EX-99.1 4 g17342exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(PINNACLE LOGO)
FOR IMMEDIATE RELEASE
         
 
  MEDIA CONTACT:   Sue Atkinson, 615-320-7532
 
  FINANCIAL CONTACT:   Harold Carpenter, 615-744-3742
 
  WEBSITE:   www.pnfp.com
PINNACLE FINANCIAL REPORTS STRONG LOAN GROWTH AND EARNINGS OF $0.31
PER FULLY DILUTED SHARE FOR FOURTH QUARTER OF 2008
Fully diluted earnings per share of $0.35, excluding merger-related expense
     NASHVILLE, Tenn., Jan. 20, 2009 — Pinnacle Financial Partners Inc. (Nasdaq/NGS: PNFP) today reported strong earnings and loan growth for the quarter ended Dec. 31, 2008. Fully diluted earnings per common share available to common stockholders were $0.31 for the quarter ended Dec. 31, 2008, compared to $0.33 per fully diluted common share available to common stockholders for the quarter ended Dec. 31, 2007. Excluding merger related expense associated with its Nov. 30, 2007, acquisition of Mid-America Bancshares Inc., fully diluted earnings per common share available to common stockholders were $0.35 for the quarters ended Dec. 31, 2008 and 2007.
     Fully diluted earnings per common share available to common stockholders were $1.27 for the year ended Dec. 31, 2008, compared to $1.34 per fully diluted common share available to common stockholders for the year ended Dec. 31, 2007. Excluding merger related expense associated with the Mid-America acquisition, fully diluted earnings per common share available to common stockholders were $1.45 for the year ended Dec. 31, 2008, compared to $1.36 for the same period last year, an increase of 6.6 percent.
     On Dec. 12, 2008, Pinnacle issued 95,000 shares of preferred stock to the U.S. Treasury for $95 million pursuant to the U.S. Treasury’s Capital Purchase Program (the “CPP”). Additionally, Pinnacle issued 534,910 common stock warrants to the U.S. Treasury as a condition to Pinnacle’s participation in the CPP. The warrants have an exercise price of $26.64 each, are immediately exercisable and expire 10 years from the date of issuance. In addition to the accrued dividend costs and the accretion of the discount recorded on the preferred stock, which totaled $309,000 during the three months and year ended Dec. 31,

 

 

2008, Pinnacle also accrued $237,000 in franchise tax expense which will be paid to the State of Tennessee as a result of the additional capital acquired through the CPP. Pinnacle estimates that the dilutive impact of its participation in the CPP was approximately $0.02 per fully diluted common share in the fourth quarter of 2008.
     Pinnacle also reported $152 million in organic loan growth during the fourth quarter of 2008 which approximated the $155 million reported in the same quarter of 2007. At Dec. 31, 2008, Pinnacle’s allowance for loan losses was 1.09 percent of total loans, compared to 1.04 percent at Dec. 31, 2007.
     “We are very pleased with our fourth quarter and 2008 results,” said M. Terry Turner, Pinnacle President and Chief Executive Officer. “While 2008 presented many challenges for our industry, we are not only pleased with the continued dramatic growth we experienced this year but also with our solid credit quality compared to our peers. Our strong results in this difficult period are reflective of the experience of our relationship managers and are a testament to the success of our strategy to hire the best, most experienced financial professionals in our market.”
FOURTH QUARTER 2008 HIGHLIGHTS:
  •   Strong earnings
  o   Net income for the fourth quarter of 2008 was $7.7 million, up 24.1 percent from the prior year’s fourth quarter net income of $6.2 million. Excluding after-tax merger related expense of $909,000, primarily related to the accrual of associate retention bonuses, net income was $8.7 million in the fourth quarter of 2008, compared to net income of $6.6 million excluding after-tax merger related expense of $378,000 in the fourth quarter of 2007, an increase of 31.4 percent.
 
  o   Revenue (the sum of net interest income and noninterest income) for the quarter ended Dec. 31, 2008, amounted to $37.93 million, compared to $28.62 million for the same quarter of last year, an increase of 32.5 percent.
  •   Continued balance sheet growth
  o   Loans at Dec. 31, 2008, were $3.35 billion, up $605 million from $2.75 billion at Dec. 31, 2007, representing a growth rate of 22.0 percent.

Page 2

 

  o   Total deposits at Dec. 31, 2008, were $3.53 billion, up $608 million from $2.93 billion at Dec. 31, 2007, representing a growth rate of 20.8 percent.
  •   Superior credit quality
  o   Net charge-offs as a percentage of average loan balances were 0.25 percent (annualized) for the three months ended Dec. 31, 2008, compared to 0.09 percent (annualized) for the three months ended Dec. 31, 2007. Net charge-offs as a percentage of average loan balances were 0.10 percent for the 12 months ended Dec. 31, 2008, compared to 0.07 percent for the 12 months ended Dec. 31, 2007.
 
  o   Nonperforming assets were 0.86 percent of total loans and other real estate at Dec. 31, 2008, compared to 0.93 percent at Sept. 30, 2008, and 0.78 percent at Dec. 31, 2007. Approximately $15.08 million of the $29.17 million of nonperforming assets at Dec. 31, 2008, were acquired in connection with the Mid-America acquisition.
 
  o   Past due loans over 30 days, excluding nonperforming loans, were 0.60 percent of total loans and other real estate at Dec. 31, 2008, 0.61 percent at Sept. 30, 2008, and 0.45 percent at Dec. 31, 2007.
  •   Strong capital position
  o   At Dec. 31, 2008, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 6.1 percent, compared to 5.8 percent at Dec. 31, 2007. Pinnacle’s tangible book value per common share was $11.62 at Dec. 31, 2008, compared to $9.24 at Dec. 31, 2007.
 
