Pinnacle Financial Reports EPS Up 27.3% Over Same Quarter Last Year

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) today reported net income available to common stockholders of $14.6 million for the quarter ended Sept. 30, 2013, up from net income available to common stockholders of $11.3 million for the same quarter in 2012. Net income per diluted common share was $0.42 for the quarter ended Sept. 30, 2013, compared to net income per diluted common share of $0.33 for the quarter ended Sept. 30, 2012, an increase of 27.3 percent.

Pinnacle also reported net income available to common stockholders of $42.4 million for the nine months ended Sept. 30, 2013, up from net income available to common stockholders of $26.3 million for the same nine-month period in 2012. Net income per diluted common share was $1.23 for the nine months ended Sept. 30, 2013, compared to net income per diluted common share of $0.76 for the nine months ended Sept. 30, 2012, an increase of 61.8 percent.

“Our third quarter operating results represent another strong quarter of execution by our associates,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “We experienced strong earnings growth and another record quarter in operating revenues as we continue to drive toward our previously stated return-on-average-asset goal of 1.10 percent to 1.30 percent.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
  • Loans at Sept. 30, 2013 were a record $3.969 billion, an increase of $257.1 million from Dec. 31, 2012, and $441.1 million from Sept. 30, 2012, a year-over-year growth rate of 12.6 percent. Loan growth during the third quarter was $43.9 million compared to $153.0 million last quarter and $80.5 million in the same quarter last year.
  • Average balances of noninterest bearing deposit accounts were $1.10 billion in the third quarter of 2013, up 8.7 percent from the second quarter of 2013 and up 37.7 percent over the same quarter last year.
  • Revenues (excluding securities gains and losses) for the quarter ended Sept. 30, 2013 were a record $57.4 million, an increase from $54.9 million last quarter and up 11.7 percent over the $51.4 million for the same quarter last year.
  • Consistent with previously disclosed expectations, the firm’s net interest margin decreased to 3.72 percent for the quarter ended Sept. 30, 2013, down from 3.77 percent last quarter and 3.78 percent for the quarter ended Sept. 30, 2012.
  • The firm’s efficiency ratio for the quarter ended Sept. 30, 2013 was 59.5 percent compared to 56.2 percent last quarter and 65.4 percent for the same quarter last year.

“Although our loan growth for the third quarter was less than we had anticipated at the beginning of the quarter, we remain optimistic about the fourth quarter as our loan pipelines appear to be gaining strength as we approach year-end,” Turner said. “Perhaps more importantly, we continue to experience strong growth in operating deposit accounts. We are pleased that a growing number of clients recognize the differentiated service we provide over that of the national and large regional franchises doing business in our markets. As a result, our average noninterest-bearing account balances increased $301.0 million during the last year, up 37.7 percent over the average balances of the third quarter last year.”

OTHER THIRD QUARTER 2013 HIGHLIGHTS:

  • Revenue growth
    • Net interest income for the quarter ended Sept. 30, 2013 was $44.6 million, compared to $43.6 million in the second quarter of 2013 and $40.9 million for the third quarter of 2012. Net interest income for the third quarter of 2013 was up 8.9 percent year-over-year and is at its highest quarterly level since the firm’s founding in 2000.
    • Noninterest income for the quarter ended Sept. 30, 2013, was $11.4 million, compared to $11.3 million for the second quarter of 2013 and $10.4 million for the same quarter last year. Excluding securities gains and losses in each period and noncredit related loan losses in the second quarter of 2013, noninterest income was up 13.0 percent on a linked-quarter basis and 22.4 percent over the same quarter last year.
      • Gains on mortgage loans sold, net of commissions, were $1.33 million during the third quarter of 2013, compared to $1.95 million during the second quarter of 2013 and $1.98 million during the third quarter of 2012.
      • Losses on the sale of available-for-sale investment securities in the third quarter 2013 were $1.44 million compared to $25,000 for the second quarter of 2013 and $50,000 for the third quarter of 2012.
      • Other noninterest income for the third quarter of 2013 increased by $1.82 million from the second quarter of 2013 and by $2.26 million over the third quarter of last year. A $1.1 million gain on the sale of the government guaranteed portion of a loan contributed to the increase in other noninterest income during the third quarter of 2013 compared to a similar gain of $166,000 in the same quarter in 2012.

