PNFP Reports Diluted Earnings Per Share Of $0.80 For 2Q 2017

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.80 for the quarter ended June 30, 2017, compared to net income per diluted common share of $0.73 for the quarter ended June 30, 2016, an increase of 9.6 percent. Net income per diluted common share was $1.62 for the six months ended June 30, 2017, compared to net income per diluted common share of $1.42 for the six months ended June 30, 2016, an increase of 14.1 percent.

Excluding pre-tax merger-related charges of $3.2 million and $3.9 million for the three and six months ended June 30, 2017, net income per diluted common share was $0.84 and $1.67, respectively, compared to $0.75 and $1.46 for the three and six months ended June 30, 2016, excluding merger-related charges, or an increase of 12.0 percent and 14.4 percent, respectively.

"Second quarter results continued to show very strong growth momentum," said M. Terry Turner, Pinnacle's president and chief executive officer. "Obviously, the most significant event impacting current and ongoing growth potential was the closing of our merger with BNC Bancorp on June 16, 2017. We are well underway in executing our integration process in terms of brand, technology and, more importantly, culture.

"Additionally, even in the midst of our merger and integration effort, during the second quarter we experienced significant organic loan growth in the legacy Tennessee franchise as well as the BNC franchise. In the Tennessee franchise, net loans increased $478 million during the second quarter, representing an annualized linked-quarter organic growth rate of 22.1 percent. Excluding the impact of fair value accounting, in the former BNC footprint net loans increased $190 million, representing an annualized organic growth rate of 16.4 percent."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
  • Revenues for the quarter ended June 30, 2017 were $141.7 million, an increase of $33.9 million, or 31.5 percent, from the quarter ended June 30, 2016.
  • Loans at June 30, 2017 were a record $14.76 billion, an increase of $6.12 billion from March 31, 2017 and $7.67 billion from June 30, 2016, reflecting year-over-year growth of 108.1 percent. Net loan growth included $5.64 billion attributable to the BNC acquisition, net of preliminary fair value accounting.
  • Deposits at June 30, 2017 were a record $15.76 billion, an increase of $6.48 billion from March 31, 2017 and $8.47 billion from June 30, 2016, reflecting year-over-year growth of 116.1 percent. Deposit growth included $6.14 billion attributable to the BNC acquisition. Excluding the acquired BNC deposits, annualized linked-quarter deposit growth for the legacy Pinnacle franchise approximated 14.0 percent when comparing balances as of June 30, 2017 to balances as of March 31, 2017.

"We are very proud of our associates who have continued to take market share in both the legacy Pinnacle and BNC footprints, contributing to our outstanding organic loan growth of approximately $668 million in the second quarter of 2017," Turner said. "We continue to hire revenue producers throughout the franchise, but importantly we are off to a great start in terms of hiring in the Carolinas and Virginia. Even with much organizational change, Rick Callicutt and his team added 14 revenue producers to their ranks during the first six months of 2017 and have many exciting recruiting opportunities on the horizon. Execution of our hiring plan has long been our principal strategic advantage and should be the key to our future growth plans as we build out our C&I platform in these very attractive banking markets in the Carolinas and Virginia."

FOCUSING ON PROFITABILITY:

  • Revenue per fully-diluted share was a record $2.64 for the quarter ended June 30, 2017, compared to $2.46 for the first quarter of 2017 and $2.57 for the second quarter of 2016.
  • Net interest margin was 3.68 percent for the second quarter of 2017, compared to 3.60 percent for the first quarter of 2017 and 3.72 percent for the same quarter last year.
    • Excluding the accretion from the application of fair value accounting for net loans acquired in previous mergers, the net interest margin in each respective period would have approximated 3.45 percent for the second quarter of 2017, compared to 3.39 percent and 3.50 percent for the first quarter of 2017 and the second quarter of 2016, respectively.
  • Return on average assets was 1.30 percent for the second quarter of 2017, compared to 1.41 percent for the first quarter of 2017 and 1.33 percent for the same quarter last year. Second quarter 2017 return on average tangible assets amounted to 1.38 percent, compared to 1.47 percent for the first quarter of 2017 and 1.39 percent for the same quarter last year.
    • Excluding merger-related charges in each respective period, return on average assets was 1.35 percent for the second quarter of 2017, compared to 1.42 percent for the first quarter of 2017 and 1.36 percent the second quarter of 2016, respectively. Excluding merger-related charges in each respective period, return on average tangible assets was 1.44 percent for the second quarter of 2017, compared to 1.48 percent for the first quarter of 2017 and 1.42 percent the second quarter of 2016, respectively.
  • Return on average equity for the second quarter of 2017 amounted to 8.40 percent, compared to 9.70 percent for the first quarter of 2017 and 9.92 percent for the same quarter last year. Second quarter 2017 return on average tangible equity amounted to 13.58 percent, compared to 14.74 percent for the first quarter of 2017 and 15.34 percent for the same quarter last year.
    • Excluding merger-related charges in each respective period, return on average tangible equity amounted to 14.19 percent for the second quarter of 2017, compared to 14.89 percent for the first quarter of 2017 and 15.64 percent for the second quarter of 2016.

"We continue to operate our firm at a high level of profitability and are pleased with our second quarter metrics," said Harold R. Carpenter, Pinnacle's chief financial officer. "With recent rate hikes and continued outsized loan growth, we are pleased that our core net interest margin experienced a 6 basis point increase over the last quarter. During the second quarter of 2017, accretion from fair value adjustments contributed approximately $6.4 million to our net interest income, compared to $5.0 million during the first quarter of 2017. Approximately $2.8 million of our accretion income was attributable to the BNC acquisition. At June 30, 2017, we had an estimated $172.7 million of remaining discount for the acquired BNC loans and $23.5 million of remaining discount related to the acquired loans from previous mergers.

"We believe that as our integration plans are achieved and with the full deployment of our merger synergy case, our profitability metrics will continue to improve over the next several quarters."

OTHER HIGHLIGHTS:
  • Revenues
    • Net interest income for the quarter ended June 30, 2017 was $106.6 million, compared to $88.8 million for the first quarter of 2017 and $75.0 million for the second quarter of 2016. Included in the second quarter 2017 net interest income was $12.4 million generated by the BNC franchise following the closing of the merger. Excluding that amount, the legacy Pinnacle franchise experienced a $5.5 million increase in net interest income between the first and second quarters of 2017, or 24.6 percent linked-quarter annualized growth.
    • Noninterest income for the quarter ended June 30, 2017 was $35.1 million, compared to $30.4 million for the first quarter of 2017 and $32.7 million for the second quarter of 2016. Included in the second quarter 2017 noninterest income was $1.7 million generated by BNC. Excluding that amount, the legacy Pinnacle franchise experienced a 38.8 percent annualized linked-quarter increase in noninterest income between the first and second quarters of 2017.
      • Net gains from the sale of residential mortgage loans were $4.7 million for the quarter ended June 30, 2017, compared to $4.2 million for both the first quarter of 2017 and the quarter ended June 30, 2016, resulting in a year-over-year growth rate of 10.6 percent.
      • Wealth management revenues, which include investment, trust and insurance services, were $6.2 million for the quarter ended June 30, 2017, compared to $6.4 million for the first quarter of 2017 and $5.2 million for the quarter ended June 30, 2016, resulting in a year-over-year growth rate of 20.5 percent.
      • Income from the firm's investment in Bankers Healthcare Group, Inc. (BHG) was $8.75 million for the quarter ended June 30, 2017, compared to $7.82 million for the quarter ended March 31, 2017 and $9.64 million for the second quarter last year.

