EX-99.1 2 exhibit99109302017.htm EXHIBIT 99.1 Exhibit


pnfplogo.jpg

FOR IMMEDIATE RELEASE

 
MEDIA CONTACT:
Joe Bass, 615-743-8219
 
FINANCIAL CONTACT:
Harold Carpenter, 615-744-3742
 
WEBSITE:
www.pnfp.com

PNFP REPORTS DILUTED EARNINGS PER SHARE OF $0.83 FOR 3Q 2017
Excluding merger-related charges, diluted EPS was $0.90 for 3Q 2017

NASHVILLE, TN, Oct. 17, 2017 - Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.83 for the quarter ended Sept. 30, 2017, compared to net income per diluted common share of $0.71 for the quarter ended Sept. 30, 2016, an increase of 16.9 percent. Net income per diluted common share was $2.46 for the nine months ended Sept. 30, 2017, compared to net income per diluted common share of $2.12 for the nine months ended Sept. 30, 2016, an increase of 16.0 percent.
Excluding pre-tax merger-related charges of $8.8 million and $12.7 million for the three and nine months ended Sept. 30, 2017, net income per diluted common share was $0.90 and $2.57, respectively, compared to $0.78 and $2.24 for the three and nine months ended Sept. 30, 2016, excluding pre-tax merger-related charges of $5.7 million and $8.5 million, respectively, or an increase of 15.4 percent and 14.7 percent, respectively.
"I am very pleased not only with the earnings growth our firm experienced during the third quarter but, more importantly, the momentum for future earnings growth," said M. Terry Turner, Pinnacle's president and chief executive officer. "The third quarter includes the first full quarter of results from our recent merger with BNC Bancorp (BNC). I believe it was an excellent quarter for our firm in terms of earnings growth, balance sheet growth and operating leverage.
"The execution of our integration with BNC remains on an accelerated path. We have now successfully completed the brand integration in the Carolinas and Virginia and are deep into our cultural integration process. The last major step toward realization of our deal synergies is the upcoming technology conversion. Given the fact that we have been performing the core processing for BNC since late August of this year, we expect the conversion to have no incremental impact on our clients in the Carolinas and Virginia and very little impact on our Tennessee client base. The progress we’ve made thus far has validated the power we believed was possible from combining our two firms." 

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
Revenues for the quarter ended Sept. 30, 2017 were $216.2 million, an increase of $97.8 million, or 82.7 percent, from the quarter ended Sept. 30, 2016.
Loans at Sept. 30, 2017 were a record $15.26 billion, an increase of $501.0 million from June 30, 2017 and $7.02 billion from Sept. 30, 2016, reflecting year-over-year growth of 85.2 percent.
Deposits at Sept. 30, 2017 were a record $15.79 billion, an increase of $32.1 million from June 30, 2017 and $7.12 billion from Sept. 30, 2016, reflecting year-over-year growth of 82.1 percent.

"Any significant merger integration like BNC requires a great deal of focus and energy," Turner said. "Despite that intense attention on the merger and integration, third quarter results also reflect significant focus on growing our client base as evidenced by our third quarter organic loan growth, which was exceptional. Concurrently, we also delivered strong earnings growth and enviable profitability metrics. We’ve also added 54 revenue producers to our ranks in 2017, with 19 of these in the Carolinas and Virginia. I remain excited that we are positioning our firm to be the employer of choice in all of our markets, which we believe will create still more opportunities to hire the best bankers in these markets over the next several quarters." 

FOCUSING ON PROFITABILITY:
Revenue per fully-diluted share was a record $2.80 for the quarter ended Sept. 30, 2017, compared to $2.64 for the second quarter of 2017 and $2.58 for the third quarter of 2016.
Net interest margin was 3.87 percent for the third quarter of 2017, compared to 3.68 percent for the second quarter of 2017 and 3.60 percent for the same quarter last year.

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Excluding the accretion from the application of fair value accounting for net loans and deposits acquired in previous mergers, the net interest margin in each respective period would have approximated 3.42 percent for the third quarter of 2017, compared to 3.45 percent and 3.39 percent for the second quarter of 2017 and the third quarter of 2016, respectively.
Return on average assets was 1.21 percent for the third quarter of 2017, compared to 1.30 percent for the second quarter of 2017 and 1.18 percent for the same quarter last year. Third quarter 2017 return on average tangible assets amounted to 1.32 percent, compared to 1.38 percent for the second quarter of 2017 and 1.26 percent for the same quarter last year.
Excluding merger-related charges in each respective period, return on average assets was 1.31 percent for the third quarter of 2017, compared to 1.35 percent for the second quarter of 2017 and 1.31 percent for the third quarter of 2016, respectively. Excluding merger-related charges in each respective period, return on average tangible assets was 1.43 percent for the third quarter of 2017, compared to 1.44 percent for the second quarter of 2017 and 1.39 percent for the third quarter of 2016, respectively.
Return on average equity for the third quarter of 2017 amounted to 6.99 percent, compared to 8.40 percent for the second quarter of 2017 and 8.93 percent for the same quarter last year. Third quarter 2017 return on average tangible equity amounted to 14.25 percent, compared to 13.58 percent for the second quarter of 2017 and 14.47 percent for the same quarter last year.
Excluding merger-related charges in each respective period, return on average tangible equity amounted to 15.43 percent for the third quarter of 2017, compared to 14.19 percent for the second quarter of 2017 and 16.01 percent for the third quarter of 2016.

"As we expected, the third quarter reflects outstanding profitability metrics," said Harold R. Carpenter, Pinnacle's chief financial officer. "Our core margin decreased by approximately three basis points between the second and third quarter primarily due to the completion of the restructuring of the legacy BNC balance sheet, where we invested in initiatives to build more asset sensitivity. During the third quarter of 2017, accretion from fair value adjustments contributed approximately $18.9 million to our net interest income, compared to $6.4 million during the second quarter of 2017. At Sept. 30, 2017, we had an estimated $182.4 million of remaining discount from loans we have acquired from our previous mergers."

OTHER HIGHLIGHTS:
Revenues
Net interest income for the quarter ended Sept. 30, 2017 was $173.2 million, compared to $106.6 million for the second quarter of 2017 and $86.6 million for the third quarter of 2016. Annualized linked-quarter revenue growth approximated 210.3 percent when comparing revenue for the quarter ended Sept. 30, 2017 to revenue for the quarter ended June 30, 2017.
Noninterest income for the quarter ended Sept. 30, 2017 was $43.0 million, compared to $35.1 million for the second quarter of 2017 and $31.7 million for the third quarter of 2016. Annualized linked-quarter growth in noninterest income approximated 90.0 percent when comparing noninterest income as of Sept. 30, 2017 to noninterest income as of June 30, 2017.
Net gains from the sale of residential mortgage loans were $6.0 million for the quarter ended Sept. 30, 2017, compared to $4.7 million for the second quarter of 2017 and $5.1 million for the quarter ended Sept. 30, 2016, resulting in a year-over-year growth rate of 17.0 percent.
Wealth management revenues, which include investment, trust and insurance services, were $8.4 million for the quarter ended Sept. 30, 2017, compared to $6.2 million for the second quarter of 2017 and $5.3 million for the quarter ended Sept. 30, 2016, resulting in a year-over-year growth rate of 57.4 percent.
Income from the firm's investment in Bankers Healthcare Group, Inc. (BHG) was $8.9 million for the quarter ended Sept. 30, 2017, compared to $8.8 million for the quarter ended June 30, 2017 and $8.5 million for the third quarter last year.