“Operationally, we had another very sound quarter,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Net interest income is up almost $975,000 over the previous quarter. As to fee income, our mortgage revenues decreased by $623,000 from the second quarter of 2013, but increases in other fee areas are more than offsetting the drop in mortgage refinance activity. Excluding the impact of securities losses, the growth in both net interest income and noninterest income produced another record revenue quarter for our firm.

“Loan yields remain a challenge for our industry. On a linked-quarter basis, loan yields decreased by 8 basis points this quarter compared to 17 basis points during the second quarter. These decreases were offset somewhat by a linked-quarter decrease in total deposit costs of 4 basis points during the third quarter after a decrease of 5 basis points during the second quarter. We believe the rate of decrease in both loan yields and deposit costs will likely slow in future quarters, but we remain optimistic that we will continue to grow our net interest income.”

  • Noninterest and income tax expense
    • Noninterest expense for the quarter ended Sept. 30, 2013 was $33.3 million, compared to $30.9 million in the second quarter of 2013 and $33.6 million in the third quarter of 2012.
      • Salaries and employee benefits costs were up from the second quarter of 2013 by approximately $440,000 and by $1.54 million from the third quarter of 2012.
      • Other real estate expenses were $700,000 in the third quarter of 2013, compared to $1.39 million in the second quarter of 2013 and $2.40 million in the third quarter of 2012.
    • Income tax expense was $7.31 million for the third quarter of 2013, compared to $6.98 million in the second quarter of 2013 and $5.02 million in the third quarter of 2012. The forecasted effective tax rate for 2013 is 33.0 percent.

“Third quarter 2013 noninterest expenses increased by approximately $2.5 million over the second quarter. Noninterest expense in the second quarter of 2013 included the $2.0 million benefit we discussed last quarter from the reversal of an off-balance sheet allowance when the underlying letter of credit funded, which impacted our 2013 expense run rate,” Carpenter said. “Health care expenses were higher in the third quarter as associates began to meet their individual plan deductibles in the latter part of the year. We also experienced increased legal costs during the third quarter. A portion of these expense increases were offset by reduced other real estate expenses during the quarter when compared to the second quarter of 2013. We anticipate our fourth quarter expenses to be consistent with or slightly less than the third quarter.”
  • Asset Quality
    • Nonperforming assets declined by $1.04 million from June 30, 2013, a linked-quarter reduction of 2.85 percent and the 13th consecutive quarterly reduction. Nonperforming assets were 0.89 percent of total loans and ORE at Sept. 30, 2013, compared to 1.65 percent for the same quarter last year and 0.93 percent last quarter.
    • Classified assets as a percentage of Tier 1 capital plus allowance were 20.6 percent at Sept. 30, 2013, compared to 23.3 percent at June 30, 2013, and 33.4 percent at Sept. 30, 2012.
    • Allowance for loan losses represented 1.70 percent of total loans at Sept. 30, 2013, compared to 1.75 percent at June 30, 2013, and 1.96 percent at Sept. 30, 2012. The ratio of the allowance for loan losses to nonperforming loans increased to 336.6 percent at Sept. 30, 2013, from 334.1 percent at June 30, 2013, and 188.9 percent at Sept. 30, 2012.
      • Net charge-offs were $2.10 million for the quarter ended Sept. 30, 2013, compared to $1.94 million for the quarter ended Sept. 30, 2012, and $3.49 million for the second quarter of 2013. Annualized net charge-offs for the quarter ended Sept. 30, 2013, were 0.21 percent compared to 0.22 percent for the quarter ended Sept. 30, 2012. Annualized net charge-offs for the nine months ended Sept. 30, 2013, were 0.27 percent.
      • Provision for loan losses decreased from $1.41 million for the third quarter of 2012 to $680,000 for the third quarter of 2013.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on Oct. 16, 2013, to discuss third quarter 2013 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 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 almost $5.4 billion in assets at Sept. 30, 2013. At Sept. 30, 2013, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and four offices in Knoxville. The firm was recently recognized for its financial performance in Sandler O’Neil + Partners’ annual Sm-All Stars report for the third time. Additionally, Great Place to Work® named Pinnacle one of the best workplaces in the United States on its 2013 Best Small/Medium Workplaces list published in FORTUNE magazine. Pinnacle ranked No. 5 out of 25 on the medium-sized company list.

