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8-K - PINNACLE FINANCIAL PARTNERS INC. 8-K 3-31-14 - PINNACLE FINANCIAL PARTNERS INCform8-k.htm





FOR IMMEDIATE RELEASE

 
MEDIA CONTACT:
Nikki Klemmer, 615-743-6132
 
FINANCIAL CONTACT:
Harold Carpenter, 615-744-3742
 
WEBSITE:
www.pnfp.com

PNFP REPORTS FULLY DILUTED EPS UP 20.5% OVER SAME QUARTER LAST YEAR
Return on average assets increases to 1.20 percent

NASHVILLE, Tenn., April 14, 2014 – Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) today reported net income per fully diluted common share of $0.47 for the quarter ended March 31, 2014, compared to net income per fully diluted common share of $0.39 for the quarter ended March 31, 2013, an increase of 20.5 percent.
"First quarter was another strong quarter of execution against our targets for soundness, profitability and growth," said M. Terry Turner, Pinnacle's president and chief executive officer. "At 0.09 percent, the annualized rate of net charge-offs was back to our pre-recession levels. Our return on average assets of 1.20 percent was an all-time high. Average loans outstanding during the first quarter were also at an all-time high, increasing at an annualized growth rate of approximately 15 percent during the quarter."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
· Loans at March 31, 2014 were a record $4.182 billion, an increase of $37.2 million from Dec. 31, 2013, and $409.3 million from March 31, 2013, reflecting year-over-year growth of 10.9 percent.
· Average balances of noninterest bearing deposit accounts were $1.129 billion in the first quarter of 2014, down 4.3 percent from the fourth quarter of 2013 and up 18.5 percent over the same quarter last year.
· Revenues for the quarter ended March 31, 2014 were a record $58.6 million, an increase from $57.5 million in the fourth quarter of 2013 and up 7.3 percent over the $54.7 million for the same quarter last year.
· The firm's net interest margin for the quarter ended March 31, 2014 was 3.76 percent, compared to 3.70 percent in the fourth quarter of 2013 and 3.90 percent for the same quarter last year.
·
Return on average assets was 1.20 percent for the first quarter of 2014, compared to 1.09 percent for the same quarter last year. First quarter 2014 return on tangible common equity amounted to 13.47 percent, compared to first quarter 2013 amount of 12.41 percent.


"Despite the strong growth in average loans outstanding during the quarter, period ending loans for the first quarter of 2014 were up just $37.2 million, less than the average quarterly growth we expect during 2014 but generally in line with our expectations based on historical first quarter performance trends," Turner said. "We continue to believe we will meet or exceed the three-year loan growth targets we established for 2012-2014."

OTHER FIRST QUARTER 2014 HIGHLIGHTS:
· Revenue growth
o
Net interest income for the quarter ended March 31, 2014 was $45.9 million, compared to $45.0 million in the fourth quarter of 2013 and $42.8 million for the first quarter of 2013. Net interest income for the first quarter of 2014 was up 7.4 percent year-over-year and is at its highest quarterly level since the firm's founding in 2000.
§
Consistent with previously disclosed expectations, the firm's net interest margin increased to 3.76 percent for the quarter ended March 31, 2014, up from 3.70 percent last quarter and down from 3.90 percent for the quarter ended March 31, 2013.
o Noninterest income for the quarter ended March 31, 2014 was $12.7 million, compared to $12.5 million for the fourth quarter of 2013 and $11.9 million for the same quarter last year. Noninterest income was up 7.0 percent over the same quarter last year.
§
Wealth management revenues, which include investment services, insurance and trust fees, were $4.7 million during the first quarter of 2014, compared to $4.4 million during the fourth quarter of 2013 and $4.1 million during the same quarter last year.
§ Gains on mortgage loans sold, net of commissions, were $952,000 during the first quarter of 2014, compared to $1.1 million during the fourth quarter of 2013 and $1.8 million during the same quarter last year.

"As anticipated, we experienced an increase in the net interest margin during the first quarter," said Harold R. Carpenter, Pinnacle's chief financial officer. "More importantly, our net interest income and our total revenues were at historic highs. Loan yields appear to be stabilizing, and growth in several fee categories contributed to the record first quarter revenues."

· Noninterest and income tax expense
o
Noninterest expense for the quarter ended March 31, 2014 was $33.7 million, compared to $32.6 million in the fourth quarter of 2013 and $32.4 million in the same quarter last year.
§ Salaries and employee benefits costs were up from the fourth quarter of 2013 by approximately $256,000 and by $2.2 million from the first quarter of 2013.
§ Other real estate expenses were $651,000 in the first quarter of 2014, compared to $302,000 in the fourth quarter of 2013 and $721,000 in the same quarter last year.
o
Income tax expense was $8.1 million for the first quarter of 2014, compared to $7.3 million in the fourth quarter of 2013 and $6.6 million in the same quarter last year.