"The third quarter of 2017 was another strong revenue quarter for our firm," Carpenter said. "I’m particularly excited about
the significant organic loan growth this year. Through the first nine months of this year, we are reporting approximately $1.21 billion of organic loan growth, which excludes the loan growth that BNC experienced prior to the completion of our merger. This balance sheet momentum will obviously help us grow our earnings in future periods.
"Growing share in the commercial and industrial segment and growing our fee revenues in the Carolinas and Virginia has received intense focus and will continue over the next several quarters. We are particularly interested in increasing the number of commercial and industrial relationship managers as well as replicating our wealth management business is in our new markets and developing more opportunities for our residential mortgage origination business. Income from our equity method investment in BHG has resulted in a net contribution of $25.5 million thus far this year. We remain very optimistic about BHG and anticipate exceptional results in the fourth quarter of this year."

2




Noninterest expense
Noninterest expense for the quarter ended Sept. 30, 2017 was $109.7 million, compared to $71.8 million in the second quarter of 2017 and $63.5 million in the third quarter last year, reflecting a year-over-year increase of 72.8 percent.
Salaries and employee benefits were $64.3 million in the third quarter of 2017, compared to $43.7 million in the second quarter of 2017 and $36.1 million in the third quarter of last year, reflecting a year-over-year increase of 78.3 percent.
The efficiency ratio for the third quarter of 2017 increased to 50.8 percent, compared to 50.7 percent for the second quarter of 2017. The ratio of noninterest expenses to average assets decreased to 2.05 percent for the third quarter of 2017 from 2.16 percent in the second quarter of 2017.
Excluding merger-related charges and other real estate owned (ORE) expense, the efficiency ratio was 46.4 percent for the third quarter of 2017, compared to 48.4 percent for the second quarter of 2017, and the ratio of noninterest expense to average assets was 1.88 percent for the third quarter of 2017, compared to 2.06 percent for the second quarter of 2017.

"Going into the third quarter, we expected improved operating leverage from the BNC merger," Carpenter said. "Excluding merger-related charges and ORE expense, we are reporting an efficiency ratio of 46.4 percent, which we believe will continue to improve over the next several quarters once the integration of the BNC synergy case is fully deployed. Our technology conversion plan involves converting the legacy Pinnacle systems in November 2017. Thus, we believe our synergy case will be largely realized in early first quarter of 2018."

Asset quality
Nonperforming assets increased to 0.51 percent of total loans and ORE at Sept. 30, 2017, compared to 0.44 percent at June 30, 2017 and 0.41 percent at Sept. 30, 2016. Nonperforming assets increased to $78.1 million at Sept. 30, 2017, compared to $65.4 million at June 30, 2017 and $34.1 million at Sept. 30, 2016.
The allowance for loan losses represented 0.43 percent of total loans at Sept. 30, 2017, compared to 0.42 percent at June 30, 2017 and 0.73 percent at Sept. 30, 2016. 
The ratio of the allowance for loan losses to nonperforming loans was 122.0 percent at Sept. 30, 2017, compared to 154.0 percent at June 30, 2017 and 211.5 percent at Sept. 30, 2016.
Net charge-offs were $3.7 million for the quarter ended Sept. 30, 2017, compared to $7.5 million for the quarter ended June 30, 2017 and $7.3 million for the quarter ended Sept. 30, 2016. Annualized net charge-offs as a percentage of average loans for the quarter ended Sept. 30, 2017 were 0.14 percent, compared to 0.17 percent for the second quarter of 2017 and 0.35 percent for the third quarter of 2016.
Provision for loan losses was $6.9 million in the third quarter of 2017, compared to $6.8 million in the second quarter of 2017 and $6.1 million in the third quarter of 2016.

"Overall, asset quality for our firm remains exceptional," Carpenter said. "Our credit administrators throughout the firm have made significant progress toward the development of one credit culture across our franchise. The soundness of our firm is something all of our associates take great pride in. Thus far, the conclusions we reached during the BNC due diligence process regarding the high quality of the BNC portfolio are being reconfirmed every day."

Other Highlights
The firm incurred pre-tax merger-related charges of $8.8 million during the third quarter of 2017, primarily attributable to the continued cultural and technology integration and associate retention awards.
On Jan. 1, 2017, Pinnacle adopted FASB Accounting Standards Update (ASU) 2016-09, Stock Compensation Improvements to Employee Share-Based Payment Activity, which represented a change in accounting for the tax effects related to vesting of common shares and the exercise of stock options previously granted to the firm's employees through its various equity compensation plans. This change resulted in a reduction in third quarter 2017 tax expense of $59,000, compared to a reduction in tax expense of $789,000 and $3.8 million in the second and first quarters of 2017, respectively.

BOARD OF DIRECTORS DECLARES DIVIDEND

On Oct. 17, 2017, Pinnacle’s Board of Directors approved a quarterly cash dividend of $0.14 per common share to be paid on Nov. 24, 2017 to common shareholders of record as of the close of business on Nov. 3, 2017. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle’s Board of Directors.


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WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on Oct. 18, 2017 to discuss third quarter 2017 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.
For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.
Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. The firm earned a place on Fortune's 2017 list of the 100 Best Companies to Work For in the U.S., and American Banker recognized Pinnacle as the sixth best bank to work for in the country in 2016.
The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $21.8 billion in assets as of Sept. 30, 2017. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 11 primarily urban markets in Tennessee, the Carolinas and Virginia.
Additional information concerning Pinnacle, which is included in the NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.
###


4



Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to:  (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities', loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina and Virginia,  particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (xi) a merger or acquisition, like Pinnacle Financial's merger with BNC; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors or otherwise to attract customers from other financial institutions; (xv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xvii) risks associated with litigation, including the applicability of insurance coverage; (xviii) the risk of successful integration of the businesses Pinnacle Financial has recently acquired with its business; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxi) the possibility of increased compliance costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients;  (xxii) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by the terms of our agreement with them; (xxii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxiv) the risk that the cost savings and any revenue synergies from Pinnacle Financial's merger with BNC may not be realized or take longer than anticipated to be realized; (xxv) disruption from Pinnacle Financial's merger with BNC with customers, suppliers, employee or other business partners relationships; (xxvi) the risk of successful integration of Pinnacle Financial's and BNC's businesses; (xxvii) the amount of the costs, fees, expenses and charges related to Pinnacle Financial's merger with BNC; (xxviii) reputational risk and the reaction of the parties' customers, suppliers, employees or other business partners to Pinnacle Financial's merger with BNC; (xxix) the risk that the integration of Pinnacle Financial's and BNC's operations will be materially delayed or will be more costly or difficult than expected; and (xxx) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.


