News Column

PNFP Reports Double-Digit Annualized Growth in EPS, Loans and DDAs

July 15, 2014

Operating leverage provides continued improvement to ROAA and ROTCE

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) today reported net income per fully diluted common share of $0.49 for the quarter ended June 30, 2014, compared to net income per fully diluted common share of $0.42 for the quarter ended June 30, 2013, an increase of 16.7 percent. Net income per fully diluted common share was $0.96 for the six months ended June 30, 2014, compared to net income per fully diluted common share of $0.81 for the six months ended June 30, 2013, an increase of 18.5 percent.

“Second quarter was another strong quarter of continued execution as we generated meaningful operating leverage primarily through loan and demand deposit account growth,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “Our return on average assets increased to 1.21 percent, representing another all-time high. Loan growth approximated $134 million during the second quarter, which equates to an annualized linked-quarter growth rate of 12.8 percent. Importantly, we experienced another strong quarter of growth in demand deposits, which is consistent with the success we continue to have moving client relationships to our firm.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at June 30, 2014 were a record $4.315 billion, an increase of $133.9 million from March 31, 2014. Loans increased $390.2 million from June 30, 2013, a year-over-year growth rate of 9.9 percent.
  • Average balances of noninterest-bearing deposit accounts were $1.203 billion in the second quarter of 2014, which represents an annualized growth rate of 26.2 percent from the first quarter of 2014. Noninterest-bearing deposit accounts represented approximately 26.6 percent of total average deposit balances for the quarter. Second quarter 2014 average noninterest-bearing deposits increased 18.8 percent over the same quarter last year, when average noninterest-bearing deposit accounts amounted to 25.6 percent of total average deposits.
  • Revenues for the quarter ended June 30, 2014 were a record $59.8 million, an increase of $1.2 million from $58.6 million in the first quarter of 2014. Revenues increased 8.9 percent from $54.9 million for the same quarter last year.
  • Return on average assets was 1.21 percent for the second quarter of 2014, compared to 1.20 percent for the first quarter of 2014 and 1.10 percent for the same quarter last year. Second quarter 2014 return on tangible common equity amounted to 13.50 percent, compared to 13.45 percent for the first quarter of 2014 and 12.72 percent for the same quarter last year.

    “We remain very pleased with our ability to grow our client base and take market share in Nashville and Knoxville,” Turner said. “With the significant loan growth we experienced in the second quarter, we continue to believe we will meet or exceed the three-year loan growth targets we established for the period of 2012 to 2014. Our ability to grow our noninterest-bearing deposits has been instrumental in enabling us to increase our net interest income and provides further evidence of the effectiveness of our business model.”

    OTHER SECOND QUARTER 2014 HIGHLIGHTS:

  • Revenue growth
  • Net interest income for the quarter ended June 30, 2014 was $47.2 million, compared to $45.9 million in the first quarter of 2014 and $43.6 million for the second quarter of 2013.
  • Consistent with previously disclosed expectations, the firm’s net interest margin decreased to 3.71 percent for the quarter ended June 30, 2014, down from 3.76 percent last quarter and 3.77 percent for the quarter ended June 30, 2013.
  • Noninterest income for the quarter ended June 30, 2014 was $12.6 million, compared to $12.7 million for the first quarter of 2014 and $11.3 million for the same quarter last year.
  • Wealth management revenues, which include investment services, insurance and trust fees, were down $278,000 from the first quarter of 2014 due primarily to the seasonal collection of contingency revenues from insurance carriers in the first quarter of 2014.
  • Gains on mortgage loans sold, net of commissions, were up $434,000 from the first quarter of 2014 due primarily to stronger home sales in Pinnacle’s residential lending markets.
  • Other fees decreased by $466,000 between the second and first quarters of 2014 due to several factors, including a reduction in vendor rebates for customer check orders, reduced gains from loan sales and other investments.

    “Operationally, we had another very sound quarter,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Total revenues are up almost $1.18 million over the first quarter. Loan yields decreased a modest 0.03 percent during the quarter and were partially offset by a 0.02 percent decrease in cost of funds. We continue to believe the rate of decrease in both loan yields and deposit costs will likely slow in future quarters. We also remain optimistic that our net interest margin will remain within our targeted range of 3.70 percent to 3.80 percent as we continue to see growth in net interest income for the remainder of 2014.”

  • Noninterest expense
  • Noninterest expense for the quarter ended June 30, 2014 was $33.9 million, compared to $33.6 million in the first quarter of 2014 and $30.9 million in the same quarter last year.
  • Salaries and employee benefit costs were up from the first quarter of 2014 by approximately $23,000 and $1.2 million from the second quarter of 2013.
  • Other real estate expenses were $226,000 in the second quarter of 2014, compared to $651,000 in the first quarter of 2014 and $1.4 million in the same quarter last year.
  • Other noninterest expense increased by $405,000 in the second quarter of 2014 compared to the first quarter of 2014 primarily due to increased lending-related costs. Additionally, other noninterest expense increased by $2.29 million between the second quarter of 2013 and 2014 primarily due to the impact of a $2.0 million reversal in 2013 of previously expensed off-balance sheet loss reserves.