2

"Excluding other real estate expenses, our first quarter noninterest expense represents an increase of 2.1 percent over our expense amount for the fourth quarter of last year," Carpenter said. "As compared to the fourth quarter of 2013, the ratio of expense (excluding ORE expenses) to average assets rose to 2.43 percent in the first quarter due primarily to seasonal salary adjustments and increases in various other expense categories.  Increasing the operating leverage of our firm remains a key objective of our leadership.
"We anticipate our expense base in 2014 will increase as we continue to recruit relationship managers and other professionals to our firm. However, we expect to make continued progress toward our target range of expenses to total assets of 2.10 to 2.30 percent in 2014 primarily through achievement of our loan growth targets."

· Asset Quality
o Nonperforming assets declined by $2.8 million from Dec. 31, 2013, a linked-quarter reduction of 8.28 percent. Nonperforming assets were 0.73 percent of total loans and ORE at March 31, 2014, compared to 0.80 percent at Dec. 31, 2013  and 1.02 percent at March 31, 2013.
o Allowance for loan losses represented 1.61 percent of total loans at March 31, 2014, compared to 1.64 percent at Dec. 31, 2013 and 1.84 percent at March 31, 2013. The ratio of the allowance for loan losses to nonperforming loans increased to 432.7 percent at March 31, 2014, from 373.8 percent at Dec. 31, 2013 and 317.9 percent at March 31, 2013.
§ Net charge-offs were $934,000 for the quarter ended March 31, 2014, compared to $1.54 million for the fourth quarter of 2013 and $2.18 million for the quarter ended March 31, 2013. Annualized net charge-offs as a percentage of average loans for the quarter ended March 31, 2014 were 0.09 percent compared to 0.24 percent for the quarter ended March 31, 2013.
§ Provision for loan losses decreased from $2.17 million for the first quarter of 2013 to $488,000 for the first quarter of 2014 and $2.23 million for the fourth quarter of 2013.

3


WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on April 15, 2014 to discuss first 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 $5.6 billion in assets at March 31, 2014. At March 31, 2014, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and four offices in Knoxville. Additionally, Great Place to Work® named Pinnacle one of the best workplaces in the United States on its 2013 Best Small & Medium Workplaces list published in FORTUNE magazine. The American Banker also recognized Pinnacle as the 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.

4

###
Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "goal," "objective," "intend," "plan," "believe," "should," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial to grow its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (xi) the development of any new market other than Nashville or Knoxville; (xii) a merger or acquisition; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiv) the ability to attract additional financial advisors or to attract customers from other financial institutions; (xv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xvii) risks associated with litigation, including the applicability of insurance coverage; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors and, (xix) 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.  Many of such factors are beyond Pinnacle Financial's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

5

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS – UNAUDITED
 
 
 
   
 
 
 
March 31, 2014
   
December 31, 2013
 
ASSETS
 
   
 
Cash and noninterest-bearing due from banks
 
$
94,172,230
   
$
79,785,004
 
Interest-bearing due from banks
   
75,826,385
     
124,509,486
 
Federal funds sold and other
   
938,792
     
4,644,247
 
Cash and cash equivalents
   
170,937,407
     
208,938,737
 
 
               
Securities available-for-sale, at fair value
   
735,400,911
     
693,456,314
 
Securities held-to-maturity (fair value of $38,194,567 and $38,817,467 at
               
        March 31, 2014 and December 31, 2013, respectively)
   
38,733,099
     
39,795,649
 
Mortgage loans held-for-sale
   
13,970,926
     
12,850,339
 
 
               
Loans
   
4,181,686,799
     
4,144,493,486
 
Less allowance for loan losses
   
(67,523,575
)
   
(67,969,693
)
Loans, net
   
4,114,163,224
     
4,076,523,793
 
 
               
Premises and equipment, net
   
71,627,370
     
72,649,574
 
Other investments
   
33,358,506
     
33,226,195
 
Accrued interest receivable
   
17,219,090
     
15,406,389
 
Goodwill
   
243,568,203
     
243,651,006
 
Core deposit and other intangible assets
   
3,603,074
     
3,840,750
 
Other real estate owned
   
15,037,823
     
15,226,136
 
Other assets
   
143,312,957
     
148,210,975
 
Total assets
 
$
5,600,932,590
   
$
5,563,775,857
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Deposits:
               