5



Non-GAAP Financial Matters

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

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



6



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
 
 
 
 
 
September 30,
2017
December 31,
2016
September 30,
2016
ASSETS
 
 
 
Cash and noninterest-bearing due from banks
$
132,324,313

$
84,732,291

$
81,750,005

Interest-bearing due from banks
270,563,317

97,529,713

165,262,687

Federal funds sold and other
5,394,587

1,383,416

9,964,345

Cash and cash equivalents
408,282,217

183,645,420

256,977,037

 
 
 
 
Securities available-for-sale, at fair value
2,880,180,805

1,298,546,056

1,223,751,538

Securities held-to-maturity (fair value of $21,021,555, $25,233,254 and $27,025,050 at Sept. 30, 2017, December 31, 2016 and Sept. 30, 2016, respectively)
20,847,849

25,251,316

26,605,251

Consumer loans held-for-sale
105,031,578

47,710,120

55,986,356

Commercial mortgage loans held-for-sale
20,385,491

22,587,971

15,531,588

 
 
 
 
Loans
15,259,785,972

8,449,924,736

8,241,020,478

Less allowance for loan losses
(65,159,286
)
(58,980,475
)
(60,248,505
)
Loans, net
15,194,626,686

8,390,944,261

8,180,771,973

 
 
 
 
Premises and equipment, net
270,136,166

88,904,145

84,916,306

Equity method investment
211,501,901

205,359,844

199,429,034

Accrued interest receivable
54,286,991

28,234,826

25,945,676

Goodwill
1,802,534,059

551,593,796

550,579,616

Core deposits and other intangible assets
59,780,903

15,104,038

16,240,711

Other real estate owned
24,338,967

6,089,804

5,589,046

Other assets
738,437,468

330,651,002

336,065,529

Total assets
$
21,790,371,081

$
11,194,622,599

$
10,978,389,661

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 

 
Deposits:
 

 

 
Noninterest-bearing
$
4,099,086,158

$
2,399,191,152

$
2,369,224,840

Interest-bearing
2,571,764,582

1,808,331,784

1,575,359,467

Savings and money market accounts
6,595,639,931

3,714,930,351

3,834,770,407

Time
2,523,094,175

836,853,761

890,791,297

Total deposits
15,789,584,846

8,759,307,048

8,670,146,011

Securities sold under agreements to repurchase
129,557,107

85,706,558

84,316,918

Federal Home Loan Bank advances
1,623,946,639

406,304,187

382,338,103

Subordinated debt and other borrowings
465,460,556

350,768,050

262,506,956

Accrued interest payable
10,715,285

5,573,377

3,009,165

Other liabilities
97,757,463

90,267,267

100,428,538

Total liabilities
18,117,021,896

9,697,926,487

9,502,745,691

 
 
 
 
Stockholders' equity:
 

 

 
Preferred stock, no par value, 10,000,000 shares authorized; no shares issued and outstanding



Common stock, par value $1.00; 90,000,000 shares authorized; 77,652,143 shares, 46,359,377 shares and 46,159,832 shares issued and outstanding at Sept. 30, 2017, December 31, 2016 and Sept. 30, 2016, respectively
77,652,143

46,359,377

46,159,832

Additional paid-in capital
3,105,577,594

1,083,490,728

1,074,112,218

Retained earnings
503,270,311

381,072,505

351,484,480

Accumulated other comprehensive gain (loss), net of taxes
(13,150,863
)
(14,226,498
)
3,887,440

Total stockholders' equity
3,673,349,185

1,496,696,112

1,475,643,970

Total liabilities and stockholders' equity
$
21,790,371,081

$
11,194,622,599

$
10,978,389,661

 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.


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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
 
 
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
 
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans, including fees
 
$
183,841,608

 
$
112,319,700

 
$
90,090,166

 
$
389,379,255

 
$
241,537,476

Securities
 
 
 
 
 
 
 
 
 
 
Taxable
 
12,066,502

 
8,265,225

 
5,012,047

 
26,764,815

 
14,050,757

Tax-exempt
 
4,620,340

 
2,235,517

 
1,544,535

 
8,533,438

 
4,481,309

Federal funds sold and other
 
1,638,704

 
922,796

 
732,951

 
3,375,817

 
2,046,244

Total interest income
 
202,167,154

 
123,743,238

 
97,379,699

 
428,053,325

 
262,115,786

 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
19,103,495

 
10,993,942

 
6,625,534

 
38,216,351

 
16,614,664

Securities sold under agreements to repurchase
 
148,442

 
78,438

 
51,270

 
276,646

 
138,852

Federal Home Loan Bank advances
and other borrowings
 
9,733,510

 
6,043,144

 
4,067,951

 
20,984,034

 
9,781,363

Total interest expense
 
28,985,447

 
17,115,524

 
10,744,755

 
59,477,031

 
26,534,879

Net interest income
 
173,181,707

 
106,627,714

 
86,634,944

 
368,576,294

 
235,580,907

Provision for loan losses
 
6,920,184

 
6,812,389

 
6,108,183

 
17,383,595

 
15,281,854

Net interest income after provision for loan losses
 
166,261,523

 
99,815,325

 
80,526,761

 
351,192,699

 
220,299,053

 
 
 
 
 
 
 
 
 
 
 
Noninterest income:
 
 
 
 
 
 

 
 
 
 
Service charges on deposit accounts
 
5,920,824

 
4,178,736

 
3,778,070

 
13,955,043

 
10,651,145

Investment services
 
3,660,103

 
3,110,088

 
2,592,077

 
9,592,025

 
7,437,396

Insurance sales commissions
 
2,123,549

 
1,461,160

 
1,233,098

 
5,443,599

 
4,131,784

Gains on mortgage loans sold, net
 
5,962,916

 
4,667,537

 
5,096,838

 
14,785,405

 
12,885,690

Investment gains on sales, net
 

 

 

 

 

Trust fees
 
2,636,212

 
1,677,079

 
1,522,763

 
6,018,570

 
4,595,330

Income from equity method investment
 
8,936,626

 
8,754,718

 
8,474,899

 
25,514,081

 
23,266,733

Other noninterest income
 
13,736,779

 
11,207,239

 
8,994,164

 
33,106,437

 
27,292,477

Total noninterest income
 
42,977,009

 
35,056,557

 
31,691,909

 
108,415,160

 
90,260,555

 
 
 
 
 
 
 
 
 
 
 
Noninterest expense:
 
 
 
 
 
 

 
 
 
 
Salaries and employee benefits
 
64,287,986

 
43,675,551

 
36,053,673

 
146,315,721

 
102,824,676

Equipment and occupancy
 
16,590,119

 
10,712,711

 
9,401,001

 
36,977,488

 
25,843,737

Other real estate, net
 
512,490

 
62,960

 
17,032

 
827,423

 
351,777

Marketing and other business development
 
2,222,290

 
2,126,693

 
1,349,557

 
6,228,189

 
4,150,761

Postage and supplies
 
1,754,789

 
1,122,251

 
922,078

 
4,073,485

 
2,929,007

Amortization of intangibles
 
3,077,277

 
1,471,568

 
1,424,956

 
5,744,974

 
3,144,786

Merger-related expenses
 
8,847,306

 
3,221,060

 
5,672,731

 
12,740,382

 
8,482,385

Other noninterest expense
 
12,443,659

 
9,404,755

 
8,685,238

 
30,679,179

 
25,793,600

Total noninterest expense
 
109,735,916

 
71,797,549

 
63,526,266

 
243,586,841

 
173,520,729

Income before income taxes
 
99,502,616

 
63,074,333

 
48,692,404

 
216,021,018

 
137,038,879

Income tax expense
 
35,060,471

 
19,987,812

 
16,316,209

 
68,839,305

 
45,910,648

Net income
 
$
64,442,145

 
$
43,086,521

 
$
32,376,195

 
$
147,181,713

 
$
91,128,231

 
 