  o   At Dec. 31, 2008, Pinnacle’s total risk based capital ratio was 13.4 percent, compared to 10.4 percent at Dec. 31, 2007.
     “Our company’s results reflect the underlying strength of our business model,” Turner said. “Excellent growth in loans, deposits and fee-based businesses demonstrate our competitive strength in Middle Tennessee and Knoxville and provide further evidence of the ongoing opportunity we have in these two valuable banking markets.”
     As noted above, Pinnacle issued 95,000 shares of preferred stock to the U.S. Treasury on Dec. 12, 2008. The preferred stock is non-voting, other than having class voting rights on certain matters, and pays cumulative dividends quarterly at a rate of 5 percent per

Page 3

 

annum for the first five years and 9 percent thereafter. The preferred shares are redeemable by Pinnacle only under certain circumstances during the first three years and are redeemable thereafter without restriction. As a result of Pinnacle’s participation in the CPP, Pinnacle’s capital ratios have been further enhanced. At Dec. 31, 2008, Pinnacle’s Tier 1 risk-based capital ratio was 12.1 percent, its total risk-based capital was 13.5 percent and its leverage ratio was 10.5 percent, compared to 9.6 percent, 10.5 percent and 8.7 percent at Dec. 31, 2007, respectively.
FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH
  •   Return on average assets for the fourth quarter 2008 was 0.68 percent compared to 0.89 percent for the fourth quarter of 2007. Excluding the impact of the Mid-America merger-related expense, return on average assets for the fourth quarter of 2008 approximated 0.76 percent compared to 0.94 percent during the fourth quarter of 2007.
 
  •   Return on average stockholders’ equity for the quarter ended Dec. 31, 2008, was 5.70 percent, compared to 8.00 percent for the fourth quarter of 2007. Excluding the impact of the Mid-America merger-related expense, return on average stockholders’ equity for the fourth quarter of 2008 approximated 6.37 percent compared to 8.49 percent for the fourth quarter of 2007.
 
  •   Return on average tangible stockholders’ equity (average stockholders’ equity less goodwill and core deposit intangibles) for the quarter ended Dec. 31, 2008, was 11.05 percent, compared to 17.65 percent for the fourth quarter of 2007. Excluding the impact of the Mid-America merger-related expense, return on average tangible stockholders’ equity for the fourth quarter of 2008 approximated 12.35 percent compared to 18.72 percent for the fourth quarter of 2007.
     Total assets grew to $4.76 billion as of Dec. 31, 2008, up $962 million from the $3.79 billion reported at the same time last year.
CREDIT QUALITY
  •   Allowance for loan losses represented 1.09 percent of total loans at Dec. 31, 2008, compared to 1.04 percent a year ago.

Page 4

 

  o   The ratio of the allowance for loan losses to nonperforming loans increased to 336 percent at Dec. 31, 2008, compared to 145 percent at Dec. 31, 2007.
  •   Provision for loan losses was $3.71 million for the fourth quarter of 2008, compared to $2.26 million for the fourth quarter of 2007, a 64.2 percent increase. Provision for loan losses was $11.21 million for the year ended Dec. 31, 2008, compared to $4.72 million for the 2007, a 137.6 percent increase.
  o   During the fourth quarter of 2008, the firm recorded net charge-offs of $2.1 million, compared to net charge-offs of $462,000 during the same period in 2007. Net charge-offs to total average loans were 0.10 percent for the year ended Dec. 31, 2008. Gross charge-offs were $2.69 million during the fourth quarter of 2008, compared to $532,000 for the same period last year. Recoveries for the fourth quarter of 2008 were $624,000, compared to $69,000 during the fourth quarter of 2007.
     “Our associates remain focused on growing our client base while at the same time prudently managing risk,” Turner said. “As expected, credit costs trended higher in the fourth quarter, but our nonperforming asset and coverage ratios remained very strong and continue to outperform peer averages. Given the current economic environment, we expect our credit costs will increase in 2009, but we also anticipate that our net charge-off and nonperforming asset ratios will outperform those of our peers.”
     As noted above, Pinnacle reported that nonperforming loans and other real estate as a percentage of total loans and other real estate increased from 0.78 percent at Dec. 31, 2007 to 0.86 percent at Dec. 31, 2008. The following is a summary of the activity in various nonperforming asset categories for the quarter ended Dec. 31, 2008:
                                 
    Balances     Payments, Sales             Balances  
(in thousands)   Sept. 30, 2008     and Reductions     Increases     Dec. 31, 2008  
Nonperforming loans:
                                
Residential construction & development
   $ 11,965     $ 9,106     $ 2,193     $ 5,052  
Other
     5,778       3,941       3,971       5,808  
 
                        
Totals
     17,743       13,047       6,164       10,860  
 
                        
Other real estate:
                                
Residential construction & development
     10,526       3,769       10,465       17,222  
Other
     1,616       999       467       1,084  
 
                        
Totals
     12,142       4,768       10,932       18,306  
 
                        
Total nonperforming assets
   $ 29,885     $ 17,815     $ 17,096     $ 29,166  
 
                        

Page 5

 