    “Building a firm that attracts and retains the most successful relationship managers in our markets is a key component of our growth strategy,” Carpenter said. “Nine new revenue producers have joined our firm in 2014, representing a continual investment in growing our customer base and increasing our market share.

    “Increasing the operating leverage of our firm remains a key objective of our leadership. We anticipate our expense base for the remainder of 2014 will experience modest increases as we continue to recruit relationship managers and other professionals. The ratio of noninterest expense (excluding ORE expense) to average assets was 2.38 percent in the second quarter. We expect to make continual progress toward our target range of 2.10 to 2.30 percent for ‘noninterest expense (excluding ORE expense) to average assets’ in 2014 primarily through achievement of our loan growth targets.”

  • Asset Quality
  • Nonperforming assets declined from $30.6 million at March 31, 2014 to $28.6 million at June 30, 2014, a 6.6 percent reduction. Nonperforming assets were 0.66 percent of total loans and ORE at June 30, 2014, compared to 0.73 percent at March 31, 2014 and 0.93 percent at June 30, 2013.
  • The allowance for loan losses represented 1.55 percent of total loans at June 30, 2014, compared to 1.61 percent at March 31, 2014 and 1.75 percent at June 30, 2014. The ratio of the allowance for loan losses to nonperforming loans was 426.6 percent at June 30, 2014, compared to 432.7 percent at March 31, 2014 and 334.1 percent at June 30, 2013.
  • Net charge-offs were $890,000 for the quarter ended June 30, 2014, compared to $934,000 for the first quarter of 2014 and $3.5 million for the quarter ended June 30, 2013. Annualized year-to-date net charge-offs as a percentage of average loans for the quarter ended June 30, 2014 were 0.09 percent compared to 0.30 percent for the quarter ended June 30, 2013.
  • Provision for loan losses decreased from $2.77 million for the second quarter of 2013 to $254,000 for the second quarter of 2014. The provision was $488,000 for the first quarter of 2014.

    “Asset quality continues to be a strength for our firm with further reductions in potential problem loans, nonperforming assets and net charge-offs during the second quarter,” Carpenter said. “We expect that the quality of our loan portfolio should improve and thus continue to provide additional credit leverage for the remainder of 2014 as well as 2015.”

    BOARD OF DIRECTORS DECLARES DIVIDEND

    On July 15, 2014, Pinnacle’s Board of Directors also declared an $0.08 per share cash dividend to be paid on Aug. 29, 2014 to common shareholders of record as of the close of business on Aug. 8, 2014. 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 16, 2014 to discuss second quarter 2014 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

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

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

    The firm began operations in a single downtown Nashville location in October 2000 and has since grown to approximately $5.8 billion in assets at June 30, 2014. At June 30, 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.

    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.

         
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS – UNAUDITED            
     
        June 30, 2014   March 31, 2014   December 31, 2013

    ASSETS

    Cash and noninterest-bearing due from banks $ 91,575,519 $ 94,172,230 $ 79,785,004
    Interest-bearing due from banks 114,865,408 75,826,385 124,509,486
    Federal funds sold and other   4,667,086       938,792       4,644,247  
    Cash and cash equivalents 211,108,013 170,937,407 208,938,737
     
    Securities available-for-sale, at fair value 743,528,294 735,400,911 693,456,314

    Securities held-to-maturity (fair value of $38,290,464, $38,194,567 and $38,817,467 at June 30, 2014, March 31, 2014 and December 31, 2013, respectively)

    38,537,545 38,733,099 39,795,649
    Mortgage loans held-for-sale 24,591,553 13,970,926 12,850,339
     
    Loans 4,315,561,552 4,181,686,799 4,144,493,486
    Less allowance for loan losses   (66,888,250 )     (67,523,575 )     (67,969,693 )
    Loans, net 4,248,673,302 4,114,163,224 4,076,523,793
     
    Premises and equipment, net 72,534,086 71,627,370 72,649,574
    Other investments 33,496,695 33,358,506 33,226,195
    Accrued interest receivable 15,921,099 17,219,090 15,406,389
    Goodwill 243,550,227 243,568,203 243,651,006
    Core deposit and other intangible assets 3,365,399 3,603,074 3,840,750
    Other real estate owned 12,946,465 15,037,823 15,226,136
    Other assets   140,538,915       143,312,957       148,210,975  
    Total assets $ 5,788,791,593     $ 5,600,932,590     $ 5,563,775,857  
     

