Press Release

PNFP Reports Diluted EPS of $1.21, ROAA of 1.54 Percent and ROTCE of 18.44 Percent for 3Q 2018

Company Release - 10/16/2018 5:00 PM ET

Year-over-year diluted EPS growth rate of 38.6 percent (34.7 percent, excluding merger-related charges)

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.21 for the quarter ended Sept. 30, 2018, compared to net income per diluted common share of $0.83 for the quarter ended Sept. 30, 2017, an increase of 45.8 percent. Net income per diluted common share was $3.41 for the nine months ended Sept. 30, 2018, compared to net income per diluted common share of $2.46 for the nine months ended Sept. 30, 2017, an increase of 38.6 percent.

No merger-related charges were recorded during the quarter ended Sept. 30, 2018. Net income per diluted common share was $1.21 for the three months ended Sept. 30, 2018, compared to net income per diluted common share of $0.90 for the three months ended Sept. 30, 2017, excluding pre-tax merger-related charges of $8.8 million in the third quarter of 2017, an increase of 34.4 percent. Net income per diluted common share was $3.49 for the nine months ended Sept. 30, 2018, excluding pre-tax merger-related charges of $8.3 million, compared to net income per diluted common share of $2.59 for the nine months ended Sept. 30, 2017, excluding pre-tax merger-related charges of $12.7 million, an increase of 34.7 percent.

"We continue to experience extremely strong earnings momentum," said M. Terry Turner, Pinnacle's president and chief executive officer. "We are reporting nearly 35 percent earnings growth so far this year after adjusting for merger-related charges, which showcases our associates' ability to integrate a sizable merger while maintaining our intense focus on growing the core earnings of our firm. There is great energy and optimism within our associate base, and I anticipate this will contribute to continued growth given the markets we serve, our ability to attract the best bankers to our franchise and our cultural focus on delivering differentiated customer service and enhancing long-term shareholder value."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at Sept. 30, 2018 were a record $17.46 billion, an increase of $421.2 million from June 30, 2018 and $2.20 billion from Sept. 30, 2017, reflecting year-over-year growth of 14.4 percent. Annualized organic loan growth during the third quarter of 2018 was 9.8 percent, compared to 13.5 percent for the third quarter of 2017.
    • Average loans were $17.26 billion for the three months ended Sept. 30, 2018, up $529.4 million from the $16.73 billion for the three months ended June 30, 2018, an annualized growth rate of 12.6 percent.
    • At Sept. 30, 2018, the remaining discount associated with fair value accounting adjustments on acquired loans was $110.0 million, compared to $132.1 million at June 30, 2018.
  • Deposits at Sept. 30, 2018 were a record $18.41 billion, an increase of $550.1 million from June 30, 2018 and $2.62 billion from Sept. 30, 2017, reflecting year-over-year growth of 16.6 percent.
    • Average deposits were $18.11 billion for the three months ended Sept. 30, 2018, up $1.16 billion from the $16.95 billion for the three months ended June 30, 2018.
    • Core deposits were $16.08 billion at Sept. 30, 2018, compared to $15.40 billion at June 30, 2018 and $14.24 billion at Sept. 30, 2017. The annualized growth rate of core deposits in the third quarter of 2018 was 17.4 percent.
  • Revenues for the quarter ended Sept. 30, 2018 were $240.9 million, an increase of $10.7 million and $24.7 million, respectively, from the $230.2 million recognized in the second quarter of 2018 and $216.2 million in the quarter ended Sept. 30, 2017. That is a year-over-year growth rate of 11.4 percent and an annualized growth rate of 18.5 percent in the third quarter of this year.
    • Revenue per fully diluted share was $3.11 for the three months ended Sept. 30, 2018, compared to $2.97 for the second quarter of 2018 and $2.80 for the third quarter of 2017.

"Our model of hiring experienced bankers to produce outsized loan and deposit growth continues to work extremely well," Turner said. "Last week, we announced that we had hired 23 high-profile revenue producers across all of our markets during the third quarter, a strong predictor of our continued future growth. This compares to 39 hires in the second quarter and 22 in the first quarter. We believe our recruiting strategies are hitting on all cylinders and have resulted in accelerated hiring in our markets, which is our principal investment in future growth.

"Loan growth was approximately 10 percent on an annualized linked-quarter basis and continues to be exceptional for our firm this year, up nearly 15.6 percent on an annualized basis since the end of last year. Importantly, we are also pleased that we have experienced 16.6 percent loan growth in our primary loan growth segments, C&I and owner-occupied commercial real estate, since Dec. 31, 2017. Much of this is occurring in the Carolinas and Virginia, where many believed our ability to grow a C&I franchise would take an extended period of time. Lastly, core deposits also showed strong growth during the third quarter, up nearly 18 percent on an annualized basis, reflecting our relationship managers’ ability to gather deposits from across the franchise."

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.54 percent for the third quarter of 2018, compared to 1.50 percent for the second quarter of 2018 and 1.21 percent for the third quarter last year. Third quarter 2018 return on average tangible assets amounted to 1.67 percent, compared to 1.63 percent for the second quarter of 2018 and 1.32 percent for the third quarter last year.
    • Excluding merger-related charges, of which there were none in the third quarter of 2018, return on average assets was 1.54 percent for the third quarter of 2018, compared to 1.54 percent for the second quarter of 2018 and 1.31 percent for the third quarter of 2017. Likewise, excluding these merger-related charges, the firm’s return on average tangible assets was 1.67 percent for the third quarter of 2018, compared to 1.67 percent for the second quarter of 2018 and 1.43 for the third quarter of 2017.
  • Return on average common equity for the third quarter of 2018 amounted to 9.60 percent, compared to 9.18 percent for the second quarter of 2018 and 6.99 percent for the third quarter last year. Third quarter 2018 return on average tangible common equity amounted to 18.44 percent, compared to 18.01 percent for the second quarter of 2018 and 14.25 percent for the third quarter last year.
    • Excluding merger-related charges, of which there were none in the third quarter of 2018, return on average tangible common equity amounted to 18.44 percent for the third quarter of 2018, compared to 18.45 percent for the second quarter of 2018 and 15.44 percent for the third quarter of 2017.