REVENUE
  •   Net interest income for fourth quarter 2008 was $29.89 million compared to $22.01 million for the same quarter last year, an increase of 35.8 percent.
  o   Net interest margin for the fourth quarter of 2008 was 2.96 percent, compared to a net interest margin of 3.49 percent for the same period last year and 3.14 percent for the third quarter of 2008.
  •   Noninterest income for the fourth quarter 2008 was $8.04 million, a 21.4 percent increase over the $6.61 million recorded during the same quarter in 2007.
     “We have traditionally been an asset sensitive institution,” said Harold R. Carpenter, chief financial officer of Pinnacle Financial Partners. “The recent decisions by the Federal Reserve to reduce the target rate to 0.25 percent had a meaningful negative impact on our margins during the fourth quarter of 2008. Although we continue to reposition our balance sheet with interest rate floors on many of our new and renewing loans and with rate decreases on new and renewed time deposits, we believe competitive pressures in both the Nashville and Knoxville MSAs will cause our margins to remain at the current low levels for the next several quarters. However, our loan pipelines remain strong as we continue to win client relationships throughout our franchise.”
     “Furthermore, although the capital we obtained through the CPP will be dilutive to our earnings for the next several quarters, we believe that we will be able to rapidly leverage this capital in the Nashville and Knoxville MSA’s as the CPP will provide us with the ability to increase lending in our markets,” said Carpenter.
     The 21.4 percent increase in noninterest income between the fourth quarter of 2007 and the fourth quarter of 2008 was due to several factors, including increased fee revenue as a result of the Mid-America merger and gains on the sales of mortgage loans from the firm’s mortgage origination unit. During the fourth quarter of 2008, Pinnacle’s mortgage origination unit sold $72.10 million of mortgage loans compared to $40.27 million during the fourth quarter of 2007, an increase of 79.02 percent.
     Noninterest income decreased by approximately $1.2 million between the third and fourth quarters of 2008. This decrease is primarily attributable to a $695,000 gain on sale of a commercial loan recorded in the third quarter of 2008, reduced revenues in the fourth quarter of 2008 from the Company’s investment in bank-owned life insurance policies and decreases

Page 6

 

in other fee revenue categories generally associated with a slowing economy and reduced investment valuations in our asset management units. Noninterest income during the fourth quarter of 2008 represented approximately 21.19 percent of total revenues, compared to 23.10 percent for the same quarter in 2007.
NONINTEREST EXPENSE
  •   Noninterest expense for the quarter ended Dec. 31, 2008, was $22.59 million ($21.09 million, excluding merger related expense), compared to $23.33 million ($22.16 million, excluding merger related expense) in the third quarter of 2008 and $17.76 million in the fourth quarter of 2007 ($17.14 million, excluding merger related expense).
 
  •   Compensation expense was $10.01 million during the fourth quarter of 2008, compared to $13.01 million during the third quarter of 2008 and $9.98 million during the fourth quarter of 2007. The decrease in compensation expense between the third and fourth quarters of 2008 was due to the reversal of previously accrued incentives during the fourth quarter. Total full-time equivalent employees were 719.0 at Dec. 31, 2008, compared to 702.0 at Dec. 31, 2007.
 
  •   Merger related expense was $1.50 million during the quarter ended Dec. 31, 2008, and was composed primarily of $1.26 million in retention bonus accruals for associates that had been Mid-America associates.
 
  •   The efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 59.5 percent during the fourth quarter of 2008, compared to 60.5 percent for the third quarter of 2008 and 62.1 percent in the fourth quarter of 2007. Excluding merger related expenses, the efficiency ratio was 55.6 percent in the fourth quarter of 2008 and 59.9 percent in the fourth quarter of 2007.
     Carpenter noted that the firm will continue to make investments in future growth and, consequently, anticipates increased noninterest expense for the first quarter of 2009 over the amount the firm has experienced during the fourth quarter of 2008. Compensation expense was less in the fourth quarter of 2008 when compared to the third quarter of 2008 because of the reversal of incentives previously accrued that were not ultimately earned. The increased expense in 2009 will be primarily attributable to increasing headcount and other variable costs associated with the organic growth of the firm.

Page 7

 

     Other noninterest expense increased by approximately $2.0 million between the third and fourth quarters of 2008. This increase is primarily attributable to a $1.1 million increase in expenses related to the Company’s other real estate properties, increases in state franchise tax accruals and other general expense increases.
INVESTMENTS IN FUTURE GROWTH
  •   Pinnacle has hired 32 highly experienced associates for its denovo expansion to Knoxville that was announced on April 9, 2007. Loans outstanding in Knoxville at Dec. 31, 2008, were $318 million, which is $93 million ahead of the original target disclosed at the time the Knoxville expansion was announced. Pinnacle has negotiated a site for construction of a full-service location in the Fountain City area of Knoxville and currently expects to begin construction during the first quarter of 2009. The Fountain City location is expected to open during the third quarter of 2009.
 
  •   Pinnacle completed construction of a new Dickson County location in the Nashville MSA to replace a temporary location. The new facility opened in the fourth quarter of 2008. Additionally, Pinnacle has entered into an agreement to construct a new facility in Brentwood, Tenn. This facility is currently scheduled to open in the fourth quarter of 2009.
 
  •   In the fourth quarter Miller Loughry Beach, Pinnacle’s wholly-owned insurance subsidiary, completed its integration with Beach and Gentry Insurance LLC, another large insurance agency acquired in July 2008. Miller Loughry Beach, one of the largest independent insurance agencies in Middle Tennessee, has 41 associates working with over 9,500 clients.
 
  •   Pinnacle’s total associate base at Dec. 31, 2008, was 719.0 full-time equivalents (FTEs), compared to 702.0 at Dec. 31, 2007. Pinnacle anticipates increasing its associate base by 70 associates during 2009.

Page 8

 

