EX-99.1 2 g18701exv99w1.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 $0.03
PER FULLY DILUTED SHARE FOR FIRST QUARTER OF 2009
     NASHVILLE, Tenn., April 20, 2009 — Pinnacle Financial Partners Inc. (Nasdaq/NGS: PNFP) today reported continued loan growth for the quarter ended March 31, 2009. Fully diluted earnings per common share available to common stockholders were $0.03 for the quarter ended March 31, 2009, compared to $0.26 per fully diluted common share available to common stockholders for the quarter ended March 31, 2008, which included the fully-diluted per common share impact of $0.08 of merger expenses related to the Pinnacle’s acquisition of Mid-America Bancshares Inc.
     Pinnacle also reported $119 million in organic loan growth during the first quarter of 2009 which approximated the $117 million reported in the same quarter of 2008. At March 31, 2009, Pinnacle’s allowance for loan losses was 1.30 percent of total loans, compared to 1.04 percent at March 31, 2008.
     “Our first quarter 2009 results reflect increased provisioning and adherence to new and stricter underwriting standards for residential construction and development loans,” said M. Terry Turner, Pinnacle president and chief executive officer. “In recent investor conferences and other public disclosures during the first quarter, we have emphasized we expect to experience increased charge-offs and provisioning due to the continued economic weakness of our local economy, particularly in residential construction and development.
     “It is difficult to project a substantial strengthening of the residential real estate market in Nashville in 2009. We are encouraged by recent valuations of residential real estate and development projects as it appears appraisal values are beginning to stabilize. In addition, we intend to continue our long-standing core business strategies which we believe will enable us to continue to grow the pre-tax, pre-provision capacity of this firm during 2009,” Turner said.

 

 

     Turner noted that the firm continues to monitor the progress of a $21.5 million loan to a financial institution which originated at PrimeTrust Bank and was acquired by Pinnacle in the Mid-America Bancshares Inc. merger in 2007. The borrower has been under increased regulatory pressure with respect to its capital position in recent months due to the borrower’s deteriorating real estate portfolio. Turner noted that Pinnacle had downgraded the loan from criticized to classified status during the first quarter of 2009.
     “This loan is our only loan to a financial institution,” said Turner. “During the course of the last few weeks and even as late as today, we have been in discussions with this borrower regarding this loan and suitable repayment options. We are encouraged about the progress this borrower has made in its recapitalization efforts and in resolving its regulatory issues. However, this borrower’s future is uncertain which ultimately could require further downgrades and a reevaluation of our collateral position. We remain hopeful that we will be paid in full on this loan.”
FIRST QUARTER 2009 HIGHLIGHTS:
  •   Earnings
  o   Net income available to common stockholders for the first quarter of 2009 was $643,000, down 89.4 percent from the prior year’s first quarter net income of $6.1 million. Included in net income available to common stockholders was $1.43 million of charges related to securities issued under the U.S. Treasury’s Capital Purchase Program.
 
  o   Revenue (the sum of net interest income and noninterest income) for the quarter ended March 31, 2009, amounted to $41.84 million, compared to $35.73 million for the same quarter of last year, an increase of 17.1 percent. Excluding the gains on sales of investment securities, revenues increased by 4.9 percent between the first quarter of 2009 and first quarter of 2008.
  •   Continued balance sheet growth
  o   Loans at March 31, 2009, were $3.47 billion, up $607 million from $2.87 billion at March 31, 2008, representing a growth rate of 21.2 percent.
 
  o   Total deposits at March 31, 2009, were $3.75 billion, up $784 million from $2.97 billion at March 31, 2008, representing a growth rate of 26.4 percent.

