Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.53 for the quarter ended Dec. 31, 2014, compared to net income per diluted common share of $0.44 for the quarter ended Dec. 31, 2013, an increase of 20.5 percent. Net income per diluted common share was $2.01 for the year ended Dec. 31, 2014, compared to net income per diluted common share of $1.67 for the year ended Dec. 31, 2013, an increase of 20.4 percent.

"Three years ago, we set out a bold plan that included $1.27 billion in net loan growth, a compound annual growth rate of 11.5 percent for the three-year period," said M. Terry Turner, Pinnacle's president and chief executive officer. "Rapid loan growth was the cornerstone for increased operating leverage and profitability for our firm. I am pleased to report that our $168.8 million of net loan growth in the fourth quarter of 2014 provided the necessary volume to exceed our three-year growth target. Every associate in our firm has helped us achieve our profitability targets in conjunction with this loan growth. While we are excited about these achievements, we continue to see similar opportunities for increased operating leverage as a result of continued balance sheet growth over the next three years."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
  • Revenues (excluding securities gains and losses) for the quarter ended Dec. 31, 2014 were a record $64.7 million, an increase of $2.3 million from $62.4 million in the third quarter of 2014. Revenues (excluding securities gains and losses) increased 12.6 percent over the same quarter last year.
  • Loans at Dec. 31, 2014 were a record $4.59 billion, an increase of $168.8 million from Sept. 30, 2014. Loans increased $445.5 million from Dec. 31, 2013, for a year-over-year growth rate of 10.7 percent.
  • Average balances of noninterest-bearing deposit accounts were $1.374 billion in the fourth quarter of 2014 and represented approximately 28.9 percent of total average deposit balances for the quarter, another record for the firm. Fourth quarter 2014 average noninterest-bearing deposits increased 16.5 percent over the same quarter last year.
  • Return on average assets increased to 1.27 percent for the fourth quarter of 2014, compared to 1.25 percent for the third quarter of 2014 and 1.13 percent for the same quarter last year. Fourth quarter 2014 return on average tangible equity amounted to 13.52 percent, compared to 13.69 percent for the third quarter of 2014 and 12.79 percent for the same quarter last year.

"Two quarters ago, we disclosed increased operating performance targets for our firm, and we remain optimistic about achieving these higher standards of operating performance. In fact, we are already approaching the mid-point of the elevated target range for return on average assets," Turner said. "Over the last few years, we've highlighted our rapid loan growth; however, the continual restructuring of our funding base to include more client operating accounts has also been critical to our success. We believe that despite the significant liquidity in our industry today, banking firms like ours that are capable of efficient and effective core deposit acquisition will be the ones ultimately rewarded by investors."

OTHER FOURTH QUARTER 2014 HIGHLIGHTS:

  • Revenue growth
    • Net interest income for the quarter ended Dec. 31, 2014 increased to $50.3 million, compared to $49.5 million for the third quarter of 2014 and $45.0 million for the fourth quarter of 2013.
      • The firm's net interest margin was 3.76 percent for the quarter ended Dec. 31, 2014, compared to 3.79 percent last quarter and 3.70 percent for the quarter ended Dec. 31, 2013.
    • Noninterest income for the quarter ended Dec. 31, 2014 increased to $14.4 million, compared to $12.9 million for the third quarter of 2014 and $12.5 million for the same quarter last year.
      • Wealth management revenues, a component of investment services, increased by approximately $558,000 between the third and fourth quarters of 2014, with most of the increase attributable to end-of-year vendor incentive payments.
      • Other noninterest income increased by approximately $821,000 between the third and fourth quarters of 2014 to $4.9 million, primarily due to increased interchange revenues as well as revenues from several other loan fee categories.

"We have said over the last several years that the achievement of our performance targets will be based primarily on attracting more clients to our firm in order to build a larger revenue base," said Harold R. Carpenter, Pinnacle's chief financial officer. "As a result of the outstanding efforts of our associates, we've seen revenues grow to $245.6 million in 2014 from $189.4 million in 2011, an impressive compound annual growth rate of more than 9 percent. Average noninterest bearing deposits were $650.6 million in 2011 and have grown to $1.26 billion in 2014, representing a compound annual growth rate of approximately 24 percent, more than twice the compound annual growth rate for loans.

"As we turn our attention to 2015, we will remain focused on high-quality organic growth in the Nashville and Knoxville markets, as that has been what has provided for the consistent earnings growth that we all have come to expect from our firm. We will also continue to consider other geographic, product expansion and investment opportunities as they arise, so long as those opportunities provide a clear path to enhanced performance for the entire franchise."

