

(dollars in thousands)
    2012     2012     2012     2012     2011     2011
 
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 22,823 36,571 40,821 42,852 47,855 54,640
Other real estate (ORE)   18,580       21,817       25,450       34,019       39,714       45,500  
Total nonperforming assets $ 41,403       58,388       66,271       76,871       87,569       100,140  

Past due loans over 90 days and still accruing interest
$ - 162 - 821 858 1,911
Troubled debt restructurings (5) $

27,450
24,090 26,626 22,832 23,416 18,187
 
Net loan charge-offs $ 2,163 1,935 2,399 3,630 6,335 5,732
Allowance for loan losses to nonperforming loans 304.2 % 188.9 % 170.5 % 166.6 % 154.6 % 137.0 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.29 % 0.35 % 0.21 % 0.34 % 0.36 % 0.28 %
Potential problem loans (6) 2.84 % 3.13 % 3.49 % 3.78 % 4.12 % 4.09 %
Allowance for loan losses 1.87 % 1.96 % 2.02 % 2.14 % 2.25 % 2.31 %
Nonperforming assets to total loans and ORE 1.11 % 1.65 % 1.91 % 2.28 % 2.66 % 3.05 %
Nonperforming assets to total assets 0.82 % 1.20 % 1.34 % 1.60 % 1.80 % 2.06 %

Annualized net loan charge-offs to year-to-date to avg. loans (7)
0.29 % 0.31 % 0.36 % 0.45 % 0.94 % 1.00 %
Avg. commercial loan internal risk ratings (6) 4.5 4.6 4.6 4.7 4.6 4.7
 
Interest rates and yields:
Loans 4.64 % 4.62 % 4.65 % 4.74 % 4.74 % 4.78 %
Securities 3.16 % 3.19 % 3.27 % 3.31 % 3.26 % 3.54 %
Total earning assets 4.24 % 4.28 % 4.29 % 4.33 % 4.30 % 4.38 %
Total deposits, including non-interest bearing 0.38 % 0.43 % 0.47 % 0.63 % 0.62 % 0.77 %
Securities sold under agreements to repurchase 0.24 % 0.29 % 0.36 % 0.48 % 0.50 % 0.56 %
FHLB advances 1.24 % 1.15 % 1.07 % 1.03 % 1.07 % 1.89 %
Subordinated debt and other borrowings 2.77 % 2.84 % 2.91 % 3.00 % 2.80 % 2.68 %
Total deposits and interest-bearing liabilities 0.46 % 0.53 % 0.57 % 0.63 % 0.69 % 0.84 %
 
Pinnacle Financial Partners capital ratios (8):
Stockholders’ equity to total assets 13.5 % 13.8 % 13.4 % 15.0 % 14.6 % 14.9 %
Leverage 10.6 % 10.5 % 10.3 % 11.7 % 11.4 % 11.9 %
Tier one risk-based 11.8 % 12.1 % 12.0 % 14.0 % 13.8 % 14.4 %
Total risk-based 13.0 % 13.4 % 13.5 % 15.4 % 15.3 % 15.9 %
Tier one common equity to risk weighted assets 9.9 % 10.1 % 10.0 % 10.1 % 9.9 % 9.8 %
Tangible common equity to tangible assets 9.0 % 9.2 % 8.7 % 8.8 % 8.4 % 8.2 %
Pinnacle Bank ratios:
Classified Asset Ratio 29.4 % 33.4 % 37.8 % 39.3 % 44.4 % 46.8 %
Leverage 10.5 % 10.5 % 10.4 % 10.6 % 10.3 % 10.2 %
Tier one risk-based 11.6 % 12.0 % 12.0 % 12.6 % 12.5 % 12.3 %
Total risk-based 12.9 % 13.3 % 13.3 % 14.1 % 14.0 % 13.8 %
 
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
 
 

 
    December     September     June     March     December     September

(dollars in thousands, except per share data)
    2012     2012     2012     2012     2011     2011
 