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Deposits:
    Noninterest-bearing $ 1,324,358,420 $ 1,180,202,107 $ 1,167,414,487
    Interest-bearing 900,576,170 912,387,013 884,294,802
    Savings and money market accounts 1,950,235,361 1,902,452,916 1,962,714,398
    Time   476,343,393       505,534,750       519,049,037  
    Total deposits 4,651,513,344 4,500,576,786 4,533,472,724
    Securities sold under agreements to repurchase 62,272,670 68,092,650 70,465,326
    Federal Home Loan Bank advances 170,556,327 150,604,286 90,637,328
    Subordinated debt and other borrowings 97,408,292 98,033,292 98,658,292
    Accrued interest payable 661,273 745,180 792,703
    Other liabilities   41,997,702       40,383,743       46,041,823  
    Total liabilities 5,024,409,608 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; 35,601,495 shares, 35,567,268 shares and 35,221,941 shares issued and outstanding at June 30, 2014, March 31, 2014 and December 31, 2013, respectively

    35,601,495 35,567,268 35,221,941
    Additional paid-in capital 555,428,349 551,461,564 550,212,135
    Retained earnings 170,155,642 155,840,829 142,298,199
    Accumulated other comprehensive income (loss), net of taxes   3,196,499       (373,008 )     (4,024,614 )
    Stockholders’ equity   764,381,985       742,496,653       723,707,661  
    Total liabilities and stockholders’ equity $ 5,788,791,593     $ 5,600,932,590     $ 5,563,775,857  
     
    This information is preliminary and based on company data available at the time of the presentation.
     
           
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED            
     
    Three Months EndedSix Months Ended
    June 30,March 31,June 30,June 30,
        2014   2014   2013   2014   2013
    Interest income:
    Loans, including fees $ 45,089,706 $ 43,695,658 $ 42,149,149 $ 88,785,364 $ 83,663,362
    Securities
    Taxable 3,628,264 3,720,279 3,650,766 7,348,543 7,321,700
    Tax-exempt 1,563,612 1,597,797 1,483,965 3,161,409 3,140,373
    Federal funds sold and other   282,822     277,058     260,440       559,880     575,212  
    Total interest income   50,564,404     49,290,792     47,544,320       99,855,196     94,700,647  
     
    Interest expense:
    Deposits 2,481,762 2,595,240 2,955,985 5,077,002 6,368,381
    Securities sold under agreements to repurchase 31,329 30,515 70,823 61,844 148,639
    Federal Home Loan Bank advances and other borrowings   824,912     757,222     918,762       1,582,134     1,826,403  
    Total interest expense   3,338,003     3,382,977     3,945,570       6,720,980     8,343,423  
    Net interest income 47,226,401 45,907,815 43,598,750 93,134,216 86,357,224
    Provision for loan losses   254,348     487,638     2,774,048       741,986     4,946,452  
    Net interest income after provision for loan losses 46,972,053 45,420,177 40,824,702 92,392,230 81,410,772
     
    Noninterest income:
    Service charges on deposit accounts 2,965,644 2,790,968 2,540,866 5,756,612 5,021,110
    Investment services 2,164,410 2,127,834 1,895,398 4,292,244 3,688,038
    Insurance sales commissions 1,144,871 1,384,921 1,107,696 2,529,792 2,501,000
    Gains on mortgage loans sold, net 1,668,604 1,234,872 1,948,531 2,903,475 3,803,942
    Investment losses on sales, net - - (25,241 ) - (25,241 )
    Trust fees 1,071,848 1,145,751 880,204 2,217,599 1,824,536
    Other noninterest income   3,582,067     4,048,017     2,978,266       7,630,084     6,414,691  
    Total noninterest income   12,597,444     12,732,363     11,325,720       25,329,806     23,228,076  
     
    Noninterest expense:
    Salaries and employee benefits 21,772,469 21,749,960 20,570,753 43,522,429 40,143,109
    Equipment and occupancy 5,822,662 5,709,030 5,204,159 11,531,692 10,317,209
    Other real estate expense 226,006 651,152 1,390,606 877,158 2,111,568
    Marketing and other business development 1,064,990 908,901 987,171 1,973,891 1,777,842
    Postage and supplies 544,194 560,614 517,667 1,104,808 1,109,155
    Amortization of intangibles 237,676 237,675 248,186 475,351 769,173
    Other noninterest expense   4,233,931     3,828,528     1,943,190       8,062,459     7,073,683  
    Total noninterest expense   33,901,928     33,645,860     30,861,732       67,547,788     63,301,739  
    Income before income taxes 25,667,569 24,506,680 21,288,690 50,174,248 41,337,109
    Income tax expense   8,497,589     8,139,557     6,978,160       16,637,146     13,578,452  
    Net income $ 17,169,980   $ 16,367,123   $ 14,310,530     $ 33,537,102   $ 27,758,657  
     
    Per share information:
    Basic net income per common share $ 0.49   $ 0.47   $ 0.42     $ 0.97   $ 0.81  
    Diluted net income per common share $ 0.49   $ 0.47   $ 0.42     $ 0.96   $ 0.81  
     
    Weighted average shares outstanding:
    Basic 34,697,88834,602,33734,172,27434,650,37734,080,281
    Diluted 35,081,70234,966,60034,431,05435,024,85934,319,796
     
    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
     
                             