 
 
 
 
 
 
 
 
 
Per share information:
 
 
 
 
 
 

 
 

 
 
Basic net income per common share
 
$
0.84

 
$
0.81

 
$
0.71

 
$
2.48

 
$
2.16

Diluted net income per common share
 
$
0.83

 
$
0.80

 
$
0.71

 
$
2.46

 
$
2.12

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 

 
 

Basic
 
76,678,584

 
53,097,776

 
45,294,051

 
59,371,202

 
42,228,280

Diluted
 
77,232,098

 
53,665,925

 
45,918,368

 
59,910,344

 
42,928,467

 
 
 
 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

8



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
(dollars in thousands)
September
June
March
December
September
June
2017
2017
2017
2016
2016
2016
 
 
 
 
 
 
 
Balance sheet data, at quarter end:
 
 
 
 
 
 
Commercial real estate - mortgage loans
$
6,450,042

6,387,372

3,181,584

3,193,496

2,991,940

2,467,219

Consumer real estate  - mortgage loans
2,541,180

2,552,927

1,196,375

1,185,917

1,185,966

1,068,620

Construction and land development loans
1,939,809

1,772,799

1,015,127

912,673

930,230

816,681

Commercial and industrial loans
3,971,227

3,688,357

2,980,840

2,891,710

2,873,643

2,492,016

Consumer and other
357,528

357,310

268,106

266,129

259,241

246,866

Total loans
15,259,786

14,758,765

8,642,032

8,449,925

8,241,020

7,091,402

Allowance for loan losses
(65,159
)
(61,944
)
(58,350
)
(58,980
)
(60,249
)
(61,412
)
Securities
2,901,029

2,448,198

1,604,774

1,323,797

1,250,357

1,137,733

Total assets
21,790,371

20,886,154

11,724,601

11,194,623

10,978,390

9,735,668

Noninterest-bearing deposits
4,099,086

3,893,603

2,508,680

2,399,191

2,369,225

2,013,847

Total deposits
15,789,585

15,757,475

9,280,597

8,759,307

8,670,146

7,292,826

Securities sold under agreements to repurchase
129,557

205,008

71,157

85,707

84,317

73,317

FHLB advances
1,623,947

725,230

181,264

406,304

382,338

783,240

Subordinated debt and other borrowings
465,461

465,419

350,849

350,768

262,507

229,714

Total stockholders' equity
3,673,349

3,615,327

1,723,075

1,496,696

1,475,644

1,262,154

 
 
 
 
 
 
 
Balance sheet data, quarterly averages:
 
 
 

 

 

 

Total loans
$
15,016,642

9,817,139

8,558,267

8,357,201

8,232,963

6,997,592

Securities
2,741,493

1,798,334

1,440,917

1,265,096

1,232,973

1,064,060

Total earning assets
18,140,036

11,885,118

10,261,974

9,884,701

9,794,094

8,362,657

Total assets
21,211,459

13,335,359

11,421,654

11,037,555

10,883,547

9,305,941

Noninterest-bearing deposits
3,953,855

2,746,499

2,434,875

2,445,157

2,304,533

2,003,523

Total deposits
15,828,480

10,394,267

9,099,472

8,791,206

8,454,424

7,093,349

Securities sold under agreements to repurchase
160,726

99,763

79,681

82,415

87,067

65,121

FHLB advances
1,059,032

399,083

212,951

307,039

583,724

653,750

Subordinated debt and other borrowings
473,805

375,249

355,082

319,790

266,934

225,240

Total stockholders' equity
3,655,029

2,057,505

1,657,072

1,493,684

1,442,440

1,247,762

 
 
 
 
 
 
 
Statement of operations data, for the three months ended:
Interest income
$
202,167

123,743

102,143

101,493

97,380

83,762

Interest expense
28,985

17,116

13,376

12,080

10,745

8,718

Net interest income
173,182

106,627

88,767

89,413

86,635

75,044

Provision for loan losses
6,920

6,812

3,651

3,046

6,108

5,280

Net interest income after provision for loan losses
166,262

99,815

85,116

86,367

80,527

69,764

Noninterest income
42,977

35,057

30,382

30,743

31,692

32,713

Noninterest expense
109,736

71,798

62,054

62,765

63,526

55,931

Income before taxes
99,503

63,074

53,444

54,345

48,693

46,546

Income tax expense
35,061

19,988

13,791

18,248

16,316

15,759

Net income
$
64,442

43,086

39,653

36,097

32,377

30,787

 
 
 
 
 
 
 
Profitability and other ratios:
 
 
 

 

 

 

Return on avg. assets (1)
1.21
%
1.30
%
1.41
%
1.30
%
1.18
%
1.33
%
Return on avg. equity (1)
6.99
%
8.40
%
9.70
%
9.61
%
8.93
%
9.92
%
Return on avg. tangible common equity (1)
14.25
%
13.58
%
14.74
%
15.49
%
14.47
%
15.34
%
Dividend payout ratio (17)
17.34
%
18.01
%
18.67
%
19.31
%
19.93
%
20.90
%
Net interest margin (1)  (2)
3.87
%
3.68
%
3.60
%
3.72
%
3.60
%
3.72
%
Noninterest income to total revenue (3)
19.88
%
24.74
%
25.50
%
25.59
%
26.78
%
30.36
%
Noninterest income to avg. assets (1)
0.80
%
1.05
%
1.08
%
1.11
%
1.16
%
1.41
%
Noninterest exp. to avg. assets (1)
2.05
%
2.16
%
2.20
%
2.26
%
2.32
%
2.42
%
Noninterest expense (excluding ORE expenses, and
merger-related charges) to avg. assets (1)
1.88
%
2.06
%
2.17
%
2.14
%
2.11
%
2.37
%
 Efficiency ratio (4)
50.77
%
50.67
%
52.08
%
52.24
%
53.69
%
51.90
%
Avg. loans to avg. deposits
94.87
%
94.45
%
94.05
%
95.06
%
97.38
%
98.65
%
Securities to total assets
13.31
%
11.72
%
13.69
%
11.82
%
11.39
%
11.69
%
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

9



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
 
 
 
 
(dollars in thousands)
Three months ended
 
Three months ended
September 30, 2017
 
September 30, 2016
 
Average Balances
Interest
Rates/ Yields
 
Average Balances
Interest
Rates/ Yields
Interest-earning assets
 
 
 
 
 
 
 
Loans (1)
$
15,016,642

$
183,842

4.91
%
 
$
8,232,963

$
90,090

4.43
%
Securities
 
 
 
 
 
 
 
Taxable
2,080,512

12,066

2.30
%
 
1,010,090

5,012

1.97
%
Tax-exempt (2)
660,981

4,620

3.72
%
 
222,883

1,545

3.70
%
Federal funds sold and other
379,769

1,639

1.71
%
 
328,158

733

0.89
%
Total interest-earning assets
18,137,904

$
202,167

4.50
%
 
9,794,094

$
97,380

3.98
%
Nonearning assets
 
 
 