NASHVILLE HOUSING MARKET UPDATE
     The Greater Nashville Realtors Association reported residential closings were down 31.3 percent in the fourth quarter of 2008 in comparison to the same quarter in 2007. For the year ended Dec. 31, 2008, compared to the previous year, residential closings are down approximately 26.8 percent. At Dec. 31, 2008, the inventory of residential homes for sale was 12,900 homes, which was a decrease of approximately 16.8 percent from Sept. 30, 2008. The average median residential home sales price for the three months ended Dec. 31, 2008, averaged $166,250, which was down 5.7 percent from the three months ended September 30, 2008 and 9.9 percent from the three months ended Dec. 31, 2007.
     Pinnacle Financial Partners provides a full range of banking, investment, mortgage and insurance products and services designed for small- to mid-sized businesses and their owners, real estate professionals and individuals interested in a comprehensive relationship with their financial institution. Comprehensive wealth management services, such as financial planning and trust, help clients increase, protect and distribute their assets. The firm also has a well-established expertise in commercial real estate.
     The firm began operations in a single downtown Nashville location in October 2000 and has since grown to $4.8 billion in assets. In 2007, Pinnacle launched an expansion into Knoxville, another high growth MSA. The addition of Mid-America has made Pinnacle the second-largest bank holding company headquartered in Tennessee, with 31 offices in eight Middle Tennessee counties and two in Knoxville.
     Additional information concerning Pinnacle 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,” “intend,” “plan,” “believe,” “seek,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated 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 to continue to grow its loan portfolio at historic rates in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, (iv) increased competition with other financial institutions, (v) deterioration or lack of sustained growth in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, (vi) rapid fluctuations or unanticipated changes in interest rates, (vii) the development any new market other than Nashville or Knoxville, (viii) a merger or acquisition, (ix) any activity in the capital markets that would cause Pinnacle to conclude that there was impairment of any asset including intangible assets and (x) changes in state and Federal legislation or regulations applicable to Banks and other financial services providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy. Many of such factors are beyond Pinnacle’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle 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.

Page 9

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
                 
    December 31, 2008   December 31, 2007
 
ASSETS
                
Cash and noninterest-bearing due from banks
   $ 68,388,961     $ 76,941,931  
Interest-bearing due from banks
     8,869,680       24,706,966  
Federal funds sold and other
     12,994,114       20,854,966  
     
Cash and cash equivalents
     90,252,755       122,503,863  
 
                
Securities available-for-sale, at fair value
     839,229,428       495,651,939  
Securities held-to-maturity (fair value of $10,469,307 and $26,883,473 at December 31, 2008 and December 31, 2007, respectively)
     10,551,256       27,033,356  
Mortgage loans held-for-sale
     25,476,788       11,251,652  
 
                
Loans
     3,354,907,269       2,749,640,689  
Less allowance for loan losses
     (36,484,073 )     (28,470,207 )
     
Loans, net
     3,318,423,196       2,721,170,482  
 
                
Premises and equipment, net
     68,865,221       68,385,946  
Other investments
     33,616,450       22,636,029  
Accrued interest receivable
     17,565,141       18,383,004  
Goodwill
     244,160,624       243,573,636  
Core deposit and other intangible assets
     16,871,202       17,325,988  
Other assets
     90,769,138       46,254,566  
     
Total assets
   $ 4,755,781,199     $ 3,794,170,461  
     
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Deposits:
                
Noninterest-bearing
   $ 424,756,813     $ 400,120,147  
Interest-bearing
     375,992,912       410,661,187  
Savings and money market accounts
     694,582,319       742,354,465  
Time
     2,037,914,307       1,372,183,317  
     
Total deposits
     3,533,246,351       2,925,319,116  
Securities sold under agreements to repurchase
     184,297,793       156,070,830  
Federal Home Loan Bank advances and other borrowings
     273,609,181       141,666,133  
Subordinated debt
     97,476,000       82,476,000  
Accrued interest payable
     8,326,264       10,374,538  
Other liabilities
     31,791,102       11,653,550  
     
Total liabilities
     4,128,746,691       3,327,560,167  
 
                
Stockholders’ equity:
                
Preferred stock, no par value; 10,000,000 shares authorized; 95,000 shares issued and outstanding at December 31, 2008, and no shares issued and outstanding at December 31, 2007
     89,842,686       —  
Common stock, par value $1.00; 90,000,000 shares authorized; 23,762,124 issued and outstanding at December 31, 2008 and 22,264,817 issued and outstanding at December 31, 2007
     23,762,124       22,264,817  
Common stock warrants
     5,202,765       —  
Additional paid-in capital
     417,040,974       390,977,308  
Retained earnings
     84,116,559       54,150,679  
Accumulated other comprehensive income (loss), net of taxes
     7,069,400       (782,510 )
     
Stockholders’ equity
     627,034,508       466,610,294  
     
Total liabilities and stockholders’ equity
   $ 4,755,781,199     $ 3,794,170,461  
     

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
                                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2008   2007   2008   2007
 
Interest income:
                                
Loans, including fees
   $ 43,433,230     $ 37,605,268     $ 175,128,097     $ 129,888,784  
Securities:
                                
Taxable
     7,996,964       3,833,771       23,431,746       13,961,714  
Tax-exempt
     1,368,613       959,662       5,399,312       3,066,519  
Federal funds sold and other
     474,618       939,052       2,122,343       4,014,424  
     
Total interest income
     53,273,425       43,337,753       206,081,498       150,931,441  
     
 
                                
Interest expense:
                                
Deposits
     19,414,345       17,634,417       76,998,042       61,671,734  
Securities sold under agreements to repurchase
     585,705       1,707,323       2,666,760       7,371,490  
Federal Home Loan Bank advances and other borrowings
     3,381,222       1,987,150       12,201,797       6,176,205  
     
Total interest expense
     23,381,272       21,328,890       91,866,599       75,219,429  
     
Net interest income
     29,892,153       22,008,863       114,214,899       75,712,012  
Provision for loan losses
     3,710,131       2,259,813       11,213,543       4,719,841  
     
Net interest income after provision for loan losses
     26,182,022       19,749,050       103,001,356       70,992,171  
 
                                
Noninterest income:
                                
Service charges on deposit accounts
     2,698,760       2,257,830       10,735,080       7,941,029  
Investment services
     1,164,061       1,002,303       4,923,840       3,455,808  
Insurance sales commissions
     907,950       657,602       3,520,205       2,486,884  
Gain on loans and loan participations sold, net
     1,048,051       477,194       4,044,441       1,858,077  
Net gain on sale of premises
     19,350       —       1,030,231       75,337  
Trust fees
     556,727       596,364       2,178,112       1,908,440  
Other noninterest income
     1,644,639       1,620,771       8,286,458       4,795,352  
     