  • Noninterest expense
    • Noninterest expense for the quarter ended Dec. 31, 2014 was $34.4 million, compared to $34.4 million in the third quarter of 2014 and $32.6 million in the same quarter last year.
      • Salaries and employee benefits were $23.1 million in the fourth quarter of 2014, compared to $21.7 million in the third quarter of 2014 and $21.5 million in the same quarter last year.

"Our fourth quarter results reflect an efficiency ratio of 53.2 percent, another record for the firm," Carpenter said. "At the end of 2011, our franchise employed 747 full-time employees, compared to 764 full-time employees at the end of 2014 or an increase of slightly more than 2 percent. We believe that prudent management of our expense base will be a requirement to remain a high performing franchise. That said, we remain focused on recruiting the most sought-after bankers and wealth management professionals in our markets and anticipate adding more to our ranks in 2015."
  • Asset quality
    • Nonperforming assets decreased to $27.9 million at Dec. 31, 2014, compared to $34.0 million at Sept. 30, 2014 and $33.4 million at Dec. 31, 2013. Nonperforming assets decreased to 0.61 percent of total loans and ORE at Dec. 31, 2014, compared to 0.77 percent at Sept. 30, 2014 and 0.80 percent at Dec. 31, 2013.
    • The allowance for loan losses represented 1.47 percent of total loans at Dec. 31, 2014, compared to 1.50 percent at Sept. 30, 2014 and 1.64 percent at Dec. 31, 2013. The ratio of the allowance for loan losses to nonperforming loans was 403.2 percent at Dec. 31, 2014, compared to 305.6 percent at Sept. 30, 2014 and 373.8 percent at Dec. 31, 2013.
      • Net charge-offs were $842,000 for the quarter ended Dec. 31, 2014, compared to $1.6 million for the third quarter of 2014 and $1.5 million for the quarter ended Dec. 31, 2013. Annualized net charge-offs as a percentage of average loans for the quarter ended Dec. 31, 2014 were 0.08 percent, compared to 0.36 percent for the quarter ended Dec. 31, 2013.
      • Provision for loan losses increased $1.2 million to $2.0 million in the fourth quarter of 2014 from $851,000 in the third quarter of 2014 due to expanding loan volumes.
      • Due to a gain on sale recognized in the fourth quarter of 2014, other real estate owned (OREO) expense decreased by $1.0 million, thus providing a benefit of $630,000 in the fourth quarter of 2014, compared to an expense of $417,000 in the third quarter of 2014.

BOARD OF DIRECTORS DECLARES DIVIDEND

On Jan. 20, 2015, Pinnacle's Board of Directors also declared a $0.12 per share cash dividend to be paid on Feb. 27, 2015 to common shareholders of record as of the close of business on Feb. 6, 2015. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle's Board of Directors.

"We are pleased to provide a $0.04 increase in our common dividend to shareholders this quarter," Turner said. "Despite our double-digit loan growth, since the date we initiated our common dividend we've continued to experience net increases in our capital ratios. This increase in our dividend should also bring us back to our target range of a 20 percent payout ratio over time without disrupting our prospective growth plans."

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CST) on Jan. 21, 2015 to discuss fourth quarter 2014 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to approximately $6.0 billion in assets at Dec. 31, 2014. At Dec. 31, 2014, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and five offices in Knoxville. Additionally, Great Place to Work ® named Pinnacle one of the best workplaces in the United States on its 2014 Best Small & Medium Workplaces list published in FORTUNE magazine. The American Banker also recognized Pinnacle as the second best bank to work for in the country.

Additional information concerning Pinnacle, which is included in 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 maintain the historical growth of 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) risks of expansion into new geographic or product markets; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Financial) or otherwise to attract customers from other financial institutions; (xvi) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xviii) risks associated with litigation, including the applicability of insurance coverage; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors, (xx) the vulnerability of our network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches, (xxi) the possibility of increased compliance costs as a result of increased regulatory oversight and the development of additional banking products for our corporate and consumer clients, and (xxii) 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 25, 2014 and Pinnacle Financial's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2014. 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 report, whether as a result of new information, future events or otherwise.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
           
      December 31, 2014     September 30, 2014     December 31, 2013

ASSETS
Cash and noninterest-bearing due from banks $ 48,741,692 $ 64,743,501 $ 79,785,004
Interest-bearing due from banks 134,176,054 148,068,613 124,509,486
Federal funds sold and other   4,989,764         4,757,438         4,644,247  
Cash and cash equivalents 187,907,510 217,569,552 208,938,737
 