 
 
 
 
Intangible assets
1,860,282

 
 
 
590,348

 
 
Other nonearning assets
1,213,273

 
 
 
499,105

 
 
Total assets
$
21,211,459

 
 
 
$
10,883,547

 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest checking
$
2,658,733

$
3,368

0.50
%
 
$
1,437,196

$
985

0.27
%
Savings and money market
6,727,136

10,725

0.63
%
 
3,808,388

4,003

0.42
%
Time
2,488,756

5,010

0.80
%
 
904,307

1,638

0.72
%
Total interest-bearing deposits
11,874,625

19,103

0.64
%
 
6,149,891

6,626

0.43
%
Securities sold under agreements to repurchase
160,726

148

0.37
%
 
87,067

51

0.23
%
Federal Home Loan Bank advances
1,059,032

3,959

1.48
%
 
583,724

1,280

0.87
%
Subordinated debt and other borrowings
473,805

5,775

4.84
%
 
266,934

2,788

4.15
%
Total interest-bearing liabilities
13,568,188

28,985

0.85
%
 
7,087,616

10,745

0.60
%
Noninterest-bearing deposits
3,953,855



 
2,304,533



Total deposits and interest-bearing liabilities
17,522,043

$
28,985

0.66
%
 
9,392,149

$
10,745

0.46
%
Other liabilities
34,387

 
 
 
48,958

 
 
Stockholders' equity 
3,655,029

 
 
 
1,442,440

 
 
Total liabilities and stockholders' equity
$
21,211,459

 
 
 
$
10,883,547

 
 
Net  interest  income 
 
$
173,182

 
 
 
$
86,635

 
Net interest spread (3)
 
 
3.65
%
 
 
 
3.38
%
Net interest margin (4)
 
 
3.87
%
 
 
 
3.60
%
 
 
 
 
 
 
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
 

 
 

 

 

(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended September 30, 2017 would have been 3.84% compared to a net interest spread of 3.53% for the quarter ended September 30, 2016.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
 
 
This information is preliminary and based on company data available at the time of the presentation.
 

 


10



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
 
 
 
 
(dollars in thousands)
Nine months ended
 
Nine months ended
September 30, 2017
 
September 30, 2016
 
Average Balances
Interest
Rates/ Yields
 
Average Balances
Interest
Rates/ Yields
Interest-earning assets
 
 
 
 
 
 

 
Loans (1)
$
11,154,340

$
389,379

4.73
%
 
$
7,327,519

$
241,538

4.48
%
Securities
 
 
 
 
 
 
 
Taxable
1,593,590

26,765

2.25
%
 
901,059

14,051

2.08
%
Tax-exempt (2)
404,756

8,533

3.78
%
 
196,340

4,481

4.09
%
Federal funds sold and other
300,552

3,376

1.50
%
 
303,996

2,046

0.90
%
Total interest-earning assets
13,453,238

$
428,053

4.34
%
 
8,728,914

$
262,116

4.04
%
Nonearning assets
 
 
 
 
 
 
 
Intangible assets
1,075,109

 
 
 
490,804

 
 
Other nonearning assets
830,337

 
 
 
465,156

 
 
Total assets
$
15,358,684

 
 
 
$
9,684,874

 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest checking
$
2,206,934

$
7,774

0.47
%
 
$
1,398,494

$
2,820

0.27
%
Savings and money market
5,043,033

21,175

0.56
%
 
3,299,102

9,974

0.40
%
Time
1,498,114

9,267

0.83
%
 
743,882

3,820

0.69
%
Total interest-bearing deposits
8,748,081

38,216

0.58
%
 
5,441,478

16,614

0.41
%
Securities sold under agreements to repurchase
113,687

277

0.33
%
 
73,821

139

0.25
%
Federal Home Loan Bank advances
560,121

6,347

1.52
%
 
540,360

3,073

0.76
%
Subordinated debt and other borrowings
401,814

14,637

4.87
%
 
218,424

6,709

4.10
%
Total interest-bearing liabilities
9,823,703

59,477

0.81
%
 
6,274,083

26,535

0.56
%
Noninterest-bearing deposits
3,050,640



 
2,090,165



Total deposits and interest-bearing liabilities
12,874,343

$
59,477

0.62
%
 
8,364,248

$
26,535

0.42
%
Other liabilities
20,486

 
 
 
27,295

 
 
Stockholders' equity 
2,463,855

 
 
 
1,293,331

 
 
Total liabilities and stockholders' equity
$
15,358,684

 
 
 
$
9,684,874

 
 
Net  interest  income 
 
$
368,576

 
 
 
$
235,581

 
Net interest spread (3)
 
 
3.53
%
 
 
 
3.48
%
Net interest margin (4)
 
 
3.75
%
 
 
 
3.69
%
 
 
 
 
 
 
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the nine months ended September 30, 2017 would have been 3.72% compared to a net interest spread of 3.62% for the nine months ended September 30, 2016.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.


11



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
(dollars in thousands)
September
June
March
December
September
June
2017
2017
2017
2016
2016
2016
 
 
 
 
 
 
 
Asset quality information and ratios:
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
Nonaccrual loans
$
53,414

40,217

25,051

27,577

28,487

33,785

Other real estate (ORE) and
other nonperforming assets (NPAs)
24,682

25,153

6,235

6,090

5,656

5,183

Total nonperforming assets
$
78,096

65,370

31,286

33,667

34,143

38,968

Past due loans over 90 days and still accruing interest
$
3,263

1,691

1,110

1,134

2,093

1,623

Troubled debt restructurings (5)
$
15,157

14,248

14,591

15,009

8,503

9,861

Net loan charge-offs
$
3,705

7,499

4,282

4,314

7,271

6,108

Allowance for loan losses to nonaccrual loans
122.0
%
154.0
%
232.9
%
213.9
%
211.5
%
181.8
%
As a percentage of total loans:
 
 
 

 

 

 

Past due accruing loans over 30 days
0.24
%
0.20
%
0.17
%
0.26
%
0.24
%
0.33
%
Potential problem loans (6)
0.97
%
1.26
%
1.27
%
1.36
%
1.13
%
1.38
%
Allowance for loan losses
0.43
%
0.42
%
0.68
%
0.70
%
0.73
%
0.87
%
Nonperforming assets to total loans, ORE and
other NPAs
0.51
%
0.44
%
0.36
%
0.40
%
0.41
%
0.55
%
Nonperforming assets to total assets
0.36
%
0.31
%
0.27
%
0.30
%
0.31
%
0.40
%
    Classified asset ratio (Pinnacle Bank) (8)
12.7
%
14.2
%
12.9
%
16.4
%
15.2
%
19.3
%
Annualized net loan charge-offs to avg. loans (7)
0.14
%
0.17
%
0.20
%
0.21
%
0.35
%
0.35
%
Wtd. avg. commercial loan internal risk ratings (6)
4.5

4.5

4.5

4.5

4.6

4.5

 
 
 
 
 
 
 
Interest rates and yields:
 
 
 

 

 

 