Additional information concerning Pinnacle, which was recently added to the NASDAQ Financial-100 Index, 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; (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 on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (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 recently adopted changes to capital calculation methodologies and required capital maintenance levels; (xvii) risks associated with litigation, including the applicability of insurance coverage; (xviii) approval of the declaration of any dividend by Pinnacle Financial’s board of directors and, (xviii) 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 February 22, 2013 and Pinnacle Financial’s most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 31, 2013. 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
       
      September 30, 2013     December 31, 2012

ASSETS
Cash and noninterest-bearing due from banks $ 92,150,263 $ 51,946,542
Interest-bearing due from banks 118,351,624 111,535,083
Federal funds sold and other   639,572         1,807,044  
Cash and cash equivalents 211,141,459 165,288,669
 
Securities available-for-sale, at fair value 704,291,206 706,577,806

Securities held-to-maturity (fair value of $38,717,744 and $583,212 at September 30, 2013 and December 31, 2012, respectively)
39,593,672 574,863
Mortgage loans held-for-sale 16,961,925 41,194,639
 
Loans 3,969,302,182 3,712,162,430
Less allowance for loan losses   (67,279,672 )       (69,417,437 )
Loans, net 3,902,022,510 3,642,744,993
 
Premises and equipment, net 74,117,834 75,804,895
Other investments 30,537,063 26,962,890
Accrued interest receivable 16,167,556 14,856,615
Goodwill 243,807,645 244,040,421
Core deposit and other intangible assets 4,087,425 5,103,273
Other real estate owned 15,522,233 18,580,097
Other assets   132,950,060         98,819,455  
Total assets $ 5,391,200,588       $ 5,040,548,616  
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing $ 1,138,420,589 $ 985,689,460
Interest-bearing 784,995,026 760,786,247
Savings and money market accounts 1,860,598,743 1,662,256,403
Time   549,528,625         606,455,873  
Total deposits 4,333,542,983 4,015,187,983
Securities sold under agreements to repurchase 84,031,927 114,667,475
Federal Home Loan Bank advances 115,670,655 75,850,390
Subordinated debt and other borrowings 99,283,292 106,158,292
Accrued interest payable 925,097 1,360,598
Other liabilities   45,530,772         48,252,519  
Total liabilities 4,678,984,726 4,361,477,257
 

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; 35,133,733 shares and 34,696,597 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively
35,133,733 34,696,597
Additional paid-in capital 547,641,227 543,760,439
Retained earnings 129,792,296 87,386,689
Accumulated other comprehensive (loss) income, net of taxes   (351,394 )       13,227,634  
Stockholders’ equity   712,215,862         679,071,359  

Total liabilities and stockholders’ equity
$ 5,391,200,588       $ 5,040,548,616  
 
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 Nine Months Ended
September 30, September 30,
      2013     2012     2013     2012
Interest income:
Loans, including fees $ 42,778,193 $ 40,405,396 $ 126,441,555 $ 118,331,163
Securities
Taxable 3,538,446 3,973,717 10,860,146 13,356,957
Tax-exempt 1,601,067 1,621,541 4,741,440 4,972,539
Federal funds sold and other   259,536         440,254         834,748         1,557,831
Total interest income   48,177,242         46,440,908         142,877,889         138,218,490
 
Interest expense:
Deposits 2,708,376 3,986,328 9,076,757 13,112,653
Securities sold under agreements to repurchase 55,601 99,379 204,240 370,405
Federal Home Loan Bank advances and other borrowings   840,318         1,422,845         2,666,721         4,114,008
Total interest expense   3,604,295         5,508,552         11,947,718         17,597,066
Net interest income 44,572,947 40,932,356 130,930,171 120,621,424
Provision for loan losses   684,956         1,412,575         5,631,408         3,080,892
Net interest income after provision for loan losses 43,887,991 39,519,781 125,298,763 117,540,532
 
Noninterest income:
Service charges on deposit accounts 2,797,342 2,531,707 7,818,452 7,295,045
Investment services 1,955,652 1,676,601 5,643,690 4,934,262
Insurance sales commissions 1,021,430 987,222 3,522,430 3,415,945
Gain on mortgage loans sold, net 1,326,469 1,978,935 5,130,411 4,930,190

(Loss) gain on sale of investment securities, net of OTTI
(1,441,234 ) (49,784 ) (1,466,475 ) 162,733
Trust fees 931,543 767,042 2,756,079 2,332,716
Other noninterest income   4,796,079         2,537,863         11,210,770         7,217,879
Total noninterest income   11,387,281         10,429,586         34,615,357         30,288,770
 