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  •   Credit quality
  o   Net charge-offs as a percentage of average loan balances were 0.56 percent (annualized) for the three months ended March 31, 2009, compared to 0.03 percent (annualized) for the three months ended March 31, 2008.
 
  o   Nonperforming assets were 1.54 percent of total loans and other real estate at March 31, 2009, compared to 0.86 percent at Dec. 31, 2008, and 0.72 percent at March 31, 2008.
 
  o   Past due loans over 30 days, excluding nonperforming loans, were 1.12 percent of total loans and other real estate at March 31, 2009, 0.60 percent at Dec. 31, 2008, and 0.77 percent at March 31, 2008.
  •   Capital
  o   At March 31, 2009, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 6.0 percent, compared to 6.2 percent at Dec. 31, 2008. Pinnacle’s tangible book value per common share was $11.75 at March 31, 2009, compared to $11.70 at Dec. 31, 2008.
 
  o   At March 31, 2009, Pinnacle’s total risk based capital ratio was 13.3 percent, compared to 13.5 percent at Dec. 31, 2008.
     “We continue to be well-capitalized pursuant to regulatory guidelines which provides us a great deal of flexibility during this time of both significant growth opportunities and a weaker overall economy. We are in the sixth quarter of a national recessionary period that is beginning to weigh on some of our borrowers. Our most important strategy since our inception in 2000 has been to hire experienced professionals who are able to attract the market’s best clients, grow loans, deposits and fee-based businesses and apply sound credit practices. Their efforts helped our nonperforming asset ratio remain better than peer averages this quarter,” Turner said. “We continue to believe that Nashville and Knoxville are two of the best banking markets in the country and the competitive landscape continues to offer solid growth potential for our firm.”
FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH
  •   Return on average assets for the first quarter 2009 was 0.05 percent, compared to 0.65 percent for the first quarter of 2008.

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  •   Return on average stockholders’ equity for the quarter ended March 31, 2009, was 0.41 percent, compared to 5.14 percent for the first quarter of 2008.
 
  •   Return on average tangible stockholders’ equity (average stockholders’ equity less goodwill and core deposit intangibles) for the quarter ended March 31, 2009, was 0.70 percent, compared to 11.31 percent for the first quarter of 2008.
     Total assets grew to $4.95 billion as of March 31, 2009, up $1.06 billion from the $3.89 billion reported at the same time last year.
CREDIT QUALITY
  •   Allowance for loan losses represented 1.30 percent of total loans at March 31, 2009, compared to 1.04 percent a year ago.
  o   The ratio of the allowance for loan losses to nonperforming loans decreased to 134 percent at March 31, 2009, compared to 174 percent at March 31, 2008.
  •   Provision for loan losses was $13.61 million for the first quarter of 2009, compared to $1.59 million for the first quarter of 2008.
  o   During the first quarter of 2009, the firm recorded net charge-offs of $4.8 million, compared to net charge-offs of $190,000 during the same period in 2008. Net charge-offs to total average loans were 0.56 percent for the quarter ended March 31, 2009.
     As noted above, Pinnacle reported that nonperforming loans and other real estate as a percentage of total loans and other real estate increased from 0.86 percent at Dec. 31, 2008, to 1.54 percent at March 31, 2009. The following is a summary of the activity in various nonperforming asset categories for the quarter ended March 31, 2009:
                                 
    Balances     Payments, Sales             Balances  
(in thousands)   Dec. 31, 2008     and Reductions     Increases     March 31, 2009  
Nonperforming loans:
                                
Residential construction & development
   $ 5,052     $ 4,526     $ 23,941     $ 24,467  
Other
     5,808       3,762       7,350       9,396  
 
                        
Totals
     10,860       8,288       31,291       33,863  
 
                        
Other real estate:
                                
Residential construction & development
     17,222       2,070       4,018       19,170  
Other
     1,084       474       37       647  
 
                        
Totals
     18,306       2,544       4,055       19,817  
 
                        
Total nonperforming assets
   $ 29,166     $ 10,832     $ 35,346     $ 53,680  
 
                        