"The second quarter of 2017 was a strong revenue quarter for our firm," Carpenter said. "Not only did we experience the impact of the mid-June merger with BNC, but we also began to experience lift in net interest income attributable to recent rate increases. Loan yields amounted to 4.66 percent during the second quarter, which was inclusive of 26 basis points of accretion income. This compares to loan yields of 4.49 percent in the first quarter of 2017, which included 23 basis points of accretion income.

"Income from our equity method investment in BHG resulted in revenues increasing by $932,000 between the first and second quarter of 2017, or 47.7 percent annualized linked-quarter growth. Second quarter 2017 revenues from BHG represent the second highest revenue quarter we've experienced since our partnership with BHG began in the first quarter of 2015. We remain very optimistic about BHG and anticipate continued growth for the remainder of this year."

  • Noninterest expense
    • Noninterest expense for the quarter ended June 30, 2017 was $71.8 million, compared to $62.1 million in the first quarter of 2017 and $55.9 million in the second quarter last year. Included in second quarter noninterest expense was $6.7 million of noninterest expense attributable to the BNC franchise's operations following the closing of the merger. The legacy Pinnacle franchise experienced a $3.0 million increase in noninterest expense between the first and second quarter of 2017, including $822,000 of increased merger-related charges.
      • Salaries and employee benefits were $43.7 million in the second quarter of 2017, compared to $38.4 million in the first quarter of 2017 and $34.3 million in the second quarter of last year, reflecting a year-over-year increase of 27.5 percent.
      • The efficiency ratio for the second quarter of 2017 decreased to 50.7 percent, compared to 52.1 percent for the first quarter of 2017. The ratio of noninterest expenses to average assets decreased to 2.16 percent for the second quarter of 2017 from 2.20 percent in the first quarter of 2017.
        • Excluding merger-related charges and other real estate owned (ORE) expense, the efficiency ratio was 48.4 percent for the second quarter of 2017, compared to 51.3 percent for the first quarter of 2017, and the ratio of noninterest expense to average assets was 2.06 percent, compared to 2.17 percent between the second quarter of 2017 and the first quarter of 2017, respectively.

"Due to our recent mergers as well as our continued rapid organic growth, we continue to believe that we have enhanced operating leverage available to us over the next several quarters," Carpenter said. "Excluding merger-related charges, we believe we will be able to maintain our expense base within or better than our current long-term targeted range. Our technology conversion plan is to convert the legacy Pinnacle systems to the BNC platform in November 2017, followed by combining the legacy BNC and PNFP data files in early first quarter 2018, which we believe will contribute to realization of our synergy case in early 2018. Our original target of annualized expense reduction in 2018 of slightly more than $40.0 million for the former BNC franchise appears intact at this time."
  • Asset quality
    • Nonperforming assets increased to 0.44 percent of total loans and ORE at June 30, 2017, compared to 0.36 percent at March 31, 2017 and 0.55 percent at June 30, 2016. Nonperforming assets increased to $65.4 million at June 30, 2017, compared to $31.3 million at March 31, 2017 and $39.0 million at June 30, 2016. Approximately $37.3 million of nonperforming assets were added in conjunction with the BNC merger.
    • The allowance for loan losses represented 0.42 percent of total loans at June 30, 2017, compared to 0.68 percent at March 31, 2017 and 0.87 percent at June 30, 2016. The impact of the application of purchase accounting to BNC's loan balances, which were recorded at fair value upon acquisition, resulted in a year-over-year reduction to the firm's ratio of allowance for loan losses to total loans of approximately 0.25 percent as of June 30, 2016.
      • The ratio of the allowance for loan losses to nonperforming loans was 154.0 percent at June 30, 2017, compared to 232.9 percent at March 31, 2017 and 181.8 percent at June 30, 2016.
      • Net charge-offs were $7.5 million for the quarter ended June 30, 2017, compared to $4.3 million for the quarter ended March 31, 2017 and $6.1 million for the quarter ended June 30, 2016. Annualized net charge-offs as a percentage of average loans for the quarter ended June 30, 2017 were 0.17 percent, compared to 0.20 percent for the first quarter of 2017 and 0.35 percent for the second quarter of 2016.
      • Provision for loan losses was $6.8 million in the second quarter of 2017, compared to $3.7 million in the first quarter of 2017 and $5.3 million in the second quarter of 2016.

"Overall, asset quality for our firm remains exceptional," Carpenter said. "During the second quarter, we continued to reduce our investment in non-prime consumer auto loans. Net charge-offs from the non-prime consumer auto portfolio were $1.9 million during the second quarter of 2017, compared to $2.2 million of net charge-offs in the first quarter of 2017. We have reduced portfolio balances in this portfolio from $66.9 million at Dec. 31, 2015 to $18.0 million at June 30, 2017 and anticipate continued reductions in this portfolio as we exit this business over the next several quarters."
  • Other Highlights
    • The firm incurred pre-tax merger-related charges of $3.2 million during the second quarter of 2017, primarily attributable to settlement of employment contracts, workforce engagement charges and other matters related to the merger with BNC. The firm expects to continue to incur charges associated with the BNC acquisition for the next several quarters.
    • On Jan. 1, 2017, Pinnacle adopted FASB Accounting Standards Update (ASU) 2016-09, Stock Compensation Improvements to Employee Share-Based Payment Activity, which represented a change in accounting for the tax effects related to vesting of common shares and the exercise of stock options previously granted to the firm's employees through its various equity compensation plans. This change resulted in a reduction in second quarter 2017 tax expense of $789,000, compared to a reduction in tax expense of $3.8 million in the first quarter of 2017.

BOARD OF DIRECTORS DECLARES DIVIDEND

On July 18, 2017, Pinnacle's Board of Directors approved a quarterly cash dividend of $0.14 per common share to be paid on Aug. 25, 2017 to common shareholders of record as of the close of business on Aug. 4, 2017. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle's Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on July 19, 2017 to discuss second quarter 2017 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 earned a place on Fortune's 2017 list of the 100 Best Companies to Work For in the U.S., and American Banker recognized Pinnacle as the sixth best bank to work for in the country in 2016.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $20.9 billion in assets as of June 30, 2017. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 11 primarily urban markets in Tennessee, the Carolinas and Virginia.