     

    JuneMarchDecemberSeptemberJuneMarch

    (dollars in thousands)

      2014   2014   2013   2013   2013   2013
     
    Balance sheet data, at quarter end:
    Commercial real estate - mortgage loans $ 1,457,335 1,456,172 1,383,435 1,326,838 1,308,873 1,278,639
    Consumer real estate - mortgage loans 698,528 703,592 695,616 687,259 697,490 675,632
    Construction and land development loans 292,875 294,055 316,191 319,973 298,509 306,433
    Commercial and industrial loans 1,697,634 1,568,937 1,605,547 1,513,632 1,504,086 1,403,428
    Consumer and other 169,190 158,931 143,704 121,600 116,407 108,232
    Total loans 4,315,562 4,181,687 4,144,493 3,969,302 3,925,365 3,772,364
    Allowance for loan losses (66,888 ) (67,524 ) (67,970 ) (67,280 ) (68,695 ) (69,411 )
    Securities 782,066 774,134 733,252 743,885 727,889 724,004
    Total assets 5,788,792 5,600,933 5,563,776 5,391,201 5,373,168 5,070,935
    Noninterest-bearing deposits 1,324,358 1,180,202 1,167,414 1,138,421 1,098,887 977,496
    Total deposits 4,651,513 4,500,577 4,533,473 4,333,543 4,096,578 3,902,895
    Securities sold under agreements to repurchase 62,273 68,093 70,465 84,032 117,346 129,100
    FHLB advances 170,556 150,604 90,637 115,671 325,762 200,796
    Subordinated debt and other borrowings 97,408 98,033 98,658 99,283 99,908 105,533
    Total stockholders’ equity 764,382 742,497 723,708 712,216 696,569 691,434
     
    Balance sheet data, quarterly averages:
    Total loans $ 4,251,900 4,130,289 3,981,214 3,932,218 3,845,476 3,681,686
    Securities 782,436 748,539 731,651 739,625 745,969 714,104
    Total earning assets 5,187,589 5,023,692 4,903,233 4,825,552 4,710,534 4,513,273
    Total assets 5,673,615 5,514,031 5,388,371 5,313,003 5,210,600 4,992,018
    Noninterest-bearing deposits 1,202,740 1,128,743 1,179,340 1,100,532 1,012,718 952,853
    Total deposits 4,518,963 4,509,493 4,407,806 4,198,779 3,963,393 3,949,742
    Securities sold under agreements to repurchase 59,888 62,500 85,096 110,123 129,550 130,740
    FHLB advances 224,432 83,787 42,012 181,392 293,581 98,989
    Subordinated debt and other borrowings 99,015 98,651 100,030 100,995 102,573 106,777
    Total stockholders’ equity 757,089 740,743 722,919 705,275 699,559 688,241
     
    Statement of operations data, for the three months ended:
    Interest income $ 50,564 49,291 48,405 48,177 47,544 47,156
    Interest expense   3,338     3,383     3,436     3,604     3,945     4,398  
    Net interest income 47,226 45,908 44,969 44,573 43,599 42,758
    Provision for loan losses   254     488     2,225     685     2,774     2,172  
    Net interest income after provision for loan losses 46,972 45,420 42,744 43,888 40,825 40,586
    Noninterest income 12,598 12,732 12,488 11,387 11,326 11,902
    Noninterest expense   33,902     33,646     32,637     33,323     30,862     32,440  
    Income before taxes 25,668 24,506 22,596 21,952 21,289 20,048
    Income tax expense   8,498     8,140     7,274     7,305     6,978     6,600  
    Net income $ 17,170     16,367     15,321     14,647     14,311     13,448  
     
    Profitability and other ratios:
    Return on avg. assets (1) 1.21 % 1.20 % 1.13 % 1.09 % 1.10 % 1.09 %
    Return on avg. equity (1) 9.10 % 8.96 % 8.41 % 8.24 % 8.21 % 7.92 %
    Return on avg. tangible common equity (1) 13.50 % 13.45 % 12.79 % 12.71 % 12.72 % 12.41 %
    Dividend payout ratio (18) 18.29 % 19.16 % 20.38 % - - -
    Net interest margin (1) (2) 3.71 % 3.76 % 3.70 % 3.72 % 3.77 % 3.90 %
    Noninterest income to total revenue (3) 21.06 % 21.72 % 21.73 % 20.35 % 20.62 % 21.77 %
    Noninterest income to avg. assets (1) 0.89 % 0.94 % 0.92 % 0.85 % 0.87 % 0.97 %
    Noninterest exp. to avg. assets (1) 2.40 % 2.47 % 2.40 % 2.49 % 2.38 % 2.64 %

    Noninterest expense (excluding ORE and FHLB restructuring charges) to avg. assets (1)

    2.38 % 2.43 % 2.38 % 2.44 % 2.27 % 2.51 %
    Efficiency ratio (4) 56.67 % 57.38 % 56.80 % 59.55 % 56.19 % 59.35 %
    Avg. loans to average deposits 94.09 % 91.59 % 90.32 % 93.65 % 97.02 % 93.21 %
    Securities to total assets 13.51 % 13.82 % 13.18 % 13.80 % 13.55 % 14.28 %
     
     
    This information is preliminary and based on company data available at the time of the presentation.
     