Noninterest expense:
Salaries and employee benefits 21,009,680 19,470,535 61,152,789 58,500,279
Equipment and occupancy 5,412,865 5,156,131 15,730,074 15,217,897
Other real estate expense 699,211 2,399,232 2,810,779 10,179,572
Marketing and other business development 720,866 834,661 2,498,708 2,359,760
Postage and supplies 581,433 637,906 1,690,588 1,816,925
Amortization of intangibles 246,675 683,430 1,015,848 2,055,564
Other noninterest expense   4,652,161         4,396,465         11,725,844         13,183,603
Total noninterest expense   33,322,891         33,578,360         96,624,630         103,313,600
Income before income taxes 21,952,381 16,371,007 63,289,490 44,515,702
Income tax expense   7,305,431         5,021,882         20,883,883         14,361,979
Net income 14,646,950 11,349,125 42,405,607 30,153,723
Preferred dividends - - - 1,660,868
Accretion on preferred stock discount   -         -         -         2,153,172
Net income available to common stockholders $ 14,646,950       $ 11,349,125       $ 42,405,607       $ 26,339,683
 
Per share information:
Basic net income per common share available to common stockholders $ 0.43       $ 0.33       $ 1.24       $ 0.78
Diluted net income per common share available to common stockholders $ 0.42       $ 0.33       $ 1.23       $ 0.76
 
Weighted average shares outstanding:
Basic 34,282,899 33,939,248 34,148,562 33,879,186
Diluted 34,606,567 34,523,076 34,415,776 34,473,895
 
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
                       
                                     

 
September June March December September June

(dollars in thousands)
    2013     2013     2013     2012     2012     2012
 
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 1,326,838 1,308,873 1,278,639 1,178,196 1,167,136 1,167,068
Consumer real estate - mortgage loans 687,259 697,490 675,632 679,927 680,890 687,002
Construction and land development loans 319,973 298,509 306,433 313,552 312,788 289,061
Commercial and industrial loans 1,513,632 1,504,086 1,403,428 1,446,577 1,279,050 1,227,275
Consumer and other 121,600 116,407 108,232 93,910 85,300 74,277
Total loans 3,969,302 3,925,365 3,772,364 3,712,162 3,525,164 3,444,683
Allowance for loan losses (67,280 ) (68,695 ) (69,411 ) (69,417 ) (69,092 ) (69,614 )
Securities 743,885 727,889 724,004 707,153 739,280 790,493
Total assets 5,391,201 5,373,168 5,070,935 5,040,549 4,871,386 4,931,878
Noninterest-bearing deposits 1,138,421 1,098,887 977,496 985,689 844,480 806,402
Total deposits 4,333,543 4,096,578 3,902,895 4,015,188 3,719,287 3,709,820
Securities sold under agreements to repurchase 84,032 117,346 129,100 114,667 134,787 127,623
FHLB advances 115,671 325,762 200,796 75,850 190,887 270,995
Subordinated debt and other borrowings 99,283 99,908 105,533 106,158 106,783 122,476
Total stockholders’ equity 712,216 696,569 691,434 679,071 672,824 659,287
 
Balance sheet data, quarterly averages:
Total loans $ 3,932,218 3,845,476 3,681,686 3,580,056 3,488,736 3,402,671
Securities 739,625 745,969 714,104 719,861 766,547 818,795
Total earning assets 4,825,552 4,710,534 4,513,273 4,493,216 4,379,742 4,365,715
Total assets 5,313,003 5,210,600 4,992,018 4,964,521 4,860,394 4,847,583
Noninterest-bearing deposits 1,100,532 1,012,718 952,853 978,366 799,508 755,594
Total deposits 4,198,779 3,963,393 3,949,742 3,883,423 3,705,672 3,636,240
Securities sold under agreements to repurchase 110,123 129,550 130,740 142,333 136,918 130,711
FHLB advances 181,392 293,581 98,989 124,781 214,271 232,606
Subordinated debt and other borrowings 100,995 102,573 106,777 108,489 112,406 101,872
Total stockholders’ equity 705,275 699,559 688,241 680,383 669,673 718,841
 