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REVENUE
  •   Net interest income for first quarter 2009 was $28.70 million, compared to $27.36 million for the same quarter last year, an increase of 4.9 percent.
  o   Net interest margin for the first quarter of 2009 was 2.72 percent, compared to a net interest margin of 3.37 percent for the same period last year.
  •   Noninterest income for the first quarter 2009 was $13.14 million, a 57.0 percent increase over the $8.37 million recorded during the same quarter in 2008.
     “We have traditionally been an asset sensitive institution,” said Harold R. Carpenter, chief financial officer of Pinnacle Financial Partners. “However, we are optimistic, absent any unforeseen competitive pressures or economic events, that continued stabilization of LIBOR rates, increased balances of new loans with interest rate floors and repricing of our time deposits over the next few months will result in modest increases in our net interest margin for the balance of 2009.”
     The 57.0 percent increase in noninterest income between the first quarter of 2009 and the first quarter of 2008 was due primarily to gains on the sale of investment securities. During the first quarter of 2009, the firm recorded gains on the sale of investment securities of approximately $4.3 million as a result of restructuring of the bond portfolio. Excluding gains on the sale of investment securities, Pinnacle’s noninterest income increased by 5.0 percent between the first quarter of 2009 and the first quarter of 2008. During the first quarter of 2009, Pinnacle’s mortgage origination unit sold a record $192.93 million of mortgage loans, compared to $59.76 million during the first quarter of 2008, an increase of 223 percent. Gross fees on these loan sales were $2.7 million in the first quarter of 2009, compared to $1.1 million in the first quarter of 2008.
     Noninterest income during the first quarter of 2009 represented approximately 31.40 percent of total revenues, compared to 23.42 percent for the same quarter in 2008.

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NONINTEREST EXPENSE
  •   Noninterest expense for the quarter ended March 31, 2009, was $25.24 million, compared to $25.49 million in the first quarter of 2008 which includes $3.1 million of merger related expenses.
 
  •   Compensation expense was $14.75 million during the first quarter of 2009, compared to $9.98 million during the fourth quarter of 2008 and $13.87 million during the first quarter of 2008. The increase in compensation expense between the first quarter of 2009 and fourth quarter of 2008 was due to the reversal of previously accrued incentives during the fourth quarter of 2008 and increased number of associates during the first quarter of 2009.
 
  •   The efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 60.3 percent during the first quarter of 2009, compared to 59.5 percent for the fourth quarter of 2008 and 71.4 percent in the first quarter of 2008. Excluding merger related expenses, the efficiency ratio was 62.7 percent in the first quarter of 2008.
     Carpenter noted that the firm will continue to make investments in future growth and, consequently, anticipates modest increases in noninterest expense for the remainder of 2009 over the amount the firm has experienced during the first quarter of 2009.
     Carpenter did note that the firm anticipates an incremental additional FDIC insurance assessment of approximately $3.5 million during the second quarter of 2009 and that the firm would evaluate impairment of goodwill, if required, prior to filing its Form 10-Q with the Securities and Exchange Commission.
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 March 31, 2009, were $330 million. Pinnacle currently has a second full-service office under construction in the Fountain City area of Knoxville and has announced plans to build a third in the Farragut area. Both will open in the fourth quarter of 2009.

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  •   Pinnacle also has two new Nashville offices under construction — in the Belle Meade area and in Brentwood, Tenn., in adjacent Williamson County. Both are expected to open in the fourth quarter of 2009 with the new Brentwood location being the consolidation of two existing Brentwood locations.
 
  •   Pinnacle’s total associate base at March 31, 2009, was 736.0 full-time equivalents (FTEs), compared to 686.0 at March 31, 2008. Pinnacle anticipates increasing its associate base by approximately 45 associates during 2009.
     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 $4.9 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. A more detailed description of these and other risks is contained in Pinnacle’s most recent annual report on Form 10-K. 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.

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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — UNAUDITED
                 
    March 31, 2009   December 31, 2008
 
ASSETS
                
Cash and noninterest-bearing due from banks
   $ 47,708,780     $ 68,388,961  
Interest-bearing due from banks
     82,793,738       8,869,680  
Federal funds sold and other
     22,789,662       12,994,114  
     
Cash and cash equivalents
     153,292,180       90,252,755  
 
                
Securities available-for-sale, at fair value
     857,932,392       839,229,428  
Securities held-to-maturity (fair value of $10,466,838 and $10,469,307 at March 31, 2009 and December 31, 2008, respectively)
     10,539,910       10,551,256  
Mortgage loans held-for-sale
     24,651,088       25,476,788  
 
                
Loans
     3,473,959,457       3,354,907,269  
Less allowance for loan losses
     (45,334,073 )     (36,484,073 )
     