Noninterest-bearing
 
$
1,180,202,107
   
$
1,167,414,487
 
Interest-bearing
   
912,387,013
     
884,294,802
 
Savings and money market accounts
   
1,902,452,916
     
1,962,714,398
 
Time
   
505,534,750
     
519,049,037
 
Total deposits
   
4,500,576,786
     
4,533,472,724
 
Securities sold under agreements to repurchase
   
68,092,650
     
70,465,326
 
Federal Home Loan Bank advances
   
150,604,286
     
90,637,328
 
Subordinated debt and other borrowings
   
98,033,292
     
98,658,292
 
Accrued interest payable
   
745,180
     
792,703
 
Other liabilities
   
40,383,743
     
46,041,823
 
Total liabilities
   
4,858,435,937
     
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; 35,567,268 shares and 35,221,941
               
  shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively
   
35,567,268
     
35,221,941
 
Additional paid-in capital
   
551,461,564
     
550,212,135
 
Retained earnings
   
155,840,829
     
142,298,199
 
Accumulated other comprehensive loss, net of taxes
   
(373,008
)
   
(4,024,614
)
Stockholders' equity
   
742,496,653
     
723,707,661
 
Total liabilities and stockholders' equity
 
$
5,600,932,590
   
$
5,563,775,857
 
 
               
This information is preliminary and based on company data available at the time of the presentation.
               
 
               
 
6

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
   
 
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
   
2013
 
Interest income:
 
   
 
Loans, including fees
 
$
43,695,658
   
$
41,514,213
 
Securities
               
Taxable
   
3,720,279
     
3,670,934
 
Tax-exempt
   
1,597,797
     
1,656,408
 
Federal funds sold and other
   
277,058
     
314,772
 
Total interest income
   
49,290,792
     
47,156,327
 
 
               
Interest expense:
               
Deposits
   
2,595,240
     
3,412,396
 
Securities sold under agreements to repurchase
   
30,515
     
77,816
 
Federal Home Loan Bank advances and other borrowings
   
757,222
     
907,641
 
Total interest expense
   
3,382,977
     
4,397,853
 
Net interest income
   
45,907,815
     
42,758,474
 
Provision for loan losses
   
487,638
     
2,172,404
 
Net interest income after provision for loan losses
   
45,420,177
     
40,586,070
 
 
               
Noninterest income:
               
Service charges on deposit accounts
   
2,790,968
     
2,480,244
 
Investment services
   
2,127,834
     
1,792,640
 
Insurance sales commissions
   
1,384,921
     
1,393,304
 
Gains on mortgage loans sold, net
   
952,222
     
1,813,488
 
Trust fees
   
1,145,751
     
944,332
 
Other noninterest income
   
4,334,360
     
3,478,348
 
Total noninterest income
   
12,736,056
     
11,902,356
 
 
               
Noninterest expense:
               
Salaries and employee benefits
   
21,749,960
     
19,572,356
 
Equipment and occupancy
   
5,709,030
     
5,113,050
 
Other real estate expense
   
651,152
     
720,962
 
Marketing and other business development
   
908,901
     
790,671
 
Postage and supplies
   
560,614
     
591,488
 
Amortization of intangibles
   
237,675
     
520,987
 
Other noninterest expense
   
3,832,221
     
5,130,495
 
Total noninterest expense
   
33,649,553
     
32,440,009
 
Income before income taxes
   
24,506,680
     
20,048,417
 
Income tax expense
   
8,139,557
     
6,600,292
 
Net income
 
$
16,367,123
   
$
13,448,125
 
 
               
Per share information:
               
Basic net income per common share
 
$
0.47
   
$
0.40
 
Diluted net income per common share
 
$
0.47
   
$
0.39
 
 
               
Weighted average shares outstanding:
               
Basic
   
34,602,337
     
33,987,265
 
Diluted
   
34,966,600
     
34,206,202
 
 
               
This information is preliminary and based on company data available at the time of the presentation.
 
 
               
 
7

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
   
   
   
   
 
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
  
  
  
  
 
 
 
   
   
   
   
   
 
 
 
   
   
   
   
   
 
(dollars in thousands)
 
March
   
December
   
September
   
June
   
March
   
December
 
 
2014
   
2013
   
2013
   
2013
   
2013
  
2012
 
 
 
   
   
   
   
   
 
Balance sheet data, at quarter end:
 
   
   
   
   
   
 
Commercial real estate - mortgage loans
 
$
1,456,172
     
1,383,435
     
1,326,838
     
1,308,873
     
1,278,639
     
1,178,196
 
Consumer real estate  - mortgage loans
   
703,592
     
695,616
     
687,259
     
697,490
     
675,632
     
679,927
 
Construction and land development loans
   
294,055
     
316,191
     
319,973
     
298,509
     
306,433
     
313,552
 
Commercial and industrial loans
   
1,568,937
     
1,605,547
     
1,513,632
     
1,504,086
     
1,403,428
     
1,446,577
 
Consumer and other
   
158,931
     
143,704
     
121,600
     
116,407
     
108,232
     
93,910
 
Total loans
   
4,181,687
     
4,144,493
     
3,969,302
     
3,925,365
     
3,772,364
     
3,712,162
 
Allowance for loan losses
   
(67,524
)
   