"Our profitability metrics remain very strong and provide us leverage to invest in our future growth," said Harold R. Carpenter, Pinnacle's chief financial officer. "We are very proud of our 1.54 percent return on average assets and our 18.44 percent return on tangible common equity for the third quarter. Importantly, we continue to experience increased tangible book value accretion. Since the merger with BNC Bancorp was completed in June 2017, our tangible book value per common share has increased by more than 16 percent. We think this is a significant achievement, because since the merger date we’ve also absorbed over $39.4 million in merger-related charges, which obviously dilutes tangible book value.

"Additionally, and as a testament to our commitment to grow this firm, we now have more associates working for our firm than we had immediately following the merger, despite the fact that since the merger date we’ve completed systems conversions, branch closures and other reductions normally associated with the execution of a merger synergy case. A reduction in staff personnel is usually critical to the financial success of a merger. Rarely can a firm continue to aggressively hire for critical roles and revenue producers during the integration process and, at the same time, achieve rock-solid profitability metrics."

MAINTAINING A FORTRESS BALANCE SHEET:

  • Nonperforming assets increased to 0.55 percent of total loans and ORE at Sept. 30, 2018, compared to 0.53 percent at June 30, 2018 and 0.51 percent at Sept. 30, 2017. Nonperforming assets were $95.6 million at Sept. 30, 2018, compared to $91.1 million at June 30, 2018 and $78.1 million at Sept. 30, 2017.
  • The allowance for loan losses represented 0.46 percent of total loans at Sept. 30, 2018 compared to 0.44 percent at June 30, 2018 and 0.43 percent at Sept. 30, 2017.
    • The ratio of the allowance for loan losses to nonperforming loans was 102.7 percent at Sept. 30, 2018, compared to 106.7 percent at June 30, 2018 and 122.0 percent at Sept. 30, 2017. At Sept. 30, 2018, purchase credit impaired loans of $12.1 million, which were recorded at fair value upon acquisition, represented 15.8 percent of our nonperforming loans.
    • Net charge-offs were $4.4 million for the quarter ended Sept. 30, 2018, compared to $3.9 million for the quarter ended June 30, 2018 and $3.7 million for the quarter ended Sept. 30, 2017. Annualized net charge-offs as a percentage of average loans for both the quarters ended Sept. 30, 2018 and June 30, 2018 were 0.10 percent, compared to 0.14 percent for the third quarter of 2017.
    • Provision for loan losses was $8.7 million in the third quarter of 2018, compared to $9.4 million in the second quarter of 2018 and $6.9 million in the third quarter of 2017.

"Overall, asset quality for our firm remains exceptional," Carpenter said. "We have allocated reserves to consider potential incurred losses from Hurricane Florence of approximately $2.5 million as of Sept. 30, 2018. Additionally, as we had projected last quarter, our commercial real estate to total risk-based capital ratio decreased to below 300 percent during the third quarter of 2018 and was 287.6 percent at Sept. 30, 2018. The ratio of construction loans to total risk-based capital also decreased to 87.8 percent at Sept. 30, 2018."

GROWING REVENUES

  • Net interest income for the quarter ended Sept. 30, 2018 was $189.4 million, compared to $182.2 million for the second quarter of 2018 and $172.9 million for the third quarter of 2017. That represents an annualized organic growth rate of 15.6 percent between the second and third quarter of 2018.
    • Net interest margin was 3.65 percent for the third quarter of 2018, compared to 3.69 percent for the second quarter of 2018 and 3.87 percent for the third quarter of 2017.
    • Included in net interest income for the third quarter of 2018 was $17.1 million of discount accretion associated with fair value adjustments, compared to $16.1 million of discount accretion recognized in the second quarter of 2018.
  • Noninterest income for the quarter ended Sept. 30, 2018 was $51.5 million, compared to $47.9 million for the second quarter of 2018 and $43.2 million for the third quarter of 2017, up 29.3 percent on an annualized basis.
    • Wealth management revenues, which include investment, trust and insurance services, were $10.5 million for the quarter ended Sept. 30, 2018, compared to $10.5 million for the second quarter of 2018 and $8.4 million for the third quarter of 2017.
    • Income from the firm's investment in Bankers Healthcare Group (BHG) was $14.2 million for the quarter ended Sept. 30, 2018, compared to $9.7 million for the quarter ended June 30, 2018 and $8.9 million for the quarter ended Sept. 30, 2017. Income from the firm's investment in BHG grew 59.3 percent for the quarter ended Sept. 30, 2018, compared to the quarter ended Sept. 30, 2017.

"We are reporting an annualized growth rate in net interest income of almost 16 percent, as well as a significant increase in noninterest income for the third quarter of 2018 when compared to the second quarter," Carpenter said. "Our net interest margin decreased to 3.65 percent from 3.69 percent during the previous quarter. Earning asset yields improved this quarter by 10 basis points, which was the same level of improvement reported in the previous quarter. Total funding rates increased by 14 basis points during the third quarter, compared to a 20 basis point increase in the second quarter. BHG had a strong third quarter, and we anticipate they will have a great fourth quarter as they finish out 2018.