Securities available-for-sale, at fair value 732,054,785 714,920,906 693,456,314

Securities held-to-maturity (fair value of $38,788,870, $38,112,282 and $38,817,467 at December 31, 2014, September 30, 2014 and December 31, 2013, respectively)
38,675,527 38,106,986 39,795,649
Mortgage loans held-for-sale 14,038,914 19,130,001 12,850,339
 
Loans 4,590,026,505 4,421,250,676 4,144,493,486
Less allowance for loan losses   (67,358,639 )       (66,159,575 )       (67,969,693 )
Loans, net 4,522,667,866 4,355,091,101 4,076,523,793
 
Premises and equipment, net 71,576,016 71,551,257 72,649,574
Other investments 38,062,134 33,599,454 33,226,195
Accrued interest receivable 16,988,407 16,949,949 15,406,389
Goodwill 243,529,010 243,533,067 243,651,006
Core deposit and other intangible assets 2,893,072 3,129,236 3,840,750
Other real estate owned 11,186,414 12,329,278 15,226,136
Other assets   138,668,142         139,792,704         148,210,975  
Total assets $ 6,018,247,797       $ 5,865,703,491       $ 5,563,775,857  
 

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 1,321,053,083 $ 1,357,934,212 $ 1,167,414,487
Interest-bearing 1,005,450,690 860,781,126 884,294,802
Savings and money market accounts 2,024,957,383 1,983,237,139 1,962,714,398
Time   431,143,756         460,378,271         519,049,037  
Total deposits 4,782,604,912 4,662,330,748 4,533,472,724
Securities sold under agreements to repurchase 93,994,730 64,772,511 70,465,326
Federal Home Loan Bank advances 195,476,384 215,523,517 90,637,328
Subordinated debt and other borrowings 96,158,292 96,783,292 98,658,292
Accrued interest payable 631,682 622,908 792,703
Other liabilities   46,688,416         43,736,364         46,041,823  
Total liabilities 5,215,554,416 5,083,769,340 4,840,068,196
 
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; 35,732,483 shares, 35,654,541 shares, and 35,221,941 shares issued and outstanding at December 31, 2014, September 30, 2014 and December 31, 2013, respectively
35,732,483 35,654,541 35,221,941
Additional paid-in capital 561,431,449 558,070,636 550,212,135
Retained earnings 201,371,081 185,496,234 142,298,199
Accumulated other comprehensive income (loss), net of taxes   4,158,368         2,712,740         (4,024,614 )
Stockholders' equity   802,693,381         781,934,151         723,707,661  
Total liabilities and stockholders' equity $ 6,018,247,797       $ 5,865,703,491       $ 5,563,775,857  
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
           
Three Months Ended Year Ended
December 31,     September 30,     December 31, December 31,
      2014     2014     2013     2014     2013
Interest income:
Loans, including fees $ 48,352,675 $ 47,510,761 $ 42,811,184 $ 184,648,800 $ 169,252,739
Securities
Taxable 3,409,318 3,469,311 3,644,318 14,227,172 14,504,464
Tax-exempt 1,472,826 1,533,029 1,636,905 6,167,264 6,378,345
Federal funds sold and other   298,391         268,455       312,119       1,126,726       1,146,867  
Total interest income   53,533,210         52,781,556       48,404,526       206,169,962       191,282,415  
 
Interest expense:
Deposits 2,441,502 2,435,426 2,644,630 9,953,930 11,721,387
Securities sold under agreements to repurchase 40,077 38,702 34,535 140,623 238,775
Federal Home Loan Bank advances and other borrowings   738,359         770,367       756,896       3,090,860       3,423,617  
Total interest expense   3,219,938         3,244,495       3,436,061       13,185,413       15,383,779  
Net interest income 50,313,272 49,537,061 44,968,465 192,984,549 175,898,636
Provision for loan losses   2,041,480         851,194       2,225,114       3,634,660       7,856,522  
Net interest income after provision for loan losses 48,271,792 48,685,867 42,743,351 189,349,889 168,042,114
 
Noninterest income:
Service charges on deposit accounts 3,038,045 2,912,617 2,739,076 11,707,274 10,557,528
Investment services 2,737,308 2,353,118 2,394,735 9,382,670 8,038,425
Insurance sales commissions 1,045,748 1,037,043 1,014,720 4,612,583 4,537,150
Gains on mortgage loans sold, net 1,373,920 1,352,976 1,113,000 5,630,371 6,243,411
Investment gains (losses) on sales, net - 29,221 - 29,221 (1,466,475 )
Trust fees 1,274,159 1,109,278 991,162 4,601,036 3,747,241
Other noninterest income   4,915,039         4,094,200       4,235,528       16,639,323       15,446,298  
Total noninterest income   14,384,219         12,888,453       12,488,221       52,602,478       47,103,578  
 