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

Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. The words "expect," "anticipate," "intend," "plan," "believe," "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 statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (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, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities', 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 in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina and Virginia, 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) a merger or acquisition, like Pinnacle Financial's merger with BNC; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors or otherwise to attract customers from other financial institutions; (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 changes to capital calculation methodologies and required capital maintenance levels; (xvii) risks associated with litigation, including the applicability of insurance coverage; (xviii) the risk of successful integration of the businesses Pinnacle Financial has recently acquired with its business; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxi) the possibility of increased compliance costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxii) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by the terms of our agreement with them; (xxiii) the possibility that the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets will exceed current estimates; (xxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxv) the risk that the cost savings and any revenue synergies from Pinnacle Financial's merger with BNC may not be realized or take longer than anticipated to be realized; (xxvi) disruption from Pinnacle Financial's merger with BNC with customers, suppliers, employee or other business partners relationships; (xxvii) the risk of successful integration of Pinnacle Financial's and BNC's businesses; (xxviii) the amount of the costs, fees, expenses and charges related to Pinnacle Financial's merger with BNC; (xxix) reputational risk and the reaction of the parties' customers, suppliers, employees or other business partners to Pinnacle Financial's merger with BNC; (xxx) the risk that the integration of Pinnacle Financial's and BNC's operations will be materially delayed or will be more costly or difficult than expected; (xxxi) the dilution caused by Pinnacle Financial's issuance of additional shares of its common stock in its merger with BNC; and (xxxii) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, net income, earnings per diluted share, efficiency ratio, core net interest margin, noninterest expense and the ratio of noninterest expense to average assets and noninterest expense to the sum of net interest income and noninterest income, in each case excluding the impact of expenses related to other real estate owned, gains or losses on sale of investments and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Bank's mergers with CapitalMark Bank & Trust, Magna Bank, Avenue Financial Holdings, Inc. and BNC, as well as Pinnacle Financial's and its bank subsidiary's investments in BHG. This release may also contain certain other non-GAAP capital ratios and performance measures. These non-GAAP financial measures exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, which Pinnacle Financial acquired on June 16, 2017, Avenue, which Pinnacle Financial acquired on July 1, 2016, Magna Bank which Pinnacle Bank acquired on September 1, 2015, CapitalMark Bank & Trust which Pinnacle Bank acquired on July 31, 2015, Mid-America Bancshares, Inc. which Pinnacle Financial acquired on November 30, 2007, Cavalry Bancorp, Inc., which Pinnacle Financial acquired on March 15, 2006 and other acquisitions which collectively are less material to the non-GAAP measure. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2017 versus certain periods in 2016 and to internally prepared projections.

 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
           
June 30,

2017
    December 31,

2016
    June 30,

2016
ASSETS
Cash and noninterest-bearing due from banks $ 121,804,437 $ 84,732,291 $ 77,817,212
Interest-bearing due from banks 416,980,586 97,529,713 390,839,578
Federal funds sold and other       1,383,416       3,124,302  
Cash and cash equivalents 538,785,023 183,645,420 471,781,092
 
Securities available-for-sale, at fair value 2,427,034,287 1,298,546,056 1,109,221,784

Securities held-to-maturity (fair value of $21,322,047, $25,233,254 and $29,092,450 June 30, 2017, December 31, 2016 and June 30, 2016, respectively)
21,163,360 25,251,316 28,511,599
Residential mortgage loans held-for-sale 90,275,468 47,710,120 53,118,706
Commercial loans held-for-sale 11,367,997 22,587,971 9,322,783
 
Loans 14,758,764,516 8,449,924,736 7,091,401,512
Less allowance for loan losses (61,944,494 )     (58,980,475 )     (61,411,537 )
Loans, net 14,696,820,022 8,390,944,261 7,029,989,975
 
Premises and equipment, net 258,037,159 88,904,145 78,800,120
Equity method investment 207,020,432 205,359,844 195,891,508
Accrued interest receivables 48,417,956 28,234,826 23,432,495
Goodwill 1,800,741,933 551,593,796 427,573,930

Core deposit and other intangible assets
60,963,513 15,104,038 8,820,668
Other real estate owned 24,805,764 6,089,804 5,005,642
Other assets 700,720,864       330,651,002       294,197,558  
Total assets $ 20,886,153,778       $ 11,194,622,599       $ 9,735,667,860  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 3,893,603,182 $ 2,399,191,152 $ 2,013,847,185
Interest-bearing 2,602,527,348 1,808,331,784 1,316,653,111
Savings and money market accounts 6,820,024,282 3,714,930,351 3,237,003,521
Time 2,441,319,823       836,853,761       725,322,534  
Total deposits 15,757,474,635 8,759,307,048 7,292,826,351
Securities sold under agreements to repurchase 205,008,077 85,706,558 73,316,880
Federal Home Loan Bank advances 725,230,449 406,304,187 783,240,425
Subordinated debt and other borrowings 465,419,408 350,768,050 229,713,860
Accrued interest payable 7,630,882 5,573,377 4,067,352
Other liabilities 110,063,488       90,267,267       90,349,182  
Total liabilities 17,270,826,939 9,697,926,487 8,473,514,050
 
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; 77,646,512 shares, 46,359,377 shares, and 42,184,120 shares, issued and outstanding at June 30, 2017, December 31, 2016 and June 30, 2016, respectively
77,646,512 46,359,377 42,184,120
Additional paid-in capital 3,100,154,656 1,083,490,728 889,468,015
Retained earnings 449,762,022 381,072,505 325,608,051
Accumulated other comprehensive (loss) income, net of taxes (12,236,351 )     (14,226,498 )     4,893,624  
Stockholders' equity 3,615,326,839       1,496,696,112       1,262,153,810  
Total liabilities and stockholders' equity $ 20,886,153,778       $ 11,194,622,599       $ 9,735,667,860  
 
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 Six months ended

June 30, 2017
 

March 31, 2017
 

June 30, 2016
 

June 30, 2017
 

June 30, 2016
Interest income:    
Loans, including fees $ 112,319,700 $ 93,217,947 $ 77,043,106 $ 205,537,647 $ 151,447,310
Securities
Taxable 8,265,225 6,433,088 4,571,876 14,698,313 9,038,710
Tax-exempt 2,235,517 1,677,581 1,443,017 3,913,098 2,936,774
Federal funds sold and other 922,796     814,317     703,706     1,737,113     1,313,293
Total interest income 123,743,238     102,142,933     83,761,705     225,886,171     164,736,087
 