Per share data:
Earnings – basic $ 0.35 0.33 0.23 0.21 0.17 0.74
Earnings – diluted $ 0.34 0.33 0.23 0.21 0.17 0.72
Book value per common share at quarter end (9) $ 19.57 19.39 18.92 18.66 18.56 18.34
Tangible common equity per common share $ 12.39 12.19 11.79 11.50 11.33 11.08
 
Weighted avg. common shares – basic 33,960,664 33,939,248 33,885,779 33,811,871 33,485,253 33,372,980
Weighted avg. common shares – diluted 34,527,479 34,523,076 34,470,794 34,423,898 34,127,209 33,993,914
Common shares outstanding 34,696,597 34,691,659 34,675,913 34,616,013 34,354,960 34,306,927
 
Investor information:
Closing sales price $ 18.84 19.32 19.51 18.35 16.15 10.94
High closing sales price during quarter $ 20.60 20.38 19.51 18.44 16.65 16.21
Low closing sales price during quarter $ 18.05 18.88 16.64 15.25 10.28 10.52
 
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 132,485 130,277 105,486 119,426 134,842 104,663
Gross fees (10) $ 3,269 3,193 2,511 2,608 2,766 2,166

Gross fees as a percentage of mortgage loans originated
2.47 % 2.45 % 2.38 % 2.18 % 2.05 % 2.07 %
Gains (losses) on sales of investment securities, net of OTTI $ 1,988 (50 ) 99 114 133 377
Brokerage account assets, at quarter-end (11) $ 1,242,379 1,244,100 1,191,259 1,176,180 1,061,249 987,908
Trust account assets, at quarter-end $ 819,270 761,641 803,904 789,614 632,608 607,668

Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end
$ 39,668 40,662 54,598 52,155 62,209 57,045
Core deposits (12) $ 3,875,745 3,576,425 3,523,542 3,405,915 3,441,547 3,388,692
Core deposits to total funding (12) 89.9 % 86.1 % 83.3 % 84.3 % 83.7 % 82.6 %
Risk-weighted assets $ 4,247,744 4,033,407 3,992,473 3,826,678 3,780,412 3,751,479
Total assets per full-time equivalent employee $ 6,900 6,715 6,724 6,442 6,511 6,580
Annualized revenues per full-time equivalent employee $ 301.4 281.6 273.9 266.8 263.2 262.5
Number of employees (full-time equivalent) 730.5 725.5 733.5 743.5 747.0 740.0
Associate retention rate (13) 93.2 % 93.4 % 94.0 % 93.7 % 92.0 % 92.6 %
 
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - November 2012 759.2 757.6 764.7 747.8 757.3 735.5
Knoxville MSA nonfarm employment - November 2012 337.2 337.3 338.9 330.9 331.7 327.7
Nashville MSA unemployment - November 2012 5.9 % 7.1 % 6.8 % 7.2 % 7.2 % 8.5 %
Knoxville MSA unemployment - November 2012 5.7 % 6.8 % 6.4 % 6.7 % 6.6 % 7.9 %
Nashville residential median home price- December 2012 $ 181.0 177.1 175.5 168.5 168.5 171.6
Nashville inventory of residential homes for sale- December 2012 (16) 9.1 11.0 11.8 11.8 10.6 13.4
 
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)     2012     2012     2012     2012     2011     2011
 
Tangible assets:
Total assets $ 5,040,549 $ 4,871,386 $ 4,931,878 $ 4,789,583 $ 4,863,951 $ 4,868,905
Less: Goodwill (244,040 ) (244,045 ) (244,065 ) (244,072 ) (244,076 ) (244,082 )
Core deposit and other intangible assets   (5,103 )       (5,787 )       (6,470 )       (7,156 )       (7,842 )       (8,558 )
Net tangible assets $ 4,791,406       $ 4,621,554       $ 4,681,343       $ 4,538,355       $ 4,612,033       $ 4,616,265  
 
Tangible equity:

Total stockholders’ equity
$ 679,071 $ 672,824 $ 659,287 $ 718,665 $ 710,145 $ 724,374
Less: Goodwill (244,040 ) (244,045 ) (244,065 ) (244,072 ) (244,076 ) (244,082 )
Core deposit and other intangible assets   (5,103 )       (5,787 )       (6,470 )       (7,156 )       (7,842 )       (8,558 )
Net tangible equity 429,928 422,992 408,752 467,437 458,226 471,734
Less: Preferred stock   -         -         -         (69,355 )       (69,097 )       (91,772 )
Net tangible common equity $ 429,928       $ 422,992       $ 408,752       $ 398,082       $ 389,130       $ 379,962  
 
Ratio of tangible common equity to tangible assets   8.97 %       9.15 %       8.73 %       8.77 %       8.44 %       8.23 %
 
 
For the three months ended
December September June March December September
2012     2012     2012     2012     2011     2011
 
Net interest income $ 42,243 $ 40,932 $ 40,185 $ 39,504 $ 39,293 $ 38,356
 
Noninterest income 13,108 10,430 9,910 9,949 9,727 10,080
Less: Net gains (losses) on sale of investment securities   1,988         (50 )       99         114         133         377  
Noninterest income excluding the impact of other net gains (losses) on sale of investment securities   11,120         10,480         9,811         9,835         9,594         9,703  
 
Noninterest expense 34,851 33,578 33,915 35,820 34,374 35,676
Other real estate owned expense 1,365 2,399 3,104 4,676 4,193 5,079
FHLB restructuring charges   2,092         -         -         -         -         -  
Noninterest expense excluding the impact of other real estate owned expense and FHLB restructuring charges   31,394         31,179         30,811         31,144         30,181         30,597  
 
Adjusted pre-tax pre-provision income (15) $ 21,969       $ 20,233       $ 19,185       $ 18,195       $ 18,706       $ 17,462  
 
 
Efficiency Ratio (4) 63.0 % 65.4 % 67.7 % 72.4 % 70.1 % 73.7 %
 
Efficiency Ratio excluding the gain or loss on sale of investment securities, the impact of other real estate owned expense and FHLB restructuring charges (4) 58.8 % 60.6 % 61.6 % 63.1 % 61.7 % 63.7 %
 
 
Noninterest expense $ 34,851 $ 33,578 $ 33,915 $ 35,820 $ 34,374 $ 35,676
Other real estate owned expense 1,365 2,399 3,104 4,676 4,193 5,079
FHLB restructuring charges   2,092         -         -         -         -         -  
Noninterest expense excluding the impact of other real estate owned expense and FHLB restructuring charges   31,394         31,179         30,811         31,144         30,181         30,597  
 
Total average assets $ 4,964,521       $ 4,860,394       $ 4,847,583       $ 4,820,951       $ 4,852,311       $ 4,786,485  
 
Noninterest expense (excluding ORE and FHLB restructuring charges) to avg. assets (1) 2.52 % 2.55 % 2.56 % 2.60 % 2.50 % 2.57 %
 

For the twelve months ended December 31,
      2012     2011
 
Net income available to common stockholders $ 38,070 $ 37,073
Reversal of valuation allowance based on net deferred tax assets - (22,480 )
Accelerated accretion on preferred stock discount   1,664         141  
$ 39,734       $ 14,734  
 
Diluted net income per common share available to common stockholders, as adjusted $ 1.15       $ 0.43  
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 

1.

Ratios are presented on an annualized basis.

2.

Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.

3.

Total revenue is equal to the sum of net interest income and noninterest income.

4.

Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

5.

Troubled debt restructurings include loans where the company, as a result of the borrower’s financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.

6.

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

7.

Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period.

8.

Capital ratios are 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.

9.

Book value per share computed by dividing total stockholders’ equity less preferred stock and common stock warrants by common shares outstanding.

10.

Amounts are included in the statement of operations in “Gains on loans sold, net”, net of commissions paid on such amounts.

11.

At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services.

12.

Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.

13.

Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.

14.

Employment and unemployment data is from the US Dept. of Labor Bureau of Labor Statistics. Labor force data is not seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. The Nashville home data is from the Greater Nashville Association of Realtors.

15.

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

16.

Represents homes currently listed with MLS in the Nashville MSA.
 

Copyright Business Wire 2010

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