           
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED    
       

     

    Three months endedThree months ended

    (dollars in thousands)

      June 30, 2014   June 30, 2013

    Average

    Balances

      Interest   Rates/ Yields  

    Average

    Balances

      Interest   Rates/ Yields
    Interest-earning assets

    Loans (1)

    $ 4,251,900 $ 45,090 4.27 % $ 3,845,476 $ 42,149 4.41 %
    Securities
    Taxable 609,884 3,628 2.39 % 575,611 3,651 2.54 %

    Tax-exempt (2)

    172,552 1,563 4.85 % 170,358 1,484 4.66 %
    Federal funds sold and other   153,253     283   0.87 %     119,089     260   1.04 %
    Total interest-earning assets 5,187,589 $ 50,564   3.97 % 4,710,534 $ 47,544   4.10 %
    Nonearning assets
    Intangible assets 247,081 248,439
    Other nonearning assets   238,945   251,627
    Total assets $ 5,673,615 $ 5,210,600
     
    Interest-bearing liabilities
    Interest-bearing deposits:
    Interest checking $ 911,878 $ 391 0.17 % $ 790,043 $ 536 0.27 %
    Savings and money market 1,913,453 1,392 0.29 % 1,581,868 1,381 0.35 %
    Time   490,892     699   0.57 %     578,764     1,039   0.72 %
    Total interest-bearing deposits 3,316,223 2,482 0.30 % 2,950,675 2,956 0.40 %
    Securities sold under agreements to repurchase 59,888 31 0.21 % 129,550 71 0.22 %
    Federal Home Loan Bank advances 224,432 187 0.33 % 293,581 223 0.31 %
    Subordinated debt and other borrowings   99,015     638   2.58 %     102,573     695   2.72 %
    Total interest-bearing liabilities 3,699,558 3,338 0.36 % 3,476,379 3,945 0.46 %
    Noninterest-bearing deposits   1,202,740     -   -       1,012,718     -   -  
    Total deposits and interest-bearing liabilities 4,902,298 $ 3,338   0.27 % 4,489,097 $ 3,945   0.35 %
    Other liabilities 14,228 21,944
    Stockholders' equity   757,089   699,559
    Total liabilities and stockholders' equity $ 5,673,615 $ 5,210,600
    Netinterestincome $ 47,226 $ 43,599

    Net interest spread (3)

    3.61 % 3.64 %

    Net interest margin (4)

    3.71 % 3.77 %
     
     
     
    (1) Average balances of nonperforming loans are included in the above amounts.
    (2) Yields computed on tax-exempt instruments on a tax equivalent basis.
    (3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended June 30, 2014 would have been 3.69% compared to a net interest spread of 3.75% for the quarter ended June 30, 2013.
    (4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
     
     
    This information is preliminary and based on company data available at the time of the presentation.
     
           
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED    
       

     

    Six Months EndedSix Months Ended

    (dollars in thousands)

      June 30, 2014   June 30, 2013

    Average

    Balances

      Interest   Rates/ Yields  

    Average

    Balances

      Interest   Rates/ Yields
    Interest-earning assets

    Loans (1)

    $ 4,191,430 $ 88,785 4.28 % $ 3,764,033 $ 83,663 4.49 %
    Securities
    Taxable 591,708 7,349 2.50 % 556,885 7,322 2.65 %

    Tax-exempt (2)

    173,873 3,161 4.90 % 173,240 3,140 4.88 %
    Federal funds sold and other   149,082     560   0.90 %     118,290     575   1.14 %
    Total interest-earning assets 5,106,093 $ 99,855   4.00 % 4,612,448 $ 94,700   4.19 %
    Nonearning assets
    Intangible assets 247,220 248,688
    Other nonearning assets   240,951   240,787
    Total assets $ 5,594,264 $ 5,101,923
     
    Interest-bearing liabilities
    Interest-bearing deposits:
    Interest checking $ 916,431 $ 821 0.18 % $ 782,631 $ 1,142 0.29 %
    Savings and money market 1,932,514 2,819 0.29 % 1,607,151 3,005 0.38 %
    Time   499,364     1,437   0.58 %     583,873     2,221   0.77 %
    Total interest-bearing deposits 3,348,309 5,077 0.31 % 2,973,655 6,368 0.43 %
    Securities sold under agreements to repurchase 61,187 62 0.20 % 130,141 149 0.23 %
    Federal Home Loan Bank advances 154,498 310 0.40 % 196,822 414 0.42 %
    Subordinated debt and other borrowings   98,834     1,272   2.60 %     104,663     1,412   2.72 %
    Total interest-bearing liabilities 3,662,828 6,721 0.37 % 3,405,281 8,343 0.49 %
    Noninterest-bearing deposits   1,165,946     -   -       982,951     -   -  
    Total deposits and interest-bearing liabilities 4,828,774 $ 6,721   0.28 % 4,388,232 $ 8,343   0.38 %
    Other liabilities 16,533 19,759
    Stockholders' equity   748,957   693,932
    Total liabilities and stockholders' equity $ 5,594,264 $ 5,101,923
    Netinterestincome $ 93,134 $ 86,357