Loans, net
     3,428,625,384       3,318,423,196  
 
                
Premises and equipment, net
     68,855,561       68,865,221  
Other investments
     35,139,980       33,616,450  
Accrued interest receivable
     17,752,634       17,565,141  
Goodwill
     244,120,021       244,160,624  
Core deposit and other intangible assets
     16,112,670       16,871,202  
Other real estate
     19,816,743       18,305,880  
Other assets
     75,312,868       70,756,823  
     
Total assets
   $ 4,952,151,431     $ 4,754,074,764  
     
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Deposits:
                
Noninterest-bearing
   $ 451,418,417     $ 424,756,813  
Interest-bearing
     380,384,416       375,992,912  
Savings and money market accounts
     717,265,116       694,582,319  
Time
     2,201,890,175       2,037,914,307  
     
Total deposits
     3,750,958,124       3,533,246,351  
Securities sold under agreements to repurchase
     209,590,988       184,297,793  
Federal Home Loan Bank advances and other borrowings
     221,642,376       201,966,181  
Federal Funds purchased
     397,000       71,643,000  
Subordinated debt
     97,476,000       97,476,000  
Accrued interest payable
     9,327,196       8,326,264  
Other liabilities
     31,113,517       29,820,779  
     
Total liabilities
     4,320,505,201       4,126,776,368  
 
                
Stockholders’ equity:
                
Preferred stock, no par value; 10,000,000 shares authorized; 95,000 shares issued and outstanding at March 31, 2009 and December 31, 2008
     88,607,989       88,348,647  
Common stock, par value $1.00; 90,000,000 shares authorized; 24,060,703 issued and outstanding at March 31, 2009 and 23,762,124 issued and outstanding at December 31, 2008
     24,060,703       23,762,124  
Common stock warrants
     6,696,804       6,696,804  
Additional paid-in capital
     418,216,850       417,040,974  
Retained earnings
     85,380,063       84,380,447  
Accumulated other comprehensive income, net of taxes
     8,683,821       7,069,400  
     
Stockholders’ equity
     631,646,230       627,298,396  
     
Total liabilities and stockholders’ equity
   $ 4,952,151,431     $ 4,754,074,764  
     

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
                 
    Three Months Ended
    March 31,
    2009   2008
 
Interest income:
                
Loans, including fees
   $ 38,525,745     $ 45,392,162  
Securities:
                
Taxable
     9,087,687       4,637,277  
Tax-exempt
     1,474,654       1,351,037  
Federal funds sold and other
     430,240       780,917  
     
Total interest income
     49,518,326       52,161,393  
     
 
                
Interest expense:
                
Deposits
     17,733,785       21,085,633  
Securities sold under agreements to repurchase
     360,787       832,053  
Federal Home Loan Bank advances and other borrowings
     2,723,502       2,884,586  
     
Total interest expense
     20,818,074       24,802,272  
     
Net interest income
     28,700,252       27,359,121  
Provision for loan losses
     13,609,535       1,591,123  
     
Net interest income after provision for loan losses
     15,090,717       25,767,998  
 
                
Noninterest income:
                
Service charges on deposit accounts
     2,476,951       2,573,737  
Investment services
     854,103       1,268,248  
Insurance sales commissions
     1,305,209       1,063,663  
Gain on loans and loan participations sold, net
     1,287,772       656,088  
Net gain on sale of investments
     4,346,146       —  
Trust fees
     657,708       505,000  
Other noninterest income
     2,207,634       2,300,667  
     
Total noninterest income
     13,135,523       8,367,403  
     
 
                
Noninterest expense:
                
Salaries and employee benefits
     14,751,049       13,866,737  
Equipment and occupancy
     4,235,328       4,276,273  
Other real estate owned
     700,595       53,664  
Marketing and other business development
     439,516       375,871  
Postage and supplies
     830,138       648,340  
Amortization of intangibles
     758,533       766,033  
Other noninterest expense
     3,527,865       2,398,977  
Merger related expense
     —       3,105,763  
     
Total noninterest expense
     25,243,024       25,491,658  
     
Income before income taxes
     2,983,216       8,643,743  
Income tax expense
     893,008       2,578,953  
     
Net income
     2,090,208       6,064,790  
Preferred dividends
     1,187,500       —  
Accretion on preferred stock discount
     259,342       —  
     