Total noninterest income
     8,039,538       6,612,064       34,718,367       22,520,927  
     
 
                                
Noninterest expense:
                                
Salaries and employee benefits
     10,013,629       9,977,978       49,396,022       36,145,588  
Equipment and occupancy
     3,451,261       3,050,938       14,686,398       10,260,915  
Marketing and other business development
     680,814       619,363       1,915,747       1,676,455  
Postage and supplies
     699,642       542,070       2,953,013       1,995,267  
Amortization of intangibles
     788,267       596,756       3,100,599       2,144,018  
Other noninterest expense
     5,455,445       2,352,923       15,310,241       7,635,439  
Merger related expense
     1,496,554       621,883       7,116,770       621,883  
     
Total noninterest expense
     22,585,612       17,761,911       94,478,790       60,479,565  
     
Income before income taxes
     11,635,948       8,599,203       43,240,933       33,033,533  
Income tax expense
     3,583,095       2,357,363       12,367,015       9,992,178  
     
Net income
     8,052,853       6,241,840       30,873,918       23,041,355  
Preferred dividends
     263,889       —       263,889       —  
Accretion on preferred stock discount
     45,450       —       45,450       —  
     
Net income available to common stockholders
   $ 7,743,514     $ 6,241,840     $ 30,564,579     $ 23,041,355  
     
 
                                
Per share information:
                                
Basic net income per common share available to common stockholders
   $ 0.33     $ 0.35     $ 1.34     $ 1.43  
     
Diluted net income per common share available to common stockholders
   $ 0.31     $ 0.33     $ 1.27     $ 1.34  
     
 
                                
Weighted average shares outstanding:
                                
Basic
     23,491,356       17,753,661       22,793,699       16,100,076  
Diluted
     24,739,044       19,110,851       24,053,972       17,255,543  

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
                                                 
    Three months ended     Three months ended  
(dollars in thousands)   December 31, 2008     December 31, 2007  
    Average                     Average              
    Balances     Interest     Rates/ Yields     Balances     Interest     Rates/ Yields  
     
Interest-earning assets:
                                                
Loans
   $ 3,282,461     $ 43,433       5.27 %   $ 2,063,442     $ 37,606       7.23 %
Securities:
                                                
Taxable
     589,113       7,997       5.40 %     309,353       3,834       4.92 %
Tax-exempt (1)
     132,938       1,369       5.40 %     100,789       959       4.98 %
Federal funds sold and other
     72,798       475       2.80 %     68,215       939       5.71 %
     
Total interest-earning assets
     4,077,310     $ 53,273       5.25 %     2,541,799     $ 43,338       6.82 %
                         
Nonearning assets
                                                
Intangible assets
     261,570                       169,140                  
Other nonearning assets
     186,526                       80,730                  
 
                                            
Total assets
   $ 4,525,406                     $ 2,791,669                  
 
                                            
 
                                                
  Interest-bearing liabilities:
                                                
Interest-bearing deposits
                                                
Interest checking
   $ 318,392     $ 614       0.77 %   $ 284,121     $ 2,083       2.91 %
Savings and money market
     678,894       2,278       1.34 %     599,127       4,497       2.98 %
Certificates of deposit
     1,953,681       16,522       3.36 %     924,859       11,055       4.74 %
     
Total interest-bearing deposits
     2,950,967       19,414       2.62 %     1,808,107       17,635       3.87 %
Securities sold under agreements to repurchase
     238,310       586       0.98 %     201,605       1,707       3.36 %
Federal Home Loan Bank advances and other borrowings
     234,482       1,912       3.24 %     57,970       673       4.61 %
Subordinated debt
     97,476       1,469       5.99 %     72,391       1,314       7.20 %
     
Total interest-bearing liabilities
     3,521,235       23,381       2.64 %     2,140,073       21,329       3.95 %
Noninterest-bearing deposits
     442,267       —       —       327,866       —       —  
     
Total deposits and interest-bearing liabilities
     3,963,502     $ 23,381       2.35 %     2,467,939     $ 21,329       3.43 %
                         
Other liabilities
     21,644                       14,299                  
Stockholders’ equity 
     540,260                       309,431                  
 
                                            
Total liabilities and stockholders’ equity
   $ 4,525,406                     $ 2,791,669                  
 
                                            
Net interest income 
           $ 29,892                     $ 22,009          
 
                                            
Net interest spread (2)
                     2.61 %                     2.87 %
Net interest margin (3)
                     2.96 %                     3.49 %
 
(1)   Yields computed on tax-exempt instruments on a tax equivalent basis.    
 
(2)   Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities.
 
(3)   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.    

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
                                                 
    Year ended     Year ended  
(dollars in thousands)   December 31, 2008     December 31, 2007  
    Average                     Average              
    Balances     Interest     Rates/ Yields     Balances     Interest     Rates/ Yields  
     
Interest-earning assets:
                                                
Loans
   $ 3,028,932     $ 175,128       5.78 %   $ 1,723,361     $ 129,889       7.54 %
Securities:
                                                
Taxable
     448,229       23,432       5.23 %     280,668       13,962       4.97 %
Tax-exempt (1)
     135,011       5,399       5.27 %     82,001       3,066       4.93 %
Federal funds sold and other
     54,878       2,122       4.13 %     72,344       4,014       5.57 %
     
Total interest-earning assets
     3,667,050     $ 206,081       5.67 %     2,158,374     $ 150,931       7.04 %
                         
Nonearning assets
                                                
Intangible assets
     260,294                       135,893                  
Other nonearning assets
     176,546                       93,782                  
 
                                            
Total assets
   $ 4,103,890                     $ 2,388,049                  
 
                                            
 
                                                
 
                                                
Interest-bearing liabilities:
                                                