(67,970
)
   
(67,280
)
   
(68,695
)
   
(69,411
)
   
(69,417
)
Securities
   
774,134
     
733,252
     
743,885
     
727,889
     
724,004
     
707,153
 
Total assets
   
5,600,933
     
5,563,776
     
5,391,201
     
5,373,168
     
5,070,935
     
5,040,549
 
Noninterest-bearing deposits
   
1,180,202
     
1,167,414
     
1,138,421
     
1,098,887
     
977,496
     
985,689
 
Total deposits
   
4,500,577
     
4,533,473
     
4,333,543
     
4,096,578
     
3,902,895
     
4,015,188
 
Securities sold under agreements to repurchase
   
68,093
     
70,465
     
84,032
     
117,346
     
129,100
     
114,667
 
FHLB advances
   
150,604
     
90,637
     
115,671
     
325,762
     
200,796
     
75,850
 
Subordinated debt and other borrowings
   
98,033
     
98,658
     
99,283
     
99,908
     
105,533
     
106,158
 
Total stockholders' equity
   
742,497
     
723,708
     
712,216
     
696,569
     
691,434
     
679,071
 
 
                                               
Balance sheet data, quarterly averages:
                                               
Total loans
 
$
4,130,289
     
3,981,214
     
3,932,218
     
3,845,476
     
3,681,686
     
3,580,056
 
Securities
   
748,539
     
731,651
     
739,625
     
745,969
     
714,104
     
719,861
 
Total earning assets
   
5,023,692
     
4,903,233
     
4,825,552
     
4,710,534
     
4,513,273
     
4,493,216
 
Total assets
   
5,514,031
     
5,388,371
     
5,313,003
     
5,210,600
     
4,992,018
     
4,964,521
 
Noninterest-bearing deposits
   
1,128,743
     
1,179,340
     
1,100,532
     
1,012,718
     
952,853
     
978,366
 
Total deposits
   
4,509,493
     
4,407,806
     
4,198,779
     
3,963,393
     
3,949,742
     
3,883,423
 
Securities sold under agreements to repurchase
   
62,500
     
85,096
     
110,123
     
129,550
     
130,740
     
142,333
 
FHLB advances
   
83,787
     
42,012
     
181,392
     
293,581
     
98,989
     
124,781
 
Subordinated debt and other borrowings
   
98,651
     
100,030
     
100,995
     
102,573
     
106,777
     
108,489
 
Total stockholders' equity
   
740,743
     
722,919
     
705,275
     
699,559
     
688,241
     
680,383
 
 
                                               
Statement of operations data, for the three months ended:
                                               
Interest income
 
$
49,291
     
48,405
     
48,177
     
47,544
     
47,156
     
47,203
 
Interest expense
   
3,383
     
3,436
     
3,604
     
3,945
     
4,398
     
4,960
 
Net interest income
   
45,908
     
44,969
     
44,573
     
43,599
     
42,758
     
42,243
 
Provision for loan losses
   
488
     
2,225
     
685
     
2,774
     
2,172
     
2,488
 
Net interest income after provision for loan losses
   
45,420
     
42,744
     
43,888
     
40,825
     
40,586
     
39,755
 
Noninterest income
   
12,736
     
12,488
     
11,387
     
11,326
     
11,902
     
13,108
 
Noninterest expense
   
33,650
     
32,637
     
33,323
     
30,862
     
32,440
     
34,851
 
Income before taxes
   
24,507
     
22,596
     
21,952
     
21,289
     
20,048
     
18,012
 
Income tax expense
   
8,140
     
7,274
     
7,305
     
6,978
     
6,600
     
6,282
 
Net income
 
$
16,367
     
15,321
     
14,647
     
14,311
     
13,448
     
11,730
 
 
                                               
Profitability and other ratios:
                                               
Return on avg. assets (1)
   
1.20
%
   
1.13
%
   
1.09
%
   
1.10
%
   
1.09
%
   
0.94
%
Return on avg. equity (1)
   
8.96
%
   
8.41
%
   
8.24
%
   
8.21
%
   
7.92
%
   
6.86
%
Return on avg. tangible equity (1)
   
13.47
%
   
12.81
%
   
12.73
%
   
12.75
%
   
12.41
%
   
10.83
%
Dividend payout ratio (18)
   
19.16
%
   
20.38
%
   
-
     
-
     
-
     
-
 
Net interest margin (1) (2)
   
3.76
%
   
3.70
%
   
3.72
%
   
3.77
%
   
3.90
%
   
3.80
%
Noninterest income to total revenue (3)
   
21.72
%
   
21.73
%
   
20.35
%
   
20.62
%
   
21.77
%
   
23.68
%
Noninterest income to avg. assets (1)
   