"While many are focused internally on cost-cutting exercises, we are aggressively growing our client base across our franchise. Despite potential modest deterioration in our margins, we will continue our focus on growing net interest income since that is the key to growing our earnings and meeting our tangible book value growth goals. We believe our track record for delivering results quarter after quarter and year after year provides confidence to our shareholders that, over the long term, this firm is a sound investment for the future."

CREATING OPERATING LEVERAGE

  • Noninterest expense for the quarter ended Sept. 30, 2018 was $114.0 million, compared to $110.9 million in the second quarter of 2018 and $109.7 million in the third quarter of 2017, reflecting a year-over-year increase of 3.9 percent.
    • Salaries and employee benefits were $69.1 million in the third quarter of 2018, compared to $64.1 million in the second quarter of 2018 and $64.3 million in the third quarter of last year, reflecting a year-over-year increase of 7.5 percent.
      • Included in salaries and employee benefits are costs related to the firm’s annual cash incentive plan. Incentive costs for this plan amounted to $10.0 million in the third quarter of 2018, compared to $6.9 million in both the second quarter of 2018 and in the third quarter of last year.
    • The efficiency ratio for the third quarter of 2018 decreased to 47.3 percent, compared to 48.2 percent for the second quarter of 2018. The ratio of noninterest expenses to average assets decreased to 1.87 percent for the third quarter of 2018 from 1.91 percent in the second quarter of 2018.
      • Excluding merger-related charges, of which there were none in the third quarter of 2018, and other real estate owned (ORE) expense, the efficiency ratio was 47.3 percent for the third quarter of 2018, compared to 46.6 percent for the second quarter of 2018, and the ratio of noninterest expense to average assets was 1.87 percent for the third quarter of 2018, compared to 1.85 percent for the second quarter of 2018.
    • The effective tax rate for the third quarter of 2018 was 20.7 percent, compared to 20.9 percent for the second quarter of 2018 and 35.2 percent for the third quarter of 2017. The Tax Cuts and Jobs Act reduced the aggregate blended federal and state statutory income tax rate for the firm from 39.23 percent to 26.14 percent.
      • Included in income tax expense for the three and nine months ended Sept. 30, 2018 were excess tax benefits of $199,000 and $3.0 million, respectively, related to the application of FASB Accounting Standards Update (ASU) 2016-09, Stock Compensation Improvements to Employee Share-Based Payment Activity compared to $59,000 and $4.6 million, respectively, for the three and nine months ended Sept. 30, 2017.
      • Inclusive of all of these matters, the firm anticipates an effective tax rate of between 20.0 and 21.0 percent for calendar year 2018.

"Our efficiency ratio for the third quarter was 47 percent, slightly higher than the ratio for the second quarter, excluding merger-related charges and ORE expense," Carpenter said. "We are very pleased with both the efficiency ratio and the expense to asset ratio given our hiring activity and that we were able to increase our incentive accruals in the third quarter by $3.1 million over the amounts we expensed in the second quarter. We have increased our target payout percentage to approximately 90 percent as of Sept. 30, 2018. Our ability to maintain our incentive accrual at 90 percent or increase it will depend on our ability to achieve the revenue and earnings necessary to fund such increases."

BOARD OF DIRECTORS DECLARES DIVIDEND

On Oct. 16, 2018, Pinnacle’s Board of Directors approved an increase to the quarterly cash dividend to $0.16 per common share to be paid on Nov. 30, 2018 to common shareholders of record as of the close of business on Nov. 2, 2018. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle’s Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on Oct. 17, 2018 to discuss third quarter 2018 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 is the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, according to 2018 deposit data from the FDIC. Pinnacle earned a place on FORTUNE’s 2017 and 2018 lists of the 100 Best Companies to Work For in the U.S., and American Banker recognized Pinnacle as one of America’s Best Banks to Work For six years in a row.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $24.6 billion in assets as of Sept. 30, 2018. 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.

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 of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "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) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (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) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the Tax Cuts and Jobs Act) and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (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) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) a merger or acquisition; (xi) risks of expansion into new geographic or product markets; (xii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiii) 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 (including as a result of the competitive environment resulting from the Tax Cuts and Jobs Act) or otherwise to attract customers from other financial institutions; (xiv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xv) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Financial’s level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xvi) approval of the declaration of any dividend by Pinnacle Financial’s board of directors; (xvii) the vulnerability of Pinnacle Bank’s network and online banking portals, and the systems of parties with whom Pinnacle Financial contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance and operational 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; (xix) 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 Pinnacle Financial or Pinnacle Bank; (xx) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxi) the availability and access to capital; (xxii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxiii) 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.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, revenues per diluted share, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, in each case excluding the impact of expenses related to other real estate owned, gains or losses on sale of investments, the revaluation of Pinnacle Financial’s deferred tax assets and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Bank’s merger with BNC. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial’s acquisitions of BNC, Avenue Bank, 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 2018 versus certain periods in 2017 and to internally prepared projections.

 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
(dollars in thousands)      

September 30,
2018

 

December 31,
2017

 

September 30,
2017

ASSETS
Cash and noninterest-bearing due from banks $ 145,638 $ 176,553 $ 132,324
Interest-bearing due from banks 394,129 496,911 270,563
Federal funds sold and other 11,313     106,132     5,395  
Cash and cash equivalents 551,080 779,596 408,282
 
Securities available-for-sale, at fair value 3,004,582 2,515,283 2,880,181
Securities held-to-maturity (fair value of $192.5 million, $20.8 million, and $21.0 million at Sept. 30, 2018, Dec. 31, 2017, and Sept. 30, 2017, respectively) 194,997 20,762 20,848
Consumer loans held-for-sale 47,417 103,729 105,032
Commercial loans held-for-sale 11,402 25,456 20,385
 
Loans 17,464,009 15,633,116 15,259,786
Less allowance for loan losses (79,985 )   (67,240 )   (65,159 )
Loans, net 17,384,024 15,565,876 15,194,627
 