Interest expense:
Deposits 10,993,942 8,118,914 5,073,567 19,112,856 9,989,130
Securities sold under agreements to repurchase 78,438 49,766 39,532 128,204 87,582

Federal Home Loan Bank advances and other borrowings
6,043,144     5,207,380     3,605,320     11,250,524     5,713,412
Total interest expense 17,115,524     13,376,060     8,718,419     30,491,584     15,790,124
Net interest income 106,627,714 88,766,873 75,043,286 195,394,587 148,945,963
Provision for loan losses 6,812,389     3,651,022     5,280,101     10,463,411     9,173,671
Net interest income after provision for loan losses 99,815,325 85,115,851 69,763,185 184,931,176 139,772,292
 
Noninterest income:
Service charges on deposit accounts 4,178,736 3,855,483 3,430,391 8,034,219 6,873,075
Investment services 3,110,088 2,821,834 2,499,719 5,931,922 4,845,319
Insurance sales commissions 1,461,160 1,858,890 1,192,827 3,320,050 2,898,686
Gains on mortgage loans sold, net 4,667,537 4,154,952 4,221,301 8,822,489 7,788,852
Investment gains on sales, net
Trust fees 1,677,079 1,705,279 1,491,955 3,382,358 3,072,567
Income from equity method investment 8,754,718 7,822,737 9,644,310 16,577,455 14,791,834
Other noninterest income 11,207,239     8,162,419     10,232,433     19,369,658     18,298,313
Total noninterest income 35,056,557     30,381,594     32,712,936     65,438,151     58,568,646
 
Noninterest expense:
Salaries and employee benefits 43,675,551 38,352,184 34,254,147 82,027,735 66,771,003
Equipment and occupancy 10,712,711 9,674,658 8,312,272 20,387,369 16,442,736
Other real estate, net 62,960 251,973 222,473 314,933 334,745
Marketing and other business development 2,126,693 1,879,206 1,537,843 4,005,899 2,801,204
Postage and supplies 1,122,251 1,196,445 1,049,842 2,318,696 2,006,929
Amortization of intangibles 1,471,568 1,196,129 846,615 2,667,697 1,719,830
Merger-related expenses 3,221,060 672,016 980,182 3,893,076 2,809,654
Other noninterest expense 9,404,755     8,830,765     8,727,393     18,235,520     17,108,362
Total noninterest expense 71,797,549     62,053,376     55,930,767     133,850,925     109,994,463
Income before income taxes 63,074,333 53,444,069 46,545,354 116,518,402 88,346,475
Income tax expense 19,987,812     13,791,022     15,758,582     33,778,834     29,594,439
Net income $ 43,086,521     $ 39,653,047     $ 30,786,772     $ 82,739,568     $ 58,752,036
Per share information:
Basic net income per common share $ 0.81     $ 0.83     $ 0.75     $ 1.64     $ 1.44
Diluted net income per common share $ 0.80     $ 0.82     $ 0.73     $ 1.62     $ 1.42
Weighted average shares outstanding:
Basic 53,097,776 48,022,342 41,274,450 50,574,079 40,678,669
Diluted 53,665,925 48,517,920 41,974,483 51,105,996 41,411,248
 
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) June March December September June March
2017   2017   2016   2016   2016   2016
 
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans $ 6,387,372 3,181,584 3,193,496 2,991,940 2,467,219 2,340,720
Consumer real estate - mortgage loans 2,552,927 1,196,375 1,185,917 1,185,966 1,068,620 1,042,369
Construction and land development loans 1,772,799 1,015,127 912,673 930,230 816,681 764,079
Commercial and industrial loans 3,688,357 2,980,840 2,891,710 2,873,643 2,492,016 2,434,656
Consumer and other 357,310 268,106 266,129 259,241 246,866 246,106
Total loans 14,758,765 8,642,032 8,449,925 8,241,020 7,091,402 6,827,930
Allowance for loan losses (61,944 ) (58,350 ) (58,980 ) (60,249 ) (61,412 ) (62,239 )
Securities 2,448,198 1,604,774 1,323,797 1,250,357 1,137,733 1,048,419
Total assets 20,886,154 11,724,601 11,194,623 10,978,390 9,735,668 9,261,387
Noninterest-bearing deposits 3,893,603 2,508,680 2,399,191 2,369,225 2,013,847 2,026,550
Total deposits 15,757,475 9,280,597 8,759,307 8,670,146 7,292,826 7,080,212
Securities sold under agreements to repurchase 205,008 71,157 85,707 84,317 73,317 62,801
FHLB advances 725,230 181,264 406,304 382,338 783,240 616,290
Subordinated debt and other borrowings 465,419 350,849 350,768 262,507 229,714 209,751
Total stockholders' equity 3,615,327 1,723,075 1,496,696 1,475,644 1,262,154 1,228,780
 
Balance sheet data, quarterly averages:
Total loans $ 9,817,139 8,558,267 8,357,201 8,232,963 6,997,592 6,742,054
Securities 1,798,334 1,440,917 1,265,096 1,232,973 1,064,060 993,675
Total earning assets 11,885,118 10,261,974 9,884,701 9,794,094 8,362,657 8,018,596
Total assets 13,335,359 11,421,654 11,037,555 10,883,547 9,305,941 8,851,978
Noninterest-bearing deposits 2,746,499 2,434,875 2,445,157 2,304,533 2,003,523 1,960,083
Total deposits 10,394,267 9,099,472 8,791,206 8,454,424 7,093,349 7,037,014
Securities sold under agreements to repurchase 99,763 79,681 82,415 87,067 65,121 69,129
FHLB advances 399,083 212,951 307,039 583,724 653,750 383,131
Subordinated debt and other borrowings 375,249 355,082 319,790 266,934 225,240 162,575
Total stockholders' equity 2,057,505 1,657,072 1,493,684 1,442,440 1,247,762 1,188,153
 
Statement of operations data, for the three months ended:
Interest income $ 123,743 102,143 101,493 97,380 83,762 80,974
Interest expense 17,116     13,376     12,080     10,745     8,718     7,072  
Net interest income 106,627 88,767 89,413 86,635 75,044 73,902
Provision for loan losses 6,812     3,651     3,046     6,108     5,280     3,894  
Net interest income after provision for loan losses 99,815 85,116 86,367 80,527 69,764 70,008
Noninterest income 35,057 30,382 30,743 31,692 32,713 25,856
Noninterest expense 71,798     62,054     62,765     63,526     55,931     54,064  
Income before taxes 63,074 53,444 54,345 48,693 46,546 41,800
Income tax expense 19,988     13,791     18,248     16,316     15,759     13,836  
Net income $ 43,086     39,653     36,097     32,377     30,787     27,964  
 