Statement of operations data, for the three months ended:
Interest income $ 48,177 47,544 47,156 47,203 46,441 45,953
Interest expense   3,604       3,945       4,398       4,960       5,509       5,768  
Net interest income 44,573 43,599 42,758 42,243 40,932 40,185
Provision for loan losses   685       2,774       2,172       2,488       1,413       634  
Net interest income after provision for loan losses 43,888 40,825 40,586 39,755 39,519 39,551
Noninterest income 11,387 11,326 11,902 13,108 10,430 9,910
Noninterest expense   33,323       30,862       32,440       34,851       33,578       33,916  
Income before taxes 21,952 21,289 20,048 18,012 16,371 15,545
Income tax expense 7,305 6,978 6,600 6,282 5,022 5,106
Preferred dividends and accretion   -       -       -       -       -       2,655  
Net income available to common stockholders $ 14,647       14,311       13,448       11,730       11,349       7,785  
 
Profitability and other ratios:
Return on avg. assets (1) 1.09 % 1.10 % 1.09 % 0.94 % 0.93 % 0.65 %
Return on avg. equity (1) 8.24 % 8.21 % 7.92 % 6.86 % 6.74 % 4.36 %
Return on avg. tangible equity (1) 12.71 % 12.72 % 12.41 % 10.83 % 10.76 % 6.69 %
Net interest margin (1) (2) 3.72 % 3.77 % 3.90 % 3.80 % 3.78 % 3.76 %
Noninterest income to total revenue (3) 20.35 % 20.62 % 21.77 % 23.68 % 20.31 % 19.78 %
Noninterest income to avg. assets (1) 0.85 % 0.87 % 0.97 % 1.05 % 0.85 % 0.82 %
Noninterest exp. to avg. assets (1) 2.49 % 2.38 % 2.64 % 2.79 % 2.75 % 2.81 %

Noninterest expense (excluding ORE and FHLB prepayment charges) to avg. assets (1)
2.44 % 2.27 % 2.51 % 2.52 % 2.55 % 2.56 %
Efficiency ratio (4) 59.55 % 56.19 % 59.35 % 62.96 % 65.38 % 67.70 %
Avg. loans to average deposits 93.65 % 97.02 % 93.21 % 92.19 % 94.15 % 93.58 %
Securities to total assets 13.80 % 13.55 % 14.28 % 14.03 % 15.18 % 16.03 %
 
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)
    September 30, 2013     September 30, 2012

AverageBalances
    Interest     Rates/ Yields    

AverageBalances
    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 3,932,218 $ 42,778 4.33 % $ 3,488,736 $ 40,405 4.62 %
Securities
Taxable 571,985 3,538 2.45 % 585,782 3,974 2.70 %
Tax-exempt (2) 167,640 1,601 5.06 % 180,765 1,622 4.77 %
Federal funds sold and other   153,709       260     0.80 %       124,459       440     1.55 %
Total interest-earning assets 4,825,552 $ 48,177     4.02 % 4,379,742 $ 46,441     4.28 %
Nonearning assets
Intangible assets 248,095 250,274
Other nonearning assets   239,356   230,378
Total assets $ 5,313,003 $ 4,860,394
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 783,623 $ 400 0.20 % $ 672,057 $ 637 0.38 %
Savings and money market 1,755,037 1,370 0.31 % 1,606,189 1,959 0.49 %
Time   559,587       938     0.66 %       627,918       1,390     0.88 %
Total interest-bearing deposits 3,098,247 2,708 0.35 % 2,906,164 3,986 0.55 %
Securities sold under agreements to repurchase 110,123 56 0.20 % 136,918 99 0.29 %
Federal Home Loan Bank advances 181,392 173 0.38 % 214,271 621 1.15 %
Subordinated debt and other borrowings   100,995       667     2.62 %       112,406       802     2.84 %
Total interest-bearing liabilities 3,490,757 3,604 0.41 % 3,369,759 5,508 0.65 %
Noninterest-bearing deposits   1,100,532       -     -         799,508       -     -  
Total deposits and interest-bearing liabilities 4,591,289 $ 3,604     0.31 % 4,169,267 $ 5,508     0.53 %
Other liabilities 16,439 21,454

Stockholders’ equity
  705,275   669,673

Total liabilities and stockholders’ equity
$ 5,313,003 $ 4,860,394
Net interest income $ 44,573 $ 40,933
Net interest spread (3) 3.61 % 3.63 %
Net interest margin (4) 3.72 % 3.78 %
 
 
(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 September 30, 2013 would have been 3.71% compared to a net interest spread of 3.75% for the quarter ended September 30, 2012.
(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
                       