Interest-bearing deposits
                                                
Interest checking
   $ 368,995     $ 5,191       1.41 %   $ 261,163     $ 8,309       3.18 %
Savings and money market
     705,988       11,954       1.69 %     535,468       17,618       3.29 %
Certificates of deposit
     1,620,621       59,853       3.69 %     727,724       35,745       4.91 %
     
Total interest-bearing deposits
     2,695,604       76,998       2.86 %     1,524,355       61,672       4.05 %
Securities sold under agreements to repurchase
     196,601       2,667       1.36 %     181,621       7,371       4.06 %
Federal Home Loan Bank advances and other borrowings
     200,699       6,870       3.42 %     44,072       2,211       5.02 %
Subordinated debt
     88,223       5,332       6.04 %     56,759       3,965       6.98 %
     
Total interest-bearing liabilities
     3,181,127       91,867       2.89 %     1,806,807       75,219       4.16 %
Noninterest-bearing deposits
     404,718       —       —       291,983       —       —  
     
Total deposits and interest-bearing liabilities
     3,585,845     $ 91,867       2.56 %     2,098,790     $ 75,219       3.58 %
                         
Other liabilities
     19,351                       13,108                  
Stockholders’ equity 
     498,694                       276,151                  
 
                                            
Total liabilities and stockholders’ equity
   $ 4,103,890                     $ 2,388,049                  
 
                                            
Net interest income 
           $ 114,215                     $ 75,712          
 
                                            
Net interest spread (2)
                     2.78 %                     2.88 %
Net interest margin (3)
                     3.17 %                     3.55 %
 
(1)   Yields computed on tax-exempt instruments on a tax equivalent basis.    
 
(2)   Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities.      
 
(3)   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.    

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                                                 
    Dec   Sept   June   March   Dec   Sept
(dollars in thousands)   2008   2008   2008   2008   2007   2007
 
Balance sheet data, at quarter end:
                                                
Total assets
   $ 4,755,781       4,337,552       4,106,055       3,888,900       3,794,170       2,368,079  
Total loans
     3,354,907       3,202,909       3,032,272       2,866,536       2,749,641       1,731,245  
Allowance for loan losses
     (36,484 )     (34,841 )     (31,789 )     (29,871 )     (28,470 )     (17,978 )
Securities
     849,781       628,807       521,214       505,377       522,685       352,222  
Noninterest-bearing deposits
     424,757       457,543       438,458       429,289       400,120       316,542  
Total deposits
     3,533,246       3,295,163       3,152,514       2,967,025       2,925,319       1,826,884  
Securities sold under agreements to repurchase
     184,298       198,807       183,188       171,186       156,071       145,332  
FHLB advances and other borrowings
     273,609       207,239       187,315       168,606       141,666       55,671  
Subordinated debt
     97,476       97,476       82,476       82,476       82,476       51,548  
Total stockholders’ equity
     627,035       512,569       481,709       476,772       466,610       274,636  
 
                                                
Balance sheet data, quarterly averages:
                                                
Total assets
   $ 4,525,406       4,202,592       3,913,519       3,774,042       2,791,669       2,378,501  
Total loans
     3,282,461       3,129,549       2,941,973       2,761,745       2,063,442       1,697,862  
Securities
     722,051       590,143       516,949       503,815       410,142       347,423  
Total earning assets
     4,077,310       3,765,582       3,500,853       3,324,452       2,541,799       2,151,583  
Noninterest-bearing deposits
     442,267       409,850       398,337       368,413       327,866       293,701  
Total deposits
     3,393,234       3,178,863       2,947,669       2,881,518       2,135,973       1,814,135  
Securities sold under agreements to repurchase
     238,310       204,101       174,847       169,146       201,605       194,774  
Advances from FHLB and other borrowings
     234,482       215,739       208,773       143,802       57,970       29,946  
Subordinated debt
     97,476       90,465       82,476       82,476       72,391       51,548  
Total stockholders’ equity
     540,260       502,575       477,502       474,439       309,431       271,653  
 
                                                
Statement of operations data, for the three months ended:
                                                
Interest income
   $ 53,273       51,873       48,774       52,161       43,338       38,347  
Interest expense
     23,381       22,591       21,092       24,802       21,329       19,387  
     
Net interest income
     29,892       29,281       27,682       27,359       22,009       18,960  
Provision for loan losses
     3,710       3,125       2,787       1,591       2,260       772  
     
Net interest income after provision for loan losses
     26,182       26,157       24,895       25,768       19,749       18,188  
Noninterest income
     8,040       9,253       9,058       8,367       6,612       5,332  
Noninterest expense
     22,586       23,326       23,075       25,492       17,762       15,110  
     
Income before taxes
     11,636       12,083       10,878       8,644       8,599       8,410  
Income tax expense
     3,583       3,288       2,917       2,579       2,357       2,638  
Preferred dividends and accretion
     309       —       —       —       —       —  
     
Net income to common stockholders
   $ 7,744       8,795       7,961       6,065       6,242       5,772  
     
 
                                                
Profitability and other ratios:
                                                
Return on avg. assets (1)
     0.68 %     0.83 %     0.82 %     0.65 %     0.89 %     0.96 %
Return on avg. equity (1)
     5.70 %     6.96 %     6.71 %     5.14 %     8.00 %     8.43 %
Net interest margin (2)
     2.96 %     3.14 %     3.24 %     3.37 %     3.49 %     3.54 %
Noninterest income to total revenue (3)
     21.19 %     24.01 %     24.66 %     23.42 %     23.10 %     21.95 %
Noninterest income to avg. assets (1)
     0.71 %     0.88 %     0.93 %     0.89 %     0.94 %     0.89 %
Noninterest exp. to avg. assets (1)
     1.99 %     2.21 %     2.36 %     2.71 %     2.52 %     2.52 %
Efficiency ratio (4)
     59.54 %     60.53 %     62.81 %     71.35 %     62.06 %     62.20 %
Avg. loans to average deposits
     96.74 %     98.45 %     99.81 %     95.84 %     96.60 %     93.59 %
Securities to total assets
     17.87 %     14.50 %     12.69 %     13.00 %     13.75 %     14.87 %
Average interest-earning assets to average interest-bearing liabilities
     115.79 %     114.83 %     116.10 %     114.30 %     118.77 %     119.75 %
Brokered time deposits to total deposits (16)
     16.55 %     13.95 %     12.53 %     7.78 %     9.48 %     8.04 %