Profitability and other ratios:
Return on avg. assets (1) 1.30 % 1.41 % 1.30 % 1.18 % 1.33 % 1.27 %
Return on avg. equity (1) 8.40 % 9.70 % 9.61 % 8.93 % 9.92 % 9.47 %
Return on avg. tangible common equity (1) 13.58 % 14.74 % 15.49 % 14.47 % 15.34 % 15.04 %
Dividend payout ratio (17) 18.01 % 18.67 % 19.31 % 19.93 % 20.90 % 21.62 %
Net interest margin (1) (2) 3.68 % 3.60 % 3.72 % 3.60 % 3.72 % 3.78 %
Noninterest income to total revenue (3) 24.74 % 25.50 % 25.59 % 26.78 % 30.36 % 25.92 %
Noninterest income to avg. assets (1) 1.05 % 1.08 % 1.11 % 1.16 % 1.41 % 1.17 %
Noninterest exp. to avg. assets (1) 2.16 % 2.20 % 2.26 % 2.32 % 2.42 % 2.46 %

Noninterest expense (excluding ORE expenses, and merger-related charges) to avg. assets (1)
2.06 % 2.17 % 2.14 % 2.11 % 2.37 % 2.37 %
Efficiency ratio (4) 50.67 % 52.08 % 52.24 % 53.69 % 51.90 % 54.20 %
Avg. loans to avg. deposits 94.45 % 94.05 % 95.06 % 97.38 % 98.65 % 95.81 %
Securities to total assets 11.72 % 13.69 % 11.82 % 11.39 % 11.69 % 11.32 %
 
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
June 30, 2017 June 30, 2016

Average Balances
  Interest  

Rates/ Yields

Average Balances
  Interest  

Rates/ Yields
Interest-earning assets        
Loans (1) $ 9,817,139 $ 112,320 4.66 % $ 6,997,592 $ 77,043 4.53 %
Securities
Taxable 1,487,806 8,265 2.23 % 880,976 4,572 2.09 %
Tax-exempt (2) 310,528 2,236 3.87 % 183,084 1,443 4.25 %
Federal funds sold and other 269,645     923     1.37 % 301,005     704     0.94 %
Total interest-earning assets 11,885,118 $ 123,744     4.21 % 8,362,657 $ 83,762     4.06 %
Nonearning assets
Intangible assets 784,603 440,504
Other nonearning assets 665,638   502,780  
Total assets $ 13,335,359   $ 9,305,941  
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 2,035,607 $ 2,527 0.50 % $ 1,352,898 $ 904 0.27 %
Savings and money market 4,470,577 5,997 0.54 % 3,085,734 3,019 0.39 %
Time 1,141,584     2,470     0.87 % 651,194     1,151     0.71 %
Total interest-bearing deposits 7,647,768 10,994 0.58 % 5,089,826 5,074 0.40 %
Securities sold under agreements to repurchase 99,763 78 0.32 % 65,121 40 0.24 %
Federal Home Loan Bank advances 399,083 1,485 1.49 % 653,750 1,256 0.77 %
Subordinated debt and other borrowings 375,249     4,560     4.87 % 225,240     2,348     4.19 %
Total interest-bearing liabilities 8,521,863 17,117 0.81 % 6,033,937 8,718 0.58 %
Noninterest-bearing deposits 2,746,499           2,003,523          
Total deposits and interest-bearing liabilities 11,268,362 $ 17,117     0.61 % 8,037,460 $ 8,718     0.44 %
Other liabilities 9,492 20,719
Stockholders' equity 2,057,505   1,247,762  
Total liabilities and stockholders' equity $ 13,335,359   $ 9,305,941  
Net interest income $ 106,627   $ 75,044  
Net interest spread (3) 3.40 % 3.48 %
Net interest margin (4) 3.68 % 3.72 %
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended June 30, 2017 would have been 3.60% compared to a net interest spread of 3.62% for the quarter ended June 30, 2016.
(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) Six months ended Six months ended
June 30, 2017 June 30, 2016

Average Balances
  Interest  

Rates/ Yields

Average Balances
  Interest  

Rates/ Yields
Interest-earning assets        
Loans (1) $ 9,191,181 $ 205,538 4.58 % $ 6,869,823 $ 151,447 4.51 %
Securities
Taxable 1,346,093 14,698 2.20 % 845,945 9,039 2.15 %
Tax-exempt (2) 274,519 3,913 3.85 % 182,923 2,937 4.33 %
Federal funds sold and other

266,533
    1,737     1.31 % 291,782     1,313     0.91 %
Total interest-earning assets 11,078,326 $ 225,886     4.14 % 8,190,473 $ 164,736     4.08 %
Nonearning assets
Intangible assets 676,015 440,485
Other nonearning assets 629,450   447,996  
Total assets $ 12,383,791   $ 9,078,954  
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest checking $ 1,977,291 $ 4,406 0.45 % $ 1,378,931 $ 1,835 0.27 %
Savings and money market 4,187,024 10,450 0.50 % 3,041,660 5,972 0.39 %
Time 994,583     4,257     0.86 % 662,788     2,182     0.66 %
Total interest-bearing deposits 7,158,898 19,113 0.54 % 5,083,379 9,989 0.40 %
Securities sold under agreements to repurchase 89,777 128 0.29 % 67,125 88 0.26 %
Federal Home Loan Bank advances 306,531 2,389 1.57 % 518,440 1,792 0.70 %
Subordinated debt and other borrowings 371,222     8,861     4.81 % 193,904     3,921     4.07 %
Total interest-bearing liabilities 7,926,428 30,491 0.78 % 5,862,848 15,790 0.54 %
Noninterest-bearing deposits 2,591,548           1,981,803          
Total deposits and interest-bearing liabilities 10,517,976 $ 30,491     0.58 % 7,844,651 $ 15,790     0.40 %
Other liabilities 7,419 16,346
Stockholders' equity 1,858,396   1,217,957  
Total liabilities and stockholders' equity $ 12,383,791   $ 9,078,954  
Net interest income $ 195,395   $ 148,946  
Net interest spread (3) 3.37 % 3.53 %
Net interest margin (4) 3.64 % 3.75 %
 
(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 six months ended June 30, 2017 would have been 3.56% compared to a net interest spread of 3.67% for the six months ended June 30, 2016.
(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
             
(dollars in thousands) June March December September June March
2017   2017   2016   2016   2016   2016
 
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 40,217 25,051 27,577 28,487 33,785 42,524