Noninterest expense:
Salaries and employee benefits 23,075,475 21,721,663 21,494,178 88,319,567 82,646,967
Equipment and occupancy 5,983,877 6,477,076 5,543,380 24,087,335 21,273,454
Other real estate expense (630,066 ) 417,197 302,267 664,289 3,113,046
Marketing and other business development 1,208,253 945,805 1,140,233 4,127,949 3,638,941
Postage and supplies 717,323 569,707 559,362 2,391,838 2,249,950
Amortization of intangibles 236,164 236,163 246,676 947,678 1,262,524
Other noninterest expense   3,801,319         3,991,944       3,350,488       15,761,027       15,076,332  
Total noninterest expense   34,392,345         34,359,555       32,636,584       136,299,683       129,261,214  
Income before income taxes 28,263,666 27,214,765 22,594,988 105,652,684 85,884,478
Income tax expense   9,526,428         9,017,943       7,274,394       35,181,517       28,158,277  
Net income $ 18,737,238       $ 18,196,822     $ 15,320,594     $ 70,471,167     $ 57,726,201  
 
Per share information:
Basic net income per common share $ 0.54       $ 0.52     $ 0.45     $ 2.03     $ 1.69  
Diluted net income per common share $ 0.53       $ 0.52     $ 0.44     $ 2.01     $ 1.67  
 
Weighted average shares outstanding:
Basic 34,827,999 34,762,206 34,355,691 34,723,335 34,200,770
Diluted 35,292,319 35,155,224 34,765,424 35,126,890 34,509,261
 
This information is preliminary and based on company data available at the time of the presentation.
 
   
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
                   
                                       
(dollars in thousands)

 

December
September June March December September
   

 

2014
    2014     2014     2014     2013     2013
 
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 1,544,091 1,478,869 1,457,335 1,456,172 1,383,435 1,326,838
Consumer real estate - mortgage loans 721,158 706,801 698,528 703,592 695,616 687,259
Construction and land development loans 322,466 322,090 292,875 294,055 316,191 319,973
Commercial and industrial loans 1,784,729 1,724,086 1,697,634 1,568,937 1,605,547 1,513,632
Consumer and other 217,583 189,405 169,190 158,931 143,704 121,600
Total loans 4,590,027 4,421,251 4,315,562 4,181,687 4,144,493 3,969,302
Allowance for loan losses (67,359 ) (66,160 ) (66,888 ) (67,524 ) (67,970 ) (67,280 )
Securities 770,730 753,028 782,066 774,134 733,252 743,885
Total assets 6,018,248 5,865,703 5,788,792 5,600,933 5,563,776 5,391,201
Noninterest-bearing deposits 1,321,053 1,357,934 1,324,358 1,180,202 1,167,414 1,138,421
Total deposits 4,782,605 4,662,331 4,651,513 4,500,577 4,533,473 4,333,543
Securities sold under agreements to repurchase 93,995 64,773 62,273 68,093 70,465 84,032
FHLB advances 195,476 215,524 170,556 150,604 90,637 115,671
Subordinated debt and other borrowings 96,158 96,783 97,408 98,033 98,658 99,283
Total stockholders' equity 802,693 781,934 764,382 742,497 723,708 712,216
 
Balance sheet data, quarterly averages:
Total loans $ 4,436,411 4,358,473 4,251,900 4,130,289 3,981,214 3,932,218
Securities 760,328 767,895 782,436 748,539 731,651 739,625
Total earning assets 5,382,479 5,264,591 5,187,589 5,023,692 4,903,233 4,825,552
Total assets 5,855,421 5,752,776 5,673,615 5,514,031 5,388,371 5,313,003
Noninterest-bearing deposits 1,373,745 1,317,091 1,202,740 1,128,743 1,179,340 1,100,532
Total deposits 4,758,402 4,655,047 4,518,963 4,509,493 4,407,806 4,198,779
Securities sold under agreements to repurchase 82,970 66,429 59,888 62,500 85,096 110,123
FHLB advances 95,221 135,920 224,432 83,787 42,012 181,392
Subordinated debt and other borrowings 96,722 100,404 99,015 98,651 100,030 100,995
Total stockholders' equity 796,338 774,032 757,089 740,743 722,919 705,275
 
Statement of operations data, for the three months ended:
Interest income $ 53,533 52,782 50,564 49,291 48,405 48,177
Interest expense   3,220       3,245       3,338       3,383       3,436       3,604  
Net interest income 50,313 49,537 47,226 45,908 44,969 44,573
Provision for loan losses   2,041       851       254       488       2,225       685  
Net interest income after provision for loan losses 48,272 48,686 46,972 45,420 42,744 43,888
Noninterest income 14,384 12,888 12,598 12,732 12,488 11,387
Noninterest expense   34,391       34,360       33,902       33,646       32,637       33,323  
Income before taxes 28,264 27,215 25,668 24,506 22,596 21,952
Income tax expense   9,527       9,018       8,498       8,140       7,274       7,305  
Net income $ 18,737       18,197       17,170       16,367       15,321       14,647  
 