0.94
%
   
0.92
%
   
0.85
%
   
0.87
%
   
0.97
%
   
1.05
%
Noninterest exp. to avg. assets (1)
   
2.47
%
   
2.40
%
   
2.49
%
   
2.38
%
   
2.64
%
   
2.79
%
Noninterest expense (excluding ORE and FHLB
                                               
       restructuring charges) to avg. assets (1)
   
2.43
%
   
2.38
%
   
2.44
%
   
2.27
%
   
2.51
%
   
2.52
%
Efficiency ratio (4)
   
57.38
%
   
56.80
%
   
59.55
%
   
56.19
%
   
59.35
%
   
62.96
%
Avg. loans to average deposits
   
91.59
%
   
90.32
%
   
93.65
%
   
97.02
%
   
93.21
%
   
92.19
%
Securities to total assets
   
13.82
%
   
13.18
%
   
13.80
%
   
13.55
%
   
14.28
%
   
14.03
%
 
                                               
 
                                               
 
                                               
This information is preliminary and based on company data available at the time of the presentation.
                         
 
                                               
 
8

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
 
 
March 31, 2014
   
March 31, 2013
 
 
 
Average Balances
   
Interest
   
Rates/ Yields
   
Average Balances
   
Interest
   
Rates/ Yields
 
Interest-earning assets
 
   
   
   
   
   
 
Loans (1)
 
$
4,130,289
   
$
43,696
     
4.30
%
 
$
3,681,686
   
$
41,514
     
4.58
%
Securities
                                               
Taxable
   
573,330
     
3,720
     
2.63
%
   
537,951
     
3,671
     
2.77
%
Tax-exempt (2)
   
175,209
     
1,598
     
4.94
%
   
176,153
     
1,656
     
5.09
%
Federal funds sold and other
   
144,864
     
277
     
0.92
%
   
117,483
     
315
     
1.25
%
Total interest-earning assets
   
5,023,692
   
$
49,291
     
4.04
%
   
4,513,273
     
47,156
     
4.30
%
Nonearning assets
                                               
Intangible assets
   
247,360
                     
248,940
                 
Other nonearning assets
   
242,979
                     
229,805
                 
Total assets
 
$
5,514,031
                   
$
4,992,018
                 
 
                                               
Interest-bearing liabilities
                                               
Interest-bearing deposits:
                                               
Interest checking
 
$
921,034
   
$
429
     
0.19
%
 
$
775,136
   
$
606
     
0.32
%
Savings and money market
   
1,951,787
     
1,427
     
0.30
%
   
1,632,715
     
1,624
     
0.40
%
Time
   
507,929
     
739
     
0.59
%
   
589,038
     
1,182
     
0.81
%
Total interest-bearing deposits
   
3,380,750
     
2,595
     
0.31
%
   
2,996,889
     
3,412
     
0.46
%
Securities sold under agreements to repurchase
   
62,500
     
31
     
0.20
%
   
130,740
     
78
     
0.24
%
Federal Home Loan Bank advances
   
83,787
     
123
     
0.59
%
   
98,989
     
191
     
0.78
%
Subordinated debt and other borrowings
   
98,651
     
634
     
2.61
%
   
106,777
     
717
     
2.72
%
Total interest-bearing liabilities
   
3,625,688
     
3,383
     
0.38
%
   
3,333,395
     
4,398
     
0.54
%
Noninterest-bearing deposits
   
1,128,743
     
-
     
-
     
952,853
     
-
     
-
 
Total deposits and interest-bearing liabilities
   
4,754,431
   
$
3,383
     
0.29
%
   
4,286,248
   
$
4,398
     
0.42
%
Other liabilities
   
18,857
                     
17,529
                 
Stockholders' equity 
   
740,743
                     
688,241
                 
Total liabilities and stockholders' equity
 
$
5,514,031
                   
$
4,992,018
                 
Net interest income 
         
$
45,908
                   
$
42,758
         
Net interest spread (3)
                   
3.66
%
                   
3.76
%
Net interest margin (4)
                   
3.76
%
                   
3.90
%
 
                                               
 
                                               
 
                                               
(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 March 31, 2014 would have been 3.75% compared to a net interest spread of 3.88% for the quarter ended March 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.
                 