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                                                 
    Dec   Sept   June   March   Dec   Sept
(dollars in thousands)   2008   2008   2008   2008   2007   2007
 
Asset quality information and ratios:
                                                
Nonperforming assets:
                                                
Nonaccrual loans
   $ 10,860       17,743       13,067       17,124       19,677       2,364  
Other real estate
   $ 18,306       12,142       9,181       3,567       1,673       878  
Past due loans over 90 days and still accruing interest
   $ 1,508       3,241       2,272       2,002       1,613       633  
Net loan charge-offs
   $ 2,068       73       870       190       462       169  
Allowance for loan losses to total loans
     1.09 %     1.09 %     1.05 %     1.04 %     1.04 %     1.04 %
Allowance for loan losses to nonaccrual loans
     335.9 %     196.4 %     243.3 %     174.4 %     144.7 %     760.5 %
As a percentage of total loans and ORE:
                                                
Past due accruing loans over 30 days
     0.60 %     0.61 %     0.34 %     0.77 %     0.45 %     0.38 %
Nonperforming assets
     0.86 %     0.93 %     0.73 %     0.72 %     0.78 %     0.19 %
Potential problem loans (5)
     0.83 %     0.83 %     0.40 %     0.64 %     0.56 %     0.40 %
Annualized net loan charge-offs year-to-date to avg. loans (6)
     0.10 %     0.05 %     0.07 %     0.03 %     0.07 %     0.05 %
Avg. commercial loan internal risk ratings (5)
     4.2       4.2       4.0       4.1       4.1       4.1  
Avg. loan account balances (7)
   $ 177       170       163       170       160       169  
 
                                                
Interest rates and yields:
                                                
Loans
     5.27 %     5.60 %     5.77 %     6.61 %     7.23 %     7.65 %
Securities
     5.40 %     5.24 %     5.10 %     5.11 %     4.92 %     4.99 %
Total earning assets
     5.25 %     5.53 %     5.66 %     6.37 %     6.82 %     7.12 %
Total deposits, including non-interest bearing
     2.28 %     2.35 %     2.42 %     2.94 %     3.28 %     3.51 %
Securities sold under agreements to repurchase
     0.98 %     1.33 %     1.30 %     1.98 %     3.36 %     4.20 %
FHLB advances and other borrowings
     3.24 %     3.40 %     3.20 %     3.99 %     4.61 %     5.10 %
Subordinated debt
     5.99 %     5.65 %     5.46 %     7.11 %     7.20 %     6.90 %
Total deposits and interest-bearing liabilities
     2.35 %     2.44 %     2.48 %     3.04 %     3.43 %     3.68 %
 
                                                
Capital ratios (9):
                                                
Stockholders’ equity to total assets
     13.2 %     11.8 %     11.7 %     12.3 %     12.3 %     11.6 %
Leverage
     10.5 %     8.7 %     8.5 %     8.5 %     8.7 %     9.2 %
Tier one risk-based
     12.1 %     9.8 %     9.3 %     9.5 %     9.6 %     10.4 %
Total risk-based
     13.5 %     11.2 %     10.3 %     10.4 %     10.5 %     11.3 %
Tangible common equity to tangible assets
     6.1 %     6.2 %     5.8 %     6.0 %     5.8 %     6.7 %

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                                                 
    Dec   Sept   June   March   Dec   Sept
(dollars in thousands, except per share data)   2008   2008   2008   2008   2007   2007
 
Per share data:
                                                
Earnings – basic
   $ 0.33       0.38       0.36       0.27       0.35       0.37  
Earnings – diluted
   $ 0.31       0.36       0.34       0.26       0.33       0.35  
Book value at quarter end (8)
   $ 26.39       21.63       21.33       21.22       20.95       17.66  
 
                                                
Weighted avg. shares – basic
     23,491,356       23,174,998       22,356,667       22,331,398       17,753,661       15,503,284  
Weighted avg. shares – diluted
     24,739,044       24,439,642       23,629,234       23,484,754       19,110,851       16,609,328  
Common shares outstanding
     23,762,124       23,699,790       22,587,564       22,467,263       22,264,817       15,553,037  
 
                                                
Investor information:
                                                
Closing sales price
   $ 29.81       30.80       20.09       25.60       25.42       28.82  
High sales price during quarter
   $ 32.00       36.57       29.29       26.75       30.93       31.31  
Low sales price during quarter
   $ 22.01       19.30       20.05       20.82       24.85       21.62  
 
                                                
Other information:
                                                
Gains on sale of loans and loan participations sold:
                                                
Mortgage loan sales:
                                                
Gross loans sold
   $ 72,097       71,903       79,693       59,757       40,273       42,895  
Gross fees (10)
   $ 1,464       1,293       1,364       1,114       750       659  
Gross fees as a percentage of mortgage loans originated
     2.03 %     1.80 %     1.71 %     1.86 %     1.86 %     1.54 %
Commercial loans sold
   $ —       695       8       4       8       19  
Gains on sales of investment securities, net
   $ —       —       —       1       16       —  
Brokerage account assets, at quarter-end (11)
   $ 686,000       848,000       826,000       859,000       878,000       590,000  
Trust account assets, at quarter-end
   $ 588,000       537,000       527,000       493,000       464,000       512,000  
Floating rate loans as a percentage of loans (12)
     41.4 %     41.4 %     44.0 %     41.4 %     41.8 %     44.6 %
Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end
   $ 125,429       136,069       125,308       113,701       110,352       125,370  
Core deposits to total funding (13)
     50.5 %     50.9 %     52.3 %     57.6 %     58.2 %     61.4 %
Risk-weighted assets
   $ 3,705,606       3,493,361       3,353,142       3,181,612       3,083,215       1,998,401  
Total assets per full-time equivalent employee
   $ 6,614       5,999       5,828       5,669       5,415       5,257  
Annualized revenues per full-time equivalent employee
   $ 209.9       214.4       209.8       209.5       161.8       213.9  
Number of employees (full-time equivalent)
     719.0       723.0       704.5       686.0       702.0       450.5  
Associate retention rate (14)
     88.9 %     90.8 %     90.9 %     92.0 %     89.7 %     89.4 %
 