Profitability and other ratios:
Return on avg. assets (1) 1.27 % 1.25 % 1.21 % 1.20 % 1.13 % 1.09 %
Return on avg. equity (1) 9.33 % 9.33 % 9.10 % 8.96 % 8.41 % 8.24 %
Return on avg. tangible common equity (1) 13.52 % 13.69 % 13.50 % 13.45 % 12.79 % 12.71 %
Dividend payout ratio (18) 16.67 % 17.58 % 18.29 % 19.16 % 20.38 % -
Net interest margin (1) (2) 3.76 % 3.79 % 3.71 % 3.76 % 3.70 % 3.72 %
Noninterest income to total revenue (3) 22.23 % 20.65 % 21.06 % 21.72 % 21.73 % 20.35 %
Noninterest income to avg. assets (1) 0.97 % 0.89 % 0.89 % 0.94 % 0.92 % 0.85 %
Noninterest exp. to avg. assets (1) 2.33 % 2.37 % 2.40 % 2.47 % 2.40 % 2.49 %

Noninterest expense (excluding ORE and FHLB restructuring charges) to avg. assets (1)
2.37 % 2.34 % 2.38 % 2.43 % 2.38 % 2.44 %
Efficiency ratio (4) 53.16 % 55.04 % 56.67 % 57.38 % 56.80 % 59.55 %
Avg. loans to average deposits 93.23 % 93.63 % 94.09 % 91.59 % 90.32 % 93.65 %
Securities to total assets 12.81 % 12.84 % 13.51 % 13.82 % 13.18 % 13.80 %
 
 
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
                       
(dollars in thousands) Three months ended Three months ended
    December 31, 2014     December 31, 2013

AverageBalances
Interest

Rates/ Yields

AverageBalances
Interest Rates/ Yields
Interest-earning assets
Loans (1) $ 4,436,411 $ 48,353 4.34 % $ 3,981,214 $ 42,811 4.28 %
Securities
Taxable 594,681 3,409 2.27 % 552,960 3,644 2.61 %
Tax-exempt (2) 165,647 1,473 4.71 % 178,691 1,637 4.85 %
Federal funds sold and other   185,740       298     0.75 %       190,368       313     0.76 %
Total interest-earning assets 5,382,479 $ 53,533     4.00 % 4,903,233 $ 48,405     3.98 %
Nonearning assets
Intangible assets 246,571 247,706
Other nonearning assets   226,371   237,432
Total assets $ 5,855,421 $ 5,388,371
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 901,774 $ 380 0.17 % $ 812,323 $ 386 0.19 %
Savings and money market 2,037,737 1,466 0.29 % 1,883,788 1,420 0.30 %
Time   445,146       596     0.53 %       532,355       839     0.63 %
Total interest-bearing deposits 3,384,657 2,442 0.29 % 3,228,466 2,645 0.32 %
Securities sold under agreements to repurchase 82,970 40 0.19 % 85,096 35 0.16 %
Federal Home Loan Bank advances 95,221 133 0.56 % 42,012 103 0.97 %
Subordinated debt and other borrowings   96,722       605     2.48 %       100,030       653     2.60 %
Total interest-bearing liabilities 3,659,570 3,220 0.35 % 3,455,604 3,436 0.39 %
Noninterest-bearing deposits   1,373,745       -     -         1,179,340       -     -  
Total deposits and interest-bearing liabilities 5,033,315 $ 3,220     0.25 % 4,634,944 $ 3,436     0.29 %
Other liabilities 25,768 30,508
Stockholders' equity   796,338   722,919
Total liabilities and stockholders' equity $ 5,855,421 $ 5,388,371
Net interest income $ 50,313 $ 44,969
Net interest spread (3) 3.65 % 3.58 %
Net interest margin (4) 3.76 % 3.70 %
 
 
 
(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, 2014 would have been 3.74% compared to a net interest spread of 3.68% for the quarter ended December 31, 2013.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
                       
(dollars in thousands) Year Ended Year Ended
    December 31, 2014     December 31, 2013