Premises and equipment, net 268,387 266,014 270,136
Equity method investment 221,302 221,667 211,502
Accrued interest receivable 73,366 57,440 54,287
Goodwill 1,807,121 1,808,002 1,802,534
Core deposits and other intangible assets 48,737 56,710 59,781
Other real estate owned 17,467 27,831 24,339
Other assets 927,663     757,334     738,437  
Total assets $ 24,557,545     $ 22,205,700     $ 21,790,371  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 4,476,925 $ 4,381,386 $ 4,099,086
Interest-bearing 3,195,657 2,987,291 2,571,765
Savings and money market accounts 7,262,968 6,548,964 6,595,640
Time 3,471,965     2,534,061     2,523,094  
Total deposits 18,407,515 16,451,702 15,789,585
Securities sold under agreements to repurchase 130,217 135,262 129,557
Federal Home Loan Bank advances 1,520,603 1,319,909 1,623,947
Subordinated debt and other borrowings 465,487 465,505 465,461
Accrued interest payable 20,944 10,480 10,715
Other liabilities 115,738     114,890     97,757  
Total liabilities 20,660,504 18,497,748 18,117,022
 

Preferred stock, no par value; 10.0 million shares authorized; no shares issued and outstanding

Common stock, par value $1.00; 180.0 million shares authorized at Sept. 30, 2018 and 90.0 million shares authorized at Dec. 31, 2017 and Sept. 30, 2017, respectively; 77.9 million, 77.7 million shares and 77.7 million shares issued and outstanding at Sept. 30, 2018, Dec. 31, 2017 and Sept. 30, 2017, respectively 77,867 77,740 77,652
Additional paid-in capital 3,123,323 3,115,304 3,105,578
Retained earnings 750,363 519,144 503,270
Accumulated other comprehensive loss, net of taxes (54,512 )   (4,236 )   (13,151 )
Total stockholders' equity 3,897,041     3,707,952     3,673,349  
Total liabilities and stockholders' equity $ 24,557,545     $ 22,205,700     $ 21,790,371  
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(dollars in thousands, except for per share data)   Three Months Ended   Nine Months Ended

September 30,
2018

 

June 30,
2018

 

September 30,
2017

 

September 30,
2018

 

September 30,
2017

Interest income:      
Loans, including fees $ 221,901 $ 208,758 $ 183,570 $ 621,873 $ 389,093
Securities
Taxable 12,209 11,748 12,067 35,179 26,765
Tax-exempt 10,074 8,350 4,620 25,709 8,533
Federal funds sold and other 3,926     2,128     1,639     7,861     3,376
Total interest income 248,110     230,984     201,896     690,622     427,767
 
Interest expense:
Deposits 44,172 32,767 19,104 100,920 38,216
Securities sold under agreements to repurchase 165 143 148 438 277
Federal Home Loan Bank advances and other borrowings 14,353     15,838     9,734     43,137     20,984
Total interest expense 58,690     48,748     28,986     144,495     59,477
Net interest income 189,420 182,236 172,910 546,127 368,290
Provision for loan losses 8,725     9,402     6,920     25,058     17,384
Net interest income after provision for loan losses 180,695 172,834 165,990 521,069 350,906
 
Noninterest income:
Service charges on deposit accounts 6,404 6,065 5,921 18,289 13,955
Investment services 5,237 4,906 3,660 15,250 9,592
Insurance sales commissions 2,126 2,048 2,123 7,293 5,444
Gains on mortgage loans sold, net 3,902 3,777 5,963 11,423 14,785
Investment gains on sales, net 11 41
Trust fees 3,087 3,564 2,636 9,768 6,019
Income from equity method investment 14,236 9,690 8,937 33,286 25,514
Other noninterest income 16,475     17,889     14,008     48,250     33,392
Total noninterest income 51,478     47,939     43,248     143,600     108,701
 
Noninterest expense:
Salaries and employee benefits 69,117 64,112 64,288 196,948 146,316
Equipment and occupancy 19,252 18,208 16,590 55,203 36,978
Other real estate, net 67 819 513 92 827
Marketing and other business development 3,293 2,544 2,222 8,084 6,228
Postage and supplies 1,654 2,291 1,755 5,984 4,074
Amortization of intangibles 2,616 2,659 3,077 7,973 5,745
Merger-related expenses 2,906 8,847 8,259 12,740
Other noninterest expense 17,991     17,369     12,444     50,935     30,679
Total noninterest expense 113,990     110,908     109,736     333,478     243,587
Income before income taxes 118,183 109,865 99,502 331,191 216,020
Income tax expense 24,436     23,000     35,060     67,069     68,839
Net income $ 93,747     $ 86,865     $ 64,442     $ 264,122     $ 147,181
 
Per share information:
Basic net income per common share $ 1.22     $ 1.13     $ 0.84     $ 3.42     $ 2.48
Diluted net income per common share $ 1.21     $ 1.12     $ 0.83     $ 3.41     $ 2.46
Weighted average shares outstanding:
Basic 77,145,023 77,123,854 76,678,584 77,116,377 59,371,202
Diluted 77,490,977 77,468,082 77,232,098 77,442,554 59,910,344
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
         