    Net interest spread (3)

    3.63 % 3.70 %

    Net interest margin (4)

    3.73 % 3.83 %
     
     
     
    (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, 2014 would have been 3.72% compared to a net interest spread of 3.81% for the six months ended June 30, 2013.
    (4) Net interest margin is the result of net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
     
    This information is preliminary and based on company data available at the time of the presentation.
     
           
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                               

     

     

     

    June

      MarchDecemberSeptemberJuneMarch

    (dollars in thousands)

     

     

    2014

      2014   2013   2013   2013   2013
     
    Asset quality information and ratios:
    Nonperforming assets:
    Nonaccrual loans $ 15,678 15,606 18,183 19,989 20,561 21,837
    Other real estate (ORE)   12,946     15,038     15,226     15,522     15,992     16,802  
    Total nonperforming assets $ 28,624     30,644     33,409     35,511     36,553     38,639  

    Past due loans over 90 days and still accruing interest

    $ 649 7,944 3,057 - 747 152
    Troubled debt restructurings (5) $ 7,552 15,108 19,647 19,661 20,427 20,667
    Net loan charge-offs $ 890 934 1,535 2,100 3,491 2,178
    Allowance for loan losses to nonperforming loans 426.6 % 432.7 % 373.8 % 336.6 % 334.1 % 317.9 %
    As a percentage of total loans:
    Past due accruing loans over 30 days 0.45 % 0.43 % 0.39 % 0.33 % 0.39 % 0.23 %
    Potential problem loans (6) 1.79 % 2.01 % 1.51 % 1.80 % 2.11 % 2.57 %
    Allowance for loan losses 1.55 % 1.61 % 1.64 % 1.70 % 1.75 % 1.84 %
    Nonperforming assets to total loans and ORE 0.66 % 0.73 % 0.80 % 0.89 % 0.93 % 1.02 %
    Nonperforming assets to total assets 0.49 % 0.55 % 0.60 % 0.66 % 0.68 % 0.76 %
    Classified asset ratio (Pinnacle Bank) (8) 18.1 % 21.2 % 18.5 % 20.6 % 23.3 % 26.4 %

    Annualized net loan charge-offs year-to-date to avg. loans (7)

    0.09 % 0.09 % 0.24 % 0.27 % 0.30 % 0.24 %

    Wtd. avg. commercial loan internal risk ratings (6)

    4.5 4.5 4.5 4.5 4.5 4.5
     
    Interest rates and yields:
    Loans 4.27 % 4.30 % 4.28 % 4.33 % 4.41 % 4.58 %
    Securities 2.93 % 3.17 % 3.16 % 3.04 % 3.03 % 3.34 %
    Total earning assets 3.97 % 4.04 % 3.98 % 4.02 % 4.10 % 4.30 %
    Total deposits, including non-interest bearing 0.22 % 0.23 % 0.24 % 0.26 % 0.30 % 0.35 %
    Securities sold under agreements to repurchase 0.21 % 0.20 % 0.16 % 0.20 % 0.22 % 0.24 %
    FHLB advances 0.33 % 0.59 % 0.97 % 0.38 % 0.31 % 0.78 %
    Subordinated debt and other borrowings 2.58 % 2.61 % 2.60 % 2.62 % 2.72 % 2.72 %
    Total deposits and interest-bearing liabilities 0.27 % 0.29 % 0.29 % 0.31 % 0.35 % 0.42 %
     
    Pinnacle Financial Partners capital ratios (8):
    Stockholders’ equity to total assets 13.2 % 13.3 % 13.0 % 13.2 % 13.0 % 13.6 %
    Leverage 11.0 % 11.0 % 10.9 % 10.8 % 10.7 % 10.8 %
    Tier one risk-based 12.1 % 12.2 % 11.8 % 12.0 % 11.7 % 11.7 %
    Total risk-based 13.4 % 13.5 % 13.0 % 13.2 % 12.9 % 13.0 %
    Tier one common equity to risk-weighted assets 10.5 % 10.5 % 10.1 % 10.2 % 9.9 % 9.9 %
    Tangible common equity to tangible assets 9.3 % 9.3 % 9.0 % 9.0 % 8.8 % 9.2 %
    Pinnacle Bank ratios:
    Leverage 10.5 % 10.5 % 10.5 % 10.5 % 10.5 % 10.7 %
    Tier one risk-based 11.5 % 11.7 % 11.3 % 11.6 % 11.5 % 11.6 %
    Total risk-based 12.8 % 12.9 % 12.6 % 12.9 % 12.7 % 12.8 %
     
    This information is preliminary and based on company data available at the time of the presentation.
     