AverageBalances
    Interest     Rates/ Yields    

AverageBalances
    Interest     Rates/ Yields
Interest-earning assets
Loans (1) $ 4,295,283 $ 184,649 4.31 % $ 3,861,166 $ 169,253 4.40 %
Securities
Taxable 594,223 14,227 2.39 % 559,702 14,504 2.59 %
Tax-exempt (2) 170,617 6,167 4.83 % 173,202 6,378 4.91 %
Federal funds sold and other   155,585       1,127     0.86 %       144,948       1,147     0.93 %
Total interest-earning assets 5,215,708 $ 206,170     4.01 % 4,739,018 $ 191,282     4.10 %
Nonearning assets
Intangible assets 246,956 248,291
Other nonearning assets   237,383   240,018
Total assets $ 5,700,047 $ 5,227,327
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 901,442 $ 1,566 0.17 % $ 790,365 $ 1,928 0.24 %
Savings and money market 1,975,517 5,711 0.29 % 1,714,154 5,795 0.34 %
Time   477,902       2,677     0.56 %       564,766       3,998     0.71 %
Total interest-bearing deposits 3,354,861 9,954 0.30 % 3,069,285 11,721 0.38 %
Securities sold under agreements to repurchase 67,999 141 0.21 % 113,742 239 0.21 %
Federal Home Loan Bank advances 134,874 594 0.44 % 153,912 690 0.45 %
Subordinated debt and other borrowings   98,698       2,496     2.53 %       102,571       2,733     2.67 %
Total interest-bearing liabilities 3,656,432 13,185 0.36 % 3,439,510 15,383 0.45 %
Noninterest-bearing deposits   1,256,420       -     -         1,062,089       -     -  
Total deposits and interest-bearing liabilities 4,912,852 $ 13,185     0.27 % 4,501,599 $ 15,383     0.34 %
Other liabilities 19,971 21,631
Stockholders' equity   767,224   704,097
Total liabilities and stockholders' equity $ 5,700,047 $ 5,227,327
Net interest income $ 192,985 $ 175,899
Net interest spread (3) 3.65 % 3.65 %
Net interest margin (4) 3.75 % 3.77 %
 
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the year ended December 31, 2014 would have been 3.74% compared to a net interest spread of 3.75% for the year ended December 31, 2013.
(4) Net interest margin is the result of net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
                     
                                     
(dollars in thousands) December September June March December September
  2014     2014     2014     2014     2013     2013
 
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 16,706 21,652 15,678 15,606 18,183 19,989
Other real estate (ORE)   11,186       12,329       12,946       15,038       15,226       15,522  
Total nonperforming assets $ 27,892       33,981       28,624       30,644       33,409       35,511  

Past due loans over 90 days and still accruing interest
$ 322 83 649 7,944 3,057 -
Troubled debt restructurings (5) $ 8,410 7,606 7,552 15,108 19,647 19,661
Net loan charge-offs $ 842 1,580 890 934 1,535 2,100
Allowance for loan losses to nonaccrual loans 403.2 % 305.6 % 426.6 % 432.7 % 373.8 % 336.6 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.40 % 0.32 % 0.45 % 0.43 % 0.39 % 0.33 %
Potential problem loans (6) 1.81 % 1.98 % 1.79 % 2.01 % 1.51 % 1.80 %
Allowance for loan losses 1.47 % 1.50 % 1.55 % 1.61 % 1.64 % 1.70 %
Nonperforming assets to total loans and ORE 0.61 % 0.77 % 0.66 % 0.73 % 0.80 % 0.89 %
Nonperforming assets to total assets 0.46 % 0.58 % 0.49 % 0.55 % 0.60 % 0.66 %
Classified asset ratio (Pinnacle Bank) (8) 18.1 % 20.0 % 18.1 % 21.2 % 18.5 % 20.6 %

Annualized net loan charge-offs year-to-date to avg. loans (7)
0.10 % 0.11 % 0.09 % 0.09 % 0.24 % 0.27 %
Wtd. avg. commercial loan internal risk ratings (6) 4.4 4.5 4.5 4.5 4.5 4.5
 
Interest rates and yields:
Loans 4.34 % 4.34 % 4.27 % 4.30 % 4.28 % 4.33 %
Securities 2.81 % 2.85 % 2.93 % 3.17 % 3.16 % 3.04 %
Total earning assets 4.00 % 4.03 % 3.97 % 4.04 % 3.98 % 4.02 %
Total deposits, including non-interest bearing 0.20 % 0.21 % 0.22 % 0.23 % 0.24 % 0.26 %
Securities sold under agreements to repurchase 0.19 % 0.23 % 0.21 % 0.20 % 0.16 % 0.20 %
FHLB advances 0.56 % 0.44 % 0.33 % 0.59 % 0.97 % 0.38 %
Subordinated debt and other borrowings 2.48 % 2.45 % 2.58 % 2.61 % 2.60 % 2.62 %
Total deposits and interest-bearing liabilities 0.25 % 0.26 % 0.27 % 0.29 % 0.29 % 0.31 %
 