(dollars in thousands) September June March December September June
2018   2018   2018   2017   2017   2017
Balance sheet data, at quarter end:
Commercial and industrial loans $ 5,006,247 4,821,299 4,490,886 4,141,341 3,971,227 3,688,357
Commercial real estate - owner occupied 2,688,247 2,504,891 2,427,946 2,460,015 2,433,762 2,368,641
Commercial real estate - investment 3,818,055 3,822,182 3,714,854 3,564,048 3,398,381 3,357,120
Commercial real estate - multifamily and other 708,817 697,566 651,488 645,547 617,899 661,611
Consumer real estate - mortgage loans 2,815,160 2,699,399 2,580,766 2,561,214 2,541,180 2,552,927
Construction and land development loans 2,059,009 2,133,646 2,095,875 1,908,288 1,939,809 1,772,799
Consumer and other 368,474 363,870 364,202 352,663 357,528 357,310
Total loans 17,464,009 17,042,853 16,326,017 15,633,116 15,259,786 14,758,765
Allowance for loan losses (79,985 ) (75,670 ) (70,204 ) (67,240 ) (65,159 ) (61,944 )
Securities 3,199,579 2,975,469 2,981,301 2,536,046 2,901,029 2,448,198
Total assets 24,557,545 23,988,370 22,935,174 22,205,700 21,790,371 20,886,154
Noninterest-bearing deposits 4,476,925 4,361,414 4,274,213 4,381,386 4,099,086 3,893,603
Total deposits 18,407,515 17,857,418 16,502,909 16,451,702 15,789,585 15,757,475
Securities sold under agreements to repurchase 130,217 128,739 131,863 135,262 129,557 205,008
FHLB advances 1,520,603 1,581,867 1,976,881 1,319,909 1,623,947 725,230
Subordinated debt and other borrowings 465,487 465,433 465,550 465,505 465,461 465,419
Total stockholders' equity 3,897,041 3,826,677 3,749,303 3,707,952 3,673,349 3,615,327
 
Balance sheet data, quarterly averages:
Total loans $ 17,259,139 16,729,734 15,957,466 15,520,255 15,016,642 9,817,139
Securities 3,075,633 2,970,267 2,829,604 2,850,322 2,741,493 1,798,334
Federal funds sold and other 647,728 442,401 335,093 439,167 379,769 269,645
Total earning assets 20,982,500 20,142,402 19,122,163 18,809,744 18,137,904 11,885,118
Total assets 24,125,051 23,236,945 22,204,599 21,933,500 21,211,459 13,335,359
Noninterest-bearing deposits 4,330,917 4,270,459 4,304,186 4,165,876 3,953,855 2,746,499
Total deposits 18,112,766 16,949,374 16,280,581 16,091,700 15,828,480 10,394,267
Securities sold under agreements to repurchase 146,864 123,447 129,969 134,983 160,726 99,763
FHLB advances 1,497,511 1,884,828 1,584,281 1,465,145 1,059,032 399,083
Subordinated debt and other borrowings 468,990 474,328 471,029 477,103 473,805 375,249
Total stockholders' equity 3,874,430 3,795,963 3,732,633 3,706,741 3,655,029 2,057,505
 
Statement of operations data, for the three months ended:
Interest income $ 248,110 230,984 211,528 208,371 201,896 123,743
Interest expense 58,690     48,748     37,057     33,354     28,986     17,116  
Net interest income 189,420 182,236 174,471 175,017 172,910 106,627
Provision for loan losses 8,725     9,402     6,931     6,281     6,920     6,812  
Net interest income after provision for loan losses 180,695 172,834 167,540 168,736 165,990 99,815
Noninterest income 51,478 47,939 44,183 36,202 43,248 35,057
Noninterest expense 113,990     110,908     108,580     122,973     109,736     71,798  
Income before taxes 118,183 109,865 103,143 81,965 99,502 63,074
Income tax expense 24,436     23,000     19,633     55,167     35,060     19,988  
Net income $ 93,747     86,865     83,510     26,798     64,442     43,086  
 
Profitability and other ratios:
Return on avg. assets (1) 1.54 % 1.50 % 1.53 % 0.48 % 1.21 % 1.30 %
Return on avg. common equity (1) 9.60 % 9.18 % 9.07 % 2.87 % 6.99 % 8.40 %
Return on avg. tangible common equity (1) 18.44 % 18.01 % 18.12 % 5.76 % 14.25 % 13.58 %
Dividend payout ratio (16) 14.89 % 16.57 % 18.36 % 20.00 % 17.34 % 18.01 %
Net interest margin (2) 3.65 % 3.69 % 3.77 % 3.76 % 3.87 % 3.68 %
Noninterest income to total revenue (3) 21.37 % 20.83 % 20.21 % 17.27 % 19.88 % 24.74 %
Noninterest income to avg. assets (1) 0.85 % 0.83 % 0.81 % 0.66 % 0.80 % 1.05 %
Noninterest exp. to avg. assets (1) 1.87 % 1.91 % 1.98 % 2.22 % 2.05 % 2.16 %
Efficiency ratio (4) 47.32 % 48.18 % 49.66 % 58.22 % 50.77 % 50.67 %
Avg. loans to avg. deposits 95.29 % 98.70 % 98.02 % 96.45 % 94.87 % 94.45 %
Securities to total assets 13.03 % 12.40 % 13.00 % 11.42 % 13.31 % 11.72 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
       
(dollars in thousands) Three months ended Three months ended
September 30, 2018 September 30, 2017