Net income available to common stockholders
   $ 643,366     $ 6,064,790  
     
 
                
Per share information:
                
Basic net income per common share available to common stockholders
   $ 0.03     $ 0.27  
     
Diluted net income per common share available to common stockholders
   $ 0.03     $ 0.26  
     
Weighted average shares outstanding:
                
Basic
     23,510,994       22,331,398  
Diluted
     24,814,408       23,484,754  

 

 

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)   March 31, 2009     March 31, 2008
    Average                 Average              
    Balances     Interest     Rates/Yields   Balances     Interest     Rates/Yields
     
Interest-earning assets:
                                                
Loans
   $ 3,416,462     $ 38,526       4.57 %   $ 2,761,745     $ 45,392       6.61 %
Securities:
                                                
Taxable
     716,317       9,088       5.15 %     367,125       4,637       5.12 %
Tax-exempt (1)
     147,963       1,475       5.33 %     136,690       1,351       5.24 %
Federal funds sold and other
     73,435       430       2.57 %     58,892       781       5.56 %
     
Total interest-earning assets
     4,354,177     $ 49,519       4.66 %     3,324,452     $ 52,161       6.37 %
                         
Nonearning assets
                                                
Intangible assets
     260,729                       258,807                  
Other nonearning assets
     254,484                       190,783                  
 
                                            
Total assets
   $ 4,869,390                     $ 3,774,042                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Interest-bearing deposits
                                                
Interest checking
   $ 359,524     $ 428       0.48 %   $ 404,307     $ 2,129       2.12 %
Savings and money market
     715,704       1,940       1.10 %     735,899       4,098       2.24 %
Certificates of deposit
     2,155,478       15,366       2.89 %     1,372,899       14,859       4.35 %
     
Total interest-bearing deposits
     3,230,706       17,734       2.23 %     2,513,105       21,086       3.37 %
Securities sold under agreements to repurchase
     229,918       361       0.64 %     169,146       832       1.98 %
Federal Home Loan Bank advances and other borrowings
     234,887       1,571       2.71 %     143,802       1,426       3.99 %
Subordinated debt
     97,476       1,153       4.80 %     82,476       1,458       7.11 %
     
Total interest-bearing liabilities
     3,792,987       20,819       2.23 %     2,908,529       24,802       3.43 %
Noninterest-bearing deposits
     417,861       —       —       368,413       —       —  
     
Total deposits and interest-bearing liabilities
     4,210,848     $ 20,819       2.01 %     3,276,942     $ 24,802       3.04 %
                         
Other liabilities
     24,061                       22,661                  
Stockholders’ equity
     634,481                       474,439                  
 
                                            
Total liabilities and stockholders’ equity
   $ 4,869,390                     $ 3,774,042                  
 
                                            
Net interest income
           $ 28,700                     $ 27,359          
 
                                            
Net interest spread (2)
                     2.43 %                     2.94 %
Net interest margin (3)
                     2.72 %                     3.37 %
 
(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
                                                 
    March   Dec   Sept   June   March   Dec
(dollars in thousands)   2009   2008   2008   2008   2008   2007
 
Balance sheet data, at quarter end:
                                                
Total assets
   $ 4,952,151       4,755,781       4,337,552       4,106,055       3,889,286       3,794,170  
Total loans
     3,473,959       3,354,907       3,202,909       3,032,272       2,866,536       2,749,641  
Allowance for loan losses
     (45,334 )     (36,484 )     (34,841 )     (31,789 )     (29,871 )     (28,470 )
Securities
     868,472       849,781       628,807       521,214       505,377       522,685  
Noninterest-bearing deposits
     451,418       424,757       457,543       438,458       429,289       400,120  
Total deposits
     3,750,958       3,533,246       3,295,163       3,152,514       2,967,025       2,925,319  
Securities sold under agreements to repurchase
     209,591       184,298       198,807       183,188       171,186       156,071  
FHLB advances and other borrowings
     221,642       273,609       207,239       187,315       168,606       141,666  
Subordinated debt
     97,476       97,476       97,476       82,476       82,476       82,476  
Total stockholders’ equity
     631,646       627,035       512,569       481,709       476,772       466,610  
 