 
Nine months ended Nine months ended

(dollars in thousands)
    September 30, 2013     September 30, 2012

AverageBalances
    Interest     Rates/ Yields    

AverageBalances
    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 3,820,711 $ 126,442 4.44 % $ 3,390,838 $ 118,331 4.67 %
Securities
Taxable 561,974 10,860 2.58 % 636,516 13,357 2.80 %
Tax-exempt (2) 171,352 4,741 4.94 % 183,572 4,973 4.83 %
Federal funds sold and other   130,226       835     1.01 %       143,311       1,558     1.58 %
Total interest-earning assets 4,684,263 $ 142,878     4.14 % 4,354,237 $ 138,219     4.30 %
Nonearning assets
Intangible assets 248,488 250,969
Other nonearning assets   240,305   237,805
Total assets $ 5,173,056 $ 4,843,011
 
Interest-bearing liabilities
Interest-bearing deposits:

Interest checking
$ 782,965 $ 1,537 0.26 % $ 674,086 $ 2,243 0.44 %
Savings and money market 1,656,988 4,375 0.35 % 1,562,930 6,068 0.52 %
Time   575,689       3,159     0.73 %       657,073       4,802     0.98 %
Total interest-bearing deposits 3,015,642 9,071 0.40 % 2,894,089 13,113 0.61 %
Securities sold under agreements to repurchase 123,395 204 0.22 % 132,523 370 0.37 %
Federal Home Loan Bank advances 191,622 587 0.41 % 228,378 1,847 1.08 %
Subordinated debt and other borrowings   103,427       2,079     2.69 %       104,003       2,267     2.91 %
Total interest-bearing liabilities 3,434,086 11,941 0.46 % 3,358,993 17,597 0.70 %
Noninterest-bearing deposits   1,022,576       -     -         752,491       -     -  
Total deposits and interest-bearing liabilities 4,456,662 $ 11,941     0.36 % 4,111,484 $ 17,597     0.57 %
Other liabilities 18,639 28,881

Stockholders’ equity
  697,755   702,646

Total liabilities and stockholders’ equity
$ 5,173,056 $ 4,843,011
Net interest income $ 130,937 $ 120,622
Net interest spread (3) 3.67 % 3.60 %
Net interest margin (4) 3.80 % 3.76 %
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.

(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 nine months ended September 30, 2013 would have been 3.78% compared to a net interest spread of 3.73% for the nine months ended September 30, 2012.
(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
                       
                                     

 
September June March December September June

(dollars in thousands)
    2013     2013     2013     2012     2012     2012
 
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 19,989 20,561 21,837 22,823 36,571 40,821
Other real estate (ORE)   15,522       15,992       16,802       18,580       21,817       25,450  
Total nonperforming assets $ 35,511       36,553       38,639       41,403       58,388       66,271  

Past due loans over 90 days and still accruing interest
$ - 747 152 - 162 -
Troubled debt restructurings (5) $ 19,661 20,427 20,667 27,450 24,090 26,626
Net loan charge-offs $ 2,100 3,491 2,178 2,163 1,935 2,399
Allowance for loan losses to nonperforming loans 336.6 % 334.1 % 317.9 % 304.2 % 188.9 % 170.5 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.33 % 0.39 % 0.23 % 0.29 % 0.35 % 0.21 %
Potential problem loans (6) 1.80 % 2.11 % 2.57 % 2.84 % 3.13 % 3.49 %
Allowance for loan losses 1.70 % 1.75 % 1.84 % 1.87 % 1.96 % 2.02 %
Nonperforming assets to total loans and ORE 0.89 % 0.93 % 1.02 % 1.11 % 1.65 % 1.91 %
Nonperforming assets to total assets 0.66 % 0.68 % 0.76 % 0.82 % 1.20 % 1.34 %
Classified asset ratio (Pinnacle Bank) (8) 20.6 % 23.3 % 26.4 % 29.4 % 33.4 % 37.8 %

Annualized net loan charge-offs to year-to-date to avg. loans (7)
0.27 % 0.30 % 0.24 % 0.29 % 0.31 % 0.36 %
Avg. commercial loan internal risk ratings (6) 4.5 4.5 4.5 4.5 4.6 4.6
 