Pinnacle Financial Partners capital ratios (8):
Stockholders' equity to total assets 13.3 % 13.3 % 13.2 % 13.3 % 13.0 % 13.2 %
Leverage 11.3 % 11.2 % 11.0 % 11.0 % 10.9 % 10.8 %
Tier one risk-based 12.1 % 12.2 % 12.1 % 12.2 % 11.8 % 12.0 %
Total risk-based 13.4 % 13.4 % 13.4 % 13.5 % 13.0 % 13.2 %
Tier one common equity to risk-weighted assets 10.6 % 10.6 % 10.5 % 10.5 % 10.1 % 10.2 %
Tangible common equity to tangible assets 9.6 % 9.5 % 9.3 % 9.3 % 9.0 % 9.0 %
Pinnacle Bank ratios:
Leverage 10.6 % 10.6 % 10.5 % 10.5 % 10.5 % 10.5 %
Tier one risk-based 11.4 % 11.5 % 11.5 % 11.7 % 11.3 % 11.6 %
Total risk-based 12.6 % 12.8 % 12.8 % 12.9 % 12.6 % 12.9 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
                       
                                       
(dollars in thousands, except per share data)

 

December
September June March December September
   

 

2014
    2014     2014     2014     2013     2013
 
Per share data:
Earnings - basic $ 0.54 0.52 0.49 0.47 0.45 0.43
Earnings - diluted $ 0.53 0.52 0.49 0.47 0.44 0.42
Common dividends per share $ 0.08 0.08 0.08 0.08 0.08 -
Book value per common share at quarter end (9) $ 22.46 21.93 21.47 20.88 20.55 20.27
Tangible common equity per common share $ 15.62 15.02 14.53 13.93 13.52 13.22
 
Weighted avg. common shares - basic 34,827,999 34,762,206 34,697,888 34,602,337 34,355,691 34,282,899
Weighted avg. common shares - diluted 35,292,319 35,155,224 35,081,702 34,966,600 34,765,424 34,606,567
Common shares outstanding 35,732,483 35,654,541 35,601,495 35,567,268 35,221,941 35,133,733
 
Investor information:
Closing sales price $ 39.54 36.10 39.48 37.49 32.53 29.81
High closing sales price during quarter $ 39.95 39.75 39.48 38.64 33.25 29.99
Low closing sales price during quarter $ 34.65 35.21 33.46 31.02 29.67 26.56
 
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 94,816 96,050 83,421 61,290 70,194 105,817
Gross fees (10) $ 2,797 2,256 2,461 1,780 1,729 2,294
Gross fees as a percentage of loans originated 2.95 % 2.35 % 2.95 % 2.90 % 2.46 % 2.17 %
Net gain on mortgage loans sold $ 1,374 1,353 1,669 1,235 1,113 1,326
Investment gains (losses) on sales, net (17) $ - 29 - - - (1,441 )
Brokerage account assets, at quarter-end (11) $ 1,695,238 1,658,237 1,680,619 1,611,232 1,560,349 1,445,461
Trust account managed assets, at quarter-end $ 764,802 720,071 687,772 613,440 605,324 576,190
Core deposits (12) $ 4,381,177 4,260,627 4,245,745 4,087,477 4,102,032 3,903,000
Core deposits to total funding (12) 84.8 % 84.6 % 85.2 % 84.8 % 85.5 % 84.3 %
Risk-weighted assets $ 5,233,329 5,049,592 4,924,884 4,730,907 4,803,942 4,557,124
Total assets per full-time equivalent employee $ 7,877 7,744 7,734 7,528 7,408 7,305
Annualized revenues per full-time equivalent employee $ 336.0 327.0 320.6 319.7 303.5 300.8
Annualized expenses per full-time equivalent employee $ 178.6 180.0 181.7 183.4 172.4 179.1
Number of employees (full-time equivalent) 764.0 757.5 748.5 744.0 751.0 738.0
Associate retention rate (13) 93.3 % 93.5 % 93.8 % 95.6 % 94.4 % 93.9 %
 
Selected economic information (in thousands) (14):
Nashville MSA nonfarm employment - November 2014 838.4 839.8 829.8 827.1 817.3 815.1
Knoxville MSA nonfarm employment - November 2014 343.7 342.4 342.2 338.0 334.2 335.6
Nashville MSA unemployment - November 2014 5.5 % 5.8 % 5.6 % 5.4 % 5.9 % 6.5 %
Knoxville MSA unemployment - November 2014 5.8 % 6.1 % 5.9 % 5.8 % 6.3 % 7.0 %
Nashville residential median home price - December 2014 $ 213.5 211.4 222.0 195.0 198.8 197.9
Nashville inventory of residential homes for sale - December 2014 (16) 7.6 9.9 10.6 9.4 8.2 10.2
 