                                                
Balance sheet data, quarterly averages:
                                                
Total assets
   $ 4,869,390       4,525,406       4,202,592       3,913,519       3,774,042       2,791,669  
Total loans
     3,416,462       3,282,461       3,129,549       2,941,973       2,761,745       2,063,442  
Securities
     864,280       722,051       590,143       516,949       503,815       410,142  
Total earning assets
     4,354,177       4,077,310       3,765,582       3,500,853       3,324,452       2,541,799  
Noninterest-bearing deposits
     417,861       442,267       409,850       398,337       368,413       327,866  
Total deposits
     3,648,567       3,393,234       3,178,863       2,947,669       2,881,518       2,135,973  
Securities sold under agreements to repurchase
     229,918       238,310       204,101       174,847       169,146       201,605  
Advances from FHLB and other borrowings
     234,887       234,482       215,739       208,773       143,802       57,970  
Subordinated debt
     97,476       97,476       90,465       82,476       82,476       72,391  
Total stockholders’ equity
     634,481       540,260       502,575       477,502       474,439       309,431  
 
                                                
Statement of operations data, for the three months ended:
                                                
Interest income
   $ 49,518       53,273       51,873       48,774       52,161       43,338  
Interest expense
     20,818       23,381       22,591       21,092       24,802       21,329  
               
Net interest income
     28,700       29,892       29,281       27,682       27,359       22,009  
Provision for loan losses
     13,610       3,710       3,125       2,787       1,591       2,260  
     
Net interest income after provision for loan losses
     15,090       26,182       26,157       24,895       25,768       19,749  
Noninterest income
     13,136       8,040       9,253       9,058       8,367       6,612  
Noninterest expense
     25,243       22,586       23,326       23,075       25,492       17,762  
     
Income before taxes
     2,982       11,636       12,083       10,878       8,644       8,599  
Income tax expense
     893       3,583       3,288       2,917       2,579       2,357  
Preferred dividends and accretion
     1,447       309       —       —       —       —  
     
Net income available to common stockholders
   $ 642       7,744       8,795       7,961       6,065       6,242  
     
 
                                                
Profitability and other ratios:
                                                
Return on avg. assets (1)
     0.05 %     0.68 %     0.83 %     0.82 %     0.65 %     0.89 %
Return on avg. equity (1)
     0.41 %     5.70 %     6.96 %     6.71 %     5.14 %     8.00 %
Net interest margin (2)
     2.72 %     2.96 %     3.14 %     3.24 %     3.37 %     3.49 %
Noninterest income to total revenue (3)
     31.40 %     21.19 %     24.01 %     24.66 %     23.42 %     23.10 %
Noninterest income to avg. assets (1)
     1.09 %     0.71 %     0.88 %     0.93 %     0.89 %     0.94 %
Noninterest exp. to avg. assets (1)
     2.10 %     1.99 %     2.21 %     2.36 %     2.71 %     2.52 %
Efficiency ratio (4)
     60.34 %     59.54 %     60.53 %     62.81 %     71.35 %     62.06 %
Avg. loans to average deposits
     93.64 %     96.74 %     98.45 %     99.81 %     95.84 %     96.60 %
Securities to total assets
     17.54 %     17.87 %     14.50 %     12.69 %     13.00 %     13.75 %
Average interest-earning assets to average interest-bearing liabilities
     114.80 %     115.79 %     114.83 %     116.10 %     114.30 %     118.77 %
Brokered time deposits to total deposits (16)
     17.39 %     16.55 %     13.95 %     12.53 %     7.78 %     9.48 %

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
                                                 
    March   Dec   Sept   June   March   Dec
(dollars in thousands)   2009   2008   2008   2008   2008   2007
 
Asset quality information and ratios:
                                                
Nonperforming assets:
                                                