Interest rates and yields:
Loans 4.33 % 4.41 % 4.58 % 4.64 % 4.62 % 4.65 %
Securities 3.04 % 3.03 % 3.34 % 3.16 % 3.19 % 3.27 %
Total earning assets 4.02 % 4.10 % 4.30 % 4.24 % 4.28 % 4.29 %
Total deposits, including non-interest bearing 0.26 % 0.30 % 0.35 % 0.38 % 0.43 % 0.47 %
Securities sold under agreements to repurchase 0.20 % 0.22 % 0.24 % 0.24 % 0.29 % 0.36 %
FHLB advances 0.38 % 0.31 % 0.78 % 1.24 % 1.15 % 1.07 %
Subordinated debt and other borrowings 2.62 % 2.72 % 2.72 % 2.77 % 2.84 % 2.91 %
Total deposits and interest-bearing liabilities 0.31 % 0.35 % 0.42 % 0.46 % 0.53 % 0.57 %
 
Pinnacle Financial Partners capital ratios (8):
Stockholders’ equity to total assets 13.2 % 13.0 % 13.6 % 13.5 % 13.8 % 13.4 %
Leverage 10.8 % 10.7 % 10.8 % 10.6 % 10.5 % 10.3 %
Tier one risk-based 12.0 % 11.7 % 11.7 % 11.8 % 12.1 % 12.0 %
Total risk-based 13.2 % 12.9 % 13.0 % 13.0 % 13.4 % 13.5 %
Tier one common equity to risk-weighted assets 10.2 % 9.9 % 9.9 % 9.9 % 10.1 % 10.0 %
Tangible common equity to tangible assets 9.0 % 8.8 % 9.2 % 9.0 % 9.2 % 8.7 %
Pinnacle Bank ratios:
Leverage 10.5 % 10.5 % 10.7 % 10.5 % 10.5 % 10.4 %
Tier one risk-based 11.6 % 11.5 % 11.6 % 11.6 % 12.0 % 12.0 %
Total risk-based 12.9 % 12.7 % 12.8 % 12.9 % 13.3 % 13.3 %
 
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
                       
                                       

 
September June March December September June

(dollars in thousands, except per share data)
    2013     2013     2013     2012     2012     2012
 
Per share data:
Earnings – basic $ 0.43 0.42 0.40 0.35 0.33 0.23
Earnings – diluted $ 0.42 0.42 0.39 0.34 0.33 0.23
Book value per common share at quarter end (9) $ 20.27 19.86 19.74 19.57 19.39 18.92
Tangible common equity per common share $ 13.22 12.78 12.64 12.39 12.19 11.79
 
Weighted avg. common shares – basic 34,282,899 34,172,274 33,987,265 33,960,664 33,939,248 33,885,779
Weighted avg. common shares – diluted 34,606,567 34,431,054 34,206,202 34,527,479 34,523,076 34,470,794
Common shares outstanding 35,133,733 35,073,763 35,022,487 34,696,597 34,691,659 34,675,913
 
Investor information:
Closing sales price $ 29.81 25.71 23.36 18.84 19.32 19.51
High closing sales price during quarter $ 29.99 26.17 23.73 20.60 20.38 19.51
Low closing sales price during quarter $ 26.56 21.68 19.29 18.05 18.88 16.64
 
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 105,817 123,181 120,569 132,485 130,277 105,486
Gross fees (10) $ 2,470 3,346 3,158 3,269 3,193 2,511
Gross fees as a percentage of loans originated 2.33 % 2.72 % 2.62 % 2.47 % 2.45 %

2.38

%
(Losses) gains on sales of investment securities, net of OTTI $ (1,441 ) (25 ) - 1,988 (50 ) 99
Brokerage account assets, at quarter-end (11) $ 1,445,461 1,387,172 1,333,676 1,242,379 1,244,100 1,191,259
Trust account managed assets, at quarter-end $ 576,190 630,322 515,970 496,264 465,983 462,487

Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end
$ 50,797 45,585 42,721 39,668 40,662 54,598
Core deposits (12) $ 3,903,000 3,771,425 3,638,402 3,674,662 3,480,410 3,476,224
Core deposits to total funding (12) 84.3 % 81.3 % 86.8 % 87.3 % 86.1 % 82.2 %
Risk-weighted assets $ 4,568,667 4,531,730 4,388,341 4,239,384 4,033,407 3,992,473
Total assets per full-time equivalent employee $ 7,305 7,335 7,038 6,900 6,715 6,724
Annualized revenues per full-time equivalent employee $ 300.8 300.8 307.7 301.4 281.6 273.9
Number of employees (full-time equivalent) 738.0 732.5 720.5 730.5 725.5 733.5
Associate retention rate (13) 93.9 % 93.0 % 91.2 % 93.2 % 93.4 % 94.0 %
 