Average
Balances

  Interest  

Rates/
Yields

Average
Balances

  Interest  

Rates/
Yields

Interest-earning assets        
Loans (1) $ 17,259,139 $ 221,901 5.15 % $ 15,016,642 $ 183,570 4.91 %
Securities
Taxable 1,803,104 12,209 2.69 % 2,080,512 12,067 2.30 %
Tax-exempt (2) 1,272,529 10,074 3.72 % 660,981 4,620 3.72 %
Federal funds sold and other 647,728     3,926     2.40 % 379,769     1,639     1.71 %
Total interest-earning assets 20,982,500 $ 248,110     4.76 % 18,137,904 $ 201,896     4.50 %
Nonearning assets
Intangible assets 1,857,413 1,860,282
Other nonearning assets 1,285,138   1,213,273  
Total assets $ 24,125,051   $ 21,211,459  
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing demand deposits $ 828,420 $ 2,566 1.23 % $ 616,404 $ 1,213 0.78 %
Interest checking 2,247,605 5,277 0.93 % 2,042,329 2,155 0.42 %
Savings and money market 7,284,373 21,125 1.15 % 6,727,136 10,725 0.63 %
Time 3,421,451     15,204     1.76 % 2,488,756     5,011     0.80 %
Total interest-bearing deposits 13,781,849 44,172 1.27 % 11,874,625 19,104 0.64 %
Securities sold under agreements to repurchase 146,864 165 0.44 % 160,726 148 0.37 %
Federal Home Loan Bank advances 1,497,511 8,171 2.16 % 1,059,032 3,959 1.48 %
Subordinated debt and other borrowings 468,990     6,182     5.29 % 473,805     5,775     4.84 %
Total interest-bearing liabilities 15,895,214 58,690 1.46 % 13,568,188 28,986 0.85 %
Noninterest-bearing deposits 4,330,917           3,953,855          
Total deposits and interest-bearing liabilities 20,226,131 $ 58,690     1.15 % 17,522,043 $ 28,986     0.66 %
Other liabilities 20,490 34,387
Stockholders' equity 3,874,430   3,655,029  
Total liabilities and stockholders' equity $ 24,121,051   $ 21,211,459  
Net interest income $ 189,420   $ 172,910  
Net interest spread (3) 3.30 % 3.65 %
Net interest margin (4) 3.65 % 3.87 %
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $3.8 million of taxable equivalent income for the quarter ended September 30, 2018 compared to $3.6 million for the quarter ended September 30, 2017.
(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, 2018 would have been 3.61% compared to a net interest spread of 3.84% for the quarter ended September 30, 2017.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
       
(dollars in thousands) Nine months ended Nine months ended
September 30, 2018 September 30, 2017

Average
Balances

  Interest  

Rates/
Yields

Average
Balances

  Interest  

Rates/
Yields

Interest-earning assets        
Loans (1) $ 16,653,548 $ 621,873 5.04 % $ 11,154,340 $ 389,093 4.73 %
Securities
Taxable 1,796,816 35,179 2.62 % 1,593,590 26,765 2.25 %
Tax-exempt (2) 1,162,587 25,709 3.51 % 404,756 8,533 3.78 %
Federal funds sold and other 476,219     7,861     2.21 % 300,552     3,376     1.50 %
Total interest-earning assets 20,089,170 $ 690,622     4.66 % 13,453,238 $ 427,767     4.34 %
Nonearning assets
Intangible assets 1,860,649 1,075,109
Other nonearning assets 1,246,081   830,337  
Total assets $ 23,195,900   $ 15,358,684  
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing demand deposits $ 803,230 $ 6,483 1.08 % $ 554,196 $ 2,712 0.65 %
Interest checking 2,205,466 12,853 0.78 % 1,652,738 5,062 0.41 %
Savings and money market 6,850,249 49,294 0.96 % 5,043,033 21,175 0.56 %
Time 2,960,055     32,290     1.46 % 1,498,114     9,267     0.83 %
Total interest-bearing deposits 12,819,000 100,920 1.05 % 8,748,081 38,216 0.58 %
Securities sold under agreements to repurchase 133,489 438 0.44 % 113,687 277 0.33 %
Federal Home Loan Bank advances 1,655,222 24,867 2.01 % 560,121 6,347 1.52 %
Subordinated debt and other borrowings 470,564     18,270     5.19 % 401,814     14,637     4.87 %
Total interest-bearing liabilities 15,078,275 144,495 1.28 % 9,823,703 59,477 0.81 %
Noninterest-bearing deposits 4,301,952           3,050,640          
Total deposits and interest-bearing liabilities 19,380,227 $ 144,495     1.00 % 12,874,343 $ 59,477     0.62 %
Other liabilities 14,145 20,486
Stockholders' equity 3,801,528   2,463,855  
Total liabilities and stockholders' equity $ 23,195,900   $ 15,358,684  
Net interest income $ 546,127   $ 368,290  
Net interest spread (3) 3.38 % 3.53 %
Net interest margin (4) 3.70 % 3.75 %
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $10.4 million of taxable equivalent income for the nine months ended September 30, 2018 compared to $8.3 million for the nine months ended September 30, 2017.
(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, 2018 would have been 3.67% compared to a net interest spread of 3.72% for the nine months ended September 30, 2017.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                       
(dollars in thousands) September June March December September June
2018     2018     2018     2017     2017     2017
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans $ 77,868 70,887 70,202 57,455 53,414 40,217

Other real estate (ORE) and other nonperforming assets (NPAs)

17,731       20,229       24,533       28,028       24,682       25,153  
Total nonperforming assets $ 95,599       91,116       94,735       85,483       78,096       65,370  
Past due loans over 90 days and still accruing interest $ 1,773 1,572 1,131 4,139 3,010 1,691
Accruing troubled debt restructurings (5) $ 6,125 5,647 6,115 6,612 15,157 14,248
Accruing purchase credit impaired loans $ 21,473 22,993 24,398 26,719 29,254 34,874
Net loan charge-offs $ 4,410 3,936 3,967 4,200 3,705 3,218
Allowance for loan losses to nonaccrual loans 102.7 % 106.7 % 100.0 % 117.0 % 122.0 % 154.0 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.25 % 0.23 % 0.24 % 0.38 % 0.24 % 0.20 %
Potential problem loans (6) 1.16 % 1.00 % 0.97 % 1.05 % 0.97 % 1.26 %
Allowance for loan losses 0.46 % 0.44 % 0.43 % 0.43 % 0.43 % 0.42 %
Nonperforming assets to total loans, ORE and other NPAs 0.55 % 0.53 % 0.58 % 0.55 % 0.51 % 0.44 %
Nonperforming assets to total assets 0.39 % 0.38 % 0.41 % 0.38 % 0.36 % 0.31 %
Classified asset ratio (Pinnacle Bank) (8) 13.7 % 12.6 % 12.6 % 12.9 % 12.7 % 14.2 %
Annualized net loan charge-offs to avg. loans (7) 0.10 % 0.10 % 0.10 % 0.13 % 0.14 % 0.17 %
Wtd. avg. commercial loan internal risk ratings (6) 4.5 4.4 4.4 4.5 4.5 4.5
 