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)       2014     2014     2014     2014     2013     2013
 
Tangible assets:
Total assets $ 6,018,248 5,865,703 5,788,792 5,600,933 5,563,776 5,391,201
Less: Goodwill (243,529 ) (243,533 ) (243,550 ) (243,568 ) (243,651 ) (243,808 )
Core deposit and other intangible assets   (2,893 )     (3,129 )     (3,365 )     (3,603 )     (3,841 )     (4,087 )
Net tangible assets $ 5,771,827       5,619,041       5,541,877       5,353,762       5,316,284       5,143,306  
 
Tangible equity:
Total stockholders' equity $ 802,693 781,934 764,382 742,497 723,708 712,216
Less: Goodwill (243,529 ) (243,533 ) (243,550 ) (243,568 ) (243,651 ) (243,808 )
Core deposit and other intangible assets   (2,893 )     (3,129 )     (3,365 )     (3,603 )     (3,841 )     (4,087 )
Net tangible common equity $ 556,271       535,272       517,467       495,326       476,216       464,321  
 
Ratio of tangible common equity to tangible assets   9.64 %     9.53 %     9.34 %     9.25 %     8.96 %     9.03 %
 
 
Average tangible equity:
Average stockholders' equity $ 796,338 774,032 757,089 740,743 722,919 705,275
Less: Average goodwill (243,531 ) (243,544 ) (243,559 ) (243,610 ) (243,729 ) (243,854 )
Core deposit and other intangible assets   (3,040 )     (3,278 )     (3,484 )     (3,722 )     (3,964 )     (4,211 )
Net average tangible common equity $ 549,767       527,210       510,046       493,411       475,226       457,210  
 
Return on average tangible common equity (1)   13.52 %     13.69 %     13.50 %     13.45 %     12.79 %     12.71 %
 
 
 
For the three months ended
December September June March December September
2014     2014     2014     2014     2013     2013
 
Net interest income $ 50,313 49,537 47,226 45,908 44,969 44,573
 
Noninterest income 14,384 12,888 12,598 12,732 12,488 11,387
Less: Investment (gains) losses on sales, net   -       (29 )     -       -       -       1,441  

Noninterest income excluding investment (gains) losses on sales, net
  14,384       12,859       12,598       12,732       12,488       12,828  

 

Total revenues excluding the impact of investment (gains) losses on sales, net
  64,697       62,396       59,824       58,644       57,457       57,401  
 
Noninterest expense 34,391 34,360 33,902 33,646 32,637 33,323
Less: Other real estate expense   (630 )     417       226       651       302       699  

 

Noninterest expense excluding the impact of other real estate expense
  35,021       33,943       33,676       32,995       32,335       32,624  
 
Adjusted pre-tax pre-provision income (15) $ 29,676       28,453       26,148       25,645       25,122       24,777  
 
 
Efficiency Ratio (4) 53.2 % 55.0 % 56.7 % 57.4 % 56.8 % 59.5 %
 
 
Total average assets $ 5,855,421       5,752,776       5,673,615       5,514,031       5,388,371       5,313,003  
 
Noninterest expense (excluding ORE expense) to avg. assets (1) 2.37 % 2.34 % 2.38 % 2.43 % 2.38 % 2.44 %
 
 
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.

Tier one common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of tier 1 capital as a percentage of total risk-weighted assets.
 
9. Book value per share computed by dividing total stockholders' equity less preferred stock and common stock warrants by common shares outstanding.
 
10. Amounts are included in the statement of operations in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.
 
11. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.
 
12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000.
The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.
 
13. Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.
 
14. Employment and unemployment data is from BERC- MTSU & Bureau of Labor Statistics. Labor force data is seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. Historical data is subject to update by the BERC- MTSU & Bureau of Labor Statistics. Historical data is presented based on the most recently reported data available by the BERC- MTSU & Bureau of Labor Statistics. The Nashville home data is from the Greater Nashville Association of Realtors.
 
15. Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments, net and non-credit related loan losses as well as other real estate owned expenses and FHLB restructuring charges.
 
16. Represents month's supply of homes currently listed with MLS based on current sales activity in the Nashville MSA.
 
17. Represents investment gains (losses) on sales and impairments, net occurring as a result of both credit losses and losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.
 
18. The dividend payout ratio is calculated as the sum of the annualized dividend rate divided by the trailing 12-months fully diluted earnings per share as of the dividend declaration date.
 

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