Loans
4.91
%
4.66
%
4.49
%
4.60
%
4.43
%
4.53
%
Securities
2.64
%
2.51
%
2.44
%
2.26
%
2.29
%
2.46
%
Total earning assets
4.50
%
4.21
%
4.06
%
4.11
%
3.98
%
4.06
%
Total deposits, including non-interest bearing
0.48
%
0.42
%
0.36
%
0.33
%
0.31
%
0.29
%
Securities sold under agreements to repurchase
0.37
%
0.32
%
0.25
%
0.22
%
0.23
%
0.24
%
FHLB advances
1.48
%
1.49
%
1.72
%
1.38
%
0.87
%
0.77
%
Subordinated debt and other borrowings
4.84
%
4.87
%
4.92
%
4.56
%
4.15
%
4.19
%
Total deposits and interest-bearing liabilities
0.66
%
0.61
%
0.56
%
0.51
%
0.46
%
0.44
%
 
 
 
 
 
 
 
Pinnacle Financial Partners capital ratios (8):
 
 
 

 

 

 

Stockholders' equity to total assets
16.9
%
17.3
%
14.7
%
13.4
%
13.4
%
13.0
%
Common equity Tier one
9.4
%
9.5
%
9.8
%
7.9
%
7.6
%
7.9
%
Tier one risk-based
9.4
%
9.5
%
10.6
%
8.6
%
8.4
%
8.8
%
Total risk-based
12.3
%
12.6
%
13.7
%
11.9
%
10.5
%
11.0
%
Leverage
8.9
%
14.5
%
10.3
%
8.6
%
8.3
%
8.7
%
Tangible common equity to tangible assets
9.1
%
9.2
%
10.4
%
8.8
%
8.7
%
8.9
%
Pinnacle Bank ratios:
 
 
 

 

 

 

Common equity Tier one
10.7
%
11.0
%
11.1
%
9.3
%
8.6
%
8.4
%
Tier one risk-based
10.7
%
11.0
%
11.1
%
9.3
%
8.6
%
8.4
%
Total risk-based
11.8
%
12.1
%
12.9
%
11.2
%
10.5
%
10.6
%
Leverage
10.1
%
16.7
%
10.9
%
9.2
%
8.6
%
8.3
%
Construction and land development loans
as a percent of total capital (20)
88.1
%
85.1
%
75.2
%
80.3
%
87.9
%
89.7
%
Non-owner occupied commercial real estate and
multi-family as a percent of total capital (20)
289.1
%
286.4
%
220.9
%
256.0
%
265.5
%
253.9
%
 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
Earnings  – basic
$
0.84

0.81

0.83

0.79

0.71

0.75

Earnings  – diluted
$
0.83

0.80

0.82

0.78

0.71

0.73

Common dividends per share
$
0.14

0.14

0.14

0.14

0.14

0.14

Book value per common share at quarter end (9)
$
47.31

46.56

34.61

32.28

31.97

29.92

Tangible book value per common share at quarter end (9)
$
23.32

22.58

23.25

20.06

19.69

19.58

 
 
 
 
 
 
 
Investor information:
 
 
 

 

 

 

Closing sales price on last trading day of quarter
$
66.95

62.80

66.45

69.30

54.08

48.85

High closing sales price during quarter
$
66.95

69.10

71.05

71.15

57.26

51.73

Low closing sales price during quarter
$
58.50

60.00

66.45

49.70

47.44

45.15

 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

12



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
 
(dollars in thousands, except per share data)
 
September
June
March
December
September
June
 
2017
2017
2017
2016
2016
2016
 
 
 
 
 
 
 
 
Other information:
 
 
 
 

 

 

 

Gains on mortgage loans sold:
 
 
 
 

 

 

 

Mortgage loan sales:
 
 
 
 

 

 

 

Gross loans sold
$
299,763

261,981

160,740

221,126

214,394

198,239

Gross fees (10)
$
9,050

7,361

4,427

6,535

6,702

5,530

Gross fees as a percentage of loans originated
 
3.02
%
3.00
%
2.75
%
2.96
%
3.13
%
2.79
%
Net gain on mortgage loans sold
$
5,963

4,668

4,155

2,869

5,097

4,221

Investment gains on sales of securities, net (16)
$



395



Brokerage account assets, at quarter end (11)
$
2,979,936

2,815,501

2,280,355

2,198,334

2,090,316

1,964,769

Trust account managed assets, at quarter end
$
1,880,488

1,804,811

1,011,964

1,002,742

978,356

953,592

Core deposits (12)
$
13,609,194

13,529,398

8,288,247

7,834,973

7,714,552

6,591,063

Core deposits to total funding (12)
 
75.6
%
78.9
%
83.4
%
81.6
%
82.1
%
78.7
%
Risk-weighted assets
$
18,164,765

17,285,264

10,489,944

10,210,711

10,020,690

8,609,968

Total assets per full-time equivalent employee
$
9,930

9,398

9,630

9,491

9,323

9,176

Annualized revenues per full-time equivalent employee
$
390.8

255.7

396.9

405.3

399.8

408.5

Annualized expenses per full-time equivalent employee
$
198.4

129.6

206.7

211.7

214.6

212.0

Number of employees (full-time equivalent)
 
2,194.5

2,222.5

1,217.5

1,179.5

1,177.5

1,061.0

Associate retention rate (13)
 
98.3
%
87.1
%
92.9
%
92.7
%
93.9
%
95.2
%
 
 
 
 
 
 
 
 
Selected economic information (in thousands) (14):
 
 
 
 
 
 
 
Charleston MSA nonfarm employment - August
 
   1,178.6

        1,179.4

1,170.6

1,167.7

1,160.9

1,148.1

Nashville MSA nonfarm employment - August
 
      982.5

           975.1

977.1

968.5

957.8

947.7

Memphis MSA nonfarm employment - August
 
      647.2

           648.1

646.4

644.7

641.3

637.2

Raleigh MSA nonfarm employment - August
 
      626.1

           617.9

612.0

609.3

606.6

601.0

Knoxville MSA nonfarm employment - August
 
      394.6

           391.3

393.8

395.5

394.1

393.1

Greensboro MSA nonfarm employment - August
 
      364.2

           362.9

362.5

360.8

358.4

357.8

Charlotte MSA nonfarm employment - August
 
      354.3

           352.5

354.2

350.9

349.4

346.0

Winston-Salem MSA nonfarm employment - August
 
      263.0

           260.8

263.2

261.6

262.1

261.3

Chattanooga MSA nonfarm employment - August
 
      259.2

           260.7

256.3

254.6

252.2

252.0

Roanoke MSA nonfarm employment - August
 
      165.0

           164.7

164.1

162.4

162.4

162.3

Greenville MSA nonfarm employment - August
 
        79.1

             78.6

78.9

79.1

79.5

79.2

 
 
 
 
 
 
 
 