Interest rates and yields:
Loans 5.15 % 5.04 % 4.91 % 4.87 % 4.91 % 4.66 %
Securities 3.11 % 2.91 % 2.87 % 2.68 % 2.64 % 2.51 %
Total earning assets 4.76 % 4.66 % 4.56 % 4.46 % 4.50 % 4.21 %
Total deposits, including non-interest bearing 0.97 % 0.78 % 0.60 % 0.53 % 0.48 % 0.42 %
Securities sold under agreements to repurchase 0.44 % 0.47 % 0.40 % 0.38 % 0.37 % 0.32 %
FHLB advances 2.16 % 2.06 % 1.79 % 1.64 % 1.48 % 1.49 %
Subordinated debt and other borrowings 5.29 % 5.20 % 5.11 % 4.83 % 4.84 % 4.87 %
Total deposits and interest-bearing liabilities 1.15 % 1.01 % 0.81 % 0.73 % 0.66 % 0.61 %
 
Capital and other ratios (8):
Pinnacle Financial ratios:
Stockholders' equity to total assets 15.9 % 16.0 % 16.3 % 16.7 % 16.9 % 17.3 %
Common equity Tier one 9.4 % 9.3 % 9.2 % 9.2 % 9.4 % 9.5 %
Tier one risk-based 9.4 % 9.3 % 9.2 % 9.2 % 9.4 % 9.5 %
Total risk-based 12.1 % 12.0 % 12.0 % 12.0 % 12.3 % 12.6 %
Leverage 8.8 % 8.8 % 8.8 % 8.7 % 8.9 % 14.5 %
Tangible common equity to tangible assets 9.0 % 8.9 % 9.0 % 9.1 % 9.1 % 9.2 %
Pinnacle Bank ratios:
Common equity Tier one 10.3 % 10.2 % 10.3 % 10.3 % 10.7 % 11.0 %
Tier one risk-based 10.3 % 10.2 % 10.3 % 10.3 % 10.7 % 11.0 %
Total risk-based 11.4 % 11.2 % 11.3 % 11.4 % 11.8 % 12.1 %
Leverage 9.6 % 9.7 % 9.8 % 9.7 % 10.1 % 16.7 %

Construction and land development loans as a percentage of total capital (19)

87.8 % 94.6 % 96.1 % 89.4 % 88.1 % 85.1 %

Non-owner occupied commercial real estate and multi-family as a percentage of total capital (19)

287.6 % 304.3 % 306.2 % 297.1 % 289.1 % 286.4 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
                       
(dollars in thousands, except per share data) September June March December September June
  2018     2018     2018     2017     2017     2017
 
Per share data:
Earnings – basic $ 1.22 1.13 1.08 0.35 0.84 0.81
Earnings – diluted $ 1.21 1.12 1.08 0.35 0.83 0.80
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) $ 50.05 49.15 48.16 47.70 47.31 46.56
Tangible book value per common share at quarter end (9) $ 26.21 25.28 24.24 23.71 23.32 22.58
Revenue per diluted share $ 3.11 2.97 2.83 2.73 2.80 2.64
Revenue per diluted share, excluding investment (gains) losses on sale of securities, net $ 3.11 2.97 2.83 2.83 2.80 2.64
Noninterest expense per diluted share $ 1.47 1.43 1.40 1.59 1.42 1.34
Noninterest expense per diluted share, excluding the impact of other real estate expense and merger-related charges $ 1.47 1.38 1.34 1.34 1.30 1.28
 
Investor information:
Closing sales price on last trading day of quarter $ 60.15 61.35 64.20 66.30 66.95 62.80
High closing sales price during quarter $ 66.20 68.10 69.45 69.30 66.95 69.10
Low closing sales price during quarter $ 60.05 61.35 60.20 63.85 58.50 60.00
 
Other information:
Gains on residential mortgage loans sold:
Residential mortgage loan sales:
Gross loans sold $ 278,073 264,934 237,667 289,149 299,763 245,474
Gross fees (10) $ 7,756 7,134 6,036 7,364 9,050 7,361
Gross fees as a percentage of loans originated 2.79 % 2.69 % 2.54 % 2.55 % 3.02 % 3.00 %
Net gain on residential mortgage loans sold $ 3,902 3,777 3,744 3,839 5,963 4,668
Investment gains (losses) on sales of securities, net (15) $ 11 30 (8,265 )
Brokerage account assets, at quarter end (11) $ 3,998,774 3,745,635 3,508,669 3,266,936 2,979,936 2,815,501
Trust account managed assets, at quarter end $ 2,074,027 1,920,226 1,844,871 1,837,233 1,880,488 1,804,811
Core deposits (12) $ 16,076,859 15,400,142 14,750,211 14,838,208 14,236,205 14,461,407
Core deposits to total funding (12) 78.3 % 76.9 % 77.3 % 80.8 % 79.1 % 84.3 %
Risk-weighted assets $ 20,705,547 20,151,827 19,286,101 18,812,653 18,164,765 17,285,264
Number of offices 115 115 114 114 123 121
Total core deposits per office $ 139,799 133,914 129,388 130,160 115,742 119,516
Total assets per full-time equivalent employee $ 10,917 10,911 10,677 10,415 9,930 9,398
Annualized revenues per full-time equivalent employee $ 424.9 419.9 412.8 393.1 390.8 255.7
Annualized expenses per full-time equivalent employee $ 201.0 202.3 205.0 228.8 198.4 129.6
Number of employees (full-time equivalent) 2,249.5 2,198.5 2,148.0 2,132.0 2,194.5 2,222.5
Associate retention rate (13) 91.1 % 89.6 % 89.9 % 93.5 % 98.3 % 87.1 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
    Three Months Ended     Nine Months Ended
(dollars in thousands, except per share data) September 30,   June 30,   September 30, September 30,   September 30,
  2018   2018   2017 2018   2017
 