 
                                               

 
9

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
   
   
   
 
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
   
   
   
   
   
 
 
 
   
   
   
   
   
 
(dollars in thousands)
 
March
   
December
   
September
   
June
   
March
   
December
 
 
2014
   
2013
   
2013
   
2013
   
2013
   
2012
 
 
 
   
   
   
   
   
 
Asset quality information and ratios:
 
   
   
   
   
   
 
Nonperforming assets:
 
   
   
   
   
   
 
    Nonaccrual loans
 
$
15,606
     
18,183
     
19,989
     
20,561
     
21,837
     
22,823
 
    Other real estate (ORE)
   
15,038
     
15,226
     
15,522
     
15,992
     
16,802
     
18,580
 
Total nonperforming assets
 
$
30,644
     
33,409
     
35,511
     
36,553
     
38,639
     
41,403
 
Past due loans over 90 days and still
                                               
    accruing interest
 
$
7,944
     
3,057
     
-
     
747
     
152
     
-
 
Troubled debt restructurings (5)
 
$
15,108
     
19,647
     
19,661
     
20,427
     
20,667
     
27,450
 
Net loan charge-offs
 
$
934
     
1,535
     
2,100
     
3,491
     
2,178
     
2,163
 
Allowance for loan losses to nonperforming loans
   
432.7
%
   
373.8
%
   
336.6
%
   
334.1
%
   
317.9
%
   
304.2
%
As a percentage of total loans:
                                               
Past due accruing loans over 30 days
   
0.22
%
   
0.31
%
   
0.33
%
   
0.39
%
   
0.23
%
   
0.29
%
Potential problem loans (6)
   
2.01
%
   
1.51
%
   
1.80
%
   
2.11
%
   
2.57
%
   
2.84
%
Allowance for loan losses
   
1.61
%
   
1.64
%
   
1.70
%
   
1.75
%
   
1.84
%
   
1.87
%
Nonperforming assets to total loans and ORE
   
0.73
%
   
0.80
%
   
0.89
%
   
0.93
%
   
1.02
%
   
1.11
%
Nonperforming assets to total assets
   
0.55
%
   
0.60
%
   
0.66
%
   
0.68
%
   
0.76
%
   
0.82
%
    Classified asset ratio (Pinnacle Bank) (8)
   
21.2
%
   
18.5
%
   
20.6
%
   
23.3
%
   
26.4
%
   
29.4
%
Annualized net loan charge-offs year-to-date
                                               
    to avg. loans (7)
   
0.09
%
   
0.24
%
   
0.27
%
   
0.30
%
   
0.24
%
   
0.29
%
Avg. commercial loan internal risk ratings (6)
   
4.5
     
4.5
     
4.5
     
4.5
     
4.5
     
4.5
 
 
                                               
Interest rates and yields:
                                               
Loans
   
4.30
%
   
4.28
%
   
4.33
%
   
4.41
%
   
4.58
%
   
4.64
%
Securities
   
3.17
%
   
3.16
%
   
3.04
%
   
3.03
%
   
3.34
%
   
3.16
%
Total earning assets
   
4.04
%
   
3.98
%
   
4.02
%
   
4.10
%
   
4.30
%
   
4.24
%
Total deposits, including non-interest bearing
   
0.23
%
   
0.24
%
   
0.26
%
   
0.30
%
   
0.35
%
   
0.38
%
Securities sold under agreements to repurchase
   
0.20
%
   
0.16
%
   
0.20
%
   
0.22
%
   
0.24
%
   
0.24
%
FHLB advances
   
0.59
%
   
0.97
%
   
0.38
%
   
0.31
%
   
0.78
%
   
1.24
%
Subordinated debt and other borrowings
   
2.61
%
   
2.60
%
   
2.62
%
   
2.72
%
   
2.72
%
   
2.77
%
Total deposits and interest-bearing liabilities
   
0.29
%
   
0.29
%
   
0.31
%
   
0.35
%
   
0.42
%
   
0.46
%
 
                                               
Pinnacle Financial Partners capital ratios (8):
                                               
Stockholders' equity to total assets
   
13.3
%
   
13.0
%
   
13.2
%
   
13.0
%
   
13.6
%
   
13.5
%
Leverage
   
11.0
%
   
10.9
%
   
10.8
%
   
10.7
%
   
10.8
%
   
10.6
%
Tier one risk-based
   
12.2
%
   
11.8
%
   
12.0
%
   
11.7
%
   
11.7
%
   
11.8
%
Total risk-based
   
13.5
%
   
13.0
%
   
13.2
%
   
12.9
%
   
13.0
%
   
13.0
%
Tier one common equity to risk-weighted assets
   
10.5
%
   
10.1
%
   
10.2
%
   
9.9
%
   
9.9
%
   
9.9
%
Tangible common equity to tangible assets
   
9.3
%
   
9.0
%
   
9.0
%
   
8.8
%
   
9.2
%
   
9.0
%
    Pinnacle Bank ratios:
                                               
     Leverage
   
10.5
%
   
10.5
%
   
10.5
%
   
10.5
%
   
10.7
%
   
10.5
%
     Tier one risk-based
   
11.7
%
   
11.3
%
   
11.6
%
   
11.5
%
   
11.6
%
   
11.6
%
     Total risk-based
   
12.9
%
   
12.6
%
   
12.9
%
   
12.7
%
   
12.8
%
   
12.9
%
 
                                               
This information is preliminary and based on company data available at the time of the presentation.
                 