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - August 2013 814.7 817.1 807.1 799.7 793.8 782.3
Knoxville MSA nonfarm employment - August 2013 337.7 337.9 337.4 333.5 332.6 328.4
Nashville MSA unemployment - July 2013 6.8 % 6.8 % 6.2 % 6.3 % 6.6 % 6.9 %
Knoxville MSA unemployment - July 2013 7.1 % 7.2 % 6.5 % 6.2 % 6.4 % 6.7 %
Nashville residential median home price - September 2013 $ 197.9 205.9 169.0 181.0 177.1 175.5
Nashville inventory of residential homes for sale - September 2013 (16) 10.2 10.5 9.9 9.1 11.0 11.8
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                       
September June March December September June
(dollars in thousands, except per share data)     2013     2013     2013     2012     2012     2012
 
Tangible assets:
Total assets $ 5,391,201 5,373,168 5,070,935 5,040,549 4,871,386 4,931,878
Less: Goodwill (243,808 ) (243,900 ) (244,012 ) (244,040 ) (244,045 ) (244,065 )
Core deposit and other intangible assets   (4,087 )     (4,334 )     (4,582 )     (5,103 )     (5,787 )     (6,470 )
Net tangible assets $ 5,143,306       5,124,934       4,822,342       4,791,406       4,621,554       4,681,343  
 
Tangible equity:

Total stockholders’ equity
$ 712,216 696,569 691,434 679,071 672,824 659,287
Less: Goodwill (243,808 ) (243,900 ) (244,012 ) (244,040 ) (244,045 ) (244,065 )
Core deposit and other intangible assets   (4,087 )     (4,334 )     (4,582 )     (5,103 )     (5,787 )     (6,470 )
Net tangible common equity $ 464,321       448,335       442,840       429,928       422,992       408,752  
 
Ratio of tangible common equity to tangible assets   9.03 %     8.75 %     9.18 %     8.97 %     9.15 %     8.73 %
 
 
For the three months ended
September June March December September June
2013     2013     2013     2012     2012     2012
 
Net interest income $ 44,573 43,599 42,758 42,243 40,932 40,185
 
Noninterest income 11,387 11,326 11,902 13,108 10,430 9,910
Less: Net (gains) losses on sale of investment securities 1,441 25 - (1,988 ) 50 (99 )
Net noncredit related loan losses   -       771       -       -       -       -  

Noninterest income excluding the impact of net (gains) losses on sale of investment securities and noncredit related loan losses
  12,828       12,122       11,902       11,120       10,480       9,811  

Total revenues excluding the impact of net (gains) losses on sale of investment securities and noncredit related loan losses
  57,401       55,721       54,660       53,363       51,413       49,996  
 
Noninterest expense 33,323 30,862 32,440 34,851 33,578 33,915
Other real estate expense 699 1,391 721 1,365 2,399 3,104
FHLB restructuring charges   -       -       877       2,092       -       -  

Noninterest expense excluding the impact of other real estate expense and FHLB restructuring charges
  32,624       29,471       30,842       31,394       31,179       30,811  
 
Adjusted pre-tax pre-provision income (15) $ 24,777       26,250       23,818       21,969       20,233       19,185  
 
 
Efficiency Ratio (4) 59.5 % 56.2 % 59.4 % 63.0 % 65.4 % 67.7 %
 
Efficiency Ratio excluding the gain or loss on sale of investment securities, noncredit related loan losses, the impact of other real estate expense and FHLB restructuring charges(4) 56.8 % 52.9 % 56.4 % 58.8 % 60.6 % 61.6 %
 
 
Total average assets $ 5,313,003       5,210,600       4,992,018       4,964,521       4,860,394       4,847,583  
 
Noninterest expense (excluding ORE expense and FHLB restructuring charges) to avg. assets (1) 2.44 % 2.24 % 2.45 % 2.51 % 2.55 % 2.52 %
 
 
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 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 net gains (losses) on investment security sales as well as other real estate owned expenses and FHLB prepayment charges.
16. Represents months supply of homes currently listed with MLS based on current sales activity in the Nashville MSA.

17. Represents gains (losses) on the sale of investment securities, net and other-than-temporary-impairment 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.
 

Copyright Business Wire 2010

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