               
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED                          
                               

     

     

    June

    MarchDecemberSeptemberJuneMarch

    (dollars in thousands, except per share data)

     

     

    2014

      2014   2013   2013   2013   2013
     
    Per share data:
    Earnings – basic $ 0.49 0.47 0.45 0.43 0.42 0.40
    Earnings – diluted $ 0.49 0.47 0.44 0.42 0.42 0.39
    Common dividends per share $ 0.08 0.08 0.08 - - -
    Book value per common share at quarter end (9) $ 21.47 20.88 20.55 20.27 19.86 19.74
    Tangible common equity per common share $ 14.53 13.93 13.52 13.22 12.78 12.64
     
    Weighted avg. common shares – basic 34,697,888 34,602,337 34,355,691 34,282,899 34,172,274 33,987,265
    Weighted avg. common shares – diluted 35,081,702 34,966,600 34,765,424 34,606,567 34,431,054 34,206,202
    Common shares outstanding 35,601,495 35,567,268 35,221,941 35,133,733 35,073,763 35,022,487
     
    Investor information:
    Closing sales price $ 39.48 37.49 32.53 29.81 25.71 23.36
    High closing sales price during quarter $ 39.48 38.64 33.25 29.99 26.17 23.73
    Low closing sales price during quarter $ 33.46 31.02 29.67 26.56 21.68 19.29
     
    Other information:
    Gains on mortgage loans sold:
    Mortgage loan sales:
    Gross loans sold $ 83,421 61,290 70,194 105,817 123,181 120,569
    Gross fees (10) $ 2,715 1,504 1,842 2,470 3,346 3,158
    Gross fees as a percentage of loans originated 3.25 % 2.45 % 2.62 % 2.33 % 2.72 % 2.62 %
    Net gain on mortgage loans sold $ 1,669 1,235 1,113 1,326 1,949 1,813
    Investment losses on sales, net (17) $ - - - (1,441 ) (25 ) -
    Brokerage account assets, at quarter-end (11) $ 1,680,619 1,611,232 1,560,349 1,445,461 1,387,172 1,333,676
    Trust account managed assets, at quarter-end $ 687,772 613,440 605,324 576,190 630,322 515,970
    Core deposits (12) $ 4,245,745 4,087,477 4,100,037 3,903,000 3,771,424 3,537,860
    Core deposits to total funding (12) 85.2 % 84.8 % 85.5 % 84.3 % 81.3 % 84.0 %
    Risk-weighted assets $ 4,924,884 4,730,907 4,803,942 4,557,124 4,532,735 4,388,341
    Total assets per full-time equivalent employee $ 7,734 7,528 7,408 7,305 7,335 7,038
    Annualized revenues per full-time equivalent employee $ 320.6 319.7 303.5 300.8 300.8 307.7
    Annualized expenses per full-time equivalent employee $ 181.7 183.4 172.4 179.1 169.0 182.6
    Number of employees (full-time equivalent) 748.5 744.0 751.0 738.0 732.5 720.5
    Associate retention rate (13) 93.8 % 95.6 % 94.4 % 93.9 % 93.0 % 91.2 %
     
    Selected economic information (in thousands) (14):
    Nashville MSA nonfarm employment - May 2014 831.1 827.1 817.3 815.1 817.1 807.1
    Knoxville MSA nonfarm employment - May 2014 340.8 338.0 334.2 335.6 337.9 337.4
    Nashville MSA unemployment - May 2014 5.2 % 5.4 % 5.9 % 6.5 % 6.6 % 6.2 %
    Knoxville MSA unemployment - May 2014 5.6 % 5.8 % 6.3 % 7.0 % 6.9 % 6.6 %
    Nashville residential median home price - June 2014 $ 222.0 195.0 198.8 197.9 205.9 169.0
    Nashville inventory of residential homes for sale - June 2014 (16) 10.6 9.4 8.2 10.2 10.6 9.9
     
    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
     

     

    June

    MarchDecemberSeptemberJuneMarch
    (dollars in thousands, except per share data)     2014   2014   2013   2013   2013   2013
     
    Tangible assets:
    Total assets $ 5,788,792 5,600,933 5,563,776 5,391,201 5,373,168 5,070,935
    Less: Goodwill (243,550 ) (243,568 ) (243,651 ) (243,808 ) (243,900 ) (244,012 )
    Core deposit and other intangible assets   (3,365 )   (3,603 )   (3,841 )   (4,087 )   (4,334 )   (4,582 )
    Net tangible assets $ 5,541,877     5,353,762     5,316,284     5,143,306     5,124,934     4,822,342  
     
    Tangible equity:
    Total stockholders' equity $ 764,382 742,497 723,708 712,216 696,569 691,434
    Less: Goodwill (243,550 ) (243,568 ) (243,651 ) (243,808 ) (243,900 ) (244,012 )