Nonaccrual loans
   $ 33,863       10,860       17,743       13,067       17,124       19,677  
Other real estate
   $ 19,817       18,306       12,142       9,181       3,567       1,673  
Past due loans over 90 days and still accruing interest
   $ 3,871       1,508       3,241       2,272       2,002       1,613  
Net loan charge-offs
   $ 4,760       2,068       73       870       190       462  
Allowance for loan losses to total loans
     1.30 %     1.09 %     1.09 %     1.05 %     1.04 %     1.04 %
Allowance for loan losses to nonaccrual loans
     133.9 %     335.9 %     196.4 %     243.3 %     174.4 %     144.7 %
As a percentage of total loans and ORE:
                                                
Past due accruing loans over 30 days
     1.12 %     0.60 %     0.61 %     0.34 %     0.77 %     0.45 %
Nonperforming assets
     1.54 %     0.86 %     0.93 %     0.73 %     0.72 %     0.78 %
Potential problem loans (5)
     2.59 %     0.83 %     0.83 %     0.40 %     0.64 %     0.56 %
Annualized net loan charge-offs year-to-date to avg. loans (6)
     0.56 %     0.10 %     0.05 %     0.07 %     0.03 %     0.07 %
Avg. commercial loan internal risk ratings (5)
     4.3       4.2       4.2       4.0       4.1       4.1  
Avg. loan account balances (7)
   $ 185       177       170       163       170       160  
 
                                                
Interest rates and yields:
                                                
Loans
     4.57 %     5.27 %     5.60 %     5.77 %     6.61 %     7.23 %
Securities
     5.18 %     5.40 %     5.24 %     5.10 %     5.11 %     4.92 %
Total earning assets
     4.66 %     5.25 %     5.53 %     5.66 %     6.37 %     6.82 %
Total deposits, including non-interest bearing
     1.97 %     2.28 %     2.35 %     2.42 %     2.94 %     3.28 %
Securities sold under agreements to repurchase
     0.64 %     0.98 %     1.33 %     1.30 %     1.98 %     3.36 %
FHLB advances and other borrowings
     2.71 %     3.24 %     3.40 %     3.20 %     3.99 %     4.61 %
Subordinated debt
     4.80 %     5.99 %     5.65 %     5.46 %     7.11 %     7.20 %
Total deposits and interest-bearing liabilities
     2.01 %     2.35 %     2.44 %     2.48 %     3.04 %     3.43 %
 
                                                
Capital ratios (9):
                                                
Stockholders’ equity to total assets
     12.8 %     13.2 %     11.8 %     11.7 %     12.3 %     12.3 %
Leverage
     9.7 %     10.5 %     8.7 %     8.5 %     8.5 %     8.7 %
Tier one risk-based
     11.8 %     12.1 %     9.8 %     9.3 %     9.5 %     9.6 %
Total risk-based
     13.3 %     13.5 %     11.2 %     10.3 %     10.4 %     10.5 %
Tangible common equity to tangible assets
     6.0 %     6.1 %     6.2 %     5.8 %     6.0 %     5.8 %

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
                                                 
    March   Dec   Sept   June   March   Dec
(dollars in thousands, except per share data)   2009   2008   2008   2008   2008   2007
 
Per share data:
                                                
Earnings — basic
   $ 0.03       0.33       0.38       0.36       0.27       0.35  
Earnings — diluted
   $ 0.03       0.31       0.36       0.34       0.26       0.33  
Book value at quarter end (8)
   $ 26.25       26.39       21.63       21.33       21.22       20.95  
 
                                                
Weighted avg. shares — basic
     23,510,994       23,491,356       23,174,998       22,356,667       22,331,398       17,753,661  
Weighted avg. shares — diluted
     24,814,408       24,739,044       24,439,642       23,629,234       23,484,754       19,110,851  
Common shares outstanding
     24,060,703       23,762,124       23,699,790       22,587,564       22,467,263       22,264,817  
 
                                                
Investor information:
                                                
Closing sales price
   $ 23.71       29.81       30.80       20.09       25.60       25.42  
High sales price during quarter
   $ 29.90       32.00       36.57       29.29       26.75       30.93  
Low sales price during quarter
   $ 13.32       22.01       19.30       20.05       20.82       24.85  
 
                                                
Other information:
                                                
Gains on sale of loans and loan participations sold:
                                                
Mortgage loan sales:
                                                