Other real estate (ORE) and other nonperforming assets (NPAs)
  25,153     6,235     6,090     5,656     5,183     5,338  
Total nonperforming assets   $ 65,370     31,286     33,667     34,143     38,968     47,862  
Past due loans over 90 days and still accruing interest $ 1,691 1,110 1,134 2,093 1,623 4,556
Troubled debt restructurings (5) $ 14,248 14,591 15,009 8,503 9,861 9,950
Net loan charge-offs $ 7,499 4,282 4,314 7,271 6,108 7,087
Allowance for loan losses to nonaccrual loans 154.0 % 232.9 % 213.9 % 211.5 % 181.8 % 146.4 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.20 % 0.17 % 0.26 % 0.24 % 0.33 % 0.32 %
Potential problem loans (6) 1.26 % 1.27 % 1.36 % 1.13 % 1.38 % 1.65 %
Allowance for loan losses 0.42 % 0.68 % 0.70 % 0.73 % 0.87 % 0.91 %

Nonperforming assets to total loans, ORE and other NPAs
0.44 % 0.36 % 0.40 % 0.41 % 0.55 % 0.70 %
Nonperforming assets to total assets 0.31 % 0.27 % 0.30 % 0.31 % 0.40 % 0.52 %
Classified asset ratio (Pinnacle Bank) (8) 14.2 % 12.9 % 16.4 % 15.2 % 19.3 % 24.2 %
Annualized net loan charge-offs to avg. loans (7) 0.17 % 0.20 % 0.21 % 0.35 % 0.35 % 0.42 %
Wtd. avg. commercial loan internal risk ratings (6) 4.5 4.5 4.5 4.6 4.5 4.5
 
Interest rates and yields:
Loans 4.66 % 4.49 % 4.60 % 4.43 % 4.53 % 4.49 %
Securities 2.51 % 2.44 % 2.26 % 2.29 % 2.46 % 2.62 %
Total earning assets 4.21 % 4.06 % 4.11 % 3.98 % 4.06 % 4.09 %
Total deposits, including non-interest bearing 0.42 % 0.36 % 0.33 % 0.31 % 0.29 % 0.28 %
Securities sold under agreements to repurchase 0.32 % 0.25 % 0.22 % 0.23 % 0.24 % 0.28 %
FHLB advances 1.49 % 1.72 % 1.38 % 0.87 % 0.77 % 0.56 %
Subordinated debt and other borrowings 4.87 % 4.92 % 4.56 % 4.15 % 4.19 % 3.89 %
Total deposits and interest-bearing liabilities 0.61 % 0.56 % 0.51 % 0.46 % 0.44 % 0.37 %
 
Pinnacle Financial Partners capital ratios (8):
Stockholders' equity to total assets 17.3 % 14.7 % 13.4 % 13.4 % 13.0 % 13.3 %
Common equity Tier one 9.5 % 9.8 % 7.9 % 7.6 % 7.9 % 7.8 %
Tier one risk-based 9.5 % 10.6 % 8.6 % 8.4 % 8.8 % 8.7 %
Total risk-based 12.6 % 13.7 % 11.9 % 10.5 % 11.0 % 11.0 %
Leverage 14.5 % 10.3 % 8.6 % 8.3 % 8.7 % 8.8 %
Tangible common equity to tangible assets 9.2 % 10.4 % 8.8 % 8.7 % 8.9 % 8.9 %

Pinnacle Bank ratios:
Common equity Tier one 11.0 % 11.1 % 9.3 % 8.6 % 8.4 % 8.3 %
Tier one risk-based 11.0 % 11.1 % 9.3 % 8.6 % 8.4 % 8.3 %
Total risk-based 12.1 % 12.9 % 11.2 % 10.5 % 10.6 % 10.6 %
Leverage 16.7 % 10.9 % 9.2 % 8.6 % 8.3 % 8.4 %

Construction and land development loans as a percent of total capital (20)
85.1 % 75.2 % 80.3 % 87.9 % 89.7 % 86.5 %

Non-owner occupied commercial real estate and multi-family as a percent of total capital (20)
286.4 % 220.9 % 256.0 % 265.5 % 253.9 % 242.5 %
 
Per share data:
Earnings - basic $ 0.81 0.83 0.79 0.71 0.75 0.70
Earnings - diluted $ 0.80 0.82 0.78 0.71 0.73 0.68
Common dividends per share $ 0.14 0.14 0.14 0.14 0.14 0.14
Book value per common share at quarter end (9) $ 46.56 34.61 32.28 31.97 29.92 29.26
Tangible book value per common share at quarter end (9) $ 22.58 23.25 20.06 19.69 19.58 18.75
 
Investor information:
Closing sales price on last trading day of quarter $ 62.80 66.45 69.30 54.08 48.85 49.06
High closing sales price during quarter $ 69.10 71.05 71.15 57.26 51.73 51.32
Low closing sales price during quarter $ 60.00 66.45 49.70 47.44 45.15 44.56
 
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) June March December September June March
2017   2017   2016   2016   2016   2016
 
Other information:
Gains on mortgage loans sold:
Mortgage loan sales:
Gross loans sold $ 261,981 160,740 221,126 214,394 198,239 163,949
Gross fees (10) $ 7,361 4,427 6,535 6,702 5,530 4,049
Gross fees as a percentage of loans originated 2.81 % 2.75 % 2.96 % 3.13 % 2.79 % 2.47 %
Net gain on mortgage loans sold $ 4,668 4,155 2,869 5,097 4,221 3,568
Investment gains on sales of securities, net (16) $ 395
Brokerage account assets, at quarter end (11) $ 2,815,501 2,280,355 2,198,334 2,090,316 1,964,769 1,812,221
Trust account managed assets, at quarter end $ 1,804,811 1,011,964 1,002,742 978,356 953,592 1,130,271
Core deposits (12) $ 13,529,398 8,288,247 7,834,973 7,714,552 6,591,063 6,432,388
Core deposits to total funding (12) 78.9 % 83.4 % 81.6 % 82.1 % 78.7 % 80.7 %
Risk-weighted assets $ 17,285,264 10,489,944 10,210,711 10,020,690 8,609,968 8,304,164
Total assets per full-time equivalent employee $ 9,398 9,630 9,491 9,323 9,176 8,616
Annualized revenues per full-time equivalent employee $ 255.7 396.9 405.3 399.8 408.5 373.2
Annualized expenses per full-time equivalent employee $ 129.6 206.7 211.7 214.6 212.0 202.3
Number of employees (full-time equivalent) 2,222.5 1,217.5 1,179.5 1,177.5 1,061.0 1,075.0
Associate retention rate (13) 87.1 % 92.9 % 92.7 % 93.9 % 95.2 % 94.0 %
 