Charleston MSA unemployment - August
 
3.9
%
3.9
%
4.5
%
4.7
%
4.8
%
4.6
%
Nashville MSA unemployment - August
 
2.7
%
2.8
%
3.7
%
4.1
%
4.1
%
3.7
%
Memphis MSA unemployment - August
 
4.2
%
4.3
%
5.0
%
5.5
%
5.6
%
5.2
%
Raleigh MSA unemployment - August
 
3.6
%
3.6
%
4.2
%
4.4
%
4.4
%
4.2
%
Knoxville MSA unemployment - August
 
3.3
%
3.5
%
4.5
%
4.9
%
4.9
%
4.4
%
Greensboro MSA unemployment - August
 
4.4
%
4.3
%
5.0
%
5.2
%
5.3
%
5.0
%
Charlotte MSA unemployment - August
 
3.4
%
3.2
%
3.7
%
3.7
%
3.9
%
4.1
%
Winston-Salem MSA unemployment - August
 
4.0
%
4.0
%
4.6
%
4.9
%
4.9
%
4.6
%
Chattanooga MSA unemployment - August
 
3.8
%
3.9
%
4.6
%
5.2
%
5.3
%
4.7
%
Roanoke MSA unemployment - August
 
3.8
%
3.8
%
3.6
%
4.0
%
4.2
%
3.8
%
Greenville MSA unemployment - August
 
4.5
%
4.5
%
5.3
%
5.6
%
5.5
%
5.2
%
 
 
 
 
 
 
 
 
Charleston, SC residential median home price - August
$
         369

              360

              365

              349

              350

            348

Nashville, TN residential median home price - August
$
         329

              339

              325

              304

              299

            299

Memphis, TN residential median home price - August
$
           90

                88

                77

                78

                82

              80

Raleigh, NC residential median home price - August
$
         309

              299

              299

              280

              275

            265

Knoxville, TN residential median home price - August
$
         195

              197

              185

              175

              174

            167

Greensboro, NC residential median home price - August
$
         179

              184

              173

              163

              157

            169

Charlotte, SC residential median home price - August
$
         270

              284

              265

              254

              247

            257

Winston-Salem, NC residential median home price - August
$
         159

              164

              159

              149

              148

            149

Chattanooga, TN residential median home price - August
$
         209

              225

              199

              194

              184

            185

Roanoke, VA residential median home price - August
$
         175

              171

              164

              150

              160

            159

Greenville, NC residential median home price - August
$
         265

              264

              275

              261

              249

            244

 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

13



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
 
(dollars in thousands, except per share data)
 
September
June
March
December
September
June
 
2017
2017
2017
2016
2016
2016
 
 
 
 
 
 
 
 
Net interest income
$
173,182

106,627

88,767

89,413

86,635

75,044

 
 
 
 
 
 
 
 
Noninterest income
 
42,977

35,057

30,382

30,743

31,692

32,713

Less: Investment (gains) and losses on sales, net
 



(395
)


Noninterest income excluding investment (gains) and losses on sales of securities, net
 
42,977

35,057

30,382

30,348

31,692

32,713

Total revenues excluding the impact of investment
(gains) and losses on sales of securities, net
 
216,159

141,684

119,149

119,761

118,327

107,757

 
 
 
 
 
 
 
 
Noninterest expense
 
109,736

71,798

62,054

62,765

63,526

55,931

Less:   Other real estate expense
 
512

63

252

44

17

222

Merger-related charges
 
8,847

3,221

672

3,264

5,672

980

Noninterest expense excluding the impact of other real estate expense and merger-related charges
 
100,377

68,514

61,130

59,457

57,837

54,729

 
 
 
 
 
 
 
 
Adjusted pre-tax pre-provision income (15)
$
115,782

73,170

58,019

60,304

60,490

53,028

 
 
 
 
 
 
 
 
Efficiency ratio (4)
 
50.77
 %
50.67
 %
52.08
 %
52.24
 %
53.69
 %
51.90
 %
Adjustment due to investment gains and losses,
ORE expense and merger-related charges
 
(4.33
%)
(2.30
%)
(0.77
%)
(2.59
%)
(4.81
%)
(1.12
%)
Efficiency ratio (excluding investment gains and losses,
ORE expense, and merger-related charges)
 
46.44
 %
48.37
 %
51.31
 %
49.65
 %
48.88
 %
50.79
 %
 
 
 
 
 
 
 
 
Total average assets
$
21,211,459

13,335,359

11,421,654

11,037,555

10,883,547

9,305,941

 
 
 
 
 
 
 
 
Noninterest expense to avg. assets
 
2.05
 %
2.16
 %
2.20
 %
2.26
 %
2.32
 %
2.42
 %
Adjustment due to ORE expenses and merger-related charges
 
(0.17
%)
(0.10
%)
(0.03
%)
(0.12
%)
(0.21
%)
(0.05
%)
Noninterest expense (excluding ORE expense, and
merger-related charges) to avg. assets (1)
 
1.88
 %
2.06
 %
2.17
 %
2.14
 %
2.11
 %
2.37
 %
 
 
 
 
 
 
 
 
Equity Method Investment (18)
 
 
 
 

 

 

 

Fee income from BHG, net of amortization
$
8,937

8,755

7,823

8,136

8,475

9,644

Funding cost to support investment
 
1,951

1,844

1,775

1,797

1,760

1,732

Pre-tax impact of BHG
 
6,986

6,911

6,048

6,339

6,715

7,912

Income tax expense at statutory rates
 
2,741

2,711

2,373

2,487

2,634

3,104

Earnings attributable to BHG
$
4,245

4,200

3,675

3,852

4,081

4,808

 
 
 
 
 
 
 
 
Basic earnings per share attributable to BHG
$
0.06

0.08

0.08

0.08

0.09

0.12

Diluted earnings per share attributable to BHG
$
0.06

0.08

0.08

0.08

0.09

0.11

 
 
 
 
 
 
 
 
Net income
$
64,442

43,086

39,653

36,097

32,377

30,787

Merger-related charges
 
8,847

3,221

672

3,264

5,672

980

Tax effect on merger-related charges (19)
 
(3,471
)
(1,264
)
(264
)
(1,281
)
(2,225
)
(385
)
Net income less merger-related charges
$
69,818

45,043

40,061

38,080

35,824

31,382

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.84

0.81

0.83

0.79

0.71

0.75

Adjustment to basic earnings per share due to
merger-related charges
 
0.07

0.04

0.01

0.05

0.08

0.01

Basic earnings per share excluding merger-related charges
$
0.91

0.85

0.84

0.84

0.79

0.76

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.83

0.80

0.82

0.78

0.71

0.73

Adjustment to diluted earnings per share due to
merger-related charges
 
0.07

0.04

0.01

0.05

0.07

0.02

Diluted earnings per share excluding merger-related charges
$
0.90

0.84

0.83

0.83

0.78

0.75

 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.