Gross loans sold
   $ 192,932       72,097       71,903       79,693       59,757       40,273  
Gross fees (10)
   $ 2,656       1,464       1,293       1,364       1,114       750  
Gross fees as a percentage of mortgage loans originated
     1.38 %     2.03 %     1.80 %     1.71 %     1.86 %     1.86 %
Commercial loans sold
   $ —       —       695       8       4       8  
Gains on sales of investment securities, net
   $ 4,346       —       —       —       1       16  
Brokerage account assets, at quarter-end (11)
   $ 671,000       686,000       848,000       826,000       859,000       878,000  
Trust account assets, at quarter-end
   $ 544,000       588,000       537,000       527,000       493,000       464,000  
Floating rate loans as a percentage of loans (12)
     40.0 %     41.4 %     41.4 %     44.0 %     41.4 %     41.8 %
Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end
   $ 122,123       125,429       136,069       125,308       113,701       110,352  
Core deposits to total funding (13)
     46.7 %     50.5 %     50.9 %     52.3 %     57.6 %     58.2 %
Risk-weighted assets
   $ 3,825,590       3,705,606       3,493,361       3,353,142       3,181,612       3,083,215  
Total assets per full-time equivalent employee
   $ 6,728       6,614       5,999       5,828       5,669       5,415  
Annualized revenues per full-time equivalent employee
   $ 226.1       209.9       214.4       209.8       209.5       161.8  
Number of employees (full-time equivalent)
     736.0       719.0       723.0       704.5       686.0       702.0  
Associate retention rate (14)
     92.1 %     88.9 %     90.8 %     90.9 %     92.0 %     89.7 %
 
                                                
Selected economic information (in thousands) (15):
                                                
Nashville MSA nonfarm employment
     733.0       755.4       760.4       758.1       762.0       778.6  
Knoxville MSA nonfarm employment
     324.5       332.0       335.7       335.7       335.2       338.7  
Nashville MSA unemployment
     8.4 %     6.5 %     6.0 %     5.8 %     4.9 %     4.2 %
Knoxville MSA unemployment
     7.9 %     6.4 %     5.6 %     5.6 %     4.7 %     4.0 %
Nashville residential median home price
   $ 161.0       163.8       169.9       183.6       178.4       187.9  
Nashville inventory of residential homes for sale
     14.0       12.9       15.1       15.8       15.1       13.4  

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY AND YEAR-TO-DATE FINANCIAL DATA — UNAUDITED
                 
    As of March 31,   As of December 31,
(dollars in thousands, except per share data)   2009   2008
 
Reconciliation of certain financial measures:
                
Tangible assets:
                
Total assets
   $ 4,952,151     $ 4,754,075  
Less: Goodwill
     (244,120 )     (244,161 )
Core deposit and other intangibles
     (16,113 )     (16,871 )
     
Net tangible assets
   $ 4,691,918     $ 4,493,043  
     
 
                
Tangible common equity:
                
Total stockholders’ equity
   $ 631,646     $ 627,298  
Less: Preferred stock
     (88,608 )     (88,349 )
Goodwill
     (244,120 )     (244,161 )
Core deposit and other intangibles
     (16,113 )     (16,871 )
     
Net tangible common equity
   $ 282,805     $ 277,918  
     
 
                
Tangible common equity divided by tangible assets
     6.03 %     6.19 %
     
 
                
Tangible common equity per common share
   $ 11.75     $ 11.70  
     
                 
    For the three months ended March 31,
(dollars in thousands)   2009   2008
 
Average tangible assets:
                
Total average assets
   $ 4,869,390     $ 3,774,042  
Less: Average intangible assets
     (260,729 )     (258,807 )
     
Net average tangible assets
   $ 4,608,661     $ 3,515,235  
     
 
                
Average tangible equity:
                
Total average stockholders’ equity
   $ 634,481     $ 474,439  
Less: Average intangible assets
     (260,729 )     (258,807 )
     
Net average tangible stockholders’ equity
   $ 373,752     $ 215,632  
     
 
                
Net income available to common stockholders
   $ 643     $ 6,065  
     
 
                
Return on average tangible assets (annualized)
     0.06 %     0.69 %
     
 
                
Return on average tangible stockholders’ equity (annualized)
     0.70 %     11.31 %
     

 

 

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).