Selected economic information (in thousands) (14) :
Charlotte MSA nonfarm employment - May 1,177.4 1,170.6 1,167.7 1,160.9 1,148.1 1,137.6
Nashville MSA nonfarm employment - May 977.7 977.1 968.5 957.8 947.7 941.7
Memphis MSA nonfarm employment - May 643.5 646.4 644.7 641.3 637.2 637.0
Raleigh MSA nonfarm employment - May 615.1 612.0 609.3 606.6 601.0 595.5
Knoxville MSA nonfarm employment - May 393.4 393.8 395.5 394.1 393.1 391.4
Greensboro MSA nonfarm employment - May 361.9 362.5 360.8 358.4 357.8 357.0
Charleston MSA nonfarm employment - May 353.0 354.2 350.9 349.4 346.0 343.0
Winston-Salem MSA nonfarm employment - May 261.1 263.2 261.6 262.1 261.3 260.7
Chattanooga MSA nonfarm employment - May 256.9 256.3 254.6 252.2 252.0 250.1
Roanoke MSA nonfarm employment - May 163.1 164.1 162.4 162.4 162.3 162.1
Greenville MSA nonfarm employment - May 79.0 78.9 79.1 79.5 79.2 78.6
 
Charlotte MSA unemployment - May 4.2 % 4.5 % 4.7 % 4.8 % 4.6 % 4.9 %
Nashville MSA unemployment - May 2.6 % 3.7 % 4.1 % 4.1 % 3.7 % 3.6 %
Memphis MSA unemployment - May 4.1 % 5.0 % 5.5 % 5.6 % 5.2 % 5.1 %
Raleigh MSA unemployment - May 3.9 % 4.2 % 4.4 % 4.4 % 4.2 % 4.4 %
Knoxville MSA unemployment - May 3.2 % 4.5 % 4.9 % 4.9 % 4.4 % 4.3 %
Greensboro MSA unemployment - May 4.7 % 5 % 5.2 % 5.3 % 5 % 5.3 %
Charleston MSA unemployment - May 3.4 % 3.7 % 3.7 % 3.9 % 4.1 % 4.6 %
Winston-Salem MSA unemployment - May 4.3 % 4.6 % 4.9 % 4.9 % 4.6 % 4.9 %
Chattanooga MSA unemployment - May 3.7 % 4.6 % 5.2 % 5.3 % 4.7 % 4.8 %
Roanoke MSA unemployment - May 3.9 % 3.6 % 4 % 4.2 % 3.8 % 3.8 %
Greenville MSA unemployment - May 4.9 % 5.3 % 5.6 % 5.5 % 5.2 % 5.6 %
 
Charlotte, NC residential median home price - May $ 284 265 254 247 257 251
Nashville, TN residential median home price - May $ 349 335 319 303 314 299
Memphis, TN residential median home price - May $ 75 69 71 75 72 57
Raleigh, NC residential median home price - May $ 314 299 280 275 265 250
Knoxville, TN residential median home price - May $ 214 195 179 179 175 159
Greensboro, NC residential median home price - May $ 199 191 180 174 185 175
Charleston, SC residential median home price - May $ 383 388 369 369 365 359
Winston-Salem, NC residential median home price - May $ 172 167 155 152 158 153
Chattanooga, TN residential median home price - May $ 198 194 184 174 173 159
Roanoke, VA residential median home price - May $ 173 161 149 160 159 150
Greenville, NC residential median home price - May $ 264 279 265 250 249 239
 
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
             
(dollars in thousands , except per share data) June March December September June March
  2017   2017   2016   2016   2016   2016
Net interest income $ 106,627 88,767 89,413 86,635 75,044 73,902
 
Noninterest income 35,057 30,382 30,743 31,692 32,713 25,856
Less: Investment (gains) and losses on sales, net           (395 )            
Noninterest income excluding investment (gains) and losses on sales of securities, net   35,057     30,382     30,348     31,692     32,713     25,856  

Total revenues excluding the impact of investment (gains) and losses on sales of securities, net
  141,684     119,149     119,761     118,327     107,757     99,758  
 
Noninterest expense 71,798 62,054 62,765 63,526 55,931 54,064
Less: Other real estate expense 63 252 44 17 222 112
Merger-related charges   3,221     672     3,264     5,672     980     1,830  
Noninterest expense excluding the impact of other real estate expense and merger-related charges   68,514     61,130     59,457     57,837     54,729     52,122  
 
Adjusted pre-tax pre-provision income (15) $ 73,170     58,019     60,304     60,490     53,028     47,636  
 
Efficiency ratio (4) 50.67 % 52.08 % 52.24 % 53.69 % 51.90 % 54.20 %

Adjustment due to investment gains and losses, ORE expense and merger-related charges
  (2.30 %)   (0.77 %)   (2.59 %)   (4.81 %)   (1.12 %)   (2.00 %)

Efficiency ratio (excluding investment gains and losses, ORE expense, and merger-related charges)
  48.37 %   51.31 %   49.65 %   48.88 %   50.79 %   52.25 %
 
Total average assets $ 13,335,359     11,421,654     11,037,555     10,883,547     9,305,941     8,851,978  
 
Noninterest expense to avg. assets 2.16 % 2.20 % 2.26 % 2.32 % 2.42 % 2.46 %
Adjustment due to ORE expenses and merger-related charges   (0.10 %)   (0.03 %)   (0.12 %)   (0.21 %)   (0.05 %)   (0.09 %)

Noninterest expense (excluding ORE expense, and merger-related charges) to avg. assets (1)
  2.06 %   2.17 %   2.14 %   2.11 %   2.37 %   2.37 %
 
Equity Method Investment (18)
Fee income from BHG, net of amortization $ 8,755 7,823 8,136 8,475 9,644 5,148
Funding cost to support investment   1,844     1,775     1,797     1,760     1,732     980  
Pre-tax impact of BHG 6,911 6,048 6,339 6,715 7,912 4,168
Income tax expense at statutory rates   2,711     2,373     2,487     2,634     3,104     1,635  
Earnings attributable to BHG $ 4,200     3,675     3,852     4,081     4,808     2,533  
 
Basic earnings per share attributable to BHG 0.08 0.08 0.08 0.09 0.12 0.06
Diluted earnings per share attributable to BHG 0.08 0.08 0.08 0.09 0.11 0.06
 
Net income $ 43,086 39,653 36,097 32,377 30,787 27,965
Merger-related charges 3,221 672 3,264 5,672 980 1,830
Tax effect on merger-related charges (19)   (1,264 )   (264 )   (1,281 )   (2,225 )   (385 )   (718 )
Net income less merger-related charges $ 45,043     40,061     38,080     35,824     31,382     29,077  
 
Basic earnings per share $ 0.81 0.83 0.79 0.71 0.75 0.70

Adjustment to basic earnings per share due to merger-related charges
  0.04     0.01     0.05     0.08     0.01     0.03  
Basic earnings per share excluding merger-related charges $ 0.85     0.84     0.84     0.79     0.76     0.73  
 
Diluted earnings per share $ 0.80 0.82 0.78 0.71 0.73 0.68

Adjustment to diluted earnings per share due to merger-related charges
  0.04     0.01     0.05     0.07     0.02     0.03  
Diluted earnings per share excluding merger-related charges $ 0.84     0.83     0.83     0.78     0.75     0.71  
 