Net interest income $ 189,420 182,236 172,910 546,127 368,290
 
Noninterest income   51,478     47,939     43,248   143,600     108,701  
Total revenues 240,898 230,175 216,158 689,727 476,991
 
Noninterest expense 113,990 110,908 109,736 333,478 243,587
Less: Other real estate (ORE) expense 67 819 513 92 827
Merger-related charges       2,906     8,847   8,259     12,740  
Noninterest expense excluding the impact of ORE expense and merger-related charges   113,923     107,183     100,376   325,127     230,020  
 
Adjusted pre-tax pre-provision income (14) $ 126,975     122,992     115,782   364,600     246,971  
 
Efficiency ratio (4) 47.32 % 48.18 % 50.77 % 48.35 % 51.07 %
Adjustment due to ORE expense and merger-related charges   (0.03 %)   (1.61 %)   (4.33 %) (1.21 %)   (2.85 %)
Efficiency ratio (excluding ORE expense and merger-related charges)   47.29 %   46.57 %   46.44 % 47.14 %   48.22 %
 
Total average assets $ 24,125,051     23,236,945     21,211,459   23,195,900     15,358,684  
 
 
Noninterest expense to average assets 1.87 % 1.91 % 2.05 % 1.92 % 2.12 %
Adjustment due to ORE expense and merger-related charges   %   (0.06 %)   (0.17 %) (0.05 %)   (0.12 %)

Noninterest expense (excluding ORE expense and merger-related charges) to average assets (1)

  1.87 %   1.85 %   1.88 % 1.87 %   2.00 %
 
Net income $ 93,747 86,865 64,442 264,122 147,181
Merger-related charges 2,906 8,847 8,259 12,740
Tax effect on merger-related charges (18)       (760 )   (3,471 ) (2,159 )   (4,998 )
Net income excluding merger-related charges $ 93,747     89,011     69,818   270,222     154,923  
 
Basic earnings per share $ 1.22 1.13 0.84 3.42 2.48
Adjustment due to merger-related charges       0.02     0.07   0.08     0.13  
Basic earnings per share excluding merger-related charges $ 1.22     1.15     0.91   3.50     2.61  
 
Diluted earnings per share $ 1.21 1.12 0.83 3.41 2.46
Adjustment due to merger-related charges       0.03     0.07   0.08     0.13  
Diluted earnings per share excluding merger-related charges $ 1.21     1.15     0.90   3.49     2.59  
 
This information is preliminary and based on company data available at the time of the presentation.
 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
    Three Months Ended     Nine Months Ended
(dollars in thousands, except per share data) September 30,   June 30,   September 30, September 30,   September 30,
  2018   2018   2017 2018   2017
 
Return on average assets 1.54 % 1.50 % 1.21 % 1.52 % 1.28 %
Adjustment due to merger-related charges   %   0.04 %   0.10 % 0.04 %   0.07 %
Return on average assets excluding merger-related charges   1.54 %   1.54 %   1.31 % 1.56 %   1.35 %
 
Tangible assets:
Total assets $ 24,557,545 23,988,370 21,790,371 24,557,545 21,790,371
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,802,534 ) (1,807,121 ) (1,802,534 )
Core deposit and other intangible assets   (48,737 )   (51,353 )   (59,781 ) (48,737 )   (59,781 )
Net tangible assets $ 22,701,687     22,129,896     19,928,056   22,701,687     19,928,056  
 
Tangible equity:
Total stockholders' equity $ 3,897,041 3,826,677 3,673,349 3,897,041 3,673,349
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,802,534 ) (1,807,121 ) (1,802,534 )
Core deposit and other intangible assets   (48,737 )   (51,353 )   (59,781 ) (48,737 )   (59,781 )
Net tangible common equity $ 2,041,183     1,968,203     1,811,034   2,041,183     1,811,034  
 
Ratio of tangible common equity to tangible assets   8.99 %   8.89 %   9.09 % 8.99 %   9.09 %
 
Average tangible assets:
Average assets $ 24,125,051 23,236,945 21,211,459 23,195,900 15,358,684
Less: Average goodwill (1,807,121 ) (1,807,850 ) (1,801,424 ) (1,807,672 ) (1,042,488 )
Average core deposit and other intangible assets   (50,292 )   (53,018 )   (59,521 ) (52,978 )   (32,881 )
Net average tangible assets $ 22,267,638   21,376,077   19,350,514   21,335,250   14,283,315  
 
Return on average assets 1.54 % 1.50 % 1.21 % 1.52 % 1.28 %
Adjustment due to goodwill, core deposit and other intangible assets   0.13 %   0.13 %   0.11 % 0.14 %   0.10 %
Return on average tangible assets 1.67 % 1.63 % 1.32 % 1.66 % 1.38 %
Adjustment due to merger-related charges   %   0.04 %   0.11 % 0.03 %   0.07 %
Return on average tangible assets excluding merger-related charges