                                                
Selected economic information (in thousands) (15):
                                                
Nashville MSA nonfarm employment
     766.3       769.1       767.1       759.2       795.2       763.6  
Knoxville MSA nonfarm employment
     337.6       338.9       339.3       335.3       358.7       337.2  
Nashville MSA unemployment
     6.1 %     5.7 %     4.3 %     4.8 %     4.2 %     3.5 %
Knoxville MSA unemployment
     5.5 %     5.4 %     4.1 %     4.7 %     3.9 %     3.2 %
Nashville residential median home price
   $ 163.8       169.9       183.6       178.4       187.9       182.3  
Nashville inventory of residential homes for sale
     12.9       15.1       15.8       15.1       13.4       15.4  

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY AND YEAR-TO-DATE FINANCIAL DATA – UNAUDITED
                 
    As of December 31,     As of December 31,  
(dollars in thousands, except per share data)   2008     2007  
 
Reconciliation of certain financial measures:
                
Tangible assets:
                
Total assets
   $ 4,755,781     $ 3,794,170  
Less: Goodwill
     (244,161 )     (243,574 )
Core deposit and other intangibles
     (16,871 )     (17,326 )
     
Net tangible assets
   $ 4,494,749     $ 3,533,271  
     
 
                
Tangible common equity:
                
Total stockholders’ equity
   $ 627,035     $ 466,610  
Less: Preferred stock
     (89,843 )     —  
Goodwill
     (244,161 )     (243,574 )
Core deposit and other intangibles
     (16,871 )     (17,326 )
     
Net tangible common equity
   $ 276,160     $ 205,711  
     
 
                
Tangible common equity divided by tangible assets
     6.14 %     5.82 %
     
 
                
Tangible common equity per common share
   $ 11.62     $ 9.24  
     
                                 
    For the three months ended December 31,   For the years ended, December 31,
(dollars in thousands)   2008   2007   2008   2007
 
Average tangible assets:
                                
Total average assets
   $ 4,525,406     $ 2,791,669     $ 4,103,890     $ 2,388,049  
Less: Average intangible assets
     (261,570 )     (169,140 )     (260,294 )     (135,893 )
     
Net average tangible assets
   $ 4,263,836     $ 2,622,529     $ 3,843,596     $ 2,252,156  
     
 
                                
Average tangible equity:
                                
Total average stockholders’ equity
   $ 540,260     $ 309,431     $ 498,694     $ 276,151  
Less: Average intangible assets
     (261,570 )     (169,140 )     (260,294 )     (135,893 )
     
Net average tangible stockholders’ equity
   $ 278,690     $ 140,291     $ 238,400     $ 140,258  
     
 
                                
Net income available to common stockholders
   $ 7,744     $ 6,242     $ 30,565     $ 23,041  
     
 
                                
Return on average tangible assets (annualized)
     0.72 %     0.94 %     0.80 %     1.02 %
     
 
                                
Return on average tangible stockholders’ equity (annualized)
     11.05 %     17.65 %     12.82 %     16.43 %
     
 
                                
Net income
   $ 7,744     $ 6,242     $ 30,565     $ 23,041  
Impact of merger related expense, net of tax
     909       378       4,325       378  
     
Net income before impact of merger related expense
   $ 8,653     $ 6,620     $ 34,889     $ 23,419  
     
Fully-diluted earnings per share before impact of merger related expense
   $ 0.35     $ 0.35     $ 1.45     $ 1.36  
     
 
                                
Return on average assets before impact of merger expenses
     0.76 %     0.94 %     0.85 %     1.31 %
     
Return on average equity before impact of merger expenses
     6.37 %     8.49 %     7.00 %     11.34 %
     
Return on average tangible equity before impact of merger expenses
     12.35 %     18.72 %     14.63 %     22.32 %
     
 
                                
Total expenses
   $ 22,586     $ 17,762     $ 94,479     $ 60,480  
Less: merger expense
     (1,497 )     (622 )     (7,117 )     (622 )
     
Total expenses before impact of merger related expense
   $ 21,089     $ 17,140     $ 87,362     $ 59,858  
     
 
                                
Efficiency ratio before impact of merger related expense
     55.60 %     59.89 %     58.66 %     60.93 %
     

 

 

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.   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 are considered potential problem loans. Potential problem loans do not include nonperforming loans. Generally, consumer loans are not subjected to internal risk ratings.
 
6.   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.
 
7.   Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter.
 
8.   Book value per share computed by dividing total stockholders’ equity by common shares outstanding
 
9.   Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows:
 
    Equity to total assets – End of period total stockholders’ equity 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.
 
10.   Amounts are included in the statement of income in “Gains on the sale of loans and loan participations sold”, 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.   Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle’s prime lending rate or other factors.
 
13.   Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $100,000. 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.
 
14.   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.
 
15.   Employment and unemployment data is from the US Dept. of Labor Bureau of Labor Statistics. Labor force data is not seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. The Nashville home data is from the Greater Nashville Association of Realtors.
 
16.   Brokered deposits do not include balances under the Certificate of Deposit Account Registry Service (CDARS).