 
                                               
 
10

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
   
   
   
   
   
 
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
   
   
   
   
   
 
 
 
   
   
   
   
   
 
(dollars in thousands, except per share data)
 
March
   
December
   
September
   
June
   
March
   
December
 
 
2014
   
2013
   
2013
   
2013
   
2013
   
2012
 
 
 
   
   
   
   
   
 
Per share data:
 
   
   
   
   
   
 
Earnings  – basic
 
$
0.47
     
0.45
     
0.43
     
0.42
     
0.40
     
0.35
 
Earnings  – diluted
 
$
0.47
     
0.44
     
0.42
     
0.42
     
0.39
     
0.34
 
Common dividends per share
 
$
0.08
     
0.08
     
-
     
-
     
-
     
-
 
Book value per common share at quarter end (9)
 
$
20.88
     
20.55
     
20.27
     
19.86
     
19.74
     
19.57
 
Tangible common equity per common share
 
$
13.93
     
13.52
     
13.22
     
12.78
     
12.64
     
12.39
 
 
                                               
Weighted avg. common shares – basic
   
34,602,337
     
34,355,691
     
34,282,899
     
34,172,274
     
33,987,265
     
33,960,664
 
Weighted avg. common shares – diluted
   
34,966,600
     
34,765,424
     
34,606,567
     
34,431,054
     
34,206,202
     
34,527,479
 
Common shares outstanding
   
35,567,268
     
35,221,941
     
35,133,733
     
35,073,763
     
35,022,487
     
34,696,597
 
 
                                               
Investor information:
                                               
Closing sales price
 
$
37.49
     
32.53
     
29.81
     
25.71
     
23.36
     
18.84
 
High closing sales price during quarter
 
$
38.64
     
33.25
     
29.99
     
26.17
     
23.73
     
20.60
 
Low closing sales price during quarter
 
$
31.02
     
29.67
     
26.56
     
21.68
     
19.29
     
18.05
 
 
                                               
Other information:
                                               
Gains on mortgage loans sold:
                                               
Mortgage loan sales:
                                               
Gross loans sold
 
$
61,290
     
70,194
     
105,817
     
123,181
     
120,569
     
132,485
 
Gross fees (10)
 
$
1,504
     
1,842
     
2,470
     
3,346
     
3,158
     
3,269
 
Gross fees as a percentage of loans originated
   
2.45
%
   
2.62
%
   
2.33
%
   
2.72
%
   
2.62
%
   
2.47
%
Investment gains and losses on sales and impairments, net (17)
 
$
-
     
-
     
(1,441
)
   
(25
)
   
-
     
1,988
 
Brokerage account assets, at quarter-end (11)
 
$
1,611,232
     
1,560,349
     
1,445,461
     
1,387,172
     
1,333,676
     
1,242,379
 
Trust account managed assets, at quarter-end
 
$
613,440
     
605,324
     
576,190
     
630,322
     
515,970
     
496,264
 
Balance of commercial loan participations sold to other
                                               
     banks and serviced by Pinnacle, at quarter end
 
$
53,959
     
52,703
     
50,797
     
45,585
     
42,721
     
39,668
 
Core deposits (12)
 
$
4,087,477
     
4,100,037
     
3,903,000
     
3,771,425
     
3,537,860
     
3,674,662
 
Core deposits to total funding (12)
   
84.8
%
   
85.5
%
   
84.3
%
   
81.3
%
   
84.0
%
   
87.3
%
Risk-weighted assets
 
$
4,740,545
     
4,785,028
     
4,568,667
     
4,531,730
     
4,388,341
     
4,239,384
 
Total assets per full-time equivalent employee
 
$
7,528
     
7,408
     
7,305
     
7,335
     
7,038
     
6,900
 
Annualized revenues per full-time equivalent employee
 
$
319.7
     
303.5
     
300.8
     
300.8
     
307.7
     
301.4
 
Number of employees (full-time equivalent)
   
744.0
     
751.0
     
738.0
     
732.5
     
720.5
     
730.5
 
Associate retention rate (13)
   
95.6
%
   
94.4
%
   
93.9
%
   
93.0
%
   
91.2
%
   
93.2
%
 
                                               
Selected economic information (in thousands) (14):
                                               
Nashville MSA nonfarm employment - February 2014
   
827.5
     
817.3
     
814.7
     
817.1
     
807.1
     
799.7
 
Knoxville MSA nonfarm employment - February 2014
   
337.1
     
334.2
     
337.7
     
337.9
     
337.4
     
333.5
 
Nashville MSA unemployment - January 2014
   
5.2
%
   
5.8
%
   
6.5
%
   
6.6
%
   
6.2
%
   
6.3
%
Knoxville MSA unemployment - January 2014
   
5.6
%
   
6.3
%
   
7.0
%
   
6.9
%
   
6.6
%
   
6.5
%
Nashville residential median home price - March 2014
 
$
195.0
     
198.8
     
197.9
     
205.9
     
169.0
     
181.0
 
Nashville inventory of residential homes for sale - March 2014 (16)
   
4.6
     
4.0
     
10.2
     
10.5
     
9.9
     
9.1
 
 
                                               
This information is preliminary and based on company data available at the time of the presentation.
                                 