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
             
(dollars in thousands , except per share data) June March December September June March
  2017   2017   2016   2016   2016   2016
 
Return on average assets 1.30 % 1.41 % 1.30 % 1.18 % 1.33 % 1.27 %
Adjustment due to merger-related charges   0.05 %   0.01 %   0.07 %   0.13 %   0.03 %   0.05 %
Return on average assets (excluding

merger-related charges) (1)
  1.35 %   1.42 %   1.37 %   1.31 %   1.36 %   1.32 %
 
Tangible assets:
Total assets $ 20,886,154 11,724,601 11,194,623 10,978,390 9,735,668 9,261,387
Less: Goodwill (1,800,742 ) (551,546 ) (551,594 ) (550,580 ) (427,574 ) (431,841 )
Core deposit and other intangible assets   (60,964 )   (13,908 )   (15,104 )   (16,241 )   (8,821 )   (9,667 )
Net tangible assets $ 19,024,448     11,159,147     10,627,925     10,411,569     9,299,273     8,819,879  
 
Tangible equity:
Total stockholders' equity $ 3,615,327 1,723,075 1,496,696 1,475,644 1,262,154 1,228,780
Less: Goodwill (1,800,742 ) (551,546 ) (551,594 ) (550,580 ) (427,574 ) (431,841 )
Core deposit and other intangible assets   (60,964 )   (13,908 )   (15,104 )   (16,241 )   (8,821 )   (9,667 )
Net tangible common equity $ 1,753,621     1,157,621     929,998     908,823     825,759     787,272  
 
Ratio of tangible common equity to tangible assets   9.22 %   10.37 %   8.75 %   8.73 %   8.88 %   8.93 %
 
 
Average tangible assets:
Average assets $ 13,335,359 11,421,654 11,037,555 10,883,547 9,305,941 8,851,978
Less: Average goodwill (760,646 ) (551,548 ) (551,042 ) (541,153 ) (431,155 ) (430,228 )
Core deposit and other intangible assets   (23,957 )   (14,674 )   (15,724 )   (11,296 )   (9,367 )   (10,237 )
Net average tangible assets $ 12,550,756     10,855,432     10,470,789     10,331,098     8,865,419     8,411,513  
 
Return on average assets 1.30 % 1.41 % 1.30 % 1.18 % 1.33 % 1.27 %

Adjustment due to goodwill, core deposit and other intangible assets
  0.08 %   0.06 %   0.08 %   0.08 %   0.06 %   0.06 %
Return on average tangible assets 1.38 % 1.47 % 1.38 % 1.26 % 1.39 % 1.33 %
Adjustment due to merger-related charges   0.06 %   0.01 %   0.08 %   0.13 %   0.03 %   0.06 %

Return on average tangible assets (excluding merger-related charges)
  1.44 %   1.48 %   1.46 %   1.39 %   1.42 %   1.39 %
 
Average tangible equity:
Average stockholders' equity $ 2,057,505 1,657,072 1,493,684 1,442,440 1,247,762 1,188,153
Less: Average goodwill (760,646 ) (551,548 ) (551,042 ) (541,153 ) (431,155 ) (430,228 )
Core deposit and other intangible assets   (23,957 )   (14,674 )   (15,724 )   (11,296 )   (9,367 )   (10,237 )
Net average tangible common equity $ 1,272,902     1,090,850     926,918     889,991     807,240     747,688  
 
Return on average common equity 8.40 % 9.70 % 9.61 % 8.93 % 9.92 % 9.47 %

Adjustment due to goodwill, core deposit and other intangible assets
  5.18 %   5.04 %   5.88 %   5.54 %   5.42 %   5.57 %
Return on average tangible common equity (1) 13.58 % 14.74 % 15.49 % 14.47 % 15.34 % 15.04 %
Adjustment due to merger-related charges   0.61 %   0.15 %   0.85 %   1.54 %   0.30 %   0.60 %
Return on average tangible common equity

(excluding merger-related charges)
  14.19 %   14.89 %   16.34 %   16.01 %   15.64 %   15.64 %
 
Total average assets $ 13,335,359     11,421,654     11,037,555     10,883,547     9,305,941     8,851,978  
 
Net interest margin 3.68 % 3.60 % 3.72 % 3.60 % 3.72 % 3.78 %
Adjustment due to fair value   (0.23 %)   (0.21 %)   (0.32 %)   (0.21 %)   (0.22 %)   (0.20 %)
Core net interest margin   3.45 %   3.39 %   3.40 %   3.39 %   3.50 %   3.58 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
 
1. Ratios are presented on an annualized basis.
 
2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.
 
3. Total revenue is equal to the sum of net interest income and noninterest income.
 
4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
 
5. Troubled debt prepayments include loans where the company, as a result of the borrower's financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.
 

6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A "1" risk rating is assigned to credits that exhibit Excellent risk characteristics, "2" exhibit Very Good risk characteristics, "3" Good, "4" Satisfactory, "5" Acceptable or Average, "6" Watch List, "7" Criticized, "8" Classified or Substandard, "9" Doubtful and "10" Loss (which are charged-off immediately). Additionally, loans rated "8" or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings. Data presented represents legacy Pinnacle portfolio at period end date.
 
7. Annualized net loan charge-offs to average loans ratios are computed by annualizing quarter-to-date net loan charge-offs and dividing the result by average loans for the quarter-to-date period.
 
8. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:
 
Equity to total assets - End of period total stockholders' equity as a percentage of end of period assets.
 
Tangible common equity to total assets - End of period total stockholders' equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.
 
Leverage - Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
 
Tier one risk-based - Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
 
Total risk-based - Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
 
Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.
 
Tier one common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of Tier 1 capital as a percentage of total risk-weighted assets.
 
9. Book value per share computed by dividing total stockholders' equity by common shares outstanding.
 
10. Amounts are included in the statement of operations in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.
 
11. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.
 
12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.
 
13. Associate retention rate is computed by dividing the number of associates employed at quarter end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter end. Associate retention rate does not include associates at acquired institutions displaced by merger.
 

14. Employment and unemployment data is from the Federal Reserve Bank of St. Louis' FRED Economic Data reporting. All data has been 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 Federal Reserve Bank of St. Louis. Historical data is presented based on the most recently reported data available by the Federal Reserve Bank of St. Louis. Area home data is from www.zillow.com and represents median list price for single family homes.
 
15. Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments of securities, net, as well as other real estate owned expenses and merger-related charges.
 
16. 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.
 
17. 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.
 
18. Earnings from equity method investment includes the impact of the issuance of subordinated debt as well as the funding costs of the overall franchise. Income tax expense is calculated using statutory tax rates.
 
19. Tax effect calculated using the blended statutory rate of 39.23% for all periods presented.
 
20. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

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Copyright Business Wire 2010

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