14



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
 
(dollars in thousands, except per share data)
 
September
June
March
December
September
June
 
2017
2017
2017
2016
2016
2016
 
 
 
 
 
 
 
 
Return on average assets
 
1.21
 %
1.30
 %
1.41
 %
1.30
 %
1.18
 %
1.33
 %
Adjustment due to merger-related charges
 
0.10
 %
0.05
 %
0.01
 %
0.07
 %
0.13
 %
0.03
 %
Return on average assets (excluding
merger-related charges)
 
1.31
 %
1.35
 %
1.42
 %
1.37
 %
1.31
 %
1.36
 %
 
 
 
 
 
 
 
 
Tangible assets:
 
 
 
 

 

 

 

Total assets
$
21,790,371

20,886,154

11,724,601

11,194,623

10,978,390

9,735,668

Less:   Goodwill
 
(1,802,534
)
(1,800,742
)
(551,546
)
(551,594
)
(550,580
)
(427,574
)
Core deposit and other intangible assets
 
(59,781
)
(60,964
)
(13,908
)
(15,104
)
(16,241
)
(8,821
)
Net tangible assets
$
19,928,056

19,024,448

11,159,147

10,627,925

10,411,569

9,299,273

 
 
 
 
 
 
 
 
Tangible equity:
 
 
 
 

 

 

 

Total stockholders' equity
$
3,673,349

3,615,327

1,723,075

1,496,696

1,475,644

1,262,154

Less: Goodwill
 
(1,802,534
)
(1,800,742
)
(551,546
)
(551,594
)
(550,580
)
(427,574
)
Core deposit and other intangible assets
 
(59,781
)
(60,964
)
(13,908
)
(15,104
)
(16,241
)
(8,821
)
Net tangible common equity
$
1,811,034

1,753,621

1,157,621

929,998

908,823

825,759

 
 
 
 
 
 
 
 
Ratio of tangible common equity to tangible assets
 
9.09
 %
9.22
 %
10.37
 %
8.75
 %
8.73
 %
8.88
 %
 
 
 
 
 
 
 
 
Average tangible assets:
 
 
 
 
 
 
 
Average assets
$
21,211,459

13,335,359

11,421,654

11,037,555

10,883,547

9,305,941

Less: Average goodwill
 
(1,800,761
)
(760,646
)
(551,548
)
(551,042
)
(541,153
)
(431,155
)
Core deposit and other intangible assets
 
(59,521
)
(23,957
)
(14,674
)
(15,724
)
(11,296
)
(9,367
)
Net average tangible assets
$
19,351,177

12,550,756

10,855,432

10,470,789

10,331,098

8,865,419

 
 
 
 
 
 
 
 
Return on average assets
 
1.21
 %
1.30
 %
1.41
 %
1.30
 %
1.18
 %
1.33
 %
Adjustment due to goodwill, core deposit and
other intangible assets
 
0.11
 %
0.08
 %
0.06
 %
0.08
 %
0.08
 %
0.06
 %
Return on average tangible assets
 
1.32
 %
1.38
 %
1.47
 %
1.38
 %
1.26
 %
1.39
 %
Adjustment due to merger-related charges
 
0.11
%
0.06
%
0.01
%
0.08
%
0.13
%
0.03
%
Return on average tangible assets (excluding
merger-related charges)
 
1.43
 %
1.44
 %
1.48
 %
1.46
 %
1.39
 %
1.42
 %
 
 
 
 
 
 
 
 
Average tangible equity:
 
 
 
 

 

 

 

Average stockholders' equity
$
3,655,029

2,057,505

1,657,072

1,493,684

1,442,440

1,247,762

Less:   Average goodwill
 
(1,800,761
)
(760,646
)
(551,548
)
(551,042
)
(541,153
)
(431,155
)
Core deposit and other intangible assets
 
(59,521
)
(23,957
)
(14,674
)
(15,724
)
(11,296
)
(9,367
)
Net average tangible common equity
$
1,794,747

1,272,902

1,090,850

926,918

889,991

807,240

 
 
 
 
 
 
 
 
Return on average common equity
 
6.99
 %
8.40
 %
9.70
 %
9.61
 %
8.93
 %
9.92
 %
Adjustment due to goodwill, core deposit and
other intangible assets
 
7.26
 %
5.18
 %
5.04
 %
5.88
 %
5.54
 %
5.42
 %
Return on average tangible common equity (1)
 
14.25
 %
13.58
 %
14.74
 %
15.49
 %
14.47
 %
15.34
 %
Adjustment due to merger-related charges
 
1.18
 %
0.61
 %
0.15
 %
0.85
 %
1.54
 %
0.30
 %
Return on average tangible common equity
(excluding merger-related charges)
 
15.43
 %
14.19
 %
14.89
 %
16.34
 %
16.01
 %
15.64
 %
 
 
 
 
 
 
 
 
Total average assets
$
21,211,459

13,335,359

11,421,654

11,037,555

10,883,547

9,305,941

 
 
 
 
 
 
 
 
Net interest margin
 
3.87
 %
3.68
 %
3.60
 %
3.72
 %
3.60
 %
3.72
 %
Adjustment due to accretion from fair value
accounting
 
(0.45
%)
(0.23
%)
(0.21
%)
(0.32
%)
(0.21
%)
(0.22
%)
Core net interest margin
 
3.42
 %
3.45
 %
3.39
 %
3.40
 %
3.39
 %
3.50
 %
 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

15



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
1. Ratios are presented on an annualized basis.
2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.
3. Total revenue is equal to the sum of net interest income and noninterest income.
4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
5. Troubled debt prepayments include loans where the company, as a result of the borrower's financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.).  All of these loans continue to accrue interest at the contractual rate.
6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A "1" risk rating is assigned to credits that exhibit Excellent risk characteristics, "2" exhibit Very Good risk characteristics, "3" Good, "4" Satisfactory, "5" Acceptable or Average, "6" Watch List, "7" Criticized, "8" Classified or Substandard, "9" Doubtful and "10" Loss (which are charged-off immediately).  Additionally, loans rated "8" or worse that are not nonperforming or restructured loans are considered potential problem loans.  Generally, consumer loans are not subjected to internal risk ratings. Data presented represents legacy Pinnacle portfolio at period end date.
7. Annualized net loan charge-offs to average loans ratios are computed by annualizing quarter-to-date net loan charge-offs and dividing the result by average loans for the quarter-to-date period.
8. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:
Equity to total assets – End of period total stockholders' equity as a percentage of end of period assets.
Tangible common equity to total assets - End of period total stockholders' equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.
Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.
Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.
Tier one common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of Tier 1 capital as a percentage of total risk-weighted assets.
9. Book value per share computed by dividing total stockholders' equity by common shares outstanding.
10. Amounts are included in the statement of operations in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.
11. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.
12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.
13. Associate retention rate is computed by dividing the number of associates employed at quarter end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter end. Associate retention rate does not include associates at acquired institutions displaced by merger.
14. Employment and unemployment data is from the Federal Reserve Bank of St. Louis' FRED Economic Data reporting. All data has been seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. Historical data is subject to update by the Federal Reserve Bank of St. Louis. Historical data is presented based on the most recently reported data available by the Federal Reserve Bank of St. Louis. Area home data is from www.zillow.com and represents median list price for single family homes.
15.  Adjusted pre-tax, pre-provision income excludes the impact of investment gains and losses on sales and impairments of securities, net, as well as other real estate owned expenses and merger-related charges.
16. Represents investment gains (losses) on sales and impairments, net occurring as a result of both credit losses and losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.
17. The dividend payout ratio is calculated as the sum of the annualized dividend rate divided by the trailing 12-months fully diluted earnings per share as of the dividend declaration date.
18. Earnings from equity method investment includes the impact of the issuance of subordinated debt as well as the funding costs of the overall franchise. Income tax expense is calculated using statutory tax rates.
19. Tax effect calculated using the blended statutory rate of 39.23% for all periods presented.
20. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.



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