 
                                               
 
11

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
   
   
   
   
   
 
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
   
   
   
   
   
 
 
 
March
   
December
   
September
   
June
   
March
   
December
 
(dollars in thousands, except per share data)
 
2014
   
2013
   
2013
   
2013
   
2013
   
2012
 
 
 
   
   
   
   
   
 
Tangible assets:
 
   
   
   
   
   
 
Total assets
 
$
5,600,933
     
5,563,776
     
5,391,201
     
5,373,168
     
5,070,935
     
5,040,549
 
Less: Goodwill
   
(243,568
)
   
(243,651
)
   
(243,808
)
   
(243,900
)
   
(244,012
)
   
(244,040
)
  Core deposit and other intangible assets
   
(3,603
)
   
(3,841
)
   
(4,087
)
   
(4,334
)
   
(4,582
)
   
(5,103
)
Net tangible assets
 
$
5,353,762
     
5,316,284
     
5,143,306
     
5,124,934
     
4,822,342
     
4,791,406
 
 
                                               
Tangible equity:
                                               
Total stockholders' equity
 
$
742,497
     
723,708
     
712,216
     
696,569
     
691,434
     
679,071
 
Less: Goodwill
   
(243,568
)
   
(243,651
)
   
(243,808
)
   
(243,900
)
   
(244,012
)
   
(244,040
)
          Core deposit and other intangible assets
   
(3,603
)
   
(3,841
)
   
(4,087
)
   
(4,334
)
   
(4,582
)
   
(5,103
)
Net tangible common equity
 
$
495,326
     
476,216
     
464,321
     
448,335
     
442,840
     
429,928
 
 
                                               
Ratio of tangible common equity to tangible assets
   
9.25
%
   
8.96
%
   
9.03
%
   
8.75
%
   
9.18
%
   
8.97
%
 
                                               
 
                                               
 
 
For the three months ended
 
 
 
March
   
December
   
September
   
June
   
March
   
December
 
 
   2014    
2013
   
2013
   
2013
   
2013
   
2012
 
 
                                               
Net interest income
 
$
45,908
     
44,969
     
44,573
     
43,599
     
42,758
     
42,243
 
 
                                               
Noninterest income
   
12,736
     
12,488
     
11,387
     
11,326
     
11,902
     
13,108
 
Less: Investment gains and losses on sales and impairments, net
   
-
     
-
     
1,441
     
25
     
-
     
(1,988
)
  Net noncredit related loan losses
   
-
     
-
     
-
     
771
     
-
     
-
 
  Noninterest income excluding investment gains and losses on
                                               
sales and impairments, net, and noncredit related loan losses
   
12,736
     
12,488
     
12,828
     
12,122
     
11,902
     
11,120
 
Total revenues excluding the impact of investment gains and losses on
                                               
sales and impairments, net, and noncredit related loan losses
   
58,644
     
57,457
     
57,401
     
55,721
     
54,660
     
53,363
 
 
                                               
Noninterest expense
   
33,650
     
32,637
     
33,323
     
30,862
     
32,440
     
34,851
 
Less: Other real estate expense
   
651
     
302
     
699
     
1,391
     
721
     
1,365
 
  FHLB restructuring charges
   
-
     
-
     
-
     
-
     
877
     
2,092
 
  Noninterest expense excluding the impact of other real estate
                                               
expense and FHLB restructuring charges
   
32,999
     
32,335
     
32,624
     
29,471
     
30,842
     
31,394
 
 
                                               
Adjusted pre-tax pre-provision income (15)
 
$
25,645
     
25,122
     
24,777
     
26,250
     
23,818
     
21,969
 
 
                                               
 
                                               
Efficiency Ratio (4)
   
57.4
%
   
56.8
%
   
59.5
%
   
56.2
%
   
59.4
%
   
63.0
%
 
                                               
 
                                               
Total average assets
 
$
5,514,031
     
5,388,371
     
5,313,003
     
5,210,600
     
4,992,018
     
4,964,521
 
 
                                               
Noninterest expense (excluding ORE expense and FHLB restructuring charges) to avg. assets (1)
   
2.43
%
   
2.38
%
   
2.44
%
   
2.24
%
   
2.45
%
   
2.51
%
 
                                               
 
                                               
This information is preliminary and based on company data available at the time of the presentation.
 
 
                                               
 
12

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 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 months 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.


13