    Core deposit and other intangible assets

      (3,365 )   (3,603 )   (3,841 )   (4,087 )   (4,334 )   (4,582 )
    Net tangible common equity $ 517,467     495,326     476,216     464,321     448,335     442,840  
     
    Ratio of tangible common equity to tangible assets   9.34%   9.25%   8.96%   9.03%   8.75%   9.18%
     
    Average tangible equity:
    Average stockholders' equity $ 757,089 740,743 722,919 705,275 699,559 688,241
    Less: Average goodwill (243,559 ) (243,610 ) (243,729 ) (243,854 ) (243,956 ) (244,026 )
    Core deposit and other intangible assets   (3,484 )   (3,722 )   (3,964 )   (4,211 )   (4,458 )   (4,843 )
    Net average tangible common equity $ 510,046     493,411     475,226     457,210     451,145     439,372  
     
    Return on average tangible common equity (1)   13.50%   13.45%   12.79%   12.71%   12.72%   12.41%
     
     
     

     

    For the three months ended

     

    June

    MarchDecemberSeptemberJuneMarch
      2014   2014   2013   2013   2013   2013
     
    Net interest income $ 47,226 45,908 44,969 44,573 43,599 42,758
     
    Noninterest income 12,598 12,732 12,488 11,387 11,326 11,902
    Less: Investment losses on sales, net - - - 1,441 25 -
    Net noncredit related loan losses   -     -     -     -     771     -  

    Noninterest income excluding investment losses on sales, net, and noncredit related loan losses

      12,598     12,732     12,488     12,828     12,122     11,902  

    Total revenues excluding the impact of investment losses on sales, net, and noncredit related loan losses

      59,824     58,644     57,457     57,401     55,721     54,660  
     
    Noninterest expense 33,902 33,646 32,637 33,323 30,862 32,440
    Less: Other real estate expense 226 651 302 699 1,391 721
    FHLB restructuring charges   -     -     -     -     -     877  

    Noninterest expense excluding the impact of other real estate expense and FHLB restructuring charges

      33,676     32,995     32,335     32,624     29,471     30,842  
     

    Adjusted pre-tax pre-provision income (15)

    $ 26,148     25,645     25,122     24,777     26,250     23,818  
     
     
    Efficiency Ratio (4)56.7%57.4%56.8%59.5%56.2%59.4%
     
     
    Total average assets $ 5,673,615     5,514,031     5,388,371     5,313,003     5,210,600     4,992,018  
     
    Noninterest expense (excluding ORE expense and FHLB restructuring charges) to avg. assets (1)2.38%2.43%2.38%2.44%2.27%2.51%
     
     
    This information is preliminary and based on company data available at the time of the presentation.
     
     
    PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
    SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
       
     
    1. Ratios are presented on an annualized basis.
    2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.
    3. Total revenue is equal to the sum of net interest income and noninterest income.
    4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
    5. Troubled debt restructurings include loans where the company, as a result of the borrower’s financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.
    6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A "1" risk rating is assigned to credits that exhibit Excellent risk characteristics, "2" exhibit Very Good risk characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or Average, “6” Watch List, “7” Criticized, “8” Classified or Substandard, “9” Doubtful and “10” Loss (which are charged-off immediately). Additionally, loans rated “8” or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings.
    7. Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period.
    8. Capital ratios are defined as follows:
    Equity to total assets – End of period total stockholders’ equity as a percentage of end of period assets.
    Tangible common equity to total assets - End of period total stockholders' equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.
    Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
    Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
    Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
    Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.

    Tier one common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of tier 1 capital as a percentage of total risk-weighted assets.

    9. Book value per share computed by dividing total stockholders’ equity less preferred stock and common stock warrants by common shares outstanding.
    10. Amounts are included in the statement of operations in “Gains on loans sold, net”, net of commissions paid on such amounts.
    11. At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services.
    12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000.
    The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.
    13. Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.
    14. Employment and unemployment data is from BERC- MTSU & Bureau of Labor Statistics. Labor force data is seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. Historical data is subject to update by the BERC- MTSU & Bureau of Labor Statistics. Historical data is presented based on the most recently reported data available by the BERC- MTSU & Bureau of Labor Statistics. The Nashville home data is from the Greater Nashville Association of Realtors.
    15. Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments, net and non-credit related loan losses as well as other real estate owned expenses and FHLB restructuring charges.

    16. Represents month's supply of homes currently listed with MLS based on current sales activity in the Nashville MSA.

    17. Represents investment gains (losses) on sales and impairments, net occurring as a result of both credit losses and losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.
    18. The dividend payout ratio is calculated as the sum of the annualized dividend rate divided by the trailing 12-months fully diluted earnings per share as of the dividend declaration date.
     





    Pinnacle Financial Partners, Inc.

    Media Contact:

    Nikki Klemmer, 615-743-6132

    or

    Financial Contact:

    Harold Carpenter, 615-744-3742

    www.pnfp.com


    Source: Pinnacle Financial Partners, Inc.


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